Criminals and fraudsters often see disasters as an opportunity to take advantage of victims when they are the most vulnerable, as well as the generous taxpayers who want to help with relief efforts.
These disaster scams normally start with unsolicited contact. The scammer contacts their possible victim by telephone, social media, email or in-person. Also, taxpayers may search for a charity online and be directed to a website or social media page that is not affiliated with the actual charity.
Here are some tips to help taxpayers recognize a scam and avoid becoming a victim:
Some thieves pretend they are from a charity. They do this to get money or private information from well-intentioned taxpayers.
Bogus websites use names like legitimate charities. They do this scam to trick people to send money or provide personal financial information.
Scammers even claim to be working for ― or on behalf of ― the IRS. The thieves say they can help victims file casualty loss claims and get tax refunds.
Disaster victims can call the IRS toll-free disaster assistance line at 866-562-5227. Phone assistors will answer questions about tax relief or disaster-related tax issues.
Taxpayers who want to make donations can get information to help them on IRS.gov. The Tax Exempt Organization Search helps users find or verify qualified charities. Donations to these charities may be tax-deductible.
Taxpayers should always contribute by check or credit card to have a record of the tax-deductible donation if they choose to give money. individual taxpayers can deduct up to $300 and married couples can deduct up to $600 in qualifying charitable contributions for tax year 2021 even if they don’t itemize.
Donors should not give out personal financial information to anyone who solicits a contribution. This includes things like Social Security numbers or credit card and bank account numbers and passwords.
September is National Preparedness Month. With the height of hurricane season fast approaching and the ongoing threat of wildfires in some parts of the country, the Internal Revenue Service reminds everyone to develop an emergency preparedness plan.
All taxpayers, from individuals to organizations and businesses, should take time now to create or update their emergency plans.
Taxpayers can begin getting ready for a disaster with a preparedness plan that includes securing and duplicating essential tax and financial documents, creating lists of property and knowing where to find information once a disaster has occurred. Securing this information can help in the aftermath of a disaster, and it can help people more quickly take advantage of disaster relief available from the IRS.
Taxpayers should keep critical original documents inside waterproof containers in a secure space. Documents such as tax returns, birth certificates, deeds, titles and insurance policies should also be duplicated and kept with a trusted person outside the area a natural disaster may affect.
If original documents are available only on paper, taxpayers can use a scanner and save them on a USB flash drive, CD or in the cloud, which provide security and easy portability.
After a disaster hits, photographs and videos of a home or business’s contents can help support claims for insurance or tax benefits. All property, especially expensive and high- value items, should be recorded. The IRS disaster-loss workbooks can help individuals (.pdf) and businesses (.pdf) compile lists of belongings or business equipment.
Employer fiduciary bonds
Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer in the event of a default by provider. Employers are encouraged to create an Electronic Federal Tax Payment System account at EFTPS.gov to monitor their payroll tax deposits and receive email alerts.
Know where to go
Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. Find out if financial institutions provide statements and documents electronically. Taxpayers who have lost some or all of their records during a disaster should visit IRS’ Reconstructing Records webpage.
IRS is ready to help
Taxpayers living in a federally declared disaster can visit the IRS Tax Relief in Disaster Situations webpage or Around the Nation on IRS.gov and check for the available disaster tax relief. The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Affected taxpayers can call 866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.
A taxpayer impacted by a disaster outside of a federally declared disaster area may qualify for disaster relief. This includes taxpayers who are not physically located in a disaster area, but whose records necessary to meet a filing or payment deadline postponed during the relief period are located in a covered disaster area.
If you didn’t get your August advance child tax credit in your bank account today, you’re not alone. Due to “an issue,” a percentage—less than 15%—of folks who got their payment by direct deposit in July will be mailed paper checks for the August payment, according to an Internal Revenue Service news release. Another way to put it: More than 4 million families will have to wait for a paper check. That could be at the end of August. “For those receiving their payments by paper check, be sure to allow extra time for delivery by mail through the end of August,” the IRS says.
The first batch of advance monthly payments sent out in July worth roughly $15 billion reached about 35 million families. About 86% (30 million families) got their July payments by direct deposit. That would work out to 4.5 million folks stuck waiting for their August payments. The IRS says it expects to have a fix before September, so for those affected, September payments will resume by direct deposit.
Most families will see the August direct deposit payments in their accounts starting today, August 13. Subsequent payment dates are: September 15, October 15, November 15 and December 15.
Normally you get the Child Tax Credit when you file your tax return (you’d get the 2021 credit in the spring of 2022 when you file your 2021 tax return). But the American Rescue Act both increased the tax credit dollar amount and included a provision to make half of the credit available as advance payments on a monthly basis starting July 15—for 2021.
The expanded credit provides parents with a $3,000 credit ($250/month) for every child age 6 to 17, and $3,600 ($300/month) for every child under age 6 (that’s up from $2,000 per dependent child up to age 16). Individuals earning up to $75,000 a year, heads of household up to $112,500 a year, and joint filers up to $150,000 a year are eligible to receive the full amount of the enhanced credit. The credit is nonrefundable, meaning you don’t need income to receive it (normally to take advantage of a tax credit you need income that it would offset). Earn too much to get the enhanced credit? The advance payments apply to the basic $2,000/year child tax credit, too. That phases out at $440,000 of income for a couple.
Didn’t get a July payment? Families who did not get a July payment and are getting their first monthly payment in August will still receive their total advance payment for the year. This means that the total payment will be spread over five months, rather than six, making each monthly payment larger.
Some families will get two August payments. In another fix, the IRS is correcting an issue regarding payments for families where the parent(s) have an Individual Taxpayer Identification Number and the qualifying children have a Social Security number. For these families who didn’t not get a July payment, they should get a monthly payment in August, which includes a portion of the missed July payment. They should get the remainder of the July payment in late August.
Are you a small business owner or self-employed and received a Paycheck Protection Program (PPP) loan and are still waiting for your bank to forgive the loan? Here is some good news for you!
On Wednesday 07/28/21 the U.S. Small Business Administration (SBA) published new guidance designed to simplify and speed up the forgiveness process for businesses and not-for-profits with Paycheck Protection Program (PPP) loans of $150,000 or less.
The SBA also announced that it will launch a new application portal Aug. 4, allowing borrowers to apply for forgiveness directly with the agency instead of having to go through their lender. More than 600 banks have agreed to allow access to the portal for more than 2.17 million borrowers.
In a 29-page interim final rule (IFR), the SBA introduced a COVID Revenue Reduction Score that can be used at the time of forgiveness to document the required revenue reduction for second-draw PPP loans. The new IFR also establishes a direct borrower forgiveness process for lenders that choose to opt in as an alternative method of processing loan forgiveness applications.
Despite earlier moves to streamline the forgiveness process for those loans, many smaller PPP lenders have informed the SBA that they lack the technology and manpower to develop efficient electronic loan forgiveness platforms to process applications.
Overwhelmed by the volume of PPP loans and mindful of the statutory 60-day requirement for lenders to issue a forgiveness decision to the SBA from receipt of the borrower’s loan forgiveness application, many smaller lenders are limiting when they will accept forgiveness applications from borrowers. This policy leaves borrowers uncertain if they will have to start making payments on their PPP loans while they are waiting for their lenders to process their forgiveness applications.
In addition, the SBA said it has heard concerns from PPP lenders of all sizes that the requirement for borrowers to submit and lenders to review revenue reduction documentation at the time of forgiveness is delaying the forgiveness process for second-draw PPP loans of $150,000 or less.
The first monthly payments of the expanded and newly-advanceable Child Tax Credit from the American Rescue Plan will be made starting July 15. Most families will begin receiving monthly payments without any additional action. Eligible families will receive a payment of up to $300 per month for each child under age 6, and up to $250 per month for each child ages 6 to 17.
People who don’t need to file a 2020 federal tax return can also use the Non-filer Sign-up Tool to register to receive the advance CTC payments, the Third Round Economic Impact Payment, and the Recovery Rebate Credit.
The IRS encourages people to request payments via direct deposit, which is faster and more secure than other payment methods. People who don’t have a bank account should visit the Federal Deposit Insurance Corporation website for details on opening an account online. They can also use the FDIC’s BankFind tool to locate an FDIC-insured bank.
This link will also taxpayers to opt out of receiving the advanced tax credit if they prefer to receive the entire credit at one time when they file their 2021 federal income tax return. However, you must create a separate account for both the taxpayer and spouse since the IRS requires both parents in a two-parent household to unenroll separately.
It is too late to opt out of the July 15 payment, but you can opt out of all subsequent payments if you sign up now.
Finally, like the 2020 stimulus payments, this is an advance against the actual credit that will be calculated when taxpayers prepare their 2021 tax returns. So taxpayers must keep track of all advance payments received to prevent delays in the IRS processing their 2021 tax refunds.
The IRS has opened an online site to enable taxpayers to unenroll from receiving advance payments of the 2021 child tax credit (CTC).
The new “Child Tax Credit Update Portal” allows parents to view their eligibility, view their expected CTC advance payments, and, if they wish to do so, unenroll from receiving advance payments (i.e., to opt out). Unenrolling may be desirable if, for instance, taxpayers expect the amount of tax they owe to be greater than their CTC refund when they file their 2021 tax return.
In a set of new FAQs, the Service answers questions about unenrolling from the CTC advance payments.
2021 child tax credit
Under the American Rescue Plan Act (ARPA), P.L. 117-2, the IRS must make 2021 periodic advance child tax credit payments to taxpayers up to the “annual advance amount.” These payments — up to $300 per month per child under age 6 and up to $250 per month per child age 6 through 17 — will be paid in equal amounts and made no earlier than July 1, 2021, and no later than Dec. 31, 2021.
For tax year 2021 only, ARPA increased the child tax credit amount to up to $3,000 for each qualifying child between age 6 and 17 at the end of the 2021 tax year, and $3,600 for each qualifying child under age 6 at the end of the 2021 tax year. ARPA also made the child tax credit for 2021 fully refundable if the taxpayer (or spouse, on a joint return) has a principal place of abode in the United States for more than one-half of the 2021 tax year.
Last week, the Service opened an online site called the “Non-Filer Sign-Up Tool” that enables parents who are not required to file a 2019 or 2020 individual income tax return to sign up to receive 2021 CTC advance payments.
The IRS also, in Rev. Proc. 2021-24, clarified how individuals who are not otherwise required to file 2020 returns can claim 2021 CTC advance payments by either filing simplified returns or electronically filing a 2020 return with zero adjusted gross income.
Tax Day for individuals extended to May 17: Treasury, IRS extend filing and payment deadline
WASHINGTON — The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.
Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17
The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.
Last month, the Maryland General Assembly passed the RELIEF ACT of 2021 MD SB496) which extended the due date of Maryland income tax returns to July 15, 2021
Today many taxpayers woke up to find they had more money in their bank accounts thanks to the Third Round of Stimulus checks.
On March 11 President Biden signed the American Rescue Act (ARA) into law. The ARA provides up to $1,400 for eligible taxpayers ($2,800 per married couple) and an additional $1,400 per adult dependent children.
The stimulus payment is tied to your 2020 federal adjusted gross income (AGI) if you have already filed your 2020 return; or your 2019 AGI if you have not filed your 2020 return yet. The stimulus payment will phase out for single taxpayers with income between $75,000 and $80,000, heads of household with incomes between$112,500 and $120,000 and couples filing jointly with income between $150,000 and $160,000.
So if the Treasury Department has your bank account information on file, you should keep checking your bank account for your direct deposit. If your bank information is not on record, you will receive payment in the form of a paper check or debit card so keep an eye on your mail. And double check anything that looks like a credit or debit card.
On Saturday 03/06/21 the US Senate passed their own version of the 2021 COVID relief bill, for a cost of $1.9 Trillion, which is expected to be passed by the House as soon as Tuesday 03/09/21.
Here are some key provisions:
Direct payments of up to $1,400 per individual.
Extension of $300 federal subsidy of weekly unemployment benefits to September 6, 2021.
Up to $10,200 of unemployment benefits exempt from federal income tax.
If you received unemployment benefits in 2020, you may want to hold off filing your tax returns until the bill is passed and the IRS (and software vendors) have the opportunity to incorporate the new law into the tax software.
If you have already filed your return, or do not want to wait for the new changes, you will need to file an amended tax return to receive any additional refund you may be due as a result of the new law.
Expansion of child tax credit, up to $3,600 for children under 6, and $3,000 for children up to 17.
Expansion of the Earned Income Tax Credit.
$14 Billion payroll support for U.S. Airlines as long as they do not furlough or cut employee’s pay rates through 09/30/21.
Additional funding for Covid-19 vaccine distribution.