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Today is EITC Awareness Day! OK, Jan. 28 isn't an official holiday to celebrate the Earned Income Tax Credit, usually referred to (at least in the tax world) by its acronym EITC. But it is an annual event promoted by the Internal Revenue Service. Every year in late January, the tax agency focuses on getting the word out about the EITC. The reason is simple. Millions of individuals regularly overlook the EITC and surrendering thousands of dollars they could use. The EITC itself, however, is not so easy to claim. That's why a lot of folks ignore it. The IRS... Read more →


Reddit Just before this year's tax filing season officially opened, a group of 11 tax-related groups sent the Internal Revenue Service a letter urging it, among other things, to stop sending some automated notices. Today, that group, which dubbed itself Tax Professionals United for Taxpayer Relief Coalition, got some good news. The IRS has agreed to stop sending automated CP-80 notices. In a statement posted today to IRS.gov, the IRS said: "…[W]e have already decided to suspend notices in situations where we have credited taxpayers for payments but have no record of the tax return being filed. In many situations,... Read more →


As COVID-19 continued into 2021, so did Congressional creation of relief payments. A third round of coronavirus-related cash started going out in late last March. This most recent economic impact payment (EIP) shared a lot of similarities with the two earlier versions. It was an advance tax credit. It was distributed by the Internal Revenue Service. The amount delivered was based on prior-year information in the IRS database. Some eligible individuals didn't get the maximum available (or any) of the third EIP amount. That last bullet point about missing EIP money produces one more similarly. Folks who didn't get the... Read more →


The standard deduction always has been appealing because it's easier. There are no receipts to collect, no Schedule A to fill out. When you add in the Tax Cuts and Jobs Act's standard deduction increases, even more taxpayers saw their standard amounts exceed their itemized claims. Since you always want to use the deduction method that gives you the larger claim, using the standard deduction became a no-brainer for millions more filers. Will you join this growing group of taxpayers this filing season? To help you decide, here's a look at the standard deduction amounts that can be claimed on... Read more →


Photo by Anna Shvets from Pexels For some folks, the question isn't when to file, but whether they need to do so at all. It's a legitimate issue. While most of us do have to send in a Form 1040 every year, there are some situations where the Internal Revenue Service doesn't demand filing. So just who has to file a tax return? Filing requirements for most of us: Generally, if you are a U.S. citizen or resident you must consider three things when determining whether you have to file a tax return: your age, your filing status and your... Read more →


Photo by Kay Bell The 2022 filing season is already underway for many taxpayers even though the Internal Revenue Service won't start processing their returns until Jan. 24. But these early bird filers are on to something. Here are eight reasons you might want to consider completing your Form 1040 soon. 1. To get the rest of your Child Tax Credit. Around 36 million families last year got an early tax benefit. The IRS delivered half of their 2021 tax year Child Tax Credit (CTC) in advance as monthly payments from last July through December. The maximum advance amounts were... Read more →


Photo by Andea Piacquadio from Pexels Back in olden times, taxpayers put their literal signatures on the 1040 forms they filed with the Internal Revenue Service. Now, most of us electronically sign our tax returns. Regardless of which method you use, the end result is the same. If you don't sign your tax return, it's not a valid submission. That oversight cost one expatriate couple $12,697 in tax refunds. The loss recently was affirmed the Federal Circuit Court of Appeals. The ruling gets this weekend's Sunday Shout Out. I'll let you read it yourself. It's not that long (just nine... Read more →


Eager tax filers, especially those with relatively uncomplicated returns, can now take advantage of Free File. The Internal Revenue Service and Free File Alliance of tax software manufacturers are open for filers. Just go to IRS.gov, click the File Your Taxes for Free line under How can we help you?" and you're there. If you use a search engine to find free tax filing, you'll likely discover other options. You'll also probably get such offers in your email box. But the only official, IRS-sanctioned Free File option is the one on its website. 8 participants in 2022: This year, the... Read more →


IRS via Twitter The millions of taxpayers who must make estimated tax payments this month get a few more days to come up with the money. Since the usual Jan. 15 deadline is Saturday, and the next business day is Monday's MLK Day federal holiday, the fourth estimated deadline for 2021 payments is Tuesday, Jan. 18. Taxes on self-employment earnings: More than 20 million individuals make these extra tax payments each year. They generally total four, with the payment amounts reflecting earnings that aren't subject to withholding received during four segments of the tax year. Estimated taxes typically are paid... Read more →


I got my first tax statement today, a 1099 for some freelance work I did last year. That's just one of the documents that millions of taxpayers are awaiting so they can file their tax year 2021 returns. In addition to income statements, such as the 1099-NEC I got, 1099s with details on investment earnings, and W-2 forms for folks with wage-paying jobs, there are beau coup documents reporting tax-related transactions. Among the most common are forms detailing home related mortgage interest and taxes paid from escrow accounts, retirement account distributions, prize and gambling winnings, and in some cases, health... Read more →


It's the first week of January and some people are already working on their taxes. They're expecting a refund and they want the Internal Revenue Service to have their forms as soon as possible so the agency can process them when tax season 2022 officially starts. Those enthusiastic filers, however, might want to take a break. In order to properly file their 2021 tax returns, many likely will need one or both tax statements the IRS is sending out this month. One is a notice of how much an individual got as the third Economic Impact Payment (EIP) issued in... Read more →


Tornado damage caused Dec. 10-11 to an Amazon warehouse building and high-tension power lines between Pontoon Beach and Edwardsville, Illinois. (National Weather Service-St. Louis/Wikipedia Commons photo) While most of us are rushing this week to complete Christmas plan, some are trying to salvage what, if anything, they still have after a deadly line of tornadoes struck earlier this month. As part of this recovery process, the Internal Revenue Service has announced tax relief for residents in parts of Tennessee and Illinois. This includes a new deadline of May 16, 2022, for filing 2021 federal tax returns. Specific counties designated: The... Read more →


This holiday season, some families are getting an added gift: their final Advance Child Tax Credit payment for 2021. An estimated 36 million families will see their final Advance Child Tax Credit arrive in their bank accounts today, Dec. 15. The bank deposit will be labeled CHILDCTC. Those getting the early 2021 tax year payments by mailed paper Treasury checks should have their money soon. Then what? Today's end of the pre-payments is the start of another process. When filing season starts next year, eligible families will claim the remaining Child Tax Credit (CTC) amounts for this year on their... Read more →


An aerial view of Mayfield, Kentucky, one of the hardest hit communities during the Dec. 10-11 tornado outbreak in the western half of the state, shows the devastation of the community. (Photo by State Farm via Flickr CC 2.0 and Wikimedia) Kentucky residents who were in the path of last weekend's deadly tornadoes have a later 2022 federal tax filing deadline. The Internal Revenue Service today announced that Kentucky taxpayers in, so far, eight counties will have until May 16, 2022, to file various individual and business tax returns and make tax payments. UPDATE, Dec. 16, 2021: The Kentucky Department... Read more →


To keep yourself and Uncle Sam happy, don't ignore the annual required minimum distribution from your tax-deferred retirement accounts. Retirement accounts, such as traditional IRAs and workplace 401(k) plans, are great ways for many to save for their post-work years. These tax-deferred plans offer a variety of benefits, ranging from reduced taxes on work earnings to a potential tax deduction for some IRA owners to the added Saver's Tax credit for eligible filers. But these tax-deferred retirement accounts also come with a big drawback. At some point the Internal Revenue Service demands you take out at least some of the... Read more →


Single parenting can be challenging, especially at tax time and you and your ex-spouse are vying for the same child-related tax breaks. (Photo by MART PRODUCTION from Pexels) For some, this Thanksgiving was quieter than normal. Their youngsters spent Turkey Day with their parent as part of the alternating holidays agreement reached in the divorce decree. Breaking up is always hard. It's also complicated when it involves lawyers, court hearings and the Internal Revenue Service. It's can get even more complex when children are involved. I'm not a lawyer. I don't play one on the ol' blog. And I don't... Read more →


A tax credit for dependents offers a break for older children, extended family members, and even non-relatives. Thanksgiving is the traditional time for families to gather. But not all families are traditional. That's evident in real and tax life. The family-friendly tax break that's been getting most attention of late is the Child Tax Credit (CTC) and the advance payments for 2021 that are going out through December. I'm guilty, as a perusal of the ol' blog quickly shows. But some families aren't eligible for the CTC, either the money being distributed now or when they file their annual tax... Read more →


Photo by Alesia Kozik from Pexels President Joe Biden signed the Infrastructure Investment and Jobs Act of 2021 (IIJA) into law on Monday, Nov. 15. The new law, like prior transportation bills, does include plenty of traditional roads and bridges provisions. But it went decidedly digital to help cover some of its $1.2 trillion costs. The IIJA includes reporting requirements that mandate cryptocurrency exchanges share information with the Internal Revenue Service. The good news for crypto fans who are freaking out is that they have time to adjust. These reporting rules generally don't go into effect until 2023. Here are... Read more →


Photo by ivan sellar from Pexels You're finally ready to give up being the boss. Or maybe you got a great offer for your business. Or maybe the COVID-19 pandemic did a number on you and your company. Whatever your reason, you've decided it's time to close your company's doors. Make sure that during that process, you take taxes into account. The Internal Revenue Service offers these tips to business owners who've decided to call it quits. File the appropriate final return: This filing is for the year you close your business. The type of return you file, and the... Read more →


Many Social Security recipients are celebrating the announcement that their benefits will increase in 2022. But if you get other income to help you enjoy your retirement, you could owe tax on your government benefits. There's some good news for the around 72 million people who receive Social Security benefits, either as retirees or Supplemental Security Income (SSI) recipients (or both). The Social Security Administration announced* on Wednesday, Oct. 13, that they will see a 5.9 percent increase in their benefit checks in 2022. It's the largest increase to the government benefits, which primarily go to retirees, in nearly four... Read more →