IRS Archives - Whalen & Company, CPAs

Advance Child Tax Credit Payments

Kathleen Hargrove on July 1, 2021

The American Rescue Plan enacted in March increased the child tax credit benefit for 2021 and directed the IRS to deliver direct payments to eligible families beginning in July. The credit increased from $2,000 to $3,600 for a child under age 6 and to $3,000 for a child age 6-17.

The payments are worth up to $300 per month for each child under age 6, and up to $250 for each child ages 6 to 17. They will be deposited to recipient’s accounts close to the 15th of each remaining month for 2021.

Normally, parents would claim the credit as a lump sum on their annual tax returns, lowering their overall tax bill or resulting in a refund.

The credit owed is ultimately determined by 2021 income and will have to be reconciled on next year’s tax return. That means individuals who got a new job or received a raise in 2021 may find themselves owing money to the government if their monthly payment was too high.

People might also receive too much in monthly payments if they have a child who no longer qualifies as a dependent in 2021, but was accurately claimed on the 2019 or 2020 tax return. The law does offer some repayment protection in those cases for lower-income households.

In a letter currently being sent to taxpayers, the IRS has explained that taxpayers don’t have to do anything to begin receiving the Advance Child Tax Credit payments (assuming they are otherwise eligible) for 2021.

The letter also states that taxpayers may choose to opt out of receiving the advance payments. For more information on opting out and for reasons you may want to consider this option, check out this list of FAQs provided by the IRS.

The IRS has also provided helpful tools here, including a new Child Tax Credit Eligibility Assistant and Child Tax Credit Update Portal.

This website has two links, the first interactive link will allow taxpayers to unenroll from any potential advance payments. Using the second link, the nonfiler sign-up link on the same website, non-filers who aren’t required to file a tax return and haven’t submitted information to prove their eligibility for the ACTC can provide their information.

If you have any questions on this announcement or your filing for next year, please contact your Whalen advisor for assistance.

TIGTA reports IRS swamped with backlog of unprocessed returns

Kathleen Hargrove on April 1, 2021

TIGTA (Treasury Inspector General for Tax Administration) has conducted and audit and reported that the unprocessed individual returns, as well as the additional returns and correspondence in the Error Resolution, Rejects, and Unpostables functions and the Accounts Management inventory, include returns, etc. for taxpayers who still have not received their tax year 2019 tax refunds, the audit noted.

TIGTA stressed that IRS’s ability to resolve the backlog may well be impacted by the need to divert manpower and other resources to issuing economic impact payments or an unforeseen closure of Tax Processing Centers due to the pandemic. “The ability of these taxpayers to contact the IRS to receive updated information about the status of their refunds is a further challenge as staffing issues continue to hinder the IRS’s ability to provide adequate customer service,” the audit said.

The bulk of the work done at Tax Processing Centers “is not conducive to a telework environment,” TIGTA said. As described in the audit, “this work includes the receiving, sorting, and distributing of mail and the processing of paper tax returns, which requires manually inputting information from the tax return into IRS systems, correcting errors, and corresponding with the taxpayer, if needed.”

IRS has been able to restore most of its toll-free taxpayer assistance telephone lines and reopen many of its Taxpayer Assistance enters, the audit said.

IRS Extends Filing and Payment Deadline

Kathleen Hargrove on March 18, 2021

The Treasury Department and IRS announced Wednesday that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.

The IRS states that they will be providing formal guidance in the coming days.

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief.

If you need additional time to file beyond the May 17 deadline, please work with your Whalen advisor to request a filing extension until October 15.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments.

State Tax Returns:

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax.

State filing and payment deadlines vary and are not always the same as the federal filing deadline.

Currently, the state of Ohio has not announced an extension and still lists their due date as April 15, 2021. We will keep you informed if Ohio and other states follow suit with this extension and notify you as that information becomes available.

For more information or further assistance with your filing, please contact your Whalen advisor.

SOURCE: IRS.gov

IRS Launches Tracking Tools

Kathleen Hargrove on March 16, 2021

As the latest round of stimulus payments have started hitting some bank accounts, The IRS has updated the “Get My Payment” tool on its website with further information on when to expect payments.

You can check the status of your payment here.

The third round of Economic Impact Payments will be based on a taxpayer’s latest processed tax return from either 2020 or 2019. That includes anyone who used the IRS non-filers tool last year, or submitted a special simplified tax return.

For those who received the first two stimulus checks but didn’t receive a payment via direct deposit, they will receive a check or a prepaid debit card. Social Security and other federal beneficiaries will generally receive this third payment the same way as their regular benefits. A payment date for this group is expected to be announced soon.

In addition, the “Where’s My Refund” page is also live on the IRS website.

You need the following information to track the status of your tax refund:

Social Security number or Individual Taxpayer Identification Number
Filing status (single, married or head of household)
Exact refund amount in whole dollars (can be found on your tax return)

The tool will show you one of three messages to explain your tax return status:

Received: The IRS now has your tax return and is working to process it.
Approved: The IRS has processed your return and confirmed the amount of your refund, if you’re owed one.
Sent: Your refund is now on its way to your bank through direct deposit, or as a paper check to your mailbox.

For more information or further assistance with your filing, please contact your Whalen advisor.

SOURCE: IRS

IRS Delays Start of Tax Filing Season to Feb. 12

Kathleen Hargrove on January 18, 2021

The IRS announced that the nation’s tax season will start on Friday, February 12, 2021, when they will begin accepting and processing 2020 tax year returns.

They typically begin accepting returns at the end of January, but the February 12 start date this year allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits. This programming work is critical to ensuring IRS systems run smoothly.

To speed refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit as soon as they have the information they need.

Individuals can still begin filing their tax returns now, and the returns will be transmitted to the IRS starting February 12.

Under the PATH Act, the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law provides this additional time to help the IRS stop fraudulent refunds and claims from being issued, including to identity thieves.

The IRS anticipates a first week of March refund for many EITC and ACTC taxpayers if they file electronically with direct deposit and there are no issues with their tax returns. This would be the same experience for taxpayers if the filing season opened in late January. Taxpayers can utilize the Where’s My Refund Tool for their personalized refund date.

Overall, the IRS anticipates that the majority of taxpayers will receive their refund within 21 days of when they file electronically with direct deposit if there are no issues with their tax return. Filing via paper could cause additional delays.

Check out these helpful tips from the IRS for taxpayers to make filing easier.

Tag: IRS

News & Tech Tips

Advance Child Tax Credit Payments

TIGTA reports IRS swamped with backlog of unprocessed returns

IRS Extends Filing and Payment Deadline

IRS Launches Tracking Tools

IRS Delays Start of Tax Filing Season to Feb. 12