Harless Tax Blog

Harless Tax Blog

IRS reminder: June 15 tax deadline postponed to July 15 for taxpayers who live and work abroad

Wednesday, June 03, 2020

IR-2020-109, June 2, 2020

WASHINGTON – The Internal Revenue Service today reminded people who live and work abroad that they have until Wednesday, July 15, 2020, to file their 2019 federal income tax return and pay any tax due. The usual deadline is June 15.

This extension was included in a wide range of Coronavirus-related relief announced in early April. The extension generally applies to all taxpayers who have an income tax filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.

This means that anyone, including Americans who live and work abroad, nonresident aliens and foreign entities with a U.S. filing and payment requirement, have until July 15 to file their 2019 federal income tax return and pay any tax due. Visit IRS.gov/coronavirus for details.

Need more time beyond July 15?

Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension to Oct. 15 in one of two ways:

  • Filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov.
  • Submitting an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or digital wallet options and selecting Form 4868 or extension as the payment type. The automatic extension of time to file will process when taxpayers pay all or part of their taxes, electronically, by the July 15 due date. An extension to file is not an extension to pay. Taxes are still due by July 15.

Businesses that need additional time to file income tax returns must file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

Combat zone extension

Members of the military qualify for an additional extension of at least 180 days to file and pay taxes if either of the following situations apply:

  • They serve in a combat zone or they have qualifying service outside of a combat zone or
  • They serve on deployment outside the United States away from their permanent duty station while participating in a contingency operation. This is a military operation that is designated by the Secretary of Defense or results in calling members of the uniformed services to active duty (or retains them on active duty) during a war or a national emergency declared by the President or Congress.

Deadlines are also extended for individuals serving in a combat zone or a contingency operation in support of the Armed Forces. This applies to Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the Armed Forces in support of those forces.

Spouses of individuals who served in a combat zone or contingency operation are generally entitled to the same deadline extensions with some exceptions.

Extension details and more military tax information is available in IRS Publication 3, Armed Forces' Tax Guide.

IRS.gov assistance 24/7

Tax help is available 24/7 on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics, Frequently Asked Questions, and Tax Trails to get answers to common questions. Go to IRS.gov/payments for electronic payment options.

More information

The IRS will post frequently asked questions on IRS.gov/coronavirus and will provide updates as soon as they are available.

Millions of paper tax returns go unopened at short-staffed IRS

Monday, June 01, 2020

By TOBY ECKERT Read original article on Politico > 
05/29/2020 06:04 PM EDT
Updated: 05/29/2020 09:48 PM EDT

The IRS estimates that nearly 5 million unopened paper tax returns had piled up at the agency by mid-May amid the closure of its offices nationwide due to the coronavirus pandemic, according to a report that POLITICO has obtained.

Overall, the IRS estimated it had a backlog of 10 million pieces of mail to open and process as thousands of workers begin returning to the offices on Monday.

In addition to tax returns, the unopened mail includes taxpayer correspondence, information returns and payments, according to the report.

Through May 22, the agency had processed 120 million returns, down 14 percent from the same point in 2019, when the filing deadline was April 15. The deadline was delayed by three months this year because of disruptions caused by the pandemic.

Nearly 90 percent of the 134 million returns filed so far were sent to the agency electronically, the report said. Filings were down 6.2 percent from 2019, but the average refund — nearly $2,900 — was similar to last year, the report said.

More than 10,000 IRS employees have been told to report to offices in Kentucky, Texas and Utah on Monday. They will focus on mail and return processing, taxpayer refund claims, depositing checks, income verification requests, customer service and telephone assistance, the report said.

Additional employees are expected to be recalled in coming weeks. More than half of the agency’s roughly 81,000 employees have been teleworking.

The report said the IRS “is taking a number of steps to ensure employee safety in our facilities, for example: enforcing social distancing; procuring 1.76 million disposable masks and 188,000 reusable masks; providing hand sanitizer at all facilities and limited quantities of disinfecting wipes (IRS is attempting to procure more); enhanced cleaning; and assessing the ability to modify HVAC operations to provide additional outside air and increase air exchange.”

How are unemployment benefits taxed?

Friday, May 15, 2020

Millions of Americans who have filed for unemployment in recent weeks may be wondering if their benefits will be taxed.

The answer is yes.

However, there’s a difference that could cause Americans to pay less tax relative to levies on a typical paycheck.

“Unemployment benefits are taxed just like income,” said Michele Evermore, senior policy analyst at the National Employment Law Project.

Read Original Article on CNBC.com >

PPP Loan Frequently Asked Questions provided by US Treasury Department

Tuesday, May 05, 2020

PDF download of a comprehensive 15 page FAQ regarding questions about the PPP program. Download the below document to read.

PAYCHECK PROTECTION PROGRAM (PPP) FAQ's - May 3, 2020

Filing and Payment Deadline Extended to July 15, 2020 - Updated Statement

Thursday, March 26, 2020

Released: March 21, 2020

The Treasury Department and the Internal Revenue Service are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns has been extended from April 15 to July 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can't file by the July 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request an extension to file their return.

This filing and payment relief includes:

The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts, and corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15.

Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004.

State tax returns

This relief only applies to federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details. More information is available at https://www.taxadmin.org/state-tax-agencies.

Palm Beaches Chamber of Commerce Announcement

Monday, March 23, 2020

The U.S. Small Business Administration South Florida District Office will host virtual office hours to answer questions about the SBA Economic Injury Disaster Loan Program.

In addition to the virtual office hours, the District Office will also be hosting webinars twice daily to help small businesses navigate the disaster loan application. Details about the webinars coming soon!

In the meantime, feel free to contact the staff during the hours listed below.

Virtual Office Hours:
Monday, March 23 - Friday, April 04
11:00 a.m. – 1:00 p.m.
3:00 p.m. – 5:00 p.m

  • Limited to 250 callers at one time.
  • Participants may call at anytime and are welcome to enter and exit at will.
  • Callers will be muted upon entry and will be taken in the order they are received.

How to Participate:
Join Skype Meeting Here
Join by phone
(202) 765-1264; Conference ID - 162817288
Trouble Joining? Try Skype Web App Here

New Coronavirus Info for Small and Medium-size Business

Monday, March 23, 2020

WASHINGTON — Today the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.

The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee's own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

Read Remainder of Article at IRS.gov >

TAX NOTIFICATION: Retirement Planning Revamped Under The SECURE Act

Thursday, March 12, 2020

Happy New Year!! In the tax world, it wouldn’t be a New Year without tax legislation impacting your planning. Welcome to 2020 and with it, new significant tax legislation that may have a meaningful impact on your retirement planning.

What’s important to know?

NAME: The Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE” Act) was signed into law on December 20, 2019.

EFFECTIVE: The SECURE Act is effective January 1, 2020.

CHANGES: The Most Notable Changes to Retirement Planning under The SECURE Act:

  • Elimination of the “Stretch” IRA. Elimination of the ability to “stretch” certain inherited retirement accounts over a designated beneficiary’s life expectancy.
  • Raises RMD Age. Raises the age at which required minimum distributions (RMDs) must begin from the year the taxpayer attains age 70 ½ to 72.

NEW LAW: Under the SECURE Act:

  • “10-Year Rule”. An IRA must be distributed by December 31 of the 10th year following the year in which the retirement account owner dies. Designated
  • Exceptions to the 10-Year Rule if the IRA designated beneficiary is:
    1. a surviving spouse
    2. a disabled or chronically ill person
    3. the child of the decedent who is younger than 18 years of age until the child attains 18 and then the 10-year rule applies (exception does not apply to grandchildren)
    4. an individual who is not more than 10 years younger than the decedent
    5. IRAs that have already been inherited should be grandfathered, and thus free from the SECURE Act new requirements

    NO CHANGE TO “5-YEAR” RULE.

    • No designated beneficiary (i.e., if the beneficiary is a charity or certain trusts that do not qualify as a designated beneficiary) = “5-Year” Rule.
    • Law Still in Effect After the SECURE Act – An inherited IRA with no designated beneficiary is ineligible for stretch treatment (both lifetime and now 10-year rule). Such inherited IRA is subject to an accelerated withdrawal period of 5 years.

    Read article here.

Failed to Pay Your Taxes? The IRS May Pay You a Visit

Wednesday, February 19, 2020

There’s a new incentive to file a tax return this year: an Internal Revenue Service agent may be making a house call if you don’t.

The IRS is increasing efforts to reach high-income individuals who have failed to file at least one or more tax returns in recent years as a last-ditch attempt to encourage compliance, the agency said on Wednesday. This would be the final step before the agency would pursue more severe procedures, including civil or criminal action against that individual, the IRS said.

The agency will send several dozens agents to make at least 800 face-to-face visits in February and March of this year, Hank Kea, who directs the IRS field collections operations, said Thursday. The IRS will be identifying other non-compliant individuals throughout the year and adding cases as they find them, he said.

“Enforcement truly is our last resort,” Kea said. “Don’t delay filing or worse yet avoid filing all together.”

The IRS is concentrating efforts on individuals who received at least $100,000 in income during a year and didn’t file tax returns. The agency knows the incomes of many taxpayers from third-party reporting from employers or financial institutions, even if they don’t file a return.

The agency will focus on the most egregious cases first, Kea said, such as individuals contacted by the agency multiple times via mail with no response.

“The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes,” Paul Mamo, the IRS’s director of collection operations, said in a statement. “We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”

Not a Scam

The goal of these visits is to educate taxpayers about their filing requirements and try to bring them into compliance without taking stronger enforcement actions against the individual, Mamo said.

The agency will have several precautions in place to assure taxpayers that a home visit isn’t a scam. The IRS employee will provide two forms of official credentials, including a serial number and a photo ID. IRS employees will also not make threats nor demand an unusual form of payment, such as a gift card.

All taxpayers met in person will also have also been contacted multiple times by the IRS, so they should know they have a tax issue, the agency said. However, the timing of most visits will be unannounced.

The increased efforts to reach non-compliant people comes as the agency has come under criticism from its watchdog, the Treasury Inspector General for Tax Administration, and outside groups that say the agency isn’t effectively auditing corporations and high-income individuals with complicated returns. IRS Commissioner Chuck Rettig has said he is focusing on improving enforcement – in both criminal and civil cases – and has asked Congress for more money to staff these efforts.

In the past decade, the number of income tax returns increased by about 9%, but the IRS’s funding and number of employees both declined by more than 20%, according to a January report from the Taxpayer Advocate Service, an independent government office.

The report also found that some taxpayers who are audited or face adverse action from the IRS often cannot reach the agency to resolve the situation. The IRS received 15 million calls on its automated telephone lines in fiscal year 2019. Employees were able to answer only about 31% of those calls, and taxpayers who got through waited on hold for an average of 38 minutes, the Taxpayer Advocate said.

Some tax professionals worry that fewer employees at the agency mean that more taxpayers will try to cheat on their returns. Individuals face a 0.45% chance of being audited, while businesses are audited at a rate of 1.6%, some of the lowest audit figures on record, according to the IRS’s annual report, released in January.

Individual income taxes are the largest group of uncollected taxes before audits, representing about $314 billion, according to agency statistics on the tax gap.

Article from www.bloomberg.com

How and why you should check your credit report

Friday, June 07, 2019