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1.  IRS issues guidance regarding the retroactive termination of the Employee Retention Credit

The IRS news release about the retroactive termination of the Employee Retention Credit covers what wages this applies to and what business should do to avoid failure to pay and failure to deposit penalties.

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2.  Businesses must report nonemployee compensation and backup withholding

The IRS reminds businesses, payroll professionals and other payers to use Form 1099-NEC, Nonemployee Compensation, to report nonemployee compensation of $600 or more paid to a payee.

Generally, payers must file Form 1099-NEC by Monday, January 31, 2022, for tax year 2021. Payers must also furnish Form 1099-NEC to payees by this date.

Businesses should also be aware of:

  • The 30-day extension

  • When nonemployee compensation may be subject to backup withholding

  • What to do when a payer must backup withhold

  • What to do if a payer doesn’t have an EIN

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3.  IRS joins leading nonprofit groups to highlight special charitable tax benefit available through December 31

The Independent Sector and National Council of Nonprofits joined with the IRS to highlight a pandemic-related provision where married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. Under the temporary law, taxpayers don't need to itemize deductions on their tax returns to take advantage of this, which creates tax-favorable donation options not normally available to about 90 percent of tax filers. At a time when many charitable groups are struggling during the pandemic, the IRS highlights the new provision and urges people to make sure they donate to a qualifying charity.

The special Tax Exempt Organization Search tool on IRS.gov can help people make sure they donate to a qualified charity. This article is also available in Spanish and Simplified Chinese.

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4.  Small businesses should make sure to use the right form when filing employment tax returns

The IRS advises small business owners to review the rules for which form to use when filing quarterly versus annually:

  • Form 941, Employer's Quarterly Federal Tax Return

  • Form 944, Employer's Annual Federal Tax Return

The two forms are not interchangeable.

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5.  IRS issues information letters to Advance Child Tax Credit recipients and recipients of the third round of Economic Impact Payments; taxpayers should hold onto letters to help the 2022 Filing Season experience

The IRS announced 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.

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 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.

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6.  Revised questions and answers for 2020 Recovery Rebate Credit

The IRS updated its frequently asked questions (FAQs) regarding the 2020 Recovery Rebate Credit.

Individuals who didn't get the full first and second Economic Impact Payments may be eligible to claim the 2020 Recovery Rebate Credit.

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7.  National Tax Security Awareness Week: Security Summit partners remind businesses to tighten security; be aware of steps to help prevent, protect data loss

The IRS, state tax agencies and the nation’s tax industry urged businesses to be alert to cyberattacks aimed at gaining access to business data and customer information and be aware of steps to help them on tax-related issues related to identity theft.

More than 70% of cyberattacks are aimed at businesses with 100 or fewer employees. Con artists can target credit card or payment information, the business identity information or employee identity information.

The information covers:

  • COVID-19 or tax-related phishing email scams

  • Best practices from the Federal Trade Commission

  • What the IRS is doing

  • COVID-19 or tax-related phishing email scams

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8.  IRS issues standard mileage rates for 2022

The IRS issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021

  • 18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021

  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021

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9.  Interest rates remain the same for the first quarter of 2022

The IRS announced that interest rates will remain the same for the calendar quarter beginning January 1, 2022.

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10. Other tax news

Disaster relief

Filing taxes, retirees and more

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