Thomas Rosenburg Tax Preperation

07/26/2022

01/17/2022

The IRS advised taxpayers they shouldn’t file their 2021 returns until the advance child tax credit is reconciled either with IRS Letter 6419 or using IRS transcript data. Not following this advice could result in a delayed refund for your clients, which we all know will cause headaches for everyone.

01/11/2022

The Internal Revenue Service announced on 12/22/2021 that it will issue information letters to Advance Child Tax Credit recipients starting in December (Letter 6419) and to recipients of the third round of the Economic Impact Payments at the end of January (Letter 6475). Using this information when preparing a tax return can reduce errors and delays in processing. For more information, see the IRS New Release page here.

01/11/2022

IRS will begin accepting and processing returns Monday, January 24, 2022, YOU CAN FILE ANYTIME BEFORE THAT

09/18/2021

This is the source for the previous post. It’s in the new budget

They say its requirements would infringe on customer privacy and impose significant compliance costs on financial institutions.

07/28/2021

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06/25/2021

. You qualify for full repayment protection and won’t need to repay any excess amount if your main home was in the United States for more than half of 2021 and your modified adjusted gross income (AGI) for 2021 is at or below the following amount based on the filing status on your 2021 tax return:

$60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower;
$50,000 if you are filing as head of household; and
$40,000 if you are a single filer or are married and filing a separate return.

Your repayment protection may be limited if your modified AGI exceeds these amounts or your main home was not in the United States for more than half of 2021.

For more on the definition of your main home, see Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit. For information on the definition of modified AGI, see Topic C: Calculation of the 2021 Child Tax Credit.

so, if you get excess payments , and your income is below $60,000 for married joint , you don't have to repay

06/25/2021

A1. When you file your 2021 tax return during the 2022 tax filing season, you will need to compare:

The total amount of the advance Child Tax Credit payments that you received during 2021; with
The amount of the Child Tax Credit that you can properly claim on your 2021 tax return.

Excess Child Tax Credit Amount: If the amount of your Child Tax Credit exceeds the total amount of your advance Child Tax Credit payments, you can claim the remaining amount of your Child Tax Credit on your 2021 tax return.

Excess Advance Child Tax Credit Payment Amount: If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment.

In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

06/25/2021

As reported earlier this week, the IRS launched new online tools designed to help families manage and monitor the advance monthly child tax credit (CTC) payments. The first payment will be made on July 15, 2021.

The tools include:

Child Tax Credit Eligibility Assistant: allows families to answer a series of questions to quickly determine whether they qualify for the advance credit
Child Tax Credit Update Portal: allows families to verify their eligibility for the payments and, if they choose to, unenroll or opt out from receiving the monthly payments
Child Tax Credit Non-filer Sign-up Tool: allows eligible individuals who don’t normally file an income tax return to register for payments

06/18/2021

Advanced CTC Non-filer Sign-Up Tool

The IRS has released a tool designed to help eligible families who don’t normally file tax returns to register for the monthly advance child tax credit (CTC) payments.

The Child Tax Credit Non-filer Sign-up Tool, an update of last year’s IRS non-filers tool, is also designed to help eligible individuals who don’t normally file income tax returns register for the third round of economic impact payments (EIP) and claim the recovery rebate credit for any amount of the first two rounds of EIPs they may have missed.

Taxpayers who did not file a tax return for 2019 or 2020 and who did not use the tool last year to register for EIPs should use this updated tool. The tool enables them to provide required information about themselves, their qualifying children age 17 and under, their other dependents and their direct deposit bank information so the IRS can quickly and easily deposit the payments into their checking or savings account.

In the next few weeks, it will also feature other useful new tools, including:

An interactive CTC eligibility assistant to help families determine whether they qualify for the ACTC payments.
Another tool, the Child Tax Credit Update Portal, will initially enable anyone who is eligible for advance payments to see that they are eligible and unenroll/opt out of the advance payment program. Later, it will allow people to check on the status of their payments, make updates to their information and be available in Spanish.

06/04/2021

We’ve been hearing from members that some of their clients are still waiting on refunds when they filed their tax return in February. Some tax returns take longer to process than others, including when a return:

Includes errors such as an incorrect recovery rebate credit (RRC) amount
Was filed with missing information
Is affected by identity theft or fraud
Includes a claim filed for an earned income tax credit or an additional child tax credit using 2019 income
Includes a Form 8379, Injured Spouse Allocation (this can take up to 14 weeks to process)
Needs further review in general
We’ve contacted our IRS liaison who stated that the majority of delayed processing of returns are due to the incorrect recovery rebate credit amount reported, where the IRS’s records show that an economic impact payment (EIP) was issued.

If there is a discrepancy between what was reported on the tax return and what the IRS has on file for the RRC amount (stimulus payments one and two) the IRS is manually verifying the tax return for credit eligibility. If the eligibility has not been met, the IRS will generate Letter 105C or Letter 106C, Correspondence for Disallowing a Claim. This letter provides for appeals rights in disallowing a claim. The taxpayer will have to reply to the correspondence before the IRS will continue processing the return.

However, if the discrepancy is not an eligibility issue, and the IRS records show an EIP was made, the IRS representative is routing the return to the Accounts Management team for further research, which includes tracing EIP funds and identity theft issues.

According to IRS FAQ (Q G2), if you are aware that you filed a return with incorrect RRC information, you should NOT file an amended return.

04/02/2021

Recent Tax Legislation
April 2, 2021
Unemployment Compensation Changes:
The IRS has finally provided guidance on how to handle tax returns that were impacted by the change in Unemployment benefit taxability.

For those returns already filed that are eligible for the unemployment compensation exemption:

The IRS will determine the correct taxable amount of unemployment compensation and tax. Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed.

The IRS can & will adjust returns for those taxpayers who claimed the Earned Income Tax Credit (EITC) and, because the exclusion changed the income level, may now be eligible for an increase in the EITC amount which may result in a larger refund.

The IRS will do these recalculations in two phases:
Starting with those taxpayers eligible for the up to $10,200 exclusion.
Then the IRS will then adjust returns for those married filing jointly taxpayers who are eligible for the up to $20,400 exclusion and others with more complex returns.
The first refunds are expected to be made in May and will continue into the summer.

Amending Tax Returns:
There is no need to amend tax returns already filed unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.

There are a number of items that are impacted by income changes (especially Adjusted Gross Income) that may require you to amend the returns, those would include items like:
Returns where they did not claim an EIC because of original income limitations
IRA contributions and deductions
Tuition tax credits and deductions
Itemized deductions – portions that are subject to income limitations that may change the total itemized deduction vs the standard deduction
Various states that base their tax on the federal income as well as certain states that allow the itemized portion of deductions despite the standard deduction being taken on federal return. (Keep in mind, many states have not commented on accepting the new federal legislation – or deadline extension for that matter)
And others...

For those returns not yet filed:
The IRS has worked with the tax return preparation software industry to reflect these updates in their software. So just follow the guidance provided in your software.

Please see the IRS information at this link for more details.
https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-may

EIP 3 - Payments Continuing
The IRS and Treasury Department announced this week that they anticipate payments will begin to be issued this weekend to Social Security recipients and other federal beneficiaries who do not normally file a tax return, with the projection that the majority of these payments would be sent electronically and received on or after April 7.

After receiving data from the Social Security Administration on Thursday, March 25, the IRS began the multi-step process to review, validate, and test tens of millions of records to ensure eligibility and proper calculation of Economic Impact Payments. If no additional issues arise, the IRS currently expects to complete that work and to begin processing these payment files for next week. Because the majority of these payments will be disbursed electronically – through direct deposits and payments to existing Direct Express cards – they would be received on or after the official payment date of April 7.

IR-2021-71, March 31, 2021 — To help taxpayers, the Internal Revenue Service announced today that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue P...