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Deferred Social Security payments due Jan. 3

WASHINGTON — The Internal Revenue Service today reminded employers and self-employed individuals that chose to defer paying part of their 2020 Social Security tax obligation that a payment is due on Jan. 3, 2022.

Most affected employers and self-employed individuals received reminder billing notices from the IRS. The agency noted, however, that those affected are still required to make the payment on time, even if they did not receive a bill.

As part of the COVID relief provided during 2020, employers and self-employed people could choose to put off paying the employer’s share of their eligible Social Security tax liability, normally 6.2% of wages. Half of that deferral is now due on Jan. 3, 2022, and the other half on Jan. 3, 2023.

Under separate COVID relief, employers could choose to forgo withholding Social Security taxes from eligible employees, and instead withhold tax this year and then pay those amounts to the IRS. For details, visit What employers need to know about repayment of deferred payroll taxes on IRS.gov.

How to repay the deferred taxes

Employers and individuals can make the deferral payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. To be sure these payments are credited properly, they must be made separately from other tax payments.

EFTPS has an option to make a deferral payment. On the Tax Type Selection screen, choose Deferred Social Security Tax and then change the date to the applicable tax period (typically, the calendar quarter in 2020 for which tax was deferred). Visit EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.

Individual taxpayers can also use Direct Pay, available only on IRS.gov. Select the “balance due” reason for payment. If paying with a debit or credit card, select “installment agreement.” Apply the payment to the 2020 tax year where the payment was deferred.

Tax Security Awareness Week: Identity Protection PIN

National Tax Security Awareness Week Choosing a special Identity
Protection PIN adds extra safety for taxpayers

WASHINGTON – As part of a wider effort to increase security, the Internal Revenue Service today
reminded taxpayers they can get extra protection starting in January by joining the agency’s Identity
Protection Personal Identification Number (IP PIN) program.
Anyone who can verify their identity can protect themselves against tax-related identity theft by opting
into the IP PIN program. More than 5.1 million taxpayers are now participating in the IP PIN program,
enabling them to proactively protect themselves against identity theft. The IRS has made recent
changes to the program to make it easier for more taxpayers to join. The fastest and easiest way to
receive an IP Pin is by using the Get an IP PIN tool.
Today’s reminder marks the third day of National Tax Security Awareness Week, which runs through
Dec. 3. This annual observance is sponsored by the Security Summit, a partnership that includes
state tax agencies, the nation’s tax industry and the IRS.
The Security Summit was established in 2015 to protect taxpayers and the nation’s tax system
against tax-related identity theft. This unique collaboration between the public and private sectors has
increased mutual defenses against criminals trying to file fraudulent tax returns and steal refunds.
One of the key features of the IRS system involves an IP PIN, which is a six-digit number assigned to
eligible taxpayers to help prevent the misuse of their Social Security number or Individual Taxpayer
Identification Number on fraudulent federal income tax returns.
An IP PIN is known only to the taxpayer and the IRS. Originally designed for confirmed victims of tax-
related identity theft, the IP PIN program was expanded in 2021 to include any taxpayer, nationwide,
who wants the additional protection and security of using an IP PIN to file tax returns with the IRS.
“When people have this special code, it prevents someone else from filing a tax return in their name,”
said IRS Commissioner Chuck Rettig. “The fastest way to get an Identity Protection PIN is to use our
online tool, but keep in mind people must pass a rigorous authentication process. We must know that
the person asking for the IP PIN is who they really say they are.”
An IP PIN helps the IRS verify a taxpayer’s identity and accept their federal income tax returns,
regardless of whether they are filing electronically or on paper. The online Get an IP PIN tool at
IRS.gov/IPPIN immediately displays the taxpayer’s IP PIN. In each subsequent year, any participating
taxpayer will then use the tool to obtain a new number.
The IRS urges any IP PIN applicant previously rejected during the identity authentication process to
try applying again in 2022. The authentication process has been refined and improved, now enabling
many taxpayers screened out in the past to have a better chance of passing the authentication

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process.
Before applying, keep in mind these key points about the IP PIN program:
 For 2022, the Get an IP PIN tool is scheduled to launch on Jan. 10. It’s the fastest and easiest
way to get an IP PIN. It is also the only option that immediately reveals the IP PIN to the taxpayer.
For that reason, the IRS urges everyone to try the Get an IP PIN tool first, before pursuing other
options.
 No identity theft affidavit is required for taxpayers opting in. This means that anyone who
voluntarily applies for an IP PIN doesn’t need to file Form 14039, Identity Theft Affidavit, with the
IRS.
 The IP PIN is valid for one year. This means that each January any participating taxpayer must
obtain a newly generated IP PIN.
 Be sure to enter the IP PIN on any return, whether it is filed electronically or on paper. This
includes any amended returns or returns for prior years. Doing so will help avoid processing
delays or having the return rejected by the IRS.
 Anyone with either a Social Security number (SSN) or Individual Taxpayer Identification Number
(ITIN) who can verify their identity is eligible for the IP PIN opt-in program.
 Any eligible family member can get an IP PIN. This includes the primary taxpayer (the person
listed first on a tax return), the secondary taxpayer (on a joint return, the person listed second on
the return) or any of their dependents.
 With one key exception, never reveal an IP PIN to anyone. The only exception is a taxpayer who
uses a trusted tax professional to file their return. Even then, only share the IP PIN with the trusted
tax pro when it is time to sign and submit the return. The IRS will never ask for an IP PIN.
Remember to watch out: Phone calls, emails and texts requesting an IP PIN are scams.
 Identity theft victims should still fill out an ID theft affidavit. This means that any confirmed victim of
tax-related identity theft still needs to file Form 14039 with the IRS if their e-filed tax return was
rejected by the agency due to a duplicate SSN filing. The IRS will then investigate their case.
Once the fraudulent tax return is removed from their account, the IRS will automatically mail an IP
PIN to the confirmed victim at the start of the next calendar year. Because of security risks,
confirmed identity theft victims cannot opt out of the IP PIN program.
Options for people who can’t pass the online authentication process
Two options are available for people who cannot pass the IRS online identity authentication process.
One involves filing Form 15227 and the other requires a visit to an IRS Taxpayer Assistance Center
(TAC). Unlike the online option, both of these options involve, for security reasons, a delay in
receiving an IP PIN.
Form 15227: For processing year 2022, individuals with an adjusted gross income of $73,000 or less
and those married filing jointly with an AGI of $146,000 or less with access to a telephone can
complete Form 15227 (.pdf) and either mail or fax it to the IRS. An IRS representative will then call
them to verify their identity with a series of questions. Taxpayers choosing this option who pass the

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identity authentication process will generally receive their IP PIN in about a month.
IRS Taxpayer Assistance Centers: Any taxpayer who is ineligible to file a Form 15227 may make an
appointment to visit an IRS Taxpayer Assistance Center (TAC). Anyone using this option must bring
two forms of picture identification. Because this is an in-person identity verification, an IP PIN will be
mailed to the taxpayer after their visit. Normally, allow three weeks for delivery. To find the nearest
TAC, use the IRS Local Office Locator online tool or call 844-545-5640.
The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in
partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This
is the third in a week-long series of tips to raise awareness about identity theft.
See IRS.gov/securitysummit for more details. Also, check out the most recent A Closer Look column
on National Tax Security Awareness Week

2022 Tax Rates, Standard Deduction Amounts to be prepared in 2023

These brackets and rates will apply for tax year 2022, which will be prepared in 2023

Here’s why taxpayers should have an IRS online account

Here’s why taxpayers should have an IRS online account

An IRS online account is an safe an easy way for individual taxpayers to view specific details about their federal tax account. Here are some of the benefits and features of this online system.

Taxpayers can view:

  • Their payoff amount, which is updated for the current day.
  • The balance for each tax year for which they owe taxes.
  • Their payment history.
  • Key information from the their most current tax return as originally filed.
  • Payment plan details if they have one.
  • Digital copies of select IRS notices.
  • Economic Impact Payments if they received any.
  • Their address on file.

After viewing their information, a taxpayer can:

  • Select an electronic payment option.
  • Set up an online payment agreement.
  • Go directly to Get Transcript.

New authorization feature

The new the “authorization” option in Online Account allows taxpayers to control who can represent them before the IRS or view their tax records. They can also approve and electronically sign Power of Attorney and Tax Information Authorization requests from their tax professional.

Taxpayer’s balance will update no more than once every 24 hours, usually overnight. Taxpayers should also allow 1 to 3 weeks for payments to show up in the payment history.

To access their information online, taxpayers must register through Secure Access. This is the agency’s two-factor authentication process that protects personal info. Taxpayers can review the Secure Access page process prior to starting registration.

Unenrolling from Advance Payments

 

A1. You may want to unenroll from receiving advance Child Tax Credit payments for several reasons, including if you expect the amount of tax you owe to be greater than your expected refund when you file your 2021 tax return. The payments you receive are an advance of the Child Tax Credit that you would normally get when you file your 2021 tax return. Because these credits are paid in advance, every dollar you receive will reduce the amount of Child Tax Credit you will claim on your 2021 tax return. This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase.

You may avoid owing tax to the IRS if you unenroll and claim the entire credit when you file your 2021 tax return.

A2. To stop advance payments, you must unenroll 3 days before the first Thursday of next month by 11:59 p.m. Eastern Time.

Payment Month Unenrollment Deadline Payment Date
July 6/28/2021 7/15/2021
August 8/2/2021 8/13/2021
September 8/30/2021 9/15/2021
October 10/4/2021 10/15/2021
November 11/1/2021 11/15/2021
December 11/29/2021 12/15/2021

A3. You will get the next scheduled advance payment until we process your request to unenroll.

A4. It may take up to seven calendar days. Check back after unenrolling to make sure your request was processed successfully.

A5. You cannot re-enroll at this time. Unenrollment is a one-time action. You will be able to re-enroll starting in late September 2021.

A7. If you don’t unenroll, you will get half of the joint payment you were supposed to receive with your spouse.

2021 Child Tax Credit and Advance Child Tax – General Information

A1. Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may properly claim on your 2021 tax return during the 2022 tax filing season. If the IRS has processed your 2020 tax return or 2019 tax return, these monthly payments will be made starting in July and through December 2021, based on the information contained in that return.

Note: Advance Child Tax Credit payment amounts are not based on the Credit for Other Dependents, which is not refundable. For more information about the Credit for Other Dependents, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents PDF.

For more information about how your advance Child Tax Credit payments are calculated, see Topic D: Calculation of Advance Child Tax Credit Payments.

The expanded and newly-advanceable Child Tax Credit was authorized by the American
Rescue Plan Act, enacted in March. Normally, the IRS will calculate the payment based on a
family’s 2020 tax return, including those who use the Non-filer Sign-up Tool. If that return is not
available because it has not yet been filed or is still being processed, the IRS will instead
determine the initial payment amounts using the 2019 return or the information entered using
the Non-filers tool that was available in 2020.
The payment will be up to $300 per month for each child under age 6 and up to $250 per month
for each child age 6 through 17.
To make sure families have easy access to their money, the IRS will issue these payments by
direct deposit, as long as correct banking information has previously been provided to the IRS.
Otherwise, people should watch their mail around July 15 for their mailed payment. The dates
for the Advance Child Tax Credit payments are July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15, and
Dec. 15.
For more information, visit IRS.gov/childtaxcredit2021, or read FAQs on the 2021 Child Tax
Credit and Advance Child Tax Credit Payments.

A2. Generally, nothing. If you are eligible to receive advance Child Tax Credit payments based on your 2020 tax return or 2019 tax return (including information you entered into the Non-Filer tool for Economic Impact Payments on IRS.gov in 2020), you generally will receive those payments automatically without needing to take any additional action.

You must take action if you have not filed your 2020 tax return or 2019 tax return. The IRS has unveiled an online Non-Filer tool that will allow individuals who weren’t required to file (and have not filed) a tax return for 2020 to file a simplified tax return. This simplified tax return will allow eligible individuals to register for advance Child Tax Credit payments and the third Economic Impact Payment, as well as claim the 2020 Recovery Rebate Credit. Taxpayers also can visit IRS.gov/filing for details about:

The fastest way to get advance payments is to file your tax return electronically and provide information about your financial account so that you can receive your payments by direct deposit. You can use a bank account, prepaid debit card, or mobile app for your direct deposit and will need to provide routing and account numbers.

For more information regarding eligibility and how advance Child Tax Credit payments are disbursed, see Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit and Topic E: Advance Payment Process of the Child Tax Credit.​​​

A3. No. Even if you have $0 in income, you can receive advance Child Tax Credit payments if you are eligible.

For information regarding eligibility, see Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit.

A4. If you cannot or choose not to use the Non-Filer tool, IRS Free File, or Free File Fillable Forms to file your 2020 tax return, there are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and others who can assist you in filing your return. For more information about these and other return preparers who might be right for you, visit Need someone to prepare your tax return?.

A5. If you prefer not to receive monthly advance Child Tax Credit payments because you would rather claim the full credit when you file your 2021 tax return, or you know you will not be eligible for the Child Tax Credit for your 2021 tax year, you will be able to unenroll through the Child Tax Credit Update Portal (CTC UP). CTC UP will be available in June and will allow you to unenroll before the first advance Child Tax Credit payment is made. You will not be able to unenroll before the portal is open.

For more information regarding CTC UP, see Topic F: Updating Your Child Tax Credit Information During 2021.

A6. The IRS will begin disbursing advance Child Tax Credit payments on July 15. After that, payments will be disbursed on a monthly basis through December 2021.

For more information regarding how advance Child Tax Credit payments are disbursed, see Topic E: Advance Payment Process of the Child Tax Credit.

A7. Yes. In June, the IRS will send you Letter 6417. This letter will inform you of the amount of your estimated Child Tax Credit monthly payments. This letter will also indicate where you can find additional information about advance Child Tax Credit payments.

A8. You qualify for advance Child Tax Credit payments if you have a qualifying child. Also, you — or your spouse, if married filing a joint return — must have your main home in one of the 50 states or the District of Columbia for more than half the year. Your main home can be any location where you regularly live. Your main home may be your house, apartment, mobile home, shelter, temporary lodging, or other location and doesn’t need to be the same physical location throughout the taxable year. You don’t need a permanent address to get these payments. If you are temporarily away from your main home because of illness, education, business, vacation, or military service, you are generally treated as living in your main home.

For more information regarding eligibility for advance Child Tax Credit payments, and the Child Tax Credit generally, see Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit.

For information on how the amount of your Child Tax Credit could be reduced based on the amount of your income, see Topic C: Calculation of the 2021 Child Tax Credit.

A10. No. Advance Child Tax Credit payments are not income and will not be reported as income on your 2021 tax return. Advance Child Tax Credit payments are advance payments of your tax year 2021 Child Tax Credit.

However, the total amount of advance Child Tax Credit payments that you receive during 2021 is based on the IRS’s estimate of your 2021 Child Tax Credit. If the total is greater than the Child Tax Credit amount that you are allowed to claim on your 2021 tax return, you may have to repay the excess amount on your 2021 tax return during the 2022 tax filing season. For example, if you receive advance Child Tax Credit payments for two qualifying children properly claimed on your 2020 tax return, but you no longer have qualifying children in 2021, the advance Child Tax Credit payments that you received based on those children are added to your 2021 income tax unless you qualify for repayment protection. For more information regarding your eligibility for repayment protection, and how to reconcile your advance Child Tax Credit payments with your Child Tax Credit on your 2021 tax return, see Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return.

For this reason, you may wish to unenroll from receiving advance Child Tax Credit payments. You will be able to unenroll through the Child Tax Credit Update Portal (CTC UP), which will become available in June. For more information regarding the CTC UP, see Topic F: Updating Your Child Tax Credit Information During 2021.

A11. Yes. In January 2022, the IRS will send you Letter 6419 to provide the total amount of advance Child Tax Credit payments that were disbursed to you during 2021. Please keep this letter regarding your advance Child Tax Credit payments with your tax records. You may need to refer to this letter when you file your 2021 tax return during the 2022 tax filing season.

For more information regarding this letter and how to reconcile your advance Child Tax Credit payments with your Child Tax Credit on your 2021 return, see Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return.

A12. No. Advance Child Tax Credit payments cannot be counted as income when determining if you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. These programs also cannot count advance Child Tax Credit payments as a resource for purposes of determining eligibility for at least 12 months after you receive it.

A13. The IRS will provide on IRS.gov a Child Tax Credit Update Portal (CTC UP), which will allow you update information with the IRS, including your bank account information.

CTC UP will be available on IRS.gov starting in June, and initially will only allow you to elect not to receive advance Child Tax Credit payments. The IRS will add features to CTC UP later this year, which are described in QF-1, below.

For more information regarding CTC UP, see Topic F: Updating Your Child Tax Credit Information During 2021.

A14. The IRS urges everyone to be on the lookout for scam artists trying to use advance Child Tax Credit payments as a cover for schemes to steal personal information and money. The IRS doesn’t initiate contact by email, text messages, or social media channels to request personal or financial information – even information related to advance Child Tax Credit payments. Also, watch out for emails with attachments or links claiming to have special information about advance Child Tax Credit payments or refunds of the Child Tax Credit.

If you receive a suspicious IRS-related email, see Report Phishing and Online Scams for additional information.

A15. The IRS will be releasing additional materials and information that can be easily shared by social media, email, and other methods. The IRS urges employers, community groups, non-profits, associations, education groups, and anyone else with connections to people with children to share this critical information about advance Child Tax Credit payments and the Child Tax Credit expansions for the 2021 tax year.

A16. You will be able to update certain information in the coming months:

*Date You Can Make Changes What You Can Do
June 21
  • Find out if you’re eligible
  • Unenroll from payments
  • See a list your payments
Late June
  • Make changes to your bank information for your payments beginning in August
Early August
  • Make changes to your address
Late summer
  • Make changes to your dependents, marital status and income
  • Re-enroll if you previously unenrolled

How the American Rescue Plan affects 2021

Here are the first two tax tips providing an overview of how the American Rescue Plan may affect some individual’s 2021 taxes.

COVID Tax Tip 2021-78

Child and dependent care credit increased for 2021 only

The new law increases the amount of the credit and the percentage of employment-related expenses for qualifying care considered in calculating the credit, modifies the phase-out of the credit for higher earners, and makes it refundable for eligible taxpayers.

For 2021, eligible taxpayers can claim qualifying employment-related expenses up to:

  • $8,000 for one qualifying individual, up from $3,000 in prior years, or
  • $16,000 for two or more qualifying individuals, up from $6,000.

The maximum credit in 2021 increased to 50% of the taxpayer’s employment-related expenses, which equals $4,000 for one qualifying individual, or $8,000 for two or more qualifying individuals. When figuring the credit, a taxpayer must subtract employer-provided dependent care benefits, such as those provided through a flexible spending account, from total employment-related expenses.

A qualifying individual is a dependent under the age of 13, or a dependent of any age or spouse who is incapable of self-care and who lives with the taxpayer for more than half of the year.

As before, the more a taxpayer earns, the lower the percentage of employment-related expenses that are considered in determining the credit. However, under the new law, more individuals will qualify for the new maximum 50% of employment-related expenses credit percentage rate. That’s because the adjusted gross income level at which the credit percentage starts to phase out is raised to $125,000. Above $125,000, the 50% credit percentage goes down as income rises. It is entirely unavailable for any taxpayer with adjusted gross income over $438,000.

The credit is fully refundable for the first time in 2021. This means an eligible taxpayer can receive it, even if they owe no federal income tax. To be eligible for the refundable portion of the credit, a taxpayer, or the taxpayer’s spouse if filing a joint return, must reside in the United States for at least half of the year.

Workers can set aside more in a dependent care FSA

For 2021, the maximum amount of tax-free employer-provided dependent care benefits increased to $10,500. This means an employee can set aside $10,500 in a dependent care flexible spending account, instead of the normal $5,000.

Workers can only do this if their employer adopts this change. Employees should contact their employer for details.

Childless EITC expanded for 2021

For 2021 only, more workers without qualifying children can qualify for the earned income tax credit, a fully refundable tax benefit that helps many low- and moderate-income workers and working families. That’s because the maximum credit is nearly tripled for these taxpayers and is, for the first time, available to younger workers and now has no age limit cap.

For 2021, EITC is generally available to filers without qualifying children who are at least 19 years old with earned income below $21,430; $27,380 for spouses filing a joint return. The maximum EITC for filers with no qualifying children is $1,502.

Another change for 2021, allows individuals to figure the EITC using their 2019 earned income if it was higher than their 2021 earned income. In some instances, this option will give them a larger credit.

COVID Tax Tip 2021-79, June 3, 2021

Changes expanding EITC for 2021 and beyond

New law changes expand the EITC for 2021 and future years. These changes include:

  • More workers and working families who also have investment income can get the credit. Starting in 2021, the amount of investment income they can receive and still be eligible for the EITC increases to $10,000.
  • Married but separated spouses who do not file a joint return may qualify to claim the EITC. They qualify if they live with their qualifying child for more than half the year and either:
    • Do not have the same principal place of abode as the other spouse for at least the last six months of tax year for which the EITC is being claimed, or
    • Are legally separated according to their state law under a written separation agreement or a decree of separate maintenance and do not live in the same household as their spouse at the end of tax year for which the EITC is being claimed.

Expanded child tax credit for 2021 only

The American Rescue Plan made several notable but temporary changes to child tax credit, including:

  • Increasing the amount of the credit
  • Making it available for qualifying children who turn age 17 in 2021
  • Making it fully refundable for most taxpayers
  • Allowing many taxpayers to receive half of the estimated 2021 credit, in advance.

Taxpayers who have qualifying children under age 18 at the end of 2021 can now get the full credit if they have little or no income from a job, business, or other source. Prior to 2021, the credit was worth up to $2,000 per qualifying child, with the refundable portion limited to $1,400 per child. The new law increases the credit to as much as $3,000 per child ages 6 through 17 at the end of 2021, and $3,600 per child ages 5 and under at the end of 2021. For taxpayers who have their main homes in the United States for more than half of the tax year and bona fide residents of Puerto Rico, the credit is fully refundable, and the $1,400 limit does not apply.

The maximum credit is available to taxpayers with a modified adjusted gross income of:

  • $75,000 or less for single filers and married persons filing separate returns
  • $112,500 or less for heads of household
  • $150,000 or less for married couples filing a joint return and qualifying widows and widowers

Above these income thresholds, the excess amount over the original $2,000 credit — either $1,000 or $1,600 per child — reduces by $50 for every $1,000 in additional modified AGI. The original $2,000 credit continues to be reduced by $50 for every $1,000 that modified AGI is more than $200,000; $400,000 for married couples filing a joint return.

Advance child tax credit payments

From July 15 through December 2021, Treasury and the IRS will advance one half of the estimated 2021 child tax credit in monthly payments to eligible taxpayers. Eligible taxpayers are taxpayers who have a main home in the United States for more than half the year. This means the 50 states and the District of Columbia. U.S. military personnel stationed outside the United States on extended active duty are considered to have a main home in the United States.

The monthly advance payments will be estimated from their 2020 tax return, or their 2019 tax return if 2020 information is not available. Advance payments will not be reduced or offset for overdue taxes or other federal or state debts that taxpayers or their spouses owe. Taxpayers will claim the remaining child tax credit based on their 2021 information when they file their 2021 income tax return.

Update for taxpayers who paid taxes on 2020 unemployment compensation

The IRS is sending more than 2.8 million refunds to those who already paid taxes on 2020 unemployment compensation.

Earned Income Tax Credit (EITC) adjustments

  • Taxpayers who have qualifying children and who become eligible for EITC after the exclusion is calculated may have to file an amended return to claim any new benefits.
  • The IRS can adjust tax returns for those who are single with no children and who become eligible for EITC.
  • The IRS also can adjust tax returns where EITC was claimed and qualifying children identified.

The IRS plans to issue the next set of refunds in mid-June. The review of returns and processing corrections will continue during the summer as the IRS continues to review the simplest returns and then turns to more complex returns.

Taxpayers will receive letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.

IRS News – Families Who May Qualify for Child Tax Credits

IRS sending letters to more than 36 million families who may qualify for monthly Child Tax Credits; payments start July 15

WASHINGTON — The Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting in July.

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.
Families who are eligible for advance Child Tax Credit payments will receive a second, personalized letter listing an estimate of their monthly payment, which begins July 15.

Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return.  If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS will instead determine the payment amount using the 2019 return.

Eligible families will begin receiving advance payments, either by direct deposit or check. The payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17.The IRS will issue advance Child Tax Credit payments on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

Eligible families should file tax returns soon

The IRS urges individuals and families who haven’t yet filed their 2020 return – or 2019 return – to do so as soon as possible so they can receive any advance payment they’re eligible for.

Filing soon will also ensure that the IRS has their most current banking information, as well as key details about qualifying children. This includes people who don’t normally file a tax return, such as families experiencing homelessness, the rural poor, and other underserved groups.

For most people, the fastest and easiest way to file a return is by using the Free File system, available only on IRS.gov.

Throughout the summer, the IRS will be adding additional tools and online resources to help with the advance Child Tax Credit. One of these tools will enable families to unenroll from receiving these advance payments and instead receive the full amount of the credit when they file their 2021 return next year.

Additionally, later this year, individuals and families will also be able to go to IRS.gov and use a Child Tax Credit Update Portal to notify IRS of changes in their income, filing status, or number of qualifying children; update their direct deposit information; and make other changes to ensure they are receiving the right amount as quickly as possible.

Other tools coming soon

The IRS has created a special Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021, designed to provide the most up-to-date information about the credit and the advance payments.

In the next few weeks, the page will also feature other useful new online tools, including:

• An interactive Child Tax Credit eligibility tool to help families determine whether they qualify for the Advance Child Tax Credit payments.
• Another tool, the Child Tax Credit Update Portal, will initially enable anyone who has been determined to be eligible for advance payments unenroll/ to opt out of the advance payment program. Later this year, it will allow people to check on the status of their payments, make updates to their information, and be available in Spanish.  More details will be available soon about the online Child Tax Credit Update Portal.

Child Tax Credit Changes

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children between ages 6 and 17. Before 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not considered as qualifying children for the credit.

The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
• $75,000 or less for singles,
• $112,500 or less for heads of household, and
• $150,000 or less for married couples filing a joint return and qualified widows and widowers.

For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every extra $1,000 in modified AGI.

In addition, the entire credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

The IRS urges community groups, non-profits, associations, education organizations, and others with connections to people with children to share this critical information about the Child Tax Credit as well as other important benefits. The IRS will be providing in the near future additional materials and information that can be easily shared by social media, email and other methods.

For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.

February 1 is the deadline for employers to issue and file wage statements

February 1 is the deadline for employers to issue and file wage statements

Employers must file Form W-2 and other wage statements by Monday, February 1, 2021. This is also the date Form W-2s are due to employees.

By law, employers are required to file copies of their Form W-2Wage and Tax Statement, and Form W-3Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. However, since January 31 falls on a Sunday in 2021, the deadline is the next business day, Monday, February 1.

Form 1099-MISCMiscellaneous Income and Form 1099-NECNonemployee Compensation, are also due to recipients on February 1, 2021, with some exceptions. Other due dates related to Form 1099 are listed in the instructions for these forms.

Timely filing helps prevent fraud.
Filing wage statements on time and without errors is beneficial to employers and the IRS. The employer avoids penalties, and the IRS has time to verify income taxpayers report on their tax returns, which helps prevent fraud.

Employers should plan and prepare early.
Good preparation now can help employers avoid problems later. For instance, employers can start by verifying or updating employee information, such as:
•  Names
•  Addresses
•  Social Security numbers
•  Individual Taxpayer Identification Numbers

Employers should be sure their account information is current and active with the Social Security Administration as soon as possible. Lastly, employers should order paper Form W-2s, if needed.

Automatic extensions of time to file Form W-2s are not available. The IRS will only grant extensions for very specific reasons. For details, employers should read the instructions for Form 8809Application for Extension of Time to File Information Returns.