Some tax changes to be aware of

It's been an interesting year with important tax changes that will impact you. Here are some of the changes and issues you need to know about.

Tax return due dates:

• Individuals must file returns by April 18, 2022, for the 2021 tax year;

• Partnerships must file returns by the 15th day of the third month following the close of the taxable year (March 15 for calendar-year taxpayers);

• C corporation returns are generally due by the 15th day of the fourth month following the close of the taxable year (April 15 for calendar-year taxpayers);

• S corporation returns will remain due by the 15th day of the third month of the taxable year (March 15 for calendar-year taxpayers); and

• W-2s and 1099s must be filed by Jan. 31, 2022, for the 2021 tax year.

Stimulus payments: The American Rescue Plan Act, which was passed into law in March 2021, authorized a third round of stimulus payments (also referred to as economic impact payments) that were issued to many taxpayers.

People who received an economic impact payment should have received IRS Notice 1444-C. Your Economic Impact Payment, notifying them of the amount of the payment they should have received. The maximum payment was $1,400 per taxpayer, spouse, and dependent.

Advanced child tax credits: Starting in July 2021, the IRS began sending Advanced Child Tax Credit payments to those who qualify to claim the Child Tax Credit on their 2021 income tax returns. The Child Tax Credit we are able to claim on your 2021 income tax return will be reduced by the amount of any advanced payments you received.

The IRS will send Letter 6419 to taxpayers in January 2022 reminding them of the number of advanced payments they received. You will need to provide us with a copy of the notice so that we can properly calculate the Child Tax Credit you are eligible to receive on your 2021 income tax return.

Virtual Currencies: The IRS has ramped up its enforcement of virtual currencies, such as bitcoin, most taxpayers who own virtual currencies fail to report their taxable transactions when filing their tax returns. The IRS is sending letters to tax payers with known virtual currencies accounts. The IRS requires taxpayers to affirmatively declare whether they are engaged in any virtual transactions. Intentionally failing to report taxable income can have severe consequences. Be sure to provide us this information.

Foreign accounts: You must report overseas assets owned by businesses as well as individuals. So, the reporting requirements are increasing and the penalties for failure to report continue to be harsh. Not all foreign holdings must be reported. If, for example, you hold stock in a foreign company through a U.S. broker, those holdings do not have to be separately reported. However, if you hold any other types of foreign assets, including bank accounts and securities accounts, please let us know. If you have any doubt as to whether any of your assets are foreign, please discuss those assets with your tax preparer. Again, this year you will need information on a business' foreign holdings as well.

There are many things going on in the tax world. We at Moats and Hebebrand are very prepared on the issues and can help you with them. Give us a call at (661) 822-1750.