IRS Tax Tips October 31, 2022
Useful Links: IRS.gov Help For Hurricane Victims News Essentials What’s Hot News Releases IRS – The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News IRS Resources Contact Your Local IRS Office Filing Your Taxes Forms & Instructions Frequently Asked Questions Taxpayer Advocate Service Where to File IRS Social Media	Issue Number:  COVID Tax Tip 2022-166 ___________________________________________________________ Nine million people who missed expanded tax benefits still have time to file More than nine million people may qualify for tax benefits but didn’t claim them by filing a 2021 federal income tax return. Many in this group may be eligible to claim some or all of the 2021 recovery rebate credit, the child tax credit, the earned income tax credit and other tax credits. These and other tax benefits were expanded under last year’s American Rescue Plan Act and other recent legislation. The only way to get the valuable benefits is to file a 2021 tax return. Often, people 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 tax return should do so for 2021, even if they haven’t been required to file in recent years. Eligible people can file a tax return even if they don’t receive a letter. There’s no penalty for a refund claimed on a tax return filed after the regular April 2022 tax deadline. The expanded tax 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. The total credit can be as much as $3,600 per child. A more generous earned income tax credit. The law boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children. The credit can be as much as $1,502 for workers with no qualifying children, $3,618 for those with one child, $5,980 for those with two children and $6,728 for those with at least three children. The recovery rebate credit. Those who missed out on last year’s third round of Economic Impact Payments may be eligible to claim the RRC. Often referred to as stimulus payments, this credit can help eligible people whose third payment was less than the full amount, including those who welcomed a child in 2021. The maximum credit is $1,400 for each qualifying adult, plus $1,400 for each eligible child or adult dependent. An increased child and dependent care credit. Families who have care expenses for a child or dependent 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 deduction for gifts to charity. Most tax-filers 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 individuals can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021. Free File to stay open until November 17 To help people claim these benefits, Free File will remain open for an extra month this year, until November 17, 2022. People with income of $73,000 or less can electronically file a return for free using brand-name software. People can also visit ChildTaxCredit.gov to file a 2021 income tax return. Individuals with income below $12,500 and couples with income below $25,000 may be able to file a simple tax return to claim the 2021 Recovery Rebate Credit and the Child Tax Credit. More information EITC Assistant Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents? Am I Eligible to Claim the Child and Dependent Care Credit? Share this tip on social media — #IRSTaxTip: Nine million people who missed expanded tax benefits still have time to file http://ow.ly/ZIGN50LpQFf Back to top     Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.

 

Update your subscriptions, modify your password or email address, or stop subscriptions at any time on your Subscriber Preferences Page. You will need to use your email address to log in. If you have questions or problems with the subscription service, please contact subscriberhelp.govdelivery.com. This service is provided to you at no charge by the Internal Revenue Service (IRS).

This email was sent to jim@jimsimpsoncpa.com by: Internal Revenue Service (IRS) · Internal Revenue Service · 1111 Constitution Ave. N.W. · Washington DC 20535

See the IRS advice if you are missing a W-2:

Here is a video tax tip from the IRS:

Missing W-2 English | Spanish | ASL

Subscribe today: The IRS YouTube channels provide short, informative videos on various tax related topics in English, Spanish and ASL.

• www.youtube.com/irsvideos
• www.youtube.com/irsvideosmultilingua
• www.youtube.com/irsvideosASL

Back to Top

 

The Arizona Department of Revenue (ADOR) advises taxpayers who receive a Form 1099-G from the Arizona Department of Economic Security (DES) for unemployment benefits they did not receive to contact the Arizona Department of Economic Security for a corrected form.

Form 1099-G for Arizona Unemployment Insurance (UI) or Pandemic Unemployment Assistance (PUA) benefits are sent to the taxpayer and the Internal Revenue Service (IRS) as the compensation is taxable income. Since the amount is reported on the federal income tax return, which is the starting point for Arizona income taxes, taxpayers also report the amount on the state individual income tax return.

Unfortunately, some taxpayers have fallen victim to fraudsters stealing personal information and filing fraudulent claims for unemployment benefits. States across the nation have seen a significant surge in unemployment benefit fraud, largely in association with identity theft. There has not been a breach of information stored by DES. Rather, criminals are using phishing scams, previous corporate data breaches and other tactics to collect information from individuals across the country and file for UI and PUA benefits in their name.

Taxpayers who receive an incorrect Form 1099-G for UI or PUA benefits should contact DES to request a revised Form 1099-G showing they did not receive these benefits. DES will send a corrected 1099-G to the IRS and the taxpayer to adjust the unemployment compensation income. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid receiving an unexpected tax bill. The IRS advises that taxpayers who cannot obtain a timely, corrected form should still file an accurate tax return, reporting only the income they received. For more counsel from the IRS, click here.

Get ready for tax season using IRS Online Account

WASHINGTON — The Internal Revenue Service today reminded taxpayers they can securely access their IRS account information through their individual online account.

The IRS regularly adds features to online account. For example, people can now check the amounts of their Economic Impact Payments (EIPs) to help them accurately calculate any Recovery Rebate Credit they may be eligible for on their 2020 tax return. The EIP amounts can be found on the Tax Records tab. Amounts will show as “Economic Impact Payment” for the first payment and “Additional Economic Impact Payment” for the second payment. For married filing joint individuals, each spouse will need to sign into their own account to retrieve their portion of the payments. For more information regarding the credit, see Recovery Rebate Credit. Additionally, taxpayers can view:

• The amount they owe, updated for the current calendar day
• Their balance details by year
• Their payment history and any scheduled or pending payments
• Key information from their most recent tax return
• Details about their payment plan, if they have one
• Digital copies of select notices or letters from the IRS (under the Message Center tab)

They can also:

• Make a payment online
• See payment plan options and request a plan via Online Payment Agreement
• Access their tax records via Get Transcript

Later in 2021, taxpayers will be able to digitally sign certain authorization forms, such as a power of attorney, initiated by their tax professional.

Here’s how to get started for new users:

1. Select View Your Account at IRS.gov homepage
2. Select the “Create or View Your Account” button
3. Click “Create Account”
4. Pass “Secure Access” authentication. This is a rigorous process to verify that the taxpayers are who they say they are. They must be able to authenticate their identity to continue. See www.irs.gov/secureaccess for details.
5. Create a profile.

Once the initial authentication process is complete, returning users can use the same username and password to access other IRS online services such as Get Transcript and Get An Identity Protection PIN (IP PIN) (if applicable).

All password-protected online IRS tools for taxpayers are protected by multi-factor authentication, offering extra security precautions.

 

Back to Top

EITC Awareness Day: Critical tax credit provides a significant refund boost to millions

IRS YouTube Videos:
Earned Income Tax Credit – Get it Right – English | Spanish | ASL

WASHINGTON – The Internal Revenue Service and partners across the nation remind taxpayers about the Earned Income Tax Credit today on “EITC Awareness Day” 2021. The IRS and partners nationwide urge people to check to see if they qualify for this important credit.

“This year marks the 15th annual EITC Awareness Day,” said IRS Commissioner Chuck Rettig. “For more than 45 years, this tax credit has been helping hard-working Americans and their families. We want to thank our partners around the country who help us reach out to those low- and moderate-income people who may qualify and not even know about it.”

The IRS earlier announced that it will begin accepting 2020 tax returns on Feb. 12. In the meanwhile, people can file their taxes electronically using IRS Free File or other name-brand software. Once filing season officially opens, the returns will be electronically submitted for processing. The IRS reminds taxpayers that the quickest way to get a tax refund is by filing electronically and choosing direct deposit for their refund.

New look-back rule
Under the COVID-related Tax Relief Act of 2020, taxpayers can use their 2019 earned income to figure their 2020 EITC if their 2019 earned income was more than their 2020 earned income. To qualify for EITC, people must have earned income, so this option may help workers who earned less in 2020, or received unemployment income instead of their regular wages, get bigger tax credits and larger refunds in the coming year.

Also, any Economic Impact Payments received are not taxable or counted as income for purposes of claiming the EITC. Eligible individuals who did not receive the full amounts of both Economic Impact Payments may claim the Recovery Rebate Credit on their 2020 tax return. See IRS.gov/rrc for more information.

Vital refund boost
The EITC is the federal government’s largest refundable federal income tax credit for low- to moderate-income workers. For those who qualify, and if the credit is larger than the amount of tax they owe, they will receive a refund for the difference. While the majority of those eligible claim EITC every year, IRS estimates that one of five eligible taxpayers do not claim the credit.

Taxpayers earning $56,844 or less can see if they qualify using the EITC Assistant tool at www.irs.gov/eitc. The EITC Assistant, available in English and Spanish, helps users determine if they are eligible, have a qualifying child or children and  estimates the amount of the EITC they may get. If an individual doesn’t qualify for the EITC, the Assistant explains why.

Nationwide in 2020, more than 25 million taxpayers received over $62 billion in EITC. The average EITC amount received was $2,461 per return. The EITC is worth as much as $6,660 for a family with three or more children or up to $538 for taxpayers who do not have a qualifying child.

Refunds
By law, the IRS cannot issue refunds before mid-February for tax returns that claim the EITC or the Additional Child Tax Credit (ACTC). The IRS must hold the entire refund − even the portion not associated with EITC or ACTC and the Recovery Rebate Credit if applicable. This helps ensure taxpayers receive the refund they deserve and gives the agency more time to detect and prevent errors and fraud.

‘Where’s My Refund?‘ on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early EITC/ACTC refund filers by Feb. 22. Therefore, EITC/ACTC filers will not see an update to their refund status for several days after Feb. 15. The IRS expects most EITC or ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they choose direct deposit and there are no other issues with their tax return.

Workers who can claim the EITC
Workers at risk for overlooking this important credit can include taxpayers:

• Without children
• Living in non-traditional families, such as a grandparent raising a grandchild
• Whose earnings declined or whose marital or parental status changed
• With limited English language skills
• Who are members of the armed forces
• Living in rural areas
• Who are Native Americans
• With disabilities or who provide care for a disabled dependent

Life events or changes may make people eligible for certain tax benefits like the EITC. The IRS urges people to use the EITC Assistant to check their eligibility for this valuable credit.

How to claim the EITC
To get the EITC, workers must file a tax return and claim the credit. Eligible taxpayers are urged to claim the credit even if their earnings were below the income requirement to file a tax return. Free tax preparation help is available online and through volunteer organizations.

Those eligible for the EITC have these options:

• Free File on IRS.gov. Free brand-name tax software is available that leads taxpayers through a question-and-answer format to help prepare the tax return and claim credits and deductions, if they are eligible. Free File also provides online versions of IRS paper forms, an option called Free File Fillable Forms, best suited for taxpayers comfortable preparing their own returns.
• Free tax preparation sites. EITC-eligible workers can seek free tax preparation at thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites. To locate the nearest site, use the search tool on IRS.gov, the IRS2go smartphone application, or call toll-free 800-906-9887. They should be sure to bring along all required documents and information.
• Find a trusted tax professional. The IRS also reminds taxpayers that a trusted tax professional can prepare their tax return and provide helpful information and advice. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov. EITC recipients should be careful not to be duped by an unscrupulous return preparer.

The IRS reminds taxpayers to be sure they have valid Social Security numbers (SSN) for themselves, their spouse, if filing a joint return, and for each qualifying child claimed for the EITC. The SSNs must be issued before the due date of the return, including extensions. There are special rules for those in the military or those out of the country.

Avoid errors
Taxpayers are responsible for the accuracy of their tax return even if someone else prepares it for them. Since the rules claiming the EITC can be complex, the IRS urges taxpayers to understand all of them. People can find help to make sure they are eligible by visiting a free tax return preparation site, or using Free File software or by using a paid tax professional.

Beware of scams
Be sure to choose a tax preparer wisely. Beware of scams that claim to increase the EITC refund. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC could leave taxpayers with a penalty.

Visit IRS online
IRS.gov is a valuable first stop to help taxpayers get it right this filing season. Information on other tax credits, such as the Child Tax Credit, is also available.

Related items

• EITC Central at www.eitc.irs.gov, helpful resources for IRS partners and others.
• Publication 596, Earned Income Credit (EIC)
• Tax Professionals, another place for valuable EITC resources and assistance.

Back to Top