As we enter the second half of 2022 full speed ahead, both individuals and businesses should be aware of key IRS news as they keep their documentation in order. We’ve got some of the latest tax updates to ensure you stay prepared, avoid penalties, and know how to maximize your tax refund!
Check out this summer’s hottest tax news so far.
Increased Mileage Rate for Second Half of 2022
Perhaps most exciting for those who travel for work is the recent increase in the optional standard mileage rate! Effective for the final six months of 2022, taxpayers can deduct a bit more for business and certain other reasons.
For travel between July 1 and December 31, 2022, you can deduct:
62.5 cents per mile for business travel (up 4 cents)
22 cents for eligible medical/moving expenses (also up 4 cents and available for active-duty military members)
The IRS made this special adjustment in recognition of recent rising gas costs. Mileage rate updates typically occur only once a year in the fall for the following calendar year. For travel from January 1 through June 30, 2022, you should use the rates below:
58.5 cents per mile for business travel
18 cents per mile for medical/moving expenses
The charitable travel rate remains 14 cents per mile as it is set by statute.
Fuel prices may be rocky, but you can stay grounded and slightly less stressed for the rest of the year. Plus, check out 15 common small business tax deductions to save even more next time you file!
Electronic Tax Administration Advisory Committee Annual Report
The Electronic Tax Administration Advisory Committee (ETAAC) is a panel of volunteers appointed by the Secretary of Treasury who serve a three-year term. The committee provides an organized public forum to discuss issues regarding electronic tax administration, such as identity theft and refund fraud prevention.
Members represent various segments of the tax community, including individual and business taxpayers, tax professionals and preparers, tax software developers, payroll service providers, the financial industry, and state and local governments.
The ETAAC releases an annual report to Congress on IRS progress toward achieving the 80% goal of electronically filed tax and information returns. This report also includes:
The status of the strategic plan for electronic tax administration.
Legislative changes necessary to help the IRS reach these goals.
Effects of e-filing on small businesses and self-employed individuals.
In its 2022 report, the ETAAC recommended that Congress provide the IRS with:
Flexible, sustainable, predictable multi-year funding.
Budgetary and legislative support so the IRS can leverage its successes to deliver a higher level of services to taxpayers.
The panel also recommended that the IRS:
Update Modernized e-File to remove obstacles to e-filing, with appropriate security features, taxpayer consent, and acknowledgments.
Conduct a national, year-long campaign to promote the use of identity protection PIN.
Collaborate with states and software providers to develop a long-term roadmap for Payroll and Information Return Modernization.
Taxpayer Tips: Updates on Your Returns
Even More Tax Forms Can be Amended Electronically
The IRS recently announced that more forms can be amended electronically, including:
Form 1040-NR, U.S. Nonresident Alien Income Tax Return
Forms 1040-SS, U.S. Self-Employment Tax Return (including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico)
Forms 1040-PR, Self-Employment Tax Return - Puerto Rico
These additions are all part of an effort to make the process easier for taxpayers who need to make corrections and assist the IRS in catching up on the backlog of amended returns.
Additional updates include:
An electronic checkbox for Forms 1040/1040-SR, 1040-NR, and 1040-SS/1040-PR to indicate that a superseding return is being filed electronically. A superseded return, including extensions, is filed after the initially filed return but before the due date.
The ability for taxpayers to amend their returns electronically to change their filing status or add a dependent who was previously claimed on another return.
Taxpayers can still submit:
Amended Forms 1040 and 1040-SR for tax years 2019, 2020, and 2021
Amended Form 1040-NR for tax year 2021
Corrected Forms 1040-SS and 1040-PR for tax year 2021
IRS Continues to Catch Up on Inventory of Tax Returns
In late June, the IRS continued its push to finish processing a key group of individual tax returns filed during 2021. The agency began 2022 with more 2021 paper tax returns and correspondence due to the pandemic and staffing limitations. The IRS reported on June 21 that it was on track to complete processing of all Form 1040 without errors received in 2021 by the end of that week.
The agency was still working on a group of remaining 2021 individual tax returns with processing issues or needing additional information from the taxpayer. Business paper returns filed in 2021 were to follow shortly after.
The IRS is still receiving current and prior-year individual returns and related correspondence as people file extensions, amended returns, and various business tax returns.
Additionally, the IRS reminded taxpayers who haven’t yet filed their 2021 tax returns this year — including those who requested an October 17 extension — to file their returns electronically with direct deposit as soon as they are ready. Filing as early as possible will help avoid delays and assist the agency’s ongoing efforts to finish processing tax returns this year.
So don’t wait until the last minute before the October 17 extension deadline! File your return today. You can also check Where’s My Refund? or log in to your account to get the status of your return.
File Your Return ASAP
Whether you haven’t yet filed your 2021 tax return or requested an extension, the IRS urges you to file a complete and accurate return as early as possible. Again, don’t wait for that October deadline.
Filing electronically ASAP can help you get a refund faster or save money if you owe by avoiding additional interest and penalties. If you didn’t file an extension and missed the April deadline, you can also prevent extra penalties and interest if you owe by filing now.
Did you not file a tax return because you didn’t earn enough money to be required to file? You likely won’t receive a penalty if you are owed a refund — but you could miss out on receiving that refund if you don’t file! File your 2021 tax return electronically and if you’re due a refund, choose direct deposit.
Are you waiting to file your 2021 tax return because your 2020 return hasn’t been processed? You need your Adjusted Gross Income (AGI) from your most recent tax return to validate and submit your electronic return. If you’re still waiting on your 2020 return, you can file your 2021 return by entering $0 for your 2020 AGI on your 2021 tax return. The field will auto-populate if you use the same tax preparation software as last year.
Find more guidance and resources on IRS.gov.
Understanding Key IRS Updates
IRS updates occur quickly and frequently, so it can be challenging to keep up! That’s why we’re here to break down essential tax news that affects you as an individual and business taxpayer. Continue checking back for future updates and tips to stay prepared come tax season.
Do you have questions or concerns about your taxes or accounting records? Reach out to Check & Balance to schedule a free consultation today! We will be happy to answer your tax and accounting questions.