Pro-Tax Preparation Services LLC

02/01/2022

STIMULUS CHECKS-TAX CONSEQUENCE

Don’t be surprised if you receive a letter from the IRS in the coming weeks.

You’re not in trouble. The agency is simply sending out information about the third stimulus checks, which were disbursed in 2021. The letters are slated to start being mailed in late January.

When you get one, don’t throw it away just yet. “These letters can help taxpayers, or their tax professional, prepare their 2021 federal tax return,” the IRS said in a release.

Labeled Letter 6475, “Your Third Economic Impact Payment,” the correspondence will include how much you received in stimulus money in 2021, including any so-called plus-up payments.

You can use it to figure out if you can claim the Recovery Rebate Credit on your 2021 tax return. This credit will make up the difference between the amount of the third stimulus check you were eligible for, and how much you actually received.

01/31/2022

IRS announces Letter 6419 error

In late December and early January the IRS sent out Letter 6419 to the roughly 35 million families who benefitted from the Child Tax Credit expansion in 2021, outlining how the payments should be declared in the 2022 tax return.

But earlier this week the IRS confirmed that a small group of taxpayers who moved or switched banks during December may not have received the sixth and final monthly payment which was scheduled for that month. In this instance the Letter 6419 may not reflect with the household actually received.

01/27/2022

Taxpayers beware: Tax season is prime time for phone scams

With the new tax season starting this week, the IRS reminds taxpayers to be aware that criminals continue to make aggressive calls posing as IRS agents in hopes of stealing taxpayer money or personal information.

Here are some telltale signs of a tax scam along with actions taxpayers can take if they receive a scam call.

The IRS will never:

Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
Threaten to immediately bring in local police or other law enforcement groups to have the taxpayer arrested for not paying.
Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
Call unexpectedly about a tax refund.
Taxpayers who receive these phone calls should:

Record the number and then hang up the phone immediately.
Report the call to TIGTA using their IRS Impersonation Scam Reporting form or by calling 800-366-4484.
Report the number to [email protected] and be sure to put “IRS Phone Scam” in the subject line.

More information:
Tax Scams and Consumer Alerts
Report Phishing and Online Scams

Share this tip on social media -- season is prime time for phone scams.

Tax Tip 2022-15, January 27, 2022 — With the new tax season starting this week, the IRS reminds taxpayers to be aware that criminals continue to make aggressive calls posing as IRS agents in hopes of stealing taxpayer money or personal information.

01/25/2022

ELECTRONIC FILING- A MUST FOR YOUR RETURN

Don't file a paper return. It will delay the processing of your return and the receipt of your refund. We will file your return electronically and you will get your refund much faster with direct deposit in your bank account. Expect delays if you mailed a paper return or responded to an IRS inquiry about your 2020 return.

Some tax returns take longer to process than others, including when a return:

Needs a correction to the Recovery Rebate Credit amount
Is incomplete
Is affected by identity theft or fraud
Includes a claim filed for an Earned Income Tax Credit or an Additional Child Tax Credit using 2019 income.
Includes a Form 8379, Injured Spouse Allocation PDF, which could take up to 14 weeks to process
Needs further review in general

01/20/2022

2022 SPECIAL TAX ISSUES-CHILD TAX CREDIT, STIMULUS PAYMENTS
You should be aware of the following issues which may pertain to you when filing your tax return. You must report the total amount of Advance Child Tax Credit payments received in 2021. You will receive a letter 6419 from the IRS reporting the amount. Stimulus payments are not taxable, however the IRS will review your 2021 income and may provide an additional stimulus payment as a tax credit if you did not receive the full amount.

01/17/2022

STANDARD DEDUCTION VS. ITEMIZATION

For single filers and married individuals filing separately, the standard deduction in 2021 returns climbs to $12,550, a $150 increase. The following year, the deduction increases to $12,950, a $400 increase.

• The income levels applying to each tax bracket are increasing up and down the income scale. For example, in 2021 returns, the top 37% rate applies to individuals making $523,600, or $628,300 for married couples filing jointly. In 2022 returns, the richest households face the top rate for incomes above $539,900 or $647,850 for married couples filing jointly.

• The annual exclusion on the gift tax rises for the first time in several years. From 2018 to 2021, $15,000 was the threshold before taxes applied on gifts, according to the IRS. It rises to $16,000 in 2022, with returns filed in 2023.

• The Earned Income Tax Credit, a credit for low- and moderate-income households, also increases. For example, the maximum credit for 2021 returns of qualifying households with three or more eligible children is $6,728. The following year, households with three or more kids will receive $6,935, the IRS said. The American Rescue Plan passed in March expanded the EITC’s rules, qualifications and potential payouts, particularly for workers without children.

01/14/2022

THE 2021 CHILD TAX CREDIT- IRS INFORMATION

You qualified 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 had 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.

Disbursement of advance Child Tax Credit payments began in July and continued on a monthly basis through December 2021, generally based on the information contained in your 2019 or 2020 federal income tax return. If you are eligible for the Child Tax Credit, but did not receive advance Child Tax Credit payments, you can claim the full credit amount when you file your 2021 tax return during the 2022 tax filing season.

01/13/2022

Once you have gathered all of your tax documents and relevant information don't delay in contacting us