News

The Treasury Department and the Internal Revenue Service today issued further guidance on the employee retention credit, including guidance for employers who pay qualified wages after June 30, 2021, and before January 1, 2022, and additional guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021. Notice 2021-49 PDF amplifies prior guidance regarding the employee retention credit provided in Notice 2021-20 PDF and Notice 2021-23 PDF.

Notice 2021-49 addresses changes made by the American Rescue Plan Act of 2021 (ARP) to the employee retention credit that are applicable to the third and fourth quarters of 2021.
Those changes include, among other things:


making the credit available to eligible employers that pay qualified wages after June 30, 2021, and before January 1, 2022,
expanding the definition of eligible employer to include "recovery startup businesses,"
modifying the definition of qualified wages for "severely financially distressed employers," and
providing that the employee retention credit does not apply to qualified wages taken into account as payroll costs in connection with a shuttered venue grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or a restaurant revitalization grant under section 5003 of the ARP.


Notice 2021-49 also provides guidance on several miscellaneous issues with respect to the employee retention credit for both 2020 and 2021. This guidance responds to various questions that the Treasury Department and the IRS have been asked about the employee retention credit, including:


The definition of full-time employee and whether that definition includes full-time equivalents,
The treatment of tips as qualified wages and the interaction with the section 45B credit,
The timing of the qualified wages deduction disallowance and whether taxpayers that already filed an income tax return must amend that return after claiming the credit on an adjusted employment tax return, and
Whether wages paid to majority owners and their spouses may be treated as qualified wages.







Reporting
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns (generally, Form 941) for the applicable period. If a reduction in the employer's employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
 
Where can I find more information on the employee retention credit and other COVID-19 economic relief efforts?

Treasury and the IRS continue to closely monitor pending legislation related to the employee retention credit and will provide additional information as needed.

Updates on the implementation of this employee retention credit, Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.




Source :
https://www.irs.gov/newsroom/treasury-irs-provide-additional-guidance-to-employers-claiming-the-employee-retention-credit-including-for-the-third-and-fourth-quarters-of-2021

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The IRS continues to observe criminals using a variety of scams that target honest taxpayers. In some cases, these scams will trick taxpayers into doing something illegal or that ultimately causes them financial harm. These scammers may cause otherwise honest people to do things they don't realize are illegal or prey on their good will to steal their money.

Here are a couple of this year's Dirty Dozen scams.

Fake charities

Taxpayers should be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity. Scammers take advantage of tragedies and disasters.

Scams requesting donations for disaster relief efforts are especially common over the phone. Taxpayers should always check out a charity before they donate, and they should not feel pressured to give immediately.

Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return by reducing the amount of their taxable income. However, to receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, they can use the IRS Tax Exempt Organization Search tool. It's also important for taxpayers to remember that they can't deduct gifts to individuals or to political organizations and candidates.

Here are some tips to help taxpayer avoid fake charity scams:


Individuals should never let any caller pressure them. A legitimate charity will be happy to get a donation at any time, so there's no rush. Donors are encouraged to take time to do their own research.
Confirm the charity is real. Potential donors should ask the fundraiser for the charity's exact name, website and mailing address, so they can confirm it later. Some dishonest telemarketers use names that sound like well-known charities to confuse people.
Be careful about how a donation is made. Taxpayers shouldn't work with charities that ask for donations by giving numbers from a gift card or by wiring money. That's a scam. It's safest to pay by credit card or check — and only after researching the charity.


For more information about fake charities see the Federal Trade Commission website.

 



Immigrant fraud

IRS impersonators and other scammers often use threats and intimidation to target groups with limited English proficiency.

The IRS phone impersonation scam remains a common scam. This is where a taxpayer receives a phone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Recent immigrants often are the most vulnerable. People need to ignore these threats and not engage the scammers.

A taxpayer's first contact with the IRS will usually be through mail, not over the phone. Legitimate IRS employees will not threaten to revoke licenses or have a person deported. These are scare tactics.

New multilingual resources available

The IRS has added new features to help those who are more comfortable in a language other than English. The Schedule LEP PDF allows a taxpayer to select in which language they wish to communicate. Once they complete and submit the schedule, they will receive future communications in that selected language preference.

The IRS is providing tax information, forms and publications in many languages other than English. IRS Publication 17, Your Federal Income Tax, is now available in Spanish, Chinese simplified and traditional, Vietnamese, Korean and Russian.


Source :
https://www.irs.gov/newsroom/irs-cautions-taxpayers-about-fake-charities-and-scammers-targeting-immigrants

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The Internal Revenue Service, U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced today they have disbursed more than 2.2 million additional Economic Impact Payments under the American Rescue Plan.

Today's announcement covering the most recent six weeks of the effort brings the total disbursed so far under the American Rescue Plan to more than 171 million payments. They represent a total value of more than $400 billion since these payments began rolling out to Americans in batches on March 12.

Here is additional information on the last six weeks of payments, which includes those with official payment dates through July 21:


In total, this includes about 2.2 million payments with a value of more than $4 billion.
About 1.3 million payments, with a value of approximately $2.6 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return. 
This also includes additional ongoing supplemental payments for people who earlier this year received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns. In the last six weeks, there were more than 900,000 of these "plus-up" payments, with a value of more than $1.6 billion. In all, the IRS has made more than 9 million of these supplemental payments this year worth approximately $18.5 billion.


The IRS will continue to disburse Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for "plus-up" payments.

 



Special reminder for those who don't normally file a tax return

Although payments are automatic for most people, the IRS continues to urge people who don't normally file a tax return and haven't received Economic Impact Payments to file a 2020 tax return to get all the benefits they're entitled to under the law, including tax credits such as the 2020 Recovery Rebate Credit, the Child Tax Credit, and the Earned Income Tax Credit. Filing a 2020 tax return will also assist the IRS in determining whether someone is eligible for monthly advance payments of the 2021 Child Tax Credit, which began earlier this month.

For example, some federal benefits recipients may need to file a 2020 tax return – even if they don't usually file – to provide information the IRS needs to send payments for a qualifying dependent. Eligible individuals in this group should file a 2020 tax return as quickly as possible to be considered for an additional payment for their qualifying dependents.

People who don't normally have an obligation to file a tax return and don't receive federal benefits may qualify for these Economic Impact Payments. This includes those experiencing homelessness, the rural poor, and other historically under-served groups. Individuals who didn't get a first or second round Economic Impact Payment or got less than the full amounts may be eligible for the 2020 Recovery Rebate Credit, but they'll need to file a 2020 tax return. See the special section on IRS.gov: Claiming the 2020 Recovery Rebate Credit if you aren't required to file a tax return.

The IRS has provided an online Non-Filer tool to allow individuals who weren't required to file (and have not filed) a tax return for 2020 to file a simplified tax return. This simplified tax return allows eligible individuals to register for advance Child Tax Credit payments and the third Economic Impact Payment, as well as claim the 2020 Recovery Rebate Credit. Free tax return preparation is also available for qualifying people.

The IRS reminds taxpayers that the income levels in this third round of Economic Impact Payments have changed. This means that some people won't be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly). The payments end at $80,000 for individuals ($160,000 for married filing jointly); people with Adjusted Gross Incomes above these levels are ineligible for a payment.

Individuals can check the Get My Payment tool on IRS.gov to see the payment status of these payments. Additional information on Economic Impact Payments is available on IRS.gov.



Source :
https://www.irs.gov/newsroom/more-than-2-point-2-million-additional-economic-impact-payments-disbursed-under-the-american-rescue-plan

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The Internal Revenue Service and the Treasury Department announced today that millions of American families have started receiving monthly Child Tax Credit payments as direct deposits begin posting in bank accounts and checks arrive in mailboxes.

This first batch of advance monthly payments worth roughly $15 billion reached about 35 million families today across the country. About 86% were sent by direct deposit.

The payments will continue each month. The IRS urged people who normally aren't required to file a tax return to explore the tools available on IRS.gov. These tools can help determine eligibility for the advance Child Tax Credit or help people file a simplified tax return to sign up for these payments as well as Economic Impact Payments, and other credits you may be eligible to receive.

Under the American Rescue Plan, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. Normally, anyone who receives a payment this month will also receive a payment each month for the rest of 2021 unless they unenroll. Besides the July 15 payment, payment dates are: Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

 



Here are further details on these payments:


Families will see the direct deposit payments in their accounts starting today, July 15. For those receiving payment by paper check, they should remember to take into consideration the time it takes to receive it by mail.
Payments went to eligible families who filed 2019 or 2020 income tax returns.
Tax returns processed by June 28 are reflected in these payments. This includes people who don't typically file a return, but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool or in 2021 successfully used the Non-filer Sign-up Tool for Advance CTC, also on IRS.gov.



Payments are automatic. Aside from filing a tax return, including a simplified return from the Non-Filer Sign-Up tool, families don't have to do anything if they are eligible to receive monthly payments.


Additional information is available on a special Advance Child Tax Credit 2021 page, designed to provide the most up-to-date information about the credit and the advance payments.




Source :
https://www.irs.gov/newsroom/irs-monthly-child-tax-credit-payments-begin

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The Internal Revenue Service has launched a new Spanish-language version of its online tool, Child Tax Credit Eligibility Assistant, designed to help families determine whether they qualify for the Child Tax Credit and the special monthly advance payments of the credit, due to begin on July 15.

Available exclusively on IRS.gov, the new Spanish version of the tool, like its English-language counterpart, is interactive and easy to use. By answering a series of questions about themselves and their family members, a parent or other family member can quickly determine whether they qualify for the credit.

Though anyone can use this tool, it may be particularly useful to families who don't normally file a federal tax return and have not yet filed either a 2019 or 2020 return. Often, these are people who receive little or no income, including those experiencing homelessness, low income households, and other underserved groups. Using this tool can help them decide whether they should take the next step and either register for the Child Tax Credit payments using another IRS tool, the Non-filer Sign-up Tool, or file a regular tax return using the IRS Free File system.

To help people understand and receive this benefit, the IRS has developed materials in several languages and additional multi-lingual resources will roll out in coming weeks and months. All tools and materials, in English and other languages, are posted on a special Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021.

Multilingual resources already available include:


A step-by-step guide to using the Non-filer Sign-up Tool (Publication 5538) in Spanish, Chinese Simplified, Korean, Vietnamese, Haitian Creole and Russian. 
A basic You Tube video on the Advance Child Tax Credit in Spanish and Chinese, as well as English.
E-posters in various languages.
Information about Free File in seven languages.


Besides the Child Tax Credit, the IRS has a variety of tax-related tools and resources available in various languages. 

Community partners can help

The IRS urges community groups, especially those who serve non-English speakers, to help share this critical information about the Advance Child Tax Credit as well as other important benefits. This includes nonprofits, associations, education organizations and anyone else with connections to people with children. Among other things, The IRS is providing these groups with information that can be easily shared through social media, email and other methods.

Watch out for scams

The IRS urges everyone, especially those who speak languages other than English, to be on the lookout for scams related to both Advance Child Tax Credit payments and Economic Impact Payments. In particular, scammers often target non-English speakers and underserved communities. The IRS emphasized that the only way to get either of these benefits is by either filing a tax return with the IRS or registering online through the Non-filer Sign-up Tool, exclusively on IRS.gov. Any other option is a scam.

Watch out for scams using email, phone calls or texts related to the payments. Remember, the IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental web site.


 



More about the Child Tax Credit Eligibility Assistant

The Child Tax Credit Eligibility Assistant does not request any personally-identifiable information (PII) for any family member. For that reason, its results are not an official determination by the IRS. Though the results are reliable, if the questions are answered accurately, they should be considered preliminary. Neither the answers supplied by the user, nor the results, are retained by the IRS.

Non-filer Sign-Up Tool

If the Child Tax Credit Eligibility Assistant indicates that a family qualifies for the credit, the next step is to either register with the IRS or file a return. For families who don't normally need to file a return, The online Non-filer Sign-Up Tool is the easiest way to register for the advance payments.

This tool, an update of last year's IRS Economic Impact Payment Non-filers tool, is also designed to help eligible individuals who don't normally file tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks). In addition, it can help them claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

Developed in partnership with Intuit and delivered through the Free File Alliance, the tool enables them to provide the IRS with basic information, such as their name, address, and social security numbers, as well as information about their qualifying children age 17 and under and their other dependents. It also enables them to provide their bank account information, so the IRS can quickly and easily deposit the payments directly into their checking or savings account.

The Non-filer Sign-Up tool should not be used by anyone who has already filed a 2019 or 2020 federal income tax return, or plans to do so.

Free File; a better option for some

Though the Non-filer Sign-up Tool is the easiest way to register for Advance Child Tax Credit payments, it may not be the best option for all families. That's because many families also qualify for the Earned Income Tax Credit and other benefits for low-and moderate-income people. For them, a better option is filing a regular tax return using the Free File system, available only on IRS.gov.

About the Advance Child Tax Credit

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. Normally, the IRS will calculate the payment based on a family's 2020 tax return, including those who use the Non-filer Sign-up Tool. If that return is not available because it has not yet been filed or is still being processed, the IRS will instead determine the initial payment amounts using the 2019 return or the information entered using the Non-filers tool that was available in 2020.

The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.

To make sure families have easy access to their money, the IRS will issue these payments by direct deposit, as long as correct banking information has previously been provided to the IRS. Otherwise, people should watch their mail around July 15 for their mailed payment. The dates for the Advance Child Tax Credit payments are July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15, and Dec. 15.

Source :
https://www.irs.gov/newsroom/irs-online-child-tax-credit-eligibility-tool-now-available-in-spanish-other-multi-lingual-materials-help-families-see-if-they-qualify-for-advance-payments

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The IRS reminds taxpayers they may have money waiting for them. An estimated 1.3 million taxpayers didn't file a 2017 Form 1040 federal income tax return and are due a refund.
Here are some things taxpayers should know about these unclaimed refunds:


To collect the money, taxpayers must file their 2017 tax return with the IRS no later than this year's tax deadline, Monday, May 17.
 
When a taxpayer who is getting a refund does not file a return, the law gives them three years to claim that tax refund. If the taxpayer does not file a tax return within three years, the money goes back to the U.S. Treasury. For 2017 tax returns, the three-year window closes May 17, 2021.
 
The law requires taxpayers to properly address and mail the tax return to the IRS. It must be postmarked by the May deadline.
 
The IRS may hold the 2017 refunds of taxpayers who have not filed tax returns for 2018 and 2019.
 
The unclaimed money will be applied to any amounts still owed to the IRS or a state tax agency. The money may also be used to offset unpaid child support or past due federal debts, such as student loans.





By failing to file a tax return, people stand to lose more than just their tax refund. Many low-and moderate-income workers may be eligible for the earned income tax credit. For 2017, the credit was worth as much as $6,318. The EITC helps individuals and families whose incomes are below certain thresholds. The 2017 thresholds were:
 

$48,340 for those with three or more qualifying children; $53,930 if married filing jointly
$45,007 for people with two qualifying children; $50,597 if married filing jointly
$39,617 for those with one qualifying child; $45,207 if married filing jointly
$15,010 for people without qualifying children; $20,600 if married filing jointly
 


Current and prior year tax forms are available on the Forms, Instructions and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676).
 
Taxpayers who are missing forms W-2, 1098, 1099 or 5498 for the years 2017, 2018 or 2019 should request copies from their employer, bank, or other payer. Taxpayers who are unable to get missing forms can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool. Taxpayers can use the information on the transcript to file their tax return.




Source :
www.irs.gov/newsroom/what-taxpayers-need-to-know-about-getting-their-unclaimed-2017-tax-refunds

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The third Economic Impact Payment is an advance payment of the 2021 Recovery Rebate Credit.
The two earlier payments are advance payments of the 2020 Recovery Rebate Credit. Eligible people who didn't get a first and second Economic Impact Payment or got less than the full amounts, may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if they don't usually file a tax return.

The third Economic Impact Payment will be larger for most eligible people.
Eligible individuals who filed a joint tax return will receive up to $2,800, and all other eligible individuals will receive up to $1,400. Those with qualifying dependents on their tax return will receive up to $1,400 per qualifying dependent.

More people qualify as dependents.
Unlike the first two payments, the third payment is not restricted to children under 17. Eligible families will get a payment for all qualifying dependents claimed on their return. This may include older relatives like college students, adults with disabilities, parents and grandparents.

Income phase-out amounts are different for the third payments.

Taxpayers will not receive a third payment if their Adjusted Gross Income exceeds:


$160,000, if married and filing a joint return or if filing as a qualifying widow or widower.
$120,000, if filing as head of household.
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns


This means that some people won't be eligible for the third payment, even if they received first or second EIPs or are eligible for a 2020 Recovery Rebate Credit.



Some people may be eligible for a Supplemental Payment.

The amount of the third payment is based on the taxpayer's latest processed tax return from either 2020 or 2019. If the taxpayer's 2020 return hasn't been processed, the IRS used 2019 tax return information to calculate the third payment.

If the third payment is based on the 2019 return, and is less than the full amount, the taxpayer may qualify for a supplemental payment. After their 2020 return is processed, the IRS will automatically re-evaluate their eligibility using their 2020 information. If they're entitled to a larger payment, the IRS will issue a supplemental payment for the additional amount.

Changes to earlier eligibility requirements.
For taxpayers who file jointly and only one individual has a valid SSN, the spouse with a valid SSN will receive up to a $1,400 third payment and up to $1,400 for each qualifying dependent claimed on their 2020 tax return.

For taxpayers who don't have a valid SSN, but have a qualifying dependent who has an SSN, they will only receive up to $1,400 for a qualifying dependent claimed on their return only if they meet all other eligibility and income requirements.

If either spouse was an active member of the U.S. Armed Forces at any time during the taxable year, only one spouse needs to have a valid SSN for the couple to receive up to $2,800 for themselves, plus up to $1,400 for each qualifying dependent.

If married taxpayers filing jointly did not receive one or both of the first two Economic Impact Payments because one spouse didn't have a Social Security number valid for employment, they may be eligible to claim a 2020 Recovery Rebate Credit on their 2020 tax return for the spouse with the SSN valid for employment.



Source :
https://www.irs.gov/newsroom/heres-how-the-third-economic-impact-payment-is-different-from-earlier-payments

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