Interest Rates Increase
The IRS has announced that interest rates will increase for the third calendar quarter of the year, beginning July 1, 2022. The rates will be:
- 5% for overpayments (4% in the case of a corporation).
- 2.5% for the portion of a corporate overpayment exceeding $10,000.
- 5% for underpayments.
- 7% for large corporate underpayments.
These rates are calculated by the federal short-term rate determined during April 2022, based on daily compounding.
Child Tax Credit FAQs Revised
The IRS has revised a set of frequently asked questions (FAQs) for the 2021 Child Tax Credit and Advance Child Tax Credit. Updates have been made to several topics, including general information, receiving advance child tax credit payments, updating your information, reconciling your payments, unenrolling from advance payments, shared custody questions and more.
Where’s My Refund? Updated
The IRS has made a helpful improvement to the Where’s My Refund? online tool that now allows taxpayers to check the status of their current tax year and two previous years’ refunds. Taxpayers will need their Social Security number or ITIN, as well as filing status and expected refund amount for the tax year they’re checking. Previously the tool only displayed the status of the most recent tax return. The tool is usually updated overnight and gives a projected refund date as soon as it’s approved.
Earned Income Tax Credit FAQs Revised
The IRS has revised the FAQs for the Earned Income Tax Credit (EITC). The EITC helps low- to moderate-income workers and their families either reduce their taxes owed or increase their refund (if no taxes are owed). The credit varies depending on whether the taxpayer has children, dependents, a disability or other eligible status. The FAQs explain the EITC, how it was expanded in 2021, which taxpayers are eligible, and how to claim 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.
Advance Child Tax Credit Payment Tools
The IRS and Treasury have unveiled an online Non-filer Sign-up tool to assist eligible families who don’t normally file tax returns to register for the monthly Child Tax Credit payments scheduled to begin July 15. The tool is an update of last year’s Non-filers tool which helped individuals claim Economic Impact Payments (EIPs). The tool will continue this work as well. Additionally, the IRS has also released a Child Tax Credit Eligibility Assistant tool to help families determine if they qualify for the payments and an Update Portal for monitoring and managing the payments. Finally, the IRS is also partnering with groups such as non-profit organizations, churches, and community groups in 12 cities to help identify any families who may have missed the many previous requests to register for EIPs or the Advance Child Tax Credit. Outreach events were held this past weekend and will be held next weekend in Atlanta; New York; Detroit; Houston; Los Angeles; Las Vegas; Miami; Milwaukee; Philadelphia; Phoenix; St. Louis; and Washington, DC.
IRS Data Book Released
The IRS has issued the Data Book for fiscal year 2020 (October 1, 2019 through September 30, 2020), detailing the agency’s activities and “important work that IRS employees accomplish on behalf of the public,” according to IRS Commissioner Chuck Rettig. The 2020 Data Book also describes the measures taken to protect the health and safety of taxpayers and IRS employees during the COVID-19 pandemic while implementing legislation such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as carrying on their typical work of processing returns and making online tools to assist taxpayers.
ETAAC Annual Report
The Electronic Tax Administration Advisory Committee (ETAAC) has released its annual report (PDF) to Congress, featuring recommendations focused on preventing identity theft and refund fraud. Recommendations were made to Congress regarding the IRS budget, filing information returns, and federal data-sharing, while those made to the IRS dealt with electronic filing and cybersecurity. ETAAC members represent various segments of the tax community, from taxpayers to tax professionals, software developers, the financial industry and state and local governments.
North Carolina parents who want to receive the $335 covid relief check for families need to file their taxes by October 15.
If you have not done your taxes, lived in North Carolina for all of 2019, and have at least one dependent under the age of 17, then contact us on the form below to see if we can help you get your taxes in before the deadline.