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
Pretending to be an IRS agent is one of the favorite tactics of scam artists according to the Better Business Bureau. The con artists impersonate the IRS, to either intimidate people into making payments over the phone or to send misleading emails tricking people into sharing personal information digitally.
You can defend yourself against these scammers by knowing these simple rules:
Tip 1: Expect A Letter First
In almost every case, the IRS will send you a letter via standard mail if they need to get in touch with you. This will alert you to expect future communication from the agency and instruct you on the best ways to get in touch with them.
What to do: If you get a letter from the IRS that is unexpected or suspicious, it should have a form or notice number searchable on the IRS website, www.irs.gov. If something doesn’t look right, you can call the IRS help desk at 1-800-829-1040 to question it, or call your tax professional.
Tip 2: Never Communicate Via Email
The IRS will never initiate contact with you using email. A common scammer trick is to send emails to taxpayers using accounts and graphics that imitate the agency’s logo. These emails may threaten imprisonment or fines if you don’t pay up, or promise an extra refund if you send money to “prepay” your taxes. Often the emails contain links to an official-looking fake website to collect payments. Clicking on them may also trigger the installation of virus programs on your computer.
What to do: Don’t respond to any email communications supposedly from the IRS. Don’t click on any links. Delete the email or forward it to firstname.lastname@example.org to help catch the scammers.
Tip 3: Proper Phone Call Etiquette
After notification via the USPS, the real IRS may call to discuss options for handling delinquent taxes or an audit. A real IRS agent, or a debt collector, won’t demand immediate payment without giving you an opportunity to question or appeal the bill. Nor will they threaten lawsuits, arrest or deportation. Their tone should not be hostile or insulting. Finally, if they ask for payment, they should be asking you to make payments only to the United States Treasury.
What to do: If you get a call from the IRS or an IRS debt collector, politely ask for the employee’s name, badge number and phone number. They shouldn’t hesitate to provide this information. You should then end the call and dial the IRS at 1-800-366-4484 to confirm the person’s identity.
Tip 4: Check In-Person Visits
Ask the person for their credentials. Every IRS agent is able to produce two forms of credentials: a pocket commission card and a personal identity verification card issued by the Department of Homeland Security, also called an HSPD-12.
What to do: Never provide sensitive information nor confirm information they may have without first independently verifying they are legitimate representatives of the IRS. If you have concerns, call the IRS at 1-800-366-4484 to confirm the person’s identity. https://www.irs.gov/newsroom/common-tax-scams-and-tips-to-help-taxpayers-avoid-them?fbclid=IwAR39fbxAvKUMmnD3LvUpakAIx-fnHEoQfeh-3WDZa_ARt4SSpMo40usQP9I
November 1, 2021
For the first time in 40 years, taxes on income and wealth transfers may be headed higher, making tax planning more important than ever.
As a client of RMS Accounting, we are pleased to offer you a FREE year-end tax planning appointment. That’s right — as long as we prepared your 2020 tax return, your tax planning appointment is FREE. This year’s appointments are available in person. Our entire team is vaccinated, so it’s safe for you to visit us! You can also make a phone or Zoom appointment. No masks are required as long as you are comfortable being without a mask. We are working hard to get things back to normal and one of the things we missed most last tax season was getting to visit with old friends.
2021 has turned out to be quite a year. Between Covid-19, variants, a new president and congress, along with lots of proposed tax legislation, none of which are sure to become law. There is a lot to consider in planning for an uncertain future. As we get closer to year end, we hope to know more and have real answers to what the tax laws will look like for the coming year.
Many businesses and individuals have suffered a decline in income during 2021 and this can create unique planning opportunities. Some of you, those with qualifying children may also have been receiving advance payments of the newly increased child tax credit. What you may not know is the money received as advanced child tax credit payments will reduce your tax refund – It might even mean you owe taxes when it comes time to file your return.
One thing you can be sure of is that our tax professionals are following the latest developments in Washington and will be up to date and ready, if and when tax changes are made.
While many things have changed in the world, one thing we can assure you has not changed is our dedication to you, our valued clients.
As the end of the year approaches, it is a good time for you to start thinking about the tax planning moves you can make. What those moves are will depend a lot on how 2021 has played out for you. If you suffered a drop in income due to Covid-19, or for any other reason, it might make sense to delay deductions and accelerate income. If your income has stayed the same or increased what you do will depend on how much of what is currently proposed you believe will become law. For high income taxpayers, it sounds a lot like tax rates will be going up. Who will be considered high income and how much, if at all, taxes will increase is unknown as we write this letter. If you believe that higher tax rates are around the corner, than that needs to be factored into your plans.
Businesses that received Employee Retention Credits will find that they don’t get to deduct the payroll expenses these credits offset. This could result in increased taxable income. On the bright side PPP loans forgiven do not reduce the deductions from expenses they paid and do not create taxable income. There were many other government funded plans and each of these can affect your taxable income differently.
If we did not prepare your 2020 return, but you, or someone you refer to us, mentions this letter, we will take $150.00 off our normal fee of $300.00 and charge you and/or your friends only $150.00. You can be sure that planning will save you many times this small amount.
Remember, the time to act is now — before the clock strikes midnight on December 31. Time is limited, and our appointment calendar fills up fast, so be sure to make your appointment early. This will ensure that you will get an appointment that works with your schedule and still have plenty of time to put your tax plan into action.
Need some help getting ready for for your tax planning meeting? We have developed the 2021 YEAR END TAX PLANNING GUIDE, to help you uncover tax planning opportunities to download a copy of this important guide just click here.
We look forward to seeing you soon.
Steven J Weil, Ph.D., EA Theresa J Weil, Ph.D., EA Lisa Shmaruk, EA
Do you know what the minimum wage is for your state? Federal minimum wage requirements are enforced by the department of labor, but there often state requirements as well and who enforces these depends on the state your employees are located in.
Raises the minimum wage to $10.00 per hour effective September 30th, 2021 and then increases it annually by $1.00 per hour until the minimum wage reaches $15.00 per hour in 2026 and then reverts to being adjusted annually for inflation.
Here’s what the minimum wage increase would look like each year:
- $10.00 on September 30, 2021
- $11.00 on September 30, 2022
- $12.00 on September 30, 2023
- $13.00 on September 30, 2024
- $14.00 on September 30, 2025
- $15.00 on September 30, 2026
Beginning on Sept. 30, 2027, the state’s plan is to have an annual adjustment to the state minimum wage based on increases to the Consumer Price Index for Urban Wage Earners and Clerical Workers.