Income Tax News

In 2025, eligible taxpayers might receive reimbursement under the PATH Act 2025 Refund Dates given by the department. This is because the Path limit causes payment delays, which are expected to be delivered to residents.

The PATH Act imposed restrictions on applicants who wanted to receive their tax refund or tax credit, such as Earned Income Tax and Refundable Credits, on their federal tax returns. The refundable nature of both EITC and CTC enables people to receive a higher refund than the amount they have paid in their taxes.

PATH Act 2025 Refund Dates

The Internal Revenue Service department distributes tax credits among eligible taxpayers. However, there is a report of an exam that concludes that fraud was common among people claiming these credits.

So, they need to have complete information related to the tax benefit. The PATH Act 2025 Refund Dates will give taxpayers a clear indication of the tax credit dates. However, it is also essential for citizens to know that only eligible taxpayers can receive the payment benefit.

PATH Act Refund Dates 2025 Overview

Administering Department	Internal Revenue Service
Program Name	PATH Act 2025 Refund Dates
Country	USA
Delays	May occur for paper checks
Refund Timeframe	3 weeks for e-file, sooner with direct deposit
Payment Date	After February 15, 2025 for EITC and CTC claims
Category	Government Aid
Official Website	https://www.irs.gov/

PATH Act 2025 Refund Dates Details

Beneficiaries who have submitted their tax return electronically, such people will be eligible to receive the refund in three weeks. Meanwhile, the beneficiaries who have e-filed and chosen direct deposit may get processed sooner. The date beneficiaries will receive the refund will be utterly contingent upon when your file return is processed.

The PATH Act 2025 Refund Dates protects the IRS from delivering any benefit before February 15 if you file an EITC and CTC tax credit from the department. It means eligible citizens must be aware that even if they have submitted their tax return early, they still need to wait to get it processed till February 15.

What to Do If Your PATH Act Refund is Delayed

Taxpayers should contact the IRS if their refund status remains unchanged for more than three to four weeks or if they have not received their refund by the specified deadline. Delays are rare when refunds are issued electronically, but physical checks may experience occasional delays.

• IRS authorities are available to help taxpayers identify the cause of delays and guide them on how to receive their reimbursement.
• The tax season in the United States will start one month from now, 2025. Those taxpayers claiming tax credits in their returns might experience delays in receiving tax credits.
• Taxpayers can track the status of their tax credit online and double-check the legitimacy of any accompanying documentation, assuring timely delivery.
• Communication from the IRS allows taxpayers to detect potential issues sooner and, with the agency’s assistance, resolve the matters quickly, receiving the refunds on time.
• Taxpayers can find further details about refund processing and tax credit claims on the official IRS website or from a local office for taxes.

How to Check PATH Act 2025 Refund Dates

To check the status of PATH Act 2025 Refund Dates, citizens need to follow the points which are mentioned below:

• For electronic submission, the taxpayers who submit their taxes can receive the refund in just three weeks, and it’s even sooner with e-filing, which involves a direct deposit feature.
• Refund dates depend on filing, processing times, and specific payment arrangements.
• The PATH Act holds refunds for those claiming the EITC and ACTC until after February 15, 2025.
• Even if taxpayers file their 2025 tax return early, refunds for those claiming these credits will not be processed before February 15.
• Taxpayers can check the PATH Act refund status based on the tax year or the date they filed their tax return.
• It is advised to keep up-to-date on refund updates and to use the IRS tools to track the status of refund claims.

FAQs

Are there any exceptions to the refund delay?

No, refunds for EITC and CTC will always be delayed until after February 15, 2025.

What is the importance of the PATH Act?

The PATH Act helps prevent fraud by delaying refunds for certain tax credits.

When can I expect my refund for the PATH Act 2025?

After February 15, 2025, for those claiming EITC and CTC.

Originally Appeared Here

FutureFuel Corp. (NYSE: FF) has announced receiving Excise Tax Registration approval from the Internal Revenue Service, marking a important first step towards eligibility for the Internal Revenue Code 45Z credit (clean fuel production tax credit). The tax credit, initially approved in August 2022, became effective January 1, 2025. FutureFuel, which has an annual biodiesel production capacity of 60 million gallons, is awaiting further guidance from the IRS regarding the implementation of this tax credit, along with other Renewable Fuel Producers.

FutureFuel Corp. (NYSE: FF) ha annunciato di aver ricevuto l’approvazione per la registrazione dell’imposta sui consumi da parte del Servizio delle Entrate Interno, segnando un importante primo passo verso l’idoneità per il credito d’imposta previsto dal Codice Fiscale 45Z (credito d’imposta per la produzione di carburanti puliti). Il credito d’imposta, inizialmente approvato nell’agosto 2022, entrerà in vigore il 1 gennaio 2025. FutureFuel, che ha una capacità annuale di produzione di biodiesel di 60 milioni di galloni, è in attesa di ulteriori indicazioni dall’IRS riguardo l’attuazione di questo credito d’imposta, insieme ad altri Produttori di Carburanti Rinnovabili.

FutureFuel Corp. (NYSE: FF) ha anunciado que ha recibido la aprobación del Registro de Impuesto Especial por parte del Servicio de Impuestos Internos, marcando un importante primer paso hacia la elegibilidad para el crédito fiscal del Código de Rentas Internas 45Z (crédito fiscal para la producción de combustible limpio). El crédito fiscal, aprobado inicialmente en agosto de 2022, entrará en vigor el 1 de enero de 2025. FutureFuel, que tiene una capacidad anual de producción de biodiésel de 60 millones de galones, está esperando más orientaciones del IRS sobre la implementación de este crédito fiscal, junto con otros Productores de Combustibles Renovables.

FutureFuel Corp. (NYSE: FF)는 내부 수익국으로부터 세금 면세 등록 승인을 받았다고 발표했으며, 이는 내부 세법 45Z 세액 공제(청정 연료 생산 세액 공제)에 대한 자격의 중요한 첫걸음을 의미합니다. 이 세액 공제는 2022년 8월에 처음 승인되었으며, 2025년 1월 1일부터 시행됩니다. FutureFuel는 연간 6000만 갤런의 바이오디젤 생산 능력을 보유하고 있으며, 이 세액 공제의 시행에 대한 추가 지침을 IRS로부터 기다리고 있습니다. 그리고 다른 재생 가능 연료 생산업체들과 함께 있습니다.

FutureFuel Corp. (NYSE: FF) a annoncé avoir reçu l’approbation d’enregistrement de la taxe d’accise par l’Internal Revenue Service, marquant une première étape importante vers l’éligibilité pour le crédit d’impôt du Code des Impôts Internes 45Z (crédit d’impôt pour la production de carburant propre). Le crédit d’impôt, approuvé initialement en août 2022, entrera en vigueur le 1er janvier 2025. FutureFuel, qui a une capacité de production annuelle de biodiesel de 60 millions de gallons, attend de plus amples directives de l’IRS concernant la mise en œuvre de ce crédit d’impôt, ainsi que d’autres producteurs de carburants renouvelables.

FutureFuel Corp. (NYSE: FF) hat angekündigt, die Genehmigung zur Registrierung der Verbrauchsteuer vom Internal Revenue Service erhalten zu haben, was einen wichtigen ersten Schritt zur Berechtigung für das Steuerkredit nach Internal Revenue Code 45Z (Steuerkredit für die Produktion von sauberem Kraftstoff) darstellt. Das Steuerkredit, das ursprünglich im August 2022 genehmigt wurde, wird am 1. Januar 2025 wirksam. FutureFuel, das eine jährliche Biodieselproduktionskapazität von 60 Millionen Gallonen hat, wartet auf weitere Anweisungen vom IRS bezüglich der Umsetzung dieses Steuerkredits, zusammen mit anderen Produzenten erneuerbarer Brennstoffe.

Positive

• Received IRS Excise Tax Registration approval, enabling potential eligibility for clean fuel production tax credits
• Substantial production capacity of 60 million gallons of biodiesel annually

Negative

• Full guidance from IRS still pending, creating uncertainty about actual tax credit benefits

Insights

The IRS excise tax registration approval for FutureFuel marks a important milestone in accessing the IRC 45Z clean fuel production tax credit. This 60 million gallon capacity biodiesel producer is now positioned to potentially benefit from tax credits ranging from $0.20 to $1.00 per gallon depending on the carbon intensity score of their fuel production process.

The Section 45Z credit represents a significant shift from the previous biodiesel tax credit structure, introducing a sliding scale based on lifecycle emissions rather than a flat rate. For a company with FF’s production capacity, this could translate to annual tax benefits between $12 million and $60 million, though actual figures will depend on production volumes and carbon intensity metrics once full IRS guidance is released.

This registration approval comes at an optimal time, coinciding with the credit’s effective date of January 1, 2025. However, investors should note that final guidance from the IRS regarding specific credit calculations and carbon intensity thresholds remains pending, creating some near-term uncertainty about the precise financial impact.

The timing of FutureFuel’s excise tax registration approval aligns perfectly with the biodiesel industry’s transition to the new emissions-based incentive structure. The 60 million gallon annual production capacity positions FF as a significant player in the renewable fuels market, representing meaningful clean energy infrastructure in a growing sector.

While the industry awaits complete IRS guidance, this development signals FF’s proactive approach to maintaining competitive advantages in the biofuels market. The new credit structure is designed to reward producers with lower carbon intensity scores, potentially creating additional value for companies with efficient production processes and sustainable feedstock sourcing strategies.

The market implications extend beyond direct tax benefits – this registration enhances FF’s ability to compete effectively in a sector where margins are heavily influenced by government incentives. The transition to an emissions-based credit system could drive strategic investments in process improvements and technology upgrades to optimize carbon intensity scores.

01/03/2025 – 04:14 PM

CLAYTON, Mo., Jan. 03, 2025 (GLOBE NEWSWIRE) — FutureFuel Corp. (NYSE: FF) (“FutureFuel”), a manufacturer of custom and performance chemicals and biofuels, today announced that it has received Excise Tax Registration approval from the Internal Revenue Service. This registration is the first requirement to be eligible to claim the Internal Revenue Code 45Z credit, also known as the clean fuel production tax credit. The tax credit was first approved in August 2022, to be effective beginning January 1, 2025. FutureFuel along with other Renewable Fuel Producers, are awaiting full guidance from the Internal Revenue Service regarding the tax credit. FutureFuel has the capacity to produce up to 60 million gallons of biodiesel annually.

About FutureFuel

FutureFuel is a leading manufacturer of diversified chemical products, specialty chemical products, and biofuel products. In its chemicals business, FutureFuel manufactures specialty chemicals for specific customers (“custom chemicals”), as well as multi-customer specialty chemicals (“performance chemicals”). FutureFuel’s custom chemicals product portfolio includes proprietary intermediates for major chemical companies and chlorinated polyolefin adhesion promoters and antioxidant precursors for a major chemical company. FutureFuel’s performance chemicals product portfolio includes polymer (nylon) modifiers and several small-volume specialty chemicals for diverse applications. FutureFuel’s biofuels segment primarily produces and sells biodiesel. Please visit www.futurefuelcorporation.com for more information.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements deal with FutureFuel’s current plans, intentions, beliefs, and expectations, and statements of future economic performance. Statements containing such terms as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate,” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements. In addition, from time-to-time FutureFuel or its representatives have made or will make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in various filings that the company makes with United States Securities and Exchange Commission (the “SEC”), in press releases, or in oral statements made by or with the approval of one of FutureFuel’s authorized executive officers.

These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in FutureFuel’s Form 10-K Annual Report, as amended for the year ended December 31, 2023 and in its future filings made with the SEC. An investor should not place undue reliance on any forward-looking statements contained in this document, which reflect FutureFuel management’s opinions only as of their respective dates. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revisions to forward-looking statements. The risks and uncertainties described in this document and in current and future filings with the SEC are not the only ones faced by FutureFuel. New factors emerge from time to time, and it is not possible for the company to predict which will arise. There may be additional risks not presently known to the company or that the company currently believes are immaterial to its business. In addition, FutureFuel cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, FutureFuel’s business, operating results, liquidity, and financial condition could be materially affected in an adverse manner. An investor should consult any additional disclosures FutureFuel has made or will make in its reports to the SEC on Forms 10-K, 10-Q, and 8-K, and any amendments thereto. All subsequent written and oral forward-looking statements attributable to FutureFuel or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this document.

# # #

FAQ

What is the significance of FutureFuel’s (FF) IRS Excise Tax Registration approval?

The approval is the first requirement for FutureFuel to become eligible for the Internal Revenue Code 45Z clean fuel production tax credit, potentially providing financial benefits for their biodiesel production.

When does the clean fuel production tax credit become effective for FutureFuel (FF)?

The clean fuel production tax credit became effective on January 1, 2025, following its initial approval in August 2022.

What is FutureFuel’s (FF) current biodiesel production capacity?

FutureFuel has the capacity to produce up to 60 million gallons of biodiesel annually.

What is the current status of IRS guidance for the clean fuel production tax credit for FutureFuel (FF)?

FutureFuel, along with other Renewable Fuel Producers, is currently awaiting full guidance from the Internal Revenue Service regarding the implementation of the tax credit.

Originally Appeared Here

Institutional investors are harvesting ETF losses for tax purposes, then placing their assets in highly correlated funds — regardless of so-called wash-sale restrictions, a new study found.

In theory, IRS guidelines prohibit investors from buying “substantially identical” securities 30 days before or after selling them. 

In practice, fund managers, pensions, insurance firms, endowments and other institutional investors “engage in substantial swapping” of ETFs with holdings that are 99% or more the same thing to the tune of $417 billion in assets since 2001 and $106 billion in 2022 in transactions that “seem to lack economic substance beyond harvesting capital losses,” according to a working academic paper released this summer and revised last month by four professors of business and management. The findings, which echo those of another working paper from earlier this year, shed more light on how ETFs help financial advisors and their clients offset the taxes on capital gains by booking losses in their portfolios.

“While the economic intent of the wash sale rule is straightforward, significant uncertainty remains as to the permissibility of tax deductions achieved through ETF swaps,” the report’s authors — Michael Dambra of the University of Buffalo and Andrew Glover, Charles M.C. Lee and Phillip Quinn of the University of Washington — wrote in the introduction. “Specifically, the IRS has not ruled on what constitutes a ‘substantially identical’ security, leaving financial advisors to navigate a foggy legal landscape. Some advisors seem to take the regulatory silence as tacit permission to swap ETFs that hold identical securities or that are even benchmarked to the same index (e.g., Lasser 2011). Others argue that if an investor’s economic position has not changed after swapping ETFs, the spirit of the wash sale rule has likely been violated (e.g., Fischer 2010). Against this backdrop of legal uncertainty, the extent to which investors engage in tax avoidance through ETF wash sales remains largely unknown.”

READ MORE: How a newly unified GOP government will affect ETFs

Representatives for the SEC declined to comment on the report’s conclusions and referred questions to the IRS, which didn’t provide a response.

The findings essentially “confirmed what all of us expected,” but “what was striking about the study was being able to demonstrate that the loss harvesting was material enough to be measured,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, a nonpartisan think tank.

Tax strategies around possible wash sales have been “going on for decades and decades and decades,” he noted. The rise of ETFs — which topped $10 trillion in assets for the first time in September in a shift fueled by technology, lower fees and tax advantages — has altered the picture. But it’s not clear whether IRS policymakers or members of Congress will try to rein in the wash-sale practices documented in the report.

“I don’t think they view this as high on their agenda, because there’s other tax evasion that goes on. This is lawful, and the question is whether it’s pushing the limits,” Rosenthal said in an interview. “It’s just easier now. There are more vehicles, there are more opportunities, there is more technology to help plan and there are more people marketing these strategies as a result of the ease.”

The study hasn’t been published by a peer-reviewed journal, and the researchers listed some possible “sources of noise” in the data they tracked from quarterly SEC filings of firms’ holdings known as Form 13F and granular trading records from financial technology firm AbelNoser Solutions, a Trading Technologies company. Some swap trades of correlated ETFs could have occurred at random, between the quarterly filings, at lower than 99% matches in their holdings or at an even greater volume when considering the growth of ETFs, the authors wrote.

“Exchange-traded funds provide an efficient way for investors to circumvent the trading frictions associated with the wash sale rule,” Dambra and the other academics wrote. “Specifically, investors can sell a depreciated ETF security and realize a capital loss while simultaneously purchasing another ‘nearly identical’ ETF security. This form of swap trading allows investors to maintain a substantively identical economic position while harvesting a capital loss that can be used to offset realized gains and other taxable income. With an explosion in available ETFs over the past two decades, these securities have become ideal vehicles for circumventing the wash sale rule.”

READ MORE: The most wonderful time of the year, for tax-loss harvesting

Their research suggests that ETFs can offer even greater tax efficiency than many experts have pointed out in the past — or that the IRS may be ignoring the enforcement of a rule that has restricted loss harvesting maneuvers for more than a century.   

“The expansion of ETFs has provided investors with a new, low-cost tool whereby capital losses can be realized without disturbing an optimal portfolio,” the authors wrote. “Similar to the findings in Li (2024), we find the introduction of a near-identical ETF leads to more volume activity for the incumbent ETF. Next, we find that tax-sensitive institutions hold a more diverse set of highly correlated ETFs, invest a larger portion of their AUM in these ETFs, engage in more swapping between near-identical ETFs and capture more capital losses with this swapping activity. We estimate conservatively that capital loss recognition attributable to annual swapping among tax-sensitive institutional investors is in the tens of billions of dollars. While this behavior is becoming increasingly widespread and economically important, regulators have remained silent on where ETFs fit in their definition of ‘substantially identical securities.’ We contribute to the policy discussion on the potential costs of that continued silence.”

Originally Appeared Here

As 2024 winds down to its final days there are still a number of steps that can be taken prior to the end of the year that can help reduce your 2024 tax liability. However, for many of these you must act quickly as most of these require action prior to stroke of midnight on Dec. 31. Reducing or deferring income taxes is always a good strategy, and little planning can help make the April 15 tax filing deadline easier to deal with.

One of the strategies that I personally will be utilizing is making some additional charitable contributions by the end of the year. Whether the deduction is made through a monetary contribution or by a donation of items, as long as the recipient organization receives the donation prior to year-end you will be entitled to a charitable contribution for 2024. I use this time of year to go through my closet and other areas of my home to identify clothing and other items that are not in use. If these items are in good or better condition your donation will entitle you to a charitable contribution deduction equal to the fair market value of the donated item.

Likewise, as a family we identify charitable organizations that we support and make some year-end charitable contributions. Many of these charitable organizations have a website that allows you to make your donation online through your credit card. Involving our children allows them to be a part of the decision as to what we determine to be worthy charitable organizations and for them to learn the importance of giving.

In addition, to charitable contributions you might also want to consider funding an Ohio 529 plan for your children. Not only will you be entitled to a tax deduction from your State of Ohio income taxes, but you will also enjoy the benefits of tax-deferred growth for their college education. Keep in mind, however, that this needs to be funded by Dec. 31 and needs to be through the Ohio 529 plan and not another out-of-state plan.

The Ohio Angel Scholarship Fund is another newer opportunity whereby the donor gets a dollar-for-dollar tax credit off of their Ohio income tax obligation. The amount is limited to $750 per taxpayer or $1,500 for a married couple. You will be spending the money one way or the other so why not direct the funds to an approved Ohio educational institution rather than the general Ohio State treasury.

You may also want to consider making some other payments by year-end so that you will be able to take advantage of the deduction for 2024. If you are able to itemize your deductions, then making your January real estate tax payment, or making your January 2025 State of Ohio or Ohio local estimated tax payments will allow you to increase your itemized deductions for 2024. As long as you have written the check by the end of the year and made these payments, these would be an itemized deduction for 2024, even if the check does not clear until 2025.

For those who are educators, there is a deduction of up to $300 for certain expenses of elementary and secondary school teachers through the end of 2024. Certain educational books, supplies, computers and software purchased prior to year-end for educators would be entitled to this deduction.

Taking a little bit of time during these final days of 2024 to plan and strategize could reap significant benefits when tax-filing season approaches.  Although you may have until April 15 for certain items, other tax-saving strategies require you to act before the end of the calendar year. So, in these final few days take a few moments to review your tax position and if you can save yourself some money down the road it would be wise to act now before it is too late.

Paul Pahoresky is the owner of PRP & Associates. He can be reached at 440-974-1040 extension 214 or at paul@prpassoc.com. Consult your tax advisor about your specific situation for additional information and guidance on these topics.

Originally Appeared Here

Details

By Native News Online Staff

December 24, 2024

The Internal Revenue Service (IRS) has announced plans to issue automatic payments later this month to eligible individuals who did not claim the Recovery Rebate Credit on their 2021 tax returns. This initiative follows a review of internal data that identified many taxpayers who filed a return but overlooked claiming the credit.

The Recovery Rebate Credit is a refundable credit designed for individuals who did not receive one or more Economic Impact Payments (EIPs), commonly referred to as stimulus payments.

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No Action Required for Eligible Taxpayers

Eligible taxpayers do not need to take any action to receive these payments. The IRS will automatically send the payments, which are expected to arrive via direct deposit or paper check by late January 2025. Recipients will also receive a separate letter confirming the payment.

“The IRS continues to work hard to support taxpayers,” said IRS Commissioner Danny Werfel. “By examining our internal data, we identified approximately one million taxpayers who were eligible for this credit but didn’t claim it. To simplify the process and ensure these individuals receive their payment, we are issuing the payments automatically, eliminating the need for them to file an amended return.”

Payment Details

The maximum payment amount is $1,400 per individual, with the total payments estimated to reach $2.4 billion. Payment amounts will vary based on several factors.

The IRS also reminds taxpayers who haven’t yet filed their 2021 tax returns that they may still be eligible for the credit, provided they file by April 15, 2025.

Most Taxpayers Have Already Claimed the Credit

The majority of taxpayers eligible for EIPs or the Recovery Rebate Credit have already received their payments. These upcoming December payments are specifically for those who filed a 2021 tax return but either left the Recovery Rebate Credit field blank or entered $0, despite being eligible for the credit.

How Automatic Payments Will Be Issued

For taxpayers who qualify, payments will be issued to the bank account provided on their 2023 tax return or sent to the address on file. If a taxpayer’s bank account has been closed, the payment will be returned to the IRS and reissued as a check to their address of record. Recipients will also receive a letter detailing the payment.

Additional Information and Filing Deadline

Taxpayers with questions about eligibility or payment calculations can visit the IRS’s 2021 Recovery Rebate Credit Questions and Answers page.

For those who did not file a 2021 tax return, the IRS encourages them to file by April 15, 2025, to claim the credit and any other potential refunds.

This effort reflects the IRS’s commitment to making the process easier for taxpayers and ensuring that eligible individuals receive the benefits they are entitled to without additional administrative burdens.

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Originally Appeared Here

The IRS has exciting news for taxpayers who may have missed out on a recovery rebate credit. This month, the agency will automatically send payments to about one million eligible individuals who didn’t claim this credit on their tax returns.

These payments are expected to total around $2.4 billion, with each eligible taxpayer receiving up to $1,400.

This initiative comes after the tax agency found that many taxpayers who filed their 2021 returns overlooked this tax relief. The recovery rebate credit was designed for those who didn’t receive one or more Economic Impact Payments, often called “stimulus checks.”

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So, will you be receiving a check or direct deposit soon? Here’s more of what you need to know, beginning with key points about the recovery rebate credit and how it worked.

Recovery rebate credit: What is it?

The recovery rebate credit was part of the U.S. government’s financial response to the COVID-19 pandemic. It was a refundable tax credit linked to federal stimulus checks many people received during that time.

Here’s how it worked: Eligible individuals who didn’t get the full amount of their pandemic stimulus payments or whose circumstances changed could claim the recovery rebate credit on their 2021 tax returns.

• The credit’s value depended on factors including income, filing status, and number of dependents.
• It was designed to ensure that people received the full financial support they were entitled to, even if they initially missed out on stimulus payments.
• For more information, see Kiplinger’s report: What is the Recovery Rebate Credit?

However, many people didn’t receive their recovery rebate credit due to a lack of awareness about eligibility, misunderstandings regarding the credit’s complexities, changes in financial circumstances, and issues related to filing tax returns.

Additionally, processing errors and confusion surrounding dependent claims contributed to missed payments, leaving some eligible individuals without the funds they were entitled to.

So, now, the IRS has decided to issue the payments automatically so recipients won’t have to file amended returns to get the money they’re owed.

IRS sending up to $1,400 ‘stimulus’ checks soon

The agency says eligible taxpayers can expect their payments to be processed by late January 2025, either through direct deposit or by paper check, depending on what they provided in their 2023 tax returns.

• If you closed your bank account since filing your 2023 tax return, the IRS says your bank will return the payment to the IRS and the agency will reissue the refund to the address of record.
• Additionally, the IRS will send letters to inform recipients about their payments and how the amounts were calculated.

IRS Commissioner Danny Werfel emphasized the agency’s commitment to helping taxpayers, saying, “These payments are an example of our commitment to go the extra mile for taxpayers.”

In a release, he pointed out that many people qualified for this credit but didn’t claim it when filing their returns. “Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible.”

Didn’t file 2021 taxes? What you can do

The IRS is also reminding anyone who hasn’t yet filed their 2021 tax return that they might still be eligible for an up to $1,400 credit if they file by April 15, 2025.

“Eligible taxpayers who did not file must file a tax return to claim a recovery rebate credit, even if their income from a job, business or other source was minimal or non-existent,” the agency says on its website.

As tax season approaches, the IRS says it wants to help individuals understand and claim available credits and deductions —especially those related to COVID-19 relief. If you’re uncertain about your 2021 tax return, you may want to consult a trusted tax professional who can help.

Related

Originally Appeared Here

The Internal Revenue Service (“IRS”) and the Treasury Department on October 21, 2024, issued final regulations under Sections 3405(a) and 3405(b) of the Internal Revenue Code of 1986, as amended (“Code”). (The IRS had issued previous guidance with respect thereto in Notice 87-7 and the IRS and Treasury had proposed regulations in May 2019.). Code Sections 3405(a) and 3405(b) generally require the payor of any distribution from an employer deferred compensation plan, both tax-qualified and non-qualified, an individual retirement plan (“IRA”) or a commercial annuity to withhold income taxes from the distribution unless the payee elects not to have taxes withheld.

Code Section 3405 provides a number of exceptions to that general rule in the international context. First, the tax withholding rules under Code Section 3405 do not apply to any payment or distribution that relates to the taxation of nonresident aliens under the rules of Code Sections 1441 through 1445 (or that would be subject to federal income taxation under those Code Sections, but for a tax treaty). For example, federal income tax withholding under Code Section 3405 would not apply to a U.S.-sourced distribution. In such a case, the withholding rules of Code Section 1441 that apply to nonresident aliens would apply to the distribution.

Under a second exception to the general rule, in the case of any periodic or nonperiodic distribution that is “to be delivered outside of the United States and any possession of the United States,” a payee may not elect that no withholding be made from the distribution . This second exception does not apply if the payee certifies to the payor that he or she is a nonresident alien.

The final regulations provide that:

• An Army Post Office, a Fleet Post Office and a Diplomatic Post Office are treated as addresses within the United States.
• Even if the payee’s residence address is located in the United States, an election of no withholding in connection with a distribution subject to income tax withholding under Code Section 3405 is invalid if the payee provides any of the following instructions:
  • Send the distribution to a financial institution or other person located outside the United States.
  • Send the distribution to a financial institution or other person located within the United States with further instructions (such as “for further credit to” instructions) directing the funds to be forwarded to a financial institution or other person located outside the United States.
  • Send the distribution to a financial institution or other person pursuant to payment instructions (including addenda information) that referto an International Automated Clearing House Transaction, International Bank Account Number, Society for Worldwide Interbank Financial Telecommunication (SWIFT), Business Identifier Code or similar identifier linked to a financial institution or other person located outside the United States.

• Except for distributions to certain nonresident aliens, if a payee’s residence address is located outside the United States, the payor of the distribution is required to withhold without regard to any delivery instructions or elections not to withhold.
• If the payee of a distribution has not provided the payor with the payee’s residence address, the payor must withhold from the distribution. For purposes of this Code requirement, a payee who has provided the payor with an address for the payee’s nominee, trustee or agent, without also providing the payee’s residence address, is treated as not having provided a residence address to the payor.

The final regulations apply with respect to distributions and payments made on or after January 1, 2026. However, taxpayers may apply the guidance under the final regulations to earlier distributions and payments.

Originally Appeared Here

In the fall of 2023, the Internal Revenue Service announced a pilot program that would allow some Americans to file their taxes directly to the agency — for free. The Direct File service managed to go against at least a half-dozen federal government stereotypes: it was new and novel in a system that loathes change; it allowed people to be more efficient with their time; and the people who used it this past tax season had plenty of good things to say about their experience. In May, the IRS said the program would be expanded and made permanent.

But of course, there are Republicans who would like nothing more than to strangle a popular government initiative in its cradle. In a letter to President-elect Donald Trump, more than two dozen House GOP members called on him to end the program through executive order once he takes office. If he heeds their request, they’ll have succeeded in ending a successful program before Americans get used to the idea that tax season need not be such a headache.

The letter effort was spearheaded by Reps. Adrian Smith of Nebraska and Chuck Edwards of North Carolina. “Under the guise of offering a convenient “free-to-file” alternative preparation service, the IRS asserts itself as the tax assessor, collector, preparer, and enforcer — all in one — when the program is used,” they fret before hinting that the IRS might actively cheat taxpayers out of their money:

“This is deeply concerning and a clear conflict of interest. The IRS has little incentive to ensure hardworking Americans do not pay more than they owe in taxes and may instead benefit from families and small businesses paying greater amounts than they are required by law. Furthermore, it is highly inappropriate for the IRS to serve as a tax preparer for taxpayers while also being the final enforcer of tax violations.”

This isn’t the first time that these two lawmakers have taken direct fire at Direct File. They introduced a similar bill earlier this year and have joined their colleagues in denouncing the Biden administration’s investment in the IRS despite it being a net savings for taxpayers. It’s also worth noting that the letter writers cc’ed billionaire budget bros Elon Musk and Vivek Ramaswamy, in hopes of putting Direct File in the crosshairs of their cockamamie cost-cutting commission.

It should be said that the program that these Republicans are railing against provides just the bare minimum of service from the IRS. Direct File can only handle filings from people with the most straightforward returns, like taxpayers who only have a single source of income from a W-2 and take the standard deduction. The system can’t process filings from gig economy workers, who companies consider to be self-employed contractors, let alone those in the kind of complex financial situation that would require multiple accountants.

Moreover, even the Direct File system is still wildly inefficient compared to European countries that do much more of the work for their taxpayers than the IRS does for Americans. Though the IRS already has data to show how much you should owe each year, the agency leaves it to you to figure it out if the math lines up. The consequences for getting it wrong are dire, which makes for exactly the kind of system a reasonable person would expect Musk and Ramaswamy’s pro-government efficiency to want to improve.

But despite all that, the Direct File system is a step in the right direction given the amount of dread people feel over filing their taxes each year. A 2013 Pew Research study found that over half of Americans dislike — or downright hate — doing their taxes each year. Small wonder when the IRS’ own data shows that the average American spends roughly 13 hours preparing their 1040 form each year. Add in the money that many people pay to file both their federal and state taxes together online and you can see how anything that will streamline the process reduce that burden is a major boon for taxpayers.

It feels likely then that Smith and Edwards are trying to ingratiate themselves with wealthier Americans who would stand to benefit more from a less popular IRS. The more friction in the system, the more visible of a target the IRS becomes for average Americans; the more people who are frustrated with the IRS, the better their case for cutting even more taxes for the wealthy. It also doesn’t hurt to be in the good graces of massive tax preparation companies like Intuit, which have spent years and millions of dollars to ensure that filing taxes is as painful a process as possible. Among the reforms they blocked was a plan to go further than Direct File, letting many taxpayers file pre-populated forms for free.

The net effect is that there’s no upside to murdering Direct File ahead of tax season beyond making the federal government less responsive and useful in the eyes of Americans. Republicans can falsely claim that they’re trying to save taxpayers’ money from the clutches of the IRS. It’s clear what they’re really trying to claw back is a massive refund of Americans’ time and energy in the name of making everything a little bit worse.

This article was originally published on MSNBC.com

Originally Appeared Here

Lahaina property on Lokia Street. File PC: Lahaina Community Land Trust

The Internal Revenue Service today announced new penalty relief for Maui wildfire victims impacted by the historic 2023 wildfires, which caused a reported $5.5 billion in damages.

The IRS will be providing failure to pay penalty relief to nearly 600 Maui taxpayers, which equates to about $300,000 in relief – an average of about $500 per taxpayer. This is separate from disaster relief previously announced in August 2023, that postponed various tax-filing and tax-payment deadlines for individuals and businesses in Maui and Hawaiʻi counties until Aug. 7, 2024. 

Due to the widespread damage and closure of postal facilities, the IRS did not mail the initial notice, typically the CP14 notice, to taxpayers who filed a balance due return in Maui and Hawaii counties, between Aug. 17, 2023, and Jan. 30, 2024. As a result, the IRS is removing any failure to pay penalties added to balance due tax periods from the date the IRS would have normally mailed the notice until the date the penalties were fully paid or through Dec. 30, 2024, whichever is earlier.

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Qualifying taxpayers with an impacted disaster address on the day the notice would normally have been issued are eligible, regardless of if their address has changed since then. 

This penalty relief is automatic. Maui wildfire disaster taxpayers don’t need to take any action to get it. Eligible taxpayers who already fully paid these penalties will benefit from the relief, too. If the penalties have been paid, the IRS will issue a refund or credit the payment toward another outstanding tax liability. 

Receive the latest notices from the IRS

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The IRS understands that some Maui residents may still be displaced. Affected taxpayers are urged to contact the IRS to update their address as soon as possible to ensure they receive future correspondence. The IRS advises wildfire victims in Maui and Hawaii counties to update their current address with the IRS by calling the IRS Disaster Hotline at 866-562-5227, or by filing Form 8822, Change of Address. The IRS also recommends that taxpayers notify the post office serving the old address, if their address has changed.

The IRS will mail impacted taxpayers a notice in the next couple of weeks informing them why their penalties were removed and any refund amounts or balances due remaining on the affected tax years.   

Improving taxpayer service and help for Maui taxpayers still needing assistance

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The IRS has taxpayer services available in person, over the phone and online. The IRS reminds taxpayers with unpaid tax debts that there are a number of payments options and online tools available to help.   

The IRS also encourages taxpayers unable to fully pay their tax balance to sign into and create an IRS Online Account where they can learn about payment plan options and apply for a new payment plan. This account allows taxpayer to view:

• The amount they owe.
• Payment history and any scheduled or pending payments.
• Payment plan details and revise details of an existing payment plan.
• Digital copies of select notices from the IRS.
• Most recently filed tax return, including adjusted gross income, and access transcripts or tax compliance reports.

Eligible business taxpayers also now have the option to sign in and create a Business Tax Account to view and submit balance due payments. Additionally, the Tax Pro Online Account has more self-service options for tax professionals, including easier navigation to secure two-way messaging where authorized tax professionals can digitally communicate with the IRS on behalf of their clients.

What taxpayers should know about interest

The IRS is required by law to charge interest when a tax balance is not paid on time. Interest cannot be reduced due to reasonable cause. Interest is based on the amount of tax owed for each day it’s not paid in full. The interest is compounded daily, so it’s assessed on the previous day’s balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the interest page of IRS.gov.

Originally Appeared Here

State Rep. Jay Steagall, R-Yukon, has become the second lawmaker in recent weeks to file legislation that would gradually lead to the full elimination of Oklahoma’s personal income tax.

“Recent polls show that Oklahomans overwhelmingly support the elimination of the state income tax, an effort for which I have filed legislation in the past two years and (am) filing once again for the 60th Legislature,” Steagall said. “The state income tax is a clear violation of our own state constitution and I will continue to pursue righting this wrong in the upcoming session.”

Steagall pointed to Article 2, Section 2 of the Oklahoma Constitution, which declares that “all persons have the inherent right to life, liberty, the pursuit of happiness, and the enjoyment of the gains of their own industry.” He said income taxes go against the foundation of the state constitution and encroach on Oklahomans’ liberties.

House Bill 1009, by Steagall, would reduce the personal income tax rate and corporate income tax rate by equal amounts every year for 10 years, at which point the two taxes would be eliminated.

Steagall indicated the legislation would completely phase out Oklahoma’s personal and corporate income taxes by 2035.

Steagall’s bill is the second such measure publicly announced since the Nov. 5 general election.

Under Senate Bill 1, by state Sen. Micheal Bergstrom, R-Adair, the state’s personal income-tax rate would be cut from its current rate of 4.75 percent to 4.5 percent in the 2025 tax year. The bill provides for additional, automatic income-tax reductions of another quarter-point every year that the Oklahoma Legislature has at least $400 million in growth revenue available.

SB 1 would not cut the tax rate during state revenue failures or shortfalls.

Members of the Oklahoma House of Representatives passed a similar measure to gradually eliminate the personal income tax during the 2024 legislative session but that bill was never granted a hearing in the Senate. Lawmakers ultimately adjourned the 2024 legislative session without passing any income-tax cuts.

However, Senate lawmakers are reportedly more receptive to addressing tax issues during the 2025 session.

Oklahoma’s current top income-tax rate of 4.75 percent is higher than several neighboring states, including Texas (which has no personal income tax), Arkansas (where the rate is 3.9 percent), and Colorado (4.4 percent). Missouri’s top rate of 4.8 percent is almost the same as Oklahoma’s rate. Among bordering states, only Kansas and New Mexico have significantly higher personal income-tax rates than Oklahoma.

While Oklahoma has experienced positive net migration since 2019 as more people move into the state than leave it, Internal Revenue Service data show that states with no personal income tax are still outpacing Oklahoma, particularly when it comes to attracting higher-income individuals.

The Business Leaders Poll, a collaborative project of The State Chamber, the Oklahoma Business Roundtable, and The State Chamber Research Foundation, surveyed 325 business owners and executives in Oklahoma in early summer 2024.

The poll found that 78 percent of business leaders favored reducing or eliminating the state income tax, with half saying the state should use growth revenue to reduce the tax over time and 28 percent supporting “outright elimination of the income tax so Oklahoma can compete with other high-growth states.”

The tax bills can be considered by lawmakers after the next legislative session begins on Feb. 3, 2025.

Originally Appeared Here