Tag Archives: economic impact payments

IRS Tax Updates

New FAQs For Families And Small Businesses

The IRS has posted two new frequently asked questions (FAQs) to help families and small- and mid-sized employers in claiming credits under the American Rescue Plan (ARP) Act. For families, the child and dependent care credit was increased and expanded under the ARP, and made fully refundable. The paid sick and family leave credits reimburse eligible employers for the paid sick leave provided to employees for COVID-19 related reasons. 

Economic Impact Payments Continue

The IRS and Treasury continue to disburse millions of Economic Impact Payments (EIPs). As of June 9, the value of the payments was approximately $395 billion since payments began in March. More than 169 million payments have been made thus far, with plans to continue payments on a weekly basis to those who were previously unknown to the IRS but who have recently filed a tax return.

Letters Begin Re: Advance Child Tax Credits

Letters have been sent to more than 36 million American families who may be eligible to receive monthly Child Tax Credit payments. Families have been identified based on information they included in their recent tax return, or who registered for an Economic Impact Payment. The credit was increased and expanded under the ARP, and eligible families can expect monthly direct deposits or paper checks around the 15th of each month from July through December. A tool will be provided soon which will enable families to unenroll from receiving the advance payments and instead receive the full credit amount when they file their 2021 return next year.

Tax Updates April 30, 2021

Tax Court Cases Resolved

Virtual Settlement Days, first announced in May 2020, help taxpayers resolve their cases and avoid taking their chances in court. Building on that, March was National Virtual Settlement month, which saw Virtual Settlement Days events held in all 50 states and the District of Columbia. Nearly 240 taxpayers met with Chief Council employees and pro bono organizations to help them with free advice and to understand their cases; 148 cases were settled. Taxpayers with cases before the court are encouraged to contact their assigned Chief Counsel attorney or paralegal to inquire about participating in future events. 

Avoid Common Return Errors

The IRS is reminding taxpayers to check their tax returns for common errors that could delay their processing and refunds. As the May 17 due date approaches, taxpayers are encouraged to:

  • Use electronic filing 
  • Report all taxable income
  • Double check names and social security numbers
  • Check filing status accuracy (use the Interactive Tax Assistant)
  • Correctly answer virtual currency question
  • Use correct routing and account numbers if receiving a refund
  • Sign and date your return
  • If mailing a paper return, double check address
  • Keep a copy for your records
  • Request an extension if needed – avoid late filing penalties

American Rescue Plan Tax Credits

A new fact sheet outlines the details of tax credits available to small businesses, including paid leave for employees receiving COVID-19 vaccinations. Eligible employers, which may include businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers can receive a tax credit for providing paid time off for each employee receiving the vaccine who needs time to recover from the jab. Self-employed individuals may claim comparable credits. 

Economic Impact Payments Continue

The sixth batch of Economic Impact Payments (EIPs) from the American Rescue Plan is disbursing another two million payments, for a total of approximately 161 million payments. This totals $379 billion since payments began rolling out on March 12. More than $1.3 billion went to individuals for whom the IRS previously did not have information to issue an EIP, but who recently filed a tax return. This batch also includes “additional ongoing supplemental payments” for people who received an EIP earlier this year based on their 2019 return, but became eligible for more after their 2020 return was processed. Another 600,000 payments went to Social Security beneficiaries and Supplemental Security Income recipients, including those with foreign addresses. The IRS will continue to make EIPs on a weekly basis. 

 

Tax Updates March 2, 2021

Selecting Tax Return Preparers

The IRS is reminding taxpayers to choose a tax return preparer with care. While the vast majority of paid preparers provide quality service, others commit fraud, identity theft, and other scams. Credentials to look for in a professional with whom you’re trusting your personal and financial information include:

  • Year-round availability – being able to contact your preparer after tax season can be helpful if questions about your return arise.
  • Professional credentials – does your preparer belong to a professional organization, attend continuing education classes, and remain up-to-date on tax law?
  • Legitimate pricing – avoid preparers who base their fees on a percentage of a client’s refund.
    More information can be found in the new Tax Time Guide.

Tax Relief For Texas Storm Victims

The IRS has announced that taxpayers in FEMA-designated disaster areas will have until June 15, 2021 to file tax returns and make tax payments. This includes the entire state of Texas and areas of other states where FEMA disaster declarations have been made. Among other things, this also means that taxpayers will have until June 15 to make 2020 IRA contributions. Taxpayers do not need to contact the IRS to get this benefit; if their address of record is located in the disaster area, they will be provided the relief.

EIPs Issued; Recovery Rebate Credit Available

All legally permitted first and second round of Economic Impact Payments (EIPs) have been issued, the IRS has announced. Individuals who didn’t receive EIPs or didn’t receive the full amounts may be eligible to claim the Recovery Rebate Credit. To claim the credit, individuals will need to know the amounts of any EIPs they received. This information can be found online.

Health FSA Flexibility Increased

Due to the pandemic and the COVID-related Taxpayer Certainty and Disaster Tax Relief Act of 2020, the IRS has provided greater flexibility to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs. These plans now have additional discretion to adjust their programs. Potential adjustments include carrying over unused amounts, extending the permissible period for incurring claims, allowing certain mid-year changes, and more. The decisions to adjust these programs is at the discretion of the employer that sponsors the plan.