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Deductible Home Offices

Posted by Admin Posted on Jan 26 2023

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Whether you are self-employed or an employee, if you use a portion of your home exclusively and regularly for business purposes, you may be able to take a home office deduction.

You can deduct certain expenses if your home office is the principal place where your trade or business is conducted or where you meet and deal with clients or patients in the course of your business. If you use a separate structure not attached to your home for an exclusive and regular part of your business, you can deduct expenses related to it.

Your home office will qualify as your principal place of business if you use it exclusively and regularly for the administrative or management activities associated with your trade or business. There must be no other fixed place where you conduct substantial administrative or management activities. If you use both your home and other locations regularly in your business, you must determine which location is your principle place of business, based on the relative importance of the activities performed at each location. If the relative importance factor doesn't determine your principle place of business, you can also consider the time spent at each location.

If you are an employee, you have additional requirements to meet. You cannot take the home office deduction unless the business use of your home is for the convenience of your employer. Also, you cannot take deductions for space you are renting to your employer.

Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses. Please contact us for more!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters    

IRS: California Storm Victims Qualify for Tax Relief; April 18 Deadline, Other Dates Extended to May 15

Posted by Admin Posted on Jan 26 2023

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The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo and Yuba counties qualify for tax relief. The current list of eligible localities is always available on the Tax Relief in Disaster Situations page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on January 8, 2023. As a result, affected individuals and businesses will have until May 15, 2023, to file returns and pay any taxes that were originally due during this period.

This includes 2022 individual income tax returns due on April 18, as well as various 2022 business returns normally due on March 15 and April 18. Among other things, this means that eligible taxpayers will have until May 15 to make 2022 contributions to their IRAs and health savings accounts.

In addition, farmers who choose to forgo making estimated tax payments and normally file their returns by March 1 will now have until May 15, 2023, to file their 2022 return and pay any tax due. The May 15, 2023, deadline also applies to the quarterly estimated tax payments, normally due on January 17, 2023, and April 18, 2023. This means that individual taxpayers can skip making the fourth quarter estimated tax payment, normally due January 17, 2023, and instead include it with the 2022 return they file, on or before May 15.

The May 15 deadline also applies to the quarterly payroll and excise tax returns normally due on January 31 and April 30, 2023. In addition, penalties on payroll and excise tax deposits due on or after January 8, 2023, and before January 23, 2023, will be abated as long as the tax deposits are made by January 23, 2023.

The Disaster Assistance and Emergency Relief for Individuals and Businesses page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022, normally filed this tax season). Be sure to write the FEMA declaration number – 3691-EM − on any return claiming a loss. See Publication 547 for details.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS    

Refund, Where's my Refund?

Posted by Admin Posted on Jan 26 2023

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Are you expecting a tax refund from the Internal Revenue Service this year? If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return. If you file your return electronically, your refund should be issued in about half the time it would take if you filed a paper return — even faster when you choose direct deposit.

You can have a refund check mailed to you, or you may be able to have your refund electronically deposited directly into your bank account. Direct deposit into a bank account is more secure because there is no check to get lost. And it takes the U.S. Treasury less time than issuing a paper check. If you prepare a paper return, complete Form 8050, making sure that the routing and account numbers are accurate, and attach it to the corporation's tax return. Note that Form 8050 may only be filed with the original Form 1120 or 1120S, and the corporation is not eligible to receive direct deposit if the receiving financial institution is a foreign bank, or foreign branch of a U.S. bank. Incorrect numbers can cause your refund to be misdirected or delayed. Direct deposit is also available if you electronically file your return.

You may not receive your refund as quickly as you expected. A refund can be delayed for a variety of reasons. For example, a name or identification number and Social Security number listed on the tax return may not match the IRS records. You may have failed to sign the return or to include a necessary attachment, such as Form W-2, Wage and Tax Statement. Or you may have made math errors that require extra time for the IRS to correct.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters 

Revisar créditos y deducciones tributarios ahora ayuda a los contribuyentes a presentar impuestos exitosamente

Posted by Admin Posted on Jan 26 2023

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Probablemente la mayoría de las personas solo piensan en los créditos y deducciones tributarias cuando completan su declaración de impuestos. Sin embargo, con un poco de planificación anticipada se puede facilitar el proceso de presentación. Al familiarizarse ahora, los contribuyentes pueden comprender claramente qué créditos y deducciones tienen sentido para ellos y los archivos necesarios para demostrar su elegibilidad.

Aquí hay algunos datos acerca de créditos y deducciones que pueden ayudar con la planificación tributaria durante todo el año.

Algunas cosas que debe saber acerca de las deducciones:

  • Las deducciones pueden reducir la cantidad de ingresos de un contribuyente antes de que calculen el impuesto que adeudan.
  • La mayoría de la gente toma la deducción estándar. La deducción estándar se ajusta cada año según la inflación. El monto de la deducción estándar depende del estado civil del contribuyente, la edad, si es ciego y si otra persona lo reclama como dependiente.
  • Algunas personas están obligadas a detallar sus deducciones, y algunas personas pueden optar por hacerlo porque reduce su ingreso tributable más que la deducción estándar.
  • Como regla general, si las deducciones detalladas de un contribuyente son mayores que su deducción estándar, debe detallarlas.

Cosas que debe saber acerca de los créditos tributarios:

  • Los contribuyentes pueden restar créditos tributarios de la cantidad total de impuestos que adeudan.
  • Algunos créditos tributarios, como el Crédito tributario por ingreso del trabajo, son incluso reembolsables, lo que significa que un contribuyente podría obtener un reembolso incluso si no adeuda ningún impuesto.
  • Para reclamar un crédito, los contribuyentes deben llevar archivos que demuestren su elegibilidad para el mismo. Reclamar correctamente los créditos tributarios puede reducir los impuestos adeudados y aumentar los reembolsos.
  • Los contribuyentes pueden verificar ahora si califican para reclamar algún crédito el próximo año en su declaración de impuestos.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS    

Don’t let a tax mistake ruin newlywed bliss

Posted by Admin Posted on Jan 26 2023

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When people get married their tax situation often changes. A taxpayer's marital status as of December 31 determines their tax filing options for the entire year, but that's not all newlyweds need to know.

Here's a tax checklist for newly married couples:

Name and address changes

  • Name – When a name changes through marriage, it's important to report that change to the Social Security Administration. The name on a person's tax return must match what is on file at the SSA. If it doesn't, it could delay any tax refund. To update information, taxpayers should file Form SS-5, Application for a Social Security Card. It is available on SSA.gov, by phone at 800-772-1213 or at a local SSA office.
  • Address – If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, people should complete and send the IRS Form 8822, Change of Address. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or visiting their local post office.

Withholding

Filing status

  • Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly is usually more beneficial, it's best to figure the tax both ways to find out which makes the most sense. Taxpayers should remember, if a couple is married as of December 31, the law says they're married for the whole year for tax purposes.

Scams

  • All taxpayers should be aware of and avoid tax scams. The IRS will never initiate contact using email, phone calls, social media or text messages. First contact generally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS    

6 Key Tax Questions for 2023

Posted by Admin Posted on Jan 26 2023

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Right now, you may be more concerned about your 2022 tax bill than you are about how to handle your personal finances in the new year. However, as you deal with your annual tax filing, it’s a good idea to also familiarize yourself with pertinent amounts that may have changed for 2023.

Not all tax figures are adjusted for inflation. And even if they are, during times of low inflation the changes may be slight. When inflation is higher, as it currently is, the changes are generally more substantial. In addition, some tax amounts can change only with new tax legislation. Here are the answers to six commonly asked questions about 2023 tax-related figures:

1. How much can I contribute to an IRA for 2023? If you’re eligible, you can contribute up to $6,500 for 2023 to a traditional or Roth IRA (up from $6,000 for 2022). If you’re age 50 or older, you can make another $1,000 “catch-up” contribution.

2. I have a 401(k) plan through my job. How much can I contribute to it? For 2023, you can contribute up to $22,500 to a 401(k) or 403(b) plan. You can make an additional $7,500 catch-up contribution if you’re age 50 or older. (These figures for 2022 were $20,500 and $6,500, respectively).

3. I sometimes hire a babysitter and a cleaning person. Do I have to withhold and pay FICA tax on the amounts I pay them? The threshold for when a domestic employer must withhold and pay FICA for babysitters, house cleaners and other domestic employees has increased to $2,600 for 2023 (up from $2,400).

4. How much do I have to earn in 2023 before I can stop paying Social Security tax on my salary? The Social Security tax wage base is $160,200 for 2023, up from $147,000 for 2022. That means that you don’t owe Social Security tax on amounts earned above that. (You must pay Medicare tax on all amounts that you earn.)

5. On my last income tax return, my itemized deductions didn’t exceed my standard deduction. What’s my standard deduction for 2023? If the total amount of your itemized deductions (such as charitable gifts and mortgage interest) is less than your applicable standard deduction amount, itemizing won’t save you taxes. The Tax Cuts and Jobs Act eliminated the tax benefit of itemizing for many people by increasing the standard deduction and reducing or eliminating various itemized deductions. For 2023, the standard deduction amount is $27,700 for married couples filing jointly (up from $25,900 for 2022). For single filers, the amount is $13,850 (up from $12,950), and, for heads of households, it’s $20,800 (up from $19,400).

6. How much can I give to one person without having to file a gift tax return for 2023? The annual gift tax exclusion for 2023 is $17,000 (up from $16,000 in 2022). This amount is adjusted only in $1,000 increments, so it typically increases only every few years.

These are only some of the tax figures that may apply to you. For more information about your tax picture, or if you have questions, don’t hesitate to contact us.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters  

Recordatorio del IRS a empleadores: 31 de enero es el plazo para presentar formularios W-2 y otras declaraciones de salarios

Posted by Admin Posted on Jan 23 2023

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El Servicio de Impuestos Internos les recordó hoy a empleadores y otras empresas que presenten el Formulario W-2 del año tributario 2022 y otras declaraciones de salarios para el 31 de enero de 2023.

Los empleadores deben presentar copias del Formulario W-2, Declaración de salarios e impuestos (en inglés), y el Formulario W-3, Transmisión de declaraciones de salarios e impuestos (en inglés), ante la Administración del Seguro Social (SSA) para el 31 de enero. Puede encontrar información adicional acerca de cómo presentar en IRS.gov bajo el Tema 752, Presentación de Formularios W-2 y W-3.

La fecha límite del 31 de enero también se aplica al Formulario 1099-NEC, Compensación para no empleados (en inglés), presentada ante el IRS para informar la compensación de no empleados a contratistas independientes. Para obtener más información acerca de esta y otras fechas de vencimiento, consulte las instrucciones de los Formularios 1099-MISC y 1099-NEC (en inglés)PDF en IRS.gov.

Presente ahora para evitar multas

Las extensiones automáticas de tiempo para presentar los Formularios W-2 no están disponibles. El IRS solo otorgará extensiones por razones muy específicas. Los detalles se pueden encontrar en las instrucciones del Formulario 8809, Solicitud de extensión de tiempo para presentar declaraciones de información (en inglés).

Para obtener más información, lea las instrucciones de los Formularios 1099-MISC y 1099-NEC (en inglés)PDF y la página de Multas por declaraciones informativas en IRS.gov.

Prepárese

Es importante tener todo preparado para presentar a tiempo. Los empleadores deben verificar o actualizar la información de los empleados, como nombres, direcciones y números de Seguro Social o Números de Identificación Personal del Contribuyente. También deben asegurarse de que la información de la cuenta de su compañía esté actualizada y activa con la Administración del Seguro Social y solicitar los Formularios W-2 en papel si es necesario.

Ayudar con la detección de fraude

La fecha límite de presentación del Formulario W-2 y otras declaraciones de salarios permite que el IRS pueda detectar más fácilmente el fraude de reembolso al verificar los ingresos reportados en las declaraciones de impuestos individuales. Empleadores pueden apoyar este proceso y evitar multas al llenar los formularios a tiempo y sin errores. El IRS recomienda e-file (en inglés) como la manera más rápida, precisa y conveniente de presentar estos formularios. Para más información acerca de cómo presentar electrónicamente los Formularios W-2, los empleadores pueden consultar las Instrucciones e información de presentación W-2 del empleador en el sitio web de la Administración del Seguro Social.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS    

IRS reminds employers of January 31 deadline for Form W-2 and other wage statements

Posted by Admin Posted on Jan 23 2023

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The Internal Revenue Service today reminded employers and other businesses to file Tax Year 2022 Form W-2 and other wage statements by January 31, 2023.

Employers must file their copies of Form W-2, Wage and Tax Statement and Form W-3, Transmittal of Wage and Tax Statements with the Social Security Administration by January 31. Additional information on how to file can be found in Topic No. 752, Filing Forms W-2 and W-3.

The January 31 deadline also applies to Forms 1099-NEC, Nonemployee Compensation filed with the IRS to report non-employee compensation to independent contractors. For more information on this and for other due dates, see the Instructions for Forms 1099-MISC and 1099-NECPDF.

File now to avoid penalties

Automatic extensions of time to file Forms W-2 are not available. The IRS will only grant extensions for very specific reasons. Details can be found in the general instructions on Form 8809, Application for Time to File Information Returns.

For more information, read the instructions for Forms W-2 and W-3 and the Information Return Penalties page at IRS.gov.

Be prepared

It's important to have everything prepared to file on time. Employers should verify or update employee information, like names, addresses and Social Security numbers or Individual Taxpayer Identification Numbers. They should also ensure their company's account information is current and active with the Social Security Administration and order paper Forms W-2 if needed.

Helping with fraud detection

The filing date for Form W-2 and other wage statements allows the IRS to detect refund fraud more easily by verifying income that individuals report on their tax returns. Employers can help support this process and avoid penalties by filing the forms on time and without errors. The IRS recommends e-file as the quickest, most accurate and convenient way to file these forms. For more information on e-filing Forms W-2, employers can refer to Employer W-2 Filing Instructions & Information on the Social Security Administration's website.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS     

BEGINNING OF THE TAX FILING SEASON WITH IMPROVEMENTS

Posted by Admin Posted on Jan 19 2023

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The Internal Revenue Service today announced Monday, January 23, 2023, as the beginning of the nation's 2023 tax season when the agency will begin accepting and processing 2022 tax year returns.

More than 168 million individual tax returns are expected to be filed, with the vast majority of those coming before the April 18 tax deadline. People have three extra days to file this year due to the calendar.

With the three previous tax seasons dramatically impacted by the pandemic, the IRS has taken additional steps for 2023 to improve service for taxpayers. As part of the August passage of the Inflation Reduction Act, the IRS has hired more than 5,000 new telephone assistors and added more in-person staff to help support taxpayers.

"This filing season is the first to benefit the IRS and our nation's tax system from multi-year funding in the Inflation Reduction Act," said Acting IRS Commissioner Doug O'Donnell. "With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year. We've trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season. That's just the start as we work to add new long-term transformation efforts that will make things even smoother in future years. We are very excited to begin to deliver what taxpayers want and our employees know we could do with this funding."

These steps took place as the IRS worked for months to prepare for the 2023 tax season. The January 23 start date for individual tax return filers allows the IRS time to perform annual updates and readiness work that are critical to ensuring IRS systems run smoothly. This is the date IRS systems officially begin accepting tax returns. Many software providers and tax professionals are already accepting tax returns; they will transmit those returns to the IRS when the agency begins accepting tax returns on January 23.

The IRS urges people to have all the information they need before they file a tax return. Filing a complete and accurate tax return can avoid extensive processing and refund delays as well as avoid the possibility of needing to file an amended tax return.

In addition, the IRS encourages people to carefully review their tax situation to make sure they don't overlook important tax credits they may be eligible for, like the Earned Income Tax Credit (EITC). The IRS has set a special day on January 27 to encourage people to make sure they understand the important benefits of the EITC, a credit that can help low- and moderate-income workers and families.

The IRS has a variety of free services available to help people. The IRS's Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs also offer free basic tax return preparation to qualified individuals. People can also get help from trusted tax professionals, commercially available tax software as well as IRS Free File, which provides free electronic filing of tax returns.

April 18 tax filing deadline in 2023

The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia's Emancipation Day holiday, which falls on Monday, April 17.

Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.

Tips to help people with the 2023 tax season

The IRS recommends several things for people to keep in mind for a smooth filing experience this year:

Have the right information before filing. The IRS encourages individuals to have all the information they need before filing a complete and accurate return. Organize and gather 2022 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers and this year's Identity Protection Personal Identification Numbers valid for calendar year 2023.

Filing an accurate tax return can help taxpayers avoid delays or later IRS notices. Sometimes this means waiting to make sure individuals have accounted for all their income and the related documents. This is especially important for people who may receive one of the various Forms 1099 from banks or other payers reporting unemployment compensationdividendspension, annuity or retirement plan distributions.

People should also remember that most income is taxable, including unemployment income, interest received or money earned from the gig economy or digital assets. Individuals should make sure they report the correct amount on their tax return to avoid processing delays.

Visit IRS.gov first for questions. The IRS reminds people to visit IRS.gov first for common questions and also to check on the status of their refunds. IRS.gov has much of the same information that IRS phone assistors have.

The IRS anticipates making significant improvements to phone service this year for taxpayers and tax professionals as more training for new phone assistors is completed in the weeks ahead. However, the IRS emphasizes it's important to note that call volumes remain at historically high levels. The IRS urges people to visit IRS.gov for the information they need.

"Our phone volumes remain at very high levels," O'Donnell said. "For faster access to information, we urge people to start with IRS.gov. From there, taxpayers can quickly access the variety of free resources available to help taxpayers anytime, day or night."

Speed refunds by filing electronically and choosing direct deposit. There are important steps people can take to help ensure their tax return and refund are processed without delays. The most important is to file electronically with direct deposit. This is still the fastest and easiest way to file and receive a refund. To avoid delays in processing, people should avoid filing paper returns wherever possible.

To speed refunds, the IRS urges people to file electronically with direct deposit information as soon as they have everything needed to file an accurate return. Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers with their return. Learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator Tool.

IRS Free File available January 13

IRS Free File will open January 13 when participating providers will accept completed returns and hold them until they can be filed electronically with the IRS. Many commercial tax preparation software companies and tax professionals will also be accepting and preparing tax returns before January 23 to submit the returns when the IRS systems open.

The IRS's Free File program, available only at IRS.gov, allows taxpayers who made $73,000 or less in 2022 to file their taxes electronically for free using brand-name software provided by commercial tax filing companies. Free File Fillable forms, a part of this effort, is available to any income level and provides free electronic forms that people fill out and file themselves also at no cost.

Most refunds issued in less than 21 days; EITC refunds for many available starting February 28

The IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically, if they choose direct deposit and there are no issues with their tax return. Taxpayers should check Where's My Refund? on IRS.gov for their personalized refund status.

While the IRS will begin accepting returns January 23, the IRS cannot issue a refund that includes the Earned Income Tax Credit or Additional Child Tax Credit (ACTC) before mid-February. This is due to the 2015 PATH Act law passed by Congress, which provides this additional time to help the IRS stop fraudulent refunds from being issued.

Where's My Refund? should show an updated status by February 18 for most early EITC/ACTC filers. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by February 28 if taxpayers chose direct deposit and there are no other issues with their tax return.

Awaiting processing of previous tax returns? People can still file 2022 returns

Currently, the IRS has processed all paper and electronic individual tax year 2021 returns received prior to November 2022 that didn't require error-correction or further review. The IRS continues to work on remaining tax returns in these categories. This work will not impact tax refund timing for people filing in 2023, but the IRS continues to urge people to make sure they submit an error-free tax return this tax season to avoid delays. Check the IRS Operations page for the latest information about the status of tax returns received in 2022.

IRS.gov, IRS Online Account provide free help

Taxpayers can find online tools at IRS.gov that are easy-to-use and available anytime. Millions of people use them to help file and pay taxes, find information about their accounts, determine eligibility for tax credits and get answers to tax questions.

An IRS Online Account allows individuals to log in securely to access personal tax account information including balance, payments and tax records including adjusted gross income.

There are various types of tax return preparers, including enrolled agents, certified public accountants, attorneys and some who don't have a professional credential. Choosing a Tax Professional offers information to help people select one. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find local preparers who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion.

The Interactive Tax Assistant provides answers to many tax law questions. For example, it can help people determine if a type of income is taxable, or if they can deduct certain expenses. It also helps people find out if life event changes make them eligible for credits they didn't qualify for in the past and provides answers for general questions, such as determining filing status, if someone can claim dependents or if they have to file a tax return.

Where's My Refund? offers taxpayers the ability to check the status of their refund within 24 hours after the IRS accepts their e-filed tax return. The Where's My Refund? tool updates once every 24 hours, usually overnight.

MilTax is a free tax resource available for the military community, offered through the Department of Defense. It includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It's designed to address the realities of military life – including deployments, combat and training pay, housing and rentals and multi-state filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

Key filing season dates

There are several important dates taxpayers should keep in mind for this year's filing season:

  • January 13: IRS Free File opens
  • January 17: Due date for tax year 2022 fourth quarter estimated tax payment.
  • January 23: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns.
  • January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
  • April 18: National due date to file a 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.
  • October 16: Due date to file for those requesting an extension on their 2022 tax returns.

Before filing: Plan ahead

It's never too early to get ready for the tax-filing season. For more tips and resources, check out the Get Ready page on IRS.gov.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS

IRS establece el 23 de enero como inicio oficial de la temporada de presentación de impuestos de 2023; ayuda adicional disponible para contribuyentes este año

Posted by Admin Posted on Jan 19 2023

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El Servicio de Impuestos Internos anunció que la temporada de impuestos de la nación comenzará el lunes, 23 de enero de 2023, cuando la agencia tributaria comenzará a aceptar y procesar las declaraciones del año tributario 2022.

Se espera que se presenten más de 168 millones de declaraciones de impuestos individuales, y la gran mayoría de ellas se presentarán antes de la fecha límite de impuestos del 18 de abril. Las personas tienen tres días adicionales para presentar este año debido al calendario.

Con las tres temporadas de impuestos anteriores impactadas dramáticamente por la pandemia, el IRS ha tomado medidas adicionales para 2023 para mejorar el servicio para los contribuyentes. Como parte de la aprobación en agosto de la Ley de Reducción de la Inflación, el IRS contrató a más de 5,000 nuevos asistentes telefónicos y agregó más personal en persona para ayudar a los contribuyentes.

"Esta temporada de presentación de impuestos es la primera en beneficiar al IRS y al sistema tributario de nuestra nación con financiamiento plurianual en la Ley de Reducción de la Inflación", dijo Doug O'Donnell, comisionado interino del IRS. "Con estos nuevos recursos adicionales, los contribuyentes y los profesionales de impuestos verán mejoras en muchas áreas de la agencia este año. Hemos capacitado a miles de nuevos empleados para contestar teléfonos y ayudar a las personas. Si bien queda mucho trabajo después de varios años difíciles, esperamos que las personas experimenten mejoras en esta temporada de impuestos. Ese es solo el comienzo a medida que trabajamos para agregar nuevos esfuerzos de transformación a largo plazo que facilitarán aún más las cosas en los próximos años. Estamos muy emocionados de comenzar a brindar lo que los contribuyentes quieren y nuestros empleados saben que podemos hacer con estos fondos".

Estos pasos se dieron mientras el IRS trabajaba durante meses para prepararse para la temporada de impuestos de 2023. La fecha de inicio del 23 de enero para los declarantes de impuestos individuales le da tiempo al IRS para realizar actualizaciones anuales y trabajos de preparación que son fundamentales para garantizar que los sistemas del IRS funcionen sin problemas. Esta es la fecha en que los sistemas del IRS comienzan oficialmente a aceptar declaraciones de impuestos. Muchos proveedores de software y profesionales de impuestos ya están aceptando declaraciones de impuestos; transmitirán esas declaraciones al IRS cuando la agencia comience a aceptar declaraciones de impuestos el 23 de enero.

El IRS insta a las personas a tener toda la información que necesitan antes de presentar una declaración de impuestos. Presentar una declaración de impuestos completa y precisa puede evitar demoras extensas en el procesamiento y el reembolso, así como evitar la posibilidad de tener que presentar una declaración de impuestos enmendada.

Además, el IRS alienta a las personas a revisar cuidadosamente su situación tributaria para asegurarse de no pasar por alto importantes créditos tributarios para los que pueden ser elegibles, como el Crédito tributario por ingreso del trabajo (EITC). El IRS ha establecido un día especial el 27 de enero para alentar a las personas a asegurarse de que comprendan los importantes beneficios del EITC, un crédito que puede ayudar a los trabajadores y familias de ingresos bajos y moderados.

El IRS tiene una variedad de servicios gratuitos disponibles para ayudar a las personas. Los programas Ayuda voluntaria a los contribuyentes y Asesoramiento tributario para personas de edad avanzada del IRS también ofrecen preparación básica gratuita para la declaración de impuestos a personas calificadas. Las personas también pueden obtener ayuda de profesionales de impuestos de confianza, software de impuestos disponible en el mercado, así como Free File del IRS, que proporciona la presentación electrónica gratuita de declaraciones de impuestos.

Fecha límite del 18 de abril en 2023

La fecha límite para presentar declaraciones de impuestos de 2022 es el martes, 18 de abril de 2022 para la mayoría de los contribuyentes. Por ley, los días feriados de Washington, DC impactan las fechas límite de impuestos para todos de la misma manera que los días feriados federales. La fecha de vencimiento es el 18 de abril, en lugar del 15 de abril, debido al fin de semana y al feriado del Día de la Emancipación del Distrito de Columbia, que cae el lunes 17 de abril.

Los contribuyentes que soliciten una extensión tendrán hasta el lunes, 16 de octubre de 2023 para presentar la declaración.

Consejos para ayudar a las personas con la temporada de impuestos de 2023

El IRS recomienda varias cosas que las personas deben tener en cuenta para una experiencia de presentación sin problemas este año:

Tenga la información correcta antes de presentar. El IRS alienta a todos a tener toda la información que necesitan para estar en la mejor posición para presentar una declaración completa y precisa. Organice y recopile los archivos tributarios de 2022, incluidos los números de seguro social, los números de identificación de contribuyentes individuales, los números de identificación de contribuyentes de adopción y los Número de Identificación Personal para la Protección de la Identidad válidos para el año calendario 2023. Tener una declaración de impuestos precisa puede evitar demoras o avisos posteriores del IRS. A veces, esto significa esperar para asegurarse de que las personas hayan contabilizado todos sus ingresos y los documentos relacionados. Esto es especialmente importante para las personas que pueden recibir uno de los diversos Formularios 1099 de bancos u otros pagadores que reportan distribuciones de compensación por desempleodividendospensiones, anualidades o planes de jubilación.

Las personas también deben recordar que la mayoría de los ingresos están sujetos a impuestos, incluidos los ingresos por desempleo, los intereses recibidos o el dinero ganado de la economía informal o los activos digitales. Las personas deben asegurarse de informar el monto correcto en su declaración de impuestos para evitar demoras en el procesamiento.

Visite IRS.gov primero si tiene preguntas. El IRS les recuerda a las personas que primero visiten IRS.gov para preguntas comunes y también para verificar el estado de sus reembolsos. IRS.gov tiene mucha de la misma información que tienen los asistentes telefónicos del IRS.

El IRS anticipa realizar mejoras significativas en el servicio telefónico este año para los contribuyentes y los profesionales de impuestos a medida que se complete más capacitación para los nuevos asistentes telefónicos en las próximas semanas. Sin embargo, el IRS enfatiza que es importante tener en cuenta que los volúmenes de llamadas se mantienen en niveles históricamente altos. El IRS insta a las personas a visitar IRS.gov para obtener la información que necesitan.

"Nuestros volúmenes telefónicos continúan en niveles muy altos", dijo O'Donnell. "Para un acceso más rápido a la información, instamos a las personas a comenzar con IRS.gov. Desde allí, los contribuyentes pueden acceder rápidamente a la variedad de recursos gratuitos disponibles para ayudar a los contribuyentes en cualquier momento, de día o de noche".

Acelere los reembolsos al presentar electrónicamente y escoger el depósito directo. Hay pasos importantes que las personas pueden tomar para ayudar a garantizar que su declaración de impuestos y su reembolso se procesen sin demoras. Lo más importante es presentar electrónicamente con depósito directo. Esta continúa siendo la manera más rápida y fácil de presentar y recibir un reembolso. Para evitar demoras en el procesamiento, las personas deben evitar presentar declaraciones en papel siempre que sea posible.

Para acelerar los reembolsos, el IRS insta a las personas a presentar electrónicamente la información de depósito directo tan pronto como tengan todo lo necesario para presentar una declaración precisa. Las personas pueden usar una cuenta bancaria, una tarjeta de débito prepaga o una aplicación móvil para usar el depósito directo y deberán proporcionar números de ruta y de cuenta. Aprenda cómo abrir una cuenta en un banco asegurado por la FDIC o a través de la herramienta localizador de cooperativas de crédito y ahorro.

Free File del IRS disponible a partir del 13 de enero

Free File del IRS comenzará sus operaciones el 13 de enero cuando los proveedores participantes aceptarán las declaraciones completadas y las retendrán hasta que puedan presentarse electrónicamente ante el IRS. Muchas empresas de software de preparación de impuestos comerciales y profesionales de impuestos también aceptarán y prepararán declaraciones de impuestos antes del 23 de enero para enviarlas cuando se abran los sistemas del IRS.

El programa Free File del IRS, solo disponible en IRS.gov, permite a los contribuyentes que ganaron $73,000 o menos en 2022 presentar sus impuestos electrónicamente de manera gratuita mediante el software proporcionado por empresas comerciales de presentación de impuestos. Los formularios rellenables de Free File están disponibles para cualquier nivel de ingresos y proporcionan formularios electrónicos gratuitos que las personas completan y presentan sin costo alguno.

Mayoría de reembolsos se emiten en menos de 21 días; reembolsos de EITC para muchos disponibles a partir del 28 de febrero

El IRS anticipa que la mayoría de los contribuyentes recibirán su reembolso dentro de los 21 días posteriores a la presentación electrónica, si eligen el depósito directo y no hay problemas con su declaración de impuestos. Los contribuyentes deben consultar ¿Dónde está mi reembolso? en IRS.gov para conocer su estado de reembolso personalizado.

Si bien el IRS comenzará a aceptar declaraciones el 23 de enero, el IRS no puede emitir un reembolso que incluya el Crédito tributario por ingreso del trabajo o el Crédito tributario adicional por hijos (ACTC) antes de mediados de febrero. Esto se debe a la Ley PATH de 2015 aprobada por el Congreso, que proporciona este tiempo adicional para ayudar al IRS a detener la emisión de reembolsos fraudulentos.

¿Dónde está mi reembolso? debe mostrar un estado actualizado antes del 18 de febrero para la mayoría de los primeros solicitantes de EITC/ACTC. El IRS espera que la mayoría de los reembolsos relacionados con EITC/ACTC estén disponibles en las cuentas bancarias de los contribuyentes o en tarjetas de débito antes del 28 de febrero si los contribuyentes eligieron el depósito directo y no hay otros problemas con su declaración de impuestos.

¿Espera el procesamiento de declaraciones de impuestos anteriores? Las personas aún pueden presentar declaraciones de 2022

Actualmente, el IRS ha procesado todas las declaraciones de impuestos individuales del año tributario 2021 en papel y electrónicas recibidas antes de noviembre de 2022 que no requirieron corrección de errores o revisión adicional. El IRS continúa trabajando en las declaraciones de impuestos restantes en estas categorías. Este trabajo no afectará el tiempo de reembolso de impuestos para las personas que presenten su declaración en 2023, pero el IRS continúa instando a las personas a asegurarse de que presenten una declaración de impuestos sin errores en esta temporada de impuestos para evitar demoras. Consulte la página de Operaciones del IRS para obtener la información más reciente acerca del estado del inventario recibido en 2022.

IRS.gov, Cuenta en línea del IRS proporciona ayuda gratuita

Los contribuyentes pueden encontrar herramientas en línea en IRS.gov que son fáciles de usar y están disponibles en cualquier momento. Millones de personas las usan para ayudar a presentar y pagar impuestos, encontrar información de sus cuentas, determinar la elegibilidad para créditos tributarios y obtener respuestas a sus preguntas de impuestos.

Una cuenta en línea del IRS permite a las personas iniciar sesión de manera segura para acceder a la información de la cuenta de impuestos personales, incluidos el saldo, los pagos y los archivos de impuestos, incluido el ingreso bruto ajustado.

Hay varios tipos de preparadores de declaraciones de impuestos, incluidos agentes inscritos, contadores públicos certificados, abogados y algunos que no tienen una credencial profesional. La elección de un profesional de impuestos ofrece información para ayudar a las personas a seleccionar uno. El Directorio de preparadores de declaraciones de impuestos federales con credenciales y calificaciones seleccionadas (en inglés) puede ayudar a los contribuyentes a encontrar preparadores locales que actualmente tengan credenciales profesionales reconocidas por el IRS o que tengan un Archivo de finalización del programa de temporada tributario anual.

El Asistente Tributario Interactivo proporciona respuestas a muchas preguntas de leyes tributarias. Por ejemplo, puede ayudar a las personas a determinar si un tipo de ingreso está sujeto a impuestos o si pueden deducir ciertos gastos. También ayuda a las personas a averiguar si los cambios en los eventos de la vida los hacen elegibles para créditos para los que no calificaron en el pasado y brinda respuestas a preguntas generales, como determinar el estado civil, si alguien puede reclamar dependientes o si tienen que presentar una declaración de impuestos.

¿Dónde está mi reembolso? ofrece a los contribuyentes la capacidad de verificar el estado de su reembolso dentro de las 24 horas posteriores a que el IRS acepte su declaración de impuestos presentada electrónicamente. La herramienta ¿Dónde está mi reembolso? se actualiza una vez cada 24 horas, generalmente durante la noche.

MilTax (en inglés) es un recurso tributario gratuito disponible para la comunidad militar, ofrecido a través del Departamento de la Defensa. Incluye software de preparación de impuestos y presentación electrónica, apoyo personalizado de asesores tributarios e información actualizada acerca de la presentación de impuestos. Está diseñado para abordar las realidades de la vida militar, incluidos los despliegues, pagos por combate y entrenamiento, vivienda y alquileres y presentaciones en varios estados. Los contribuyentes elegibles pueden usar MilTax para presentar electrónicamente (en inglés) una declaración de impuestos federal y hasta tres declaraciones estatales de forma gratuita.

Fechas clave de la temporada de impuestos

Hay varias fechas importantes que los contribuyentes deben tener en cuenta para la temporada de presentación de impuestos de este año.

  • 13 de enero: Free File del IRS comienza operaciones.
  • 17 de enero: Fecha de vencimiento para el pago de impuestos estimados del cuarto trimestre del año tributario 2022.
  • 23 de enero: El IRS comienza la temporada de impuestos de 2022 y comienzan a aceptar y procesar las declaraciones de impuestos individuales de 2022.
  • 27 de enero: Día de Concienciación del Crédito tributario por ingreso del trabajo para crear conciencia acerca de los créditos tributarios valiosos disponibles para muchas personas, incluida la opción de usar los ingresos del año anterior para calificar.
  • 18 de abril: Fecha límite para presentar la declaración de impuestos de 2022 o solicitar una extensión y pagar los impuestos adeudados debido al día feriado del Día de la Emancipación en Washington, DC.
  • 16 de octubre: Fecha límite para presentar para aquellos que solicitan una extensión en sus declaraciones de impuestos de 2022.

Planifique antes de presentar

Nunca es demasiado temprano para prepararse para la temporada de presentación de impuestos que se avecina. Para obtener más consejos y recursos, consulte la página Prepárese en IRS.gov.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS

Revisar créditos y deducciones tributarios ahora ayuda a los contribuyentes a presentar impuestos exitosamente

Posted by Admin Posted on Jan 16 2023

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Probablemente la mayoría de las personas solo piensan en los créditos y deducciones tributarias cuando completan su declaración de impuestos. Sin embargo, con un poco de planificación anticipada se puede facilitar el proceso de presentación. Al familiarizarse ahora, los contribuyentes pueden comprender claramente qué créditos y deducciones tienen sentido para ellos y los archivos necesarios para demostrar su elegibilidad.

Aquí hay algunos datos acerca de créditos y deducciones que pueden ayudar con la planificación tributaria durante todo el año.

Algunas cosas que debe saber acerca de las deducciones:

  • Las deducciones pueden reducir la cantidad de ingresos de un contribuyente antes de que calculen el impuesto que adeudan.
  • La mayoría de la gente toma la deducción estándar. La deducción estándar se ajusta cada año según la inflación. El monto de la deducción estándar depende del estado civil del contribuyente, la edad, si es ciego y si otra persona lo reclama como dependiente.
  • Algunas personas están obligadas a detallar sus deducciones, y algunas personas pueden optar por hacerlo porque reduce su ingreso tributable más que la deducción estándar.
  • Como regla general, si las deducciones detalladas de un contribuyente son mayores que su deducción estándar, debe detallarlas.

Cosas que debe saber acerca de los créditos tributarios:

  • Los contribuyentes pueden restar créditos tributarios de la cantidad total de impuestos que adeudan.
  • Algunos créditos tributarios, como el Crédito tributario por ingreso del trabajo, son incluso reembolsables, lo que significa que un contribuyente podría obtener un reembolso incluso si no adeuda ningún impuesto.
  • Para reclamar un crédito, los contribuyentes deben llevar archivos que demuestren su elegibilidad para el mismo. Reclamar correctamente los créditos tributarios puede reducir los impuestos adeudados y aumentar los reembolsos.
  • Los contribuyentes pueden verificar ahora si califican para reclamar algún crédito el próximo año en su declaración de impuestos.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS   

Filing Deadline and Payment Options

Posted by Admin Posted on Jan 16 2023

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If you're trying to beat the tax deadline, there are several options for last-minute help. If you need a form or publication, you can download copies from the IRS Forms page under Tax Tools on our website. If you find you need more time to finish your return, you can get a six-month extension of time to file using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. And if you have trouble paying your tax bill, the IRS has several payment options available.

The extension will give you extra time to get the paperwork to the IRS, but it does not extend the time you have to pay any tax due. You have to make an accurate estimate of any tax due when you request an extension. You can also send a payment for the expected balance due, but this is not required to get the extension. However, you will owe interest on any amounts not paid by the April 15 deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters   

5 Tips for Early Preparation

Posted by Admin Posted on Jan 16 2023

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Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.

There are five easy ways to get a good jump on your taxes long before the April 15 deadline rolls around:

  1. Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don't forget to save a copy for your files.
  2. Get the right forms. They're available around the clock on IRS.gov in the Forms and Publications section.
  3. Take your time. Don't forget to leave room for a coffee break when filling out your tax return. Rushing can mean making a mistake — and that can be expensive!
  4. Double-check your math and Social Security number. These are among the most common errors on tax returns. Taking care on these reduces your chances of hearing from the IRS.
  5. Get the fastest refund. When you file early, you get your refund faster. Using e-filing with direct deposit gets you a refund in half the time as paper filing.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters   

Business or Hobby?

Posted by Admin Posted on Jan 16 2023

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It is generally accepted that people prefer to make a living doing something they like. A hobby is an activity for which you do not expect to make a profit. If you do not carry on your business or investment activity to make a profit, there is a limit on the deductions you can take. You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. You cannot use a loss from the activity to offset other income. Activities you do as a hobby, or mainly for sport or recreation, come under this limit. So does an investment activity intended only to produce tax losses for the investors.

The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. For additional information on these entities, refer to business structures. It does not apply to corporations other than S corporations. In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:

  1. You carry on the activity in a business-like manner,
  2. The time and effort you put into the activity indicate you intend to make it profitable,
  3. You depend on income from the activity for your livelihood,
  4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),
  5. You change your methods of operation in an attempt to improve profitability,
  6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business,
  7. You were successful in making a profit in similar activities in the past,
  8. The activity makes a profit in some years, and
  9. You can expect to make a future profit from the appreciation of the assets used in the activity.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters      

Check Withholding to Avoid a Tax Surprise

Posted by Admin Posted on Jan 16 2023

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Whether or not you owed taxes or received a refund last year, check your tax withholding to avoid not having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. This is even more important due to the recent changes to the tax law for 2018 and beyond. On the other end, if you had a large refund you lost out on having the money in your pocket throughout the year. Changing jobs, getting married or divorced, buying a home or having children can all result in changes in your tax calculations.

The IRS withholding calculator on IRS.gov can help compute the proper tax withholding. The worksheets in Publication 505, Tax Withholding and Estimated Tax can also be used to do the calculation. If the result suggests an adjustment is necessary, you can submit a new W-4, Withholding Allowance Certificate, to your employer.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters  

Foreign Income

Posted by Admin Posted on Jan 12 2023

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With more and more United States citizens earning money from foreign sources, the IRS reminds people that they must report all such income on their tax return, unless it is exempt under federal law. U.S. citizens are taxed on their worldwide income.

This applies whether a person lives inside or outside the United States. The foreign income rule also applies regardless of whether or not the person receives a Form W-2, Wage and Tax Statement, or a Form 1099 (information return).

Foreign source income includes earned income, such as wages and tips, and unearned income, such as interest, dividends, capital gains, pensions, rents and royalties.

An important point to remember is that citizens living outside the U.S. may be able to exclude up to $102,100 for 2017 and $103,900 for 2018, of their foreign source income if they meet certain requirements. However, the exclusion does not apply to payments made by the U.S. government to its civilian or military employees living outside the U.S. Please contact us if you feel you may have earned foreign income to learn more!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters  

Tips and Taxes

Posted by Admin Posted on Jan 10 2023

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Do you work at a hair salon, barber shop, casino, golf course, hotel or restaurant or drive a taxicab? The tip income you receive as an employee from those services is taxable income, advises the IRS.

As taxable income, these tips are subject to federal income, Social Security and Medicare taxes, and may be subject to state income tax as well.

You must keep a running daily log of all your tip income and tips paid out. This includes cash that you receive directly from customers, tips from credit card charges from customers that your employer pays you, the value of any non-cash tips such as tickets or passes that you receive, and the amount of tips you paid out to other employees through tip pools or tip splitting and the names of those employees.

You can use IRS Publication 1244, Employee's Daily Record of Tips and Report of Tips to Employer, to record your tip income. For a free copy of Publication 1244, call the IRS toll free at 1-800-TAX-FORM (1-800-829-3676).

If you receive $20 or more in tips in any one month, you should report all your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes and to report the correct amount of your earnings to the Social Security Administration (which will affect your benefits when you retire or if you become disabled, or your family's benefits if you die).  Contact us so your wages are properly reported!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters      

Earned Income Tax Credit for Certain Workers

Posted by Admin Posted on Jan 10 2023

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Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.

The IRS estimates that 25 percent of people who qualify don't claim the credit and at the same time, there are millions of Americans who have claimed the credit in error, many of whom simply don't understand the criteria.

EITC is based on the amount of your earned income and the number of qualifying children in your household. If you have children, they must meet the relationship, age and residency requirements. And, you must file a tax return to claim the credit.

Its easier than ever to find out if you qualify for EITC using the online tool, EITC Assistant. Please contact us for more information!

Are you eligible for any of these tax credits?

Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns, advises the IRS. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable – taxes could be reduced to the point that a taxpayer would receive a refund rather than owing any taxes. Below are some of the credits taxpayers could be eligible to claim:

  • Earned Income Tax Credit This is a refundable credit for low-income working individuals and families. Income and family size determine the amount of the EITC. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. For more information, see IRS Publication 596, Earned Income Credit (EIC).
  • Child Tax Credit This credit is for people who have a qualifying child under age 17. The maximum amount of the credit is $1,400 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see Pub. 972, Child Tax Credit.
  • Child and Dependent Care Credit This is for expenses paid for the care of children under age 13, or for a disabled spouse or dependent, to enable the taxpayer to work. There is a limit to the amount of qualifying expenses. The credit is a percentage of those qualifying expenses. For more information, see Pub. 503, Child and Dependent Care Expenses.
  • Adoption Credit Adoptive parents can take a tax credit of up to $13,570 for 2017 and $13,810 for 2018 for qualifying expenses paid to adopt an eligible child. For more information, see Form 8839, Qualified Adoption Expenses.
  • Credit for the Elderly and Disabled This credit is available to individuals who are either age 65 or older or are under age 65 and retired on permanent and total disability, and who are U.S. citizens or residents. There are income limitations. For more information, see Pub.524, Credit for the Elderly or the Disabled.
  • Education Credits There are two credits available, the American Opportunity Credit (formerly called the Hope Credit) and the Lifetime Learning Credit, for people who pay higher education costs. The American Opportunity Credit is for the payment of the first four years of tuition and related expenses for an eligible student for whom the taxpayer claims as a dependent on the tax return. The Lifetime Learning Credit is available for all post-secondary education for an unlimited number of years. A taxpayer cannot claim both credits for the same student in one year. For more information, see Publication 970, Tax Benefits for Education.
  • Retirement Savings Contribution Credit Eligible individuals may be able to claim a credit for a percentage of their qualified retirement savings contributions, such as contributions SIMPLE plan. To be eligible, you must be at least age 18 at the end of the year and not a full-time student or an individual for whom someone else claims a personal exemption. Also, your adjusted gross income (AGI) must be below a certain amount. For more information, see chapter three in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

There are other credits available to eligible taxpayers.  Please contact us so we may analyze your specific situation, and offer advice.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters    

Organizational and Start Up Costs

Posted by Admin Posted on Jan 10 2023

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Have you just started a new business? Did you know expenses incurred before a business begins operations are not allowed as current deductions? Generally, these start-up costs must be amortized over a period of 180 months beginning in the month in which the business begins. However, based on the current tax provisions, you may elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred. The $5,000 deduction is reduced by any start-up or organizational costs which exceed $50,000. If you want to deduct a larger portion of your start-up cost in the first year, a new business will want to begin operations as early as possible and hold off incurring some of those expenses until after business begins. Contact us to help determine how you can maximize your deduction for start-up and/or organizational expenses. For additional information on what costs constitute start-up or organizational expenses, refer to IRS publication 535, Business Expenses.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuter      

Individuals Living or Working in U.S. Territories/Possessions

Posted by Admin Posted on Dec 19 2022

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An individual who has income from American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, Puerto Rico or the U.S. Virgin Islands will usually have to file a tax return with the tax department of one of these territories. In some situations, you may have to determine if you are a resident or a nonresident of the territory. For forms and advice on filing a territory tax return, contact that territory's tax department. The addresses and telephone numbers for the tax departments of the U.S. territories may be found in Publication 570, Tax Guide for Individuals With Income From U.S. Possessions. Additional information about the U.S. territories can be found at State and Local Government on the Net.

If you have income from one of these U.S. territories, you may have to file a U.S. tax return only, a territory tax return only, or both returns. This generally depends on whether you are considered a bona fide resident of one of the U.S. territories. In some cases, you may have to file a U.S. return, but be able to exclude income earned in a territory from U.S. tax. Filing requirements for specific U.S. territories are explained in Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.

Possession Exclusion for Bona Fide Residents  of American Samoa

Currently, the possession exclusion - under Internal Revenue Code (IRC) section 931 - applies only to U.S. citizens or resident aliens who are bona fide residents of American Samoa. If you qualify for this exclusion, you may have to attach Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to their U.S. federal individual income tax returns.

Individuals in the following U.S. territories are NOT eligible for the possession exclusion: Baker Island, the CNMI, Guam, Howland Islands, Jarvis Island, Johnston Island, Kingman Reef, Midway Islands, Palmyra, Puerto Rico, the U.S. Virgin Islands, and Wake Island.

Please refer to Publication 570, Tax Guide for Individuals With Income From U.S. Possessions, for the exclusions, credits, and deductions which apply to residents of the CNMI, Guam, Puerto Rico, and the U.S. Virgin Islands.

Determining Residency Status in U.S. Territories

IRC 937 establishes the criteria for determining the residency of an individual in American Samoa, the CNMI, Guam, Puerto Rico, and the U.S. Virgin Islands, and for determining whether income is sourced in a U.S. territory. An individual is generally considered a bona fide resident of a U.S. territory if he or she (1) is physically present in the territory for 183 days during the taxable year, (2) does not have a tax home outside the territory during the tax year, and (3) does not have a closer connection to the U.S. or a foreign country. However, U.S. citizens and resident aliens are permitted certain exceptions to the 183-day rule. For a detailed explanation of the U.S. territory residency rules and income sourcing rules, please refer to Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.

IRC 937 also establishes the filing requirement for Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession for individuals who became or ceased to be a bona fide resident of a U.S. Territory. If you are required to file Form 8898 for any tax year and fail to file it, you may be subject to a penalty of $1,000.

Individuals who are required to file Form 8898 generally must do so by the due date (including extensions) for filing Form 1040 or Form 1040-NR. Form 8898 must be filed by itself; do not file it with Form 1040 or Form 1040-NR. Refer to Residents of U.S. Possessions-Form 8898 Bona Fide Residence for more information.

Self-Employment Tax

A U.S. citizen who is self-employed in a U.S. territory must pay self-employment tax on net self-employment earnings of $400 or more. This rule applies whether or not the earnings are excludable from gross income (or whether or not a U.S. income tax return must otherwise be filed).

Your payments of self-employment tax contribute to your coverage under the social security system. Social security coverage provides you with old age, survivor, and disability benefits and hospital insurance.

If you are a resident of American Samoa, the CNMI, Guam, Puerto Rico, or the U.S. Virgin Islands who has net self-employment income and you do not have to file Form 1040 with the United States, use Form 1040-SS, U.S. Self-Employment Tax Return, to figure your self-employment tax.

Note: If you are a resident of Puerto Rico, you can file Form 1040 (PR) instead of Form 1040-SS. Form 1040 (PR) is the Spanish-language equivalent of Form 1040-SS. These forms must be filed with the U.S. Internal Revenue Service at the address shown in the instructions for Form 1040 (PR) and Form 1040-SS.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS         

Recordatorio para dueños de IRAs de 70½ años: distribuciones benéficas calificadas son excelentes opciones para hacer donaciones no tributables a organizaciones benéficas

Posted by Admin Posted on Dec 19 2022

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El Servicio de Impuestos Internos les recordó hoy a los dueños de un arreglo individual de ahorro para la jubilación (IRA, por sus siglas en inglés) de 70½ años o más, su opción de transferir hasta $100,000 a organizaciones benéficas, no sujetas a impuestos, cada año.

Estas transferencias, conocidas como distribuciones benéficas calificadas (QCD, por sus siglas en inglés), ofrecen a los estadounidenses mayores elegibles una excelente manera de donar fácilmente a la caridad antes de fin de año. Además, para aquellos que tienen al menos 72 años, las QCD cuentan para la distribución mínima requerida (RMD) del dueño de un IRA para el año.

Cómo configurar una QCD

El IRS insta a cualquier dueño de un IRA que desee hacer una QCD para 2022 a comunicarse con su fideicomisario de IRA pronto para que el fideicomisario tenga tiempo de completar la transacción antes de fin de año.

Normalmente, las distribuciones de un IRA están sujetas a impuestos cuando se reciben. Pero con una QCD, estas distribuciones no están sujetas a impuestos, siempre y cuando se paguen directamente de un IRA a una organización benéfica elegible.

Las QCD se pueden hacer electrónicamente, directamente a la organización benéfica o mediante cheque, pagaderos a la organización benéfica.

Una distribución de un IRA, como un pago electrónico realizado directamente al dueño de un IRA, no cuenta como una QCD. Del mismo modo, un cheque pagadero al dueño de un IRA no es una QCD.

Cada año, un dueño de un IRA, de 70½ años o más, puede excluir de los ingresos brutos hasta $100,000 de estas QCD. Para una pareja casada, si ambos cónyuges tienen 70½ años o másy si ambos tienen un IRA, cada cónyuge puede excluir hasta $100,000 para un total de hasta $200,000 por año.

La opción QCD está disponible independientemente si un dueño de IRA elegible detalla las deducciones en el Anexo A. Los montos transferidos no están sujetos a impuestos y no hay deducción disponible para la transferencia.

Informar correctamente

Una QCD 2022 debe reportarse en la declaración de impuestos federales de 2022, normalmente presentada durante la temporada de presentación de impuestos de 2023.

A principios de 2023, el dueño de un IRA recibirá el Formulario 1099-R (en inglés) de su fideicomisario de IRA, que muestra cualquier distribución de IRA durante el año calendario 2022, incluidas las distribuciones regulares y las QCD. La distribución total figura en la casilla 1 de ese formulario. No hay un código especial para una QCD.

Al igual que otras distribuciones de IRA, las QCD se muestran en la línea 4 del Formulario 1040 o el Formulario 1040-SR. Si parte o la totalidad de una distribución IRA es una QCD, ingrese el monto total de la distribución IRA en la Línea 4a. Esta es la cantidad que se muestra en la casilla 1 del Formulario 1099-R.

Luego, si el monto total de la distribución es una QCD, ingrese 0 en la línea 4b. Si solo una parte de ella es una QCD, la parte imponible restante normalmente se ingresa en la línea 4b.

De cualquier manera, asegúrese de ingresar "QCD" junto a la línea 4b. Más detalles estarán en las instrucciones finales del Formulario 1040 de 2022.

Obtenga un recibo

Las QCD no son deducibles como contribuciones caritativas en el Anexo A. Pero al igual que con las contribuciones deducibles, el donante debe obtener un acuse de recibo por escrito de su contribución de la organización caritativa, antes de presentar su declaración.

En general, el acuse de recibo debe indicar la fecha y el monto de la contribución e indicar si el donante recibió algo de valor a cambio de su contribución. Para obtener más detalles, consulte la sección de Recibo en la Publicación 526, Donaciones caritativas (en inglés), disponible en IRS.gov.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS    

Tax Treaties

Posted by Admin Posted on Dec 19 2022

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The United States has income tax treaties with a number of foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries may be eligible to be taxed at a reduced rate or exempt from U.S. income taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income.

If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for Form 1040NR, U.S. Nonresident Alien Income Tax Return. Also see Publication 519, U.S. Tax Guide for Aliens, and Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.

Many of the individual states of the United States tax the income of their residents. Some states honor the provisions of U.S. tax treaties and some states do not. Therefore, you should consult the tax authorities of the state in which you live to find out if that state taxes the income of individuals and, if so, whether the tax applies to any of your income, or whether your income tax treaty applies in the state in which you live.

Tax treaties generally reduce the U.S. taxes of residents of foreign countries as determined under the applicable treaties. With certain exceptions, they do not reduce the U.S. taxes of U.S. citizens or U.S. treaty residents. U.S. citizens and U.S. treaty residents are subject to U.S. income tax on their worldwide income.

Treaty provisions generally are reciprocal (apply to both treaty countries). Therefore, a U.S. citizen or U.S. treaty resident who receives income from a treaty country and who is subject to taxes imposed by foreign countries may be entitled to certain credits, deductions, exemptions, and reductions in the rate of taxes of those foreign countries. U.S. citizens residing in a foreign country may also be entitled to benefits under that country's tax treaties with third countries.

Foreign taxing authorities sometimes require certification from the U.S. Government that an applicant filed an income tax return as a U.S. citizen or resident, as part of the proof of entitlement to the treaty benefits. For information on this, refer to Form 8802, Application for United States Residency Certification – Additional Certification Requests. In addition, refer to the discussion at Form 6166 - Certification of U.S. Tax Residency.

Note: You should carefully examine the specific treaty articles that may apply to find if you are entitled to a:

  • tax credit,
  • tax exemption,
  • reduced rate of tax, or
  • other treaty benefit or safeguard.

The Effect of Tax Treaties

Residency for treaty purposes is determined by the applicable treaty.

If you are treated as a resident of a foreign country under a tax treaty, and not treated as a resident of the United States under the treaty (i.e., not a dual resident), you are treated as a nonresident alien in figuring your U.S. income tax. For purposes other than figuring your tax, you will be treated as a U.S. resident. For example, the rules discussed here do not affect your residency time periods to determine if you are a resident alien or nonresident alien during a tax year.

If you are a resident of both the United States and another country under each country's tax laws, you are a dual resident taxpayer. If you are a dual resident taxpayer, you can still claim the benefits under an income tax treaty. The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence.

If you are a dual resident taxpayer and you claim treaty benefits as a resident of the other country, you must timely file a return (including extensions) using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents, and compute your tax as a nonresident alien. You must also attach a fully completed Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS    

What if I receive an IRS notice that says something is wrong with my 2021 tax return?

Posted by Admin Posted on Dec 19 2022

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Don’t panic! It is important to remember – not all correspondence from the IRS necessarily contains bad news.

It is the IRS’s responsibility to make sure your tax return is as accurate as it can be while it is processed and verified. These verification checks can include anything from finding and fixing basic mathematical errors to checking for required attachments, like schedules that support a credit or deduction you are claiming. The IRS also checks to confirm the amounts shown on your return match what banks, employers, third parties, and other government agencies have reported. In some cases, these checks may result in identifying a credit you could potentially claim to get a bigger refund, when the IRS determines you may be eligible for it.

The IRS has recently suspended some of its notices, but not all. Most IRS correspondence, if it relates to a question about your current tax return while it is being processed are still being sent, with the exception of the unfiled tax return requests listed in the IRS chart. Here’s what you need to know if you did receive one of these notices prior to the IRS suspension.

What should I do if I get tax return processing type of correspondence?

Open it, read it, and keep it in a safe place (in case you need it later). IRS correspondence always tells you why the IRS is writing, what topic it is about, and either what you need to do in response and by when, or it will tell you that you don’t need to reply at all.

Letters and notices aren’t always easy to understand. So, here are three resources we recommend you use if you want more help understanding that particular notice or letter:

Note: To find the correspondence number look in either the top or bottom right-hand corner. They will generally be preceded by the letters CP or LTR.

Do I need to reply?

Whether you need to reply or not will depend on the issue.

If you agree with the information or change listed, sometimes there is no need to reply. Other times, even if you do agree, you may need to provide specific information to resolve the issue, particularly if you need to verify your identity or if a schedule is missing. In most tax return processing situations, you generally have 60 days to reply, but be sure to go by the date specified in your letter.

If you disagree, the letter should outline how to dispute the issue, including what action(s) is needed and a date to complete the action by, as well information about your Taxpayer Rights.

Whether you agree or not, if it requires a reply – do not delay! You must reply by the date required or you may lose certain resolution options or may also have to pay in full before the IRS will consider your position. See more on this below.

When to respond

If your notice or letter requires a response by a specific date, there are many reasons you’ll want to comply. Here are just a few:

  • minimize additional interest and penalty charges;
  • prevent further action from being taken on the account or against you; and
  • preserve your appeal rights if you don’t agree.

If you need more time to respond than indicated, contact the IRS using the contact information provided.

How and where to reply

The correspondence should tell you exactly where to send your response, whether it’s to a mailing address or fax number. Follow the instructions.

What if I want to talk to someone?

Each notice or letter should include contact information. The telephone number is usually found in the upper right-hand corner.

If a specific employee is working your case, it will show a specific phone number for that employee or the department manager. Otherwise, it will show the IRS toll-free number (800-829-1040).

Be aware COVID-19 continues to cause delays for IRS services, including live phone support and responding to correspondence. The IRS encourages taxpayers to make use of the IRS.gov website and its online resources, like Tax Law Questions to get questions answered and find resources to resolve problems.

Important: You’ll want to check the IRS’s Help for taxpayers and tax professionals: Special filing season alerts page for announcements related to processing 2021 tax returns before you call in case the information you need is located there.

The best days to call the IRS are Wednesdays, Thursdays, and Fridays. The IRS advises that wait times are the longest on Mondays and Tuesdays, and close to the April filing deadline.

Have a copy of your tax return and the correspondence available when you call.

Wait – I still need help

You can generally resolve most notices or letters without help, but you can also get the help of a professional – either the person who prepared your return, or another tax professional.

If you can’t afford to hire a tax professional to assist you, you may be eligible for free or low cost representation from an attorney, certified public accountant, or enrolled agent associated with a Low Income Taxpayer Clinic (LITC). In addition, LITCs can help if you speak English as a second language and need help understanding the notice or letter. For more information or to find an LITC near you, see the LITC page or IRS Publication 4134, Low Income Taxpayer Clinic List.

If your IRS problem is causing you financial hardship, see Can TAS help me with my tax issue?.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: TAS     

Selling Your Home

Posted by Admin Posted on Dec 19 2022

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If you sold your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return. This exclusion is allowed each time that you sell your main home, but generally no more frequently than once every two years.

To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale. You also must not have excluded gain on another home sold during the two years before the current sale.

If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount.

To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use. Longer breaks, such as a one-year sabbatical, do not.

If you do not meet the ownership and use tests, you may be allowed to exclude a reduced maximum amount of the gain realized on the sale of your home if you sold your home due to health, a change in place of employment, or certain unforeseen circumstances. Unforeseen circumstances include, for example, divorce or legal separation, natural or man-made disaster resulting in a casualty to your home, or an involuntary conversion of your home.  

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters   

U.S. Citizens and Resident Aliens Abroad

Posted by Admin Posted on Dec 19 2022

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If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. You are subject to tax on worldwide income from all sources and must report all taxable income and pay taxes according to the Internal Revenue Code.

Many Americans living abroad qualify for special tax benefits, such as the foreign earned income exclusion and foreign tax credit, but they can only get them by filing a U.S. return. For further details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

U.S. taxpayers who own foreign financial accounts must report those accounts to the U.S. Treasury Department, even if the accounts don't generate any taxable income. Taxpayers should file a Report of Foreign Bank and Financial Accounts (FBAR) electronically by April 18, 2022, using the BSA E-Filing System. For further details see Report of Foreign Bank and Financial Accounts (FBAR).

Taxpayers must also report virtual currency transactions to the IRS on their tax returns; these transactions are taxable by law just like any other property transaction. For more information see Virtual Currencies.

When to File

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15. For calendar year 2021 you must pay any tax due by April 18, 2022, or interest will be charged.

If you qualify for the 2-month extension but are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, before the automatic 2-month extension date. If you are allowed extensions to June 15 and/or October 15, you will owe interest on any unpaid tax amount from the original due date of the return (April 18, 2022, for calendar year 2021).

Where to File

If you are a U.S. citizen or resident alien (including a green card holder) and you live in a foreign country, and you are:

Requesting a refund, or no check or money order enclosed, mail your U.S. tax return to:

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215
USA

Enclosing a check or money order, mail your U.S. tax return to:

Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303
USA

Electronic Filing (e-file)

Taxpayers with an AGI (Adjusted Gross Income) within a specified threshold can electronically file their tax return for free using Free File. Taxpayers with an AGI greater than the specified threshold can use the Free File Fillable Forms, the e-file by purchasing commercial software, or the Authorized IRS e-file Provider Locator Service. A limited number of companies provide software that can accommodate foreign addresses.

Taxpayer Identification Number

Each taxpayer who files, or is claimed as a dependent on, a U.S. tax return will need a social security number (SSN) or individual taxpayer identification number (ITIN). To obtain an SSN, use form SS-5, Application for a Social Security Card. To get form SS-5, or to find out if you are eligible for a social security card, contact a Social Security office or visit Social Security International Operations. If you, or your spouse, are not eligible for a SSN, you can obtain an ITIN by filing form W-7 along with appropriate documentation.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS         

What the Inflation Reduction Act Means for You

Posted by Admin Posted on Dec 19 2022

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The Inflation Reduction Act, which includes expanded or extended tax credits and additional funding for the IRS, was signed into law on August 16, 2022.

How could the Inflation Reduction Act impact you when filing your next tax return?

Below is a simplified summary of how the Inflation Reduction Act may affect you.

Health Care

The Inflation Reduction Act includes:

  • Extension of Affordable Care Act (ACA) funding through 2025. This funding, which was due to expire at the end of 2022, will allow consumers to continue to buy insurance with lower premiums through the Health Insurance Marketplace (also referred to as the Marketplace or the Exchange).
  • Extension of the American Rescue Plan Act (ARPA) temporary exception that allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit.
  •  

Energy Efficient Home Improvement Credit

The Nonbusiness Energy Property Credit was extended through 2032 and renamed the Energy Efficient Home Improvement Credit.

Starting in 2023, the credit will be equal to 30 percent of the costs of all eligible home improvements made during the year. Additionally:

  • The $500 lifetime limit on the total credit amount will be replaced with a $1,200 annual limit.
  • The annual limits for specific types of qualifying improvements will be:
    • $150 for home energy audits;
    • $250 for any exterior door ($500 total for all exterior doors) that meet applicable Energy Star requirements;
    • $600 for exterior windows and skylights that meet Energy Star most efficient certification requirements;
    • $600 for other qualified energy property, including central air conditioners; electric panels and certain related equipment; natural gas, propane, or oil water heaters; oil furnaces; water boilers;
    • $2,000 for heat pump and heat pump water heaters; biomass stoves and boilers. This category of improvement is not limited by the $1,200 annual limit on total credits or the $600 limit on qualified energy property; and
    • Roofing will no longer qualify.

For eligible home improvements using products placed in service after 2024, no credit will be allowed unless the manufacturer of any purchased item creates a product identification number for the product and the taxpayer claiming the credit includes the number on his or her return for that tax year.

Note: For 2022, the prior credit rules apply.

 

Residential Clean Energy Credit

The Residential Energy Efficient Property Credit, now called the Residential Clean Energy Credit, was previously scheduled to expire at the end of 2023 but has been extended through 2034. The Inflation Reduction Act also increased the credit amount, with a phaseout of the applicable percentage.

Amount of Credit:

  • 30 percent for 2023-2032;
  • 26 percent for 2033; and
  • 22 percent for 2034.

The credit no longer applies to biomass furnaces and water heaters, now covered under the Energy Efficient Home Improvement Credit. Starting in 2023, however, the new credit will apply to battery storage technology with a capacity of at least three kilowatt hours.

Clean Vehicle Credits

The Inflation Reduction Act extends the Clean Vehicle Credit until the end of 2032 and creates new credits for previously-owned clean vehicles and qualified commercial clean vehicles.

 

Tax credits include up to:

  • $7,500 for the purchase of new qualified commercial clean vehicles;
  • $40,000 for vehicles over 14,000 pounds; and
  • the lesser of 30 percent of the price of used electric vehicles or $4,000.

Limitations apply based on the manufacturer’s suggested retail price of the vehicle. There are also limitations for the new vehicle credit based on adjusted gross income (AGI) thresholds – for single or married filing separately taxpayers, the limit is $150,000; for taxpayers filing as head of household, the limit is $225,000; and for married filing jointly, or surviving spouse taxpayers, the limit is $300,000. Reduced AGI limitations apply to the used vehicle credit.

Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price.

Taxes and IRS Funding

The Inflation Reduction Act also includes:

  • 15 percent minimum tax on corporations with over $1 billion in revenue;
  • 1 percent excise tax on corporate share buybacks; and
  • About $79 billion of additional funding over ten years for the IRS.

The IRS is preparing a plan showing how it expects to use the additional funding. In a recent letter to all Members of the Senate, IRS Commissioner Charles Rettig stated, “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans…Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers.”

 

More information

The Inflation Reduction Act makes these and several additional changes to the Internal Revenue Code.  While these changes may not impact your individual tax bill, the extended tax credits may save you money at tax time.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: TAS    

Car Donations

Posted by Admin Posted on Dec 19 2022

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The IRS reminds taxpayers that specific rules apply for taking a tax deduction for donating cars to charities. If the claimed value of the donated motor vehicle, boat or plane exceeds $500, you can deduct the smaller of the vehicle's FMV on the date of the contribution or the gross proceeds received from the sale of the vehicle.

People who want to take a deduction for the donation of their vehicle on their tax return should take quite a few steps, but here is the most obvious:

Check that the Organization is Qualified.

Taxpayers must make certain that they contribute their car to an eligible organization; otherwise, their donation will not be tax deductible. Taxpayers can search Tax Exempt Organization Search to check that an organization is qualified. In addition, taxpayers can call IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500. Be sure to have the organization's correct name and its headquarters location, if possible. Churches, synagogues, temples, mosques and governments are not required to apply for this exemption in order to be qualified.  Please contact us if you're considering a car donation for your tax return!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters  

Semana nacional de Seguridad Tributaria: Elegir un PIN de Protección de Identidad único agrega seguridad adicional para contribuyentes

Posted by Admin Posted on Dec 19 2022

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Como parte de un esfuerzo más amplio para aumentar la seguridad, el Servicio de Impuestos Internos y los socios de la Cumbre de Seguridad recordaron hoy a los contribuyentes que podrían obtener protección adicional a partir de enero si se unen al programa de Número de identificación personal de protección de identidad (IP PIN, por sus siglas en inglés) de la agencia.

Cualquier persona que tenga un Número de Seguro Social (SSN) o un Número de identificación personal del contribuyente (ITIN, por sus siglas en inglés) y pueda verificar su identidad es elegible para inscribirse en el programa IP PIN. Más de 6.6 millones de contribuyentes ahora se protegen contra el robo de identidad relacionado con los impuestos al participar en el programa IP PIN. El año pasado, el IRS hizo cambios al programa para facilitar la participación de más contribuyentes. La manera más rápida y sencilla de recibir un IP PIN es mediante la herramienta Obtenga un IP PIN, que estará disponible en enero.

El recordatorio de hoy marca el cuarto día de la Semana Nacional de Seguridad Tributaria, que se extiende hasta el 2 de diciembre. La Cumbre de Seguridad patrocina esta celebración anual como parte de un esfuerzo mayor entre el IRS, las agencias tributarias estatales, así como las industrias de software de impuestos y profesionales de impuestos de la nación.

La Cumbre de Seguridad se estableció en 2015 para proteger a los contribuyentes y al sistema tributario de la nación contra el robo de identidad relacionado con los impuestos. Esta colaboración única entre los sectores público y privado ha aumentado las defensas mutuas contra los delincuentes que intentan presentar declaraciones de impuestos fraudulentas y robar reembolsos.

Una de las características críticas del sistema del IRS involucra un IP PIN, que es un número de seis dígitos asignado a los contribuyentes elegibles para ayudar a prevenir el uso indebido de su número de Seguro Social o Número de Identificación Personal del Contribuyente en declaraciones federales de impuestos fraudulentas.

Un IP PIN es conocido únicamente por el contribuyente y el IRS. Inicialmente diseñado para víctimas confirmadas de robo de identidad relacionado con los impuestos, el programa IP PIN se amplió en 2021 para incluir a cualquier contribuyente de todo el país que quiere la protección y seguridad adicional de usar un IP PIN para presentar declaraciones de impuestos al IRS.

"Evitar que alguien presente una declaración de impuestos a nombre de otra persona es la razón principal por la que queremos que las personas tengan este código especial," dijo Doug O'Donnell, Comisionado interino del IRS. "Alentamos a las personas a solicitar el código cuando se abra el sistema en enero. Este paso provee una capa adicional de protección para los contribuyentes y sus declaraciones de impuestos."

Un IP PIN ayuda al IRS a verificar la identidad de un contribuyente y aceptar sus declaraciones federales de impuestos, independientemente de si se presentan electrónicamente o en papel. La herramienta en línea Obtenga un IP PIN en IRS.gov muestra el IP PIN del contribuyente. Cualquier contribuyente participante usará la herramienta en cada año subsiguiente para obtener un nuevo número.

El IRS insta a cualquier solicitante de IP PIN que fue rechazado durante el proceso de autenticación de identidad, a que intente solicitarlo nuevamente en 2023. El proceso de autenticación se ha refinado y mejorado, lo que permite que muchos contribuyentes excluidos en el pasado tengan más posibilidades de aprobar el proceso de autenticación.

  • con fotografía, usan esta información para vendérsela a otros, o presentar declaraciones de impuestos fraudulentas, abrir cuentas de crédito y más.
  • Las víctimas de robo de identidad aún deben completar una declaración jurada de robo de identidad. Cualquier víctima confirmada de robo de identidad relacionada con los impuestos aún debe presentar el Formulario 14039 al IRS si la agencia rechaza su declaración de impuestos presentada electrónicamente debido a una presentación duplicada del SSN. El IRS entonces investigará su caso. Una vez que se elimine la declaración de impuestos fraudulenta de su cuenta, el IRS enviará automáticamente un IP PIN a la víctima confirmada al comienzo del siguiente año calendario. Debido a los riesgos de seguridad, las víctimas confirmadas de robo de identidad no pueden optar por no participar en el programa IP PIN.

Opciones para personas que no pueden pasar el proceso de autenticación en línea

Hay dos opciones disponibles para las personas que no pueden pasar el proceso de autenticación de identidad en línea del IRS. Uno se trata de presentar el Formulario 15227 y el otro requiere una visita a un Centro de Asistencia al Contribuyente (TAC) del IRS. A diferencia de la opción en línea, ambas opciones implican, por razones de seguridad, un retraso en el recibo de un IP PIN.

Formulario 15227: Para la tramitación del año 2023, las personas con un ingreso bruto ajustado de $73,000 o menos y las que presentan una declaración conjunta con un AGI de $146,000 o menos con acceso a un teléfono pueden completar el Formulario 15227PDF y enviarlo por correo o por fax al IRS. Un representante del IRS les llamará entonces para verificar su identidad con una serie de preguntas. Los contribuyentes que elijan esta opción y que pasen el proceso de autentificación de la identidad recibirán, por lo general, su IP PIN en aproximadamente un mes.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS    

What’s Your Taxpayer Filing Status? & Have You Considered A Cost Segregation Study?

Posted by Admin Posted on Dec 19 2022

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What’s Your Taxpayer Filing Status?

For many people, December 31 means a New Year’s Eve celebration. However, from a tax perspective, it’s a key date in determining the filing status you’ll use when filing your tax return for the year. The one you’ll use depends partly on whether you’re married on that date.

The five statuses

When you file your federal tax return, you do so with one of five filing statuses. First, there’s “single” status, which is generally used if you’re unmarried, divorced or legally separated. A second status, “married filing jointly,” is for married couples who file a tax return together. If your spouse passes away, you can usually still file a joint return for that year. A third status, “married filing separately,” is for married couples who choose to file separate returns. In some cases, doing so may result in less tax owed.

“Head of household” is a fourth status. Certain unmarried taxpayers with dependents qualify to use it and potentially pay less tax. Finally, there’s a fifth status: “qualifying widow(er) with a dependent child.” It may be used if your spouse died during one of the previous two years and you have a dependent child. (Other conditions apply.)

Head of household

Let’s focus on head-of-household status because it’s often misunderstood and can be more favorable than filing as a single taxpayer. To qualify, you must “maintain a household” that, for more than half the year, is the principal home of a “qualifying child” or other relative that you can claim as a dependent.

A qualifying child is defined as someone who lives in your home for more than half the year and is your child, stepchild, foster child, sibling, stepsibling or a descendant of any of these. A qualifying child must also be under 19 years old (or a full-time student under age 24) and be unable to provide over half of his or her own support for the year.

Different rules may apply if a child’s parents are divorced. Also, a child isn’t a qualifying child if he or she is married and files jointly or isn’t a U.S. citizen or resident.

For head-of-household filing status, you’re considered to maintain a household if you live in it for the tax year and pay more than half the cost of running it. This includes property taxes, mortgage interest, rent, utilities, property insurance, repairs, upkeep and food consumed in the home. Medical care, clothing, education, life insurance and transportation aren’t included.

Under a special rule, you can qualify as head of household if you maintain a home for a parent even if you don’t live with the parent. To qualify, you must be able to claim the parent as your dependent.

You must generally be unmarried to claim head-of-household status. However, if you’ve lived apart from your spouse for the last six months of the year, you have a qualifying child living with you and you maintain the household, you’re typically considered unmarried. In this case, you may be able to qualify as head of household.

Not always obvious

Filing status may seem obvious, but there can be situations when it warrants careful consideration. If you have questions about yours, contact us.

Have You Considered A Cost Segregation Study?

Because of the economic impact of inflation, many companies may need to conserve cash and not buy much equipment. As a result, you may not be able to claim as many depreciation tax deductions as in the past. However, if your company owns real property, there may be another approach to depreciation to consider: a cost segregation study.

Depreciation basics

Business buildings generally have a 39-year depreciation period (27.5 years for residential rental properties). Typically, companies depreciate a building’s structural components (including walls, windows, HVAC systems, plumbing and wiring) along with the building. Personal property (such as equipment, machinery, furniture and fixtures) is eligible for accelerated depreciation, usually over five or seven years. And land improvements, such as fences, outdoor lighting and parking lots, are depreciable over 15 years.

Often, businesses allocate all or most of their buildings’ acquisition or construction costs to real property, overlooking opportunities to allocate costs to shorter-lived personal property or land improvements. Items that appear to be “part of a building” may in fact be personal property. Examples include removable wall and floor coverings, removable partitions, awnings, canopies, window treatments, signs and decorative lighting.

Pinpointing costs

A cost segregation study combines accounting and engineering techniques to identify building costs that are properly allocable to tangible personal property rather than real property. Although the relative costs and benefits of a cost segregation study will depend on your particular facts and circumstances, it can be a valuable investment.

It may allow you to accelerate depreciation deductions on certain items, thereby reducing taxes and boosting cash flow. And, thanks to the Tax Cuts and Jobs Act, the potential benefits of a cost segregation study are even greater than they were years ago because of enhancements to certain depreciation-related tax breaks.

Worth a look

Cost segregation studies have costs all their own, but the potential long-term tax benefits may make it worth your while to undertake the process. Contact our firm for further details.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters         

 

Amended Returns

Posted by Admin Posted on Dec 19 2022

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Oops! You've discovered an error after your tax return has been filed. What should you do? You may need to amend your return.

The IRS usually corrects math errors or requests missing forms (such as W-2s) or schedules. In these instances, do not amend your return. However, do file an amended return if any of the following were reported incorrectly:

  • Your filing status
  • Your total income
  • Your deductions or credits

Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed paper or electronically-filed Form 1040 return. Be sure to enter the year of the return you are amending at the top of Form 1040X. If you are amending more than one tax return, use a separate 1040X for each year and mail each in a separate envelope to the IRS processing center for your state. The 1040X instructions list the addresses for the centers.

Form 1040X has three columns. Column A is used to show original or adjusted figures from the original return. Column C is used to show the corrected figures. The difference between the figures in Columns A and C is shown in Column B. You should explain the items you are changing and the reason for each change on the back of the form.

If the changes involve another schedule or form, attach it to the 1040X. For example, if you are filing a 1040X because you have a qualifying child and now want to claim the Earned Income Tax Credit, you must complete and attach a Schedule EIC to the amended return.

If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund. If you owe additional tax for the prior year, Form 1040X must be filed and the tax paid by April 15 of this year, to avoid any penalty and interest.

You generally must file Form 1040X to claim a refund within three years from the date you filed your original return, or within two years from the date you paid the tax, whichever is later. Please contact us for more!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters  

Gift Giving

Posted by Admin Posted on Dec 19 2022

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If you gave any one person gifts valued at more than $15,000, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift.

The person who received your gift does not have to report the gift to the IRS or pay either gift or income tax on its value.

You make a gift when you give property, including money, or the use of or income from property, without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions to the tax rules on gifts. The following gifts do not count against the annual limit:

  • Tuition or medical expenses that you pay directly to an educational or medical institution for someone's benefit
  • Gifts to your spouse
  • Gifts to a political organization for its use
  • Gifts to charities

If you are married, both you and your spouse can give separate gifts of up to the annual limit to the same person without making a taxable gift. Please contact us for more!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters     

Deductible Taxes

Posted by Admin Posted on Dec 15 2022

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Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation. There are four types of deductible non-business taxes:

1. State and local income taxes, or general sales taxes;
2. Real estate taxes; and
3. Personal property taxes

The Tax Cuts and Jobs Act (TCJA) limit the cumulative amount of the above taxes an individual can deduct in a calendar year to $10,000.

You can deduct estimated taxes paid to state or local governments and prior year's state or local income tax as long as they were paid during the tax year. If deducting sales taxes instead, you may deduct actual expenses or use optional tables provided by the IRS to determine your deduction amount, relieving you of the need to save receipts. Sales taxes paid on motor vehicles and boats may be added to the table amount, but only up to the amount paid at the general sales tax rate. Taxpayers will check a box on Schedule A, Itemized Deductions, to indicate whether their deduction is for income or sales tax.

Deductible real estate taxes are usually any state, local, or foreign taxes on real property. If a portion of your monthly mortgage payment goes into an escrow account and your lender periodically pays your real estate taxes to local governments out of this account, you can deduct only the amount actually paid during the year to the taxing authorities. Your lender will normally send you a Form 1098, Mortgage Interest Statement, at the end of the tax year with this information.

To claim a deduction for personal property tax you paid, the tax must be based on value alone and imposed on a yearly basis. For example, the annual fee for the registration of your car would be a deductible tax, but only the portion of the fee that was based on the car's value.

Call us or contact us today to find out how we can save you money!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters    

Plug-In Electric Vehicles (PEVs)

Posted by Admin Posted on Dec 15 2022

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For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

The credit is available only to the original purchaser of a new qualifying vehicle, and the vehicle must be placed in service in the same year the credit is being claimed on the return. If the qualifying vehicle is leased the credit is available only to the leasing company. Also, the vehicle must be used primarily in the United States.

Additional conditions regarding qualified manufacturers and phase out rules may also apply in determining credit eligibility. To find out whether your car qualifies for the Qualified Plug-in Electric Drive Motor Vehicle tax credit, you can go to the IRS.gov website and search for "plug-in vehicles" or contact us for more information.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters   

Semana Nacional de Seguridad Tributaria: “Martes de dar” es buen recordatorio que estafadores podrían crear organizaciones benéficas falsas para engañar a contribuyentes

Posted by Admin Posted on Dec 15 2022

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En el martes de dar o "Giving Tuesday", el Servicio de Impuestos Internos (IRS) y sus Socios de la Cumbre de Seguridad advirtieron a los contribuyentes a tener cuidado con estafadores que usan organizaciones benéficas falsas, no solo durante la temporada de fiestas, si no el año entero.

Para el segundo día de la Semana Nacional de Seguridad Tributaria, el IRS y sus Socios de la Cumbre de Seguridad urgen a las personas a que se aseguren de que su dinero vaya a organizaciones benéficas legitimas. Estar alerta a estafas potenciales no solo protege el dinero de los contribuyentes si no también los datos personales y financieros que pueden usarse para el robo de identidad relacionado con los impuestos.

"Las personas deben tener cuidado con las organizaciones benéficas falsas que crean problemas en múltiples frentes," dijo Doug O'Donnell, Comisionado interino del IRS. "Los donantes bien intencionados no solo pueden perder su dinero y un posible crédito por donación benéfica, si no también podría resultar en el robo de información personal y financiera. Le urgimos a las personas a que actúen responsablemente antes de donar y sigan los consejos para asegurarse de que la organización benéfica es legítima."

Trabajando juntos como la Cumbre de Seguridad, el IRS, las agencias tributarias estatales y la industria de software y de profesionales de impuestos brindan consejos esta semana para ayudar a proteger a los contribuyentes contra el robo de identidad al igual que la información tributaria que los criminales usan para presentar declaraciones de impuestos falsas y obtener reembolsos. Este esfuerzo es parte de la Semana Nacional de Seguridad Tributaria, ahora en su séptimo año.

Los estafadores a menudo se aprovechan de la generosidad de las personas al establecer organizaciones benéficas falsas para engañar a los donantes desprevenidos para que regalen no solo dinero, sino también su información personal confidencial. Pueden usar la temporada festiva y otros eventos oportunos como los desastres recientes para tratar de llegar a las personas y atraerlas a hacer una donación. Las estafas que solicitan donaciones para los esfuerzos de ayuda en casos de desastres son especialmente comunes por teléfono. Sin embargo, los estafadores también usan los correos electrónicos, sitos web y mensajes por redes sociales que parecen provenir de organizaciones benéficas legitimas para engañar a las personas a dar dinero o información personal.

El IRS y sus socios de la Cumbre de Seguridad instan a las personas a asegurarse de que su dinero se destine solo a organizaciones benéficas legitimas. Estar alerta a posibles estafas no solo protegerá el dinero de los contribuyentes, sino que también ayudará a proteger los datos personales y financieros que pueden usarse en el robo de identidad relacionado con los impuestos.

  • No se deje presionar. Los estafadores a menudo usan la técnica de urgencia eminente para presionar a las personas a hacer un pago inmediato. Las organizaciones benéficas legitimas están felices de recibir una donación en cualquier momento, no hay prisa. Se pide a los donantes que se tomen el tiempo de hacer sus propias investigaciones. No olvide que los estafadores pudieran alterar o "falsificar" su identificador de llamadas para hacerse pasar por una organización benéfica legitima.
     
  • Tenga cuidado de cómo solicitan la donación. Los contribuyentes no deben trabajar con organizaciones benéficas que soliciten donativos a través de números de tarjeta de regalo o transferencia de dinero. Eso es una estafa. Es más seguro pagar con tarjeta de crédito o cheque, y sólo después de investigar la organización benéfica.
     
  • No de más de lo necesario. Los estafadores buscan dinero, pero la información personal puede ser igual de valiosa. Los contribuyentes deben tratar la información personal igual que su dinero en efectivo y no entregársela a cualquiera. Nunca proporcione números de Seguro Social, números de tarjetas de crédito o números de PIN. Solo proporcione información financiera limitada cuando esté seguro de que la organización benéfica es legítima. 

Los contribuyentes que dan dinero o bienes a una organización benéfica pueden reclamar una deducción (en inglés) en su declaración de impuestos federal al reducir el monto de su ingreso tributable. Sin embargo, para recibir una deducción, los contribuyentes deben donar a una organización benéfica calificada.

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: IRS      

Filing an Extension

Posted by Admin Posted on Dec 15 2022

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If you can't meet the April 15 deadline to file your tax return, you can get an automatic six-month extension of time to file from the IRS. The extension will give you extra time to get the paperwork into the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amounts not paid by the April deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date.

You must make an accurate estimate of any tax due when you request an extension. You may also send a payment for the expected balance due, but this is not required to obtain the extension.

To get the automatic extension, file Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return, with the IRS by the April 15 deadline, or make an extension-related electronic payment. You can file your extension request by computer or mail the paper Form 4868 to the IRS.

The system will give you a confirmation number to verify that the extension request has been accepted. Put this confirmation number on your copy of Form 4868 and keep it for your records. Do not send the form to the IRS.  As this is the area of our expertise, please contact us for more detailed information on how to file an extension properly!

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source:Thomson Reuters  

Get Ready now to file your 2022 federal income tax return

Posted by Admin Posted on Dec 07 2022

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Steps you can take now to make tax filing easier in 2023

The Internal Revenue Service today encouraged taxpayers to take simple steps before the end of the year to make filing their 2022 federal tax return easier. With a little advance preparation, a preview of tax changes and convenient online tools, taxpayers can approach the upcoming tax season with confidence.

View your account online

Use online account to securely access the latest information available about your federal tax account and see information from your most recently filed tax return.

You can:

  • View your tax owed, payments, and payment plans
  • Make payments and apply for payment plans
  • Access your tax records
  • Sign Power of Attorney authorizations electronically from your tax professional
  • Manage your communication preferences from the IRS

Gather and organize your tax record

Organized tax records make preparing a complete and accurate tax return easier. It helps you avoid errors that lead to processing delays that slow your refund and may also help you find overlooked deductions or credits.

Wait to file until you have your tax records including:

Notify the IRS if your address changes and notify the Social Security Administration of a legal name change.

Remember, most income is taxable. This includes:

Check your Individual Tax Identification Number (ITIN)

An ITIN only needs to be renewed if it has expired and is needed on a U.S. federal tax return. If you do not renew an expiring or expired ITIN, the IRS can still accept your tax return, but it may delay processing it or delay tax credits owed to you, such as the Child Tax Credit and the American Opportunity Tax Credit, which can impact when you get your tax refund.

If your ITIN wasn't included on a U.S. federal tax return at least once for tax years 2019, 2020, and 2021, your ITIN will expire on December 31, 2022.

As a reminder, ITINs with middle digits 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, or 88 have expired. In addition, ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98, or 99, IF assigned before 2013, have expired. If you previously submitted a renewal application and it was approved, you do not need to renew again.

The IRS processes requests in the order they were received. Currently, IRS is working ITIN applications received in July 2022. Your patience is appreciated. You will be notified once your ITIN is assigned or if additional information is needed. 

Make sure you’ve withheld enough tax

Consider adjusting your withholding if you owed taxes or received a large refund when you filed. Changing your withholding can help you avoid a tax bill or let you keep more money each payday. Credit amounts may change each year, so visit IRS.gov and use the Interactive Tax Assistant to identify whether you qualify for any tax credits that may call for a withholding adjustment. Life changes – getting married or divorced, welcoming a child, or taking on a second job - may also mean changing withholding.

Use the Tax Withholding Estimator to help you determine the right amount of tax to have withheld from your paycheck. This tool on IRS.gov will help determine if you need to adjust your withholding and submit a new Form W-4 to your employer.

Consider estimated tax payments. If you receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income you should make quarterly estimated tax payments, with the last payment for 2022 due on January 17, 2023.

Log in to your online account to make a payment online or go to IRS.gov/payments.

The fastest way for you to get your tax refund is by filing electronically and choosing direct deposit. Direct deposit gives you access to your refund faster than a paper check. Get your routing and account number by signing into your online banking account or contacting your bank.

Get banked to speed tax refunds with direct deposit

Don't have a bank account? Learn how to open an account at an FDIC-Insured bank or through the National Credit Union Locator Tool. If you are a Veteran, see the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

Prepaid debit cards or mobile apps may allow direct deposit of tax refunds. They must have routing and account numbers associated with them that can be entered on your tax return. Check with the mobile app provider or financial institution to confirm which numbers to use. 

Direct deposit also avoids the possibility that a refund check could be lost or stolen or returned to the IRS as undeliverable.  

What’s new and what to consider when you file in 2023

More taxpayers will be receiving Form 1099-K

Change is effective Jan. 1, 2022.  All third-party payment platforms are required to issue Forms 1099-K when payments to merchants for goods and services exceed $600.

What is reported on a 1099-K? If you accepted $600 or more in 2022:

  • by payment cards for good and services, you will receive one Form 1099-K for the total amount of the payments from each payment card.
  • from a third-party payment app, you will receive one Form 1099-K from that organization for the total amount.

When will I get the 1099-K and what should I do with it? 2022 Forms 1099-K must be furnished to the payee by January 31, 2023. Use this information return with your other tax records to determine your correct tax. 

What is not reported on a 1099-K? Money received as a gift or reimbursement of a share of a meal or rent should not be reported on a 1099-K. Payments should indicate whether they are personal to family and friends or a business transaction for goods and services. 

What if the information is wrong? If the information is incorrect on the 1099-K, contact the payer immediately, whose name appears in the upper left corner on the form. Keep a copy of all correspondence with the payer with your records. If you cannot get the form corrected, you may attach an explanation of the error to your tax return and report your income correctly.

The IRS cannot correct inaccurate Forms 1099-K.

2022 changes that may affect your tax refund

Changes in the number of dependents, employment or self-employment income and divorce, among other factors, may affect your tax-filing status and refund for 2023.

No additional stimulus payments.  Unlike 2020 and 2021, there were no new stimulus payments for 2022 so taxpayers should not expect to get an additional payment in their 2023 tax refund.

Some tax credits return to 2019 levels. Several tax credits, including the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC) and the Dependent Care Credit will revert to pre-COVID levels. This means that taxpayers will likely receive a significantly smaller refund compared with the previous tax year. For a comparison, those who got $3,600 per dependent in 2021 for the CTC will get $2,000 for the 2022 tax year. Similarly, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022. And the Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021. Visit Credits and Deductions for more details.

No above-the-line charitable deductions. During COVID, taxpayers were able to take up to a $600 charitable donation tax deduction on their tax returns. However, in 2022, this deduction will return to pre-COVID rules, which will not allow those who take a standard deduction to make an above-the-line deduction for charitable donations.

More people may be eligible for the Premium Tax Credit.
For tax year 2022, taxpayers may qualify for temporarily expanded eligibility for the premium tax credit. Remember that simply meeting the income requirements does not mean you're eligible for the premium tax credit. You must also meet the other eligibility criteria.

The Inflation Reduction Act of 2022 changes the eligibility rules to claim a tax credit for clean vehicles. More details about clean vehicles will be available in coming months.

Avoid refund delays and understand refund timing

Many different factors can affect the timing of your refund after we receive your return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills.

Identity Theft and refund fraud. Some returns may require additional review and may take longer. The IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.

IRS cannot issue EITC and ACTC refunds before mid-February. Refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) can't be issued before mid-February. The law requires the IRS to hold the entire refund − even the portion not associated with EITC or ACTC.

Returns requiring manual review. Some returns, filed electronically or on paper, may need manual review delaying the processing if our systems detect a possible error, the return is missing information, or there is suspected identity theft or fraud. Some of these situations require us to correspond with taxpayers, but some do not. This work does require special handling by an IRS employee so, in these instances, it may take the IRS more than the normal 21 days to issue any related refund. In those cases where IRS is able to correct the return without corresponding, the IRS will send an explanation to the taxpayer.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS  

IRS Collection Procedures for Past Due Taxes

Posted by Admin Posted on Dec 07 2022

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The U.S. government expects you to pay income taxes to the IRS each year. Most Americans have taxes withheld from their wages, which helps to avoid owing the IRS a large sum at the end of the year. However, self-employed individuals and independent contractors who do not have any (or enough) tax withheld may need to make estimated tax payments instead.

If your taxes are not fully paid when you file your tax return, the IRS will send you a bill for the amount owed. This bill is the beginning of the collection process.

The first IRS notice that you receive will explain the amount you owe, including any taxes, penalties, and interest charges. This notice will also demand full payment of your balance due.

IRS Penalties for Past Due Taxes

There are stiff penalties for not paying your taxes. With monthly late fees and interest charges, the amount you owe can grow exponentially in size, making it even more difficult to pay. The longer your taxes go unpaid, the bigger the consequences – leading all the way to asset seizure and even incarceration.

Here are some of the penalties and fees that apply to past due taxes:

• Interest is compounded daily and accumulates on the owed amount (the interest rate is equal to the Federal short-term rate, plus 3%)
• The late payment penalty is .05% of the owed amount and increases each month the taxes remain unpaid (up to a maximum of 25%)
• The combined penalty for both filing and paying late is 5% of the tax owed (if your return is over 60 days late, the penalty may be up to 100% of the tax owed)

However, if you can provide reasonable cause for not filing or paying on time, you may be able to avoid incurring the late filing/payment penalty.

IRS Collection Enforcement Actions

It is in your best interest to contact the IRS and make arrangements to pay the tax due. If you cannot pay the amount in full, you can request a payment plan (see below). But if you ignore the issue and do nothing, the IRS will take actions to collect your taxes – such as filing a Notice of Federal Tax Lien, serving a Notice of Levy, offsetting your tax refund, or garnishing your wages.

Federal tax lien is a claim against your property that is used to protect the government’s interest in your tax debt. If you fail to fully pay your tax balance within 10 days after the IRS sends you the first notice (of taxes owed and demand for payment), the IRS will file a ‘Notice of Federal Tax Lien’ in the public records. This notifies creditors that the IRS has a claim against all your property, including any property that you acquire after the lien arises.

Federal tax levy is an outright seizure of property or assets. The IRS may levy your wages, bank accounts, or retirement income and apply the funds towards your tax liability. The IRS may also seize your house, car, or boat and sell your property to satisfy your tax debt. If you are owed any tax refunds in the future (Federal or State), the IRS may take these as well.

Furthermore, in some situations, the IRS may decide to launch a criminal investigation or file charges for tax evasion.

Tax Payment Arrangements (If You Cannot Pay in Full)

If you cannot fully pay your tax due, you should still respond to the IRS notice in a timely manner. Pay as much as you can now and explore your other options. If you’re unable to alleviate the debt with a loan or credit card(s), you will need to consider the IRS’ payment arrangements – including an installment agreement, an offer in compromise, or a temporary delay of collection.

An installment agreement allows you to resolve your tax debt by making monthly payments over a period of time, generally up to 72 months. Individuals owing $50,000 or less (and businesses owing $25,000 or less) can apply for an Online Payment Agreement. Otherwise, you must make the request by filing Form 9465 (Installment Agreement Request) and a Collection Information Statement (Form 433-A, Form 433-B, or Form 433-F).

An offer in compromise (OIC) is a settlement offer that you make to the IRS for less than the actual amount owed. Basically, you offer to pay a portion of your taxes now and the IRS agrees to forgive the remaining debt. There are strict eligibility requirements and you must be able to demonstrate that paying the taxes in full will cause you “extraordinary hardship.” If you are able to pay your taxes through an installment agreement, you will not qualify for an offer in compromise.

In some cases, you can request a temporary delay of collection from the IRS. If the IRS determines that you cannot pay any of your tax owed, they may label your account as ‘currently not collectible’ and delay tax collection until your financial situation improves. However, this does not reduce your tax debt in any sense.

NOTE: If you a member of the U.S. Armed Forces, you may be allowed to defer your payment. For more information, see IRS Publication 3 (Armed Forces’ Tax Guide).

Your Rights as a Taxpayer

It is important to understand that you have rights and protections when it comes to the tax collection process. The ‘Taxpayer Bill of Rights’ contains 10 major provisions – including the right to be informed, the right to pay no more than the correct amount of tax, the right to challenge the IRS’ position and be heard, the right to appeal an IRS decision in an independent forum, and the right to retain representation.

If you want to discuss your payment options, you can contact the IRS at 1-800-829-1040 or call the phone number on your notice.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS    

Tax resources for individuals filing a federal income tax return for the first time

Posted by Admin Posted on Dec 07 2022

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Every year brings new people into the workforce. The Taxpayer Advocate Service (TAS) wants to reach individuals filing tax returns for the first time, or for the first time after a gap in filing, to share information to help them meet their federal tax obligations.

Who is a first-time filer?

Many individuals may be filing a federal income tax return for the first time, or for the first time in several years. This includes:

  • Students and recent graduates working for the first time
  • Gig workers who did not previously need to file
  • Adults returning to the workforce after long periods of unemployment
  • New military recruits who may be getting their first paychecks
  • Retirees returning to work to supplement their income
  • People taking on filing responsibilities after a spouse’s death
  • People filing only to claim refundable credits

What are some of the challenges for first-time filers?

People who have never filed, and people who have not filed for several years, have similar needs for information and resources. First-time filers may not have experience with taxes in general. The tax law is complex and changes every year. Obtaining tax help from the IRS continues to be difficult. First-time filers may not have a trusted tax professional to rely on, and they may not be able to afford professional help. Free resources are available, and TAS wants to help you find them.

As a first-time filer, you may need help determining:

  • Make sure each name and SSN or ITIN are listed exactly as printed on the individual’s Social Security card issued by the Social Security Administration or the ITIN notice issued by the IRS.
  • Choose the correct filing status. The Interactive Tax Assistant on IRS.gov can help you choose the correct status, especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.
  • Double check your math. Calculation errors are some of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Check your calculations, or better yet, use tax return preparation software that does it automatically.
  • Double check your bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for taxpayers to get their money. It’s important to make sure the correct routing transit number and account number are used.
  • Sign your return. An unsigned tax return isn’t valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have executed a valid power of attorney.

Can first-time filers use electronic filing?

Electronic filing, or e-filing, refers to the process of filing one’s tax return electronically, using approved online software. Most first-time filers can use e-file. E-filing is becoming increasingly popular because of its benefits:

  • E-filing has brought about increased flexibility in the filing of tax returns and is a lot more convenient because you can file your tax return from the comfort of your home, at any time.
  • You sign your return digitally when e-filing, preventing the possibility of sending an unsigned return.
  • E-filing saves a huge amount of time and money. When tax returns are e-filed, the data is directly transmitted online from the e-filer’s servers to the tax agency’s servers. You won’t have to print and mail your tax return, or wait for a paper return to be received, opened and input by an IRS employee. Because you’re inputting the data yourself, you can avoid potential input, or transcription, errors.
  • Because transcription errors can be avoided by accurately e-filing, the overall tax return filing process is more accurate.
  • When you e-file, you will receive notifications throughout the filing process. You will receive confirmation that your return was received. Within 24 hours, you will be notified whether your return can be processed or if it must be returned, or rejected, to correct one or more errors. In most cases, you can correct the error and resubmit a rejected return. You can also check the status of your return online after it’s been accepted for processing. Paper filing is much more ambiguous. Although you can file a paper return by certified or registered mail to confirm when the IRS receives it, status updates after that point are limited.

Are there tax credits available to first-time filers?

If you are a first-time filer, you may not be aware of credits that can reduce your tax or increase your refund.

  • Earned Income Tax Credit – This credit is available to taxpayers with low to moderate earned income, with or without a qualifying child.
  • Education Credit – This credit is available to taxpayers who incurred qualified education expenses. Some education credits are refundable.
  • Premium Tax Credit – This credit helps eligible individuals and families afford premiums for health insurance purchased through the Health Insurance Marketplace.
  • Child Tax Credit – This credit is available to individuals with qualifying children. Portions of this credit are available even if the individual did not have income.
  • Recovery Rebate Credit – Even if an individual did not receive stimulus payments (economic impact payments), the individual can potentially claim recovery rebate credits for 2020 and 2021. Individuals do not need income to qualify for this credit.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS     

Beneficios por Incapacidad

Posted by Admin Posted on Dec 01 2022

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Los programas de Seguro por Incapacidad del Seguro Social (SSDI, por sus siglas en inglés) y Seguridad de Ingreso Suplementario (SSI, por sus siglas en inglés) brindan asistencia a las personas que cumplen nuestros requisitos de incapacidad.

Antes de presentar la solicitud, revise los conceptos básicos para asegurarse de que comprende qué esperar durante el proceso de solicitud. Además, recopile la información y los documentos que necesitará para llenar una solicitud.

Conceptos Básicos Sobre los Beneficios Por Incapacidad

El programa de SSDI le paga beneficios a usted y a ciertos miembros de su familia si está «asegurado». Esto significa que trabajó por el tiempo necesario –y que fue suficientemente reciente –y pagó impuestos de Seguro Social sobre sus ganancias. El programa de SSI paga beneficios a adultos y niños que cumplen con nuestros requisitos de lo que es una incapacidad calificada y que tienen ingresos y recursos limitados.

Aunque estos dos programas son diferentes, los requisitos médicos son los mismos. Si usted cumple con los requisitos no médicos, se pagan beneficios mensuales si tiene un padecimiento médico que se espera dure al menos un año o que resulte en muerte.

El Proceso Para una Solicitud Por Incapacidad

Ya sea que presente la solicitud por internet, por teléfono o en persona, el proceso de solicitud de beneficios por incapacidad sigue estos pasos generales:

  • Usted recopila la información y los documentos que necesita para presentar la solicitud. Le recomendamos que imprima y revise la Lista de cotejo para solicitar por internet los beneficios por incapacidad para adultos. Esto le ayudará a recopilar la información y los documentos que necesita para llenar la solicitud.
  • Usted llena y presenta la solicitud.
  • Revisamos su solicitud para asegurarnos de que cumpla con algunos requisitos básicos para los beneficios por incapacidad.
  • Confirmamos si trabajó suficientes años para calificar.
  • Evaluamos las actividades laborales actuales.
  • Procesamos su solicitud y enviamos su caso a la Agencia de Determinación de Incapacidad de su estado.
  • Esta agencia estatal toma la decisión de determinación de incapacidad.

Para informarse mejor sobre quién decide si tiene una incapacidad, lea nuestra publicación Beneficios por incapacidad.

Una vez que haya solicitado

Una vez que recibamos su solicitud, la revisaremos y nos comunicaremos con usted si tenemos preguntas. Es posible que solicitemos documentos adicionales antes de que podamos continuar.

Busque nuestra respuesta

Cuando la agencia estatal tome una decisión sobre su caso, recibirá una carta por correo con nuestra decisión. Si incluyó información sobre otros miembros de la familia cuando presentó la solicitud, le informaremos si es posible que puedan recibir beneficios en su registro.

Verifique el estatus de la solicitud

Puede verificar el estatus de su solicitud por internet usando su cuenta personal my Social Security.

Apelar una decisión

Tiene derecho a apelar cualquier decisión que tomemos sobre si tiene derecho a recibir beneficios. Debe solicitar una apelación por escrito dentro de los 60 días después de recibir nuestra decisión. Hay cuatro niveles de apelación:

  • Reconsideración.
  • Audiencia por un juez de derecho administrativo.
  • Una revisión por el Consejo de Apelaciones.
  • Una revisión por la Corte Federal.

Información que Necesita para Solicitar

Antes de presentar la solicitud, esté preparado para brindar información sobre usted, su padecimiento médico y su trabajo. Le recomendamos que imprima y revise la Lista de cotejo para solicitar por internet los beneficios por incapacidad para adultos. Le ayudará a recopilar la información que necesita para llenar la solicitud.

Información sobre usted

  • Su fecha y lugar de nacimiento y número de Seguro Social
  • El nombre, número de Seguro Social y fecha de nacimiento de su cónyuge actual y cualquier ex cónyuge. También debería saber las fechas y lugares de todos los matrimonios, y fechas de divorcios o fallecimiento de los cónyuges (si es apropiado)
  • Los nombres y fechas de nacimientos de sus niños menores de edad
  • El numero de ruta de transito de su banco u otra institución financiera y el número de cuenta.

Información sobre su Padecimiento Médico

  • El nombre, dirección y número de teléfono de alguien con quien nos podamos comunicar, que sepa de sus padecimientos médicos y que pueda ayudar con su solicitud.
  • Información detallada acerca de sus enfermedades médicas, lesiones o padecimientos:
    • Los nombres, direcciones, números de teléfonos, los números de identificación del paciente y fechas de tratamientos de todos los médicos, hospitales y clínicas.
    • Nombres de los medicamentos, y cantidad o dosis que está tomando y quién se los recetó.
    • Nombres y fechas de los exámenes médicos a las que se sometió y quién las ordenó.

Información sobre su Empleo

  • La cantidad de dinero que ganó el año pasado y este año
  • El nombre y la dirección de su(s) empleador(es) durante este año y el año pasado
  • Las fechas iniciales y finales de cualquier servicio activo en el ejército de los EE.UU. que desempeñó antes de 1968
  • Enumere los tipos de trabajos (hasta 5) en que trabajó en los últimos 15 años antes de comenzar la incapacidad. Incluya las fechas en que trabajó en esos empleos.
  • Información acerca de cualquier compensación a trabajadores, enfermedad pulmonar del minero, y beneficios similares que la persona haya solicitado o intente solicitar.

Estos beneficios pueden:

  • Ser de naturaleza temporaria o permanente.
  • Incluir anualidades o pagos globales que recibió en el pasado.
  • Haber sido pagados por el empleador, la compañía de seguros del empleador, agencias privadas, o el gobierno federal, estatal u otras agencias del gobierno o públicas.
  • Ser referidos como:
    • Compensación a trabajadores.
    • Beneficios de enfermedad pulmonar del minero.
    • Compensación de trabajadores del largo de la costa y del Puerto.
    • Jubilación de servicio civil.
    • Jubilación (incapacidad) de empleados federales.
    • Compensación de empleados federales.
    • Beneficios de seguro por incapacidad estatal o municipal.
    • Beneficios por incapacidad del servicio militar, (incluso pensiones por jubilación del servicio militar basadas en incapacidad, pero no los beneficios de la Administración de Veteranos (VA, siglas en inglés).

Documentos que Necesita Proveer

Junto con la información mencionada anteriormente, es posible que le pidamos que muestre documentos para demostrar que tiene derecho, como:

Aceptamos fotocopias de los formularios W-2, declaraciones de impuestos de trabajo propio y documentos médicos, pero tenemos que ver los documentos originales en la mayoría de los documentos, tal como su acta, certificado o partida de nacimiento. Le devolveremos los documentos.

No se demore en solicitar los beneficios debido a que no tiene todos los documentos. Le ayudaremos a obtenerlos.

Solicite los Beneficios por Internet

Debe solicitar los beneficios por incapacidad tan pronto comience su incapacidad. Siga estos sencillos pasos para solicitar por incapacidad por internet:

  • Para iniciar su solicitud, vaya a nuestra página Solicitar los beneficios* y lea y acepte los Términos de servicio. Haga clic en «Next» (siguiente).
  • En esa página, revise la sección «Getting Ready» (preparándose) para asegurarse de tener la información que necesita para presentar la solicitud.
  • Seleccione «Start A New Application‌» (iniciar una nueva solicitud).
  • Le haremos algunas preguntas sobre quién está llenando la solicitud.
  • Luego iniciará sesión en su cuenta personal my Social Security, o se le pedirá que cree una.
  • Llene la solicitud.

Puede usar la solicitud por internet para solicitar beneficios por incapacidad si:

  • Tiene 18 años o más.
  • Actualmente no recibe beneficios en su propio registro de Seguro Social.
  • No puede trabajar debido a un padecimiento médico que se espera que dure al menos 12 meses o resulte en la muerte.
  • No se le ha negado por incapacidad en los últimos 60 días.

Nota aclaratoria: Si su solicitud fue denegada recientemente, nuestra solicitud de Apelación por Internet es un punto de partida para solicitar una revisión de la determinación que tomamos.

Es posible que pueda solicitar SSI por internet al mismo tiempo que solicita los beneficios de SSDI. Una vez que complete el proceso por internet mencionado anteriormente, un representante del Seguro Social se comunicará con usted si necesitamos información adicional.

Otras Formas de Solicitar

Solicite con su oficina local

Puede hacer la mayor parte de sus trámites con el Seguro Social por internet. Si no puede utilizar estos servicios por internet, su oficina local del Seguro Social puede ayudarle a presentar la solicitud. Puede encontrar el número de teléfono de su oficina local utilizando nuestro Localizador de oficinas (aunque el localizador de la oficina local solo está disponible en inglés, solo necesita ingresar su código postal para encontrar la oficina local más cercana) y buscando en Social Security Office Information (información de la oficina del Seguro Social). El número de teléfono gratuito que aparece en Office (oficina) es su oficina local.

Solicitar por teléfono

Llame al 1-800-772-1213 y oprima 7 para español (TTY 1-800-325-0778) de 8:00 a.m. a 7:00 p.m., de lunes a viernes, para solicitar por teléfono.

Si no vive en los EE. UU. o en uno de sus territorios

Comuníquese con la Unidad de Beneficios Federales de su país de residencia* si vive fuera de los EE. UU. o un territorio de los EE. UU. y desea solicitar los beneficios por jubilación.

Enviando sus documentos por correo

Si nos envía algún documento por correo, debe incluir el número de Seguro Social para que podamos relacionarlo con la solicitud correcta. No escriba nada en los documentos originales. Escriba el número de Seguro Social en una hoja de papel aparte e inclúyalo en el sobre de envío junto con los documentos.

Informacion para Defensores, Abogados y Terceros

Si usted es un defensor, abogado o representante de terceros y está ayudando a alguien a preparar una Solicitud de beneficios del Seguro Social por internet*, hay algunas cosas que debe saber*.

¿Que Necesito Saber sobre el Nombramiento por Adelantado?

Debe tener en cuenta otro tipo de representación conocido como Nombramiento por adelantado.

El Nombramiento por Adelantado permite que los solicitantes y beneficiarios adultos capaces y menores emancipados que están solicitando o reciben beneficios de Seguro Social, Seguridad de Ingreso Suplementario o Beneficios Especiales para Veteranos la opción de elegir hasta tres personas por adelantado para que actúen como su representante de beneficiario, si surge la necesidad.

En el caso de que ya no pueda administrar sus beneficios, usted y su familia tendrán la tranquilidad de saber que alguien de su confianza puede ser nombrado para administrar sus beneficios. Si necesita un representante de beneficiario que lo ayude con la administración de sus beneficios, primero consideraremos a sus nombramientos por adelantado, pero aún debemos evaluarlos por completo y determinar su idoneidad en ese momento.

Puede enviar y actualizar su solicitud de Nombramiento por adelantado cuando solicite beneficios o después de que ya los esté recibiendo. Puede hacerlo a través de su cuenta personal my Social Security*, comunicándose con nosotros por teléfono al 1-800-772-1213 y oprima 7 para español (TTY 1-800-325-0778), o en su oficina local (aunque el localizador de la oficina local solo está disponible en inglés, solo necesita ingresar su código postal para encontrar la oficina local más cercana).

Si tiene alguna pregunta sobre la contabilidad comercial esencial, los impuestos nacionales, los impuestos internacionales, la representación del IRS, las implicaciones fiscales de los Estados Unidos de las transacciones de bienes inmuebles o los estados financieros, llámenos al +305-274-5811.

Fuente: SSA    

SOCIAL SECURITY

Posted by Admin Posted on Nov 30 2022

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Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs provide assistance to people who meet our requirements for disability.

Before you apply, please review the basics to make sure you understand what to expect during the application process. Also, gather the information and documents you’ll need to complete an application.

The Basics About Disability Benefits

The SSDI program pays benefits to you and certain family members if you are “insured.” This means that you worked long enough – and recently enough - and paid Social Security taxes on your earnings. The SSI program pays benefits to adults and children who meet our requirements for a qualifying disability and have limited income and resources.

While these two programs are different, the medical requirements are the same. If you meet the nonmedical requirements, monthly benefits are paid if you have a medical condition expected to last at least one year or result in death.

The Disability Application Process

Whether you apply online, by phone, or in person, the disability benefits application process follows these general steps:

  • You gather the information and documents you need to apply. We recommend you print and review the Adult Disability Checklist. It will help you gather the information and documents you need to complete the application.
  • You complete and submit your application.
  • We review your application to make sure you meet our basic requirements for disability benefits.
  • We confirm you worked enough years to qualify.
  • We evaluate any current work activities.
  • We process your application and forward your case to the Disability Determination Services office in your state.
  • This state agency makes the disability determination decision.

Once You've Applied

  • Processing time for disability applications vary depending on the nature of the disability, necessary medical evidence or examinations, and applicable quality reviews.
  • Once we receive your application, we’ll review it and contact you if we have questions. We might request additional documents from you before we can proceed.

 

 

Look For Our Response

  • When the state agency makes a determination on your case, you’ll receive a letter in the mail with our decision. It generally takes three to six months for an initial decision. If you included information about other family members when you applied, we’ll let you know if they may be able to receive benefits on your record.
  • Check The Status
  • You can check the status of your application online using your personal my Social Security account.

Appeal A Decision

You have the right to appeal any decision we make about whether you’re entitled to benefits. You must request an appeal in writing within 60 days after you receive the notice of our decision. There are four levels of appeal:

  • Reconsideration.
  • Hearing by an administrative law judge.
  • Review by the Appeals Council.
  • Federal Court Review.

Information You Need to Apply

Before applying, be ready to provide information about yourself, your medical condition, and your work. We recommend you print and review the Adult Disability Checklist. It will help you gather the information you need to complete the application.

Information About You

  • Your date and place of birth and Social Security number.
  • The name, Social Security number, and date of birth or age of your current spouse and any former spouse. You should also know the dates and places of marriage and dates of divorce or death (if appropriate).
  • Names and dates of birth of children not yet 18 years of age.
  • Your bank or other financial institution's Routing Transit Number and the account number.

Information About Your Medical Condition

  • Name, address, and phone number of someone we can contact who knows about your medical conditions and can help with your application.
  • Detailed information about your medical illnesses, injuries, or conditions:
    • Names, addresses, phone numbers, patient ID numbers, and dates of treatment for all doctors, hospitals, and clinics.
    • Names of medicines, the amount you are taking, and who prescribed them.
    • Names and dates of medical tests you have had and who ordered them.

Information About Your Work:

  • The amount of money earned last year and this year.
  • The name and address of your employer(s) for this year and last year.
  • The beginning and ending dates of any active U.S. military service you had before 1968.
  • A list of the jobs (up to five) that you had in the 15 years before you became unable to work and the dates you worked at those jobs.
  • Information about any workers' compensation, black lung, and similar benefits you filed, or intend to file for. These benefits can:
    • Be temporary or permanent.
    • Include annuities and lump sum payments that you received in the past.
    • Be paid by your employer or your employer's insurance carrier, private agencies, or federal, state, or other government or public agencies.
    • Be referred to as:
      • Workers' Compensation.
      • Black Lung Benefits.
      • Longshore and Harbor Workers' Compensation.
      • Civil Service (Disability) Retirement.
      • Federal Employees' Retirement.
      • Federal Employees' Compensation.
      • State or local government disability insurance benefits.
      • Disability benefits from the military. These include military retirement pensions based on disability but not Veterans' Administration (VA) benefits.

Documents You Need to Provide

Along with the information listed above, we may ask you to provide documents to show that you are eligible, such as:

We accept photocopies of W-2 forms, self-employment tax returns, and medical documents, but we must see the originals of most other documents, such as your birth certificate. We will return them to you.

Do not delay applying for benefits because you do not have all the documents. We will help you get them.

Apply for Benefits Online

You should apply for disability benefits as soon as you develop a disability. Follow these easy steps to apply online for disability:

  • To start your application, go to our Apply for Benefits page, and read and agree to the Terms of Service. Click “Next.”
  • On that page, review the “Getting Ready” section to make sure you have the information you need to apply.
  • Select “Start A New Application.”
  • We will ask a few questions about who is filling out the application.
  • You will then sign in to your personal my Social Security account, or you will be prompted to create one.
  • Complete the application.

You can use the online application to apply for disability benefits if you:

  • Are age 18 or older.
  • Are not currently receiving benefits on your own Social Security record.
  • Are unable to work because of a medical condition that is expected to last at least 12 months or result in death.
  • Have not been denied for disability in the last 60 days.

Note: If your application was recently denied, our Internet Appeal application is a starting point to request a review of the determination we made.

You may be able to file online for SSI at the same time that you file for SSDI benefits. Once you complete the online process described above, a Social Security representative will contact you if we need additional information.

Other Ways You Can Apply

Apply With Your Local Office

You can do most of your business with Social Security online. If you cannot use these online services, your local Social Security office can help you apply. You can find the phone number for your local office by using our Office Locator and looking under Social Security Office Information. The toll-free “Office” number is your local office.

Apply By Phone

Call 1-800-772-1213 (TTY 1-800-325-0778) from 8:00 a.m. to 7:00 p.m., Monday through Friday, to apply by phone.

If You Do Not Live in the U.S. Or One of Its Territories

Contact the Federal Benefits Unit for your country of residence if you live outside the U.S. or a U.S. territory and wish to apply for retirement benefits.

Mailing Your Documents

If you mail any documents to us, you must include the Social Security number so that we can match them with the correct application. Do not write anything on the original documents. Please write the Social Security number on a separate sheet of paper and include it in the mailing envelope along with the documents.

Information for Advocates, Attorneys and Third Parties

If you are an Advocate, Attorney, or Third Party Representative and you are helping someone prepare an online Social Security benefit application, there are some things you should know.

What do I need to know about Advance Designation

You should be aware of another type of representation called Advance Designation.

Advance Designation allows capable adult and emancipated minors who are applying for or receiving Social Security benefits, Supplemental Security Income, or Special Veterans Benefits the option to choose up to three people in advance who could serve as their representative payee, if the need arises.

In the event that you can no longer manage your benefits, you and your family will have peace of mind knowing that someone you trust may be appointed to manage your benefits for you. If you need a representative payee to assist with the management of your benefits, we will first consider your advance designees. We must still fully evaluate them and determine their suitability at that time.

You can submit and update your advance designation request when you apply for benefits or after you are already receiving benefits. You may do so through your personal my Social Security account, contacting us by telephone at 1-800-772-1213 (TTY 1-800-325-0778), or at your local office.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: SSA     

Ayuda en Español

Posted by Admin Posted on Nov 30 2022

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If you need federal tax information, the IRS provides free Spanish language products and services. Pages on IRS.gov, tax topics, refund information, tax publications and toll-free telephone assistance are all available in the Spanish-language. The Spanish-language page has links to tax information such as forms and publications, warnings about tax scams that victimize taxpayers, information on the Earned Income, child and various other tax credits, and more. Look for a new interactive tool called EITC Assistant to help you learn if you are eligible to receive the Earned Income Tax Credit.

The IRS issues most refunds in less than 21 days, although some require additional time. Visit the IRS website to get the status of your refund. Where’s My Refund? will give you the status of your refund within 24 hours after the IRS has received your e-filed return or 4 weeks after you’ve mailed a paper return. It has the most up to date information about your refund. You should only call the IRS if it has been:

  • 21 days or more since you e-filed
  • 6 weeks or more since you mailed your return, or when
  • "Where’s My Refund" tells you to contact the IRS

For IRS telephone assistance contact numbers, please visit IRS.gov and type in “Telephone Assistance” in the search box

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters      

Credit for the Elderly or Disabled

Posted by Admin Posted on Nov 30 2022

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You may be able to take the Credit for the Elderly or the Disabled if you were age 65 or older at the end of last year, or if you are retired on permanent and total disability, according to the IRS. Like any other tax credit, it's a dollar-for-dollar reduction of your tax bill. The maximum amount of this credit is constantly changing.

You can take the credit for the elderly or the disabled if:

  • You are a qualified individual,
  • Your nontaxable income from Social Security or other nontaxable pension is less than $3,750 to $7,500 (also depending on your filing status).

Generally, you are a qualified individual for this credit if you are a U.S. citizen or resident at the end of the tax year and you are age 65 or older, or you are under 65, retired on permanent and total disability, received taxable disability income, and did not reach mandatory retirement age before the beginning of the tax year.

If you are under age 65, you can qualify for the credit only if you are retired on permanent and total disability. This means that:

  • You were permanently and totally disabled when you retired, and
  • You retired on disability before the end of the tax year.

Even if you do not retire formally, you are considered retired on disability when you have stopped working because of your disability. If you feel you might be eligible for this credit, please contact us for assistance.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters    

Tax resources for individuals filing a federal income tax return for the first time

Posted by Admin Posted on Nov 21 2022

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Every year brings new people into the workforce. The Taxpayer Advocate Service (TAS) wants to reach individuals filing tax returns for the first time, or for the first time after a gap in filing, to share information to help them meet their federal tax obligations.

Who is a first-time filer?

Many individuals may be filing a federal income tax return for the first time, or for the first time in several years. This includes:

  • Students and recent graduates working for the first time
  • Gig workers who did not previously need to file
  • Adults returning to the workforce after long periods of unemployment
  • New military recruits who may be getting their first paychecks
  • Retirees returning to work to supplement their income
  • People taking on filing responsibilities after a spouse’s death
  • People filing only to claim refundable credits

What are some of the challenges for first-time filers?

People who have never filed, and people who have not filed for several years, have similar needs for information and resources. First-time filers may not have experience with taxes in general. The tax law is complex and changes every year. Obtaining tax help from the IRS continues to be difficult. First-time filers may not have a trusted tax professional to rely on, and they may not be able to afford professional help. Free resources are available, and TAS wants to help you find them.

As a first-time filer, you may need help determining:

  • Make sure each name and SSN or ITIN are listed exactly as printed on the individual’s Social Security card issued by the Social Security Administration or the ITIN notice issued by the IRS.
  • Choose the correct filing status. The Interactive Tax Assistant on IRS.gov can help you choose the correct status, especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.
  • Double check your math. Calculation errors are some of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Check your calculations, or better yet, use tax return preparation software that does it automatically.
  • Double check your bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for taxpayers to get their money. It’s important to make sure the correct routing transit number and account number are used.
  • Sign your return. An unsigned tax return isn’t valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have executed a valid power of attorney.

Can first-time filers use electronic filing?

Electronic filing, or e-filing, refers to the process of filing one’s tax return electronically, using approved online software. Most first-time filers can use e-file. E-filing is becoming increasingly popular because of its benefits:

  • E-filing has brought about increased flexibility in the filing of tax returns and is a lot more convenient because you can file your tax return from the comfort of your home, at any time.
  • You sign your return digitally when e-filing, preventing the possibility of sending an unsigned return.
  • E-filing saves a huge amount of time and money. When tax returns are e-filed, the data is directly transmitted online from the e-filer’s servers to the tax agency’s servers. You won’t have to print and mail your tax return, or wait for a paper return to be received, opened and input by an IRS employee. Because you’re inputting the data yourself, you can avoid potential input, or transcription, errors.
  • Because transcription errors can be avoided by accurately e-filing, the overall tax return filing process is more accurate.
  • When you e-file, you will receive notifications throughout the filing process. You will receive confirmation that your return was received. Within 24 hours, you will be notified whether your return can be processed or if it must be returned, or rejected, to correct one or more errors. In most cases, you can correct the error and resubmit a rejected return. You can also check the status of your return online after it’s been accepted for processing. Paper filing is much more ambiguous. Although you can file a paper return by certified or registered mail to confirm when the IRS receives it, status updates after that point are limited.

Are there tax credits available to first-time filers?

If you are a first-time filer, you may not be aware of credits that can reduce your tax or increase your refund.

  • Earned Income Tax Credit – This credit is available to taxpayers with low to moderate earned income, with or without a qualifying child.
  • Education Credit – This credit is available to taxpayers who incurred qualified education expenses. Some education credits are refundable.
  • Premium Tax Credit – This credit helps eligible individuals and families afford premiums for health insurance purchased through the Health Insurance Marketplace.
  • Child Tax Credit – This credit is available to individuals with qualifying children. Portions of this credit are available even if the individual did not have income.
  • Recovery Rebate Credit – Even if an individual did not receive stimulus payments (economic impact payments), the individual can potentially claim recovery rebate credits for 2020 and 2021. Individuals do not need income to qualify for this credit.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS     

Under the Taxpayer Bill of Rights, all taxpayers have the right to finality of IRS matters

Posted by Admin Posted on Nov 21 2022

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By law, taxpayers interacting with the IRS have the right to finality. This right comes into play for taxpayers who are going through an audit. These taxpayers have the right to know when the IRS has finished the audit. This is one of ten basic rights — known collectively as the Taxpayer Bill of Rights.

Here's what taxpayers in the process of an audit, should know about their right to finality:

  • Taxpayers have the right to know:
    • The maximum amount of time they have to challenge the IRS's position.
    • The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. 
    • When the IRS has finished an audit.
       
  • The IRS generally has three years from the date taxpayers file their returns to assess any additional tax for that tax year.
     
  • There are some limited exceptions to the three-year rule, including when taxpayers fail to file returns for specific years or file false or fraudulent returns. In these cases, the IRS has an unlimited amount of time to assess tax for that tax year.
     
  • The IRS generally has 10 years from the assessment date to collect unpaid taxes. This 10-year period cannot be extended, except for taxpayers who enter into installment agreements, or the IRS obtains court judgments.
     
  • There are circumstances when the 10-year collection period may be suspended. This can happen when the IRS cannot collect money due to the taxpayer's bankruptcy or there's an ongoing collection due process proceeding involving the taxpayer.
     
  • A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.
     
  • Generally, a taxpayer will only be subject to one audit per tax year. However, the IRS may reopen an audit for a previous tax year, if the IRS finds it necessary. This could happen, for example, if a taxpayer files a fraudulent return.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS

Not too much, not too little - taxpayers should check if their tax withholding is just right

Posted by Admin Posted on Nov 21 2022

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There are good surprises and there are bad surprises. Generally, a tax-related surprise is probably unwanted. To avoid tax surprises, people should review their tax withholding. There's still time left in 2022 to make changes and see the benefit on their tax return next year. An adjustment made now will help people avoid the surprise of a balance due or a larger-than-expected refund. People who owe taxes when they file may also face a penalty for underpayment, so they should take steps to avoid that.

It's an especially good idea to check withholding when a taxpayer has a big life change. Events like marriage, divorce, a new child, a new home purchase, or changes in tax laws can all be reasons to adjust withholding.

Credit amounts may change each year. Taxpayers can visit IRS.gov and use the Interactive Tax Assistant to identify whether they qualify for any tax credits that may call for a withholding adjustment.

Taxes are pay as you go

Taxes are generally paid throughout the year, whether from salary withholding, quarterly estimated tax payments or a combination of both. About 70% of taxpayers, however, withhold too much every year. This typically results in a refund.

A few other facts about refunds:

  • Proper withholding adjustments help people boost their take home pay rather than overwithholding taxes throughout the year and getting it back as a tax refund.
  • While the IRS issues most refunds in 21 days or less from an error-free electronic tax return, it may take longer for different reasons.
  • It's generally not a good idea to rely on a refund for big purchases.
  • Direct Deposit is the easiest and most convenient way to get a refund. The IRS issues more than 90% of all refunds this way.
  • Paper return processing delays stemming from the pandemic are six months or more. The IRS COVID-19 operations page offers complete details.

Tax Withholding Estimator

The Tax Withholding Estimator can help people determine if they have too much income tax withheld and how to make an adjustment. In other cases, it can help taxpayers see if they should withhold more or make an estimated tax payment to avoid a tax bill when they file their tax return next year.

Other items may affect 2022 taxes

Some unforeseen life events can make withholding adjustments necessary. They include:

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS

When to Use a Durable Power of Attorney to Authorize Representation Before the IRS

Posted by Admin Posted on Nov 21 2022

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As the U.S. population ages, taxpayers and their representatives are increasingly confronted with the question of how to appoint a power of attorney (POA) to act on behalf of taxpayers in the event of incompetence or incapacity. When taxpayers are competent, they use a Form 2848, Power of Attorney and Declaration of Representative, for this purpose. However, an incompetent or incapacitated taxpayer is in no position to execute a Form 2848. Likewise, even a preexisting Form 2848 is usually voided if taxpayers become incompetent or incapacitated. In other contexts, individuals typically rely on various types of POA instruments to enable representation, but the IRS often will not recognize these for tax purposes. Thus, in the event of unforeseen circumstances, taxpayers can find themselves without a voice in their own tax matters beyond that of a court-appointed fiduciary.

One way of avoiding this potential pitfall is through creative and well-informed use of a durable power of attorney (DPOA). DPOAs are a common tool in the realm of estate planning and financial and medical decision-making. The key feature of a DPOA is that it remains operative or becomes effective when the principal (the individual who granted the authority) becomes incompetent or unable to act on his or her own behalf.

Tax practitioners rarely rely on DPOAs because, in their usual format, they do not authorize representation before the IRS. For this reason, individuals who have been acting on behalf of someone via a DPOA (often known as “attorneys-in-fact”) may have an unwelcome surprise when it comes to IRS representation.

Based on regulatory requirements, the Form 2848 includes information beyond a typical DPOA, such as:

  • The taxpayer’s Social Security number;
  • Name and mailing address of the appointed representative(s); and
  • A description of the matter or matters for which the representation is authorized that must include, as applicable—
    • Type of tax involved;
    • Federal tax form number involved; and
    • Specific year(s) involved.
  • Note also that any appointed representative would need to meet the practice requirements specified by Circular 230 § 10.2 and 10.7(c).

Without these and certain other specifics, the attorney-in-fact cannot represent a taxpayer before the IRS. However, this does not mean that a DPOA can never furnish this authorization; it can, if it enumerates the appropriate details. In other words, the information doesn’t have to be presented on a Form 2848, but the information from the Form 2848 must be present.

When seeking to represent an incapacitated taxpayer before the IRS, attorneys-in-fact should submit a copy of the detailed DPOA as well as Part II of the Form 2848 (Declaration of Representative). Of course, taxpayers cannot foresee the twists and turns of future audits, with the result that many DPOAs do not include the requisite information.

To accommodate this circumstance, taxpayers can adopt an alternative method, which is to utilize what, for tax purposes, can be thought of as a broad DPOA. Under this approach, the broad DPOA simply states that the attorney-in-fact is authorized to represent the principal in federal tax matters. The IRS will accept the broad DPOA as giving the attorney-in-fact the authority to execute a Form 2848 on behalf of the taxpayer. In this scenario, an attorney-in-fact wishing to initiate representation before the IRS should submit the broad DPOA and also complete Form 2848 with all relevant information.

Conclusion

Not all IRS personnel are aware of these rules and policies surrounding the use of DPOAs to facilitate tax representation. As a result, if any questions or controversies arise in this context, it may be helpful to provide them with this recent guidance from the IRS Office of Professional Responsibility.

As with more common forms of estate planning, such as wills and advance medical directives, a few minutes of care now can save a great deal of complication and difficulty later. Whether opting for a detailed DPOA or broad DPOA, either of these vehicles can ensure tax representation in the event of unforeseen circumstances, thus eliminating unnecessary stress and burden during a difficult time.

Additional Resources

Eligible taxpayers can reach out to Low Income Taxpayer Clinics (LITCs) for assistance. LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs are a great resource and can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court, including the Tax Court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. LITC services are offered for free or a small fee.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: TAS         

Under the Taxpayer Bill of Rights, all taxpayers have the right to finality of IRS matters

Posted by Admin Posted on Nov 14 2022

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By law, taxpayers interacting with the IRS have the right to finality. This right comes into play for taxpayers who are going through an audit. These taxpayers have the right to know when the IRS has finished the audit. This is one of ten basic rights — known collectively as the Taxpayer Bill of Rights.

 

Here's what taxpayers in the process of an audit, should know about their right to finality:

 

  • Taxpayers have the right to know:
    • The maximum amount of time they have to challenge the IRS's position.
    • The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. 
    • When the IRS has finished an audit.
       
  • The IRS generally has three years from the date taxpayers file their returns to assess any additional tax for that tax year.
     
  • There are some limited exceptions to the three-year rule, including when taxpayers fail to file returns for specific years or file false or fraudulent returns. In these cases, the IRS has an unlimited amount of time to assess tax for that tax year.
     
  • The IRS generally has 10 years from the assessment date to collect unpaid taxes. This 10-year period cannot be extended, except for taxpayers who enter into installment agreements, or the IRS obtains court judgments.
     
  • There are circumstances when the 10-year collection period may be suspended. This can happen when the IRS cannot collect money due to the taxpayer's bankruptcy or there's an ongoing collection due process proceeding involving the taxpayer.
     
  • A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.
     
  • Generally, a taxpayer will only be subject to one audit per tax year. However, the IRS may reopen an audit for a previous tax year, if the IRS finds it necessary. This could happen, for example, if a taxpayer files a fraudulent return.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS

Storing tax records: How long is long enough?

Posted by Admin Posted on Nov 14 2022

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April 15 has come and gone and another year of tax forms and shoeboxes full of receipts is behind us. But what should be done with those documents after your check or refund request is in the mail?

Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the "three-year law" and leads many people to believe they're safe provided they retain their documents for this period of time.

However, if the IRS believes you have significantly underreported your income (by 25 percent or more), it may go back six years in an audit. If there is any indication of fraud, or you do not file a return, no period of limitation exists. To be safe, use the following guidelines.

Business Records To Keep...

Personal Records To Keep...

1 Year

1 Year

3 Years

3 Years

6 Years

6 Years

Forever

Forever

Special Circumstances

Business Documents To Keep For One Year

  • Correspondence with Customers and Vendors
  • Duplicate Deposit Slips
  • Purchase Orders (other than Purchasing Department copy)
  • Receiving Sheets
  • Requisitions
  • Stenographer's Notebooks
  • Stockroom Withdrawal Forms

Business Documents To Keep For Three Years

  • Employee Personnel Records (after termination)
  • Employment Applications
  • Expired Insurance Policies
  • General Correspondence
  • Internal Audit Reports
  • Internal Reports
  • Petty Cash Vouchers
  • Physical Inventory Tags
  • Savings Bond Registration Records of Employees
  • Time Cards For Hourly Employees

Business Documents To Keep For Six Years

  • Accident Reports, Claims
  • Accounts Payable Ledgers and Schedules
  • Accounts Receivable Ledgers and Schedules
  • Bank Statements and Reconciliations
  • Cancelled Checks
  • Cancelled Stock and Bond Certificates
  • Employment Tax Records
  • Expense Analysis and Expense Distribution Schedules
  • Expired Contracts, Leases
  • Expired Option Records
  • Inventories of Products, Materials, Supplies
  • Invoices to Customers
  • Notes Receivable Ledgers, Schedules
  • Payroll Records and Summaries, including payment to pensioners
  • Plant Cost Ledgers
  • Purchasing Department Copies of Purchase Orders
  • Records related to net operating losses (NOL's)
  • Sales Records
  • Subsidiary Ledgers
  • Time Books
  • Travel and Entertainment Records
  • Vouchers for Payments to Vendors, Employees, etc.
  • Voucher Register, Schedules

Business Records To Keep Forever

While federal guidelines do not require you to keep tax records "forever," in many cases there will be other reasons you'll want to retain these documents indefinitely.

  • Audit Reports from CPAs/Accountants
  • Cancelled Checks for Important Payments (especially tax payments)
  • Cash Books, Charts of Accounts
  • Contracts, Leases Currently in Effect
  • Corporate Documents (incorporation, charter, by-laws, etc.)
  • Documents substantiating fixed asset additions
  • Deeds
  • Depreciation Schedules
  • Financial Statements (Year End)
  • General and Private Ledgers, Year End Trial Balances
  • Insurance Records, Current Accident Reports, Claims, Policies
  • Investment Trade Confirmations
  • IRS Revenue Agent Reports
  • Journals
  • Legal Records, Correspondence and Other Important Matters
  • Minutes Books of Directors and Stockholders
  • Mortgages, Bills of Sale
  • Property Appraisals by Outside Appraisers
  • Property Records
  • Retirement and Pension Records
  • Tax Returns and Worksheets
  • Trademark and Patent Registrations

Personal Documents To Keep For One Year

While it's important to keep year-end mutual fund and IRA contribution statements forever, you don't have to save monthly and quarterly statements once the year-end statement has arrived.

Personal Documents To Keep For Three Years

  • Credit Card Statements
  • Medical Bills (in case of insurance disputes)
  • Utility Records
  • Expired Insurance Policies

Personal Documents To Keep For Six Years

  • Supporting Documents For Tax Returns
  • Accident Reports and Claims
  • Medical Bills (if tax-related)
  • Sales Receipts
  • Wage Garnishments
  • Other Tax-Related Bills

Personal Records To Keep Forever

  • CPA Audit Reports
  • Legal Records
  • Important Correspondence
  • Income Tax Returns
  • Income Tax Payment Checks
  • Property Records / Improvement Receipts (or six years after property sold)
  • Investment Trade Confirmations
  • Retirement and Pension Records (Forms 5448, 1099-R and 8606 until all distributions are made from your IRA or other qualified plan)

Special Circumstances

  • Car Records (keep until the car is sold)
  • Credit Card Receipts (keep until verified on your statement)
  • Insurance Policies (keep for the life of the policy)
  • Mortgages / Deeds / Leases (keep 6 years beyond the agreement)
  • Pay Stubs (keep until reconciled with your W-2)
  • Sales Receipts (keep for life of the warranty)
  • Stock and Bond Records (keep for 6 years beyond selling)
  • Warranties and Instructions (keep for the life of the product)
  • Other Bills (keep until payment is verified on the next bill)
  • Depreciation Schedules and Other Capital Asset Records (keep for 3 years after the tax life of the asset)

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: Thomson Reuters        

Did IRS adjust your charitable contribution deduction?

Posted by Admin Posted on Nov 14 2022

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The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted March 27, 2020, permits taxpayers to deduct up to 100 percent of their adjusted gross income (AGI), for qualified contributions made during calendar year 2020. The Consolidated Appropriations Act of 2021 enacted on December 27, 2020, extends these benefits for 2021.

General Information

Taxpayers who file Form 1040 Schedule A, Itemize Deductions, may claim an itemize deduction for cash contributions made to qualifying charitable organizations, subject to certain limits. These limits typically range from 20 to 60 percent of the taxpayer’s AGI and vary by the type of contribution and type of charitable organization.

How do you elect to deduct up to 100 percent of a charitable contribution as an itemized deduction on Form 1040 Schedule A?

If you are filing a paper tax return, you must make the election on Form 1040 or Form 1040SR Schedule A next to line 11. You should include your election amount on the dotted line next to the line 11 or ensure your software makes the election per the instructions on Worksheet Two of Publication 526, Charitable Contributions.

Unless you make the election as described above, the usual percentage limit applies. Keep in mind your other allowed charitable contribution deductions reduce the maximum amount allowed under this election. See Worksheet Two in Publication 526 for more information.

Did you receive an IRS notice?

If you received an IRS notice, most likely a Notice CP12, adjusting your charitable contributions for tax years 2020 or 2021.

Review a copy of your 2020 or 2021 tax return, paper or electronic copy, to see if you made the election on the dotted line next to Line 11 of the Schedule A. You should take the following action:

  • If you did, follow the instructions on the Notice CP12 telling the IRS you made a proper election and provide any supporting documentation as needed.
  • If you didn’t, contact the IRS at the toll-free number listed on the top right corner of your notice or respond by mail to the address on your notice. If you write to the IRS, include a copy of the notice along with your correspondence or documentation. See Did you get a notice from the IRS?

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: TAS       

IRS Collection Procedures for Past Due Taxes

Posted by Admin Posted on Nov 14 2022

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The U.S. government expects you to pay income taxes to the IRS each year. Most Americans have taxes withheld from their wages, which helps to avoid owing the IRS a large sum at the end of the year. However, self-employed individuals and independent contractors who do not have any (or enough) tax withheld may need to make estimated tax payments instead.

If your taxes are not fully paid when you file your tax return, the IRS will send you a bill for the amount owed. This bill is the beginning of the collection process.

The first IRS notice that you receive will explain the amount you owe, including any taxes, penalties, and interest charges. This notice will also demand full payment of your balance due.

IRS Penalties for Past Due Taxes

There are stiff penalties for not paying your taxes. With monthly late fees and interest charges, the amount you owe can grow exponentially in size, making it even more difficult to pay. The longer your taxes go unpaid, the bigger the consequences – leading all the way to asset seizure and even incarceration.

Here are some of the penalties and fees that apply to past due taxes:

• Interest is compounded daily and accumulates on the owed amount (the interest rate is equal to the Federal short-term rate, plus 3%)
• The late payment penalty is .05% of the owed amount and increases each month the taxes remain unpaid (up to a maximum of 25%)
• The combined penalty for both filing and paying late is 5% of the tax owed (if your return is over 60 days late, the penalty may be up to 100% of the tax owed)

However, if you can provide reasonable cause for not filing or paying on time, you may be able to avoid incurring the late filing/payment penalty.

IRS Collection Enforcement Actions

It is in your best interest to contact the IRS and make arrangements to pay the tax due. If you cannot pay the amount in full, you can request a payment plan (see below). But if you ignore the issue and do nothing, the IRS will take actions to collect your taxes – such as filing a Notice of Federal Tax Lien, serving a Notice of Levy, offsetting your tax refund, or garnishing your wages.

Federal tax lien is a claim against your property that is used to protect the government’s interest in your tax debt. If you fail to fully pay your tax balance within 10 days after the IRS sends you the first notice (of taxes owed and demand for payment), the IRS will file a ‘Notice of Federal Tax Lien’ in the public records. This notifies creditors that the IRS has a claim against all your property, including any property that you acquire after the lien arises.

Federal tax levy is an outright seizure of property or assets. The IRS may levy your wages, bank accounts, or retirement income and apply the funds towards your tax liability. The IRS may also seize your house, car, or boat and sell your property to satisfy your tax debt. If you are owed any tax refunds in the future (Federal or State), the IRS may take these as well.

Furthermore, in some situations, the IRS may decide to launch a criminal investigation or file charges for tax evasion.

Tax Payment Arrangements (If You Cannot Pay in Full)

If you cannot fully pay your tax due, you should still respond to the IRS notice in a timely manner. Pay as much as you can now and explore your other options. If you’re unable to alleviate the debt with a loan or credit card(s), you will need to consider the IRS’ payment arrangements – including an installment agreement, an offer in compromise, or a temporary delay of collection.

An installment agreement allows you to resolve your tax debt by making monthly payments over a period of time, generally up to 72 months. Individuals owing $50,000 or less (and businesses owing $25,000 or less) can apply for an Online Payment Agreement. Otherwise, you must make the request by filing Form 9465 (Installment Agreement Request) and a Collection Information Statement (Form 433-A, Form 433-B, or Form 433-F).

An offer in compromise (OIC) is a settlement offer that you make to the IRS for less than the actual amount owed. Basically, you offer to pay a portion of your taxes now and the IRS agrees to forgive the remaining debt. There are strict eligibility requirements and you must be able to demonstrate that paying the taxes in full will cause you “extraordinary hardship.” If you are able to pay your taxes through an installment agreement, you will not qualify for an offer in compromise.

In some cases, you can request a temporary delay of collection from the IRS. If the IRS determines that you cannot pay any of your tax owed, they may label your account as ‘currently not collectible’ and delay tax collection until your financial situation improves. However, this does not reduce your tax debt in any sense.

NOTE: If you a member of the U.S. Armed Forces, you may be allowed to defer your payment. For more information, see IRS Publication 3 (Armed Forces’ Tax Guide).

Your Rights as a Taxpayer

It is important to understand that you have rights and protections when it comes to the tax collection process. The ‘Taxpayer Bill of Rights’ contains 10 major provisions – including the right to be informed, the right to pay no more than the correct amount of tax, the right to challenge the IRS’ position and be heard, the right to appeal an IRS decision in an independent forum, and the right to retain representation.

If you want to discuss your payment options, you can contact the IRS at 1-800-829-1040 or call the phone number on your notice.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: IRS    

Return to Claim Certain Credits Before Time Runs Out to Use IRS Free File Options!

Posted by Admin Posted on Nov 10 2022

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Hurry – time is running out to claim your credits on your 2021 federal income tax return using the IRS’s Free File! The Taxpayer Advocate Service (TAS) wants to educate individuals about claiming the Recovery Rebate Credit, the Child Tax Credit, or the Earned Income Tax Credit, and the upcoming deadline for using IRS Free File. You may be eligible to receive the full amount of these credits, even if you have little or no income, or are not usually required to file a federal income tax return. IRS Free File allows you to electronically prepare and file your federal income tax return for free using software at an IRS partner site or fillable forms.

What are the criteria for these credits?

Recovery Rebate Credit

  • For stimulus payment amounts you did not receive in 2021
  • S. citizen or resident alien
  • Must have Social Security number (SSN) valid for employment
  • Worth up to:
  • $1,400 per eligible adult plus
  • $1,400 per qualifying dependent

Child Tax Credit

  • Up to $3,600 for each qualifying child ages 5 and under at the end of 2021
  • Up to $3,000 for each qualifying child ages 6 through 17 at the end of 2021
  • Each qualifying child must have an SSN valid for employment
  • You may have received up to half of this amount through monthly payments in 2021. You must file a tax return to receive the rest. See Letter 6419 for more information.

Earned Income Tax Credit

  • Helps low and moderate-income workers and families
  • Based on your wages and income from self-employment
  • S. citizen or resident alien
  • Must have an SSN valid for employment
  • Worth up to:
  • $1,502 with no qualifying children
  • $3,618 with 1 qualifying child
  • $5,980 with 2 qualifying children
  • $6,728 with 3+ qualifying children

Earned Income Tax Credit

The fastest and most secure way to receive your refund is by electronically filing your return and having any refund direct deposited. The deadline to use the IRS’s Free File will close at midnight, Eastern Time, on November 17, 2022.

Here are some other tips to help you prepare to file your 2021 federal income tax return:

What you need to gather to file

  • Bank account and routing number for direct deposit of a refund.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at +305-274-5811.

Source: TAS       

Internal Controls Reduce Check Kiting Risk

Posted by Admin Posted on Nov 02 2022

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A check kiting scheme relies on “float” time, which is the period between when a check is deposited and when the bank collects the funds on the check. In recent years, the float time has narrowed, but there’s still opportunity to capitalize on that delay. So it’s important for businesses to put internal controls in place to protect against this fraud risk.

No small matter

Check kiting schemes typically involve two or more banks, though some schemes can involve multiple accounts at one bank if there’s a lag in how the institution processes checks. The perpetrator’s goal is to falsely inflate the balance of a checking account so that written checks that otherwise would bounce, clear.

Check kiting is a federal crime that can lead to up to 30 years in federal prison, plus hefty fines. Even if a bank doesn’t press charges, it may close the account and report the incident to ChexSystems (similar to a credit bureau), making it difficult to open a new business account.

Strategies for grounding the kite

Here are five strategies your organization can implement to keep people from using your company’s accounts for check kiting:

1. Educate employees about bank fraud. Describe the types of transactions that qualify as bank fraud and their red flags. That makes workers aware of suspicious activities and demonstrates management’s commitment to preventing fraud.

2. Rotate key accounting roles. Segregate accounting duties. Rotate tasks among staffers if possible to help uncover ongoing schemes and limit opportunities to steal.

3. Reconcile bank accounts daily. Make sure someone trustworthy, who isn’t involved in issuing payments, reconciles every company bank account.

4. Maintain control of paper checks. Store blank checks in a locked cabinet or safe and periodically inventory the blank check stock. Also limit who’s allowed to order new ones.

5. Go digital. The most effective way to prevent most check fraud is to stop using paper checks altogether. Consider replacing them with ACH payments or another form of electronic payments.

Tighten up

Check kiting is relatively easy to perpetrate, particularly if your company isn’t vigilant about its check stock and bank account activity. For help tightening your internal controls, contact us.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: Thomson Reuters         

Get Current on Your Federal Taxes

Posted by Admin Posted on Nov 02 2022

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Part of your Mid-Year Tax Checkup should include seeing whether you have any overdue tax returns and making sure you file them as soon as possible.  If you’re not sure whether you are required to file, you can use the IRS’s Interactive Tax Assistant Do I Need to File a Tax Return? to help figure it out.

Even if you don’t have to file because you didn’t earn enough money, you may want to file to avoid missing out on a refund. This could apply if you had federal income tax withheld from your pay, made estimated tax payments for the year, had any of your overpayment from last year applied to this year’s estimated tax, or qualify to claim tax credits such as the Earned Income Tax Credit. The only way to get your refund is to file a tax return.

There is still time to claim your Child Tax Credit.  In addition, if you didn’t qualify for a third economic impact payment or received less than the full amount to which you were entitled, you may be eligible to claim the Recovery Rebate Credit. You must file a 2021 tax return to claim either credit.

Filing past due tax returns is important for reasons other than just the potential of losing out on a credit or refund, including:

  • Protecting your Social Security benefits;
  • Avoiding issues obtaining loans; and
  • Preventing the IRS from filing a substitute return for you. This return might not give you credit for deductions and exemptions you may be entitled to receive (which may result in you owing).

Be aware of the consequences for not filing a tax return when you are required to do so.

Find the records you need

Create and/or sign into your individual IRS online account to view, access and print:

  • Key data from your most recently filed tax return, including your adjusted gross income, as well as transcripts;
  • Information about your Economic Impact Payments and Advance Child Tax Credit payments, including the amount you received; and
  • Digital copies of certain notices from the IRS.

Additional ways to find records specifically related to: 

Wage and Income information – Complete Form 4506-T, Request for Transcript of Tax Return, and check the box on line 8. You can also contact your employer for a copy of your Form W-2, Wage and Tax Statement.

Economic Impact Payments/Recovery Rebate Credit – Review Letter 6475, Your 2021 Economic Impact Payment(s), that the IRS issued to you earlier this year. Spouses filing a joint return for 2021 need to know the payment amounts for both spouses to claim this credit.

Advance Child Tax Credit payments – Review Letter 6419, 2021 Total Advance Child Tax Credit (AdvCTC) Payments, that the IRS issued to you earlier this year.

Earned Income Tax Credit – You can request an account transcript online using Get Transcript. You can use the EITC Assistant to see if you’re eligible, calculate how much money you may qualify for, and find answers to questions about this credit.

Help Preparing your Past-Due Return

Tax form(s) – Get IRS online tax forms and instructions to file your past-due return, or order them by calling 800-TAX-FORM (800-829-3676).

Preparation assistance – If you need return preparation assistance, you may be eligible for assistance from a Low Income Taxpayer Clinic (LITC), or get free tax help from volunteers.

Note: LITCs can prepare returns if the due date for the return has already passed.

How to File 

The IRS encourages you to file electronically through a tax professional, IRS Free File, free tax return preparation sites, or commercial tax return preparation software.

You can also send your return via Mail or private delivery service, but be aware that it may take 6 months or more to process. For service delay details, see Status of Operations. If you must file a paper tax return, consider sending it by certified mail, with a return receipt. This will be your proof of the date you mailed your tax return and when the IRS received it.

Did you file an extension for 2021?

If you requested an extension for 2021, the filing deadline is coming soon. This year, an extension gives you until October 17 to file your return. But you don’t have to wait; file electronically and if you are due a refund, choose direct deposit once you have all your information together.

Note: IRS employees continue working hard to process tax returns and address inventory issues but are urging people to file electronically to avoid processing delays.

Do you need to correct a previously filed return?

If you file your individual tax return and then realize you made a mistake, you can amend your tax return. Usually this involves filing Form 1040-X, Amended U.S. Individual Income Tax Return, to report changes to your income, deductions or credits. You may also be able to make certain changes to your filing status.

Do you owe taxes you can’t pay?

If you owe taxes and your tax return is overdue, you should file your tax return now to avoid further penalties for not filing by the deadline. Again, you should file electronically if at all possible due to the IRS backlog in processing paper returns.  See Status of Operations.

If you can’t pay the full amount, pay what you can now to reduce the amount of penalties and interest that will continue to accrue, and review the IRS payment options, including an offer in compromise. Each option has different requirements and fees, so please review each one carefully. Depending on your economic circumstances, you may qualify to be placed in Currently Not Collectible status.

For more updates from the Taxpayer Advocate Service, visit the news and information center to read the latest tax tips, blogs, alerts and more.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: TAS      

What the Inflation Reduction Act Means for YouThe Inflation

Posted by Admin Posted on Nov 02 2022

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Reduction Act, which includes expanded or extended tax credits and additional funding for the IRS, was signed into law on August 16, 2022.

How could the Inflation Reduction Act impact you when filing your next tax return?

Below is a simplified summary of how the Inflation Reduction Act may affect you.

Health Care

The Inflation Reduction Act includes:

  • Extension of Affordable Care Act (ACA) funding through 2025. This funding, which was due to expire at the end of 2022, will allow consumers to continue to buy insurance with lower premiums through the Health Insurance Marketplace (also referred to as the Marketplace or the Exchange).
  • Extension of the American Rescue Plan Act (ARPA) temporary exception that allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit.

Energy Efficient Home Improvement Credit

The Nonbusiness Energy Property Credit was extended through 2032 and renamed the Energy Efficient Home Improvement Credit.

Starting in 2023, the credit will be equal to 30 percent of the costs of all eligible home improvements made during the year. Additionally:

  • The $500 lifetime limit on the total credit amount will be replaced with a $1,200 annual limit.
  • The annual limits for specific types of qualifying improvements will be:
    • $150 for home energy audits;
    • $250 for any exterior door ($500 total for all exterior doors) that meet applicable Energy Star requirements;
    • $600 for exterior windows and skylights that meet Energy Star most efficient certification requirements;
    • $600 for other qualified energy property, including central air conditioners; electric panels and certain related equipment; natural gas, propane, or oil water heaters; oil furnaces; water boilers;
    • $2,000 for heat pump and heat pump water heaters; biomass stoves and boilers. This category of improvement is not limited by the $1,200 annual limit on total credits or the $600 limit on qualified energy property; and
    • Roofing will no longer qualify.

For eligible home improvements using products placed in service after 2024, no credit will be allowed unless the manufacturer of any purchased item creates a product identification number for the product and the taxpayer claiming the credit includes the number on his or her return for that tax year.

Note: For 2022, the prior credit rules apply.

Residential Clean Energy Credit

The Residential Energy Efficient Property Credit, now called the Residential Clean Energy Credit, was previously scheduled to expire at the end of 2023 but has been extended through 2034. The Inflation Reduction Act also increased the credit amount, with a phaseout of the applicable percentage.

Amount of Credit:

  • 30 percent for 2023-2032;
  • 26 percent for 2033; and
  • 22 percent for 2034.

The credit no longer applies to biomass furnaces and water heaters, now covered under the Energy Efficient Home Improvement Credit. Starting in 2023, however, the new credit will apply to battery storage technology with a capacity of at least three kilowatt hours.

Clean Vehicle Credits

The Inflation Reduction Act extends the Clean Vehicle Credit until the end of 2032 and creates new credits for previously-owned clean vehicles and qualified commercial clean vehicles.

Tax credits include up to:

  • $7,500 for the purchase of new qualified commercial clean vehicles;
  • $40,000 for vehicles over 14,000 pounds; and
  • the lesser of 30 percent of the price of used electric vehicles or $4,000.

Limitations apply based on the manufacturer’s suggested retail price of the vehicle. There are also limitations for the new vehicle credit based on adjusted gross income (AGI) thresholds – for single or married filing separately taxpayers, the limit is $150,000; for taxpayers filing as head of household, the limit is $225,000; and for married filing jointly, or surviving spouse taxpayers, the limit is $300,000. Reduced AGI limitations apply to the used vehicle credit.

Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price.

Taxes and IRS Funding

The Inflation Reduction Act also includes:

  • 15 percent minimum tax on corporations with over $1 billion in revenue;
  • 1 percent excise tax on corporate share buybacks; and
  • About $79 billion of additional funding over ten years for the IRS.

The IRS is preparing a plan showing how it expects to use the additional funding. In a recent letter to all Members of the Senate, IRS Commissioner Charles Rettig stated, “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans…Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers.”

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: TAS       

Feel like you are not responsible for a debt owed by your spouse or ex-spouse?

Posted by Admin Posted on Nov 02 2022

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If you file jointly and your spouse has a debt (this can be a federal, state income tax, child support, or spousal support debt) the IRS can apply your refund to one of these debts, which is known as an “offset.” The agency can also take a collection action against you for the tax debt you and your spouse owe, such as filing of the Notice of Federal Tax Lien or issuing a levy. However, if you’re not legally responsible for the past due amount you may still be entitled to receive your share of the refund or request relief from joint and several liability, depending on the facts of the situation. “Joint and several liability” means that each taxpayer is legally responsible for the entire debt, even if you’ve divorced after you filed a joint tax return.

If you feel you are not responsible for the debt, there are two ways to request relief:

Injured Spouse Claim: You can request that you be treated as an injured spouse, if you filed a joint tax return and all or part of a refund is taken to pay a debt owed only by your spouse and not you. See the Injured Spouse page for step-by-step instructions for filing this claim and what information is needed. We also have a short video that explains what injured spouse means and when to file a claim.

Innocent Spouse Relief: For instances involving individual earned income or self-employment taxes only, by requesting innocent spouse relief, you can be considered for relief of responsibility from paying tax, interest, and penalties, if your spouse (or former spouse) improperly reported items or omitted items on your tax return.

Note: Household Employment taxes, Individual Shared Responsibility payments, business taxes and trust fund recovery penalty for employment taxes are not eligible for innocent spouse relief.

The three types of innocent spouse relief available are:

Innocent spouse relief: By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse did something wrong on your tax return.

Separation of liability relief: Under this type of relief, you allocate (divide) the understatement of tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse).

Equitable relief: If you do not qualify for innocent spouse relief or separation of liability, you may still be relived of responsibility for tax, interest, and penalties through equitable relief.

Each type of relief has different requirements. Three Types of Relief at a Glance compares the rules for these three types of relief. You may also want to refer to Innocent Spouse Questions & Answers for more information about these types of relief.

If you file an Innocent Spouse claim, but the IRS denies your claim and you still disagree, see Appeal an Innocent Spouse Determination for next steps to take.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: TAS       

Beware of “Wash Sales” When Selling Securities

Posted by Admin Posted on Nov 02 2022

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If you’re planning to sell stock or other securities at a loss to offset gains you realized earlier in the year, beware of the “wash sale” rule. It comes into play when an investor wants to realize a loss on a security for tax purposes while continuing to invest in the security. Under the wash rule, selling securities for a loss and buying back substantially identical securities within 30 days before or after the sale date means the loss can’t be claimed for tax purposes.

The rule

The wash sale rule is designed to prevent taxpayers from benefiting from a loss without actually parting with ownership. Note that the rule applies not only to buying back stock within 30 days after selling it but also to a 30-day period before the sale date to prevent “buying the stock back” before it’s even sold.

Although the loss can’t be claimed on a wash sale, the disallowed amount is added to the cost of the new stock to increase its tax basis. So, the disallowed amount can be claimed when the new stock is finally sold at some point in the future (other than in a wash sale).

An example

Assume you buy 500 shares of XYZ Inc. for $10,000 and sell them on November 1 for $3,000. On November 15, you buy 500 shares of XYZ again for $3,200. Because the shares were “bought back” within 30 days of the sale, the wash sale rule applies. Therefore, you can’t claim a $7,000 loss. Your basis in the new 500 shares is $10,200: the actual cost plus the $7,000 disallowed loss.

If only a portion of the stock sold is repurchased, only that portion of the loss is disallowed. In the example above, if 60% of the shares sold were bought back, you’d be able to claim 40% of the loss on the sale. The remaining loss would be disallowed and added to your cost basis of the repurchased shares.

No surprises

The wash sale rule can deliver a nasty surprise at tax time. Contact us with questions as you’re contemplating year-end tax planning strategies for your investment portfolio.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: Thomson Reuters      

Year-end Gifts And The Gift Tax Annual Exclusion

Posted by Admin Posted on Nov 02 2022

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With the holidays and year-end approaching, you might be considering making gifts of stock or cash to family members and other loved ones. By using your gift tax annual exclusion, those gifts can reduce the size of your taxable estate. For 2022, the annual exclusion is $16,000. The exclusion will increase to $17,000 for 2023.

How it works

The annual exclusion applies to gifts on a per recipient, per year, basis. Therefore, a taxpayer with three children can transfer a total of $48,000 to them in 2022 free of federal gift taxes and another $51,000 gift-tax-free in 2023.

If these are the only gifts made in the applicable year, there’s no need to file a federal gift tax return. If an annual gift exceeds the exclusion, only the excess amount is a taxable gift, though it may not result in tax liability. (See “More ways to save gift tax,” below.)

However, keep in mind that the exclusion doesn’t carry over from year to year. For example, if you don’t make an annual exclusion gift to someone this year, you can’t add $16,000 to your 2023 annual exclusion and make a $33,000 tax-free gift to that person next year.

Married taxpayers and gift splitting

If you’re married, a gift can be treated as split between you and your spouse, even if only one of you gives the gift. That means, by gift splitting, a married couple can use their two exclusions to give a recipient up to $32,000 in 2022 and $34,000 in 2023. For example, in 2022 a married couple with three married children can transfer a total of $192,000 to their children and the children’s spouses ($32,000 for each of six recipients).

Because more than the exclusion amount is being transferred by a spouse, a gift tax return (or returns) will have to be filed, even if the spouses’ combined exclusion covers the total gift. If gift splitting is involved, both spouses must consent to it and that consent should be indicated on each gift tax return (or returns) that each spouse files.

Speaking of married taxpayers, gifts from one spouse to the other aren’t covered here, because these gifts are free of gift tax under separate marital deduction rules, as long as the recipient spouse is a U.S citizen.

More ways to save gift tax

Gifts that are taxable because they aren’t covered by the annual exclusion may still not result in a tax liability. This is because the lifetime gift and estate tax exemption wipes out the federal gift tax liability on taxable gifts up to a cumulative $12.06 million for 2022 (increasing to $12.92 million for 2023). The amount of the exemption you use during your life reduces or eliminates the exemption available for federal estate tax purposes upon your death.

Gifts made directly to an educational institution to pay tuition or to a health care provider to pay for medical expenses on behalf of someone else do not count towards the exclusion. For example, you can pay $20,000 directly to your grandson’s college for his tuition this year, plus still give him a tax-free direct cash gift of up to $16,000.

Why 2022 gifts make sense

Annual exclusion gifts reduce the taxable value of your estate. While the lifetime gift and estate tax exemption amount is historically high right now, it’s scheduled to fall in 2026 to around $7 or $8 million, depending on inflation. Congress could act to extend today’s higher exemption or could change estate tax law in other ways. Making large tax-free gifts now could help insulate you against any later reduction in the gift and estate tax exemption.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: Thomson Reuters 

Selling Trade Or Business Property? Know The Tax Effects

Posted by Admin Posted on Nov 02 2022

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Many rules can potentially apply to the sale of business property, but what are the tax consequences? For simplicity, let’s assume that the property you want to sell is depreciable property used in your business and you’ve held it for more than one year.

General rules

Under the Internal Revenue Code, your gains and losses from sales of business property are netted against each other. The net gain or loss qualifies for tax treatment as follows:

1. If the netting process results in a net gain, then long-term capital gain treatment results, subject to “recapture” rules discussed below. This treatment is generally more favorable than ordinary income treatment.

2. If the netting of gains and losses results in a net loss, that loss is fully deductible against ordinary income (so, none of the rules that limit the deductibility of capital losses apply).

Recapture rules

The availability of long-term capital gain treatment for business property net gain is limited by recapture rules. Recapture rules specify that amounts are treated as ordinary income rather than capital gain because of previous ordinary loss or deduction treatment for these amounts (such as depreciation, for example).

There’s a special recapture rule that applies only to business property. Under this rule, to the extent you’ve had a business property net loss within the previous five years, any business property net gain is treated as ordinary income, not as long-term capital gain.

More tax code details

Here are some more details about two types of property:

Section 1245 property. This is all depreciable personal property, tangible or intangible, and certain depreciable real property (usually, real property with specific functions). If you sell this property, you must recapture your gain as ordinary income to the extent of your earlier depreciation deductions on the asset.

Section 1250 property. This type of property generally includes buildings and their structural components. If you sell such property that was placed in service after 1986, none of the long-term capital gain attributable to depreciation deductions will be subject to depreciation recapture. (Additional rules apply for Section 1250 property placed in service in 1986 or earlier.)

However, for most noncorporate taxpayers, the gain attributable to depreciation deductions up to the amount of the business property net gain will be taxed at no higher than 28.8% (as reduced by the business property recapture rule above). That’s 25% plus the 3.8% net investment income tax (NIIT), rather than the maximum 23.8% rate (20% plus the 3.8% NIIT) that generally applies to long-term capital gains of noncorporate taxpayers.

Proceed with caution

As you can see, the tax treatment of the sale of business assets can be complex. And different rules apply based on property type, such as property held for sale to customers, intellectual property, low-income housing, and farming or livestock property. Contact us for help with specific transactions or additional questions.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: Thomson Reuters       

When to Use a Durable Power of Attorney to Authorize Representation Before the IRS

Posted by Admin Posted on Nov 02 2022

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As the U.S. population ages, taxpayers and their representatives are increasingly confronted with the question of how to appoint a power of attorney (POA) to act on behalf of taxpayers in the event of incompetence or incapacity. When taxpayers are competent, they use a Form 2848, Power of Attorney and Declaration of Representative, for this purpose. However, an incompetent or incapacitated taxpayer is in no position to execute a Form 2848. Likewise, even a preexisting Form 2848 is usually voided if taxpayers become incompetent or incapacitated. In other contexts, individuals typically rely on various types of POA instruments to enable representation, but the IRS often will not recognize these for tax purposes. Thus, in the event of unforeseen circumstances, taxpayers can find themselves without a voice in their own tax matters beyond that of a court-appointed fiduciary.

One way of avoiding this potential pitfall is through creative and well-informed use of a durable power of attorney (DPOA). DPOAs are a common tool in the realm of estate planning and financial and medical decision-making. The key feature of a DPOA is that it remains operative or becomes effective when the principal (the individual who granted the authority) becomes incompetent or unable to act on his or her own behalf.

Tax practitioners rarely rely on DPOAs because, in their usual format, they do not authorize representation before the IRS. For this reason, individuals who have been acting on behalf of someone via a DPOA (often known as “attorneys-in-fact”) may have an unwelcome surprise when it comes to IRS representation.

Based on regulatory requirements, the Form 2848 includes information beyond a typical DPOA, such as:

  • The taxpayer’s Social Security number;
  • Name and mailing address of the appointed representative(s); and
  • A description of the matter or matters for which the representation is authorized that must include, as applicable
  • Type of tax involved;
  • Federal tax form number involved; and
  • Specific year(s) involved.
  • Note also that any appointed representative would need to meet the practice requirements specified by Circular 230 § 10.2 and 10.7(c).

Without these and certain other specifics, the attorney-in-fact cannot represent a taxpayer before the IRS. However, this does not mean that a DPOA can never furnish this authorization; it can, if it enumerates the appropriate details. In other words, the information doesn’t have to be presented on a Form 2848, but the information from the Form 2848 must be present.

When seeking to represent an incapacitated taxpayer before the IRS, attorneys-in-fact should submit a copy of the detailed DPOA as well as Part II of the Form 2848 (Declaration of Representative). Of course, taxpayers cannot foresee the twists and turns of future audits, with the result that many DPOAs do not include the requisite information.

To accommodate this circumstance, taxpayers can adopt an alternative method, which is to utilize what, for tax purposes, can be thought of as a broad DPOA. Under this approach, the broad DPOA simply states that the attorney-in-fact is authorized to represent the principal in federal tax matters. The IRS will accept the broad DPOA as giving the attorney-in-fact the authority to execute a Form 2848 on behalf of the taxpayer. In this scenario, an attorney-in-fact wishing to initiate representation before the IRS should submit the broad DPOA and also complete Form 2848 with all relevant information.

Conclusion

Not all IRS personnel are aware of these rules and policies surrounding the use of DPOAs to facilitate tax representation. As a result, if any questions or controversies arise in this context, it may be helpful to provide them with this recent guidance from the IRS Office of Professional Responsibility.

As with more common forms of estate planning, such as wills and advance medical directives, a few minutes of care now can save a great deal of complication and difficulty later. Whether opting for a detailed DPOA or broad DPOA, either of these vehicles can ensure tax representation in the event of unforeseen circumstances, thus eliminating unnecessary stress and burden during a difficult time

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811

Source: TAS      

TAS Tax Tip: Valuable information about child and dependent-related tax benefits

Posted by Admin Posted on Oct 26 2022

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If you have children or other dependents, and qualify to claim them on your tax return, there are a few things you need to know before you file your federal tax return.

General Information

Child and dependent-related tax benefits are some of the most common claimed benefits on federal tax returns each year. If you don’t know which ones you may qualify for, you can use the online interactive tax assistant.

In addition, you should use the IRS child-related tax benefits comparison table to help you with basic eligibility rules applying to:

  • Earned Income Tax Credit (EITC);
  • Child Tax Credit (CTC);
  • Credit for Other Dependents (ODC);
  • Child and Dependent Care Credit (CDCC); and
  • Head of household (HOH) filing status.

Items that Require Action Now

Get a Social Security number (SSN) or a Taxpayer Identification Number (TIN) for all qualifying dependents.

  • If your qualifying child does not have a valid SSN and needs one, get it before you file. Why? Because your child needs an SSN that is valid for employment which has been issued before the due date of your tax return (including extensions) for you to be able to claim EITC or CTC.
  • If you are not able to claim the CTC or EITC because your qualifying child or qualifying relative does not have the required SSN, but has another type of TIN issued on or before the due date of your tax return (including extensions) such as an individual taxpayer identification number (ITIN)Adoption Taxpayer Identification Number (ATIN), or a Not Valid for Employment SSN, you may be able to claim the Credit for Other Dependents, Child and Dependent Care Credit, or Head of Household.
    • If your qualifying dependent has an ITIN that will expire before the end of the year or does not have one assigned yet, you will need to timely file a Form W-7, Application for IRS Individual Taxpayer Identification Number to ensure it is available for when you file.
    • Sometimes an ITIN request can take up to 11 weeks to process. Please make sure you check on irs.gov that any IRS backlogs have not extended these timeframes. Review the rules now and apply right away, so you don’t miss out on this credit or delay any possible refund. ATIN requests generally take 4 to 8 weeks.

No matter which credit(s) you may claim, learn more about what identification is needed for dependents now to avoid problems later.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

TAS Tax Tip: Paying the IRS

Posted by Admin Posted on Oct 26 2022

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Taxes should be paid as you earn or receive income during the year. The IRS offers a variety of ways for you to do so. Some of the ways to pay include:

  • Tax Withholding – For employees, withholding is the amount of federal income tax withheld from your paycheck. The amount your employer withholds depends on how much you earn and the information you give your employer on Form W-4, Employee’s Withholding Certificate. For help with your withholding, use the IRS’s Tax Withholding Estimator.
  •   Using your online account – Create and/or sign into your   

individual IRS online account to pay and see your payment history. You can also:

  • View the amount you owe, including a breakdown by tax year;
  • View some notices;
  • View 5 years of payment history, including your estimated tax payments (if any);
  • View any pending or scheduled payments;
  • Learn about payment plan options and apply for a new payment plan; and
  • View details of your payment plan (if you have one).
  • Downloading the IRS2Go app on your phone or mobile device – The IRS2Go app can help you find IRS tools and resources faster. You can get easy access to mobile-friendly payment options, and the app is available in both English and Spanish for Android and iOS mobile devices.
  • Paying directly from your bank account – When looking into how to pay individual taxes without any added fees, Direct Pay is one option. With Direct Pay you can make a payment directly from your savings or checking account with no registration required and receive instant confirmation when the payment is made. You can schedule payments up to a year in advance and change or cancel a payment up to two business days before the scheduled payment date.
  • Submitting business payments or scheduling estimated payments with Electronic Federal Tax Payment System – The Electronic Federal Tax Payment System (EFTPS) is a free system for businesses, tax professionals and individuals to make secure federal tax payments. You must be enrolled to use the EFTPS. It can take up to five days to process your enrollment, so plan ahead. Visit EFTPS or call EFTPS Customer Service to request an enrollment form:

With EFTPS, you can schedule payments 24/7, up to a year in advance, and you’ll receive an immediate confirmation upon payment. You can easily change or cancel scheduled payments and view the last 15 months of payment history.

  • By debit card, credit card or digital wallet – This option is available for individuals and businesses. The IRS uses third party payment processors for payments by debit or credit card. You can pay online, over the phone, or using a digital wallet, such as PayPal or Click to Pay. The IRS doesn’t charge a fee for this service, but the payment processors do. Visit the IRS pay your taxes by debit or credit card to choose the payment processor that offers you the best fees for your card type and payment amount. Keep in mind there’s a maximum number of card payments allowed based on your tax type and payment type.

Note: Employers’ federal tax deposits cannot be paid by debit or credit card; see how to pay employment taxes.

  • Other ways you can pay
    • Same-Day Wire — Bank fees may apply.
    • Check or Money Order — Through U.S. mail; with or without your return.
    • Cash — The easiest way to pay is electronically; however, you can pay with cash. Please review the requirements before doing so.
    • Electronic Funds Withdrawal — When e-filing your return, you can schedule your payment for a designated date of withdrawal.

Need more time to pay?

To limit the amount of interest and penalties the IRS may charge you, it’s in your best interest to pay your tax debt as soon as possible.

However, if you currently can’t pay your taxes in full, the IRS offers a number of payment options. Depending on the type of tax you owe, and how much, different options are available, ranging from short term extensions, to installment agreements, to an offer in compromise. Each option has different requirements and fees, so please review each one carefully. Depending on your economic circumstances, you may qualify to be placed in Currently Not Collectible status.

For more updates from the Taxpayer Advocate Service, visit the news and information center to read the latest tax tips, blogs, alerts and more. Our tax tips are also available in Spanish.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

Taxpayers with an outstanding tax bill should consider an Offer in Compromise

Posted by Admin Posted on Oct 26 2022

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An Offer in Compromise can be an effective way individuals and businesses to settle federal tax debt. This federal program allows taxpayers to enter into an agreement, with the IRS, that settles a tax debt for less than the full amount owed. Sometimes taxpayers are able to settle for significantly less, especially if they have low income and few assets.

This type of agreement is an option when taxpayers can't pay their full tax liabilities or when paying the entire balance owed would cause financial hardship. The goal is a compromise that suits the best interests of both the taxpayer and the IRS.

Individual taxpayers and business owners should review the IRS's Offer in Compromise BookletPDF to learn how these agreements work and decide if it could help them resolve their tax debts.

When reviewing OIC applications, the IRS considers the taxpayer's unique set of facts and any special circumstances affecting the taxpayer's ability to pay, as well as:

  • Income
  • Expenses
  • Asset equity

The booklet covers everything a taxpayer needs to know about submitting an offer in compromise, including:

  • Who is eligible to submit an offer
  • How much it costs to apply
  • How the application process works

The booklet also includes the forms that taxpayers must complete as part of the offer in compromise process. The current application fee is $205. However, taxpayers who meet the definition of a low-income taxpayer don't have to pay this fee.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

APPLY TO CHAPTER 13 IF THE NUMBERS ARE IN RED

Posted by Admin Posted on Oct 26 2022

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Bankruptcy is a last resort for taxpayers to get out of debts. For individuals, the most common type of bankruptcy is a Chapter 13. This section of the bankruptcy law allows individuals and small business owners in financial difficulty to repay their creditors. Chapter 13 bankruptcy is only available to wage earners, the self-employed and sole proprietor businesses.

Tax obligations while filing Chapter 13 bankruptcy:

  • Taxpayers must file all required tax returns for tax periods ending within four years of their bankruptcy filing.
  • During a bankruptcy taxpayers must continue to file, or get an extension of time to file, all required returns.
  • During a bankruptcy case taxpayers should pay all current taxes as they come due.
  • Failure to file returns and pay current taxes during a bankruptcy may result in a case being dismissed, converted to a liquidating bankruptcy Chapter 7, or the Chapter 13 plan may not be confirmed.

Other things to know:

  • If the IRS is listed as a creditor in their bankruptcy, the IRS will receive electronic notice about their case from the U.S. Bankruptcy Courts. People can check by calling the IRS' Centralized Insolvency Operation at 800-973-0424 and giving them the bankruptcy case number.
  • If one of the reasons a taxpayer is filing bankruptcy is overdue federal tax debts, they may need to increase their withholding or their estimated tax payments. The Tax Withholding Estimator can help people determine the proper withholding. The IRS.gov Estimated Taxes page has more information on estimated taxes. 
  • People can receive tax refunds while in bankruptcy. However, refunds may be subject to delay or used to pay down their tax debts. Taxpayers can see if their refund has been delayed or offset against their tax debts by going to the Where's My Refund? tool or by contacting the Centralized Insolvency Operations Unit. 

Other types of bankruptcy

Partnerships and corporations file bankruptcy under Chapter 7, Liquidation or Chapter 11, Reorganization of the bankruptcy code. Individuals may also file under Chapter 7 or Chapter 11. Other types of bankruptcy include Chapters 9, 12 and 15. Cases under these chapters of the bankruptcy code involve municipalities, family farmers and fisherman, and international cases.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS 

Grandparents and other relatives with eligible dependents can qualify for 2021 Child Tax Credit

Posted by Admin Posted on Oct 20 2022

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WASHINGTON – The Internal Revenue Service reminded families today that some taxpayers who claim at least one child as their dependent on their tax return may not realize they could be eligible to benefit from the Child Tax Credit (CTC).

Eligible taxpayers who received advance Child Tax Credit payments last year should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advance Child Tax Credit payments last year can claim the full credit by filing a 2021 tax return.

The IRS urges grandparents, foster parents or people caring for siblings or other relatives to check their eligibility to receive the 2021 Child Tax Credit. It's important for people who might qualify for this credit to review the eligibility rules to make sure they still qualify. Taxpayers can use the Interactive Tax Assistant to check eligibility. Taxpayers who haven't qualified in the past should also check because they may now be able to claim the credit. To receive it, eligible individuals must file a 2021 federal tax return.

What is the Child Tax Credit expansion?

The Child Tax Credit expansion, which is a part of the American Rescue Plan, increased the amount of money per child families can receive and expanded who can receive the payments.

The American Rescue Plan increased the Child Tax Credit from $2,000 to $3,600 per child for children under the age of six, from $2,000 to $3,000 for children over the age of 6 and raised the age limit from 16 to 17 years old.

The American Rescue Plan Act of 2021 expanded the Child Tax Credit for tax year 2021 only.

Who qualifies for the Child Tax Credit?

Taxpayers can claim the Child Tax Credit for each qualifying child who has a Social Security number that is valid for employment in the United States and issued by the Social Security Administration before the due date of their tax return (including an extension if the extension was requested by the due date).

To be a qualifying child for the 2021 tax year, the dependent generally must:

  • Be under age 18 at the end of the year.
  • Be their son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of one of these (for example, a grandchild, niece, or nephew).
  • Provide no more than half of their own financial support during the year.
  • Have lived with the taxpayer for more than half the year.
  • Be properly claimed as their dependent on their tax return.
  • Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid.
  • Have been a U.S. citizen, U.S. national or U.S. resident alien.

What are the eligibility factors?

Individuals qualify for the full amount of the 2021 Child Tax Credit for each qualifying child if they meet all eligibility factors and their annual income is not more than:

  • $150,000 if they're married and filing a joint return, or if they're filing as a qualifying widow or widower.
  • $112,500 if they're filing as a head of household.
  • $75,000 if they're a single filer or are married and filing a separate return.

Parents and guardians with higher incomes may be eligible to claim a partial credit. Claiming these benefits can result in tax refunds for many individuals. Individuals should file electronically and choose direct deposit to avoid delays and receive their refund faster.

Finding free tax return preparation

A limited number of  Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) program sites remain open and available to help eligible taxpayers get their tax returns prepared and filed for free by IRS trained and certified volunteers. Low- and moderate-income taxpayers as well as those age 60 and above can check to see if there is an available site in or near their community by using the VITA/TCE Site Locator.

IRS Free File available until Nov. 17 to help more people receive credits

The IRS Free File program, available only through IRS.gov and offered in partnership the tax software industry's Free File Alliance, offers eligible taxpayers brand-name tax preparation software to use at no cost. The software does all the work of finding deductions, credits and exemptions for which the taxpayer qualifies. It's free for most individual filers who earned $73,000 or less in 2021. Some of the Free File packages also offer free state tax returns to those who qualify. Taxpayers who earned more than $73,000 in 2021 and are comfortable preparing their own taxes can use Free File Fillable Forms. This electronic version of paper IRS tax forms is also used to file tax returns online.

To help more people claim a variety of tax credits and benefits, Free File will remain open for an extra month this year, until November 17, 2022.

The IRS is sending letters to more than 9 million individuals and families who appear to qualify for a variety of key tax benefits but did not claim them by filing a 2021 federal income tax return. Many in this group may be eligible to claim some or all of the 2021 Recovery Rebate Credit, the Child Tax Credit, the Earned Income Tax Credit and other tax credits depending on their personal and family situation. The special reminder letters, which will be arriving in mailboxes over the next few weeks, are being sent to people who appear to qualify for the Child Tax Credit, Recovery Rebate Credit (RRC) or Earned Income Tax Credit (EITC) but haven't yet filed a 2021 return to claim them. The letter, printed in both English and Spanish, provides a brief overview of each of these three credits.

These and other tax benefits were expanded under last year's American Rescue Plan Act and other recent legislation. Even so, the only way to get the valuable benefits is to file a 2021 tax return. Often, individuals and families can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don't normally need to file a tax return should do so this year, even if they haven't been required to file in recent years.

People can file a tax return even if they haven't yet received their letter. The IRS reminds people that there's no penalty for a refund claimed on a tax return filed after the regular April 2022 tax deadline. The fastest and easiest way to get a refund is to file an accurate return electronically and choose direct deposit.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

TAS Tax Tip: Get Current on Your Federal Tax

Posted by Admin Posted on Oct 20 2022

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Part of your Mid-Year Tax Checkup should include seeing whether you have any overdue tax returns and making sure you file them as soon as possible.  If you’re not sure whether you are required to file, you can use the IRS’s Interactive Tax Assistant Do I Need to File a Tax Return? to help figure it out.

Even if you don’t have to file because you didn’t earn enough money, you may want to file to avoid missing out on a refund. This could apply if you had federal income tax withheld from your pay, made estimated tax payments for the year, had any of your overpayment from last year applied to this year’s estimated tax, or qualify to claim tax credits such as the Earned Income Tax Credit. The only way to get your refund is to file a tax return.

There is still time to claim your Child Tax Credit.  In addition, if you didn’t qualify for a third economic impact payment or received less than the full amount to which you were entitled, you may be eligible to claim the Recovery Rebate Credit. You must file a 2021 tax return to claim either credit.

Filing past due tax returns is important for reasons other than just the potential of losing out on a credit or refund, including:

  • Protecting your Social Security benefits;
  • Avoiding issues obtaining loans; and
  • Preventing the IRS from filing a substitute return for you. This return might not give you credit for deductions and exemptions you may be entitled to receive (which may result in you owing).

Be aware of the consequences for not filing a tax return when you are required to do so.

Find the records you need

Create and/or sign into your individual IRS online account to view, access and print:

  • Key data from your most recently filed tax return, including your adjusted gross income, as well as transcripts;
  • Information about your Economic Impact Payments and Advance Child Tax Credit payments, including the amount you received; and
  • Digital copies of certain notices from the IRS.

Additional ways to find records specifically related to: 

Wage and Income information – Complete Form 4506-T, Request for Transcript of Tax Return, and check the box on line 8. You can also contact your employer for a copy of your Form W-2, Wage and Tax Statement.

Economic Impact Payments/Recovery Rebate Credit – Review Letter 6475, Your 2021 Economic Impact Payment(s), that the IRS issued to you earlier this year. Spouses filing a joint return for 2021 need to know the payment amounts for both spouses to claim this credit.

Advance Child Tax Credit payments – Review Letter 6419, 2021 Total Advance Child Tax Credit (AdvCTC) Payments, that the IRS issued to you earlier this year.

Earned Income Tax Credit – You can request an account transcript online using Get Transcript. You can use the EITC Assistant to see if you’re eligible, calculate how much money you may qualify for, and find answers to questions about this credit.

Help Preparing your Past-Due Return

Tax form(s) – Get IRS online tax forms and instructions to file your past-due return, or order them by calling 800-TAX-FORM (800-829-3676).

Preparation assistance – If you need return preparation assistance, you may be eligible for assistance from a Low Income Taxpayer Clinic (LITC), or get free tax help from volunteers.

Note: LITCs can prepare returns if the due date for the return has already passed.

How to File 

The IRS encourages you to file electronically through a tax professional, IRS Free File, free tax return preparation sites, or commercial tax return preparation software.

You can also send your return via Mail or private delivery service, but be aware that it may take 6 months or more to process. For service delay details, see Status of Operations. If you must file a paper tax return, consider sending it by certified mail, with a return receipt. This will be your proof of the date you mailed your tax return and when the IRS received it.

Did you file an extension for 2021?

If you requested an extension for 2021, the filing deadline is coming soon. This year, an extension gives you until October 17 to file your return. But you don’t have to wait; file electronically and if you are due a refund, choose direct deposit once you have all your information together.

Note: IRS employees continue working hard to process tax returns and address inventory issues but are urging people to file electronically to avoid processing delays.

Do you need to correct a previously filed return?

If you file your individual tax return and then realize you made a mistake, you can amend your tax return. Usually this involves filing Form 1040-X, Amended U.S. Individual Income Tax Return, to report changes to your income, deductions or credits. You may also be able to make certain changes to your filing status.

Do you owe taxes you can’t pay?

If you owe taxes and your tax return is overdue, you should file your tax return now to avoid further penalties for not filing by the deadline. Again, you should file electronically if at all possible due to the IRS backlog in processing paper returns.  See Status of Operations.

If you can’t pay the full amount, pay what you can now to reduce the amount of penalties and interest that will continue to accrue, and review the IRS payment options, including an offer in compromise. Each option has different requirements and fees, so please review each one carefully. Depending on your economic circumstances, you may qualify to be placed in Currently Not Collectible status.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

IRS reports significant increase in texting scams; warns taxpayers to remain vigilant

Posted by Admin Posted on Oct 20 2022

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WASHINGTON — The Internal Revenue Service today warned taxpayers of a recent increase in IRS-themed texting scams aimed at stealing personal and financial information.

So far in 2022, the IRS has identified and reported thousands of fraudulent domains tied to multiple MMS/SMS/text scams (known as smishing) targeting taxpayers. In recent months, and especially in the last few weeks, IRS-themed smishing has increased exponentially.

Smishing campaigns target mobile phone users, and the scam messages often look like they're coming from the IRS, offering lures like fake COVID relief, tax credits or help setting up an IRS online account. Recipients of these IRS-related scams can report them to phishing@irs.gov.

"This is phishing on an industrial scale so thousands of people can be at risk of receiving these scam messages," said IRS Commissioner Chuck Rettig. "In recent months, the IRS has reported multiple large-scale smishing campaigns that have delivered thousands – and even hundreds of thousands – of IRS-themed messages in hours or a few days, far exceeding previous levels of activity."

With the approach of October's Cybersecurity Awareness Month, the IRS and the Security Summit partners in the states and the nation's tax community remind people and the tax professional community to be on the lookout for phishing scams and other schemes that could put sensitive tax data at risk.

In the latest activity, the scam texts often ask taxpayers to click a link where phishing websites will try to collect their information or potentially send malicious code onto their phones. The IRS does not send emails or text messages asking for personal or financial information or account numbers. These messages should all be red flags for taxpayers.

Beginning in the fall of 2020, the IRS observed an increase in reports of smishing scams requesting taxpayer personal and financial information. These smishing campaigns continued through the pandemic. The IRS has taken numerous steps to warn people of this ongoing threat, including posting a video about how to avoid IRS text message scams.

Taxpayers should continue reporting these scams to phishing@irs.gov. Their reporting allows the IRS to report these scams to the appropriate service providers for action, protecting other taxpayers who might receive a variant of the same scam.

While the IRS works to shut down online fraud, criminals are using ever-evolving tactics to cast a wider net and catch more victims, like using algorithms to automatically generate hundreds or even thousands of fraudulent domains. For example, a recent campaign used just three dozen stolen or bogus email addresses to create over 1,000 fraudulent domains.

"Particularly in these cases, the best offense is a good defense," said Rettig. "Taxpayers and tax pros need to remain constantly vigilant with suspicious IRS-related emails and text messages. And if you get one, sending the IRS important details from the text can help us disrupt the scams and protect others."

Reporting IRS-related smishing

The IRS maintains an inbox, phishing@irs.gov, to process IRS, Treasury and/or tax-related online scams only. Smishing involving other agencies and/or brands should not be reported to phishing@irs.gov.

Reporting IRS-themed texts to the IRS allows security professionals to track and disrupt these scams. Individuals reporting scam texts to the IRS should include both the body of the message and the sender's information in one email or text. Copying the actual text into an email is preferred. However, if necessary, screenshots can be sent. Scam SMS/text messages can also be copied and forwarded to wireless providers via text to 7726 (SPAM), which helps them spot and block similar messages in the future.

The following process will help capture important details for reporting smishing to the IRS:

  • Create a new email to phishing@irs.gov.
  • Copy the caller ID number (or email address).
  • Paste the number (or email address) into the email.
  • Press and hold the SMS/text message and select "copy".
  • Paste the message into the email.
  • If possible, include the exact date, time, time zone and telephone number that received the message.
  • Send the email to phishing@irs.gov.

Additional reporting

In addition to reporting the scam to phishing@irs.gov, if IRS-related, report the message to the Treasury Inspector General for Tax Administration using their IRS Impersonation Scam Reporting form and the Federal Trade Commission (FTC) through their Complaint Assistant to make the information available to investigators.

All incidents, successful and attempted, should also be reported to the Internet Crime Complaint Center.

Any individual entering personal information, or otherwise finding themselves a victim of tax-related scams, can find additional resources at Identity Theft Central on IRS.gov.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Taxpayers should stay on top of taxes all year to avoid a surprise tax bill

Posted by Admin Posted on Oct 20 2022

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The next tax season seems far away, but this is actually the perfect time for taxpayers to review their withholding and estimated tax payments. Because federal taxes are pay-as-you-go, it’s important for taxpayers to withhold enough from their paychecks or pay enough in estimated tax. If they don’t, they risk being charged a penalty.

Adjust tax withholding

For employees, withholding is the amount of federal income tax withheld from their paycheck. The amount of income tax an employer withholds from an employee’s regular pay depends on two things:

  • The amount they earn.
  • The information they give their employer on Form W–4.

All taxpayers should review their federal withholding each year to make sure they're not having too little or too much tax withheld.

Individuals can use the IRS Tax Withholding Estimator to help decide if they should make a change to their withholding. This online tool guides users, step-by-step, through the process of checking their withholding, and provides withholding recommendations to help aim for their desired refund amount when they file next year.

Taxpayers can check with their employer to update their withholding or submit a new Form W-4, Employee's Withholding Certificate.

Make estimated payments

Taxpayers may need to make quarterly estimated tax payments in a few situations:

  • If the amount of income tax withheld from a taxpayer's salary or pension isn’t enough.
  • If they receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards.
  • If they are self-employed.

Estimated tax payments are due from individual taxpayers on April 15, June 15, September 15 and January 17. The fastest and easiest way to make estimated tax payments is using Direct Pay or the Electronic Federal Tax Payment System. Taxpayers can visit IRS.gov for other payment options.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Got a letter or notice from the IRS? Here are the next steps

Posted by Admin Posted on Oct 12 2022

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When the IRS needs to ask a question about a taxpayer's tax return, notify them about a change to their account, or request a payment, the agency often mails a letter or notice to the taxpayer. Getting mail from the IRS is not a cause for panic but, it should not be ignored either.

When an IRS letter or notice arrives in the mail, here's what taxpayers should do:

Read the letter carefully. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. A notice may reference changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return. Taking timely action could minimize additional interest and penalty charges.

Review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records. Typically, a taxpayer will only need to take action or contact the IRS if they don't agree with the information, if the IRS requested additional information, or if they have a balance due.

Take any requested action, including making a payment. The IRS and authorized private debt collection agencies do send letters by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and take the appropriate action or submit a payment.

Reply only if instructed to do so. Taxpayers don't need to reply to a notice unless specifically told to do so. There is usually no need to call the IRS. If a taxpayer does need to call the IRS, they should use the number in the upper right-hand corner of the notice and have a copy of their tax return and letter.

Let the IRS know of a disputed notice. If a taxpayer doesn't agree with the IRS, they should mail a letter explaining why they dispute the notice. They should send it to the address on the contact stub included with the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute.

Keep the letter or notice for their records. Taxpayers should keep notices or letters they receive from the IRS. These include adjustment notices when an action is taken on the taxpayer's account. Taxpayers should keep records for three years from the date they filed the tax return.

Watch for scams. The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure whether they owe money to the IRS can view their tax account information on IRS.gov.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS                            

Understanding taxes when a family member signs the paycheck

Posted by Admin Posted on Oct 12 2022

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Many people work for a family member, whether it's a child helping out at their parent's shop or spouses running a business together. When someone is employed by a family member, the tax implications depend on the relationship and the type of business. It's important for taxpayers and employers to understand their tax situation.

Married people in business together

  • Generally a qualified joint venture whose only members are a married couple filing a joint return isn't treated as a partnership for federal tax purposes.
  • Someone who works for their spouse is considered an employee if the first spouse makes the business's management decisions and the second spouse is under the direction of the first spouse.
  • The wages for someone who works for their spouse are subject to income tax withholding and Social Security and Medicare taxes, but not to FUTA tax.

Children employed by their parents

If the business is a parent's sole proprietorship or a partnership in which both partners are parents of the child:

  • Wages paid to a child of any age are subject to income tax withholding.
  • Wages paid to a child age 18+ are subject to social security and Medicare taxes.
  • Wages paid to a child age 21+ are subject to Federal Unemployment Tax Act  tax.

If the business is a corporation, estate, or a partnership in which one or no partners are parents of the child:

  • Payments for services of a child are subject to income tax withholding, Social Security taxes, Medicare taxes and FUTA taxes regardless of age.

Parents employed by their child

If the business is a child's sole proprietorship:

  • Payments for services of a parent are subject to income tax withholding, social security taxes and Medicare taxes.
  • Payments for services of a parent are not subject to FUTA tax regardless of the type of services provided.

If the business is a corporation, a partnership, or an estate:

  • The payments for the services of a parent are subject to income tax withholding, Social Security taxes, Medicare taxes and FUTA taxes.

If the parent is performing services for the child, but not for the child's trade or business:

  • Payments for services of a parent are not subject to Social Security and Medicare taxes, unless the services are for domestic services and several other criteria apply.
  • Payments for services of a parent are not subject to FUTA tax regardless of the type of services provided.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Every taxpayer has the right to retain representation when working with the IRS

Posted by Admin Posted on Oct 12 2022

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Taxpayers have the right to retain an authorized representative of their choice to represent them when they are dealing with the IRS. They also have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation. This is one of the ten fundamental rights of all taxpayers as outlined in the Taxpayer Bill of Rights.

What the right to retain representation means for taxpayers:

·  Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS.

·  Taxpayers who are heading to an interview with the IRS may select someone to represent them.

·  Taxpayers who retain representation don't have to attend with their representative unless the IRS formally summons them to appear.

·  In most situations, the IRS must suspend an interview if the taxpayer requests to consult with a representative, such as an attorney, certified public accountant or enrolled agent.

·  Any attorney, CPA, enrolled agent, enrolled actuary or other person permitted to represent a taxpayer before the IRS, who's not disbarred or suspended from practice before the IRS, may submit a written power of attorney to represent a taxpayer before the IRS.

·  Taxpayers have the right to seek assistance from an LITC if they can't afford representation. They can find a LITC near them by visiting the Low Income Taxpayer Clinics page or by calling the IRS toll-free at 800-829-3676.

LITCs are independent from the IRS and the Taxpayer Advocate Service These clinics represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS                  

IRS: Hurricane Ian victims in Florida qualify for tax relief; Oct. 17 deadline, other dates extended to Feb. 15

Posted by Admin Posted on Oct 12 2022

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WASHINGTON — Hurricane Ian victims throughout Florida now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business anywhere in the state of Florida qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on September 23, 2022. As a result, affected individuals and businesses will have until February 15, 2023, to file returns and pay any taxes that were originally due during this period.

This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until February 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.

The February 15, 2023, deadline also applies to quarterly estimated income tax payments due on January 17, 2023, and the quarterly payroll and excise tax returns normally due on October 31, 2022, and January 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on October 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on November 15, 2022.

In addition, penalties on payroll and excise tax deposits due on or after September 23, 2022, and before October 10, 2022, will be abated as long as the deposits are made by October 10, 2022.

The Disaster Assistance and Emergency Relief for Individuals and Businesses page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-4673-FL − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by Hurricane Ian and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.gov.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Too Much Inventory At Your Business? Trim the Fat!

Posted by Admin Posted on Oct 06 2022

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Businesses need to have inventory on hand. But having excess inventory is expensive, so it’s important to keep it as lean as possible. Here are some ways to trim the fat from your inventory without compromising revenue and customer service.

Accuracy first

Effective inventory management starts with an accurate physical inventory count. This allows you to determine your true cost of goods sold and to identify and remedy discrepancies between your physical count and perpetual inventory records. A CPA can introduce an element of objectivity to the counting process and help minimize errors.

Next, compare your inventory costs to those of other companies in your industry. Trade associations often publish benchmarks for:

  • Gross margin ([revenue - cost of sales] / revenue),
  • Net profit margin (net income / revenue), and
  • Days in inventory (annual revenue / average inventory × 365 days).

Your company should strive to meet or beat industry standards. For a retailer or wholesaler, inventory is simply purchased from the manufacturer. But the inventory account is more complicated for manufacturers and construction firms. It’s a function of raw materials, labor and overhead costs.

The composition of your company’s cost of goods will guide you on where to cut. In a tight labor market, it’s hard to reduce labor costs. But, depending on the goods, it might be possible to renegotiate prices with suppliers.

Don’t forget the carrying costs of inventory, such as storage, insurance, obsolescence and pilferage. You can also improve margins by negotiating a net lease for your warehouse, installing antitheft devices and opting for less expensive insurance coverage.

Product mix

Cutting your days-in-inventory ratio should be done based on individual product margins. Stock more products with high margins and high demand and less of everything else. Whenever possible, return excessive supplies of slow-moving materials or products to your suppliers.

Product mix should be sufficiently broad and in tune with customer needs. Before cutting back on inventory, you might need to negotiate speedier delivery from suppliers or give suppliers access to your perpetual inventory system. These precautionary measures can help prevent lost sales due to lean inventory.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters   

Large Cash Business Transactions Must Be Reported To The IRS

Posted by Admin Posted on Oct 06 2022

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If your business receives large amounts of cash or cash equivalents, you may be required to report these transactions to the IRS. Here are some details.

The requirements

Each person who, while operating a trade or business, receives more than $10,000 in cash in one transaction (or at least two related transactions), must file Form 8300. What constitutes “related transactions?” Related transactions are conducted within a 24-hour period. But transactions that occur in a greater than 24-hour period may also be deemed related if the recipient knows, or has reason to know, that the transactions are connected.

To complete a Form 8300, you’ll need certain information about the person making the payment. This includes a Social Security or taxpayer identification number.

Reasons behind the reporting

Although many cash transactions are legitimate, the IRS explains that “information reported on (Form 8300) can help stop those who evade taxes, profit from the drug trade, engage in terrorist financing and conduct other criminal activities. The government can often trace money from these illegal activities through the payments reported on Form 8300 and other cash reporting forms.”

It’s important to keep a copy of each Form 8300 for five years from the date you file it, according to the IRS.

“Cash” and “cash equivalents” defined

For Form 8300 reporting purposes, cash includes U.S. currency and coins, as well as foreign money. It also includes cash equivalents such as cashier’s checks (sometimes called bank checks), bank drafts, traveler’s checks and money orders. Money orders and cashier’s checks under $10,000, when used in combination with other forms of cash for a single transaction that exceeds $10,000, are defined as cash for Form 8300 reporting purposes.

Note: Under a separate reporting requirement, banks and other financial institutions report cash purchases of cashier’s checks, treasurer’s checks and/or bank checks, bank drafts, traveler’s checks and money orders with a face value of more than $10,000 by filing currency transaction reports.

Options for filing

Businesses required to file reports of large cash transactions on Form 8300 should know that in addition to filing on paper, e-filing is an option. The form is due 15 days after a transaction and there’s no charge for the e-file option. Businesses that file electronically get an automatic acknowledgment of receipt when they file.

The IRS also reminds businesses that they can “batch file” their reports. This is especially helpful to those required to file many forms.

Setting up an electronic account

To file Form 8300 electronically, a business must set up an account with FinCEN’s Bank Secrecy Act E-Filing System. For more information, visit: bsaefiling.fincen.treas.gov or contact us with questions.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters                 

Offset Nursing Home Costs With Possible Tax Breaks

Posted by Admin Posted on Oct 06 2022

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If you have a parent entering a nursing home, taxes are probably the last thing on your mind. But you should know that several tax breaks may be available to help offset some of the costs.

Medical expense deductions

The costs of qualified long-term care (LTC), such as nursing home care, may be deductible as medical expenses to the extent they, along with other qualified expenses, exceed 7.5% of adjusted gross income (AGI). But keep in mind that the medical expense deduction is an itemized deduction. And itemizing deductions saves taxes only if total itemized deductions exceed the applicable standard deduction.

Amounts paid to a nursing home are deductible as medical expenses if a person is staying at the facility principally for medical, rather than custodial care. Also, for those individuals, only the portion of the fee that’s allocable to actual medical care qualifies as a deductible expense.

If the individual is chronically ill, all qualified LTC services are deductible. Qualified LTC services are those required by a chronically ill individual and administered by a licensed health care practitioner. They include diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal-care services.

For your parent to qualify as chronically ill, a physician or other licensed health care practitioner must certify him or her as unable to perform at least two activities of daily living (ADLs) for at least 90 days due to a loss of functional capacity or severe cognitive impairment. ADLs include eating, toileting, transferring, bathing, dressing and continence.

Qualifying as a dependent

If your parent qualifies as your dependent, you can add medical expenses you incur for him or her to your own medical expenses when calculating your deduction. We can help with this determination.

If you aren’t married and you meet the dependency tests for your parent, you may qualify for head-of-household filing status, which has a higher standard deduction and lower tax rates than filing as single. You may be eligible to use this status even if the parent for whom you claim an exemption doesn't live with you.

Selling your parent’s home

In many cases, a move to a nursing home also means selling the parent’s home. Fortunately, up to $250,000 of gain from the sale of a principal residence may be tax-free. To qualify for the $250,000 exclusion, the seller must generally have owned the home for at least two years of the five years before the sale.

Also, the seller must have used the home as a principal residence for at least two of the five years before the sale. However, there’s an exception to the two-of-five-year use test for a seller who becomes physically or mentally unable to care for him- or herself during the five-year period.

LTC insurance

Perhaps your parent is still in good health but is paying for LTC insurance (or you’re paying LTC insurance premiums for yourself). If so, be aware that premiums paid for a qualified LTC insurance contract are deductible as medical expenses (subject to limits) to the extent that they, when combined with other medical expenses, exceed the 7.5%-of-AGI threshold. Such a contract doesn’t provide payment for costs covered by Medicare, is guaranteed renewable and doesn't have a cash surrender value.

The amount of qualified LTC premiums that can be included as medical expenses is based on the age of the insured individual. For 2022 for those 61 to 70 years old, the limit on deductible premiums is $4,510 and for those over 70, the limit is $5,640.

Need more information?

This is just a brief overview of tax breaks that may help offset nursing home and related costs. Contact us if you need more information or assistance.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters              

People who still haven’t filed a 2021 tax return should file electronically to avoid these common mistakes

Posted by Admin Posted on Sept 28 2022

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Don't wait until the deadline to electronically file a complete — and accurate — return

Extension filers have until October 17 to file but filing electronically helps reduce processing time and correct errors. Mistakes on a tax return can also lead to longer processing time or cause the return to be rejected.

Filing electronically can help taxpayers avoid many mistakes. Tax software does the math, flags common errors and prompts taxpayers for missing information. It can also help eligible taxpayers claim overlooked credits and deductions.

Another way taxpayers can avoid mistakes is by using a reputable tax preparer, including certified public accountants, enrolled agents or other knowledgeable tax professionals.

Here are some of the most common errors taxpayers should avoid:

·         Missing or inaccurate Social Security numbers. Each SSN on a tax return should appear exactly as printed on the Social Security card.

·         Misspelled names. Likewise, a name listed on a tax return should match the name on that person's Social Security card.

·         Entering information inaccurately. Taxpayers should carefully enter wages, dividends, bank interest, and other income received and reported on an information return. This includes any information needed to calculated credits and deductions. Using tax software should help prevent math errors, but individuals should always review their tax return for accuracy.

·         Incorrect filing status. Some taxpayers choose the wrong filing status. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status, especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.

·         Math mistakes. Math errors are some of the most common mistakes. They range from simple addition and subtraction errors to more complex calculation mistakes. Taxpayers should always double check their math.

·         Figuring credits or deductions Taxpayers can make mistakes figuring things like their earned income tax creditchild and dependent care creditchild tax credit, and recovery rebate credit. The Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions. Tax software will calculate these credits and deductions and include any required forms and schedules. Taxpayers should double check where items appear on the final return before clicking the submit button.

·         Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for a taxpayer to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.

·         Unsigned forms. An unsigned tax return isn't valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have a valid power of attorney. Taxpayers can avoid this error by filing their return electronically and digitally signing it before sending it to the IRS. 

Taxpayers who file electronically and choose direct deposit get their refund faster. IRS Free File offers online tax preparation, direct deposit of refunds, and electronic filing —all for free to qualified individuals. Some options are available in Spanish. Many taxpayers also qualify for free tax return preparation from IRS-certified volunteers.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS     

When Is Employer-provided Life Insurance Taxable?

Posted by Admin Posted on Sept 28 2022

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If your employee benefits include group term life insurance paid by your employer, a portion of the premiums paid for the coverage may be taxable. Depending on the amount of coverage you’re provided, some of it may create undesirable income tax consequences for you.

The cost of the first $50,000 of group term life insurance coverage that your employer pays for is excluded from taxable income and doesn’t add anything to your income tax bill. That’s good news. But the employer-paid cost of group term coverage over $50,000 is taxable income to you. That means it will be included in the taxable wages reported on your Form W-2.

Have you reviewed your W-2?

If you think the tax cost of employer-provided group term life insurance may be too high, first you should determine whether this is actually the case. If a specific dollar amount appears in Box 12 of your Form W-2 (with code “C”), that dollar amount represents your employer’s cost to provide you with group-term life insurance coverage of more than $50,000, minus any amount you paid for the coverage. You’re responsible for federal, state and local taxes on the amount that appears in Box 12 and for the associated employee portion of Social Security and Medicare taxes as well.

But keep in mind that the amount in Box 12 is already included as part of your total “Wages, tips and other compensation” in Box 1 of the W-2. It’s the amount in Box 1 that is reported on your tax return.

How is phantom income calculated?

The cost of employer-provided group term life insurance that will be taxable income to you is determined using the IRS Premium Table based on preset factors such as age. Under these determinations, the amount of taxable income attributed to an older employee is often higher than the premium the employee would pay for comparable coverage under an individual term policy.

This tax trap gets worse as employees gets older and as the amount of their compensation increases.

What are your options?

If you decide that the tax cost is too high for the benefit you’re getting in return, you should find out whether your employer has a “carve-out” plan. That’s a plan that allows selected employees to carve out from the group term coverage. If your employer’s plan doesn’t offer a carve-out, ask if they’d be willing to create one.

There are several types of carve-out plans that employers can offer to their employees. For example, the employer can continue to provide $50,000 of group term insurance (since there’s no tax cost for the first $50,000 of coverage). Then, the employer can either provide the employee with an individual policy for the balance of the coverage or give the employee the amount the employer would have spent for the excess coverage as a cash bonus that the employee can use to pay the premiums on an individual policy.

Do you have questions?

You may have questions about this important topic, such as how much your group term life insurance benefit is adding to your income. Contact us for help with this and other questions.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters                       

Know what’s deductible after buying that first home, sweet home

Posted by Admin Posted on Sept 28 2022

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Making the dream of owning a home a reality is a big step for many people. Whether a fixer-upper or dream home, homeownership is a milestone that can come with a learning curve. First-time homeowners should make themselves familiar with authorized deductions, programs that can assist with home ownership and the use of housing allowances that can be beneficial.

When it comes to home ownership, the IRS considers a home to be a house, condominium, cooperative apartment, mobile home, houseboat or house trailer that contains a sleeping space, toilet and cooking facilities.

Most home buyers take out a mortgage loan to buy their home and then make monthly payments to the mortgage holder. This payment may include several costs of owning a home. The only costs the homeowner can deduct are:

Taxpayers must file Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Income Tax Return for Seniors, and itemize their deductions to deduct home ownership expenses. However, taxpayers can't take the standard deduction if they itemize.

Non-deductible payments and expenses

Homeowners can't deduct any of the following items.

  • Insurance, other than mortgage insurance, including fire and comprehensive coverage, and title insurance
  • The amount applied to reduce the principal of the mortgage
  • Wages you pay for domestic help
  • Depreciation
  • The cost of utilities, such as gas, electricity, or water
  • Most settlement or closing costs
  • Forfeited deposits, down payments, or earnest money
  • Internet or Wi-Fi system or service
  • Homeowners' association fees, condominium association fees, or common charges
  • Home repairs

Mortgage interest credit

The mortgage interest credit is meant to help individuals with lower income afford home ownership. Those who qualify can claim the credit each year for part of the home mortgage interest paid.

A homeowner may be eligible for the credit if they were issued a qualified Mortgage Credit Certificate from their state or local government. An MCC is issued only for a new mortgage for the purchase of a main home. The MCC will show the certificate credit rate the homeowner will use to figure their credit. It will also show the certified indebtedness amount and only the interest on that amount qualifies for the credit.

Homeowners Assistance Fund

The Homeowners Assistance Fund program provides financial assistance to eligible homeowners for paying certain expenses related to their principal residence to prevent mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and also displacements of homeowners experiencing financial hardship after January 21, 2020.

Minister's or military housing allowance

Ministers and members of the uniformed services who receive a nontaxable housing allowance can still deduct their real estate taxes and home mortgage interest. They don't have to reduce their deductions based on the allowance.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS 

Hurricane Fiona victims in Puerto Rico qualify for tax relief; Oct. 17 deadline, other dates extended to Feb. 15

Posted by Admin Posted on Sept 28 2022

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The Internal Revenue Service announced that Hurricane Fiona victims in all 78 Puerto Rican municipalities now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business anywhere in the Commonwealth of Puerto Rico qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on September 17, 2022. As a result, affected individuals and businesses will have until February 15, 2023, to file returns and pay any taxes that were originally due during this period.

This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until February 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.

The February 15, 2023, deadline also applies to quarterly estimated income tax payments due on January 17, 2023, and the quarterly payroll and excise tax returns normally due on October 31, 2022 and January 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on October 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on November 15, 2022.

In addition, penalties on payroll and excise tax deposits due after September 17, 2022 and before October 3, 2022, will be abated as long as the deposits are made by October 3, 2022.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-3583-EM − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by Hurricane Fiona and is based on local damage assessments by FEMA. For information on disaster recovery, visit Disaster

Assistance.gov.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Understanding taxpayer rights: Every taxpayer has the right to privacy

Posted by Admin Posted on Sept 19 2022

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The privacy of America's taxpayers is paramount at the IRS. The right to privacy is one of ten rights the Taxpayer Bill of Rights gives all taxpayers.

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary. Taxpayers can also expect that the IRS will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

Here are a few more details about what a taxpayer's right to privacy means:

  • The IRS cannot seize certain personal items, such as schoolbooks, clothing and undelivered mail.
  • The IRS cannot seize a personal residence without first getting court approval, and the agency must show there is no reasonable alternative for collecting the tax debt.
  • Sometimes, taxpayers submit offers to settle their tax debt that relate only to how much they owe. This is formally known as a Doubt as to Liability Offer in Compromise. Taxpayers who make this offer do not need to submit any financial documentation.
  • During an audit, if the IRS finds no reasonable indication that a taxpayer has unreported income, the agency will not seek intrusive and extraneous information about the taxpayer's lifestyle.
  • A taxpayer can expect that the IRS's collection actions are no more intrusive than necessary. During a collection due process hearing, the Office of Appeals must balance that expectation with the IRS's proposed collection action and the overall need for efficient tax collection.

 

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

2021 tax extension filers, don’t overlook these important tax benefits

Posted by Admin Posted on Sept 19 2022

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WASHINGTON — The Internal Revenue Service reminds taxpayers who've yet to file their 2021 federal income tax return to make sure they take advantage of the deductions and credits for which they're entitled and to file electronically as soon as possible.

"Each year, eligible taxpayers overlook money saving deductions and credits that can help them with the cost of raising a family, daycare, paying for college, saving for retirement or making a donation to charity," said IRS Commissioner Chuck Rettig. "We want to ensure they're aware of all the tax benefits for which they may qualify."

This year, the IRS received about 19 million requests for extensions to file until October 17. Those who qualify can prepare and file their return for free with IRS Free File. Electronically filing and choosing direct deposit can help taxpayers get their refund faster. If they owe, sending the tax return with full payment prevents additional interest and penalties. There's no penalty for failure to file if the taxpayer is due a refund.

Filing tips for taxpayers who haven't filed their 2021 tax return are available on IRS.gov.

Taxpayers should consider the following tax benefits when filing their tax return:

  • Earned Income Tax Credit: Qualified low- to moderate-income workers and families may get a tax break.
     
  • Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
     
  • Child and Dependent Care Credit: Families who pay expenses for the care of a qualifying individual so they can work, or look for work, can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
     
  • Recovery Rebate Credit (RRC): Those who missed out on last year's third round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.
     
  • Deduction for gifts to charity: The majority of taxpayers who take the standard deduction can deduct eligible cash contributions they made to charity during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.
     
  • American Opportunity Tax Credit and the Lifetime Learning Credit: Tax credits for higher education can help offset taxpayers' tuition and other costs by reducing the amount of tax owed on their tax return.
     
  • Retirement Savings Contributions Credit (Saver's Credit): A tax credit is available for making eligible contributions to an individual retirement account or employer-sponsored retirement plan.

Helpful reminders

The IRS urges taxpayers to ensure they have all their year-end statements in hand before filing their 2021 return. Besides W-2s and 1099s, this includes two statements issued by the IRS – Letter 6419, showing their total advance Child Tax Credit payments, and Letter 6475, showing their total EIP3 payments.

Individuals can also use their IRS Online Account to see the total amounts of their third round of Economic Impact Payments or advance Child Tax Credit payments. Married spouses who received joint payments will each need to sign into their own account to retrieve their separate amounts.

Taxpayers can find answers to questions, forms and instructions, and easy-to-use tools online at IRS.gov. They can use these resources to get help when it's needed at home, at work or on the go.

Adjust 2022 withholding now to avoid tax surprises next year

Summer is a great time for taxpayers to check their 2022 withholding to avoid a tax surprise when they file next year. Life events like marriage, divorce, having a child or a change in income can affect taxes. Too little tax withheld can lead to a tax bill or penalty. Too much can mean the taxpayer won't have use of the money until they get their tax refund in 2023.

The IRS Tax Withholding Estimator on IRS.gov helps employees assess their income tax, credits, adjustments and deductions, and determine whether they need to change their withholding. If a change is recommended, the estimator will provide instructions to update their withholding with their employer, either online or by submitting a new Form W-4, Employee's Withholding Allowance Certificate.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

 

COVID tax relief: IRS provides broad-based penalty relief for certain 2019 and 2020 returns due to the pandemic; $1.2 billion in penalties being refunded to 1.6 million taxpayers

Posted by Admin Posted on Sept 19 2022

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WASHINGTON — To help struggling taxpayers affected by the COVID-19 pandemic, the Internal Revenue Service today issued Notice 2022-36PDF, which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late.

The IRS is also taking an additional step to help those who paid these penalties already. Nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September.

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

"Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways," said IRS Commissioner Chuck Rettig. "The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify; there's no need to call."

The relief applies to the failure to file penalty. The penalty is typically assessed at a rate of 5% per month and up to 25% of the unpaid tax when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36PDF, posted today on IRS.gov.

To qualify for this relief, any eligible income tax return must be filed on or before September 30, 2022.

In addition, the IRS is providing penalty relief to banks, employers and other businesses required to file various information returns, such as those in the 1099 series. To qualify for relief, the notice states that eligible 2019 returns must have been filed by August 1, 2020, and eligible 2020 returns must have been filed by August 1, 2021.

Because both of these deadlines fell on a weekend, a 2019 return will still be considered timely for purposes of relief provided under the notice if it was filed by August 3, 2020, and a 2020 return will be considered timely for purposes of relief provided under the notice if it was filed by August 2, 2021. The notice provides details on the information returns that are eligible for relief.

The notice also provides details on relief for filers of various international information returns, such as those reporting transactions with foreign trusts, receipt of foreign gifts, and ownership interests in foreign corporations. To qualify for this relief, any eligible tax return must be filed on or before September 30, 2022.

Relief is automatic; most of $1.2 billion in refunds delivered to eligible taxpayers by next month

Penalty relief is automatic. This means that eligible taxpayers need not apply for it. If already assessed, penalties will be abated. If already paid, the taxpayer will receive a credit or refund.

As a result, nearly 1.6 million taxpayers who already paid the penalty are receiving refunds totaling more than $1.2 billion. Most eligible taxpayers will receive their refunds by the end of September.

Penalty relief is not available in some situations, such as where a fraudulent return was filed, where the penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were finally determined by a court. For details, see Notice 2022-36PDF, available on IRS.gov.

This relief is limited to the penalties that the notice specifically states are eligible for relief. Other penalties, such as the failure to pay penalty, are not eligible. But for these ineligible penalties, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First Time Abate program. Visit IRS.gov/penaltyrelief for details.

"Penalty relief is a complex issue for the IRS to administer," Rettig said. "We've been working on this initiative for months following concerns we've heard from taxpayers, the tax community and others, including Congress. This is another major step to help taxpayers, and we encourage those affected by this to review the guidelines."

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Taxpayers should be sure to have all their info before going to a tax pro

Posted by Admin Posted on Sept 19 2022

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Taxpayers using a professional tax preparer should make sure they have all their information readily available before their appointment. Collecting their information and getting copies of any missing documents before taxpayers sit down to prepare their return is critical to filing an accurate tax return. Having organized records and information in hand helps prevent filing errors and will likely create a smoother filing experience.

Here's a list of information taxpayers may need. Not all information applies to all taxpayers.

  • Social Security numbers of everyone listed on the tax return. 
  • Bank account and routing numbers for direct deposit or information to make a tax payment.
  • Forms W-2 from employer(s).
  • Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan.
  • Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy.
  • Form 1099-INT for interest received.
  • Other income documents and records of virtual currency transactions.
  • Form 1095-A, Health Insurance Marketplace Statement.
  • Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments.
  • Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the recovery rebate credit.
  • Information to support claiming other credits or deductions, such as receipts for child or dependent care, college expenses or donations.

Taxpayers can get information about their Economic Impact Payments and advance child tax credit payments through their IRS online account.

Taxpayers who don't have their letters about their Economic Impact Payment to claim missing stimulus payments and advance child tax credit payments to claim their full child tax credit have an online option. They can log in to their IRS online account and get the information from the Tax Records tab.

For taxpayers who are married filing jointly, each spouse will need to have their own Economic Impact Payment and advance child tax credit information.

What taxpayers should do if they're missing other documents

Taxpayers who didn't receive a W-2 or Form 1099 should contact the employer, payer or issuing agency and request the missing documents. This also applies for those who received an incorrect W-2 or Form 1099.

If they still can't get the forms, they can use Form 4852, Substitute for Form W-2, Wage and Tax Statement or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. If a taxpayer doesn't receive the missing or corrected form in time to file their tax return, they can estimate the wages or payments made to them, as well as any taxes withheld. They can use Form 4852 to report this information on their federal tax return.

 

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Aspiring entrepreneurs: learn the basics of setting up a business

Posted by Admin Posted on Sept 19 2022

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New entrepreneurs can start out on the right foot by making sure they understand the tax responsibilities of running a business. The process can seem daunting, but IRS.gov has resources to help new business owners.

Here are a few things new entrepreneurs need to do when starting their business.

Choose a business structure

The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:

  • Sole proprietorship: An unincorporated business owned by an individual. There's no distinction between the taxpayer and their business.
  • Partnership: An unincorporated business with ownership shared between two or more people.
  • Corporation: Also known as a C corporation. It's a separate entity owned by shareholders.
  • S Corporation: A corporation that elects to pass corporate income, losses, deductions and credits through to the shareholders.
  • Limited Liability Company: A business structure allowed by state statute.

Choose a tax year

tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:

  • Calendar year: 12 consecutive months beginning January 1 and ending December 31.
  • Fiscal year: 12 consecutive months ending on the last day of any month except December.

Apply for an employer identification number

An EIN is also called a federal tax identification number. It's used to identify a business. Most businesses need one of these numbers. It's important for a business with an EIN to keep the business mailing address, location and responsible party up to date. IRS regulations require EIN holders to report changes in the responsible party within 60 days. They do this by completing Form 8822-B, Change of Address or Responsible Party and mailing it to the address on the form.

Have all employees complete these forms

Pay business taxes

The form of business determines what taxes must be paid and how to pay them.

Visit state's website

Prospective business owners should visit their state's website for info about state requirements.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

From markers to face masks, classroom supplies may be tax deductible

Posted by Admin Posted on Aug 30 2022

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Teachers go above and beyond for their students, often buying classroom supplies needed to make learning successful. The educator expense deduction allows eligible teachers and administrators to deduct part of the cost of technology, supplies and training from their taxes. They can only claim this deduction for expenses that weren't reimbursed by their employer, a grant or other source.

Who is an eligible educator:

The taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Things to know about this deduction:

Starting on tax returns for 2022, educators can deduct up to $300 of trade or business expenses that weren't reimbursed. If two married educators are filing a joint return, the limit rises to $600. These taxpayers cannot deduct more than $300 each.

For 2021 returns, the limit is $250, or $500 for married educators filing jointly. As teachers prepare for the school year, they should remember to keep receipts after making any purchase to support claiming this deduction.

Qualified expenses are amounts the taxpayer paid themselves during the tax year.

Here are some of the expenses an educator can deduct:

  • Professional development course fees
  • Books and supplies
  • COVID-19 protective items to stop the spread of the disease in the classroom.
  • Computer equipment, including related software and services
  • Other equipment and materials used in the classroom

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS 

People without a filing requirement may miss out on a refund if they don’t file a 2021 tax return

Posted by Admin Posted on Aug 30 2022

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Some people may choose not to file a tax return because they didn't earn enough money to be required to file but may miss getting a refund if they don't file. While the filing deadline is October 17, 2022 to file 2021 tax returns, the IRS strongly encourages individuals to consider filing electronically sooner, rather than later, especially if they're due a refund.

In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or can be claimed as a dependent of someone else. The Interactive Tax Assistant can help people determine if they need to file a tax return.

Look at tax withheld or paid. Excess tax withholdings are only returned in the form of a refund when someone files a tax return. This can affect students and part-time workers where the tax withheld from their wages is at a rate that is too high. Seniors and retirees who make estimated tax payments or have money withheld from their retirement fund and Social Security disbursements may also be eligible for a refund.

Individuals who answer yes to any of these questions, may be due a refund and must file a tax return to get their money.

  • Did the taxpayer's employer withhold federal income tax from their pay?
  • Did the taxpayer make estimated tax payments during the tax year?
  • Did they overpay last year on their taxes and have it applied to their 2021 tax?

Here are some valuable credits taxpayers may be able to claim. While most tax credits can be used to reduce the tax owed, there are credits that allow individuals to receive money beyond what they owe.

Recovery rebate credit Individuals who didn't qualify for a third Economic Impact Payment or got less than the full amount, may be eligible to claim the 2021 recovery rebate credit and will need to file a 2021 tax return even if they don't usually file a tax return. The credit will reduce any tax owed for 2021 or be included in the tax refund.

Earned income tax credit A working taxpayer who earned $57,414 or less last year could receive the EITC as a tax refund. For the 2021 tax year, the tax return taxpayers file in 2022, the earned income credit ranges from $1,502 to $6,728 depending on their filing status and how many children they claim on their tax return. Taxpayers who did not file a return for tax year 2020 or 2021 or who did not claim the earned income tax credit on their 2020 or 2021 return because they had no earned income in those years may file an original or amended return to claim the credit using their 2019 earned income if they are otherwise eligible to do so.

Taxpayers can also use their 2019 earned income to figure their 2021 earned income credit if their 2019 earned income is more than their 2021 earned income. They can check eligibility by using the EITC Assistant on IRS.gov, which is available in eight different languages.

Child tax credit or credit for other dependents Taxpayers can claim the child tax credit if they have a qualifying child under the age of 18 and meet other qualifications. Other taxpayers may be eligible for the credit for other dependents. This includes people who have:

  • Dependents who are age 17 or older.
  • Dependents who have individual taxpayer identification numbers.
  • Dependent parents or other qualifying relatives supported by the taxpayer.
  • Dependents living with the taxpayer who aren't related to the taxpayer.

This Interactive Tax Assistant tool on IRS.gov can help people determine if they qualify for these two credits.

Education credits There are two higher education credits that can reduce the amount of tax someone owes on their tax return. One is the American opportunity tax credit and the other is the lifetime learning credit. The taxpayer, their spouse or their dependent must have been a student enrolled at least half time for one academic period to qualify. The taxpayer may qualify for one of these credits even if they don't owe any taxes. Form 8863, Education Credits is used to claim the credit when filing the tax return.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source : IRS

New school year reminder to educators; maximum educator expense deduction rises to $300 in 2022

Posted by Admin Posted on Aug 30 2022

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WASHINGTON — As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they'll be able to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year.

This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax years 2002 through 2021, the limit was $250 per year. The limit will rise in $50 increments in future years based on inflation adjustments.

For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they're married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?

Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What's deductible?

Educators can deduct the unreimbursed cost of:

  • Books, supplies and other materials used in the classroom.
  • Equipment, including computer equipment, software and services.
  • COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention.
  • Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.

Qualified expenses don't include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

Reminder for 2021 tax returns being filed now: Deduction limit is $250

For those who received a tax filing extension or still need to file a 2021 tax return, the IRS reminds any educator still working on their 2021 return that the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.

File electronically when ready. Tax-filing software uses a question-and-answer format that makes doing taxes easier. Whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer, the IRS urges everyone to file electronically and choose direct deposit for refunds. For details, visit Electronic Filing Options for Individuals.

In addition, the IRS urges anyone who owes taxes to choose the speed and convenience of paying electronically, such as with IRS Direct Pay, a free service available only on IRS.gov. For information about this and other payment options, visit Pay Online.

Taxpayers who requested more time to file an accurate return have until October 17, 2022. Those who have what they need to file, however, should file as soon as possible to avoid delays in processing their return. Taxpayers are urged to file electronically when they are ready and avoid the last-minute rush to file at the deadline.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

TAS Tax Tip: Mid-Year Tax Checkup

Posted by Admin Posted on Aug 30 2022

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Summertime is the perfect time for a mid-year tax checkup. A tax checkup will help you avoid being surprised with a potentially large tax bill and may help uncover ways you can save throughout the rest of the year. Keep in mind that big tax breaks were enacted for the 2021 tax year, but most of those tax law changes expired at the end of 2021. As a result, the child tax credit and credit for other dependentschild and dependent care creditEarned Income Tax Credit (EITC) and other popular tax breaks are different for the 2022 tax year than 2021.

Get organized

Collect and keep your records and receipts. Record keeping can help you identify sources of income, track deductible expenses, and make preparing a complete and accurate tax return easier.

Notify the IRS if your address changes and notify the Social Security Administration of a legal name change.

Create and/or sign into your individual IRS online account to view your federal tax records, manage communication preferences, make payments and more.

Perform a paycheck check-up

Pay close attention to your paystubs to help prevent end-of year surprises. Make sure the earnings are correct and that you have the proper amount of tax withheld. As time passes, life events like marriage, divorce, having a child, buying a home, or a change in income may affect your taxes. The IRS’s Tax Withholding Estimator will help you assess your income tax, credits, adjustments, and deductions, and determine whether you need to change your tax withholding. If a change is recommended, the estimator will provide instructions to update your withholding with your employer either online or by submitting a new Form W-4, Employee’s Withholding Allowance Certificate.

Remember, most income is taxable. This includes the following sources and more:

Consider making estimated tax payments

If you receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits, or pension and annuity income, you should make quarterly estimated tax payments. Log in to your online account to make a payment online or go to IRS.gov/payments.

Review your retirement contributions

Review contributions to your retirement plan, such as 401(k) and Individual Retirement Accounts (IRAs). If you want to maximize your contributions, run the numbers to see how much you need to save from your remaining paychecks this year. Increasing pre-tax retirement contributions reduces your taxable income for the year you contribute.

Report changes that may affect your health insurance Marketplace premiums

If you have health insurance through your state’s health insurance marketplace established under the Affordable Care Act, it is important to report changes that may affect your premiums. Changes in circumstances to report to the Marketplace include:

  • Changes in household income (including lump sum distributions from Social Security, retirement accounts, etc.);
  • Birth or adoption;
  • Marriage or divorce;
  • Moving to a different address;
  • Gaining or losing eligibility for other health care coverage; or
  • Other changes affecting income and your family.

If you want to see how a change of circumstance might affect your Premium Tax Credit (PTC), you can use the PTC Change Estimator. Remember to contact your Marketplace to report a change of circumstances.

Plan your health flexible spending arrangements

Check the balance of your flexible spending arrangement (FSA). FSAs allow you to put some of your pre-tax income toward qualifying medical, dental, and vision expenses, along with other health-related products and services. For 2022, workers can contribute up to $2,850.

While there are some provisions that may let your roll over some money into the next year, most FSAs are “use-or-lose.” Start thinking now about how you might use remaining funds in the second half of the year to ensure you don’t lose the money you contributed to your FSA account.

For more updates from the Taxpayer Advocate Service, visit the news and information center to read the latest tax tips, blogs, alerts and more. Also available in Spanish.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

TAS Tax Tip: What to do if you receive an IRS balance due notice for taxes you have already paid

Posted by Admin Posted on Aug 30 2022

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The IRS issues various balance due notices, including Notice CP14, Notice of Tax Due and Demand for Payment. This information will help you if you receive a CP14 from the IRS despite having already paid your taxes in full.

The CP14 is a balance due notice telling you that you owe money for unpaid taxes. The notice requests that a payment be made within 21 days. If the balance due is not fully paid within 60 days, the IRS can proceed with collection activity.

The first thing to know is don’t panic! Taxpayers typically don’t want to hear from the IRS. Sometimes they don’t even want to open the mail from the IRS and in particular don’t want to see a bill for federal income taxes they already paid. Because of a correspondence backlog at the IRS, many payments have not yet been processed. Until that is done, those taxpayers’ accounts reflect balances due even though the taxes have been paid.

What should I do if I receive a CP14 notice by mistake?

  • Don’t ignore it. Open it, read it, and keep it in a safe place.
  • Verify your taxes were paid. If you have documentation that you have paid the right amount of tax, don’t pay it again.
  • Due to the correspondence backlog, your payment may not have been processed yet, so we recommend that you create an online account to monitor the account for your payment to be applied.
  • Respond to the IRS. You have 60 days from the date of the CP14 notice to respond, so if the payment isn’t applied to your account AT LEAST TEN DAYS PRIOR to the 60-day deadline, have your information ready and either call the number on your notice or submit your information by mail to make sure you are compliant with the terms of the notice.

What should I do if I made a mistake and the CP14 notice is correct?

It’s in your best interest to pay your tax debt as soon as possible to limit the penalties and interest the IRS may charge.

However, if you can’t pay the full amount by the date on the notice, there are several payment options that might work for your situation. Depending on the type and amount of tax you owe, different options are available, ranging from short term extensions, to installment agreements, to an offer in compromise. Each has different requirements and may have a fee.

You must reply by the date required in the notice or you may lose certain appeal rights.

Where to reply

The notice tells you where to call and where to send your payment or response if the notice is incorrect. Follow the instructions.

What if I want to talk with someone?

Each notice or letter from the IRS should include contact information. The telephone number is usually found in the upper right-hand corner. If a specific employee is working your case, it will show a specific phone number for that employee or the department manager. Otherwise, it will show the IRS toll-free number (800-829-1040).

Note: Live phone support often has long wait times or you may have to call more than once. Responses to correspondence may also have long delays. The IRS has expanded voice bot options for faster services that includes assistance for eligible taxpayers in setting up or modifying payment plans.

The best days to call the IRS are Wednesdays, Thursdays, and Fridays. The IRS advises that wait times are the longest on Mondays and Tuesdays.

Have your paperwork (such as cancelled checks, amended return, etc.) ready when you call.

Wait – I still need help

Letters and notices aren’t always easy to understand. Here are three resources we recommend you use if you need more help:

You can generally resolve most notices or letters without help, but you can also get the help of a professional – either the person who prepared your return, or another tax professional.

If you can’t afford to hire a tax professional to assist you, you may be eligible for free or low cost representation from an attorney, certified public accountant, or enrolled agent associated with a Low Income Taxpayer Clinic (LITC). LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee.  For more information or to find an LITC near you, see the LITC page or IRS Publication 4134, Low Income Taxpayer Clinic List.  This publication is also available online at www.irs.gov/forms-pubs or by calling the IRS toll-free at 800-TAX-FORM (800-829-3676).

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

Basic things all businesses should know about excise tax

Posted by Admin Posted on Aug 30 2022

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Excise tax is an indirect tax on specific goods, services and activities. Federal excise tax is usually imposed on the sale of things like fuel, airline tickets, heavy trucks and highway tractors, indoor tanning, tires, tobacco and other goods and services.

Businesses that are subject to excise tax generally must file a Form 720, Quarterly Federal Excise Tax Return to report the tax to the IRS.

This tax is commonly included in the cost of the product. While the end consumer doesn't usually see the excise tax on their receipt, it may be charged at the time of

  • Import
  • Sale by the manufacturer
  • Sale by the retailer
  • Use by the manufacturer or consumer

Many excise taxes go into trust funds for projects related to the taxed product or service, such as highway and airport improvements. Excise taxes are independent of income taxes. Often, the retailer, manufacturer or importer must pay the excise tax to the IRS and file the Form 720.

Some excise taxes are collected by a third party. The third party then sends the tax to the IRS and files the Form 720. For example, the tax on an airline ticket generally is paid by the purchaser and collected by the airline.

When to file

Businesses must file the form for each quarter of the calendar year. Here are the due dates:

  • Quarter 1 – January, February, March: deadline, April 30
  • Quarter 2 – April, May, June: deadline, July 31
  • Quarter 3 – July, August, September: deadline, October 31
  • Quarter 4 – October, November, December: deadline, January 31

If the deadline for filing a tax return falls on a Saturday, Sunday or legal holiday, the due date is the next business day.

How to file

The IRS does accept paper excise tax returns. However, electronic filing is strongly encouraged, when possible. To make this process easier for taxpayers, the contact information for all approved e-file transmitters of excise forms is listed on IRS.gov. Businesses can submit forms online 24 hours a day.

When businesses e-file, they get confirmation that the IRS received their form. Also, e-filing reduces processing time and errors. To electronically file, business taxpayers will have to pay the provider's fee for online submission.

The excise tax forms available for electronic filing are:

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

ABLE accounts can help people with disabilities pay for disability-related expenses

Posted by Admin Posted on Aug 30 2022

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People with disabilities can use an Achieving a Better Life Experience or ABLE account to help pay qualified disability-related expenses. This tax-advantaged savings account doesn't affect their eligibility for government assistance programs.

Here are some key things people should know about these accounts.

Annual contribution limit

  • The 2022 limit is $16,000.
  • Certain employed ABLE account beneficiaries may make an additional contribution up to the lesser of these amounts:
    • The designated beneficiary's compensation for the tax year.
    • The poverty line for a one-person household. For 2022, this amount is $12,880 in the continental U.S., $16,090 in Alaska and $14,820 in Hawaii. 

Saver's credit

  • ABLE account designated beneficiaries may be eligible to claim the saver's credit for a percentage of their contributions. 
  • The beneficiary claims the credit on Form 8880, Credit for Qualified Retirement Savings ContributionsPDF. The saver's credit is a non-refundable credit available to individuals who meet these three requirements:
    • Are at least 18 years old at the close of the taxable year
    • Are not a dependent or a full-time student
    • Meet the income requirements

Rollovers and transfers from section 529 plans

  • Families may roll over funds from a 529 plan to another family member's ABLE account. 
  • The ABLE account must be for the same beneficiary as the 529 account or for a member of the same family as the 529 account holder. Rollovers from a section 529 plan count toward the annual contribution limit. For example, the $16,000 annual contribution limit would be met by parents contributing $10,000 to their child's ABLE account and rolling over $6,000 from a 529 plan to the same ABLE account.

Qualified disability expenses

  • States can offer ABLE accounts to help people who become disabled before age 26 or their families pay for disability-related expenses. These expenses include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services.
  • Though contributions aren't deductible for federal tax purposes, distributions, including earnings, are tax-free to the beneficiary, if they are used to pay qualified disability expenses. 

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS 

How extension filers – and everyone else – can get tax help fast

Posted by Admin Posted on Aug 30 2022

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For people who haven't filed their 2021 tax return yet, and for everyone looking for tax assistance, IRS.gov has resources to help people file electronically, get personalized tax account info, and find the status of their refund. These online tools are available any time, so taxpayers can use them at their convenience.

Get tax information 24/7

Taxpayers can use IRS.gov to:

  • View the filing page to get information on most federal income tax topics.
  • Access the Interactive Tax Assistant tool for answers to many tax law questions.
  • Sign into their individual IRS online account to view their balance and tax records, make payments, and manage communication preferences.
  • Find information about their tax refunds using the Where's My Refund? tool.

Taxpayers can also download the official IRS mobile app, IRS2Go, to check their refund status, make payments, find free tax preparation assistance, and sign up for helpful tax tips.

File electronically

Taxpayers who requested an extension to October 17 or missed the April 18 deadline can still prepare and file returns electronically for free with IRS Free File, if they qualify. The IRS accepts electronically filed returns 24/7. There's no reason to wait until October 17 if filers have all the information and documentation, they need to file an accurate return today. They can get their refund faster by choosing direct deposit.

If taxpayers need info about their Economic Impact Payments to determine eligibility for the recovery rebate credit or need to reconcile their advance child tax credit payments, they can go to the Tax Records tab in their IRS online account.

Taxpayers who missed the April 18 deadline and owe should file and pay electronically as soon as possible to reduce penalties and interest. Taxpayers can make payments or set up payment plans online.

Find a taxpayer assistance center

The Taxpayer Assistance Center Locator tool has a new look and feel, featuring a dynamic map, a directions button and two tabs for inputting search criteria. It's important to remember that Taxpayer Assistance Centers operate by appointment only. Taxpayers must make an appointment by calling the number for the office they want to visit.

Read information in other languages

Many IRS webpages are now available in Spanish, Vietnamese, Russian, Korean, Haitian Creole and Chinese. Some of the multilingual resources include the Taxpayer Bill of Rightse-file resources and many tax forms and publications.

Access the Alternative Media Center

The online Alternative Media Center has accessible products for use with assistive technology like screen reading software, refreshable Braille displays and screen magnifying software. These products include tax forms, instructions and publications that can be downloaded or viewed online as Section 508 compliant PDFs, HTML, eBraille, text and large print. To request paper copies of tax forms or instructions or publications in Braille or large print, taxpayers can call the tax form telephone number at 800-829-3676. Taxpayers can complete Form 9000, Alternative Media PreferencePDF, to receive their IRS tax notices in Braille, large print, audio or electronic formats.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

People should donate carefully after a disaster to avoid scams

Posted by Admin Posted on Aug 30 2022

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After an emergency or disaster, people rally to help victims by donating money. Unfortunately, this can give criminals an opportunity to prey on them by soliciting donations for fake charities. Scammers may also pose as federal agencies to dupe disaster victims trying to get disaster relief.

People should always be suspicious of unsolicited contact. Scammers often contact their possible victim by telephone, social media, email or in person.

People donating to charity should make sure their money is going to a reputable organization.

  • Thieves may pose as a representative of a charity to ask for money or private information from well-intentioned taxpayers.
  • Scammers may set up bogus websites using names that sound like real charities. When a taxpayer searches for a charity online, they find the fake website or social media page, instead.
  • Donors can use the Tax Exempt Organization Search to find or verify qualified charities. Donations to these real charities may be tax deductible.
  • Taxpayers should always give by check or credit card to have a record of the donation.
  • Donors shouldn't give out personal financial information to anyone who asks for money. This includes things like Social Security numbers, credit card information, bank account numbers, and passwords.

Disaster victims should know:

  • Scammers may claim to work for the IRS. The thieves say they can help victims file casualty loss claims and get tax refunds.
  • Disaster victims can call the IRS disaster assistance line at 866-562-5227. IRS representatives will answer questions about tax relief or disaster-related tax issues.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

TAS Tax Tip: Small business tax highlights

Posted by Admin Posted on Aug 29 2022

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The form of business you operate determines what taxes you must pay and how you pay them. There are four general types of business taxes:

  • Income
  • Self-employment
  • Employment
  • Excise

Income Tax

All businesses must file annual income tax returns, except partnerships which file annual information returns. The form you use depends on your business structure; see Publication 583, Starting a Business and Keeping Records, to decide what forms you should file to report your business income. Publication 509, Tax Calendars, explains when to file returns and make tax payments.

Self-Employment Tax

Self-employment (SE) tax is a social security and Medicare tax primarily for individuals who work for themselves. It is like the social security and Medicare taxes withheld from most employees’ wages by their employers. Your SE tax payments contribute to your coverage under the social security system. This coverage provides you with retirement, disability, survivor, and hospital insurance (Medicare) benefits.

You must file Schedule SE, Self-Employment Tax, with your federal income tax return, Form 1040 or Form 1040-SR, and pay SE tax if either of the following applies:

  • Your net self-employment income was $400 or more; or
  • You had church employee income of $108.28 or more.

The instructions for Schedule SE are a good resource to understand who must pay SE Tax.

Self-employed individuals in Puerto Rico use Form 1040-PR to compute self-employment tax.

Note:  Self-employed individuals generally must pay SE tax as well as income tax.

Employment Tax

When you have employees, you have certain employment taxes you must pay and forms you must file. Employment taxes include the following:

  • Social security and Medicare taxes;
  • Federal income tax withholding; and
  • Federal unemployment (FUTA) tax.

You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year.

If you pay wages subject to federal income tax withholding or social security and Medicare taxes, you generally must file Form 941 quarterly; however, some employers use Form 944, Form 1040 (Schedule H), or Form 943 instead of Form 941. Generally you must use Form 940 to report your annual FUTA tax.

For additional information, refer to Employment Taxes for Small Businesses and Publication 15, (Circular E), Employer’s Tax Guide.

Excise Tax

You may be subject to Excise Tax if you do any of the following:

  • Manufacture or sell certain products;
  • Operate certain kinds of businesses;
  • Use various kinds of equipment, facilities, or products; or
  • Receive payment for certain services.

Excise taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.

These are the forms most commonly used to report excise taxes:

Form 720, Quarterly Federal Excise Tax Return, is used to report your liability by IRS Number. and pay the excise taxes listed on the form. If you report a liability on Part I or Part II, you may be eligible to use Schedule C to claim a credit.

Form 2290, Heavy Highway Vehicle Use Tax Return, is used to report federal excise tax on certain trucks, truck tractors, and buses used on public highways. This tax applies to vehicles having a taxable gross weight of 55,000 pounds or more.

Note: The weight declared for registering a vehicle in a state may affect the taxable gross weight used to calculate the tax.

Form 730, Monthly Tax Return for Wagers, is used by taxpayers in the business of accepting wagers, conducting a wagering pool or lottery, or required to be registered and received wagers for on behalf of another person but didn’t report that person’s name and address.

Form 11-C, Occupational Tax and Registration Return for Wagering, is used to register for certain wagering activity with the IRS and to pay the federal occupational tax on wagering.

Form 6627, Environmental Taxes, is used to report the environmental taxes on petroleum and imported petroleum products, and certain chemicals and imported chemical substances. Find the tax rates for 121 taxable substances here.

For additional information, see Publication 510, Excise Taxes.

Estimated Tax

Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. Estimated taxes are used to pay not only income tax, but other taxes such as self-employment tax.

Individuals, including sole proprietors, partners, and S corporation shareholders, generally must make estimated tax payments if they expect to owe at least $1,000 in tax after subtracting withholding and tax credits. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax.

Corporations generally must make estimated tax payments if they expect to owe at least $500 in taxes. Use Form 1120-W, Estimated Tax for Corporations, to figure your corporation’s estimated tax. You must deposit the payments using the Electronic Federal Tax Payment System. For additional information, refer to Publication 542, Corporations.

Note: S corporations must also make estimated tax payments for certain taxes, but instead use the instructions for Form 1120-S, U.S. Income Tax return for an S Corporation, to figure their estimated tax.

If you pay too little or pay late, you may have to pay an estimated tax penalty even if you are due a refund when you file your tax return.  For more information, see Publication 505, Tax Withholding and Estimated Tax.

Payment Options

You generally must deposit certain excise taxes, corporate income tax, and S corporation taxes before you file your return. You must use an electronic funds transfer (EFT) to make all federal tax deposits (FTDs). Generally, an EFT is made using the Electronic Federal Tax Payment System (EFTPS). If you don’t want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or trusted third party to make EFT on your behalf.

For estimated tax purposes, the year is divided into four payment periods. It’s important to remember that the payment periods are not spread evenly throughout the year. In general, estimated payments are due on April 15, June 15, September 15, and January 15 of the following year. You can mail your estimated tax payments with Form 1040-ESpay online, or pay by phone or from your mobile device using the IRS2Go app. Visit IRS.gov/payments to view all payment options.

Ten Federal Tax Tips to Help Small Business Owners

April shouldn’t be the only time you’re thinking about taxes. Keep these tax tips in mind throughout the year so you’re prepared to maximize your deductions and credits.

  1. Know your limitations and know when you need to ask a professional for help: There are many Online Learning and Educational Products available to help you learn about taxes. For example, the IRS Tax Calendar has important tax dates for businesses. However, if you choose to hire a professional, it is important to choose carefully because you are trusting them with your personal information and relying on them to have the knowledge to help you file an accurate tax return. You are responsible for all the information on your tax returns, no matter who prepares them. TAS Tax Tip: Choosing the right tax return preparer for you can help.

Note: ALL tax return preparers MUST sign their name and enter a preparer tax identification number on your tax return. For your protection, please check that they do this before submitting any documents.

  1. Keep adequate records: Accurate recordkeeping throughout the year will save you time and help ensure your tax return is correct. Set up a system for receipts. This can be a paper file, or you can use an app to scan and store them; just make sure you are saving them in some way.
  2. Separate your personal and business finances: Set up a separate bank account and credit card for your business and run only business expenses through those accounts. See Publication 583, Starting a Business and Keeping Records.
  3. Correctly classify your business: Some business structures enjoy more tax advantages than others. It’s important to choose the business structure that best suits your business. If you’re not sure which to choose, a tax attorney or certified public accountant can help.
  4. Manage payroll: You can take an online class to learn how to handle payroll. But if you don’t have the time, desire, or knowledge to manage payroll, hire someone to do it for you. To help make sure the company is reputable, see Outsourcing Payroll and Third Party Payers.
  5. Subscribe to e-News for Small Businesses: The IRS e-News for Small Businesses is a free electronic mail service that offers tax information for small business owners and self-employed individuals, including reminders, tips and special announcements.
  6. Research small business tax deductions: There is a long list of tax deductions for small business owners. See Publication 535, Business Expenses. A tax deduction is an item you can subtract from your gross income to lower the amount of taxes you owe.
  7. Self-employment tax deduction: You can deduct one-half (50 percent) of your SE tax as an adjustment to income on your federal income tax return. For tax years after 2017, you will also need to report the amount on Form 1040 Schedule 1, Part II.
  8. Make your tax payments timely: Anyone who files federal income tax returns and expects to owe more than $1,000 needs to pay estimated tax If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty. You also may be charged a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.
  9. For faster processing, file your returns electronically: Electronic Filing Options for Business and Self-Employed Taxpayers.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

Some things to know about crowdfunding and taxes

Posted by Admin Posted on Aug 23 2022

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Crowdfunding is a popular way to raise money online. People often use crowdfunding to fundraise for a business, for charity, or for gifts. It's important to know that money raised through crowdfunding may be taxable.

Some money raised through crowdfunding may be considered a gift.

Under federal tax law, gross income includes all income from any source, unless it's excluded from gross income by law. In most cases, gifts aren't included in the gross income of the person receiving the gift. Here's what people involved in crowdfunding should know:

  • If a crowdfunding organizer is raising money on behalf of others, the money may not be included in the organizer's gross income, as long as the organizer gives the money to the person for whom they organized the crowdfunding campaign.
  • If people donate to a crowdfunding campaign out of generosity and without expecting anything in return, the donations are gifts. Therefore, they will not be included in the gross income of the person for whom the campaign was organized.
  • However, not all contributions to crowdfunding campaigns are gifts and may be taxable.
  • When employers give to crowdfunding campaigns for an employee, those contributions are generally included in the employee's gross income.

Taxpayers may want to consult a trusted tax pro for information and advice regarding how to treat amounts received from crowdfunding campaigns.

People may receive Form 1099-K for money raised through crowdfunding.

The crowdfunding website or its payment processor must file Form 1099-K, Payment Card and Third Party Network Transactions with the IRS if:

  • The amount raised is more than $600
  • Contributors to the crowdfunding campaign receive goods or services for their contributions.

If a Form 1099-K is filed, the crowdfunding organizer or the beneficiary of the fundraiser will receive a copy, depending on who received the funding directly from the crowdfunding website.

Receiving a Form 1099-K doesn't automatically mean the amount shown is taxable. However, if the taxpayer doesn't include the distributions from the form on their tax return, the IRS may contact the recipient for more information. The recipient may need to explain why the crowdfunding distributions weren't reported.

Recordkeeping for money raised through crowdfunding.

People who run crowdfunding campaigns or receive money from one should keep careful records about the campaign and the disposition of funds for at least three years.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

What business owners need to do when closing their doors for good

Posted by Admin Posted on Aug 23 2022

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There are a few things business owners need to do before they close their business. Of course, they need to fulfill their federal tax responsibilities. It's also important to notify the IRS of their plans.

Business owners must take these steps when closing a business:

  • File a final tax return and related forms. The type of return to file and related forms depends on the type of business.
  • Take care of employees. Business owners with one or more employees must pay any final wages or compensation, make final federal tax deposits and report employment taxes.
  • Pay taxes owed. Even if the business closes now, tax payments may be due next filing season.
  • Report payments to contract workers. Businesses that pay contractors at least $600 for services including parts and materials during the calendar year in which they go out of business, must report those payments.
  • Cancel EIN and close IRS business account. Business owners should notify the IRS so they can close the IRS business account.
  • Keep business records. How long a business needs to keep records depends on what's recorded in each document.

IRS.gov has information to help guide business owners through the process of shutting down. Small businesses and self-employed taxpayers can find information including:

  • What forms to file
  • How to report revenue received in the final year of business
  • How to report expenses incurred before closure

Business owners can also get helpful information on declaring bankruptcy, selling their business and terminating retirement plans.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Worker Classification 101: employee or independent contractor

Posted by Admin Posted on Aug 23 2022

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A business might pay an independent contractor and an employee for the same or similar work, but there are key legal differences between the two. It is critical for business owners to correctly determine whether the people providing services are employees or independent contractors.

Here's some information to help business owners avoid problems that can result from misclassifying workers.

An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker's services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public.

Independent contractor vs. employee

Whether a worker is an independent contractor, or an employee depends on the relationship between the worker and the business. Generally, there are three categories to considerPDF.

  • Behavioral control − Does the company control or have the right to control what the worker does and how the worker does the job?
  • Financial control − Does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker's job controlled by the payer? Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.
  • Relationship of the parties − Are there written contracts or employee type benefits such as pension plan, insurance, vacation pay? Will the relationship continue and is the work performed a key aspect of the business?

Misclassified worker

Misclassifying workers as independent contractors adversely affects employees because the employer's share of taxes is not paid, and the employee's share is not withheld. If a business misclassified an employee, the business can be held liable for employment taxes for that worker. Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes. Workers who believe they have been improperly classified as independent contractors generally must receive a determination of worker status from the IRS. Then they can use Form 8919, Uncollected Social Security and Medicare Tax on WagesPDF to figure and report their share of uncollected social security and Medicare taxes due on their compensation.

Voluntary Classification Settlement Program

The Voluntary Classification Settlement Program is an optional program that provides businesses with an opportunity to reclassify their workers as employees for future employment tax purposes. This program offers partial relief from federal employment taxes for eligible businesses who agree to prospectively treat their workers as employees. Businesses must meet certain eligibility requirements and apply by filing Form 8952, Application for Voluntary Classification Settlement Program (VCSP), and enter into a closing agreement with the IRS.

Who is self-employed?

Generally, someone is self-employed if any of the following apply to them.

Self-employed individuals, including those who earn money from gig economy work, are generally required to file an tax return and make estimated quarterly tax payments. They also generally must pay self-employment tax which is social security and Medicare tax as well as income tax. These taxpayers may qualify for the home office deduction if they use part of a home for business.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS 

2021 tax extension filers don’t need to wait until October 17

Posted by Admin Posted on Aug 03 2022

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WASHINGTON — The Internal Revenue Service is reminding the estimated 19 million taxpayers who requested an extension to file their 2021 tax return that they don't have to wait until mid-October to file. If a taxpayer has all the necessary information to file an accurate return, they can file electronically at any time before the October deadline and avoid a last-minute rush to file.

Taxpayers who requested more time to file an accurate return have until October 17, 2022. Those who have what they need to file, however, should file as soon as possible to avoid delays in processing their return.

Taxpayers who have questions can get help with most tax issues online or by phone. The IRS.gov website has free and easy to use online tools and resources to help taxpayers get answers 24 hours a day. Voice bots help callers navigate interactive voice responses to simple payment or notice questions, and quickly get responses to Frequently Asked Questions.

The Interactive Tax Assistant is a tool that provides answers to several tax law questions specific to individual circumstances based on input. It can determine if an individual must file a tax return, their filing status, if they can claim a dependent, if an income type is taxable, and their eligibility to claim a credit or deduct certain expenses.

Electronic filing options

The IRS advises individuals who still need to file a 2021 tax return to file electronically and, if due a refund, to choose direct deposit.

Filing electronically is fast, accurate and secure, and when an individual chooses direct deposit, their refund goes directly from the IRS into their bank or financial account getting them their refund in the fastest time possible. If they have a prepaid debit card, they may be able to have their refund applied to the card by providing the account and routing number to the IRS. The IRS processes most e-filed returns and issues direct deposit refunds in less than 21 days.

Eligible individuals can use the IRS Free File program to prepare and file their 2021 federal tax return for free. Taxpayers can choose the brand-name tax preparation software company that is best for them. Some even offer free state tax return preparation. Those who earned more than $73,000 have the option to use IRS Free File Fillable Forms.

MilTax online software is also available for members of the military and certain veterans, regardless of income. This software is offered through the Department of Defense. Eligible taxpayers can use MilTax to prepare and electronically file their federal tax returns and up to three state returns for free.

Volunteer Income Tax Assistance

The IRS's Volunteer Income Tax Assistance (VITA) program offers free basic tax return preparation to people who generally make $58,000 or less and people with disabilities or limited English-speaking taxpayers. While the majority of these sites are only open through the end of the filing season, taxpayers can use the VITA Site Locator tool to see if there's a community-based site staffed by IRS-trained and certified volunteers still open near them.

Tax professionals

There are also various types of tax return preparers who can help, including certified public accountants, enrolled agents, attorneys and others who don't have a professional credential.

Taxpayers should choose a tax preparer wisely. For individuals who want help with their taxes, the IRS online directory can assist in finding a tax professional in their area.

Get current on taxes

The IRS sends correspondence to a taxpayer's last known address, usually the address from their most recently filed tax return. If the taxpayer moves and does not send a change of address to the IRS, they may not receive an IRS notice and could miss the deadline to respond.

There's no penalty for not filing a return if due a refund, but there's also no statute of limitations for assessing and collecting taxes due if no return has been filed.

Interest is charged on any tax not paid by the April due date and will accrue until paid in full. Individual taxpayers are charged the federal short-term interest rate plus 3 percentage points, currently 5% per year, compounded daily. Penalties will accrue for each month tax remains unpaid until maxed out at 25% of the unpaid tax.

Submitting a tax return and paying any amount owed as soon as possible can help taxpayers avoid further interest and penalties.

Taxpayers who owe taxes can review all payment options online. These include paying taxes through an Online Account with IRS Direct Pay or paying by debit card, credit card or digital wallet. The IRS has options for people who can't pay their taxes, including applying for a payment plan on IRS.gov.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

TAS Tax Tip: Adjust Your Withholding to Ensure There’s No Surprises on Tax Day

Posted by Admin Posted on Aug 02 2022

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It is a good practice for everyone to do a paycheck check-up every year. Checking your tax withholding amounts can ensure that you aren’t paying too much or too little in federal income tax.

No one likes surprises come tax time. Checking your tax withholding amounts can ensure that you aren’t paying too much (or too little) in federal income tax. Doing a paycheck check-up is a great way to prepare for Tax Day – even if you just filed your taxes.

What does tax withholding mean?

Federal income tax is a pay-as-you-go tax. That means that throughout the year, you pay or have an employer, or the payer of income, withhold a portion of your taxes as you earn or receive income.

Why should I check my tax withholding?

It is a good practice for everyone to do a paycheck check-up every year.

There are essentially two ways to pay your federal income taxes:

  • Withholding from your paycheck, pension, and other government payments such as Social Security; or
  • If you don’t pay your tax through withholding, or don’t pay enough tax that way, making quarterly estimated tax payments.

If you don’t pay enough taxes during the year, you could be subject to estimated tax penalties. Typically, you can avoid a penalty and any applicable interest by paying at least 90 percent of your taxes during the year.

 

Checking and then adjusting tax withholding can help make sure you:

  • Don’t owe more tax than you are expecting;
  • Don’t get a surprise tax bill, and possibly a penalty, when filing next year; or
  • Don’t receive a refund that is much larger or smaller than anticipated.

To avoid a large or unexpected tax bill it is also a good idea to change your withholding when you experience a big life change such as marriage, divorce, birth of a child, getting a new or second job, starting a side business, or receiving any other income that isn’t subject to withholding.

It’s important to do this as early in the year as possible, so that if a tax withholding adjustment is needed, there is more time to make up the difference during the rest of the year. Waiting means there are fewer pay periods to withhold the necessary federal tax.

How do I calculate the correct amount to withhold?

The IRS Withholding Estimator on IRS.gov is a free tool that can help you calculate the right amount of tax to withhold from your paycheck.

The Estimator works for most taxpayers; however, people with more complex tax situations should use the instructions in Publication 505Tax Withholding and Estimated Tax.

This includes taxpayers who owe:

  • Self-employment tax;
  • Alternative minimum tax;
  • Tax on unearned income of dependents;
  • Tax on long-term capital gains or qualified dividends; and
  • Certain other investment- or household employee-related taxes.

For more on using the IRS Withholding Estimator read our TAS Tax Tip: Use Tax Withholding Estimator and Take Action on Your Tax Withholding Now

How do I adjust my withholding, if I need to?

If you think you need to make changes to your withholding amount, the calculator gives you the information you will need to fill out a new Form W–4, Employee’s Withholding Allowance Certificate. Because this form tells your employer how much you want them to withhold, submit the new W-4 to your employer as soon as possible to make the changes. Some payroll providers allow you to adjust your withholding using an online version of the Form W-4.

What if I don’t have enough taxes withheld?

If after making withholding adjustments, the amount of income tax withheld from your salary or pension is not enough, or if you don’t have any withholdings at all, you may have to make estimated tax payments. This also applies if you receive income such as interest, dividends, alimony, capital gains, prizes and awards, or other sources of income without withholding. You might also need to make estimated tax payments if you are in business for yourself.

Estimated tax payments are due four times each year:

  • January 1 to March 31 – April 15
  • April 1 to May 31 – June 15
  • June 1 to August 31 – September 15
  • September 1 to December 31 – January 15 of the following year

Note: If these due dates fall on a Saturday, Sunday, or legal holiday, the payments are due the next business day.

Your estimated tax payments should correspond to the period that any income is received. If you don’t pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

You can use the worksheet in Form 1040-ES to figure your estimated tax. Again, it’s a good idea to do this each year, as early in the year as possible.

If you are unemployed and receive unemployment compensation, you may choose to have a flat ten percent withheld from your unemployment benefits to cover all or part of your tax liability.

  • Complete and provide Form W-4V, Voluntary Withholding Request, or another withholding request form, to the agency paying the benefits – don’t send it to the IRS.

Remember, if you need to increase your withholding, even just adding a few dollars more or making a partial estimated tax payment can make a difference in the amount you may owe on your tax return.  For those who cannot afford to pay taxes through their withholding or estimated tax payments, the IRS has payment options available. Each option has different requirements, and some have fees.

Most options for paying off a tax debt work best if you are proactive. More information is available on our I Can’t Pay My Taxes Get Help Page.

Do I have to report gambling winnings?

Yes, all gambling winnings are taxable and must be reported as income on your tax return. This includes cash winnings and fair market value of prizes such as cars and trips from:

  • Lotteries;
  • Raffles;
  • Horse Races;
  • Casinos; and
  • Fantasy Sports Leagues.

You should receive a Form W-2G, Certain Gambling Winnings, from a payer that shows the amount of your winnings and any taxes taken out. You must report all gambling winnings as “Other Income” on Form 1040 or Form 1040-SR , including winnings that aren’t reported on a Form W-2G. Some gambling winnings may require you to pay estimated tax.

Note: There are different rules for professional gamblers. For more information about withholding gambling winnings see Publication 505, Tax Withholding and Estimated Tax.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

Hiring Your Minor Children For Summer Jobs

Posted by Admin Posted on Aug 02 2022

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If you’re a business owner and you hire your children this summer, you can obtain tax breaks and other nontax benefits. The kids can gain on-the-job experience, save for college and learn how to manage money. And you may be able to:

  • Shift some of your high-taxed income into tax-free or low-taxed income, and
  • Realize payroll tax savings (depending on the child’s age and how your business is organized).

Plus, you can spend more time with your kids.

A legitimate job

If you hire your child, you get a business tax deduction for employee wage expenses. In turn, the deduction reduces your federal income tax bill, your self-employment tax bill (if applicable) and your state income tax bill (if applicable). However, for your business to deduct the wages as a business expense, the work performed by the child must be legitimate and the child’s pay must be reasonable.

Let’s say you operate as a sole proprietor and you’re in the 37% tax bracket. You hire your 16-year-old daughter to help with office work on a full-time basis during the summer and part-time into the fall. Your daughter earns $10,000 during 2022 and doesn’t have any other earnings.

You save $3,700 (37% of $10,000) in income taxes at no income tax cost to your daughter. She can use her standard deduction of $12,950 for 2022 to completely shelter her earnings.

Your family’s taxes are cut even if your daughter’s earnings exceed her standard deduction. Why? The unsheltered earnings will be taxed to your daughter beginning at a rate of 10%, instead of being taxed at your higher rate.

How payroll taxes might be saved

If your business isn’t incorporated and certain other conditions are met, your child’s wages are exempt from Social Security, Medicare and FUTA taxes. Your child must be under age 18 for this to apply (or under age 21 for the FUTA tax exemption). Contact us for how this works.

Be aware that there’s no FICA or FUTA exemption for employing a child if your business is incorporated or a partnership that includes nonparent partners. And payments for the services of your child are subject to income tax withholding, regardless of age, no matter what type of entity you operate.

Keep accurate records

Hiring your child can be a tax-smart idea. Be sure to keep the same records as you would for other employees to substantiate the hours worked and duties performed (such as timesheets and job descriptions). Issue your child a Form W-2. Contact us with questions about how these rules apply to your situation.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters   

Deducting The Costs Of A Self-managed Portfolio

Posted by Admin Posted on Aug 02 2022

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Do you have significant investment-related expenses, including payment for financial service subscriptions, home office maintenance and clerical support? Under the 2017 Tax Cuts and Jobs Act (TCJA), these expenses aren’t deductible if they’re considered investment expenses to produce income. But they are deductible if they’re considered trade or business expenses.

Changing rules

For years before 2018, production-of-income expenses were deductible as miscellaneous itemized deductions subject to a 2%-of-adjusted-gross-income floor. But the TCJA generally suspended such miscellaneous deductions through 2025.

As a result, only the trade or business expense deduction is currently available for investment-related expenses. If you do a significant amount of trading, you should know which category your investment expenses fall into, because qualifying for trade or business expense treatment is more advantageous now.

A trader vs. an investor

To be able to deduct your investment-related expenses as business expenses, you must be engaged in a trade or business. The U.S. Supreme Court held many years ago that individual taxpayers aren’t engaged in a trade or business merely because they manage their own securities investments, regardless of the amount or the extent of the work required.

However, if you can show that your investment activities rise to the level of carrying on a trade or business, you may be considered a trader, who is engaged in a trade or business, rather than an investor, who isn’t. As a trader, you’re entitled to deduct your investment-related expenses as business expenses.

A trader is also entitled to deduct home office expenses if the home office is used exclusively on a regular basis as the trader’s principal place of business. An investor, on the other hand, isn’t entitled to home office deductions because the investment activities aren’t a trade or business.

A two-part test

Since the Supreme Court decision, there has been extensive litigation on the issue of whether a taxpayer is a trader or investor. The U.S. Tax Court has developed a two-part test, both parts of which must be satisfied for a taxpayer to be considered a trader:

1. The taxpayer’s trading is substantial (in other words, sporadic trading isn’t considered a trade or business), and

2. The taxpayer seeks to profit from short-term market swings, rather than from long-term holding of investments.

A taxpayer’s investment activities may be regular, extensive and continuous. But that itself isn’t sufficient for determining that the taxpayer is a trader. To be considered a trader (and therefore entitled to deduct investment-related business expenses) you must show that you buy and sell securities with reasonable frequency with the goal of making a profit on a short-term basis.

In one U.S. Tax Court case, a taxpayer made more than 1,000 trades a year with trading activities averaging about $16 million annually. Even so, the individual was deemed to be an investor rather than a trader, because the holding periods for stocks sold averaged about one year.

Passing the test

Again, to pass the trader test, both parts one and two must be satisfied. Contact us if you have questions or would like to figure out whether you’re an investor or a trader for tax purposes.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters             

TAS Tax Tip: How to handle a notification of tax-related identity theft

Posted by Admin Posted on Aug 02 2022

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Did you get a notification from IRS or the Social Security Administration (SSA) advising you that you might be a victim of tax-related identity (ID) theft? If yes, it is important to visit our Identity Theft Get Help page and follow the steps there, as well as in the correspondence you received.

How will you know if you are a victim of tax-related ID theft?

You may find out you’re a victim of tax-related ID theft when you try to file your tax return or start getting IRS notices about your tax account.

The most common indicators are:

  • You try to file your tax return electronically, but the IRS rejects your return because it has already received another return using your Social Security Number (SSN) or ITIN;
  • You receive an IRS notice showing you received wages from somewhere you never worked;
  • You receive an IRS letter indicating one or more tax returns have been filed using your SSN or ITIN that you did not file.

Or you may receive a notice from the SSA stating benefits will be reduced or stopped based on IRS records indicating you received wages or other income from an employer for whom you did not work.

There are several steps you may need to take. The right ones for you are based on what’s happening with your tax account.

TAS’s Identity Theft Get Help page will walk you through the steps you need to take for each of the common indicators above and others too.

The IRS Taxpayer Protection Program identifies potential ID theft tax returns as a precautionary measure to protect you. If you receive a Letter 4883C, 5071C,  5747C6330C or 6331C, respond as soon as possible, following the instructions in the letter. Be aware that not all letters have the same options for verifying your identity, so it is important to follow the instructions given.

Protecting your tax account in future years

When the IRS determines you’re the rightful owner of the SSN (or ITIN) and confirms tax-related ID theft occurred, IRS will assign you an IRS Identity Protection PIN (IP PIN), a six-digit number that prevents someone else from filing a tax return using your information. The IRS assigns you a new IP PIN every year. This is an extra layer of security; a valid IP PIN must be entered on electronic and paper tax returns to avoid rejections or delays.

Anyone who can to verify their identity may now voluntarily opt into the IP PIN program as a proactive way to protect against tax-related ID theft. Even though you may not have a filing requirement, an IP PIN still protects your account. You can also see our NTA Blog: Identity Protection PIN Can Protect You From Tax-Related Identity Theft or IRS’s FAQs about the Identity Protection Personal Identification Number (IP PIN) for more information about this special program.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

What businesses need to know about reporting nonemployee compensation and backup withholding to the IRS

Posted by Admin Posted on Aug 02 2022

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When a business hires an independent contractor, the employer is generally not responsible for withholding income taxes, Social Security, or Medicare taxes from their compensation. However, by law, business taxpayers who pay nonemployee compensation of $600 or more must report these payments to the IRS. They do this using Form 1099-NEC, Nonemployee Compensation.

Generally, payers must file Form 1099-NEC by January 31. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.

Nonemployee compensation reportable on Form 1099-NEC is subject to backup withholding if a payee has not provided a Taxpayer Identification Number to the payer or the IRS notifies the payer that the payee provided a TIN that does not match their name in IRS records.

A TIN can be one of the following numbers:

  • Social Security
  • Employer identification
  • Individual taxpayer identification
  • Adoption taxpayer identification

What is backup withholding?

Backup withholding can apply to most kinds of payments reported on Forms 1099 and W-2G. The person or business paying the taxpayer doesn't generally withhold taxes from certain payments; however, there are situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. The payer's requirement to withhold taxes from payments not otherwise subject to withholding is known as backup withholding. The current backup withholding tax rate is 24%.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Surce: IRS

OFFER IN COMPROMISE

Posted by Admin Posted on Aug 02 2022

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An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability or doing so creates a financial hardship. We consider your unique set of facts and circumstances:

  • Ability to pay
  • Income
  • Expenses
  • Asset equity

We generally approve an offer in compromise when the amount you offer represents the most we can expect to collect within a reasonable period of time. Explore all other payment options before you submit an offer in compromise. The Offer in Compromise program is not for everyone. If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.

Who Is Eligible

Confirm you're eligible and prepare a preliminary proposal with the Offer in Compromise Pre-Qualifier Tool.

You're eligible to apply for an Offer in Compromise if you:

  • Filed all required tax returns and made all required estimated payments
  • Aren't in an open bankruptcy proceeding
  • Have a valid extension for a current year return (if applying for the current year)
  • Are an employer and made tax deposits for the current and past 2 quarters before you apply

If You Apply and Are Not Eligible

If you apply for an Offer in Compromise and we can’t process your offer, we'll:

  • Return your application and offer application fee
  • Apply any offer payment you included to your balance due

Submit Your Application

Find forms to submit an application and step-by-step instructions in Form 656-B, Offer in Compromise BookletPDF.

Complete an application package:

  • Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms
  • Form 656(s) – you must submit individual and business tax debt (Corporation/ LLC/ Partnership) on separate Forms 656
  • $205 application fee (non-refundable)
  • Initial payment (non-refundable) for each Form 656.

Select a Payment Option

Your initial payment varies based on your offer and the payment option you choose:

  • Lump Sum Cash: Submit an initial payment of 20% of the total offer amount with your application. If we accept your offer, you'll receive written confirmation. You must pay any remaining balance due on the offer in five or fewer payments.
  • Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If IRS accepts your offer, continue to pay monthly until it is paid in full.

If You Meet the Low Income Certification Guidelines

You don't have to:

  • Send the application fee or the initial payment
  • Make monthly installments while we review your offer.

For details, see Form 656-B, Offer in Compromise BookletPDF.

Understand the Process

While IRS evaluates your offer:

  • Your non-refundable payments and fees are applied to the tax liability (you may designate payments to a specific tax year and tax debt)
  • IRS may file a Notice of Federal Tax Lien
  • IRS suspends other collection activities
  • Your legal assessment and collection period is extended
  • You make all required payments per your offer
  • You don't have to make payments on an existing installment agreement
  • Your offer is automatically accepted if the IRS doesn't not make a determination within two years of the IRS receipt date (This does not include any Appeal period.)

If Your Offer Is Accepted

  • You must meet all the Offer Terms listed in Section 7 of Form 656, including filing all required tax returns and making all payments
  • IRS doesn't release federal tax liens until your offer terms are satisfied
  • Certain offer information is available for public review by requesting a copy of a public inspection file.

If Your Offer Is Rejected

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

A Tax Break For Educators Gets An Update

Posted by Admin Posted on Aug 02 2022

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Teachers who are setting up their classrooms for a new school year often pay for some of their classroom supplies out-of-pocket. They can recoup some of that cost by taking advantage of a special tax break for educators. This deduction gained new importance after the 2017 passage of the Tax Cuts and Jobs Act (TCJA). For 2022, the deduction amount has increased for the first time since it was enacted.

The old-school way

Before 2018, employees who had unreimbursed out-of-pocket expenses could potentially deduct them if they were ordinary and necessary to the “business” of being an employee. A teacher’s out-of-pocket classroom expenses could qualify. Those expenses were claimed as a miscellaneous deduction, subject to a 2% of adjusted gross income (AGI) floor. That meant that only taxpayers who itemized deductions could enjoy a tax benefit, and then only to the extent that their deductions exceeded the 2% floor.

For 2018 through 2025, the TCJA has suspended miscellaneous itemized deductions subject to the 2% of AGI floor. Fortunately, qualifying educators can still deduct some unreimbursed out-of-pocket classroom costs using the educator expense deduction.

The new-school way

Back in 2002, Congress created the above-the-line educator expense deduction. An above-the-line deduction is one that’s subtracted from your gross income to determine your AGI. It can be claimed even by taxpayers who don’t itemize deductions. This is especially significant because, under the TCJA, the standard deduction has nearly doubled, which means that fewer taxpayers now itemize deductions.

For 2022, qualifying elementary and secondary school teachers and other eligible educators (such as counselors and principals) can deduct up to $300 of qualified expenses. This is up from $250 for 2021. Two married educators who file a joint tax return can deduct up to $600 of unreimbursed expenses, limited to $300 each.

Qualified expenses include amounts paid or incurred during the tax year for books, supplies, computer equipment, related software, services, and other equipment and materials used in classrooms. The cost of certain professional development courses may be deductible. Also, protective items to prevent the spread of COVID-19 such as hand sanitizers, disinfectant and other items recommended by the Centers for Disease Control for this purpose are also deductible. However, homeschooling supplies and nonathletic supplies for health or physical education courses aren’t deductible.

More details

Some additional rules apply to the educator expense deduction. If you’re an educator or you know one who might be interested in this tax break, please contact us for more details.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters            

How Start-up Costs Of A New Business Affect Your Tax Return

Posted by Admin Posted on Aug 02 2022

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Despite the COVID-19 pandemic, there has been a large increase in the number of new businesses being launched. The latest data available from the U.S. Census Bureau shows that, for the period of June 2020 through June 2021, business applications were up 18.6%. The Bureau measures this by the number of businesses applying for an employer identification number.

Entrepreneurs often don’t know that many of the expenses incurred by start-ups can’t be currently deducted. You should be aware that the way you handle some of your initial expenses can make a large difference in your federal tax bill.

How to treat expenses for tax purposes

If you’re starting or planning to launch a new business, keep these three rules in mind:

1. Start-up costs include those incurred or paid while creating an active trade or business. The costs of investigating the creation of a new business or the acquisition of one are also considered start-up costs.

2. Under the tax code, taxpayers can make a special election to deduct up to $5,000 of business start-up and $5,000 of organizational costs in the year the business begins. As you know, $5,000 doesn’t go very far these days! And the $5,000 deduction is reduced dollar-for-dollar by the amount by which your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized over 180 months on a straight-line basis.

3. No deductions or amortization deductions are allowed until the year when “active conduct” of your new business begins. Generally, that means the year when the business has all the pieces in place to start earning revenue. To determine if a taxpayer meets this test, the IRS and courts generally ask questions such as: Did the taxpayer undertake the activity intending to earn a profit? Was the taxpayer regularly and actively involved? Did the activity commence?

Be sure to keep detailed records and receipts for these costs, so that nothing falls through the cracks.

Eligible expenses

In general, “start-up” expenses that qualify for the special election are those you make to:

  • Investigate the creation or acquisition of a business,
  • Create a business, or
  • Engage in a for-profit activity in anticipation of that activity becoming an active business.

An expense also must be one that would be deductible if it were incurred after a business began. One example is money you spend analyzing potential markets for a new product or service.

To be eligible as an “organization expense” under the special election, an expense must be related to establishing a corporation or partnership. Examples of organization expenses include legal and accounting fees for services related to organizing a new business and filing fees paid to the state of incorporation.

Plan now

If you have start-up expenses that you’d like to deduct this year, you need to decide whether to take the election described above. Recordkeeping is critical. Contact us about your start-up plans. We can help with the tax and other aspects of your new business.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters             

You’re Never Too Old to File a Return – Taxes and the Elderly

Posted by Admin Posted on Aug 02 2022

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Taxpayers who are winding down full-time work may think that they can also wind down their tax return filing requirements. However, taxpayers are never too old to have a filing requirement. Although age is a consideration, filing requirements are determined by a variety of factors such as filing status, the type and amount of income received, and yes, even age. For 2021, single taxpayers are required to file a tax return if their gross income is $12,550 or more; however, single taxpayers 65 or older are not required to file unless their gross income is $14,250 or more.

Social Security and Railroad Retirement benefits

Many elderly taxpayers receive Social Security or Railroad Retirement benefits, both of which are based on prior earnings. The taxability of these benefits is not determined by age, but rather by filing status and the type and amount of other income received. TAS research shows that 98.4 percent of the 2020 tax returns filed by taxpayers 65 or older reported other income in addition to Social Security and Railroad Retirement benefits.

Even though Social Security and Railroad Retirement benefits are based on a taxpayer’s earned income, these benefits are not considered income for such refundable credits as the Earned Income Tax Credit (EITC). For tax year 2020, about four percent of the returns filed by taxpayers 65 and older reflected at least one exemption for a child – with nearly 97 percent of these taxpayers receiving Child Tax Credit. And for tax year 2020, 45 percent of the returns filed by taxpayers 65 or older reported pension or annuity income but reflected no income from wages. For many older taxpayers now raising their grandchildren, the option to claim EITC based on Social Security or Railroad Retirement benefits, or other retirement income based on a taxpayer’s earnings history, would further the credit’s goal of providing assistance to lower income families. This is especially true in multi-generational households, where raising children two or more generations removed may have been unplanned. In that vein, I have proposed legislative changes for restructuring and modernizing the EITC. Because the EITC is a credit for lower income families, its eligibility should more accurately reflect its target population.

Other credits may be available

Taxpayers 65 or older, and taxpayers under age 65 who receive taxable disability income due to being retired on permanent and total disability, may qualify for the Credit for the Elderly or Disabled. To be eligible for this credit, qualified individuals must also meet two income limitations: both their adjusted gross income and the total of their nontaxable Social Security and other nontaxable pensions, annuities, or disability income, must be below the designated amounts corresponding to the taxpayer’s filing status. If eligible, taxpayers should complete Schedule R, Credit for the Elderly or Disabled, and attach it to their tax return when filing. Taxpayers needing assistance to determine if they are eligible for this credit can use the IRS’s interactive tool, Do I Qualify for the Credit for the Elderly or Disabled?

Taxpayers paying a care provider to care for a spouse (or other qualifying relative) who was physically or mentally incapable of self-care so they could work or look for work should also consider their eligibility for the Child and Dependent Care Tax Credit. In 2021, the American Rescue Plan Act of 2021 (ARPA) temporarily increased this credit to provide additional help to working caregivers during the COVID-19 pandemic. For 2021 only, ARPA increased the limit on expenses that can be claimed to $8,000 for one qualifying person and $16,000 for two or more qualifying persons. The maximum credit amount was raised to 50 percent of employment-related expenses, which equals a maximum credit of $4,000 for one qualifying person or $8,000 for two or more qualifying persons. In addition, in 2021, the credit became potentially refundable for the first time.

Normally, a taxpayer (and spouse, if married filing jointly) must have “earned income” to qualify for the Child and Dependent Care Credit. Special earned income rules apply, however, for taxpayers and their spouses who are disabled. A disabled spouse is considered to have earnings of at least $250 for each month or part of a month they are unable to care for themselves. Therefore, disabled taxpayers, or taxpayers with a disabled spouse, may also benefit from this credit. Taxpayers who are uncertain regarding their eligibility for the Child and Dependent Care Credit may use the Interactive Child and Dependent Care Credit Eligibility Assistant on IRS.gov to determine eligibility.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS      

TAS Tax Tip: Why do I owe a penalty and interest and what can I do about it?

Posted by Admin Posted on Aug 02 2022

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There are many reasons why the IRS may charge penalties on your tax account. The IRS is legally required, under IRC § 6601(a), to charge interest when you fail to pay the full amount you owe on time. Interest may also accrue on penalties. Interest, and any applicable penalties, will continue to accrue until you pay your balance due in full. Here are some of the most common penalties, information on why they may have been charged, and how to request penalty abatement (removal) if applicable.

First let’s talk about some common penalty charges on individual accounts, along with interest, and why the IRS charges them.

Common penalties include:

  • Failure to file – you didn’t file your tax return by the return due date or extended due date if an extension to file is requested and approved.
  • Failure to pay – you didn’t pay the taxes reported on your tax return in full by the due date of the original tax return. An extension to file doesn’t extend the time to pay so you must pay your taxes by the original due date of the tax return even if you have requested an extension of time to file your tax return. In addition, the IRS may charge a failure to pay penalty if the IRS sends a request for payment and you fail to pay on time.
  • Failure to pay proper estimated tax – you didn’t pay enough taxes due for the year with your quarterly estimated tax payments, or through withholding, when required.
  • Bad check – your bank doesn’t honor your check or other form of payment.

Interest

The IRS is required to charge interest on any unpaid balance owed until it is paid in full. See the chart on the IRS’s Interest page for more details.

See Notice 746: Information about Your Notice, Penalty and Interest.

How can I dispute IRS penalties?

If you were affected by the pandemic or other circumstances, the IRS may be able to remove or reduce some penalties due to reasonable cause, but only if you tried to comply with the tax law but were unable to due to facts and circumstances beyond your control. If this applies to you and you have the necessary documentation to support your claim, you can call the toll-free number on your IRS notice or write a letter to request penalty relief due to reasonable cause.

The IRS may also provide administrative relief from a penalty that would otherwise be applicable under its First Time Penalty Abatement policy. In this instance, the IRS may provide relief if:

  • You didn’t previously have to file a tax return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty;
  • You filed all currently required returns or filed an extension of time to file; and
  • You have paid, or arranged to pay, any tax due.

The IRS may also be able to waive penalties if a Statutory Exception exists. Tax legislation may provide an exception to a penalty. Specific statutory exceptions can be found in the penalty-related Internal Revenue Code (IRC) sections. These would include situations like receiving erroneous written advice from the IRS.

See the Penalty Relief page or the Penalty Relief Due to First Time Penalty Abatement or Other Administrative Waiver page for more details about when penalties can be abated or reversed.

What if the IRS denies my penalty abatement request?

If you received a notice or letter stating the IRS didn’t grant your request for penalty relief, you may be able to request a hearing with the IRS Independent Office of Appeals. Use the Penalty Appeal Online Self-help Tool for more information. You have 30 days from the date of the rejection letter to file your request for an appeal. Refer to your rejection letter for the specific deadline.

Refer to Penalty Appeal Eligibility and Publication 4576, Orientation to the Penalty Appeals Process for more details.

How do I request removal of interest charges?

If any of your tax and/or penalties are reduced, the IRS will also automatically reduce the related interest. Interest is charged by law and will accrue until your tax account is fully paid. Interest can only be reduced or removed under certain circumstances due to unreasonable IRS error or IRS delay, not because of reasonable cause nor because it’s the first time you have accrued interest on your account.

To dispute interest due to an unreasonable IRS error or IRS delay, submit Form 843, Claim for Refund and Request for Abatement or send the IRS a signed letter requesting that the IRS reduce or adjust the overcharged interest. For more information, see Instructions for Form 843, and IRC § 6404(e)(1).

What else do I need to know?

The IRS will continue to charge the failure-to-pay penalty up to 25% of the unpaid taxes or until the tax is paid in full, whichever comes first. In general, the IRS won’t abate the failure-to-pay penalty until the underlying tax has been paid in full. Be aware that if there is still a balance due, even after the penalty is removed, interest will continue to accrue until the account is paid in full, so the sooner you pay the balance, the less you will have to pay in penalties and interest.

There are several ways you can send a payment, including payment options if you cannot full pay right now. See the IRS Pay webpage or our Paying Taxes Get Help pages and TAS Tax Tip: Need help resolving a tax amount owed or finding the right payment option?

As of this date, the IRS response times for calls and written submissions is still being affected by the ongoing COVID-19 situation, so see the IRS Operational status page, including the section on Answered a Letter or Notice, for more details. However, even if the IRS takes a bit longer to address your request, if granted, all abated penalties (and associated interest) will be removed as appropriate.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

Tax benefits and resources for people experiencing homelessness

Posted by Admin Posted on Aug 02 2022

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As of January 2020, EndHomelessness.org reports that there were over 580,000 homeless people in the United States. This includes individuals who have no housing or shelter, working taxpayers who are unable to secure housing due to costs, and those who live in shelters. If someone you know is experiencing homelessness, the Taxpayer Advocate Service (TAS) asks you to share this important information with them about tax benefits and other helpful resources.

Many people in the homeless community have taxable income sources that may qualify them for various benefits, including:

  • Earned Income Tax Credit, available to taxpayers with low to moderate earned income, with or without a qualifying child.
  • Education Credits, available to taxpayers who incurred qualified education expenses. Some education credits are refundable.
  • Health Care Premium Tax Credit, available to eligible individuals and families afford premiums for health insurance purchased through the Health Insurance Marketplace.
  • Child Tax Credit, available to individuals with qualifying children. Portions of this credit are available even those who do not have income.
  • Recovery Rebate Credit, potentially available to individuals who did not receive an economic impact payment.

The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free basic tax return preparation to qualified individuals.

Low Income Taxpayer Clinics (LITCs) are also available to assist low-income individuals who have a tax dispute with the IRS. LITCs also provide education and outreach to individuals who speak English as a second language.

Some people in the homeless community are also victims of identity theft. Sometimes family members or others inappropriately claim homeless individuals as dependents. Others file tax returns using a homeless person’s identity. It can be difficult for homeless individuals to resolve identity theft issues. Read more about identity theft here.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: TAS

After Filing Your Taxes, What Records Can You Toss?

Posted by Admin Posted on Aug 02 2022

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If you’ve filed your 2021 tax return, you may want to do some spring cleaning, starting with tax-related paper clutter. Paring down is good. Just be careful to hold on to essential records that may be needed in the event of an IRS audit. Some documents may be needed to help you collect a future refund or assist with filing your return next year. Before you start tossing or shredding documents, read the rules to learn what must be kept (and for how long) and what can be safely discarded.

The general rules

At a minimum, you should keep tax records for as long as the IRS can audit your tax return or assess additional taxes. That’s usually three years after you file your return. This means you potentially can get rid of most records related to tax returns for 2018 and earlier years.

However, the statute of limitations extends to six years for taxpayers who understate their adjusted gross income by more than 25%. What constitutes an understatement may go beyond simply not reporting items of income. So, to be safe, a general rule of thumb is to save tax records for six years from filing.

Keep some records longer

You need to hang on to some tax-related records beyond the statute of limitations. For example:

  • Keep the tax returns themselves indefinitely, so you can prove to the IRS that you did file a legitimate return. (If you didn’t file a return or if you filed a fraudulent return, there’s no statute of limitations.)
  • Retain W-2 forms until you begin receiving Social Security benefits. That may seem long, but if questions arise regarding your work record or earnings for a particular year, you’ll need your W-2 forms to help provide the documentation needed.
  • Keep records related to real estate or investments for as long as you own the assets, plus at least three years after you sell them and report the sales on your tax return (or six years if you want extra protection).
  • Hang on to records associated with retirement accounts until you’ve depleted the accounts and reported the last withdrawal on your tax return, plus three (or six) years.

If you’re still not sure about a specific document, feel free to ask us.

Other reasons to retain records

Keep in mind that these are the federal tax record retention guidelines. Your state and local tax record requirements may differ. In addition, lenders, co-op boards and other private parties may require you to produce copies of your tax returns as a condition of lending money, approving a purchase or otherwise doing business with you. Contact us with questions or concerns about recordkeeping.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters     

Spear phishing targets tax pros and other businesses

Posted by Admin Posted on Aug 02 2022

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Tax pros take their responsibilities to protect client data seriously. Knowing common identity theft scams, like spear phishing, is one way they can do that. Spear phishing scams can target specific individuals or specific groups. Spear phishing scams affect all types of businesses and organizations, including small businesses with a client database, like tax pros' firms.

Thieves use spear phishing to steal computer system credentials.

Spear phishing scams target tax pros to steal their account credentials or install malicious software. Thieves can then steal client data and the tax preparer's identity to file fraudulent tax returns for refunds.

Some common types of spear phishing emails include emails that claim to be from a tax preparation application provider that have the IRS logo, reference legitimate IRS programs or e-services, and use subject lines like, "Action Required: Your account has now been put on hold."

Once someone has clicked the malicious link, the scam email will send them to a fake website, which prompts the victim to enter their credentials. If they do so, thieves can use this information to file fraudulent returns by using the stolen credentials. Other spear phishing emails may pose as potential new clients use malicious links or attachments that will download malware onto the victim's computer to steal information.

If someone suspects an email is a phishing attempt, they shouldn't respond, clink any links in the email or open any attachments.

Tax pros can use these tips to help protect client data:

  • Use separate personal and business email accounts
  • Protect email accounts with strong passwords and two-factor authentication
  • Install an anti-phishing toolbar to help identify known phishing sites
  • Use security software products with anti-phishing tools
  • Use security software to help protect systems from malware and scan emails for viruses
  • Never open or download attachments from unknown senders, including potential clients, request additional information to help verify their identity or call them to confirm the email is from them
  • Send password-protected and encrypted documents only
  • Don't respond to suspicious or unknown emails; if the phishing email is IRS-related, save the email as a file, attach that file to an email, and send to phishing@irs.gov

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Using Alternative Energy For Business Can Bring Tax Benefits

Posted by Admin Posted on Aug 02 2022

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If you’re a business owner, you might be wondering if using alternative energy technologies in your company can help you manage energy costs and improve your bottom line. If this sounds interesting, you should know there’s also a valuable federal income tax benefit that applies to the acquisition of many types of alternative energy property: the business energy credit.

The credit is intended primarily for business users. But be aware that other energy tax breaks apply if you use alternative energy in your home or if you produce energy for sale.

What property is eligible?

The business energy credit is equal to a portion of the cost of the following types of property (with the caveat that construction must begin before 2024):

  • Equipment that uses solar energy to generate electricity for heating and cooling structures, for hot water, or for heat used in industrial or commercial processes (except for swimming pools),
  • Equipment that uses solar energy to illuminate a structure inside using fiber-optic-distributed sunlight,
  • Specific fuel-cell property,
  • Certain small wind energy property,
  • Specific waste energy property, and
  • Certain offshore wind facilities with construction beginning before 2026.

If construction of equipment that uses solar energy to generate electricity for heating and cooling structures, for hot water, or for heat used in industrial or commercial processes begins this year, the credit rate is 26%. It’s reduced to 22% for construction beginning in calendar year 2023. And if the property isn’t placed in service before 2026, the credit is 10%.

For the other types of property mentioned above, if construction begins this year, the credit is also 26%. It’s also reduced to 22% for construction beginning in 2023. But if the property isn’t placed in service before 2026, the credit is 0%.

The only exception is the final type of property mentioned above, certain offshore wind facilities. This type of property isn’t subject to a phaseout.

The business energy credit is equal to 10% of the following types of property with construction beginning before 2024:

  • Specific equipment that is used to produce, distribute, or use energy derived from a geothermal deposit,
  • Certain cogeneration property,
  • Some microturbine property, and
  • Certain equipment that uses the ground, or ground water, to heat or cool a structure.

The downside and the upside

There are several restrictions related to the credit. For example, it isn't available for property acquired with certain nonrecourse financing. Additionally, if the credit is allowable for property, the “basis” of that property is reduced by 50% of the allowable credit.

On the other hand, a favorable aspect is that, for the same property, the credit can sometimes be used in combination with other benefits. Examples include federal income tax expensing, state tax credits and utility rebates.

There are business considerations unrelated to the tax and nontax benefits that may influence your decision to use alternative energy. And even if you choose to use it, you might do so without owning the equipment, which would mean forgoing the business energy credit.

Still wondering?

As you can see, there are many issues to consider and you may have questions. We can help you work through the tax and other financial aspects of these alternative energy tax considerations.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters              

TAS Tax Tip: What to do if you receive notification your tax return is being examined or audited

Posted by Admin Posted on July 15 2022

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If the IRS selects your tax return for audit (also called examination), it doesn’t automatically mean something is wrong.

The IRS performs audits by mail or in person. The notice you receive will have specific information about why your return is being examined, what documents if any they need from you, and how you should proceed.

Once the IRS completes the examination, it may accept your return as filed or propose changes. These changes may affect the amount of tax you owe or the amount of your refund.

Got an IRS notice saying they are auditing your tax return?

If you are unable to understand the notice, you can use our Did you get a notice from the IRS? section on our Home page that allows you to enter the notice or letter number to find out more about it, what action you may need to take, and where in the IRS process it falls. Or you can go to our Taxpayer Roadmap directly to see where your tax return is within the IRS process, how the return got there, and what’s next. Once in the Roadmap, you can still look up a specific notice if it isn’t already listed to find out what to do next.

Type of audit/examination and what to do for each type

The IRS notice should confirm whether the audit is being conducted by correspondence (by mail) or in person. The actions you need to take will depend on how the audit is being conducted.

  • For correspondence audits, see our Audits by Mail Get Help page for a summary of how the process works and what actions you should take.
  • For in person audits, see our Audits in Person Get Help page for a summary of how the process works and what actions you should take.

You can also visit the IRS Audits page for more information about why your return may have been selected and more details on how far back IRS can go to examine a return, how long it may take, and more. You can also read Publication 3468, IRS Examination Process.

Be aware that IRS audits are still being affected by COVID-19. See the exam guidance memoranda in IRS Operations During COVID-19: Compliance for the most up-to-date information on IRS actions. You should also see the sections for Answered a Notice or letter and Sent a missing form or document for updated information related to expected timing for an IRS reply.

Sometimes IRS offers alternative methods to reply or submit documentation

When you review the IRS notice, there may be special circumstances in which the IRS may offer digital alternatives for submitting documentation or working with the IRS examiner. See our NTA Blog: Lifecycle of a Tax Return: Correspondence Audits: Increased Communication Alternatives Are in Progress for more information on two available alternatives. The IRS article, Accelerating Digital Communications to Solve Pandemic Challenges and Improve the Taxpayer Experience, also discusses digital options.

However, taxpayers must be invited to participate in these digital options, Secure Messaging and the Document Upload Tool (DUT). So, again, review your notice carefully to see if one or both of these options are available in your case and for information on how to use them.

What if you find out the IRS already closed their initial audit?

If you receive a tax bill for an additional tax amount the IRS assessed (added to your account) or a change in a credit you claimed and you disagree with the subsequent amount the IRS says you owe, see our Audit Reconsideration Get Help page for next steps you can take.

You may request audit reconsideration if you:

  • Did not respond to or appear for your original audit,
  • Moved and did not receive correspondence from the IRS,
  • Have additional information to present that you did not provide during your original audit, or
  • Disagree with the assessment from the audit.

You can also see Publication 3598, What You Should Know About the Audit Reconsideration Process, for more details on what you need to do to resolve the issue.

What can I do if I need further help dealing with the IRS audit process?

If you need or want assistance in dealing with an IRS audit or reconsideration, you have the right to representation. This means you can hire an attorney, certified public accountant (CPA), or enrolled agent to represent you before the IRS. Know that:

  • Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS.
  • Taxpayers who are heading to an interview with the IRS