Tag Archives: refund

IRS Tax Updates

Filing Season Scams Abound

The IRS has issued an alert warning taxpayers of new scams that urge people to claim false tax credits with inaccurate wage information. One scheme encourages people to use tax software to manually fill out Form W-2, Wage and Tax Statement with false income information. Scam artists instruct people to use the bogus information in their electronically-filed return with the aim of getting a large refund. A variation of the scam involves using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals to claim a credit based on income earned as an employee. These credits are not available for 2022 tax returns. 

Another warning has been renewed, urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit. Third parties are aggressively pushing ineligible people to use this, misleading people and businesses into thinking they can claim these credits. Penalties are wide-ranging and may include a $5000 fine or criminal prosecution. Those who have participated in such schemes can amend a previous return or consult with a trusted tax professional.

Digital Intake Ramps Up

The IRS has announced an expansion of digital scanning, having already scanned more than 120,000 paper Forms 940 since the beginning of the year. This is a 20-fold increase compared to all of 2022. The effort will expand soon to include scanning of Forms 1040 and Forms 941. The IRS has used various technologies to scan tax returns over the years, but recently took a leap forward thanks to the Inflation Reduction Act. Most tax returns are filed electronically but millions of forms are still filed by paper. With an increased capability to scan and electronically process these paper returns, the IRS will be able to shorten overall processing time.

Retiree Reminder: April 1 Deadline Approaches

The IRS reminds retirees who turned 72 during 2022 that, in most cases, Saturday, April 1, 2023 is the last day to begin receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s and similar workplace retirement plans. These payments, called required minimum distributions (RMDs) are normally made by the end of the year. However, those who reached age 72 during 2022 are covered by a special rule that allows them to wait until as late as April 1, 2023 to take their first RMD. This delayed deadline only applies to the RMD for the first year. In subsequent years the RMD must be made by the year’s end. This means that those who opt for their 2022 RMD by April 1 must still receive their 2023 RMD by December 31, 2023. Both RMDs are taxable and will be reported on the 2023 tax return. Visit the RMD FAQs page for more information.

 

Tax Updates Beginning March

Business E-File Regulations Finalized

The IRS and Treasury have issued final regulations amending the rules for filing returns and other documents electronically. Filers of partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, some information returns and other statements, notifications, and reports will be required to e-file beginning in 2024. A new online portal has been created to help businesses file form 1099 returns electronically.

May 15 Disaster Area Deadlines Extended

Disaster area taxpayers in much of California and parts of Alabama and Georgia now have until Oct 16, 2023 to file various federal tax returns and make payments, the IRS has announced. Previously, the deadline had been postponed to May 15 for these areas. This deadline includes individual and business returns normally due on March 15 and April 18; returns of tax-exempt organizations normally due on May 15. Those affected also have until October 16 to make 2022 contributions to IRAs and health savings accounts. The deadline also applies to various tax payments. Current tax-related disaster information can always be found on the IRS Disaster Tax Relief page.

AMT Guidance for Insurance Providers Issued

The Treasury and IRS have issued Notice 2023-20 which provides interim guidance for insurance companies and some other taxpayers for the new corporate alternative minimum tax (CAMT) until proposed regulations are issued. The Inflation Reduction Act of 2022 created the CAMT, imposing a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning in 2023. Large corporations, including insurance companies, with adjusted financial statement income exceeding $1 billion will be those generally affected by the CAMT. Comments on the rules are welcome and must be submitted by April 3, 2023. 

2022 Return Tax Time Guide

The IRS reminds taxpayers to gather their necessary information and visit IRS.gov or their trusted tax preparer for help with their 2022 tax return. Several changes have been implemented due to the Inflation Reduction Act and American Rescue Plan Act, including the reduction in Earned Income Tax Credit, Child Tax Credit, and Child and Dependent Care Credit amounts. Additionally, those that don’t itemize cannot deduct their charitable contributions this year. More in the Tax Time Guide series will be forthcoming.

Tax Updates End of March

Protect Personal Information

The IRS is urging people to stay vigilant in securing their online devices against online scams. Taxpayers and tax professionals can help protect against identity theft and other fraud by safeguarding personal data, keeping personal information private, using strong passwords and secured wireless networks, recognizing phishing emails, and using security software. It is also important to educate household members who may not be aware of the risks, such as children and other less-experienced online users. As a reminder, the IRS will not contact taxpayers by email, text message, or social media platforms.

Reportable Virtual Currency Transactions

The IRS reminds taxpayers to check the box on the top of Form 1040 (or Form 1040-SR or Form 1040-NR) about virtual currency. It asks, “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” All filers must check either “yes” or “no.” Taxpayers may check “no” if they purchased (with real currency) virtual currency or held it in their own wallet or account. They must check “yes” if they received or exchanged virtual currency for property, goods and services, as a result of hard fork, as a result of mining and staking activities, in trade for other virtual currency, or any disposal of a financial interest in virtual currency. Any capital gain or loss must be reported on Schedule D (Form 1040), and virtual currency income must be reported as they would report any other income.

Retirees: April 1 Deadline for RMDs

The IRS reminds retirees who turned 72 during the last half of 2021 that Friday, April 1, 2022 is the last day to begin receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s, and other workplace retirement plans.  The required minimum distributions (RMDs) are normally made by the end of the year, but those who reached age 72 after June 30, 2021 are covered by a special rule allowing this later RMD date. As this RMD counts for 2021, an additional RMD is required by December 31, 2022. Both RMDs are taxable in 2022 and must be reported on the 2022 tax return.

Delayed Refund? Some Are Taking Longer

Though the IRS issues most refunds within 21 days for tax filers who file electronically and choose direct deposit, some are taking longer. Some factors that can affect the timing of a refund are errors, identity theft, or fraud. If a return requires a correction to the Child Tax Credit or Recovery Rebate Credit amount, includes the Earned Income Tax Credit or Additional Child Tax Credit, the refund may take additional time. The Where’s My Refund tool can help filers to know when to expect their refund or if there is a problem.

2019 Tax Advance from Republic Bank

What do you need for an early advance?

You need to have reasonable evidence that you will be receiving a tax refund this year. That includes a W-2 for any labor you have done, as well as having evidence that you have either overpaid your taxes this year (and will get a refund) or qualify for refundable credits.

Who qualifies for refundable credits? Come by our office to find out!

Little Giant Tax Services are proud to offer this service for our customers: if you need access to your tax refund and credits quickly, then come by our offices at 373 E Black St, Rock Hill, SC 29730, and you may be able to walk out with a tax advance that day.

Remember to bring your W-2’s!