No Worries! The IRS Loves You!
This is a picture of some politicians. They almost always smile. Their LARGEST concern is getting elected and lately have been sending all of us tons of money. Is it because they want some votes??
DISCLAIMER: I actually have no idea who these folks are. They may or may not be politicians. But I think they are.
This is a picture of your typical mean IRS Agent looking for easy ways to irritate all of us. He is thinking of a new special letter just to send to YOU!
NO DISCLAIMER: I put money on him actually being an IRS Agent. It's the way he looks over his glasses.
The past bit, the politians have done a good job of changing tax law to benefit YOU. And the IRS has done a good job of taking those changes and making us all as miserable and confused as possible.
Our phones have been consistently lit up and our Email boxes filled up with folks asking questions about several different tax topics. Let’s go over the most popular ones…..
ADVANCE CHILD TAX CREDIT
To stave off childhood hunger and to boost the economy, our politicians raised the Child Tax Credit from $2,000 per cute darling to $3,000, $3,600 if they are five and under. So you don’t have to wait until next year’s tax filing to get the credit, they are automatically sending you half of the credit via a monthly payment over the next six months. (aka ADVANCE). The Advance is based on the kiddos you claimed on the last tax return you filed, 2019 or 2020. When you file your 2021 tax return, you’ll get to reconcile the advance payments to the actual credit. If they for some reason paid you more than you’re due, you’ll get to pay it back. You should receive a “Letter 6419” in January telling you what they sent you. You will need that letter to file your tax return. Finally, if you want to opt out of the “Advance”, change your banking info, or make other changes, go to this link.
https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021
SELF EMPLOYMENT TAX DEFERRAL
To make sure you survive COVID, if you are a business owner, 50% of your 2020 Self Employment Tax was deferred (meaning it is due later). 50% of the deferred amount must be paid on 12/31/21 and the other half on 12/31/22. It’s like an interest free loan! The IRS is currently sending out semi-threatening letters reminding you of the amount deferred on your tax return and when it must be paid. Along with a voucher you can use to send the money in. The deferred amount can be found on Schedule SE.
LONG-TERM CARE PAYROLL TAX
Starting in January, all employees (no exceptions, even for Corporate Officers) will be subject to a new payroll tax to cover the state’s new Long-term Care Benefits. (Washington is very proud to have more payroll taxes than any other state in the union. We all should be proud). The tax will come out of your paychecks and will amount to .58% of your pay. To receive the benefits, you have to pay in for ten years and remain a Washington resident. The benefits are meager at best. $3,000 per month for one year with a life-time maximum of $36,500. You can opt out of the tax by purchasing your own private Long-term Care Policy and applying with the Employment Security Department by November 1. Once you opt out, you cannot opt back in. Ever.
IRS LETTER ABOUT RECOVERY REBATE CREDIT
We asked you for the amounts of your Stimulus Payments received. You gave that to us. We typed it into your tax return. And if it didn’t match what you actually received, you are now receiving a letter from the IRS telling you so and in some cases, adjusting your refund or amount due. Not fun for us or for you! It appears that as many as 20% of our clients gave us incorrect data and they are all getting letters. We will go through this process again in 2022 for both the Stimulus #3 and the Advance Child Tax Credit. It is important that any time you receive funds from the IRS or pay funds to the IRS, you keep a solid record of them and provide that to us. That will make us all smile and we’ll be really grateful!
WHERE IS MY REFUND???!!!
As of the end of June, the IRS was 16.7 MILLION tax returns behind in their processing. That includes returns from back in 2019. This is due to their “COVID EVACUATION & SHUTDOWN”, tax law changes, and their ever growing suspicion of tax fraud. When we ask what we can tell our clients to do, they tell us to say “be patient and don’t call. It will eventually come in.”
I CAN’T GET THROUGH TO THE IRS!!!!
So far in 2021, they have answered only 3% of the citizen’s phone calls! YIKES!!! They have received 85.1 MILLION calls during 2021 as compared to 7.3 million and 12.1 million for 2019 and 2020. They say this is because folks are calling about their refund often and repeatedly, in additional to calling about the Stimulus money.
Now that we are all frowning and look grouchier than the mean IRS Agent above, here is a change of pace. Below is a picture of our newest staff member. He was born in February and is still a puppy. Golden Retriever. His name is Frivvy the Tax Dog. Which is short for Frivolous Tax Deduction. His job (in between long naps in his official executive tax chair) is to keep everyone happy, tear up important documents, and chase off unwanted IRS Agents (that would be ALL IRS Agents, right?) More about Frivvy in my next Video Blog.
Call or Text Now!
509-468-9617
