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01/22/2022

2021 Child and Dependent Care Credit:

Another temporary provision in the Act, applicable only to the 2021 taxable year, increases the credit for dependent care assistance employment expenses, in the case where the taxpayer has one dependent, from $3,000 to $8,000, and, in the case where the taxpayer has two or more dependents, from $6,000 to $16,000. The Act increases the percentage of these expenses that may be claimed as a credit from 35% to 50% and begins to phase out when the taxpayer’s adjusted gross income (AGI) exceeds $125,000. For households with income over $400,000, the credit can be reduced below 20%. Also, for the 2021 taxable year, the credit is refundable.
For a taxpayer who receive reimbursements from his or her employer, there is an exclusion from his or her gross income of amounts paid by an employer for dependent care assistance; the Act increases this exclusion amount from $5,000 to $10,500 (or from $2,500 to $5,250 for a separate return filed by a married individual). This change only applies to the 2021 taxable year.
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01/19/2022

How do I request the Letter 6419 (advance child tax credit) and/or Letter 6475 (stimulus) for tax filing?

The IRS will send these letters to taxpayers in January 2022. You should have it by the end of January 2022.

OR

You can go to the following IRS link to view the payments. Once you are on the following page, Click on VIEW PAYMENTS. You would need to create an account there:

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

OR

You can also reconcile it through your bank account. Check in your bank account how much payments you received from the IRS as Advance child tax credit from July 2021 to Dec. 2021 And how much you received as 3rd stimulus check in 2021.

If you received one or both of these payments, you MUST provide this information in your 2021 tax return.

Check if you're eligible and sign up to get advance payments of the 2021 Child Tax Credit even if you don't file taxes.

01/14/2022

Tips for keeping your New Year's resolution for 2022

01/14/2022

Awaiting Processing of Previous Tax Returns? People can still file 2021 returns

According to the IRS latest release, the IRS said that its employees continue to work hard on critical areas affected by the pandemic, including processing of tax returns from last year & record levels of phone calls coming in.

"In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me," said IRS Commissioner Chuck Rettig. "IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers. Additional resources are essential to helping our employees do more in 2022 – and beyond."

The IRS continues to reduce the inventory of prior-year individual tax returns that have not been fully processed. As of December 3, 2021, the IRS has processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.

Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.

Source: irs.gov

01/12/2022

Gather And Organize Your Tax Records - 2021 Tax Return (Expect in the Mail, Letter 6419 & 6475 from IRS)

Organized tax records make preparing a complete and accurate tax return easier. It helps you avoid errors that lead to processing delays that slow your refund and may also help you find overlooked deductions or credits.

Wait to file until you have your tax records including:

Forms W-2 from your employer(s)
Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
Form 1099-K, 1099-MISC, W-2 or other income statement if you worked in the gig economy
Form 1099-INT if you were paid interest
Other income documents and records of virtual currency transactions
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage
Letter 6419, 2021 Total Advance Child Tax Credit Payments to reconcile your advance Child Tax Credit payments
Letter 6475, Your 2021 Economic Impact Payment, to determine whether you're eligible to claim the Recovery Rebate Credit
Notify the IRS if your address changes and notify the Social Security Administration of a legal name change.

Remember, most income is taxable. This includes:

unemployment income,
refund interest,
income from the gig economy, and
virtual currencies.

I have included the links above as well, in case you want to get more information, Thank you.

Source: irs.gov

01/12/2022

2022 Tax Filing Season Begins Jan. 24th, 2022 - Deadline: April 18th, 2022

The Internal Revenue Service announced that the nation's tax season will start on Monday, January 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.

The January 24 start date for individual tax return filers allows the IRS time to perform programming and testing that is critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.

The IRS encourages everyone to have all the information they need in hand to make sure they file a complete and accurate return. Having an accurate tax return can avoid processing delays, refund delays and later IRS notices. This is especially important for people who received advance Child Tax Credit payments or Economic Impact Payments (American Rescue Plan stimulus payments) in 2021; they will need the amounts of these payments when preparing their tax return. The IRS is mailing special letters to recipients, and they can also check amounts received on IRS.gov (Letter 6419 Advance Child Tax credit & Letter 6475 for 3rd Stimulus payment).

The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers.

Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.

To speed refunds, the IRS urges taxpayers to file electronically with direct deposit information as soon as they have everything they need to file an accurate return.

Source: irs.gov

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12/31/2021

Temporary Allowance of Full Deduction for Business Meals🍔🍽🍟

The Act provides a 100% deduction for business meal food and beverage expenses, including any carry-out or delivery meals, provided by a restaurant that are paid or incurred in 2021 and 2022.

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12/27/2021

Education Benefits:

Beginning in 2021, the qualified Tuition and Fees Deduction is replaced. Instead, the phase-out limits on the Lifetime Learning Credit are increased to $80,000 ($160,000 for married filing jointly).

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12/24/2021

Medical Expense Deduction Floor:

Beginning in 2021, the medical expense deduction floor is moved permanently to 7.5%. That means that the taxpayer can deduct (assuming he or she itemizes) medical expenses which exceed 7.5% of his or her adjusted gross income (AGI).

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12/20/2021

Charitable Contribution Deductions-Upto $600 for Non-itemizer Taxpayers

Consolidated Appropriations Act, 2021 extends and modifies the non-itemizer charitable deduction for 2021. The provision increases the maximum amount that may be deducted such that married couples filing a joint return may deduct up to $600 (while non-married filers or married filers who file separately are limited to $300). Additionally, the provision restructures the deduction such that, although it may be claimed only by non-itemizers, the deduction does not reduce adjusted gross income. The Act also extends through 2021 the increased limit from the CARES Act on deductible charitable contributions for corporations and taxpayers who itemize.

12/20/2021

Expanded Flexible Spending Arrangements (FSA):

Consolidated Appropriations Act, 2021 allows taxpayers to carry amounts from FSAs forward into 2021 (and again into 2022). This would apply to FSAs for health care and dependent care.

➢ Allows plans to permit health and dependent care flexible spending arrangements (FSA) to carryover unused benefits up to the full annual amount from 2020 to 2021 and 2021 to 2022.

➢ Allows plans to permit a 12-month grace period for unused benefits or contributions in health and dependent care FSAs for plan years ending in 2020 or 2021.

➢ Allows plans to extend the maximum age of eligible dependents from 12 to 13 for dependent care FSAs for the 2020 plan year and unused amounts from the 2020 plan year carried over into the 2021 plan year.

➢ Allows plans to permit a prospective change in election amounts for health and dependent care FSAs for plan years ending in 2021.

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