Tax changes / proposals - discussion

Pandemic impact on TCJA

Yes, there is impact from the pandemic. And it might not be what you expect or what Congress anticipated when this measure was passed into law under President Trump:

How the Pandemic Affected the TCJA’s Shift to A Chained CPI Index

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Interesting unintended consequence. It remains to be seen if it continues post-pandemic.

A summary of the article :roll_eyes:

In the atypical world we now live in, it’s actually increasing faster than the old adjustment. But this may not translate to larger inflation adjustments because, like so much of the tax code, it’s complicated.

RMDs for IRAs are down for 2022. They updated the life expectancy numbers, from pre-Covid of course by the time the government finally got around to implementing those into the table, and longer life expectancies lead to lower required distributions.

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My data point

Background: Life long paper return/US Mail filer. This was my first attempt to e-file. So my 2020 return was filed by mail . . . unfortunately. This post is referring to e-filing of my 2021 return.

The attempt failed. The IRS refused to accept my return.

After working through the situation, I think this failure could be because I entered the correct AGI number from my 2020 return. The IRS uses that number as part of their ID process.

I’m hoping the wrinkle is that the IRS still has not processed my 2020 (paper) return. Thus they do not have my 2020 AGI in their records, creating thereby a mismatch with the correct data I entered and the subsequent rejection of my e-filed 2021 return.

I have re-e-filed using zero as my 2020 AGI. If that fails I will try again using my 2019 AGI. Each try consumes about two days before you learn whether or not they have accepted your e-filed return.

Of course taxpayers who have been e-filing all along should not be seeing this dilemma. But that’s not me. :slightly_frowning_face:

ETA

A big surprise for me. It has been only an hour (plus or minus) since I resubmitted my return using, as mentioned earlier, zero as my 2020 AGI

Just received an email from the IRS saying they have accepted my e-filed 2021 return!

That was damn fast.

This great news for me would appear to add credence to my supposition that the IRS still has not processed my 2020 return. The latter was filed timely, of course, April of last year . . . . but on paper.

Anyway, am a very happy camper. My 2021 return includes form 8888 which I hope will net me another five grand of I bonds before the spring rate reset. We shall see.

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Do you have an IRS online account? If not, sign up for it, and you can check your account transcript to get your official AGI for any given tax year.

Actually, I’d like to see you check your transcript regardless, just to see what info it does have for your 2020 return. 10 months seems like a very abnormal delay just to get the return in the pipeline, even in this age of long delays.

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Agreed, glitch99. But the helper information the IRS sent me, along with my initial rejection, said there remain even some 2019 returns they have yet to process!

My first reaction to that was disbelief. Then I thought maybe it was an old notification which I had been sent through error. However, in light of events I no longer think it is wrong or an error.

We hear constantly from a variety of sources how desperately far behind the IRS is in processing paper returns . . . . like my 2020 return. Those stories are apparently accurate.

While my filing for 2021 reflects the purposeful estimated tax overpayment I made in January to pay for my I bonds, it was different for me in 2020. I owed the IRS money in 2020, which I paid of course. But the point is that in 2020 I was not standing around waiting for a refund. There was none that year.

This year I’m hoping for my I bonds, and a refund, ASAP. I hope that by having e-filed all my dreams will come true. :grinning:

Wish we were due a refund. We’ll end up owing them $3-4k (no penalty fortunately).

Only reason for my refund is that, back mid-January, I had only a rough idea what my 2021 AGI would be and I wanted to be certain to overpay sufficiently my estimated tax then to guarantee me my 5 grand of I bonds.

As things turned out I was only a bit less than two grand over, which is pretty good considering. Also I make money on anything I pay them anyway, so overpayment just means more profit, assuming they process my return in a reasonable amount of time. And if not they will pay me interest on the delayed refund. So it’s win-win.

Given the sorry state of affairs at the IRS I have the feeling they will be paying out a LOT of interest.

Full disclosure: I’m on a lark here and really don’t know what I’m doing. That said:

My entire quest is for those I bonds, timely obtained. I wanted to get 'em prior to first of May. That way I lock in the current high interest rate for six months. And the way things are going with inflation right now, even after the May reset I should have another six month interval of high return. After that, who knows.

Anyway, pursuant to that quest, IRS Form 8888 is everything. It’s the entire enchilada. Without Form 8888: no I bonds.

So you will appreciate my angst when, upon re-logging into my 4F {4F = Free File Fillable Forms} account I discover the Form 8888 I filed, or so I thought, is now missing.

You log into 4F and there is the option to print out your return. No, you cannot make changes to your return after filing. But you can supposedly print out your return. I selected that option and Form 8888 was not there.

This is not life and death. I can live without the I bonds. But why did they deep six my Form 8888? I, of course, dunno. It’s just more evidence of the sad state of affairs at the IRS.

Incidentally, I printed out my return, including form 8888, prior to filing it. If you go the 4F route I suggest you do the same. Not that I expect that to help me. But I will be able to frame the Form 8888 and keep it as a souvenir. :grinning:

I have not filed my return yet. But when I go to print my unfiled return, form 8888 does not appear as well. But it is definitely listed as one of the forms I’ve added. So no, it isnt just you. And if earlier you were able to print your return with 8888 included, it would indicate that something has recently broken. Hopefully, it’s just a printing problem, and not a filing problem.

I dont know if checking your online account transcript will show 8888 was included, or not.

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that is much easier said than done. The IRS has adopted a new procedure for signing up for online accounts that has been widely criticized. There are multiple threads on it on the bogleheads. As part of the process they require you to submit a selfie to be used by their face recognition system. A lot of complaints about that.

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Thank you, glitch99. That is good information and helpful to know . . . for everyone I think.

Uh, not exactly. I never attempted to print my entire return per se. Instead what I did was to go schedule by schedule, form by form, printing them individually, one at a time. That is how I was able to obtain a printed copy of my Form 8888 . . . and all the other schedules and forms as well.

It’s entirely possible, had I tried to print everything en masse, that I would have run into the situation I reported earlier.

Now the obvious:

I encourage everyone to obtain and retain paper copies of their schedules and forms BEFORE submitting them to the IRS. That might be your only opportunity to capture them all on paper.

So true. And they very nearly got me. Here is my story:

It was late at night, I had just learned my 4F submission was rejected, and I was at a loss to know what to do. One of the IRS suggestions was to sign up for an IRS online account, which would have allowed me to view my 2020 AGI.

I was tired and disappointed and I fell for their suggestion. Of course I was quickly confronted by that ID.me crapola which seemed to go on and on. But I (stupidly) persisted. It was only by sheer luck that I got out of it and avoided a much unwanted potential privacy intrusion.

ID.me was unable to accept my photo ID driver’s license. Apparently the photo was not of sufficiently high quality. That was my saving grace and unadulterated good fortune . . . . though little did I realize it at the time.

Again it was late and I was tired. I decided to abandon ID.me and just try a 4F resubmission with $0 as my 2020 AGI. As reported up thread, it worked! and quickly, too.

I was happy. Only later did I realize how stupid it was for me even to attempt ID.me. You live and learn.

ETA

By the way, ID.me is now emailing me in an effort to entice me to return and complete my application with them.

Fat chance. S’not gonna happen in this life . . . . or in the next one, either. :wink:

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Shin - you’ve commented before about your cell phone usage. Do you even have the ability to do the whole “selfie” thing with ID.me?

Nope. But they offer a variety of alternatives enabling them to obtain a person’s mugshot. I don’t remember them all. The driver’s license option was the only viable one for me at the time. And thank goodness it didn’t work.

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IRS Total Fail - 24 Million unprocessed returns!

The IRS is truly in a world of hurt. We are talking catastrophic failure here:

Nearly 24 million taxpayers are still waiting for the Internal Revenue Service to process their tax returns from last year — a number far larger than previously reported by the agency — with many refunds being held up for ten months or more.

The inventory of unprocessed returns and related correspondence was provided by the IRS’s taxpayer advocate service to the tax-writing committees in Congress. The backlog will probably further slow service in the 2022 filing season; the Treasury Department, the IRS’s parent agency, warned in January that it expected its response to be subpar this year.

The pileup of work that remains from last year, according to three people who spoke on the condition of anonymity because they were not approved to speak publicly, comes as the tax agency struggles to hire and train new staff to clear the logjam. In response, the IRS is considering suspending tax collections and excusing some penalty enforcement.

Paper returns took the greatest hit, as mail piled up on trucks outside closed offices for months.

Rettig said he is considering penalty relief for taxpayers. “We will rapidly adapt to changing circumstances, when appropriate to do so,” he said. “We are doing everything we can with all of the resources available to us.”

The agency sought to fill 5,000 positions for several campuses across the country in time for this tax season, but was able to hire less than 200

Read the entire piece here:

IRS backlog hits nearly 24 million returns, further imperiling the 2022 tax filing season

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This mess makes me even more thankful that we had to register DH’s IRS account to opt out of the advance child tax credit back in July. Back then, I can’t remember how but there was a loophole to avoid having to use ID.me to verify your identity.

But to me, the choice between the current options sounds like: creepy, intrusive, slow, or all of the above. I really hope they strike a better compromise between convenience and security in whatever new system they’ll implement.

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Signed sealed and e-filed today. Expecting a Fed refund of $4500 and CA $1700. Hopefully :pray: all correct.

I was just checking closely on the State because I usually don’t get such a large refund. Remembering when I made estimated tax payments, by mistake I paid $2k instead of $1k.

Such a relief when completed :white_check_mark:.

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Can’t mass hire when Congress doesn’t pass a budget…