Tag Archives: taxes

IRS Updates Mid-December 2023

2024 FSA Limit Increase

Flexible Spending Arrangements (FSAs) can be used to pay medical expenses throughout the year, and the contribution limit for 2024 is increased by $150 to $3200. Employees who participate in an FSA can contribute through payroll deductions, and the amount is not subject to federal income tax, Social Security tax, or Medicare tax. Depending on the FSA plan, qualified medical expenses can include those not covered by a health plan, such as copays and deductibles, as well as services such as dental or vision care, and over-the-counter medicines. More information is available in Publication 969.

2024 Filing: Get Ready

The IRS urges taxpayers to ready themselves for filing their 2023 federal income tax return by being prepared. Important things to be aware of include:

  • Enhancements to online taxpayer accounts, including access to data and information
  • 1099-K reporting threshold delay
  • Energy related credits, for electric vehicles (purchased in 2022 or before, or in 2023), or home improvements
  • Timing of refunds, avoiding delays, and using direct deposit
  • Important documents needed for filing

Find more information at the Get Ready page.

National Tax Security Awareness Week Concludes

Security Summit partners have wrapped up the 8th National Tax Security Awareness Week. The focus is on protecting sensitive financial information against identity thieves and other security threats, especially around the holidays and the start of the 2024 tax season. 

ERC Disallowance Work Expanded

The IRS continues its efforts to combat dubious Employee Retention Credit (ERC) claims. More than 20,000 letters have been sent to taxpayers notifying them of disallowed ERC claims, including to entities that did not exist or did not have employees during the eligible ERC period. The special withdrawal program is still available to those with pending claims who realize their claims were inaccurate, and there will be a voluntary disclosure program unveiled soon to allow those who already received improper payments to avoid future IRS action. 

IRS Updates Aug 31

Security Summit Wraps Up

The IRS has finished its annual education effort regarding online security for tax professionals and taxpayers. This year includes a five-part “Protect Your Clients; Protect Yourself” series to help tax pros, especially smaller practices, protect against tax-related identity theft and fraud. The final installment of the series urges tax professionals to take critical steps to protect data and security:

  • Use caution around email attachments: Do not open links that arrive unexpectedly.
  • Do not commingle business and personal devices: do not conduct business on personal devices and do not web surf or download videos on business devices.
  • Do not share USB drives or external hard drives between personal and business devices.
  • Be careful with downloads.
  • Use strong passwords, always change default passwords, and change passwords often.

Educator Expense Deduction

The IRS reminds teachers and other educators that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses for 2023 when they file their tax return next year. Even educators who take the standard deduction may claim this deduction, and if married to another educator, filing jointly, up to $600 may be claimed. Qualified costs include those incurred in the purchase of books, supplies, classroom materials, computer and software equipment and services, and COVID-19 protective items. Qualified expenses do not include costs associated with home education or nonathletic supplies for health or physical education. The IRS urges educators to keep good records and documentation.

Hawaii Wildfire Victim Tax Relief

The IRS has announced expansive tax relief for victims of Hawaii wildfires in Maui and Hawaii counties. These taxpayers now have until February 15, 2024 to file various federal individual and business tax returns and make tax payments. Any households or businesses located in Federal Emergency Management Agency (FEMA)-designated disaster areas qualify for this relief. This relief postpones various filing and payment deadlines that occur from August 8, 2023 through February 15, 2024. Any returns and taxes originally due during this period have until the February deadline. This is automatically provided, and taxpayers do not have to take action to get this relief. However, if a taxpayer does receive a late filing or payment penalty notice, they should call the number on the notice to have it abated. More information is always available at the IRS’ disaster relief page

Educational Assistance Reminder

The IRS reminds employers and employees that under federal law, employers who provide educational assistance programs can use them to help pay student loan obligations for their employees. In an effort to promote this benefit, the IRS has a free webinar on September 14 to help people better understand this provision. Traditionally such programs have been used to pay for books, equipment, supplies, fees, and tuition; under current law, this feature will be available until December 31, 2025. 

Tax Updates Early May

IRS Updates May 2023 by Paul Davis

Better Late Than Later

The IRS is urging taxpayers who missed the April 18 tax-filing deadline to file as soon as possible. Those who owe taxes should file quickly to minimize penalties and interest, which can accrue over time. For those who should receive a refund, there is no late-filing penalty. Some taxpayers automatically qualify for extra time to file and pay, including disaster victims, military members serving in a combat zone and support personnel, and taxpayers outside the United States. There are options for taxpayers struggling to pay their tax bill. 

May 15 Deadline for Tax-Exempt

The IRS reminds tax-exempt organizations that their filing deadline is May 15, 2023. Those operating on a calendar-year basis must file a return by this date. Form 990-series (information returns such as Form 990, 990-EZ, 990-PF), Forms 990-N, 990-T, and Form 4720 must be e-filed. Those requiring additional time to file beyond the May 15 deadline can request a six-month automatic extension, however this does not extend the time for paying any taxes due. Online Workshops are also available to help exempt organizations comply with their filing requirements. 

Tax Relief for Indiana Victims

Storm victims in Indiana now have until July 31, 2023, to file various federal individual and business tax returns and make tax payments. This relief applies to any area designated by the Federal Emergency Management Agency (FEMA) as a result of tornadoes, severe storms, and wind that occurred on March 31 and April 1. Taxpayers and businesses in Allen, Benton, Clinton, Grant, Howard, Johnson, Lake, Monroe, Morgan, Owen, Sullivan, and White counties qualify, in addition to any other areas later designated. This relief is automatic, and there is no need to contact the IRS unless an affected taxpayer incorrectly receives a late filing or late payment penalty notice. As always, an updated list of eligible localities is available.

Put Withholding Estimator to Work

The IRS suggests taxpayers get a head start on the 2024 filing season by using the Tax Withholding Estimator to help update the amount of tax to have taken out of their 2023 pay. It is especially useful after a major life change such as marriage, divorce, birth or adoption of a child, a home purchase, or a significant change in income. Those who received a large refund or owed a lot of tax this year would also benefit from using the estimator. To receive the most accurate estimate, have on hand recent pay statements (for both spouses if married), other income sources, and the most recent income tax return.

Tax Updates March 29

Dirty Dozen Tax Scams

The IRS has begun their Dirty Dozen tax scam series, warning individuals and businesses about popular schemes and scams targeting taxpayers. Information to help recognize a scam, and steps to take for those who have been targeted or have fallen prey to such predators. The first six scams to be aware of are:

  • Employee Retention Credit scams, being aggressively promoted by scammers, misleading people and businesses into thinking they can claim these credits, when there are very specific guidelines around these pandemic-era credits.
  • Email and text message scams: Phishing and Smishing, messages from fraudsters claiming to be from the IRS or other legitimate organizations, offering phony tax refunds or making legal threats.
  • “Help” setting up online IRS account, putting taxpayers at risk of identity theft by third party “helpers.”
  • Fuel Tax Credit scams, promoted by scammers promising a large refund, and charging a fee and sometimes committing identity theft. The fuel tax credit is meant for off-highway business and farming use, and not available to most taxpayers.
  • Fake charity scams, where fraudsters impersonate organizations dedicated to providing relief to victims of emergencies or disasters in order to dupe good-hearted donors into giving up cash or personal information. 
  • Unscrupulous tax preparers: The IRS offers important tips to find trustworthy and legitimate tax professionals, and red flags to be aware of.

Answers About Nutrition and Wellness Expenses 

The IRS has posted frequently asked questions (FAQs) regarding whether certain costs related to nutrition, wellness, and general health are medical expenses that can be reimbursed under a health savings account (HSA) or other similar arrangement. Generally, a deduction is allowed for expenses paid for medical care if certain requirements are met. Alternatively, medical expenses are eligible to be paid or reimbursed under an HSA, health flexible spending arrangement (FSA), Archer medical savings account (Archer MSA) or health reimbursement arrangement (HRA). The FAQs address whether the cost of weight-loss programs, gym memberships and other expenses are considered medical expenses that can be paid or reimbursed under any of these arrangements. 

Where’s My Refund? Tool

The IRS reminds taxpayers that the Where’s My Refund? tool on IRS.gov is the most convenient and efficient way to check the status of their refund. IRS2Go, the mobile app, offers another way for users to check their refund status. Taxpayers must enter their Social Security number or Individual Taxpayer Identification number, filing status, and the exact whole dollar amount of their expected refund. The tool is updated once a day, usually overnight.


Tax Updates Feb 12

Tax Help FAQs

Tax filing this year is a bit more complicated, with the American Rescue Plan Act (ARPA) of 2021 which expanded the Child Tax Credit for last year only. Advance payments mean more paperwork for those who received them, and potentially repaying excess amounts, or claiming credit for remaining unpaid amounts. The IRS urges recipients to save Letter 6419 so their 2021 tax return can be properly prepared. A qualified tax preparer can help with this process, and several FAQs on the topic are available.

Be Ready to File

The IRS reminds taxpayers to be prepared to file their tax return, and to that end are providing a roundup of relevant information. Readiness topics include their Tax Time Guide, dealing with advance Child Tax Credit payments or Recovery Rebate Credit, a tax document checklist, filing tips and how to find help if needed.

IRS Backtracks Third-Party Facial Recognition

In response to concerns, the IRS has announced it will transition away from using a third-party service for facial recognition. This was intended to help authenticate people creating new online accounts. The IRS pledges to find authentication processes that do not involve facial recognition and which protect taxpayer data. This is not expected to interfere with filing returns or paying taxes owed, and people should continue to file their tax returns as they normally would. 

IRS Suspends Automatic Notices

The IRS is suspending the mailing of several letters to individuals and businesses. These automated notices include Balance Due notices, Notices of Unfiled Tax Returns, and Withholding Compliance letters. This suspension is intended to allow the IRS to catch up with the backlog of several million original and amended tax returns that have not been processed due to the pandemic and pandemic response. Other letters are legally required to be issued within a certain timeframe and cannot be stopped by the authority of the IRS. 

Are You Prepared for Unemployment Taxes?

In the craziness that is 2020, Pandemic Unemployment Assistance has helped many people survive when their places of employment had to shut down. Employees often do not think about the fact that unemployment payments are taxable income.

The South Carolina Department of Revenue recently wrote a reminder to help tax payers plan ahead for taxes. You may request that taxes are withheld from your unemployment payments, you may pay on a quarterly cycle, or pay the entire bill due at tax time next year.

Each of these methods has its own advantages and disadvantages. Withholding taxes from your unemployment can cause a reduction in weekly cash flow that you cannot afford while looking for new work. Quarterly taxes will give you regular cash flow and avoid a large lump sum at the end of the year. But, they can result in different payments if you are tracking expenses and tax deductions on the year or if you plan to offset your tax bill with tax credits at the end of the year. Finally, you can pay your entire tax bill during next year’s tax season. With good tax help, this will result in the most accurate tax cost but will also mean that you can be liable for a large lump sum payment when you file your taxes.

No matter your chosen method of managing your taxes, you need to talk to a professional about your tax bill from this year. It is going to be different than any year previously. We are available Mon-Wed, call ahead to arrange a covid-safe appointment with our staff during office hours.


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.

IRS Tax Updates December 2

IRS Updates Deductible Guidelines

The IRS has issued guidance on some of the changes brought about by the Tax Cuts and Jobs Act (TCJA) regarding certain deductible expenses. The rules for using the optional standard mileage rates in deducting costs of operating an automobile for business, charitable, medical or moving expense purposes have been updated. Taxpayers may opt to substantiate actual allowable expenses with adequate records. Rules vary for members of the Armed Services.

Medical Expenses May Be Tax Free Via FSA

The IRS today reminded eligible employees (self-employed are not eligible) that they may still have time to set up a health flexible spending arrangement (FSA) if their employer offers one. Employees may contribute up to $2,750 during the 2020 plan year not subject to federal income tax, Social Security tax or Medicare tax. Allowable expenses are those not covered by one’s health plan, and may include co-pays, deductibles, dental and vision care, eyeglasses and hearing aids. Unspent amounts may be forfeit. Talk to your employer for details. 

National Tax Security Awareness Week Announced 

Next week kicks off the fourth National Tax Security Awareness Week, in time for holiday shopping season. Security Summit partners continue to urge taxpayers, businesses and tax professionals to maintain their online security as identity thieves step up their efforts to steal personal and financial data. The Week will feature a series of educational materials to help protect individuals and businesses against identity theft. The effort will include a special social media effort on Twitter and Instagram with @IRSnews and #TaxSecurity.

Large Gifts Won’t Harm Estates After 2025

The Treasury Department and IRS today issued final regulations confirming that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount drops to pre-2018 levels. The TCJA temporarily increased the basic exclusion amount (BEA) from $5 million to $10 million for tax years 2018 through 2025 (adjusted for inflation). In 2026, the BEA will revert to the 2017 level of $5 million as adjusted for inflation. Final regulations provide a special rule that allows an estate to compute its estate tax credit using the higher of the BEA applicable to gifts made during life or the BEA applicable on the date of death.

Are Your Donations Tax Deductible?

The year is wrapping up and tax time is on the horizon. Taxpayers have hopefully been proactive throughout the year in preparing for filing the year’s taxes, and perhaps they are considering ways they might lighten their tax burden. It’s also the holiday season and giving is on our minds. Making donations to tax-exempt charities can be a win-win: It certainly benefits the charitable organization (and those whom they help) and can be helpful to the taxpayer in the coming year.

Qualified Charities

It’s important to make sure your donations accomplish those things, especially in this era of fraudulent charities and financial scams. Is your preferred charity tax-exempt and eligible to receive tax-deductible charitable contributions? Has it had its tax-exempt status revoked? What is its federal tax filing status? Perhaps you’re looking for a charity to give to and would like to see who is operating in your state. The IRS has a tool that can help.

Tax Exempt Organization Search

The Tax Exempt Organization Search (TEOS) on IRS.gov can assist in answering these questions, and more. It’s mobile device friendly, and you can sort results by various criteria. The Interactive Tax Assistant can also help you determine if a charitable contribution you’d like to make is deductible. So before you make your year-end giving decisions, double-check to ensure your donations will be doing the most good, for everyone involved.