Tag Archives: irs updates

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.

IRS Updates 13 December

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.

Recent IRS Gift Card Scams

The IRS has warned about a recent gift card scams, one of the many scams that people need to be aware of.

IRS GIft Card Scams

These scams follow many of the traits of a typical phone scam: someone calls you from a source that you wouldn’t question. They tell you that something bad has happened (in recent cases, your identity is stolen). Then, they get you to do something that gives them access to your income. In this case, they attempt to convince you that you need to buy different gift cards and give them the card numbers in order to prove that you are who you say you are.

If you think this sounds silly, remember that aware and alert people don’t fall to scammers, but anyone can fall to this type of scam when tired, scared about an actual IRS issue, or too nervous or hopeful from some other issue.

Avoid IRS Scams

If someone contacts you and asks for immediate payment, purchasing gift cards, giving your info, or some other time sensitive activity, remember these principles:

  • Call Them – If you are dealing with financial or tax issues, you will get many calls from creditors, collectors, and so on. Look up the organization you are dealing with and call them on an official number. If they demand you do something now, thank them for the information and inform them you will call them back. Then, find the official customer service number and call them.
  • Get it in writing – Official correspondence in the United States is in writing. If the IRS is dealing with you in an official manner, they will send you paperwork.
  • If It’s too good (or bad) to be true, it’s not true – not to sound too pessimistic, but scammers always attempt to appeal to our hopes by giving us limited time offers to something that has the potential to completely change our lives. Demand double verification and time if something seems to be life changing, either good or bad.

What to Do if You are Contacted By Scammers

If you happen to be targeted by a scammer, you have several options to notify governmental enforcement:

Don’t get scammed by fraudsters pretending to be with the IRS. If you are worried about IRS collections or other issues, come by our office for an appointment and we will discuss your tax needs.

Tax Updates September 18

Third Quarter Tax Payments Due

The IRS reminds taxpayers that those owing estimated quarterly tax payments must
pay their third quarter installment by September 16 . This generally applies to small
business owners and the self-employed, including those participating in the sharing
economy as well as others whose earnings aren’t subject to withholding, such as
retirees, investors, landlords, and those receiving alimony.

Regulations For 100% Depreciation Released

The IRS and Treasury released final and proposed regulations regarding the 100% first-
year depreciation allowed on certain depreciable business assets. Machinery,
equipment, computers, appliances and furniture generally qualify. The final regulations
provide guidance on the depreciation of used property as well as qualified film,
television and live theatrical productions. The proposed regulations deal with new
provisions not addressed previously.

Reporting Relief For Some Tax-Exempt Organizations

The IRS has issued proposed regulations regarding the reporting requirements for
certain tax-exempt organizations which include, among other things, the existing
exception from having to file an annual return for certain organizations that have gross
receipts of $50,000 or less, and relief from the requirement to report contributor names
and addresses. In compliance with a recent court decision, the IRS and Treasury
welcome all public comments on the proposed regulations.

Former US Citizens Offered Tax Relief

New procedures have been announced that will enable certain individuals who
relinquished their U.S. citizenship to fulfill their tax and filing requirements and receive
some relief for back taxes. Those whose tax non-compliance was non-willful, who owe
less than $25,000 in back taxes, and whose net assets are less than $2 million may be
able to avoid interest and penalties, and come into compliance with their tax obligations.
The IRS will host a webinar in the near future with additional information and practical
tips for making a submission to the Relief Procedures for Certain Former Citizens .

Tax Updates July 28

Transition Tax On Untaxed Foreign Earnings

The IRS has provided details on Section 965, transition tax on untaxed foreign earnings. The Tax Cuts and Jobs Act (TCJA) requires some untaxed foreign earnings and profits to be taxed as if those earnings have been repatriated to the US. Details on the income that must be recognized are provided, as well as a related deduction which generally lowers the effective tax rate to between 8% and 15.5%. Information is also available detailing how some taxpayers may choose to make installment payments over eight years.

Preventive Care To Include Some Chronic Conditions

The IRS has expanded the list of preventive care for HSA participants to include care for some chronic conditions. Preventive care benefits that may be provided by a high deductible health plan (HDHP) are not subject to the deductible, and now include certain medical care services received and items purchased, including prescription drugs, for certain chronic conditions for someone with that chronic condition. These include SSRIs, beta blockers, ACE inhibitors, diabetes testing materials, and more, for people with specific diagnoses.

Tax Security Remains a Priority

The IRS continues to help tax professionals secure client data and reduce tax fraud. “Taxes-Security-Together” – Step 1 details six sub-steps to secure basic protections, including anti-virus software, firewalls, two-factor authentication, backup services, encryption, and VPNs. The “Taxes-Security-Together” Checklist – Step 2 reminds tax professionals of their duty to have a written data security plan, and what is required in that plan. More steps to come.

IRS Pursues Virtual Currency Taxes

The IRS has begun sending letters to virtual currency owners, reminding them of their obligations to file amended returns and pay back taxes, interest, and penalties where appropriate. Ten thousand taxpayers are expected to receive these letters by the end of August as the IRS continues its efforts of addressing virtual currency non-compliance. Taxpayers who do not properly report such transactions could even be subject to criminal prosecution. 

Tax Tip: FAFSA Filing and Taxes

 

Summer is quickly flying by and the 2019-2020 school year fast approaches! Students who need to file the 2019 FAFSA will need to use their income from their or their parents 2017 Federal Tax Return.

Filing FAFSA and Reporting Taxes

The IRS reminds people that there are multiple ways to access the 2017 tax return: use the IRS Data Retrieval Tool, contact the provider who filed your 2017 return, or get a tax transcript online or via the mail. If you are retrieving data from the IRS, you may be required to supply additional paperwork with a student loan provider. Check with www.studentaid.gov or with your bank.

Keep a Copy of Tax Records

This is a good time to have a reminder that you should keep an electronic copy of your tax records and have it accessible. Besides making FAFSA filing easier, tax records are necessary for accounting, proof of income, and in the worst-case scenario of a tax audit.

If you do not have a record, check with your tax preparer to find out if they have a record of your tax return for that year.

At Little Giant Tax Services, we help people track their finances and get the best returns in order to help their children go to college. If your taxes and FAFSA is too confusing, stop by an office during our office hours and we can help you walk through it.

How to Find the IRS Online

Social IRS

Need to connect with the IRS? There’s an app for that. IRS2Go, available in English and Spanish, and for Android and Apple, offers tax tips, IRS YouTube videos, and your refund status. You can even pay your taxes via the app.

In an effort to connect with small business owners and taxpayers, the IRS also has several official social media accounts. Find them on YouTube, Instagram, Twitter, Facebook, and LinkedIn.

 

YouTube

 

The official IRS YouTube channel offers a small business playlist full of tax tips. The videos are available in English, Spanish, and even American Sign Language.

Instagram

News and information can be found on the IRS’ official Instagram account, IRSNews.

Twitter

The IRS has several Twitter accounts:

And the newly added:

Facebook

If Facebook is your social media platform of choice, find the IRS on Facebook and in Spanish, for news, updates, tips, and more.

LinkedIn

For agency updates and job opportunities, check the IRS’ LinkedIn account.