e-News for Tax Professionals 2021-44

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Issue Number: 2021-44

Inside This Issue

1. Enrolled Agent renewal season is underway
2. IRS issues another 430,000 refunds for adjustments related to unemployment compensation
3. 401(k) contribution limit increases to $20,500, up $1,000
4. Special tax deduction helps most people give up to $600 to charity, even if they don’t itemize
5. Tax relief for Hurricane Ida victims in Connecticut
6. IRS releases reporting guidance for partnership interests held in connection with performance of services
7. News from the Justice Department’s Tax Division
8. Technical Guidance

License renewal season began on Nov. 1 for Enrolled Agents (EAs) with Social Security numbers ending in 0, 1, 2 or 3. The following email reminder was sent to affected EAs (see image below). To read the email reminder, save the image to your device.

EAs must renew by Jan. 31, 2022, to ensure they receive their new enrollment card before their current enrollment expires on March 31, 2022.

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The IRS recently sent about 430,000 refunds totaling more than $510 million to taxpayers who paid taxes on unemployment compensation excluded from income for tax year 2020. The IRS also is making corrections for Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Credit, Premium Tax Credit and Recovery Rebate Credit amounts affected by the exclusion. Most taxpayers need not take any action and there is no need to call the IRS. This article is also available in Spanish and Simplified Chinese.

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The contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan is increased to $20,500, up from $19,500 for 2021 and 2020. For additional highlights about contribution changes for 2022, visit IRS.gov. This article is also available in Spanish and Simplified Chinese.

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Remind your clients that a special tax provision may allow them to easily deduct up to $600 in donations to qualifying charities on their 2021 federal income tax return. Ordinarily, people who choose to take the standard deduction cannot claim a deduction for their charitable contributions. But a temporary law change now permits them to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations. This article is also available in Spanish and Simplified Chinese.

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Victims of Hurricane Ida in parts of Connecticut now have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments. Individuals and households affected by remnants of Hurricane Ida that reside or have a business in Fairfield County, New London County, Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation qualify for tax relief. This article is also available in Spanish and Simplified Chinese.

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The IRS posted detailed reporting directions for certain passthrough entities and taxpayers reporting of partnership interests held in connection with the performance of services, often referred to as "carried interests," in the form of frequently asked questions (FAQs). The purpose of the FAQs is to provide guidance relating to both Passthrough Entity filing and reporting requirements and Owner Taxpayer filing requirements in accordance with Department of the Treasury regulations revised in TD 9945.

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Andrea Pasley, a Durham, N.C., tax return preparer, was sentenced to 20 months in prison for conspiring to defraud the IRS. According to court documents and statements made in court, from 2012 through 2017, Pasley conspired with Karen Jones and Audrey Odom to prepare fraudulent tax returns for clients of Jones and Stone Taxes. In addition to the term of imprisonment, Pasley has been ordered to serve three years of supervised release and to pay approximately $1.26 million in restitution to the United States.

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Notice 2021-61 provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases.

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