Tax Help FAQs
Tax filing this year is a bit more complicated, with the American Rescue Plan Act (ARPA) of 2021 which expanded the Child Tax Credit for last year only. Advance payments mean more paperwork for those who received them, and potentially repaying excess amounts, or claiming credit for remaining unpaid amounts. The IRS urges recipients to save Letter 6419 so their 2021 tax return can be properly prepared. A qualified tax preparer can help with this process, and several FAQs on the topic are available.
Be Ready to File
The IRS reminds taxpayers to be prepared to file their tax return, and to that end are providing a roundup of relevant information. Readiness topics include their Tax Time Guide, dealing with advance Child Tax Credit payments or Recovery Rebate Credit, a tax document checklist, filing tips and how to find help if needed.
IRS Backtracks Third-Party Facial Recognition
In response to concerns, the IRS has announced it will transition away from using a third-party service for facial recognition. This was intended to help authenticate people creating new online accounts. The IRS pledges to find authentication processes that do not involve facial recognition and which protect taxpayer data. This is not expected to interfere with filing returns or paying taxes owed, and people should continue to file their tax returns as they normally would.
IRS Suspends Automatic Notices
The IRS is suspending the mailing of several letters to individuals and businesses. These automated notices include Balance Due notices, Notices of Unfiled Tax Returns, and Withholding Compliance letters. This suspension is intended to allow the IRS to catch up with the backlog of several million original and amended tax returns that have not been processed due to the pandemic and pandemic response. Other letters are legally required to be issued within a certain timeframe and cannot be stopped by the authority of the IRS.
The IRS and nonprofit groups remind taxpayers that there is a special tax provision that allows more people to deduct donations to qualifying charities on their 2021 tax return. Under the temporary law, taxpayers don’t need to itemize deductions to take advantage of this pandemic-related rule; individuals can deduct up to $300 in donations and married couples filing jointly can deduct up to $600. The contributions must be made by December 31, 2021.
Taxpayers in Kentucky affected by the recent storms, tornados, and floods have until May 16, 2022 to file various individual and business tax returns, and make tax payments. This is also the due date for 2021 IRA contributions, and quarterly payroll and excise tax returns. The same relief is being provided to storm victims in Illinois and Tennessee, and relief previously offered to those affected by Hurricane Ida have had their deadlines extended from January 3, 2022, to February 15. Detailed information is available on the Disaster Assistance and Emergency Relief page, and updates for specific disasters can be found here.
The IRS reminds employers and the self-employed that chose to defer paying part of their 2020 Social Security tax payment that their payment is due January 3, 2022. Most employers and individuals received a reminder billing notice, but the payment is due whether a billing notice was received or not. The deferral was part of COVID relief in 2020; half the deferred amount is due now, and the other half on January 3, 2023.
The IRS will be issuing informational letters to recipients of the Advance Child Tax Credit starting in December, as well as letters to recipients of the third round of Economic Impact Payments in late January. These have important information that will make preparing tax returns easier and more accurate. The IRS urges taxpayers to use electronic filing to avoid delays.
The IRS is reminding those taxpayers who filed an extension for their 2020 tax returns that they have until October 15, 2021 to file . Electronic and FreeFile options are still available. Those who are in a federally declared disaster area may have more time to file, thanks to the disaster relief offered by the IRS. Additionally, those serving in a combat zone typically have 180 days after they leave the combat zone to file returns and pay taxes. There are many online resources available to file and pay, view information on one’s own tax history, and check Economic Impact Payment or advance Child Tax Credit status.
The IRS has contracted with three new private-sector collection agencies (PCAs) for collection of tax debt . Those who have unpaid tax bills may be contacted by CBE Group, Inc based in Iowa, or Coast Professional, Inc. or ConServe, both in New York.The IRS will always notify a taxpayer in writing before transferring their account to a PCA. The PCAs may not take enforcement actions, but they are authorized to discuss payment options and set up payment agreements. Tax payments must still be made to the IRS or US Treasury.
Farmers and ranchers forced to sell livestock due to drought may take an additional year to replace the livestock and defer tax on any gains. To qualify, the dairy, draft, or breeding livestock must have been sold on account of drought conditions in an applicable region – this is a county or other area designated as eligible for federal assistance plus counties contiguous to it. Specific regions are listed in Notice 2021-55. The relief does not apply to livestock raised for slaughter or sporting purposes, or
poultry.
Due to shortages of undyed diesel fuel caused by recent hurricanes, the IRS is extending penalty relief to additional areas of Louisiana. The penalty relief is available to anyone who sells or uses dyed fuel for highway use, so long as the operator or seller pays the tax of 24.4¢ per gallon that normally applies to diesel fuel for highway use. Generally dyed fuel is not taxed, because it is only to be sold and used for exempt purposes, such as farming, bus transportation, and home heating.