Author Archives: c11635511

Health Update for Little Giant Tax

At Little Giant Tax Services, we care for the health of our customers and staff members. While South Carolina is opening restaurants and office spaces for the public, we are able to serve you with drop off services and tax consulting via video chat or the phone.

In order to serve you, we are available via phone during our posted office hours, at (803) 325-1444. You may reach us via email, littlegianttax@gmail.com, or request an appointment on our Facebook page, https://www.facebook.com/LittleGiantTax/.

We will let you know when we open our office for physical visits again and what safety features we will put in place at that time.

Stay safe, and thank you for being a customer of Little Giant Tax Services!

Melynda and Team

Tax Updates April 30

SSI And VA Recipients To Receive Automatic Payments

The IRS and Treasury, in partnership with the Social Security Administration and Department of Veterans Affairs have announced that recipients of Supplemental Security Income and VA benefits will automatically receive Economic Impact Payments. Most recipients need to take no action to receive payment, however, for those who have dependents age 16 or younger and did not file a tax return for 2018 or 2019, a special tool has been set up to register for the additional dependent payment. May 5 is the deadline to register for the additional payment.

Guidance For Cross-Border Travel Disruptions

The Treasury Department and IRS have issued guidance for individuals and businesses who have been impacted by travel disruptions caused by COVID-19 and the response. The guidance addresses situations where 60 consecutive days of residence would generally indicate tax residency, and explains certain income exclusions which will not be impacted as a result of days spent away from a foreign country.

Guidance For UBTI “Silo” Rules

Guidance has been issued for tax-exempt organizations that are subject to the unrelated business income tax with more than one unrelated trade or business on how to calculate their unrelated business taxable income (UBTI). The Tax Cuts and Jobs Act (TCJA) requires tax-exempt organizations subject to the UBTI tax to compute UBTI separately for each trade or business (referred to as a “silo”).

“Get My Payment” Program Enhanced

The IRS has significantly enhanced the “Get My Payment” online application this weekend. The changes are designed to help taxpayers have an improved and smoother experience, including access to adding direct deposit information. Taxpayers can check the status of their payment and if necessary, can add direct deposit information. Further improvements and enhancements will be ongoing.

Tax Updates April 13

The IRS is Not Accepting Paper Applications

Little Giant Tax Services are are here to help you with your tax filing throughout the next few months of stay at home orders. At this time, the IRS is not accepting physical returns. If you want to have one of our staff help you e-file your return, please call or email us.

Extensions Extended To Trusts, Estates, Corporations

The IRS recently extended the filing and payment deadline for most individual taxpayers to July 15, from April 15. Now they have extended that same relief to trusts, estates, corporations, and other non-corporate filers. Additionally, those with estimated tax payments typically due June 15, 2020 can wait until July 15 to make that payment, without penalty.

Registration Tool For Non-Filers

The Treasury and IRS have released a new tool for certain individuals to register to receive economic impact payments. Those who have not filed taxes for 2018 or 2019, and also did not receive Social Security payments or Railroad Retirement benefits will need to use the new web tool to register and input their information in order to receive payment. This may apply to individual and joint filers who do not make enough to file a tax return, but will not apply to students or others who are claimed as dependents on another tax return. A new tool is being built to check the status and expected date of all economic impact payments, and should be online by the end of this week.

Reschedule April 15 Payments Now

Taxpayers who have scheduled quarterly payments for April 15 have until midnight eastern time on the 13th to reschedule their payment for July 15, 2020. Those who have scheduled electronic funds transfer (EFT) or debit, credit, or digital wallet payments can reschedule those payments, but those adjustments must be made right away. 

Reminder: Up-To-Date Coronavirus Tax Relief 

The IRS is aggregating all pertinent tax information regarding Coronavirus tax relief in one central site. Whether you are a taxpayer, employer, small business owner, health plan administrator, or just wanting to know the latest deadline updates, you can find it here.

IRS Updates Beginning of April

Tax Day Extended to July 15

The IRS previously pushed back the date to file and pay taxes to July 15, 2020 for victims of the Tennessee tornadoes, but that change in tax day has now been extended to all Americans, amid the current and ongoing COVID-19 crisis. Taxpayers do not need to take any action or file additional forms to take advantage of this adjustment. This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. North Carolina and South Carolina have also extended their state tax due date to July 15. Taxpayers in other states may check with their revenue department at this link.

Answers About Economic Impact Payments

The IRS is maintaining a dedicated site to provide information on the economic impact payments being made. If you’d like to know what you need to do (or not do), who is eligible for the payment, and how the payment will be made, you can check their site.

IRS Warns Against Scams And Schemes

The IRS urges taxpayers to be on the alert for a surge of scams, fraud, and phishing attempts in the environment surrounding economic impact payments.. Text messages, social media, and email are popular avenues for scammers. Red flags may include mention of “stimulus check,” “stimulus payment,” asking you to provide personal or banking information, or promising a faster payment. IRS Commissioner Chuck Rettig says, “we urge people to take extra care during this period. The IRS isn’t going to call you asking to verify or provide your financial information so you can get an economic impact payment or your refund faster.”

Taxpayer Assistance Centers Closed

In an effort to protect employees and citizens, the IRS has temporarily closed all Taxpayer Assistance Centers in the nation, and discontinued face-to-face service until further notice. Taxpayers are encouraged to check the IRS website for the most up-to-date information, or contact their tax preparer – via phone or email – for assistance.

Tax Updates from the IRS

Withholding Rules Updates Proposed

The IRS and Treasury have proposed regulations updating payroll withholding rules to reflect changes in the Tax Cuts and Jobs Act (TCJA) and related legislation. These updates accommodate the redesigned Form W-4, and the adjusted tables and computations for tax withholding. The regulations also address other withholding issues, such as how to treat an employee who hasn’t turned in a completed W-4.

IRS Increases Visits To High-Income Delinquents

In an effort to promote compliance and fairness among taxpayers, the IRS has committed to increasing face-to-face visits with those taxpayers who haven’t filed tax returns in 2018 or previous years. Their goal is to inform taxpayers of their obligations and to bring them into compliance. Revenue officers will not make threats or demand unusual forms of payment, but rather inform and assist. Taxpayers have the right to see credentials and should do so to protect themselves against fraud. Furthermore, getting ahead of the situation is advisable: “Taxpayers having delinquent filing or payment obligations should consult a competent tax advisor before waiting to be contacted by an IRS revenue officer,” according to Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. 

Meals And Entertainment Deduction Guidance Updated

The IRS has updated its proposed guidance regarding the handling of business meals and entertainment expense deductions. The TCJA eliminated the deduction for activities generally considered entertainment, amusement or recreation. It also limited the deduction for expenses related to food and beverages provided by employers to their employees. The proposed guidelines help determine what qualifies as entertainment and address the meals expense limit. As these are proposed guidelines, the IRS is taking public comment and will hold a public hearing on these proposed regulations on April 7, 2020.

Military Members’ Tax Benefits Explained

A newly-revised publication aims to inform members of the military of their tax benefits under the law. The Armed Forces Tax Guide will help those serving in the military, including National Guard, reservists, and those stationed abroad, understand specific tax issues related to their situation. Moving expenses, treatment of combat pay, IRA contribution limits and extended tax deadlines are included in this helpful guide.

Tax Updates Mid February 2020

New Form 1040-SR Option For Seniors

The Bipartisan Budget Act of 2018 required the IRS to create a new filing option for seniors. 1040-SR features larger print and a standard deduction chart, and is available to taxpayers age 65 or older who prefer a form with increased readability. The form may be used to file taxes this year, by April 15, and allows income reporting from sources such as investment income, Social Security and retirement plan distributions, annuities or similar deferred-payment arrangements. The form can be used whether selecting the standard deduction or itemizing deductions. 

Tax-Exempt Application Form Revised

In an effort to streamline the process by which organizations can apply for tax-exempt status, the IRS has revised Form 1023. Additionally, charities applying for 501(c)(3) tax-exempt status can now file their form electronically. The IRS expects this new process to reduce errors and improve application processing time. The payment, which remains $600, can be made directly from a bank account or by credit or debit card.

Success Against Abusive Micro-Captive Transactions

The IRS has been litigating many abusive micro-captive insurance schemes, which have the potential to avoid or evade taxation of income. They have been doing it with some success, as evidenced by an almost 80% rate of acceptance among those who received a settlement offer. The IRS is also establishing an additional 12 teams of examiners to open audits on thousands of taxpayers in the near future. The IRS urges taxpayers involved in these abusive transactions to immediately consult with an independent, competent tax advisor “on the proper treatment for past and future tax years to consider best available options.”

Identity Theft Central

The IRS has launched Identity Theft Central, a resource designed to improve online access to information on identity theft and data security protection for taxpayers, tax professionals and businesses. This new, streamlined page is a single source for information regarding identity theft, phishing, and other scams and schemes. It includes information for businesses and tax professionals to keep data safe and understand their responsibilities, and information for individuals on how to avoid falling victim to identity theft (and steps to take if that has already happened). 

Tax Updates Late January 2020

Avoid Ghosts

The IRS warns taxpayers to avoid unethical “ghost” tax return preparers. The 2020 filing season is underway and fraudulent predators are taking every advantage. A ghost preparer is someone who prepares a tax return for someone, but does not sign it. They print it out and tell the taxpayer to sign and mail it or, if e-filing, they do not add their digital signature as a paid preparer, as required by law. You can avoid falling prey to a ghost by being aware of their tactics: They may require payment in cash and withhold a receipt; they may invent income or deductions to qualify the taxpayer for credits or refunds; they may direct the tax refund into their own bank account instead of the taxpayer’s. Using a legitimate tax preparer with a valid Preparer Tax Identification Number is a sure way to avoid falling prey to a ghost preparer.

Guidance For Student Borrowers and Creditors

The IRS and Treasury issued guidance that extends the relief for some taxpayers who had student loans discharged. The Revenue Procedure provides relief when the federal loans are discharged by the Department of Education under the Closed School or Defense to Repayment discharge process, or where the private loans are discharged based on certain legal settlements. Taxpayers within the scope of this procedure should not report the amount of discharged loan as gross income, nor should creditors issue a 1099-C to taxpayers or the IRS.

IRS Reconsiders Double Taxation

The IRS is willing to consider requests for relief from double taxation resulting from the repatriation of monies under the Tax Cuts and Jobs Act (TCJA). In a few instances where corporations have paid an unusual dividend, not because of the TCJA, it may be appropriate to provide relief from double taxation. When the same earnings and profits of foreign corporations are taxed both as dividends and under section 965, double taxation could result. Taxpayers who fit these limited circumstances may contact the Office of Associate Chief Counsel (International).

US Tackles International Tax Evasion

The Joint Chiefs of Global Tax Enforcement, known as the J5, brings together leaders of tax enforcement authorities from Australia, Canada, the UK, US and the Netherlands to lead the fight against international tax crime and money laundering. Specifically, it is believed that clients of a financial institution located in Central America may be using a sophisticated system to conceal and transfer wealth anonymously to evade their tax obligations and launder their criminal proceeds. Though this was the first meeting of its kind, the J5 plan to continue coordinating such global enforcement.

IRS Tax Updates January 23

Individual Filing Season Opens

For individuals, the IRS will begin accepting tax returns on January 27, 2020. The deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020, unless an extension is filed (estimated tax payments will still be due). The IRS says this will help ensure the security and readiness of tax processing systems and address the potential impact of recent tax laws on 2019 tax returns. Taxpayers are encouraged to e-file, and to remember that they don’t have to wait until January 27 to start their tax return or contact a reputable tax preparer.

Gig Economy Tax Center Helps Businesses, Workers

The IRS has launched the Gig Economy Tax Center on irs.gov to help the many people involved in the gig economy find streamlined information that affects them. Ride-sharing and home- or room-rentals are the most popular, but other services are part of the gig economy, including the businesses that provide the apps or platforms to connect customers with services. The Gig Economy Tax Center will help to educate taxpayers about their filing requirements, making estimated income tax payments, paying self-employment, FICA, and medicare taxes, and deductible business expenses. Though earners might not be issued W-2s or 1099s, gig income is still subject to these rules.

Use Direct Deposit For Fast Refund

The IRS encourages taxpayers who are expecting refunds to choose to have their refund direct deposited into their bank account. This is the fastest way to receive a refund. Taxpayers can elect to have their refund deposited into one account, or divided up into as many as three accounts. Whether you use tax software or a preparer, your bank routing number and account number(s) are all that is needed to take advantage of this system. 

New Withholding Estimator Launched

The IRS has launched a new and improved tax withholding estimator to help employees when they fill out the new 2020 W-4. Under- and over-paying taxes have consequences and having the right amount withheld from one’s paycheck is the best way to stay on track with paying your expected tax burden. Beginning in 2020, withholding is no longer based on marital status or allowances, but on expected filing status and standard deduction. Benefits such as the Child Tax Credit, or outside income (such as from the gig economy) can also be reflected in one’s withholding.

 

Tax Season is Here!

Our early advance program through Republic Bank means that you can have access to some of your tax credits today.

If you want to find out how much you qualify for, stop by our office, open 9-5 until the 20th, then 9:00 Am to 8:00 PM.

Tax Update December 30

Make A Quarterly Payment

Taxpayers who haven’t paid enough in taxes this year can make a quarterly estimated tax payment now, directly to the IRS. The deadline for making a payment for the fourth quarter of 2019 is 15 January, 2020. This may apply to you if your employer didn’t withhold enough from payroll taxes, if you held more than one job, didn’t adjust withholding with changing circumstances, were self-employed or part of the gig economy. Use the Withholding Calculator to see how you might avoid a tax time surprise in 2020. 

Opportunity Zone Guidance Finalized

The IRS and Treasury have released final regulations on Qualified Opportunity Zone (QOZ) investment. These regulations also provide additional details on Qualified Opportunity Funds. Related forms and instructions will be available in January 2020 for taxpayers wishing to take advantage of this update. 

Tax Court Decision Results In Continued Enforcement

Taxpayers involved in designated syndicated conservation easement arrangements are encouraged to talk to their tax advisors regarding any impact a recent US Tax Court decision may have on their arrangements. “We are prepared to take each of these and all other cases being developed by the IRS to trial,” said IRS Chief Counsel Mike Desmond. “We encourage taxpayers and their advisors to see the writing on the wall and take immediate steps to resolve these matters.”

Proposed Corporate Compensation Regulations Issued

The IRS and Treasury have issued proposed regulations reflecting changes from the Tax Cuts and Jobs Act (TCJA) on the tax deductibility of officers’ compensation by publicly held corporations. The proposed regulations update some definitions and “grandfather” in some previous arrangements.