 Internal Revenue Service IRS tax news, tax time guide, American Rescue Plan changes can boost refunds from many families, people should file even if they haven't for years. But first, an attempt at a joke I apologize in advance. I just started with the IRS, a game of TAT for TIT, which is a kind of advanced form of the game of TIT for TAT, except that it confuses your opponent more if you start off with a TAT instead of a TIT. Plus, I like to hold on to my TITs and pick it up a couple more in the process of the game. Well, that's a welcome exchange. Plus, I currently have more TATs than I know what to do with. I'm not even sure what that one on my left shoulder is supposed to be anymore. That's the one I'm sending out next. IR 2022-29, February 8, 2022 Washington, the Internal Revenue Service today urged Americans to file a 2021 federal income tax return so they could take advantage of key tax benefits included in the American Rescue Plan and other recent legislation. So obviously, there's been a lot of changes to the laws, lately many of those changes have been going through the Internal Revenue Service and the tax code and a lot of them are going to be geared towards low to moderate income families. So you want to make sure that you pick up everything you can and typically to do that you're going to need to file the tax return because you will be dealing with possible flipside, at least in part of some of these new laws and legislations and that will be, of course, inflation. So you might as well get the benefit over here, which is going to be the possible money. And then because you're going to have to be dealing with the other side of things that might be at least in part due to some of these changes to the laws and certain legislations and whatnot, that being inflation, at least on a temporary basis, possibly for a longer term basis. So that means that it used to be before, if your income was below a certain level, you might say, hey, I'm not going to file taxes because I don't owe any taxes and the IRS would be typically okay with that because if you had less tax or less income, for example, then say your standard deduction, then clearly you're not going to owe any taxes and therefore you don't need to typically file at that point and the only reason you might want to file possibly is because you had W-2 withholding since you want to basically claim and get back. But more and more, they're putting in place what we call refundable credits. These are going to be credits that you still get a benefit from, which you can call like a refund, but it's not really a refund at that point, even if your tax liability goes basically below zero. And so to get those credits, you still have to file the tax return oftentimes. Those credits are going to include things like the child tax credits and the earned income tax credit, possibly the recovery rebate credits. Okay, often individuals and families can get these exempted tax benefits. There's a link to that here, even if they have little or no income from a job, business, or other source. This means that many people who don't normally need to file a return should consider doing so this year because claiming these benefits could result in tax refunds for many people. Individuals should file an accurate return electronically. There's a link to that here and choose direct deposit to avoid processing delays and speed delivery of their refunds. So if you want to get the refund as fast as possible, you want to do it electronic filing. You want to use the software that possibly could be available through the free file software that you can search for on the IRS website, irs.govirs.com. And then you want to make sure that you do it accurately, which the software should help you to do, because if it's not accurate, it's possible that it will be delayed and the delays can be quite long at this point in time due to the backlogs that have been a result on the IRS side dealing with all these kind of restrictions and staff shortages or declines and COVID requirements and so on and so forth. And the direct deposit could save time as well as they'll be able to process the checks electronically that takes less manpower on the IRS side as well and makes it easier for them to just automatically process these things through. So Expanded Tax Benefits, a new fact sheet, FS2022-10, there's a link to that here. Available now on irs.gov describes many of these Expanded Tax Benefits, but the IRS emphasized that these benefits are only available to people who filed 2021 federal income tax return benefits include and Expanded Child Tax Credit, there's a link to that here. Families can claim this credit, even if they've received monthly advance payments during the last half of 2021. So we're used to the Child Tax Credit, if you've filed tax returns in the past and you qualify for the Child Tax Credit, you're probably very aware of it because it can be quite significant. But they increased the Child Tax Credit significantly for 2021 and then they in essence tried to take half of it if everything worked out properly and they got the calculation correct and sent it out as prepayments. So even if you got the prepayments for the Child Tax Credit, you should still get the Child Tax Credit or some benefit from it from filing the tax return and so you want to make sure to do that in that event, in that situation. It'll be a little bit more confusing to do so because you're going to have now the advance payments, you'll have to apply out, the Child Tax Credit will be different to calculate and so on and so forth, so you probably want tax software to help out with that and you also want to make sure that you understand or know how much you got from the IRS, which they should send you a letter out about or you can take a look at it on your account, which I would recommend logging into so that you can check this stuff on your account on irs.gov and increase child and dependent care credit. There's a link to that here. Families who pay for daycare so they can work or to work can get a tax credit worth $4,000 for one qualifying person and $8,000 for two or more qualified persons and more generous earned income tax credit. There's a link to that here. This is one of the big ones generally. The American Rescue Plan boosted the EITC for childless workers. There are also changes that can help low and moderate income families with children. So the earned income tax credit could be quite significant but it's based on a lot of different factors including how much income you had that you worked on and it actually goes up as your income goes up, your earned income goes up and then it levels off at some point and then it goes back down and attempt. And this is what economists actually like because it basically is trying to give benefits to people that need the benefits without the downside which is to disincentivize people from working, take away their drive to want to work because if they work they lose the benefits and so why would they, you know, who doesn't, so that's tries to do that but in order to do that it's kind of complex and they tied in the child tax or the child component to it or dependent component to it so there's a different kind of arc that you can imagine if you're going to be having no children, one children, two children or three children and so you probably want tax software to help you calculate that one because it's kind of confusing plus they actually added that you can take into consideration the prior year net income, I believe they still have that this year in order to calculate the earned income tax credit which again that's nice, it could be beneficial to a lot of people but confusing, confusing is it not so tax software, check it out, the recovery rebate credit there's a link to that here, those who missed out on last year's third brown economic impact payments, the EIP3 also known as stimulus payments may be able to claim the RRC, the recovery rebate credit this credit can also help eligible people whose EIP3 was less than the full amount including those who welcomed a child in 2022 so the recovery rebate credit is kind of like the child tax credit in that it has an advanced portion to it at this point in time in other words the child tax credit has the advanced child tax credit the prepayments that went out which you can clearly see is tied to the child tax credit because it means it's an advanced thing and child tax credit whereas the recovery rebate credit has the advanced portion of it too but in that case they give the whole thing out if they can if they didn't miscalculate it and it's not named an advanced something but rather just a stimulus check and so it's a little bit more confusing for people to get that link between the economic impact payments or stimulus checks as being the advanced payments of the recovery rebate credit which if you got it properly if they did things right if there's not a complex situation for example a new child coming into the world that they didn't take into consideration because they didn't have that information because they based it on the prior year then if everything was right you wouldn't have to really do much on the tax return because you would have already got the entire thing if it was wrong because of one of those elements then you would need to file for the recovery rebate credit also note that this is the third economic impact payment which is tied to the 2021 tax return which we're going to be filing with the form 1040 by typically April 15 this time April 18 I believe of 2022 the first two stimulus payments have a similar situation but they're on the prior year tax return 2020 and so you would have to do the if there's any problem with those two you'd have to pick up the recovery rebate credit for 2020 this is something the iris is expecting many people to get wrong and I'm going to say right now I think a lot of people will get mixed up on this stuff and file their tax returns incorrectly which is going to force it into a backlog and and then it's going to delay a lot of people's returns if you don't want to get your return delayed because they've got a huge backlog and I expect it to be increasing with this kind of stuff then you want to get that piece straight because that's that's probably one of those things that'll throw you and throw you into a long delay if it's not quite right tax software will help a deduction for gifts to charity the majority of taxpayers to take a standard deduction can deduct eligible cash contributions they made during 2021 married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations in addition itemizers who make large cash donations often qualify to deduct the full amount in 2021 so charitable deductions generally are on the schedule a you can still put them on the schedule a but the schedule a is becoming less of a force for low to moderate income families because they increase the standard deduction in a deliberate attempt to simplify the tax code because generally if you're itemizing that's something that's typically benefiting more well-off individuals because only more well-off individuals typically have enough of the itemized deductions to take them however as that happens some of the things that we kind of like in the itemized deductions tend to I would believe or predict what's going to happen are going to leak over into other areas of the code such as what has happened with the charitable deduction so it's kind of there's a there's a mini charitable deduction that's offered outside of the itemized deduction so that you can take it even if you are standardizing so we'll see what happens with the tax code going forward it's going to be interesting to see what what happens with these with the tax law going forward so we'll see so see see the fact sheet for more information the IRS reminds early filers that by law the agency cannot issue the EITC refunds that's the economic impact payments before mid-February the same rule applies to refunds that include the additional child tax credit the ACTC this year the ACTC is typically claimed by Americans abroad who did not have a main home in the United States for more than half of 2021 and I believe that's because these are these because they're refundable they have a huge incentive for the fraudsters to try to steal people's information and try to take to get some of this money that's on the refundable tax credits so in an attempt to stop that inevitable thing that's going to happen when you got this large amount of refundable cash that's going out they try to basically delay the tax returns in an attempt to be better able to catch at least some of that activity going on so normally the mid-February restriction does not apply to the refundable child tax credit the RCTC claimed by people who had a main home in the U.S. unless they also claim the EITC helpful reminders the IRS urges everyone to make sure they have all their year-end statements in hand before filing their 2021 return besides all W-2s and 1099s this includes two statements issued by the IRS letter 6419 there's a link to that here showing the total advanced child tax credit payments at letter 6475 there's a link to that here showing their total EIP three payments so they're hoping that sending out these letters are going to help people to not make errors with these new changes to the tax law good luck to them but I think they're going to be a lot of errors that are still made but you want to do your tax return properly and if and if you're helping anyone else out to do them you want to do them properly because if they're not correct then there could be backlogged and put into a delayed status individuals can also use IRS online account to see the total amounts of their third round of economic impact payments or advanced child tax credit payments married spouses who receive joint payments will each need to sign into their own account to retrieve their separate amounts for most Americans the tax filing deadline is April 18th 2022 there's a link to that here for residents of Maine and Massachusetts the deadline is April 19th of 2022 the Americans who live and work abroad it's June 15th 2022 anyone who needs more time to file can get an automatic extension until October 17th 2022 so taxpayers can find answers to questions forms and instructions and easy to use tools online at irs.gov they can they can use these resources to get help when it's needed at home at work or on the go these news releases is part of a series called tax time guide a resource to help taxpayers file an accurate tax return additional help is available in publication 17 your federal income tax there's links to a lot a lot of that stuff here there'll be a link to this in the description