IRS Updates
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New Draft Schedules K-2 and K-3 Announced by IRS
Partnerships and S corporations that will have to report “international tax matters” in 2022 can now review the new draft releases for Schedules K-2 and K-3. The IRS today announced the early release drafts, noting that instructions would follow sometime in the summer. “The redesigned forms and instructions will also give useful guidance to partnerships,…
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Navigating Notices About Economic Impact Payments
The Internal Revenue Service has kept taxpayers’ mailboxes busy for months now, sending out notices to taxpayers about the various Economic Impact Payments that have been issued. The agency was required to mail a notice to the last known address of each Economic Impact Payment (EIP) recipient every time a new EIP was issued. So,…
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IRS Issues Guidance for American Rescue Plan Changes to the CTC, EITC, and APT
The Internal Revenue Service has released guidance for changes to the Child Tax Credit, Earned Income Credit, and application percentage table (APT) that were included in the American Rescue Plan Act of 2021 (ARPA). The APT table is used to calculate a taxpayer’s premium tax credit (PTC) and the required contribution percentage that determines whether…
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TAS Warns of Ban for Improperly Claiming Some Credits
The nation’s Taxpayer Advocate wants taxpayers to know there’s a downside to having too much of a good thing. In this case, it refers to making excessive or improper claims to qualify for a number of tax credits. The downside is that the IRS has the ability to ban a taxpayer from claiming any of…
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IRS Wants Help Raising Awareness of EIP Eligibility for Homeless Americans
The Internal Revenue Service continues to send out Economic Impact Payments (EIPs), aimed at helping Americans though these tough economic times. But how can the agency fulfill its mission if the citizens who need the help most—the homeless and the rural poor—don’t have permanent addresses? The IRS is relying on a team approach to tackle…
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IRS Issues Another Abusive Micro-Captive Arrangement Warning
The Internal Revenue Service is once again warning taxpayers who are involved in abusive micro-captive insurance schemes that they need to get out of those arrangements—and quickly. A new U.S. Tax Court victory has added steam to the latest round of IRS examinations of these arrangements, finding they “are not eligible for the tax benefits…
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FBAR Deadline is Still April 15
While the deadline for filing federal income taxes has been pushed back to May 15 because of the COVID-19 pandemic, those who file an annual Report of Foreign Bank and Financial Accounts (FBAR) still face their same April 15, 2021 due date. FBAR filers who miss the April 15 deadline, however, will get an automatic…
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Taxpayers Don’t Have to Repay Excess APTC for TY2020
The American Rescue Plan Act brought a third round of Economic Impact Payment and plenty of changes to tax credits, including how the agency approaches the Premium Tax Credit (PTC). The requirement that taxpayers report and repay any excess advance payment of the PTC on their income tax return has been suspended—but only for tax…
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Consider Amending Returns That Didn’t Take Unemployment Compensation Exclusion
Major tax legislation usually causes a period of confusion as taxpayers and tax professionals wait for official guidance on complex provisions. The American Rescue Plan Act of 2021 is no different. The Internal Revenue Service this week announced they will automatically issue refunds for some unemployment compensation recipients who filed their tax year 2020 return…
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IRS Says PPE Expenses Could be Deductible
A new announcement from the Internal Revenue Service should come as welcome news to front-line health care workers nationwide. Announcement 2021-7 clarifies existing language to assure taxpayers that the purchase of personal protective equipment (PPE) can be deductible. When items such as masks, hand sanitizer and sanitizing wipes are purchased to prevent the spread of…