The IRS began issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter helps Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022. It contains information that can reduce errors and delays and help taxpayers or tax professionals prepare their 2021 federal tax returns.
Working Remotely Could Affect Your Taxes
When COVID-19 struck, many employers quickly switched to a work-from-home model for their employees. Many of them began working in a state other than where their office was located. While some workers have returned to their offices, as the pandemic drags on, more offices continue to work remotely with no back-to-office dates in sight.
Eight Facts About the Adoption Credit
Taxpayers who adopted or started the adoption process in 2021 may qualify for the adoption credit. This credit can be applied to international, domestic private, and public foster care adoption; however, taxpayers who adopt their spouse’s child cannot claim this credit.
Reminder: Deferred Payroll Taxes Due in December
If you’re a household employer or self-employed and chose to defer paying some Social Security taxes under the CARES Act the deferred Social Security taxes are due by December 31, 2021 and December 31, 2022. If you also deferred the employee share of Social Security taxes the balance is included in the installment amount due by December 31, 2021.
Highlights of the Infrastructure Investment and Jobs Act
While the recently passed Infrastructure Investment and Jobs Act primarily addresses infrastructure-related issues, it includes several tax provisions affecting individuals and small business taxpayers. Let’s take a look:
IRS Charges Fee for Estate Closing Letters
Starting October 28, a new $67 user fee will apply to any estate that requests an estate tax closing letter for its federal estate tax return. This closing letter is formally referred to as IRS Letter 627.
Shared Custody and Advance Child Tax Credit Payments
Parents who share custody of their children may be confused about how the advance child tax credit payments are distributed. As such, the first step is to remember that these are advance payments of a tax credit that taxpayers expect to claim on their 2021 tax return. Understanding how the payments work will allow parents to unenroll, if they choose, and possibly avoid a possible tax bill when they file next year.
Deferred Tax on Gains From Forced Sales of Livestock
Farmers and ranchers forced to sell livestock due to drought may have an additional year to replace the livestock and defer tax on any gains from the forced sales. Here are some important facts to help farmers understand how the deferral works and their eligibility.
Tax Benefits of Health Savings Accounts
While similar to FSAs (Flexible Savings Plans) in that both allow pretax contributions, Health Savings Accounts or HSAs offer taxpayers several additional tax benefits. Let’s take a look:
Per Diem Rates Updated for FY 2021-22
Per diem rates have been updated for FY 2021-22 and are effective October 1, 2021. These allowances substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home and include lodging, meal, and incidental expenses, as well as meal and incidental expenses only.