New Releases

 

1. Keep Economic Impact Payment notice with other tax records 

People who receive an Economic Impact Payment this year should keep Notice 1444-C, Your Economic Impact Payment, with their tax records. This notice provides information about the amount of their payment, how the payment was made and how to report any payment that wasn't received. 

For security reasons, the IRS mails this notice to each recipient's last known address within 15 days after the payment goes out. It's especially important for people to keep this notice if they think their payment amount is wrong. When they file their 2021 tax return, they can refer to Notice Letter 6475 and claim additional credits, if they are eligible for them. 

 

2. Taxpayers may be able to claim the Recovery Rebate Credit if they met the eligibility criteria in 2021: 

  • If you didn't receive an Economic Impact Payment in 2021, you may claim the credit in your 2021 Tax return.

  • If you did not receive the first and second rounds of Economic Impact Payments, do not claim in 2021 Tax return. If you already filed your 2020 Tax return, you may need to file an amended return to claim the credit

  • For additional information about the Economic Impact Payment, taxpayers can visit the Economic Impact Payment Information Center. 

  • The third Economic Impact payment was issued starting in March 2021 to December 2021. The amount is $1,400 for an eligible individual with a valid SSN and $1,400 for each qualifying dependent with a valid SSN or ITIN issued  by IRS.

 
3. Interest on refunds taxable. Taxpayers who received a federal tax refund in 2020 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns. In January 2021, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more. 
 

4. Charitable deduction changes. New this year, taxpayers who don't itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 202 to qualifying organizations. For more information, read Publication 526, Charitable Contributions. 

Following tax law changes, cash donations of up to $300 made this year by December 31, 2020 are now deductible without having to itemize when people file their taxes in 2021.

 

5. Coronavirus-related relief for retirement plans and IRAs Q&A

Q1. What are the special rules for retirement plans and IRAs in section 2202 of the CARES Act? 

A1. In general, section 2202 of the CARES Act provides for expanded distribution options and favorable tax treatment for up to $100,000 of coronavirus-related distributions from eligible retirement plans (certain employer retirement plans, such as section 401(k) and 403(b) plans, and IRAs) to qualified individuals, as well as special rollover rules with respect to such distributions. It also increases the limit on the amount a qualified individual may borrow from an eligible retirement plan (not including an IRA) and permits a plan sponsor to provide qualified individuals up to an additional year to repay their plan loans. See the FAQs below for more details., from IRS website: 

 

6. IRS delay process and change address 

Special Note: For 2020 (prior year tax return) and amended tax returns: Below is IRS’s announce: Processing Delays for Paper Tax Returns: We continue to process electronic and paper tax returns, issue refunds, and accept payments. We’re experiencing delays in processing paper tax returns due to limited staffing. If you already filed a paper return, we will process it in the order we received it.

Do not file a second tax return or call the IRS. 

If you move since last return filing, you may use F8822 or link https://www.irs.gov/faqs/irs-procedures/address-changes; For CA state address change: https://www.ftb.ca.gov/help/contact/how-do-i-change-my-address.html