The Internal Revenue Service today reminds those who make estimated tax payments such as self-employed individuals, retirees, investors, businesses, corporations and others that the payment for the first quarter of 2022 is due Monday, April 18. The 2022 Form 1040-ES, Estimated Tax for Individuals, can help taxpayers estimate their first quarterly tax payment.

Income taxes are a pay-as-you-go process. This means, by law, taxes must be paid as income is earned or received during the year. Most people pay their taxes through withholding from paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.

Most often, those who are self-employed or in the gig economy need to make estimated tax payments. Similarly, investors, retirees and others often need to make these payments because a substantial portion of their income is not subject to withholding. Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income. Paying quarterly estimated taxes will usually lessen and may even eliminate any penalties.

Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers and fishers, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for more information.

How to pay estimated taxes

Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes. They can also visit IRS.gov/payments to pay electronically. The best way to make a payment is through IRS Online Account. There taxpayers can see their payment history, any pending payments and other useful tax information. Taxpayers can make an estimated tax payment by using IRS Direct Pay; Debit Card, Credit Card or Digital Wallet; or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). If paying by check, taxpayers should be sure to make the check payable to the “United States Treasury.”

Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.

Source: IRS-2022-77, April 6, 2022

With the completion of special mailings of all Letters 6475 to recipients of the third-round of Economic Impact Payments, the Internal Revenue Service reminds people to accurately claim any remaining third-round stimulus payment on their 2021 income tax return as the 2021 Recovery Rebate Credit.

Through December 31, 2021, the IRS issued more than 175 million third-round payments totaling over $400 billion to individuals and families across the country. Most of the third-round payments were issued in the spring and early summer of 2021. The IRS continued to send plus-up payments through December if, after their 2020 tax return was processed last year, the taxpayer was eligible for additional amounts.

As required by law, the IRS is no longer issuing first-, second-, or third-round Economic Impact Payments. Instead, people who are missing a stimulus payment or got less than the full amount may be eligible to claim a Recovery Rebate Credit on their 2020 or 2021 federal tax return.

Most eligible people already received the full amount of their credit in advance and don’t need to include any information about this payment when they file their 2021 tax return. This includes the additional payments – called “Plus-Up” Payments – the IRS issued to individuals who initially received a third-round Economic Impact Payment based on information on their 2019 tax return and were later eligible for a larger amount based on information on their 2020 tax return.

Individuals may securely access their IRS Online Account to view the total amount of the third-round Economic Impact Payment issued to them. This information became available on January 15, 2022, under the Tax Records page in Online Account. For married individuals filing a joint return, each spouse will need to log into their own Online Account or review their own Letter 6475 for their portion of their joint total payment. See FAQs for Topic G: Finding the Third Economic Impact Payment Amount to Calculate the 2021 Recovery Rebate Credit, for more information.

Third-round Economic Impact Payment not received? Double-check records first

Individuals are encouraged to double-check their bank accounts – especially in early spring and summer of 2021 – to see whether they received a third-round payment in advance last year.

If an individual did not receive a third-round payment – and their IRS Online Account shows a payment amount greater than $0, or they received Notice 1444-C or Letter 6475 indicating that a payment was issued to them – they should contact the IRS as soon as possible to see if a payment trace is needed. Note that Online Account shows the most current EIP information, so if a payment was issued and returned to the IRS, the amount shown in Online Account may be less than what is shown in their Letter 6475.

Taxpayers should not request a payment trace to determine if they were eligible for a payment or to confirm the amount of payment they should have received.

Individuals do not need to wait until their trace is complete to file their 2021 tax return. When completing the Recovery Rebate Credit Worksheet or answering EIP questions in the tax software, taxpayers have two options:

• Use the amount on the Letter 6475 (or EIP 3 Amount from Online Account) to calculate the RRC amount on line 30.Contact the IRS to trace the EIP amount. Once the EIP trace is completed, the IRS and the taxpayer will receive notification of the results of the EIP trace (the account it was sent to and the amount or a copy of the cashed check).
  • If the trace indicates the taxpayer received the EIP amount, no further action is necessary.
  • If the EIP amount was not received by the taxpayer, the IRS will adjust the RRC amount on the tax return and issue any refund.
• Use the amount of EIP the taxpayer believes they received to calculate the RRC amount on line 30. If the taxpayer’s calculation does not match the IRS calculation, the processing of the tax return will be delayed, the RRC amount will be adjusted to match IRS records and the taxpayer will receive a notice that includes a telephone number to contact if they disagree with the change to the tax return. If the taxpayer contacts the IRS and disagrees with the changes made, IRS will conduct a trace of the EIP, if necessary. Once the EIP trace is completed, the IRS and the taxpayer will receive notification of the results of the EIP trace (the account it was sent to and the amount or a copy of the cashed check).
  • If the trace indicates the taxpayer received the EIP amount, no further action is necessary.
  • If the EIP amount was not received by the taxpayer, the IRS will adjust the RRC amount on the return and issue any refund.

Correcting a mistake after the 2021 tax return is filed; no amended return needed

Individuals who made a mistake calculating the Recovery Rebate Credit and claimed an amount on line 30 for the 2021 Recovery Rebate Credit should not file an amended return. The IRS will correct the amount of the 2021 Recovery Rebate Credit and send a notice identifying the changes made.

If a correction is needed, there may be a delay in processing the return. If the taxpayer agrees with the changes made by the IRS, no response or action is required to indicate they agree with the changes. If the taxpayer disagrees, they can call the toll-free number listed on the top right corner of their notice.

Amended return may be needed for those eligible to claim the credit and IRS records show no Economic Impact Payment was issued

For eligible individuals who didn’t claim a Recovery Rebate Credit on their 2021 tax return (line 30 is blank or $0) and IRS records do not show the issuance of an Economic Impact Payment, they will need to file a Form 1040-X, Amended U.S. Individual Income Tax Return, to claim the remaining amount of stimulus money for which they are eligible. This includes individuals who may not have received the full amount of their third-round Economic Impact Payment because their circumstances in 2021 were different than they were in 2020.

Individuals can use the Interactive Tax Assistant, Should I File an Amended Return?, to help determine if they should amend their original tax return.

Taxpayers who need to file an amended return to claim the 2021 Recovery Rebate Credit – even if they don’t usually file taxes – should use the worksheet in the Form 1040-X to determine the amount of the credit. Enter the amount on the Refundable Credits section of the Form 1040-X and include “Recovery Rebate Credit” in the Explanation of Changes section.

Individuals who filed their 2021 return electronically and need to file an amended return, may be able to file Form 1040-X electronically.

If a taxpayer did not file their 2021 return electronically, they’ll need to submit a paper version of the Form 1040-X and should follow the instructions for preparing and mailing the paper form.

Source: IRS-2022-72, March 30, 2022

Your income tax is your life. Do you give your life into anyone’s hands?
We are pretty sure you don’t. And that is why we want to warn you.
Your tax data is your life, and if it is not correctly reported, your fate and possibly your family’s can be seriously jeopardized.
Think about it, choose well to whom you’re going to hand your documents and information for filing your income tax return in the United States.

How can you tell if a professional is qualified enough to take care of your tax life?
Regardless of where you are in the US, when it comes to “Income Tax”, any and all mistakes, from the simplest to those that the tax authorities may perceive as fraud, the responsibility lies solely and exclusively with the taxpayer, which means, your responsibility. So, before choosing who is going to do your tax return, it is good to understand what kind of professional is qualified to do it.
In the US there are two types of licenses available for chartered accountants:
 
CPA – CERTIFIED PUBLIC ACCOUNTANT
Graduated and certified public accountant. His practice is limited to the state where he is registered. He has the competence and knowledge to prepare income tax returns, for both individuals and companies.
In an accounting office, he supervises and signs the taxpayers’ returns as the person legally responsible and accredited.
Most importantly, the CPA is the taxpayer’s representative at the IRS (the Internal Revenue Service) IRS (the U.S. Internal Revenue Service) for several matters, including audits. THE CPA, for example, is the only one who can sign the accounting reports of companies traded on the American Stock Exchange.

EA – ENROLLED AGENT
Like the CPA, the EA is also a trained and certified accountant. The difference with the CPA is in the breadth of practice. While the CPA is best suited for companies and individuals whose business is restricted to one state, the EA has an even broader scope because they have unlimited rights and can represent taxpayers at the IRS throughout the United States.

Another important point is the fact that the CPA and the EA are always being inspected by the IRS and by the accounting council equivalent to the one that exists in Brazil. These two professionals, in order to have active licenses, need to be always improving their skills and attending specific evaluations at the IRS.

SO STAY TUNED!
An accounting firm has several employees in the tax department, but only the CPA and the EA can represent you in the IRS. Another thing you need to know is that in the United States, anyone can establish an accounting office, which has put the taxpayer’s security at risk.
Employees who help prepare tax returns are called “Tax Preparers” and are given a Taxpayer Identification Number (PTIN). Some of these people end up misleading the taxpayer by using the PTINumber as if it were an “endorsement” of the work they offer, and end up giving the false impression that they are qualified to represent them, but they are not.

In a survey conducted by the Taxpayer Advocate Service (TAS), an independent organization within the IRS, pointed out a situation that may greatly complicate the lives of those who need to declare income tax but are not familiar with the American system, which is to entrust non-qualified professionals with their income tax returns. Of the 681,845 PTIN number holders in the country, only 189,650 are CPAs and 53,000 EAs. The 467,263 are not trained, or even qualified, to prepare taxes.  Of the 270,646 licensed tax preparers, only 55,496 (*) have completed the 2022 season program registration for income tax preparation.

A Tax Preparer is not an accountant, and therefore has no responsibility for what is being written on your return, he is not allowed to sign your return, and most importantly, he is not allowed to and does not represent you at the IRS. The volume of erroneous tax returns and the total vulnerability of taxpayers has often resulted in inadvertent errors by preparers that have led to taxpayers paying more tax than they should or paying less and ending up facing actions and IRS enforcement.

The large number of unreasonable errors and frauds that have occurred in the last two years, along with the fact that the responsibility falls on taxpayers who have paid professionals who thought to be, but were not, qualified, has turned on a red light in the US Congress, which has classified the problem as an “alarming situation”.

And for this reason, the congressmen are discussing and should soon vote on the approval of legislation to establish minimum standards of competence for income tax preparers, to empower the IRS to regulate the profession and prevent unqualified people from continuing to prepare taxes and, mainly, to curb the opening of seasonal offices, which take advantage of the taxpayer’s lack of information to fraudulently and easily obtain important data such as the SSN (Social Security) and then sell them on the market, and thus end up hurting the taxpayer even more. By the way, another important factor to be considered concerns “Data Security”. Security”.
Accounting offices under the responsibility of CPA or EA are under constant surveillance to maintain secure systems to protect taxpayer data.
 
SO WATCH OUT!
It is your right, before hiring an accounting professional, to check the licenses of the firm or the professional who will provide the service.
CPA and EA data are public and are available on the IRS website. When hiring an accounting firm to manage your tax life in America, make sure there is a CPA or an EA on staff.
Not being able to count on these professionals is the same as not having a surgeon doctor inside a hospital’s surgical center. Think about it!
Now that you are aware of which professionals can accurately file your tax return and represent you before the IRS, don’t forget: before hiring a professional, make sure they are licensed and accredited to practice their profession.

This article was written by journalist Eleonora Paschoal

More functions coming later in 2022 to help taxpayers with more complex issues

The Internal Revenue Service today announced it has begun using voice and chat bots on two of its specialized toll-free telephone assistance lines and IRS.gov, enabling taxpayers with simple payment or collection notice questions to get what they need quickly and avoid waiting. Taxpayers can still speak with an IRS telephone representative if needed.

“Our phone lines continue to see unprecedented demand, and the IRS continues to look for ways to help people and avoid long wait times,” said IRS Commissioner Chuck Rettig. “Our telephone representatives remain an important part of the service we provide, but these bots can help some people avoid lengthy phone delays for something that could be resolved on the spot. This is part of a larger effort to help people get the assistance they need this tax season.”

The IRS in recent weeks has deployed voice and chat bots in English and Spanish for phone lines that assist taxpayers with tax payments issues or understanding an IRS notice they may have received. People with general tax season questions generally will not encounter these features at this time. The bots are now available to help taxpayers with:

• How to make one-time payments
• Answers to frequently asked questions
• Collection notice clarification

Voice bots are software powered by artificial intelligence (AI) that allow a caller to navigate an interactive voice response (IVR) system with their voice, generally using natural language. Chat bots simulate human conversation through web-based text interaction, also using AI-powered software to respond to natural language prompts. Taxpayers who request to speak with a customer service representative will be placed in queue for English or Spanish ACS telephone assistance. The IRS voice and chat bots currently provide unauthenticated services, which means they cannot provide assistance with a taxpayer’s protected account information.

“Voice and chat bots interact with taxpayers in easy-to-follow ways, which means taxpayers don’t have to wait on hold to handle simple tasks,” said Darren Guillot, Commissioner of Small Business/Self Employed Collection at the IRS.

Later in 2022, IRS voice bots will also enable taxpayers to authenticate their identity to establish payment plans, request a transcript and obtain information about their accounts, such as payoff details. The IRS plans to roll out more voice and chat bots later in 2022 to assist taxpayers with more complex issues.

IRS toll-free telephone lines receive millions of calls a year. A customer service representative spends on average nearly 20 minutes with each taxpayer they help on a collection issue. Freeing up IRS phone assistors for taxpayers with complex collection issues who need to speak with someone is another major benefit of voice and chat bots.

In addition to the payment lines, voice bots helped people calling the Economic Impact Payment (EIP) toll-free line, providing general procedural responses to frequently asked questions. The IRS also added voice bots for the Advance Child Tax Credit toll-free line in February to provide similar assistance to callers who need help reconciling the credits on their 2021 tax return.

The IRS also reminds taxpayers about numerous other self-service options that are available.

Source: IRS – Updated: 14-Mar-2022