Tax News
Taxes are constantly in the news! Check out the latest federal and state tax headlines from the United States below. See more tax statistics, tax history and other tax facts here.
U.S. IRS Federal Income Tax News
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.
Important News, Statistics Update:
The IRS announced expectations for 2021 Tax Refund delays plus details on 2020 Refund delays that many taxpayers were faced with. The IRS published the following statistics on January 12, 2022:
- The IRS workforce has shrunk by 17% while its workload increased by 19% since 2010.
- 77% of taxpayers received refunds from their 2020 Returns; 33% owed tax.
- The IRS was holding 35.3 million returns in May 2021, causing the delays which disproportionally affected low-income taxpayers claiming the Earned Income Tax Credit or EITC.
- In trying to find the status of their refund in 2021, taxpayers used the IRS "Where's My Refund?" tool more than 632 million times and called the IRS 282 million times with an average wait time of 23 minutes for only an 11% chance of connecting to an IRS customer service representative.
- The IRS issued 478 million stimulus payments, totaling $812 billion.
- 36 million families received advance Child Tax Credit payments, totaling $93 billion.
- As of late December, there were IRS backlogs of 6 million unprocessed individual returns and 2.3 million amended returns.
- The IRS issued over 11 million math error notices for taxpayers with Recovery Rebate Credit discrepancies or taxpayers who claimed the wrong amount of the stimulus payments. These resulted in manually reviewed returns, delaying the refund further.
- This leads to concern of taxpayers reporting the proper amounts of the advance Child Tax Credits they received as well as stimulus three; reporting the wrong amount will delay your refund.
- The IRS received 6.2 million responses to proposed adjustments, taking 199 days on average to process them, up from 74 days in 2019
- The top ten problems taxpayers encountered when working with the IRS, as stated by the National Taxpayer Advocate, were:
- Processing and refund delays; employee recruitment (hiring, training); telephone and in-person service; transparency and clarity; delays in the filing season; online taxpayer account limitation; digital taxpayer communication limitations, e-filing barriers; tax audits; and collection policies on low-income taxpayers.
See more tax statistics here and read more about these IRS return processing delays in 2021 and 2022.
In the table below, find current and past news that may be helpful in planning your next tax return or filing your 2021 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.
The IRS has announced that they will begin processing 2021 Tax Returns on January 24, 2022.
Beginning on Jan. 24, the IRS will begin processing 2021 Returns. States, because they are all dependent on IRS acceptance except California, will also begin at this date at the earliest. Some states may begin processing at a later time. You can still
prepare and e-file your tax return on eFile.com, but the IRS will not process it until this date and it will remain in a "Pending" state until they begin this. 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 suspension of student loan repayment has been extended once more 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 December 22, 2021, the student loan payment pause has been extended from January 31, 2022 to May 1, 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.
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
Build Back Better agenda is undergoing changes and may be signed into law. Keep up to date with this plan as there are various items which may affect your taxes, including the extension of the
enhanced Child Tax Credit payments.
Currently, this bill is not law and has only passed in the House of Representatives as of late November, 2021. Keep up with
tax rumors as to avoid any confusion. It is important to know that
there is currently no fourth stimulus check as part of this bill. The last stimulus payment was the third payment which is no longer being issued and will need to be claimed by filing 2021 Taxes.
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
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.
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