Families Can Still Get the Advance Child Tax Credit

Families Can Still Get the Advance Child Tax Credit

Families Can Still Get the Advance Child Tax Credit

Millions of American families have been taking advantage of the advance payments of the Child Tax Credit, but the Internal Revenue Service stresses there’s still time left to sign up for the remaining payments.

The latest batch of the monthly advance payments is now making its way into the bank accounts of some 36 million families. This wave of payments totals around $15 billion and the vast majority of families are getting their payments by direct deposit.

The advance payments of the Child Tax Credit (CTC) were made possible by the American Rescue Plan, passed earlier this year. It allowed qualifying families to get their CTC payments in advance installments, rather than just a refund when they file their income taxes.

Families can qualify for payments of up to $300 per month for every child under the age of 6, and up to $250 per month for each child between the ages of 6 and 17. Advance payments will total half of the overall tax credit due the taxpayer; the balance is paid out as a refund when the taxpayer files.

The IRS offers these details on the payments:

  • Families will see the direct deposit payments in their accounts starting October 15. Like the prior payments, the vast majority of families will receive them by direct deposit.
  • For those receiving payments by paper check, be sure to allow extra time, through the end of October, for delivery by mail. Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal, available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, visit gov/childtaxcredit2021.
  • Payments went to eligible families who filed a 2019 or 2020 income tax return. Returns processed by October 4 are reflected in these payments. This includes people who don’t typically file a return but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov or in 2021 successfully used the Non-filer Sign-up Tool for advance CTC, also available only on IRS.gov.
  • Payments are automatic. Aside from filing a tax return, including a simplified return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments.
  • Families who did not get a July, August or September payment and are getting their first monthly payment in October will still receive their total advance payment for the year. This means that the total payment will be spread over three months, rather than six, making each monthly payment larger.

Some American families may get a letter from the IRS, letting them know it’s not too late to sign up for advance CTC payments. The letter spotlights those who haven’t filed a 2020 income tax return with emphasis on those who aren’t normally required to file because their annual incomes are below filing thresholds.

Even these non-filing families may be eligible for the Child Tax Credit advance payments. The IRS says they should visit IRS.gov online for information on how to file a return and get their CTC credit.

September Advance Child Tax Credit payments hit a snag

The Internal Revenue Service says a technical issue led to about 2% of the qualified CTC recipients not getting their monthly advance credit amounts on time in September. The IRS has since sent out the payment to everyone affected.

Those affected included taxpayers who recently updated their bank account or address information using the IRS Child Tax Credit Update Portal.

The glitch mainly affected payments to married taxpayers filing jointly where only one spouse made a bank account or address change; this usually means payments are split into two – between the existing account or address and the new one.

Some recipients saw their payments delayed. Some saw a larger payment amount than normal, which led the IRS to adjust their three remaining monthly payments down by $10-$13 per child to compensate.

The IRS says it will send letters to all the taxpayers affected by the glitch and appreciates the patience of everyone.

For more information, check out the IRS website. Links to online tools, a guide to the Non-filer Sign-up Tool, answers to frequently asked questions and other resources are all available at IRS.gov/childtaxcredit2021, the IRS’ special advance CTC page.

Source: IR-2021-201

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IRS Highlights Charity Fraud Awareness Week

IRS Highlights Charity Fraud Awareness Week

IRS Highlights Charity Fraud Awareness Week

Criminals pushing phishing scams impersonate a wide range of people and organizations to trick victims out of their private information and money. The seemingly endless flood of charity scams perhaps best demonstrates that there truly is no honor among thieves. Luckily, we don’t have to face identity thieves alone.

The Internal Revenue Service announced that they are taking part in Charity Fraud Awareness Week to help spread the word about this persistent threat to individuals and charitable organizations. The agency says they are “joining international organizations and other regulators in highlighting Charity Fraud Awareness Week,” which runs from October 18 to October 22 this year.

What is Charity Fraud Awareness Week?

According to the IRS, Charity Fraud Awareness Week is a campaign “run by a partnership of charities, regulators, law enforcers, and other not-for-profit stakeholders from across the world … [that] raise awareness of fraud and cybercrime affecting organizations and to create a safe space for charities and their supporters to talk about fraud and share good practice.”

How is the IRS participating in Charity Fraud Awareness Week?

The IRS is highlighting helpful resources that have been created by organizations participating in Charity Fraud Awareness Week. Specifically, the press release includes a link to a UK-based website designed to aggregate helpful information related to the campaign: PreventCharityFraud.org.uk.  

According to the IRS, this site is designed to help “[Charity Fraud Awareness Week] partners, charities, and other tax-exempt organizations and non-profits find” the following information:

  • Details about the awareness week
  • Free resources
  • A fraud pledge for organizations
  • A listing of webinars and other events held as part of the week

Data-security-awareness campaigns aren’t new to the IRS. As part of the Security Summit, the agency works year round to provide taxpayers the resources they need to avoid falling victim to myriad phishing scams. Part of that effort includes publishing their annual Dirty Dozen list of tax scams and providing online resources, like the Tax Exempt Organization Search tool.

The Tax Exempt Organization Search tool is useful in avoiding fake charity scams listing legitimate charities that are currently eligible “to receive tax-deductible charitable contributions.” The tool’s page on IRS.gov notes the types of information that can be searched for any given charity:

  • Form 990 Series Returns
  • Form 990-N (e-Postcard)
  • Pub. 78 Data
  • Automatic Revocation of Exemption List
  • Determination Letters

As for avoiding scams impersonating legitimate charities, taxpayers should stay up to date on the latest phishing scams highlighted by the IRS, Security Summit, and Charity Fraud Awareness Week partners.

Sources: IR-2021-205; “Tax Exempt Organization Search,” IRS.gov

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2019 Filing Season to Start January 27, IRS Says

2019 Filing Season to Start January 27, IRS Says

2019 Filing Season to Start January 27, IRS Says

The Internal Revenue Service has confirmed that it will begin accepting and processing 2019 returns on January 27, opening the gates for millions of individual tax return filers. The deadline for filing and paying any tax due remains Wednesday, April 15.

More than 150 million individual tax returns are expected to be filed for the 2019 tax year, the vast majority of those coming before the April deadline.

“As we enter the filing season, taxpayers should know that the dedicated workforce of the IRS stands ready to help,” said IRS Commissioner Chuck Rettig. “We encourage taxpayers to plan ahead and use the tools and information available on IRS.gov. The IRS and the nation’s tax community are committed to making this another smooth filing season.”

The IRS says it set the opening date on January 27 so the agency could better ensure the security and readiness of its key tax processing computer systems while checking that IRS automated procedures are set to implement recent tax legislation for 2019 returns.

Commissioner Rettig says for best service, the taxpayer has a couple of important choices to make. “The IRS encourages everyone to consider filing electronically and choosing direct deposit,” Rettig said. “It’s fast, accurate and the best way to get your refund as quickly as possible.”

IRS reminds taxpayers that they don’t have to wait until January 27 to start their tax return or contact a reputable tax preparer.

In addition, IRS tax help is available 24 hours a day on IRS.gov, the official IRS website, where people can find answers to tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide (PDF) links to these and other IRS services.

Source: IR-2020-02

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Final Regulations Issued for Revamped Foreign Tax Credit

Final Regulations Issued for Revamped Foreign Tax Credit

Final Regulations Issued for Revamped Foreign Tax Credit

The Internal Revenue Service has announced that the final regulations have been issued on the revamped Foreign Tax Credit, which was modified as a result of tax reform in 2017. The credit generally allows taxpayers and businesses to claim a credit for income taxes paid or accrued to foreign governments.

 So What’s Different?

The tax reform legislation, termed the Tax Cuts and Jobs Act (TCJA), made major changes to the international tax system in the U.S.

Several Foreign Tax Credit provisions were changed. One was the repeal of section 902, which allowed deemed-paid credits in connection with dividend distributions based on foreign subsidiaries’ cumulative pools of earnings and foreign taxes.

The legislation also added two limitation categories for foreign branch income and amounts that are includible under the Global Intangible Low-Taxed Income (GILTI) provisions.

How taxable income is calculated when figuring the Foreign Tax Credit limitation was also changed by the tax reform package. Certain expenses have now been disregarded and the use of the fair market value for allocating interest expense has been repealed.

The IRS says the TJCA made “systemic” changes to taxation of international income that impact the Foreign Tax Credit calculation. These include the introduction of a participation exemption through a dividends-received deduction for certain section 245A dividends.

IRS changes also introduced the GILTI provisions which subjects certain foreign earnings to current U.S. taxation. Previously, these earnings would have been deferred – at a lower tax rate – and subject to extra Foreign Tax Credit restrictions.

Other Regulations Issued

Proposed regulations have also been issued that apply to the allocation and apportionment of deductions and creditable foreign taxes, foreign tax redeterminations, availability of Foreign Tax Credits under the Transition Tax, and the application of the Foreign Tax Credit limitation to consolidated groups.

For more information on the implementation of the Tax Cuts and Jobs Act, check out the Tax Reform Page of IRS.gov.

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National Tax Security Awareness Week: Spotting Business Identity Theft

National Tax Security Awareness Week: Spotting Business Identity Theft

National Tax Security Awareness Week: Spotting Business Identity Theft

Main Street businesses might consider themselves too small to be the target of a business identity theft scam, but the Security Summit says that identity thieves are more than happy to steal their personally identifiable information (PII) in today’s National Tax Security Awareness Week topic.

Just like individual identity theft, criminals use stolen PII to fraudulently apply for business-related financial services and file business tax returns. The latter has become increasingly frequent, leading the Security Summit to increase its educational outreach efforts to business-owning taxpayers. 

What businesses are targeted by identity thieves?

Reports of international retail chains suffering data theft incidents might give the impression that large brands with millions of customers are the only targets that interest cybercriminals, but the Security Summit says that simply isn’t the case.

The reality is that all businesses are a ripe target for identity thieves. Despite not having as much customer information as an international corporation, a smaller business is unlikely to have robust data security systems in place.

Another thing to consider is that an identity theft incident might be part of a full-blown data breach. Any business that maintains customer information—like a retailer with an online storefront—is a ripe target for identity theft scams.

Tax practices in particular can be home to thousands of taxpayers’ PII. Making matters worse, that data is formatted in such a way that successfully impersonating victims on credit card applications is much easier.

What are the signs that my business has been a victim of identity theft?

The first step in mitigating the damage caused by identity theft is confirming that your company’s identity has been stolen.

As the IRS notes in today’s press release, the signs of business identity theft are similar to individual identity theft. Unfortunately, they only tend to pop up when victims try to file a tax return.  

The Summit urges businesses that experience any of the following issues to immediately reach out to the IRS:

  • Extension to file requests are rejected because a tax return with the Employer Identification Number (EIN) or Social Security number (SSN) is already on file.
  • An e-filed return is rejected because of a duplicate EIN or SSN is already on file with the IRS.
  • An unexpected receipt of a tax transcript or IRS notice that doesn’t correspond to anything submitted by the filer.
  • Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.

Business identity theft victims will also want to take the same steps as individuals whose identity has been stolen: contact credit bureaus and apply for credit-monitoring services.

How do tax professionals spot business identity theft?

Tax professionals will immediately spot the reject codes outlined above, but the Security Summit stresses that they should also “step up the ‘trusted customer’ procedures” by asking the following questions:

  • Is this person authorized to sign the return?
  • Were estimated tax payments made?
  • [What is the] total income amount from prior-year filings?
  • Is there a parent company? If yes, the name?
  • [Is there any] additional information based on deductions claimed?
  • [What is your] filing history?

According to the release, the programs tax professionals use to file returns also helps in the fight against identity thieves: “Tax software products now share many data elements with the IRS and state tax agencies. These data elements assist the IRS and states to identify suspicious tax returns and to reduce the impact to legitimate filers … [and] allow legitimate returns to be processed as usual.”

What is the final National Tax Security Awareness Week topic?

On Friday, the Security Summit will address data security plans for financial institutions. As every tax professional knows, having a written data security plan in place is required by law. Tomorrow’s blog will include resources to help tax professionals create and improve those plans.

Source: IR-2019-198 

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National Tax Security Awareness Week: Making Secure Passwords

National Tax Security Awareness Week: Making Secure Passwords

National Tax Security Awareness Week: Making Secure Passwords

Passwords are a ubiquitous part of life in the Digital Age, but many of us aren’t particularly good at making them. That’s why the Security Summit is highlighting tips for creating strong passwords on the third day of National Tax Security Awareness Week.

The IRS press release opened with a nod to the frenetic nature of the holiday shopping season, a time when taxpayers across the US access online accounts to take advantage of sales. Unfortunately, cybercriminals know that many of those accounts store personally identifiable information (PII) and financial data.  

Considering how often taxpayers save their payment information on retailers’ websites—and just how many of those sites they’re frequently logging into from Thanksgiving to Christmas—it’s painfully obvious why protecting those accounts with a strong, secure password is essential.

How do I create a strong password?

The IRS and Security Summit partners recommend longer, but easy-to-remember passwords that are unique to every online account.

Part of that advice—creating a password that’s easy to remember—may seem at odds with what your third-party webmail accounts recommended a few years ago. Predictably, the shift is directly related to human habits.

“Experts previously suggested something like ‘PXro#)30,’ but now suggest a longer phrase like ‘SomethingYouCanRemember@30,’” the IRS says. “By using a phrase, users don’t have to write down their password and expose it to additional risk. Also, people may be more willing to use strong, longer passwords if it’s a phrase rather than random characters that are harder to remember.”

The rest of the password-creation tips covered account usernames, password storage, and programs designed to help users manage the exponential growth of online account passwords. Here’s the full list from the IRS:

  • Use a minimum of eight characters; longer is better.
  • Use a combination of letters, numbers and symbols in password phrases, i.e., UsePasswordPhrase@30.
  • Avoid personal information or common passwords; use phrases instead.
  • Change default or temporary passwords that come with accounts or devices.
  • Do not reuse or update passwords. For example, changing Bgood!17 to Bgood!18 is not good enough; use unique usernames and passwords for accounts and devices.
  • Do not use email addresses as usernames if that is an option.
  • Store any password list in a secure location, such as a safe or locked file cabinet.
  • Do not disclose passwords to anyone for any reason.
  • When available, a password manager program can help track passwords for numerous accounts.

From that list, choosing a unique username that’s different from your email address might seem strange, but there are a few reasons for that recommendation:

  1. Knowing an email address gives identity thieves another piece of PII that they can use to build a credible profile for fraudulently applying for loans and credit cards.
  2. Having the email address in hand means being able to start the password recovery process.
  3. Using the same email address and password for everything—including bank account logins—is a pretty common mistake that cybercriminals are more than happy to leverage against victims.

Remember, taking every possible precaution can better protect you from cybercriminals.

Should I use multi-factor authentication to protect my online accounts?

Aside from creating unique passwords and user names, the Security Summit also recommends that taxpayers use multi-factor authentication to protect online accounts. For those who are unfamiliar with the term, multi-factor authentication is any process that adds another step to the account login process.

An account just protected by a password would be considered to have single-factor authentication. Accounts that have another step, like security questions or a code sent via text message that you have to enter during login, would be considered protected by multi-factor authentication.

The IRS says, “The idea behind multi-factor authentication is that a thief may be able to steal usernames and passwords, but it’s highly unlikely they also would have access to the mobile phone to receive a security code or confirmation to actually complete the login process.”

What’s the next topic for National Tax Security Awareness Week?

So far, the Security Summit has covered online shopping safety tips, how to spot phishing scams, and password-creation tips. On Thursday, the Summit will cover how big a business needs to be for cybercriminals to target them.

Source: IR-2019-196 

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