Author Archives: support52

What taxpayers need to know about claiming the credit for other dependents

Taxpayers with dependents who don’t qualify for the child tax credit may be able to claim the credit for other dependents.

The maximum credit amount is $500 for each dependent who meets certain conditions. These include:

  • Dependents who are age 17 or older.
  • Dependents who have individual taxpayer identification numbers.
  • Dependent parents or other qualifying relatives supported by the taxpayer.
  • Dependents living with the taxpayer who aren’t related to the taxpayer.

The credit begins to phase out when the taxpayer’s income is more than $200,000. This phase out begins for married couples filing a joint tax return at $400,000.

A taxpayer can claim this credit if:

  • They claim the person as a dependent on the taxpayer’s return.
  • They cannot use the dependent to claim the child tax credit or additional child tax credit.
  • The dependent is a U.S. citizen, national or resident alien.

Taxpayers can claim the credit for other dependents in addition to the child and dependent care credit and the earned income credit. They can use the IRS Interactive Tax Assistant, Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?, to help determine if they are eligible to claim the credit.

Guidance to taxpayers on identity theft involving unemployment benefits

The Internal Revenue Service today urged taxpayers who receive Forms 1099-G for unemployment benefits they did not actually get because of identity theft to contact their appropriate state agency for a corrected form.

States issue Forms 1099-G to the taxpayer and to the IRS to report what taxable income, such as refunds or unemployment benefits, were issued by state agencies.

Some taxpayers who faced unemployment or reduced work hours applied for and received unemployment compensation from their state. Under federal law, unemployment benefits are taxable income.

Scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves, and the individuals whose names and personal information were taken did not receive any of the payments.

Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received. A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported income.

All taxpayers now eligible for Identity Protection PINs

The Internal Revenue Service today expanded the Identity Protection PIN Opt-In Program to all taxpayers who can verify their identities.

The Identity Protection PIN (IP PIN) is a six-digit code known only to the taxpayer and to the IRS. It helps prevent identity thieves from filing fraudulent tax returns using a taxpayers’ personally identifiable information.

About the IP PIN Opt-In Program

    • This is a voluntary program.
    • You must pass a rigorous identity verification process.
    • Spouses and dependents are eligible for an IP PIN if they can verify their identities.
  • An IP PIN is valid for a calendar year.
  • You must obtain a new IP PIN each filing season.
  • The online IP PIN tool is offline between November and mid-January each year.
  • Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.
  • Never share your IP PIN with anyone but your trusted tax provider. The IRS will never call, text or email requesting your IP PIN. Beware of scams to steal your IP PIN.
  • There currently is no opt-out option but the IRS is working on one for 2022.

How to get an IP PIN
Taxpayers who want an IP PIN for 2021 should go to IRS.gov/IPPIN and use the Get an IP PIN tool. This online process will require taxpayers to verify their identities using the Secure Access authentication process if they do not already have an IRS account. See IRS.gov/SecureAccess for what information you need to be successful. There is no need to file a Form 14039, an Identity Theft Affidavit, to opt into the program

Once taxpayers have authenticated their identities, their 2021 IP PIN immediately will be revealed to them. Once in the program, this PIN must be used when prompted by electronic tax returns or entered by hand near the signature line on paper tax returns.

All taxpayers are encouraged to first use the online IP PIN tool to obtain their IP PIN. Taxpayers who cannot verify their identities online do have options.

What taxpayers need to know about filing an amended tax return

If taxpayers discover a mistake on their tax return, most common errors can be fixed by filing Form 1040X.

Some reasons people may need to file an amended return:

  • Entering income incorrectly
  • Not claiming credits for which they are eligible
  • Claiming deductions incorrectly
  • Incorrect filing status

The IRS may correct math or clerical errors on a return and may accept returns without certain required forms or schedules. In these instances, there is no need for taxpayers to amend the return.

Here are some things taxpayers who do need to amend their tax return should know:

  • At this time, only tax year 2019 Forms 1040 and 1040-SR returns can be amended electronically if the original 2019 tax return was also filed electronically.
  • Taxpayers can choose to file a paper 1040-X.
  • If filing a paper 1040-X, mail it to the address listed in the form’s instructions. Taxpayers filing 1040-X in response to an IRS Notice should mail it to the address indicated on the notice.
  • Attach copies of any forms or schedules affected by the change.
  • File a separate Form 1040-X for each tax year.
  • Wait- If expecting a refund- for the original tax return to be processed before filing an amended return.
  • Pay additional tax owed as soon as possible to limit interest and penalty charges.
  • Taxpayers should file Form 1040-X to claim a refund within 3 years from the date they timely filed their original return or within two years from the date they pay the tax, whichever is later.

What Taxpayers should do if they missed the July 15 deadline

While the federal income tax-filing deadline has passed for most people, some taxpayer’s have not filed their 2019 tax returns yet.

If the taxpayer is entitled to a refund, there’s no penalty for filing late. Penalties and interest will begin to accrue on any remaining unpaid tax due as of July 16, 2020.

Anyone who did not file and has a balance due should file as soon as possible and pay as much as possible to reduce penalties and interest. Electronic filing options are still available through October 15, 2020.

Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victims, military service members and eligible support personnel in combat zones.