Are You (or Is Your Business) Eligible for Federal COVID-19 Tax Relief in 2022?

As the economic impacts of the COVID-19 pandemic continue to linger, the Internal Revenue Service (IRS) is reminding individuals and businesses that they may still qualify for pandemic-related tax relief in 2022. In a recent News Release, the IRS highlights some of the programs that remain available.

3 Types of Federal COVID-19 Tax Relief Available in 2022

For 2022, the types of federal COVID-19 tax relief that are available fall into three main categories: (i) tax relief under the American Rescue Plan Act (ARPA), (ii) penalty relief for delinquent returns, and (iii) employer tax credits for affected businesses.

1. Tax Relief Under the American Rescue Plan Act (ARPA)

Under ARPA, “retroactive tax benefits” were available to many U.S. taxpayers in 2021. For those who failed to claim these benefits last year, it may still be possible to file an amended return. Benefits afforded to eligible taxpayers under ARPA include increased child and dependent care credits, expanded eligibility for the earned income tax credit, and exclusion of qualifying unemployment compensation.

2. Penalty Relief for Delinquent 2019 and 2020 Tax Returns

The IRS is offering penalty relief to U.S. taxpayers who filed delinquent 2019 and 2020 federal income tax returns due to the economic impacts of the COVID-19 pandemic. To be eligible taxpayers must have filed these returns by September 30, 2022. While this relief is “automatic,” taxpayers who have previously paid failure-to-file penalties will want to make sure they receive appropriate refunds or credits from the IRS.

3. Employer Tax Credits for Affected Businesses

The IRS has made several credits available to employers during the COVID-19 pandemic. These include the Credit for Sick and Family Leave, Employee Retention Credit and Paid Leave Credit for Vaccines. Many businesses can still claim credits in 2022, though they must do so carefully to ensure that they do not exceed the allowable credit amount.

The IRS is Targeting Businesses and Individuals for COVID-19 Tax Relief Fraud

When claiming tax relief or other benefits related to the COVID-19 pandemic, businesses and individuals must ensure that they comply with all pertinent eligibility criteria and filing requirements. The IRS and other agencies are aggressively targeting U.S. taxpayers for pandemic-related fraud. This includes fraudulently claiming the Employee Retention Credit (as we recently discussed), among others.

Taxpayers targeted for tax relief fraud can face IRS audits and investigations, both of which have the potential to lead to steep penalties. For those who have knowingly submitted false or fraudulent returns, taking a proactive approach is the best way to mitigate any potential consequences.

Request a Confidential Consultation with US International Tax Advisors

If you have questions about your (or your business’s) eligibility for COVID-19 tax relief in 2022, or if you have concerns about facing IRS scrutiny, we encourage you to contact us for more information. To schedule an appointment with US International Tax Advisors please call 844-796-8565 or contact us confidentially online today.