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Exempt Organizations and Deadline for Filing IRS Returns

Exempt Organizations and Deadline for Filing IRS Returns for Tax Exempt Organizations for the Tax Season 2022

The Section 501(c)(3) Internal Revenue Code specifies that any Tax-exempt organizations need to be organized and operated exclusively for exempt purposes. Also, it needs to ensure that none of its earnings inure to any private shareholder or individual.  In this context, the private inurement means that the assets of the organization must not be used to benefit a single person excessively.

Here are a few types of Exempt Organizations.

  • Charitable Organizations
  • Churches and Religious Organizations
  • Private Foundations
  • Political Organizations
  • Other Non-profits

  The IRS requires most tax-exempt organizations to file annual tax returns. Even though most tax-exempt non-profit organizations do not pay federal taxes, these entities are required to file an informational return with the IRS.  Hence, such entities need to file their IRS return for this tax season 2022.

 The annual reporting return for tax-exempt organizations is referred to as a Form 990. Most of the tax-exempt organizations need to file an annual return, and it can be done electronically. The financial activity of an organization determines which form it must file, as shown in the chart below.

Status Form to File
Gross receipts normally ≤ $50,000 990-N
Gross receipts < $200,000, and Total assets < $500,000 990-EZ or 990
Gross receipts ≥ $200,000, or Total assets ≥ $500,000 990
Private foundation – regardless of financial status 990-PF

 The deadline for the tax season 2022 has been fixed as May 16 to file IRS return by the tax-exempt organizations. Taxpayers who need more time to file beyond the May 16 deadline can request Form 8868 which is the Application for Extension of Time to File an Exempt Organization Return. This form will provide a 6-month automatic extension. Extending the time to file a return does not extend the deadline to pay tax in circumstances where tax is payable. Organizations requesting an extension are encouraged to complete Form 8868 electronically, according to the IRS.

Extended Support From IRS

IRS helps taxpayers, board members, volunteers, and officers in filling returns to comply with their tax filing obligations. Therefore, it lists few modernized e-File (MeF) providers who have passed the IRS Assurance Testing System (ATS) requirements for Software Developers of electronic Exempt Organizations. The list of such service providers can be found using the below IRS webpage

https://www.irs.gov/charities-non-profits/tax-year-2021-exempt-organizations-modernized-e-file-mef-providers

IRS Audit Group is a Tax Audit Representation firm in Los Angeles, California. We are a team of tax attorneys having hands-on experience in dealing with IRS audit process. We help you file your tax return for 2022 complying with all obligations and represent you on IRS audit. Contact us to get free consultation to understand your issues. https://irsauditgroup.com/contact/

Toll Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email address: info@irs-audit-group.com

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Qualified Opportunity Fund and Tax Filling - 2022

Qualified Opportunity Fund and Tax Filling – 2022 Tax Filing Guidelines for Qualified Opportunity Fund

Qualified Opportunity Fund (QOF) is an investment vehicle formed as a company or partnership with the goal of investing in property within Qualified Opportunity Zones. This program was formed per the 2017 Tax Cuts and Jobs Act to provide a tax incentive for private, long-term investment in economically distressed communities. There are thousands of low-income communities in all 50 states, the District of Columbia and five U.S. territories that are designated as Qualified Opportunity Zones. Taxpayers can invest in these zones through Qualified Opportunity Funds. This type of opportunity funds assists taxpayers in giving tax advantages and rewards to investors.

Certain types of businesses cannot be included in opportunity funds, even if it falls within opportunity zones. Following are types of business which are not included in opportunity funds.

  • Golf courses
  • Country clubs
  • Massage parlors
  • Hot tub facilities
  • Suntan facilities
  • Racetracks or other facilities used for gambling
  • Liquor stores

Eligibility Criteria

To certify and maintain a Qualified Opportunity Fund, an entity must:

  • Be a partnership, corporation, or LLC that is treated as a partnership or corporation, and it must have filed a federal income tax return;
  • Be organized for the purpose of investing in Qualified Opportunity Zone property under the laws in one of the 50 states, the District of Columbia, a U.S. possession, or a federally recognized Indian tribal government: and
  • Hold 90% of its assets in Qualified Opportunity Zone property.

IRS Form Required to Certify as a Qualified Opportunity Fund

The entity must file Form 8996, QOF, with the qualifying partnership or corporation’s federal tax return each year to attest and retain its status as a Qualified Opportunity Fund. The entity must file Form 8996 by the due date for 2022 tax return (including extensions).

Form 8996 is used to:

  • Certify the corporation or partnership is organized to invest in Qualified Opportunity Zone property.
  • Report that it meets the 90% investment standard of section 1400Z-2.
  • Figure the penalty if it fails to meet the 90% investment standard.

Benefits to the Taxpayers

The QOF basically provides tax deferral to the capital gains if the taxpayer elects to do so. The basis in the QOF investment becomes zero when one elect to defer the gain. The longer the investment in the QOF, the higher the basis grows. The tax benefit received is determined by the length of time one retains the Qualified Opportunity Fund investment. For instance

  • After five years, a taxpayer who defers gains through a Qualified Opportunity Fund investment obtains a 10% step-up in tax basis
  • It will be followed by another 5% step-up after seven years. Note that the taxpayer must have invested before December 31, 2019, to receive the entire 15% step-up in tax base. The taxpayer will have held the investment in the fund for seven years when the tax is triggered at the end of 2026, thereby qualifying for the 15% increase in tax basis.
  • If the taxpayer holds the investment in the QOF for at least 10 years, then such taxpayer may be able to permanently exclude gain resulting from a qualifying investment when it is sold or exchanged.

A team of tax attorneys from IRS Audit Groups helps taxpayers in filling their IRS return for 2022. We are certified tax lawyers who represent taxpayers during any IRS audit. We can resolve common tax problems to complex audit sessions to help comply our clients. Get free consultation by calling or filling the enquiry from our website below

https://irsauditgroup.com/contact/

Toll Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email address: info@irs-audit-group.com

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IRS on FABR

IRS Tax Guidelines for Foreign Bank and Financial Accounts

What is FBAR?

According to the Bank Secrecy Act, one must declare and keep records of certain foreign financial accounts, such as bank accounts, brokerage accounts, and mutual funds, to the Treasury Department every year. The accounts are reported on a Financial Crimes Enforcement Network (FinCEN) Form 114 called a Report of Foreign Bank and Financial Accounts (FBAR). The annual due date for filing FBARs for foreign financial accounts is April 15th of every year.

Who must file FBAR?

A citizen, resident, corporation, partnership, limited liability company, trust, or estate in the United States must file an FBAR to report if they have a financial interest in or signature or other authority over at least one financial account located outside the United States and its aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

However, you are exempt from reporting foreign financial accounts if they are:

  • Correspondent/Nostro accounts
  • Owned by a governmental entity
  • Owned by an international financial institution
  • Maintained a U.S. military banking facility,
  • Held in an individual retirement account (IRA) of which you’re an owner or beneficiary,
  • Held in a retirement plan of which you’re a participant or beneficiary, or
  • Part of a trust of which you’re a beneficiary,  if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.

Further taxpayers don’t have to file an FBAR for the tax year 2022 if you meet the following criteria:

  • All your foreign financial accounts are reported on a consolidated FBAR, or
  • You jointly own all your foreign financial accounts with your spouse and:
    • You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly owned accounts on a timely-filed signed FBAR.

Note: Your eligibility for this exception is unaffected by your filing status, such as married-filing-jointly or married-filing-separately.

How to file the FBAR?

The FBAR must be filed online using FinCEN’s (Financial Crimes Enforcement Network) BSA E-Filing System. The FBAR is not filed with the federal tax return. You need to call FinCEN’s Resource Centre to request an exemption from e-filing if you want to file your FBAR on paper. If FinCEN authorises your request, you will get a printed FBAR form to fill out and mail to the IRS.

If you wish someone else to file your FBAR on your behalf, fill out FinCEN Report 114a, Record of Authorization to Electronically File FBARs, and provide it to them. FinCEN Report 114a is not submitted with the FBAR; instead, retain it for your records and make it available to FinCEN or the IRS upon request.

Deadline to file for the Tax year 2021

The FBAR is an annual report that is due on April 15 of the year reported. If taxpayers miss the FBAR annual due date of April 15, they will get an automatic extension until October 15. To file the FBAR, you do not need to request an extension.

More information related FBAR filing and other resources available on the IRS website here – https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar

IRS Audit Group are a team of Tax Professionals, CPAs, Enrolled Agents and Tax Attorneys, primarily specializing in Internal Revenue Services (IRS) Tax Audit Representation. We resolve your tax audit issues and represent on behalf of you to the IRS. Call us to get free consultation from our tax professional to understand our Tax audit concerns.

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email address: info@irs-audit-group.com

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What is Form 1099-K? Why Do you Get Form 1099-K from Your Payment Processor?

As the internet economy grows, business entities find tax regulations increasingly complex, which impends growth and thus hinders business entry into new markets. Online payments made it easy for businesses to manage payment details and accept transactions without visiting banks and even without adding customer accounts. This tax payment makes it easy for businesses to calculate and collect the correct relevant taxes without having to understand the complexities of tax regulations or rates.

Got Form 1099-K from Your Payment Processor_Blog

To facilitate  2022 tax filing in such transactions, IRS has instructed the payment processors like Venmo and Cash App to send the Form  1099-K to users who accept money for selling goods & services. It includes those who transact in cryptocurrency using these payment processors. In summary, 1099-K is an IRS instruction form to be filed by the payment processing companies and shared with users so taxpayers can verify and include it in their income tax filing. Form 1099-K will report the total gross income in Box 1a received during the year without considering any adjustments, discounts, or refunds.

Did You Get The Form 1099-K?

Not all the users who make transactions through these platforms will be receiving the form. IRS defines a few eligibility criteria. If you received payments in the prior calendar year, then in such a case you should have received Form 1099-K, and here is the summary.

  • From payment card transactions (e.g. debit, credit, or stored-value cards), and/or
  • In settlement of third-party payment network transactions above the minimum reporting thresholds as follows:
    • For returns for calendar years prior to 2022:
      • Gross payments that exceed $20,000, AND
      • More than 200 such transactions
    • For returns for calendar years after 2021:
      • Gross payments that exceed $600, AND
      • Any number of transactions

If you are using multiple payment processors, each company will be sending a separate Form 1099-K. This form will include all transaction details including taxable non-taxable payments. Non-taxable transactions can be money received from friends, share for home rent from roommates or as gifts, and more.

How will I Receive My 1099-K Tax Forms?

Qualified users will be notified in the app and send an email to the address on file. As soon as the taxpayers receive notifications about 1099-K, they can follow the instructions from the app on what to do next. These forms will be sent out on or before Jan 31st and the gain/loss statement will be made available on or before Feb 15th.

What to do with Form 1099-K?

It is an information form that provides a record of all tractions of your business income that happened through the payment processing platform. Therefore, IRS advises reporting this business income in your Tax Return 2022. The gross receipts on the tax returns are calculated from the total income of the business for the tax year.  Therefore, taxpayers should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return. If already included, taxpayers can keep it as a record and cross verify all the income is reported properly.

If there is any mismatch or incorrect information like wrong Tax identification number, incorrect gross income, in Form 1099-K, taxpayers can contact the payment processors through the telephone number listed in the Form.

IRS Audit Group, a tax audit representation agency in Los Angeles is serving the taxpayers in solving issues received from the IRS through its decades of expertise. Get Free Consultation with one of our tax attorneys to discuss your tax issues to take a comprehensive approach.

Call us now: +1 888-300-6670 or Email us: info@irs-audit-group.com

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Pass Through Entities on Tax Filing 2022

New Updates from IRS for Pass Through Entities on Tax Filing 2022 – Forms K-2 and K-3

The IRS issued an important update to the taxpayers of partnerships and S corporations on January 18, 2022. IRS introduced two new Schedules K-2 and K-3 for the tax year 2021. These two new forms are for reporting any sort of international income, deductions, credits, and other miscellaneous items on pass-through entity tax returns. Partnerships, S corporations, and US citizens with interests in foreign partners are required to file Schedules K-2 and K-3 with their 2022 tax returns. The purpose of these new schedules is to make it easier for taxpayers to provide their partners with the information they need for their respective US tax returns in a more consistent format.

Who is Required to File Schedules K-2 and K-3?

All pass-through entities with items of international tax relevance, including foreign partners and international activities, need to file the new schedules. Partnership with no foreign source income, no assets producing foreign source income, and no foreign taxes paid or accrued are still be required to file Schedules K-2 and K-3. Previously, international tax items were either reported on Schedule K-1, line 16, or provided to partners as a footnote to their Schedule K-1.

Penalty Relief for Schedules K-2 and K-3 During the Transition Period

While filing Schedules K-2 and K-3, the IRS recognizes reporting and compliance issues. Taxpayers, for example, may lack the systems and procedures necessary to obtain the detailed information to determine whether and how they must file a portion of the new schedules. For tax season 2022, fines for erroneous or incomplete reporting on Schedules K-2 and K-3 will not be applied if the partnership or S corporation proves that it made a good faith attempt to comply with the obligations to file or provide the schedules. The revised schedules are designed to give the taxpayers additional transparency and clarity on how to compute their US income tax liabilities from relevant international items.

Taxpayers need to examine and identify the procedural and reporting gaps that exist between prior-year obligations and the new Schedules K-2 and K-3 standards. Since the IRS is still issuing guidance and changes for Schedules K-2 and K-3, it is critical to remain vigilant and up to date.

For most taxpayers, the deadline for submitting 2021 tax returns or requesting an extension to file and pay the tax owed is April 18, 2022. Those who request an extension will have until October 17, 2022, to file their taxes.

IRS Audit Group is a tax audit representation firm in Los Angeles, California. We provide consultation and represent on behalf of you to IRS for any federal and state audits. Our certified attorneys have deep knowledge of IRS rules and norms and have represented many audit cases successfully. Get a free consultation with our tax professionals. Contact us to help you file your tax return for 2021 or any issues related to an IRS audit.

Email address: info@irs-audit-group.com

Telephone: 1-888-300-6670

https://irsauditgroup.com/contact/

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Gig Economy Tax Guide 2022

IRS Tax Guide for Gig Economy – File Tax Returns Under Gig Economy

IRS defines a “GIG” economy as sharing economy where individuals earn income by providing on-demand work, services, or goods per the flexibility of both parties.  It often involves a digital platform like a website or mobile application.  Examples include ride-hailing apps, food delivery apps, and holiday rental apps.  It’s a growing segment, bringing economic benefits of productivity and employment.

Who has to File Tax Returns Under Gig Economy?

The gig economy is taxable.  Taxpayers need to report the income in their filings, even if the income is.

  • From part-time, temporary, or side work,
  • Not reported on an information return form – like a Form 1099-K, 1099-MISC, W-2, or other income statement or
  • Paid in any form, including cash, property, goods, or virtual currency.

Tax Slab for Gig Workers

A gig worker who is primarily dependent on the Gig Economy needs to consider taxes to be paid as a self-employed taxpayer.  They need to file tax returns for 2021 if their income from self-employment equals or exceeds $400.  Therefore, it is important to keep a record of all receipts to track income, deduct expenses, and complete tax returns.

How to File Your Income Tax Returns as Gig Workers?

Independent contractors or Gig workers, whether it is a full-time, part-time or side job, need to file their tax returns for 2021 using the below forms.

 In case the filed tax return needs to be modified, use Form 1040-X, Amended U.S.  Individual Income Tax Return.

IRS provides various options to guide the taxpayers in filing their returns.  Below are a few options that can be utilized by any individuals

IRS Audit Group is a Los Angeles-based Tax Audit Representation firm that helps in resolving common tax problems and provides points of clarification on issues such as tax relief, tax fraud, California state tax issues, and other tax debt-related circumstances.  Our certified tax attorneys help taxpayers in facilitating their filings as well as after filing issues like IRS audits.  Contact us to get a free consultation from our staff members to help us understand your problems.  Email: info@irs-audit-group.com, Phone: 1-888-300-6670

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Child and Dependent care Tax filing guide

Child and Dependent Care Credit for Taxpayers in the Tax Filing 2021 and Advance Tax Credit Payment

The ‘child and dependent care” in the tax system are applicable if the taxpayer paid expenses for the qualifying dependents during a financial year.  The eligibility criteria are listed separately.  This tax credit can be claimed in tax filing by taxpayers under the applicable situations.  

If the taxpayer is a parent or caretaker of a disabled dependent or spouse, they can save the expenses while claiming in this tax filing 2021. For the tax year 2021, the credit is fully refundable. This means that an eligible family can get it, even if they owe no federal income tax. 

 

Eligibility of Child and Dependent Care Credit

  • Taxpayer’s dependent who is under age 13 when the care is provided,
  • The spouse who is physically or mentally incapable of self-care and lived with the taxpayer for more than half the year, or
  • A person who is physically or mentally incapable of self-care, lived with the taxpayer for more than half the year and either: 
    1. is your dependent; or 
    2. Could have been your dependent except that 
      • he or she is over the gross income limit of $4300 
      • or files a joint return, 
      • or you (or your spouse, if filing jointly) could have been claimed on another taxpayer’s return.

 

Qualifying Claim Amount of Claim and Child and Dependent Care Credit

For 2021, taxpayers can claim the credit for up to $8,000 of expenses for one qualifying person or $16,000 for two or more people. The percentage of expenses you can claim ranges from 0% to 50%, depending on your adjusted gross income (AGI). You can claim the maximum percentage (50%) of expenses if your AGI is $125,000 or less. So, for example, if your AGI is $75,000 and you had $8,000 of expenses for one qualifying person, the tax credit would be worth $4,000 (50% of $8,000). The tax credit starts to phase out if your AGI is above $125,000 and disappears entirely at AGIs above $438,000. For more details, refer to IRS official website below

https://www.irs.gov/newsroom/irs-highlights-importance-of-child-and-dependent-care-credit-can-help-families-others

 

How to Claim Child and Dependent Care Credit

To claim the credit, taxpayers must fill out Form 2441 and include it with the federal tax return. Further, a valid taxpayer identification number (TIN) for each qualifying person, as well as the names, addresses, and TINs for the people and organizations that provided care for your child, spouse, or dependent must also be included.

According to the IRS, since the advance child tax credit payments cannot be counted as income, federal, state, or local agencies can’t use the amount when determining if you or your family are eligible for other benefits or assistance.

 

Advance Child Tax Credit payments

Advance Child Tax Credit payments provide an option to claim the credits early from the estimated amount of the Child Tax Credit. Taxpayers can claim up to 50% of the estimated credit that you may properly claim on your 2021 tax return during the 2022 tax filing season. 

Going through different forms and documents is always a hassle for taxpayers especially when the deadlines are nearing. IRS Audit Group in Los Angeles facilitates your tax filing through its certified IRS attorneys. Get a free consultation with one of our staff members to help us understand your needs. Call us on 1- -888-300-6670 or email us at info@irs-audit-group.com.

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IRS 2022

IRA Contribution for Tax Season 2022 – Things To Know About Tax Benefits On Your Retirement Account

 

 

IRA or the Individual Retirement Account will help lower your taxable income for the tax season 2022. IRA is easy to set up, and it allows to save for retirements with tax-free benefits. One can open a traditional IRA from a bank, brokerage, mutual fund, or insurance company. The money saved in this account can be used to invest in stocks, bonds, mutual funds, exchange-traded funds, and other approved investments.

 

As we know, IRA is an individual-owned account that provides more flexible benefits than the 401(K) plans.  The 401(K) plans are sponsored by employers.    The employer has the right to change the plan or limit the investment options.

 

Traditional IRA vs. Roth IRA

These are two common IRAs that an individual can set up to contribute to their retirement savings. The important difference between these two is traditional is tax-deferred and Roth is tax-free.

 

Traditional IRA: The contribution is deductible from your tax return. The earnings grow tax-deferred until you withdraw them upon retirement. But the withdrawals are taxable as income after age 59½. There is also a 10% IRS penalty tax in addition to current income tax if the withdrawal is made before 59½. Individuals with a low tax bracket at the time of retirement or taking withdrawals can use a traditional IRA.

 

Roth IRA: Savings for Roth IRA is contributed after the tax is paid. But the withdrawal is penalty-free and tax-free after the age of 59½. Still, one needs to wait at least five years to withdraw the savings from Roth IRA.

 

What has been changed for the tax year 2022?

The contribution limit for tax season 2022 is not changed from the previous year for the IRA, but the adjusted gross income (AGI) has been increased like every year. One can contribute a maximum of $6,000 in the tax year 2022 if you are below the age of 50. An additional contribution of $10,00 is allowed for individuals older than 50. But the contributions for the 401(k)s and 403(b)s plans that are provided by employers for the tax season 2022 have been increased. For the retirement savers younger than 50, the maximum contribution limit has been set as $20,500 in 2022, an increase of $1,000 from 2021. Those 50 and older can add an extra $6,500 (same as 2021) — for a maximum contribution of $27,000 in 2022.

 

The AGI limits for the tax year 2022 on Traditional IRA tax deduction are summarized below

 

Filing status Traditional IRA AGI limits Comments
Single taxpayers $68,000 to $78,000 covered by a workplace retirement plan
Married couples filing jointly $109,000 to $129,000 spouse making the IRA contribution is covered by a workplace retirement plan.
Married couples filing jointly $204,000 to $214,000 not covered by a workplace retirement plan married to someone who is covered
Married filing a separate return $0 to $10,000 taxpayers covered by a workplace retirement plan

 

The AGI limits for the tax year 2022 on Roth IRA tax contribution are summarized below

 

Filing status Traditional IRA AGI limits Comments
Single taxpayers $129,000 to $144,000 covered by a workplace retirement plan
Married couples filing jointly $204,000 to $214,000 spouse making the IRA contribution is covered by a workplace retirement plan.
Married filing a separate return $0 to $10,000 taxpayers covered by a workplace retirement plan

 

The savings on an IRA can help build sizable retirement savings. It gives more investment options and choices while having benefits like tax-deductible and tax deferral. Take advantage of this terrific opportunity and jump-start your IRA account. Taxpayers can contribute to an IRA for the 2021 Tax Year until the tax deadline (April 18, 2022).

 

Call our consultants with IRS Audit Group, Los Angeles at (888) 300-6670 for more information and to find out if you are eligible to contribute. Let us help you establish your retirement funding plan today.

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IRS Tax Filing 2021 – 2022 – Three Tax Changes we need to Know in Tax Filing – Highlights about the Changes in Tax Filing 2021

As the Tax season for 2021 is nearing, it is good to have a basic understanding of the recent adjustments in tax structure, exemptions, and credits.  Such info will help taxpayers to plan and file tax returns in time.  Every year, the Internal Revenue Service (IRS) updates tax rates, rebates and thresholds that are adjusted with the annual inflation. On Nov. 10, 2021, the IRS announced inflation adjustments for 2022 affecting standard deductions, tax brackets, and more.

 

Thus, the Tax Filing Year 2022 got many updates that are listed in detail by IRS in this document. It is important to discuss a few such changes that need spotlight among every taxpayers which are listed below.

 

  1. Child Credit on Monthly Basis

Child Tax Credit provides financial benefits to those with qualifying kids. For those Tax Years before 2021, the IRS allowed claim up to $2,000 per child under the age of 17 in Tax Filing.  However, during the Tax Year 2021, the following changes were done.

  • Child tax credit amount has increased up to $3,600 per child under 6
  • Child tax credit amount has increased up to $3,000 per child ages 6 to 17
  • Child tax credit is now fully refundable.
  • Child tax credit has been converted to monthly payment

As the COVID-19 has negatively impacted the country’s economy and the taxpayers, the IRS provided 50% of the child tax credit as advance monthly payments during the period July to December 2021. Tax filers may need to repay if they received more than the eligible pay.  Similarly, those who received lesser credit can file and claim back. Thus, the expanded child tax credit payments could impact many families’ tax refunds. For more specific details, please be guided by the IRS government portal

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

 

  1. Recovery Rebate Tax Credit

Recovery Rebate Tax Credit or Stimulus Payment is another benefit in case you haven’t received the third economic impact payment while preparing Tax Filing. Those who lost jobs or whose income drastically decreased in 2021 can now claim the Recovery Rebate Tax Credit. Here are the eligibility criteria to receive the economic impact payment.

  • You’re not dependent of a taxpayer
  • Your adjusted gross income (AGI) can’t exceed:
  • $150,000 for married filing jointly
  • $112,500 for heads of household
  • $75,000 for single filers

One must file 2021 Tax Return to receive the Recovery Rebate Tax Credit even if not done Tax Filing or any tax return in the past. You can use any one of IRS’ Free File Providers from the list given.

Note: You must have AGI of less than $73,000 to use the IRS’ free file program.

Learn more from IRS official website below

https://www.irs.gov/coronavirus/economic-impact-payment-information-center

 

  1. Claim Charitable Donations

For the Tax Year 2021 Tax filing, the claims on Charitable Donations are changed with the increase in tax deductions. Taxpayers both individuals who itemized and those who do not itemize can avail such benefits of these deductions while filing the return.  Now, the tax filers can deduct up to $300 for cash donations to qualifying charities (up to $600 combined for married filers) whether you itemize or take the standard deduction for 2021.

Those who claim charitable contributions as itemized deductions can claim cash contributions made to qualifying organizations up to 100% of their adjusted gross income (AGI) for the 2021 tax year only. Such deductions used to be limited to 60% of the taxpayer’s AGI. More specific info can be found at https://www.irs.gov/about-irs/the-irs-encourages-taxpayers-to-consider-charitable-contributions

 

IRS Audit Group continues to monitor the tax provision updates every year and highlights important changes that benefit the taxpayers in Tax Filing. We are certified tax lawyers having immense experience in state and federal tax laws. Get a free consultation with us to understand your tax problems and help you deal with IRS on this upcoming Tax season 2022. Contact us (888) 300-6670 (or) info@irs-audit-group.com

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RMD for Retirees_blog

Required Minimum Distribution (RMD) for Retirees – Deadline is Dec 31 2019

RMD (Required Minimum Distributions) is an important part in everyone’s retirement income planning process. As we are approaching the end of the year it is important to remind about the deadlines associated with RMD withdrawals. In order to avoid tax penalties from IRS, withdraw your RMD’s on time from certain retirement accounts. Yes, tax audit can be done by the IRS for the non-withdrawal IRA accounts because withdrawals will be subject to federal income tax. The deadline to withdraw the RMD amount is December-31 2019.

To enjoy the golden years after retirement, the IRS is providing options to invest in a variety of tax-advantaged retirement accounts. The types Of Individual Retirement Accounts (IRA) can be as follows:

Traditional IRA

This type of individual retirement account will allow your earnings grow tax deferred. There are some advantages and limits in traditional IRA plan. Individuals will be able to deduct the entire amount of the IRA contribution if not covered by retirement plan by the employers. There is no income limit for this plan. You can invest in traditional IRA plan, no matter how much you earn. But one cannot make contribution after the age of 70.5 years. You should begin to take the RMD amount from your account by April 1 of the calendar year following the year you reach the age of 70.5. Failures to withdraw, the IRS will audit your account and can impose a whopping penalty of 50% from the minimum amount to be withdrawn.

Simplified Employee Pension (SEP) IRA

This is a plan for those who are self-employed, own a business, employs others or earn freelance income. Generally, employers will be contributors of SEP IRA but employees also be able to make traditional contribution to SEP IRA. Employees can participate only if they are 21 or older and should earn at least $600 in the tax year, and worked with the employer in at least 3 of the past 5 years.

Simple IRA

Simple IRA is a retirement plan offered by small businesses up to 100 employees. Distribution can be taken within 2 years of opening the plan. In simple IRA, the employer can match the contribution of employees up to 3% of salary. When the employee not chooses to participate in the plan, then the employer can make the contribution of a flat 2%. Compared to other retirement plans, simple IRA plan offers lower startup and annual costs.

You can estimate the current and future year’s RMD amount with a simple calculation. It is determined by the prior year’s December 31st IRA account balance. Then check the distribution period based on your age. The account balance should be divided by the distribution factor you found based on your age. Online RMD calculators also available to calculate the amount you can withdraw from your RMD account.

IRS Audit Group’s resolves your tax issues faced during the IRS Audit. Through the RMD’s IRS will collect the tax from your income and investment gains. If you have any questions regarding RMD’s, the different IRA plans, to know how the RMD amount is calculated and to avoid the tax penalties for your RMD accounts by the IRS we can help you to resolve with our efficient tax experts. We also offer Tax Audit Representation Services for all your tax dispute cases, Contact us for free consultation

info@irs-audit-group.com/1-888-300-6670

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IRS Audit Group

Tax attorney in Beverly Hills, California

468 N Camden Dr #200,
Beverly Hills, CA 90210, USA

Call: +1 888-300-6670

Hours

Sunday8:00am-5:00pm Monday8:00am-10:00pm Tuesday8:00am-10:00pm Wednesday8:00am-10:00pm Thursday8:00am-10:00pm Friday8:00am-10:00pm Saturday8:00am-10:00pm