Author Archives: c18488809

Advance Child Tax Credit: Should You Opt Out?

It may be a good idea if you usually owe the IRS money or think you will owe at the end of the year.

The new advance child tax credit payments start July 15, 2021. Half of the total credit amount will be issued in advance monthly payments, and the remaining half will be paid as a credit with your 2021 tax return.   However, you can choose to opt out of the advance payments.

There are two scenarios when it might make sense to opt out.

  1. If you usually owe taxes or are very close to owing when you file your taxes, you should consider opting out because the credit amount you are accustomed to receiving will be less.
  2. If you take turns “claiming” your kids.  If you claimed your kids in 2020 but will not be claiming them in 2021, you need to opt out because you will have to repay any advance payments you received!

The following link sends you to the IRS website to Unenroll from Advance Payments: IRS Child Tax Credit Update Portal

 

IRS Experiencing Processing Delays

IMPORTANT INFORMATION CONCERNING YOUR 2020 TAX REFUND

The Taxpayer Advocate Service (TAS) is aware that taxpayers are experiencing more refund delays this year than usual. Typically, the IRS processes electronic returns and pays refunds within 21 days of receipt. However, the high volume of 2020 tax returns being filed daily, backlog of unprocessed 2019 paper tax returns, IRS resource issues, and technology problems are causing delays. This is due, in part, to the IRS’s need to manually verify large numbers of Refund Recovery Credits (RRCs), as well as Earned Income Tax Credit (EITC) and Advance Child Tax Credit (ACTC) 2019 adjusted income lookback claims. Once a return is processed by the IRS and loaded on to the IRS systems, TAS may be able to assist with delayed refunds if you meet our case criteria. Please review our case criteria tool to determine if TAS may be able to assist.

Currently, the vast majority of processing delays result from tax returns not loaded onto the IRS system or in “suspense” status awaiting IRS action. To date, over 6 million electronic returns have been “suspended” due to issues requiring manual processing or return inconsistencies. Until these returns move out of suspense status, neither the IRS nor TAS can access these cases to work them or provide taxpayers with any additional information. TAS cannot accept refund delay cases that are in suspense, including requests for assistance made through the Systemic Advocacy Management System (SAMS). Until the tax return is posted on the IRS system, neither TAS nor the IRS can see or access the return information. And until TAS can see the return on the system, we cannot advocate to resolve any issues. TAS is working with the IRS to identify how taxpayers can use the Where’s My Refund tool to determine their status.

TAS understands the frustrations and hardships caused by these unprecedented circumstances. Please be patient if you learn your refund claim is not yet processed and understand why TAS cannot accept your case at this time. We continue to work with the IRS to identify ways to address this backlog. TAS will continue to update its case acceptance criteria as the situation changes. Meanwhile, you are encouraged to check the IRS.gov page, Where’s My Refund, for the most current information on the processing of your return. The IRS also has information on this issue at IRS.gov/newsroom and IRS.gov/refunds. We will continue to update taxpayers on the delays and any progress we make.

Source: The Taxpayer Advocate Service (TAS) is an independent organization within the IRS.

IRS Sending Interest to Individual Taxpayers

Last week, the Treasury Department announced that the Internal Revenue Service will send interest payments to individual taxpayers who filed their 2019 federal income tax returns by the July 15 deadline and are due a refund.

The extension of the 2019 filing deadline to July 15, 2020, due to COVID-19, was considered a disaster-related postponement.  When there is a disaster-related postponement, the IRS is required, by law, to pay interest, calculated from the original April 15 filing deadline, as long as an individual files a 2019 federal income tax return by the postponed deadline, which was July 15, 2020. This refund interest requirement only applies to individual income tax filers.  Businesses are not eligible.

These interest payments are taxable; therefore, taxpayers must report the interest on their 2020 federal income tax return. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.

For more information, visit IRS.gov.

IRS Tax Scams & Consumer Alerts

IMPORTANT – PLEASE READ – IMPORTANT – PLEASE READ – IMPORTANT

The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.  In addition, IRS does not threaten taxpayers with lawsuits, imprisonment or other enforcement action.  Being able to recognize these tell-tale signs of a phishing or tax scam could save you from becoming a victim.

An aggressive and sophisticated phone scam targeting taxpayers, including recent immigrants, has been making the rounds throughout the country. Callers claim to be employees of the IRS, but are not. These con artists can sound convincing when they call. They use fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make it look like the IRS is calling.  Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting. Or, victims may be told they have a refund due to try to trick them into sharing private information. If the phone isn’t answered, the scammers often leave an “urgent” callback request.

Note that the IRS will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Ask for credit or debit card numbers over the phone.

Remember: Scammers Change Tactics — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but variations of the IRS impersonation scam continue year-round and they tend to peak when scammers find prime opportunities to strike.

For additional information, visit the IRS website https://www.irs.gov/uac/tax-scams-consumer-alerts

IRS Warning: Avoid scams related to COVID-19 economic payments

The IRS urges taxpayers to be on the lookout for scam artists trying to use the economic impact payments as cover for schemes to steal personal information and money.

Remember, the IRS will not call , text you, email you or contact you on social media  asking for personal or bank account information – even related to the economic impact payments! Beware of emails with attachments or links claiming to have special information about economic impact payments or refunds.  Never click on links or attachments from unknown sources.

Payment recipients will receive an IRS letter: For security reasons, the IRS plans to mail a letter about the economic impact payment to the taxpayer’s last known address within 15 days after the payment is paid. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If a taxpayer is unsure they’re receiving a legitimate letter, the IRS urges taxpayers to visit IRS.gov to protect against scam artists.