The Internal Revenue Service announced on June 9, 2022 an increase to mileage rates for 2022 taxes. The changes are just for the final six months of 2022 only. Individuals taking advantage of this deduction will need to break out their mileage into the proper time category. 

A recent TIAA Institute survey reported that 50% of Americans were unable to answer financial literacy questions properly.  While I presume you are not in that group if you are reading this article, here are some highlights to share with your friends.

You may qualify to exclude from capital gains from the sale of your primary residence if you meet these criteria:

1. Ownership test. The homeowner must have owned the home for at least two years of the five-year period ending on the date of the sale.
2. Use test. The homeowner must have used the home as their main residence for at least two years of the five-year period ending on the date of the sale.

A coalition of the 20 top internet service providers in the U.S. plan to join the Affordability Connectivity Program, a government program to offer broadband internet to millions of Americans. Based on qualifying income, the program will reimburse the cost of the service, making it free after the rebate for as much as 40% of the U.S. population, or 48 million homes.

The impacts of COVID and Amazon or other online shopping options and working from home has changed many of our behaviors.  But, has online shopping busted your monthly budget?

In a Harris Poll survey on behalf of the American Institute of CPAs, more than 2 in 5 Americans said online shopping makes it harder for them to stick to a monthly budget.  They are buying things when they want because it makes them feel good.  They are not realizing the cost until they see their monthly statement.

President Biden said January 19 that he was willing to break up his Build Back Better (BBB) plan into manageable "chunks" to see what could pass now, and return later in the year in hope of passing what remains. He also acknowledged that the enhanced Child Tax Credit, free community college, paid leave, and other BBB provisions would likely have to be jettisoned.

"It's clear to me we'll have to probably break it up," Biden said of the nearly $1.7 trillion bill. "I think we can break the package up, get as much as we can now, come back, and fight for the rest later."

The Internal Revenue Service is issuing information letters to recipients of the third round of the Economic Impact Payments. People receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.

IRS Letter 6475, Your Third Economic Impact Payment, will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns that they file in 2022.

The Internal Revenue Service is issuing information letters to Advance Child Tax Credit recipients. People receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.

IRS Letter 6419, 2021 advance CTC, will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

Many Americans wish to help out their communities and favorite charities through end of year financial support.  Are you able to do it more efficiently?

The easiest was to give is through a check or electronic giving portal.  Cash comes right out of your bank account.  Here are three fairly simple strategies to consider.

Taxpayers, including those who received stimulus payments or advance Child Tax Credit payments, should take steps now to make filing their tax returns easier in 2022.  Planning will help taxpayers file an accurate return and avoid processing delays that can hold up refunds, the IRS says.

Did you know you can make a $300 donation (or $600 for a married couple filing jointly) and get a tax deduction – even if you do not itemized your deductions?

The IRS has reminded taxpayers that a special tax provision will allow more Americans to deduct up to $600 in donations to qualifying charities on their 2021 federal income tax return.  It is just for 2021.

The Internal Revenue Service sent a large number of CP14 notices dated July 5, 2021 to individuals that had an amount due on their 2020 income tax return. These notices appear to be sent in error; however, there are steps you should take to prevent further action and dispute the amount due.

Based on our research and conversations with other CPAs, the IRS has deposited tax payments made on individual’s 2020 income returns; but has not updated individual accounts to credit payments made.

The American Rescue Plan Act of March 2021 changed a number of provisions for the child tax credit – these tax changes are temporary and only apply to the 2021 tax year.

• Raised the age of qualifying children to 17 from 16
• Increased the amount for certain taxpayers
• Made the credit fully refundable (meaning you can receive it even if you don’t owe the IRS)
• May be partially received in monthly cash payments