IR 2022-45, 3/1/2022
In an information release, the IRS has remined taxpayers of their reporting and potential tax obligations from working in the gig economy.
Gig economy earnings are taxable. Generally, income earned from the gig economy is taxable and must be reported to the IRS. The IRS notes that taxpayers must report income earned from the gig economy on a tax return, even if the income is:
- From part-time, temporary or side work,
- Not reported on an information return form-like a Form 1099-K (Payment Card and Third-Party Network Transactions), 1099-MISC (Miscellaneous Income), W-2 (Wage and Tax Statement) or other income statement or
- Paid in any form, including cash, property, goods or virtual currency.
Under the heading Not Quite Ready for Tax Season the IRS is urging people to use the information in their online taxpayer accounts for the most up-to-date figures on the amount of the advance Child Tax Credit to include on their tax returns — instead of the numbers stated in the letters it has been sending.
The IRS began hearing questions from reporters the day tax season started on January 24 about why some of the letters the IRS had been sending to taxpayers who had received the monthly Child Tax Credit payments seemed to have incorrect amounts. The IRS believes the inconsistencies are relatively limited and mostly apply to taxpayers who have changed addresses, whose payments were undelivered, or where the direct deposit failed to work, perhaps because they changed bank accounts.
The best answer, as always, is to check your records and bank statements to see exactly what you received. This is another reminder that it is never a good idea to leave the record keeping for your taxes up to a third party, even when that third party is the IRS. W2s, 1099s and other tax documents you receive are not always correct and if you have the records to prove they are wrong you can use those records to make sure you don’t over pay your taxes.
IRS warns taxpayers and tax professionals to be ready for a turbulent tax-filing season. The IRS is still dealing with backups in processing returns from the past two filing seasons, and the upcoming filing season will just make things worse. The volume of unopened mail at the IRS, including tax returns, as of December 23rd was over six million pieces, which is more than six times the normal amount.
Thus, when it comes to dealing with the IRS or having your tax professional deal with them for you, patience is more important than ever. It still sometimes takes hours to get anyone from the IRS on the phone; and when they do answer, they might just tell you to allow more time for payments or other correspondence to be processed.
Filing your tax return electronically will help get your return around the backlog and in most cases will speed up your refund. It will also assure that you have proof of timely submitting your return.
The IRS will begin electronically accepting returns on January 24, 2022 for the 2021 individual tax filing season.
Now is the time to start getting your 2021 tax records together. be sure to set-up a safe place to keep your W2s, 1099s and other important tax information. Keep an eye open for letters from the IRS reporting the amounts of Economic Impact Payments your received and or Advance Child Tax Credits.
If you are a prior year client of RMS Accounting you can email us for a custom 2021 Tax Organizer that will include last years tax data so that you can use it to help locate this years tax information just email us at Info@RMSAccounting.com and be sure to include your name and spouses name and to include “2021 Tax Organizer” in the subject line.
New to our firm or just looking for a little help to get organized? Just click here to download our FREE 2021 TAX ORGANIZER!
The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns that they file in 2022.
Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. The third round of Economic Impact Payments, 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 Economic Impact Payment based on a 2019 tax return or information received from SSA, RRB or VA; 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, people 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.
The Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.
To help taxpayers reconcile and receive all of the Child Tax Credits to which they are entitled, the IRS will send Letter 6419, 2021 advance CTC, starting late December, 2021 and continuing into January. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.
Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.
The letter contains important information that can make preparing their tax returns easier. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.
Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don’t normally need to file a tax return.
Public Law 117-58 the Infrastructure Investment and Jobs Act, could end up costing crypto investors by increasing required annual reporting from digital currency brokers starting in January 2023. A lot of crypto investors have no idea what’s coming and many still believe, incorrectly, that trading one crypto or digital asset for another is not a taxable even. This is just not true according to Enrolled Agent Steven J Weil, President of RMS Accounting.
The IRS requires investors to disclose yearly cryptocurrency activity by checking a box on their tax returns. Many filers don’t know which transactions to report.
While buying digital currency won’t prompt a tax bill, converting it to cash, trading for another coin, or using it for purchases may trigger levies.
Many crypto investors don’t understand the complex tax ramifications of cryptocurrency and often don’t have the records needed to support the taxability of their trades or exchanges. Taxable income results from the difference between the asset’s original purchase price, known as cost basis, and the value upon sale or exchange, and this can be tricky when instead of cash one crypto currency is traded for another.
The infrastructure bill will require crypto exchanges to send Form 1099-B, a federal tax document used by traditional brokerages, to report an asset’s yearly profit or loss. This will make it simpler for both the IRS and investors to track profits and losses. It will also give the IRS the tools to go after what it believes has been substantially underreported income.
It’s important to remember even without a 1099-B, investors are responsible for reporting and paying their crypto tax liability, and 2023 reporting could also give the IRS tools to use in auditing 2021 and 2022 returns from un or under reported crypto income.
Order Confirmation Imitation
If you’ve started your holiday shopping, you may have received purchase confirmation emails from Amazon, one of the world’s most popular retailers. Unfortunately, cybercriminals have also been sending their own version of these emails. In a new scam, cybercriminals impersonate Amazon to send fake purchase confirmation emails in hopes of receiving a special holiday gift: your credit card information.
In this scam, cybercriminals send you a fake purchase confirmation email that appears to come from Amazon. In the email, you can review details about the phony purchase, such as the payment amount and your mailing address. To review the purchase further, you can click a “View or manage order” button in the email. If you click this button, you’ll be taken to Amazon’s real website, but you won’t be able to find information about the purchase. As a last resort, you can call the customer service phone number in the email. If you call, you’ll be asked to provide your credit card number and CVV number to cancel the purchase. Instead of canceling the purchase, you’ll grant cybercriminals access to your credit card.
Don’t fall for this scam! Follow the tips below to stay safe:
- Watch out for fake customer service phone numbers. If you need assistance, check the vendor’s website to find their customer service phone number or email address.
- Don’t click links in emails you weren’t expecting. If you click a malicious link, malware or other malicious software may be downloaded onto your device.
Don’t share sensitive information, such as credit card numbers or social security numbers, over the phone.
We received this article from The KnowBe4 Security Team KnowBe4.com