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

The Internal Revenue Service issued a filing season reminder today that those taxpayers who pay expenses for the care of a qualifying person while working or looking for work may qualify for an important tax credit.

The Child and Dependent Care Credit is expanded for tax year 2021. This means that more taxpayers will qualify this year than ever before, and the credit will be worth more. Taxpayers with an adjusted gross income of more than $438,000 are not eligible for this credit.

“There are many important tax credits available for families, and we don’t want anyone to overlook the Child and Dependent Care Credit,” said IRS Commissioner Chuck Rettig. “We encourage families and others who may qualify for this credit to carefully review the criteria to make sure they receive the maximum amount they’re entitled to. We also encourage the tax professional communities and others to share this important information.”

Depending on their income, taxpayers can get a credit worth 50% of their qualifying childcare expenses. For tax year 2021, the maximum eligible expense for this credit is $8,000 for one qualifying person and $16,000 for two or more.

For the purposes of this credit, the IRS defines a qualifying person as:

• A taxpayer’s dependent who is 12 or younger (no age limit if incapacitated) when the care is provided.
• A taxpayer’s spouse who is physically or mentally unable to care for themselves and lived with the taxpayer for more than half the year.
• Someone who is physically or mentally unable to take care of themselves and lived with the taxpayer for six months and is either:
  1. the taxpayer’s dependent or
  2. would have been the taxpayer’s dependent except for one of the following:
     • The qualifying person received gross income of $4,300 or more
     • The qualifying person filed a joint return
     • The taxpayer or spouse, if filing jointly, could be claimed as a dependent on someone else’s return

Source: IRS – March 8, 2022

WASHINGTON — The Internal Revenue Service reminds taxpayers of their reporting and potential tax obligations from working in the gig economy, making virtual currency transactions, earning foreign-source income or holding certain foreign assets. Information available on IRS.gov and instructions on Form 1040 can help taxpayers in understanding and meeting these reporting and tax requirements.

Gig economy earnings are taxable

Generally, income earned from the gig economy is taxable and must be reported to the IRS. The gig economy is activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website. Taxpayers must report income earned from the gig economy on a tax return, even if the income is:

• From part-time, temporary or side work,
• Not reported on an information return form – like a Form 1099-K, 1099-MISC, W-2 or other income statement or
• Paid in any form, including cash, property, goods or virtual currency.

For more information on the gig economy, visit the gig economy tax center.

Understand virtual currency reporting and tax requirements

The IRS reminds taxpayers that once again there is a question at the top of Form 1040 and Form 1040-SR asking about virtual currency transactions. All taxpayers filing these forms must check the box indicating either “yes” or “no.” A transaction involving virtual currency includes, but is not limited to:

• The receipt of virtual currency as payment for goods or services provided;
• The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
• The receipt of new virtual currency as a result of mining and staking activities;
• The receipt of virtual currency as a result of a hard fork;
• An exchange of virtual currency for property, goods or services;
• An exchange/trade of virtual currency for another virtual currency;
• A sale of virtual currency; and
• Any other disposition of a financial interest in virtual currency.

If an individual disposed of any virtual currency that was held as a capital asset through a sale, exchange or transfer, they should check “Yes” and use Form 8949 to figure their capital gain or loss and report it on Schedule D (Form 1040).

If they received any virtual currency as compensation for services or disposed of any virtual currency they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type (for example, W-2 wages on Form 1040 or 1040-SR, line 1, or inventory or services from Schedule C on Schedule 1). More information on virtual currency can be found in the instructions for Form 1040 and on the Virtual Currencies page on IRS.gov.

Report Foreign Source Income

A U.S. citizen or resident alien’s worldwide income is generally subject to U.S. income tax, regardless of where they live. They’re also subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States.

U.S. citizens and resident aliens must report unearned income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States. An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

A taxpayer is allowed an automatic 2-month extension to June 15 if both their tax home and abode are outside the United States and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 18, 2022.

Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15. IRS recommends attaching a statement if one of these two situations apply. More information can be found in the instructions for Form 1040 and 1040-SR PDF, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad and Publication 519, U.S. Tax Guide for Aliens.

Reporting required for foreign accounts and assets

Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

Further, separate from reporting specified foreign financial assets on their tax return, taxpayers with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2020, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website.

The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is the same as that of Form 1040. FinCEN grants filers who missed the original deadline an automatic extension until October 15, 2022, to file the FBAR. There is no need to request this extension.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax.

Source: IRS – IR-2022-45, March 1, 2022

There’s still time to salvage this year’s tax filing season, or at least make a difference, if the IRS adopts recommended taxpayer relief measures, Jan F. Lewis, CPA, the chair of the AICPA’s Tax Executive Committee, told the U.S. Senate Committee on Finance in a hearing Thursday.

Lewis, who is also a tax partner with Haddox Reid Eubank Betts PLLC in Jackson, Miss., was joined by National Taxpayer Advocate Erin Collins and Jessica Lucas-Judy, director, Strategic Issues, with the U.S. Government Accountability Office, in the committee’s hearing, titled “Spotlighting IRS Customer Service Challenges.”

Practitioner difficulties

Over the past few years, Lewis said in her testimony to the committee, tax practitioners have experienced difficulties in dealing with the IRS, mostly with the Service’s sending erroneous notices to taxpayers, being slow to process returns and correspondence, and failing to answer a large majority of phone calls.

“These problems have been magnified the past two years,” Lewis said, “and at times, we as CPAs feel powerless to help our clients navigate these IRS service issues.”

Some clients have received notices instructing them to file forms and returns they had already filed or to allow more time to resolve an issue about which they did not receive any original notice, she said.

“We’ve had clients receive notices regarding payroll Form 941 [Employer’s Quarterly Federal Tax Return], stating that the IRS needs more time, but the client has no employees and does not even file payroll tax returns,” she said.

Other clients who did file Form 941 or the amended version, Form 941-X, on which they claimed an employee retention credit for 2020 or 2021, are still waiting for the resulting refunds, she said.

“I could go on for hours with examples,” Lewis said, but she described one particularly frustrating example: Several passthrough entities were unable to file returns before the 2020 extended due date because of pandemic-related difficulties, she said. None of the returns were more than a couple of months late.

“But despite the IRS’s indication that there would be penalty relief for late filings due to COVID, the telephone assisters had no knowledge of any special pandemic relief when we called,” and penalties were assessed, Lewis said.

The IRS did have its own dislocations to deal with, she noted, including shuttered offices and significant new tasks handed it by Congress, such as administering economic impact payments.

“Frankly, though, we expected a little more flexibility, and a little more empathy from IRS leadership,” Lewis said.

Strategic recommendations

While the AICPA has communicated long-term strategic recommendations to improve IRS service, it continues, with its partners in the Tax Professionals United for Taxpayer Relief Coalition, to advocate shorter-term recommendations that Lewis reiterated for the committee: temporarily postpone all automated compliance actions, adjust account hold times, liberalize the reasonable-cause penalty waiver process, and provide targeted relief from underpayment and late-payment penalties.

Lewis added another specific recommendation: The IRS should delay implementing its requirement that passthrough entities with “items of international tax relevance” file Schedules K-2, Partners’ Distributive Share Items — International, and K-3, Partner’s Share of Income, Deductions, Credits, etc. — International, and similar forms for S corporations.

She noted with appreciation that the IRS on Wednesday clarified that some entities did not have to file the schedules for 2021. But the schedules’ instructions were revised during the current filing season, and affected entities are currently unable to e-file them, Lewis pointed out, potentially exacerbating existing challenges for both taxpayers and the IRS.

The Tax Professionals United for Taxpayer Relief Coalition also on Thursday released its letter dated Feb. 16 to the House Oversight Subcommittee in support of Collins’s testimony there on Feb. 8 and restating the coalition’s relief recommendations.

IRS resources and backlog

Several senators questioned the witnesses on issues of IRS funding and the Service’s resources, particularly its outmoded and in some respects antiquated computer systems and processes that often rely on personnel performing manual tasks.

In describing the IRS’s still “snowballing” backlog of unprocessed returns and correspondence, Collins reiterated her earlier assessment that the IRS is buried in paper. Clearing the backlog and putting the IRS in a stable and healthy condition will require expanding electronic submission and automating not just returns but other forms and taxpayer correspondence as well.

While e-filing can be efficient, “paper is different,” Collins said.

“The IRS still transcribes paper line by line, number by number,” Collins said. The Service received roughly 17 million original paper returns last year, and processing them has extended over 10 months.

“And still we have over 4 million amended returns that taxpayers are waiting to be processed,” Collins said.

Lucas-Judy’s testimony, which the GAO also released as a report Thursday, focused on challenges in the IRS’s 2021 filing season, which included a tripling of taxpayer correspondence over 2019 levels and a fivefold increase in telephone calls.

Both Lucas-Judy and Collins pointed out the IRS’s alternative for taxpayers’ most likely reason for calling, its Where’s My Refund? online portal, leaves much to be desired: It tells taxpayers at the beginning of the process that the Service has received a return and at the end that a refund has been authorized and sent, but little to no information about what happens in the meantime.

In response to a question from Sen. Ben Cardin, D-Md., about the impact of the IRS’s problems on small businesses, Lewis said she is “passionate about” the issue, having grown up as the daughter of a pharmacist and store owner.

“It is burdensome, it is complex, but we’re here to help in any way that we can,” Lewis said. “But what’s burdening my small business clients right now is the unending notices and not being able to reach the IRS.”

Source: AICPA

With filing season beginning January 24, the Internal Revenue Service reminded taxpayers about several key items to keep in mind when filing their federal income tax returns this year.

Given the unprecedented circumstances around the pandemic and unique challenges for this tax season, the IRS offers a 5-point checklist that can help many people speed tax return processing and refund delivery while avoiding delays.

1. File an accurate return and use e-file and direct deposit to avoid delays. Taxpayers should electronically file and choose direct deposit as soon as they have everything they need to file an accurate return. Taxpayers have many choices, including using a trusted tax professional. For those using e-file, the software helps individuals avoid mistakes by doing the math. It guides people through each section of their tax return using a question-and-answer format.

2. For an accurate return, collect all documents before preparing a tax return; make sure stimulus payment and advance Child Tax Credit information is accurate. In addition to collecting W-2s, Form 1099s and other income-related statements, it is important people have their advance Child Tax Credit and Economic Impact Payment information on hand when filing.

Advance CTC letter 6419: In late December 2021, and continuing into January, the IRS started sending letters to people who received advance CTC payments. The letter says, “2021 Total Advance Child Tax Credit (AdvCTC) Payments” near the top and, “Letter 6419” on the bottom righthand side of the page. Here’s what people need to know:
– The letter contains important information that can help ensure the tax return is accurate.
– People who received advance CTC payments can also check the amount of the payments they received by using the CTC Update Portal available on IRS.gov.
– Eligible taxpayers who received advance Child Tax Credit payments should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advance Child Tax Credit payments can claim the full credit by filing a tax return.

Third Economic Impact Payment letter 6475: In late January 2022, the IRS will begin issuing letters to people who received a third payment in late January 2021. The letter says, “Your Third Economic Impact Payment” near the top and, “Letter 6475” on the bottom righthand side of the page. Here’s what people need to know:
– Most eligible people already received their stimulus payments. This letter will help individuals determine if they are eligible to claim the Recovery Rebate Credit (RRC) for missing stimulus payments.
– People who are eligible for RRC must file a 2021 tax return to claim their remaining stimulus amount.
– People can also use IRS online account to view their Economic Impact Payment amounts.

Both letters – 6419 and 6475 – include important information that can help people file an accurate 2021 tax return. If a return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund. Using this information when preparing a tax return electronically can reduce errors and avoid delays in processing.

3. Avoid lengthy phone delays; use online resources before calling the IRS. Phone demand on IRS assistance lines remains at record highs. To avoid lengthy delays, the IRS urges people to use IRS.gov to get answers to tax questions, check a refund status or pay taxes. There’s no wait time or appointment needed — online tools and resources are available 24 hours a day.

Additionally, the IRS has several ways for taxpayers to stay up to date on important tax information:
– Follow the IRS’ official social media accounts and email subscription lists to stay current on the latest tax topics and alerts.
– Download the IRS2Go mobile app, watch IRS YouTube videos, or follow the IRS on Twitter, Facebook, LinkedIn and Instagram for the latest updates on tax changes, scam alerts, initiatives, products and services.
– Taxpayers can also get information in their preferred language. The IRS translates tax resources into several languages and currently has basic tax information in 20 languages. People can also file Schedule LEP, Request for Change in Language Preference, to receive written communications from the IRS in their preferred language.

4. Waiting on a 2020 tax return to be processed? Special tip to help with e-filing a 2021 tax return: In order to validate and successfully submit an electronically filed tax return to the IRS, taxpayers need their Adjusted Gross Income, or AGI, from their most recent tax return. For those waiting on their 2020 tax return to be processed, here’s a special tip to ensure the tax return is accepted by the IRS for processing. Make sure to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return. For those who used a Non-Filer tool in 2021 to register for an advance Child Tax Credit or third Economic Impact Payment in 2021, they should enter $1 as their prior year AGI. Everyone else should enter their prior year’s AGI from last year’s return. Remember, if using the same tax preparation software as last year, this field will auto-populate.

5. Free resources are available to help taxpayers file. During this challenging year, the IRS reminds taxpayers there are many options for free help, including many resources on IRS.gov. For those looking to avoid the delays with a paper tax return, IRS Free File is an option. With Free File, leading tax software providers make their online products available for free as part of a 20-year partnership with the Internal Revenue Service. This year, there are eight products in English and two in Spanish. IRS Free File is available to any person or family who earned $73,000 or less in 2021. Qualified taxpayers can also find free one-on-one tax preparation help around the nation through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

Source: IRS – IR-2022-16, January 20, 2022

WASHINGTON — The IRS today announced the availability of Free File, providing taxpayers online tax preparation products available at no charge. Today’s launch of IRS Free File, available only through IRS.gov, provides people an early opportunity to file their taxes and claim the 2021 Recovery Rebate Credit, the enhanced Child Tax Credit, the Earned Income Tax Credit, and other important credits. Taxpayers can use Free File to claim the remaining amount of their Child Tax Credit and claim any advance payments of the Child Tax Credit they did not receive in 2021.

Leading tax software providers make their online products available for free as part of a 20-year partnership with the Internal Revenue Service. This year, there are eight products in English and two in Spanish. IRS Free File is available to any person or family who earned $73,000 or less in 2021.

“Free File is part of a wide selection of services available on IRS.gov to help people file taxes during this challenging period,” said IRS Commissioner Chuck Rettig. “IRS Free File offers taxpayers an easy, free way to do their taxes from the safety of their own home. Free File also provides electronic filing with direct deposit, which is the best way to avoid delays and receive refunds quickly and securely.”

Because the filing season starts on January 24, 2022, IRS Free File providers will accept completed tax returns and hold them until they can be filed electronically on that date. The Free File Fillable Forms, the electronic version of IRS paper forms, will be available on January 24, 2022. Free File Fillable Forms is available for use by everyone, regardless of income, but should be used only by people who are comfortable preparing their own taxes.

Other important information related to the January 24 start of tax season is available on IRS.gov, including important filing tips.

How IRS Free File works

Each IRS Free File provider sets its own eligibility rules for products based on age, income, and state residency. However, for those who make $73,000 or less, they will find at least one product that matches their needs, and usually more. Some providers also offer free state income tax return preparation. [Some state tax benefits, such as state Earned Income Tax Credits, are based on information contained on the taxpayer’s federal income tax return. Taxpayers are encouraged to check with their state tax agency about state tax benefits and requirements to file a state income tax return.] Active-duty military can use any IRS Free File product if their income was $73,000 or less.

Here’s a step-by-step overview of how to find the right Free File product:

1. Go to IRS.gov/freefile.
2. Use the “Choose an IRS Free File Offer” tool for help in finding the right product, or
3. Review each offer by a provider using the “Browse All” tool.
4. Select a product.
5. Follow links to the provider’s website to begin a tax return.

No computer? No problem. Taxpayers can complete and file their tax return using IRS Free File products through smart phones or tablets.

Child Tax Credit, 2021 Recovery Rebate Credit and other tax benefits

IRS Free File is all taxpayers need to claim the Child Tax Credit (CTC), 2021 Recovery Rebate Credit, and other tax benefits such as the Earned Income Tax Credit (EITC).

The IRS also continues to urge people who received one or more advance Child Tax Credit payments in 2021 to carefully review their taxes before filing. Families who received advance payments will need to compare the advance Child Tax Credit paymentsthey received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return. To help taxpayers who received an advance Child Tax Credit payment, the IRS started sending Letter 6419, 2021 Advance CTC, in late December 2021.

The letter contains important information on advance Child Tax Credit payments that can help ensure the tax return is accurate. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.

In late January, the IRS will begin sending Letter 6475, Your Third Economic Impact Payment, to individuals who received a third stimulus payment in 2021, including initial and “plus-up” payments. While most eligible people already received their Economic Impact Payments, or stimulus payments, this letter will help them determine if they are eligible to claim the 2021 Recovery Rebate Credit for missing stimulus payments. If so, they must file a 2021 tax return to claim this credit. People can also use IRS online account to view both payment amounts.

IRS Free File also can be used by workers to claim the EITC, which provides a refundable tax credit based on a filer’s income and family size.

Please remember that unemployment benefits paid by states are taxable income. States should send Forms 1099-G to those who received jobless benefits.

Source: IRS 

The Internal Revenue Service announced that the nation’s tax season will start on Monday, January 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.

The January 24 start date for individual tax return filers allows the IRS time to perform programming and testing that is critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.

“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare,” said IRS Commissioner Chuck Rettig. “The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays. Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays.”

The IRS encourages everyone to have all the information they need in hand to make sure they file a complete and accurate return. Having an accurate tax return can avoid processing delays, refund delays and later IRS notices. This is especially important for people who received advance Child Tax Credit payments or Economic Impact Payments (American Rescue Plan stimulus payments) in 2021; they will need the amounts of these payments when preparing their tax return. The IRS is mailing special letters to recipients, and they can also check amounts received on IRS.gov.

Like last year, there will be individuals filing tax returns who, even though they are not required to file, need to file a 2021 return to claim a Recovery Rebate Credit to receive the tax credit from the 2021 stimulus payments or reconcile advance payments of the Child Tax Credit. People who don’t normally file also could receive other credits.

April 18 tax filing deadline for most

The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way federal holidays do. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots’ Day holiday in those states. Taxpayers requesting an extension will have until Monday, October 17, 2022, to file.

Awaiting processing of previous tax returns? People can still file 2021 returns

Rettig noted that IRS employees continue to work hard on critical areas affected by the pandemic, including processing of tax returns from last year and record levels of phone calls coming in.

“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” Rettig said. “IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers. Additional resources are essential to helping our employees do more in 2022 – and beyond.”

The IRS continues to reduce the inventory of prior-year individual tax returns that have not been fully processed. As of December 3, 2021, the IRS has processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.

Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.

Key information to help taxpayers

The IRS encourages people to use online resources before calling. Last filing season, as a result of COVID-era tax changes and broader pandemic challenges, the IRS phone systems received more than 145 million calls from January 1 – May 17, more than four times more calls than in an average year. In addition to IRS.gov, the IRS has a variety of other free options available to help taxpayers, ranging from free assistance at Volunteer Income Tax Assistance and Tax Counseling for the Elderly locations across the country to the availability of the IRS Free File program.

“Our phone volumes continue to remain at record-setting levels,” Rettig said. “We urge people to check IRS.gov and establish an online account to help them access information more quickly. We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need.”

Last year’s average tax refund was more than $2,800. More than 160 million individual tax returns for the 2021 tax year are expected to be filed, with the vast majority of those coming before the traditional April tax deadline.

Overall, the IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically if they choose direct deposit and there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. To avoid delays in processing, people should avoid filing paper returns wherever possible.

By law, the IRS cannot issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February, though eligible people may file their returns beginning on January 24. The law provides this additional time to help the IRS stop fraudulent refunds from being issued.

Some returns, filed electronically or on paper, may need manual review, which delays the processing, if our systems detect a possible error or missing information, or there is suspected identity theft or fraud. Some of these situations require us to correspond with taxpayers, but some do not. This work does require special handling by an IRS employee so, in these instances, it may take the IRS more than the normal 21 days to issue any related refund. In those cases where IRS is able to correct the return without corresponding, the IRS will send an explanation to the taxpayer.

File electronically and choose direct deposit

To speed refunds, the IRS urges taxpayers to file electronically with direct deposit information as soon as they have everything they need to file an accurate return. If the return includes errors or is incomplete, it may require further review that may slow the tax refund. Having all information available when preparing the 2021 tax return can reduce errors and avoid delays in processing.

Most individual taxpayers file IRS Form 1040 or Form 1040-SR once they receive Forms W-2 and other earnings information from their employers, issuers like state agencies and payers. The IRS has incorporated recent changes to the tax laws into the forms and instructions and shared the updates with its partners who develop the software used by individuals and tax professionals to prepare and file their returns. Forms 1040 and 1040-SR and the associated instructions are available now on IRS.gov. For the latest IRS forms and instructions, visit the IRS website at IRS.gov/forms.

Free File available January 14

IRS Free File will open January 14 when participating providers will accept completed returns and hold them until they can be filed electronically with the IRS. Many commercial tax preparation software companies and tax professionals will also be accepting and preparing tax returns before January 24 to submit the returns when the IRS systems open.

The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds – as well having all the information they need to file an accurate return to avoid delays. The IRS’s Free File program allows taxpayers who made $73,000 or less in 2021 to file their taxes electronically for free using software provided by commercial tax filing companies. More information will be available on Free File later this week.

In addition to IRS Free File, the IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs free basic tax return preparation to qualified individuals.

Watch for IRS letters about advance Child Tax Credit payments and third Economic Impact Payments

The IRS started sending Letter 6419, 2021 advance Child Tax Credit, in late December 2021 and continues to do so into January. The letter contains important information that can help ensure the return is accurate. People who received the advance CTC payments can also check the amount of the payments they received by using the CTC Update Portal available on IRS.gov.

Eligible taxpayers who received advance Child Tax Credit payments should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advance Child Tax Credit payments can claim the full credit by filing a tax return.

The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to individuals who received a third payment in 2021 in late January. While most eligible people already received their stimulus payments, this letter will help individuals determine if they are eligible to claim the Recovery Rebate Credit for missing stimulus payments. If so, they must file a 2021 tax return to claim their remaining stimulus amount. People can also use IRS online account to view their Economic Impact Payment amounts.

Both letters include important information that can help people file an accurate 2021 tax return. If the return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund. Using this information when preparing a tax return electronically can reduce errors and avoid delays in processing.

The fastest way for eligible individuals to get their 2021 tax refund that will include their allowable Child Tax Credit and Recovery Rebate Credit is by filing electronically and choosing direct deposit.

Tips to make filing easier

To avoid processing delays and speed refunds, the IRS urges people to follow these steps:

Organize and gather 2021 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers, and this year’s Identity Protection Personal Identification Numbers valid for calendar year 2022.

Check IRS.gov for the latest tax information, including the latest on reconciling advance payments of the Child Tax Credit or claiming a Recovery Rebate Credit for missing stimulus payments. There is no need to call.

Set up or log in securely at IRS.gov/account to access personal tax account information including balance, payments, and tax records including adjusted gross income.

Make final estimated tax payments for 2021 by Tuesday, January 18, 2022, to help avoid a tax-time bill and possible penalties.

Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers. Learn how to open an account at an FDIC-Insured bank or through the National Credit Union Locator Tool.

File a complete and accurate return electronically when ready and choose direct deposit for the quickest refund.

Key filing season dates

There are several important dates taxpayers should keep in mind for this year’s filing season:

• January 14: IRS Free File opens. Taxpayers can begin filing returns through IRS Free File partners; tax returns will be transmitted to the IRS starting January 24. Tax software companies also are accepting tax filings in advance.
• January 18: Due date for tax year 2021 fourth quarter estimated tax payment.
• January 24: IRS begins 2022 tax season. Individual 2021 tax returns begin being accepted and processing begins
• January 28: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
• April 18: Due date to file 2021 tax return or request extension and pay tax owed due to Emancipation Day holiday in Washington, D.C., even for those who live outside the area.
• April 19: Due date to file 2021 tax return or request extension and pay tax owed for those who live in MA or ME due to Patriots’ Day holiday
• October 17: Due date to file for those requesting an extension on their 2021 tax returns

Planning ahead

It’s never too early to get ready for the tax-filing season ahead. For more tips and resources, check out the Get Ready page on IRS.gov.

Source: IRS – 2022-08, January 10, 2022