WASHINGTON — The Internal Revenue Service and the Treasury Department announced today that millions of American families will soon receive their advance Child Tax Credit (CTC) payment for the month of November. Low-income families who are not getting payments and have not filed a tax return can still get one, but they must sign up on IRS.gov by 11:59 pm Eastern Time on Monday, Nov. 15.

This fifth batch of advance monthly payments, totaling about $15 billion, will reach about 36 million families across the country. The majority of payments are being made by direct deposit.

Under the American Rescue Plan, most eligible families received payments dated July 15, Aug. 13, Sept. 15 and Oct. 15. The last payment for 2021 is scheduled for Dec. 15. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.

Here are more details on the November payments:

Sign up by Nov. 15

Recently, the IRS sent letters to many Americans urging them to check out the Child Tax Credit and if they qualify, to sign up soon to get advance payments. Whether or not they got one of these letters, an eligible family who is not already getting monthly payments can still sign up to get an advance payment of the Child Tax Credit.

Treasury and IRS urge any low-income family who doesn’t normally need to file a return to sign up now to get their payment. The deadline is 11:59 pm Eastern Time on Monday, November 15.

Right now, they can only sign up online. To do so, quickly and securely, visit IRS.gov/childtaxcredit2021. Families can choose to file either in English or Spanish.

Families signing up now will normally receive half of their total Child Tax Credit on Dec. 15. This means a payment of up to $1,800 for each child under 6, and up to $1,500 for each child age 6 to 17. This is the same total amount that most other families have been receiving in up to six monthly payments that began in July.

Any family who receives advance payments of the CTC during 2021 can claim the rest of the credit when they file their 2021 Federal income tax return. To help them do that, early in 2022 families will receive Letter 6419 documenting any advance payments issued to them during 2021 and the number of qualifying children used to calculate the advance payments.

Families can make changes to their account

Families who are already receiving monthly payments can use the Child Tax Credit Update Portal (CTC-UP) to quickly update their account. Available only on IRS.gov, CTC-UP already allows families to verify their eligibility for the payments and then, if they choose to:

Updates made by 11:59 pm Eastern Time on Nov. 29 will be reflected in the monthly payment scheduled for Dec. 15.

Later this month, the IRS will launch a Spanish-language version of the tool. In addition, new features will be added to enable families to raise or lower their final monthly payment to reflect life changes, such as another child born or adopted in 2021.

Community partners can help

The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up to receive these benefits.

Links to online tools, answers to frequently asked questions and other helpful resources are available on the IRS’ special advance CTC 2021 page.

WASHINGTON – The Internal Revenue Service today updated its frequently-asked-questions (FAQs) on 2020 Unemployment Compensation Exclusion.

These updated FAQs (FS-2021-14) are:

Question 2, Topic D: Amended Return (Form 1040-X)
Questions 8 & 9, Topic G: Receiving a Refund, Letter, or Notice
Question 3, Topic I: Post Unemployment Compensation Exclusion Adjustment.

These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

More information about reliance is available.

WASHINGTON – The Internal Revenue Service published its Financial Report on IRS.gov today. This new report provides the American people with a comprehensive view of the IRS’s financial activities as well as the accomplishments of its finance management community.

In fiscal year 2021, the IRS managed more than $4.1 trillion in tax revenue, $1.1 trillion in refunds and $658 billion in unpaid assessments, as well as the resources that support its mission. In addition, Congress and both Administrations entrusted the IRS with $2.4 billion in supplemental funding to support the nation’s recovery from the COVID-19 pandemic.

“The IRS disbursed an unprecedented $1.1 trillion to Americans in fiscal year 2021,” said Teresa Hunter, IRS Chief Financial Officer. “To implement legislative requirements resulting in the expedient roll out of Economic Impact Payments, COBRA, Premium Tax Credit changes and the advanced Child Tax Credits, we overcame significant barriers. I’m proud of the finance management community’s hard work and dedication,” she said. “We strive for excellence in reporting and will continue to ensure taxpayer dollars are managed with integrity and accuracy.”

For more information about the IRS FY 2021 Financial Report visit https://www.irs.gov/pub/irs-pdf/p5456.pdf.

Revenue Procedure 2021-45 sets forth the annual inflation-adjusted items for 2022 for various provisions of the Internal Revenue Code of 1986 (Code) as amended as of November 10, 2021.  To the extent amendments to the Code are enacted for 2022 after November 10, 2021, taxpayers should consult additional guidance to determine whether these adjustments remain applicable for 2022.

Revenue Procedure 2021-45 will be in IRB:  2021-48, dated November 29, 2021.

WASHINGTON — The Internal Revenue Service today announced the tax year 2022 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2021-45 provides details about these annual adjustments.

Highlights of changes in Revenue Procedure 2021-45: 

The tax year 2022 adjustments described below generally apply to tax returns filed in 2023.
 
The tax items for tax year 2022 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
• The personal exemption for tax year 2022 remains at 0, as it was for 2021, this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act. 
• Marginal Rates: For tax year 2022, the top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly).

The other rates are:

35%, for incomes over $215,950  ($431,900  for married couples filing jointly);

32% for incomes over $170,050  ($340,100  for married couples filing jointly);

24% for incomes over $89,075  ($178,150  for married couples filing jointly);

22% for incomes over $41,775 ($83,550  for married couples filing jointly);

12% for incomes over $10,275  ($20,550  for married couples filing jointly).

The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).

• For 2022, as in 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
• The Alternative Minimum Tax exemption amount for tax year 2022 is $75,900 and begins to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption begins to phase out at $1,079,800). The 2021 exemption amount was $73,600 and began to phase out at $523,600 ($114,600 for married couples filing jointly for whom the exemption began to phase out at $1,047,200).
• The tax year 2022 maximum Earned Income Tax Credit amount is $6,935 for qualifying taxpayers who have three or more qualifying children, up from $6,728 for tax year 2021. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
• For tax year 2022, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $280.
• For the taxable years beginning in 2022, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $2,850.  For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $570, an increase of $20 from taxable years beginning in 2021.
• For tax year 2022, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,450, up $50  from tax year 2021; but not more than $3,700, an increase of $100 from tax year 2021. For self-only coverage, the maximum out-of-pocket expense amount is $4,950, up $150  from 2021. For tax year 2022, for family coverage, the annual deductible is not less than $4,950, up from $4,800 in 2021; however, the deductible cannot be more than $7,400, up $250 from the limit for tax year 2021. For family coverage, the out-of-pocket expense limit is $9,050 for tax year 2022, an increase of $300 from tax year 2021.
• The modified adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit provided in § 25A(d)(2) is not adjusted for inflation for taxable years beginning after December 31, 2020.  The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns).
• For tax year 2022, the foreign earned income exclusion is $112,000 up from $108,700 for tax year 2021.
• Estates of decedents who die during 2022 have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
• The annual exclusion for gifts increases to $16,000 for calendar year 2022, up from $15,000  for calendar year 2021.
• The maximum credit allowed for adoptions for tax year 2022 is the amount of qualified adoption expenses up to $14,890, up from $14,440 for 2021.

WASHINGTON – The Internal Revenue Service today updated frequently-asked-questions (FAQs) for the 2021 Child Tax Credit and Advance Child Tax Credit Payments to describe how taxpayers can now provide the IRS an estimate of your 2021 income using the Child Tax Credit Update Portal (CTC UP).

These FAQs update the Advance Child Tax Credit Topic A FAQs by adding a new question, question 17 and Topic F FAQs by adding new questions, questions 2 through 6.

These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

More information about reliance is available.

Additional Advance Child Tax Credit information

The IRS has created a special Advance Child Tax Credit Payments in 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It's at IRS.gov/childtaxcredit2021.

The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up. People can check their eligibility by using the Advance Child Tax Credit Eligibility Assistant.

The webpage features a set of frequently asked questions. It also provides direct links to the portal, as well as two other online tools – the Non-filer Sign up Tool and the Child Tax Credit Eligibility Assistant – and other useful resources.

Rev. Proc. 2021-47 provides guidance on the income tax treatment and information reporting requirements for payments made to or on behalf of financially distressed individual homeowners by certain entities with funds allocated from the Homeowner Assistance Fund (HAF), which was established under section 3206 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2, 135 Stat. 4 (March 11, 2021) (ARP), in response to the coronavirus disease (COVID-19) pandemic. 

This revenue procedure provides that a payment made by a State or State entity to, or for the benefit of, a homeowner from funds allocated from HAF is a qualified disaster relief payment within the meaning of § 139(b)(4), and such payments are not included in the homeowner’s gross income.  In addition, the revenue procedure provides an optional safe harbor method for homeowners to compute their itemized deductions for mortgage interest and real property taxes when in the same taxable year the homeowner has received, or benefited from, a HAF payment from a State or State entity that may be used to pay a portion of a homeowner’s mortgage interest and/or real property taxes and the homeowner has also paid a portion of the mortgage interest and real property taxes with funds from the homeowner’s own sources.  

This revenue procedure also provides guidance to States, and mortgage lenders and servicers regarding information reporting requirements relating to certain HAF payments

WASHINGTON – The Internal Revenue Service today encouraged taxpayers, including those who received stimulus payments or advance Child Tax Credit payments, to take important steps this fall to help themselves file their federal tax returns in 2022. 

Planning ahead can help people file an accurate return and avoid processing delays that can slow tax refunds. 

This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to prepare to file a 2021 tax return next year. 

Gather and organize tax records

Organized tax recordsmake preparing a complete and accurate tax return easier. It helps avoid errors that lead to processing and refund delays. Individuals should have all their tax information available before filing to ensure the return is complete and accurate. They should notify the IRS if their address changes and notify the Social Security Administration of a legal name change. 

Remember, most income is taxable. Recordkeeping for individuals includes:

• Forms W-2 from employer(s)
• Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
• Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy
• Form 1099-INT for interest received
• Other income documents and records of virtual currency transactionsIncome documents can help individuals determine if they're eligible for deductions or credits. Additionally, people who need to reconcile their advance payments of the Child Tax Credit and Premium Tax Credit will need their related 2021 information. Those who received third Economic Impact Payments and think they qualify for an additional amount will need their stimulus payment and plus-up amounts to figure and claim the 2021 Recovery Rebate Credit. Taxpayers should also keep end of year documents including:  
• Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance Child Tax Credit payments
• Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the Recovery Rebate Credit
• Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverageOnline Account securely provides tax account information on IRS.gov; helps provide important filing information    
• Taxpayers who have an Online Account may:
• Taxpayers with questions about how to create an account or how to reset their username or password can find help at How to Register for Certain Online Self-Help Tools. Individuals should act now if they need to create an account. If they’re unable to verify their identity online, there’s a mail option they can use, but that takes longer.
• Individuals who have not set up an Online Account yet should act soon to create an account. People who have already set up an Online Account should make sure they can still log in successfully.
• Eligible individuals claiming a 2021 Recovery Rebate Credit can log in to their online account to see their Economic Impact Payment amounts so they can accurately claim the credit when they file.
• Taxpayers who access Online Account can securely gain entry to the Child Tax Credit Update Portal to see their payment dates and amounts. Taxpayers will need this information to reconcile their advance Child Tax Credit payments with the Child Tax Credit they can claim when they file their 2021 tax returns. 

• View the amounts of their Economic Impact Payments
• Access Child Tax Credit Update Portal for information about their advance Child Tax Credit payments
• Approve or reject authorization requests from their tax professional
• Update their email address and opt-out/in for selected paper notice preferences 

Taxpayers should make sure they’ve withheld enough tax

Individuals may want to consider adjusting their withholding if they owed taxes or received a large refund the previous year. Changing withholding can help avoid a tax bill or let individuals keep more money each payday. Life changes – getting married or divorced, welcoming a child or taking on a second job – may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee's Withholding Certificate, each year and when personal or financial situations change.

People also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on Jan. 18, 2022. 

Individuals can log in to their Online Account to make a payment online or go to IRS.gov/payments.

ITINs need to be renewed only if expired and if needed on a U.S. federal tax return

If an Individual Taxpayer Identification Number (ITIN) was not included on a U.S. federal tax return at least once for tax years 2018, 2019 and 2020, the ITIN will expire on Dec. 31, 2021. 

As a reminder, ITINs with middle digits 70 through 88 have expired. In addition, ITINs with middle digits 90 through 99, IF assigned before 2013, have expired. Individuals who previously submitted a renewal application that was approved, do not need to renew again. 

Want a faster refund? Getting banked speeds tax refunds with direct deposit

 Direct deposit gives individuals access to their refund faster than a paper check. Those without a bank account can learn how to open an account at an FDIC-Insured bank or through the National Credit Union Locator Tool. 

Veterans should see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

Volunteer to help eligible taxpayers file their returns

The IRS and its community partners are preparing for the upcoming filing season and are looking for people around the country to become IRS-certified volunteers. Join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. VITA/TCE volunteers provide free tax return preparation for eligible taxpayers. With many people experiencing financial changes this year, additional volunteers are needed to assist them.

Visit IRS.gov/volunteers to learn more and sign up. After signing up, more information about attending a virtual orientation will be provided.

WASHINGTON — The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020. The IRS today also issued technical guidance regarding all of the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022 in Notice 2021-61, posted today on IRS.gov.

Highlights of changes for 2022

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $20,500, up from $19,500.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2022.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2022:

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to $129,000 to $144,000 for singles and heads of household, up from $125,000 to $140,000. For married couples filing jointly, the income phase-out range is increased to  $204,000 to $214,000, up from $198,000 to $208,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $68,000 for married couples filing jointly, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for singles and married individuals filing separately, up from $33,000.

The amount individuals can contribute to their SIMPLE retirement accounts is increased to $14,000, up from $13,500.

Key employee contribution limits that remain unchanged

The limit on annual contributions to an IRA remains unchanged at $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan who are 50 and older can contribute up to $27,000, starting in 2022. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans remains unchanged at $3,000.

Details on these and other retirement-related cost-of-living adjustments for 2022 are in Notice 2021-61, available on IRS.gov.

WASHINGTON — The Internal Revenue Service today posted detailed reporting directions for certain passthrough entities and taxpayers reporting of partnership interests held in connection with the performance of services, often referred to as “carried interests”, in the form of frequently asked questions (FAQs).

The FAQs contain sample worksheets that certain passthrough entities and taxpayers may be required to use in reporting “carried interests,” partnership interests held in connection with the performance of services for tax returns, filed after Dec. 31, 2021 in which a passthrough entity applies the final regulations.

In addition, the FAQs contain additional instructions for certain passthrough entities and taxpayers who though not required to file the sample worksheets must provide similar information and must disclose whether the information was determined under the proposed regulations or another method for tax returns filed after Dec. 31, 2021 for a taxable year beginning before Jan. 19, 2021.

A 2017 tax law change recharacterized certain net long-term capital gains of a partnership that holds one or more applicable partnership interest (APIs) as short-term capital gains. The provision generally requires that a capital asset be held for more than three years for capital gains allocated with respect to any API to be treated as a long-term capital gain.

The purpose of the FAQs is to provide guidance relating to both Passthrough Entity filing and reporting requirements and Owner Taxpayer filing requirements in accordance with Department of the Treasury regulations revised in TD 9945 (.pdf).

This updated reporting guidance will also be added to the next revision of Publication 541-Partnerships, which will be released in 2022.