 Internal Revenue Service IRS tax news. Get ready for taxes. Bookmark the IRS.gov, IRS.gov, IRS website, resources, and online tools to use before, during, and after filing. But first, an attempt at a joke. I apologize in advance. In order to settle the tax bill, the IRS and I had to split the house. I got the outside. Okay, now you're just taking bad 20 year old divorce jokes and applying them to the IRS. What? Did you get that joke from an old married with children's episode or what? Maybe? IR 2022-12 January 13, 2022, Washington. The Internal Revenue Service today encouraged taxpayers to use IRS online tools and resources to find information they need to be ready to file their 2021 federal tax returns, including important special steps related to economic impact payments and advanced child tax credit payments. And if you're a tax professional, I would try to encourage your clients possibly to get onto this resource as well, because as we know, we got all these prepayments that are taking place, and we want to be able to verify what those prepayments are going to be. In other words, the child tax credit or advanced child tax credit is tied to the 2021 tax return that we're going to be filing by April 15 or April 18 of 2022, and we need to know the prepayments that happened in order to do that. And if you don't have the documentation for that, then you might be able to get that from the online portal. The same is true for the economic impact payments. If they didn't get that correct, or if we didn't get the proper payment from the government for that, the remedy is to do the recovery rebate credit. But in order to do that, we got to know what the actual payments were, and you might be able to get that from the portal. Note that the IRS is updating their portal as well. So I think you could still kind of log in the old way, which is somewhat doable. The newer portal that they have, the verification process is fairly comprehensive and somewhat difficult to get approval for. So if you get people on that in the website earlier, the better. So in a case, individuals, especially those who didn't usually file a tax return are urged to file their 2021 tax return electronically. There's a link to that here beginning January 24, 2022. Using tax preparation software or a trusted tax professional will help guide people through the process and avoid making errors. Filing an incomplete or inaccurate return may mean processing delay that slows the resulting tax refund. Quote, there are some simple steps people can take to make sure they avoid delays and receive a quick refund. End quote IRS Commissioner Chuck Reddick said, quote, I are it's critical this year to avoid a paper tax return whenever possible and file electronically with direct deposit. So with all with everything that's been going on, the IRS is really backed up on the paper tax returns. So so it seems that if you're getting a refund and you're depending on that refund, you might want to I would recommend filing electronically and try to do everything electronically as possible. Try to eliminate and remove the need for the manual services, given the fact that the IRS is still short on staff and whatnot. They got the COVID removing the staff and so and so forth and those kind of restrictions that are taking place, which there's a heavier burdens on the government entities in order to comply with all these kind of rules and whatnot. And so the electronic filing might be the way to go. However, if you owe them money, you know, you might want to send them a paper tax return and like a written check and they might not be able to cash it for like a year due to processing delays. And as long as you're not getting penalties or interest on it, I don't know, maybe that would be okay with you. But it's even even if you're going to be paying, I typically like to make the payment just so I can see that it cleared and I don't have to deal with this thing. Well, it got lost in the mail or got lost in the IRS or whatever. But again, it's probably more important to you if you're getting a refund and you're dependent on that to electronically file. And if you're not so worried about the refund and you don't really care if they take forever processing your return as long as they don't penalize you. Then maybe the paper returns the way to go. And it's more important than ever to make sure you're filing an accurate tax return. The IRS urges people to review some straightforward tips that can help them avoid problems and get their tax refunds quickly end quote. This is the third in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, there's a link to that page here, updated and available on irs.gov. Outline steps taxpayers can take now to make tax filing easier. irs.gov tools are easy to use and available 24 hours a day. Millions of people use them to find information about their accounts, get answers to tax questions and file and pay taxes. Recovery rebate credit slash economic impact payments. These two things are tied together. The recovery rebate credit being the credit that you would be getting, the economic impact payment in essence having the prepayment to the recovery rebate credit, which if you got the full amount of the prepayment, you shouldn't have the recovery rebate credit. But if you didn't get the full amount of the prepayment, then the recovery rebate credit is the remedy to the problem. Noting we're only talking about when we're talking about 2021 tax returns, the third economic impact payments because the prior two economic impact payments have the same scenario but applied to the 2020 tax returns. Individuals who don't qualify for the third economic impact payments or get less than the full amount may be eligible to claim the recovery rebate credit. They will need to know the total amount of their third economic impact payment received to calculate their correct 2021 recovery rebate credit amount when they file their 2021 tax return. And just note that problems with the recovery rebate credit, it seems in the report that they had that was issued out not too long ago that that was one of the major problems, miscalculations of the recovery rebate credit. And if there's a math error with it, then it could delay the processing time and that could delay the total refund in total. And I would imagine, we haven't seen it yet, but I would imagine you're going to have the same problem with the CTC, the advanced child tax credits given the fact that these are advanced payments as well and they could have gotten the payments wrong. They've also adjusted the calculation of the credit and therefore that change could cause people to do math errors in terms of just calculating the credit and then applying out the payment. If you get those things wrong, then the IRS is going to think there's a math error and then they're going to have to adjust it somehow. And of course that could possibly take a person, an actual person, rather than the computer doing it. And they're still in the IRS having to try to compensate for all the crazy policies that are seemingly to be applied first on the Fed. So manual processing is not their strong point at this point in time, I would think. So ensuring they use the correct payment amounts will help them avoid a processing delay that may slow their refund. Beginning in late January, the IRS will send letter 6475 with the total amount of the third economic impact payment received. People can also view their economic impact payments using the online account. There's a link to the online account here. Advanced child tax credit payments. People will need to know the total amount of advanced payments they received in 2021 to compare them with the full amount of the child tax credit. So we've never done this before and it's another one of these advanced things. But it's the same process. Maybe people are getting more used to it at this point in time. But you're going to have to calculate the credit which is different and then apply the advanced payments to it to see what the remainder of the credit would be. And if they did everything right, I believe that you would still get half of the current calculated credit which was increased from the prior year if the prepayments worked properly. So that they can properly claim when they file their 2021 tax return. People who receive the advanced payments can access their online account to check the total amount of their payments. The IRS is also sending letter 6419 to provide the total amount of advanced child tax credit payments received in 2021. Eligible families who did not get monthly advanced payments in 2021 can still get a lump sum payment by claiming the child tax credit when they file a 2021 federal income tax return this year. This includes families who don't normally need to file a return. Interactive tax assistant. The interactive tax assistant answers general tax law questions including helping to determine if a type of income is taxable or if someone is eligible to claim certain credits and deductions. With changes into income and other life events for many in 2021, tax credits and deductions can be more money to a taxpayer's pocket. Thinking about eligibility now can help make tax filing easier. Online account. Taxpayers can use their online accounts to securely see important information when preparing to file their tax return for following up on balances or notices. Taxpayers can view the amount they owe, make and track payments and view payment plan details. Taxpayers can now also manage their communication preferences to go paperless for certain notices from the IRS or to receive email notifications when the IRS sends them a new digital notice. And this is a huge deal that they're actually going to move away from the snail mail a little bit, get a little bit digital here. You might be able to get some notices from the IRS that are electronically transferred and not going through the mail. Wow, up into the 21st century here, people. They can also access information about economic impact payments and advanced child tax credit payments needed to file a complete and accurate return. Now, to create an account, where's my refund? Taxpayers can check the status of their refund using the where's my refund tool. There's a link to that here. The status is available 24 hours after the IRS accepts their e-filed tax return or up to four weeks after they mailed a paper return. The where's my refund tool updates once every 24 hours, usually overnight. So taxpayers only need to check once a day. Get ready to use direct deposit for tax refund. Direct deposit gives taxpayers access to their refund faster than paper check. Individuals can use a bank account, a prepared debit card or mobile app to use direct deposit and will need to provide routing and account numbers. So again, if you're getting a payment coming to you and you're going to want possibly the direct deposit is going to be, of course, faster than the paper checks and again, the paper checks might involve more processing time for the IRS, which of course, again, they're short on. So if you're getting money back, then it might be good to have the direct deposit. If you're paying them money, then you could give them an electronic payment in that case as well. But again, in that case, you might not be so concerned. And as long as they're not penalizing you, as long as they don't hit you with that big stick of penalties and interest they have over there and they like to whack people with, you can send them, you know, you might send, I'll send them the money in the mail and they could take a year to process it. If that's how it is, that's fine. They could sit at home because they don't want to wear a mask if they go into work or whatever, they don't have their shot or something. So in any case, learn how to open an account at an FDIC insured bank. There's a link to that here or through the National Credit Union Locator Tool. There's a link to that here. Veterans should see the Veterans Benefit Banking Program. There's a link to that here for access to financial services at participating banks. IRS free file. Everyone can file electronically for free starting January 14th. The IRS free file program. There's a link to that here available only through irs.gov or the IRS to go app, which is the super coolest app ever on your phone that you can get the IRS to go app. I don't have it. I'm not super cool yet. But it offers brand name tax preparation software packages. So basically this program is going to have third party providers like, you know, you got TurboTax I believe on there into it. The owner of QuickBooks owns the TurboTax and other big providers. I'm not trying to promote any of them. But then it looks like the IRS kind of pressured them to give a free filing of the software and use their third proprietary software for free if your income is below a certain threshold. If your income is above a certain threshold, then you could still file for free using free file fillable forms. But I wouldn't recommend it because at that point your return is probably fairly complicated and you probably want to buy the software so you have a double check on your calculations and or get tax help at that point since you have significant income at that point possibly. So those who earn 73,000 or less in 2021, they may qualify for free file guided tax software. The software does all the work of finding the deductions, credits and exemptions. I think that's a little bit of an overkill at all. It does all the work. The tax software does all the work. I'm not sure about that. That's a little I'm in any case. Some of the free file offers may include a free state tax return. So if you have a state tax return, you want to make sure that you're taking care of the state needs as well. So you'd like to be able to pick a software that does the state to not just the Fed if you have to file for the state. And that will differ by state. Taxpayers come comfortable filing out of tax tax forms can use free file fillable forms. So you could use the free file fillable forms, which is good for practice, but I wouldn't actually do it for in practice. It's good for practice, but I wouldn't do it in practice. Actually, because it'd be nice to have software that would kind of help you give you a double check, typically it is nice. Even tax professionals, they don't do the fillable forms typically. They're going to use some software because the tax code is complicated and even if you know what you're doing, it's easy to make a math error and so on. So in any case, the electronic federal tax forms paper versions to file their tax returns online, regardless of income, members of the military and qualified veterans can use a mill tax, which is great. And I think it's free no matter what your income level. If you were a member of the military, obviously it's geared towards the military, but the thing I've never really got, I'm still not sure if it's better than like a turbo tax, meaning if you were a member of the military and you could still use turbo tax and I think it has the settings to do what you need to do if you tell them you're a member of the military. But the military, the mill tax is geared just for the military. So if you have the option to get either one free, like a turbo tax or something like that, or mill tax, I'm not sure which would be better. I would kind of imagine that the proprietary software would be better because it's been tested on the free market whereas the mill tax is created from the Department of Defense and therefore it's not really competing against other proprietary softwares to be the best on the market. So I would think it wouldn't be as designed quite as well in my opinion, but I've never used it. So I'd be interested if anybody has and what their experience is on it, if anyone would like to share that. The generally offers free online tax preparation, e-filing software for federal returns and up to three state returns, free tax return preparation site, the IRS Volunteer Income Tax Assistant, the VITA and the tax counseling for the elderly, the TCE programs, offer free tax help and e-file for taxpayers who qualify choosing a preparer. The IRS has several options for finding a tax preparer. The IRS provides an online database to help taxpayers locate an authorized e-file provider. There's a link to that here in their area who can electronically file their tax return. Choosing a tax professional provides information for selecting tax professionals. There's a link to that. The directory for federal tax return preparers with credentials and selected qualifications. There's a link to that here. Can help taxpayers find preparers in their area who qualify, who currently hold professional credentials recognized by the IRS or who hold an annual filing season program record of completion. Taxpayers need to remember that they, not the tax preparer, are responsible for information on their tax return once they sign it. So oftentimes when you get someone else to help you with your tax return, people tend to think like they're the IRS, as if they're the enforcement agent, and know they're acting kind of more like as your agent to help you file the tax return. The responsibility for filing an accurate tax return is still on you. In essence, the tax preparer, or you, the taxpayer, who is hiring a preparer to help you out. So you want to make sure that you're hiring a preparer that's going to be a good preparer and file an accurate return. And so if you hear anything about the preparer, it's going to say, I'm going to take a percentage of your refund or I'll get paid based on the refund you're going to get or something like that. You're going to be suspicious that they're not going to be doing stuff properly. You want them to file a proper return, because if they file a fraudulent return, then the IRS is going to first come back to you typically, even though the preparer advised you to do that. They're first going to generally come back to the taxpayer, and they could have three years generally, that's the statute of limitations generally, unless there's fraud in it or something. They're the government, they can come back anytime they want in reality, it seems like. So they can come back three years later. So if you get a refund this year and then the IRS comes back three years later and takes the refund back plus charges you penalties and interest and causes you all kind of headache to go through the process, that's not worth the refund that you get in the front. So you want to make it accurate typically, obviously in hiring a good professional. Also note that the professional that you hire may differ on your particular needs. So you might have just a tax professional that's really good at making individual tax returns. But if you have a business, then you might need someone that helps you out a little bit with the accounting maybe or knows how to do some adjusting entries as well. And so you might want someone that that would most likely be more like a CPA because they have accounting background training and also then the taxes. Whereas if you have an enrolled agent or something like that, then they might not have as much accounting training, might not help you as much with the accounting problems, but maybe able to do the data entry perfectly fine. Okay, so then we have irs.gov get ready links to online tools, publications and other helpful resources for are available on the get ready page. There's a link to that for more information about planning ahead. See publication 5348 get ready to file. There's a link to that in publication 5349 year round tax planning for everyone. There's links to this resources and all these links and resources here. And there'll be a link to this in the description.