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Low-income taxpayers who need help resolving a tax dispute with the IRS and can't afford representation, may qualify for free or low-cost assistance from a Low Income Tax Clinic. These clinics are independent from the IRS and from the agency's Taxpayer Advocate Service.

How LITCs can help taxpayers

These clinics can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. LITCs can also help taxpayers respond to IRS notices and correct account problems. They also can provide information about taxpayer rights and responsibilities in different languages for taxpayers for whom English is a second language.

Who qualifies for help from LITCs

To qualify for assistance from an LITC, a taxpayer's income must be below a certain threshold, and the amount in dispute with the IRS is usually less than $50,000. For details taxpayers should review the Low Income Taxpayer Clinic Income Eligibility Guidelines.



How to find the nearest LITC

Taxpayers can find the LITC closest to them by reviewing the Low Income Taxpayer Clinic List PDF or using the Low Income Taxpayer Clinic finder on the Taxpayer Advocate Service website.

The IRS is looking for organizations interested in joining the LITC Program

Organizations interested in representing, educating and advocating for low-income and English as a second language taxpayers should watch this video about applying for an LITC grant and review the most recent application package PDF.

Currently there are no LITCs in Montana and North Dakota, or the territory of Puerto Rico. There are also unserved counties in Arizona, Florida, Idaho, Nevada, North Carolina, and Pennsylvania. Qualifying organizations looking to serve taxpayers in these areas are strongly encouraged to apply.

A complete list of current LITCs and their locations is in Publication 4134 PDF. Organizations who have questions or need additional information about the LITC program or application process, please contact Karen Tober with the LITC program office by email at litcprogramoffice@irs.gov.

Source:https://www.irs.gov/newsroom/irs-low-income-tax-clinics-can-help-taxpayers-resolve-federal-tax-issues

The Internal Revenue Service today announced it has begun using voice and chat bots on two of its specialized toll-free telephone assistance lines and IRS.gov, enabling taxpayers with simple payment or collection notice questions to get what they need quickly and avoid waiting. Taxpayers can still speak with an IRS telephone representative if needed.

"Our phone lines continue to see unprecedented demand, and the IRS continues to look for ways to help people and avoid long wait times," said IRS Commissioner Chuck Rettig. "Our telephone representatives remain an important part of the service we provide, but these bots can help some people avoid lengthy phone delays for something that could be resolved on the spot. This is part of a larger effort to help people get the assistance they need this tax season."

The IRS in recent weeks has deployed voice and chat bots in English and Spanish for phone lines that assist taxpayers with tax payments issues or understanding an IRS notice they may have received. People with general tax season questions generally will not encounter these features at this time. The bots are now available to help taxpayers with:


How to make one-time payments
Answers to frequently asked questions
Collection notice clarification


Voice bots are software powered by artificial intelligence (AI) that allow a caller to navigate an interactive voice response (IVR) system with their voice, generally using natural language. Chat bots simulate human conversation through web-based text interaction, also using AI-powered software to respond to natural language prompts. Taxpayers who request to speak with a customer service representative will be placed in queue for English or Spanish ACS telephone assistance. The IRS voice and chat bots currently provide unauthenticated services, which means they cannot provide assistance with a taxpayer's protected account information.



"Voice and chat bots interact with taxpayers in easy-to-follow ways, which means taxpayers don't have to wait on hold to handle simple tasks," said Darren Guillot, Commissioner of Small Business/Self Employed Collection at the IRS.

Later in 2022, IRS voice bots will also enable taxpayers to authenticate their identity to establish payment plans, request a transcript and obtain information about their accounts, such as payoff details. The IRS plans to roll out more voice and chat bots later in 2022 to assist taxpayers with more complex issues.

IRS toll-free telephone lines receive millions of calls a year. A customer service representative spends on average nearly 20 minutes with each taxpayer they help on a collection issue. Freeing up IRS phone assistors for taxpayers with complex collection issues who need to speak with someone is another major benefit of voice and chat bots.

In addition to the payment lines, voice bots helped people calling the Economic Impact Payment (EIP) toll-free line, providing general procedural responses to frequently asked questions. The IRS also added voice bots for the Advance Child Tax Credit toll-free line in February to provide similar assistance to callers who need help reconciling the credits on their 2021 tax return.

The IRS also reminds taxpayers about numerous other self-service options that are available.
Source:https://www.irs.gov/newsroom/irs-unveils-voice-and-chat-bots-to-assist-taxpayers-with-simple-collection-questions-and-tasks-provides-faster-service-reduced-wait-times

The Internal Revenue Service issued a filing season reminder today that those taxpayers who pay expenses for the care of a qualifying person while working or looking for work may qualify for an important tax credit.

The Child and Dependent Care Credit is expanded for tax year 2021. This means that more taxpayers will qualify this year than ever before, and the credit will be worth more. Taxpayers with an adjusted gross income of more than $438,000 are not eligible for this credit.

"There are many important tax credits available for families, and we don't want anyone to overlook the Child and Dependent Care Credit," said IRS Commissioner Chuck Rettig. "We encourage families and others who may qualify for this credit to carefully review the criteria to make sure they receive the maximum amount they're entitled to. We also encourage the tax professional communities and others to share this important information."

Depending on their income, taxpayers can get a credit worth 50% of their qualifying childcare expenses. For tax year 2021, the maximum eligible expense for this credit is $8,000 for one qualifying person and $16,000 for two or more.


For the purposes of this credit, the IRS defines a qualifying person as:


A taxpayer's dependent who is 12 or younger (no age limit if incapacitated) when the care is provided.
A taxpayer's spouse who is physically or mentally unable to care for themselves and lived with the taxpayer for more than half the year.
Someone who is physically or mentally unable to take care of themselves and lived with the taxpayer for six months and is either:

the taxpayer's dependent or
would have been the taxpayer's dependent except for one of the following:

The qualifying person received gross income of $4,300 or more
The qualifying person filed a joint return
The taxpayer or spouse, if filing jointly, could be claimed as a dependent on someone else's return






Taxpayers can use the Interactive Tax Assistant or see the Frequently Asked Questions on IRS.gov to determine if they can claim this credit. For IRS partners, there's a special promotional flyer available PDF.

The IRS has been highlighting this credit in a number of ways, including Tax Tips, fact sheets, news releases as well as through Twitter and other IRS social media and outreach channels. It's also featured in a special IRS YouTube video.
Source:https://www.irs.gov/newsroom/irs-highlights-importance-of-child-and-dependent-care-credit-can-help-families-others

Comparing Earned Income Tax Credit, Child Tax Credit, and Child and Dependent Care Credit (FY 2021)：




Child and Dependent Care Credit
Taxpayers who are paying someone to take care of their children or another member of household while they work, may qualify for child and dependent care credit regardless of their income.

For tax year 2021, the maximum eligible expense for this credit is $8,000 for one child and $16,000 for two or more. Depending on their income, taxpayers could write off up to 50% of these expenses.

For the purposes of this credit, the IRS defines a qualifying person as:


A taxpayer's dependent who is under age 13 when the care is provided.
A taxpayer's spouse who is physically or mentally unable to care for themselves and lived with the taxpayer for more than half the year.
Someone who is physically or mentally unable to take care of themselves and lived with the taxpayer for six months and either:

The qualifying person was the taxpayer's dependent or
They would have been the taxpayer's dependent except for one of the following:

The qualifying person received gross income of $4,300 or more
The qualifying person filed a joint return
The taxpayer or spouse, if filing jointly, could be claimed as a dependent on someone else's return





Child and Dependent Care Credit FAQs
Q1: How do I claim the credit?
A1: To claim the credit, you will need to complete Form 2441, Child and Dependent Care Expenses, and include the form when you file your Federal income tax return.  In completing the form to claim the credit, you will need to provide a valid taxpayer identification number (TIN) for each qualifying person. Generally, this is the social security number for the qualifying person.
You should keep records of your work-related expenses. Also, if your dependent or spouse is not able to take care of himself or herself, your records should show both the nature and length of the disability.

Q2: What information do I need from my care provider to claim the credit?
A2: You must identify all persons or organizations that provided care for your child, dependent, or spouse. To identify the care provider, you must give the provider’s name, address, and taxpayer identification number (TIN). You can use Form W-10, Dependent Care Provider’s Identification and Certification, to request this information. If the care provider information you give is incorrect or incomplete, your credit may not be allowed. However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit.

Q3: What does “physically or mentally not able to care for oneself” mean?
A3: Persons who can’t dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Persons who must have constant attention to prevent them from injuring themselves or others also are considered not able to care for themselves.
 


Q4: For 2021, what percentage of my work-related expenses are allowed as a credit?
A4: The percentage of your work-related expenses allowed as a credit depends on your income (and your spouse’s income in the case of a joint return). The maximum percentage of your work-related expenses allowed as a credit for 2021 is 50 percent. The 2021 Instructions for Form 2441 and IRS Publication 503, Child and Dependent Care Expenses for 2021 both will contain a chart indicating the percentage of work-related expenses allowed as a credit at each income level.

Q5: I have two qualifying persons. In 2021, I incurred more than $16,000 in work-related expenses for the care of one of them, and none for the other. Am I subject to the higher $16,000 work-related expenses limitation for two or more qualifying persons, even though my expenses were only for the care of one qualifying person? Or am I subject to the lower $8,000 work-related expenses limitation for one qualifying person?
A5: Because you have two or more qualifying persons, you are subject to the higher $16,000 work-related expense limitation, regardless of how the expenses are allocated among the qualifying persons.

Q6: For 2021, can I take the full credit even if my credit exceeds the amount of taxes I owe?
A6: Yes. For 2021, the credit is refundable for eligible taxpayers. This means that even if your credit exceeds the amount of Federal income tax that you owe, you can still claim the full amount of your credit, and the amount of the credit in excess of your tax liability can be refunded to you.

Q7: What do I need to do for the credit to be refundable for 2021?
A7: You must pay the work-related expenses incurred in 2021 by December 31, 2021, and meet the special residency requirements for the credit to be refundable for 2021.

Q8: What are the special residency requirements for the refundable portion of the credit?
A8: To be eligible for the refundable portion of the credit for 2021, you (or your spouse in the case of a joint return) must have your main home in one of the 50 states or the District of Columbia for more than half of the tax year. Your main home can be any location where you regularly live. Your main home may be your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location throughout the taxable year. If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home during that time.

Q9: What qualifies as a work-related expense?
A9: A work-related expense is an amount you (or your spouse in the case of a joint return) pay for the care of a qualifying person, or for household services if at least part of the services is for the care of a qualifying person, in order for you to work or look for work. Your work can be for others or in your own business or partnership.  It can be full or part-time. It also includes actively looking for work. However, if you do not find a job and have no earned income for the year, you cannot take this credit.

Source: 
https://www.irs.gov/newsroom/understanding-the-child-and-dependent-care-credit
https://www.irs.gov/newsroom/child-and-dependent-care-credit-faqs
https://www.irs.gov/pub/irs-pdf/p5585.pdf

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Tax Time Guide: IRS reminds taxpayers to report gig economy income, virtual currency transactions, foreign source income and assets

The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning April 1, 2022. The rates will be:


4% for overpayments (3% in the case of a corporation);
1.5% for the portion of a corporate overpayment exceeding $10,000;
4% for underpayments; and
6% for large corporate underpayments. 


Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.



The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during January 2022 to take effect February 1, 2022, based on daily compounding.

Revenue Ruling 2022-05 announcing the rates of interest, will appear in Internal Revenue Bulletin 2022-10, dated March 7, 2022.

Source: https://www.irs.gov/newsroom/interest-rates-increase-for-the-second-quarter-of-2022

Check the status of a refund in just a few clicks using the Where’s My Refund?

WASHINGTON — The Internal Revenue Service today issued frequently asked questions (FAQs) for the 2021 Recovery Rebate Credit PDF. Individuals who did not qualify for, or did not receive, the full amount of the third Economic Impact Payment may be eligible to claim the 2021 Recovery Rebate Credit based on their 2021 tax year information. Individuals may have received their third Economic Impact Payment through initial and "plus-up" payments in 2021.

Note: Third Economic Impact Payments are different than the monthly advance Child Tax Credit payments that the IRS disbursed from July through December 2021.

Most eligible people already received their Economic Impact Payments and won't include any information about their payment when they file. However, people who are missing stimulus payments should review the information on the Recovery Rebate Credit page to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2021.

To claim any remaining credit for 2021, eligible people must file a 2021 tax return, even if they usually do not file taxes. Also, people who did not receive all of their first and second Economic Impact Payments in 2020 can receive those amounts only by filing a 2020 tax return (or amending a previously filed return) and claiming the 2020 Recovery Rebate Credit. They should review the Recovery Rebate Credit page to determine their eligibility.

The 2021 Recovery Rebate Credit can reduce any taxes owed or be included in the tax refund for the 2021 tax year. Filers must ensure to not mix information from their 2020 and 2021 tax years. In particular, filers should take care to NOT include any information regarding the first and second Economic Impact Payments received in 2020, or the 2020 Recovery Rebate Credit, on their 2021 return. They will need the total of the third payment received to accurately calculate the 2021 Recovery Rebate Credit when they file their 2021 federal tax return in 2022.



People can locate this information on Letter 1444-C, which they received from the IRS during 2021 after each payment, as well as Letter 6475, which the IRS will mail to them beginning in late January 2022. Individuals can also view this information in their online account later in January.

The FAQs cover most questions relating to claiming the credit and are for use by taxpayers and tax professionals and are being issued as expeditiously as possible.

The 2021 Recovery Rebate FAQ topics are:


Topic A: General Information
Topic B: Claiming the Recovery Rebate Credit if you aren't required to file a 2021 tax return
Topic C: Eligibility for claiming a Recovery Rebate Credit on a 2021 tax return
Topic D: Claiming the 2021 Recovery Rebate Credit
Topic E: Calculating the 2021 Recovery Rebate Credit
Topic F: Receiving the Credit on a 2021 tax return
Topic G: Finding the third Economic Impact Payment Amounts to calculate the 2021 Recovery Rebate Credit
Topic H: Correcting issues after the 2021 tax return is filed


File for free and use direct deposit

Taxpayers with income of $73,000 or less can file their federal tax returns electronically for free through the IRS Free File Program. The fastest way to receive a tax refund is to file electronically and have it direct deposited into a financial account. Refunds can be directly deposited into bank accounts, prepaid debit cards or mobile apps as long as a routing and account number is provided.

Source : https://www.irs.gov/newsroom/irs-issues-frequently-asked-questions-and-answers-for-2021-recovery-rebate-credit
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Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Explore your rights and our obligations to protect them.

The Right to Be Informed
The Right to Quality Service
The Right to Pay No More than the Correct Amount of Tax
The Right to Challenge the IRS’s Position and Be Heard
The Right to Appeal an IRS Decision in an Independent Forum
The Right to Finality
The Right to Privacy
The Right to Confidentiality
The Right to Retain Representation
The Right to a Fair and Just Tax System

 

The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

Learn more about your right to be informed.

 

The Right to Quality Service

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

Learn more about your right to quality service.

 

The Right to Pay No More than the Correct Amount of Tax

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

Learn more about your right to pay no more than the correct amount of tax.

 

The Right to Challenge the IRS’s Position and Be Heard

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

Learn more about your right to challenge the IRS’s position and be heard.

 

The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

Learn more about your right to appeal an IRS decision in an independent forum.

 

 


 
The Right to Finality

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

The Right to Privacy

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

Learn more about your right to privacy.

 

The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

Learn more about your right to confidentiality.

 

The Right to Retain Representation

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

Learn more about your right to retain representation.

 

The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Learn more about your right to a fair and just tax system.

Source : https://www.irs.gov/taxpayer-bill-of-rights
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As taxpayers are getting ready to file their taxes, the first thing they should do is gather their records. To avoid processing delays that may slow their refund, taxpayers should gather all year-end income documents before filing a 2021 tax return.

It's important for people to have all the necessary documents before starting to prepare their return. This helps them file a complete and accurate tax return. Here are some things taxpayers need to have before they begin doing their taxes.


Social Security numbers of everyone listed on the tax return. Many taxpayers have these numbers memorized. Still, it's a good idea to have them on hand to double check that the numbers on the tax return are correct. An SSN with one number wrong or two numbers switched will cause processing delays.
Bank account and routing numbers. People will need these for direct deposit refunds. Direct deposit is the fastest way for taxpayers to get their money and avoids a check getting lost, stolen or returned to IRS as undeliverable.
Don't have a bank account? Learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator Tool. Veterans can access the Veterans Benefits Banking Program.
Forms W-2 from employer(s).
Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan.


 

 


Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy.
Form 1099-INT for interest received.
Other income documents and records of virtual currency transactions.
Form 1095-A, Health Insurance Marketplace Statement. Taxpayers will need this form to reconcile advance payments or claim the premium tax credit.
Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments.
Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit.

Forms usually start arriving by mail or are available online from employers and financial institutions in January. Taxpayers should review them carefully. If any information shown on the forms is inaccurate, the taxpayer should contact the payer ASAP for a correction.

Source :　https://www.irs.gov/newsroom/tax-filing-step-1-gather-all-year-end-income-documents

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Below are some of the more common questions and answers about Gift Tax issues. You may also find additional information in Publication 559 or some of the other forms and publications offered on our Forms page. Included in this area are the instructions to Forms 706 and 709. Within these instructions, you will find the tax rate schedules to the related returns. If the answers to your questions can not be found in these resources, we strongly recommend visiting with a tax practitioner.
Who pays the gift tax?

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

What is considered a gift?

Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

What can be excluded from gifts

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.


Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.


In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

May I deduct gifts on my income tax return?

Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). If you are not sure whether the gift tax or the estate tax applies to your situation, refer to Publication 559, Survivors, Executors, and Administrators.
 

How many annual exclusions are available?

The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, 2015, 2016 and 2017 is $14,000. For 2018, 2019, 2020 and 2021, the annual exclusion is $15,000. For 2022, the annual exclusion is $16,000.
 

What if my spouse and I want to give away property that we own together?

You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013 (including 2014, 2015, 2016 and 2017). In 2018, 2019, 2020 and 2021, the total for you and your spouse is $30,000. In 2022, the total for you and your spouse is $32,000.
 

What other information do I need to include with the return?

Refer to Form 709 PDF, 709 Instructions and Publication 559. Among other items listed:


Copies of appraisals.
Copies of relevant documents regarding the transfer.
Documentation of any unusual items shown on the return (partially-gifted assets, other items relevant to the transfer(s)).


What is "Fair Market Value?"

Fair Market Value is defined as: "The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate." Regulation §20.2031-1.
 

Whom should I hire to represent me and prepare and file the return?

The Internal Revenue Service cannot make recommendations about specific individuals, but there are several factors to consider:


How complex is the transfer?
How large is the transfer?
Do I need an attorney, CPA, Enrolled Agent (EA) or other professional(s)?


For most simple, small transfers (less than the annual exclusion amount) you may not need the services of a professional.

However, if the transfer is large or complicated or both, then these actions should be considered; It is a good idea to discuss the matter with several attorneys and CPAs or EAs. Ask about how much experience they have had and ask for referrals. This process should be similar to locating a good physician. Locate other individuals that have had similar experiences and ask for recommendations. Finally, after the individual(s) are employed and begin to work on transfer matters, make sure the lines of communication remain open so that there are no surprises.

Finally, people who make gifts as a part of their overall estate and financial plan often engage the services of both attorneys and CPAs, EAs and other professionals. The attorney usually handles wills, trusts and transfer documents that are involved and reviews the impact of documents on the gift tax return and overall plan. The CPA or EA often handles the actual return preparation and some representation of the donor in matters with the IRS. However, some attorneys handle all of the work. CPAs or EAs may also handle most of the work, but cannot take care of wills, trusts, deeds and other matters where a law license is required. In addition, other professionals (such as appraisers, surveyors, financial advisors and others) may need to be engaged during this time.



Do I have to talk to the IRS during an examination?

You do not have to be present during an examination unless IRS representatives need to ask specific questions. Although you may represent yourself during an examination, most donors prefer that the professional(s) they have employed handle this phase of the examination. You may delegate authority for this by executing Form 2848 "Power of Attorney."

What if I disagree with the examination proposals?

You have many rights and avenues of appeal if you disagree with any proposals made by the IRS. See Publication 1 and Publication 5  PDFfor an explanation of these options.
 

What if I sell property that has been given to me?

The general rule is that your basis in the property is the same as the basis of the donor. For example, if you were given stock that the donor had purchased for $10 per share (and that was his/her basis), and you later sold it for $100 per share, you would pay income tax on a gain of $90 per share. (Note: The rules are different for property acquired from an estate).

Most information for this page came from the Internal Revenue Code: Chapter 12--Gift Tax (generally Internal Revenue Code §2501 and following, related regulations and other sources)
 

Can a married same sex donor claim the gift tax marital deduction for a transfer to his or her spouse?

 

For federal tax purposes, the terms “spouse,” “husband,” and “wife” includes individuals of the same sex who were lawfully married under the laws of a state whose laws authorize the marriage of two individuals of the same sex and who remain married.  Also, the Service will recognize a marriage of individuals of the same sex that was validly created under the laws of the state of celebration even if the married couple resides in a state that does not recognize the validity of same-sex marriages.

However, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.

Gifts to your spouse are eligible for the marital deduction.

For further information, including the timeframes regarding filing claims or amended returns, see Revenue Ruling 2013-17 PDF.

Revenue Ruling 2013-17 PDF, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.
 

How does the basic exclusion amount apply in 2026 if I make large gifts before 2026?

Individuals taking advantage of the increased gift tax exclusion amount in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.  For more information, see the related Tax Reform page.

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Source :https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

 
WASHINGTON — The Internal Revenue Service announced today that it will issue information letters to Advance Child Tax Credit recipients starting in December and to recipients of the third round of the Economic Impact Payments at the end of January. Using this information when preparing a tax return can reduce errors and delays in processing.

The IRS urged people receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.

Watch for advance Child Tax Credit letter

To help taxpayers reconcile and receive all of the Child Tax Credits to which they are entitled, the IRS will send Letter 6419, 2021 advance CTC, starting late December 2021 and continuing into January. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.

The letter contains important information that can make preparing their tax returns easier. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.

Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don't normally need to file a tax return.

 


 
Economic Impact Payment letter can help with the Recovery Rebate Credit

The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns that they file in 2022.

Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. The third round of Economic Impact Payments, including the "plus-up" payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA; or to people who may be eligible for a larger amount based on their 2020 tax return.

Most eligible people already received the payments. However, people who are missing stimulus payments should review the information to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020 or 2021.

Like the advance CTC letter, the Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.

More information about the advance Child Tax Credit, Economic Impact Payments and other COVID-19-related tax relief may be found at IRS.gov.

As the 2022 tax filing season approaches, the IRS urges people to make sure to file an accurate tax return and use electronic filing with direct deposit to avoid delays.

Source : https://www.irs.gov/newsroom/irs-issues-information-letters-to-advance-child-tax-credit-recipients-and-recipients-of-the-third-round-of-economic-impact-payments-taxpayers-should-hold-onto-letters-to-help-the-2022-filing-season
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