Child Tax Credit: New update address feature available with IRS online portal

The Internal Revenue Service has launched a new feature allowing any family receiving monthly Child Tax Credit payments to quickly and easily update their mailing address using the Child Tax Credit Update Portal, found exclusively on IRS.gov. This feature will help any family that chooses to receive their payment by paper check avoid mailing delays or even having a check returned as undeliverable.

Any family can easily have their September check and all future checks sent to their new address by using the portal to make an address change request. To have the change take effect in September, people need to complete the request before midnight Eastern Time on Monday, Aug. 30. Families can still make changes after that date, but their request will not be effective until the next scheduled monthly payment.

If you change your mailing address using the Child Tax Credit Update Portal, the IRS will use this updated address for all future IRS correspondence so the address change feature can also be helpful to taxpayers that are receiving payments by direct deposit. For example, the IRS will mail a year-end summary statement (Letter 6419) to all taxpayers who have received advance Child Tax Credit payments during 2021, and having a current address on file with the IRS will ensure prompt delivery of this statement.

Families will need Letter 6419 to quickly and accurately fill out their 2021 federal income tax return next year. This is important because, for most families, the advance payments they are receiving during 2021 cover only half of the total credit. They will claim the remaining portion on their 2021 tax return.

The address change feature joins a growing set of services available through the Child Tax Credit Update Portal. Available only on IRS.gov, the portal already allows families to verify their eligibility for the payments and then, if they choose to:

• Switch from receiving a paper check to direct deposit;
• Change the account where their payment is direct deposited; or
• Stop monthly payments for the rest of 2021.

Any of these changes made before midnight ET on Aug. 30, will apply to the Sept. 15 payment and all subsequent monthly payments, scheduled for Oct. 15, Nov. 15, and Dec. 15.

Future enhancements are planned for the Child Tax Credit Portal

Later this year, families will also be able to use the Update Portal tool to:

• Add or remove children in most situations;
• Report a change in marital status; or
• Report a significant change in income.

Latest information for the Child Tax Credit payments on IRS.gov

The IRS has created a special Advance Child Tax Credit 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It’s at IRS.gov/childtaxcredit2021.

The web page now features an updated set of frequently asked questions and a new user guide for the Child Tax Credit Update Portal (Publication 5549). It also provides direct links to the portal, as well as two other online tools-- the Non-Filer Sign Up Tool and the Child Tax Credit Eligibility Assistant -- and other useful resources.

Indiana Experiencing Ack Processing Delays due to scheduled maintenance

The Indiana Department of Revenue (DOR) will launch the third phase (Rollout 3) of its multi-year tax system modernization initiative, Project NextDOR, on Tuesday, Sept. 7, 2021. As DOR continues its transition to the new Indiana Tax System (ITS), there will be some outages for maintenance.

As a result, return submission acknowledgements will not be generated from 11:59 p.m. EST on Aug. 12, 2021, until 8 a.m. EST on Sept. 7, 2021. Tax return submissions received during this period will be processed when DOR’s system is back online.

*Resolved* New York Experiencing Ack Processing Delays

New York State has announced that the issue affecting their ability to retrieve MeF submissions and send acknowledgements has been resolved.  

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 New York State is currently unable to retrieve MeF submissions and send acknowledgements.  They are working on a resolution.

Once New York notifies us that the issue has been resolved and normal operations have resumed, we will update this blog post.

COVID Tax Tip 2021-120: Here’s how tax pros can help clients battle unemployment related identity theft

Unemployment compensation fraud was one of the more common identity theft schemes that emerged in 2020 as criminals exploited the COVID-19 pandemic and the resulting economic impact.

Unemployment compensation is taxable, although Congress waived the tax for 2020 for many people. States report compensation to the individual and to the IRS by using the Form 1099-G. Because of fraud and identity theft, many taxpayers received Forms 1099-G for compensation they were not paid. Some taxpayers received forms from multiple states.

This scam could affect 2020 or 2021 tax returns. Here are some steps tax pros should take to help victims of the unemployment compensation fraud scheme:

• File Form 14039, Identity Theft Affidavit. This should be done only if an e-filed tax return rejects because the client's Social Security number has already been used. Do not file the IRS Form 14039 to report unemployment compensation fraud to the IRS.
• Report fraud to state workforce agencies, and request a corrected Form 1099-G. Each state has its own process for reporting unemployment compensation fraud. The U.S. Department of Labor has created an information page with all state contacts and other information.
• File a tax return reporting only the actual income received. State workforce agencies may not be able to issue a corrected Form 1099-G in a timely manner. Even if the client has not received a corrected Form 1099-G, report only wages and income received and exclude any fraudulent claims.
• Consider an IRS Identity Protection PIN. Clients receiving Forms 1099-G are identity theft victims whose personal information could be used for additional criminal activities, such as filing fraudulent tax returns. All taxpayers who can verify their identities can now get an Identity Protection PIN to protect their SSN.
• Follow Federal Trade Commission recommendations for identity theft victims. Taxpayers should consider steps to protect their credit and other actions outlined by the FTC. The Department of Labor website explains how individuals should report unemployment identity theft
• Reply to notices in a timely manner. Tax pros' business clients can also assist in fighting unemployment compensation fraud by responding quickly to state notices about employees filing jobless claims, especially when it has no record of those employees.

The American Rescue Plan Act allows an exclusion of unemployment compensation of up to $10,200 for individuals for tax year 2020. In the case of married individuals filing jointly this exclusion is up to $10,200 per spouse. To qualify for this exclusion, the taxpayer’s adjusted gross income must be less than $150,000. This threshold applies to all filing statuses. The exclusion may ease the burden on many fraud victims. However, victims who received Forms 1099-G from multiple states may have fraud claims that exceed the exclusion amount.

More information: 

• Publication 4557, Safeguarding Taxpayer Data
  
• Publication5293, Data Security Resource Guide for Tax Professionals
  
• Small Business Information Security: The Fundamentals 
• Identity Theft Central

Microsoft Windows 11 Not Supported for 2021 Software

  At this time, we are unable to officially support our 2021 software products on the new Microsoft Windows 11 operating system for the upcoming tax season.  While preliminary testing against the preview versions has shown positive results, the final release candidate of Windows 11 has not yet been released to us and therefore we have been unable to test our 2021 software for full compatibility with Windows 11.  After the final release candidate for Windows 11 is released to us, we will commence our compatibility testing.  The projected official release of Windows 11 is late 2021 and as such we do not anticipate officially supporting the new operating system for the 2021/2022 tax season. We will communicate any change in the support policy for our 2021 software once Microsoft officially releases the operating system and our compatibility testing is complete. Click here for more information on Windows 11.

Security Summit warns tax pros to watch for tell-tale signs of identity theft

The IRS, state tax agencies and the tax industry – working together as the Security Summit – reminded tax professionals that they should contact the IRS immediately when there’s an identity theft issue while also contacting insurance or cybersecurity experts to assist them with determining the cause and extent of the loss.

“There are tell-tale signs of identity theft that tax pros can easily miss,” said IRS Commissioner Chuck Rettig. “Identity thieves continue to look for ways to slip into the systems of tax pros to steal data. We urge practitioners to take simple steps and remain on the lookout for signs of data and identity theft. They are a critical first line of defense against identity theft.”

Knowing the signs of identity theft is the final part of a five-part series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data. This year’s theme “Boost Security Immunity: Fight Against Identity Theft,” focused on urging tax professionals to try harder to secure their systems and protect client data during this pandemic and its aftermath.

This summer-time Summit series, now in its sixth year, highlighted the protections offered by multi-factor authentication and key security steps, the use of the Identity Protection PIN for clients, scams to steal unemployment benefits and the dangers of phishing email/text scams.

One common refrain the IRS hears from tax professionals reporting data thefts is that they did not immediately recognize its signs.

Summit partners urged tax professionals to watch out for these critical signs:

• Client e-filed returns rejected because client’s Social Security Number was already used on another return.
• More e-file acknowledgements received than returns the tax pro filed.
• Clients responded to emails the tax pro didn’t send.
• Slow or unexpected computer or network responsiveness such as:
• Software or actions take longer to process than usual,
• Computer cursor moves or changes numbers without touching the mouse or keyboard,
• Unexpectedly locked out of a network or computer.

Tax professionals should also watch for warning signs when clients report they’ve received:

• IRS Authentication letters (5071C, 4883C, 5747C) even though they haven’t filed a return.
• A refund even though they haven’t filed a return.
• A tax transcript they didn’t request.
• Emails or calls from the tax pro that they didn’t initiate.
• A notice that someone created an IRS online account for the taxpayer without their consent.
• A notice the taxpayer wasn’t expecting that:
• Someone accessed their IRS online account,
• The IRS disabled their online account.

These are just a few common examples. Tax pros should ensure they have the highest security possible and contact these sources if they sense or see something amiss.

If you or your firm are the victim of data theft, immediately:

• Report it to your local IRS Stakeholder Liaison Liaisons will notify IRS Criminal Investigation and others within the agency on the practitioner’s behalf. Speed is critical. If reported quickly, the IRS can take steps to block fraudulent returns in the clients’ names and will assist tax pros through the process.
• Email the Federation of Tax Administrators at StateAlert@taxadmin.org Get information on how to report victim information to the states. Most states require that the state attorney general be notified of data breaches. This notification process may involve multiple offices.

Find more information at Data Theft Information for Tax Professionals.

For more information, see Boost Security Immunity: Fight Against Identity Theft.

IRS: Families now receiving August Child Tax Credit payments; still time for low-income families to sign up

 WASHINGTON — The Internal Revenue Service and the Treasury Department announced today that millions of American families are now receiving their advance Child Tax Credit (CTC) payment for the month of August as direct deposits begin posting in bank accounts and checks arrive in mailboxes.

This second batch of advance monthly payments, worth about $15 billion, are reaching about 36 million families today across the country. The majority will be issued by direct deposit.

Under the American Rescue Plan, most eligible families received the first payment on July 15, and payments will continue each month for the rest of 2021. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.

Besides the July 15 and Aug. 13 payments, payment dates are Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

Here are further details on these payments:

• Families will see the direct deposit payments in their accounts starting today, Aug. 13. Like the first payments, the vast majority of families will receive these payments by direct deposit.

• The IRS wants to alert some recipients who received direct deposits in July that they will receive the August payments by mail. Due to an issue expected to be resolved by the September payments, a percentage of these recipients – less than 15% – who received payments by direct deposit in July will be mailed paper checks for the August payment. For those affected, no additional action is needed for the September payment to be issued by direct deposit. Families can visit the Child Tax Credit Update Portal to see if they’re receiving a direct deposit or paper check this month.

• For those receiving their payments by paper check, be sure to allow extra time for delivery by mail through the end of August. Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal (https://www.irs.gov/credits-deductions/child-tax-credit-update-portal), available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, visit IRS.gov/childtaxcredit2021. A change made by 11:59 p.m. ET on Aug. 30 will apply starting with the September payment.

• Payments went to eligible families who filed a 2019 or 2020 income tax return. Returns processed by Aug. 2 are reflected in these payments. This includes people who don’t typically file a return but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov or in 2021 successfully used the Non-filer Sign-up Tool for advance CTC, also available only on IRS.gov.

• Payments are automatic. Aside from filing a tax return, including a simplified return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments. The Non-Filer Sign-Up tool is available until October 15, 2021. Families who did not get a July payment and are getting their first monthly payment in August will still receive their total advance payment for the year. This means that the total payment will be spread over five months, rather than six, making each monthly payment larger. For these families, each payment is up to $360 per month for each child under age 6 and up to $300 per month for each child ages 6 through 17

• Additionally, the IRS is correcting the advance CTC payments for families where the parent(s) have an Individual Taxpayer Identification Number (ITIN) and the qualifying children have a Social Security number. Such families who did not receive a July payment will receive a payment in early August, which includes a portion of the July payment. They will receive the remainder of the July payment in late August.

Low-income families can still sign up

It’s not too late for low-income families to sign up for advance CTC payments. The IRS urged anyone who normally isn’t required to file a tax return to explore the tools available on IRS.gov. These tools can help determine eligibility for the advance CTC or help people file a simplified tax return to sign up for these payments as well as Economic Impact Payments and the Recovery Rebate Credit. People can get these benefits, even if they don’t work and even if they receive no income.

The IRS continues to raise awareness of the expanded Child Tax Credit. The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up to receive the advance Child Tax Credits as well as Economic Impact Payments. People can check their eligibility for the advance payments by using the new advance Child Tax Credit Eligibility Assistant.

Families can stop payments anytime

Families can stop payments anytime, even after payments begin. They do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year. To stop all payments starting in September and the rest of 2021, they must unenroll by 11:59 p.m. ET on Aug. 30, 2021.

For married couples, each spouse must unenroll separately. If they each choose to unenroll, they will receive no monthly payments. If only one spouse unenrolls, they will still receive monthly payments, but they will be half the normal amount.

The unenroll feature can also be helpful to any family that no longer qualifies for the CTC or believes they will not qualify when they file their 2021 return. This could happen if, for example, someone else, such as an ex-spouse or another family member, qualifies to claim their child or children as dependents in 2021.

Links to these tools, a step-by-step guide to using the Non-filer Sign-up Tool, answers to frequently asked questions and other helpful resources are available on the tax agency’s special advance CTC 2021 page. It’s at IRS.gov/childtaxcredit2021.