Security Awareness Week Wraps Up
The National Tax Security Awareness Week has finished its focused campaign to help tax professionals and taxpayers protect themselves from security risks. Issues for the week included basic steps that should be taken to avoid scams and identity theft schemes taking advantage of holiday shopping, the approaching tax season and coronavirus concerns; the multi-factor authentication that will be available on all 2021 online tax preparation products; the expanded Identity Protection PIN Opt-In Program for all taxpayers who can properly verify their identities; security advice for businesses; and more security advice for tax professionals.
Interest Rates To Remain The Same
The IRS has announced that interest rates for under- and overpayments will remain the
same for the calendar quarter beginning January 1, 2021. The rates will continue at three (3) percent for overpayments (two (2) percent in the case of a corporation); one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000; three (3) percent for underpayments; and
five (5) percent for large corporate underpayments.
Wage Statements Due February 1, 2021
The IRS reminds employers that Forms W-2 and other wage statements must be filed with the Social Security Administration no later than February 1, 2021, to avoid penalties and reduce fraud. Normally, such statements are due January 31, but since that date falls on a Sunday, the deadline has been pushed to the next business day. Copies to employees are also due by then, as well as Forms 1099-MISC and 1099-NEC.
Final QTF Regulations Issued
The IRS and Treasury have issued final regulations on the deduction for qualified transportation fringe (QTF) and commuting expenses following changes made by the Tax Cuts and Jobs Act (TCJA). These final regulations address expenses related to QTFs, including providing guidance on determining the amount of QTF parking expenses that is nondeductible, and the disallowance of the deduction for expenses of transportation between an employee’s home and workplace.
National Tax Security Awareness Week
The IRS and Security Summit partners marked National Tax Security Awareness Week earlier this month with a series of tips and reminders for consumers, taxpayers, businesses, and professionals. Advice focused on protecting your personal and financial information while online shopping, guarding against email and phishing scams, creating strong passwords, tips for business owners to avoid identity theft, and encouraging tax professionals to have a data security plan.
Foreign Tax Credit Regulations Finalized
The IRS and Treasury issued final regulations regarding the Foreign Tax Credit. This credit generally allows individuals and businesses to claim a US tax credit for income taxes paid to foreign governments. These regulations were updated due to changes the Tax Cuts and Jobs Act (TCJA) made in how taxable income is calculated and how the US taxes international income.
Jan 31 Filing Deadline For Businesses
The IRS reminds employers and other businesses that wage statements and independent contractor forms have a due date of January 31. While businesses used to have more time to file such forms as Form W-2, Form W-3, and 1099-MISC, the 2015 Protecting Americans from Tax Hikes (PATH) Act permanently changed the due date to help protect against fraud.
Dec 31 Deadline For Minimum Distributions
December 31 is the deadline for retirees to take their required minimum distributions (RMDs) from certain retirement plans. Those who turned 70½ in 2019 are allowed to wait until April 1, 2020, to take their first RMD. This deadline applies to most IRAs, SEP IRAs, SIMPLE IRAs, and workplace plans such as 401(k), 403(b) and 457(b) plans. Roth IRAs don’t require distributions while the original owner is alive.
Interest Rates To Remain the Same
The IRS announced that interest rates will remain the same for the quarter beginning January 1, 2020. The rates will be:
- 5% for overpayments (4% in the case of a corporation)
- 2.5% for the portion of a corporate overpayment exceeding $10,000
- 5% for underpayments
- 7% for large corporate underpayments
These rates are computed from the federal short-term rate determined during October 2019.