Be Prepared For Disaster
Ahead of hurricane season, the IRS is reminding taxpayers to create or review their emergency preparedness plans, including protecting important tax-related information. The following tips are advised:
- Protect documents – original tax returns, birth certificates, titles and insurance policies should be kept in waterproof containers in a secure place. Duplicates or digital copies should be made and deposited with a trusted person outside the area.
- Document property – home or business photos, including contents, can help if insurance claims must be made.
- Check fiduciary bonds – employers should ensure that their payroll provider has a fiduciary bond in place, which would protect the employer in the event of default by the provider.
- Reconstructing documents – the IRS has a webpage to help.
National Small Business Week
In honor of National Small Business Week, the IRS is highlighting many tax benefits and resources for entrepreneurs:
IRS Reaches Out To Puerto Rico
The IRS is encouraging residents of Puerto Rico with even one child to file a federal tax return to claim the Child Tax Credit. Beginning with Tax Year 2021, the Credit is available, even if they had no income, only tax-exempt income, or paid no US Social Security taxes. If the April 18 filing deadline was missed, returns can still be filed without penalty to claim the Credit through April 15, 2025. Additionally, the IRS is expanding outreach to serve Puerto Rico residents who may have little or no experience filing a federal tax return. “Not only do we want them to know about the credit, but we also want them to know there is help – some of it free – for getting it.”
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.
2021 Recovery Rebate Credit FAQ
The IRS has issued frequently asked questions (FAQs) for the 2021 Recovery Rebate Credit. This credit may apply to those who didn’t receive the full amount of their third Economic Impact Payment. To claim the credit, which can reduce taxes owed or provide a refund, eligible people must file a 2021 tax return. The FAQ covers eligibility, claiming the credit, calculating the credit, and finding the relevant information in order to claim the credit.
January 31 Wage Statement Deadline
The IRS is reminding employers to be aware of the January 31 deadline to file Forms W-2 and other wage statements. Filing accurate forms by this date helps the IRS more easily detect refund fraud and helps employers avoid penalties. Applications for extension may also be submitted to provide more time to file with the IRS. A separate extension application may extend the due date for furnishing wage statements to employees.
Some Filing Reminders
The IRS reminds taxpayers to keep a few things in mind when filing federal income tax returns this year. Their checklist encourages individuals to:
- Use e-file and direct deposit, even if using a trusted tax professional
- Collect all documents, including letters regarding the Advance Child Tax Credit and third Economic Impact Payment
- Use online tools and resources to save time over calling the IRS
2022 Tax Season Begins
The IRS has kicked off the 2022 tax filing season admonishing taxpayers to take extra precautions when filing. Electronic filing, with direct deposit, is the fastest way to avoid any refund delay. Tax software, a trusted tax professional, or Free File for those who qualify, is recommended. Recipients of the advance Child Tax Credit payments or Economic Impact Payments should ensure those amounts are entered correctly as inaccuracies in this area will result in extensive delays. Most taxpayers have a filing due date of April 18, thanks to the Washington, DC Emancipation Day holiday observance. Those in Massachusetts and Maine have until April 19 due to Patriots Day, and as always, some disaster victims have later filing deadlines.