WASHINGTON – The Internal Revenue Service today encouraged taxpayers to take necessary actions this fall to help them file their federal tax returns timely and accurately in 2021, including special steps related to Economic Impact Payments.

This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to prepare for the 2021 tax return filing season ahead.

Steps taxpayers can take now to make tax filing easier in 2021

Taxpayers should gather Forms W-2, Wage and Tax Statement, Forms 1099-Misc, Miscellaneous Income, and other income documents to help determine if they’re eligible for deductions or credits. They’ll also need their Notice 1444, Your Economic Impact Payment, to calculate any Recovery Rebate Credit they may be eligible for on their 2020 Federal income tax return.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and virtual currencies.

Taxpayers with an Individual Tax Identification Number should ensure it hasn’t expired before they file their 2020 federal tax return. If it has, IRS recommends they submit a Form W-7, Application for IRS Individual Taxpayer Identification Number, now to renew their ITIN. Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits.

Taxpayers can use the Tax Withholding Estimator on IRS.gov to help determine the right amount of tax to have withheld from their paychecks. If they need to adjust their withholding for the rest of the year time is running out, they should submit a new Form W-4, Employee’s Withholding Certificate, to their employer as soon as possible.

Taxpayers who received non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income, may have to make estimated tax payments. Payment options can be found at IRS.gov/payments.

New in 2021: Those who didn’t receive an EIP may be able to claim the Recovery Rebate Credit

Taxpayers may be able to claim the Recovery Rebate Credit if they met the eligibility criteria in 2020 and:

• They didn’t receive an Economic Impact Payment this year, or
• Their Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018) plus $500 for each qualifying child.
• For additional information about the Economic Impact Payment, taxpayers can visit the Economic Impact Payment Information Center.

Received interest on a federal tax refund? Remember these are taxable; include when filing

Taxpayers who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income, to anyone who received interest totaling at least $10.

Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a 2020 federal tax refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer.

EITC/ACTC-related refunds should be available by first week of March

By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. The law requires the IRS to hold the entire refund − even the portion not associated with EITC or ACTC. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they chose direct deposit and there are no other issues with their tax return. Taxpayers should “Where’s My Refund?” for their personalized refund date.

With social distancing continuing, taxpayers can stay home and stay safe with IRS online tools

Taxpayers can find online tools and resources to help get the information they need. These IRS.gov tools are easy-to-use and available 24 hours a day. Millions of people use them to find information about their accounts, get answers to tax questions or file and pay their taxes.  

Almost everyone can file electronically for free.The IRS Free File program, available only through IRS.gov or the IRS2Go app, offers brand-name tax preparation software packages at no cost. The software does all the work of finding deductions, credits and exemptions for you. It‘s free for those who earned $72,000 or less in 2020. Some of the Free File packages also offer free state tax return preparation.

If you’re comfortable filling out  your own tax forms electronically, you can use Free File Fillable Forms, regardless of your income, to file your tax returns either by mail or online.

Taxpayers have several options to find a tax preparer. One resource is Choosing a Tax Professional, which offers a wealth of information for selecting a tax professional.

The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find preparers in their area who currently hold professional credentials recognized by the IRS, or who hold an Annual Filing Season Program Record of Completion.

Taxpayers can use the Interactive Tax Assistant beginning in January 2021 to get answers to a number of tax law questions. The ITA can help determine if a type of income is taxable, if someone is eligible to claim certain credits, or if they can deduct expenses on their tax return.

Taxpayers can check the status of their refund using “Where’s My Refund?“. The status is available within 24 hours after the IRS receives their e-filed tax return or up to four weeks if they after they mailed a paper return. The “Where’s My Refund?” tool updates once every 24 hours, usually overnight, so taxpayers only need to check once a day.

The best and fastest way for taxpayers to get their tax refund is to have it direct deposited into their financial account. Taxpayers who don’t have a financial account can visit the FDIC website for information to help open an account online.

Taxpayers are invited to join the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. VITA/TCE volunteers receive training to provide free tax return preparation for eligible taxpayers. There’s never been a better time to get ready to help others file and the IRS is rolling out new ways to make volunteering easier. Visit IRS.gov/volunteers to learn more.

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The latest post of “A Closer Look,” features what went on behind the scenes for the IRS to simultaneously execute a highly successful filing season while taking on significant new responsibilities to deliver Economic Impact Payments and implement other tax relief to help Americans during the COVID-19 pandemic. Continue reading here.

“A Closer Look” covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

People can check here for prior posts and new updates.

WASHINGTON — The Internal Revenue Service (IRS) today issued Notice 2020-75, which announces rules to be included in forthcoming proposed regulations.  Specifically, the proposed regulations will clarify that State and local income taxes imposed on and paid by a partnership or S corporation on its income are allowed as a deduction by the partnership or S corporation in computing its  non-separately stated taxable income or loss for the taxable year of payment, and therefore are not subject to the State and local tax deduction limitation for partners and shareholders who itemize deductions.  

The notice describing the forthcoming proposed regulations applies to these types of income taxes starting today, and also allows taxpayers to apply these rules to specified income tax payments made in a taxable year of a partnership or an S corporation ending after Dec. 31, 2017, and before the date the forthcoming proposed regulations are published in the Federal Register.

Updates on the implementation of the Tax Cuts and Jobs Act (TCJA) can be found on the Tax Reform page of IRS.gov.

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WASHINGTON – The Internal Revenue Service today urged anyone who doesn’t normally file a tax return and has not yet received an #Economic #Impact #Payment (#EIP) to take advantage of “National EIP Registration Day,” on Tuesday, Nov. 10. National EIP Registration Day is part of the agency’s further concerted push with partners across the country to make sure every eligible American has registered before the Nov. 21 deadline to receive their Economic Impact Payment this year.

National EIP Registration Day will take place just a few days ahead of the Nov. 21 deadline for registering online to receive an Economic Impact Payment. This special event will feature support from IRS partner groups inside and outside of the tax community, including those that work with low-income and underserved communities. These groups will help spread the word about the new Nov. 21 deadline and, in some cases, provide special support for people who still need to register for the payments on IRS.gov.

Earlier this fall, the IRS sent nearly 9 million letters to people who appear to qualify for the Economic Impact Payments but don’t normally file a tax return. To help tax professionals and other partners reach out to these non-filers, the IRS has posted a zip-code level breakdown of the number of these letters. The letters, along with the special Nov. 10 event, urge people to use the Non-Filers: Enter Info Here tool, available exclusively on IRS.gov.

“Our partner groups have been vital to our efforts to reach many underserved communities,” said IRS Commissioner Chuck Rettig. “Already, millions of Americans have successfully used the Non-Filers portal and received their Economic Impact Payment. Registration is quick and easy, and we urge everyone to share this information to reach as many people before time runs out on Nov. 21.”

Many partner groups have been working with the IRS, helping translate and making available Economic Impact Payment information and resources in 35 languages. The IRS is also conducting a multilingual push on social media to support the final registration drive.

Since the Non-Filers tool launched in the spring, nearly 8.3 million people who normally aren’t required to file a tax return have registered for the payments. The IRS continues to work to reach others who haven’t used the tool yet, which led to this fall’s mailing and the Nov. 10 registration event.

The tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.

Normally, an eligible individual who registers will receive a $1,200 payment if they are single or $2,400 if married and file a joint return. If they have dependent children, they will normally also get an additional $500 for each qualifying child.

Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.

Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov. For other EIP-related information, including answers to frequently asked questions, visit the Economic Impact Payment Information Center on IRS.gov.

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