Category: FATCA

Early January 2021, the Treasury Department and the IRS started sending the second round of Economic Impact Payments to millions of Americans as part of the implementation of the Coronavirus Response and Relief Supplemental Appropriations Act.

Taxpayers don’t need to take any action to receive these payments. Economic Impact Payments are automatic for eligible taxpayers who filed a 2019 tax return and those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who didn’t file a tax return.

These second round of payments follow the successful delivery of more than $270 billion in CARES Act Economic Impact Payments to about 160 million Americans in 2020.

Eligible individuals who did not receive an Economic Impact Payment – either the first or the second payment – can claim a Recovery Rebate Credit when they file their 2020 taxes this year. The IRS urges taxpayers who didn’t receive an advance payment to review the eligibility criteria when they file their 2020 taxes; many people, including recent college graduates, may be eligible for a credit.

Eligible individuals who didn’t receive the full amount of both Economic Impact Payments should claim the missing amount as a credit. Anyone who did receive the full amount for both Economic Impact Payments should not include any information about their payment when they file their taxes – they’ve already received the full amount of the Recovery Rebate Credit as advance payments.

For the latest IRS forms and instructions, visit the IRS website at IRS.gov/forms.

You can visit IRS.gov for the latest information about the Economic Impact Payments and filing your 2020 tax return.

Excerpt from IR-2021 Bulletin 12 Jan. 2021

In October 2019, as part of a wider effort to assist taxpayers and to enforce the tax laws in a rapidly changing area, the Internal Revenue Service issued two new pieces of guidance for taxpayers who engage in transactions involving virtual currency. The new guidance includes Revenue Ruling 2019-24 and frequently asked questions (FAQs). It supplements the guidance the IRS issued on virtual currency in Notice 2014-21 that describes how virtual currency is treated for federal tax purposes.

In addition, the IRS has now issued the second early release draft of the 2019 Form 1040, Schedule 1, Additional Income and Adjustments to Income, which includes the following checkbox question:

At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency? ◊ Yes ◊ No

Taxpayers who file Schedule 1 to report income or adjustments to income that can’t be entered directly on Form 1040 should check the appropriate box to answer the virtual currency question. Taxpayers do not need to file Schedule 1 if their answer to this question is NO and they do not have to file Schedule 1 for any other purpose.

The related draft Form 1040 instructions, also now available on IRS.gov, include instructions to help taxpayers determine how they should answer this new question.

Taxpayers can access Where’s My Refund? anytime to track their refunds. They can find this tool on both IRS.gov and the IRS2GO app. The IRS issues most refunds in less than 21 days, although some require additional time. Agency customer service representatives can’t answer refund questions unless it has been:

• 21 days or more since the taxpayer e-filed
• 6 weeks or more since the taxpayer mailed their return

Also, in some cases “Where’s My Refund” may tell the taxpayer to contact the IRS.

Taxpayers can also call the automated IRS refund hotline at 800-829-1954.

Validate identity
Taxpayers who call the IRS with questions about their account should be ready to verify their identity. IRS telephone assistors may ask a series of questions to confirm the identity of callers. Many of the answers to these questions come from the taxpayer’s prior year tax return.

 

Excerpt from: IRS Tax tip 2019-09

Standard Deduction Chart for Most People*

Changes in Tax Rates
For 2018, most tax rates have been reduced. This means most people will pay less tax starting this year. The 2018 tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

In addition, for 2018, the tax rates and brackets for the unearned income of a child have changed and are no longer affected by the tax situation of the child’s parents. The new tax rates applicable to a child’s unearned income of more than $2,550 are 24%, 35%, and 37%.

In addition to lowering the tax rates, some of the changes in the law that affect you and your family include increasing the standard deduction, suspending personal exemptions, increasing the child tax credit, and limiting or discontinuing certain deductions.

Most of the changes in this legislation take effect in 2018 for federal tax returns filed in 2019. It is important that individual taxpayers consider what the TCJA means and make adjustments in 2018 and 2019.