Non Profit
Don’t Lose Your Nonprofit’s Tax-Exempt Status!
Preserving 501(c)(3) Status: Safeguarding Your Nonprofit's IRS Tax-Exempt Designation It’s easy for a 501(c)(3) organization / Nonprofit to maintain its IRS tax-exempt status – and it can be just as easy to lose it. the IRS recognizes private foundations, churches, educational institutions, hospitals, and many other types of public charities. 501(c)(3) IRS Tax-Exempt Status Is a Privilege IRS tax exemption is a privilege, and your 501(c)(3) organization can lose it if you’re not careful. There are 6 key areas to stay on the IRS’s good side and keep that tax exemption. Private benefit Lobbying Unrelated business income (UBIT) Political campaign activity Operation in accordance with the stated exempt purpose Annual reporting obligation Private Benefit / Private Inurement If your 501(c)(3) holds an IRS tax exemption, then its activities have to be directed toward an exempt purpose. It should not serve the private interests, or benefit, of any person or organization more than insubstantially. The concept of inurement states that no part of an organization’s net earnings may inure to the benefit of a private shareholder or individual who, because of the person’s relationship to the organization, has an opportunity to control or influence its activities. Prohibited inurement includes the payment of dividends, the payment of unreasonable compensation to insiders, and the transfer of property to insiders for less than fair market value. By the same token, nonprofits with tax exemptions can’t have their income or assets benefit insiders. This includes people like board members, officers, directors, and important employees of an organization. If an organization benefits them, the insiders AND the organization could be subject to penalty excise taxes, and the nonprofit could lose its tax-exempt status. If a 501(c)(3) organization engages in inurement or substantial private benefit, the organization risks losing its exemption. Additionally, insiders guilty of inurement may be subject to excise tax. Lobbying Lobbying is when an organization contacts, or asks the public to contact, lawmakers to propose, support, or oppose the legislation. It’s also considered lobbying when the organization directly advocates for or against any legislation. 501(c)(3) organizations are allowed to do some lobbying. However, if lobbying activities are substantial an organization risks losing its tax-exempt status. An organization can elect to have its lobbying activities measured by an “expenditure test” to determine whether or not the activities are substantial. This is known as a 501(h) election, so named for the section of the Internal Revenue Code where the rules for the expenditure test are spelled out. By making this election, an organization agrees to not spend more than a certain percentage of its total expenses on lobbying activities. The other way to measure lobbying activity is to determine whether, based on all of the pertinent facts and circumstances, an organization’s lobbying comprises a substantial part of its overall activities. This substantial part test is a more subjective method compared to the more mathematical, objective expenditure test. Organizations must file Form 5768, Election/Revocation of Election by an Eligible Sec. 501(c)(3) Organization to Make Expenditures to Influence Legislation, in advance to be subject to the expenditure test. Political Activity Nonprofits cannot participate in political campaigns for or against any candidate for public office, at the federal, state, or local level. All Section 501(c)(3) organizations are prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate running for public office. The prohibition applies to all campaigns (federal, state, and local level). Political campaign intervention includes any and all activities that favor or oppose one or more candidates for public office. The prohibition extends beyond candidate endorsements. Contributions to political campaign funds or public statements of position (verbal or written) made by or on behalf of an organization in favor of, or in opposition to, any candidate for public office clearly violate the prohibition on political campaign intervention. Section 501(c)(3) organizations may engage in some activities to promote voter registration, encourage voter participation, and provide voter education, but they can’t engage in activities that favor or oppose any candidate for public office. Whether an activity is a political campaign intervention depends on all the facts and circumstances. The political campaign intervention prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax-exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions of the organization. To learn more about political activity and nonprofits, check out Charities, Churches, and Educational Organizations – Political Campaign Intervention. Unrelated Business Income (UBI) Earning too much income from activities that aren’t related to your exempt purpose can endanger your exempt status. This kind of income comes from a business activity that is not substantially related to the organization’s exempt purpose. This can get murky because there are some modifications, exclusions, and exceptions. An organization that produces unrelated business income due to its unrelated trade or business may have to pay taxes on that income. The income-producing activity must meet three conditions before the income is potentially taxable. First, the activity must be a trade or business. Second, the trade or business must be regularly carried on. Third, the business activity is not substantially related to an organization’s exempt purpose. In other words, the activity itself does not contribute to accomplishing the exempt purpose for which the non-profit had been set up, other than through the production of funds. Some of the most common UBI-generating activities include the sale of advertising space in weekly bulletins, magazines, journals, or on the organization’s website; sale of merchandise and publications when those items being sold do not have a substantial relationship to the exempt purpose of the organization; provision of management or other similar services to other organizations; and, even some types of fundraising activities. Generally, organizations that generate unrelated business income should file Form 990-T, Exempt Organization Business Income Tax Return, and pay tax on the income. Any non-profit generating money in activities that do not further its specific exempt purposes should be very careful in continuing to do so. In addition to paying taxes on the income from unrelated activities, if those activities are substantial in relation to the exempt purpose activities, the non-profit may be putting its exempt status in jeopardy. For more information about what is considered UBI and how it’s taxed, see Publication 598, Tax on Unrelated Business Income of Exempt Organizations. Annual Reporting Requirements Public charities are exempt from federal income tax, yes. But, the Internal Revenue Code requires most of these organizations to report information every year by filing Form 990. The 990 verifies that the nonprofit still qualify for tax exemption. It’s a public record, and it helps inform the public about the organization’s programs and operations. In addition, the non-profit may also be liable for unrelated business income tax as discussed above, employment tax, excise taxes, and certain state and local taxes. Public charities generally file either Form 990, Return of Organization Exempt from Income Tax, Form 990- EZ, Short Form Return of Organization Exempt from Income Tax or submit online Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ. The type of form or notice required to be filed by the non-profit is determined by its gross receipts and the value of its assets. An organization may file Form 990-EZ if its gross receipts are normally less than $200,000 and if its total assets are less than $500,000 at the end of the year. If the organization’s gross receipts are $200,000 or greater, or if its assets at the end of the tax year are $500,000 or more, the organization generally must file Form 990. If the organization’s annual gross receipts are generally $50,000 or less, the organization may in lieu of Form 990 or 990-EZ submit online new Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required to File Form 990 or 990-EZ. There are some public charities that are not required to file Forms 990 or 990-EZ, including churches and certain church-affiliated organizations. In general, the organizations that do not need to file a Form 990 are: Branches of other nonprofits: Subsidiaries of larger nonprofit organizations may be covered under a general return filed by the parent nonprofit organization. Many government corporations. State organizations that provide essential services. Smaller nonprofit organizations: Those with annual incomes of $25,000 or less do not need to file. Nonprofit organizations not yet in the system: Organizations that have not yet applied for exemption from federal income tax are not required to file a Form 990 as the IRS would not yet have the organization's information. State institutions: Organizations that provide essential services, such as universities, do not need to file a Form 990. Churches and other faith-based organizations. The Pension Protection Act of 2006 provides for the automatic revocation of an organization’s tax-exempt status if it fails to file a required annual information return for three consecutive years. In June 2011, the IRS enforced this provision for the first time by publishing a list of about 275,000 organizations that lost their tax-exempt status for failing to meet their annual filing obligations for three consecutive taxable years. If an organization finds that its exempt status has been automatically revoked due to non-filing and it wants its tax-exempt status reinstated, it will need to reapply and pay the appropriate user fee. Get started today to get the help you need in reinstating the tax-exempt status of your non-profit. You can learn more about filing requirements, including new requirements applicable to supporting organizations, at IRS Nonprofits and Charities. Not Operating Within Your Exempt Purpose Endangers Your 501(c)(3) IRS Tax-Exempt Status This can be really troublesome. A 501(c)(3) with the IRS tax exemption received it because it promised to fulfill a charitable mission or purpose. Day to day it must pursue the exempt activities it promised in its IRS application for exemption. If an organization’s activities go toward something other than its original purposes, it must inform the IRS to prevent future problems. If you’re unsure whether a deviation is significant enough to report, contact a nonprofit attorney. Non-profit organizations must adhere to the guidelines inherent in these six areas. If they continue to do this, they will maintain their tax-exempt status and enjoy its benefits. Questions about 501(c)(3) IRS Tax-Exempt Status? If you have questions about your 501(c)(3) IRS tax-exempt status, schedule your consultation with NexGen Taxes now. Related Articles Help, My Nonprofit’s Tax Exemption Status Has Been Revoked! Nonprofit Tax Filing 101 – Get Started Today! Tax Season Refund Frequently Asked Questions
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8 Costly Tax Errors To Avoid While Filing Your Personal Taxes
Navigating Individual Tax Filing: Common Errors to Avoid for a Smooth Process Filing your taxes as an individual can seem very easy. However, a lot of little details can slip by depending on your due diligence. Here are 8 common tax filing errors committed by people while filing their taxes. 1. Missing/Incorrect Details A lot of missing or incorrect details go unnoticed when people file their tax reforms. People often forget to file entire forms depending on their tax bracket, their assets, and investments. Some of the details inaccurately or entirely left out of tax forms include: Missing or Inaccurate Social Security Numbers: Each SSN on a tax return should appear exactly as printed on the Social Security card. Misspelled Names: A name listed on a tax return should match the name on that person's Social Security card. Missed forms: 1099 forms for Interest and Dividends on the accounts, even the accounts that you didn't actively trade in, needs to be added to your filing 2. Incorrect Filing Status Certain taxpayers choose the wrong filing status for their filing. At times, more than one filing status applies to you. Figuring this out can be challenging as the Tax laws change from time to time. If you are in doubt, reach out to our team of tax experts to help you figure out your tax filing status. 3. Mathematical Errors The most common errors are often mathematical mistakes which can range from addition and subtraction to more complex operations. Taxpayers often double-check their math, but it’s better to have software do it automatically for you. 4. Unsigned Forms Unsigned tax returns are invalid. If you are filing a Join Tax Return with your Spouse, your spouse also needs to sign the joint tax return. Some exceptions do exist, like for members of the armed forces, and those taxpayers who have a valid power of attorney. The best solution is to file returns electronically and use a digital signature. 5. Figuring Credits or Deductions Did you know that one of the most common mistakes tax filers make while filing their taxes is figuring out things like their Earned Income Tax Credit, Child, and Dependent Care Credit, Child Tax Credit, and Recovery Rebate Credit? This can be a pain if you’re owed some deductions and want to collect. More importantly, if you don't use these credits correctly, you will get the dreaded letter from the IRS. Having a streamlined tax filing service for individuals can cut down on such errors. If you are in doubt, reach out to our team of tax experts to help you figure out the tax credits and deductions you are entitled to 6. Using an Expired ITIN (Individual Tax Identification Number) Many tax filers use ITIN instead of SSN to file their taxes. However, some of the ITINs series issued previously have expired. It’s quite common for tax returns to be filed using an invalid or expired tax identification number (ITIN). Taxpayers can renew their ITIN number while filing their tax return 7. Filing Too Early While taxpayers should not file late, they also should not file prematurely. People who don't wait to file before they receive all the proper tax reporting documents risk making a mistake that may lead to a processing delay. 8. Incorrect Bank Account Numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for a taxpayer to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax returns. During tax filing season, IRS is usually backlogged. If you have committed one of these errors, your tax file will get stuck in that backlog. The much-awaited tax refund you were looking forward to will be delayed. So don't commit these common mistakes. Better still, use one of the Tax Software to compute your taxes or reach out to our tax experts to help you file your taxes. Related Articles 10 Costly Tax Errors for Individuals and Businesses What Has Changed for the 2022 Tax Season? Where is My Refund?
Tax Tips
10 Costly Tax Errors for Individuals and Businesses
Avoiding Costly Mistakes: The Importance of Professional Tax Filing Services for Businesses and Individuals There are several technicalities and inaccuracies through which you can make errors when filing taxes. These errors can be costly for both businesses and individuals, depending on the taxes owed. To make sure you don’t make these errors, you should hire a tax filing service for businesses or individuals. A business like NexGen Taxes has CPAs and tax professionals onboard to help you. Here are 10 costly tax errors which can cost businesses and individuals dearly according to the IRS. 4 Costly Tax Errors for Businesses These 4 tax errors can result in heavy penalties for businesses, big and small. 1. Underpayment of Estimated Taxes Business owners usually estimate what taxes they have to pay if they are paying over $1,000. However, if they don’t pay enough of it through withholding and estimated tax payments, there is a penalty charge. These penalties start from 5% of the underpaid amount. However, they can rise to 25% of that amount as well. Depending on how much you’ve underpaid, the penalty can get larger and larger. 2. Depositing Employment Taxes Business owners have to deposit withholding tax if they have employees. These taxes also include the employer’s share of those taxes. This is done through electronic transfers. However, if not deposited correctly, or before the deadline, those taxes can result in penalties. 3 Late Filing This is a no-brainer. Filing your taxes late will result in a late fee. Whether you’re a business owner or an individual, you have to meet deadlines. These deadlines can vary depending on your status as a filer and the year in question. The tax filing deadline in the US is the 15th day of the 4th month. However, if that date falls on a Saturday, Sunday or legal holiday, it’s pushed to the next business day. 4. Not Separating Personal Expenses It may be easier to use a single credit card for all expenses if your business is a sole proprietorship. However, this can blur the lines between legitimate business expenses and personal expenses. This could cause errors when you claim deductions. It could also be a problem when an audit comes up. 6 Costly Tax Errors for Individuals Filing your own taxes as an individual can seem very easy. However, a lot of little details can slip by depending on your due diligence. Here are 6 tax filing errors for individuals. 1. Missing/Incorrect Details A lot of missing or incorrect details go unnoticed when people file their tax reforms. In fact, people often forget to file entire forms depending on their tax bracket, their various assets, and their investments. The various details inaccurately or entirely left out of tax forms include: • Missing or Inaccurate Social Security Numbers: Every social security number should match the one on your Social Security Card. • Misspelled Names: Your name should be filled out exactly as it appears on your Social Security Card. 2. Incorrect Filing Status Certain taxpayers choose the wrong filing status for their documents. This is one of the major problems that a tax filing service for individuals can help you solve. At times, more than one filing status applies to you. Figuring this out can be extremely tricky for the layman. 3. Mathematical Errors The most common errors are often mathematical mistakes which can range from addition and subtraction to more complex operations. Taxpayers often double-check their math, but it’s better to have software do it automatically. 4. Unsigned Forms Unsigned tax returns are invalid. In several cases, spouses have to sign a joint tax return, so both their signatures are required. Some exceptions do exist, like for members of the armed forces, and those taxpayers who have valid power of attorney. The best solution is to file returns electronically and use a digital signature. 5. Figuring Credits or Deductions Did you know that one of the most common mistakes in tax filing is to figure out things like credits or deductions? This can really be a pain if you’re owed some deductions and want to collect. The mistakes can include things like tax credits, child and dependent card credits, rebate credits, etc. Having a streamlined tax filing service for individuals can really cut down on such errors. 6. Using an Expired Individual Tax Identification Number Finally, it’s quite common for tax returns to be filed using an invalid or expired tax identification number (ITIN). This can work if you just have to file taxes. However, if you’re expecting exemptions or credits from that tax return, it won’t happen. The IRS has clear rules to not allow claims to be filed using an expired ITIN. Taxpayers can renew their number and refile a return to get back the claimed credits and exemptions. These are just a few of the errors that you can commit when filing individual and business taxes. However, if you’re working with a tax filing service, you can significantly minimize your chances of filing taxes incorrectly. Use NexGen Taxes for Your NextGen Tax Filing Needs If you’re looking for a tax filing service for individuals or businesses, look no further than NexGen Taxes. We provide not only a streamlined process for filing your taxes, but a network of experienced professionals to guide you. So, what are you waiting for? Whether you’re a business or a regular citizen, contact NexGen Taxes for tax filing in the 21st century! Related Articles What Has Changed for the 2022 Tax Season? Why Did I Get a Reduced Refund? Financial Tips For The New Year
Non Profit
Nonprofit Tax Filing 101 – Get Started Today!
Navigating Non-Profit Tax Obligations: A Guide to Successful Filing and Compliance Congratulations! You were able to set up your non-profit to work on the cause you care about. You also did the hard work of getting the non-profit status established with the IRS. Now what? Here are some of your questions answered about tax filing for the non-profit. Do Nonprofit Organizations File Tax Returns? Yes! Nonprofit organizations that have been granted tax exemption by the IRS are required to file an IRS Form 990, an annual information return. You might wonder why, given that such organizations are exempt from paying taxes anyway. To put it in layman’s terms – your nonprofit organization is required to ‘justify’ its tax-exempt status. In other words, the annual tax return of a 501(c)(3) organization proves to the IRS that the nonprofit is living up to its charitable purpose. Unfortunately, there are always some who might take advantage of a nonprofit’s tax-exempt status for personal financial gain. For example, an individual could create a shell company and submit invoices to obtain payments for services not rendered or deliver goods or services marked up excessively. It is for reasons such as these that larger nonprofits, and nonprofits that are recipients of grants, are required to have an independent accountant perform an audit. What is the IRS Form 990? IRS Form 990 is the annual information return or tax return filed by tax-exempt organizations with the IRS that details financial information, including statements of revenue and expenses and balance sheets. Form 990 is an annual compliance report of your organization to the IRS that documents: Information on governance, documentation of decisions made, and written policies to demonstrate accountability and transparency. That your tax-exempt organization is adhering to best practices and stays within the confines of its tax-exempt purpose. That your organization remained compliant with applicable federal tax law, from payroll and information reporting to unrelated business income taxes, and so on. Generally, tax-exempt organizations under section 501(a) of the Internal Revenue Code (which includes 501(c)(3) nonprofits) are required to file annual information returns. Failure to file the IRS Form 990, filing after the due date, or failing to file an extension of time to file, could result in the IRS assessing penalties of up to $20 or more per day. The penalty assessed largely depends on annual gross receipts, for each date the information return is overdue. It is worth noting that penalties will also be assessed if a tax-exempt organization files on time but files inaccurate information or omits any required information. Your information return is considered filed only if it is complete and accurate. What Kind of Tax Return Does a Nonprofit File? There are several types of IRS Form 990s, which are determined by the financial standing of a nonprofit. Nonprofit organizations are required to file form 990 based on their assets, gross receipts, and public charity status. Tax-exempt organizations with gross receipts that are equal to or greater than $200,000 or have total assets of $500,000 or more are required to file Form 990, Return of Organization Exempt from Income Tax. Organizations with gross receipts less than $200,000 and total assets less than $500,000 can file Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. Organizations with gross receipts of at most $50,000 are not required to file either Form 990 or 990-EZ but are required to file, IRS 990-N Electronic Notice (e-Postcard). If the organization is a private foundation rather than a public charity, it is required to file an IRS Form 990-PF regardless of its revenue. To ensure that your tax returns are filed correctly and on time, the team at NexGen Taxes keep track of due dates on your behalf, file extensions when necessary, and triple-check every tax return to account for errors before filing. What Happens if Your Tax Return or Form 990 Has Incorrect or Missing Information? It is not uncommon for nonprofit organizations to file the wrong type of Form 990. All too often, Form 990s might be missing information or even an entire schedule. When this happens, the IRS generally sends back your information return along with one of the following letters: IRS Letter 2694C (Return Form 990 due to missing information) IRS Letter 2695C (Return Form 990-EZ due to missing information) IRS Letter 2696C (Mission Information Request to Process EO Return) If your organization has received one of these letters, Contact Us immediately. Our nonprofit tax filing experts here at NexGen Taxes will assist you in providing a corrected return, along with your explanation detailing why your organization failed to submit the required information. Once you receive one of these letters from the IRS, you have 10 days from the date of the letter to correct your mistake. If your organization fails to file its required information return for 3 consecutive years, the IRS will automatically revoke your tax-exempt status and place your organization on its Auto-Revocation List. Revocation means that your nonprofit organization will now be liable to pay federal income tax and often state income tax on annual revenue. In addition, your donors will no longer be able to make tax-deductible contributions. If your tax-exempt status has been revoked, reach out to the team at NexGen Taxes today, and we will help you reinstate it on your behalf. If your organization has reasonable cause for failure to file on time, we will also request an abatement of penalties assessed. How the IRS Assesses Penalties for Tax-Exempt Organizations The maximum penalty the IRS can assess if an organization fails to file its return is the lesser of either 5% of the organization’s gross receipts or $10,000 for the year. For nonprofit organizations with over a million dollars in gross receipts per annum, the penalty is $100 per day with a maximum of $50,000. To avoid these penalties, your nonprofit must remain aware of Form 990 return due dates, which vary based on your organization’s accounting periods or tax timetable. What is the Due Date of IRS Form 990? Form 990 due dates depend on the specific tax calendar that your nonprofit follows. This table outlines different due dates based on when your nonprofit's tax year ends: Who is Responsible for Filing Non-Profit Taxes? Every nonprofit organization is responsible for filing its taxes, in fact, there are several people within the non-profit organization who are responsible for filing its taxes. The first person you should know about is the Board of Directors. The Board of Directors is often made up of volunteers (or paid employees) who oversee the day-to-day operations of your nonprofit organization and help ensure that all financial responsibilities are met. It's their responsibility to make sure that all tax filings are kept current and accurate so that you don't incur any penalties or fines from the IRS or state department. Another person who might be involved in helping prepare your nonprofit's tax returns each year is an accountant or CPA (certified public accountant). CPAs handle tax preparation for individuals and businesses alike, so if you don't have experience preparing tax returns yourself, it might be worth hiring one at least once every year to do so for you. Reach out to our qualified team of Tax experts to help you get started with tax filing for your non-profit. How Do Non-Profits File Their Taxes? In general, non-profit/exempt organizations are required to file annual returns, although there are exceptions. If an organization does not file a required return or files late, the IRS may assess penalties. In addition, if an organization does not file as required for three consecutive years, it automatically loses its tax-exempt status. You can check which 990 Series Form your organization needs to file on the IRS's Website. You can now file your 990 Form online. What's at Stake if I Forget to File My Non-Profit Taxes? If you don't file your nonprofit taxes on time, you may be hit with tax penalties and fines. Per IRS, if an organization fails to file a required return by the due date (including any extensions of time), it must pay a penalty of $20 a day for each day the return is late. The same penalty applies if the organization does not give all the information required on the return or does not give the correct information. The use of a paid preparer doesn't relieve the organization of its responsibility to file a complete and accurate return. In general, the maximum penalty for any return is the lesser of $10,500 or 5 percent of the organization's gross receipts for the year. For returns required to be filed in 2021, for an organization that has gross receipts of over $1,084,000 for the year, the penalty is $105 a day up to a maximum of $54,000. For returns required to be filed in 2022, for an organization that has gross receipts of over $1,094,500 for the year, the penalty is $105 a day up to a maximum of $54,500. If the organization is subject to this penalty, the IRS may specify a date by which the return of correct information must be filed. If the return is not filed by that date, an individual within the organization who fails to comply may be charged a penalty of $10 a day. The maximum penalty on all individuals for failures concerning a return shall not exceed $5,000. Penalties for failure to file may be abated if the organization has reasonable cause for the failure to file timely, completely, or accurately. Please keep in mind, automatic revocation of your tax exemption status occurs when an exempt organization that is required to file an annual return (e.g., Form 990, 990-EZ, or 990-PF) or submit an annual electronic notice (Form 990-N, or e-Postcard) does not do so for three consecutive years. Under the law, the organization automatically loses its federal tax exemption. The NexGen Taxes team can help you get this tax-exemption status reinstated. Reach Out to us today! How Should I Prepare for Tax Season? Some of the tips you can follow to file taxes are: Prepare to file taxes throughout the year, don't leave it for the last minute. It helps to be organized. Reach Out to us today to get our Non-Profit Tax Organizer to help you be prepared for the tax filing. Have a good understanding of your organization's financials, especially if you're new to running the non-profit. This will help you prepare accurate tax forms and keep records that are necessary for reviewing past years' tax returns. Use the Internal Revenue Service's (IRS) Form 990 series to submit your annual information return. These forms are public records and can be accessed by anyone who requests them online or in person at an IRS office, so make sure they’re accurate! Keep a calendar of when the filing is due and then file taxes for your non-profit on time. The IRS has strict rules about filing deadlines, so make sure you stay up-to-date with these deadlines when preparing for tax season each year. We hope you now have most of your questions answered for filing taxes for your non-profit. If you have any questions about how to file, please reach out to our team of qualified tax professionals. We'd love to hear from you! Related Articles Help, My Nonprofit’s Tax Exemption Status Has Been Revoked! Don’t Lose Your Nonprofit’s Tax-Exempt Status! Tax Season Refund Frequently Asked Questions
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Tips for 401k Retirement Investment
Maximizing Your Retirement Savings: Optimizing 401(K) or 403(B) Plans for a Secure Future For most people retirement planning is synonymous with investing in 401(K) or 403(B) plans as employer-provided tax advantage retirement vehicles are the most used retirement planning tools. Quite frankly, they are some of the best vehicles out there for the average employee. They provide great ways to defer money from your payroll on a pre-tax, or post-tax, basis for retirement. Here are some tips for optimizing your retirement savings through your employer provided 401(K) or 403(B). Sign-up Immediately The old Chinese proverb by Lao Tzu goes “A journey of a thousand miles starts with the first step.” Interpreting it in terms of building your retirement nest egg, if you aren’t contributing to your 401(k) / 403(B), do it now! The sooner you get started the closer you will be to building a nest egg that can help you retire with peace of mind. Minimum Contribution Now even if you are facing challenges in your life, you should still contribute in your 401(k) / 403(B) account to at least the minimum your company will match. For instance, if your company matches on the first 6% you defer, then put minimum 6% away. If you are not doing the minimum contribution, you are leaving literally free money on the table. Beyond the minimum contribution whatever extra you can contribute will be a huge plus but doing the minimum contribution should be a first and foremost priority. 10%-15% The general rule of thumb is to elect a minimum of 10%-15% of your salary from day one to defer into your 401(k) / 403(B) account. This will typically have you in a pretty good position when it comes time to retire. Don’t think about doing all the savings in later part of the year. Nobody can predict future; you might encounter some emergency due to which you might not be able to maximize the contribution in later half of the year. Also, last few months of the year also are filled with holidays. What if did some impulse shopping and are unable to maximize your contribution. So, it makes sense to start contributing into your retirement account from the beginning of the year. Max Out If the minimum target to save is the company match, and the minimum target for a good retirement savings rate is 10%-15%, then what is the maximum we can contribute? Well, in 2022 if you are under 50 years old you can contribute $20,500 with a $6,500 catch-up amount for those 50 or older. Everyone’s goal should be to max out as soon as they can. However, highly paid employees may be restricted in their ability to make 401(k) contributions. A 401(k) plan can elect to stop salary deferrals once a participant's compensation reaches $305,000 in 2022 and can only use up to this amount when providing a 401(k) match. For the 2022 plan year, an employee who earns more than $130,000 in 2021 is a Highly Compensated Employee. Also, keep a lookout year-to-year on the maximum as the government tends to increase these limits frequently. Auto Increase A cool feature that will help big time is the auto increase feature. This is one feature that everyone should check/enable when they sign up It will increase your 401(k) contribution 1% a year until you hit the IRS maximum. Most people don’t even notice the marginal change as it is usually offset with the yearly pay increase and it goes a long way in getting your retirement savings on the right track. Before or After-tax Savings Many companies these days offer both a pre-tax option and a Roth 401(k) option. Whatever you choose or even a mixed combo is still subject to the IRS limits in aggregate. Thus, not allowing you to contribute $20,500 to both accounts. That said, which account should you invest in? This is a personal decision and one that you should discuss with your financial planner. As such a good rule of thumb is the higher your income bracket is, the bigger the benefit of pre-tax contributions are as you’ll likely be in a lower tax bracket at retirement. Of course, the opposite is true for Roth 401(k) contributions. If you are in a modest tax bracket it may be better for you to contribute to the Roth and take the tax hit now in hopes of never paying taxes on those dollars ever again. Keep in mind, whatever type of account you choose the company match always goes into a pre-tax account. How Much Savings for Retirement is Enough This is a great question and the best way to answer this is to consult with your financial planner. A good financial planner can see how much you are earning and based on your unique needs how much you will need in retirement. Having said that, for a quick reference guide go by these guidelines suggested by Fidelity based upon a study it has done of retirement portfolios it holds. At age 30 you should aim to have one times your yearly salary saved in your 401(k), thus if you earn $75,000 your 401(k) balance should be $75,000. By age 40 aim to have three times your yearly salary saved. Age 50 the goal is six times of your yearly salary saved, while at age 60 the minimum target is eight times your yearly salary. This is a good basic guideline to reference while saving for retirement. That said, you can never have too much stashed away in your savings. Brokerage Window 401(k) plans can be a little confining if you have investing experience. Because a 401(k)can only be offered by an employer, you’re stuck investing money into a plan with relatively few investing options compared to the almost limitless options of an IRA or traditional brokerage account. As more people become sensitive to investing fees, employers have started offering 401(k) accounts with a brokerage window. A brokerage window allows you to take advantage of the many other investment options outside of a normal 401(k) and yes, it includes stocks, ETFs, bonds, and even some lower risk trading. If your employer provides this option, and you have solid investment experience or guidance, you should definitely look into it. Essentially, the Provider allows you to pay a nominal fee to elect to open a brokerage window within your 401(k) account. You can then move your balance within the plan to this brokerage window. Once it is done, you’ll have many more investment options, rather than the normal dozen or so your provider offers. However, this can be overwhelming and risky if investing isn’t your strong suit. Good news is that you can easily get someone to help you with investments, and investing in stocks and bonds does not carry any investing fees. How to Invest Once you start making deductions, the next big hurdle is, how to allocate your 401(k). Conventional wisdom is the younger you are the more “aggressive” or equity-based your allocation should be. However, it is a personal decision based on your goals and risk tolerance. You should look at what are the investment options offered by your 401(K) service provider in your plan, and research a little on historical performance and trends of investment options. Choose investment offerings based on this research and your investment goals. Target Date Funds Most 401(k) plans these days offer ‘No Brainer’ target date funds. These are funds where you choose a retirement date and basically let it ride. The funds will shift through the years to a more and more conservative allocation or more bond-focused as it starts getting close to your target retirement date. For some, these are simple and get the job done. However, if you have experience with investing, you don’t have to put your funds in the Target Date Funds. Keep in mind, that most of these Target Date Funds have additional costs associated with them. Also, the fact of the matter is the investing, and investment allocation is a very personal decision so generalizing it with a Target Date Fund should be your last choice. The investment choices should be based on goals and needs, rather than arbitrary age allocation. If you are uncomfortable making investment choices by yourself, reach out to your 401(K) service provider to get help. Rebalance Often missed or misunderstood by many is the option of rebalancing your retirement portfolio. By selecting this option (semiannually if not quarterly) your 401(k) portfolio will be rebalanced at your chosen interval back to your preselected allocation. You may ask why is it important. Because funds performance is not guaranteed so with the passage of time you may find your 60/40 Stocks / Bonds allocation has drifted into a 90/10 Stocks / Bonds allocation which may leave you exposed and out of your comfort zone. Active vs. Passive Funds Another question that comes up time and again is whether to go with actively managed funds or passively managed (index) funds while selecting funds in your retirement portfolio. Frankly speaking, there are benefits to both. During certain time periods, and for certain sectors that will benefit from both active and passive management. It is advisable to get exposure to both in hopes of smoothing out the ride. Diversification It is a good idea to hold different funds in different sectors within your retirement portfolio. This will help you in smoothing out the ride a bit and you won’t end up putting all your eggs in one basket. It also can go a long way in protecting the downside from one sector decimating your retirement savings. Rollover Old 401(k) Don’t forget to take care of your old 401(K) with your ex-employers. Roll them into an IRA or Roth IRA depending on how you contributed in the first place. This way you will have endless investment options vs. the handful that your ex-employer is offering. If you consolidate them into a single IRA it will become more manageable and you won’t have to spend endless hours taking care of multiple IRAs with multiple providers. Rollover of an old 401(k) into an IRA is tax-free to do and relatively easy. In the long term, you will see enormous benefits from this move. Audit Your Retirement Accounts Once a year you should audit your retirement accounts. A retirement account is not like your checking account that you need to keep a close eye on. However annually or semiannually do an audit of the account and check for the following: Is your allocation still appropriate? How has the performance been? Any new funds available? Any new features added like Roth or open architecture? Is your contribution rate appropriate, or can you do more? If intending to max out, are you on track to hit the limits? if you are 50 or older have you selected the catch-up option? Are you receiving the full employer match? Any change in your beneficiaries? After Tax Strategy Last but not least, see if you can do a Mega Back-Door Roth. A Mega Back-Door Roth is a special type of 401(k) rollover strategy used by high earners to deposit funds in a Roth IRA account. This strategy only works under certain circumstances for people with extra money they would like to stash in a Roth IRA. In short, if your employer allows after-tax (different than Roth 401(K)) contributions, you can contribute above and beyond the $20,500 limit (up to $61,000 including all sources if under 50 or $67,500 if you are 50 or over) to an after-tax bucket. Then typically once a year you can convert just the after-tax dollars to a Roth IRA of your own effectively making a substantial Roth IRA contribution each year from already after-tax dollars. If this sounds complicated it probably is so it would be probably better to get help from an investment professional. If you keep on following these tips year after year, you will have a stellar nest egg built by the time you are ready to retire. Click Here to Get Started! Let's Go Related Articles IRS Has Announced 2024 Retirement Account Contribution Limits: Start Your Retirement Planning Today! What Has Changed for the 2022 Tax Season? Financial Tips For The New Year
Track My Refund
Check Your State Refund Status
Track Your State Refund Let's help you track your State Tax Refund Status. If you are wondering when you will receive your refund? The answer depends on how you filed your return. The state should typically issue your refund check within six to eight weeks of filing a paper return. If you use e-file, your refund should be issued between two and three weeks. You can check on your state tax refund status by clicking on the links below. State Tax Refund Status Select state and press submit to open the corresponding state website State Files Alabama California Delaware Alaska Colorado Georgia Arizona Connecticut Hawaii Idaho Iowa Louisiana Illinois Kansas Maine Indiana Kentucky Maryland Massachusetts Mississippi New Jersey Michigan Montana New Mexico Missouri Nebraska New York North Carolina Oklahoma Rhode Island North Dakota Oregon South Carolina Ohio Pennsylvania Utah Vermont Wisconsin Wyoming Virginia Washington North Carolina (NC) West Virginia Related Articles Where is My Refund? Tax Season Refund Frequently Asked Questions Why Did I Get a Reduced Refund?
Child Tax Credit
IRS Letter 6419-Reporting Child Tax Credit Payments
IRS Letter 6419: How Do I Report My Child Tax Credit Payments? Now that the tax season is about to start, you must be collecting your tax documents to file your taxes. While doing this, keep an eye out for IRS Letter 6419. The IRS is planning to send this important notice in late January to those who received Advance Child Tax Credit Payments in 2021. You may ask, why is this letter so important? The details in the document will not only help you report your advance payments correctly—it will also help you claim the other half of your Child Tax Credit that is still pending. Additionally, by reporting the amount reported in IRS Letter 6419, you can avoid delays in processing and sending your refund that might arise due to mismatch in amount. So let’s dig deeper into what is the IRS Letter 6419 and what you can do in case you didn’t receive this letter or lost it. What is a Letter 6419? The IRS Letter 6419 is the official documentation that has the details you need to report your advance Child Tax Credit (CTC) payments. Specifically, it will show you: The total amount of advance CTC payments you received for 2021. This information will go on Schedule 8812, line 14f or 15e as applicable. Number of qualifying children counted in determining the advance CTC In addition to the details above, the letter 6419 will also outline how the IRS calculated your amount and the conditions for repayment. You can also find those details here in our 2021 Child Tax Credit article. Do I Really Need the 6419 Letter to File My Taxes or Can I Just Use My Bank Statement? As such it is not required for you to have the IRS Letter 6419 but we would strongly encourage you to reference IRS Letter 6419 before you file your taxes. Using incorrect amounts on your return can trigger a manual review of your return, which can result in a possible delay in processing your return—and a refund for weeks. Also, using your bank statements may not be the best route. In some cases, amounts may have been adjusted due do a variety of reasons, including if the processing of a 2020 return after an initial advance CTC payment was made. Or, the amounts may have changed from one payment to the next as you made changes in the IRS Child Tax Credit portal. Ready to file but don’t have your IRS Letter 6419? Read on to learn about using the IRS Child Tax Credit portal as an alternative. Who Will Receive the IRS Letter 6419? Anyone who received at least one advance Child Tax Credit payment from July 2021 to December 2021 will receive the IRS Letter 6419. So, even if you stopped payments after receiving your first or second payment, you should still expect to receive a letter. In case of ‘Married’ filers, both spouses will receive their own IRS Letter 6419. You’ll need to have both documents to file an accurate return and claim the second half of your credit. Help, I Can’t Find My IRS Letter 6419. If you’re ready to file, but don’t have your letter, there is an alternative. You can use the IRS Child Tax Credit portal with an ID.me account to verify the details from the letter. Here’s how to check your advance child tax credit payments: Create a new ID.me account (if you don’t have one) by going to: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal Click Manage Advance Payments Click ID.me Create New Account Follow the on-screen instructions to provide information to set up the secure ID.me account. Note that users may be asked to create a live video of themselves (using phone or webcam) and/or upload photo identification. Once you’ve created an ID.me account, you can access the portal at the link directly above. Need Help Reporting Advance Child Tax Credit Payments? Need help filing your IRS letter 6475, NexGen Taxes team of fully vetted accounting and tax professionals can help you report the advance payments you received in 2021 and help you claim the second half of your Child Tax Credit payment on your return. We are here for you 24/7, reach out to us today. Related Articles Tax Season Refund Frequently Asked Questions Help, I’m Missing My IRS Letter 6475 How Do I Report My Child Tax Credit Payments?
News
2021 Tax Law Changes
It is easier to keep up with Kardashians than with ever-changing tax laws!! No wonder it gets challenging to file your taxes. You have been closely following news about all tax-related changes and then you blinked and now you don’t know what you missed! Luckily, the team at NexGen Tax is here to walk you through the must-know tax law changes for 2021, so you can file your taxes with confidence. Top 10 Must-know changes for 2021 taxes Here is a summary of the top tax law changes for 2021 and a brief outline of what has changed along with the reason why it could matter to you. Need help navigating 2021 tax law changes? NexGen Tax team of fully vetted accounting and tax professionals will evaluate your tax situation and can help you determine whether you qualify for a deduction and identify other opportunities to minimize your taxes. Contact our Tax Services team to learn how legislation can impact you or can benefit you. Reach out to us today. 2021 Tax Changes Impacting Individual Tax Filing Stimulus payments and Recovery Rebate Credits You need to report any stimulus payments you received in the spring of 2021 on your tax return. At the time of tax filing, if you realize that you didn’t get every dollar you should have, you can claim a Recovery Rebate Credit to get the money you deserve. Unlike last year, the IRS will send out Letter 6475 in January to everyone who received the Stimulus payments, which will show the amount you received for 2021. To avoid tax refund delays, you may want to use the amounts shown on your Letter 6475 to report your payment and claim any additional money. Find out more about Letter 6475 and how to validate your amount if you don’t have your letter. Child Tax Credit The Child Tax Credit was expanded in 2021 to provide more money for more families. With this 2021 tax law change, up to half of the credit was paid as advance payments, while the other part can be claimed when you file. To provide relief to families during difficult COVID-19 pandemic times, this is the first time child tax credit has been sent in advance to families. As part of your 2021 tax filing, you need to accurately report the advance amount on your 2021 returns to claim the remainder of your child tax credit. The IRS will send Letter 6419 to you in January, which will show the amount of advance payment you received. To avoid tax refund delays, you may want to use the amount shown on your Letter 6419 to report your advance payments and claim the rest of your credit. Find out more about Letter 6419 and how to validate your amount if you don’t have your letter. You can estimate the Child Tax Credit with our child tax credit calculator. Earned Income Tax Credit The Earned Income Tax Credit has always been a valuable tax credit for families whose income falls beyond a certain threshold but understanding who is eligible for it has always been a bit complicated. For the tax year 2021, the IRS has expanded the maximum credit for childless workers from $538 to about $1,500, making this credit even more valuable. Additional changes include lowering the bottom age limit to 19 and allowing those without children to claim the credit if they are 65 or older. These changes are new for 2021 tax filing. Besides this, you can also choose to use your 2019 income to calculate your Earned Income Credit amount if your 2019 earned income is larger than your 2021 earned income and that provides a larger credit (this is called the Lookback Rule). However, keep in mind that if you decide to use your 2019 income for calculation, it might take the IRS more time to process your refund. As you may already know the Earned Income Credit is refundable, meaning after it helps reduce your tax bill, you could potentially get your money back. With the changes above and the potential for a delay related to using the Lookback Rule, it is always advisable to get help from a tax expert to file your taxes. NexGen Taxes team of fully vetted accounting and tax professionals will evaluate your tax situation, and analyze to figure out if choosing to use the Lookback Rule can qualify you for a better refund and help you in minimizing your taxes. Child and Dependent Care Credit The Child and Dependent Care Credit allows families to claim expenses related to the care of a child or someone who is physically or mentally unable to care for themselves. While filling 2021 taxes, families may now claim a refundable credit of up to 50% of qualifying expenses, meaning they could claim a maximum credit of: $4,000 for one qualifying child (based on $8,000 of expenses) $8,000 for two or more qualifying children (based on $16,000 of expenses) As this is a refundable credit, this tax benefit not only will help in lowering the tax you owe, but it also can potentially help you in getting your money back. You can estimate the Child Tax Credit with our child tax credit calculator. Unemployment Income Taxability Historically unemployment income is considered taxable income by the IRS. However, in the tax year 2020 due to the pandemic, the unemployment income up to $10,200 was excluded for tax purposes. For tax filing for 2021, the tax law has changed back to what it was before 2020 which means, any unemployment compensation received will be subject to income taxes. If you received unemployment income in 2021, please make sure to include that in your taxable income. In case, you had taxes withheld from your unemployment benefits as they were paid out, you might have already covered a portion of your tax liability for this income. Education Credit Changes The cost of going to college is high. However, education-related tax benefits can help make college more affordable for students and their families. For the tax filing year, 2021 few changes have been made to these tax benefits to make them more streamlined. While the Tuition and Fees deduction has not been extended for the tax year 2021, eligibility has been extended for more people for the Lifetime Learning Credit. To extend the eligibility, the phase-out range for this credit has been increased to $80,000-$90,000 for single filers and from $160,000 to $180,000 for joint filers. As such this credit still carries a value of up to $2,000 While the eligibility for the Lifetime Learning Credit for higher education has been extended, American Opportunity Credit still gives you a better refund. However, you need to carefully review other factors to consider around choosing between the Lifetime Learning Credit or American Opportunity Credit when filing as a student or filing with a dependent student. Wrongfully applied education credits are one of the leading causes of Tax audits but the IRS. Get help from the NexGen Taxes team of fully vetted accounting and tax professionals to which credit is best suited for your tax situation. Charitable Contributions When the standard deduction was doubled in 2017, far fewer taxpayers were still able to itemize their deductions. This impacted the deductions related to charitable contributions as well. The 2021 tax law change allows for a deduction of up to $600 in cash charitable contributions for those married filing jointly and up to $300 for individuals and married filing separately. This deduction is available to all taxpayers whether you use the standard deduction or itemize your deductions. So make sure you keep the receipts of your charitable contributions handy and use this deduction to lower your tax liability. 2021 & 2022 Tax Changes Premium Tax Credit For Health Insurance If you are one of those who buy health insurance from the federal or state marketplace, the Premium Tax Credit gives health insurance premiums give you relief and makes it more affordable. A larger tax credit was put in place for the tax years 2021 and 2022. For households to pay a smaller share of their income towards premiums, they get a higher premium tax credit. You can use the credit to pay a smaller share of your income towards the premium. Change Impacting Business Tax Filing 100% Business Meal Tax Deduction To incentivize visits to restaurants after the pandemic, an expanded business meal deduction was added for the tax years 2021 and 2022. Unlike previous years the deduction now covers 100% of business meals that are dine-in, catered, or take-out; and a 50% limit is in place for food and beverages not from restaurants. So start gathering receipts on your business meals that meet the criteria for business meal deductions, so you can claim the deduction for the tax years 2021 and 2022. Employer Incentives And Payroll Credits For Small Business The 2021 American Rescue Plan Act put in place several new or expanded credits that impacted employer payroll returns, especially among small businesses. This business stimulus relief was designed to help keep people on the payroll through a long period of economic uncertainty. Payroll credits for continuing to pay employees in adverse situations were extended and a new credit for covering health insurance premiums was added. There are multiple credits employers can use for their payroll tax filings. If you’re a small business owner and you have people on the payroll, or if this is your first year with employees on a payroll, there may be credits and incentives you’re unaware of for payroll quarters during 2021. NexGen Taxes team of fully vetted accounting and tax professionals will evaluate your tax situation, and analyze to figure out what credits your business can qualify for to help you in minimizing your taxes. 2022 Tax Changes A major change coming in for tax year 2022 that impacts gig workers 1099-K Rule Change For Gig Workers Previously, workers who received payments via credit card or a third-party payment network received Form 1099-K if they had more than 200 individual payments and $20,000 in payments. When you report this income, you also report the expenses associated with your business. Starting in 2022, these thresholds have been significantly lowered. Now you only need payment transactions of $600 or more. While the first 1099-Ks under this rule won’t be sent until Jan. 2023, if you expect to meet this new threshold, you’ll have additional tax responsibilities—this year. For starters, you may want to consider making or adjusting quarterly estimated tax payments to help avoid an unexpected tax bill and to avoid underpayment penalties. Need Help Navigating 2021 Tax Laws? With the ever-changing tax laws, you may want to work with a tax pro to have peace of mind. We’re ready to help you in tax season 2021! Get started with filing taxes online with the NexGen Taxes team of fully vetted accounting and tax professionals who will analyze your tax situation to help minimize your taxes. We are here for you 24/7, reach out to us today. Related Articles What Has Changed for the 2022 Tax Season? Financial Tips For The New Year 10 Costly Tax Errors for Individuals and Businesses
Child Tax Credit
Help, I Am Missing IRS Letter 6475
Navigating Tax Changes: Reporting Stimulus Payments and IRS Letter 6475 for the 2021 Tax Season Due to the pandemic and the 2021 American Rescue Plan Act, tax filing has seen many changes. One of them is reporting stimulus payments received in 2021. Reporting of stimulus payments for the tax year 2021 will look a little different for the 2021 tax season. To help taxpayers report the correct amount, the IRS will begin to send out a new type of document in late January, it will be IRS Letter 6475. Just like every year, you are eager to file your taxes and get your refund but you should wait to file your taxes till you receive Letter 6475 from the IRS. Using the figures in this letter will not only help you report your 2021 stimulus payment correctly—but it will also help you avoid delays in getting back your refund. What is IRS Letter 6475? IRS Letter 6475 only applies to the third round of Economic Impact Payments, which were issued in March through December of 2021. The third round of Economic Impact Payments, including "plus-up" payments, were advance payments of the 2021 recovery rebate credit that would be claimed on a 2021 tax return. Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from the Social Security Administration, Railroad Retirement Board, or Veterans Affairs. Plus-up payments were also sent to people who were eligible for a larger amount based on their 2020 tax return. Anyone who received a 2021 stimulus payment will be sent letter 6475. Does Letter 6475 Need to be Filed? Can’t I Use My Bank Statement? As such it is not required for you to have the 6475 letters but we would like to encourage you to wait for your 6475 letters before filing taxes for 2021 vs. using other sources to figure out the amount. If the amount you gathered from alternate sources is different from what is reported by the IRS then it could trigger a manual review of your return, which could delay your return – and refund for weeks. While you may have received a Letter 1444-C after receiving your stimulus payment, that’s not the document the IRS recommends you use to prepare your tax return. What if I can’t find my Letter 6475? If you’re ready to file your taxes, but you have still not received your 6475 letters, there is an alternative. You can create an ID.me account with the IRS to verify the details from the 6475 letters. Here’s how to check your Economic Impact Payment: • Create a new ID.me account (if you don’t have one) by going to: https://www.irs.gov/payments/your-online-account • Click Sign in to your Online Account • Click ID.me to Create a New Account • Follow the on-screen instructions to provide information to set up the secure ID.me account. Note that users may be asked to create a live video of themselves (using a phone or webcam) and/or upload photo identification. For help, visit the ID.me help page. Get Started Now Once you’ve created an ID.me account, you can access your online account at the link directly above. In your online account, you should be able to see all transactions including the Economic Impact Payment. What should you do with IRS Letter 6475? Once you get your letter, you need to use the amount shown on your Recovery Rebate Worksheet to determine if any credit applies. “I’m not required to file taxes. Is there a benefit to reporting this money?” Yes, even if you are not required to file taxes, you should file taxes to be eligible for more money later on. For example: • If you believe you didn’t receive the full stimulus payment amount that you were due, you can file a 2021 federal income tax return to claim the additional money. This is known as a Recovery Rebate Credit. • You may be entitled to a refundable credit, such as a Child Tax Credit or Earned Income Credit. That means, when you file, you’ll get your money back. But the catch is, you have to first file your tax return to claim that money. Get Help Filing Your IRS Letter 6475 and Getting Back the Dollars You Deserve. Need help filing your IRS letter 6475, NexGen Taxes team of fully vetted accounting and tax professionals can help you report the advance payments you received in 2021 and help you claim any other credits or deductions you’re entitled to. We are here for you 24/7, reach out to us today. 10Nov Restricted Stock Units – RSU Vesting & Taxation For Dummies Read More 07Nov IRS Has Announced 2024 Retirement Account Contribution Limits: Start Your Retirement Planning Today! Read More 26Aug Help, My Nonprofit’s Tax Exemption Status Has Been Revoked! Read More
Tax Tips
2021 Tax Law Changes
Decoding 2021: A Concise Guide to Key Tax Law Changes and How They Impact You It is easier to keep up with Kardashians than with ever-changing tax laws!! No wonder it gets challenging to file your taxes. You have been closely following news for all tax-related changes and then you blinked and now you don’t know what you missed! Luckily, the team at NexGen Taxes is here to walk you through the must-know tax law changes for 2021, so you can file your taxes with confidence. Top 10 Must-Know Changes for 2021 Taxes Here is a summary of the top tax law changes for 2021 and a brief outline of what has changed along with the reason why it could matter for you. Need help navigating 2021 tax law changes? NexGen Taxes team of fully vetted accounting and tax professionals will evaluate your tax situation and can help you determine whether you qualify for a deduction and identify other opportunities to minimize your taxes. Contact our Tax Services team to learn how legislation can impact you or can benefit you. Reach out to us today. 2021 Tax Changes- Impacting Individual Tax Filing 1. Stimulus payments and Recovery Rebate Credits You need to report any stimulus payments you received in the spring of 2021 on your tax return. At the time of tax filing, if you realize that you didn’t get every dollar you should have, you can claim a Recovery Rebate Credit to get the money you deserve. Unlike last year, the IRS will send out Letter 6475 in January to everyone who received the Stimulus payments, which will show the amount you received for 2021. To avoid tax refund delays, you may want to use the amounts shown on your Letter 6475 to report your payment and claim any additional money. Find out more about Letter 6475 and how to validate your amount if you don’t have your letter. 2. Child Tax Credit The Child Tax Credit was expanded in 2021 to provide more money for more families. With this 2021 tax law change, up to half of the credit was paid as advance payments, while the other part can be claimed when you file. To provide relief to families during difficult COVID-19 pandemic times, this is the first time child tax credit has been sent in advance to families. As part of your 2021 tax filing, you need to accurately report the advance amount on your 2021 returns to claim the remainder of your child tax credit. The IRS will send Letter 6419 to you in January, which will show the amount of advance payment you received. To avoid tax refund delays, you may want to use the amount shown on your Letter 6419 to report your advance payments and claim the rest of your credit. Find out more about Letter 6419 and how to validate your amount if you don’t have your letter. 3. Earned Income Tax Credit The Earned Income Tax Credit has always been a valuable tax credit for families whose income falls beyond a certain threshold but understanding who is eligible for it has always been a bit complicated. For the tax year 2021, the IRS has expanded the maximum credit for childless workers from $538 to about $1,500, making this credit even more valuable. Additional changes include lowering the bottom age limit to 19 and allowing for those without children to claim the credit if they are 65 or older. These changes are new for 2021 tax filing. Besides this, you can also choose to use your 2019 income to calculate your Earned Income Credit amount if your 2019 earned income is larger than your 2021 earned income and that provides a larger credit (this is called the Lookback Rule). However, keep in mind that if you decide to use your 2019 income for calculation, it might take the IRS more time to process your refund. As you may already know the Earned Income Credit is refundable, meaning after it helps reduce your tax bill, you could potentially get money back. With the changes above and the potential for a delay related to using the Lookback Rule, it is always advisable to get help from a tax expert to file your taxes. NexGen Taxes team of fully vetted accounting and tax professionals will evaluate your tax situation, and analyze to figure out if choosing to use the Lookback Rule can qualify you for a better refund and help you in minimizing your taxes. 4. Child and Dependent Care Credit The Child and Dependent Care Credit allows families to claim expenses related to the care of a child or someone who is physically or mentally unable to care for themselves. While filling 2021 taxes, families may now claim a refundable credit of up to 50% of qualifying expenses, meaning they could claim a maximum credit of: • $4,000 for one qualifying child (based on $8,000 of expenses) • $8,000 for two or more qualifying children (based on $16,000 of expenses) As this is a refundable credit, this tax benefit not only will help in lowering the tax you owe, but it also can potentially help you in getting your money back. 5. Unemployment Income Taxability Historically unemployment income is considered taxable income by the IRS. However, in the tax year 2020 due to the pandemic, the unemployment income up to $10,200 was excluded for tax purposes. For tax filing for 2021, the tax law has changed back to what it was before 2020 which means, any unemployment compensation received will be subject to income taxes. If you received unemployment income in 2021, please make sure to include that in your taxable income. In case, you had taxes withheld from your unemployment benefits as they were paid out, you might have already covered a portion of your tax liability for this income. 6. Education Credit Changes The cost of going to college is high. However, education-related tax benefits can help make college more affordable for students and their families. For the tax filing year, 2021 few changes have been made to these tax benefits to make them more streamlined. While the Tuition and Fees deduction has not been extended for the tax year 2021, eligibility has been extended for more people for the Lifetime Learning Credit. To extend the eligibility, the phase-out range for this credit has been increased to $80,000-$90,000 for single filers and from $160,000 to $180,000 for joint filers. As such this credit still carries a value of up to $2,000 While the eligibility for the Lifetime Learning Credit for higher education has been extended, American Opportunity Credit still gives you a better refund. However, you need to carefully review other factors to consider around choosing between the Lifetime Learning Credit or American Opportunity Credit when filing as a student or filing with a dependent student. Wrongfully applied education credits are one of the leading causes of Tax audits but the IRS. Get help from the NexGen Taxes team of fully vetted accounting and tax professionals to which credit is best suited for your tax situation. 7. Charitable Contributions When the standard deduction was doubled in 2017, far fewer taxpayers were still able to itemize their deductions. This impacted the deductions related to charitable contributions as well. The 2021 tax law change allows for a deduction of up to $600 in cash charitable contributions for those married filing jointly and up to $300 for individuals and married filing separately. This deduction is available to all taxpayers whether you use the standard deduction or itemize your deductions. So make sure you keep the receipts of your charitable contributions handy and use this deduction to lower your tax liability. 2021 & 2022 Tax Changes 8. Premium Tax Credit For Health Insurance If you are one of those who buy health insurance from the federal or state marketplace, the Premium Tax Credit gives health insurance premiums give you relief and makes it more affordable. A larger tax credit was put in place for the tax years 2021 and 2022. For households to pay a smaller share of their income towards premiums, they get a higher premium tax credit. You can use the credit to pay a smaller share of your income towards the premium. Change Impacting Business Tax Filing 9. 100% Business Meal Tax Deduction To incentivize visits to restaurants after the pandemic, an expanded business meal deduction was added for the tax years 2021 and 2022. Unlike previous years the deduction now covers 100% of business meals that are dine-in, catered, or take-out; and a 50% limit is in place for food and beverages not from restaurants. So start gathering receipts on your business meals that meet the criteria for business meal deductions, so you can claim the deduction for the tax years 2021 and 2022. 10. Employer Incentives And Payroll Credits For Small Business The 2021 American Rescue Plan Act put in place several new or expanded credits that impacted employer payroll returns, especially among small businesses. This business stimulus relief was designed to help keep people on the payroll through a long period of economic uncertainty. Payroll credits for continuing to pay employees in adverse situations were extended and a new credit for covering health insurance premiums was added. There are multiple credits employers can use for their payroll tax filings. If you’re a small business owner and you have people on the payroll, or if this is your first year with employees on the payroll, there may be credits and incentives you’re unaware of for payroll quarters during 2021. NexGen Taxes team of fully vetted accounting and tax professionals will evaluate your tax situation, and analyze to figure out what credits your business can qualify for to help you in minimizing your taxes. 2022 Tax Changes A major change coming in for the tax year 2022 that impacts gig workers: 1099-K Rule Change For Gig Workers Previously, workers who received payments via credit card or a third-party payment network received Form 1099-K if they had more than 200 individual payments and $20,000 in payments. When you report this income, you also report the expenses associated with your business. Starting in 2022, these thresholds have been significantly lowered. Now you only need payment transactions of $600 or more. While the first 1099-Ks under this rule won’t be sent until Jan. 2023, if you expect to meet this new threshold, you’ll have additional tax responsibilities—this year. For starters, you may want to consider making or adjusting quarterly estimated tax payments to help avoid an unexpected tax bill and to avoid underpayment penalties. Need Help Navigating 2021 Tax Laws? With the ever-changing tax laws, you may want to work with a tax pro to have peace of mind. We’re ready to help you in tax season 2021! Get started with filing taxes online with the NexGen Taxes team of fully vetted accounting and tax professionals who will analyze your tax situation to help minimize your taxes. We are here for you 24/7, reach out to us today.
Child Tax Credit
How Do I Report My Child Tax Credit Payments?
IRS Letter 6419: How Do I Report My Child Tax Credit Payments? Now that the tax season is about to start, you must be collecting your tax documents to file your taxes. While doing this, keep an eye out for IRS Letter 6419. The IRS is planning to send this important notice in late January to those who received Advance Child Tax Credit Payments in 2021. You may ask, why is this letter so important? The details in the document will not only help you report your advance payments correctly—but it will also help you claim the other half of your Child Tax Credit that is still pending. Additionally, by reporting the amount reported in IRS Letter 6419, you can avoid delays in processing and sending your refund that might arise due to a mismatch in the amount. So let’s dig deeper into what is IRS Letter 6419 and what you can do in case you didn’t receive this letter or lost it. What is a Letter 6419? The IRS Letter 6419 is the official documentation that has the details you need to report your advance Child Tax Credit (CTC) payments. Specifically, it will show you: The total amount of advance CTC payments you received for 2021. This information will go on Schedule 8812, line 14f or 15e as applicable. Number of qualifying children counted in determining the advanced CTC. In addition to the details above, letter 6419 will also outline how the IRS calculated your amount and the conditions for repayment. You can also find those details here in our 2021 Child Tax Credit article. Do I Need the Letter 6419 to File My Taxes or Can I Just Use My Bank Statement? As such it is not required for you to have the IRS Letter 6419 but we would strongly encourage you to reference IRS Letter 6419 before you file your taxes. Using incorrect amounts on your return can trigger a manual review of your return, which can result in a possible delay in processing your return—and a refund for weeks. Also, using your bank statements may not be the best route. In some cases, amounts may have been adjusted due to a variety of reasons, including the processing of a 2020 return after an initial advance CTC payment was made. Or, the amounts may have changed from one payment to the next as you made changes in the IRS Child Tax Credit portal. Ready to File But Don’t Have Your IRS Letter 6419? Read on to learn about using the IRS Child Tax Credit portal as an alternative. Who Will Receive IRS Letter 6419? Anyone who received at least one advance Child Tax Credit payment from July 2021 to December 2021 will receive the IRS Letter 6419. So, even if you stopped payments after receiving your first or second payment, you should still expect to receive a letter. In the case of ‘Married’ filers, both spouses will receive their own IRS Letter 6419. You’ll need to have both documents to file an accurate return and claim the second half of your credit. Help, I can’t find my IRS Letter 6419 If you’re ready to file, but don’t have your letter, there is an alternative. You can use the IRS Child Tax Credit portal with an ID.me account to verify the details from the letter. Here’s how to check your advance child tax credit payments: Create a new ID.me account (if you don’t have one) by going to: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal Click Manage Advance Payments Click ID.me to Create a New Account Follow the on-screen instructions to provide information to set up the secure ID.me account. Note that users may be asked to create a live video of themselves (using a phone or webcam) and/or upload photo identification. For help, visit the ID.me help page. Once you’ve created an ID.me account, you can access the portal at the link directly above. Need Help Reporting Advance Child Tax Credit Payments? Need help filing your IRS letter 6475, NexGen Taxes team of fully vetted accounting and tax professionals can help you report the advance payments you received in 2021 and help you claim the second half of your Child Tax Credit payment on your return. We are here for you 24/7, reach out to us today.
News
Financial Tips For The New Year
Navigating the New Year: Strategic Financial Tips Amidst Omicron Challenges Financial Tips For The New Year With Omicron raging, most of us are hunkering down again during the holidays. What can be a better use of time than to do an analysis of your financial well-being and take steps to ensure that your financial future is secure with health, wealth, and happiness? So, to start the New Year off with strategic financial planning, here are our top suggestions to help you start the new year on the right note. There Is Still Time To Manage Your 2021 Finances Even though the new financial year starts on Jan 1st, you still have time to manage your finances for the 2021 financial year and take steps that will have a meaningful impact on your 2021 tax filing. One way to help save money while decreasing your tax liability is by making an IRA contribution in 2022 but earmarking it for the year 2021. When you make this contribution to your IRA for the financial year 2021, make sure you reach out to your IRA Service provider and ask them to assign it to the 2021 financial year. Just like IRA, most Flexible Spending Account (FSA) accounts allow you to still use the funds in these accounts till March 15 and count it as an expense of the previous financial year. If you made contributions to your FSA account in 2021, make sure you reach out to your FSA service provider and ask them for the deadline to use the funds remaining in the account. Invest Fully In Your Health Savings Account Health Savings Account (HSA) account is a tax-advantaged account that you can use for qualified medical expenses. You are allowed to put aside $7,300 a year for your family’s HSA, assuming your family is covered by a high deductible Health Insurance plan, so leverage these pre-tax savings by maxing out this savings account. The biggest benefit of having an HSA is that it is controlled solely by you and allows for contributions to roll over whereas FSA (Flexible Spending Account) is less flexible and is controlled by your employer. Be Fully Vested In Your Employer-Sponsored Retirement Plan The number one tip for securing your financial future is to max out your 401(k). If you are going through some financial hardship due to which you aren’t not putting any money aside for 401(k), then start with the minimum your employer will match. This will automatically double your retirement savings with an employer match. If you are already investing the minimum to take benefit of employer match, then at least increase your contribution by 1%. This 1% increase in contribution will not make much of a difference in your day-to-day living. Once you start getting comfortable with this 1% increase then again increase your contribution by 1% and keep following these baby steps till you reach the point where you can no more cuts in your take-home pay. These small incremental financial changes will significantly benefit your long-term retirement planning and will take you one step closer to your retirement goals. While you are adjusting your retirement contributions, keep in mind that the IRS has increased the limit for 2022. So, in 2022, you may contribute up to $20,500 to your 401(k), which is $1,000 more than what was allowed in 2021 if you are under 50. If you are about to hit the magical number of 50 in the year 2022 or are older than 50, you can add an extra $6,500 per year in "catch-up" contributions, bringing your total 401(k) contributions for 2022 to $27,000. Review Your Asset Allocations In Your Investments As we pass through different phases of life, our savings needs and risk appetite change. It is always advisable to review our portfolio at least twice a year, once at the beginning of the year and once in the middle of the year to ensure that the portfolio allocation is still in line with how much risk you want to take. If you experienced unexpected financial expenditures, adjust your investment distributions to align with your needs and future goals. Consider Upcoming Expenses And Plan Accordingly Planning is the best way to proceed when it comes to smart financial planning. Take a look ahead to determine what major expenses are coming up in 2022 and create a plan on how you will finance them. Examples of major expenses are house repairs or upgrades, life events such as marriage, pregnancy, or planned surgery, children’s activities, vacations, and donations to charity. Once you have your major expenses identified, start allocating funds to them in advance, so you know how to invest any remaining funds of your possible savings. Also, remember to take a look at your emergency funds account to make sure you have ample funds saved to cover your day-to-day expenses. Most financial experts recommend that you have somewhere between three months and six months of basic living expenses in your emergency fund. The three-month guideline is generally recommended for those who are in salaried positions and have more secure employment. With Covid-19 and an uncertain job market, it is always advisable to have your emergency fund well-funded. Examine Your Long-Term Financial Goals Now that you have completed financial planning for the current year, start reviewing your 3 years, 5 years, 10 years long-term personal, financial, and professional goals. Start this exercise by jotting down your 10-year goals as the benchmark. Think about what you seek to accomplish and where you want to be in your life in ten years. Now start working back from 10-year goals and what progress you need to make in three years and five years to be on target for your ten-year objectives. Think about factors at work and home. Stop Procrastinating – First Things First No one wants to think about death in the new year or for that matter ever but you cannot evade death forever, right? Have you taken steps to secure the future of your loved ones if something unfortunate happens to you? In this new year take care of the unpleasant tasks upfront. Many people put off the things they don't like or don't want to think about. Check your life insurance plans and other areas of insurance to make sure you are covered to mitigate risks. By tackling these unpleasant items early in the year, you free up the remainder of your time to focus on what makes you happy. While you are working on covering your risks, make sure you have a living will. Once you are done with these seven steps, you should be off to a stellar start in 2022 and your financial future. Get started with a tax expert today!
Track My Refund
Why Did I Get a Reduced Refund?
Understanding Potential Refund Reductions: The Role of the Bureau of the Fiscal Service (BFS) and Tax Offsets There are multiple reasons why you may get less refund than your tax preparer has prepared for you. Your final refund issued may depend on any changes BFS has made to your taxes. The Department of Treasury’s Bureau of the Fiscal Service(BFS) issues IRS tax refunds and Congress authorizes BFS to conduct the Treasury Offset Program (TOP). Through the TOP program, BFS may reduce your refund (overpayment) and offset it to pay: Past-due child support; Federal agency non-tax debts; State income tax obligations; or Certain unemployment compensation debts owed to a state (generally, these are debts for (1) compensation paid due to fraud, or (2) contributions owing to a state fund that weren’t paid). You can contact the agency with which you have a debt to determine if your debt was submitted for a tax refund offset. You may call BFS’s TOP call center at the number below for an agency address and phone number. If your debt meets submission criteria for offset, BFS will reduce your refund as needed to pay off the debt you owe to the agency. Any portion of your remaining refund after offset is issued in a check or directly deposited as originally requested on the return. BFS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. BFS will notify the IRS of the amount taken from your refund once your refund date has passed. You should contact the agency shown on the notice if you believe you don’t owe the debt or if you’re disputing the amount taken from your refund. Contact the IRS only if your original refund amount shown on the BFS offset notice differs from the refund amount shown on your tax return. If you don’t receive a notice, contact the BFS’s TOP call center at 800-304-3107 (or TTY/TDD 866-297-0517), Monday through Friday 7:30 a.m. to 5 p.m. CST. NexGen Tax team is always here to help! Click here to contact one of our tax experts.
Track My Refund
Tax Season Refund Frequently Asked Questions
How Quickly Will You Get Your Income Tax Refund? We issue most refunds in less than 21 calendar days. It is taking the IRS more than 21 days to issue refunds for some 2020 income tax returns that require review including incorrect Recovery Rebate Credit amounts, or that used 2019 income to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). What is Delaying Your Income Tax Refund Beyond 21 Days? Many different factors can affect the timing of your refund after we receive your return. Even though the IRS issues most income tax refunds in less than 21 days, your refund may take longer. Also, remember to take into consideration the time it takes for your financial institution to post the refund to your account or for you to receive it by mail. What Are Other Factors That Would Delay Your Personal or Business Income Tax Refund? Some tax returns take longer to process than others for many reasons, including when a return: Includes errors, such as incorrect Recovery Rebate Credit Is incomplete It might have picked up in an Audit. Needs further review in general Is affected by identity theft or fraud Includes a claim filed for an Earned Income Tax Credit or an Additional Child Tax Credit. See the Q&A below. Includes a Form 8379, Injured Spouse Allocation PDF, which could take up to 14 weeks to process For the latest information on IRS refund processing during the COVID-19 pandemic, see the IRS Operations Status page. IRS will contact you by mail when (or if) they need more information to process your return. If the IRS is still processing your tax return or correcting an error, neither Where’s My Refund? nor their phone representatives will be able to provide you with your specific tax refund date. Please check Where’s My Refund? for updated information on your refund. If I Claimed the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) on My Tax Return. When Can I Expect My Refund? According to the Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue EITC and ACTC refunds before mid-February. The IRS expects most EITC/ACTC-related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March if they chose direct deposit and there are no other issues with their tax return. Check Where’s My Refund? for your personalized refund date. Where’s My Refund? On IRS.gov and the IRS2Go mobile app remains the best way to check the status of a refund. WMR on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early EITC/ACTC refund filers by February 22. So EITC/ACTC filers will not see an update to their refund status for several days after Feb. 15. Will calling the IRS or NexGen Taxes Pro help me get my personal or business income tax refund any faster? No. unless Where’s My Refund? directs you to call us, IRS representatives or NexGen Taxes Pro will not be able to provide any additional information. If Where’s My Refund? says that we’re still processing your return, the IRS or our representatives won’t be able to give you a specific refund date. What Information Do I Need For My Refund Status? Usually information on the most recent income tax year refund we have on file for you. Can I use Where’s My Refund? to check the status of a refund on a prior year's return? Where’s My Refund? will display the status of your most recently filed tax return within the past two tax years. When Can I Start Checking Where’s My Refund? for My Refund’s Status? Twenty-four hours after the IRS has received your electronically filed tax return or at least 4 weeks after you’ve mailed a paper tax return. Will Ordering a Transcript Help Me Find Out When I’ll Get My Refund? A tax transcript will not help you find out when you’ll get your income tax refund. The information transcripts have about your account does not necessarily reflect the amount or timing of your refund. They are best used to validate past income and tax filing status for mortgage, student, and small business loan applications, and to help with tax preparation. I’m a nonresident alien. I don’t have to pay U.S. federal income tax. How do I claim a refund for federal taxes withheld on income from a U.S. source? When can I expect to receive my refund? To claim a refund of federal taxes withheld on income from a U.S. source, a nonresident alien must report the appropriate income and withholding amounts on Form 1040-NR, U.S. Nonresident Alien Income Tax Return PDF. You must include the documents substantiating any income and withholding amounts when you file your Form 1040NR. IRS will need more than 21 days to process a 1040NR return. Please allow up to 6 months from the date you filed the 1040NR for your refund. How Long Will It Take for My Status to Change From Return Received to Refund Approved? Sometimes a few days, but it could take longer. Does Where’s My Refund? always display my refund status showing the different stages of return received, refund approved, and refund sent? No, not always. Sometimes, when we are still reviewing your return, instead, it will display instructions or an explanation of what we are doing. Once per day, usually at night. There’s no need to check more often. Does the Site Give Me My Amended Return Status? No, it won’t give you information about amended tax returns. Where’s My Amended Return? can give you the status of your amended return. (IRS’s phone and walk-in representatives can only research the status of your amended return 16 weeks or more after you’ve mailed it.) I requested a direct deposit refund. Why are you mailing it to me as a paper check? There are three possible reasons. They are as follows: We can only deposit refunds electronically into accounts in your name, your spouse’s name, or in a joint account. A financial institution may reject a direct deposit. IRS can’t deposit more than three electronic refunds into a single financial account. Why is My Refund Different Than the Amount on the Tax Return I Filed? All or part of your refund may have been used (offset) to pay off past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or other federal nontax debts, such as student loans. To find out if you may have an offset or if you have questions about an offset, contact the agency to which you owe the debt. We also may have changed your refund amount because we made changes to your tax return. This may include corrections to any incorrect Recovery Rebate Credit amount. You’ll get a notice explaining the changes. Where’s My Refund? will reflect the reasons for the refund offset when it relates to a change in your tax return. Tax Topic 203, Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts have more information about refund offsets. What Should I Do When the Refund I Receive is Not From My Tax Account? Please don’t cash the refund check or spend the direct deposit refund. If possible, send the refund back to the IRS. Tax Topic 161, Returning an Erroneous Refund – Paper Check or Direct Deposit has more information on what needs to be done in that case.
Track My Refund
Where is My Refund?
When Are You Going to Receive It? When will you receive your refund? The answer depends on how you filed your return. The IRS should issue your refund check within six to eight weeks of filing a paper return. If you choose to receive your refund through direct deposit, you should receive it within a week. If you used an e-file, your refund should be issued between two and three weeks. You can check the status of your refund by clicking on the links below. We Can Help You Locate Your Refund! The IRS sends most refunds within three weeks of when you file your taxes. Want to know the status of your refund right now? Let’s help you find it out. Federal Refund Status You can check the status of your Federal Refunds at IRS’s refund tracking site https://www.irs.gov/refunds What Information Will You Need? Social security number or ITIN Your filing status Your exact refund amount State Refund Status Select state and press submit to open the corresponding state website Get State Links here How Soon Can I See My Returns? You can typically see your returns 24 hours after e-filing or 4 weeks after you mailed your return. IRS usually makes the tax updates daily, overnight. What Information Is Not Available? Amended Tax Returns Refund information for Form 1040X, Amended U.S. Individual Income Tax Return is not available on IRS’s Where’s My Refund website.IRS phone and walk-in representatives can only research the status of your amended return 16 weeks or more after you’ve mailed it, Business Tax Return Information For refund information on federal tax returns other than Form 1040, U.S. Individual Income Tax Return, visit the app Prior Year Refund Information Where’s My Refund? will display the status of your most recently filed tax return within the past two tax years. If you need refund amount information for other years, you need to use Get Transcript. How Long Will My Refund Information Be Available? For U.S. Individual Income Tax Returns filed before July 1: Around the second or third week in December. For U.S. Individual Income Tax Returns filed on or after July 1: Throughout the following year until you file a tax return for a more current tax year. If your refund check was returned to us as undeliverable by the U.S. Post Office, your refund information will remain available throughout the following year until you file a tax return for a more current tax year. What If My Refund Was Lost, Stolen, Or Destroyed? Generally, you can file an online claim for a replacement check if it’s been more than 28 days from the date we mailed your refund. Where’s My Refund? will give you detailed information about filing a claim if this situation applies to you. For more information, check our Tax Season Refund Frequently Asked Questions. When Are You Going to Receive It? When will you receive your refund? The answer depends on how you filed your return. The IRS should issue your refund check within six to eight weeks of filing a paper return. If you choose to receive your refund through direct deposit, you should receive it within a week. If you used an e-file, your refund should be issued between two and three weeks. You can check the status of your refund by clicking on the links below. We Can Help You Locate Your Refund! The IRS sends most refunds within three weeks of when you file your taxes. Want to know the status of your refund right now? Let’s help you find it out. Federal Refund Status You can check the status of your Federal Refunds at IRS’s refund tracking site https://www.irs.gov/refunds What Information Will You Need? Social security number or ITIN Your filing status Your exact refund amount State Refund Status Select state and press submit to open the corresponding state website Get State Links here How Soon Can I See My Returns? You can typically see your returns 24 hours after e-filing or 4 weeks after you mailed your return. IRS usually makes the tax updates daily, overnight. What Information Is Not Available? Amended Tax Returns Refund information for Form 1040X, Amended U.S. Individual Income Tax Return is not available on IRS’s Where’s My Refund website.IRS phone and walk-in representatives can only research the status of your amended return 16 weeks or more after you’ve mailed it, Business Tax Return Information For refund information on federal tax returns other than Form 1040, U.S. Individual Income Tax Return, visit the app Prior Year Refund Information Where’s My Refund? will display the status of your most recently filed tax return within the past two tax years. If you need refund amount information for other years, you need to use Get Transcript. How Long Will My Refund Information Be Available? For U.S. Individual Income Tax Returns filed before July 1: Around the second or third week in December. For U.S. Individual Income Tax Returns filed on or after July 1: Throughout the following year until you file a tax return for a more current tax year. If your refund check was returned to us as undeliverable by the U.S. Post Office, your refund information will remain available throughout the following year until you file a tax return for a more current tax year. What If My Refund Was Lost, Stolen, Or Destroyed? Generally, you can file an online claim for a replacement check if it’s been more than 28 days from the date we mailed your refund. Where’s My Refund? will give you detailed information about filing a claim if this situation applies to you. For more information, check our Tax Season Refund Frequently Asked Questions.
