WASHINGTON — The Internal Revenue Service today announced tax relief for individuals and businesses affected by Idalia, anywhere in South Carolina. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments. This is similar to relief already being provided in most of Florida.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). All 46 counties in South Carolina qualify. Individuals and households that reside or have a business in these counties qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Filing and Payment Relief
The tax relief postpones various tax filing and payment deadlines that occurred from Aug. 29, 2023, through Feb. 15, 2024 (postponement period). As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 15, 2024, deadline will now apply to:

• Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief.
• Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
• Calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, 2023.
• Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
• Calendar-year tax-exempt organizations whose extensions run out on Nov. 15, 2023.

In addition, penalties for the failure to make payroll and excise tax deposits due on or after Aug. 29, 2023, and before Sept. 13, 2023, will be abated as long as the deposits are made by Sept. 13, 2023.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Additional Tax Relief
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. Be sure to write the FEMA declaration number – DR-3597-EM − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by this storm and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Kilolo Kijakazi, Acting Commissioner of Social Security, announced 12 new Compassionate Allowances conditions: 1p36 Deletion Syndrome, Anaplastic Ependymoma, Calciphylaxis, Cholangiocarcinoma, FOXG1 Syndrome, Leber Congenital Amaurosis, Metastatic Endometrial Adenocarcinoma, Paraneoplastic Cerebellar Degeneration, Pineoblastoma – Childhood, Primary Omental Cancer, Sarcomatoid Carcinoma of the Lung – Stages II-IV, and Trisomy 9.

The Compassionate Allowances program quickly identifies claims where the applicant’s medical condition or disease clearly meets Social Security’s statutory standard for disability. Due to the severe nature of many of these conditions, these claims are often allowed based on medical confirmation of the diagnosis alone. To date, nearly 900,000 people with severe disabilities have been approved through this accelerated, policy-compliant disability process, which now includes a total of 278 conditions.

“The Social Security Administration remains committed to reducing barriers and ensuring people who are eligible for benefits receive them,” said Acting Commissioner Kijakazi. “Our Compassionate Allowances program allows us to reinforce that commitment by expediting the disability application process for people with the most severe disabilities.”

When a person applies for disability benefits, Social Security must obtain medical records in order to make an accurate determination. The agency incorporates leading technology to identify potential Compassionate Allowances cases and make quick decisions. Social Security’s Health IT brings the speed and efficiency of electronic medical records to the disability determination process. With electronic records transmission, Social Security can quickly obtain a claimant’s medical information, review it, and make a faster determination.

For more information about the program, including a list of all Compassionate Allowances conditions, please visit www.ssa.gov/compassionateallowances.

To learn more about Social Security’s Health IT program, please visit www.ssa.gov/hit.

People may apply online for disability benefits by visiting www.ssa.gov.

By law, all taxpayers have the right to finality of tax matters. For example, taxpayers have the right to know when the IRS has finished an audit. This is one of ten basic rights — known collectively as the Taxpayer Bill of Rights.

Here’s what taxpayers should know about their right to finality:

• Taxpayers have the right to know:
  • The maximum amount of time they have to challenge the IRS’s position.
  • The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt.
  • When the IRS has finished an audit.
• The IRS generally has three years from the date taxpayers file their returns to assess any additional tax for that tax year.
• There are some limited exceptions to the three-year rule, including when taxpayers fail to file returns for specific years or file false or fraudulent returns. In these cases, the IRS can assess tax for that tax year at any time.
• The IRS generally has 10 years from the assessment date to collect unpaid taxes. The IRS can’t extend this 10-year period unless the taxpayer agrees to extend the period as part of an installment agreement to pay tax debt or a court judgment allows the IRS to collect unpaid tax after the 10-year period.
• There are circumstances when the 10-year collection period may be suspended. This can happen when the IRS can’t collect unpaid tax due to the taxpayer’s bankruptcy or there’s an ongoing collection due process proceeding involving the taxpayer.
• A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.
• Generally, a taxpayer can be subject to only one audit per tax year. The IRS may reopen an audit for a previous tax year if the agency finds it necessary. This could happen, for example, if a taxpayer files a fraudulent return.

WASHINGTON — The Internal Revenue Service today reminded thousands of tax-exempt organizations of their May 15, 2023, filing deadline.

The annual filing due date for certain returns filed by tax-exempt organizations is normally by the 15th day of the 5th month after the end of an organization’s accounting period. Those operating on a calendar-year (CY) basis must file a return by May 15, 2023. Returns due include:

• Form 990-series annual information returns (Forms 990, 990-EZ, 990-PF)
• Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ
• Form 990-T, Exempt Organization Business Income Tax Return (other than certain trusts)
• Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code

Mandatory electronic filing
Electronic filing provides fast acknowledgement that the IRS has received the return and reduces processing time, making compliance with reporting requirements easier. Note:

• Organizations filing a Form 990, 990-EZ, 990-PF or 990-T for CY2022 must file their returns electronically.
• Private foundations filing a Form 4720 for CY 2022 must file the form electronically.
• Charities and other tax-exempt organizations can file these forms electronically through an IRS Authorized e-File Provider.
• Organizations eligible to submit Form 990-N must do so electronically and can submit it through Form 990-N (e-Postcard) on IRS.gov.

Common errors
The IRS also reminds organizations to submit complete and accurate returns. If an organization’s return is incomplete or the wrong return for the organization, the return will be rejected. Common errors include missing or incomplete schedules.

Extension of time to file
Tax-exempt organizations that need additional time to file beyond the May 15 deadline can request a six-month automatic extension by filing Form 8868, Application for Extension of Time to File an Exempt Organization Return. In situations where tax is due, extending the time for filing a return does not extend the time for paying tax. The IRS encourages organizations requesting an extension to electronically file Form 8868.

Pre-recorded workshops
To help exempt organizations comply with their filing requirements, IRS provides a series of pre-recorded online workshops. These workshops are designed to assist officers, board members and volunteers with the steps they need to take to maintain their tax-exempt status, including filing annual information returns.

WASHINGTON — The Internal Revenue Service today warned taxpayers to watch out for scammers who try to sell or offer help setting up an Online Account on IRS.gov that puts their tax and financial information at risk of identity theft. 

The IRS Online Account provides valuable tax information for people. But this information in the wrong hands can provide important information to help an identity thief try to submit a fraudulent tax return in the person’s name in hopes of getting a big refund. People should watch out for these scam artists offering to help set up these accounts because these are identity theft attempts to run off with the taxpayer’s personal or financial information. 

These third-party online account scams are part of day three of the IRS annual Dirty Dozencampaign. 

“Scammers are coming up with new ways all the time to try to steal information from taxpayers,” said IRS Commissioner Danny Werfel. “An Online Account at IRS.gov can help taxpayers view important details about their tax situation. But scammers are trying to convince people they need help setting up an account. In reality, no help is needed. This is just a scam to obtain valuable and sensitive tax information that scammers will use to try stealing a refund. People should be wary and avoid sharing sensitive personal data over the phone, email or social media to avoid getting caught up in these scams.”

The Dirty Dozen is an annual IRS list of 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money, personal data and more. Some items on the list are new, and some make a return visit. While the list is not a legal document or a formal listing of agency enforcement priorities, it is intended to alert taxpayers, businesses and tax preparers about scams at large. 

As a member of the Security Summit, the IRS, with state tax agencies and the nation’s tax industry, have taken numerous steps over the last eight years to warn people to watch out for common scams and schemes each tax season, including tax-related identity theft. Along with the Security Summit initiative, the Dirty Dozen aims to protect taxpayers, businesses and the tax system from identity thieves and various hoaxes designed to steal money and information, including this new Online Account scheme. 

IRS Online Account: Steer clear of help from third-party scammers

In this scam targeting individuals, swindlers pose as a “helpful” third party and offer to help create a taxpayer’s IRS Online Account at IRS.gov. People should remember they can set these accounts up themselves. But third parties making these offers will try to steal a taxpayer’s personal information this way. Taxpayers can and should establish their own Online Account through IRS.gov. 

These scammers often ask for the taxpayer’s personal information including address, Social Security number or Individual Taxpayer Identification number (ITIN) and photo identification. The criminal then sells this valuable information to other criminals. They can also use the sensitive information to file fraudulent tax returns, obtain loans and open credit accounts. 

The IRS urges people to watch out for these “helpful” criminals. The only place individuals should go to create an IRS Online Account is IRS.gov. People should not use third-party assistance, other than the approved IRS authentication process through IRS.gov, to create their own IRS online account. 

Help stop fraud and scams

As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns. 

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center

Stop MS5040

24000 Avila Road Laguna Niguel, California 92677-3405

Fax: 877-477-9135

Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary reward. For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.

WASHINGTON — The Internal Revenue Service today issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.

The IRS and tax professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.

“While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits,” said Acting IRS Commissioner Doug O’Donnell. “Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they’re using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this.”

The IRS has been warning about this scheme since last fall, but there continue to be attempts to claim the ERC during the 2023 tax filing season. Tax professionals note they continue to be pressured by people wanting to claim credits improperly. The IRS Office of Professional Responsibility is working on additional guidance for the tax professional community that will be available in the near future.

People and businesses can avoid this scheme, and by not filing improper claims in the first place. If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.

Businesses should be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.

What is the ERC?
The ERC is a refundable tax credit designed for businesses who continued paying employees while shut down due to the COVID-19 pandemic or who had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021. Eligible taxpayers can claim the ERC on an original or amended employment tax return for a period within those dates.

To be eligible for the ERC, employers must have:

• sustained a full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel or group meetings due to COVID-19 during 2020 or the first three quarters of 2021,
• experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
• qualified as a recovery startup business for the third or fourth quarters of 2021.

As a reminder, only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021. Additionally, for any quarter, eligible employers cannot claim the ERC on wages that were reported as payroll costs in obtaining PPP loan forgiveness or that were used to claim certain other tax credits.

To report tax-related illegal activities relating to ERC claims, submit by fax or mail a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail: Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135

Employers should also report instances of fraud and IRS-related phishing attempts to the IRS at phishing@irs.gov and Treasury Inspector General for Tax Administration at 800-366-4484.

Go to IRS.gov to learn more about eligibility requirements and how to claim the Employee Retention Credit:

• For qualified wages paid after March 12, 2020, and before Jan. 1, 2021 – Notice 2021-20, Notice 2021-49, and Revenue Procedure 2021-33
• For qualified wages paid after Dec. 31, 2020, and before July 1, 2021 – Notice 2021-23, Notice 2021-49 and Revenue Procedure 2021-33
• For qualified wages paid after June 30, 2021, and before Oct. 1, 2021 – Notice 2021-49 and Revenue Procedure 2021-33
• For qualified wages paid after Sept. 30, 2021, and before Jan. 1, 2022 – Notice 2021-49 and Notice 2021-65

Additional Information

• Employee Retention Credit – 2020 vs 2021 Comparison Chart | Internal Revenue Service (irs.gov)
• Form 941-X Instructions (April 2022 Revision) – for use in conjunction with Form 941 Instructions from relevant calendar quarter
• Form 941 Instructions (December 2021 Revision)
• Form 941 Instructions (2020 Revisions)
• Form 943, 943-X, 944, 944-X, CT-1 and CT-1-X Instructions

WASHINGTON − The Internal Revenue Service reminds taxpayers of their reporting and potential tax obligations on income from the gig economy and service industry, transactions from digital assets, and foreign sources or holding certain foreign assets.

Information available on IRS.gov and Instructions for Form 1040 and Form 1040-SR can help taxpayers understand and meet these reporting and tax requirements.

Gig economy earnings are taxable
Generally, income earned from the gig economy is taxable and must be reported to the IRS on tax returns.

The gig economy is activity where people earn income providing on-demand work, services or goods, such as selling goods online, driving a car for deliveries or renting out property. Often, it’s through a digital platform like an app or website.

Taxpayers must report income earned from the gig economy on a tax return, even if the income is:

• From part-time, temporary or side work.
• Paid in any form, including cash, property, goods or digital assets
• Not reported on an information return form like a Form 1099-K, 1099-MISC, W-2 or other income statement.

For more information on the gig economy, visit the gig economy tax center.

Service industry tips are also taxable
People who work in restaurants, salons, hotels and similar service industries often receive tips for the customer service they provide. Tips are usually taxable income, and it’s important for people working in these areas to understand details on how to report tips.

Tips are optional cash or noncash payments customers make to employees.

• Cash tips include those received directly from customers, electronically paid tips distributed to the employee by their employer and tips received from other employees under any tip-sharing arrangement. All cash tips must be reported to the employer, who must include them on the employee’s Form W-2, Wage and Tax Statement.
• Noncash tips are those of value received in any other medium than cash, such as: tickets, passes or other goods or commodities a customer gives the employee. Noncash tips aren’t reported to the employer but must be reported on a tax return.
• Any tips the employee didn’t report to the employer must be reported separately on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to include as additional wages with their tax return. The employee must also pay the employee share of Social Security and Medicare tax owed on those tips.

Employees don’t have to report tip amounts of less than $20 per month per employer. For larger amounts, employees must report tips to the employer by the 10th of the month following the month the tips were received.

The employee can use Form 4070, Employee’s Report of Tips to Employer, available in Publication 1244, Employee’s Daily Record of Tips and Report to Employer, an employer-provided form or other electronic system used by their employer.

For more information on how to report tips see Tip Recordkeeping and Reporting.

Understand digital asset reporting and tax requirements
The IRS reminds taxpayers that there’s a question at the top of Forms 1040 and 1040-SR that asks about digital asset transactions. All taxpayers filing these forms must check the box indicating either “yes” or “no.”

If an individual disposed of any digital asset that was held as a capital asset through a sale, exchange or transfer, they should check “Yes” and use Form 8949, Sales and other Dispositions of Capital Assets, to figure their capital gain or loss and report it on Schedule D (Form 1040), Capital Gains and Losses, or Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, in the case of a gift.

Examples of transactions involving digital assets include:

• A sale of digital assets.
• The receipt of digital assets as payment for goods or services provided.
• The receipt or transfer of digital assets for free (without providing any consideration) that does not qualify as a bona fide gift.
• The receipt of new digital assets as a result of mining and staking activities.
• The receipt of new digital assets as a result of a hard fork.
• An exchange of digital assets for property, goods or services.
• An exchange/trade of digital assets for another digital asset(s).
• Any other disposition of a financial interest in digital assets.

If individuals received any digital assets as compensation for services or disposed of any digital assets they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type (for example, W-2 wages on Form 1040 or 1040-SR, line 1a, or inventory or services on Schedule C).

More information on digital assets can be found in the Instructions for Form 1040 and 1040-SRand on the IRS’ Digital Assets page.

Report foreign source income
A U.S. citizen or resident alien’s worldwide income is generally subject to U.S. income tax, regardless of where they live. They’re also subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States.

U.S. citizens and resident aliens must report unearned income, such as interest, dividends and pensions from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States.

An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are available only if an eligible taxpayer files a U.S. income tax return.

A taxpayer is allowed an automatic two-month extension to June 15 if both their tax home and abode are outside the United States and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 18, 2023.

Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15. IRS recommends attaching a statement if one of these two situations applies. More information can be found in the Instructions for Form 1040 and Form 1040-SR, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad and Publication 519, U.S. Tax Guide for Aliens.

Reporting required for foreign accounts and assets
Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach Schedule B (Form 1040), Interest and Ordinary Dividends, to their tax return. Part III of Schedule B asks about the existence of foreign accounts such as bank and securities accounts and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

Further, separate from reporting specified foreign financial assets on their tax return, U.S. persons with an interest in or signature or other authority over foreign financial accounts where the aggregate value exceeded $10,000 at any time during 2022 must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages U.S. persons with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is available only through the BSA E-filing System website.

The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15, 2023. FinCEN grants U.S. persons who miss the original deadline an automatic extension until Oct. 15, 2023, to file the FBAR. There is no need to request this extension. See FinCEN’s website for further information.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional guidance is available in Publication 17, Your Federal Income Tax (For Individuals).

WASHINGTON — With the 2023 tax filing season in full swing, the Internal Revenue Service reminds taxpayers to gather their necessary information and visit IRS.gov for updated resources and tools to help with their 2022 tax return.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional guidance is available in Publication 17, Your Federal Income Tax (For Individuals).

Things to consider before filing
Taxpayers should wait to file until they receive all their proper tax documents, or they risk making a mistake that could cause delays.

They should also review their documents carefully. If any of the information is inaccurate or missing, taxpayers should contact the payer right away for a correction or to ensure the issuer has their current mailing or email address.

Creating an IRS Online Account can help taxpayers securely access information about their federal tax account, including payments, tax records and more.

Organized tax records make preparing a complete and accurate tax return easier and may help taxpayers find overlooked deductions or credits.

Taxpayers with an Individual Taxpayer Identification Number or ITIN may need to renew it if it’s expired and is needed on a U.S. federal tax return. If they don’t renew an expiring or expired ITIN, the IRS can still accept their return, but it may delay processing or credits owed.

Changes to credits and deductions for tax year 2022
Unlike 2020 and 2021, there were no new stimulus payments for 2022, so taxpayers should not expect to get an additional payment in their 2023 tax refund.

However, taxpayers may still qualify for temporarily expanded eligibility of the Premium Tax Credit, a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. To get this credit, taxpayers must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit.

Also, eligibility rules changed to claim a Clean Vehicle Credit under the Inflation Reduction Act of 2022.

Some tax credits return to 2019 levels. This means that taxpayers will likely receive a significantly smaller refund compared with the previous tax year.

Changes include amounts for the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC)and the Child and Dependent Care Credit will revert to pre-COVID levels.

• For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 for the 2022 tax year.
• Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 per dependent for the 2022 tax year.
• The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.

Finally, taxpayers that don’t itemize and take the standard deduction cannot deduct their charitable contributions this year.

Transition year for 1099-K reporting
There are no changes to what counts as income or how tax is calculated, including income from the sale of personal assets. Taxpayers must report all their income on their tax return unless it’s excluded by law.

Form 1099-K, Payment Card and Third-Party Network Transactions, is an IRS information return used to report certain payment transactions and helps to improve voluntary tax compliance. Taxpayers use this information return with their other tax records to determine their correct tax liability. 2022 Forms 1099-K should have been furnished to the payee by Jan. 31, 2023.

The American Rescue Plan of 2021 changed the reporting threshold for third-party settlement organizations, including payment apps and online settlement organizations. The new threshold requires reporting of transactions in excess of $600 per year; changed from the previous threshold of an excess of $20,000 and an excess of 200 transactions per year. Third-party settlement organizations are required to report payments for goods and services.

On Dec. 23, 2022, the IRS announced that calendar year 2022 will be treated as a transition year for the reduced reporting threshold of $600.

Even though the Form 1099-K reduced reporting requirement for third-party settlement organizations is delayed, some individuals may still receive a Form 1099-K who have not received one in the past. Some individuals may receive a Form 1099-K for the sale of personal items or in situations where they received a Form 1099-K in error (i.e. for transactions between friends and family, or expense sharing).

Money received as a gift or to reimburse shared meals or rent should not be reported on a 1099-K. Payments should indicate whether they are personal to family and friends or a business transaction for goods and services.

If the information is incorrect on the 1099-K, taxpayers should contact the payer immediately. The payer’s name appears in the upper left corner on the form. The taxpayer should keep a copy of all correspondence with the payer with their records.

If a Form 1099-K is received in error and a corrected Form 1099-K can’t be obtained, follow the IRS’ updated guidance at Understanding Your Form 1099-K.

Businesses hanging up their Help Wanted signs should be sure to check out the work opportunity tax credit. This credit encourages employers to hire workers certified as members of any of ten targeted groups facing barriers to employment. The credit has been extended through the end of 2025.

The 10 targeted groups are:

• Temporary Assistance for Needy Families recipients
• Qualified unemployed veterans, including disabled veterans
• Formerly incarcerated individuals
• Designated community residents living in Empowerment Zones or Rural Renewal Counties
• Vocational rehabilitation referrals
• Summer youth employees living in Empowerment Zones
• Supplemental Nutrition Assistance Program recipients
• Supplemental Security Income recipients
• Long-term family assistance recipients
• Long-term unemployment recipients

Certification requirement
To claim the credit, an employer must first get certification that an individual is a member of the targeted group. They do so by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency within 28 days after the eligible worker begins work. Employers should not submit this form to the IRS. They should contact their state workforce agency with any questions about the processing of Form 8850.

Figuring and claiming the credit
Eligible businesses claim the work opportunity credit on their federal income tax return. It is generally based on wages paid to eligible workers during the first year of employment. After the employer receives Form 8850 certification, they figure the credit on Form 5884, Work Opportunity Credit, and then claim the credit on Form 3800, General Business Credit.

Special rule for tax-exempt organizations
A special rule allows tax-exempt organizations to claim the credit only for hiring qualified veterans who began work for the organization between 2020 and 2026. After the employer receives the Form 8850 certification, these organizations claim the credit against payroll taxes on Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations.

Credit limitations on the credits
For a taxable business, the credit is limited to the business’ income tax liability. Any credit remaining above the income tax liability is subject to the normal carry-back and carry forward rules. For qualified tax-exempt organizations, the credit is limited to the amount of employer Social Security tax it owes on wages paid to qualifying employees.

Share this tip on social media — #IRSTaxTip: Help wanted? Businesses that are hiring should know about the work opportunity tax credit. http://ow.ly/YvUI50Kz14F