by NFS | Dec 22, 2021 | Archives, Blog Posts
The IRS announced today that it will issue information letters to Advance Child Tax Credit recipients starting in December and to recipients of the third round of the Economic Impact Payments at the end of January. Using this information when preparing a tax return can reduce errors and delays in processing.
The IRS urged people receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.
Watch for advance Child Tax Credit letter
To help taxpayers reconcile and receive all of the Child Tax Credits to which they are entitled, the IRS will send Letter 6419, 2021 advance CTC, starting late December, 2021 and continuing into January. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.
Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.
The letter contains important information that can make preparing their tax returns easier. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.
Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don’t normally need to file a tax return.
Economic Impact Payment letter can help with the Recovery Rebate Credit
The IRS will begin issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter will help Economic Impact Payment recipients determine if they are entitled to and should claim the Recovery Rebate Credit on their tax year 2021 tax returns that they file in 2022.
Letter 6475 only applies to the third round of Economic Impact Payments that was issued starting in March 2021 and continued through December 2021. The third round of Economic Impact Payments, including the “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 SSA, RRB or VA; or to people who may be eligible for a larger amount based on their 2020 tax return.
Most eligible people already received the payments. However, people who are missing stimulus payments should review the information to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020 or 2021.
Like the advance CTC letter, the Economic Impact Payment letters include important information that can help people quickly and accurately file their tax return.
More information about the Advance Child Tax Credit, Economic Impact Payments and other COVID-19-related tax relief may be found at IRS.gov.
As the 2022 tax filing season approaches, the IRS urges people to make sure an accurate tax return and use electronic filing with direct deposit to avoid delays.
by NFS | Oct 12, 2021 | Archives, Blog Posts
The Internal Revenue Service says it’s on track to dig out of the pandemic-related backlog of tax year 2020 returns by year end 2021—just in time for the 2022 tax filing season.
Millions of taxpayers are still waiting for refunds and/or struggling to understand IRS notices saying their refund amounts have been adjusted. And the IRS expects to receive another 4 million returns for tax year 2020 by the October 15th tax filing extension deadline.
The National Taxpayer Advocate, Erin Collins, puts it bluntly: “Taxpayers need greater transparency regarding return processing” in her September blog series, Bumps in the Road Sequel. One of her suggestions is to provide a “dashboard” on the IRS website with real time numbers showing the progress on processing returns.
Here are the latest filing season statistics, and where you can go for help:
- As of October 2, the IRS had 6.8 million unprocessed individual 2020 tax year returns, down from 7.6 million the week before. The IRS has reduced the number of returns requiring special handling from an historical high of 9.8 million on May 1, 2021, to the current level of 224,000 individual returns. In some cases, these can take 90 to 120 days to process. To check the status, see Where’s My Refund?
- It’s not just 1040 tax returns in the pipeline. As of October 2, the IRS had 2.8 million unprocessed amended individual tax returns, Form 1040-X. The current processing time frame for these is 20 weeks, up from the usual 16 weeks. To check the status, see Where’s My Amended Return?.
- The Where’s My Refund tool is great if it shows that your refund was approved or sent. The problem is if your return is still in processing. If you are one of the millions of taxpayers whose return processing has been delayed, the tool just tells you that the return was received by the IRS and nothing more. If you try calling the IRS, the phone assistors typically do not have access to any more information then you can get online. The delay could be caused by a myriad list of reasons. Discrepancy in the amount of the Economic Income Payment is one of the primary causes of the delay.
- Another option to check on the status of your return is to set up an IRS online account, but only 40% of taxpayers trying to do so (as of August) were successful because of the multiple steps and security measures in place. If you do not succeed in setting up an online account, you can request an IRS transcript that should be mailed to you within 10 calendar days. Search “Refund Issued” to see what payments have been made to you.
By the time the American Rescue Plan was signed into law in March, nearly half of all 2020 individual tax returns had been filed. That law suspended the requirement to repay excess APTC health insurance credits and created a partial exclusion for up to $10,200 in unemployment benefits. All those taxpayers who had filed and paid taxes were suddenly due refunds. As of September 3, the IRS had processed a total of about 13 million taxpayer accounts to reflect the unemployment income exclusion and about 1 million accounts where the excess APTC was reported. As of mid-September, there were still about 436,000 individual returns awaiting processing in the error resolution system, the National Taxpayer Advocate reported, and those could need adjustments.
The latest confusion is surrounding letters sent to 6.5 million taxpayers, telling them a notice of a 60-day-appeal period was missing from letters they got earlier about their recovery rebate credit calculations on their 2020 tax returns not matching IRS records. “Although these and other notices are often confusing, it is critical — if you receive a letter from the IRS about your 2020 return, do not delay in your response, as that will only further postpone any potential refunds and may lead to more problems down the road,” the Taxpayer Advocate says.
Last week the IRS announced a new online information portal for taxpayers who have refunds of over $2 million that are also being held for special approval.
by NFS | Jul 15, 2021 | Archives, Blog Posts
The advance payments of child tax credits is set to begin today, July 15th. As you may have heard, the IRS will pay half the total credit amount in advance monthly payments and you will claim the other half when you file your 2021 income tax return in 2022. Here is an overview of the child tax credit and how it will work.
ELIGIBILITY
Eligibility for the child tax credit is subject to income limitations and determines how much you will receive. Single taxpayers earning $75,000 or less, heads of household earning $112,500 or less per year and married couples earning less than $150,000 per year all qualify for the full credit. For people with higher incomes, payment amounts phase out at a rate of $50 for every $1,000 over each of the aforementioned thresholds. While there are income limitations to determine eligibility, there is no limitation on the number of children claimed as dependents.
CREDIT AMOUNTS
36 million US households qualify for the child tax credit payment which amounts to: up to $3,600 for children ages 5 and younger, up to $3,000 for each child who is between the ages of 6 and 17, $500 for each dependent who is 18 years old, and $500 for full-time students between the ages of 19 an 24. If you had a baby in 2021, your newborn qualifies for the child tax credit payment of $3,600.
TIMING
The timing of these payments is different from previous stimulus payments as most taxpayers will receive half of the total amount monthly for 6 months, starting July 15, 2021. Then, in 2022, the second half of the credit will be applied to the amount you owe on your 2021 taxes (which you file in 2022). Hence, the reason it is called a “child tax credit.” Your tax liability for tax year 2021 will be reduced by the “credit” you gain from your eligible dependents which will either decrease the amount you owe to the IRS or increase your tax refund.
PAYMENTS
The IRS is targeting automatic payment dates of July 15, August 13, September 15, October 15, November 15, December 15 and April 2022 for those who filed their 2020 tax returns by the extended tax deadline of May 17, 2021.
If you didn’t file taxes in 2020, share custody of your children, would prefer to opt for one big payment or opt out of the program entirely, click
here to visit the IRS website as it contains several helpful links.
As always, we here to answer any questions you may have. Please call the office at (800) 560-4637 to speak with us about your individual situation.
by NFS | Jul 6, 2021 | Archives, Blog Posts, In The Community
The Wrentham (WYBSA) Rockets of the Major League Division are 2021 Champions!! The team is sponsored by NFS and coached by NFS President Jeff Schweitzer. Congratulations to the Wrentham Rockets who had an awesome regular season going 10-2-1 and finished strong with 2 more wins in the playoffs beating the Plainville Tigers in the semi-finals 9-6 and the Norfolk Jayhawks 12-2 in the championship game! Way to go girls and coaches 
by NFS | Jul 6, 2021 | Archives, In The Community
Wrentham Barbarians Youth Rugby Summer Tournament Sponsored by NFS
by NFS | Jul 1, 2021 | Archives, Blog Posts
If you pay much attention to social media, you’ve probably noticed the trending memes about “adulting.” They can be pretty funny, but they also make young adulthood look a little scary. In reality, being a young professional is an exciting time. And adulting doesn’t have to be so hard — or scary — when you have the knowledge it takes to set yourself up for success, especially when it comes to making sound financial decisions.
Start Investing Now!
One of the most common mistakes that young professionals make is the assumption that investing takes more money and experience than they have. You don’t want to invest blindly, of course, but that doesn’t mean you can’t learn enough to start making smart investments now. If you aren’t sure where to start, contact Northeast Financial Strategies for investment guidance, and check out a resource like Money Under 30 for a primer on investing basics like mutual funds, bonds, and robo-advisors.
In addition to stocks and bonds, real estate is another investment option young adults should consider. Any property you buy is technically an investment, but real estate investing as a growth strategy usually means buying a property that you either rent or fix and sell for a profit.
Like any other investment, real estate has the potential for positive outcomes along with possible drawbacks. For young people, one advantage to real estate is that it doesn’t require a great amount of capital. The rental market is also a sustainable business model with the potential for regular passive income. The possible downside is that financing your property does require a certain amount of money. What’s more, if you aren’t up for the task, handling maintenance, marketing, and everything else it takes to be successful can become a burden.
Adopt Money-Smart Habits
Saying it’s important to manage money wisely may seem like a no-brainer, but actually doing this takes effort. To begin, make sure you’re familiar with money management basics like setting a budget. You may even want to use a budgeting app. Once you have the basics down, focus on adopting other money-smart habits that will protect your finances now and for the future.
Spend Less
One of the best long-term habits to adopt is to live frugally. Doing this doesn’t mean leading a life of denial; instead, it’s all about learning to make informed decisions about purchases. Try some of our favorite money-saving tips from Young Adult Money, including shopping habits like choosing generic brands and using coupons. It may not seem like saving a dollar here and there is such a big deal, but small savings add up, especially when you start early.
Save More
The natural result of spending less is that you have more money left over to save. In addition to investing, young adults should also set savings goals. These should always include creating an emergency fund and saving for retirement, but you may also have other specific goals like saving to start a family or buy a house.
Build Credit Wisely
Another top financial goal for young adults should be to build your credit history. This is important because having a good credit score can make a difference in other financial decisions like getting a car or home loan. To make sure you do this without incurring debt, brush up on credit card best practices, which include finding a card that’s low-interest and low-fee and always paying off your balance. It’s also important to know what kind of things damage your credit. One key example is how your credit score takes a hit anytime you pay bills late, which is why CNBC money experts recommend setting up automatic bill pay.
“Adulting” may be a recent concept, but learning smart money management is something every generation of young adults has to do (or at least, should do). The great thing for today’s generation is that technology has made this easier than ever, with tools like automatic bill pay and budgeting apps. With a concerted effort, commitment to using these tools, and guidance from Northeast Financial Strategies, getting started on solid financial footing doesn’t have to be hard or scary!
Photo credit: Pixabay
