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Issue Number: 2021-06

Inside This Issue

1. New online tools to help families manage Child Tax Credit payments
2. The IRS needs your help: Join study to improve IRS.gov
3. Tax credits for paid leave under the American Rescue Plan Act of 2021
4. Guidance available on tax credits for continuation health coverage
5. 2022 Adjustments for HSAs & Excepted-Benefit HRAs
6. #IRSTaxTip – Information you can share on social media
7. Other tax news
8. New and Draft forms, instructions and publications on IRS.gov

The American Rescue plan increased the maximum Child Tax Credit amount in 2021 to $3,600 per child for children under the age of 6 and to $3,000 per child for children ages 6 through 17. It’s also now an advanceable payment, and automatic payments for eligible families will start on July 15, 2021.

To help families sign up for this advanceable credit, the IRS launched several new online tools designed to help families manage and monitor these payments:

• Child Tax Credit Eligibility Assistant – allows families to answer a series of questions to quickly determine whether they qualify for the advance credit.
• Child Tax Credit Update Portal – allows families to verify their eligibility for the payments and if they choose to unenroll, or opt out, from receiving the monthly payments so they can receive a lump-sum when they file their tax return next year.
• Non-filer Sign-up Tool – helps families not normally required to file an income tax return to quickly register for the Child Tax Credit and Economic Impact Payments.

Help spread the word

The IRS urges payroll professionals, and anyone else with connections to people with children, to share this critical information about the Child Tax Credit, especially those who do not normally file an income tax return.

For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.

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The IRS wants to make using its website easier for payroll professionals by improving how it organizes payroll information.

Take part in a 10 to 15 minute IRS research study to help determine how people sort different tasks or topics into categories, and to suggest titles for these categories.

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The IRS posted new frequently-asked-questions (FAQs) to help small- and mid-sized employers in claiming credits under the American Rescue Plan (ARP) with respect to leave taken by employees beginning on April 1, 2021, through September 30, 2021. The FAQs cover the equivalent credits available for certain self-employed individuals.

The FAQs include information on how eligible employers may claim the paid sick and family leave credits, including how to file for and compute the applicable credit amounts, and how to receive advance payments for and refunds of the credits.

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IRS news release IR-2021-115, provides information on tax breaks under the American Rescue Plan for continuation health coverage under COBRA. In summary:

• The American Rescue Plan Act provides a temporary 100% reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in work hours or an involuntary termination of employment.
• The new law also provides a corresponding tax credit for the entities that maintain group health plans—such as employers, multiemployer plans and insurers.
• The 100% reduction in the premium and the credit are also available with respect to continuation coverage provided for those events under comparable state laws—sometimes referred to as “mini-COBRA.”

Notice 2021-31 provides information regarding the calculation of the credit, the eligibility of individuals, the premium assistance period, and other information vital to employers, plan administrators, and insurers to understand the credit.

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The IRS released its 2022 annual inflation adjustments for Health Savings Accounts (HSAs) as determined under Section 223 of the Internal Revenue Code. IRS Revenue Procedure 2021-25 provides the adjusted limits for contributions to a HSA, as well as the high deductible health plan (HDHP) minimums and maximums for calendar year 2022.

The revenue procedure also sets the maximum amount that may be made newly available for the plan year for an excepted-benefit health reimbursement arrangements (HRAs). 

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• #IRSTaxTip: Filing payroll taxes electronically makes good business sense https://go.usa.gov/x69Uw
• #IRSTaxTip: IRS offers information and resources in variety of multilingual and alternative formats https://go.usa.gov/x69UV
• #IRSTaxTip: Facts to help taxpayers understand backup withholding https://go.usa.gov/x69Ud

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The following information may be of interest to individuals and groups in or related to payroll professionals’ circles:

• ETAAC delivers 2021 Annual Report with recommendations to Congress and IRS
• IRS sending more than 2.8 million refunds to those who already paid taxes on 2020 unemployment compensation
• IRS seeks nominations for the 2022 Internal Revenue Service Advisory Council (IRSAC)
• 2021 IRS Virtual Nationwide Tax Forum begins in July

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New forms

• Form 7200, Advance Payment of Employer Credits Due to COVID-19
• Form 7200 (SP), Advance Payment of Employer Credits due to COVID-19 (Spanish Version)

Draft forms

• Form 941, Employer's Quarterly Federal Tax Return
• Form 941 (Schedule R), Allocation Schedule for Aggregate Form 941 Filers
• Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands
• Form 1094-B, Transmittal of Health Coverage Information Returns
• Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
• Form 1095-B, Health Coverage
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

New instructions

• Inst 941-X (PR), Instructions for Form 941-X (PR), Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund (Puerto Rico Version)
• Inst 943-X (PR), Instructions for Form 943-X (PR), Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund (Puerto Rico Version)
• Inst 7200, Instructions for Form 7200, Advance Payment of Employer Credits Due to COVID-19
• Inst 7200 (SP), Instructions for Form 7200, Advance Payment of Employer Credits Due to COVID-19 (Spanish Version)

Draft instructions

• Inst 941, Instructions for Form 941, Employer's Quarterly Federal Tax Return
• Inst 941-SS, Instructions for Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands
• Inst 7200 (SP), Instructions for Form 7200, Advance Payment of Employer Credits Due to COVID-19 (Spanish Version)

New publications

• Pub 1187, Specifications for Electronic Filing of Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
• Pub 1693, SSA/IRS Reporter

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