WASHINGTON — The Internal Revenue Service today continued an ongoing effort to help those experiencing homelessness by reminding people who don’t have a permanent address or a bank account that they may still qualify for stimulus payments and other credits, including the advance Child Tax Credit.

The agency is also asking for help from groups that assist vulnerable or underserved people who may have difficulty getting a stimulus payment automatically. Filing a 2020 tax return, even if people don’t have to, could put money in their pocket.

While the third round of Economic Impact Payments continue to be made automatically to most eligible people, the IRS can’t issue a payment to eligible Americans when information about them isn’t available in the tax agency’s systems.

To help people experiencing homelessness, the rural poor and other historically underserved groups, the IRS urges community groups, employers and others to share information about Economic Impact Payments, the upcoming advance Child Tax Credit and other tax details to help more eligible people file a tax return so they can receive everything to which they’re eligible.

Advance Child Tax Credit: Payments begin soon

The IRS and the U.S. Department of the Treasury announced earlier this week that the first monthly payment of the expanded and newly-advanceable Child Tax Credit (CTC) from the American Rescue Plan will be made on July 15. Roughly 39 million households—covering 88% of children in the United States—are slated to begin receiving monthly payments without any further action required.

IRS and Treasury also announced the increased CTC payments will be made on the 15th of each month unless the 15th falls on a weekend or holiday. Families who receive the credit by direct deposit can plan their budgets around receipt of the benefit. Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above.

The American Rescue Plan increased the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children between ages 6 and 17. The American Rescue Plan is projected to lift more than five million children out of poverty this year, cutting child poverty by more than half.

Households covering more than 65 million children will receive the monthly CTC payments through direct deposit, paper check, or debit cards, and IRS and Treasury are committed to maximizing the use of direct deposit to ensure fast and secure delivery. While most taxpayers will not be required to take any action to receive their payments, Treasury and the IRS will continue outreach efforts with partner organizations over the coming months to make more families aware of their eligibility.

How to help

The IRS urges community groups, employers and others to share information about the Child Tax Credit, Economic Impact Payments and other key programs to help more eligible people file a tax return so they can receive everything to which they’re eligible. IRS.gov has a variety of information and tools to help people.

Economic Impact Payments, also known as stimulus payments, are different from most other tax benefits; people are eligible for the payments even if they have little or no income and even if they don’t usually file a tax return. This is true as long as they have a Social Security number and are not being supported by someone else who can claim them as a dependent. For anyone who missed out on the first two rounds of payments, it’s not too late.

However, filing a 2020 tax return is the only way, if they’re eligible, to get the money from the first or second payment now. People will need to claim the 2020 Recovery Rebate Credit. Most people who don’t usually file can use IRS Free File to provide very basic information. There’s even a special section on IRS.gov that can help: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return.

When the individual answers the questions in Free File, they may also find that they’re eligible for other tax credits which may mean a bigger refund. The IRS will process the tax return and issue a refund. The individual can expect two payments because the 2020 Recovery Rebate Credit is paid as part of the tax refund. After the refund is issued, if they’re eligible, they’ll get another payment shortly afterward for the third Economic Impact Payment.

For the third round of payments, people who are experiencing homelessness may qualify to receive $1,400 for themselves. If they are married or have eligible dependents, they can get an additional $1,400 for each of their family members.

Filing a 2020 federal income tax return that provides very basic information about the person is something that can be done electronically using a smartphone or a computer. When the IRS receives the return, it will automatically calculate and issue the Economic Impact Payments to eligible individuals. People do not need a permanent address or a bank account. They don’t need to have a job. For eligible individuals, the IRS will still issue the payment even if they haven’t filed a tax return in years.

Permanent address not required

People can claim the Recovery Rebate Credit or other credits or get a third Economic Impact Payment even if they don’t have a permanent address. For example, someone experiencing homelessness may list the address of a friend, relative or trusted service provider, such as a shelter, drop-in day center or transitional housing program, on the return filed with the IRS. If they are unable to choose direct deposit, a check or debit card for the tax refund and the third Economic Impact Payment can then be mailed to this address.

For those with no bank account

Many financial institutions will help a person lacking an account to open a low-cost or no-cost bank account. Individuals who open accounts will then have an account and routing number available if they file and request a direct deposit of the Economic Impact Payment.

Visit the Federal Deposit Insurance Corporation (FDIC) website for details, in both English and Spanish, on opening an account online. Among other things, people can use the FDIC’s BankFind tool to locate a nearby FDIC-insured bank. In addition, BankOn, the American Bankers Association, Independent Community Bankers of America and the National Credit Union Administration have all compiled lists of banks and credit unions that can open an account online.

For veterans, see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

People with a prepaid debit card may be able to have their refund applied to the card. Many reloadable prepaid cards or mobile payment apps have account and routing numbers that can be provided to the IRS. Individuals would need to check with the financial institution to ensure the card can be used and to obtain the routing number and account number, which may be different from the card number.

Workers experiencing homelessness can also receive the EITC

A worker experiencing homelessness might also qualify for an Earned Income Tax Credit (EITC). To get the credit, federal law requires that a worker live in the U.S. for more than half of the year and meet other requirements. This means living in a home in any of the 50 states or the District of Columbia. Therefore, individuals experiencing homelessness, including those who reside at one or more homeless shelters, can meet that requirement.

More details on the Earned Income Tax Credit

For people experiencing homelessness who have a job, filing a return often carries an added bonus—getting a refund based on various tax benefits, especially the EITC for low-and moderate-income workers and working families.

Like many other workers, some workers experiencing homelessness still qualify for the credit even if they earned too little income during 2020 to owe tax. For 2020, the income limit is $15,820 for singles with no children ($21,710 for couples with no children). The income limit is higher for people with children. For example, the limit is $50,594 for singles with three or more children ($56,844 for couples with three or more children). Those who make less must also meet other eligibility requirements.

Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund. The EITC can put up to $6,660 into a worker’s pocket. The amount varies depending upon the worker’s income, filing status and other factors.

The IRS recognizes that eligible workers experiencing homelessness often encounter unique challenges not faced by other people.

To find out if they’re eligible, people can use the EITC Assistant on IRS.gov. It’s available in both English and Spanish.

File for free

The fastest and easiest way to claim the 2020 Recovery Rebate Credit and Earned Income Tax Credit (EITC) or to get the third Economic Impact Payment is to file a return electronically using IRS Free File. People can use a smartphone or computer to visit IRS.gov.

Through the Free File system, anyone who qualifies for the EITC also qualifies to use brand-name software to prepare and electronically file their return for free. The IRS urges anyone experiencing homelessness who has a smartphone or access to a computer to take advantage of this service.

Direct deposit speeds payments

Direct deposit is the safest and fastest way to receive a refund and the third Economic Impact Payment. People will need to include direct deposit information on their 2020 tax return to get their payment directly deposited.

Anyone with a savings, checking or brokerage account can choose to have their refund electronically deposited in that account. Taxpayers can also purchase U.S. Savings Bonds with their refund. Direct deposit is available even for people who file a paper tax return, but processing of paper returns takes longer.

Help spread the word

Employers can help by making their employees aware of the third Economic Impact Payment, 2020 Recovery Rebate Credit and Earned Income Tax and Child Tax Credit, and by encouraging them to file for these benefits based on tax year 2020 rules. In addition, the American Rescue Plan, enacted in March 2021, expands EITC and the Child Tax Credit benefits for the 2021 tax year.

Some people will be able to get advance payments of the Child Tax Credit later this year. There is nothing those who qualify need to do at this point other than file a 2020 tax return.

The IRS also continues to work extensively with community groups across the country to get people to file tax returns and receive all the Economic Impact Payments and credits they’re entitled to. These efforts helped lead to more than 8 million people last year to submit tax returns who normally don’t file.

For more information, check out the outreach material, available on IRS.gov.

Source: IRS – R-2021-116, May 19, 2021

The IRS is falling behind in processing millions of income tax returns, potentially delaying refunds for many Americans.

According to the Taxpayer Advocate Service, an independent arm of the IRS focused on tax filers’ rights, the agency is holding almost 31 million returns for manual processing just ahead of the May 17 tax-filing deadline. That backlog has grown by 2 million returns since mid-April, National Taxpayer Advocate Erin M. Collins told CBS MoneyWatch.

“I was hoping it would go down, but I’m not that optimistic,” she said of the logjam. “Taxpayers will continue to experience unusually long delays. I don’t think anyone wants to hear that, but that is the case.”

Collins had flagged the issue in an April 22 blog post, when the number of tax returns held up for manual processing had reached about 29 million. Some of those returns are paper tax filings from 2019, which the IRS got behind in processing due to the coronavirus pandemic last year. But much of the backlog also consists of 2020 tax returns, which are still flowing into the IRS.

Some of those newly filed tax returns are getting flagged by the IRS because of issues related to recent tax changes and federal stimulus checks, Collins said. One of those relates to the “Recovery Rebate Credit,” the line on Form 1040 that allows people to adjust their stimulus payments if they didn’t receive all the funds to which they were entitled. Some people are incorrectly filling out that line, typically by claiming the incorrect amount on the form.

In such instances, the IRS flags the return for review — that requires an employee to check the return against the agency’s record of stimulus payments. All that can add time to processing a tax return, which, in turn, means delays for taxpayers in getting their refunds.

About 1 in 3 people who have claimed the Recovery Rebate Credit have had their returns flagged for review by an employee, according to a May 6 report from the Treasury Inspector General for Tax Administration.

Collins expressed concern that the returns-processing backlog will continue to grow ahead of the May 17 filing deadline. So far, about 121 million tax returns have been filed out of the more than 160 million that are expected. The IRS has issued about 5 million fewer refunds so far this tax season compared with the same time last year, according to the agency’s statistics.

With more than 40 million taxpayers yet to file, it’s likely a portion of those returns will end up flagged for review — leaving those taxpayers with an unknown wait for their refunds, rather than the usual three-week turnaround.

“My tax person said he was shocked if I wouldn’t see my refund in 10 days, and it’s been over two months,” said Hillary Osborne, 41. She filed her 2020 tax return on February 27. So far, nothing. “I check ‘Where’s My Refund?,’ and it says it’s still being processed — I called the IRS after 21 days, and you can’t get through to anyone.”

Osborne, a single mother who works as a project administrator in Tennessee, said her refund should amount to more than $4,400, which will cover about four months of rent. She said her taxes are fairly simple, but she wondered if something about the stimulus checks have tied up her return.

For now she remains in limbo, with Osborne telling CBS MoneyWatch she’s been unable to reach anyone at the IRS. “I’m not happy,” she said. “I depend on that money.”

In limbo for a year

Some taxpayers are still in the dark due to tax returns filed last year, when the IRS shut down its offices as the pandemic took hold. Paper tax returns filed for the 2019 tax year were stored in trailers until IRS employees could get to them. As of March, the agency still had a backlog of 2.4 million paper returns from the 2019 tax year to process.

The IRS also must cope with the unprecedented health crisis with significantly fewer employees and less funding compared with a decade ago. The number of operations staff has fallen by almost a third since 2010, while overall funding has declined by more than 20%, according to the Center on Budget and Policy Priorities.

The IRS said the agency is now opening mail within “normal timeframes,” and noted that it’s making progress on processing tax returns that were filed last year. As of April 23, it had a backlog of 1.3 million individual returns filed before 2021 to finish processing, an IRS spokesman told CBS MoneyWatch in an emailed statement.

One of those taxpayers is Eileen Mahoney, 63, an American who lives in London and who mailed her paper tax forms last year. She’s still waiting for her tax return to be processed. Although Mahoney said she wasn’t due a refund, she worries the issue is holding up her second and third stimulus checks — $600 and $1,400, respectively — which she has yet to receive.

“It is money I could well do with,” Mahoney said, noting that she was laid off from her job as a paralegal before COVID-19 hit. The stimulus checks would allow her and her husband to fix up their home in London and list it for sale, achieving a dream of moving to Galway, Ireland. She’s reached out to lawmakers and spent four hours and about $60 in overseas telephone charges to try to get through to the IRS, but hasn’t been able to find out where her 2019 tax return is, or when it might be processed.

“The fact I might have to wait 12 to 18 months for it is driving me insane,” Mahoney said. “This is not my fault — it’s the IRS’.”

Other taxpayers who spoke with CBS MoneyWatch about their return-processing delays also expressed frustration. Many have been unable to reach an IRS employees, an issue that’s carried over from last year, when only one in four callers got through to an actual person.

All expressed a desire to get two questions answered: Where is my tax return, and when will it be processed? Knowing some information — even if it’s learning that their tax return wouldn’t be processed for several months — is better than nothing, they said.

Collins of the Taxpayer Advocate Service agreed. “The IRS should do a better job of being more transparent even if it’s bad news,” she said. “Being in limbo is worse.”

Avoiding manual review?

Taxpayers who have yet to file should heed the issues that millions of taxpayers are currently facing, tax experts say. For one, file electronically if possible, which is something the IRS is also urging taxpayers to do given their backlog of paper tax returns.

If you have to file via paper — a requirement for people who live outside the U.S., as well as in some other cases — make sure to send it via certified mail with a required signature, said Lisa Greene-Lewis, a certified public accountant and TurboTax tax expert. Without that, you may not know whether the IRS received your return, she added.

People who are filing for the Recovery Rebate Credit should also check their records to make sure they are accurately noting the amount they received, Greene-Lewis said. If you can’t find the letters the IRS sent to confirm payment (forms 1444 and 1444-b), then check your bank and deposit records, she recommended.

WASHINGTON — The Internal Revenue Service and the Treasury Department announced today further details of tax credits available under the American Rescue Plan to help small businesses, including providing paid leave for employees receiving COVID-19 vaccinations.

The additional details, provided in a fact sheet released today, spell out some basic facts about the employers eligible for the tax credits. It also provides information on how these employers may claim the credit for leave paid to employees related to COVID-19 vaccinations

Eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine. For example, if an eligible employer offers employees a paid day off in order to get vaccinated, the employer can receive a tax credit equal to the wages paid to employees for that day (up to certain limits).

“This new information is a shot in the arm for struggling small employers who are working hard to keep their businesses going while also watching out for the health of their employees,” said IRS Commissioner Chuck Rettig. “Our work on this issue is part of a larger effort by the IRS to assist the nation recover from the pandemic.”

The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. Self-employed individuals are eligible for similar tax credits.

The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through Sept. 30, 2021.

The paid leave credits under the ARP are tax credits against the employer’s share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.

In anticipation of claiming the credits on the Form 941, Employer’s Quarterly Federal Tax Return PDF, eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. If the eligible employer does not have enough federal employment taxes on deposit to cover the amount of the anticipated credits, the eligible employer may request an advance by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Self-employed individuals may claim comparable credits on the Form 1040, U.S. Individual Income Tax Return PDF.

More details are available on this fact sheet.

Source: IRS

WASHINGTON — Today, the Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced they are disbursing nearly two million payments in the sixth batch of Economic Impact Payments from the American Rescue Plan.

Today’s announcement brings the total disbursed so far to approximately 161 million payments, with a total value of more than $379 billion, since these payments began rolling out to Americans in batches as announced on March 12.

The sixth batch of payments began processing on Friday, April 16, with an official payment date of April 21, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

• In total, this batch includes nearly 2 million payments with a value of nearly $3.4 billion.
• Nearly 700,000 payments, with a value of more than $1.3 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return.
• This batch also includes additional ongoing supplemental payments for people who earlier this year received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns. This batch included nearly 700,000 of these “plus-up” payments, with a value of nearly $1.2 billion.
• Another 600,000 payments went to Social Security beneficiaries and Supplemental Security Income recipients, including those with foreign addresses.
• Overall, this sixth batch of payments contains about 900,000 direct deposit payments (with a total value of $1.5 billion) and nearly 1.1 million paper check payments (with a total value of nearly $1.8 billion).

Additional information is available on the first five batches of Economic Impact Payments from the American Rescue Plan, which began processing on April 9, April 2, March 26, March 19 and March 12.

The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for “plus-up” payments.

Special reminder for those who don’t normally file a tax return

Although payments are automatic for most people, the IRS continues to urge people who don’t normally file a tax return and haven’t received Economic Impact Payments to file a 2020 tax return to get all the benefits they’re entitled to under the law, including tax credits such as the 2020 Recovery Rebate Credit, the Child Tax Credit, and the Earned Income Tax Credit. Filing a 2020 tax return will also assist the IRS in determining whether someone is eligible for an advance payment of the 2021 Child Tax Credit, which will begin to be disbursed this summer.

For example, some federal benefits recipients may need to file a 2020 tax return – even if they don’t usually file – to provide information the IRS needs to send payments for a qualifying dependent. Eligible individuals in this group should file a 2020 tax return as quickly as possible to be considered for an additional payment for their qualifying dependents.

People who don’t normally file a tax return and don’t receive federal benefits may qualify for these Economic Impact Payments. This includes those experiencing homelessness, the rural poor and others. Individuals who didn’t get a first or second round Economic Impact Payment or got less than the full amounts may be eligible for the 2020 Recovery Rebate Credit, but they’ll need to file a 2020 tax return. See the special section on IRS.gov: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return.

Free tax return preparation is available for qualifying people.

The IRS reminds taxpayers that the income levels in this new round of Economic Impact Payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly). The payments end at $80,000 for individuals ($160,000 for married filing jointly); people with Adjusted Gross Incomes above these levels are ineligible for a payment.

Individuals can check the Get My Payment tool on IRS.gov to see the payment status of these payments. Additional information on Economic Impact Payments is available on IRS.gov.

Source: IRS

IR-2021-87, April 15, 2021

WASHINGTON — The Internal Revenue Service today continued an ongoing effort to help those experiencing homelessness during the pandemic by reminding people who don’t have a permanent address or a bank account that they may still qualify for Economic Impact Payments and other tax benefits.

While Economic Impact Payments continue to be made automatically to most people, the IRS can’t issue a payment to eligible Americans when information about them isn’t available in the tax agency’s systems.

To help people experiencing homelessness, the rural poor and other historically under-served groups, the IRS urges community groups, employers and others to share information about Economic Impact Payments and help more eligible people file a tax return so they can receive everything they’re entitled to. IRS.gov has a variety of information and tools to help people receive the Economic Impact Payments.

“The IRS has been continuing to work directly with groups inside and outside the tax community to get information directly to people experiencing homelessness and other groups to help them receive Economic Impact Payments,” said IRS Commissioner Chuck Rettig. “The IRS is working hard on this effort, enabling millions of people who don’t normally file a tax return to receive these payments. But we need to do more, and we appreciate all the help we’ve been receiving from national and local groups to assist in this effort to reach the people who desperately need this help.”

Economic Impact Payments, also known as stimulus payments, are different from most other tax benefits; people can get the payments even if they have little or no income and even if they don’t usually file a tax return. This is true as long as they have a Social Security number and are not being supported by someone else who can claim them as a dependent.

The IRS needs information from people who don’t usually file a tax return – even if they did not have any income last year or their income was not large enough to require them to file. The only way for the agency to have that information is for people to file a basic 2020 tax return with the IRS. Once that return is processed, the IRS can quickly send stimulus payments to an address selected by the eligible individual. People do not need a permanent address or a bank account. They don’t need to have a job. For eligible individuals, the IRS will still issue the payment even if they haven’t filed a tax return in years.

People in this group can still qualify for the first two Economic Impact Payments when they file their 2020 return by claiming the Recovery Rebate Credit. There’s a special section on IRS.gov that can help: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return. For the current third round of payments, people who are experiencing homelessness usually qualify to receive $1,400 for themselves. If they are married or have dependents, they can get an additional $1,400 for each of their family members.

Filing a 2020 federal income tax return that provides very basic information about the person is something that can be done electronically using a smartphone or a computer. When the IRS receives the return, it will automatically calculate and issue the Economic Impact Payments to eligible individuals.

Permanent address not required

People can claim an Economic Impact Payment or other credits even if they don’t have a permanent address. For example, someone experiencing homelessness may list the address of a friend, relative or trusted service provider, such as a shelter, drop-in day center or transitional housing program, on the return filed with the IRS. If they are unable to choose direct deposit, a check or debit card for the tax refund and the third Economic Impact Payment can then be mailed to this address.

Individuals experiencing homelessness can receive the EITC

A worker experiencing homelessness can get an Earned Income Tax Credit (EITC). To get the credit, federal law requires that a worker live in the U.S. for more than half of the year and meet other requirements. This means living in a home in any of the 50 states or the District of Columbia. Therefore, individuals experiencing homelessness, including those who reside at one or more homeless shelters, can meet that requirement.

No bank account? No problem

Many financial institutions will help a person lacking an account to open a low-cost or no-cost bank account. Individuals who open accounts will then have an account and routing number available when they file and claim a direct deposit of the Economic Impact Payment.

Visit the Federal Deposit Insurance Corporation (FDIC) website for details, in both English and Spanish, on opening an account online. Among other things, people can also use the FDIC’s BankFind tool to locate a nearby FDIC-insured bank. In addition, BankOn, American Bankers Association, Independent Community Bankers of America, and National Credit Union Administration have all compiled lists of banks and credit union that can open an account online.

For veterans, see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

For those with a prepaid debit card, they may be able to have their refund applied to the card. Many reloadable prepaid cards or mobile payment apps have account and routing numbers that can be provided to the IRS. Individuals would need to check with the financial institution to ensure the card can be used and to obtain the routing number and account number, which may be different from the card number.

File for free

The fastest and easiest way to claim the 2020 Recovery Rebate Credit and Earned Income Tax Credit (EITC) or to get the third Economic Impact Payment is to file a return electronically using IRS Free File. People can use a smartphone or computer to visit IRS.gov and click the File Your Taxes for Free link.

Through the Free File system, anyone who qualifies for the EITC also qualifies to use brand-name software to prepare and electronically file their return for free. The IRS urges anyone experiencing homelessness who has a smartphone or access to a computer to take advantage of this service.

Get free help from IRS partners

Alternatively, anyone who qualifies for the EITC or does not have a filing requirement but is filing to get an Economic Impact Payment also qualifies for free tax help from a trained community volunteer tax preparer. Through VITA (Volunteer Income Tax Assistance) and TCE (Tax Counselling for the Elderly), volunteers prepare basic tax returns at thousands of tax help sites nationwide.

Please note that some VITA/TCE sites are not operating at full capacity and others are not opening this year. To find the nearest location, visit the Free Tax Return Preparation site on IRS.gov, or call 800-906-9887. VITA/TCE site availability is updated throughout the filing season, so check back if there aren’t any sites listed nearby.

The IRS also continues to work extensively with community groups across the country to get people to file tax returns and receive all the Economic Impact Payments and credits they’re entitled to. These efforts helped lead to more than 8 million people last year to submit tax returns who normally don’t file.

Direct deposit speeds payments

Direct deposit is the safest and fastest way to receive a refund and Economic Impact Payments. People will need to include direct deposit information on their 2020 tax return to get their payment directly deposited.

Anyone with a savings, checking, or brokerage account can choose to have their refund electronically deposited in that account. Direct deposit is available even for people who file a paper tax return, but processing of paper returns takes longer.

More details on the Earned Income Tax Credit

For people experiencing homelessness who have a job, filing a return often carries an added bonus—getting a refund based on various tax benefits, especially the EITC for low-and moderate-income workers and working families.

Like many other workers, some workers experiencing homelessness still qualify for the credit even if they earned too little income during 2020 to owe tax. For 2020, the income limit is $15,820 for singles with no children ($21,710 for couples with no children). The income limit is higher for people with children. For example, the limit is $50,594 for singles with three or more children ($56,844 for couples with three or more children). Those who make less than this amount must also meet other eligibility requirements.

Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, pay no tax, or even get a tax refund. The EITC can put up to $6,660 into a worker’s pocket. The amount varies depending upon the worker’s income, marital status, and other factors.

The IRS recognizes that eligible workers experiencing homelessness often encounter unique challenges not faced by other people.

To find out if they’re eligible, people can use the EITC Assistant on IRS.gov. It’s available in both English and Spanish.

Help spread the word

Employers can help by making their employees aware of the third Economic Impact Payment, 2020 Recovery Rebate Credit and Earned Income Tax and Child Tax Credit, and by encouraging them to file for these benefits based on tax year 2020 rules. In addition, the American Rescue Plan, enacted in March 2021, expands EITC and the Child Tax Credit benefits for the 2021 tax year.

Some people will be able to get advance payments of the Child Tax Credit later this year. There is nothing those who qualify need to do at this point other than file a 2020 tax return.

Employers can also help by making it easy for employees to obtain or access their 2020 W-2 forms. For more information, check out the outreach material, available on IRS.gov.

Source: IRS – IR-2021-87, April 15, 2021

WASHINGTON — Today, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they are disbursing nearly 2 million payments in the fifth batch of Economic Impact Payments from the American Rescue Plan.

Today’s announcement brings the total disbursed so far to approximately 159 million payments, with a total value of more than $376 billion, since these payments began rolling out to Americans in batches as announced on March 12.

The fifth batch of payments began processing on Friday, April 9, with an official payment date of April 14, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

• In total, this batch includes nearly 2 million payments with a value of more than $3.4 billion.
• More than 320,000 payments, with a total value of $450 million, went to Veterans Affairs (VA) beneficiaries who receive Compensation and Pension (C&P) benefit payments but who don’t normally file a tax return and didn’t use the Non-Filers tool last year.
• Nearly 850,000 payments, with a total value of nearly $1.6 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return.
• This batch also includes additional ongoing supplemental payments for people who earlier this year received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns. This batch included more than 700,000 of these “plus-up” payments, with a total value of more than $1.2 billion.
• Another 72,000 payments went to Social Security beneficiaries who didn’t file a 2020 or 2019 tax return and didn’t use the Non-Filers tool last year.
• Overall, this fifth batch of payments contains nearly 1.2 million direct deposit payments (with a total value of just under $2 billion) and nearly 800,000 paper check payments (with a total value of over $1.4 billion).

Additional information is available on the first four batches of Economic Impact Payments from the American Rescue Plan, which began processing on April 2, March 26, March 19 and March 12.

A larger percentage of payments was made electronically during this round of payments than during previous rounds. This accelerated the delivery of payments to millions of American families whose payments would otherwise have been sent by mail. Over 95% of all Social Security beneficiaries have been paid electronically during this round of payments, compared to 70% in the first round and 72% in the second round.

The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for “plus-up” payments.

Special reminder for those who don’t normally file a tax return

Although payments are automatic for most people, the IRS continues to urge people who don’t normally file a tax return and haven’t received Economic Impact Payments to file a 2020 tax return to get all the benefits they’re entitled to under the law, including tax credits such as the 2020 Recovery Rebate Credit, the Child Tax Credit, and the Earned Income Tax Credit. Filing a 2020 tax return will also assist the IRS in determining whether someone is eligible for an advance payment of the 2021 Child Tax Credit, which will begin to be disbursed this summer.

For example, some federal benefits recipients may need to file a 2020 tax return – even if they don’t usually file – to provide information the IRS needs to send payments for a qualifying dependent. Eligible individuals in this group should file a 2020 tax return as quickly as possible to be considered for an additional payment for their qualifying dependents.

People who don’t normally file a tax return and don’t receive federal benefits may qualify for these Economic Impact Payments. This includes those experiencing homelessness, the rural poor, and others. Individuals who didn’t get a first or second round Economic Impact Payment or got less than the full amounts may be eligible for the 2020 Recovery Rebate Credit, but they’ll need to file a 2020 tax return. See the special section on IRS.gov: Claiming the 2020 Recovery Rebate Credit if you aren’t required to file a tax return.

Free tax return preparation is available for qualifying people.

The IRS reminds taxpayers that the income levels in this new round of Economic Impact Payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly). The payments end at $80,000 for individuals ($160,000 for married filing jointly); people with Adjusted Gross Incomes above these levels are ineligible for a payment.

Individuals can check the Get My Payment tool on IRS.gov to see the payment status of these payments. Additional information on Economic Impact Payments is available on IRS.gov.

Source: IRS – IR-2021-86, April 14, 2021

WASHINGTON — The Internal Revenue Service issued Announcement 2021-7 PDF today clarifying that the purchase of personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus are deductible medical expenses.

The amounts paid for personal protective equipment are also eligible to be paid or reimbursed under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs).

For more information on determining what is deductible, see Can I Deduct My Medical and Dental Expenses? and Publication 502, Medical and Dental Expenses.

IR-2021-66, March 26, 2021

WASHINGTON — The Internal Revenue Service’s Criminal Investigation Division (IRS-CI) marks the one-year anniversary of the Coronavirus Aid, Relief and Economic Security (CARES) Act by pledging its continued commitment to investigating COVID-19 fraud.

Over the last year, IRS-CI has been combatting COVID-19 fraud related to the Economic Impact Payments, Paycheck Protection Program (PPP) and Employee Retention Credit. The agency has investigated more than 350 tax and money laundering cases nationwide totaling $440 million. These investigations covered a broad range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families, and small businesses.

“Criminals have tried funding their lavish lifestyles with money intended to provide Americans relief during one of the most difficult times in recent history”, said Jim Lee, Chief of IRS Criminal Investigation. “We have investigated cases of criminals flaunting stolen money to buy fancy cars, boats and pay for luxury apartments while families and businesses struggle to make ends meet. IRS-CI special agents have done an extraordinary job identifying millions in stolen money and our work is far from over. We will not cease until every fraudulently obtained dollar is accounted for and the individuals behind the schemes are prosecuted to the fullest extent of the law.”

IRS-CI encourages the public to share information regarding known or suspected fraud attempts against any of the programs offered through the CARES Act. To report a suspected crime, taxpayers may visit IRS.gov.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, to provide emergency financial assistance to millions of Americans suffering the economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the Paycheck Protection Program. In April 2020, Congress authorized over $300 billion in additional funding, and in December 2020, another $284 billion.

The Paycheck Protection Program allows qualifying small businesses and certain other organizations to receive loans with a maturity of two to five years and an interest rate of 1%. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

To learn more about COVID-19 scams and other financial schemes visit IRS.gov. Official IRS information about COVID-19 and Economic Impact Payments can be found on the Coronavirus Tax Relief page, which is updated frequently.

IR-2021-65, March 25, 2021
Source: IRS Mar/2021

IR-2021-42, February 19, 2021

WASHINGTON — The Internal Revenue Service is reminding those with income from a farming or fishing business can avoid making any estimated tax payments by filing and paying their entire tax due on or before March 1.

This rule generally applies if farming or fishing income was at least two-thirds of the taxpayer’s total gross income in either the current or the preceding tax year. Those who choose not to file by March 1 should have made an estimated tax payment by Jan. 15 to avoid an estimated tax penalty. For more information on estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Those in the farming business report income and expenses on Schedule F (Form 1040), Profit or Loss From Farming. They also use Schedule SE (Form 1040), Self-Employment Tax to figure self-employment tax if their net earnings from farming are $400 or more. For more information refer to Topic No. 554, Publication 225, Farmer’s Tax Guide and Agriculture Tax Center.

Those in the fishing business report income and expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). They also use Schedule SE (Form 1040) to figure self-employment tax if their net earnings from fishing are $400 or more. For general information about the rules applying to individuals, including commercial fishermen who file Schedule C, refer to Publication 334, Tax Guide for Small Business.

Those whose trade or business is a partnership or corporation see Publication 541, Partnerships or Publication 542, Corporations.