Refund Myths Addressed
The IRS is debunking some common refund myths circulating among taxpayers.
- The IRS wants taxpayers to know that calling them or a tax professional cannot expedite your refund, nor do they have access to any special information regarding your refund date.
- Ordering a tax transcript doesn’t provide that either.
- A smaller refund doesn’t mean the IRS has a problem: outstanding child support, federal or state taxes, student loans or other debts can cause your refund to be less than expected.
The best way to find out the status of your refund is to use the Where’s My Refund tool, or the IRS2Go app.
Retirement Distributions Waived For 2020
Seniors and retirees do not have to take their usual required minimum distribution (RMD) from their IRA or workplace retirement accounts in 2020, thanks to coronavirus relief measures passed this year. The waiver includes RMDs for individuals who turned 70 ½ in 2019 and took their first RMD in 2020. Those who have already taken their RMD have the option of returning it to their qualified plan. These provisions apply to most retirement plans, including traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and others.
Annual “Dirty Dozen” Unveiled
The IRS has published its list of the 12 most common tax scams perpetrated by criminals this year. Taxpayers should be aware and vigilant in regards to spotting and avoiding these scams, especially the ones on the rise in the wake of the pandemic and economic impact payments (EIPs). Scams on the list include phishing emails, fake charities, threatening phone calls, EIP or refund theft, organizations “overselling” Offer In Compromise assistance, payroll scams, ransomware, and more.
Foreign-Taxed Income Guidelines
The IRS has published final regulations on how income from foreign corporations subject to a high rate of foreign tax shall be treated. The final regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their Global Intangible Low Taxed Income (GILTI) computation on an elective basis. The IRS also released proposed regulations regarding that high-tax exception with the GILTI exclusion, and welcomes public comments on the subject.
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.
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).
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.