Anthony Sykes & Company

               Monday April 18 is approaching with certainty. The time left to file is reduced. If you are waiting until the very last minute, here are some things you should keep in mind.           File online. Those who file online tend to have fewer errors. Common errors will be picked up and needed information will be asked for. Additionally, any paper mail will take months to be processed. That will lead to penalties and interest. Filing online is the most practical option.           Consider an extension. This allows extra time to file a tax return, not to pay any taxes due. Any estimated tax liability must be paid by April 18 to be considered on time.           Extra information. When dealing with something like the Advance Child Tax Credit payment or trying to claim the Recovery Rebate Credit ...

       The Internal Revenue Service ( IRS ) has finished issuing the third round of Economic Impact Payments ( EIP ). This means that if you qualified, but did not receive the full amount, you must claim the 2021 Recovery Rebate Credit on your tax return. This also applies to those who do not normally file a tax return. Families that added a new dependent in 2021 may be eligible for a greater amount.      The IRS will send a letter confirming what was sent in 2021, so taxpayers must carefully look at the information and determine what amount, if anything, they can claim as a credit. Doing this will help avoid processing delays. Careful review is needed in this matter. Having a Qualified Tax Professional would be helpful.

                 While most people do, there are some who do not normally file a tax return. There are good reasons to check and see if you should file this year. For example, to claim any tax credit like the Child Tax Credit or the Earned Income Tax Credit ( EITC ) a tax return must be filed. This will determine if the taxpayer qualifies.           Something that is still relatively new is the Recovery rebate credit. This is a result of the Economic Impact Payments. If you qualified but did not receive your third stimulus payment last year, it can be claimed as a credit. This can only happen if you file a tax return and provide your income for 2021. This credit can reduce any taxes that you might owe, or it will be included in your total refund.

                 We now know that the filing season for 2022 will officially start in less than 2 weeks. What can we expect? We should be prepared for many challenges and frustrations, delays and difficulties. Why?           For one reason, it is no secret that the Internal Revenue Service ( IRS ) has had customer service issues and shortages for years. For example, last tax season the IRS was only able to answer about 10% of phone calls. That is not expected to improve. In fact, things can get worse due to budget cuts related to the current pandemic. They are also still to trying deal with some requirements like processing Economic Impact Payments ( EIP ) and advanced child tax credits.           As of November, the IRS still had almost 9 million tax returns left to process. That backlog is far greater than a normal year. It usually takes 3 w...

             It is now official that the Internal Revenue Service ( IRS ) will begin to accept and process tax returns on January 24, 2022 . To make this tax season go as smoothly as possible, it is strongly recommended that Taxpayers have all of their documents gathered ahead of time. This will allow them to file a complete return the first time and avoid processing delays.           Your Qualified Tax Professional can help you determine what documents are needed. With the stimulus and child credit payments in 2021, there is a greater need for keeping good records than before. Another important note is that the deadline for filing an individual tax return is April 18,  2022,  because Emancipation Day is observed in Washington D.C.

           With each new year, the Internal Revenue Service ( IRS ) makes changes to the tax law, and 2022 will be no different. Now is the time to get informed about these adjustments.           Economic Impact Payments have been a part of our lives for 2 years. However, some may not have received all of their third payment. A taxpayer in this situation may be eligible for the recovery rebate credit . They would need to file a 2021 tax return to determine how much they could claim. It is also necessary to use the records you already have regarding your previous stimulus payments. Keeping good records is always important.           When it comes to Child Tax Credits , many families got monthly advance payments. If the total was less than they were eligible for, the balance can be claimed on their tax return. If there were no advance payments, the entire amount can ...

             This is the busiest shopping season of the year. As a result, criminals are doing their best to find ways to steal your sensitive personal information. Another time they try to do this is during tax filing season from January to April. However, according to a recent security report from the Internal Revenue Service ( IRS ), even if someone doesn’t file a tax return, their online interactions can reveal that same data and often it is used to try and get a fraudulent tax refund. How can we protect ourselves?           There are some basic steps that we can all take. Make sure that there is security software on all your devices and that it stays updated. Avoid the trap of phishing scams . These are the messages that seem to be from a legitimate source, but they ask for your personal information. They might claim to have information about Economic Impact Payments, Child Tax Credits, or oth...

             Time seems to move faster and faster. With the end of the year approaching, now is the time to prepare for filing taxes in 2022. Before we know it, different tax forms will be released documenting activity for this year. How can we get ready for that now?           Something that has made this year different from others are the advance Child Tax Credit payments and the third Economic Impact Payment. For those who qualified for this income, all documents need to be saved. This will help determine if the Taxpayer is eligible for a credit, especially if they did not receive their full payment. Now is the time to make sure that any address or name changes have been reported to the Internal Revenue Service ( IRS ) to avoid needless delays. Planning now will make things easier during filing season.

          A report that was released this month confirmed what many had long suspected, the Internal Revenue Service ( IRS ) is very, very behind in processing Tax Returns. This is a situation that will not quickly resolve itself. The Treasury Inspector General said that the backlog was at about 12 million paper returns in December 2020. Even though this report focuses on paper Tax Returns, it’s reasonable to apply this to any paper correspondence as well. How did this happen? The IRS was put into an unknown situation in 2020 just like every other organization. They moved to remote work as much as possible and closed many distribution centers. However, what is sent to them on paper requires a physical presence. While the mail continued to be delivered, few would enter the offices and do the manual data entry. This is why many are waiting for acknowledgment of payments, or Tax Refunds. The different rounds of Economic Impact Payments ( EIP ) have also ca...

          The 2021 American Rescue Plan ( ARP ) Act created a third round of Economic Impact Payments ( EIP ). An earlier post had discussed the changed eligibility requirements. Within the first 5 days of enactment, the Internal Revenue Service ( IRS ) has made 90 million payments. This was made possible by the use of Direct Deposit, and this will be the primary method of payment. In time, more checks and debit cards will be mailed.           These payments are made automatically, and since we are in the third round, no action is required by most Taxpayers. Please remember that this payment is coming from the Treasury Department and the IRS . There is a new scam that has come to light where someone contacts a Taxpayer claiming to be from the Federal Trade Commission ( FTC ). That person will claim that a fee or tax needs to be collected to receive the EIP , or they may want some personal information from you. ...

          Just like last year, the Tax Deadline for 2021 will be pushed back. This year it will now fall on Monday, May 17 . There have been calls for this action for some time. The reasons the Internal Revenue Service ( IRS ) took this action are many, but here are a few.           The Tax Season this year started two weeks later than normal. This was to accommodate law changes that were passed in December 2020 and make sure that IRS computers were updated. The newly enacted 2021 American Rescue Plan Act also makes some significant changes to existing tax law, including allowing a certain amount of unemployment benefits from 2020 to be untaxed. With this recent news, some may take additional time to file, but the IRS does not want anyone to file an amended Tax Return at this time. If you look at this time last year, there have been about 18% fewer Tax Returns filed . It’s clear that people needed more time....

         The 2021 American Rescue Plan ( ARP ) Act and its $1.9 trillion budget has been discussed since it was passed and enacted last week. One of the most talked about parts has been the third round of Economic Impact Payments ( EIP ) that it allows for many who received the previous two. The Internal Revenue Service ( IRS ) immediately went to work on sending out the payments, which for many would amount to $1,400. However, the criteria for who qualifies is now different.           Individuals making over $75,000 will receive smaller payments, and those who make over $80,000 will have no payment at all. This is based off of their 2019 or 2020 Tax Return. This means that some who were a part of the last two payments may not qualify for this one. Unlike the last two payments, dependents under 17 will be included. Those with Direct Deposit may already have the payment. If you got a debit card before, a new one wi...

          The $1.9 trillion American Rescue Plan ( ARP ) has many parts to it. The ARP was enacted on March 11, 2021 and some aspects have already gone into action. With something this large, it is difficult to truly understand what it will do unless you look at its different components.           That is what we will do. Over the next few posts, we will discuss how the ARP changes things. It was designed to essentially touch some aspect of our lives, from COVID vaccines to unemployment payments, and increases to different tax credits. Some have been talked about at length, others are less well known and the effects may only be seen in the near future. Our next post will discuss how the Internal Revenue Service ( IRS ) will be impacted by the ARP .

     The second round of Economic Impact Payments ( EIP ) are being sent out by the Internal Revenue Service ( IRS ) as fast as possible. To speed up the delivery, many will receive these funds as a debit card in the mail. The IRS does not make the determination of who receives a card, and your particular form of payment might be different from the last time. They are being sent to all 50 states, so watch your mail if you qualify and have not received your EIP yet. It has been stated that Taxpayers in the Western US are more likely to be sent a card. The Get My Payment tool is useful to determine your EIP status.

     The Internal Revenue Service ( IRS ) has announced the beginning of Tax Season for 2021. The day they will start to accept and process Tax Returns is Friday, February 12 . Does that date seem a little later than usual? Yes it is and there are reasons for that.      There were tax law changes that came into effect on December 27, 2020 that related to the second round of Economic Impact Payments. Some of these changes will allow those who did not receive a payment in 2020, to get a Recovery Rebate Credit when they file this year. Given that timing, the IRS needs to reprogram and test their systems to make sure they run as smooth as possible. This looks to be one of, if not the most, important Tax Filing seasons ever. To make sure you are prepared, take time now to talk to your Qualified Tax Professional .

             At this point the Internal Revenue Service ( IRS ) has not released the date when it will start to accept Tax Returns. However, we do know about many of the changes coming this Tax Season. As a reflection of what happened in 2020, there are some different things to consider when filing in 2021.           Recovery Rebate Credit. This would apply to those who never received their Economic Impact Payment ( EIP ) in 2020, or what they got was less than what they qualified for. Refund Interest Payments. If you filed on time and got your Tax Refund after April 15, 2020 it was late, and the IRS paid interest for the delay in sending the refund. That interest is also income that must be declared. The appropriate form will be sent soon. Another point to keep in mind is that you should never depend on a Tax Refund to arrive at a particular time. It usually takes 3 weeks, but certain credit cl...

     The new COVID relief package ( Consolidated Appropriations Act, 2021 ) was signed on December 27. A Bill like this is unlikely to be changed after it has been signed. This means we have a much clearer understanding of what it will provide.      This is actually part of a larger piece of legislation that includes funding the government until September 2021. The COVID relief part of the law renews many of the programs created with the Coronavirus Relief and Economic Security ( CARES ) Act. For example, the Paycheck Protection Program ( PPP ) will continue. There is also a clarification that businesses can deduct expenses paid with funds from a forgiven PPP loan. There will be an extension of Federal Pandemic Unemployment Assistance ( FPUA ). This allows for Unemployment Insurance for Independent Contractors and those who work in the Gig Economy. This will go in effect 1 week later due to the delay in signing the Bill. Another round of Economic Impac...

     On December 20, new information about another round of COVID relief was released. This is certainly welcome news. Not everything is known at this time about the deal in Congress, but there are some details that have surfaced.      Unemployment assistance will be extended by about 11 weeks. However, it will only be at $300 per week. The Paycheck Protection Program ( PPP ) would continue and even expand to allow some businesses to apply for a second loan. It is still unclear if paying for business expenses with these loans is fully tax deductible. There would be a simplified process for those seeking a loan of less than $150,000. The Employee Retention Credit will continue. Student loan forbearance on Federal Student Loans would be extended. There is also a report of a provision to increase business meal deductions from 50% to 100%. Remember that nothing is final until it is written down and voted on, so a lot can still change.

     The Internal Revenue Service ( IRS ) is trying to make Taxpayers everywhere aware of a new COVID-19 related scam. Some are still waiting for news about their Economic Impact Payment ( EIP ), and this text message plays on those feelings. The IRS will never send a text message asking for information. This message claims that a direct deposit has been received from the “COVID-19 TREAS FUND” and more information is needed to claim the money. The included link sends you to a phishing website where your banking information will be taken.      The link will look like it comes from a state agency. The website will be an imitation of the IRS page that shows where you can track your EIP . If you are sent this text, take a screenshot and send it to phishing@irs.com . Make sure to include information like the date and time it was sent. We must all continue to remain vigilant during these challenging times.

       All Taxpayers and even Tax Professionals need to be very careful during this time of year. It is the time when scams and identity theft concerns grow to one of the highest points of the year. When you add to that holiday shopping and COVID-19 related schemes, this is a combination that has never been experienced before.      With the increase of working from home, there are new vulnerabilities that may be exposed. The Internal Revenue Service ( IRS ) along with state tax agencies to get the word out about what everyone can do to protect themselves. This is especially important since Tax Season will be upon us sooner rather than later. Some simple things to remember are to keep an eye out for phishing scams (imposter emails and texts). These are the #1 way criminals compromise security. Many of them are now related to COVID-19 and Economic Impact Payments ( EIP ). Use security programs on your phones and computers – and make sure it is updat...