What To Do If You Missed the April Tax Deadline

What To Do If You Missed the April Tax Deadline

Monday, April 18, 2022, was the tax deadline for most taxpayers to file their tax returns, but if you haven’t filed a 2021 tax return yet, it’s not too late. Here’s what you need to do:

First, gather any information related to income and deductions for the tax years for which a return must be filed, then call the office to set up an in-person or virtual appointment.

If you are owed money, then the sooner you file, the sooner you will get your refund. If you owe taxes, file and pay as soon as you can, which will stop the interest and penalties you owe.

If you owe money but cannot pay the IRS in full, pay as much as you can when filing your tax return to minimize penalties and interest. The IRS will work with taxpayers suffering financial hardship. If you continue to ignore your tax bill, the IRS may take collection action.

Some taxpayers may have extra time to file their tax returns and pay any taxes due. These include: individuals living or working in a federally declared disaster area, military service members and eligible support personnel in combat zones, and U.S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico.

How To Make a Payment

There are several ways to make a payment on your taxes: credit card, electronic funds transfer, check, money order, cashier’s check, or cash. If you pay your federal taxes using a major credit card or debit card, there is no IRS fee for credit or debit card payments, but processing companies may charge a convenience fee or flat fee. It is important to review all your options. The interest rates on a loan or credit card could be lower than the combination of penalties and interest imposed by the Internal Revenue Code.

What To Do if You Can’t Pay in Full

Taxpayers who cannot pay the full amount owed on a tax bill are encouraged to pay as much as possible. By paying as much as possible now, the amount of interest and penalties owed will be less than if you pay nothing at all. Based on individual circumstances, a taxpayer could qualify for an extension of time to pay, an installment agreement, a temporary delay, or an offer in compromise. Don’t hesitate to call if you have questions about any of these options.

Direct Pay. For individuals, IRS Direct Pay is a fast and free way to pay directly from your checking or savings account. Taxpayers who need more time to pay can set up either a short-term payment extension or a monthly payment plan.

Payment Plans. Most people can set up a monthly payment plan or installment agreement that gives them more time to pay. However, penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the installment agreement/payment plan. You should pay as much as possible before entering into an installment agreement.

 

Taxpayers who have a history of filing and paying on time often qualify for penalty relief. A taxpayer generally qualifies if they have filed and paid timely for the past three years and meet other requirements.

 

Your specific tax situation will determine which payment options are available to you. Payment options include full payment, a short-term payment plan (paying in 120 days or less), or a long-term payment plan (installment agreement) (paying in more than 120 days). User fees may apply depending on the type of installment plan you are approved for. A sole proprietor or independent contractor should apply for a payment plan as an individual.

You may qualify to apply online if:

  • Long-term payment plan (installment agreement): You owe $50,000 or less in combined tax, penalties, and interest and filed all required returns.
  • Short-term payment plan: You owe less than $100,000 in combined tax, penalties, and interest.

Cash Payments. Individual taxpayers who do not have a bank account or credit card and need to pay their tax bill using cash are able to make a cash payment at participating PayNearMe payment locations (places like 7-Eleven) in 44 states. Individuals wishing to take advantage of this payment option should visit the IRS.gov payments page, select the cash option in the other ways you can pay section, and follow the instructions.

What Happens if You Don’t File a Past Due Return

It’s important to understand the ramifications of not filing a past due return and the steps that the IRS will take. Taxpayers who continue to not file a required return and fail to respond to IRS requests for a return may be considered for various enforcement actions – including substantial penalties and fees. For example, the failure-to-file penalty is 5 percent of the tax owed for each month or part of a month that a tax return is late. However, this penalty is reduced for any month where the failure to pay penalty also applies. The basic failure-to-pay penalty rate is generally 0.5 percent of unpaid tax owed for each month or part of a month.

Need Help Filing Your 2021 Tax Return?

If you haven’t filed a tax return yet, don’t delay. Contact us today to schedule an appointment as soon as possible.

Getting Ready for the 2022 Tax Filing Season

Getting Ready for the 2022 Tax Filing Season

Filing your tax return promises to be just as complicated as always – especially if you received stimulus payments or advance child tax credit payments. However, there are steps that taxpayers can take right now to make sure their tax filing experience goes smoothly in 2022. Let’s take a look at four things taxpayers can do now to get ready for tax season:

Gather and Organize Tax Records

Organized tax records make preparing a complete and accurate tax return easier. They help avoid errors that lead to processing delays that slow refunds. Having all needed documents on hand before taxpayers prepare their return helps them file it completely and accurately. Important tax records you need to file a return include:

Forms W-2 from employers

Forms 1099 from banks, issuing agencies, and other payers, including unemployment compensation, dividends, distributions from a pension, annuity, or retirement plan

Form 1099-K, 1099-MISC, W-2, or other income statements for workers in the gig economy

Form 1099-INT for interest received

Other income documents and records of virtual currency transactions

Taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years.

These types of Income documents help taxpayers determine if they’re eligible for deductions or credits. For example, people who need to reconcile their advance payments of the child tax credit and premium tax credit will need their related 2021 information. Those who did not receive their full third Economic Impact Payments will need their third payment amounts to figure and claim the 2021 recovery rebate credit.

 Taxpayers should also keep end of year documents such as:

 Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments

Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the recovery rebate credit

Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage

Confirm Mailing and Email Addresses and Report Name Changes

To make sure forms make it to taxpayers on time, they should confirm now that each employer, bank, and other payer has their current mailing address or email address. People can report address changes by completing Form 8822, Change of Address and sending it to the IRS. Taxpayers should also notify the postal service to forward their mail online at USPS.com or their local post office. They should also notify the Social Security Administration of a legal name change.

 View Account Information Online

Individuals who have not set up an Online Account yet should do so soon. People who have already set up an Online Account should make sure they can still log in successfully. Taxpayers can use Online Account to securely access the latest available information about their federal tax account.

 Review Proper Tax Withholding and Make Adjustments if Needed

Taxpayers may want to consider adjusting their withholding if they find they owe taxes or receive a large refund in 2021. Changing withholding can help avoid a tax bill or let individuals keep more money each payday. Life changes – getting married or divorced, welcoming a child, or taking on a second job – may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee’s Withholding Certificate, each year and when personal or financial situations change.

 People also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits, and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on January 18, 2022.

 Tax Season is Right Around the Corner

Filing taxes is inevitable for most people, and with tax law becoming more complex with every passing year, there’s no better time to get ready than right now. Contact us today for a free consultation to find out how we can help.

2022 tax filing season begins Jan. 24; IRS outlines refund timing and what to expect in advance of April 18 tax deadline

2022 tax filing season begins Jan. 24; IRS outlines refund timing and what to expect in advance of April 18 tax deadline

WASHINGTON − The Internal Revenue Service announced that the nation’s tax season will start on Monday, Jan. 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, Oct. 17, 2022, to file.

ADVANCE CHILD TAX CREDIT AND EIP MUST BE RECONCILED ON YOUR 2021 RETURN

ADVANCE CHILD TAX CREDIT AND EIP MUST BE RECONCILED ON YOUR 2021 RETURN

Article Highlights

  • American Rescue Plan
  • Advance Payments
  • Payment Reconciliation
  • IRS Letter 6419
  • Refund May Not Be as Expected
  • Unusual CTC Circumstances
  • Economic Impact Payment Letter 6475

Early in 2021, Congress passed the American Rescue Plan which included a provision that increased the child tax credit amount and upped the age limit of eligible children. Normally, the credit was $2,000 per eligible child under age 17. For the 2021 tax year, the American Rescue Plan increased the credit to $3,000 for each child under age 18 and to $3,600 for children under age 6 at the end of the year.

Even though the benefit of a tax credit traditionally isn’t available until after the tax return for the year has been filed, for 2021 the new tax law included a provision to get the credit benefit into the hands of taxpayers as quickly as possible and charged the Secretary of the Treasury with establishing an advance payment plan. Under this mandate, those qualifying for the credit would receive monthly payments starting in July equal to 1⁄12 of the amount the IRS estimated the taxpayer would be entitled to by using the information on the 2020 return. If the 2020 return had not been filed or processed yet by the IRS, the 2019 information was to be used.

However, since the IRS only estimated the amount of the advance payments, some taxpayers may have received too much and others not enough. Thus, the payments received must be reconciled on the 2021 tax return with the amount that each taxpayer is actually entitled to. Those who received too much may be required to repay some portion of the advance credit while some may be entitled to an additional amount.

To provide taxpayers with the information needed to reconcile the payments, the IRS has begun sending out Letter 6419, an end-of-year statement that outlines the payments received as well as the number of qualifying children used by the IRS to determine the advance payments. For those who filed jointly on their prior-year return, each spouse will receive a Letter 6419 showing the advance amount received.

Do not discard the letter(s) from the IRS as they will be required to properly file 2021 returns.

Having received the advance credit payment, taxpayers will find their refunds will be substantially less than they may have expected, or they might even end up owing money on their tax return unless their AGI is low enough to qualify for the safe harbor repayment protection for lower-income taxpayers, in which case the excess advance repayment is eliminated or reduced.

Example: If a taxpayer received advance child tax credit payments for two children based on the 2020 return, and the taxpayer doesn’t claim both children as dependents in 2021, the taxpayer would need to repay the excess on their return, unless they are protected by the safe harbor provision.

It is also possible that one taxpayer could have received the advance child tax credit payments based on their 2020 return and not have to make a repayment under the safe harbor rule, while another taxpayer, who can legitimately claim the child, can get the credit on their 2021 tax return. This is most likely to happen when the parents are divorced. So, there’s the potential for the child tax credit to be received by both parents.

Economic Impact Payment (EIP) Letter – The IRS will begin issuing Letter 6475, regarding the third Economic Impact Payment, to EIP recipients in late January. This letter will EIP recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns filed in 2022.

Letter 6475 only applies to the third round of Economic Impact Payments that were issued starting in March 2021 and continued through December 2021. The third round of EIPs, including the “plus-up” payments, were advance payments of the 2021 Recovery Rebate Credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third EIP based on a 2019 tax return or information received from the Social Security Administration, Railroad Retirement Board, or Dept. of Veterans Affairs; or to people who may be eligible for a larger amount based on their 2020 tax return.

Most eligible people already received the payments. However, those who are missing stimulus payments should review the information to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020 or 2021.

Like the advance CTC letter, the EIP letter includes important information that can help tax preparers quickly and accurately reconcile the Recovery Rebate Credit when preparing 2021 tax returns.

Make final 2021 quarterly tax payment by Jan. 18; avoid surprise tax bill, possible penalty

Make final 2021 quarterly tax payment by Jan. 18; avoid surprise tax bill, possible penalty

IRS Newswire: IR-2022-03 January 5, 2022

WASHINGTON − The IRS urges taxpayers to check into their options to avoid being subject to estimated tax penalties, which apply when someone underpays their taxes. Taxpayers who paid too little tax during 2021 can still avoid a surprise tax-time bill and possible penalty by making a quarterly estimated tax payment now, directly to the Internal Revenue Service. The deadline for making a payment for the fourth quarter of 2021 is Tuesday, Jan. 18, 2022.
Income taxes are pay-as-you-go. This means that taxpayers need to pay most of their tax during the year as income is earned or received. There are two ways to do this:
• Withholding from paychecks, pension payments and some government payments, such as Social Security benefits or unemployment compensation. Most people pay their tax this way.
• Making quarterly estimated tax payments throughout the year to the IRS. Self-employed people and investors, among others, often pay tax this way.
Act now to avoid a penalty
Either payment method–withholding or estimated tax payments–or a combination of the two, can help avoid a surprise tax bill at tax time and the accompanying penalty that often applies.
If a taxpayer failed to make required quarterly estimated tax payments earlier in the year, making a payment soon to cover these missed payments will usually lessen and may even eliminate any possible penalty. Because the penalty calculation considers the date on which the payment or payments were made, even making a payment now, rather than waiting until the April filing deadline, often helps.
Who needs to make a payment
People who owed tax when they filed their 2020 tax return may find themselves in the same situation again when they file for 2021. This will likely be true, especially if they failed totake action to avoid another shortfall by increasing their withholding during 2021.
People in this situation often include those who itemized in the past but are now taking the standard deduction, two wage-earner households, employees with non-wage sources of income and those with complex tax situations.
In addition, families who received advance payments of the Child Tax Credit during 2021 but don’t expect to qualify for the credit when they file their 2021 return, may need to make an estimated tax payment.
Additional points to consider:
• Most income is taxable. Besides wages, interest and other investment income, which also includes income related to virtual currencies, refund interest and income from the gig economy are taxable.
• Unemployment compensation is fully taxable in 2021. The American Rescue Plan Act of 2021 allowed an exclusion of unemployment compensation of up to $10,200 for 2020 only. Often, this means that an estimated tax payment should be made, especially if no federal income tax was withheld from these payments.
• Various financial transactions, especially late in the year, can often have an unexpected tax impact. Examples include year-end and holiday bonuses, stock dividends, capital gain distributions from mutual funds, and stocks, bonds, virtual currency, real estate or other property sold at a profit.
The Tax Withholding Estimator, available on IRS.gov, can often help people determine if they need to make an estimated tax payment.
Alternatively, taxpayers can use the worksheet included with estimated tax form 1040-ES, also available on IRS.gov. In addition, Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.
How to make an estimated tax payment
The fastest and easiest way to make an estimated tax payment is to do so electronically using IRS Direct Pay. Taxpayers can schedule a payment in advance for the January deadline.
Taxpayers can now also make a payment through their IRS Online Account. There they can see their payment history, any pending or recent payments and other useful tax information.
The IRS does not charge a fee for these services. Plus, using these or other electronic payment options ensures that a payment gets credited promptly.
For information on other payment options, visit IRS.gov/payments.

What To Do If You Missed the April Tax Deadline

Fourth Stimulus Check 2022: How to get a $1,400 payment in 2022

By Marca English, US News, December 15, 2021

Some people in the United States of America are set to receive a payment of up to $1,400 on top of their tax refund in 2022, but in order to do so certain criteria will have to be met. To stand to receive such a payment, American citizens must either be a parent of a child who was born in 2021, or those who have a new dependent.

Why is there another check happening?

All these new economic measures are part of the new American Rescue Plan, which made $1,400 payments available for individuals and their dependent children.

Another stimulus payment?

Most people have already had their full payment come in, but those who had eligible children in 2022 are able to claim the Recovery Rebate Credit on their next tax return.

The Economic Impact Payments, otherwise referred to as stimulus checks, were sent out during 2021 and these are advance payments of the Recovery Rebate Credit.

If you did not receive the full amount you were expecting by December 31, you can claim the remainder of the money when you submit your taxes in 2022.

Given that the 2021 Economic Impact Payments were calculated off of a person’s 2020 or 2019 return, any eligible dependents who became a member of the family in 2021 will not have been included in the calculation nor the payment.

Will every State be giving these checks?

Every State will be receiving a Federal budget to administrate these funds, but it will solely depend on each State’s Administration to decide how to spend these funds and which different benefits will be part of this plan.

Qualifying for Recovery Rebate Credit

Should you qualify for the Recovery Rebate Credit, you are able to claim the child on your 2021 tax return, which will be completed in 2022.

Those who qualify for an additional payment via the American Rescue Plan will be able to have the credit arrive as part of their 2021 refund.

In order to qualify, dependents must be under 19 at the end of the year unless they are a student, or any age but are permanently disabled. In addition, the dependent must be a child, brother, sister, foster child, stepbrother, stepsister, half-brother or half-sister, or a descendent of any of them.

There are some income requirements that must be met to receive the Recovery Rebate Credit payment, though, as taxpayers can receive the full amount if they have an adjusted gross income under $75,000, or an income of $150,000 and are married and filing jointly.

IRS plus-up payments

The plus-up payments are additional stimulus checks that are sent out to people who were sent a stimulus check based on their 2019 tax return or information that was on the Social Security Administration’s system.

If you are a taxpayer in the USA whose income was lower in 2020 than it was in 2019, then you are eligible to receive what is being referred to as a plus-up payment. (https://www.marca.com/en/lifestyle/us-news/2021/12/15/61b9d79aca4741af6c8b45a5.html)

2022 tax filing season begins Jan. 24; IRS outlines refund timing and what to expect in advance of April 18 tax deadline

Tax Return Season 2022: How can taxpayers get ready for 2022?

By Marca English, US News, 12/13/2021

The final weeks of the year mean that tax season is almost upon us, so there are some things that you can do to make your life a little easier before it is time to file your tax return next year.

Some programs, like Economic Impact Payments and advance Child Tax Credit payments, need to have action taken in December. Therefore, it is best not to wait too long in these cases.

Advance Child Tax Credit payments

If you received the advance Child Tax Credit payments in 2021, you will need to compare this with the Child Tax Credit amount that you are able to claim on your 2021 tax return.

If you received less than what you were expecting to get, you will be able to claim a credit for the outstanding Child Tax Credit amount on your 2021 tax return.

Conversely, if you received more than what you were expecting, you may need to repay some or all of the payment when it comes time to file.

January 2022 will see the IRS sent out Letter 6419, which will tell people how much they received in terms of Child Tax Credit payments in 2021.

Those eligible families that did not take up the option to receive monthly Child Tax Credit payments will be able to receive a lump-sum payment when they hand in their 2021 federal income tax return next year.

Economic Impact Payments

Those individuals who did not qualify for the third Economic Impact Payment or only received a partial amount could be eligible when it comes to the Recovery Rebate Credit, which is based on the information you provide in your 2021 tax return.

In order to receive the credit, though, you will have to file your 2021 tax return, even if you usually don’t hand one in. (https://www.marca.com/en/lifestyle/us-news/2021/12/13/61b772b4268e3e7d558b45c5.html)

Government Shutdown Expected to be Averted

Government Shutdown Expected to be Averted

Congress and the president have until midnight tonight to pass a continuing resolution to avoid a government shutdown. As of this morning, reports are that Congress has come to an agreement to pass a stopgap funding bill that will keep the government funded at current levels through Dec. 3.

However, unlike the proposed resolution from last week, this one does not address the approaching debt limit. Treasury Secretary Janet Yellen warned that the federal government will likely run out of cash and extraordinary measures by Oct.18.

If government appropriations were to lapse, the IRS has a contingency plan, which identifies the following activities that would continue:

  • Activities necessary for the payment of refunds
  • Completion and testing of the upcoming filing year programs
  • Processing remittances
  • Processing disaster relief transcripts
  • Processing mail
  • Responding to taxpayer questions (call sites; only if during filing season)
  • Continuing the IRS’s computer operations to prevent the loss of data
  • Protection of statute expiration, bankruptcy, liens and seizure cases
  • Upcoming tax year forms design and printing

The plan also identifies activities that would cease:

  • Processing non-disaster relief transcripts
  • All audit functions and examination of returns
  • Non-automated collections
  • Taxpayer services such as responding to taxpayer questions (call sites; during non-filing season)

Planning, research, training and development activities (except as necessary to perform excepted activities, e.g., filing season or needed to perform exempt activities) (Source: NATP TAXPRO Weekly,  9/30/21).

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