Tax Updates July 29

Advance Child Tax Payments Begin

The first batch of advance monthly child tax payments, totaling about $15 billion, went out on July 15. The vast majority were sent by direct deposit. Payments will continue monthly through the end of the year, and the IRS continues to “urge people who normally aren’t required to file a tax return” to sign up for these payments as well as Economic Impact Payments and other credits they may be eligible to receive. The IRS is even holding weekend events in cities around the nation to “support eligible families.” The events are hosted by the IRS and partner groups, and employees and volunteers assist individuals and families to file tax returns and register for the advance payments. Additionally, the IRS has launched a new Spanish language version of its online Child Tax Credit Eligibility Assistant tool, and urges community groups to help share this and other benefit information.

Unemployment Tax Refunds Continue

The IRS continues to issue refunds to taxpayers who overpaid their taxes on employment compensation received last year. Up to $10,200 in 2020 unemployment payments were excluded from taxable income calculations, but this exclusion didn’t happen until the American Rescue Plan Act was passed in March, so many taxpayers had already filed and paid taxes under the old rules. Most taxpayers need not take any action, unless they need to amend their 2020 return.

Protect Against Identity Theft

The IRS is spreading the word about their IP PIN Opt-In Program. An Identity Protection PIN is available to anyone who can verify their identity, and prevents someone else from filing a tax return using the taxpayer’s Social Security number. Tax professionals cannot obtain an IP PIN on behalf of clients, but clients should share their IP PIN only with their trusted tax preparer. The program is voluntary and the IRS will never call, email, or text a request for the IP PIN, which can be obtained at the online tool.