What's New this Tax Filing Season?

(film reel clattering) - Welcome to today's Ethnic Media Services Zoom news conference.

I'm Sandy Close, executive director, and your moderator for today.

[soft background music] We are entering the tax filing season in earnest.

We all know the deadline for filing is April 15th.

We worry about procrastinating.

Here to help us help our audiences and ourselves get through this filing season, we are pleased to welcome back the IRS for what has now become an annual briefing session with EMS.

What's new this tax filing season?

We are going to learn about changes in the Earned Income Tax Credit program, the new green energy credits, changes in the 1099-K, and, above all, where to go to get help filing your taxes at new taxpayers assistance centers.

Our speakers include Kevin Moorehead, deputy commissioner, Wage and Investment Division of the IRS; Susan Simon, director of Customer Assistance, Relationships and Education at the IRS.

- Thank you so much, Sandy.

Sue and I are glad to be talking with you today and hope that the information we provide assists taxpayers across the nation.

So, let me start a little bit about the IRS in general.

(hesitates) As one of the world's most efficient tax administrators, the IRS collects about $4.1 trillion a year which is about 96% of the U.S. gross revenue.

During the fiscal year 2021, the IRS collected more than 4.1 in gross taxes, processed more than 260 million tax returns and other forms, and issued more than $1.1 trillion in tax refunds, including $585 billion in economic impact payments and advanced child tax payments.

So, we are finishing up about the third week of what we call the filing season.

And, overall we are very encouraged by how well things are going.

We started processing 2022 tax returns on January 23rd and we expect more than 168 million individual tax returns to be filed with the vast majority of those coming in before April 18th, the tax deadline date.

So, for the week ending February 3rd, just two weeks' worth of data, we'd received almost 19 million tax returns and processed 16.8 million of those.

We've issued 8 million refunds averaging $1,963 with 6.9 million of those being direct deposited.

All of those numbers are higher than the same time last year except the average refund amount, which is about 10% lower, but we expected that and have been telling taxpayers to expect that, too.

We know people rely on us for the information and help that may need to meet their tax obligation.

Our focus is to continue to help taxpayers, the tax industry and our employees.

While much work remains after several difficult years, we anticipate a significantly better tax season for everyone this year.

So, here's a few reasons for that.

As part of the passage of the Inflation Reduction Act, we hired more than 5,000 new telephone assisters bringing our phone staffing to its highest level ever.

We've expanded the in-person assistance in our taxpayer assistance center by adding staff across the country and are still working to staff those locations.

In a week or so, we'll be entering what is typically our busiest time of the filing season.

So, I want to encourage taxpayers to take advantage of the many online tools and resources on irs.gov available anytime.

There you can find answers to questions, view your account, check the status of your refund, and you can even pay your taxes all without calling or visiting the IRS.

In the fall, we started talking about steps people can take to make taxes-- tax their filing experience simple and easy.

It's not too late to take those steps now.

So, I'm going to cover a few.

There's, one, gather your tax documents and take time to review your information.

Make sure you have all of the documents that you may need for filing your return.

Second, choose direct deposit.

You know, just taking these two steps will get most people to the finish line because filing an accurate tax return electronically will avoid delays, and direct deposit speeds up refunds.

There are a few options available to most taxpayers for free filing.

We'll talk more about that.

Also, a 2022 tax return, even if you-- please file one even if you don't have to because you could get more money in your pocket.

While people with income under a certain amount are not generally required to file a tax return, those who qualify for certain tax credits or already paid some federal tax by having taxes withheld from their paycheck, may qualify for a tax refund, but they must file in order to get one.

Now, I'm gonna shift gears a little bit and talk about what's new and what to consider when filing a '22 tax return.

So, as I mentioned, refunds are slightly smaller, and (clears throat) part of that is taxpayers will not receive an additional stimulus payment with their return because there were no Economic Impact Payments for 2022.

In addition, taxpayers who don't itemize and take the standard deduction won't be able to deduct their charitable contributions like they were able to in 2021 returns.

Some credit amounts are also slightly smaller.

So, for tax year 2022, taxpayers may still qualify for temporary expanded eligibility for the "premium tax credit."

The PTC is a tax credit for certain people who enroll, or whose family member enrolls, in a qualified health plan.

Qualified taxpayers must file the Form 8962 to compute and take the PTC on their tax return.

I think with that, I am ready to turn it over to my colleague, Sue Simon, for some additional comments.

- Could I interrupt with-?

- [Kevin] Yes!

- Just two quick questions?

First of all, why-- can you remind us what charitable deductions are we allowed to take?

Or, is it that somehow contributions we make to our local religious or faith-based institution, or to the Red Cross, or to local charities, no longer qualified for tax deductions?

- No.

The issue that I mentioned is only associated with those individuals that do not itemize.

In past years, you could also take a deduction for your charitable contributions up to, I believe it was $500 on your return, and that is not available to you.

There's no change as far as what is the qualifying charitable deductions.

- And, could you repeat the reasons why we're projecting that refunds will be lower this year?

- Yes.

So, the reason that the refunds we expect to be lower is associated with the fact that there are not the Economic Impact Payment components that we've had in the COVID period of time.

There was no special payouts in 2022.

Many taxpayers ended up getting those credits on their tax return as they weren't sent directly to them in prior years.

And, there is no special credit this year.

- And, is it the case that overall, the tax revenues brought in by the IRS during the pandemic years were not necessarily lower?

Or, were they actually higher than pre-pandemic years?

- I...do not have that specific information of the revenue that was brought in.

We'll have to follow back up.

Maybe one of my colleagues can put it in the window for us.

- That would be terrific, and thank you.

I know we will have more questions once each of you has made your presentation.

Thank you so much.

Susan Simon, you're next!

(chuckles) It's wonderful to say we have IRS on the firing line (Susan laughs) 'cause it usually feels the other way around!

Go ahead.

- Okay.

Thank you, Sandy.

Thank you, Kevin, for leading off and giving me a slight break!

I can't agree more, though, with what Kevin said about being prepared to do your tax return.

It is so important that you have the information that you need to prepare an accurate tax return that will be processed quickly so that you get your refund in time to do things you want to do as a family or as an individual.

One of the ways that we help taxpayers is providing free tax return preparation.

We have an organization called Stakeholder Partnerships, Education and Communication which operates our Volunteer Income Tax Assistance programs and our Tax Counseling for the Elderly programs.

We call them VITA, and TCE.

We are so pleased this year because we have expanded VITA tremendously.

During COVID, many of our VITA partners were not able to operate their face-to-face tax assistance programs.

Rather than face-to-face taxpayer assistance and tax return preparation, many of our VITA sites had to shut down.

Other VITA sites operated in a virtual manner, which caused a lot of our volunteers to be retrained and to be hesitant to do tax returns.

During the last two years, we had about 50,000 volunteers throughout the United States doing tax returns.

This year, as of today, we have 89,000 volunteers-- I'm sorry!

81,000 volunteers in the United States prepare- and Puerto Rico- preparing free tax returns for individuals and families.

- You will have a question about TurboTax.

- My name is Vansh Gupta.

I'm the Gen-Z editor at Siliconeer.

And so, my question was regarding TurboTax.

Now last year and the year before, there were reports of TurboTax misfiling taxes for a lot of people who used that software and that was a similar story for H&R Block.

So, my question was how do we-?

How does IRS ensure that, that doesn't happen and what is a good platform to use for online filing for different people?

- So, you know, as far as online filing?

You know, TurboTax, which is Intuit and the H&R Block are partners, and they supply a lot of the returns that come into this service.

They, too, just like Sue just mentioned to the last caller, there are individuals that do try to use their service through frauds and means but we really can't provide specifics as far as which tool, or which software that is the best for you.

I do always say, look to see if one of the "free file" tools might be a way for you to have your return filed.

Or, as Sue says, if you meet the qualifications you can have a VITA volunteer assist you or your constituents with the filing of the returns in that process.

I have not heard of any specific systemic issue with the TurboTax or other software this year, but we are always on the lookout for concerns and we'll work with those specific partners if something does come up.

- Thank you.

I have two questions that have come through my text messaging.

One is, and we may have missed this.

We're trying to absorb a great deal of information you're providing, and we may have missed this.

(reading slowly) But, what can you tell us about the new green energy credits?

Kevin?

- So, the new "green energy credits" are part of the IRA act that occurred back in August.

So, for taxpayers, they really should review the information on the irs.gov webpage.

It is very specific because it will help you follow along.

You may not fully-- you may want to go to specifics as far as cars and automobiles that are available for this credit.

But, as far as the purchase of new clean vehicles, if it's purchased new, it's a $7,500 credit claimed on the tax return; associated with using the Form 8936.

But, not-- you have to look at the car and its availability.

It's associated with the price of the vehicle as far as the availability of the credit.

And, their-- each of the manufacturers list the cars that would meet this credit.

Because, in 2023 cars purchased after January 1st, 2023 it even includes some plug-in hybrid individual vehicles, too.

So, if you-- there are also, beginning in 2023, a purchase of used clean vehicles can provide a credit if the purchase price is below a certain threshold.

So, there's-- it's best to just follow that link.

I think it's in the chat.

It is a really good way for American citizens, you know, to save on fuel economy and save on their taxes as far as the purchase.

- Okay.

Now, I'm going to ask a question on behalf of all of us who procrastinate for various reasons!

What are the second chances?

If we miss the April 18th deadline, how do you advise-?

Some of us-- a friend of mine is getting cataract surgery.

She's very worried.

She also works around the clock, and she's worried that she may miss the tax filing deadline.

- So, I'll start and Sue can help make sure I don't miss anything.

Go online now, and request to file an extension.

It's an automatic extension that grants you the opportunity to file that return all the way to October.

So, I would immediately, especially if someone believes that they're not gonna meet the tax filing date to go ahead and file the extension.

Now, Sue mentioned it; I think I've mentioned it.

That does not provide an extension to pay!

So, you should-- if you think you're gonna owe, you should go ahead and estimate what the amount that you may have to pay, and go ahead and submit that payment because we want to avoid any interest or penalties associated with late payment.

But, if you think you're not gonna meet it-- even up if you're trying to get your return together and it's April 17th- "I'm not gonna be able to file"- you can still file the extension.

- Thank you.

And finally, a question in the text from a journalist who heard the NPR report about audited-- (reading the chat slowly) IRS audits, which seemed to have particularly impacted people who filed for earned income tax credits and were African American, that there seemed to have been a disproportionate number of audits.

I don't expect you to be able to respond exactly to that but it flags the importance, I think all of us who want to share with our audiences about how IRS determines who gets audited and what penalties are out there if we either make a mistake or fail in some way to...meet the requirements and are found to be negligent.

- So, first, I'll start and Sue-?

It's important to, as we said, gather all your information and file the best, just return that you think you have.

One of the things that we are doing, and Sue's organization is leading this effort, is in the education of many of the taxpaying community that may not understand these credits, may not have-- understand how they're eligible.

We're trying to provide better education for the communities as far as understanding who can take the credit, how you can take the credit in that process.

So we, as the IRS, are trying to help American citizens know their eligibility of when they should be able to take that credit.

If you are faced into an audit, be responsive to the questions that you may get.

You know, a lot of the audit process is done through correspondence now.

You'll get a letter; you'll get notification.

If you have a reason or something that occurred, let us know.

If there was justification on maybe something tragic was happening in your life and you missed the document, let the person you're working with know the whole story.

It's really important for the auditor to understand what might have been happening if you're-- as you're working through that audit examination in that process.

There will be specific appeal rights that are provided to every individual.

We think it's really important, you know, that we share your rights that are out there as part of the components of the taxpayer advocate, and your appeal rights and your rights as a taxpayer.

So, Sue, did I miss anything in that environment?

- No, that's exactly right.

But, let me go back and address the specific allegation to a certain extent.

So, there was a review done by an oversight agency a couple years ago which resulted in data that said in two to three states, very specific states, the audit selection rate was higher than in the other states and the audit finding rate was higher.

These are...a very small percentage of U.S. citizens under a certain limit, and this is primarily looking at EITC audits are selected.

So, it was like 0.27 overall.

- Oh, I hope-?

Okay.

- And, these states-- when I looked at that data, when we looked at that data, we say, "why?

What is the cause?"

Because, we do not target demographically.

We do not target-- I can't tell from a tax return, if someone is Black, white, Chinese, Korean, Vietnamese.

It's just not on there.

What we did find when we started looking at the data more closely was a nexus to education levels.

So, we did an outreach- what we call an outreach- with our VITA, our SPEC stakeholder partnership organization, and we worked through the school districts in those states.

We took two of the three states, by sending educational information home with school children in their backpacks.

We provided the [screen freezes] information to their families [audio glitches] and we've already seen some improvement in those areas.

- That's very helpful.

Because we have only one minute left-- and thank you for taking on that question.

We have one minute left.

I'm gonna ask each of you for the headline you'd most like to see in our media from today's briefing.

What is the most important single point you'd like to see in a headline about filing our taxes?

- So, to me, the headline is associated with the IRS.

"IRS is off to a great start servicing American citizens and helping them get their taxes filed."

You know, and I did see the question about, we do help anyone that has a tax liability or has tax.

So, in that-- in the question in the chat.

Sue?

- And, mine would be my normal one: "The IRS is here to help you."

- Well?

(chuckles) This has been a terrific session.

[background music] Thank you so much.

I think my brain is gradually gaining enough confidence!

I would say the headline I took away from you, Kevin, was: "file electronically, and (Sue laughs) "apply for direct deposit of your refund because it makes it go faster."

And, Susan, you were so excited about the opening of these assistance centers which we can get in multiple languages, assistance, hand-holding.

(chuckles) I mean-- and that is what I, as an older widow who never did the taxes before-- - [Sue] Mm hm.

- I'm going to actually draw on.

So, thank you so much to both of you for putting a smiling emoji face on the IRS!

You were very compelling speakers.

Thank you so much.

♪ ♪ [soft flute music] ♪ ♪ [hip-hop beat]