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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
US TAX, U.S. TAX

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
US TAX, U.S. TAX

 
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

US TAX, U.S. TAX

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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.

US TAX, U.S. TAX
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
US TAX, U.S. TAX

 
December 13, 2021 (updated December 16, 2021)

IRS Revising Form 1024 to Allow for Electronic Submission

As part of an ongoing effort to improve service for the tax-exempt community, the IRS is revising Form 1024, Application for Recognition of Exemption Under Section 501(a), and its instructions to allow electronic filing for the first time.

Additionally, organizations requesting determinations under subsections 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), (29) and Section 501(d) that currently submit letter applications will use the electronic Form 1024. Organizations requesting determination under Section 521 will also be able to use the electronic Form 1024 instead of Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code. Form 1024 will be revised accordingly.

The IRS expects electronic filing to be available early in 2022, at which point applications for recognition of exemption on Form 1024 must be submitted electronically online at Pay.gov. The IRS will provide a grace period during which it will continue to accept paper versions of Form 1024.

Stay tuned to IRS.gov for more details regarding the release of the revised Form 1024.

New Technical Guides Published

Exempt Organizations and Government Entities has published eight new Technical Guides (TG). These guides are comprehensive, issue-specific documents. TGs combine and update the Audit Technique Guides (ATG) available on IRS.gov with other technical content and will replace corresponding ATGs as they are completed. The newest TGs are:


TG 3-21 Private Operating Foundations  PDF
TG 22 Termination of Private Foundation Status IRC 507 PDF
TG 45 Suspension of Tax-Exempt Status of Terrorist Orgs under IRC 501(p) PDF
TG 57 Taxes on Net Investment Income IRC 4940 PDF
TG 59 Taxes on Foundation Failure to Distribute Income IRC 4942 PDF
TG 60 Taxes on Excess Business Holdings IRC 4943 PDF
TG 64 Foreign Organizations PDF
TG 61 Taxes on Investments which Jeopardize Charitable Purposes IRC 4944 PDF


LLCs Applying for Tax-exempt Status under Section 501(c)(3) Must Submit Information Described in Notice 2021-56

Notice 2021-56 PDF sets forth current standards that a limited liability company (LLC) must satisfy to receive a determination letter recognizing it as tax-exempt under Internal Revenue Code Section 501(c)(3). Accordingly, an LLC applying for recognition of exemption on Form 1023, Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code, must submit the following information as part of its completed application. Otherwise, LLCs continue to complete Form 1023 as described in the instructions for Form 1023 PDF.

1. Submit both the LLC's state-approved articles of organization and its adopted operating agreement. Both your articles of organization and your operating agreement must contain the following:


Provisions requiring that each member of the LLC be either (i) an organization described in Section 501(c)(3) and exempt from taxation under Section 501(a) or (ii) a governmental unit described in Section 170(c)(1) (or wholly owned instrumentality of such a governmental unit).
An acceptable contingency plan (such as suspension of its membership rights until a member regains recognition of its Section 501(c)(3) status) in the event that one or more members cease to be Section 501(c)(3) organizations or governmental units (or wholly owned instrumentalities thereof).
The charitable purposes and charitable dissolution clauses described in Part III, lines 1 and 2 of Form 1023.
The express Chapter 42 compliance provisions described in Section 508(e)(1) if the LLC is a private foundation. See Part VII, line 1a of the Instructions for Form 1023 for more information on these provisions.


 



 




NOTE: If you are formed under a state LLC law that prohibits the addition of provisions to articles of organization other than certain specific provisions required by the state LLC law, you may include the provisions above only in your operating agreement. Include an explanation if you are prohibited from including the provisions in your articles of organization under your state's LLC law.

2. Submit the following representation, signed and dated by an officer, director, trustee or other governing body member (not an authorized representative):

"We represent that all provisions in our articles of organization and operating agreement are consistent with applicable state LLC law and are legally enforceable." 

New Form 4506-B and Revised Form 4506-A

Exempt Organizations (EO) has developed and released a new Form 4506-B, Request for a Copy of Exempt Organization IRS Application or Letter PDF. Use the new Form 4506-B to request copies of an exempt organization's exemption application or determination letter. You can submit Form 4506-B by mail, fax or email. Tax Exempt Organization Search (TEOS) can be used to directly access copies of determination letters issued to exempt organizations in 2014 or later.

EO has also revised Form 4506-A, Request for a Copy of Exempt or Political Organization IRS Form PDF. Form 4506-A is used to request copies of an exempt or political organization's return, report or notice. You can mail or fax Form 4506-A to the IRS. Use TEOS for copies of Form 990‑N, Electronic Notice (e-Postcard), and for direct access to Form 990-series returns received by the IRS in 2017 or later. Check TEOS to see if the return you're requesting is available there before submitting Form 4506-A.

Please review the instructions for Form 4506-A PDF (Rev. 11-2021) and instructions for Form 4506-B PDF (11-2021) before you submit the form. Submitting incomplete or incorrect information or sending to the incorrect mailing, fax or email address will cause delays.

Taxable Unrelated Business Income: Online Course

Even though your organization is tax exempt, it may generate taxable income. The Unrelated Business Income course explains how to determine if you have taxable income and how to report it. Organizational leadership and volunteers should complete the Tax-Exempt Organization Workshop for important information on the benefits, limitations and expectations of tax-exempt organizations. 

Source : https://www.irs.gov/e-file-providers/e-file-for-charities-and-non-profits
US TAX, U.S. TAX

There are steps people, including those who received stimulus payments or advance child tax credit payments, can take now to make sure their tax filing experience goes smoothly in 2022. They can start by visiting the Get Ready page on IRS.gov. Here are some other things they should do to prepare to file their tax return.

Gather and organize tax records

Organized tax records make preparing a complete and accurate tax return easier. They help avoid errors that lead to processing delays that slow refunds. Having all needed documents on hand before taxpayers prepare their return helps them file it completely and accurately. This includes:


Forms W-2 from employers
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


Taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years.

Income documents can help taxpayers determine if they're eligible for deductions or credits. People who need to reconcile their advance payments of the child tax credit and premium tax credit will need their related 2021 information. Those who did not receive their full third Economic Impact Payments will need their third payment amounts to figure and claim the 2021 recovery rebate credit.

Taxpayers should also keep end of year documents including:


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
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage


 


 
Confirm mailing and email addresses and report name changes

To make sure forms make it to the them on time, taxpayers should confirm now that each employer, bank and other payer has their current mailing address or email address. People can report address changes by completing Form 8822, Change of Address and sending it to the IRS. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or their local post office. They should also notify the Social Security Administration of a legal name change.


View account information online

Individuals who have not set up an Online Account yet should do so soon. People who have already set up an Online Account should make sure they can still log in successfully. Taxpayers can use Online Account to securely access the latest available information about their federal tax account.

Review proper tax withholding and make adjustments if needed

Taxpayers may want to consider adjusting their withholding if they owed taxes or received a large refund in 2021. Changing withholding can help avoid a tax bill or let individuals keep more money each payday. Life changes – getting married or divorced, welcoming a child or taking on a second job – may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee's Withholding Certificate, each year and when personal or financial situations change.

People also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on Jan. 18, 2022.

Source : https://www.irs.gov/newsroom/what-taxpayers-can-do-now-to-get-ready-to-file-taxes-in-2022

 

Here you'll find items of current interest — new programs, recent guidance or timely reminders.

American Rescue Plan Act (ARPA) of 2021

Several ARPA provisions affect the 2020 tax return people are filing in 2021, including exempting up to $10,200 in unemployment compensation from tax and another benefiting people who purchased subsidized health coverage through federal or state Health Insurance Marketplaces. The law also includes the third round of Economic Impact Payments, now going out to eligible Americans, that are generally equal to $1,400 per person for most people and advance payments of the Child Tax Credit, paid monthly from July to December 2021. Keep up with tax law developments by regularly checking IRS.gov.

2020 Unemployment Compensation

The Internal Revenue Service is issuing refunds throughout the summer to eligible taxpayers who paid taxes on 2020 unemployment compensation that the recently-enacted American Rescue Plan later excluded from taxable income.

Advanced child tax credit (CTC) payments in 2021

The first monthly payment of the expanded and newly-advanceable CTC will be made on July 15. Eligible families are slated to begin receiving monthly payments without any further action required.

Normally, the IRS will calculate the payment based on a person's 2020 tax return. 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.

For people who don’t normally file a tax return, the IRS offers the Non-filer Sign-up tool. It’s for people who did not file a tax return for 2019 or 2020 and who did not use the IRS Non-filers tool last year to register for Economic Impact Payments. The tool enables them to provide required information about themselves, their qualifying children age 17 and under, their other dependents, and their direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account.

To help people understand and receive this benefit, the IRS has created a special Advance Child Tax Credit 2021 webpage to provide the most up-to-date information about the credit and the advance payments. The page features links to the Non-filer Sign-up Tool, the Child Tax Credit Eligibility Assistant, and the Child Tax Credit Update Portal.

Coronavirus Tax Relief

For the latest information about coronavirus tax relief, see the Coronavirus Tax Relief and Economic Impact Payments page. 

Visit our Coronavirus and Economic Impact Payments: Resources and Guidance page for our latest content including news releases, Tax Tips, frequently asked questions, multilingual partner materials and more. 

To learn about IRS operations during COVID-19, visit our operations page for up-to-date status on affected IRS operations and services.
 

Outreach Connection

Get free tax content to share  with your staff, clients, customers or colleagues that you can include in your:


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Taxpayer First Act

On July 1, 2019, The Taxpayer First Act of 2019 was signed into law, which aims to broadly redesign the Internal Revenue Service. Generally, the legislation aims to expand and strengthen taxpayer rights and to reform the IRS into a more taxpayer friendly agency by requiring it to develop a comprehensive customer service strategy, modernize its technology and enhance its cyber security.

See the Taxpayer First Act page for the latest updates.
 

Taxpayer Bill of Rights

All taxpayers have 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




 




Tax Reform

The Tax Cuts and Jobs Act included major tax legislation that affects both individuals and businesses. Check the Tax Reform page for the latest updates.

Tax Withholding

The Tax Cuts and Jobs Act changed the way tax is calculated. The IRS encourages taxpayers to perform a quick “paycheck checkup” by using the Withholding Estimator to check if they have the right amount of withholding for their personal situation.

Consumer Alerts on Tax Scams

‪Note that the IRS will never:

Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.


Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
Ask for credit or debit card numbers over the phone.


For more information on tax scams, please see Tax Scams/Consumer Alerts. For more information on phishing scams, please see Suspicious emails and Identity Theft.

A Message from James C. Lee, Chief Criminal Investigation

IRS Criminal Investigation Marks International Fraud Awareness Week Highlighting Successes from FY20

In recognition of International Fraud Awareness Week, the IRS is highlighting the many successes in combating fraud and protecting taxpayers. This year was different as half of the year was spent under the new realities that COVID-19 has brought us. Through all the COVID challenges, the IRS was still able to attain many results. For example, we opened more investigations in FY20 than we did in FY19 in most of our program areas, our conviction rate is still the highest in federal law enforcement, and we are the go-to agency for complex financial investigations in the world.

A Message from Damon Rowe, Executive Director, IRS Office of Fraud Enforcement

Observing International Fraud Awareness Week

As part of a continuing focus on tax compliance issues, the IRS created the Office of Fraud Enforcement to support IRS efforts to detect and deter fraud while strengthening the national fraud program. 

In observation of International Fraud Awareness Week, we will promote the incredible investment the IRS has made in the area of fraud enforcement. This week, we will take part in a global effort to minimize the impact of fraud, including tax fraud, by promoting fraud awareness and education. The IRS’s efforts to combat tax and other financial fraud help protect taxpayers around the world and highlight how important fraud prevention is to society. 

Foreign Account Tax Compliance Act (FATCA)

FATCA refers to the Foreign Account Tax Compliance Act that requires reporting on specified foreign accounts by U.S. taxpayers and foreign financial institutions. In general, federal law requires U.S. citizens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts.

Source :　https://www.irs.gov/newsroom/whats-hot
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Dec.4-5 Sino-American CPAs Association seminar

 
The IRS recently launched a new feature in its Child Tax Credit Update Portal, allowing families receiving monthly advance child tax credit payments to update their income.

Families should enter changes by November 29, so the changes are reflected in the December payment. Once the update is made, the IRS will adjust the payment amount to ensure people receive their total advance payment for the year. For married couples, if one spouse makes the income update, it will apply to both spouses and could impact both spouses' future monthly advance payments of the child tax credit.

Who should use the income feature 

The new income feature can help families make sure they are getting the right amount of advance child tax credit payments during 2021. It is especially useful to any family who wants to raise or lower their monthly payments because their 2021 income changed substantially from 2020.

In many cases a big income swing can raise or lower a family's monthly payments. Normally, this means that small changes in income will not impact the payment amount and need not be entered into the CTC UP.

Changes made before midnight on November 29 will only impact the December 15 payment, which is the last scheduled monthly payment for 2021. Payments in 2021 could be up to $1,800 for each child under age 6 and up to $1,500 for each child ages 6 through 17.

Families need to claim the remaining portion of their child tax credit on their 2021 tax return.

Who may qualify for a bigger payment

In some cases, families currently receiving monthly payments that are below the maximum may qualify to have their payments increased. For example, they experienced job loss during 2021, or for some other reason are receiving substantially less income this year. If the reduction in income is large enough, reporting that change now may increase the amount of their advance CTC payments for the rest of this year.

For any family already receiving the maximum payment, a drop in income will not increase the payment amount.

Most families are receiving half of the total CTC through monthly payments. This means any changes they enter in the CTC UP will increase or decrease their monthly payments to ensure they receive half of their total expected credit before the end of 2021.


 
Who should have their payments reduced

Any family whose income rose substantially in 2021 should consider using the Child Tax Credit Update Portal to update their income and have their payments reduced. This is especially true if they are now receiving the maximum monthly payment, and they expect to qualify for less than the full credit when they file their 2021 federal income tax return. For more information on calculating the CTC, see Topic C of the agency's frequently asked questions. Families who qualify for less than the full amount should see QC 4 and QC 5.

Using the portal to report income changes

Only families who are already eligible for and receiving advance CTC payments based on their 2020 tax return can use the CTC UP to update their income. Someone who filed a joint return for 2020 can only update their income if they plan to file a joint return for 2021 with the same spouse. IRS representatives cannot process income changes over the phone or at Taxpayer Assistance Centers.

After a family completes an income update, the CTC UP will acknowledge the change but will not display the change. Likewise, IRS representatives won't be able to confirm an update.

Source :　https://www.irs.gov/newsroom/families-can-now-report-income-changes-using-the-child-tax-credit-update-portal
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WASHINGTON — The Internal Revenue Service today encouraged taxpayers, including those who received stimulus payments or advance Child Tax Credit payments, to take important steps this fall to help them file their federal tax returns in 2022.

Planning ahead can help people file an accurate return and avoid processing delays that can slow tax refunds.

This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to prepare to file a 2021 tax return next year.

Gather and organize tax records

Organized tax records make preparing a complete and accurate tax return easier. It helps avoid errors that lead to processing and refund delays. Individuals should have all their tax information available before filing to ensure the return is complete and accurate. They should notify the IRS if their address changes and notify the Social Security Administration of a legal name change.

Remember, most income is taxable. Recordkeeping for individuals includes:


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


Income documents can help individuals determine if they're eligible for deductions or credits. Additionally, people who need to reconcile their advance payments of the Child Tax Credit and Premium Tax Credit will need their related 2021 information. Those who received third Economic Impact Payments and think they qualify for an additional amount will need their stimulus payment and plus-up amounts to figure and claim the 2021 Recovery Rebate Credit.

Taxpayers should also keep end of year documents including:


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
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage


Online Account securely provides tax account information on IRS.gov; helps provide important filing information

Taxpayers who access Online Account can securely gain entry to the Child Tax Credit Update Portal to see their payment dates and amounts. Taxpayers will need this information to reconcile their advance Child Tax Credit payments with the Child Tax Credit they can claim when they file their 2021 tax returns.

Eligible individuals claiming a 2021 Recovery Rebate Credit can log in to their online account to see their Economic Impact Payment amounts so they can accurately claim the credit when they file.

Individuals who have not set up an Online Account yet should act soon to create an account. People who have already set up an Online Account should make sure they can still log in successfully.





 
Taxpayers who have an Online Account may:


View the amounts of their Economic Impact Payments
Access Child Tax Credit Update Portal for information about their advance Child Tax Credit payments
View key data from your most recent tax return and access additional records and transcripts
View details of your payment plan if you have one
View 5 years of payment history and any pending or scheduled payments


Taxpayers should make sure they've withheld enough tax

Individuals may want to consider adjusting their withholding if they owed taxes or received a large refund the previous year. Changing withholding can help avoid a tax bill or let individuals keep more money each payday. Life changes – getting married or divorced, welcoming a child or taking on a second job – may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee's Withholding Certificate, each year and when personal or financial situations change.

People also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on Jan. 18, 2022.

Individuals can log in to their Online Account to make a payment online or go to IRS.gov/payments.

ITINs need to be renewed only if expired and if needed on a U.S. federal tax return

If an Individual Taxpayer Identification Number (ITIN) was not included on a U.S. federal tax return at least once for tax years 2018, 2019 and 2020, the ITIN will expire on Dec. 31, 2021.

As a reminder, ITINs with middle digits 70 through 88 have expired. In addition, ITINs with middle digits 90 through 99, IF assigned before 2013, have expired. Individuals who previously submitted a renewal application that was approved, do not need to renew again.

Want a faster refund? Getting banked speeds tax refunds with direct deposit

Direct deposit gives individuals access to their refund faster than a paper check. Those without a bank account can learn how to open an account at an FDIC-Insured bank or through the National Credit Union Locator Tool.

Veterans should see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

Volunteer to help eligible taxpayers file their returns

The IRS and its community partners are preparing for the upcoming filing season and are looking for people around the country to become IRS-certified volunteers. Join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. VITA/TCE volunteers provide free tax return preparation for eligible taxpayers. With many people experiencing financial changes this year, additional volunteers are needed to assist them.

Visit IRS.gov/volunteers to learn more and sign up. After signing up, more information about attending a virtual orientation will be provided.

Source :　https://www.irs.gov/newsroom/get-ready-for-taxes-easy-steps-taxpayers-can-take-now-to-make-tax-filing-easier-in-2022

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Taxpayers can find answers to most questions about tax payments and penalties on IRS.gov. The Let Us Help You page, features links to information and resources on a wide range of topics related to penalties and payments.

Payments

Payment options


This page lays out the different ways taxpayers can pay what they owe, from having the payment taken directly from their bank account to using a credit card.


Payment plan


Taxpayers who cannot pay what they owe in full can learn their options on this page.


View balance and payment history


Individual taxpayers can use this tool to check their account and see things like the total amount they owe and their payment history.


Liens and levies

These links explain what a lien and a levy are, and the effect of each legal action. 


Understanding a federal tax lien
Understanding a levy


 





 



Resolve a dispute

The Office of Appeals is an independent organization within the IRS that helps taxpayers resolve their tax disputes. This page has links to information that will help taxpayers who received a notice saying their case qualifies to be reviewed by Appeals.


Office of Appeals


Prevent future tax bill

Taxpayers who owed more than expected when they filed this year have a couple options to help them avoid that when they file next year. These pages have more info about the options.


Tax Withholding Estimator
Estimated payments


Penalties

These links take the user to information where they can find out more about topics related to penalties and penalty relief.


Penalties
Penalty relief/abatement
Penalty relief for under withholding
Help for struggling taxpayers 


Source :
https://www.irs.gov/newsroom/taxpayers-can-find-answers-to-questions-about-payments-and-penalties-on-irsgov
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