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Alliance Tax Recommends all Clients Create an Individual IRS Online Account

Setting up an IRS online account has many benefits. You can securely access and view your IRS tax information anytime through the individual online account. You have the option to:
- Review your Economic Impact Payments. Check amounts of the Economic Impact Payments to accurately report them on your tax return. Married filing joint couples will each need to sign into their own account to view their portion of the payment. The IRS reported a 2020 tax return refund delay, due to incorrectly reported Economic Impact Payment amounts. We will need the accurate amount of your 3rd stimulus payment for the 2021 tax return preparation and to avoid refund delays.
- Review Federal estimated payments made during the year or refunds applied as a credit.
- Review Federal amounts owed for past tax years. Payment history. Payment plan details.
- Print digital copies of IRS notices.
- Request Federal tax records/tax transcripts.
- Schedule Federal payments.
To create an IRS online account, each individual taxpayer needs to visit:
https://www.irs.gov/payments/view-your-tax-account


Economic Impact Payments?
The IRS started sending the third Economic Impact Payments to eligible individuals mid-March 2021 through the end of the year. The IRS mailed Notice 1444-C to people who received the third Economic Impact Payment. Bring in this letter with your 2021 tax documents.

If you do not have the letter, please have the dollar amount for your 2021 tax return preparation. If you are eligible and did not receive the third Economic Impact Payment, we will discuss how to claim the Recovery Rebate Credit on your 2021 tax return.
 


Advanced Child Tax Credit
Important changes to the Child Tax Credit helped many families get advance payments of the Child Tax Credit starting in the summer of 2021.

Half of the total credit amount was paid in monthly advance payments. You will claim the other half when you file your 2021 income tax return. You should have received the first advanced payment on July 15, 2021 and last payment on December 15, 2021. These accurate dollar amounts are needed for your 2021 tax preparation and to avoid refund delays.

If you qualify for the Child Tax Credit and did not receive the advanced portion, we will discuss how to claim the Child Tax Credit on your 2021 tax return.

To view your payments, create an ID.me account through the IRS website. Have your photo ID ready. https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

 

Expanded Dependent Care Assistance
The American Rescue Plan expanded the child and dependent care tax credit and made it refundable for certain taxpayers. For 2021, the dollar limit on qualifying expenses increases to $8,000 for one child and $16,000 for two or more children. The child must have been a dependent who was under age 13 when the care was provided. Typically, the child and dependent care credit is 20% to 35% of some or all of the dependent care expenses you paid. The percentage depends on your adjusted gross income.

Please provide your childcare expense statement for your 2021 tax return preparation.
 

Unemployment Benefits
Individuals who received unemployment benefits in 2020 received a unique tax break. In brief, the first $10,200 of unemployment benefits were exempt from taxable income if your adjusted gross income was below $150,000. If you had already filed before this tax law change, you may have decided to amend your 2020 tax return or wait for the IRS to correct. Either way, the IRS may have paid you interest on the tax refund. The interest paid is taxable, and taxpayers must report the interest on their 2021 Federal Income Tax Return. This is still true, even if the IRS does not send you Form 1099-INT. The IRS will only send Form 1099-INT to individuals who received interest totaling at least $10.00.

Unlike Federal, Missouri did not correct 2020 tax filings, it was up to the individual to amend. If you decided to wait for the IRS to correct your 2020 tax return, ask your tax preparer to review your 2020 Missouri tax return. Missouri may owe you a refund.
 

2021 Standard Mileage Rate
Beginning on January 1, 2021, the IRS issued the optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable or medical purposes. Taxpayers always have the option of calculating the actual cost of using their vehicle rather than using the standard mileage rates.
 
- 56 cents per mile driven for business use, down 1.2 cents from 2020.
- 16 cents per mile driven for medical, down 1 cent from 2020.
- 14 cents per mile driven in service of charitable organizations, remains unchanged from 2020.

2021 Standard Deduction Amounts
For 2021, the standard deduction amount has increased for all filers, and the amounts are as follows.
 
- $12,550 Single, or Married Filing Separately
- $25,100 Married Filing Jointly
- $18,800 Head of Household
Taxpayers who are at least 65 years old or blind can claim an additional 2021 standard deduction of $1,350 ($1,700 if using the single or head of household filing status). For anyone who is both 65 and blind, the additional deduction amount is doubled.

Virtual Currency/Cryptocurrency
The IRS treats virtual currencies as property, meaning it is taxed in a manner similar to stocks or real property. The IRS is focusing on cryptocurrency tax evasion with virtual currencies, employing data analytics to uncover transactions that crypto users assumed were hidden. Form 1040 asks whether at any time during 2021, if you received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency. If the answer is yes, you must provide a record of all transactions. This includes, how much you paid for cryptocurrency, how long you held it for and how much you sold it for, as well as receipts for each transaction. More information may be required to complete your 2021 tax return.


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