The Internal Revenue Service today issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. The Infrastructure Investment and Jobs Act, which was enacted on November 15, 2021, amended the law so that the Employee Retention Credit applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business.

Notice 2021-65 PDF applies to employers that paid wages after September 30, 2021 and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021 but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021.

Employers who Received Advance Payments

Generally, employers that are not recovery startup businesses and received advance payments for fourth quarter wages of 2021 will avoid failure to pay penalties if they repay those amounts by the due date of their applicable employment tax returns.

Employers who Reduced Employment Tax Deposits

Employers that reduced deposits on or before December 20, 2021, for wages paid during the fourth calendar quarter of 2021 in anticipation of the Employee Retention Credit and that are not recovery startup businesses will not be subject to a failure to deposit penalty with respect to the retained deposits if—

1. The employer reduced deposits in anticipation of the Employee Retention Credit, consistent with the rules in Notice 2021-24 PDF,
2. The employer deposits the amounts initially retained in anticipation of the Employee Retention Credit on or before the relevant due date for wages paid on December 31, 2021 (regardless of whether the employer actually pays wages on that date). Deposit due dates will vary based on the deposit schedule of the employer, and
3. The employer reports the tax liability resulting from the termination of the employer’s Employee Retention Credit on the applicable employment tax return or schedule that includes the period from October 1, 2021, through December 31, 2021. Employers should refer to the instructions to the applicable employment tax return or schedule for additional information on how to report the tax liability.

Due to the termination of the Employee Retention Credit for wages paid in the fourth quarter of 2021 for employers that are not recovery startup businesses, failure to deposit penalties are not waived for these employers if they reduce deposits after December 20, 2021.

If an employer does not qualify for relief under this Notice, it may reply to a notice about a penalty with an explanation and the IRS will consider reasonable cause relief.

More information for businesses seeking coronavirus-related tax relief can be found at IRS.gov.

Source: IRS-2021-242, December 6, 2021

After a shortened trading week in the U.S. due to Thanksgiving holiday closures, markets will return to a full schedule next week, and investors can count on a robust set of data releases and earnings along with it. Companies will also continue to watch Thanksgiving sales, which extend through Cyber Monday. Those sales from Nov. 25 to Nov. 29 are projected to increase 12% from last year, led by middle-income households, according to a survey by Deloitte.

The nation’s debt limit will also come back into focus when Congress returns from its Thanksgiving recess. Last month, Treasury Secretary Janet Yellen had warned the nation could hit its debt limit by Dec. 3. On Tuesday, she wrote that lawmakers likely have until Dec. 15 to lift the debt limit, but that still only leaves Congress a few weeks to approve new funding. That timeline could collide with the Biden administration’s $1.75 trillion Build Back Better plan, and stall the bill. Senate Majority Leader Chuck Schumer stated in a letter to Democratic lawmakers that the Senate’s schedule for the rest of the year could run longer than predicted.

The housing market will kick off the week’s data releases with pending home sales on Monday, and the Case-Shiller Home Price Index on Tuesday. The Conference Board’s November reading for consumer confidence will follow, and we’ll get an update on how managers are feeling with manufacturing and services PMIs from the U.S. and around the world. We’ll also find out whether seasonal hiring ahead of the holidays boosted nonfarm payrolls for the month of November on Friday.

As of today, November 29, 2021, the benchmark 30-Year Fixed mortgage rate is 3.39%, FHA 30-Year Fixed is 3.38%, Jumbo 30-Year Fixed is 3.45%; 15-Year Fixed is 2.63%, and 5/1 ARM is 2.53%. These rates are not the teaser rates you may see advertised online and based on our methodology should be more representative of what customers could expect to be quoted depending on their qualifications. You can learn more about what makes our rates different in the Methodology section of this page.

Because mortgage rates can differ, it’s important to compare rates before taking out a home loan. We’ve compiled the best rates for the various types of mortgages, and common questions you may have to help you understand what might affect the final rate you’ll receive.

Today’s Mortgage Rates

How to Use Our Mortgage Rate Table

Our mortgage rate table is designed to help you compare the rates you’re being offered by lenders to know if it is better or worse. These rates are benchmark rates for those with good credit and not the teaser rates that make everyone think they will get the lowest rate available. Of course, your personal credit profile will be a significant factor in what rate you actually get quoted from a lender, but you will be able to shop for either new purchase or refinance rates with confidence.

Source: Investopedia
Written By: Sarah Li Cain

WASHINGTON — The Internal Revenue Service this week launched a new Spanish-language version of the Child Tax Credit Update Portal (CTC-UP). This tool is designed to help families quickly and easily make changes to the monthly Child Tax Credit payments they are receiving from the IRS.

Families who are already receiving monthly payments use the CTC-UP to update their accounts. Now, all the features that have only been available in English are also available in Spanish. Updates made by 11:59 pm Eastern Time on Nov. 29 will be reflected in the last monthly payment for 2021, scheduled for Dec. 15.

Under the American Rescue Plan, most eligible families began receiving monthly payments starting in July. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. Payments are based on returns filed for 2019 or 2020, including those who registered online with the IRS.

Available only on IRS.gov, CTC-UP allows families to verify their eligibility for the payments and then, if they choose to:

• Switch from receiving a paper check to direct deposit;
• Change the account where their payment is direct deposited;
• Update their mailing address;
• Stop monthly payments and
• Reflect significant changes in their income that could potentially raise or lower their monthly payments.

Be sure to make any changes by 11:59 pm ET on Nov. 29. To access the portal, visit IRS.gov/childtaxcredit2021.

Families are typically receiving half of their total CTC in advance monthly payments during 2021. They can claim the rest of the credit when they file their 2021 federal income tax return next year. To help them do that, early in 2022, families will receive Letter 6419 documenting any advance payments issued to them during 2021 and the number of qualifying children used to calculate the advance payments.

Non-filers can get lump-sum next year; community partners can help

The IRS encourages partners and community groups to share information and use available online tools to help non-filers, low-income families and other underserved groups learn about the expanded Child Tax Credit. While it’s now too late to sign up for advance payments of the CTC during 2021, it’s not too late for eligible families to get the full benefit of the credit.

To do that, any eligible family who missed out on this year’s monthly payments can still get a lump-sum payment by filing a 2021 federal income tax return next year. This includes families who don’t normally need to file a return with the IRS.

Links to online tools, answers to frequently asked questions and other helpful resources are available on the IRS’ special advance CTC 2021 page.

Source: IRS-2021-235, November 23, 2021

The Internal Revenue Service released an advance copy of a set of proposed regulations that can help taxpayers, employers and insurers navigate the complex tax rules surrounding COVID-19 testing and health insurance coverage.

REG-109128-21 includes proposed regulations saying that “minimum essential coverage,” as that term is used in health insurance-related tax laws, doesn’t include Medicaid coverage that’s limited to COVID-19 testing and diagnostic services provided under the Families First Coronavirus Response Act of 2020.

The proposed regulations also have a bearing on the “minimum essential coverage” rules of the Affordable Care Act of 2010. They provide an automatic extension of time for providers of minimum essential coverage to furnish individual statements regarding such coverage, and an alternative method for furnishing individual statements when the shared responsibility payment amount is zero.

In addition, the proposed regs provide an automatic extension of time for “applicable large employers” (typically those with 50 or more full-time or equivalent employees) to furnish statements relating to health insurance that the employer offers to its full-time employees, as required by the ACA.

The proposed regulations released Monday would affect some taxpayers who claim the premium tax credit, health insurers, self-insured employers, government agencies, and others that provide minimum essential coverage to individuals, as well as large employers.

The proposed regulations clarify some of the guidance issued last year in response to COVID-19 relief legislation. Last year, in Notice 2020-66, the IRS said that Medicaid coverage that’s limited to COVID-19 testing and diagnostic services under Section 6004(a)(3) of the Families First Coronavirus Response Act isn’t considered minimum essential coverage under a government-sponsored program. That means an individual’s eligibility for that coverage for one or more months doesn’t prevent those months from qualifying as coverage months for purposes of determining eligibility for the premium tax credit for health coverage. Notice 2020-66 applies to tax years starting in or after 2020.

Notice 2020-66 advised the public that the Treasury Department and the IRS intended to amend the regulations to provide more guidance about Medicaid coverage for COVID-19 testing and diagnostic services. In keeping with that, the proposed regulations propose to amend Section 1.5000A-2 by adding Medicaid coverage for COVID-19 testing and diagnostic services to the health coverage areas listed there that don’t qualify as minimum essential coverage under a government-sponsored program.

Source: AccountingToday

The Internal Revenue Service today announced the tax year 2022 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2021-45 PDF provides details about these annual adjustments.

Highlights of changes in Revenue Procedure 2021-45:

The tax year 2022 adjustments described below generally apply to tax returns filed in 2023.

The tax items for tax year 2022 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
• The personal exemption for tax year 2022 remains at 0, as it was for 2021, this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
• Marginal Rates: For tax year 2022, the top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly).The other rates are:
  35%, for incomes over $215,950 ($431,900 for married couples filing jointly);
  32% for incomes over $170,050 ($340,100 for married couples filing jointly);
  24% for incomes over $89,075 ($178,150 for married couples filing jointly);
  22% for incomes over $41,775 ($83,550 for married couples filing jointly);
  12% for incomes over $10,275 ($20,550 for married couples filing jointly).
  The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).
• For 2022, as in 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
• The Alternative Minimum Tax exemption amount for tax year 2022 is $75,900 and begins to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption begins to phase out at $1,079,800). The 2021 exemption amount was $73,600 and began to phase out at $523,600 ($114,600 for married couples filing jointly for whom the exemption began to phase out at $1,047,200).
• The tax year 2022 maximum Earned Income Tax Credit amount is $6,935 for qualifying taxpayers who have three or more qualifying children, up from $6,728 for tax year 2021. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
• For tax year 2022, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $280.
• For the taxable years beginning in 2022, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $2,850. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $570, an increase of $20 from taxable years beginning in 2021.
• For tax year 2022, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,450, up $50 from tax year 2021; but not more than $3,700, an increase of $100 from tax year 2021. For self-only coverage, the maximum out-of-pocket expense amount is $4,950, up $150 from 2021. For tax year 2022, for family coverage, the annual deductible is not less than $4,950, up from $4,800 in 2021; however, the deductible cannot be more than $7,400, up $250 from the limit for tax year 2021. For family coverage, the out-of-pocket expense limit is $9,050 for tax year 2022, an increase of $300 from tax year 2021.
• The modified adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit provided in § 25A(d)(2) is not adjusted for inflation for taxable years beginning after December 31, 2020. The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns).
• For tax year 2022, the foreign earned income exclusion is $112,000 up from $108,700 for tax year 2021.
• Estates of decedents who die during 2022 have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
• The annual exclusion for gifts increases to $16,000 for calendar year 2022, up from $15,000 for calendar year 2021.
• The maximum credit allowed for adoptions for tax year 2022 is the amount of qualified adoption expenses up to $14,890, up from $14,440 for 2021.

Source: IR-2021-219, November 10, 2021

The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020. The IRS today also issued technical guidance regarding all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022 in Notice 2021-61 PDF, posted today on IRS.gov.

Highlights of changes for 2022

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $20,500, up from $19,500.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2022.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2022:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to $68,000 to $78,000, up from $66,000 to $76,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to $109,000 to $129,000, up from $105,000 to $125,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to $204,000 to $214,000, up from $198,000 to $208,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to $129,000 to $144,000 for singles and heads of household, up from $125,000 to $140,000. For married couples filing jointly, the income phase-out range is increased to $204,000 to $214,000, up from $198,000 to $208,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $68,000 for married couples filing jointly, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for singles and married individuals filing separately, up from $33,000.

The amount individuals can contribute to their SIMPLE retirement accounts is increased to $14,000, up from $13,500.

Key employee contribution limits that remain unchanged

The limit on annual contributions to an IRA remains unchanged at $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $27,000, starting in 2022. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans remains unchanged at $3,000.

Details on these and other retirement-related cost-of-living adjustments for 2022 are in Notice 2021-61 PDF, available on IRS.gov.

Source: IRS

The Internal Revenue Service published its Financial Report on IRS.gov today. This new report provides the American people with a comprehensive view of the IRS’s financial activities as well as the accomplishments of its finance management community.

In fiscal year 2021, the IRS managed more than $4.1 trillion in tax revenue, $1.1 trillion in refunds and $658 billion in unpaid assessments, as well as the resources that support its mission. In addition, Congress and both Administrations entrusted the IRS with $2.4 billion in supplemental funding to support the nation’s recovery from the COVID-19 pandemic.

“The IRS disbursed an unprecedented $1.1 trillion to Americans in fiscal year 2021,” said Teresa Hunter, IRS Chief Financial Officer. “To implement legislative requirements resulting in the expedient roll out of Economic Impact Payments, COBRA, Premium Tax Credit changes and the advanced Child Tax Credits, we overcame significant barriers. I’m proud of the finance management community’s hard work and dedication,” she said. “We strive for excellence in reporting and will continue to ensure taxpayer dollars are managed with integrity and accuracy.”

For more information see Publication 5456, IRS FY 2021 Financial Report.

Source: IRS – IR-2021-220, November 10, 2021

The Internal Revenue Service today reminded employers that the next quarterly payroll tax return is due November 1, 2021. The IRS urges employers to use the speed and convenience of filing the returns electronically.

E-filing is the most accurate method to file returns and saves taxpayers time by performing calculations and auto-populating forms and schedules with a step-by-step process. The IRS acknowledges receipt of e-filed returns within 24 hours, giving taxpayers reassurance that their return was not misplaced or lost in the mail. Electronically filed returns reduce processing time and have fewer errors, which reduces a taxpayer’s chance of receiving an IRS notice. E-file users also receive missing information alerts.

Two options for electronically filing payroll tax returns:

• Self file

  • Purchase IRS-approved software.
  • Business owners may need to pay a fee to electronically file their returns.
  • Apply for an online signature PIN or scan and attach Form 8453-EMP for the required signature.

• Tax professional file

  • Use the Authorized IRS e-file Provider Locator Service to find a tax professional who can file on behalf of the business.

The IRS requires all authorized IRS e-file providers to ensure only authorized users have access to secure information. Only the business owner, authorized signers and reporting agents can apply for an online signature PIN. Third parties (such as attorneys, CPAs, tax return preparers or other tax professionals) can’t request a PIN on behalf of the business, nor can they use the PIN to sign returns on behalf of their clients.

For more information on electronic filing of payroll tax returns, see the E-file Employment Tax Forms page.

COVID-related Employer Tax Credits

The credit for qualified sick and family leave wages has been extended and amended.

The employer tax credits for qualified sick and family leave wages gives all American businesses with fewer than 500 employees funds to provide their employees with paid leave, either for the employee’s own health needs or to care for family members. The American Rescue Plan of 2021 further amended and extended the tax credits (and the availability of advance payments of the tax credits) for paid sick and family leave. See Notice 2021-24 PDF for guidance on the ability to reduce deposits and request advances for the credits for periods of leave through September 30, 2021.

The Employee Retention Credit has been extended and amended.

The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees. The modified and extended credit is available for qualified wages paid before January 1, 2022. Generally, the rules for the Employee Retention Credit for the second quarter of 2021 and the third and fourth quarters of 2021 are substantially similar.

For more information about other coronavirus-related tax relief, visit IRS.gov/coronavirus.

Advance Child Tax Credit

The IRS encourages employers to help get the word out about the advance payments of the Child Tax Credit. Employers have direct access to many who may receive this credit. More information on the Advance Child Tax Credit is available on IRS.gov. The website has tools employers can use to deliver this information, including e-posters, drop-in articles (for paycheck stuffers, newsletters) and social media posts to share.

For more information see Advance Child Tax Credit Payments.

Source: IRS, October 20, 2021