03/01/21

Here’s what taxpayers should do if they have missing or incorrect documents 
Taxpayers should double-check to make sure they have all their documents before filing a tax return.

Taxpayers who haven’t received a W-2 or Form 1099 should contact the employer, payer or issuing agency and request the missing documents. This also applies for those who received an incorrect W-2 or Form 1099.

If they can’t get the forms, they must still file their tax return on time. To avoid filing an incomplete or amended return, they may need to use Form 4852Substitute for Form W-2, Wage and Tax Statementor Form 1099-R,Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

If a taxpayer doesn’t receive the missing or corrected form in time to file their tax return, they can estimate the wages or payments made to them, as well as any taxes withheld. Then use Form 4852 to report this information on their federal tax return.

If they receive the missing or corrected Form W-2 or Form 1099-R after filing their return and the information differs from their previous estimate, they must file Form 1040-XAmended U.S. Individual Income Tax Return.

Most taxpayers should have received income documents near the end of January, including:

  • Forms W-2, Wage and Tax Statement
  • Form 1099-MISC, Miscellaneous Income
  • Form 1099-INT, Interest Income
  • Form 1099-NEC, Nonemployee Compensation
  • Form 1099-G, Certain Government Payments; like unemployment compensation or state tax refund

Incorrect Form 1099-G for unemployment benefits Many people received unemployment compensation in 2020. For some, this may have been the first time they ever received unemployment. These taxpayers need to know that unemployment compensation is taxable and must be included on their tax return.

Taxpayers who receive an incorrect Form 1099-G for unemployment benefits they did not receive should contact the issuing state agency to request a revised Form 1099-G showing they did not receive these benefits. Taxpayers who are unable to obtain a timely, corrected form from states should still file an accurate tax return, reporting only the income they received.

02/24/21

People should be on the lookout for identity theft involving unemployment benefits

The IRS urges taxpayers whose identities may have been used by thieves to steal unemployment benefits to file a tax return claiming only the income they actually received.

In 2020, millions of taxpayers were affected by the COVID-19 pandemic through job loss or reduced work hours. Some taxpayers applied for and received unemployment compensation from their state. By law, unemployment benefits are taxable.

Scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation
using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves.

Taxpayers who receive an incorrect Form 1099-G should contact the issuing state agency to request a revised form. If they’re unable to get a timely, corrected form from states, they should still file an accurate tax return, reporting only the income they received. They should save whatever documentation they have regarding their attempts to receive a corrected form from their state agency.

What people should if they think they might be an identity theft victim
People should visit Identity Theft Central for more information about the signs of identity theft.

Taxpayers do not need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. An affidavit should only be filed only if the taxpayer’s e-filed return is rejected because a return using the same Social Security number already has been filed.

If a taxpayer is concerned that their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can request an identity protection PIN from the IRS.

An Identity Protection PIN is a six-digit number that prevents someone else from filing a tax return using a taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, and this step helps the IRS verify the taxpayer’s identity when they file their electronic or paper tax return.

States should not issue Forms 1099-Gs to taxpayers they know to be victims of identity theft involving unemployment compensation

02/09/21

The first step of tax preparation is gathering records

As taxpayers get ready to file their 2020 tax return, they should start by gathering their records. Taxpayers should gather all year-end income documents to help ensure they file a complete and accurate 2020 tax return and avoid refund delays.

Taxpayers should have all necessary records handy, such as W-2s, 1099s, receipts, canceled checks and other documents that support any income, deductions or credits on their tax return.

Most taxpayers should have already received income documents including:

  • Forms W-2, Wage and Tax Statement
  • Form 1099-MISC, Miscellaneous Income
  • Form 1099-INT, Interest Income
  • Form 1099-NEC, Nonemployee Compensation
  • Form 1099-G, Certain Government Payments; like unemployment compensation or state tax refund
  • Form 1095-A, Health Insurance Marketplace Statements

01/29/21

1.  EITC Awareness Day: Critical tax credit provides refund boost to millions


The IRS and its partners reminded individuals about the Earned Income Tax Credit today on “EITC Awareness Day” 2021and urged people to check to see if they qualify for this important credit.

“This year marks the 15th annual EITC Awareness Day,” said IRS Commissioner Chuck Rettig. “For more than 45 years, this tax credit has been helping hard-working Americans and their families. We want to thank our partners around the country who help us reach out to those low- and moderate-income people who may qualify and not even know about it.”

The IRS earlier announced that it will begin accepting 2020 tax returns on Feb. 12. Once filing season officially opens, the returns will be electronically submitted for processing.

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2.  Guidance to taxpayers on identity theft involving unemployment benefits


The IRS urged individuals who receive Forms 1099-G for unemployment benefits they did not actually get because of identity theft to contact their appropriate state agency for a corrected form. States issue Forms 1099-G to the taxpayer and to the IRS to report what taxable income, such as refunds or unemployment benefits, were issued by state agencies.

During 2020, millions of taxpayers were impacted by the COVID-19 pandemic through job loss or reduced work hours. Some taxpayers who faced unemployment or reduced work hours applied for and received unemployment compensation from their state. Under federal law, unemployment benefits are taxable income.

However, scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves, and the individuals whose names and personal information were taken did not receive any of the payments.

If you have clients who received unemployment benefits in 2020, remind them to visit the website of the agency paying unemployment benefits to get their Form 1099-G. Visit www.irs.gov/uc for more information.

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3.  New online tool simplifies third-party authorizations


Tax professionals can now use a new online tool, Submit Forms 2848 and 8821 Online, to remotely obtain signatures from clients and submit authorization forms without meeting face-to-face. The tool is protected by Secure Access authentication, so tax professionals must have a Secure Access username and password or create an account.

For details about how to use “Submit Forms 2848 and 8821 Online,” tax professionals may review an IRS webinar or Fact Sheet 2021-01.

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4.  IRS creates new Chief Taxpayer Experience Officer position


As part of a larger effort related to the Taxpayer First Act, the IRS announced the creation of a new Chief Taxpayer Experience Officer position to unify and expand efforts across the agency to serve taxpayers. Ken Corbin, currently the IRS Wage and Investment Commissioner, will take on this new role reporting directly to IRS Commissioner Charles Rettig while continuing to serve in his position overseeing the agency’s largest operating division.

This announcement is the first senior leadership role created within the IRS under the Taxpayer First Act framework. The Taxpayer Experience Office, led by the Chief Taxpayer Experience Officer, reporting directly to the Commissioner, is one of the new roles envisioned in the multi-year plan.

“This position is designed to ensure the views and experiences of taxpayers and their professional representatives are factored into all aspects of IRS operations,” said IRS Commissioner Chuck Rettig. “While taxpayer service has always been a priority for the IRS, we can do more. Having Ken Corbin in this new position will provide a different way of ensuring the taxpayer component is factored into all aspects of global IRS operations and business decisions in a way that’s never been done before. Every taxpayer and every taxpayer interaction are important, and Ken will make a significant difference going forward.”

The position will work with business units and offices across the IRS, including Chief Counsel, the Independent Office of Appeals and the National Taxpayer Advocate. The role is envisioned as working in coordination with the National Taxpayer Advocate, which is an independent organization inside the agency that helps taxpayers with issues that can’t be resolved with the IRS.

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5.  New law extends COVID tax credit for employers who keep workers on payroll


Employers are encouraged to take advantage of the newly-extended employee retention credit, designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll. As a result of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after Dec. 31, 2020, through June 30, 2021.

Retroactive to the March 27, 2020, enactment of the CARES Act, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan. For more information, see COVID-19-Related Employee Retention Credits: How to Claim the Employee Retention Credit FAQs.