Apr 28, 2022

IRS Tax Withholding Estimator helps taxpayers get their federal withholding right

April 28th, 2022|

IRS Tax Withholding Estimator helps taxpayers get their federal withholding right

All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld. Doing this now can help protect against facing an unexpected tax bill or penalty in 2023.The sooner taxpayers check their withholding, the easier it is to get the right amount of tax withheld.

Taxpayers whose employers withhold federal income tax from their paycheck can use the IRS Tax Withholding Estimator to help decide if they should make a change to their withholding. This online tool guides users through the process of checking their withholding to help determine the right amount to withhold for their personal situation. Taxpayers can check with their employer to update their withholding or submit a new Form W-4, Employee’s Withholding Certificate.

Adjustments to withholding
Individuals should generally increase withholding if they hold more than one job at a time or have income from sources not subject to withholding. If they don’t make any changes, they may owe additional tax and possibly penalties when filing their tax return.

Individuals should generally decrease their withholding if they qualify for income tax credits or deductions other than the basic standard deduction.

Either way, those who need to adjust their withholding must prepare a new Form W-4, Employee’s Withholding Certificate. They need to submit the new Form W-4 to their employer as soon as possible since withholding occurs throughout the year.

Individuals who should check their withholding include those:

  • who experienced a marriage, divorce, birth or adoption of child, purchase of a new home or retirement
  • who are working two or more jobs at the same time or who only work for part of the year
  • who claim credits such as the child tax credit
  • with dependents age 17 or older
  • who itemized deductions on prior year returns
  • with other personal and financial changes

Tax Withholding Estimator benefits
The IRS Tax Withholding Estimator can help taxpayers:

  • determine if they should complete a new Form W-4.
  • know what information to put on a new Form W-4.
  • save time because the tool completes the form worksheets.

Taxpayers should prepare before using the Tax Withholding Estimator by having their most recent pay statements, information for other income sources and their most recent income tax return. The tool does not ask for sensitive information such as name, Social Security number, address, or bank account numbers.

Taxpayers shouldn’t use the Tax Withholding Estimator if:

  • They have a pension but not a job. They should estimate their tax withholding with the new Form W-4P.
  • They have nonresident alien status. They should use Notice 1392, Supplement Form W-4 Instructions for Nonresident Aliens.
  • Their tax situation is complex. This includes alternative minimum tax, long-term capital gains or qualified dividends. See Publication 505, Tax Withholding and Estimated Tax.

Apr 21, 2022

Taxpayers should open and carefully read any mail from the IRS

April 21st, 2022|

Taxpayers should open and carefully read any mail from the IRS

The IRS mails letters or notices to taxpayers for a variety of reasons including:

• They have a balance due.
• They are due a larger or smaller refund.
• The agency has a question about their tax return.
• They need to verify identity.
• The agency needs additional information.
• The agency changed their tax return.

If a taxpayer receives an IRS letter or notice, they should:

Not ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. The notice or letter will explain the reason for the contact and gives instructions on what to do.

Not panic. The IRS and its authorized private collection agencies generally contact taxpayers by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and take the appropriate action.

Read the notice carefully and completely. If the IRS changed the tax return, the taxpayer should compare the information provided in the notice or letter with the information in their original return. In general, there is no need to contact the IRS if the taxpayer agrees with the notice.

Respond timely. If the notice or letter requires a response by a specific date, taxpayers should reply in a timely manner to:

o avoid delays in processing their tax return
o minimize additional interest and penalty charges
o preserve their appeal rights if they don’t agree

Pay amount due. Taxpayers should pay as much as they can, even if they can’t pay the full amount. People can pay online or apply online for a payment agreement, including installment agreements, or an Offer in Compromise. The agency offers several payment options.

Keep a copy of the notice or letter. It’s important that taxpayers keep a copy of all notices or letters with other tax records. They may need these documents later.

Remember there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of their tax return and letter when calling. Typically, taxpayers only need to contact the agency if they don’t agree with the information, if the IRS requests additional information, or if the taxpayer has a balance due. Taxpayers can also write to the agency at the address on the notice or letter. Taxpayer replies are worked on a first-come, first-served basis and will be processed based the date the IRS receives it.

More Information:
Understanding Your IRS Notice or Letter
Tax Topic 651, Notices – What to Do
Tax Topic 653, IRS Notices and Bills, Penalties, and Interest Charges
Tax Topic 654, Understanding Your CP75 or CP75A Notice Request for Supporting Documentation

Share this tip on social media — #IRSTaxTip: Taxpayers should open and carefully read any mail from the IRS https://go.usa.gov/xubc9

Apr 19, 2022

Taxpayers who owe and missed the April 18 filing deadline should file now to limit penalties and interest; not too late to claim the Child Tax Credit for 2021

April 19th, 2022|

Taxpayers who owe and missed the April 18 filing deadline should file now to limit penalties and interest; not too late to claim the Child Tax Credit for 2021

WASHINGTON — The Internal Revenue Service encourages taxpayers who missed Monday’s April 18 tax-filing deadline to file as soon as possible. While taxpayers due a refund receive no penalty for filing late, those who owe and missed the deadline without requesting an extension should file quickly to limit penalties and interest.

Families who don’t owe taxes to the IRS can still file their 2021 tax return and claim the Child Tax Credit for the 2021 tax year at any point until April 15, 2025, without any penalty. This year also marks the first time in history that many families with children in Puerto Rico will be eligible to claim the Child Tax Credit, which has been expanded to provide up to $3,600 per child.

Some taxpayers automatically qualify for extra time to file and pay taxes due without penalties and interest, including:

File without penalty to get a tax refund

Some people may choose not to file a tax return because they didn’t earn enough money to be required to file. But they may miss out on receiving a refund. The only way to get a refund is to file a tax return. There’s no penalty for filing after the April 18 deadline if a refund is due. Taxpayers are encouraged to use electronic filing options including IRS Free File which is available on IRS.gov through October 17 to prepare and file 2021 tax returns electronically.

While most tax credits can be used to reduce the tax owed, there are a few credits that allow taxpayers to receive money beyond what they owe. The most common examples of these refundable credits are the Earned Income Tax Credit, Child and Dependent Care Credit and Child Tax Credit. Those who don’t usually file and didn’t qualify for a third-round Economic Impact Payment or got less than the full amount may be eligible to claim the 2021 Recovery Rebate Credit when they file their 2021 tax return. Taxpayers often fail to file a tax return and claim a refund for these credits and others for which they may be eligible.

Generally, the IRS issues nine out of 10 refunds in less than 21 days for taxpayers who e-file and choose direct deposit. However, it’s possible a tax return may require additional review or take longer. The IRS processes paper tax returns in the order they are received.

Taxpayers can track their refund using the Where’s My Refund? tool on IRS.gov, IRS2Go or by calling the automated refund hotline at 800-829-1954. Taxpayers need the primary Social Security number on the tax return, the filing status and the expected refund amount. The refund status information updates once daily, usually overnight, so there’s no need to check more frequently.

File to reduce penalties and interest

Taxpayers should file their tax return and pay any taxes they owe as soon as possible to reduce penalties and interest. An extension to file is not an extension to pay. An extension to file provides an additional six months with a new filing deadline of October 17. Penalties and interest apply to taxes owed after April 18 and interest is charged on tax and penalties until the balance is paid in full.

Filing and paying as much as possible is key because the late-filing penalty and late-payment penalty add up quickly.

Even if a taxpayer can’t afford to immediately pay the full amount of taxes owed, they should still file a tax return to reduce possible delayed filing penalties. The IRS offers a variety of options for taxpayers who owe the IRS but cannot afford to pay.

Usually, the failure to file penalty is 5% of the tax owed for each month or part of a month that a tax return is late, up to five months, reduced by the failure to pay penalty amount for any month where both penalties apply. If a return is filed more than 60 days after the due date, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is less.

The failure to pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month until the tax is fully paid or until 25% is reached. The rate is subject to change. For more information see IRS.gov/penalties.

Taxpayers may qualify for penalty relief if they have filed and paid timely for the past three years and meet other important requirements, including paying or arranging to pay any tax due. For more information, see the first time penalty abatement page on IRS.gov.

Pay taxes due electronically on IRS.gov/Payments

Those who owe taxes can pay quickly and securely via their Online Account, IRS Direct Pay, debit or credit card or digital wallet, or they can apply online for a payment plan (including an installment agreement). Taxpayers paying electronically receive immediate confirmation when they submit their payment. With Direct Pay and the Electronic Federal Tax Payment System (EFTPS), taxpayers can receive email notifications about their payments.

Selecting a tax professional

The IRS offers tips to help taxpayers choose a Tax Professional to assist in tax return preparation.

The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find tax return preparers who hold a professional credential recognized by the IRS or who have completed IRS requirements for the Annual Filing Season Program.

Taxpayer Bill of Rights

Taxpayers have fundamental rights under the law that protect them when they interact with the IRS. The Taxpayer Bill of Rights presents these rights in 10 categories. IRS Publication 1, Your Rights as a Taxpayer, highlights these rights and the agency’s obligation to protect them.

Apr 19, 2022

Here’s how to tell the difference between a hobby and a business for tax purposes

April 19th, 2022|

Here’s how to tell the difference between a hobby and a business for tax purposes

A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit. Many people engage in hobby activities that turn into a source of income. However, determining if that hobby has grown into a business can be confusing.

To help simplify things, the IRS has established factors taxpayers must consider when determining whether their activity is a business or hobby.

These factors are whether:

  • The taxpayer carries out activity in a businesslike manner and maintains complete and accurate books and records.
  • The taxpayer puts time and effort into the activity to show they intend to make it profitable.
  • The taxpayer depends on income from the activity for their livelihood.
  • The taxpayer has personal motives for carrying out the activity such as general enjoyment or relaxation.
  • The taxpayer has enough income from other sources to fund the activity.
  • Losses are due to circumstances beyond the taxpayer’s control or are normal for the startup phase of their type of business.
  • There is a change to methods of operation to improve profitability.
  • Taxpayer and their advisor have the knowledge needed to carry out the activity as a successful business.
  • The taxpayer was successful in making a profit in similar activities in the past.
  • Activity makes a profit in some years and how much profit it makes.
  • The taxpayer can expect to make a future profit from the appreciation of the assets used in the activity.

All factors, facts, and circumstances with respect to the activity must be considered. No one factor is more important than another.

If a taxpayer receives income from an activity that is carried on with no intention of making a profit, they must report the income they receive on Schedule 1, Form 1040, line 8.

More Information:
Publication 17, Your Federal Income Tax
Publication 525, Taxable and Nontaxable Income
Publication 535, Business Expenses
Publication 334, Tax Guide for Small Business, For Individuals Who Use Schedule C

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Apr 19, 2022

2021 return done? Next step: use IRS’ Tax Withholding Estimator to make sure withholding is right for 2022

April 19th, 2022|

2021 return done? Next step: use IRS’ Tax Withholding Estimator to make sure withholding is right for 2022

WASHINGTON – The Internal Revenue Service today urged any taxpayer, now finishing up their 2021 tax return, to use the IRS Tax Withholding Estimator to make sure they’re having the right amount of tax taken out of their pay during 2022.

This online tool offers workers, self-employed individuals and retirees who have wage income a user-friendly resource for effectively tailoring the amount of income tax withheld from wages.

2021 refund too big? Too small? Surprise tax bill? If any of these apply, the Tax Withholding Estimator can help anyone make sure it doesn’t happen again by having the right amount of taxes taken out for 2022.

Benefits of using the Estimator
For employees, withholding is the amount of federal income tax taken out of their paycheck. Taxpayers can use the results from the Tax Withholding Estimator to determine if they should complete a new Form W-4 and submit it to their employer. For example, checking withholding can:

  • Ensure the right amount of tax is withheld and prevent an unexpected tax bill or penalty at tax time and
  • Determine whether to have less tax withheld up front, thereby boosting take-home pay and reducing any refund at tax time.

When should taxpayers use this tool?
The IRS recommends checking withholding at least once a year. For anyone who has just finished filling out their 2021 return, now is a particularly good time to do it. It’s also a good idea to use this tool right after a major life change, such as marriage, divorce, home purchase or the birth or adoption of a child.

What records are needed?
The Tax Withholding Estimator’s results are only as accurate as the information entered. To help prepare, the IRS recommends that taxpayers gather:

  • Their most recent pay statements and if married, for their spouse,
  • Information for other sources of income and
  • Their most recent income tax return, 2021, if possible.

While the Tax Withholding Estimator works for most taxpayers, people with more complex tax situations should instead use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.

Still working on a 2021 return?
The IRS urges anyone still working on their 2021 return to make sure they have all their year-end statements in hand before filing. Besides all W-2s and 1099s, this includes two new letters issued by the IRS.

People who received advance payments of the Child Tax Credit will need to reconcile, or compare, the total received in advance with the amount they’re eligible to claim. Letter 6419 shows their total advance Child Tax Credit payments to help taxpayers reconcile and receive the full amount of the 2021 Child Tax Credit.

While most eligible people already received their stimulus payments, people who are missing a third stimulus payment or got less than the full amount may be eligible to claim a Recovery Rebate Credit on their 2021 federal tax return. Letter 6475 shows their total third round of Economic Impact Payments.

Alternatively, anyone can securely sign in to their Online Account to access information on their advance Child Tax Credit payments and Economic Impact Payments.

Taxpayers should also e-file and choose direct deposit to avoid processing delays and help with faster delivery of their refund.

For most Americans, the tax-filing deadline is April 18, 2022. For residents of Maine and Massachusetts, the deadline is April 19, 2022. Americans who live and work abroad have until June 15, 2022. Those who need more time to file can get an automatic extension to file until Oct. 17, 2022. These extensions don’t change the April 18 payment deadline. It is not an extension to pay. More information is available at IRS.gov.

Then, after they file, taxpayers can use the Tax Withholding Estimator to help them update their withholding for 2022.

Mar 4, 2022

Tax Time Guide: IRS reminds taxpayers to report gig economy income, virtual currency transactions, foreign source income and assets

March 4th, 2022|

Tax Time Guide: IRS reminds taxpayers to report gig economy income, virtual currency transactions, foreign source income and assets

WASHINGTON − The Internal Revenue Service reminds taxpayers of their reporting and potential tax obligations from working in the gig economy, making virtual currency transactions, earning foreign-source income or holding certain foreign assets. Information available on IRS.gov and instructions on Form 1040 can help taxpayers in understanding and meeting these reporting and tax requirements.

Gig economy earnings are taxable
Generally, income earned from the gig economy is taxable and must be reported to the IRS. The gig economy is activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website. Taxpayers must report income earned from the gig economy on a tax return, even if the income is:

  • From part-time, temporary or side work,
  • Not reported on an information return form – like a Form 1099-K, 1099-MISC, W-2 or other income statement or
  • Paid in any form, including cash, property, goods or virtual currency.

For more information on the gig economy, visit the gig economy tax center.

Understand virtual currency reporting and tax requirements
The IRS reminds taxpayers that once again there is a question at the top of Form 1040 and Form 1040-SR asking about virtual currency transactions. All taxpayers filing these forms must check the box indicating either “yes” or “no.” A transaction involving virtual currency includes, but is not limited to:

  • The receipt of virtual currency as payment for goods or services provided;
  • The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
  • The receipt of new virtual currency as a result of mining and staking activities;
  • The receipt of virtual currency as a result of a hard fork;
  • An exchange of virtual currency for property, goods or services;
  • An exchange/trade of virtual currency for another virtual currency;
  • A sale of virtual currency; and
  • Any other disposition of a financial interest in virtual currency.

If an individual disposed of any virtual currency that was held as a capital asset through a sale, exchange or transfer, they should check “Yes” and use Form 8949 to figure their capital gain or loss and report it on Schedule D (Form 1040).

If they received any virtual currency as compensation for services or disposed of any virtual currency they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type (for example, W-2 wages on Form 1040 or 1040-SR, line 1, or inventory or services from Schedule C on Schedule 1). More information on virtual currency can be found in Instruction for Form 1040 and on IRS.gov.

Report Foreign Source Income
A U.S. citizen or resident alien’s worldwide income is generally subject to U.S. income tax, regardless of where they live. They’re also subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States.

U.S. citizens and resident aliens must report unearned income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States. An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

A taxpayer is allowed an automatic 2-month extension to June 15 if both their tax home and abode are outside the United States and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 18, 2022.

Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15. IRS recommends attaching a statement if one of these two situations apply. More information can be found in the Instructions for Form 1040 and 1040-SR, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad and Publication 519, U.S. Tax Guide for Aliens.

Reporting required for foreign accounts and assets
Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

Further, separate from reporting specified foreign financial assets on their tax return, taxpayers with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2020, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website.

The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is the same as that of Form 1040. FinCEN grants filers who missed the original deadline an automatic extension until October 15, 2022, to file the FBAR. There is no need to request this extension.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax.

Mar 4, 2022

Taxpayers can start the 2022 tax year off right by checking their withholding

March 4th, 2022|

Taxpayers can start the 2022 tax year off right by checking their withholding

One way people can get the new tax year off to a good start is by checking their federal income tax withholding. They can do this using the Tax Withholding Estimator on IRS.gov.

This online tool helps employees avoid having too much or too little tax withheld from their wages. It also helps self-employed people, who have wage income, estimate tax payments that they should make to avoid unexpected results at tax time. Having too little withheld can result in a tax bill or even a penalty at tax time. Having too much withheld results in less money in their pocket. The estimator can help them get to a balance of zero or a desired refund amount.

Taxpayers can use the results from the Tax Withholding Estimator to determine if they should:

The Tax Withholding Estimator asks taxpayers to estimate:

  • Their 2022 income.
  • The number of children they will claim for the child tax credit and earned income tax credit.
  • Other items that will affect their 2022 tax return when they file in 2023.

The Tax Withholding Estimator does not ask for personally identifiable information, such as a name, Social Security number, address, and bank account numbers. The IRS doesn’t save or record the information entered in the Estimator.

Before using the Estimator, it can be helpful for taxpayers to gather applicable income documents including:

These documents are not needed to use the estimator but having them handy will help taxpayers estimate 2022 income and answer other questions asked during the process.

The Tax Withholding Estimator results will only be as accurate as the information entered by the taxpayer. People with only pension income should not use the Estimator. Those with wage income can account for current or future pension income. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.

Share this tip on social media – #IRSTaxTip: Taxpayers can start the 2022 tax year off right by checking their withholding. https://go.usa.gov/xtF4M

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Tax@accountants-on-the-go.com
Office: 541-342-1040 ext.101


Accountants on the Go, LLC
www.accountants-on-the-go.com
311 West 13th Ave.
Eugene, OR 97401

Click here to upload files securely.

 

Accountants on the Go! helps businesses small and large to manage their accounting, bookkeeping, payroll, and overall financial needs.

Feb 24, 2022

IRS launches resource page on IRS.gov with latest details and information for taxpayers during filing season

February 24th, 2022|

IRS launches resource page on IRS.gov with latest details and information for taxpayers during filing season

WASHINGTON –To help taxpayers and tax professionals, the Internal Revenue Service today announced a special new page on IRS.gov to provide the latest details and information affecting the 2022 filing season and ongoing efforts by the agency to address the inventory of previously filed tax returns.

During this tax season, taxpayers face a number of issues due to critical tax law changes that took place in 2021 and ongoing challenges related to the pandemic. To raise awareness about these issues and provide people with the latest timely information, the IRS has created a special tax season web page. This page will provide people with a quick overview of information to help people filing tax returns as well as those who have previous year tax returns awaiting processing by the IRS.

“The IRS is taking numerous steps to keep this tax season going smoothly while also taking additional action to address the inventory of tax returns filed last year,” said IRS Commissioner Chuck Rettig. “We’re off to a good start processing tax returns and issuing refunds. But we want people to have an easy way to see the latest information. This new page provides a one-stop shop for the latest key information people and the tax community may need.”

The “special tax season alerts” page will be available through the IRS.gov home page and shared through social media and other channels.

The page will include the latest filing season updates. The IRS began tax season on Jan. 24, and in less than two weeks more than 4 million tax refunds have gone out worth nearly $10 billon. Millions more will go out in the weeks ahead as the IRS enters an important period of the tax season.

The page also includes links to important information related to ongoing efforts by the IRS to address the inventory of unprocessed tax returns filed before this year. This includes steps to stop more than a dozen common letters to taxpayers, and updates on IRS operations and the number of unprocessed tax returns.

“The combination of the pandemic, new tax laws and numerous other factors led to an unprecedented amount of unprocessed tax returns and correspondence remaining in the IRS inventory during 2021,” Rettig said. “We must continue pursuing innovative strategies while supporting the hard work and dedication of our employees to fulfill our commitment to return inventories to a healthy level before entering the 2023 filing season. These steps are making a difference. Refunds for tax returns and amended tax returns in the inventory continue to flow out to taxpayers.”

The IRS continues to urge taxpayers to carefully review their tax filings for accuracy and file electronically with direct deposit to speed refunds. Special tips are available in several places on IRS.gov, including these top 5 tips; basics on the 2022 tax season and IRS Tax Time Guide.

______________________________________

AOTG-Biz-logo-2

Tax@accountants-on-the-go.com
Office: 541-342-1040 ext.101


Accountants on the Go, LLC
www.accountants-on-the-go.com
311 West 13th Ave.
Eugene, OR 97401

Click here to upload files securely.

 

Accountants on the Go! helps businesses small and large to manage their accounting, bookkeeping, payroll, and overall financial needs.

Feb 16, 2022

Check the status of a refund in just a few clicks using the Where’s My Refund tool

February 16th, 2022|

Check the status of a refund in just a few clicks using the Where’s My Refund tool

Tracking the status of a tax refund is easy with the Where’s My Refund? tool. It’s available anytime on IRS.gov or through the IRS2Go App.

Taxpayers can start checking their refund status within 24 hours after an e-filed return is received.

Refund timing
Where’s My Refund provides a personalized date after the return is processed and a refund is approved. While most tax refunds are issued within 21 days, some may take longer if the return requires additional review.

Here are a few reasons a tax refund may take longer:

  • The return may include errors or be incomplete.
  • The return could be affected by identity theft or fraud.
  • Many banks do not process payments on weekends or holidays.

The IRS will contact taxpayers by mail if more information is needed to process their tax return.

Taxpayers who claimed the earned income tax credit or the additional child tax credit, can expect to get their refund March 1 if:

  • They file their return online
  • They choose to get their refund by direct deposit
  • The IRS found no issues with their return

Fast and easy refund updates
Taxpayers can start checking on the status of their return within 24 hours after the IRS acknowledges receipt of an electronically filed return or four weeks after the taxpayer mails a paper return. The tool’s tracker displays progress in three phases:

  1. Return received
  2. Refund approved
  3. Refund sent

To use  Where’s My Refund?, taxpayers must enter their Social Security number or Individual Taxpayer Identification Number, their filing status and the exact whole dollar amount of their refund. The IRS updates the tool once a day, usually overnight, so there’s no need to check more often.

Calling the IRS won’t speed up a tax refund. The information available on Where’s My Refund? is the same information available to IRS phone assistors.

Share this tip on social media — #IRSTaxTip: Check the status of a refund in just a few clicks using the Where’s My Refund tool. https://go.usa.gov/xtF4H

______________________________________

AOTG-Biz-logo-2

Tax@accountants-on-the-go.com
Office: 541-342-1040 ext.101


Accountants on the Go, LLC
www.accountants-on-the-go.com
311 West 13th Ave.
Eugene, OR 97401

Click here to upload files securely.

 

Accountants on the Go! helps businesses small and large to manage their accounting, bookkeeping, payroll, and overall financial needs.

Feb 11, 2022

Why taxpayers should have their tax refund direct deposited

February 11th, 2022|

Issue Number: Tax Tip 2022-14


Why taxpayers should have their tax refund direct deposited


As the 
2022 filing season begins, the IRS encourages taxpayers to file electronically when they are ready and choose direct deposit to get their refund. Direct deposit is the safest and most convenient way to receive a tax refund.

Here are some other benefits of choosing IRS direct deposit:

  • It’s fast. The fastest way for taxpayers to get their refund is to electronically file and choose direct deposit. Visit IRS.gov for details about IRS Free File, Free File Fillable Forms, free tax return preparation and more. Taxpayers who file a paper return can also choose direct deposit, but it will take longer to process the return and get a refund.
  • It’s secure. Since refunds are electronically deposited, there’s no risk of having a paper check stolen or lost in the mail.
  • It’s easy. Taxpayers can simply follow the instructions when selecting direct deposit as a refund method and enter their account information as directed. They must enter the correct account and routing numbers when they file.
  • It provides options. Taxpayers can split a refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. They should use IRS Form 8888, Allocation of Refund, Including Savings Bond Purchases to deposit a refund in up to three accounts. However, this form cannot be used to designate part of a refund to pay tax preparers.

Taxpayers should deposit refunds into U.S. bank accounts in their own name, their spouse’s name or both. They should avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a tax refund from a joint return. Taxpayers should check with their bank for direct deposit rules.

Get banked
Taxpayers who don’t have a bank account can visit the FDIC website for information on banks that allow them to open an account online and how to choose the right account. Veterans can use the Veterans Benefits Banking Program for access to financial services at participating banks. Tax preparers may also offer electronic payment options.

Mobile apps may be an option
Some mobile apps and prepaid debit cards allow for direct deposit of tax refunds. They must have routing and account numbers associated with them that can be entered on a tax return. Taxpayers should check with the mobile app provider or financial institution to confirm which numbers to use.

Taxpayers must have their routing and account numbers for direct deposit available when they are ready to file. The IRS can’t accept this information after a return is filed.

There is a limit of three direct deposit refunds made into a single financial account or prepaid debit card.

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Tax@accountants-on-the-go.com
Office: 541-342-1040 ext.101


Accountants on the Go, LLC
www.accountants-on-the-go.com
311 West 13th Ave.
Eugene, OR 97401

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Accountants on the Go! helps businesses small and large to manage their accounting, bookkeeping, payroll, and overall financial needs.

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