Below, find current, past, and future pieces of tax news. Some of the past news may be helpful in tax planning or prepare your current year tax return.
In the table below, find current and past news that may be helpful in planning your next tax return or filing your 2022 Taxes. Tax laws change year to year as new parts are added, removed, or modified from the tax code. Keep up to date with eFile.com.
IRS announced late penalty relief due to COVID for 2019 and 2020 Returns on August 26, 2022 - update as of September 22, 2022.
Due to the pandemic, many individuals and businesses had late filing and/or payment penalties on their returns. The IRS announced that they will abate any late
filing penalties -
not payment penalties - for those who have not yet filed and they will refund late filing penalties that have already been paid. This applies to 2019 and 2020 Returns only and is for those who file by September 30, 2022 - get the
details on the IRS COVID penalty forgiveness. As of September 22, 2022, the IRS urges taxpayers to file their returns by this date as they will otherwise not qualify for this forgiveness.
Are student loans going to be forgiven or cancelled as promised by the Biden Administration? Update as of August 24, 2022: President Biden has extended the student loan forbearance through the end of 2022 and will begin writing law to forgive $10,000 - $20,000 for Americans with federal student loans.
The Biden Administration announced plans in early June that they expect to pass a bill forgiving $10,000 of student loans. He has since announced his plan which will be finalized by December 31, 2022 when the forbearance will finally end. As it stands in 2022, American student debt totals more than $1.5 trillion with an average total debt of around $28,000 per student graduating with a bachelor's degree. President Biden's campaign promises included the cancellation of student loans up to a maximum of $50,000. The government will cancel $20,000 for those who went to college and received Pell Grants and $10,000 for those who did not receive Pell Grants. This forgiveness applies to those earning under $125,000 per year. Additionally, if your loans are not completely forgiven, those with undergraduate loans can cap repayment at 5% of their monthly income. Most student loan cancellation, or debt cancellation in general, is subject to be taxed, so it is possible that this forgiven debt will be taxable on your 2022 Return. See details on
canceled debt or loans.
The Inflation Reduction Act was signed into law on August 16, 2022; see a copy of the
2022 Inflation Reduction Act.
This $750 billion bill legislation has four main categories, including an $80 billion payment to the IRS over multiple years, $385 billion towards climate and green initiates (including $20 billion on electric vehicle sales and changes to the
electric vehicle tax credit), $100 billion on healthcare (including allowing Medicare to negotiate drug prices and extension of the
Premium Tax Credit), and a corporate tax increase. The enhanced Child Tax Credit from 2021 is not included, thus there is no advance Child Tax Credit in 2022 or future years.
eFile.com will break down all the income tax elements in this legislation so taxpayers can be assured that all tax credits and tax deductions will be applied on their tax returns accordingly. All
tax calculators and estimators will reflect all applicable tax return updates to help you plan your taxes.
Is the government doing anything about inflation?
With rising inflation in 2022 affecting low- and middle-class Americans, many feel that the government has not done anything to help its citizens. In July of 2022, two bills have only been introduced in the Senate: the Inflation Relief Act (IRA) and the Middle-Class Savings and Investment Act (MCSIA). The IRA would modify tax credits and deductions for the middle class, including the
Child Tax Credit,
Dependent Care Credit, both
education tax credits, the
student loan interest deduction, and potentially more. The bill would make these credits more accessible by raising the income limits. The MSCIA would encourage the middle-class to invest and save through not taxing the first $300 of investment income made, increase the
Saver's Tax Credit amount and income limitation, change net investment income tax for married couples, and it would increase the income limits for the 0%
tax on capital gains. Both bills would be paid for by extending the cap on the
SALT Deduction.
Mitt Romney has brought forth the Family Security Act 2.0 which addresses the future of the Child Tax Credit. The proposed bill offers $350 a month for each child under 6 years old and $250 for children ages 6-17; additionally, pregnant women would receive a payment of $2,800. Families with multiple children would receive a maximum of $1,250 per month or $15,000 per year. Parents or guardians would need to have a child with a valid Social Security Number and would have to work to earn at least $10,000 a year. This bill is controversial as it would get rid of or reduce many credits or deductions, including the
Child and Dependent Care Credit, the
Earned Income Tax Credit, and the
SALT Deduction. It also aims to eliminate the
head of household filing status as this would all save money to pay for the bill.
None of these bills were passed.
Where's my refund?
On June 22, the IRS released their midyear report to congress entitled Review of the 2022 Filing Season. In it, they detailed the extensive backlog affecting 2020 and 2021 IRS refunds. According to the report, the IRS has failed to keep up with incoming paper returns, stating that they would need to more than double the amount of returns they are processing per week from 200,000 to 500,000. Overall, the backlog of returns has increased from 20,000,000 individual and business returns to 21,300,000, an increase of around 7% for the same time of year. The reason e-filed returns are caught up in these delays is due to errors on the return, largely due to inaccurate reporting of the
Recovery Rebate Credit for the
third stimulus check, resulting in a processing review. Meanwhile, as of May 20, 2022, the IRS has received 136,484,000 e-filed returns compared to 141,272,000 total returns - see
IRS refund processing statistics. Additionally, the IRS reported over 336,00 taxpayers who are unable to file and receive their refund due to
identity theft, resulting in an average wait of a full year to resolve. The IRS outlined 14 key objects for 2023, including: automate processing of paper returns, reduce e-filing barriers, improve internal hiring process, and improve telephone services. See more
details on IRS refund delays.
Proposed $2,400 boost for
Social Security Recipients, increase to payroll taxes for all, tax the wealthy for more Social Security Income, and other changes to keep the program going.
In late June 2022, the Social Security Expansion Act was introduced in Congress which would give Social Security Recipients an additional $200 per month, resulting in a total increase of $2,400 per year. This would go into effect in 2023 for those 62 years old or older, increasing the average Social Security monthly payment of around $1,650 per month. This bill is being brought forth because the Social Security Administration has stated that they will go bankrupt or run out of funds by 2035 if no changes are made. This bill being passed with updated or increased Social Security taxes would ensure the program survives until 2096. The plan would be to increase payroll taxes; specifically, the Social Security tax of 6.2% on the first $147,000 of income. The bill would change this so that anything above $250,000 would still be taxed. Additionally, investment income is not subject to Social Security taxes, but this may change it.
May 2022: Taxpayer related updates from the IRS submitted to members of Congress.
Even though the April 17, 2022 tax filing deadline has passed, learn about steps you can take to stay up-to-date in case you need to amend your return or receive a letter from the IRS. Details about face-to-face IRS help options. Read more
about IRS taxpayer updates to members of Congress.
On May 4, 2022, the IRS announced a plan put forth by the Treasury Inspector General for Tax Administration (TIGTA) to destroy 30 million paper tax documents.
Due to
extensive IRS processing delays from 2020 and 2021, the IRS and TIGTA have announced a plan to move forward with processing by ridding of backlogged informational returns which were only used to support tax filings. This means that actual 1040 income tax returns were
not affected. Information returns include W-2, 1099, 1098, etc. - these are the returns filed by businesses, employers, or firms,
not by individuals. With these documents gone, the IRS database may be lacking accuracy for certain returns. The IRS is encouraging businesses and individuals to file electronically instead of paper file as it is simpler, safer, and less costly for all parties.
The suspension of student loan repayment has been extended once more to August 31, 2022 after being extended to May 1, 2022.
Student loans have been deferred multiple times due to the
Coronavirus Pandemic, being set into forbearance since early 2020. As of April 6, 2022, the student loan payment pause has been extended from January 31, 2022 to May 1, 2022, and then once more to the newest date of
August 31, 2022. This means that students with eligible loans will have a suspension of loan payments, a 0% interest rate, and will not have to worry about collection of defaulted loans. After this date, payments and interest will resume, presumably. Use this time to pay off any overdue taxes or other debt, such as credit card debit, or make payments towards your student loans while the interest rate is at 0%.
What is the gas tax? Is there any government plan to make gas cheaper through gas taxes?
The tax on gas is nothing new; it is included in the price a consumer pays at the pump each time they fill up their car. The 2022 federal gasoline excise tax rate is roughly $0.18 per gallon which pays for infrastructure, transportation, and other expenses. The U.S. Government has introduced many plans to combat the rapid increasing gas prices in 2022. They have suggested stimulus checks which would go to taxpayers while also increasing the gas tax. This has not signed into law and is not part of any bill. If any of these programs become law, we will update this with information including the tax implications of gas stimulus checks.
The IRS announced voice and chat bot services to answer simple questions for faster service.
Chat bots and automated voice replies have become normalized for larger corporations and businesses. Not so on eFile.com - we offer
person-to-person, premium support with
no robot interaction at no charge. Speak directly to a Taxpert
® via your
personal support page.
When trying to reach the IRS as of March 11, 2022, you may get in contact with a voice or chat bot over the phone or via IRS.gov in order to reduce wait times. This is specifically geared towards taxpayers looking to inquire about simple payment or collection notice questions as well as some pre-determined frequently asked questions.
On March 4, 2022, the IRS officially announced the Taxpayer Experience Office in order to improve service across the IRS.
The Taxpayer Experience Office is part of a longer-term effort to improve their service. The efforts hope to unify and expand work across the IRS in order to better improve their services and production. This will focus on taxpayer transactions and interactions with the IRS, compliance with other program areas, work on conjunction with IRS business units, and enhance coordination with the Taxpayer Advocate Service.
The IRS announced the statistics thus far for the 2022 Filing Season for 2021 Returns.
Statistics released by the IRS show that, since the 2022 season began on January 24, they have issued more than 22 million refunds for the week ending in February 18, totaling more than $78 billion for an average refund of $3,356. Roughly 97% of all 2021 Returns have been filed electronically; keep up with
year-to-year tax return and refunds statistics.
The IRS has suspended the mailing of various letters to help taxpayers.
On February 9, 2022, the IRS announced the suspension of issuing various letters to taxpayers. This is part of an ongoing effort to provide help to people in need. The IRS will delay issuing letters such as automated collection notices that are sent when a taxpayer owes taxes and did not file for the tax year. These letters include IRS Letter CP80, CP59, CP516, CP518, CP501, CP503, CP504, and 2802C. This will alleviate some of the stress of receiving an IRS notice with a deadline to pay due tax on it.
The IRS has begun transitioning away from requiring facial recognition to create an IRS account.
Gaining recent news popularity, the IRS began requiring facial recognition or a "live selfie" through a third-party service called ID.me. The IRS is moving away from this following backlash as of February 7, 2022 and it is no longer going to be required to
create an IRS account. Those who have already created an account using this process do not need to take any further action; their face-scan will be deleted as confirmed by the IRS. The IRS will be working to create a more trusting method of verifying identities without using a third-party company and roll eventually roll out Login.Gov. In the meantime, taxpayers can still use ID.me to create a secure IRS account, but
elect to use a virtual interview without biometric data or by agreeing to a face scan. Images provided by taxpayers are deleted after the account is created.
What is going on with the Child Tax Credit? Is the Child Tax Credit extended through 2022?
The
Child Tax Credit is a credit that has been a part of income tax returns since 1997, but got an
increased amount in 2021 and gave parents
advance payments.
The enhanced Child Tax Credit is not extended and is not part of any bill. The
Build Back Better Act did not pass, but Republicans and Democrats were working to pass standalone Child Tax Credit bills.
These are not signed into law. The following are proposals set by different members of congress:
- Republican Senator Mitt Romney: The Family Security Act would give parents $350 per month per child 5 years old and under or $250 per month per child ages 6 - 17. This would also give expecting parents their payments four months before their child's due date. Single parents making under $200,000 and married couples making under $400,00 would qualify if they and their children have valid Social Security Numbers. The Social Security Administration would carry out the program instead of the IRS.
- Republican Senator Josh Holly: The Parent Tax Credit which would provide $6,000 to single parents or $12,000 for married couples filing jointly. This would be paid out in monthly payments of $500 for single parents and $1,000 for married parents. These would go to qualifying parents with at least $7,500 in annual earned income with children under 13 where both the parent(s) and dependent(s) have a valid SSN. This program would be carried out by the IRS.
The IRS has begun processing 2021 Tax Returns on January 24, 2022.
Beginning on Jan. 24, the IRS has been processing 2021 Returns. States, because they are all dependent on IRS acceptance except California, generally began at this date at the earliest. Some states may begin processing at a later time. We generally recommend waiting until after January 31 to e-file your taxes to be sure you have
all your tax statement forms so you can e-file your federal and state returns together by
April 18, 2022, the official 2022 Filing Season deadline.
The Build Back Better plan failed in the US Senate on December 18, 2021.
The bill, often referred to as Biden's Stimulus Plan, the Human Infrastructure Bill, and the Democratic Reconciliation package, has failed in the Senate. Democratic Senator Joe Manchin has voted no to the bill, leaving the program to hang in limbo as the Senate goes on vacation. Will this bill be passed in 2022?
Keep up with Biden's tax plan, the Build Back Better Act.
Why is everyone talking about NFTs? What are they?
A
non-fungible token or NFT is a digital piece of property one can purchase with cryptocurrency. They are growing in popularity as a form of investment. The IRS has not officially stated the tax implications of investing in and trading NFTs, but has only suggested they they will be treated similarly to collectibles. View the linked page for details.
The
IRS Child Tax Credit Update portal has been updated once more as of late November, 2021
The CTC UP can be used to make updates to your tax information, income, and dependents. This allows the IRS to issue the correct amount of the advance payment to you to the correct bank or address. The most recent update added a new Spanish language version of the tool. Changes made up until the end of the day on November 29, 2021, will be reflected in the last monthly 2021 payment on December 15.
The time to claim and enroll in the
advance payments of the 2021 Child Tax Credit has passed.
The
third stimulus plan had temporarily increased the amounts of the
Child Tax Credit for 2021 only as well as provided the credit through advance payments - the Build Back Better Plan may extend this for an additional year, however. Since November 15, 2021, the time to claim these advance payments has passed. If the advance payments were not received, a taxpayer would need to file a 2021 Return in 2022 to claim the credit.
Stimulus three payment schedule updates were announced by the IRS on April 1, 2021. The IRS is no longer issuing Stimulus 1, 2, or 3. The only way to claim Stimulus 1 and 2 is by filing
back taxes for 2020 - prepare and e-file your 2021 Taxes in 2022 to claim Stimulus 3.
See criteria, scheduling, and other details for
stimulus three check payments. If you did not receive the full amount of the third stimulus payment you are entitled to, claim this by filing a 2021 Tax Return. Since the IRS is no longer issuing these payments, this is the only way to claim it.
Due to severe storms, hurricanes, and other disasters, various states received extended deadlines to file taxes. This means that their
Federal Tax Return Filing and Payment Deadlines was extended past the usual April 15 deadline. Keep up with the dates for extended deadlines on the linked page.
The IRS has provided more details and information for the
recent changes to unemployment compensation as part of the
American Rescue Plan Act, or ARPA - posted April 1, 2021. Get detailed
state tax amendment instructions here.
Many taxpayers filed their 2020 return early, millions of whom reported their unemployment benefits on Form 1099-G for the first time in their life. The recently passed stimulus bill made a portion of these benefits tax exempt and taxpayers who already filed did not get to take advantage of this. The IRS has confirmed that those who already filed will be issued a refund for the tax they paid on this income.
Face masks, sanitizer, and other forms of personal protective equipment are medical expenses if they are used to stop the spread of COVID-19 - posted March 26, 2021.
More details here and on
the Medical Expense page. Many qualified medical expenses can be reported in order to lower your taxable income and give you a tax break.
Nearly 17 million 2019 IRS Tax Returns and 35 million 2020 Returns have not been processed- updated November 22, 2021. This might be why your 2020 returns got rejected even though you correctly entered your 2019 AGI.
Read more details here
about 2019 AGI rejections and other issues. The IRS is working through their backlog of returns in order to verify taxpayer information and allow the acceptance of e-filed returns. This has resulted in extensively delayed
tax refunds.
The Government Accountability Office (GAO) reports that almost half a million taxpayers did not receive their entire stimulus payment amounts due to distributing complications related to those who have dependents but filed
simple/stimulus tax returns. They also report that the IRS had challenges contacting individuals who do not usually file tax returns, as well as those without permanent residences, bank accounts, and internet access. The IRS and Treasury Department stated that taxpayers who filed returns with properly claimed dependents and were received after May 17 were given the correct stimulus payment amount. For taxpayers who did not file proper returns, the IRS was working to adjust payment amounts before the end of July.
As of July 17, 2019, the IRS is allowing chronic condition treatments such as Angiotensin converting enzyme (ACE) inhibitors (for congestive heart failure, diabetes, coronary artery disease) and Inhaled corticosteroids/Peak flow meters (asthma) to be covered by
high-deductible health plans (HDHP). Individuals can even apply for these treatments if their health care spending has not surpassed their plans' deductible, without conflicting the rules allowing pretax contributions to their Health Savings Accounts. In addition to this benefit, taxpayers can claim up $117.47 of the $199 cost of a health-and-ancestry kit as medical care.
The remaining news is mostly relevant for back taxes but some of it may apply today.
The
U.S. Treasury is cutting tax penalties for taxpayers who did not have enough tax withheld throughout 2018 via paycheck withholding or estimated tax payments. This applies to taxpayers who paid at least 80% of their tax liabilities. The Treasury will release a form for these taxpayers to attach to their 2018 Tax Returns exempting them from penalties. Taxpayers that already filed their returns and paid the penalties may request a refund from the IRS for the amounts they paid to the IRS.
Democrat House Representatives Sean Casten and Lauren Underwood introduced The Taxpayer Extension Act, which proposed to extend the
April 15, 2019 Federal Tax Return deadline to May 20, 2019. This provides 35 additional days for taxpayers to file their returns due to recent tax reform and the government shutdown. They suggest that the extended deadline would give the IRS more time to prepare their filing systems to avoid computer system breakdowns on Tax Day. This, however, did not pass.
Though the government shutdown was ongoing, the IRS called more than 46,000 employees back to work to process tax refunds. They would also answer phone calls in the coming days, but taxpayers should have expected longer wait times. No audits or identity theft cases will be reviewed at this time. The IRS recommends
preparing and e-filing Tax Returns to process refunds faster and minimize errors.
The House Ways and Means Committee released the
Retirement, Savings, and Other Tax Relief of 2018 tax bill. The bill proposed to renew tax breaks that expired on December 31, 2017 (i.e. the Tuition and Fees Deduction) and provided retirement saving tax help (i.e. eliminate required minimum distributions for savers with less than $50,000 in retirement plans). This was passed in December of 2018.
When you owe taxes or are owed a tax refund, you are not optimizing your tax withholding. Keep more of your money during the year and don't be surprised by a large tax bill -
get tax balanced with eFile.com.
The IRS released a draft of the
2018 1040 tax form based on the Tax Cuts and Jobs Act. The shorter form is half the size of the current 1040 form and combines all three current 1040 forms (1040, 1040-A, and 1040-EZ) into one 1040 form. This new 1040 Form uses a “building block” approach and the form can be supplemented with six new tax schedules for additional tax credits and deductions (i.e. deduction for teacher expenses and energy tax credits).
As a result of the IRS reactivating a private
tax debt collection program, the National Taxpayer Advocate released a report stating that taxpayers assigned to the program are entered into installment programs that they cannot afford. They also report that the program costs the U.S. Treasury more money that it collects from the program. Due to increased
IRS impersonating phone scams, the IRS warns taxpayers that they will first contact them via a letter in the mail.
The Tax Cuts and Jobs Act or TCJA passed in December of 2017 and would affect tax returns for Tax Years 2018-2025.
The TCJA created a higher
standard deduction, removed many deductions in order to make deductions generally easier for common taxpayers to claim, and simplified many aspects of the U.S. Tax Code. This allowed the lower and middle class to take advantage or more
tax breaks without needing to have extensive tax knowledge.
U.S. State Income Taxes
The
Minnesota Department of Revenue did not update their tax code to align with the current federal tax code. CPA's in the state predict that this would result in more taxpayers claiming standard deductions on their federal and state returns.
According to Nicole Kaeding at the Tax Foundation, taxpayers may claim fewer state deductions due to the
Virginia standard deduction restriction and updated federal tax code. State officials predict that the government would receive about $300 million.