Feb 8, 2022

Tax Time Guide: American Rescue Plan changes can boost refunds for many families; people should file even if they haven’t for years

February 8th, 2022|

Statue:Publish

Issue Number:    IR-2022-29

Inside This Issue


Tax Time Guide: American Rescue Plan changes can boost refunds for many families; people should file even if they haven’t for years

WASHINGTON – The Internal Revenue Service today urged Americans to file a 2021 federal income tax return so they can take advantage of key tax benefits included in the American Rescue Plan and other recent legislation.

Often, individuals and families can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don’t normally need to file a return should consider doing so this year. Because claiming these benefits could result in tax refunds for many people, individuals should file an accurate return electronically and choose direct deposit to avoid processing delays and speed delivery of their refund.

Expanded tax benefits
A new fact sheet, FS-2022-10, available now on IRS.gov, describes many of these expanded tax benefits. But the IRS emphasized that these benefits are only available to people who file a 2021 federal income tax return. Benefits include:

  • An expanded Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
  • An increased Child and Dependent Care Credit: Families who pay for daycare so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
  • A more generous Earned Income Tax Credit: The American Rescue Plan boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children.
  • The Recovery Rebate Credit: Those who missed out on last year’s third-round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.
  • A deduction for gifts to charity: The majority of taxpayers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.

See the fact sheet for more information.

The IRS reminds early filers that by law, the agency cannot issue EITC refunds before mid-February. The same rule applies to refunds that include the Additional Child Tax Credit (ACTC). This year, the ACTC is typically claimed by Americans abroad who did not have a main home in the United States for more than half of 2021. Normally, the mid-February restriction does not apply to the Refundable Child Tax Credit (RCTC) claimed by people who had a main home in the U.S., unless they also claim the EITC.

Helpful reminders
The IRS urges everyone to make sure they have all their year-end statements in hand before filing their 2021 return. Besides all W-2s and 1099s, this includes two statements issued by the IRS — Letter 6419, showing their total advance Child Tax Credit payments, and Letter 6475, showing their total EIP3 payments. Individuals can also use IRS Online Account to see the total amounts of their third round of Economic Impact Payments or advance Child Tax Credit payments. Married spouses who received joint payments will each need to sign into their own account to retrieve their separate amounts.

For most Americans, the tax-filing deadline is April 18, 2022. For residents of Maine and Massachusetts, the deadline is April 19, 2022. For Americans who live and work abroad, it’s June 15, 2022. Anyone who needs more time to file can get an automatic extension until Oct. 17, 2022.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed at home, at work or on the go.

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.

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311 West 13th Ave.
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Feb 8, 2022

Top things all taxpayers need to remember when filing their 2021 tax return

February 8th, 2022|

​Status:Publish

Issue Number: COVID Tax Tip 2022-21


Top things all taxpayers need to remember when filing their 2021 tax return

Now that the filing season has begun, there are several key items all taxpayers should keep in mind when filing their federal income tax returns this year.

Here’s a checklist to help file an accurate tax return, avoid processing delays and speed up refund delivery.

Use online resources before calling the IRS. The IRS urges people to use IRS.gov to get answers to tax questions, check a refund status or pay taxes. There’s no wait time or appointment needed — online tools and resources are available 24 hours a day.

The IRS has several ways for taxpayers to stay up to date on important tax information. They can:

Collect all documents before preparing a tax return. Collect W-2s, Form 1099s and other income-related statements. People who need to reconcile advance child tax credit payments or claim the recovery rebate credit will need additional information when they file.

Individuals must have the total amounts of advance child tax credit payments to receive the remainder of their child tax credit and the amounts of their third Economic Impact Payment to claim a Recovery Rebate Credit. Taxpayers should check their online account or review Letter 6419, 2021 Total Advance Child Tax Credit Payments, and Letter 6475, Your 2021 Economic Impact Payment, for their total payment amounts to help them file an accurate return. If married taxpayers received payments based on a joint return, each spouse received half of the payments. Each spouse can find their payment total in their own online account or letter. They should add the payments together to provide the total amount.

File an accurate return electronically and have any refund direct deposited. Taxpayers should electronically file and choose direct deposit when they have everything they need to file an accurate return. Taxpayers have many choices, including using a tax professional. Tax software guides people through each section of their tax return using a question-and-answer format. Enter information return carefully. This includes any information needed to calculate credits and deductions. Using tax software should help prevent math errors, but taxpayers should always review their tax return for accuracy.

Free tax preparation and e-file options are available for qualifying taxpayers. These include IRS Free File, MilTax for military service members and some veterans, the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.

Waiting on a 2020 tax return to be processed? To validate and successfully submit an electronically filed tax return to the IRS, taxpayers need their adjusted gross income, from their most recent tax return. Generally, tax software automatically enters the information for returning customers. People using a software product for the first time, may have to enter this information. For those waiting on their 2020 tax return to be processed, enter $0 for last year’s AGI on the 2021 tax return. Those who used a non-filer tool in 2021 to register for an advance child tax credit or third Economic Impact Payment in 2021, should enter $1 as their prior year AGI.

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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 4, 2022

Tips to help taxpayers reduce tax-time stress

February 4th, 2022|

Issue Number: COVID Tax Tip 2022-19


Tips to help taxpayers reduce tax-time stress

Each tax season comes with unique challenges and 2022 is no exception. The IRS wants taxpayers to get the information they need as quickly as possible. Taxpayers should keep these tips in mind when they get ready to file. Following them will help get this year’s taxes done accurately and refunds issued timely.

• Avoid errors. Taxpayers should review their tax return so they can file a complete and accurate return and avoid refund delays. Filing electronically is the most accurate way to file. Taxpayers should check all names and double check all Social Security numbers, bank account and routing numbers.

• Gather records. Good recordkeeping makes preparing a tax return easier. It can also ensure taxpayers do not overlook deductions and credits.
 
• Start with IRS.gov. IRS.gov is available around-the-clock and it’s the fastest way to get assistance. Millions of people use IRS.gov for filing and paying taxes, getting information about their accounts or answers to tax questions. The IRS Services Guide outlines the many ways taxpayers can get help from the IRS.
 
• Use online tools. IRS.gov has many useful online tools. The Interactive Tax Assistant provides answers to many tax questions specific to an individual’s circumstances. It gives the same answers that an IRS representative would give over the phone.
 
 Report all income. Taxpayers must report their taxable income from all sources, including the gig economy, Forms W-2, Wage and Tax Statements, and Forms 1099. Other income may be taxable, even if the taxpayer does not receive a statement.

• Report unemployment benefits. Taxpayers who received unemployment benefits in 2021, must report the amount as taxable income on their tax return.

• Access online account or review IRS letters. This year, people must have the total amounts of their advance child tax credit payments and their Economic Impact Payments on hand when filing. They can check online account or review Letter 6419, 2021 Total Advance Child Tax Credit Payments, and Letter 6475, Your 2021 Economic Impact Payment, for their total payment amounts to help them file an accurate return.

• Choose a reputable preparer. Taxpayers can self-prepare or use a tax preparer. IRS.gov has resources to help people choose a tax pro. The IRS Directory of Federal Tax Return Preparers provides information on who has a professional credential or participates in the IRS Annual Filing Season Program.

 File electronically. IRS Free File online can help taxpayers claim their earned income tax credit, child and dependent care credit, child tax credit and recovery rebate credit. Some Free File options are available in Spanish. MilTax online software is available for members of the military and certain veterans, regardless of income, and is offered through the Department of Defense. Eligible taxpayers may prepare and file their federal returns and up to three state returns for free.

• Choose direct deposit. Filing electronically and choosing direct deposit is the safest and easiest way to file an accurate tax return and the fastest way to get a refund.

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Feb 1, 2022

An overview of the credit for other dependents

February 1st, 2022|

An overview of the credit for other dependents


Taxpayers with dependents who don’t qualify for the child tax credit may be able to claim the credit for other dependents. This is a non-refundable credit. It can reduce or, in some cases, eliminate a tax bill but, the IRS cannot refund the taxpayer any portion of the credit that may be left over.

Here’s more information to help taxpayers determine if they’re eligible to claim it on their 2021 tax return.

The maximum credit amount is $500 for each dependent who meets certain conditions. These include:

  • Dependents who are age 17 or older.
  • Dependents who have individual taxpayer identification numbers.
  • Dependent parents or other qualifying relatives supported by the taxpayer.
  • Dependents living with the taxpayer who aren’t related to the taxpayer.

The credit begins to phase out when the taxpayer’s income is more than $200,000. This phaseout begins for married couples filing a joint tax return at $400,000.

A taxpayer can claim this credit if:

  • They claim the person as a dependent on the taxpayer’s return.
  • They cannot use the dependent to claim the child tax credit or additional child tax credit.
  • The dependent is a U.S. citizen, national or resident alien.

Taxpayers can claim the credit for other dependents in addition to the child and dependent care credit and the earned income credit. They can use the IRS Interactive Tax Assistant, Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?, to help determine if they are eligible to claim the credit.

More information:
Publication 501, Dependents, Standard Deduction and Filing Information

 

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Feb 1, 2022

Taxpayers must report gig economy earnings when filing taxes

February 1st, 2022|

Taxpayers must report gig economy earnings when filing taxes

Whether it’s a full-time job or just a side hustle, taxpayers must report gig economy earnings on their tax return. Understanding how gig work can affect taxes may sound complicated but, it doesn’t have to be. The IRS offers several resources to help gig economy taxpayers properly fulfill their tax responsibilities.

Here are some things gig workers should keep in mind.

Gig work is taxable:

  • Earnings from gig economy work is taxable, regardless of whether an individual receives information returns. The reporting requirement for issuance of Form 1099-K changed for payments received in 2022 to totals exceeding $600, regardless of the total number of transactions. This means some gig workers will now receive an information return. This is true even if the work is full-time, part-time or if an individual is paid in cash.
  • Gig workers may also be required to make quarterly estimated income tax payments and pay their share of Social Security and Medicare taxes.

Check worker classification:

  • While providing gig economy services, it is important that the taxpayer is correctly classified.
  • This means the business, or the platform, must determine whether the individual providing the services is an employee or independent contractor.
  • Taxpayers can use the worker classification page on IRS.gov to see how they are classified.
  • Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is important for taxpayers to keep records of their business expenses.

Pay the right amount of taxes throughout the year:

  • An employer typically withholds income taxes from their employees’ pay to help cover income taxes their employees owe.
  • Gig economy workers who are not considered employees have two ways to cover their income taxes:
    • Submit a new From W-4 to their employer to have more income taxes withheld from their paycheck, if they have another job as an employee.
    • Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.

The Gig Economy Tax Center on IRS.gov answers questions and helps gig economy taxpayers understand their tax responsibilities.

More information:
Publication 5369, Gig Economy and your taxes: things to know
Publication 1779, Independent Contractor or Employee
Is My Residential Rental Income Taxable and/or Are My Expenses Deductible?

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Feb 1, 2022

IRS sending information letters to recipients of advance child tax credit payments and third Economic Impact Payments

February 1st, 2022|

IRS sending information letters to recipients of advance child tax credit payments and third Economic Impact Payments

The IRS started issuing information letters to advance child tax credit recipients in December. Recipients of the third round of the Economic Impact Payments will begin receiving information letters at the end of January. Using the information in these letters when preparing a tax return can reduce errors and delays in processing.

People receiving these letters should keep them. Do not throw them away. These letters can help taxpayers, or their tax professional prepare their 2021 federal tax return.

Advance child tax credit payments letter can help people get remainder of 2021 credit
To help taxpayers reconcile and receive all the 2021 child tax credits to which they are entitled, the IRS started sending Letter 6419, 2021 advance CTC, in late December 2021 and will continue into January. This letter includes the total amount of advance child tax credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance child tax credit payments with their tax records.

Families who received advance payments need to file a 2021 tax return and compare the advance payments they received in 2021 with the amount of the child tax credit they can properly claim on their 2021 tax return.

The letter contains important information that can make preparing their tax returns easier. People who received the advance payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.

Eligible families who did not receive any advance child tax credit payments can claim the full amount of the child tax credit on their 2021 federal tax return. This includes families who don’t normally need to file a tax return.

Economic Impact Payment letter can help people claim the 2021 recovery rebate credit
The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022.

Letter 6475 only applies to the third round of Economic Impact Payments, which were issued in March through December of 2021. The third round of Economic Impact Payments, including “plus-up” payments, were advance payments of the 2021 recovery rebate credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from the Social Security Administration, Railroad Retirement Board or Veterans Affairs. Plus-up payments were also sent to people who were eligible for a larger amount based on their 2020 tax return.

Most eligible people already received the payments. However, people who are missing stimulus payments should review information on IRS.gov to determine their eligibility and whether they need to claim a recovery rebate credit for 2020 or 2021. This includes people who don’t normally need to file a tax return.

The Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.

More information about the 2021 advance child tax credit, Economic Impact Payments and other COVID-19-related tax relief is available on IRS.gov.

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Feb 1, 2022

Tax Time Guide: Important considerations before filing a 2021 tax return

February 1st, 2022|

Tax Time Guide: Important considerations before filing a 2021 tax return

WASHINGTON — Now that the 2022 tax season is open, the Internal Revenue Service reminds taxpayers to make sure they’ve got what they need before they file and to consider free resources available to help them get organized.

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 at IRS.gov or in Publication 17, Your Federal Income Tax.

Don’t file before ready
While taxpayers should not file late, they also should not file prematurely. People who file before they receive all the proper tax reporting documents risk making a mistake that may lead to processing delays.

Typically, year-end forms start arriving by mail – or are available online – in January. Taxpayers should review them carefully. If any of the information shown is inaccurate or not available, taxpayers should contact the payer right away for a correction or to ensure they have their current mailing or email address.

New this year, the IRS sent Letter 6419, Advance Child Tax Credit Reconciliation, in January 2022 to help individuals reconcile and receive the full amount of their 2021 Child Tax Credit. This letter includes the total amount of the 2021 advance Child Tax Credit payments issued and the number of qualifying children used to calculate their advance payments. People need this important information to accurately claim the other half of the 2021 Child Tax Credit when filing their 2021 tax return and prevent delays in processing. The IRS reminds people to check this information carefully.

Most eligible people were already issued their third Economic Impact Payment and won’t include any information about it when they file. However, people who didn’t qualify for a third payment or did not receive the full amount may be eligible for the 2021 Recovery Rebate Credit based on their 2021 tax situation. They will need the total amount of their third Economic Impact Payment to file an accurate tax return to avoid a processing delay. Taxpayers can sign into their IRS Online Account to view the total amount of the third-round Economic Impact Payment or wait to receive IRS Letter 6475.

Individuals not required to file must file a tax return to claim important tax credits
The IRS strongly encourages individuals who are not required to file a tax return to file one this season to claim potentially thousands of dollars in tax credits. By filing a tax return, individuals could claim:

  • The Recovery Rebate Credit to receive any remaining 2021 stimulus payments that they might not have received (for example, if they added a new child or other dependent in 2021);
  • The remaining Child Tax Credit for which they are eligible, including any monthly payments that they might not have received (for example, if they added a new qualifying child in 2021); and
  • The Earned Income Tax Credit, the federal government’s largest refundable tax credit for low- to moderate-income families (the amount of which has been nearly tripled for filers without children).

View IRS account information online
Individuals can use their IRS Online Account to securely access information about their federal tax account, including payments, tax records and more.

To help with filing a return, individuals can view:

  • The total amounts of Economic Impact Payments issued for tax year 2021
  • The total amount of advance Child Tax Credit payments
  • Their adjusted gross income from their last tax return
  • The total of any estimated tax payments they made, and refunds applied as a credit

They can also now make and track payments and manage communication preferences, including the option to go paperless and request email notifications for certain notices available online. Taxpayers are encouraged to register for an online account, if they haven’t already, or sign in to access this information and explore these new features.

Important 2021 Tax Documents
Organized tax records make preparing a complete and accurate tax return easier and may help taxpayers find overlooked deductions or credits.

Taxpayers should wait to file until they have all their supporting income statements including but not limited to:

Free help
Once taxpayers have collected all their tax documents and information, they’re ready to consider how they will file.

IRS Free File is a great option for eligible taxpayers who are only filing a tax return to reconcile 2021 advance payments and claim the remaining portion of their Child Tax Credit or to claim the 2021 Recovery Rebate Credit, either because they didn’t receive a third-round Economic Impact Payment or did not receive the full amount. IRS Free File can also be used to claim the Earned Income Tax Credit, which provides a refundable tax credit based on a filer’s income and family size.

IRS Free File is available to any person or family who earned $73,000 or less in 2021. This year, there are eight IRS Free File products in English and one in Spanish.

Taxpayers can use a “look up” tool to choose from one of the Free File Providers. Each provider sets its own eligibility standards, generally based on income, age and state residency giving taxpayers who earned $73,000 or less at least one product to use for free.

Free File is just one way the IRS provides free tax preparation options to taxpayers through a partnership model. The IRS also partners with community organizations to train IRS-certified volunteers to prepare and electronically file basic income tax returns for qualified individuals for free.

Qualified taxpayers who generally make $58,000 or less, persons with disabilities and limited English-speaking taxpayers who need help preparing their own tax returns can get free tax help at one of thousands of community volunteer sites through the Volunteer Income Tax Assistance (VITA) program.

And the Tax Counseling for the Elderly (TCE) program offered by AARP, offers free tax help for all taxpayers, particularly those who are 60 and older, specializing in questions about pensions and retirement-related issues unique to seniors.

Members of the military and qualifying veterans can use MilTax, a Department of Defense program that generally offers free online tax preparation and e-filing software for federal returns and up to three state returns.

New alternative media preference to help taxpayers
Beginning Jan.31, 2022, taxpayers can complete Form 9000, Alternative Media Preference, to choose to receive their IRS tax notices in Braille, large print, audio or electronic formats. This includes notices about additional taxes or penalties owed. Taxpayers can include the completed form with their tax return, mail it as a standalone form to the IRS or call 800-829-1040 to elect their preferred format.

As a reminder, Forms 1040 and 1040-SR are available in Spanish, and Schedule LEP, Request for Change in Language Preference, allows taxpayers to request information in 20 different languages besides English.

E-file and choose direct deposit
The IRS encourages taxpayers to file electronically and use direct deposit to get their refunds. Combining e-file with direct deposit is the safest and fastest way to receive a refund. Taxpayers can file electronically through a tax professional, IRS Free File or commercial tax preparation software. When choosing e-file and direct deposit, most people receive their refunds in less than 21 days.

People who don’t have a bank account can visit the FDIC website or use the National Credit Union Administration’s Credit Union Locator Tool to find an institution that allows them to open an account online and for tips on how to choose the right account. Veterans can check out the Veterans Benefits Banking Program for access to financial services at participating banks. Taxpayers can also ask their preparer if they offer other electronic refund options.

Although most refunds are delivered in 21 days, it could take longer if the tax return includes errors, is incomplete or requires further security review. Paper-filed tax returns and paper refund checks will take even longer this year.

Jan 31, 2022

Get ready for taxes: Here’s what’s new and what to consider when filing in 2022

January 31st, 2022|

Get ready for taxes: Here’s what’s new and what to consider when filing in 2022

The IRS encourages taxpayers to get informed about topics related to filing their federal tax returns in 2022. These topics include special steps related to charitable contributions, economic impact payments and advance child tax credit payments. Taxpayers can visit IRS.gov/getready for online tools, publications and other helpful resources for the filing season.

Here are some key items for taxpayers to know before they file next year.

Changes to the charitable contribution deduction

Taxpayers who don’t itemize deductions may qualify to take a deduction of up to $600 for married taxpayers filing joint returns and up to $300 for all other filers for cash contributions made in 2021 to qualifying organizations.

Check on advance child tax credit payments

Families who received advance payments will need to compare the advance child tax credit payments that they received in 2021 with the amount of the child tax credit that they can properly claim on their 2021 tax return.

  • Taxpayers who received less than the amount for which they’re eligible will claim a credit for the remaining amount of child tax credit on their 2021 tax return.
  • Eligible families who did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the child tax credit when they file a 2021 federal income tax return next year. This includes families who don’t normally need to file a return.

In January 2022, the IRS will send Letter 6419 with the total amount of advance child tax credit payments taxpayers received in 2021. People should keep this and any other IRS letters about advance child tax credit payments with their tax records. Individuals can also create or log in to IRS.gov online account to securely access their child tax credit payment amounts.

Economic impact payments and claiming the recovery rebate credit

Individuals who didn’t qualify for the third economic impact payment or did not receive the full amount may be eligible for the recovery rebate credit based on their 2021 tax information. They’ll need to file a 2021 tax return, even if they don’t usually file, to claim the credit.

Individuals will need the amount of their third economic impact payment and any plus-up payments received to calculate their correct 2021 recovery rebate credit amount when they file their tax return.

In early 2022, the IRS will send Letter 6475 that contains the total amount of the third economic impact payment and any plus-up payments received. People should keep this and any other IRS letters about their stimulus payments with other tax records. Individuals can also create or log in to IRS.gov online account to securely access their economic impact payment amounts.

More information:
Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return

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Jan 31, 2022

What taxpayers can do now to get ready to file taxes in 2022

January 31st, 2022|

What taxpayers can do now to get ready to file taxes in 2022

There are steps people, including those who received stimulus payments or advance child tax credit payments, can take now to make sure their tax filing experience goes smoothly in 2022. They can start by visiting the Get Ready page on IRS.gov. Here are some other things they should do to prepare to file their tax return.

Gather and organize tax records
Organized tax records make preparing a complete and accurate tax return easier. They help avoid errors that lead to processing delays that slow refunds. Having all needed documents on hand before taxpayers prepare their return helps them file it completely and accurately. This includes:

Taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years.

Income documents can help taxpayers determine if they’re eligible for deductions or credits. People who need to reconcile their advance payments of the child tax credit and premium tax credit will need their related 2021 information. Those who did not receive their full third Economic Impact Payments will need their third payment amounts to figure and claim the 2021 recovery rebate credit.

Taxpayers should also keep end of year documents including:

  • Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments
  • Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the recovery rebate credit
  • Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage

Confirm mailing and email addresses and report name changes
To make sure forms make it to the them on time, taxpayers should confirm now that each employer, bank and other payer has their current mailing address or email address. People can report address changes by completing Form 8822, Change of Address and sending it to the IRS. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or their local post office. They should also notify the Social Security Administration of a legal name change.

View account information online
Individuals who have not set up an Online Account yet should do so soon. People who have already set up an Online Account should make sure they can still log in successfully. Taxpayers can use Online Account to securely access the latest available information about their federal tax account.

Review proper tax withholding and make adjustments if needed
Taxpayers may want to consider adjusting their withholding if they owed taxes or received a large refund in 2021. Changing withholding can help avoid a tax bill or let individuals keep more money each payday. Life changes – getting married or divorced, welcoming a child or taking on a second job – may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee’s Withholding Certificate, each year and when personal or financial situations change.

People also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on Jan. 18, 2022.

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Jan 28, 2022

Important charitable giving reminders for taxpayers

January 28th, 2022|

Issue Number: Tax Tip 2021-176


Important charitable giving reminders for taxpayers

Giving Tuesday is the kickoff of the season of charitable giving. The IRS encourages taxpayers to research charities before donating and to familiarize themselves with the expanded tax benefits that may come with giving to causes that mean something to them.

Taxpayers may be able to deduct donations to tax-exempt organizations on their tax return. As people are deciding where to make their donations, the IRS has a tool that may help. Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for charities. TEOS provides information about an organization’s federal tax status and filings.

Here are some facts about the Tax Exempt Organization Search tool:

  • Donors can use it to confirm an organization is tax-exempt and eligible to receive tax-deductible charitable contributions.
  • Users can find out if an organization had its tax-exempt status revoked. A common reason for revocation is when an organization does not file its Form 990-series return for three consecutive years.
  • TEOS does not list certain organizations that may be eligible to receive tax-deductible donations, including churches, organizations in a group ruling, and governmental entities.
  • Organizations are listed under the legal name or a “doing business as” name on file with the IRS. No separate listing of common or popular names is searchable.

Taxpayers can also use the interactive tax assistant, Can I Deduct my Charitable Contributions? to help determine if a charitable contribution is deductible. They should get a written acknowledgement for any charitable contributions of $250 or more.

Expanded tax benefits
The law now permits taxpayers to claim a limited deduction on their 2021 federal income tax returns for cash contributions they made to certain qualifying charitable organizations even if they don’t itemize their deductions. Taxpayers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions to qualifying charities during 2021. The maximum deduction is $600 for married individuals filing joint returns.

Qualified charitable distributions
Taxpayers age 70 ½ or older can make a qualified charitable distribution, up to $100,000, directly from their IRA, other than a SEP or SIMPLE IRA, to a qualified charitable organization. It’s generally a nontaxable distribution made by the IRA trustee directly to a charitable organization. A qualifying deduction may also count toward the taxpayers required minimum distribution requirement for the year. Taxpayers should review Publication 590B, Distributions from Individual Retirement Arrangements for more information.

Cash donations
Most cash donations made to charity qualify for the deduction. However, there are some exceptions. Cash contributions that are not tax deductible include those:

These exceptions also apply to taxpayers who itemize their deductions.

Cash contributions include those made by check, credit card or debit card as well as unreimbursed out-of-pocket expenses in connection with volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.

Share this tip on social media — #IRSTaxTip: Important charitable giving reminders for taxpayers. https://go.usa.gov/xeE3R

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