2022 Required Minimum Distributions (RMD’s) & Life Expectancy Table
There is a major change in RMD’s for tax year 2022; most notably the new Life Expectancy Table. For individuals receiving RMD’s, your minimum distribution will change, and it will be a smaller percentage. Congress is realizing that Americans are living longer (even with COVID?), and therefore need to make certain we have ample retirement (but not from Social Security) to live on. Please discuss this with your Financial Planning professional.
In addition to updated life expectancy tables, they have also raised the age to begin taking RMD’s to age 72, instead of 70 ½ like was the case before 2020. If you reach 72 in 2021, you must take your RMD by April 1st of the year after you turn 72. In general, the year after you turn 72, you could be required to take two RMD’s (one by April 1st of that year, and a second one by December 31st of the same year to apply towards the following year); then take the normal by the December 31st deadline each year after that. If you don’t want to pay tax for both in the same year, you are permitted to take a distribution the year of your 72nd birthday instead of waiting until April of the following year.
Feel free to use this link from the IRS to see the new life expectancy table and a simple calculator to determine your current and future distribution amounts.
(Remember, if you are the beneficiary of an IRA, this rule applies to you, but using the age of the deceased beneficiate, and our age is younger.)
Child Tax & Dependent Care Credit
If this applies to you, you probably have already seen the payments deposited into your account each month on the 15th. The government has made a one-time increase to the child tax credit to $3,000 per child (up from $2,000), or $3,600 for children 5 and under. Where do those payments come into play? The purpose was to get money into the taxpayers’ hands “immediately”. Therefore, they have been depositing $250-300 per child each month as an advanced credit, with the rest of the credit being paid out when the tax return is filed.
There are a few instances where this may affect some taxpayers in a different way. If your income has changed over the previous year, you may not receive the second half of the credit figured on your tax return. If a taxpayer had a child during the 2021 calendar year, you wouldn’t receive advanced payments for this child. Therefore, you would receive the full credit on your tax return. If there is a situation with alternating years’ custody between divorced parents, this becomes more complicated and probably requires special handling.
The IRS was instructed to create an online portal to give taxpayers an opportunity to update information including:
- Add/Change bank account information
- Unenroll from these advanced payments (receive full amount on tax return)
- Update your modified gross income
They were also instructed to give taxpayers an option to add/change dependent information, to add the new child and amend shared custody situations. Unfortunately, the IRS hasn’t completed this and will not by the end of the year. Use this link to check your payment status and history, as well as access the options mentioned above.
IRS Scam
Scammers have been perfecting the art of fraud for years. We at Lewis Financial Tax Service, LLC will be doing our best to stay abreast of the newest scams and alerts from the IRS. We will continually update our site to pass this information along to our clients and potential clients. You may also use the following link to stay up-to-date with all the current IRS scams https://www.irs.gov/newsroom/tax-scams-consumer-alerts
IMPORTANT: The IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments. This includes the agencies assigned to collect past due balances with the IRS.
There is currently a fake “IRS” email making the rounds and it is targeting Microsoft Office 365 users. This email is claiming it has been sent to collect payments and will even threaten to take legal action. This scam is even more convincing than most because it appears to originate from the “irs.gov” domain.
This scam, as with most of them, imply a sense of urgency to the matter. This can cause individuals to act rashly and pay off debts to avoid arrest. In this particular instance, the fraudster claims to already have made attempts of contacting the individual and the case is escalating. Even gong so far as to saying, “And our apologies that this notification will also be sent to your current employer.”, implying that made-up outstanding amounts will be legally withheld out of their wages. It even has fabricated account numbers, loan numbers and balance due amounts. They use specific information to strengthen the aura of legitimacy of the attack. "We have sent you this warning notification about legal proceedings in May 2019. But you failed to respond on time," the messages say. "This time, if you fail to respond then we will register this case in court. Consider this as a Final Warning."
There is a giveaway, however, as is the case with all scams. A closer look shows the emails' header is actually "shoesbagsall.com." Not only that, the “reply-to” field redirects the replies to “legal.cc@outlook.com”.
To see all of the security measures taken by Lewis Financial Tax Service, LLC
