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. Taxpayers who adopt their spouse's child can’t claim this credit.

Here is some basic information to help people understand this credit and if they can claim it when filing their taxes:

• The maximum adoption credit taxpayers can claim on their 2021 tax return is $14,440 per eligible child.  
  
  
• There are income limits that could affect the amount of the credit.
    
• Taxpayers should complete Form 8839, Qualified Adoption Expenses. They use this form to figure how much credit they can claim on their tax return.  
• An eligible child must be younger than 18. If the adopted person is older, they must be unable to physically take care of themselves.
   
• This credit is non-refundable. This means the amount of the credit is limited to the taxpayer's taxes due for 2021. Any credit leftover from their owed 2021 taxes can be carried forward for up to five years.
   
• Qualified expenses include:
• • Reasonable and necessary adoption fees.
  • Court costs and legal fees.
  • Adoption related travel expenses like meals and lodging.
  • Other expenses directly related to the legal adoption of an eligible child.        
• In some cases, a registered domestic partner may pay the adoption expenses. If they live in a state that allows a same-sex second parent or co-parent to adopt their partner's child, these may also be considered qualified expenses.  
  
  
• Expenses may also qualify even if the taxpayer pays them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.  

More information:
Adoption Taxpayer Identification Number


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Notice 2022-07 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for January 2022 used under § 417(e)(3)(D), the 24-month average segment rates applicable for January 2022, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv). 

Notice 2022-07 will be in IRB:  2022-6, dated February 7, 2022.

Today, the IRS published the latest executive column, “A Closer Look,” which features Harrison Smith, Co-Director, IRS Enterprise Digitalization and Case Management Office, discussing how the immediate need to minimize in-person contact to protect taxpayers and employees led the IRS to take steps toward increasing digital interactions. “As difficult as these last months have been, we’ve found demands from challenging times can evolve into opportunities to meet taxpayers’ needs and to better serve their representatives,” said Smith. “Never was this more evident than during this pandemic.” Read more here. Read the Spanish version here.

“A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

Check here for prior posts and new updates.

WASHINGTON — With filing season beginning January 24, the Internal Revenue Service reminded taxpayers about several key items to keep in mind when filing their federal income tax returns this year.

Given the unprecedented circumstances around the pandemic and unique challenges for this tax season, the IRS offers a 5-point checklist that can help many people speed tax return processing and refund delivery while avoiding delays.

1. File an accurate return and use e-file and direct deposit to avoid delays. Taxpayers should electronically file and choose direct deposit as soon as they have everything they need to file an accurate return. Taxpayers have many choices, including using a trusted tax professional. For those using e-file, the software helps individuals avoid mistakes by doing the math. It guides people through each section of their tax return using a question-and-answer format.

2. For an accurate return, collect all documents before preparing a tax return; make sure stimulus payment and advance Child Tax Credit information is accurate. In addition to collecting W-2s, Form 1099s and other income-related statements, it is important people have their advance Child Tax Credit and Economic Impact Payment information on hand when filing.

Advance CTC letter 6419: In late December 2021, and continuing into January, the IRS started sending letters to people who received advance CTC payments. The letter says, “2021 Total Advance Child Tax Credit (AdvCTC) Payments” near the top and, “Letter 6419” on the bottom righthand side of the page.  Here’s what people need to know:

Third Economic Impact Payment letter 6475: In late January 2022, the IRS will begin issuing letters to people who received a third payment in late January 2021. The letter says, “Your Third Economic Impact Payment” near the top and, “Letter 6475” on the bottom righthand side of the page. Here’s what people need to know:

Both letters – 6419 and 6475 – include important information that can help people file an accurate 2021 tax return. If a return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund. Using this information when preparing a tax return electronically can reduce errors and avoid delays in processing.

3. Avoid lengthy phone delays; use online resources before calling the IRS. Phone demand on IRS assistance lines remains at record highs. To avoid lengthy delays, the IRS urges people to use IRS.gov to get answers to tax questions, check a refund status or pay taxes. There’s no wait time or appointment needed — online tools and resources are available 24 hours a day.

Additionally, the IRS has several ways for taxpayers to stay up to date on important tax information:

4. Waiting on a 2020 tax return to be processed? Special tip to help with e-filing a 2021 tax return: In order to validate and successfully submit an electronically filed tax return to the IRS, taxpayers need their Adjusted Gross Income, or AGI, from their most recent tax return. For those waiting on their 2020 tax return to be processed, here’s a special tip to ensure the tax return is accepted by the IRS for processing. Make sure to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return. For those who used a Non-Filer tool in 2021 to register for an advance Child Tax Credit or third Economic Impact Payment in 2021, they should enter $1 as their prior year AGI. Everyone else should enter their prior year’s AGI from last year’s return. Remember, if using the same tax preparation software as last year, this field will auto-populate.

5. Free resources are available to help taxpayers file. During this challenging year, the IRS reminds taxpayers there are many options for free help, including many resources on IRS.gov. For those looking to avoid the delays with a paper tax return, IRS Free File is an option. With Free File, leading tax software providers make their online products available for free as part of a 20-year partnership with the Internal Revenue Service. This year, there are eight products in English and two in Spanish. IRS Free File is available to any person or family who earned $73,000 or less in 2021. Qualified taxpayers can also find free one-on-one tax preparation help around the nation through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

Revenue Procedure 2022-13 modifies and supersedes Notice 2002-5. It provides information about when and how the IRS will issue a Notice of Employment Tax Determination Under IRC § 7436 (§ 7436 Notice) and how taxpayers petition for Tax Court review of the determinations under IRC § 7436. 

Revenue Procedure 2022-13 will be in IRB:  2022-6, dated 02/07/2022.

WASHINGTON - The Internal Revenue Service today urged employers to be aware of the January deadline to file Forms W-2 and other wage statements. Filing these documents timely helps employers avoid penalties and helps the IRS in fraud prevention.

A 2015 law made it a permanent requirement that employers file copies of their Form W-2, Wage and Tax Statements, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31.

Forms W-2 are normally due to workers by January 31. Forms 1099-MISC, Miscellaneous Information and Forms 1099-NEC, Nonemployee Compensation, are also due to taxpayers by January 31. Various other due dates related to Form 1099-MISC and Form 1099-NEC, including dates due to the IRS, can be found on the form’s instructions at IRS.gov.

Fraud detection

The normal January filing date for wage statements means that the IRS can more easily detect refund fraud by verifying income that individuals report on their tax returns. Employers can help support that process and avoid penalties by filing the forms on time and without errors.

The IRS and SSA encourage all employers to e-file. It is the quickest, most accurate and convenient way to file these forms. For more information about e-filing Forms W-2 and a link to the SSA’s Business Services Online website, visit the SSA’s Employer W-2 Filing Instructions & Information website at SSA.gov/employer.

Use same employer identification number on all forms

Employers should ensure the employer identification number (EIN) on their wage and tax statements (Forms W-2, W-3, etc.) and their payroll tax returns (Forms 941, 943, 944, etc.) match the EIN the IRS assigned to their business. They should not use their social security number (SSN) or Individual Taxpayer Identification number (ITIN) on forms that ask for an EIN.

If an employer used an EIN (including a prior owner's EIN) on their payroll tax returns that’s different from the EIN reported on their W-3, they should review General Instructions for Forms W-2 and W-3 (.pdf), Box h—Other EIN used this year.

Filing these forms with inconsistent EINs or using another business's EIN may result in penalties and delays in processing an employer’s returns. Even if an employer uses a third-party payer (such as a Certified Professional Employer Organization, Professional Employer Organization, or other third party) or a different entity within their business to file these documents, the name and EIN on all statements and forms filed must be consistent and exactly match the EIN the IRS assigned to their business. For more information on third-party arrangements, see Publication 15, Employer’s Tax Guide.

Extensions

Employers may request a 30-day extension to file Forms W-2 by submitting a complete application on Form 8809, Application for Extension of Time to File Information Returns by January 31. However, one of the criteria in Section 7 of Form 8809 must be met for the extension to be granted.

Filing Form 8809 does not extend the due date for furnishing wage statements to employees. A separate extension of time to furnish Forms W-2 to employees must be filed by January 31. See Extension of time to furnish Forms W-2 to employees for more information.

Additional information can be found on the instructions for Forms W-2 & W-3 and the Information Return Penalties page at IRS.gov.

Revenue Ruling 2022-03 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. 

The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

It will be in IRB: 2022-6, dated February 7, 2022. 

Notice 2022-06 updates the life expectancy and mortality tables used to determine substantially equal periodic payments under the methods set forth in Rev. Rul. 2002-62 and provides a 5 percent floor on the maximum interest rates that may be used to calculate annuity payments under the fixed amortization and annuitization methods.  This notice also modifies the guidance in Notice 2004-15 to apply these changes for purposes of section 72(q).

It will appear in IRB: 2022-5, dated January 31, 2022.

Revenue Procedure 2022-10 establishes an 18-month pilot program that provides an opportunity for fast-track processing of certain private letter ruling requests solely or primarily under the jurisdiction of the Associate Chief Counsel (Corporate). 

It will appear in IRB: 2022-6, dated February 7, 2022.

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