News & Updates

People with disabilities and their families can use Achieving a Better Life Experience or ABLE accounts to help pay for qualified disability-related expenses. ABLE accounts are tax-advantaged savings accounts that don't affect eligibility for government assistance programs. Here are some key things people should know about these accounts.

Annual contribution limit

• The 2022 limit is $16,000.
• Certain employed ABLE account beneficiaries may make an additional contribution up to the lesser of these amounts:
• The designated beneficiary's compensation for the tax year or
• For 2022, $12,880 for residents in the continental U.S., $16,090 in Alaska and $14,820 in Hawaii.

Saver's credit

• ABLE account designated beneficiaries may be eligible to claim the saver's credit for a percentage of their contributions.
• The beneficiary claims the credit on Form 8880, Credit for Qualified Retirement Savings ContributionsPDF. The saver's credit is a non-refundable credit available to individuals who meet these three requirements:
• Are at least 18 years old at the close of the taxable year
• Are not a dependent or a full-time student
• Meet the income requirements

Rollovers and transfers from section 529 plans

• Families may roll over funds from a 529 plan to another family member's ABLE account.
• The ABLE account must be for the same beneficiary as the 529 account or for a member of the same family as the 529 account holder. Rollovers from a section 529 plan count toward the annual contribution limit. For example, the $16,000 annual contribution limit for 2022 would be met by parents contributing $10,000 to their child's ABLE account and rolling over $6,000 from a 529 plan to the same ABLE account.

Qualified disability expenses

• States can offer ABLE accounts to help people who become disabled before age 26 or their families pay for disability-related expenses. These expenses include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services.
• Though contributions aren't deductible for federal tax purposes, distributions, including earnings, are tax-free to the beneficiary, if they are used to pay qualified disability expenses.

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When people get married their tax situation often changes. A taxpayer's marital status as of December 31 determines their tax filing options for the entire year, but that's not all newlyweds need to know.

Here's a tax checklist for newly married couples:

Name and address changes

• Name – When a name changes through marriage, it's important to report that change to the Social Security Administration. The name on a person's tax return must match what is on file at the SSA. If it doesn't, it could delay any tax refund. To update information, taxpayers should file Form SS-5, Application for a Social Security Card. It is available on SSA.gov, by phone at 800-772-1213 or at a local SSA office.

• Address – If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, people should complete and send the IRS Form 8822, Change of Address. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or visiting their local post office.

Withholding

• After getting married, couples should consider changing their withholding. Newly married couples must give their employers a new Form W-4, Employee's Withholding Allowance within 10 days. If both spouses work, they may move into a higher tax bracket or be affected by the additional Medicare tax. They can use the Tax Withholding Estimator on IRS.gov to help complete a new Form W-4. Taxpayers should review Publication 505, Tax Withholding and Estimated Tax, for more information.

Filing status

• Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly is usually more beneficial, it's best to figure the tax both ways to find out which makes the most sense. Taxpayers should remember, if a couple is married as of December 31, the law says they're married for the whole year for tax purposes.

Scams

• All taxpayers should be aware of and avoid tax scams. The IRS will never initiate contact using email, phone calls, social media or text messages. First contact generally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

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The IRS and its Security Summit partners recently held the annual National Tax Security Awareness Week.

The Security Summit is a longstanding partnership between the IRS, state tax administrators and the tax software and tax professional community. They work together to improve defenses and protect people from tax-related identity theft. The Summit partners also work to raise taxpayer and tax professional awareness about security issues – not only protecting people from the risk of identity theft but, helping protect the nation's tax system from refund-related fraud.

Here are some of the highlights from this year's Tax Security Awareness Week.

• Stay safe online. The holiday season presents a prime opportunity for identity thieves to try stealing personal financial information, which also could be used to potentially file fraudulent tax returns. The Summit partners urged people to take extra care while shopping online or viewing emails and texts, especially during the holiday season when criminals are very active. Taxpayers should review these important online safety considerations.
  
• Watch out for fake charities. Taxpayers should be on alert for scammers using fake charities to commit fraud not just during the holiday season but year-round. Scammers often take advantage of people's generosity by setting up fake charities to trick unsuspecting donors into giving away not only money, but also their sensitive personal information. Being alert to potential scams will not only shield a taxpayer's money but also help protect personal and financial data that scammers can use in tax-related identity theft. Taxpayers can visit IRS.gov for tips to help them make sure their money goes only to legitimate charities.
  
• Tax pros should review security plans and checklists. The IRS and its Security Summit partners work to highlight data security and provide scam prevention tips. It is especially important for tax pros, including smaller practices, to protect themselves and safeguard client information. They can visit IRS.gov for tips or to review resources available to them including sample security plans and checklists.
  
• Choosing a unique Identity Protection PIN provides extra safety for taxpayers. The IRS and its Security Summit partners remind taxpayers they can get extra protection starting in January by joining the agency's Identity Protection Personal Identification Number or IP PIN program. Anyone who has a Social Security number or Individual Taxpayer Identification number and can verify their identity is eligible to enroll in the IP PIN program. The fastest and easiest way for taxpayers to receive an IP PIN is by using the Get an IP PIN tool, which will be available in January. In the meantime, taxpayers can visit IRS.gov to learn more about this valuable program.
  
• Businesses should be on guard against cyberattacks. The IRS continues to see instances where small businesses and others face a variety of identity-theft related schemes trying to get information that can be used to file fake business tax returns. For example, phishing schemes continue to target businesses as well as tax professionals and individual taxpayers. Knowing some cybersecurity basics and putting them in practice will help business owners protect their business and reduce the risk of a cyberattack. Business owners can visit IRS.gov to learn more about the best practices in cyberattack prevention.

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Most people probably only think about tax credits and deductions when they're completing their tax return. However, a little early planning can make for a smoother filing process. By familiarizing themselves now, taxpayers can have a clear understanding of which credits and deductions make sense for them and the records needed to show their eligibility.

Here are a few facts about credits and deductions that can help with year-round tax planning.

A few things to know about deductions

• Deductions can reduce the amount of a taxpayer's income before they calculate the tax they owe.

• Most people take the standard deduction. The standard deduction is adjusted each year for inflation. The amount of the standard deduction depends on a taxpayer's filing status, age, whether they're blind, and whether the taxpayer is claimed as a dependent by someone else.

• Some people are required to itemize their deductions, and some people may choose to do so because it reduces their taxable income more than the standard deduction.

• As a general rule, if a taxpayer's itemized deductions are larger than their standard deduction, they should itemize.

• Taxpayers can use the Interactive Tax Assistant to see what expenses they may be able to itemize.

Things to know about tax credits

• Taxpayers can subtract tax credits from the total amount of tax they owe.

• Some tax credits, like the earned income tax credit, are even refundable, which means a taxpayer could get a refund even if they don't owe any taxes.

• To claim a credit, taxpayers should keep records that show their eligibility for it. Properly claiming tax credits can reduce taxes owed and boost refunds.

• Taxpayers can check now to see if they qualify to claim any credits next year on their tax return.

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On day two of Nationwide Tax Security Awareness Week, the IRS and its Security Summit partners urge people to make sure their money goes only to legitimate charities. Being alert to potential scams will not only shield a taxpayer's money but also help protect personal and financial data that can be used in tax-related identity theft.

"People should watch out for fake charities, which create problems on multiple fronts," said IRS Acting Commissioner Doug O'Donnell. "Not only can well-intentioned donors lose out on their money and a potential charitable donation credit, but their personal financial information could also be stolen. We urge people to act carefully before they give, including following several tips to make sure the charity is legitimate."

Working together as the Security Summit, the IRS, state tax agencies and the nation's tax software and tax professional industries are providing tips this week to help protect people against identity theft as well as help safeguard sensitive tax information that criminals can use to try to file fake tax returns and obtain refunds. This effort is part of National Tax Security Awareness Week, now in its seventh year.

Scammers often take advantage of people's generosity by setting up fake charities to trick unsuspecting donors into giving away not only money, but also their sensitive personal information. They can use the holiday season and other timely events, such as recent disasters, to try to reach out to people and lure them into a donation. Scams requesting donations for disaster relief efforts are especially common over the phone. However, scammers also use emails, text messages, websites and social media messages that mimic a legitimate charity to trick people into giving money or personal information.

The IRS and its Security Summit partners urge people to make sure their money goes only to legitimate charities. Being alert to potential scams will not only shield a taxpayer's money but also help protect personal and financial data that can be used in tax-related identity theft.

Tips to avoiding fake charity scams:

• Don't give in to pressure. Scammers often use the technique of urgent need to pressure people into making an immediate payment. Legitimate charities are happy to get a donation at any time, there's no rush. Donors are encouraged to take time to do their own research. Don't forget that scammers may alter or "spoof" their caller ID to make it look like a real charity.

• Be wary about how a donation is requested. Taxpayers shouldn't work with charities that ask for donations by giving numbers from a gift card or by wiring money. That's a scam. It's safest to pay by credit card or check — and only after researching the charity.

• Don't give more than needed. Scammers are seeking money, but personal information can be just as valuable. Taxpayers should treat personal information like cash and not hand it out to just anyone. Never give out Social Security numbers, credit card numbers or PIN numbers. Donors should only give limited financial information when the person is sure the charity is legitimate.

Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return by reducing the amount of their taxable income if they itemize and don't take the standard deduction. However, for people itemizing to receive a deduction, taxpayers must donate to a qualified charity.

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