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Small business owners should see if they qualify for the home office deduction

Posted by Admin Posted on Sept 21 2021

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Many Americans have been working from home due to the pandemic, but only certain people will qualify to claim the home office deduction. This deduction allows qualifying taxpayers to deduct certain home expenses on their tax return when they file their 2021 tax return next year.

Here are some things to help taxpayers understand the home office deduction and whether they can claim it:

Employees are not eligible to claim the home office deduction.

  • The home office deduction, reported on Form 8829, is available to both homeowners and renters.
  • There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
  • Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
  • The term "home" for purposes of this deduction:
    • Includes a house, apartment, condominium, mobile home, boat or similar property which provide basic living accommodations.
    • A separate structure on the property such as an unattached garage, studio, barn or greenhouse.
      • Any portion of a home used exclusively as a hotel, motel, inn or similar establishment does NOT qualify as a "home" and, therefore, does not qualify for a home office deduction.
  • Generally, there are two basic requirements for the taxpayer's home to qualify as a deduction:
    • There must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
    • The home must be the taxpayer's principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.
      • A portion of a home that is used exclusively for conducting business on a regular basis but not used as the principal place of business, will qualify for a home office deduction if either patients, clients or customers are met in the home or there is a separate structure that is used exclusively for conducting business on a regular basis.
  • Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:
    • Using the simplified method consisting of a rate of $5 per square foot for business use of the home which is limited to a maximum size of 300 square feet and a maximum deduction $1,500.
    • Using the regular method whereby deductions for a home office are based on the percentage of the home devoted to business use. Any use a whole room or part of a room for conducting their business will involve figuring out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.

If you have any questions regarding accounting, domestic taxation, 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   

WHICH IS BETTER, BUYING OR LEASING MY NEXT CAR?

Posted by Admin Posted on Sept 21 2021

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It depends on factors such as 1) what kind of deal you can make with the dealership, 2) the typical mileage you put on your car, 3) how much you wear down a car, and 4) the primary use for the car.

To determine whether leasing or buying is best, compare the costs and other issues involved in a lease or purchase. The following factors should be considered:

  • Beginning costs
  • Continual costs
  • Total costs
  • Is there a possibility of deduction of any of the costs due to the car being used for business?
  • How important is it to have ownership of the car

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 Sept 21 2021

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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:

  • You carry on the activity in a business-like manner,
  • The time and effort you put into the activity indicate you intend to make it profitable,
  • You depend on income from the activity for your livelihood,
  • Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),
  • You change your methods of operation in an attempt to improve profitability,
  • You, or your advisors, have the knowledge needed to carry on the activity as a successful business,
  • You were successful in making a profit in similar activities in the past,
  • The activity makes a profit in some years, and
  • 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, 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 reminds business owners to correctly identify workers as employees or independent contractors

Posted by Admin Posted on Sept 21 2021

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The Internal Revenue Service reminds business owners that it's critical to correctly determine whether the individuals providing services are employees or independent contractors.

An employee is generally considered to be 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. Doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers are generally independent contractors.

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 examine:

  • 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 (i.e. pension plan, insurance, vacation pay, etc.)? 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 without a reasonable basis, it could 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 can use IRS Form 8919, Uncollected Social Security and Medicare Tax on Wages 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 (VCSP) is an optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future tax periods for employment tax purposes with partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat their workers (or a class or group of workers) as employees. Taxpayers must meet certain eligibility requirements, apply by filing Form 8952, Application for Voluntary Classification Settlement Program, 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 generally are required to file an annual tax return and pay estimated tax quarterly. They generally must pay self-employment tax (Social Security and Medicare tax) as well as income tax. Self-employed taxpayers may be able to claim the home office deduction if they use part of a home for business.

What about the gig economy?

The gig economy − also called sharing economy or access economy−is activity where people earn income providing on-demand work, services or goods. Gig economy income must be reported on a tax return, even if the income is: from part-time, temporary or side work; not reported on a Form 1099-K, 1099-MISC, W-2 or other income statement; or paid in any form, including cash, property, goods or virtual currency.

Help spread the word - Advance Child Tax Credit

The IRS encourages employers to help get the word out about the advance payments of the Child Tax Credit during Small Business Week. Employers have direct access to many who may receive this credit. More information on the Advance Child Tax Credit is available on IRS.gov. The website has tools employers can use to deliver this information, including e-posters, drop-in articles (for paycheck stuffers, newsletters) and social media posts to share.

If you have any questions regarding accounting, domestic taxation, 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     

 

Here’s how taxpayers can rebuild records after a natural disaster

Posted by Admin Posted on Sept 08 2021

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After a natural disaster, taxpayers need records to help them prove and recover disaster-related losses. This may be for tax purposes, getting support from federal assistance program or for insurance claims.

While personal or business property may have been destroyed, all hope is not lost. Here are some steps that can help people reconstruct important records.

Tax records

  • Get free tax return transcripts immediately using Get Transcript on IRS.gov.
  • Order transcripts by calling 800-908-9946 and following the prompts.

Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

  • To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
  • Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • When no other records are available, people should check the county assessor's office for old records that might address the value of the property.
  • Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley's Blue Book, the National Automobile Dealers Association and Edmunds.

If you have any questions regarding accounting, domestic taxation, 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      

Retirement and taxes: Understanding IRAs

Posted by Admin Posted on Sept 08 2021

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Individual Retirement Arrangements, or IRAs, provide tax incentives for people to make investments that can provide financial security for their retirement. These accounts can be set up with a bank or other financial institution, a life insurance company, mutual fund or stockbroker.

Here's a basic overview to help people better understand this type of retirement savings account.

  • Contribution. The money that someone puts into their IRA. There are annual limits to contributions depending on their age and the type of IRA. Generally, a taxpayer or their spouse must have earned income to contribute to an IRA.
     
  • Distribution. The amount that someone withdraws from their IRA.
     
  • Withdraws. Taxpayers may face a 10% penalty and a tax bill if they withdraw money before age 59 ½, unless they qualify for an exception.
     
  • Required distribution. There are requirements for withdrawing from an IRA:
  • Someone generally must start taking withdrawals from their IRA when they reach age 70½.
  • Per the 2019 SECURE Act, if a person's 70th birthday is on or after July 1, 2019, they do not have to take withdrawals until age 72.
  • Special distribution rules apply for IRA beneficiaries.
     
  • Traditional IRA. An IRA where contributions may be tax-deductible. Generally, the amounts in a traditional IRA are not taxed until they are withdrawn.
     
  • Roth IRA. This type of IRA that is subject to the same rules as a traditional IRA but with certain exceptions:
  • A taxpayer cannot deduct contributions to a Roth IRA.
  • Qualified distributions are tax-free.
  • Roth IRAs do not require withdrawals until after the death of the owner.
     
  • Savings Incentive Match Plan for Employees. This is commonly known as a SIMPLE IRA. Employees and employers may contribute to traditional IRAs set up for employees. It may work well as a start-up retirement savings plan for small employers.
     
  • Simplified Employee Pension. This is known as a SEP-IRA. An employer can make contributions toward their own retirement and their employees' retirement. The employee owns and controls a SEP.
     
  • Rollover IRA. This is when the IRA owner receives a payment from their retirement plan and deposits it into a different IRA within 60 days.

If you have any questions regarding accounting, domestic taxation, 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        

September is National Preparedness Month; IRS urges taxpayers to prepare for natural disasters

Posted by Admin Posted on Sept 08 2021

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WASHINGTON — September is National Preparedness Month. With the height of hurricane season fast approaching and the ongoing threat of wildfires in some parts of the country, the Internal Revenue Service reminds everyone to develop an emergency preparedness plan.

All taxpayers, from individuals to organizations and businesses, should take time now to create or update their emergency plans.

Taxpayers can begin getting ready for a disaster with a preparedness plan that includes securing and duplicating essential tax and financial documents, creating lists of property and knowing where to find information once a disaster has occurred. Securing this information can help in the aftermath of a disaster, and it can help people more quickly take advantage of disaster relief available from the IRS.

Start secure

Taxpayers should keep critical original documents inside waterproof containers in a secure space. Documents such as tax returns, birth certificates, deeds, titles and insurance policies should also be duplicated and kept with a trusted person outside the area a natural disaster may affect.

Make copies

If original documents are available only on paper, taxpayers can use a scanner and save them on a USB flash drive, CD or in the cloud, which provide security and easy portability.

Document valuables

After a disaster hits, photographs and videos of a home or business's contents can help support claims for insurance or tax benefits. All property, especially expensive and high- value items, should be recorded. The IRS disaster-loss workbooks can help individuals and businesses compile lists of belongings or business equipment.

Employer fiduciary bonds

Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer in the event of a default by provider. Employers are encouraged to create an Electronic Federal Tax Payment System account at EFTPS.gov to monitor their payroll tax deposits and receive email alerts.

Know where to go

Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. Find out if financial institutions provide statements and documents electronically. Taxpayers who have lost some or all of their records during a disaster should visit IRS' Reconstructing Records webpage.

IRS is ready to help

Taxpayers living in a federally declared disaster can visit the IRS Tax Relief in Disaster Situations webpage or Around the Nation on IRS.gov and check for the available disaster tax relief. The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Affected taxpayers can call 866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

A taxpayer impacted by a disaster outside of a federally-declared disaster area may qualify for disaster relief. This includes taxpayers who are not physically located in a disaster area, but whose records necessary to meet a filing or payment deadline postponed during the relief period are located in a covered disaster area.

For more information about National Preparedness Month, visit Ready.gov/september.

If you have any questions regarding accounting, domestic taxation, 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 can protect themselves from scammers by knowing how the IRS communicates

Posted by Admin Posted on Sept 08 2021

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If the IRS does call a taxpayer, it should not be a surprise because the agency will generally send a notice or letter first. Understanding how the IRS communicates can help taxpayers protect themselves from scammers who pretend to be from the IRS with the goal of stealing personal information.

Here are some facts about how the IRS communicates with taxpayers:

  • The IRS doesn't normally initiate contact with taxpayers by email. Do not reply to an email from someone who claims to be from the IRS because the IRS email address could be spoofed or fake. Emails from IRS employees will end in IRS.gov.
  • The agency does not send text messages or contact people through social media. Fraudsters will impersonate legitimate government agents and agencies on social media and try to initiate contact with taxpayers.
  • When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. Debt relief firms send unsolicited tax debt relief offers through the mail. Fraudsters will often claim they already notified the taxpayer by U.S. Mail.
  • Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, the IRS sends a letter or written notice to a taxpayer in advance, but not always. Taxpayers can search IRS notices by visiting Understanding Your IRS Notice or Letter. However, not all IRS notices are searchable on that site and just because someone references an IRS notice in email, phone call, text, or social media, does not mean the request is legitimate.
  • IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit. The IRS encourages taxpayers to review, How to Know it's Really the IRS Calling or Knocking on Your Door: Collection.
  • Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice. Private debt collection should not be confused with debt relief firms who will call, send lien notices via U.S. Mail, or email taxpayers with debt relief offers. Taxpayers should contact the IRS regarding filing back taxes properly.
  • IRS revenue officers and agents routinely make unannounced visits to a taxpayer's home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.
  • When visited by someone from the IRS, the taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential.

If you have any questions regarding accounting, domestic taxation, 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       

Energize tax savings with an EV credit

Posted by Admin Posted on Sept 08 2021

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Electric vehicles (EVs) are increasing in popularity all the time — and more of them are qualifying for a federal tax credit. In fact, the IRS added several more eligible models over the summer.

The tax code provides a credit to buyers of qualifying plug-in electric drive motor vehicles, including passenger vehicles and light trucks. The credit is equal to $2,500 plus an additional amount, based on battery capacity, that can’t exceed $5,000. Therefore, the maximum credit allowed for a qualifying EV is $7,500.

EV definition

For purposes of the tax credit, a qualifying vehicle is defined as one with four wheels that’s propelled to a significant extent by an electric motor, which draws electricity from a battery. The battery must have a capacity of not less than four kilowatt hours and be capable of being recharged from an external source of electricity.

However, depending on the EV you purchase, the credit may not be available because of a per-manufacturer cumulative sales limitation. Specifically, it phases out over six quarters beginning when a manufacturer has sold at least 200,000 qualifying vehicles for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For example, Tesla and General Motors vehicles are no longer eligible for the tax credit.

The IRS provides a list of qualifying vehicles on its website and, as mentioned, recently added more eligible models. You can access the list here: https://bit.ly/2Yrhg5Z. Additional points

There are some additional points about the plug-in EV tax credit to keep in mind. It’s allowed only in the year you place the vehicle in service, and the vehicle must be new. Also, an eligible vehicle must be used predominantly in the United States and have a gross weight of less than 14,000 pounds.

There’s a separate 10% federal income tax credit for the purchase of qualifying electric two-wheeled vehicles manufactured primarily for use on public thoroughfares and capable of at least 45 miles per hour (in other words, electric-powered motorcycles). It can be worth up to $2,500. This electric motorcycle credit was recently extended to cover qualifying 2021 purchases.

Basic rules

These are only the basic rules. There may be additional incentives provided by your state. Contact us if you’d like to receive more information about the federal plug-in EV tax break.

 

If you have any questions regarding accounting, domestic taxation, 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 

Which business website costs are deductible?

Posted by Admin Posted on Sept 08 2021

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Every business needs a website, but it’s not always easy to determine which costs of running one are deductible. Fortunately, established rules that generally apply to the deductibility of more long-standing business costs provide business owners with a basic idea of how to anticipate and handle the tax impact of a website. And the IRS has issued guidance that applies to software costs.

Hardware considerations

Hardware costs generally fall under the standard rules for depreciable equipment. Specifically, once website-related assets are up and running, you can deduct 100% of the cost in the first year they’re placed in service (before 2023). This favorable treatment is allowed under the 100% first-year bonus depreciation break.

In later years, you can probably deduct 100% of these costs in the year the assets are placed in service under the Section 179 first-year depreciation expensing privilege. However, Sec. 179 deductions are subject to several limitations.

For the 2021 tax year, the maximum Sec. 179 deduction is $1.05 million, subject to a phaseout rule. Under the rule, the deduction is phased out if more than a specified amount of qualified property is placed in service during the year. The threshold amount for 2021 is $2.62 million.

There’s also a taxable income limit. Under it, your Sec. 179 deduction can’t exceed your business taxable income. In other words, Sec. 179 deductions can’t create or increase an overall tax loss. However, any Sec. 179 deduction amount that you can’t immediately deduct is carried forward and can be deducted in later years (to the extent permitted by the applicable limits).

Software issues

Similar rules apply to off-the-shelf software that you buy for your business. However, software license fees are treated differently from purchased software costs for tax purposes. Payments for leased or licensed software used for your website are currently deductible as ordinary and necessary business expenses.

An alternative position is that your software development costs are currently deductible research and development costs under the tax code. To qualify for this treatment, the costs must be paid or incurred by December 31, 2022. A more conservative approach would be to capitalize the costs of internally developed software. Then you would depreciate them over 36 months.

If your website is primarily for advertising, you can also currently deduct internal website software development costs as ordinary and necessary business expenses.

Are you paying a third party for software to run your website? This is commonly referred to as “software as a service.” In general, payments to third parties are currently deductible as ordinary and necessary business expenses.

Still important

So much of business today seems to happen in virtual places other than your website — such as social media, apps and teleconferencing calls. Nonetheless, a central website where you can provide a solid overview of your company is still important. We can help you determine the appropriate tax treatment of website costs.

 

If you have any questions regarding accounting, domestic taxation, 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          

Interest rates remain the same for the fourth quarter 2021

Posted by Admin Posted on Sept 08 2021

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WASHINGTON — The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning October 1, 2021. The rates will be:

  • 3% for overpayments (2% in the case of a corporation);
     
  • 0.5 % for the portion of a corporate overpayment exceeding $10,000;
     
  • 3% percent for underpayments; and
     
  • 5% percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during July 2021 to take effect August 1, 2021, based on daily compounding.

Revenue Ruling 2021-17, announcing the rates of interest, will appear in Internal Revenue Bulletin 2021-37, dated September 13, 2021.

If you have any questions regarding accounting, domestic taxation, 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: Tax relief now available to victims of Hurricane Ida; Oct. 15 deadline, other dates extended to Jan. 3

Posted by Admin Posted on Sept 08 2021

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WASHINGTON — Victims of Hurricane Ida that began on August 26 now have until January 3, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently this includes the entire state of Louisiana, but taxpayers in Ida-impacted localities designated by FEMA in neighboring states will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

"During this difficult time, the IRS stands ready to help victims of Hurricane Ida," said IRS Commissioner Chuck Rettig. "We want people affected by this devastating hurricane focused on their safety and recovery for themselves and their families. To provide assistance now and in the weeks ahead, we have a variety of different types of relief available to help people and businesses affected by this disaster."

The tax relief postpones various tax filing and payment deadlines that occurred starting on August 26, 2021. As a result, affected individuals and businesses will have until January 3, 2022, 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 2020 return due to run out on October 15, 2021, will now have until January 3, 2022, to file. The IRS noted, however, that because tax payments related to these 2020 returns were due on May 17, 2021, those payments are not eligible for this relief.

The January 3, 2022 deadline also applies to quarterly estimated income tax payments due on September 15, 2021, and the quarterly payroll and excise tax returns normally due on November 1, 2021. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on November 15, 2021. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2020 extensions run out on October 15, 2021.

In addition, penalties on payroll and excise tax deposits due on or after August 26 and before September 10, will be abated as long as the deposits are made by September 10, 2021.

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 2021 return normally filed next year), or the return for the prior year (2020). Be sure to write the FEMA declaration number – 4611 − for Hurricane Ida in Louisiana 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 Ida 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, 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 on the lookout for new version of SSN scam

Posted by Admin Posted on Aug 24 2021

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Taxpayers should be on the lookout for new variations of tax-related scams. In the latest twist on a scam related to Social Security numbers, scammers claim to be able to suspend or cancel the victim’s SSN. It’s yet another attempt by con artists to frighten people into returning ‘robocall’ voicemails.

Scammers may mention overdue taxes in addition to threatening to cancel the person’s SSN. If taxpayers receive a call threatening to suspend their SSN for an unpaid tax bill, they should just hang up.

Make no mistake…it’s a scam.

Taxpayers should not give out sensitive information over the phone unless they are positive they know the caller is legitimate. When in doubt –hang up. Here are some telltale signs of this scam. The IRS and its authorized private collection agencies will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, iTunes gift card or wire transfer. The IRS does not use these methods for tax payments.
  • Ask a taxpayer to make a payment to a person or organization other than the U.S. Treasury.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

Taxpayers who don’t owe taxes and have no reason to think they do should:

Taxpayers who owe tax or think they do should:

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          

Know the Nuances of the Nanny Tax

Posted by Admin Posted on Aug 24 2021

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Many families hire household workers to care for their children, their home or their outdoor spaces. If you’re among them, be sure you know the nuances of the “nanny tax.”

Withholding taxes

For federal tax purposes, a household worker is anyone who does household work for you and isn’t an independent contractor. Common examples include child care providers, housekeepers and gardeners.

If you employ such a person, you aren’t required to withhold federal income taxes from the individual’s pay unless the worker asks you to and you agree. In that case, the worker would need to complete a Form W-4. However, you may have other withholding and payment obligations.

You must withhold and pay Social Security and Medicare taxes, otherwise known as “FICA” taxes, if your worker earns cash wages of $2,300 or more (excluding food and lodging) during 2021. If you reach the threshold, all wages (not just the excess) are subject to FICA taxes.

Employers are responsible for withholding the worker’s share and must pay a matching employer amount. The Social Security tax portion of FICA taxes is 6.2% for both the employer and the worker (12.4% total). Medicare tax is 1.45% each for the employer and the worker (2.9% total). If you prefer, you can pay your worker’s share of Social Security and Medicare taxes, instead of withholding it from pay.

However, if your worker is under 18 and child care isn’t his or her principal occupation, you don’t have to withhold FICA taxes. Therefore, if your worker is really a student/part-time babysitter, there’s no FICA tax liability.

Reporting and paying

You pay nanny tax by increasing your quarterly estimated tax payments or increasing withholding from your wages rather than by making an annual lump-sum payment. You don’t have to file any employment tax returns — even if you’re required to withhold or pay tax — unless you own a business. Instead, your tax professional will report employment taxes on Schedule H of your individual Form 1040 tax return.

On your return, your employer identification number (EIN) will be included when reporting employment taxes. The EIN isn’t the same as your Social Security number. If you need an EIN, you must file Form SS-4.

A keen awareness

Retaining a household worker calls for careful recordkeeping and a keen awareness of the applicable rules. Keep in mind that you may also have federal unemployment tax (FUTA) liability, as well as state and local tax obligations. Contact us for assistance complying.

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       

Seniors and immigrants to watch out for predators

Posted by Admin Posted on Aug 24 2021

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The Internal Revenue Service continued its "Dirty Dozen" tax scams with a warning for people to watch out for predators using tax-related schemes ranging from fake charities to scams targeting seniors and immigrants.

The IRS continues to see a group of ruses by dishonest people who trick others into doing something illegal or which ultimately causes them harm. Predators encourage otherwise honest people to do things they don't realize are illegal or prey on their good will to take something from them.

Several schemes involve fraudsters targeting groups like seniors or immigrants, posing as fake charities impersonating IRS authorities, charging excessive fees for Offers in Compromise, conducting unemployment insurance fraud and unscrupulously preparing tax returns.

Here are five of this year's "Dirty Dozen" scams.

Fake charities

The IRS advises taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity. They especially take advantage of tragedies and disasters, such as the COVID-19 pandemic.

Scams requesting donations for disaster relief efforts are especially common on the phone. Taxpayers should always check out a charity before they donate, and they should not feel pressured to give immediately.

Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return by reducing the amount of their taxable income. But taxpayers should remember that to receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, use the IRS Tax Exempt Organization Search tool. (It's also important for taxpayers to remember that they can't deduct gifts to individuals or to political organizations and candidates.)

Here are some tips to remember about fake charity scams:

  • Individuals should never let any caller pressure them. A legitimate charity will be happy to get a donation at any time, so there's no rush. Donors are encouraged to take time to do the research.
  • Potential donors should ask the fundraiser for the charity's exact name, web address and mailing address, so it can be confirmed later. Some dishonest telemarketers use names that sound like large well-known charities to confuse people.
  • Be careful how a donation is paid. Donors should not work with charities that ask them to pay by giving numbers from a gift card or by wiring money. That's how scammers ask people to pay. It's safest to pay by credit card or check — and only after having done some research on the charity.

For more information about fake charities see the information on fake charity scams on the Federal Trade Commission web site.

Immigrant/senior fraud

IRS impersonators and other scammers are known to target groups with limited English proficiency as well as senior citizens. These scams are often threatening in nature.

While it has diminished some recently, the IRS impersonation scam remains a common scam. This is where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

The IRS reminds taxpayers that the first contact with the IRS will usually be through mail, not over the phone. Legitimate IRS employees will not threaten to revoke licenses or have a person deported. These are scare tactics.

As phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language, the IRS has added new features to help those who are more comfortable in a language other than English. The Schedule LEP PDF allows a taxpayer to select in which language they wish to communicate. Once they complete and submit the schedule, they will receive future communications in that selected language preference.

Additionally, the IRS is providing tax information, forms and publications in many languages other than English. IRS Publication 17, Your Federal Income Tax, is now available in Spanish, Chinese (simplified and traditional), Vietnamese, Korean and Russian.

Seniors beware

Senior citizens and those who care about them need to be on alert for tax scams targeting older Americans. The IRS recognizes the pervasiveness of fraud targeting older Americans, along with the Department of Justice and FBI, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), among others.

In an effort to make filing taxes easier for seniors, the IRS reminds seniors born before Jan. 2, 1956 that the IRS has re-designed the Form 1040 and its instructions, and that they can use the Form 1040SR and related instructions.

The IRS reminds seniors that the best source for information about their federal taxes is the IRS website.

Offer in Compromise "mills"

Offer in Compromise mills contort the IRS program into something it's not – misleading people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.

"We're increasingly concerned that people having trouble paying their taxes are being duped into misleading claims about settling their tax debts for 'pennies on the dollar'," said IRS Commissioner Chuck Rettig. "The IRS urges people to take a few minutes to review information on IRS.gov to see if they might be a good candidate for the program – and avoiding costly promoters who advertise on radio and television."

The IRS reminds taxpayers to beware of promoters claiming their services are needed to settle with the IRS, that their tax debts can be settled for "pennies on the dollar" or that there is a limited window of time to resolve tax debts through the Offer in Compromise (OIC) program.

An "offer," or OIC, is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. However, some promoters are inappropriately advising indebted taxpayers to file an OIC application with the IRS, even though the promoters know the person won't qualify. This costs honest taxpayers money and time.

Taxpayers should be especially wary of promoters who claim they can obtain larger offer settlements than others or who make misleading promises that the IRS will accept an offer for a small percentage. Companies advertising on TV or radio frequently can't do anything for taxpayers that they can't do for themselves by contacting the IRS directly.

Taxpayers can go to IRS.gov and review the Offer in Compromise Pre-Qualifier Tool to see if they qualify for an OIC. The IRS reminds taxpayers that under the First Time Penalty Abatement policy, taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.

Unscrupulous tax return preparers

Although most tax preparers are ethical and trustworthy, taxpayers should be wary of preparers who won't sign the tax returns they prepare, often referred to as ghost preparers. For e-filed returns, the "ghost" will prepare the return, but refuse to digitally sign as the paid preparer.

By law, anyone who is paid to prepare, or assists in preparing federal tax returns, must have a valid Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.

Unscrupulous tax return preparers may also:

  • Require payment in cash only and will not provide a receipt.
  • Invent income to qualify their clients for tax credits.
  • Claim fake deductions to boost the size of the refund.
  • Direct refunds into their bank account, not the taxpayer's account.

It's important for taxpayers to choose their tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

Taxpayers should also remember that they are legally responsible for what is on their tax return even if it is prepared by someone else. Consumers can help protect themselves by choosing a reputable tax preparer.

Unemployment insurance fraud

Unemployment fraud often involves individuals acting in coordination with or against employers and financial institutions to get state and local assistance to which they are not entitled. These scams can pose problems that can adversely affect taxpayers in the long run.

States, employers and financial institutions need to be aware of the following scams related to unemployment insurance:

  • Identity-related fraud: Filers submit applications for unemployment payments using stolen or fake identification information to perpetrate an account takeover.
  • Employer-employee collusion fraud: The employee receives unemployment insurance payments while the employer continues to pay the employee reduced, unreported wages.
  • Misrepresentation of income fraud: An individual returns to work and fails to report the income to continue receiving unemployment insurance payments, or in an effort to receive higher unemployment payments, applicants claim higher wages than they actually earned.
  • Fictitious employer-employee fraud: Filers falsely claim they work for a legitimate company, or create a fictitious company, and supply fictitious employee and wage records to apply for unemployment insurance payments.
  • Insider fraud: State employees use credentials to inappropriately access or change unemployment claims, resulting in the approval of unqualified applications, improper payment amounts, or movement of unemployment funds to accounts that are not on the application.

Below is a short list of financial red flag indicators of unemployment fraud:

  • Unemployment payments are coming from a state other than the state in which the customer reportedly resides or has previously worked.
  • Multiple state unemployment payments are made within the same disbursement timeframe.
  • Unemployment payments are made in the name of a person other than the account holder or in the names of multiple unemployment payment recipients.
  • Numerous deposits or electronic funds transfers (EFTs) are made that indicate they are unemployment payments from one or more states to people other than the account holder(s).
  • A higher amount of unemployment payments is seen in the same timeframe compared to similar customers and the amount they received.

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 to know it’s really the IRS calling or knocking on your door

Posted by Admin Posted on Aug 24 2021

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Many taxpayers have encountered individuals impersonating IRS officials – in person, over the telephone and via email. Don’t get scammed. We want you to understand how and when the IRS contacts taxpayers and help you determine whether a contact you may have received is truly from an IRS employee.

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

However, there are special circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations.

Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail.

Note that the IRS does not:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.
  • Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

If you owe taxes:

The IRS instructs taxpayers to make payments to the “United States Treasury.” The IRS provides specific guidelines on how you can make a tax payment at irs.gov/payments.

Here is what the IRS will do:

If an IRS representative visits you, he or she will always provide two forms of official credentials called a pocket commission and a HSPD-12 card. HSPD-12 is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. You have the right to see these credentials. And if you would like to verify information on the representative’s HSPD-12 card, the representative will provide you with a dedicated IRS telephone number for verifying the information and confirming their identity.

Collection

IRS collection employees may call or come to a home or business unannounced to collect a tax debt. They will not demand that you make an immediate payment to a source other than the U.S. Treasury.

Learn more about the IRS revenue officers’ collection work.

The IRS can assign certain cases to private debt collectors but only after giving the taxpayer and his or her representative, if one is appointed, written notice. Private collection agencies will not ask for payment on a prepaid debit card or gift card. Taxpayers can learn about the IRS payment options on IRS.gov/payments. Payment by check should be payable to the U.S. Treasury and sent directly to the IRS, not the private collection agency. 

Learn more about how to know if it’s really an IRS Private Debt Collector.

Audits

IRS employees conducting audits may call taxpayers to set up appointments or to discuss items with the taxpayers, but not without having first attempted to notify them by mail. After mailing an official notification of an audit, an auditor/tax examiner may call to discuss items pertaining to the audit. 

Learn more about the IRS audit process.

Criminal Investigations

IRS criminal investigators may visit a taxpayer’s home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment. 

Learn more about the What Criminal Investigation Does and How Criminal Investigations are Initiated.

Beware of Impersonations

Scams take many shapes and forms, such as phone calls, letters and emails. Many IRS impersonators use threats to intimidate and bully people into paying a fabricated tax bill. They may even threaten to arrest or deport their would-be victim if the victim doesn’t comply.

For a comprehensive listing of recent tax scams and consumer alerts, visit Tax Scams/Consumer Alerts.

Know Who to Contact

  • Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report phone scams to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
  • Report an unsolicited email claiming to be from the IRS, or an IRS-related component like the Electronic Federal Tax Payment System, to the IRS at 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            

Identity Theft and Unemployment Benefits

Posted by Admin Posted on Aug 23 2021

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States have experienced a surge in fraudulent unemployment claims filed by organized crime rings using stolen identities. Criminals are using these stolen identities to fraudulently collect benefits across multiple states.

Because unemployment benefits are taxable income, states issue Form 1099-G, Certain Government Payments, to recipients and to the IRS to report the amount of taxable compensation received and any withholding. Box 1 on the form shows "Unemployment Compensation." You should report fraud to the issuing state agency and request a corrected Form 1099-G.

For details on how to report fraud to state workforce agencies, how to obtain a corrected Form 1099-G, a list of state contacts and other steps you should take if you are a victim, see the U.S. Department of Labor’s DOL.gov/fraud page. Please follow Department of Labor guidance on reporting fraud and protecting yourself from additional scams.

You may be a victim of unemployment identity theft if you received:

  • Mail from a government agency about an unemployment claim or payment and you did not recently file for unemployment benefits. This includes unexpected payments or debit cards and could be from any state.
  • An IRS Form 1099-G reflecting unemployment benefits you weren't expecting. Box 1 on this form may show unemployment benefits you did not receive or an amount that exceeds your records for the unemployment benefits you did receive. The form itself may be from a state in which you did not file for benefits.
  • While you are still employed, a notice from your employer indicating that your employer received a request for information about an unemployment claim in your name.

IRS Information for Taxpayers

When you file your income taxes, ONLY include income you received, even if you have not yet received a corrected 1099-G from the state.
 

  • The processing of your tax return should not be delayed while your report of unemployment identity theft is under investigation.
  • Do not report the incorrect 1099-G income on your tax return.
  • The American Rescue Plan of 2021 provides for a one-time exemption of $10,200 per person in unemployment benefits to individuals and couples who earned $150,000 or less last year. If you have already filed your taxes, do not file an amended return. The IRS will issue additional guidance.
  • There is no requirement to file a Form 14039, Identity Theft Affidavit. A Form 14039 should be filed only if the taxpayers' e-filed tax return is rejected because a duplicate return with their Social Security number is already on file or if the IRS instructs them to file a Form 14039.
  • Taxpayers who were victims of an unemployment benefits identity theft scheme should consider opting into the IRS Identity Protection PIN program. An IP PIN is a six-digit number that helps prevent thieves from filing federal tax returns in the names of identity theft victims. The IP PIN is a voluntary program open to any taxpayer who can verify his or her identity. See details at Get an IP PIN.

IRS Information for Employers

Employers are often the first line of defense against unemployment fraud. Employers should:

  • Respond quickly to state notices that its employees have filed for unemployment claims, especially if the names on the notices are not employees;
  • Be alert to misuse of the IRS-issued Employer Identification Number that fraudsters may use to file jobless claims;
  • File a Form 14039-B PDF, Business Identity Theft Affidavit, if the company’s EIN is being used to generate fraudulent unemployment benefit claims.
  • Write to the IRS to close out the business tax account if the company is going out of business; this will help curtail the misuse of dormant EINs.

Justice Department Warns on Fake Unemployment Benefit Websites

The Department of Justice recently warned that fraudsters are creating websites mimicking unemployment benefit websites, including state workforce agency (SWA) websites, for the purpose of unlawfully capturing consumers’ personal information.
To lure consumers to these fake websites, fraudsters send spam text messages and emails purporting to be from an SWA and containing a link. The fake websites are designed to trick consumers into thinking they are applying for unemployment benefits and disclosing personally identifiable information and other sensitive data. That information can then be used by fraudsters to commit identity theft.

Help stop these scams by reporting them and using the list of state contacts at DOL.gov/fraud.

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                                 

5 Key Points About Bonus Depreciation

Posted by Admin Posted on Aug 23 2021

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Like most business owners, you’ve probably heard about 100% bonus depreciation — and hopefully you’ve been claiming it when appropriate. It’s available for a wide range of qualifying asset purchases and allows you to deduct the entire expense of an eligible asset in the year it’s placed in service.

But there are many important details to keep in mind as you plan your asset purchases for 2021 and beyond. Here are five key points about this powerful tax-saving tool:

1. It’s scheduled to be reduced and eliminated. Under current law, 100% bonus depreciation will be gradually reduced and eliminated for property placed in service in 2023 through 2026. Thus, an 80% rate will apply to property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026. Bonus depreciation will be eliminated for 2027 and later years.

For some aircraft (generally, company planes) and for costs of certain property with a long production period, the reduction is scheduled to take place beginning a year later, from 2024 through 2027. Then it will be eliminated beginning in 2028.

Of course, Congress could pass legislation to extend bonus depreciation.

2. It’s available for new and most used property. Before a Tax Cuts and Jobs Act (TCJA) provision went into effect in late 2017, used property didn’t qualify for bonus depreciation. It currently qualifies unless the taxpayer is the party that previously used the property or unless the property was acquired in ineligible transactions. (These are, generally, acquisitions that are tax-free or from a related person or entity.)

3. In some situations you should elect to turn it down. Taxpayers can elect out of bonus depreciation for one or more classes of property. The election out may be useful for certain businesses. These include sole proprietorships and pass-through entities, such as partnerships, S corporations and, typically, limited liability companies, that want to prevent the “wasting” of depreciation deductions from applying them against lower-bracket income in the year property was placed in service — instead of applying them against anticipated higher-bracket income in future years.

C corporations are currently taxed at a flat rate. But because an increase to the corporate rate has been proposed, it could also make sense for C corporations to elect out of bonus depreciation this year.

4. Certain building improvements are eligible. Before the TCJA, bonus depreciation was available for two types of real property: 1) land improvements other than buildings, such as fencing and parking lots, and 2) qualified improvement property (QIP), a broad category of internal improvements made to nonresidential buildings after the buildings have been placed in service.

The TCJA inadvertently eliminated bonus depreciation for QIP. However, 2020’s CARES Act made a retroactive technical correction to the TCJA that makes QIP placed in service after December 31, 2017, eligible for bonus depreciation.

5. 100% bonus depreciation has — temporarily — reduced the importance of Section 179 expensing. If you own a smaller business, you’ve likely benefited from Sec. 179 expensing. This is an elective benefit that, subject to dollar limits, allows an immediate deduction of the cost of equipment, machinery, off-the-shelf computer software and certain building improvements.

Sec. 179 has been enhanced by the TCJA, but the availability of 100% bonus depreciation is economically equivalent and has greatly reduced the cases in which Sec. 179 expensing is useful. If bonus depreciation is reduced and eliminated as scheduled, then the importance of Sec. 179 will return for many 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: Thomson Reuters                 

AFTER MARRIAGE, WHAT ARE THE TAX IMPLICATIONS?

Posted by Admin Posted on July 30 2021

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You are entitled to file a joint income tax return upon marriage. Although this simplifies the filing process, you will more than likely discover that your tax bill is either higher or lower than when you were single. It's higher when you file together, as more of your income is taxed in the higher tax brackets. This is commonly known as the marriage tax penalty. In 2003, a tax law that intended to reduce the marriage penalty went into effect, but this law didn't get rid of the penalty for higher bracket taxpayers.

Once married, you may not file separately in an attempt to avoid the marriage penalty. Actually, filing as married filing separately can raise your taxes. For the optimal filing status for your situation you should speak with your tax advisor.

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

Ten Things to Know About Advance Child Tax Credit Payments

Posted by Admin Posted on July 30 2021

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For taxpayers wanting more information about the 2021 Child Tax Credit and advanced payment option, here’s ten things you need to know.

  1. The IRS is determining potential Advanced Child Tax Credit Payment (AdvCTC) eligibility* using information from:
    • taxpayer’s 2020 tax return (or, in some cases, taxpayer’s 2019 tax return),
      or
    •  taxpayer’s information submitted by using the Non-Filers tool on IRS.gov last year (to register for an Economic Impact Payment),
      or
    • taxpayer’s information submitted using the new non-filer tool this year.
      *Note that this is not necessarily the same as the information that the IRS will use to determine your bank account information.
  2. If taxpayer is unsure if they qualify, they can use the Advance Child Tax Credit Eligibility Assistant tool to find out.
  3. Families who are eligible for AdvCTC (based on the above) will receive three letters.
  4.  The monthly payment amount will be up to $300 per month for each qualifying child under age 6, and up to $250 per month for each qualifying child ages 6 to 17.
  5.  Payments start July 15, 2021. Additional payments will be issued:
    Aug. 13 | Sept. 15 | Oct. 15 | Nov. 15 | and Dec. 15.
  6. Payments will be issued either by direct deposit or paper check.
  7. Taxpayers will be able to use the IRS Child Tax Credit Update Portal to:
    • Check if they are enrolled to receive advance payments.
    • Unenroll to stop getting advance payments. Important note: if taxpayers are married filing joint, both must unenroll.
    • Provide or update bank account information for monthly payments sent in August or later.
      Note: More functionality within this tool will be added later this year that will allow taxpayers to:
    • Make changes to your address;
    • Report a change to your dependents;
    • Report a change in marital status; and
    • Report a change in income.
  8. Taxpayers who unenroll can still report the Child Tax Credit on their 2021 individual income tax return.
  9.  All taxpayers who receive AdvCTC will be required to reconcile the total payments received versus the total Child Tax Credit they qualify for on their 2021 Individual Tax Return, when they file in 2022.

10. The best places to find more information about AdvCTC 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: TAS                                 

IRS readies nearly 4 million refunds for unemployment compensation overpayments

Posted by Admin Posted on July 30 2021

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The Internal Revenue Service announced that it will issue another round of refunds to nearly 4 million taxpayers who overpaid their taxes on unemployment compensation received last year.

The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.

Refunds by direct deposit will begin July 14 and refunds by paper check will begin July 16. The IRS previously issued refunds related to unemployment compensation exclusion in May and June, and it will continue to issue refunds throughout the summer.

To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law's enactment to identify those people who are due an adjustment. For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed.

For this round, the IRS identified approximately 4.6 million taxpayers who may be due an adjustment. Of that number, approximately 4 million taxpayers are expected to receive a refund. The refund average is $1,265, which means some will receive more and some will receive less.

Most taxpayers need not take any action and there is no need to call the IRS. However, if, as a result of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return.

Taxpayers should file an amended return if they:

  • did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;
  • did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;
  • are now eligible for any other credits and/or deductions not mentioned below. Make sure to include any required forms or schedules.

Taxpayers do not need to file an amended return if they:

  • already filed a tax return and did not claim the unemployment exclusion; the IRS will determine the correct taxable amount of unemployment compensation and tax;
  • have an adjustment, because of the exclusion, that will result in an increase in any non-refundable or refundable credits reported on the original return;
  • did not claim the following credits on their tax return but are now eligible when the unemployment exclusion is applied: Recovery Rebate Credit, Earned Income Credit with no qualifying dependents or the Advance Premium Tax Credit. The IRS will calculate the credit and include it in any overpayment;
  • filed a married filing joint return, live in a community property state, and entered a smaller exclusion amount than entitled on Schedule 1, line 8.

Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.

 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        

Can Your Business Benefit From the Enhanced Employee Retention Credit?

Posted by Admin Posted on July 30 2021

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Over the course of the COVID-19 pandemic, many businesses have had to shut down or reduce operations, causing widespread furloughs and layoffs. Fortunately, employers that have kept workers on their payrolls may be eligible for a refundable employee retention credit. Three laws have created, extended and enhanced the credit.

The original law

The CARES Act created the employee retention credit in March of 2020. The credit originally:

Equaled 50% of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter,

Was subject to an overall wage cap of $10,000 per eligible employee, and

Was available to eligible large and small employers.

The credit covered wages paid from March 13, 2020, through Dec. 31, 2020.

What’s changed

The Consolidated Appropriations Act (CAA), signed into law in December of 2020, extended the covered wage period to include the first two calendar quarters of 2021, ending on June 30, 2021. And now the American Rescue Plan Act (ARPA), signed into law on March 11, has extended it again through Dec. 31, 2021.

In addition, for the first two quarters of 2021, the CAA increased the overall covered wage ceiling to 70% of qualified wages paid during the applicable quarter. And it increased the per-employee covered wage ceiling to $10,000 of qualified wages paid during the applicable quarter (versus a $10,000 annual ceiling under the original rules). Because of the ARPA extension, these higher wage ceilings now apply to all four quarters of 2021.

Substantial tax savings

Additional rules and limits apply to the employee retention credit, and these are just some of the changes made to it. But the potential tax savings can be substantial. Contact your tax advisor for more information about this tax saving opportunity.

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     

The IRS begins adjusting tax returns for unemployment compensation exclusion

Posted by Admin Posted on July 30 2021

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On May 14, the IRS issued notification that it began making adjustments to 2020 tax returns to allow the exclusion of unemployment compensation of up to $10,200, as included in the American Rescue Plan Act of 2021.

Here’s some quick facts you need to know:

  • The adjustments will be done in phases.
  1. The first phase, began on May 6, 2021, and includes single taxpayers who had the simplest tax returns, such as those filed by taxpayers who did not claim children or any refundable tax credits.
  2. The second phase is scheduled to begin after the completion of the first phase and will include married filing joint taxpayers with more complex tax returns.
  • The $10,200 per person exclusion applies to taxpayers, single or married filing jointly, with modified adjusted gross income of less than $150,000. The $10,200 is the amount of income exclusion, not the amount of the refund.
  • A notice, CP 21 or CP 22, will be issued within 30 days to inform you of the adjustment and let you know if the adjustment created a balance due, refund, or no change. You should keep any Notice you receive for your tax records.
  • Refund amounts will vary and not all adjustments will result in a refund.
  • If the adjustment results in a refund, it will be issued as a direct deposit (if the IRS has your bank account information) or a check (if no valid bank account information is available), as long as no other past due amounts are owed which the IRS is obligated to collect.
  1. If other amounts are owed, such as past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or certain federal nontax debts (e.g., student loans), the refund will be offset to pay them.
  2. The IRS will send a separate notice to you if the refund is sent to pay unpaid debts.

 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   

 

How to know it’s really the IRS calling or knocking on your door

Posted by Admin Posted on July 30 2021

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Many taxpayers have encountered individuals impersonating IRS officials – in person, over the telephone and via email. Don’t get scammed. We want you to understand how and when the IRS contacts taxpayers and help you determine whether a contact you may have received is truly from an IRS employee.

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

However, there are special circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations.

Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail.

Note that the IRS does not:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.
  • Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

If you owe taxes:

The IRS instructs taxpayers to make payments to the “United States Treasury.” The IRS provides specific guidelines on how you can make a tax payment at irs.gov/payments.

Here is what the IRS will do:

If an IRS representative visits you, he or she will always provide two forms of official credentials called a pocket commission and a HSPD-12 card. HSPD-12 is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. You have the right to see these credentials. And if you would like to verify information on the representative’s HSPD-12 card, the representative will provide you with a dedicated IRS telephone number for verifying the information and confirming their identity.

Collection

IRS collection employees may call or come to a home or business unannounced to collect a tax debt. They will not demand that you make an immediate payment to a source other than the U.S. Treasury.

Learn more about the IRS revenue officers’ collection work.

The IRS can assign certain cases to private debt collectors but only after giving the taxpayer and his or her representative, if one is appointed, written notice. Private collection agencies will not ask for payment on a prepaid debit card or gift card. Taxpayers can learn about the IRS payment options on IRS.gov/payments. Payment by check should be payable to the U.S. Treasury and sent directly to the IRS, not the private collection agency. 

Learn more about how to know if it’s really an IRS Private Debt Collector.

Audits

IRS employees conducting audits may call taxpayers to set up appointments or to discuss items with the taxpayers, but not without having first attempted to notify them by mail. After mailing an official notification of an audit, an auditor/tax examiner may call to discuss items pertaining to the audit. 

Learn more about the IRS audit process.

Criminal Investigations

IRS criminal investigators may visit a taxpayer’s home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment. 

Learn more about the What Criminal Investigation Does and How Criminal Investigations are Initiated.

Beware of Impersonations

Scams take many shapes and forms, such as phone calls, letters and emails. Many IRS impersonators use threats to intimidate and bully people into paying a fabricated tax bill. They may even threaten to arrest or deport their would-be victim if the victim doesn’t comply.

For a comprehensive listing of recent tax scams and consumer alerts, visit Tax Scams/Consumer Alerts.

Know Who to Contact

  • Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report phone scams to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
  • Report an unsolicited email claiming to be from the IRS, or an IRS-related component like the Electronic Federal Tax Payment System, to the IRS at 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                     

Why Do I Owe a Penalty and Interest and What Can I Do About It?

Posted by Admin Posted on July 29 2021

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There are many reasons why the IRS may charge penalties on your tax account. The IRS is legally required, under Internal Revenue Code (IRC) § 6601, 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.

Penalties (and the reasons for them) include:

  • Failure to file – when you don’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 – when you don’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 makes a notice and demand for payment and you fail to pay on time.
  • Failure to pay proper estimated tax – when you don’t pay enough taxes due for the year with your quarterly estimated tax payments, or through withholding, when required.
  • Bad check – when 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

Common scenarios where you may get penalty and interest charges

Here are some common scenarios this year where you may see penalty and interest charges, and how to handle them.

  • I sent a payment to the IRS, but I still got a bill with penalty and interest charges. What can I do?If you mailed a payment in 2021 to the IRS on or before May 17, it may still be unopened in the backlog of mail the IRS is processing due to COVID-19. See the information for Received a Bill or Notice and Sent Us a Check for more details. The IRS will process your payment with the date the IRS received it. Do not cancel your check, and make sure funds are available for when the IRS processes your payment.
  • I received penalty and interest charges because I did not pay yet. What are my options?First, it’s important to understand that applicable penalties and 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 a number of ways you can send a payment, including payment options if you cannot full pay right now, see the IRS Pay webpage or our articles File by May 17; here are some options and Need options for when you owe federal taxes, but can’t pay in full?

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.

See the IRS reasonable cause relief page for more details.

The IRS will also consider the following situations for waiving penalties:

What if the IRS denies my penalty abatement request?

If the IRS rejects your request to remove a penalty, you may be able to request a conference or hearing with the IRS Independent Office of Appeals. You have 30 days from the date of the rejection letter to file your request for an appeal.

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.

The IRS doesn’t remove or reduce interest for reasonable cause or as first-time relief. Interest is charged by law and will continue until your tax account is fully paid.

The IRS may only reduce the amount of interest you owe if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act.

Use Form 843 PDF to request a reduction in interest. See Instructions for Form 843 PDF and IRC Section 6404(e)(1) for additional information.

What else do I need to know?

The IRS will continue to charge failure-to-pay penalty up to 25% in total 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.

As of this date, the IRS response times for calls and written submissions is still being affected by the ongoing Coronavirus 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 applicable penalties (and associated interest) will be removed as appropriate.

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

Source: TAS     

ARPA Provides More Than Just Direct Payments to Taxpayers

Posted by Admin Posted on July 28 2021

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On March 11, another round of COVID-19 relief legislation was signed into law. The American Rescue Plan Act (ARPA) includes funding for individuals, businesses, and state and local governments, but also some significant tax-related provisions.

ARPA extends and expands some tax provisions in the CARES Act and the Consolidated Appropriations Act (CAA) and also includes some new tax-related provisions.

A quick look

Here’s a quick look at some of the tax provisions that may affect you:

Individuals

Recovery rebates of up to $1,400 for singles and heads of households and $2,800 for married couples filing jointly — plus $1,400 per qualifying dependent (including adult dependents) — subject to adjusted gross income (AGI) phaseouts starting at $75,000 for singles, $112,500 for heads of households and $150,000 for joint filers and ending at $80,000, $120,000 and $160,000, respectively

Increased Child credit, including advance payments of part of the credit later this year

Expanded child and dependent care tax credit

Tax-free treatment of forgiven student loan debt

Exclusion from gross income of the first $10,200 in unemployment benefits received

Businesses and other employers

Extended and expanded tax credits for retaining employees, through Dec. 31, 2021

Extended and modified payroll tax credits for paid sick and family leave, through Sept. 30, 2021

Extended excess business loss limitation, through Dec. 31, 2026

Expansion of the Section 162(m) limits on the tax deduction public companies can take for executive compensation to cover the CEO, the CFO and the five next highest paid employees, beginning in 2027

How will you benefit?

This is just a brief overview of the tax-related provisions of ARPA. Additional rules and limits apply. Contact your tax advisor for more details on these provisions and how you might benefit.

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        

Beware of scammers offering help with getting advanced child tax credit payments

Posted by Admin Posted on July 28 2021

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We know a lot of eligible families are excited to learn how to get part of their Child Tax Credit in advance this year. So are scammers. The Taxpayer Advocate Service wants you to be alert of potential scams that might use that eagerness to harm you and your family by offering to help you get that money.

Here are some common scams to avoid:

Don’t fall for anyone making calls, sending emails, texts or direct messages, or posting on social media offering to help you apply for child tax credit benefits or offering ways to get advanced payment money quicker or get you more money through a larger child tax credit.

Also don’t provide any personal information in response to advertisements, especially any individual or company asking for the following information:

  • Social Security, bank account, debit and credit card numbers or other financial information
  • Home address, work address, or telephone number(s)
  • Any tax return related information

The IRS will never ask for you to pay by cash, gift card, credit card, wire transfer through companies like Money Gram or Western Union, or cryptocurrency to get help with making sure you get the necessary information to receive this payment. IRS, TAS, or other official government tax related information assistance is always free!

Go to the IRS Tax Scams/Consumer Alerts site if you think something sounds too good to be true. They publish warnings about the most recently identified scams, schemes, and phishing efforts. If you do encounter this type of activity, please also visit the Tax Scams – How to Report Them page to report it. Reporting these illegal efforts helps other taxpayers who might not be so savvy, potentially avoid falling prey to them. It also provides a lead for federal agencies to potentially identify and halt those activities, where possible.

2021 Advanced Child Tax Credit general information

As part of the Rescue Plan Act Armeican, families may be eligible for an increased child tax credit amount and may receive advanced payments of the credit for 2021. Eligible families will be receiving monthly payments from the government starting July 15 through December 2021,

The IRS will send these monthly payments directly to people who qualify, based on 2020 or 2019 tax return information on file, through direct deposit, paper checks, or debit cards, with no action required by you to get these payments as long as the IRS has this information on file.

Eligible families will get up to half of their child tax credit in these monthly payments and the other half when they file their 2021 taxes.

More details are coming soon and will be updated on IRS.gov about:

  • how to get official help filing a 2020 tax return to ensure you receive these payments (in addition to what’s already on the IRS Filing and Free File pages);
  • choosing to un-enroll or opt-out (so you get the payment in full instead on your 2021 tax return, in 2022); or
  • changing information the IRS has on file to calculate these advanced payments.

Use ONLY official IRS or TAS websites

For the real deal on information about advanced payments of the Child Tax Credit, refer only to the official IRS.gov Advance Child Tax Credit Payments in 2021 page or IRS News page, or monitor our Taxpayer Advocate Service siteNews and Information page or Coronavirus (COVID-19) Tax Relief page.

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 may file a 2020 superseding return changing their joint filing election to receive the third economic impact payment

Posted by Admin Posted on July 22 2021

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Economic Impact Payments

The IRS previously issued two rounds of economic impact payments (EIPs). The IRS delivered over 160 million payments for the first round of EIPs and 147 million payments for the second round of EIPs. The IRS has currently disbursed approximately 159 million payments for the third round of EIPs based on the adjusted gross incomes of the taxpayers’ latest processed returns from 2019 or 2020. The IRS is also automatically issuing and will continue to issue true-up payments for those individuals who already received a third EIP based on their 2019 tax return but have since filed their 2020 tax return and qualify for additional EIP funds. However, since enactment of the legislation many eligible victims of domestic abuse face issues in receiving their EIPs.

If the IRS determined the EIP based upon a filed joint tax return, it electronically deposited the EIP to the bank account shown on the joint return or it issued a check in both taxpayers’ names and sent the check to the address shown on the joint return. And on March 30, the IRS advised joint filers that taxpayer may receive half of the EIP payment as a direct deposit and the other half as a check, so keep an eye on your mailbox.

Superseding Returns

In my April 29, 2020, blog, I called attention to superseding returns — returns filed after an original return but before the due date of the original return. Returns are typically due on April 15, but taxpayers can submit a Form 4868, Application for Automatic Extension of Time to File, until October 15. Taxpayers can use superseding returns to correct an error or change a tax election as a substitute for the original filed return. For example, taxpayers might elect to have an overpayment shown on an original return applied to the tax owed the following year. By filing a second (superseding) return, taxpayers can change that election and receive the refund in the current year instead.

Superseding returns are treated as a replacement of an original return, and the IRS adjusts its records accordingly (see, for example, Internal Revenue Manual (IRM) 21.6.7.4.10). As I noted in a recent blog, it is important to remember the IRS treats the original return filing date as the key date for assessment and refund statute purposes — not the date the superseding return was filed if the superseding return was filed before an extended due date.

Superseding Return Changing Filing Status

Another reason to file a superseding return would be to change the election to file a joint return. For example, taxpayers who were married at the conclusion of the tax year, filed a joint return, and subsequently divorced or separated might decide to change their filing statuses (to married filing separately or head of household, if eligible).  One additional benefit is each spouse would receive their EIP individually rather than receive their EIP as an electronic deposit to a joint bank account they no longer share, or via a check in both their names to an address they no longer share.

Taxpayers who are still married, particularly victims of domestic abuse, may also decide to change their joint return election by filing a timely superseding return. This may be especially important when they do not have access to the bank account shown on the filed joint return, or they cannot access the mail at the address shown on the joint return, and the other joint filer may misappropriate their share of EIP.

The IRM takes the position that superseding returns changing the joint filing election must be filed before the due date of the original return without regard to extensions. The deadline for filing an original return was postponed to May 17, 2021, for tax year 2020 (see Treas. Reg. § 1.6013–1(a)(1)). Taxpayers may request extensions to file beyond that date and may file superseding returns if they do so by the extended filing date, but the IRS’s position set forth in its IRM states that for irrevocable elections (e.g., section 179, Joint to Separate) a return filed after the original due date but on or before the extended due date does not constitute a superseding return.

If the IRS did not issue the first or second EIP based on a taxpayer’s filed superseding return changing a joint filing status and instead based the EIP on the prior joint return, the taxpayer may still claim a Recovery Rebate Credit (RRC) on their 2020 income tax return, Form 1040, line 30. However, taxpayers should expect that their refund will be delayed because the IRS will manually review the claim if its records are inconsistent with the RRC.  The IRS will likely issue a math error notice explaining that it is reducing or eliminating the claimed RRC because the EIP was previously paid. This leaves the taxpayer in a situation that is similar to the one I discussed in my February 11, 2021, blog — EIP is based on a joint return but the joint election was invalid because it was coerced or the taxpayers were not married. In either instance, taxpayers will have the opportunity to explain their situation by responding to the math error notice and must respond within 60 days that the joint election was invalid or was superseded and they did not receive the EIP to which they were entitled.

Conclusion and Recommendation

Taxpayers who did not receive their first or second EIP after they filed a superseding return changing their election from filing jointly may still be eligible for the RRC on their 2020 income tax return. Taxpayers may still file a superseding return electing to file married filing separately or head of household for the 2020 return by May 17 which may trigger a separate EIP after processing the superseded return.  That superseded return would be the basis for the third EIP.

I will continue to work with the IRS to ensure appropriate math error notice procedures are in place to assist with the processing of the 2020 RRC for those taxpayers that filed superseding returns changing their election to file a joint return.  Victims of domestic violence in particular may benefit from these procedures.

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

A Tax Quirk of Being a Business Partner

Posted by Admin Posted on July 22 2021

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If you’re a partner in a business, you may have encountered a situation that gave you pause: In any given year, you may have been taxed on more partnership income than was distributed to you. The cause of this quirk of taxation lies in the way partnerships and partners are taxed.

Pass-through taxation

Unlike regular corporations, partnerships aren’t subject to income tax. Instead, each partner is taxed on the partnership’s earnings — whether or not they’re distributed to the partners. Similarly, if a partnership has a loss, the loss is passed through to the partners. (Be aware that various rules may prevent partners from currently using their share of a partnership’s loss to offset other income.)

While a partnership isn’t subject to income tax, it’s treated as a separate entity for purposes of determining its income, gains, losses, deductions and credits. This makes it possible to pass through to partners their share of these items.

Partnership items

A partnership must file an information return, which is IRS Form 1065, “U.S. Return of Partnership Income.” On this form, the partnership separately identifies income, deductions, credits and other items. This is so partners can properly treat items that are subject to limits or other rules that could affect their treatment at the partner level.

Examples of such items include capital gains and losses, interest expense on investment debts, and charitable contributions. Each partner gets a Schedule K-1 showing his or her share of partnership items.

Basis and distribution rules

Basis and distribution rules ensure that partners aren’t taxed twice. A partner’s initial basis in his or her partnership interest (which varies depending on how the interest was acquired) is increased by his or her share of partnership taxable income.

When that income is paid out to partners in cash, they aren’t taxed on the cash if they have sufficient basis. Instead, partners reduce their basis by the distribution amount. If a cash distribution exceeds a partner’s basis, then the excess is taxed to the partner as a gain (often, capital gain).

The tax ins and outs

Partnership structure offers owners many benefits, but it’s important to understand the tax ins and outs. Contact us to discuss further.

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   

Curtailing Cryptocurrency Tax Surprises

Posted by Admin Posted on July 22 2021

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As investing in Bitcoin, Dogecoin and other cryptocurrencies becomes increasingly popular, investors need to understand the potential tax ramifications. Unlike traditional currency, the IRS views cryptocurrency as property for federal income tax purposes and even asks about it on Form 1040.

Many transactions involving cryptocurrency — such as purchases of goods or services — become taxable events where the purchase is also considered a sale. In addition, certain changes to the blockchain (the distributed digital “ledger” on which cryptocurrency transactions are typically recorded) can trigger taxable income.

Gains and losses

Because cryptocurrency is property, investors recognize a capital gain or loss when they sell it in exchange for traditional currency. As with other capital assets, the amount of gain or loss is the difference between the adjusted basis in the cryptocurrency (usually, the amount paid to acquire it) and the amount for which it’s sold. And, as with other capital assets, gain or loss may be short term or long term, depending on whether an investor held the cryptocurrency for more than one year. If cryptocurrency is sold at a loss, there may be limitations on the deductibility of the capital losses.

Cryptocurrency owners often are surprised to discover that using cryptocurrency to pay for goods or services can also trigger a capital gain or loss. Let’s say you purchased 10 units of cryptocurrency 10 years ago for $1,000 each, or a total of $10,000. This year, when the cryptocurrency’s price has climbed to $5,000 per unit, you use it to purchase a $50,000 car. Assuming your adjusted basis in the cryptocurrency is $10,000, you’ll recognize a $40,000 long-term capital gain. Generally, your gain or loss is the difference between your adjusted basis in the cryptocurrency and the fair market value of the goods or services you receive in exchange for it.

Forks and drops

In some cases, a cryptocurrency owner may recognize taxable income because of certain blockchain events. Taxable income may be triggered even if you don’t conduct transactions or take any other actions with the cryptocurrency.

IRS guidance in 2019 addressed the tax implications of two types of blockchain events: “hard forks” and “airdrops.” A hard fork occurs “when a cryptocurrency on a distributed ledger undergoes a protocol change resulting in a permanent diversion from the legacy or existing distributed ledger.” Put much more simply, it’s when a single cryptocurrency is split in two.

A hard fork may or may not be followed by an airdrop, which the IRS describes as “a means of distributing units of a cryptocurrency to the distributed ledger addresses of multiple taxpayers.” According to the guidance, when an airdrop follows a hard fork, it “results in the distribution of units of the new cryptocurrency to addresses containing the legacy cryptocurrency.” In simpler terms, it’s when “free coins” representing the new cryptocurrency are dropped into the existing cryptocurrency wallets of the owners of the legacy cryptocurrency.

If the new cryptocurrency isn’t airdropped or otherwise transferred to an account of the legacy cryptocurrency’s owner, a hard fork doesn’t trigger taxable income. On the other hand, if a hard fork is followed by an airdrop (which enables owners to immediately dispose of the new cryptocurrency), the owner recognizes ordinary income in the year the new cryptocurrency is received.

Stay current

Buying and selling cryptocurrency involves significant risk, including the possibility you could lose part or all of the money you’ve invested. Tax treatment of cryptocurrency is also subject to change. The IRS will likely continue to provide guidance on the distinctive tax issues presented by cryptocurrency. We can help you stay current on these developments and work with you to avoid unpleasant tax surprises.

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                              

Keep safe on social media at tax time – Don’t post or message tax info

Posted by Admin Posted on July 22 2021

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Social media timelines, forums and community groups may be a great way to connect with others and even comment publicly about something, but it’s not a great place to share your personal tax information.

Turning to social media and posting personal financial information such as tax transcripts or refund details are just examples of what you should not be doing. Also, asking personal tax details of others, puts you and them at risk for identity theft.

Never post your:

  • IRS account transcripts,
  • IRS Where’s My Refund status images,
  • Refund amounts,
  • Bank account or routing numbers,

Pictures or snapshots of tax returns and other documents with tax and personal information on them such as TAS Form 911, Request for Taxpayer Advocate Service Assistance.

TAS does not have the ability to open cases or respond to incoming messaging originating from our social media sites or any of our subscriber lists. If you qualify for TAS assistance, please follow the instructions on our “Submit a Request for Assistance” page.

Official Information Sources

Both the TAS and the IRS continuously strive to provide information to help you get your refund timely, to resolve return or account issues, and to help you protect yourself from fraud and ID theft. Unfortunately, the current Coronavirus (COVID-19) pandemic is exactly the type of situation that thieves and fraudsters look for to exploit.

The current IRS tax return processing programming is there to help prevent and identify possible ID Theft scenarios in relation to your account. Unfortunately, this programming protection can also delay a legitimate refund while information cross-checking is in process. And it can delay it past normal refund release timeframes in many cases.

Watch for official IRS notices and letters mailed to you that contain tax return and account updates. The correspondence may request you to take certain steps or actions to resolve any discrepancies identified. If identity theft is suspected, you may receive an official IRS letter 5071c requesting you to contact the IRS Identity Verification telephone number provided in the letter.

 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 LEVEL OF HOME INSURANCE SHOULD I BUY?

Posted by Admin Posted on July 07 2021

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Make sure that you are insured against whatever natural disasters are common in your area, because insurance against these differs. If you don't specifically ask, you may not be covered.

Be sure to insure for 100% of rebuilding costs. The price of rebuilding your home could differ greatly from the amount that your home is valued at today.

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

TAXPAYER BILL OF RIGHTS 6: THE RIGHT TO FINALITY

Posted by Admin Posted on July 07 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service (IRS). The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Finality.

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

What you can expect:

  • The IRS generally has three years from the date you file your return to assess any additional tax for that tax year. There are some limited exceptions to this rule. For example, if you fail to file a return or you file a false or fraudulent return, 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 from you. The IRS can’t extend this 10-year period unless you agree to extend the period as part of an installment agreement to pay your tax debt or the IRS obtains a court judgment. However, there are some situations where the IRS may suspend the ten-year collection period and resume it later. The IRS may be able to do this if there’s a period when the IRS cannot collect, such as times of bankruptcy or a collection due process proceeding.
  • If you believe you have overpaid your taxes, you can file a refund claim asking for the money back. Generally, you must file a refund claim within three years from the date you filed your original return, or two years from the date you paid the tax, whichever is later.
  • If the IRS sends you a notice proposing additional tax (statutory notice of deficiency), the notice must include the deadline for when you can file a petition with the Tax Court to challenge the amount proposed.
  • To timely challenge a statutory notice of deficiency in Tax Court, you must file your petition within 90 days of the date of the statutory notice (150 days if the taxpayer’s address on the notice is outside the United States or if the taxpayer is out of the country at the time the notice is mailed). If you do not timely file a petition, the IRS will assess the amount proposed in the statutory notice and you will receive a bill.
  • Generally, the IRS can only examine (audit) your tax return once for any given tax year. However, the IRS may reopen a previously examined return if the IRS finds it necessary. For example, if there is evidence of fraud, the IRS can reopen an exam.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages. 

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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      

TAXPAYER BILL OF RIGHTS 7: THE RIGHT TO PRIVACY

Posted by Admin Posted on July 07 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service (IRS). The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Privacy.

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, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

What you can expect:

  • There are limits on the amount of wages that the IRS can levy (seize) to collect tax that you owe. A portion of your wages are protected from levy. The protected amount is the equivalent to the standard deduction, plus any deductions for personal exemptions.
  • The IRS can’t seize certain personal items, such as necessary schoolbooks, clothing, undelivered mail and certain amounts of furniture and household items. The IRS also can’t seize your primary home without court approval. It also must show there is no reasonable, alternative way to collect the tax debt from you.
  • If you submit an offer to settle your tax debt, and the offer relates only to how much you owe (known as a Doubt as to Liability Offer in Compromise), you do not need to submit any financial documentation.
  • The IRS should not seek intrusive and extraneous information about your lifestyle during an audit if there is no reasonable sign that you have unreported income.
  • During a Collection Due Process hearing, the Office of Appeals must consider whether the IRS’s proposed collection action balances the need for efficient tax collection with ensuring the IRS’s collection actions are no more intrusive to you than necessary.
  • More information about the IRS Privacy Policy is available online.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages. 

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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  

TAXPAYER BILL OF RIGHTS 5: THE RIGHT TO APPEAL AN IRS DECISION IN AN INDEPENDENT FORUM

Posted by Admin Posted on July 07 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service (IRS). The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Appeal an IRS Decision in an Independent Forum.

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

What you can expect:

  • The IRS Commissioner must ensure that there is an independent IRS Office of Appeals. It’s an office that is separate from the IRS office that initially reviewed your case. Generally, Appeals will not discuss a case with the IRS to the extent that those communications appear to compromise the independence of Appeals.
  • Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree PDF, tells you how to appeal your tax case if you don’t agree with the IRS’s findings.
  • If the IRS has sent you a statutory notice of deficiency, which is a notice proposing additional tax, and you timely file a petition with the United States Tax Court, you may dispute the proposed adjustment in tax court before you have to pay the tax. For more information about the United States Tax Court, see the Court’s taxpayer information page.
  • Generally, if you fully paid the tax and the IRS denies your tax refund claim, or if the IRS takes no action on the claim within six months, then you may file a refund suit. You can file a suit in a United States District Court or the United States Court of Federal Claims. However, you generally have only two years to file a refund suit from the date the IRS mails you a notice that denies your claim.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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 announces two new online tools to help families manage Child Tax Credit payments

Posted by Admin Posted on June 30 2021

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The Internal Revenue Service launched two new online tools designed to help families manage and monitor the advance monthly payments of Child Tax Credits under the American Rescue Plan. These two new tools are in addition to the Non-filer Sign-up Tool, announced last week, which helps families not normally required to file an income tax return to quickly register for the Child Tax Credit.

The new Child Tax Credit Eligibility Assistant allows families to answer a series of questions to quickly determine whether they qualify for the advance credit.

The Child Tax Credit Update Portal allows families to verify their eligibility for the payments and if they choose to, unenroll, or opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return next year. This secure, password-protected tool is available to any eligible family with internet access and a smart phone or computer. Future versions of the tool planned in the summer and fall will allow people to view their payment history, adjust bank account information or mailing addresses and other features. A Spanish version is also planned.

Both the Child Tax Credit Eligibility Assistant and Child Tax Credit Update Portal are available now on IRS.gov.

The American Rescue plan increased the maximum Child Tax Credit amount in 2021 to $3,600 per child for children under the age of 6 and to $3,000 per child for children ages 6 through 17. The advance Child Tax Credit payments, which will generally be made on the 15th of each month, create financial certainty for families to plan their budgets. Eligible families will receive a payment of up to $300 per month for each child under age 6, and up to $250 per month for each child ages 6 through 17. The first monthly payment of the expanded and newly-advanceable Child Tax Credit will be made on July 15. Most families will begin receiving monthly payments automatically next month without any further action required.

"IRS employees continue to work hard to help people receive this important credit," IRS Commissioner Chuck Rettig said. "The Update Portal is a key piece among the three new tools now available on IRS.gov to help families understand, register for and monitor these payments. We will be working across the nation with partner groups to share information and help eligible people receive the advance payments."

More features coming to the Update Portal soon

Coming soon, families will be able to use the Child Tax Credit Update Portal to check the status of their payments. In late June, people will be able to update their bank account information for payments starting in August. In early August, a feature is planned that will allow people to update their mailing address. Then, in future updates planned for this summer and fall, they will be able to use this tool for things like updating family status and changes in income.

For more information see the FAQs, which will continue to be updated.

Update Portal allows people to unenroll

Instead of receiving these advance payments, some families may prefer to wait until the end of the year and receive the entire credit as a refund when they file their 2021 return. In this first release of the tool, the Child Tax Credit Update Portal now enables these families to quickly and easily unenroll from receiving monthly payments.

The unenroll feature can also be helpful to any family that no longer qualifies for the Child Tax Credit or believes they will not qualify when they file their 2021 return. This could happen if, for example:

Their income in 2021 is too high to qualify them for the credit.

Someone else (an ex-spouse or another family member, for example) qualifies to claim their child or children as dependents in 2021.

Their main home was outside of the United States for more than half of 2021.

Accessing the Update Portal

To access the Child Tax Credit Update Portal, a person must first verify their identity. If a person has an existing IRS username or an ID.me account with a verified identity, they can use those accounts to easily sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a trusted third party for the IRS. Identity verification is an important safeguard and will protect your account from identity theft.

Anyone who lacks internet access or otherwise cannot use the online tool may unenroll by contacting the IRS at the phone number included in your outreach letter.

Who is getting a monthly payment

In general, monthly payments will go to eligible families who:

Filed either a 2019 or 2020 federal income tax return.

Used the Non-Filers tool on IRS.gov in 2020 to register for an Economic Impact Payment.

Registered for the advance Child Tax Credit this year using the new Non-Filer Sign-up Tool on IRS.gov.

An eligible family who took any of these steps does not need to do anything else to get their payments.

Normally, the IRS will calculate the advance payment based on the 2020 income tax return. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS is instead determining the payment using the 2019 tax return.

Eligible families will receive advance payments, either by direct deposit or check. Each payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. The IRS will issue advance Child Tax Credit payments on these dates: July 15, August 13, September 15, October 15, November 15 and December 15.

The IRS urges any family who hasn't yet filed their 2020 return – or 2019 return – to do so as soon as possible so they can receive any advance payment they're eligible for. At the same time, the agency cautions that tax returns must be processed by June 28 to be reflected in the first batch of monthly payments scheduled for July 15, so eligible families filing now will likely receive payments in the following months. Even if monthly payments begin after July, the IRS will adjust the monthly amounts upward to ensure that people still receive half of their total eligible Child Tax Credit benefit by the end of the year.

Filing soon will also ensure that the IRS has their most current bank account information, as well as key details about qualifying family members. This includes people who don't normally file a tax return, such as families experiencing homelessness and people in underserved groups.

For most people, the fastest and easiest way to file a return is by using IRS Free File, available only on IRS.gov. Besides qualifying them for these advance payments, using Free File will also enable them to claim other family-oriented tax benefits, if eligible, such as the Earned Income Tax Credit and the Recovery Rebate Credit/Economic Impact Payments.

New tool helps non-filers register

For families who don't normally file an income tax return, another easy option is to register for these advance payments using the new Non-filer Sign-up Tool, introduced recently, and available only on IRS.gov. Among other things, the tool asks users to supply current bank information, along with key details about themselves and their qualifying children. The tool then automatically fills in a very basic 2020 federal income tax return that is electronically sent to the IRS. The new tool was developed in partnership with Intuit and the Free File Alliance.

Child Tax Credit Eligibility Assistant unveiled

Before filing a return or using the Non-filer Sign-up Tool, families unsure of whether they qualify for either the credit or the advance payments may want to check out another new tool — the Child Tax Credit Eligibility Assistant. By answering a series of questions, the tool helps people determine if they qualify for the credit and the payments.

The IRS emphasized that because the Child Tax Credit Eligibility Assistant requests no personalized information, it is not a registration tool, but merely an eligibility tool. Nevertheless, it can still help an eligible family determine whether they should take the next step and either file an income tax return or register using the Non-filer Sign-up Tool.

Personal help available

IRS and its partners are helping families register for the payments using the Non-filer Sign-up Tool. During late June and early July, free events will take place in Atlanta, Brooklyn, Detroit, Houston, Las Vegas, Los Angeles, Miami, Milwaukee, Philadelphia, Phoenix, St. Louis and Washington, D.C. More details will be available soon on IRS.gov.

Child Tax Credit 2021

The IRS has created a special Advance Child Tax Credit 2021 page, designed to provide the most up-to-date information about the credit and the advance payments. It's at IRS.gov/childtaxcredit2021.

Among other things, it provides direct links to the Non-Filer Sign Up Tool, the Child Tax Credit Update Portal, the Child Tax Credit Eligibility Assistant, a set of frequently asked questions and other useful resources.

Child Tax Credit changes

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child.

The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

$75,000 or less for singles,

$112,500 or less for heads of household and

$150,000 or less for married couples filing a joint return and qualified widows and widowers.

For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI. In addition, the credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

Help spread the word

The IRS urges community groups, non-profits, associations, education organizations and anyone else with connections to people with children to share this critical information about the Child Tax Credit as well as other important benefits. Among other things, the IRS is already working closely with its community partners to ensure wide access to the Non-filer Sign-up Tool and the Child Tax Credit Update Portal. The agency is also providing additional materials and information that can be easily shared by social media, email and other methods.

For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.

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 anuncia dos nuevas herramientas en línea para ayudar a familias a administrar pagos del Crédito tributario por hijos

Posted by Admin Posted on June 30 2021

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 El Servicio de Impuestos Internos lanzó hoy dos nuevas herramientas en línea diseñadas para ayudar a las familias a administrar y monitorizar los pagos mensuales adelantados del Crédito tributarios por hijos bajo el Plan de Rescate Estadounidense. Estas dos nuevas herramientas se suman a la herramienta Non-filer Sign-up, anunciada la semana pasada, para que las familias que normalmente no tienen que presentar una declaración de impuestos puedan inscribirse rápidamente para el Crédito tributario por hijos.

El nuevo Asistente de elegibilidad del Crédito tributario por hijos (en inglés) permite a las familias responder a una serie de preguntas para determinar rápidamente si califican para el crédito por adelantado.

El Portal de actualización del Crédito tributario por hijos (en inglés) permite a las familias verificar su elegibilidad para los pagos y, si así lo desean, cancelar la inscripción u optar por no recibir los pagos mensuales para que puedan recibir una suma global cuando presenten su declaración de impuestos el próximo año. Esta herramienta segura y protegida por contraseña está disponible para cualquier familia elegible con acceso a Internet y un teléfono inteligente o computadora. Las versiones futuras de la herramienta previstas para el verano y el otoño permitirán a las personas ver su historial de pagos, ajustar la información de la cuenta bancaria o las direcciones de correo y otras funciones. También está prevista una versión en español.

Tanto el Asistente de elegibilidad para el Crédito tributario por hijos como el Portal de actualización del Crédito tributario por hijos están disponibles ahora en IRS.gov.

El Plan de Rescate Estadounidense aumentó el monto máximo del Crédito tributario por hijos en 2021 a $3,600 por niño para niños menores de 6 años y a $3,000 por niño para niños de 6 a 17 años. Los pagos anticipados del Crédito tributario por hijos, que generalmente se realizarán el 15 de cada mes, crean certeza financiera para que las familias planifiquen sus presupuestos. Las familias elegibles recibirán un pago de hasta $300 por mes por cada niño menor de 6 años, y hasta $250 por mes por cada niño de 6 a 17 años. El 15 de julio se realizará el primer pago mensual del Crédito tributario por hijos ampliado. La mayoría de las familias comenzarán a recibir pagos mensuales automáticamente el próximo mes sin que se requiera ninguna acción adicional.

"Los empleados del IRS continúan trabajando duro para ayudar a las personas a recibir este importante crédito", dijo Chuck Rettig, Comisionado del IRS. "El Portal de actualización es una pieza clave entre las tres nuevas herramientas ahora disponibles en IRS.gov para ayudar a las familias a comprender, inscribirse y monitorizar estos pagos. Trabajaremos en todo el país con grupos asociados para compartir información y ayudar a las personas elegibles a recibir los pagos por adelantado".

Mejoras futuras pronto llegaran al Portal de actualización

Próximamente, las familias podrán usar el Portal de actualización del Crédito tributario por hijos para verificar el estado de sus pagos. A fines de junio, las personas podrán actualizar la información de su cuenta bancaria para los pagos a partir de agosto. A principios de agosto, se planifica una función que permitirá a las personas actualizar su dirección postal. Luego, en futuras actualizaciones planificadas para este verano y otoño, podrán usar esta herramienta para cosas como actualizar el estado de la familia y cambios en los ingresos.

Para obtener más información, consulte las preguntas frecuentes, que seguirán actualizándose.

Portal de actualización permite a las personas a cancelar su inscripción

En lugar de recibir estos pagos por adelantado, algunas familias pueden preferir esperar hasta fin de año y recibir el crédito completo como reembolso cuando presenten su declaración de 2021. El Portal de actualización del Crédito tributario por hijos ahora permite a estas familias cancelar su inscripción de los pagos mensuales de manera rápida y fácil.

La función para cancelar también puede ser útil para cualquier familia que ya no califica para el Crédito tributario por hijos o cree que no calificará cuando presente su declaración de 2021. Esto podría ocurrir si, por ejemplo:

  • Sus ingresos en 2021 son demasiado altos para calificarlos para el crédito.
  • Alguien más (un excónyuge u otro miembro de la familia, por ejemplo) ahora califica para reclamar a su hijo o hijos como dependientes.
  • Su hogar principal estuvo fuera de los Estados Unidos durante más de la mitad de 2021.

Acceder al portal

Para acceder al Portal de actualización del Crédito tributario por hijos, una persona debe primero verificar su identidad. Si una persona tiene un nombre de usuario del IRS existente o una cuenta ID.me (en inglés) con una identidad verificada, puede usar esas cuentas para iniciar sesión fácilmente. A las personas sin una cuenta existente se les pedirá que verifiquen su identidad con una forma de identificación con foto a través de ID.me, un tercero de confianza para el IRS. La verificación de identidad es una protección importante y protegerá su cuenta del robo de identidad.

Cualquier persona que no tenga acceso a Internet o que no pueda usar la herramienta en línea puede cancelar su inscripción comunicándose con el IRS al número de teléfono incluido en su carta de divulgación.

¿Quién recibe el pago mensual?

Por lo general, los pagos mensuales se emitirán a las familias elegibles que:

  • Presentaron una declaración de impuestos federales de 2019 o 2020.
  • Usaron la herramienta Non-Filers en IRS.gov para inscribirse para un pago de impacto económico en 2020.
  • Se inscribieron para el Crédito tributario por hijos por adelantado mediante la nueva herramienta Non-Filer Sign-up en IRS.gov.

Una familia elegible que hizo una de estas cosas no necesita tomar ninguna acción para obtener su pago.

Normalmente, el IRS calculará la cantidad del pago a base de la declaración de impuestos de 2020. Si esa declaración no está disponible, ya sea porque aún no se ha presentado o procesado, el IRS determinará la cantidad del pago con la declaración de 2019.

Las familias elegibles comenzarán a recibir pagos por adelantado, ya sea mediante depósito directo o cheque. El pago será de hasta $300 por mes por cada niño calificado menor de 6 años y hasta $250 por mes por cada niño calificado de 6 a 17 años. El IRS emitirá pagos por adelantado del Crédito tributario por hijos: el 15 de julio, el 13 de agosto, el 15 de septiembre, el 15 de octubre, el 15 de noviembre y el 15 de diciembre.

El IRS insta a cualquier familia que aún no haya presentado su declaración de 2020 - o su declaración de 2019 - a hacerlo lo antes posible para que puedan recibir cualquier pago por adelantado para el que sean elegibles. Al mismo tiempo, la agencia advirtió que una presentación ahora es demasiado tarde para que se refleje en el primer lote de pagos mensuales programados para el 15 de julio. Pero la presentación ahora todavía permitirá que las familias elegibles reciban pagos a finales de este año. Incluso si los pagos mensuales comienzan después de julio, los montos mensuales aún se ajustarán al aumento para asegurar que todavía reciban la mitad de su beneficio elegible total del Crédito tributario por hijos.

Presentar pronto también asegurará que el IRS tenga su información bancaria más actualizada, así como detalles clave acerca de los miembros de la familia que califican. Esto incluye a las personas que normalmente no presentan una declaración de impuestos, como las familias sin hogar, los pobres en áreas rurales y otros grupos desamparados.

Para la mayoría de las personas, la manera más rápida y fácil de presentar una declaración es mediante el sistema de Free File del IRS, disponible sólo en IRS.gov. Además de calificarlos para estos pagos por adelantado, el uso de Free File también les permitirá reclamar otros beneficios tributarios orientados a la familia, como el Crédito tributario por ingreso del trabajo y el Crédito de recuperación de reembolso.

Nueva herramienta ayuda a los que no presentan impuestos a inscribirse

Para las familias que normalmente no presentan una declaración, otra opción fácil es inscribirse para estos pagos por adelantado a través de la nueva herramienta Non-Filer Sign-up presentada recientemente y disponible solo en IRS.gov. Entre otras cosas, la herramienta pide a los usuarios que proporcionen información bancaria actualizada, junto con detalles clave acerca de ellos mismos y sus hijos calificados. La herramienta entonces completa automáticamente una declaración de impuestos federales de 2020 que se envía electrónicamente al IRS. La nueva herramienta fue desarrollada en colaboración con Intuit y Free File Alliance.

Asistente de elegibilidad del Crédito tributario por hijos

Antes de presentar una declaración o usar la herramienta Non-Filer Sign-up, las familias que no están seguras si califican para el crédito o los pagos por adelantado tal vez quieran usar otra nueva herramienta: el Asistente de elegibilidad del Crédito tributario por hijos. Al contestar una serie de preguntas, la herramienta permite a cualquier persona hacer una determinación preliminar de si califican para el crédito y los pagos.

El IRS destacó que debido a que el Asistente de elegibilidad del Crédito tributario por hijos no solicita información personal, no es una herramienta de inscripción, sino simplemente una herramienta de elegibilidad. Sin embargo, aún puede ayudar a una familia elegible a determinar si debe hacer el siguiente paso y presentar una declaración o inscribirse oficialmente con la herramienta Non-Filer Sign-up.

Ayuda personal disponible

El IRS y sus socios ayudan a las familias a inscribirse para los pagos a través de la herramienta Non-Filer Sign-up. Durante finales de junio y principios de julio, se llevarán a cabo eventos gratuitos en Atlanta, Brooklyn, Detroit, Houston, Las Vegas, Los Ángeles, Miami, Milwaukee, Filadelfia, Phoenix, St. Louis y Washington, DC. Más detalles próximamente en IRS.gov.

Crédito tributario por hijos de 2021

El IRS creó una página especial del pago por adelantado del Crédito tributario por hijos de 2021 y está diseñada para proporcionar la información más actualizada acerca del crédito y los pagos por adelantado. Está en IRS.gov/creditoporhijos2021.

Entre otras cosas, proporciona enlaces directos a la herramienta Non-Filer Sign-up, el Portal de actualización del Crédito tributario por hijos, el Asistente de elegibilidad del Crédito tributario por hijos, un conjunto de preguntas frecuentes y otros recursos útiles.

Cambios al Crédito tributario por hijos

El Plan de Rescate Estadounidense elevó el máximo del Crédito tributario por hijos en 2021 a $3,600 para niños calificados menores de 6 años y a $3,000 por niño para niños calificados entre 6 y 17 años. Antes de 2021, el crédito valía hasta $2,000 por niño calificado elegible y los de 17 años no se consideraban niños calificados para el crédito.

El nuevo crédito máximo está disponible para los contribuyentes con un ingreso bruto ajustado modificado (AGI) de:

  • $75,000 o menos para personas solteras,
  • $112,500 o menos para jefes de hogar y
  • $150,000 o menos para parejas casadas que presentan una declaración conjunta y para viudas y viudos calificados.

Para la mayoría de las personas, el AGI modificado es la cantidad que se muestra en la línea 11 de su Formulario 1040 o 1040-SR de 2020. Por encima de estos umbrales de ingresos, la cantidad adicional por encima del crédito original de $2,000, ya sea $1,000 o $1,600 por hijo, se reduce en $50 por cada $1,000 adicional en AGI modificado.

Además, todo el crédito es totalmente reembolsable para 2021. Esto significa que las familias elegibles pueden obtenerlo, incluso si no deben impuestos federales. Antes de este año, la porción reembolsable estaba limitada a $1,400 por hijo.

Ayude a correr la voz

El IRS insta a los grupos comunitarios, organizaciones sin fines de lucro, asociaciones, grupos educativos y cualquier otra persona con conexiones con personas con niños a compartir esta información crítica acerca del pago por adelantado del Crédito tributario por hijos, así como otros beneficios importantes. Entre otras cosas, el IRS ya trabaja en estrecha colaboración con grupos de la comunidad para garantizar un acceso amplio a la herramienta Non-Filer Sign-up. El IRS proveerá materiales e información adicional en el futuro que se pueden compartir fácilmente a través de las redes sociales, correo electrónico y otros métodos.

Para obtener información más actualizada del Crédito tributario por hijo y los pagos por adelantado, visite Pagos por adelantado del Crédito tributario por hijos en 2021.

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

Herramienta en línea del IRS ayuda a familias a ver si califican para Crédito tributario por hijos; una de tres herramientas ahora disponibles para próximos pagos por adelantado

Posted by Admin Posted on June 30 2021

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El Departamento del Tesoro y el Servicio de Impuestos Internos exhortaron hoy a las familias a tomar ventaja de una herramienta en línea especial que puede ayudarles a determinar si califican para el Crédito tributario por hijos y los pagos mensuales por adelantado programados para el 15 de julio.

Disponible únicamente en IRS.gov, el nuevo Asistente de elegibilidad para los pagos por adelantado del Crédito tributario por hijos, lanzado a principios de semana, es interactivo y fácil de usar. Al contestar una serie de preguntas personales y de sus familiares, un padre u otro miembro de la familia puede determinar rápidamente si califica para el crédito.

Aunque cualquiera puede usar esta herramienta, puede ser especialmente útil para las familias que normalmente no presentan una declaración de impuestos federales y aún no han presentado una declaración de impuestos de 2019 o 2020. A menudo, se trata de personas que reciben pocos o ningún ingreso e incluso las personas sin hogar, los hogares de bajos ingresos y otros grupos desamparados. El uso de esta herramienta puede ayudarles a decidir si deben hacer el siguiente paso e inscribirse para los pagos de Crédito tributario por hijos en otra nueva herramienta del IRS que se lanzó a principios de esta semana.

"Esta nueva herramienta proporciona un primer paso importante para ayudar a las personas a entender si califican para el Crédito tributario por hijos, lo cual es especialmente importante para aquellos que normalmente no presentan una declaración de impuestos", dijo Chuck Rettig, Comisionado del IRS. "El Asistente de elegibilidad trabaja en conjunto con otras funciones en IRS.gov para ayudar a las personas a recibir este importante crédito. El IRS trabaja arduamente para entregar el Crédito tributario por hijos ampliado, y estaremos emitiendo ayuda adicional para los contribuyentes en el futuro cercano. Siempre que sea posible, ayúdenos a ayudar a otros distribuyendo información del Crédito tributario por hijos en sus comunidades".

Para ayudar a las personas a entender y recibir este beneficio, el IRS creó una página especial del pago por adelantado del Crédito tributario por hijos de 2021 en IRS.gov/creditoporhijos2021 y está diseñada para proporcionar la información más actualizada acerca del crédito y los pagos por adelantado. Entre otras cosas, la página ya cuenta con un enlace a la herramienta Non-Filer Sign-up, y el Asistente de elegibilidad del Crédito tributario por hijos, así como una tercera herramienta lanzada a principios de semana, el Portal de actualización del Crédito tributario por hijos.

El Asistente de elegibilidad del Crédito tributario por hijos no solicita ninguna información de identificación personal (PII, por sus siglas en inglés) para ningún miembro de la familia. Por esa razón, sus resultados no son una determinación oficial del IRS. Aunque los resultados son confiables, si las preguntas se contestan con exactitud, deben considerarse hipotéticas o preliminares. Ni las respuestas proporcionadas por el usuario, ni los resultados, son retenidos por el IRS.

Después de verificar con el Asistente de elegibilidad, la herramienta Non-Filer Sign-up está disponible para ayudar a aquellos que normalmente no presentan declaraciones de impuestos

La herramienta Non-Filer Sign-up está diseñada para ayudar a las familias elegibles que normalmente no presentan declaraciones de impuestos a inscribirse para los pagos mensuales del Crédito tributario por hijos.

Esta herramienta, una actualización de la herramienta Non-Filers del IRS para los Pagos del impacto económico del año pasado, también está diseñada para ayudar a las personas elegibles que normalmente no presentan declaraciones de impuestos, a inscribirse para la tercera ronda de Pagos de impacto económico de $1,400 (también conocidos como cheques de estímulo) y reclamar el Crédito de recuperación de reembolso por cualquier monto de las dos primeras rondas de Pagos de impacto económico que no hayan recibido.

Desarrollada en colaboración con Intuit y ofrecida a través de Free File Alliance, esta herramienta proporciona una manera gratis y fácil para las personas elegibles que no tienen la obligación de presentar una declaración de impuestos proporcionarle al IRS la información necesaria para calcular y emitir sus pagos por adelantando del Crédito tributario por hijos. Esto incluye nombre, dirección y números de Seguro Social. Esto también les permite proveer información de sus hijos calificados menores de 17 años, sus otros dependientes, y su información bancaria de depósito directo para que el IRS pueda depositar de una manera rápida y fácil los pagos directamente en su cuenta de cheques o ahorros. Está disponible sólo en IRS.gov.

La herramienta Non-Filer Sign-up no debe usarla cualquier persona que ha presentado una declaración de impuestos federales de 2019 o 2020.

La mayoría de las familias no tienen que hacer nada

Las familias elegibles que ya presentaron o tienen planes de presentar declaraciones de impuestos de 2019 o 2020 no deben usar la herramienta Non-Filer Sign-up. Una vez que el IRS procese su declaración de impuestos de 2019 o 2020, la información se usará para determinar la elegibilidad y emitir pagos por adelantado.

Las familias que deseen reclamar otros beneficios tributarios, como el Crédito tributario por ingreso del trabajo para familias de ingresos bajos y moderados, no deben usar esta herramienta y deben presentar una declaración de impuestos regular. Para ellos, la manera más rápida y fácil de presentar una declaración es el sistema de Free File, disponible sólo en IRS.gov.

Cuidado con las estafas

El IRS insta a todos a estar atentos a las estafas relacionadas tanto con los pagos por adelantado del Crédito tributario por hijos como de los Pagos de impacto económico. El IRS destacó que la única manera de obtener cualquiera de estos beneficios es al presentar una declaración de impuestos con el IRS o inscribirse en línea a través de la herramienta Non-Filer Sign-up, únicamente en IRS.gov. Cualquier otra opción es una estafa.

Tenga cuidado con las estafas por correo electrónico, llamadas telefónicas o mensajes de texto relacionados con los pagos. Recuerde, el IRS nunca envía comunicaciones electrónicas no solicitadas para pedir que abra archivos adjuntos o visite un sitio web no gubernamental.

Portal de actualización del Crédito tributario por hijos

A principios de esta semana, el Departamento del Tesoro y el IRS lanzaron otra herramienta útil, el Portal de actualización del Crédito tributario por hijos. Inicialmente, esta herramienta solo permite a cualquiera persona que haya sido determinada elegible recibir los pagos por adelantado, ver su elegibilidad y cancelar inscripción u optar por no participar en el programa de pagos por adelantado. Más adelante, se les permitirá a las personas verificar el estado de sus pagos y hacer actualizaciones a su información, incluyendo la información de su cuenta bancaria. Más tarde en el año la herramienta también estará disponible en español.

Grupos comunitarios pueden ayudar

El IRS insta a los grupos comunitarios, organizaciones sin fines de lucro, asociaciones, grupos educativos y cualquier otra persona con conexiones con personas con niños a compartir esta información crítica acerca del pago por adelantado del Crédito tributario por hijos, así como otros beneficios importantes. Entre otras cosas, el IRS ya trabaja en estrecha colaboración con sus socios comunitarios para garantizar un amplio acceso a la herramienta Non-Filer Sign-up y al Portal de actualización del Crédito tributarios por hijos. La agencia también está proporcionando materiales e información adicional que se puede compartir fácilmente a través de las redes sociales, el correo electrónico y otros métodos.

Acerca de los pagos por adelantado del Crédito tributario por hijos

El nuevo Crédito tributario por hijos ampliado fue autorizado por la Ley del Plan de Rescate Estadounidense, promulgada en marzo. Normalmente, el IRS calculará el pago de acuerdo con la información de la declaración de impuestos de una familia de 2020, incluyendo aquellos que usan la herramienta Non-Filer Sign-up. Si esa declaración no está disponible porque aún no se ha presentado o todavía se está procesando, el IRS determinará la cantidad del pago inicial con la declaración de 2019 o la información ingresada mediante la herramienta Non-Filers que estaba disponible en 2020.

El pago será de hasta $300 por mes por cada niño menor de 6 años y hasta $250 por mes por cada niño de 6 a 17 años.

Para asegurarse de que las familias tengan fácil acceso a su dinero, el IRS emitirá estos pagos por depósito directo, siempre y cuando el IRS tenga disponible la información bancaria correcta. De lo contrario las personas deben estar al pendiente de su buzón a partir del 15 de julio ya que el pago llegará por correo. Las fechas de envío de los pagos por adelantado del Crédito tributario por hijos son el 15 de julio, 15 de agosto, 15 de septiembre, 15 de octubre, 15 de noviembre y 15 de diciembre.

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 online tool helps families see if they qualify for the Child Tax Credit; one of three tools now available for the upcoming advance payments

Posted by Admin Posted on June 30 2021

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The Treasury Department and the Internal Revenue Service urge families to take advantage of a special online tool that can help them determine whether they qualify for the Child Tax Credit and the special monthly advance payments beginning on July 15.

Available exclusively on IRS.gov, the new Child Tax Credit Eligibility Assistant, launched earlier this week, is interactive and easy to use. By answering a series of questions about themselves and their family members, a parent or other family member can quickly determine whether they qualify for the credit.

Though anyone can use this tool, it may be particularly useful to families who don't normally file a federal tax return and have not yet filed either a 2019 or 2020 tax return. Often, these are people who receive little or no income, including those experiencing homelessness, low income households, and other underserved groups. Using this tool can help them decide whether they should take the next step and register for the Child Tax Credit payments on another new IRS tool unveiled earlier this week.

"This new tool provides an important first step to help people understand if they qualify for the Child Tax Credit, which is especially important for those who don't normally file a tax return," said IRS Commissioner Chuck Rettig. "The eligibility assistant works in concert with other features on IRS.gov to help people receive this important credit. The IRS is working hard to deliver the expanded Child Tax Credit, and we will be rolling out additional help for taxpayers in the near future. Where possible, please help us help others by distributing CTC information in your communities."

To help people understand and receive this benefit, the IRS has created a special Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021 designed to provide the most up-to-date information about the credit and the advance payments. Among other things, the page already features a link to both the Non-filer Sign-up Tool, and the Child Tax Credit Eligibility Assistant, along with a third tool launched earlier this week—the Child Tax Credit Update Portal.

The Child Tax Credit Eligibility Assistant does not request any personally-identifiable information (PII) for any family member. For that reason, its results are not an official determination by the IRS. Though the results are reliable, if the questions are answered accurately, they should be considered preliminary. Neither the answers supplied by the user, nor the results, are retained by the IRS.

After checking the Eligibility Assistant, Non-filer Sign-Up Tool is available to help those who don't normally file tax returns

The online Non-filer Sign-Up Tool is designed to help eligible families who don't normally file tax returns register for the monthly Advance Child Tax Credit payments.

This tool, an update of last year's IRS Economic Impact Payment Non-filers tool, is also designed to help eligible individuals who don't normally file tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

Developed in partnership with Intuit and delivered through the Free File Alliance, this tool provides a free and easy way for eligible people who don't make enough income to have an income tax return-filing obligation to provide the IRS the basic information needed to figure and issue their Advance Child Tax Credit payments. This includes name, address, and social security numbers. This also enables them to provide information about their qualifying children age 17 and under, their other dependents, and their direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account. It is available only on IRS.gov.

The Non-filer Sign-Up tool should not be used by anyone who has already filed a 2019 or 2020 federal income tax return.

No action needed by most other families

Eligible families who already filed or plan to file 2019 or 2020 income tax returns should not use the Non-filer Sign-Up Tool. Once the IRS processes their 2019 or 2020 tax return, the information will be used to determine eligibility and issue advance payments.

Families who want to claim other tax benefits, such as the Earned Income Tax Credit for low-and moderate-income families, should not use this tool and instead file a regular tax return. For them, the fastest and easiest way to file a return is the Free File system, available only on IRS.gov.

Watch out for scams

The IRS urges everyone to be on the lookout for scams related to both Advance Child Tax Credit payments and Economic Impact Payments. The IRS emphasized that the only way to get either of these benefits is by either filing a tax return with the IRS or registering online through the Non-filer Sign-up Tool, exclusively on IRS.gov. Any other option is a scam.

Watch out for scams using email, phone calls or texts related to the payments. Remember, the IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental web site.

Child Tax Credit Update Portal

Earlier this week, Treasury and IRS launched another useful tool, the Child Tax Credit Update Portal. Initially, this tool only enables anyone who has been determined to be eligible for advance payments to see that they are eligible and unenroll from (opt out of) the advance payment program. Later, it will allow people to check on the status of their payments and make updates to their information, including their bank account information. Later this year, the tool will also be available in Spanish.

Community partners can help

The IRS urges community groups, non-profits, associations, education organizations and anyone else with connections to people with children to share this critical information about the Advance Child Tax Credit as well as other important benefits. Among other things, the IRS is already working closely with its community partners to ensure wide access to the Non-filer Sign-up Tool and the Child Tax Credit Update Portal. The agency is also providing additional materials and information that can be easily shared by social media, email and other methods.

About the Advance Child Tax Credit

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. Normally, the IRS will calculate the payment based on a family's 2020 tax return, including those who use the Non-filer Sign-up Tool. If that return is not available because it has not yet been filed or is still being processed, the IRS will instead determine the initial payment amounts using the 2019 return or the information entered using the Non-filers tool that was available in 2020.

The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.

To make sure families have easy access to their money, the IRS will issue these payments by direct deposit, as long as correct banking information has previously been provided to the IRS. Otherwise, people should watch their mail around July 15 for their mailed payment. The dates for the Advance Child Tax Credit payments are July 15, August 13, September 15, October 15, November 15, and December 15.

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      

 

Revisiting Worker Classification Rules

Posted by Admin Posted on June 09 2021

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Over the last year, many companies have experienced workforce fluctuations and have engaged independent contractors to address staffing needs. In May, the U.S. Department of Labor (DOL) announced that it had withdrawn the previous administration’s independent contractor rule that had been scheduled to go into effect earlier this year. That rule generally would have made it easier to classify certain workers as independent contractors for the purposes of the Fair Labor Standards Act (FLSA), and thus make them ineligible for minimum wage and other FLSA protections.

While worker classification for DOL purposes isn’t necessarily the same for IRS purposes, now is a good time to revisit the federal tax implications of worker classification.

Tax obligations

The question of whether a worker is an independent contractor or an employee for federal income and employment tax purposes is a complex one. If a worker is an employee, the company must withhold federal income and payroll taxes, and pay the employer’s share of FICA taxes on the wages, plus FUTA tax. And there may be state tax obligations as well.

These obligations don’t apply if a worker is an independent contractor. In that case, the business simply sends the contractor a Form 1099-NEC for the year showing the amount paid (if the amount is $600 or more).

No uniform definition

The IRS and courts have generally ruled that individuals are employees if the organization they work for has the right to control and direct them in the jobs they’re performing. Otherwise, the individuals are generally independent contractors, though other factors are considered.

Some employers that have misclassified workers as independent contractors may get some relief from employment tax liabilities under Internal Revenue Code Section 530. In general, this protection applies only if an employer filed all federal returns consistent with its treatment of a worker as a contractor and treated all similarly situated workers as contractors.

The employer must also have a “reasonable basis” for not treating the worker as an employee. For example, a “reasonable basis” exists if a significant segment of the employer’s industry traditionally treats similar workers as contractors. (Note: Sec. 530 doesn't apply to certain types of technical services workers. And some categories of individuals are subject to special rules because of their occupations or identities.)

Asking for a determination

Under certain circumstances, you may want to ask the IRS (on Form SS-8) to rule on whether a worker is an independent contractor or employee. However, be aware that the IRS has a history of classifying workers as employees rather than independent contractors.

Consult a CPA before filing Form SS-8 because doing so may alert the IRS that your company has worker classification issues — and inadvertently trigger an employment tax audit. It may be better to ensure you are properly treating a worker as an independent contractor so that the relationship complies with the tax rules.

Latest developments

With growth in the “gig” economy and other changes to the ways Americans are working, the question of who is an independent contractor and who is an employee will likely continue to evolve. Stay tuned for the latest developments and contact us for any help you may need with worker classification.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 do I find my refund information?

Posted by Admin Posted on June 09 2021

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If you filed a 2020 tax return and are expecting a refund from the IRS, you may want to find out the status of the refund or at least get an idea of when you might receive it. You can start checking on the status of your refund within 24 hours after the IRS has received your electronically-filed return or 4 weeks after you mailed a paper return. Currently you might be waiting a bit longer to receive it due to the effects of COVID-19, new tax law changes, and possible errors made on the tax return. However, here are the best ways to find the status of a refund:

Also see “Tax Season Refund Frequently Asked Questions” for what these applications can tell you and what they can’t.

Do not call the IRS unless instructed by the application to call. These online tools are updated every 24 hours and truly are the best way to get your refund status.

What you will need to use the above tools

  • Social security number (SSN) or Individual Taxpayer Identification Number (ITIN)
  • Your filing status
  • Your exact refund amount

Be aware of processing delays

Again, this year some tax returns with errors or items on the return that need an IRS correction due to a tax law change are taking longer than the normal timeframes to process, so expect delays. In a nutshell, it is taking the IRS more than the normal 21 days to issue refunds for some 2020 tax returns that require review, including but not limited to, incorrect Recovery Rebate Credit amounts, or that used 2019 income to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC).

See our NTA blogs titled “2021 Filing Season Bumps in the Road: Part I,” “2021 Filing Season Bumps in the Road: Part II” and the IRS’s Operational Status page, question and answer titled: Filed an Individual Tax Return (Form 1040) for tax year 2019 or tax year 2020, a Business Tax Return or an Amended Return (updated May 7, 2021) for details of why delays may occur.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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          

2 More Ways Parents Are Benefitting From the American Rescue Plan Act

Posted by Admin Posted on June 09 2021

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When you think back on this spring, you may fondly recall a substantial deposit made to your bank account by the federal government (if you were eligible). Economic Impact Payments were a focal point of the American Rescue Plan Act (ARPA), signed into law in March, and the payments were even larger for parents with dependent children. But ARPA contains two other provisions that benefit parents:

1. Child credit expansion and advance payments. For 2021, this refundable tax credit has been increased from $2,000 to $3,000 per child — $3,600 for children under six years of age. In addition, qualifying children now include 17-year-olds.

The child credit is subject to modified adjusted gross income (AGI) phaseout rules and begins to phase out when MAGI exceeds:

  • $400,000 for married couples who file a joint return, and
  • $200,000 for other taxpayers.

The increased credit amount ($1,000 or $1,600) is subject to lower income phaseouts than the ones that apply to the first $2,000 of the credit. The increased amount begins to phase out when MAGI exceeds:

  • $150,000 for joint filers,
  • $112,500 for heads of household, and
  • $75,000 for other taxpayers.

ARPA also calls for the IRS to make periodic advance payments of the child credit totaling 50% of the estimated 2021 credit amount. The IRS has announced the payments will begin on July 15, 2021. They’ll then be made on the 15th of each month (unless the 15th falls on a weekend or holiday).

Recipients will receive the monthly payments through direct deposit, paper check or debit cards. The IRS says that it is committed to maximizing the use of direct deposit.

2. Child and dependent care break increases. For 2021, the amount of qualifying expenses for the refundable child and dependent care credit has been increased to:

1. $8,000 (from $3,000) if there’s one qualifying care individual, and

2. $16,000 (from $6,000) if there are two or more such individuals.

The maximum percentage of qualifying expenses for which credit is allowed has been increased from 35% to 50%. So the credit ultimately is worth up to $4,000 or $8,000. But the credit is subject to an income-based phaseout beginning at household income levels exceeding $125,000.

The amount you can contribute to a child and dependent care Flexible Spending Account (FSA, also sometimes referred to as a “dependent care assistance program”) also has been increased. For 2021, it’s $10,500 (up from $5,000 for 2020). The FSA pays or reimburses you for these expenses. But you can’t claim a tax credit for expenses paid by or reimbursed through an FSA.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 sending letters to more than 36 million families who may qualify for monthly Child Tax Credits; payments start July 15

Posted by Admin Posted on June 09 2021

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WASHINGTON — The Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting in July.

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.

Families who are eligible for advance Child Tax Credit payments will receive a second, personalized letter listing an estimate of their monthly payment, which begins July 15.

Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS will instead determine the payment amount using the 2019 return.

Eligible families will begin receiving advance payments, either by direct deposit or check. The payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17.The IRS will issue advance Child Tax Credit payments on July 15, August 13, September 15, October 15, November 15 and December 15.

Eligible families should file tax returns soon

The IRS urges individuals and families who haven't yet filed their 2020 return – or 2019 return – to do so as soon as possible so they can receive any advance payment they're eligible for.

Filing soon will also ensure that the IRS has their most current banking information, as well as key details about qualifying children. This includes people who don't normally file a tax return, such as families experiencing homelessness, the rural poor, and other underserved groups.

For most people, the fastest and easiest way to file a return is by using the Free File system, available only on IRS.gov.

Throughout the summer, the IRS will be adding additional tools and online resources to help with the advance Child Tax Credit. One of these tools will enable families to unenroll from receiving these advance payments and instead receive the full amount of the credit when they file their 2021 return next year.

Additionally, later this year, individuals and families will also be able to go to IRS.gov and use a Child Tax Credit Update Portal to notify IRS of changes in their income, filing status, or number of qualifying children; update their direct deposit information; and make other changes to ensure they are receiving the right amount as quickly as possible.

Other tools coming soon

The IRS has created a special Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021, designed to provide the most up-to-date information about the credit and the advance payments.

In the next few weeks, the page will also feature other useful new online tools, including:

  • An interactive Child Tax Credit eligibility tool to help families determine whether they qualify for the Advance Child Tax Credit payments.
  • Another tool, the Child Tax Credit Update Portal, will initially enable anyone who has been determined to be eligible for advance payments unenroll/ to opt out of the advance payment program. Later this year, it will allow people to check on the status of their payments, make updates to their information, and be available in Spanish. More details will be available soon about the online Child Tax Credit Update Portal.

Child Tax Credit Changes

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children between ages 6 and 17. Before 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not considered as qualifying children for the credit.

The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

  •  $75,000 or less for singles,
  •  $112,500 or less for heads of household, and
  •  $150,000 or less for married couples filing a joint return and qualified widows and widowers.

For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every extra $1,000 in modified AGI.

In addition, the entire credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

The IRS urges community groups, non-profits, associations, education organizations, and others with connections to people with children to share this critical information about the Child Tax Credit as well as other important benefits. The IRS will be providing in the near future additional materials and information that can be easily shared by social media, email and other methods.

For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 sending more than 2.8 million refunds to those who already paid taxes on 2020 unemployment compensation.

Posted by Admin Posted on June 09 2021

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WASHINGTON — The Internal Revenue Service is sending more than 2.8 million refunds this week to taxpayers who paid taxes on unemployment compensation that new legislation now excludes as income.

IRS efforts to correct unemployment compensation overpayments will help most affected taxpayers avoid filing an amended tax return. So far, the IRS has identified 13 million taxpayers that may be eligible for the adjustment. Some will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. For some there will be no change.

The American Rescue Plan Act of 2021 (ARPA) excluded up to $10,200 in unemployment compensation per taxpayer paid in 2020. The $10,200 is the maximum amount that can be excluded when calculating taxable income; it is not the amount of refunds.

Earlier this month, the IRS began its programming review of tax returns filed prior to the enactment of ARPA to identify the excludible unemployment compensation. The IRS also is making corrections for the Earned Income Tax Credit, Premium Tax Credit and Recovery Rebate Credit affected by the exclusion.

Taxpayers who have qualifying children and who become eligible for EITC after the exclusion is calculated may have to file an amended return to claim any new benefits. The IRS can adjust tax returns for those who are single with no children and who become eligible for EITC. The IRS also can adjust tax returns where EITC was claimed and qualifying children identified.

To date, the IRS has reviewed over 3.1 million returns, with more than 2.8 million receiving refunds.

The IRS plans to issue the next set of refunds in mid-June. The review of returns and processing corrections will continue during the summer as the IRS continues to review the simplest returns and then turns to more complex returns.

Taxpayers will receive letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 taxpayers need to know about getting their unclaimed 2017 tax refunds

Posted by Admin Posted on May 27 2021

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The IRS reminds taxpayers they may have money waiting for them. An estimated 1.3 million taxpayers didn't file a 2017 Form 1040 federal income tax return and are due a refund.

Here are some things taxpayers should know about these unclaimed refunds:

To collect the money, taxpayers must file their 2017 tax return with the IRS no later than this year's tax deadline, Monday, May 17.

When a taxpayer who is getting a refund does not file a return, the law gives them three years to claim that tax refund. If the taxpayer does not file a tax return within three years, the money goes back to the U.S. Treasury. For 2017 tax returns, the three-year window closes May 17, 2021.

The law requires taxpayers to properly address and mail the tax return to the IRS. It must be postmarked by the May deadline.

The IRS may hold the 2017 refunds of taxpayers who have not filed tax returns for 2018 and 2019.

The unclaimed money will be applied to any amounts still owed to the IRS or a state tax agency. The money may also be used to offset unpaid child support or past due federal debts, such as student loans.

By failing to file a tax return, people stand to lose more than just their tax refund. Many low-and moderate-income workers may be eligible for the earned income tax credit. For 2017, the credit was worth as much as $6,318. The EITC helps individuals and families whose incomes are below certain thresholds. The 2017 thresholds were:

  • $48,340 for those with three or more qualifying children; $53,930 if married filing jointly
  • $45,007 for people with two qualifying children; $50,597 if married filing jointly
  • $39,617 for those with one qualifying child; $45,207 if married filing jointly
  • $15,010 for people without qualifying children; $20,600 if married filing jointly

Current and prior year tax forms are available on the Forms, Instructions and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676).

Taxpayers who are missing forms W-2, 1098, 1099 or 5498 for the years 2017, 2018 or 2019 should request copies from their employer, bank, or other payer. Taxpayers who are unable to get missing forms can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool. Taxpayers can use the information on the transcript to file their tax return.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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        

Créditos tributarios para empleadores

Posted by Admin Posted on May 27 2021

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Crédito de licencia pagada para vacunas — La Ley del Plan de Rescate Estadounidense de 2021 (ARP) permite a los empleadores pequeños y medianos, y a ciertos empleadores gubernamentales, reclamar créditos tributarios que les reembolsan el costo de proporcionar licencia por enfermedad y familiar pagada a sus empleados debido a COVID-19, incluida la licencia tomada por empleados para recibir o recuperarse de las vacunas de COVID-19. Los créditos tributarios de ARP están disponibles para empleadores elegibles que pagan licencia por enfermedad y familiar desde el 1ro de abril de 2021 hasta el 30 de septiembre de 2021. Para obtener mas información consulte nuestra hoja de datos.

Crédito de retención de empleados — Nueva ley extiende el crédito tributario por coronavirus a los empleadores que mantienen a los trabajadores en nómina (en inglés): la nueva ley extiende el crédito tributario por coronavirus a los empleadores que mantienen a los trabajadores en nómina. La Ley de Certeza del Contribuyente y de Alivio Tributario por Desastres de 2020, promulgada el 27 de diciembre de 2020, modificó y extendió el Crédito de retención de empleados (y la disponibilidad de ciertos pagos por adelantado de los créditos tributarios) bajo la sección 2301 de la Ley CARES.

Créditos por licencia familiar y por enfermedad —  Créditos tributarios relacionados con COVID-19 para licencias pagadas proporcionadas por pequeñas y medianas empresas (en inglés): Créditos tributarios relacionados con COVID-19 para licencias pagas proporcionadas por pequeñas y medianas empresas. La Ley de Alivio Tributario relacionada con COVID de 2020, promulgada el 27 de diciembre de 2020, enmendó y extendió los créditos tributarios por licencia familiar y por enfermedad pagada en virtud de las secciones 7001-7005 de la Ley de Familias Primero en Respuesta al Coronavirus.

Muchas empresas que se han visto gravemente afectadas por el coronavirus (COVID-19) calificarán para dos nuevos créditos tributarios del empleador: el Crédito por licencia familiar y por enfermedad y el Crédito por retención de empleados.

Crédito por licencia familiar y por enfermedad

Un empleado que no puede trabajar (incluido el teletrabajo) debido a la cuarentena o la cuarentena del coronavirus o tiene síntomas de coronavirus y está buscando un diagnóstico médico, tiene derecho a una licencia por enfermedad remunerada de hasta diez días (hasta 80 horas) a la tarifa de pago regular del empleado, o, si es más alto, el salario mínimo federal o cualquier salario mínimo estatal o local aplicable, hasta $511 por día, pero no más de $5,110 en total.

Cuidando a alguien con coronavirus

Un empleado que no puede trabajar debido al cuidado de alguien con coronavirus o al cuidado de un niño porque la escuela o el lugar de cuidado del niño está cerrado, o el proveedor de cuidado infantil no está disponible debido al coronavirus, tiene derecho a licencia por enfermedad remunerada por hasta dos semanas (hasta 80 horas) a dos tercios de la tarifa de pago regular del empleado o, si es mayor, el salario mínimo federal o cualquier salario mínimo estatal o local aplicable, hasta $200 por día, pero no más de $2,000 en total.

Cuidado de niños debido al cierre de la guardería o la escuela

Un empleado que no puede trabajar debido a la necesidad de cuidar a un niño cuya escuela o lugar de cuidado está cerrado o cuyo proveedor de cuidado de niños no está disponible debido al coronavirus, también tiene derecho a una licencia familiar y médica pagada equivalente a dos tercios del pago regular del empleado, hasta $200 por día y $10,000 en total. Se pueden contar hasta diez semanas de licencia calificada para el crédito de licencia familiar.

Crédito para empleadores elegibles

Los empleadores elegibles tienen derecho a recibir un crédito por el monto total de la licencia por enfermedad y la licencia familiar requeridas, más los gastos relacionados con el plan de salud y la parte del empleador del impuesto de Medicare sobre la licencia, durante el período del 1 de abril de 2020 al 31 de diciembre, 2020. El crédito reembolsable se aplica contra ciertos impuestos laborales sobre los salarios pagados a todos los empleados. Los empleadores elegibles pueden reducir los depósitos de impuestos federales sobre el empleo en previsión del crédito. También pueden solicitar un anticipo de los créditos pagados por enfermedad y licencia familiar por cualquier monto no cubierto por la reducción de depósitos. Los pagos adelantados se emitirán mediante cheque en papel a los empleadores.

Crédito de retención de empleados

Los empleadores elegibles pueden reclamar el crédito de retención de empleados, un crédito tributario reembolsable equivalente al 50 por ciento de hasta $10,000 en salarios calificados (incluidos los gastos del plan de salud), pagado después del 12 de marzo de 2020 y antes del 1 de enero de 2021. Los empleadores elegibles son aquellas empresas con operaciones que se han suspendido parcial o totalmente debido a órdenes gubernamentales debido a COVID-19, o negocios que tienen una disminución significativa en los ingresos brutos en comparación con 2019.

El crédito reembolsable tiene un tope de $5,000 por empleado y se aplica contra ciertos impuestos laborales sobre los salarios pagados a todos los empleados. Los empleadores elegibles pueden reducir los depósitos de impuestos federales sobre el empleo en anticipación del crédito. También pueden solicitar un anticipo del crédito de retención de empleados por cualquier monto no cubierto por la reducción de depósitos. Los pagos adelantados se emitirán mediante cheque en papel a los empleadores.

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         

Taxpayers Living Abroad

Posted by Admin Posted on May 27 2021

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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. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

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.  Note that you must pay any tax due by April 15 or interest will be charged starting from April 15.

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, mail your U.S. tax return to:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301-0215

USA

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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       

Cómo informar sobre cuentas bancarias y financieras extranjeras

Posted by Admin Posted on May 27 2021

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Cómo informar sobre cuentas bancarias y financieras extranjeras

Las personas estadounidenses tienen cuentas financieras en el extranjero por una variedad de razones legítimas, incluyendo conveniencia y acceso. Deben presentar un Informe de Cuentas Bancarias y Financieras Extranjeras (FBAR) porque las instituciones financieras extranjeras pueden no estar sujetas a los mismos requisitos de presentación de información que las instituciones financieras nacionales.

El FBAR es una herramienta también usada por el gobierno de los Estados Unidos para identificar a las personas que pueden estar usando cuentas financieras extranjeras para eludir la ley estadounidense. El gobierno puede usar la información de FBAR para identificar o rastrear fondos usados con fines ilícitos o para identificar los ingresos no reportados mantenidos o generados en el extranjero.

Quién debe informar

Desde 1970, la Ley de Secreto Bancario requiere que las personas de los EE. UU, presenten un FBAR (en inglés) si tienen:

1. Interés financiero en, autoridad de firma, u otra autoridad sobre una o más cuentas, tales como una cuenta bancaria, una cuenta de corretaje, un fondo mutuo, un fideicomiso u otra cuenta financiera extranjera, y

2. El valor agregado de todas las cuentas financieras extranjeras supera los $10,000 en cualquier momento durante el año calendario.

Una persona de los EE. UU. es un ciudadano o residente de los Estados Unidos o cualquier entidad legal doméstica, como una sociedad, corporación, compañía de responsabilidad limitada, patrimonio o fideicomiso.

Un país extranjero incluye cualquier área fuera de los Estados Unidos, tierras indias (tal como se define en la Ley Reguladora de Juegos Indios (en inglés) y estos territorios y posesiones de los EE. UU.:

Islas Marianas del Norte,

Distrito de Columbia,

Samoa Americana,

Guam

Puerto Rico

Islas Vírgenes de los Estados Unidos, y

Territorios en fideicomiso de las Islas del Pacífico.

Cómo presentar el informe

Los que deben informar sus cuentas en el extranjero deben presentar el FBAR electrónicamente a través del Sistema de Presentación Electrónica de la BSA (en inglés). El FBAR vence el 15 de abril. Si el 15 de abril cae sábado, domingo o día feriado legal, el FBAR vence el siguiente día laborable. Los contribuyentes no presentan el FBAR con declaraciones de impuestos individuales, comerciales, fiduciarias o de patrimonio.

Aquellos que no pueden presentar electrónicamente su FBAR, deben llamar a la Línea de Ayuda Regulatoria de la Red de Ejecución de Delitos Financieros al 800-949-2732 para solicitar una exención de presentar electrónicamente. Las personas que llamen desde fuera de los Estados Unidos pueden comunicarse con la línea de ayuda al 703-905-3975.

Cuentas de propiedad conjunta. Si dos personas poseen conjuntamente una cuenta financiera extranjera, o si varias personas tienen un interés parcial en una cuenta, entonces cada persona tiene un interés financiero en esa cuenta, y cada persona debe informar el valor completo de la cuenta en un FBAR.

Excepción para cónyuges. Los cónyuges no necesitan presentar FBAR por separado si completan y firman el Formulario 114A, Registro de Autorización para Presentar FBAR Electrónicamente (en inglés) PDF, y:

1. Todas las cuentas financieras declarables del cónyuge que no presentó son propiedad conjunta del cónyuge que presenta la declaración, y

2. El cónyuge que presenta, informa las cuentas de propiedad conjunta con el cónyuge que no presentó en un FBAR presentado a tiempo.

De lo contrario, ambos cónyuges deben presentar un FBAR separado, y cada cónyuge debe informar el valor total de las cuentas de propiedad conjunta.

El sistema de presentación electrónica no permitirá las firmas de ambos cónyuges en el mismo formulario electrónico, solo el cónyuge que presenta firma en el sistema. Los contribuyentes no presentan el Formulario 114a con el FBAR; lo guardan para sus archivos.

Niños. En general, un niño es responsable de presentar su propio FBAR. Si un niño no puede presentar su propio FBAR por algún motivo, como la edad, el padre o tutor del niño debe presentarlo. Si el niño no puede firmar su FBAR, un padre o tutor debe firmarlo.

Cuentas no reportadas en FBAR

Las personas no necesitan informar cuentas financieras extranjeras mantenidas en cuentas de jubilación individuales (descritas en las secciones 408 y 408A del Código de Impuestos Internos) y planes de jubilación calificados para impuestos (descritos en, secciones 401(a), 403(a) o 403(b)) del Código de Impuestos Internos en el FBAR. Las instrucciones de FBAR (en inglés) PDF enumera otras excepciones.

Cómo informar el valor de las cuentas financieras extranjeras

Los que presentan el FBAR deben calcular e informar razonablemente el mayor valor de los activos monetarios o no monetarios en sus cuentas durante el año calendario. Pueden confiar en sus estados periódicos de cuenta si las declaraciones muestran razonablemente el mayor valor de la cuenta durante el año.

Los declarantes calculan el mayor valor en la moneda de la cuenta. Si aún no están en dólares estadounidenses, convierten ese valor en dólares estadounidense usando la tasa de cambio del último día del año calendario (en inglés). Si la tasa de la Oficina del Servicio Fiscal del Departamento del Tesoro no está disponible, pueden usar otra tasa de cambio válida e informar la fuente de la tasa. Por ejemplo, el valor de una cuenta ubicada en Japón puede mostrarse en los estados de cuenta en yenes japoneses. Los declarantes calculan el mayor valor de la cuenta en yenes y luego lo convertirían en dólares estadounidenses.

La Guía de Referencia del FBAR del IRS (en inglés) PDF tiene otros ejemplos de cómo informar el valor de la cuenta. El sitio web de la Red de Cumplimiento de Delitos Financieros (FinCEN, por sus siglas en inglés) tiene pasos para informar el valor máximo de la cuenta (en inglés).

Comparación de los requisitos del Formulario 8938 y FBAR

Además de los requisitos del Informe de Cuentas Bancarias y Financieras Extranjeras (FBAR) de cuentas bancarias y financieras extranjeras (FBAR), ciertos contribuyentes de los EE. UU. presentan el Formulario 8938, Declaración de activos financieros extranjeros especificados (en inglés). Las cuentas que se informan en el Formulario 8938 a menudo también se deben informar en el FBAR. A diferencia del FBAR, los contribuyentes presentan el Formulario 8938 con sus declaraciones de impuestos federales

Dependiendo de la situación del contribuyente, es posible que deba presentar el Formulario 8938 o el FBAR o ambos, y es posible que deba informar ciertas cuentas extranjeras en ambos formularios. Los contribuyentes pueden encontrar una comparación de los requisitos del Formulario 8938 y FBAR (en inglés) en IRS.gov.

Fecha de vencimiento extendida para presentar el FBAR

Aquellos que no cumplieron con la fecha de vencimiento del 15 de abril deben presentar antes del 15 de octubre, la fecha de vencimiento extendida automáticamente para el FBAR. No necesitan solicitar prórroga. Si no tienen toda su información para presentar antes de la fecha de vencimiento extendida, deben presentar la declaración más completa posible y modificar el informe cuando tengan más información.

Enmendar un FBAR

Aquellos que necesiten corregir un FBAR presentado deben presentar un nuevo FBAR con la información corregida y marcar el nuevo FBAR como "enmendado." Rellene completamente, incluso los campos que no necesitan corrección. Pueden presentar electrónicamente el FBAR enmendado con el Sistema de Presentación Electrónica o presentarlo en papel con una exención de presentación electrónica de FinCEN.

Si presentan electrónicamente un FBAR enmendado, deben marcar la casilla "enmendada" en el Formulario FinCEN 114. El campo del Identificador de Informe Previo del BSA se activará, e ingresará el número de ID de BSA del FBAR original. Si presentaron electrónicamente el FBAR original, encontrarán el número de ID de BSA en el correo electrónico de confirmación enviado por FinCEN. Si no pueden localizar el número de identificación de BSA o si presentaron en papel el FBAR original, deben ingresar ceros en el campo de Identificador de Informe Previo de la BSA.

Presentación tardía de FBAR

Si una persona se entera de que debería haber presentado un FBAR el año anterior, debe presentar electrónicamente el FBAR tardío tan pronto como sea posible. El Sistema de Presentación Electrónica de la BSA les permite ingresar al año calendario que están informando, incluidos los años anteriores. También les ofrece una opción para explicar el motivo de la presentación tardía o mostrar si es parte de un programa de cumplimiento del IRS.

Multas por no presentar un FBAR

Aquellos que no presentan un FBAR cuando es necesario pueden estar sujetos a multas civiles y penales. Las infracciones criminales de las reglas de FBAR pueden resultar en una multa y/o cinco años de prisión. El gobierno de EE. UU. ajusta las multas anualmente por inflación.

El IRS no penalizará a aquellas personas que reporten adecuadamente las cuentas financieras extranjeras en un FBAR de presentación tardía y el IRS considera que tienen motivos razonables para la presentación tardía.

Archivos

Aquellos que deben presentar un FBAR deben mantener archivos de cuentas por lo general por cinco años a partir de la fecha de vencimiento de FBAR, incluyendo:

Nombre en cada cuenta,

Número de cuenta u otra designación,

Nombre y dirección del banco extranjero u otra persona que mantenga la cuenta,

Tipo de cuenta y,

Mayor valor de cada cuenta durante el período de informe.

También deben conservar copias de sus FBAR presentados

Los funcionarios o empleados que presentan un FBAR para informar el control sobre la cuenta financiera extranjera de un empleador no necesitan mantener personalmente los registros de las cuentas de sus empleadores.

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        

Happy Graduation!

Posted by Admin Posted on May 20 2021

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Congratulations to Dayana Machado, a member of the Lord Breakspeare Callagham family for her BA in Accounting.

We are very proud of you Dayana!

Taxpayers should file their tax return on time even if they can’t pay their tax bill in full

Posted by Admin Posted on May 18 2021

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Taxpayers should file their tax return by the deadline even if they cannot pay the full amount due.

If an individual taxpayer owes taxes, but can't pay in full by the May 17, 2021 deadline, they should:

File their tax return or request an extension of time to file by the May 17 deadline.

People who owe tax and do not file their return on time or request an extension may face a failure-to-file penalty for not filing on time.

Taxpayers should remember that an extension of time to file is not an extension of time to pay. An extension gives taxpayers until October 15, 2021 to file their 2020 tax return, but taxes owed are still due May 17, 2021.

To get an extension to file, taxpayers must do one of the following:

File Form 4868 through their tax professional, tax software or using Free File on IRS.gov.

Submit an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or digital wallet and select Form 4868 or extension as the payment type.

Pay as much as possible by the May 17 due date.

Whether filing a return or requesting an extension, taxpayers must pay their tax bill in full by the May deadline to avoid interest and penalties.

People who do not pay their taxes on time will face a failure-to-pay penalty.

The IRS has options for taxpayers who can't afford to pay taxes they owe.

Set up a payment plan as soon as possible.

Taxpayers who owe but cannot pay in full by May 17 don't have to wait for a tax bill to set up a payment plan.

They can apply for a payment plan on IRS.gov.

Taxpayers can also submit a payment plan request using Form 9465, Installment Agreement Request.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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

American Rescue Plan tax credits available to small employers to provide paid leave to employees receiving COVID-19 vaccines; new fact sheet outlines details

Posted by Admin Posted on May 18 2021

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WASHINGTON — The Internal Revenue Service and the Treasury Department announced further details of tax credits available under the American Rescue Plan to help small businesses, including providing paid leave for employees receiving COVID-19 vaccinations.

The additional details, provided in a fact sheet released today, spell out some basic facts about the employers eligible for the tax credits. It also provides information on how these employers may claim the credit for leave paid to employees related to COVID-19 vaccinations

Eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine. For example, if an eligible employer offers employees a paid day off in order to get vaccinated, the employer can receive a tax credit equal to the wages paid to employees for that day (up to certain limits).

"This new information is a shot in the arm for struggling small employers who are working hard to keep their businesses going while also watching out for the health of their employees," said IRS Commissioner Chuck Rettig. "Our work on this issue is part of a larger effort by the IRS to assist the nation recover from the pandemic."

The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. Self-employed individuals are eligible for similar tax credits.

The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through Sept. 30, 2021.

The paid leave credits under the ARP are tax credits against the employer's share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer's share of the Medicare tax.

In anticipation of claiming the credits on the Form 941, Employer's Quarterly Federal Tax Return , eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees' share of social security and Medicare taxes and the eligible employer's share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. If the eligible employer does not have enough federal employment taxes on deposit to cover the amount of the anticipated credits, the eligible employer may request an advance by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Self-employed individuals may claim comparable credits on the Form 1040, U.S. Individual Income Tax Return.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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                  

Do’s and Don’ts for taxpayers who get a letter or notice from the IRS

Posted by Admin Posted on May 18 2021

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The IRS mails letters or notices to taxpayers for a variety of reasons including if:

They have a balance due.

They are due a larger or smaller refund.

The agency has a question about their tax return.

They need to verify identity.

The agency needs additional information.

The agency changed their tax return.

Here are some do's and don'ts for taxpayers who receive one:

Don't ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. The notice or letter will explain the reason for the contact and gives instructions on what to do.

Don't panic. The IRS and its authorized private collection agencies generally contact taxpayers by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and take the appropriate action.

Do read the notice. If the IRS changed the tax return, the taxpayer should compare the information provided in the notice or letter with the information in their original return. In general, there is no need to contact the IRS if the taxpayer agrees with the notice.

Do respond timely. If the notice or letter requires a response by a specific date, taxpayers should reply in a timely manner to:

Minimize additional interest and penalty charges.

preserve their appeal rights if they don't agree.

Do pay amount due. Taxpayers should pay as much as they can, even if they can't pay the full amount. People can pay online or apply for an Online Payment Agreement or Offer in Compromise. The agency offers several payment options.

Do keep a copy of the notice or letter. It's important to keep a copy of all notices or letters with other tax records. Taxpayers may need these documents later.

Do remember there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of their tax return and letter when calling. Typically, taxpayers only need to contact the agency if they don't agree with the information, if the IRS request additional information, or if the taxpayer has a balance due. Taxpayers can also write to the agency at the address on the notice or letter. If taxpayers write, they should allow at least 30 days for a response.

Do avoid 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 if they owe money to the IRS can view their tax account information on IRS.gov.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 shouldn’t believe these myths about federal tax refunds

Posted by Admin Posted on May 18 2021

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Now that many taxpayers have filed their federal tax returns, they're eager for details about their refund. When it comes to refunds, there are several common myths that can mislead taxpayers.

Getting a refund this year means there's no need to adjust withholding for 2021

To help avoid a surprise next year, taxpayers should make changes now to prepare for next year. One way to do this is to adjust their tax withholding with their employer. This is easy to do using the Tax Withholding Estimator. This tool can help taxpayers determine if their employer is withholding the right amount. This is especially important for anyone who got an unexpected result from filing their tax return this year. Also, taxpayers who experience a life event like marriage, divorce, birth of a child, an adoption or are no longer able to claim a person as a dependent are encouraged to check their withholding.

Calling the IRS or a tax professional will provide a better refund date

Many people think talking to the IRS or their tax professional is the best way to find out when they will get their refund. The best way to check the status of a refund is online through the Where's My Refund? tool or the IRS2Go app.

Taxpayers can call the automated refund hotline at 800-829-1954. This hotline has the same information as Where's My Refund? and IRS telephone assistors. There is no need to call the IRS unless Where's My Refund? says to do so.

Ordering a tax transcript is a secret way to get a refund date

Doing so will not help taxpayers find out when they will get their refund. Where's My Refund? tells the taxpayer their tax return has been received and if the IRS has approved or sent the refund.

Where's My Refund? must be wrong because there's no deposit date yet

Updates to Where's My Refund? ‎on both IRS.gov and the IRS2Go mobile app are made once a day. These updates usually occur overnight. Even though the IRS issues most refunds in less than 21 days, it's possible a refund may take longer. If the IRS needs more information to process a tax return, the agency will contact the taxpayer by mail. Taxpayers should also consider the time it takes for the banks to post the refund to the taxpayer's account. People waiting for a refund in the mail should plan for the time it takes a check to arrive.

Where's My Refund? must be wrong because a refund amount is less than expected

There are several factors that could cause a tax refund to be larger or smaller than expected. Situations that could decrease a refund include:

The taxpayer made math errors or mistakes

The taxpayer owes federal taxes for a prior year

The taxpayer owes state taxes, child support, student loans or other delinquent federal non-tax obligations

The IRS holds a portion of the refund while it reviews an item claimed on the return

The IRS will mail the taxpayer a letter of explanation if these adjustments are made. Some taxpayers may also receive a letter from the Department of Treasury's Bureau of the Fiscal Service if their refund was reduced to offset certain financial obligations.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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        

All taxpayers are now eligible for identity protection PINs

Posted by Admin Posted on May 10 2021

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The IRS has expanded the Identity Protection PIN Opt-In Program to all taxpayers who can verify their identity.

The Identity Protection PIN is a six-digit code known only to the taxpayer and to the IRS. It helps prevent identity thieves from filing fraudulent tax returns using a taxpayers' personally identifiable information.

Here are a few key things to know about the IP PIN Opt-In program.

This is a voluntary program.

Taxpayers must pass a rigorous identity verification process.

Spouses and dependents are eligible for an IP PIN if they can verify their identities.

An IP PIN is valid for a calendar year.

People must get a new IP PIN each filing season.

The online IP PIN tool is offline between November and mid-January each year.

Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.

Taxpayers should Never share their IP PIN with anyone but their trusted tax provider.

The IRS will never call, text or email requesting their IP PIN.

People should beware of scams to steal their IP PIN.

There currently is no opt-out option but the IRS is working on one for 2022.

How to get an IP PIN

Taxpayers who want an IP PIN for 2021 should use Get an IP PIN tool on IRS.gov. This tool uses Secure Access authentication verify a person's identity. Taxpayers should review the Secure Access requirements before they try to use the Get An IP PIN tool. There is no need to file a Form 14039, Identity Theft Affidavit, to join the program.

Once a taxpayer have authenticated their identity, their 2021 IP PIN immediately will be revealed to them. This PIN must be used when prompted by electronic tax returns or written near the signature line on paper tax returns.

Options for taxpayers who can't verify their identity online

Taxpayers whose adjusted gross income is $72,000 or less may complete Form 15227 (EN-SP), Application for an Identity Protection Personal Identification Number PDF, and mail or fax it to the IRS. A customer service representative will contact the taxpayer and verify their identity by phone. Taxpayers should have their prior year tax return for verification process.

Taxpayers who verify their identity this way will have an IP PIN mailed to them the following tax year. This is for security reasons. Once in the program, the IP PIN will be mailed to these taxpayers each year.

Taxpayers who can't verify their identity online or by phone and are ineligible for file Form 15227 can contact the IRS and make an appointment at a Taxpayer Assistance Center to verify their identity in person. They'll need to bring should bring two forms of identification, including one government-issued picture identification.

Taxpayers who verify their identity in-person will have an IP PIN mailed to them within three weeks. Once in the program, the IP PIN will be mailed to these taxpayers each year.

 

Confirmed identity theft victims

Current tax-related identity theft victims who have been receiving IP PINs by mail will experience no change.

Taxpayers who are confirmed identity theft victims or who have filed an identity theft affidavit because of suspected stolen identity refund fraud will automatically receive an IP PIN by mail once their cases are resolved.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 use the correct filing status for accuracy and to avoid surprises

Posted by Admin Posted on May 10 2021

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Taxpayers need to know their correct filing status and be familiar with each option. The IRS Interactive Tax Assistant can help them determine their filing status.

A taxpayer's filing status typically depends on whether they are single or married on Dec. 31, which determines their filing status for that entire year.

More than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to owe the least amount of tax.

When preparing and filing a tax return, the filing status affects:

If the taxpayer is required to file a federal tax return

If they should file a return to receive a refund

Their standard deduction amount

If they can claim certain credits

The amount of tax they should pay

Here are the five filing statuses:

Single. Normally, this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.

Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.

Married filing separately. Married couples can choose to file separate tax returns. When doing so, it may result in less tax owed than filing a joint tax return.

Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.

Qualifying widow or widower with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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        

Todos los contribuyentes ahora son elegibles para un PIN de Protección de Identidad

Posted by Admin Posted on May 10 2021

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El PIN de Protección de Identidad (IP PIN) es un código de seis dígitos asignado a contribuyentes elegibles y conocido sólo por el contribuyente y el IRS. Ayuda a evitar que los ladrones de identidad presenten declaraciones de impuestos fraudulentas mediante el uso del número de Seguro Social de un contribuyente.

Acerca del programa de suscripción

  • Este es un programa voluntario
  • Los contribuyentes deben pasar un riguroso proceso de verificación de identidad.
  • Los cónyuges y dependientes son elegibles para un IP PIN si pueden verificar sus identidades.
  • Un IP PIN es válido para un año calendario.
  • Los contribuyentes deben obtener un IP PIN nuevo cada temporada de impuestos.
  • El IP PIN debe ingresarse correctamente en las declaraciones de impuestos electrónicas  y en papel para evitar rechazos y retrasos.

Cómo obtener un IP PIN:

Los contribuyentes que desean un IP PIN deben ir a IRS.gov/IPPIN y usar la herramienta Obtenga un IP PIN.

Cuidado con las estafas para robar el IP PIN

Los contribuyentes nunca deben compartir su IP PIN con nadie más que con su proveedor de impuestos de confianza. El IRS nunca llamará, enviará un mensaje de texto o correo electrónico para solicitar su IP PIN.

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        

Contribuyentes residentes en el extranjero

Posted by Admin Posted on May 05 2021

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Si es ciudadano estadounidense o extranjero residente, las reglas para presentar declaraciones de impuestos sobre la renta, sucesiones y donaciones y pagar el impuesto estimado son generalmente las mismas, ya sea que se encuentre en los Estados Unidos o en el extranjero. Sus ingresos mundiales están sujetos al impuesto sobre la renta de los EE. UU., Independientemente de dónde resida.

Cuándo presentar

Si es ciudadano estadounidense o extranjero residente que reside en el extranjero, o está en el servicio militar fuera de los EE. UU., En la fecha de vencimiento habitual de su declaración, se le permite una extensión automática de 2 meses para presentar su declaración sin solicitar una extensión. Para una declaración de año calendario, la extensión automática de 2 meses es hasta el 15 de junio. Tenga en cuenta que debe pagar cualquier impuesto adeudado antes del 15 de abril o se cobrarán intereses a partir del 15 de abril.

Dónde presentar la solicitud

Si es ciudadano estadounidense o extranjero residente (incluido el titular de una tarjeta verde) y vive en un país extranjero, envíe su declaración de impuestos de los EE. UU. A:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301-0215

USA

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         

Here’s how people can pay their federal taxes

Posted by Admin Posted on May 05 2021

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The May 17 deadline for individuals to file and pay their federal income tax is fast approaching. While paying taxes is not optional, people do have options when it comes to how they pay taxes. The IRS offers a variety of ways to pay taxes.

Some taxpayers must make quarterly estimated tax payments throughout the year. This includes sole proprietors, partners, and S corporation shareholders who expect to owe $1,000 or more when they file. Individuals who participate in the gig economy might also have to make estimated payments. The deadline to pay estimated taxes remains April 15, 2021.

Here are five ways for people who need to pay their taxes. They can:

Pay when they e-file using their bank account, at no charge, using electronic funds withdrawal.

Use IRS Direct Pay which allows taxpayers to pay electronically directly from their checking or savings account for free. They can choose to receive email notifications about their payments when they pay this way. Taxpayers should watch out for email schemes. IRS Direct Pay sends emails only to users who request the service.

Pay using a payment processor by credit card, debit card or digital wallet options. Taxpayers can make these payments online, by phone or through the IRS2Go app.

Make a cash payment at more than 60,000 participating retail locations nationwide. To pay with cash, visit IRS.gov and follow the instructions.

Pay over time by applying for an online payment agreement. Once the IRS accepts an agreement, the taxpayers can make their payment in monthly installments.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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

Personas Extranjeras

Posted by Admin Posted on May 05 2021

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Reglas relevantes a los capítulos 3 y 4.

Un beneficiario está sujeto a retención solo si es una persona extranjera. Una persona extranjera incluye un individuo extranjero no residente, una corporación extranjera, una sociedad extranjera, un fideicomiso extranjero, un patrimonio extranjero y cualquier otra persona que no sea una persona de los EE. UU. También incluye una sucursal extranjera de una institución financiera estadounidense si la sucursal extranjera es un intermediario calificado. En la mayoría de los casos, la sucursal estadounidense de una corporación o sociedad extranjera se trata como una persona extranjera.

Si una cantidad es tanto un pago retenible como una cantidad sujeta a la retención del capítulo 3 y el agente de retención retiene según el capítulo 4, puede acreditar esta cantidad contra cualquier impuesto adeudado según el capítulo 3.

Extranjero no residente

Un extranjero no residente es un individuo que no es ciudadano estadounidense o extranjero residente. Un residente de un país extranjero bajo el artículo de residencia de un tratado de impuesto sobre la renta es un individuo extranjero no residente a los efectos de la retención.

Casado con ciudadano estadounidense o extranjero residente. Las personas extranjeras no residentes casadas con ciudadanos o residentes de los EE. UU. Pueden optar por ser tratados como extranjeros residentes para ciertos fines del impuesto sobre la renta. Sin embargo, estas personas todavía están sujetas a las reglas de retención del capítulo 3 que se aplican a los extranjeros no residentes para todos los ingresos excepto los salarios. Los salarios pagados a estas personas están sujetos a retenciones graduales. Consulte la Publicación 15 Circular E, Guía de impuestos del empleador.

Persona de EE. UU.

El término "persona de los Estados Unidos" significa: Un ciudadano o residente de los Estados Unidos,

Una sociedad creada u organizada en los Estados Unidos o bajo la ley de los Estados Unidos o de cualquier estado, o el Distrito de Columbia,

Una corporación creada u organizada en los Estados Unidos o bajo la ley de los Estados Unidos o de cualquier estado, o el Distrito de Columbia,

Cualquier patrimonio o fideicomiso que no sea un patrimonio extranjero o un fideicomiso extranjero. (Consulte la sección 7701 (a) (31) del Código de Rentas Internas para obtener la definición de un patrimonio extranjero y un fideicomiso extranjero.), O

Cualquier otra persona que no sea extranjera.

ciudadano estadounidense

El término "ciudadano de los Estados Unidos" significa: Un individuo nacido en los Estados Unidos,

Un individuo cuyo padre es ciudadano de los EE. UU.,

Un ex extranjero que se ha naturalizado como ciudadano de los EE. UU.,

Un individuo nacido en Puerto Rico,

Un individuo nacido en Guam, o

Un individuo nacido en las Islas Vírgenes de EE. UU.

Residente extraterrestre

Un extranjero residente es un individuo que no es ciudadano o nacional de los Estados Unidos y que cumple con la prueba de la tarjeta verde o la prueba de presencia sustancial para el año calendario.

En la mayoría de los casos, los días que el extranjero está en los Estados Unidos como maestro, estudiante o aprendiz con una visa "F", "J", "M" o "Q" no se cuentan. Esta excepción es por un período de tiempo limitado. Para obtener más información sobre el estado de residente y no residente, las pruebas de residencia y las excepciones, consulte la Publicación 519, Guía de impuestos de EE. UU. Para extranjeros.

Nota: Si su empleado se demora en notificarle que su estado cambió de extranjero no residente a extranjero residente, es posible que tenga que hacer un ajuste al Formulario 941 si ese empleado estaba exento de la retención de impuestos de seguro social y Medicare como extranjero no residente. . Para obtener más información sobre cómo realizar ajustes, consulte el Capítulo 13 de la Publicación 15 (Circular E), Guía de impuestos del empleador.

Residente de una posesión estadounidense. Un residente de buena fe de Puerto Rico, las Islas Vírgenes de EE. UU., Guam, el Estado Libre Asociado de las Islas Marianas del Norte (CNMI) o Samoa Estadounidense que no sea ciudadano de EE. UU. O ciudadano de EE. UU. Es tratado como un extranjero no residente según las reglas de retención que se explican aquí…

Un residente de buena fe de una posesión es alguien que: Cumple con la prueba de presencia,

No tiene un domicilio fiscal fuera de la posesión, y

No tiene una conexión más cercana con los Estados Unidos o con un país extranjero que con la posesión.

La Sección 937 del Código de Rentas Internas establece el requisito de presentación del Formulario 8898, Declaración para personas que comienzan o terminan la residencia de buena fe en una posesión de los EE. UU. Este formulario informa cada cambio de residencia hacia o desde una posesión de los EE. UU. El IRS está autorizado a imponer una multa de $ 1,000 a cualquier contribuyente que esté obligado a presentar este formulario, pero que no lo haga.

Para obtener una explicación detallada de las reglas de residencia en posesión de los EE. UU. Y las reglas de obtención de ingresos, consulte la Publicación 570, Guía de impuestos para personas con ingresos de posesiones estadounidenses.

Corporaciones extranjeras

Una corporación extranjera es aquella que no se ajusta a la definición de corporación nacional. Una corporación nacional es aquella que fue creada u organizada en los Estados Unidos o bajo las leyes de los Estados Unidos, cualquiera de sus estados o el Distrito de Columbia.

Corporaciones de Guam o de las Islas Marianas del Norte. Una corporación creada u organizada en, o bajo las leyes de, Guam no se considera una corporación extranjera a los efectos de la retención de impuestos para el año fiscal si:

En todo momento durante el año fiscal, menos del 25% del valor de las acciones de la corporación es propiedad, directa o indirecta, de personas extranjeras, y

Al menos el 20% de los ingresos brutos de la corporación se obtiene de fuentes dentro de Guam o la CNMI para el período de 3 años que finaliza con el cierre del año fiscal anterior de la corporación (o el período de existencia de la corporación, si es menos) .

Nota: Las disposiciones que se discuten a continuación bajo las Islas Vírgenes de los EE. UU. Y las Corporaciones de Samoa Americana se aplicarán a las corporaciones de Guam o CNMI cuando haya un acuerdo de implementación en vigor entre los Estados Unidos y esa posesión.

Corporaciones de las Islas Vírgenes de EE. UU. Y Samoa Americana. Una corporación creada u organizada en, o bajo las leyes de, las Islas Vírgenes de los EE. UU. O Samoa Americana no se considera una corporación extranjera a los efectos de la retención de impuestos para el año fiscal si:

En todo momento durante el año fiscal, menos del 25% del valor de las acciones de la corporación es propiedad, directa o indirecta, de personas extranjeras.

Al menos el 65% de los ingresos brutos de la corporación está efectivamente relacionado con la realización de un comercio o negocio en las Islas Vírgenes de los EE. UU., Samoa Americana, Guam, la CNMI o los Estados Unidos durante el período de 3 años que finaliza con el cierre de la año fiscal de la corporación (o el período de existencia de la corporación o cualquier predecesor, si es menor), y

Ninguna parte sustancial de los ingresos de la corporación se utiliza, directa o indirectamente, para satisfacer obligaciones con una persona que no es un residente de buena fe de las Islas Vírgenes de los Estados Unidos, Samoa Americana, Guam, la CNMI o los Estados Unidos.

Fundación privada extranjera

Una fundación privada que fue creada u organizada bajo las leyes de un país extranjero es una fundación privada extranjera. Los ingresos brutos de inversiones de fuentes dentro de los Estados Unidos pagados a una fundación privada extranjera calificada están sujetos a una retención de una tasa del 4% (a menos que estén exentos por un tratado) en lugar de la tasa legal ordinaria del 30%.

Otras organizaciones, asociaciones e instituciones benéficas extranjeras

Una organización puede estar exenta del impuesto sobre la renta en virtud de la sección 501 (a) del Código de Rentas Internas y el capítulo 4 de retención de impuestos incluso si se formó de conformidad con la ley extranjera. En la mayoría de los casos, no tiene que retener impuestos sobre los pagos de ingresos a estas organizaciones extranjeras exentas de impuestos a menos que el IRS haya determinado que son fundaciones privadas extranjeras. Como regla general, dichas organizaciones extranjeras exentas de impuestos deben presentar el formulario W-8EXP al agente de retención para establecer su condición de organización extranjera exenta de impuestos.

Sin embargo, los pagos a estas organizaciones deben declararse en el Formulario 1042-S si el pago está sujeto a la retención del capítulo 3, aunque no se retengan impuestos.

Debe retener impuestos sobre los ingresos comerciales no relacionados (como se describe en la Publicación 598, Impuesto sobre los ingresos comerciales no relacionados de organizaciones exentas) de organizaciones extranjeras exentas de impuestos de la misma manera que retendría impuestos sobre ingresos similares de organizaciones no exentas cuando la organización lo hace. no proporcionarle un Formulario W-8ECI para certificar que los ingresos están efectivamente relacionados con una actividad comercial o comercial de la organización en los EE. UU.

Sucursales estadounidenses de personas extranjeras

En la mayoría de los casos, un pago a una sucursal estadounidense de una persona extranjera es un pago realizado a la persona extranjera. Sin embargo, puede tratar los pagos a sucursales estadounidenses de bancos extranjeros y compañías de seguros extranjeras que están sujetas a la supervisión reguladora de EE. UU. Como pagos realizados a una persona estadounidense, si usted y la sucursal de EE. UU. Han acordado hacerlo y si se demuestra su acuerdo. mediante un certificado de retención, formulario W-8IMY, certificado de intermediario extranjero, entidad extranjera de flujo directo o ciertas sucursales de EE. UU. para la retención de impuestos en los Estados Unidos. Para este propósito, una institución financiera del territorio que actúa como intermediario o que es una entidad de flujo directo se trata como una sucursal de EE. UU.

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         

University students and staff should be aware of IRS impersonation email scam

Posted by Admin Posted on May 05 2021

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People should be aware of an ongoing IRS-impersonation scam that appears to target educational institutions, including students and staff who have ".edu" email addresses. The suspect emails display the IRS logo and use various subject lines, such as "Tax Refund Payment" or "Recalculation of your tax refund payment." It asks people to click a link and submit a form to claim their refund.

The scam website requests taxpayers provide their:

Social Security number

First name

Last name

Date of birth

Prior year annual gross income

Driver's license number

Current address

City

State/U.S. territory

ZIP code/postal code

Electronic filing PIN

Taxpayers who believe they have a pending refund can easily check on its status using the Where's My Refund? tool on IRS.gov.

Here are a few things people can do if they believe they are a target of the scam:

Report the scam: People who receive this scam email should not click on the link in the email and report it to the IRS. For security reasons, they should save the email using save as and then send that attachment to phishing@irs.gov or forward the email as an attachment to phishing@irs.gov.

Get an Identity Protection PIN: Taxpayers who believe they may have provided identity thieves with their personal information should consider immediately obtaining an Identity Protection PIN. This is a voluntary opt-in program. An IP PIN is a six-digit number that helps prevent identity thieves from filing fraudulent tax returns in the victim's name.

Report identity theft: Taxpayers who attempt to e-file their tax return and find it rejected because a return with their SSN has been filed should file a Form 14039, Identity Theft Affidavit PDF to report themselves as a possible identity theft victim. See Identity Theft Central to learn about the signs of identity theft and actions to take.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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

Treasury Department and IRS provide safe harbor for small businesses to claim deductions relating to first-round Paycheck Protection Program loans

Posted by Admin Posted on May 05 2021

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WASHINGTON — The Treasury Department and the Internal Revenue Service issued Revenue Procedure 2021-20 https://www.irs.gov/pub/irs-drop/rp-21-20.pdf for certain businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct any of the original eligible expenses because they relied on guidance issued before the enactment of tax relief legislation in December of 2020.

Under prior guidance, businesses that received PPP loans to cover payroll costs, interest on covered mortgage obligations, covered rent obligation payments, and covered utility payments could not deduct corresponding expenses.

With the Dec. 27, 2020, enactment of the Consolidated Appropriations Act, 2021, businesses now may claim these deductions even though they received PPP loans to cover original eligible expenses. These businesses can use the safe harbor provided by this guidance to deduct those expenses on the return for the immediately subsequent year.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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       

Foreign Persons

Posted by Admin Posted on May 05 2021

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Rules relevant to chapters 3 and 4.

A payee is subject to withholding only if it is a foreign person. A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U.S. person. It also includes a foreign branch of a U.S. financial institution if the foreign branch is a qualified intermediary. In most cases, the U.S. branch of a foreign corporation or partnership is treated as a foreign person.

If an amount is both a withholdable payment and an amount subject to chapter 3 withholding and the withholding agent withholds under chapter 4, it may credit this amount against any tax due under chapter 3.

Nonresident alien

A nonresident alien is an individual who is not a U.S. citizen or a resident alien. A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding.

Married to U.S. citizen or resident alien. Nonresident alien individuals married to U.S. citizens or residents may choose to be treated as resident aliens for certain income tax purposes. However, these individuals are still subject to the chapter 3 withholding rules that apply to nonresident aliens for all income except wages. Wages paid to these individuals are subject to graduated withholding. Refer to Publication 15 Circular E, Employer's Tax Guide.

U.S. person

The term "United States person" means:

A citizen or resident of the United States,

A partnership created or organized in the United States or under the law of the United States or of any State, or the District of Columbia,

A corporation created or organized in the United States or under the law of the United States or of any State, or the District of Columbia,

Any estate or trust other than a foreign estate or foreign trust. (See Internal Revenue Code section 7701(a)(31) for the definition of a foreign estate and a foreign trust.), or

Any other person that is not a foreign person.

U.S. citizen

The term "United States citizen" means:

An individual born in the United States,

An individual whose parent is a U.S. citizen,

A former alien who has been naturalized as a U.S. citizen,

An individual born in Puerto Rico,

An individual born in Guam, or

An individual born in the U.S. Virgin Islands.

Resident alien

A resident alien is an individual that is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year.

In most cases, the days the alien is in the United States as a teacher,  student, or trainee on an "F", "J", "M", or "Q" visa are not counted. This exception is for a limited period of time. For more information on resident and nonresident status, the tests for residence, and the exceptions to them, refer to Publication 519, U.S. Tax Guide for Aliens.

Note: If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. For more information on making adjustments, refer to Chapter 13 of Publication 15 (Circular E), Employer's Tax Guide.

Resident of a U.S. possession. A bona fide resident of Puerto Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI) or American Samoa who is not a U.S. citizen or a U.S. national is treated as a nonresident alien for the withholding rules explained here. A bona fide resident of a possession is someone who:

Meets the presence test,

Does not have a tax home outside the possession, and

Does not have a closer connection to the United States or to a foreign country than to the possession.

Section 937 of the Internal Revenue Code establishes the filing requirement for Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession. This form reports each change of residency to or from a U.S. possession. The IRS is authorized to impose a $1,000 penalty on any taxpayer who is liable to file this form, but who fails to file it.

For a detailed explanation of the U.S. possession residency rules and income sourcing rules, please refer to Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.

Foreign corporations

A foreign corporation is one that does not fit the definition of a domestic corporation. A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia.

Guam or Northern Mariana Islands corporations. A corporation created or organized in, or under the laws of, Guam is not considered a foreign corporation for the purpose of withholding tax for the tax year if:

At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, and

At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less).

Note: The provisions discussed below under U.S. Virgin Islands and American Samoa Corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession.

U.S. Virgin Islands and American Samoa corporations. A corporation created or organized in, or under the laws of, the U.S. Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if:

At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons.

At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U.S. Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and

No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U.S. Virgin Islands, American Samoa, Guam, the CNMI, or the United States.

Foreign private foundation

A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to withholding of a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate.

Other foreign organizations, associations, and charitable institutions

An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code and chapter 4 withholding tax even if it was formed under foreign law. In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. As a general rule, such foreign tax-exempt organizations should file Form W-8EXP with the withholding agent in order to establish their status as a foreign tax-exempt organization.

Payments to these organizations, however, must be reported on Form 1042-S if the payment is subject to chapter 3 withholding, even though no tax is withheld.

You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations when the organization does not provide you a Form W-8ECI to certify that the income is effectively connected with a U.S. trade or business of the organization.

U.S. branches of foreign persons

In most cases, a payment to a U.S. branch of a foreign person is a payment made to the foreign person. You may, however, treat payments to U.S. branches of foreign banks and foreign insurance companies that are subject to U.S. regulatory supervision as payments made to a U.S. person, if you and the U.S. branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding. For this purpose, a territory financial institution acting as an intermediary or that is a flow-through entity is treated as a U.S. branch.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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

Recovery Rebate Credit and Economic Impact Payment information you might need to know

Posted by Admin Posted on Apr 22 2021

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Economic Impact Payments (EIPs), also known as stimulus payments, and the related Recovery Rebate Credits (RRCs) are essentially divided into two tax years: 2020 and 2021. The information outlined below is to help you understand which EIPs relate to which RRC and how to find more information about each.

Please share this information: If you have friends, family or clients who do not have internet access, please feel free to print this article and share it with them. Both TAS and IRS phone lines are overloaded with calls, so taxpayers who chose to call may encounter long wait times. Help get this information out to others.

Tax Year 2020

Two EIPs (EIP1 and EIP2) were issued to eligible taxpayers during 2020 and early 2021. These EIPs were advanced payments of the Recovery Rebate Credit (RRC), a refundable credit, claimed on the 2020 Individual Tax Return.

How do I get these EIPs if I didn’t receive them or got an incorrect amount?

If you are eligible and did not receive either or both EIPs, you now must claim them as the RRC on the 2020 Form 1040, Individual Income Tax or Form 1040-SR, U.S. Tax Return for Seniors. The Form 1040 and Form 1040-SR instructions include a worksheet you can use to figure the amount of any RRC for which you are eligible.The eligibility criteria for the RRC is generally the same as for EIPs, except that the RRC is based on tax year 2020 information, instead of the tax year 2019 or tax year 2018 information used for EIP1 and tax year 2019 information used for EIP2.

If you are not normally required to file a tax return, you still must file either a 2020 Form 1040, Individual Income Tax or Form 1040-SR, U.S. Tax Return for Seniors to get the amount owed.

There is no other way to receive the amount of 2020 stimulus/RRC credit you may be entitled to, with one exception:

If you did not receive an EIP payment, but did get Notice 1444, visit the IRS’s Economic Impact Payments page and look for the EIP Frequently Asked Questions and Answers pages; then, under the section titled Payment Issued but Lost, Stolen, Destroyed or Not Received, follow the applicable instructions. Note the EIP FAQ pages are separated for the EIP1, EIP2, and EIP3 payments, so make sure you are looking at the correct page for the EIP you are missing.

How long will it take to get a refund?

If you are eligible for a refund of your 2020 income tax, then the amount you receive for the Recovery Rebate Credit will be included as part of your 2020 tax refund. It will not be issued separately. You can check the status of your refund under Where’s My Refund?

Generally, you will receive your refund within 3 weeks if you file electronically or 8 weeks if you mail your return. See How long you may have to wait? for more details. If the IRS identifies an error in your calculation for this (or anything else reported on your return), it could also cause a delay while IRS make any necessary corrections. Please note that the IRS is experiencing delays in processing mailed tax returns. To receive any tax refund you are due, we recommend you file your tax return electronically as quickly as possible. If you need assistance with electronically filing and you meet the eligibility requirements, a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site may be able to assist you.Be aware though, that the 2020 Recovery Rebate Credit can be reduced to pay debts owed to other Federal government agencies (separate from federal income tax debt), as well as to state agencies. Keep in mind that the credit is part of your tax refund and your tax refund is subject to any offset. However, see the National Taxpayer Advocate’s blog, dated March 15, 2021 for more information concerning 2020 RRC offsets.

Why is my 2020 Recovery Rebate Credit different than expected?

The IRS is mailing letters to some taxpayers who claimed the 2020 credit, but may be getting a different amount than they expected. Here are some common reasons the IRS corrected the credit:

The individual was claimed as a dependent on another person’s 2020 tax return.

The individual did not provide a Social Security number valid for employment.

The qualifying child was age 17 or older on January 1, 2020.

Math errors relating to calculating adjusted gross income and any EIPs already received.

IRS.gov has a special section – Correcting Recovery Rebate Credit issues after the 2020 tax return is filed – that provides additional information explaining what errors may have occurred. Taxpayers who disagree with the IRS calculation should review their letter as well as the questions and answers for what information they should have available when contacting the IRS. See IRS information letters about Economic Impact Payments and the Recovery Rebate Credit or visit IRS.gov/rrc and the frequently asked questions by topic for more details.

Where can I find more information?

See our Coronavirus (COVID-19) Tax Relief page, Recovery Rebate Credit & Economic Impact Payments section and Additional Economic Impact Payment Information section for more detailed information or go to the following IRS.gov pages:

 

2020 Recovery Rebate Credit (RRC)

Topic A: Claiming the Recovery Rebate Credit if you aren’t required to file a tax return

Topic B: Eligibility

Topic C: Claiming the Credit

Topic D: Calculating the Credit

Topic E: Receiving the Credit

Topic F: Finding the First and Second Economic Impact Payment Amounts to Calculate the 2020 Recovery Rebate Credit

Topic G: Correcting issues after the 2020 tax return is filed

See also TAS’s Ability to Help With Delayed Refunds Is Limited.

Tax Year 2021

The American Rescue Plan Act of 2021, enacted March 11, 2021, provides a 2021 Recovery Rebate Credit (RRC) which can be claimed on 2021 Individual Income Tax Returns. It also provides for an advanced payment of the RRC in calendar year 2021 through payments that are referred to as Economic Impact Payments (EIP3), similar to what was done in 2020, but with different eligibility criteria and payment amounts. More detailed information about when and how to claim the RRC on the 2021 individual tax forms will be provided prior to the opening of the 2021 filing season.

How much should my EIP3 amount be?

Generally, the amount will be $1,400 (or $2,800 in the case of a joint return), plus an additional $1,400 per each qualifying dependent of the taxpayer, for all U.S. residents with adjusted gross income up to a threshold phase-out of $75,000 ($150,000 in the case of a joint return or a surviving spouse, and $112,500 in the case of a head of household), who are not a dependent of another taxpayer and have a work-eligible Social Security number (SSN). The rebate amount is phased out above certain income levels.

When should I get my 2021 EIP3 payment and how can I check on it?

The IRS started issuing the EIP3 to eligible individuals in phases in March of 2021. EIP3 will be sent each week to eligible individuals throughout most of the calendar year 2021 by direct deposit, or mailed as a check, or a debit card, as the IRS continues to process tax returns. You can check your payment status in the Get My Payment tool.

Where can I find more information?

See our Coronavirus (COVID-19) Tax Relief page, 2021 Recovery Rebate Credit & Economic Impact Payments sections and Additional Economic Impact Payment Information section for more detailed information or go to the following IRS.gov pages:

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

ARPA Provides More Than Just Direct Payments to Taxpayers

Posted by Admin Posted on Apr 22 2021

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On March 11, another round of COVID-19 relief legislation was signed into law. The American Rescue Plan Act (ARPA) includes funding for individuals, businesses, and state and local governments, but also some significant tax-related provisions.

ARPA extends and expands some tax provisions in the CARES Act and the Consolidated Appropriations Act (CAA) and also includes some new tax-related provisions.

A quick look

Here’s a quick look at some of the tax provisions that may affect you:

Individuals

Recovery rebates of up to $1,400 for singles and heads of households and $2,800 for married couples filing jointly — plus $1,400 per qualifying dependent (including adult dependents) — subject to adjusted gross income (AGI) phaseouts starting at $75,000 for singles, $112,500 for heads of households and $150,000 for joint filers and ending at $80,000, $120,000 and $160,000, respectively

Increased Child credit, including advance payments of part of the credit later this year

Expanded child and dependent care tax credit

Tax-free treatment of forgiven student loan debt

Exclusion from gross income of the first $10,200 in unemployment benefits received

Businesses and other employers

Extended and expanded tax credits for retaining employees, through Dec. 31, 2021

Extended and modified payroll tax credits for paid sick and family leave, through Sept. 30, 2021

Extended excess business loss limitation, through Dec. 31, 2026

Expansion of the Section 162(m) limits on the tax deduction public companies can take for executive compensation to cover the CEO, the CFO and the five next highest paid employees, beginning in 2027

How will you benefit?

This is just a brief overview of the tax-related provisions of ARPA. Additional rules and limits apply. Contact your tax advisor for more details on these provisions and how you might benefit.

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        

Taxpayers may file a 2020 superseding return changing their joint filing election to receive the third economic impact payment.

Posted by Admin Posted on Apr 22 2021

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Economic Impact Payments

The IRS previously issued two rounds of economic impact payments (EIPs). The IRS delivered over 160 million payments for the first round of EIPs and 147 million payments for the second round of EIPs. The IRS has currently disbursed approximately 159 million payments for the third round of EIPs based on the adjusted gross incomes of the taxpayers’ latest processed returns from 2019 or 2020. The IRS is also automatically issuing and will continue to issue true-up payments for those individuals who already received a third EIP based on their 2019 tax return but have since filed their 2020 tax return and qualify for additional EIP funds. However, since enactment of the legislation many eligible victims of domestic abuse face issues in receiving their EIPs.

If the IRS determined the EIP based upon a filed joint tax return, it electronically deposited the EIP to the bank account shown on the joint return or it issued a check in both taxpayers’ names and sent the check to the address shown on the joint return. And on March 30, the IRS advised joint filers that taxpayer may receive half of the EIP payment as a direct deposit and the other half as a check, so keep an eye on your mailbox.

Superseding Returns

In my April 29, 2020, blog, I called attention to superseding returns — returns filed after an original return but before the due date of the original return. Returns are typically due on April 15, but taxpayers can submit a Form 4868, Application for Automatic Extension of Time to File, until October 15. Taxpayers can use superseding returns to correct an error or change a tax election as a substitute for the original filed return. For example, taxpayers might elect to have an overpayment shown on an original return applied to the tax owed the following year. By filing a second (superseding) return, taxpayers can change that election and receive the refund in the current year instead.

Superseding returns are treated as a replacement of an original return, and the IRS adjusts its records accordingly (see, for example, Internal Revenue Manual (IRM) 21.6.7.4.10). As I noted in a recent blog, it is important to remember the IRS treats the original return filing date as the key date for assessment and refund statute purposes — not the date the superseding return was filed if the superseding return was filed before an extended due date.

Superseding Return Changing Filing Status

Another reason to file a superseding return would be to change the election to file a joint return. For example, taxpayers who were married at the conclusion of the tax year, filed a joint return, and subsequently divorced or separated might decide to change their filing statuses (to married filing separately or head of household, if eligible).  One additional benefit is each spouse would receive their EIP individually rather than receive their EIP as an electronic deposit to a joint bank account they no longer share, or via a check in both their names to an address they no longer share.

Taxpayers who are still married, particularly victims of domestic abuse, may also decide to change their joint return election by filing a timely superseding return. This may be especially important when they do not have access to the bank account shown on the filed joint return, or they cannot access the mail at the address shown on the joint return, and the other joint filer may misappropriate their share of EIP.

The IRM takes the position that superseding returns changing the joint filing election must be filed before the due date of the original return without regard to extensions. The deadline for filing an original return was postponed to May 17, 2021, for tax year 2020 (see Treas. Reg. § 1.6013–1(a)(1)). Taxpayers may request extensions to file beyond that date and may file superseding returns if they do so by the extended filing date, but the IRS’s position set forth in its IRM states that for irrevocable elections (e.g., section 179, Joint to Separate) a return filed after the original due date but on or before the extended due date does not constitute a superseding return.

If the IRS did not issue the first or second EIP based on a taxpayer’s filed superseding return changing a joint filing status and instead based the EIP on the prior joint return, the taxpayer may still claim a Recovery Rebate Credit (RRC) on their 2020 income tax return, Form 1040, line 30. However, taxpayers should expect that their refund will be delayed because the IRS will manually review the claim if its records are inconsistent with the RRC.  The IRS will likely issue a math error notice explaining that it is reducing or eliminating the claimed RRC because the EIP was previously paid. This leaves the taxpayer in a situation that is similar to the one I discussed in my February 11, 2021, blog — EIP is based on a joint return but the joint election was invalid because it was coerced, or the taxpayers were not married. In either instance, taxpayers will have the opportunity to explain their situation by responding to the math error notice and must respond within 60 days that the joint election was invalid or was superseded and they did not receive the EIP to which they were entitled.

Conclusion and Recommendation

Taxpayers who did not receive their first or second EIP after they filed a superseding return changing their election from filing jointly may still be eligible for the RRC on their 2020 income tax return. Taxpayers may still file a superseding return electing to file married filing separately or head of household for the 2020 return by May 17 which may trigger a separate EIP after processing the superseded return.  That superseded return would be the basis for the third EIP.

I will continue to work with the IRS to ensure appropriate math error notice procedures are in place to assist with the processing of the 2020 RRC for those taxpayers that filed superseding returns changing their election to file a joint return.  Victims of domestic violence in particular may benefit from these procedures.

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

Can Your Business Benefit From the Enhanced Employee Retention Credit?

Posted by Admin Posted on Apr 22 2021

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Over the course of the COVID-19 pandemic, many businesses have had to shut down or reduce operations, causing widespread furloughs and layoffs. Fortunately, employers that have kept workers on their payrolls may be eligible for a refundable employee retention credit. Three laws have created, extended and enhanced the credit.

The original law

The CARES Act created the employee retention credit in March of 2020. The credit originally:

Equaled 50% of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter,

Was subject to an overall wage cap of $10,000 per eligible employee, and

Was available to eligible large and small employers.

The credit covered wages paid from March 13, 2020, through Dec. 31, 2020.

What’s changed

The Consolidated Appropriations Act (CAA), signed into law in December of 2020, extended the covered wage period to include the first two calendar quarters of 2021, ending on June 30, 2021. And now the American Rescue Plan Act (ARPA), signed into law on March 11, has extended it again through Dec. 31, 2021.

In addition, for the first two quarters of 2021, the CAA increased the overall covered wage ceiling to 70% of qualified wages paid during the applicable quarter. And it increased the per-employee covered wage ceiling to $10,000 of qualified wages paid during the applicable quarter (versus a $10,000 annual ceiling under the original rules). Because of the ARPA extension, these higher wage ceilings now apply to all four quarters of 2021.

Substantial tax savings

Additional rules and limits apply to the employee retention credit, and these are just some of the changes made to it. But the potential tax savings can be substantial. Contact your tax advisor for more information about this tax saving opportunity.

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 Day for individuals extended to May 17: Treasury, IRS extend filing and payment deadline

Posted by Admin Posted on Mar 24 2021

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WASHINGTON — The Treasury Department and Internal Revenue Service announced  that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.

"This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities," said IRS Commissioner Chuck Rettig. "Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to."

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn't subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

State tax returns

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.

Winter storm disaster relief for Louisiana, Oklahoma and Texas

Earlier this year, following the disaster declarations issued by the Federal Emergency Management Agency (FEMA), the IRS announced relief for victims of the February winter storms in Texas, Oklahoma and Louisiana. These states have until June 15, 2021, to file various individual and business tax returns and make tax payments. This extension to May 17 does not affect the June deadline.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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        

American Rescue Plan Act (H.R. 1319)

Posted by Admin Posted on Mar 24 2021

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President Biden signed into law the American Rescue Plan Act (ARPA), H.R. 1319. A few highlights of the $1.9 trillion Act include an exclusion of up to $10,200 of unemployment benefits received for taxpayers making less than $150,000; a third economic impact payment that is an advance of 2021 tax credit; changes to the child tax credit, earned income credit and dependent care credit. The IRS announced that they are reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of Economic Impact Payments, the expanded Child Tax Credit, including advance payments of the Child Tax Credit, and other tax provisions will be made available as soon as possible on IRS.gov. The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time.

The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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 DO I FILE AN AUTO INSURANCE CLAIM?

Posted by Admin Posted on Mar 24 2021

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A few tips to ensure that you claim correctly and receive your money as quickly as possible:

  • File the claim immediately; take note of hospital bills, police accident reports, and copies of claims that have been submitted.
  • Take notes of exactly what was said every time you speak with a company representative, make a note of the date and keep the information together in a file.
  • If you get the feeling that the company isn't being forthcoming with the results that you need, complain to the state insurance regulator.
  • If you still feel that your claim isn't getting the attention it deserves, call a lawyer.

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

MULTISTATE RESIDENT? WATCH OUT FOR DOUBLE TAXATION

Posted by Admin Posted on Mar 24 2021

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Contrary to popular belief, there’s nothing in the U.S. Constitution or federal law that prohibits multiple states from collecting tax on the same income. Although many states provide tax credits to prevent double taxation, those credits are sometimes unavailable. If you maintain residences in more than one state, here are some points to keep in mind.

Domicile vs. residence

Generally, if you’re “domiciled” in a state, you’re subject to that state’s income tax on your worldwide income. Your domicile isn’t necessarily where you spend most of your time. Rather, it’s the location of your “true, fixed, permanent home” or the place “to which you intend to return whenever absent.” Your domicile doesn’t change — even if you spend little or no time there — until you establish domicile elsewhere.

Residence, on the other hand, is based on the amount of time you spend in a state. You’re a resident if you have a “permanent place of abode” in a state and spend a minimum amount of time there — for example, at least 183 days per year. Many states impose their income taxes on residents’ worldwide income even if they’re domiciled in another state.

Potential solution

Suppose you live in State A and work in State B. Given the length of your commute, you keep an apartment in State B near your office and return to your home in State A only on weekends. State A taxes you as a domiciliary, while State B taxes you as a resident. Neither state offers a credit for taxes paid to another state, so your income is taxed twice.

One possible solution to such double taxation is to avoid maintaining a permanent place of abode in State B. However, State B may still have the power to tax your income from the job in State B because it’s derived from a source within the state. Yet State B wouldn’t be able to tax your income from other sources, such as investments you made in State A.

Minimize unnecessary taxes

This example illustrates just one way double taxation can arise when you divide your time between two or more states. Our firm can research applicable state law and identify ways to minimize exposure to unnecessary taxes.

Sidebar: How to establish domicile

Under the law of each state, tax credits are available only with respect to income taxes that are “properly due” to another state. But, when two states each claim you as a domiciliary, neither believes that taxes are properly due to the other. To avoid double taxation in this situation, you’ll need to demonstrate your intent to abandon your domicile in one state and establish it in the other.

There are various ways to do so. For example, you might obtain a driver’s license and register your car in the new state. You could also open bank accounts in the new state and use your new address for important financially related documents (such as insurance policies, tax returns, passports and wills). Other effective measures may include registering to vote in the new jurisdiction, subscribing to local newspapers and seeing local health care providers. Bear in mind, of course, that laws regarding domicile vary from state to state.

If you have any questions regarding accounting, domestic taxation, 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

THE TAX ADVOCATE SERVICE, PROVIDED BY THE IRS

Posted by Admin Posted on Mar 24 2021

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Have you tried everything to resolve a tax problem with the IRS but are still experiencing delays? Are you facing what you consider to be an economic burden or hardship due to IRS collection or other actions? If so, you can seek the assistance of the Taxpayer Advocate Service.

You may request the assistance of the Taxpayer Advocate if you find that you can no longer provide for basic necessities such as housing, transportation or food because of IRS actions. You can also seek help from the Taxpayer Advocate Service if you own a business and are unable to meet basic expenses such as payroll because of IRS actions. A delay of more than 30 days to resolve a tax related problem or no response by the date promised may also qualify you for assistance.

Qualified taxpayers will receive personalized service from a knowledgeable Taxpayer Advocate. The Advocate will listen to your situation, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved to the fullest extent permitted by law.

The Taxpayer Advocate Service is an independent organization within the IRS and can help clear up problems that resulted from previous contacts with the IRS. Taxpayer Advocates will ensure that your case is given a complete and impartial review. What's more, if your problem affects other taxpayers, the Taxpayer Advocate Service can work to change the system.

If you have any questions regarding accounting, domestic taxation, 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

WHAT CAN I DO TO GET A GOOD PRICE ON MY HOMEOWNER'S INSURANCE?

Posted by Admin Posted on Mar 24 2021

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Clearly you should always perform a good amount of due diligence when searching for any policy. Be sure to compare the differences in services offered and prices quoted. There are many discounts available for different things, don't forget to ask if you qualify for any of them.

Remember that the deductible will largely affect the price of the premium. It is a good idea to keep the deductible as high as you feel comfortable with to keep the premium down.

You can generally get a better deal when you purchase your auto and house policies from the same company and you can also get a better rate by not insuring the land.

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 CAN I EASILY COMPARE PRICES BETWEEN INSURANCE COMPANIES?

Posted by Admin Posted on Mar 18 2021

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In most states there will be a set of rules laid down by a group of insurance regulators. Agents may be required to calculate two different types of indexes to aid in price shopping.

  • Net payment index
  • Surrender cost index

The net payment index calculates the cost of carrying the policy for ten to twenty years. This can be judged easily by remembering that the lower this number is, the more inexpensive the policy is. This is most helpful if you are more concerned with the death payout than the investment.

On the other hand, the surrender cost index is more useful to those who are concerned with the cash value of the investment. The lower this number is, the better.

The cash surrender value is what you will receive in return if you were to surrender the policy, which is different than the cash accumulation value. If you are checking the prices of universal life policies, if the policies have different premiums and death benefits, the policy with the higher cash surrender value would be the better investment.

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

REFINANCING YOUR HOME

Posted by Admin Posted on Mar 18 2021

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Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.

Generally, for taxpayers who itemize, the “points” paid to obtain a home mortgage may be deductible as mortgage interest. Points paid to obtain an original home mortgage can be, depending on circumstances, fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, the interest deduction for points is determined by dividing the points paid by the number of payments to be made over the life of the loan. This information is usually available from lenders. Taxpayers may deduct points only for those payments made in the tax year. For example, a homeowner who paid $2,000 in points and who would make 360 payments on a 30-year mortgage could deduct $5.56 per monthly payment, or a total of $66.72 if he or she made 12 payments in one year.

However, if part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off.

Other closing costs — such as appraisal fees and other non-interest fees — generally are not deductible. Additionally, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken.  Please contact us if you've recently refinanced, and we can be a big help!

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

CHARITABLE GIVING IN A TIME OF CRISIS

Posted by Admin Posted on Mar 18 2021

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The novel coronavirus (COVID-19) pandemic has created much financial stress, but the crisis has also generated an intense need for charitable action. If you’re able to continue donating during this difficult period, the Coronavirus Aid, Relief, and Economic Security (CARES) Act may make it a little easier for you to do so, whether you’re a small or large donor.

Tax benefits

From an income tax perspective, the CARES Act has expanded charitable contribution deductions. Individual taxpayers who don’t itemize can take advantage of a new above-the-line $300 deduction for cash contributions to qualified charities in 2020. “Above-the-line” means the deduction reduces adjusted gross income (AGI). You can take this in addition to your standard deduction.

For larger donors, the CARES Act has eased the limitation on charitable deductions for cash contributions made to public charities in 2020, boosting it from 60% to 100% of AGI. There’s no requirement that your contributions be related to COVID-19.

Careful steps

To be able to claim a donation deduction, whatever the size, you need to ensure you’re giving to a qualified charity. You can check a charity’s eligibility to receive tax-deductible contributions by visiting the IRS’s Tax-Exempt Organization Search.

If you’re making a large gift, it’s a good idea to do additional research on the charities you’re considering so you can make sure they use their funds efficiently and effectively. The IRS tool provides access to detailed financial information about charitable organizations, such as Form 990 information returns and IRS determination letters.

Even if a charity is financially sound when you make a gift, there’s no guarantee it won’t suffer financial distress, file for bankruptcy protection or even cease operations down the road. The last thing you likely want is for a charity to use your gifts to pay off its creditors or for a purpose unrelated to the mission that inspired you to give in the first place.

One way to manage these risks is to restrict the use of your gift. For example, you might limit the use to assisting a specific constituency or funding medical research. These restrictions can be documented in a written gift or endowment fund agreement.

Generous impact

Indeed, charitable giving is more important than ever. Contact our firm for help allocating funds for a donation and understanding the tax impact of your generosity.

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   

WHAT LEVEL OF HOME INSURANCE SHOULD I BUY?

Posted by Admin Posted on Mar 18 2021

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Make sure that you are insured against whatever natural disasters are common in your area, because insurance against these differs. If you don't specifically ask, you may not be covered.

Be sure to insure for 100% of rebuilding costs. The price of rebuilding your home could differ greatly from the amount that your home is valued at today.

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

-WHAT CAN I DO TO ENSURE THAT I AM INSURED ADEQUATELY?

Posted by Admin Posted on Mar 10 2021

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Make a list of your possessions in your household. The better documented this is the more likely you will be to be able to replace them.

Make sure that you inform your agents of any changes that you make to the home so that if anything happens to the structure, the recent changes will be reflected in the payout.

Check to see if there are any specific limits to what is insured by your company. Sometimes a person may think they are covered for certain things, but the limits negate that.

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  

WHY SHOULD I HAVE LIFE INSURANCE? DO I REALLY NEED IT?

Posted by Admin Posted on Mar 10 2021

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The main reason that people purchase life insurance is to know that in the event of their passing, their children and loved ones will be taken care of. Life insurance can also help with the distribution of your estate. Your payout could go to family, charity, or wherever you choose to distribute it.

The main reasons to buy life insurance would be because you have dependents that would be put in a tough position without you providing for them. For example, if you have a spouse, a child, or a parent who is dependent on your income, you should have life insurance.

If you have a spouse and young children, you will need more insurance than someone with older children, because they will be dependents for a longer amount of time than older children. If you are in a position where you and your spouse both earn for the family, then you should both be insured in proportion to the incomes that you garner.

If you have a spouse and older children or no children, you will still want to have life insurance, but you won't need the same level of insurance as in the first example, just enough to ensure that your spouse will be provided for, to cover your burial expenses, and to settle the debts that you have accumulated.

If you don't have children or a spouse, you will only need enough insurance to make sure that your burial expenses are covered, unless you would like to have an insurance policy in order to help in the distribution of your estate.

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

TAXPAYER BILL OF RIGHTS 6: THE RIGHT TO FINALITY

Posted by Admin Posted on Mar 02 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service (IRS). The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Finality.

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

What you can expect:

  • The IRS generally has three years from the date you file your return to assess any additional tax for that tax year. There are some limited exceptions to this rule. For example, if you fail to file a return or you file a false or fraudulent return, 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 from you. The IRS can’t extend this 10-year period unless you agree to extend the period as part of an installment agreement to pay your tax debt or the IRS obtains a court judgment. However, there are some situations where the IRS may suspend the ten-year collection period and resume it later. The IRS may be able to do this if there’s a period when the IRS cannot collect, such as times of bankruptcy or a collection due process proceeding.
  • If you believe you have overpaid your taxes, you can file a refund claim asking for the money back. Generally, you must file a refund claim within three years from the date you filed your original return, or two years from the date you paid the tax, whichever is later.
  • If the IRS sends you a notice proposing additional tax (statutory notice of deficiency), the notice must include the deadline for when you can file a petition with the Tax Court to challenge the amount proposed.
  • To timely challenge a statutory notice of deficiency in Tax Court, you must file your petition within 90 days of the date of the statutory notice (150 days if the taxpayer’s address on the notice is outside the United States or if the taxpayer is out of the country at the time the notice is mailed). If you do not timely file a petition, the IRS will assess the amount proposed in the statutory notice and you will receive a bill.
  • Generally, the IRS can only examine (audit) your tax return once for any given tax year. However, the IRS may reopen a previously examined return if the IRS finds it necessary. For example, if there is evidence of fraud, the IRS can reopen an exam.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages. 

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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      

TAXPAYER BILL OF RIGHTS 5: THE RIGHT TO APPEAL AN IRS DECISION IN AN INDEPENDENT FORUM

Posted by Admin Posted on Mar 02 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service (IRS). The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Appeal an IRS Decision in an Independent Forum.

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

What you can expect:

  • The IRS Commissioner must ensure that there is an independent IRS Office of Appeals. It’s an office that is separate from the IRS office that initially reviewed your case. Generally, Appeals will not discuss a case with the IRS to the extent that those communications appear to compromise the independence of Appeals.
  • Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree PDF, tells you how to appeal your tax case if you don’t agree with the IRS’s findings.
  • If the IRS has sent you a statutory notice of deficiency, which is a notice proposing additional tax, and you timely file a petition with the United States Tax Court, you may dispute the proposed adjustment in tax court before you have to pay the tax. For more information about the United States Tax Court, see the Court’s taxpayer information page.
  • Generally, if you fully paid the tax and the IRS denies your tax refund claim, or if the IRS takes no action on the claim within six months, then you may file a refund suit. You can file a suit in a United States District Court or the United States Court of Federal Claims. However, you generally have only two years to file a refund suit from the date the IRS mails you a notice that denies your claim.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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      

TAXPAYER BILL OF RIGHTS 7: THE RIGHT TO PRIVACY

Posted by Admin Posted on Mar 02 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service (IRS). The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Privacy.

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, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

What you can expect:

  • There are limits on the amount of wages that the IRS can levy (seize) to collect tax that you owe. A portion of your wages are protected from levy. The protected amount is the equivalent to the standard deduction, plus any deductions for personal exemptions.
  • The IRS can’t seize certain personal items, such as necessary schoolbooks, clothing, undelivered mail and certain amounts of furniture and household items. The IRS also can’t seize your primary home without court approval. It also must show there is no reasonable, alternative way to collect the tax debt from you.
  • If you submit an offer to settle your tax debt, and the offer relates only to how much you owe (known as a Doubt as to Liability Offer in Compromise), you do not need to submit any financial documentation.
  • The IRS should not seek intrusive and extraneous information about your lifestyle during an audit if there is no reasonable sign that you have unreported income.
  • During a Collection Due Process hearing, the Office of Appeals must consider whether the IRS’s proposed collection action balances the need for efficient tax collection with ensuring the IRS’s collection actions are no more intrusive to you than necessary.
  • More information about the IRS Privacy Policy is available online.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages. 

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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  

PPP Loans: What 2020 Borrowers Need to Know in 2021

Posted by Admin Posted on Mar 02 2021

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Almost a year ago, the Paycheck Protection Program (PPP) was launched in response to the COVID-19 crisis. If your company took out such a loan, you’re likely curious about the tax consequences — particularly for loans that have been forgiven — and also about the launch of “second-draw” PPP loans.

Forgiveness criteria

An eligible recipient may have a PPP loan forgiven in an amount equal to the sum of various costs incurred and payments made during the covered period. These include payroll costs, interest (but not principal) payments on any covered mortgage obligation (for mortgages in place before February 15, 2020), payments for any covered rent obligation (for leases that began before February 15, 2020), and covered utility payments (for utilities that were turned on before February 15, 2020). Also eligible are covered operations expenditures, property damage costs, supplier costs and worker protection expenses.

Your covered period would normally have been the 24-week period beginning on the date you took out the loan (ending no later than December 31, 2020, if that was before the expiration of the 24-week period). If you received a PPP loan before June 5, 2020, you could elect a shorter 8-week covered period. If you didn’t elect the 8-week period and instead used the longer 24-week period, you had to maintain payroll levels for the full 24 weeks to be eligible for loan forgiveness. If you didn't make an election, the 24-week period applies.

An eligible recipient seeking forgiveness of indebtedness on a covered loan must verify that the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage obligation, make payments on a covered lease obligation or make covered utility payments.

Cancellation and deductibility

The reduction or cancellation of indebtedness generally results in cancellation of debt income to the debtor. However, the forgiveness of PPP debt is excluded from gross income. Your tax attributes (net operating losses, credits, capital and passive activity loss carryovers, and basis) won’t generally be reduced on account of this exclusion.

The CARES Act was silent on whether expenses paid with the proceeds of PPP loans could be deducted. The IRS took the position that these expenses were not deductible. However, under the Consolidated Appropriations Act (CAA), enacted at the end of 2020, expenses paid from the proceeds of PPP loans are deductible.

“Second-draw” PPP loans

Under the CAA, eligible businesses may be able take out so-called “second-draw” PPP loans. These loans are primarily intended for beleaguered small businesses with 300 or fewer employees that have used up, or will soon use up, the proceeds from initial PPP loans. The maximum second-draw loan amount is $2 million, and only one such loan can be taken out.

To qualify for a second-draw loan, a business must demonstrate at least a 25% decline in gross receipts in any quarter of 2020 as compared to the corresponding quarter in 2019. Qualifying businesses can generally borrow up to 2.5 times their average monthly payroll costs for either the one-year period before the date on which the loan is made or calendar year 2019. The application deadline is March 31, 2021.

Any questions?

A PPP loan may complicate your company’s 2020 income tax filing, but a second draw could provide a much-needed influx of cash. Please contact us with any questions you might have.

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             

TAXPAYER BILL OF RIGHTS 4: THE RIGHT TO CHALLENGE THE IRS’S POSITION AND BE HEARD

Posted by Admin Posted on Mar 02 2021

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The Taxpayer Bill of Rights is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service. The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.
 
It includes The Right to Challenge the IRS’s Position and Be Heard.

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

What you can expect:

  • If the IRS notifies you that your tax return has a math or clerical error, you have 60 days to tell the IRS that you disagree. You should provide photocopies of any records that may help correct the error. In addition, you may call the number listed on your notice or bill for help. If the IRS agrees with your position, we will make the necessary adjustment to your account and send you a corrected notice.
  • If the IRS does not adopt your position, it will send a notice proposing a tax adjustment (known as a statutory notice of deficiency). The statutory notice of deficiency gives you the right to challenge the proposed adjustment in the United States Tax Court before paying it. To do this, you need to file a petition within 90 days of the date of the notice (150 days if the notice is addressed to you outside the United States). For more information about the United States Tax Court, see the Court’s taxpayer information page.
  • If you submit documentation or raise objections during a return examination (or audit), and the IRS does not agree with your position, it will issue you a statutory notice of deficiency. This notice will explain why the IRS is increasing your tax, which gives you the right to petition the U.S. Tax Court prior to paying the tax.
  • When the IRS notifies you of plans to levy your bank account or other property, you’ll generally have an opportunity to request a hearing before the Office of Appeals. Also, you’ll generally have an opportunity to appeal the proposed or actual filing of a notice of federal tax lien.

To find out more about the TBOR and what it means to you, visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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

Why the Child Tax Credit is so Valuable

Posted by Admin Posted on Feb 25 2021

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If you’re a parent, or soon will be, you’re no doubt aware of how expensive it is to pay for food, clothes, activities and education. Fortunately, the federal child tax credit is available to help many taxpayers with children under the age of 17, and there’s a dependent credit for those who are eligible with older children.

An expanded break

Before the Tax Cuts and Jobs Act (TCJA) kicked in, the child tax credit was $1,000 per qualifying child. But it was reduced for eligible married couples filing jointly by $50 for every $1,000 (or part of $1,000) by which their adjusted gross income (AGI) exceeded $110,000 ($75,000 for unmarried taxpayers).

Starting with the 2018 tax year, and applying through the 2025 tax year, the TCJA doubled the child tax credit to $2,000 per qualifying child under 17. It also created a $500 credit per dependent who isn’t a qualifying child under 17. There’s no age limit for the $500 credit, but IRS tests for dependency must be met.

The TCJA also substantially increased the thresholds at which the credit begins to phase out. Starting with the 2018 tax year, the total credit amount allowed to a married couple filing jointly is reduced by $50 for every $1,000 (or part of a $1,000) by which their AGI exceeds $400,000. The threshold is $200,000 for other taxpayers. So, many taxpayers who were once ineligible for the credit because their AGI was too high are now eligible to claim it.

SSN requirement

In order to claim the child tax credit for a qualifying child, you must include the child’s Social Security number (SSN) on your tax return. Under previous law, you could instead use an individual taxpayer identification number (ITIN) or adoption taxpayer identification number (ATIN).

If a qualifying child doesn’t have an SSN, you won’t be able to claim the $2,000 credit. However, you can claim the $500 dependent credit for that child using an ITIN or an ATIN. The SSN requirement doesn’t apply for non-qualifying-child dependents but, if there’s no SSN, you must provide an ITIN or ATIN for each dependent for whom you’re claiming a $500 credit.

Don’t miss out

The changes made by the TCJA generally increase the value of these credits and widen their availability to more taxpayers. Please contact us for further information or ask about it when we prepare 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

TAXABLE VS. TAX-ADVANTAGED: WHERE TO HOLD INVESTMENTS

Posted by Admin Posted on Feb 24 2021

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When investing for retirement or other long-term goals, people usually prefer tax-advantaged accounts, such as IRAs, 401(k)s or 403(b)s. Certain assets are well suited to these accounts, but it may make more sense to hold other investments in traditional taxable accounts.

Know the rules

Some investments, such as fast-growing stocks, can generate substantial capital gains, which may occur when you sell a security for more than you paid for it.

If you’ve owned that position for over a year, you face long-term gains, taxed at a maximum rate of 20%. In contrast, short-term gains, assessed on holding periods of a year or less, are taxed at your ordinary-income tax rate — maxing out at 37%. (Note: These rates don’t account for the possibility of the 3.8% net investment income tax.)

Choose tax efficiency

Generally, the more tax efficient an investment, the more benefit you’ll get from owning it in a taxable account. Conversely, investments that lack tax efficiency normally are best suited to tax-advantaged vehicles.

Consider municipal bonds (“munis”), either held individually or through mutual funds. Munis are attractive to tax-sensitive investors because their income is exempt from federal income taxes and sometimes state and local income taxes. Because you don’t get a double benefit when you own an already tax-advantaged security in a tax-advantaged account, holding munis in your 401(k) or IRA would result in a lost opportunity.

Similarly, tax-efficient investments such as passively managed index mutual funds or exchange-traded funds, or long-term stock holdings, are generally appropriate for taxable accounts. These securities are more likely to generate long-term capital gains, which have more favorable tax treatment. Securities that generate more of their total return via capital appreciation or that pay qualified dividends are also better taxable account options.

Take advantage of income

What investments work best for tax-advantaged accounts? Taxable investments that tend to produce much of their return in income. This category includes corporate bonds, especially high-yield bonds, as well as real estate investment trusts (REITs), which are required to pass through most of their earnings as shareholder income. Most REIT dividends are nonqualified and therefore taxed at your ordinary-income rate.

Another tax-advantaged-appropriate investment may be an actively managed mutual fund. Funds with significant turnover — meaning their portfolio managers are actively buying and selling securities — have increased potential to generate short-term gains that ultimately get passed through to you. Because short-term gains are taxed at a higher rate than long-term gains, these funds would be less desirable in a taxable account.

Get specific advice

The above concepts are only general suggestions. Please contact our firm for specific advice on what may be best for you.

Sidebar: Doing due diligence on dividends

If you own a lot of income-generating investments, you’ll need to pay attention to the tax rules for dividends, which belong to one of two categories:

  • Qualified. These dividends are paid by U.S. corporations or qualified foreign corporations. Qualified dividends are, like long-term gains, subject to a maximum tax rate of 20%, though many people are eligible for a 15% rate. (Note: These rates don’t account for the possibility of the 3.8% net investment income tax.)
  • Nonqualified. These dividends — which include most distributions from real estate investment trusts and master limited partnerships — receive a less favorable tax treatment. Like short-term gains, nonqualified dividends are taxed at your ordinary-income tax rate.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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: Claiming the Health Care Premium Tax Credit

Posted by Admin Posted on Feb 24 2021

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The Premium Tax Credit (PTC) makes health insurance more affordable by helping eligible individuals and their families pay premiums for coverage purchased through the Health Insurance Marketplace (also referred to as the Marketplace or Exchange).

There are two ways to get the credit:

  • If you qualify for advance payments of the premium tax credit (APTC), you can choose to have all or some of the advance payments paid directly to the insurance provider to help cover your monthly premiums.
  • You can choose to receive the entire benefit when you claim the PTC on your tax return.

However, whether you chose to get advanced payments or claim the credit on the tax return, you must file a federal income tax return, even if otherwise not required to file, and include a completed Form 8962, Premium Tax Credit. If you do not include this form when filing, the IRS will stop processing your tax return and request it from you.

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: How to Address Unemployment Compensation Related Identity Theft

Posted by Admin Posted on Feb 24 2021

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During 2020, millions of taxpayers were impacted by the COVID-19 pandemic through job loss or reduced work hours. Some taxpayers who faced unemployment or reduced work hours applied for and received unemployment compensation from their state. States issue 1099-G, Certain Government Payments to you and to the IRS to report taxable income, including unemployment compensation.

However, identity thieves took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves, while the victims whose names and personal information were taken, did not receive any of the payments. However, the victims may receive a Form 1099-G saying that amount was paid to them anyway.

Here’s how you may find out if your information was used for false claims:

  • Receive a Form 1099-G for unemployment benefits that you did not receive.

If you receive a Form 1099-G for an amount you did not receive, contact the issuing state agency to request a revised Form 1099-G showing you did not receive these benefits. The state agency should send a corrected Form 1099-G reporting $0 in box 1 (zero benefits paid) to you (the identity theft victim) and then they will file a copy with the IRS as soon as possible after the error is discovered.

Act quickly if this is an identity theft situation. If you are unable to obtain a timely, corrected form from your state agency, you should still file an accurate tax return, reporting only the income you received. However, you may still get a notification from the IRS as your tax return is processed. See below for more information.

  • Receive a notification from the IRS, after filing a tax return.

You may receive some type of notification (e.g., letter) indicating:

  • that someone else used your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN), or
  • that IRS income records – income from unemployment or income from an employer you did not work for – do not match what you reported to the IRS.

Both types of instances involve identity theft and can happen whether you file electronically or on paper. Different methods of communication are used by the IRS to notify you for each 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: TAS      

-DOES MY CAR AFFECT MY INSURANCE RATE?

Posted by Admin Posted on Feb 24 2021

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It is a good idea to check the insurance rates that are given to certain cars before you buy them. Usually as the cost of the car rises, so does the insurance premium. The insurance rates on used cars are generally substantially lower than those of new cars.

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 time is seasonal, but the Taxpayer Bill of Rights applies all year

Posted by Admin Posted on Feb 01 2021

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All taxpayers have fundamental rights when they’re interacting with the IRS. These rights apply all year long, not just during tax season. The Taxpayer Bill of Rights presents these rights in 10 categories.

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

Taxpayer Bill of Rights 1: The Right to Be Informed

Posted by Admin Posted on Jan 29 2021

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The Taxpayer Bill of Rights is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service. The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Be Informed.

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

What you can expect:

  • Certain notices must include the amount (if any) of the tax, interest, and certain penalties you owe. It must explain why you owe these amounts.
  • When the IRS fully or partially disallows your claim for a refund, it must explain the specific reasons why.
  • Help with Understanding Your IRS Notice or Letter is available online at IRS.gov.
  • If the IRS proposes to assess tax against you, it must explain the process – from examination (audit) through collection – in its first letter. This letter should explain your options for a review by an independent Office of Appeals and how the Taxpayer Advocate Service may be able to help you.
  • If you enter a payment plan, known as an installment agreement, the IRS must send you an annual statement. This gives you a record of balances and payments.
  • You can access current and prior year IRS forms and publications at IRS.gov. You can also request order them by calling 800-829-3676.
  • IRS also uses several social media tools that provide helpful tax information to a broad audience. You can find IRS on Twitter, YouTube, LinkedIn and the IRS2Go free mobile app.

To find out more about the TBOR and what it means to you visit: https://www.taxpayeradvocate.irs.gov

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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

Taxpayer Bill of Rights 2: The Right to Quality Service

Posted by Admin Posted on Jan 29 2021

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The Taxpayer Bill of Rights is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service. The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Quality Service.

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

What you can expect:

  • You can find answers to most tax questions on IRS.gov. If you cannot find an answer to your tax issue on the IRS website or in published instructions, please contact the IRS for help. IRS representatives care about the quality of the service provided to you and are available to help. Here are some things to consider when contacting the IRS.
    • The IRS provides a contact phone number on the top right corner of the notice or letter.
    • IRS representatives should listen objectively and consider all relevant information.
    • They should answer questions promptly, accurately and thoroughly.
  • Generally, you can speak to an employee’s supervisor if you have a problem.
  • When collecting tax, the IRS should treat you with courtesy. Generally, the IRS should only contact you between 8 a.m. and 9 p.m. The IRS should not contact you at your place of employment if the IRS knows or has reason to know that your employer does not allow such contacts. Be mindful of tax scams. Remember, the IRS does not make aggressive phone calls that threaten arrest or prison.
  • The IRS must include information about your right to get help from the Taxpayer Advocate Service in all statutory notices of deficiency. It should tell you how to contact TAS.
  • If you are eligible for Low Income Taxpayer Clinic (LITC) assistance, the IRS may provide information about your options for legal help.

To find out more about the TBOR and what it means to you visit https://www.taxpayeradvocate.irs.gov.

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages. 

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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 taxpayers need to know to claim the earned income tax credit

Posted by Admin Posted on Jan 29 2021

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The earned income tax credit can give qualifying workers with low-to-moderate income a substantial financial boost. In 2019, the average amount of this credit was $2,476. It not only reduces the amount of tax someone owes but may give them a refund even if they don't owe any taxes or aren't required to file a return. People must meet certain requirements and file a federal tax return in order to receive this credit.

EITC eligibility

  • A taxpayer's eligibility for the credit may change from year to year, so it's a good idea for people to use the EITC Assistant to find out if they qualify.
     
  • Eligibility can be affected by major life changes such as:
    • a new job or loss of a job
    • unemployment benefits
    • a change in income
    • a change in marital status
    • the birth or death of a child
    • a change in a spouse's employment situation
       
  • Taxpayers qualify based on their income and the filing status they use on their tax return. The credit can be more if they have one or more children who live with them for more than half the year and meet other requirements.

New this tax season

There's a new rule to help people impacted by a job loss or change in income in 2020. taxpayers can use their2019 earned income to figure your EITC, if their 2019 earned income was more than their 2020 earned income. The same is true for the additional child tax credit. For details, see the instructions for Form 1040 PDF.

2020 Maximum credit amounts allowed

The maximum credit amounts are based on whether the taxpayer can claim a child for the credit and the number of children claimed:

  • Zero children: $538
  • One child: $3,584
  • Two children: $5,920
  • Three or more children: $6,660

2020 income limits

Those who are working and earn less than these amounts may qualify for the EITC:

Married filing jointly:

  • Zero children: $21,710
  • One child: $47,646
  • Two children: $53,330
  • Three or more children: $56,844

Head of household and single:

  • Zero children: $15,820
  • One child: $41,756
  • Two children: $47,440
  • Three or more children: $50,954

Taxpayers who are married filing separately can't claim EITC.

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

Taxpayer Bill of Rights 3: The Right to Pay No More Than the Correct Amount of Tax

Posted by Admin Posted on Jan 29 2021

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The Taxpayer Bill of Rights (TBOR) is a cornerstone document that highlights the 10 fundamental rights taxpayers have when dealing with the Internal Revenue Service. The IRS wants every taxpayer to be aware of these rights in the event they need to work with the IRS on a personal tax matter. The IRS continues to publicly highlight these rights to taxpayers. The IRS also regularly reminds its employees about these rights. The IRS expects employees to understand and apply taxpayer rights throughout every encounter with taxpayers.

IRS Publication 1, Your Rights as a Taxpayer, includes a full list of taxpayers’ rights.

It includes The Right to Pay No More Than the Correct Amount of Tax.

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

What you can expect:

  • If you believe you have overpaid your taxes, you can file for a refund; however, there are specific time frames in which you must file your claim. For more information, see Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.
  • If you receive an IRS notice or bill and believe there is an error on it, write to the IRS office that sent it to you within the time frame given. You should provide photocopies of any records that may help correct the error. Also, you may call the number listed on your notice or bill for help. If you are correct, the IRS will make the necessary adjustment to your account and send you a corrected notice.
  • If you discover an error after you file your return, you may need to amend your return. You should file an amended return if there is an error or change in your filing status, income, deductions or credits. However, the IRS may automatically correct math errors on a return, and may accept returns with certain forms or schedules left out. In these cases, you do not need to amend your return. If you disagree with an adjustment the IRS made, you must request within 60 days that the IRS reverse the change. This timeline preserves your right to challenge the proposed adjustment in court, if needed, before paying it. 
  • You may request that any amount owed be removed if it exceeds the correct amount due under the law, if the IRS has assessed it after the period allowed by law, or if the assessment was done in error or violation of the law.
  • You may request that the IRS remove any interest from your account if the IRS caused unreasonable errors or delays. For example, if the IRS delays issuing a statutory notice of deficiency because the assigned IRS employee was away for several months attending training, and interest accrues during this time, the IRS may abate the interest related to the delay.
  • You can submit an offer in compromise, asking the IRS to accept less than the full amount of your tax debt, if you believe you don’t owe all or part of the debt. Use Form 656-L, Offer in Compromise PDF.

If you enter a payment plan, known as an installment agreement, the IRS must send you an annual statement. The statement provides balances and a record of payments.

To find out more about the TBOR and what it means to you visit: https://www.taxpayeradvocate.irs.gov.

The IRS offers Publication 1, Your Rights as a Taxpayer, in several languages

By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. The IRS has more tax information in other languages too. See the “Languages” menu at the top of any IRS.gov page.

The IRS also is committed to protecting taxpayers’ civil rights. The IRS will not tolerate discrimination based on age, color, disability, race, reprisal, national origin, English proficiency, religion, sex, sexual orientation or status as a parent. This includes any contact with IRS employees and the staff or volunteers at community sites.

If a taxpayer faces discrimination, they can send a written complaint PDF to the IRS Civil Rights Division.

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

Get a federal tax refund faster with direct deposit

Posted by Admin Posted on Jan 29 2021

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The Internal Revenue Service reminds taxpayers that the fastest way to get their tax refund is by filing electronically and choosing direct deposit.

Direct deposit is free, fast, simple, safe and secure. Taxpayers can even split their refund to have it deposited into one, two or three different accounts.

Eight out of 10 taxpayers get their refunds by using direct deposit. The IRS uses the same electronic transfer system to deposit tax refunds that is used by other federal agencies to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.

Direct deposit also avoids the possibility that a refund check could be lost or stolen or returned to the IRS as undeliverable. And it saves taxpayer money. It costs more than $1 for every paper refund issued, but only a dime for each direct deposit.

Easy to use

A taxpayer simply selects direct deposit as the refund method when using tax software or working with a tax preparer, and either they or their tax preparer type in their account and routing number. It's important to double check entries to avoid errors.

The IRS reminds taxpayers they should only deposit refunds directly into U.S. affiliated accounts that are in their name, their spouse's name or both if it's a joint account. Many people do not use checks and may find their routing and account numbers on their online bank account or mobile app.

Taxpayers may have a refund applied to their prepaid debit card. Many reloadable prepaid cards have account and routing numbers that could be provided to the IRS. But check with the financial institution to make sure the card can be used and verify the routing number and account number, which may be different from the card number.

There are mobile apps that may allow for direct deposit of tax refunds. They must have routing and account numbers associated with them that can be entered on a tax return. Check with the mobile app provider to confirm what numbers to use.

Have the bank routing and account number when having taxes prepared. The IRS does not have the ability to accept this information after a return is filed.

Don't have a bank account?

Visit the FDIC website for information on where to find a bank that can open an account online and how to choose the right account. Veterans can use the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks. Tax return preparers may also offer electronic payment options.

Split refunds

By using direct deposit, a taxpayer can split their refund into up to three financial accounts, including a bank or Individual Retirement Account. Part of the refund can even be used to purchase up to $5,000 in U.S. Series I Savings Bonds.

A taxpayer can split their refund by using tax software or by using Form 8888, Allocation of Refund PDF (including Savings Bond Purchases), if they file a paper return. Some people use split refunds as a convenient option for managing their money, sending some of their refund to an account for immediate use and some for future savings.

No more than three electronic tax refunds can be deposited into a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund will be issued for the refunds exceeding that limit.

Combining Electronic Filing plus direct deposit yields fastest refunds

The safest and most accurate way to file a tax return is to file electronically. Many people may be eligible to file electronically for free. Most refunds are issued in less than 21 days, but some returns may take longer. Taxpayers can track their refund using Where's My Refund? on IRS.gov or by downloading the IRS2Go mobile app.

Where's My Refund? is updated once daily, usually overnight, so there's no reason to check more than once per day or call the IRS to get information about a refund. Taxpayers can check Where's My Refund? within 24 hours after the IRS has received their e-filed return or four weeks after mailing a paper return. Where's My Refund? has a tracker that displays progress through three stages:

1.   Return Received,

2.   Refund Approved, and 

3.   Refund Sent.

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                 

Did You Know That Unemployment Compensation Is Taxable and Could Impact a Taxpayer’s Earned Income Tax Credit (EITC)?

Posted by Admin Posted on Jan 27 2021

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In January of 2021, a record high number of taxpayers will receive a Form 1099-G, Certain Government Payments, indicating the amount of unemployment compensation (UC) paid to them during 2020 that must be reported on their 2020 federal income tax return. 2020 has been a difficult year, particularly for those experiencing unemployment. Taxpayers who received UC, including any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, may be unaware that generally, unemployment benefits are included in gross income, like a regular paycheck, and can be taxed. For taxpayers expecting to receive the EITC, it’s important to remember that UC can reduce the amount of EITC, even to zero.

Taxability of UC: UC is not subject to certain payroll taxes, for example, Social Security and Medicare taxes, and withholding is not required. However, taxpayers may still have to pay federal and state income taxes on that income.  The federal income tax treatment of UC depends on the type of program paying the benefits. The IRS provides a tool to help taxpayers determine if payments received for being unemployed are taxable.

The amount of UC shown in box 1 on the Form 1099-G is taxable and must be reported on a federal income tax return for the tax year it was received. UC generally includes any amount received under an unemployment compensation law of the United States or of a state. For example, it includes benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund, state unemployment insurance benefits, railroad unemployment compensation benefits, disability payments from a government program paid as a substitute for unemployment compensation, unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974, etc.  For more information, see IRS Publication 525, Taxable and Nontaxable Income.

Taxpayers should also consider potential state tax requirements, because UC may be taxable in some states. With over 65 million initial jobless claims filed during 2020, many taxpayers will be reporting UC on their tax returns for the first time.

Increased UC under the CARES Act: The CARES Act, signed into law on March 27, 2020, just as U.S. unemployment reached a record high of 14.7 percent in April, increased UC for many unemployed taxpayers and further expanded benefits to certain categories of workers not ordinarily eligible to receive these benefits, such as self-employed workers and independent contractors. The Department of Labor reported that during the week ending November 21, 2020, 33 states were still offering extended benefits to unemployed workers.

UC Impact on EITC: In addition to reporting UC on their income tax returns for the first time, taxpayers may receive a significantly lower EITC because their 2020 earned income was less than expected. The amount of EITC fluctuates based on the taxpayer’s earned income and adjusted gross income. The EITC is a complex area of law and most low income taxpayers require specialized assistance in order to claim the credit successfully. The IRS provides a helpful tool to help taxpayers determine eligibility for the EITC and an estimated credit amount. However, not all taxpayers can avail themselves of the tool — a 2018 Taxpayer Advocate Service (TAS) study found that more than 11 percent of low income taxpayers and over 28 percent of seniors never use the internet.

Taxpayers living paycheck to paycheck or from one unemployment check to the next may be anticipating the EITC based on last year’s earned income. However, earned income does not include amounts received as UC. Thus, a taxpayer receiving UC may report less earned income for the purpose of computing the EITC, resulting in a reduction or elimination of the credit. In addition, taxpayers who did not opt for voluntary withholding may see reduced refunds or have a tax due as a result.

To address the negative tax consequences of UC not constituting earned income, I am recommending that Congress allow UC to be included as qualifying income in computing the EITC during national disasters. This legislative recommendation has special meaning in the year of the coronavirus pandemic, with so many jobless taxpayers reliant on UC as a primary source of income. The recommendation will be included in the 2021 Purple Book issued in conjunction with my 2020 Annual Report to Congress.

Collection Alternatives: Some taxpayers may be reluctant to file balance due tax returns if they are unable to pay the tax by the due date. Taxpayers who owe tax and fail to file and pay on time will most likely owe interest and penalties on the tax they pay late. Two penalties may apply – for filing late and for paying late.  Interest accrues on top of penalties. The penalty for late filing can be as much as five percent of the unpaid taxes each month up to a maximum of 25 percent, while the penalty for late payment is generally 0.5 percent of the taxpayer’s unpaid taxes per month up to a maximum of 25 percent of unpaid taxes. If both penalties apply, the maximum amount charged for the two penalties is five percent per month. Taxpayers can avoid incurring the failure-to-file-penalty by timely filing their return. Where taxpayers have a balance due on their returns and are unable to pay that balance in full, the IRS offers collection alternatives, such as installment agreements and offers in compromise. Some taxpayers may qualify to be placed in currently not collectible status.  During 2020, the IRS expanded collection alternatives for individuals experiencing COVID-19-related financial difficulties. The IRS website contains information on these alternatives. Eligible taxpayers may contact a Low Income Taxpayer Clinic (LITC) for assistance with understanding their filing obligations and collection alternatives.

Communication with Taxpayers: Millions of taxpayers will receive Form 1099-G for the first time and may not appreciate the effect UC will have on their tax returns, including the amount of the EITC. Taxpayers may receive the form in the mail or may receive instructions to retrieve an electronic version of Form 1099-G from their state’s website. We encourage the IRS to continue educating taxpayers about the taxability of UC. In addition to posting information on IRS.gov, I recommend the IRS engage stakeholders, such as Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) partners, and community organizations to spread the word to potential EITC recipients that the amount of their 2020 credit may be less than they are expecting. TAS will also collaborate with the IRS on including UC information in its EITC outreach materials at the beginning of the filing season.

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

Follow these tips to help prevent common tax return filing issues and refund delays

Posted by Admin Posted on Jan 27 2021

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Ready to file your tax return? Stop and check out these tax tips before you file to avoid delays and pass “go” with confidence.

Use your Form W-2, not your pay stub, to verify your income. Your employer generally has until February 1 to issue your Form W-2, and you should wait to receive it before you file. In case you didn’t know, IRS computer systems compare the income that is reported on your tax return to what has been reported to IRS. When income and/or federal income tax withholding don’t match, this can cause a delay in the processing of the return and any refund.

Double check that your information is correct for yourself and your dependents. Check name spellings, taxpayer identification numbers, dates of birth, addresses, and your bank account information for accuracy. Be aware that you must have valid Social Security numbers for all your dependents before filing or that may not only delay processing of your tax return, but in certain instances disqualify you for some refundable credits, like the Earned Income Tax Credit.

Don’t forget your W-2s, 1099s, and other attachments. This includes Form 8962 if you are claiming the Premium Tax Credit and Form 1099-G if you received unemployment benefits. Any income document that shows federal income tax was withheld must be attached to your return, if you are filing by paper. If you are filing electronically, follow the software provider’s instructions. If you are unable to obtain your W-2 (or other information returns like Form 1099, K-1, etc.) from your employer, because they closed, you can call the IRS for assistance at 1-800-829-1040, but you must wait until after February 1.

In January, some people who received unemployment benefits in 2020 will get a Form 1099-G, Certain Government Payments, from the agency paying the benefits. The agency will either automatically send a hard copy or, if the agency does not mail the form, recipients will need to visit the agency’s website to get an electronic version of the form.

Also, taxpayers who received a federal tax refund in 2020 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns. In January 2021, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.

You need a Form 1098-T from an eligible educational institution to claim education expenses. Eligible educational institutions have until January 31, to provide this form on paper or electronically to students. If not received by January 31, you’ll need to contact the Institution.

Be aware of tax software that imports prior year data automatically. If you are using the same software as the prior year, you’ll want to check that only the current year information is present, and that prior year data didn’t transfer over which may cause an error. So, double check your figures before hitting submit.

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 issues standard mileage rates for 2021

Posted by Admin Posted on Jan 27 2021

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The Internal Revenue Service issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
  • 16 cents per mile driven for medical, or moving purposes for qualified active duty members of the Armed Forces, down 1 cent from the rate for 2020, and
  • 14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 2021-02 PDF, contains the optional 2021 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2021 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

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

¿Sabía que la compensación por desempleo es tributable y podría afectar el Crédito tributario por ingreso del trabajo (EITC, por sus siglas en inglés) de un contribuyente?

Posted by Admin Posted on Jan 27 2021

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En enero de 2021, un número récord de contribuyentes recibirá un Formulario 1099-G, Certain Government Payment (Ciertos pagos del gobierno, en inglés), indicando la cantidad de compensación por desempleo (UC, por sus siglas en inglés) que se les pagó durante 2020 y que deben declarar en su declaración del impuesto federal sobre los ingresos de 2020. El año 2020 ha sido un año  difícil, sobre todo para aquellas personas que experimentan el desempleo. Los contribuyentes que recibieron la UC, incluso cualquier parte de la compensación especial por desempleo autorizada según la Ley de Ayuda, Alivio y Seguridad Económica por el Coronavirus (CARES, por sus siglas en inglés), pueden no saber que, por lo general, los beneficios por el desempleo se incluyen en los ingresos brutos como un cheque de pago normal y pueden estar sujetos a impuestos. Para los contribuyentes que esperan recibir el EITC, es importante recordar que la UC  puede reducir la cantidad de EITC, incluso a cero.

Imponibilidad sobre la compensación por desempleo (UC): La UC no está sujeta a ciertos impuestos sobre la nómina, por ejemplo los impuestos al Seguro Social y al Medicare y no se requiere la retención de impuestos. Sin embargo, puede que los contribuyentes aún tengan que pagar impuestos federales y estatales sobre esos ingresos. El tratamiento del impuesto federal sobre los ingresos de la UC depende de la clase de programa que pague los beneficios. El IRS proporciona una herramienta (en inglés) para ayudar a los contribuyentes a determinar si los pagos recibidos por estar desempleados son tributables.

La cantidad de la UC que se muestra en la casilla 1 del Formulario 1099-G es tributable y debe declararse en una declaración del impuesto federal sobre los ingresos del año tributario en que se recibió. La UC generalmente incluye cualquier cantidad recibida conforme a una ley de compensación por desempleo de los Estados Unidos o de un estado. Por ejemplo, incluye los beneficios pagados por un estado o el Distrito de Columbia del Fondo de Fideicomiso Federal de Desempleo; los beneficios del seguro de desempleo estatal; los beneficios de compensación por el desempleo ferroviario; los  pagos por incapacidad de un programa gubernamental pagado como sustituto de la compensación por desempleo; asistencia por desempleo conforme a la Ley de Alivio por Desastres y Asistencia por Emergencias de 1974, etcétera. Para obtener más información consulte la Publicación 525 del IRS, Taxable and Nontaxable Income, en inglés (Ingresos tributables y no tributables).

Los contribuyentes deben también considerar los potenciales requisitos tributarios estatales, ya que la UC puede ser tributable en algunos estados. Con más de 65 millones (en inglés)  de reclamaciones iniciales de desempleo presentadas durante 2020, muchos contribuyentes por primera vez declararán la UC en sus declaraciones de impuestos.

 

Aumento de la UC conforme a la ley CARES: La Ley CARES, promulgada el 27 de marzo de 2020, así como el desempleo en los Estados Unidos llegó a una tasa récord de 14.7 por ciento en abril (en inglés), aumentó la UC para muchos contribuyentes desempleados y amplió aún más los beneficios  a ciertas categorías de trabajadores que normalmente no reúnen los requisitos para recibir estos beneficios, tales como los trabajadores por cuenta propia y los contratistas independientes. El Departamento de Trabajo informó que durante la semana que terminó el 21 de noviembre de 2020 (en inglés), 33 estados seguían ofreciendo beneficios ampliados a los trabajadores desempleados.

 

  1. Impacto de la UC en el EITC: Además de declarar por primera vez la UC en sus declaraciones de impuestos, los contribuyentes pueden recibir un EITC significativamente más bajo porque sus ingresos de trabajo en 2020 fueron menores de lo esperado. La cantidad del EITC fluctúa con base en el ingreso de trabajo y el ingreso bruto ajustado del contribuyente. El EITC es un área compleja de la ley (en inglés) y la mayoría de los contribuyentes con bajos niveles de ingresos requieren asistencia especializada para reclamar el crédito con éxito. El IRS proporciona una herramienta útil para ayudar a los contribuyentes a determinar la elegibilidad para el EITC y una cantidad estimada del crédito. Sin embargo, no todos los contribuyentes pueden aprovechar la herramienta — un estudio del Servicio del Defensor del Contribuyente (TAS) de 2018 (en inglés) encontró que más del 11 por ciento de los contribuyentes con bajos niveles de ingresos y más del 28 por ciento de las personas mayores de edad nunca utilizan internet.

Los contribuyentes que viven de cheque en cheque o de un cheque por desempleo al siguiente, pueden anticipar un EITC con base en los ingresos de trabajo del año pasado. Sin embargo, el ingreso de trabajo no incluye las cantidades recibidas como compensación por desempleo (en inglés). Por lo tanto, un contribuyente que reciba la UC puede declarar menos ingreso de trabajo para los propósitos de calcular el EITC, lo que resulta en una reducción o eliminación del crédito. Además, los contribuyentes que no eligieron la retención voluntaria pueden ver reembolsos reducidos o adeudar un impuesto (en inglés) como resultado.

Para abordar las consecuencias tributarias negativas de que la UC no constituya ingreso de trabajo, recomiendo que el Congreso permita que la UC se incluya como ingresos calificados en el cálculo del EITC durante desastres nacionales. Esta recomendación legislativa tiene un significado especial en el año de la pandemia del coronavirus, con tantos contribuyentes desempleados que dependen de la UC como fuente primaria de ingresos. La recomendación se incluirá en el Libro Morado de 2021, emitido conjuntamente con mi Informe Anual al Congreso de 2020.

Alternativas de cobro: Algunos contribuyentes pueden estar reacios a presentar declaraciones de impuestos con saldos adeudados si no pueden pagar los impuestos para la fecha de vencimiento. Los contribuyentes que adeudan impuestos y que no presenten y paguen oportunamente probablemente adeudarán intereses y multas sobre el impuesto que pagan tardío. Hay dos multas que pueden corresponder – por presentar tardío y por pagar tardío. Los intereses se acumulan sobre ambas multas. La multa por la presentación tardía puede ser hasta el cinco por ciento de los impuestos no pagados cada mes hasta un máximo del 25 por ciento, mientras que la multa por el pago tardío generalmente es el 0.5 por ciento de los impuestos no pagados del contribuyente por mes hasta un máximo de 25 por ciento de los impuestos no pagados. Si se aplican ambas multas, la cantidad máxima que se cobra por las dos multas es del cinco por ciento al mes. Los contribuyentes pueden evitar incurrir en la multa por no presentar mediante la presentación oportuna de sus declaraciones. Cuando los contribuyentes tienen un saldo adeudado en sus declaraciones y no pueden pagar ese saldo en su totalidad, el IRS ofrece alternativas de cobro, tales como los planes de pagos a plazos y los ofrecimientos de transacción. Algunos contribuyentes pueden calificar para ser colocados en el estado de “cuenta no cobrable actualmente”. Durante 2020, el IRS amplió las alternativas de cobro para las personas que experimentan dificultades financieras relacionadas con la COVID-19. La página web del IRS, en inglés, contiene información sobre estas alternativas. Los contribuyentes elegibles pueden comunicarse con una Clínica para contribuyentes con bajos niveles de ingresos (LITC) (en inglés) para obtener ayuda para entender sus obligaciones de presentación y las alternativas de cobro.

Comunicación con los contribuyentes: Millones de contribuyentes recibirán por primera vez el Formulario 1099-G y puede que no comprendan el efecto que la UC tendrá en sus declaraciones de impuestos, incluso la cantidad del EITC. Los contribuyentes pueden recibir el formulario por correo o pueden recibir instrucciones para recuperar una versión electrónica del Formulario 1099-G del sitio web de su estado. Animamos al IRS a continuar educando a los contribuyentes sobre la imponibilidad de la UC. Además de publicar información en IRS.gov/español, recomiendo que el IRS involucre a las partes interesadas, tales como los socios de la Asistencia tributaria por voluntarios (VITA, por sus siglas en inglés) y de Asesoramiento tributario para los Ancianos (TCE, por sus siglas en inglés), y las organizaciones comunitarias para difundir a los posibles beneficiarios del EITC que  la cantidad de su crédito en 2020 puede ser menor de lo que esperan. El TAS también colaborará con el IRS en la inclusión de la información de la UC en sus materiales de divulgación del EITC al comienzo de la temporada de presentación de impuestos.

Asistencia en la preparación de la declaración de impuestos: Si los contribuyentes han recibido la UC durante 2020 y no están seguros de qué hacer, los programas de VITA y TCE proporcionan asistencia gratuita para la preparación de la declaración de impuestos a los contribuyentes  elegibles. Los VITA ofrecen preparación gratuita de las declaraciones de impuestos básicas a las personas que generalmente ganan $57,000 o menos, a las personas con discapacidades, y a las personas con dominio limitado del inglés, mientras que los TCE proporcionan asistencia para la preparación de impuestos a los contribuyentes mayores de 60 años de edad. Algunos sitios de los VITA y TCE ofrecerán ayuda virtual a los contribuyentes en lugar de ayuda en persona. Los contribuyentes también pueden acceder a la Alianza Free File (en inglés), que es una coalición sin fines de lucro de compañías de software tributario líderes en la industria, que colabora con el IRS para ayudar a los estadounidenses a preparar y presentar electrónicamente sus declaraciones de impuestos federales de forma rápida, segura y gratuita.

A medida que muchos contribuyentes siguen navegando por un futuro económico incierto en medio de la pandemia, el TAS está listo para ayudar y dirigir a los contribuyentes a los recursos que necesitan.

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: TAS      

REPORT YOUR VIRTUAL CURRENCY TRANSACTIONS.

Posted by Admin Posted on Jan 21 2021

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What is virtual currency?

Virtual currency is a digital representation of value other than a representation of the U.S. dollar or a foreign currency (“real currency”). Virtual currency is used as a unit of account, a store of value, or a medium of exchange. TAS wants to help you understand the tax treatment of virtual currency that can be converted into, or exchanged for, real currency.

Bitcoin is one example of a convertible virtual currency. Bitcoin is a cryptocurrency, which is a specific type of virtual currency that uses cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain. A transaction involving cryptocurrency that is recorded on a distributed ledger is referred to as an “on-chain” transaction. A transaction that is not recorded on the distributed ledger is referred to as an “off-chain” transaction, where individuals can engage directly with each other without necessarily using a trusted third party like a cryptocurrency exchange.

Why are virtual currency transactions taxable?

Income is generally taxable regardless of the source it comes from. As such, virtual currency transactions are taxable just like ‘traditional’ transactions involving money for goods or services, or an exchange of property for other property or services. Virtual currency is treated as property by the IRS and general tax principles that apply to property transactions apply if you sell, exchange, or otherwise transact using virtual currency.

How are virtual currency transactions taxed?

In general, individuals who transact with virtual currency, including buying and selling virtual currency or exchanging virtual currency, hold the virtual currency as a capital asset and the transactions result in capital gain or capital loss. Since virtual currency is considered property, the same general principles apply. However, virtual currency received as compensation for services is treated the same as wages and results in ordinary income to the recipient who then holds the virtual currency as a capital asset.

The following examples illustrate several common transactions involving virtual currency:

  • Sales: When you sell virtual currency, it is generally a capital asset and you must report the transaction along with any capital gain or loss on the sale.
    • Example: If Mary purchased 5 Bitcoins for $50,000 in April and sold all of her Bitcoins in July for $52,000, she would have short-term capital gain of $2,000 (the sales price less the purchase price). If Mary sold the Bitcoins for $48,000, she would have a short-term capital loss on the sale, that must be reported too, but it would be subject to any limitations on capital loss deductions.
  • Exchanges: If you exchange virtual currency held as a capital asset for services or other property, including goods or another virtual currency, you must report the transaction and any capital gain or loss resulting from the exchange.
    • Example: If Bill buys 5 Bitcoins for $50,000 in April and exchanges them for another virtual currency in June worth $40,000 at the date and time of the exchange, Bill would report a $10,000 short-term capital loss on the transaction. In this case, Bill would have to look at his other capital losses and could potentially be limited in how much he could deduct in the current year. Likewise, if the exchanged virtual currency was worth $60,000 instead of $40,000, Bill would report a $10,000 short-term capital gain on the transaction.
  • Earnings: When you receive property, including virtual currency, in exchange for performing services, whether or not you perform the services as an employee, you must report the earnings as ordinary income. Compensation for services are reported and taxed the same regardless of how the compensation is received (dollars, virtual currencies, property, or other services).If you receive virtual currency in return for providing services as an employee, it’s considered wages and is subject to Federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported by your employer on Form W-2, Wage and Tax Statement, like traditional wages paid in U.S. dollars. If you receive virtual currency in return for providing services and are not an employee of the payor, you are self-employed, and may be considered an independent contractor. Income from self-employment is often reported on Form 1099-MISC, Miscellaneous Income.
    • Example: If Deng receives $100,000 for providing services as an employee, he should report this as “wages” on his income tax return. If Deng is not an employee, the compensation is reported on Schedule 1 or Schedule C. Deng must report this income on his income tax return regardless of whether he receives a W-2, 1099-MISC, or other information return.
  • Hard forks: A hard fork occurs when a cryptocurrency undergoes a protocol change resulting in a permanent diversion from the legacy distributed ledger. This may result in the creation of a new cryptocurrency in addition to the legacy cryptocurrency. If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency you don’t have taxable income.
    • Example: Maria holds 10 units of cryptocurrency A that has a hard fork after which she also has 10 units of cryptocurrency B. Regardless of how she receives the new cryptocurrency B, she has income. If the 10 units of cryptocurrency B are worth $50 at the date and time she receives them, Maria will have taxable income of $50 that she must report in the year she receives the cryptocurrency B.
  • Unreported transactions: You must report income, gain, or loss from all taxable transactions involving virtual currency on your Federal income tax return for the year of the transaction, regardless of the amount or whether you receive a payee statement (like a Form W-2) or information return (like a Form 1099-MISC).

For more information on the tax treatment of property transactions, see Publication 544, Sales and Other Dispositions of Assets.

What virtual currency transactions are not taxable?

Generally, the same rules that apply to other property apply to virtual currency. Not all property transactions are taxable. For example, the following transactions are not taxable:

  • Transactions with yourself. If you transfer virtual currency from a wallet, address, or account belonging to you, to another wallet, address, or account that also belongs to you, the transfer is a non-taxable event, even if you receive an information return reporting the transfer.
  • Bona fide gifts. If you receive virtual currency as a bona fide gift, the gift is not taxable. You will report any income or loss when you sell, exchange, or otherwise dispose of the virtual currency.
  • Charitable donations. If you donate virtual currency to a charitable organization described in Internal Revenue Code Section 170(c), you will not report income, gain, or loss from the donation.
  • Soft forks. A soft fork occurs when a distributed ledger undergoes a protocol change that does not result in a diversion of the ledger and thus does not result in the creation of a new cryptocurrency. Because soft forks do not result in you receiving new cryptocurrency, you will be in the same position you were in prior to the soft fork, meaning that the soft fork will not result in any income to you.

Where Are Virtual Currency Transactions Reported?

Transactions conducted in virtual currency are generally reported on the same tax forms as transactions in other property. They are also reported on a new checkbox on Form 1040. Virtual currency transactions must be reported on:

What records do I need to maintain regarding my transactions using virtual currency?

The Internal Revenue Code and regulations require taxpayers to maintain records that are sufficient to establish the positions taken on tax returns. You should therefore maintain records documenting receipts, sales, exchanges, or other dispositions of virtual currency and the fair market value of the virtual currency for at least three years after reporting any taxable event or have other reporting requirements even if they’re not immediately taxable.

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

2021 tax filing season begins Feb. 12; IRS outlines steps to speed refunds during pandemic

Posted by Admin Posted on Jan 21 2021

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The Internal Revenue Service announced that the nation's tax season will start on Friday, February 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.

The February 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.

This programming work is critical to ensuring IRS systems run smoothly. If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers. These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.

To speed refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit as soon as they have the information they need. People can begin filing their tax returns immediately with tax software companies, including IRS Free File partners. These groups are starting to accept tax returns now, and the returns will be transmitted to the IRS starting February 12.

"Planning for the nation's filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time," said IRS Commissioner Chuck Rettig. "Given the pandemic, this is one of the nation's most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible."

Last year's average tax refund was more than $2,500. More than 150 million tax returns are expected to be filed this year, with the vast majority before the Thursday, April 15 deadline.

Under the PATH Act, the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law provides this additional time to help the IRS stop fraudulent refunds and claims from being issued, including to identity thieves.

The IRS anticipates a first week of March refund for many EITC and ACTC taxpayers if they file electronically with direct deposit and there are no issues with their tax returns. This would be the same experience for taxpayers if the filing season opened in late January. Taxpayers will need to check Where's My Refund for their personalized refund date.

Overall, the IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit if there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. To avoid delays in processing, people should avoid filing paper returns wherever possible.

Tips for taxpayers to make filing easier

To speed refunds and help with their tax filing, the IRS urges people to follow these simple steps:

  • File electronically and use direct deposit for the quickest refunds.
     
  • Check IRS.gov for the latest tax information, including the latest on Economic Impact Payments. There is no need to call.
     
  • For those who may be eligible for stimulus payments, they should carefully review the guidelines for the Recovery Rebate Credit. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn't receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return. Tax preparation software, including IRS Free File, will help taxpayers figure the amount.
     
  • Remember, advance stimulus payments received separately are not taxable, and they do not reduce the taxpayer's refund when they file in 2021.

Key filing season dates

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

  • January 15. IRS Free File opens. Taxpayers can begin filing returns through Free File partners; tax returns will be transmitted to the IRS starting Feb. 12. Tax software companies also are accepting tax filings in advance.
     
  • January 29. 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.
     
  • February 12. IRS begins 2021 tax season. Individual tax returns begin being accepted and processing begins.
     
  • February 22. Projected date for the IRS.gov Where's My Refund tool being updated for those claiming EITC and ACTC, also referred to as PATH Act returns.
     
  • First week of March. Tax refunds begin reaching those claiming EITC and ACTC (PATH Act returns) for those who file electronically with direct deposit and there are no issues with their tax returns.
     
  • April 15. Deadline for filing 2020 tax returns.
     
  • October 15. Deadline to file for those requesting an extension on their 2020 tax returns

Filing season opening

The filing season open follows IRS work to update its programming and test its systems to factor in the second Economic Impact Payments and other tax law changes. These changes are complex and take time to help ensure proper processing of tax returns and refunds as well as coordination with tax software industry, resulting in the February 12 start date.

The IRS must ensure systems are prepared to properly process and check tax returns to verify the proper amount of EIP's are credited on taxpayer accounts – and provide remaining funds to eligible taxpayers.

Although tax seasons frequently begin in late January, there have been five instances since 2007 when filing seasons did not start for some taxpayers until February due to tax law changes made just before the start of 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: IRS        

Get an Identity Protection PIN to protect yourself from tax-related identity theft

Posted by Admin Posted on Jan 21 2021

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The Taxpayer Advocate Service (TAS) is pleased to share the news that the Internal Revenue Service (IRS) has now opened up enrollment in the Identity Protection PIN (IP PIN) program to anyone who has a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) and is able to verify his or her identity. TAS has long advocated for this change. Beginning in 2004 and through 2019, the National Taxpayer Advocate has made 46 recommendations to the IRS in the Annual Reports to Congress on improving IDT victim assistance. The IRS has adopted over half of these recommendations over this timeframe. TAS continues to advocate for even more improvement to assist IDT victims; see our 2019 Report to Congress for more information.

Starting in mid-January 2021, you may voluntarily opt into the IP PIN program as a proactive way to protect yourself from tax-related identity theft.

What is an IP PIN and why you should consider getting one?

An IP PIN is a six-digit number that prevents someone else from filing a tax return using your SSN or ITIN. The IP PIN is known only to you and the IRS and helps verify your identity when you file your electronic or paper tax return.

The IP PIN is valid for one year. Each January, a newly generated IP PIN must be obtained.
Any primary taxpayer (listed first on the return), secondary taxpayer (listed second on the return), or dependent may obtain an IP PIN if they can pass the identity proofing requirements.

How do I get an IP PIN?

If you’re volunteering for the IP PIN Opt-In Program you should use the online Get An IP PIN tool which will be available mid-January.

If you don’t already have an account on IRS.gov, you must register to validate your identity. Before you register, read about the secure access identity authentication process.

If you’re volunteering for the IP PIN Opt-In program and you can’t successfully validate your identity through the Get an IP PIN tool, there are alternatives. Please note: using an alternative method will delay your IP PIN. One alternative to using the online tool is filing Form 15227, Application for an Identity Protection Personal Identification Number (available mid-January 2021) if your income is $72,000 or less. To apply this way, you must have:

  • A valid SSN or ITIN;
  • An adjusted gross income of $72,000 or less; and
  • Access to a telephone.

IRS will use the telephone number provided on the Form 15227 to call you, validate your identity, and assign you an IP PIN for the next filing season. For security reasons, the IP PIN cannot be used for the current filing season. You will receive your IP PIN via the U.S. Postal Service the following year and in the future.

For other application options, see IRS’s Get An Identity Protection PIN (IP PIN) page.

How does the IP PIN process work?

Enter the six-digit IP PIN when prompted by your tax software product, provide it to your trusted tax professional preparing your tax return, or enter it on your paper tax return.

Be aware, correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays. An incorrect or missing IP PIN will result in the rejection of your e-filed return or a delay of your paper return until it can be verified.

Don’t reveal your IP PIN

Your IP PIN should be known only to your tax professional and only when you are ready to sign and submit your return. Be aware that the IRS will never ask for your IP PIN. Phone calls, emails, or texts asking for your IP PIN are scams.

Want to opt-out of the program later?

The IRS plans to offer an opt out feature to the IP PIN program in 2022 if taxpayers find it is not right for them.

For more information about the program and other alternative application options, see IRS’s Get An Identity Protection PIN (IP PIN) page and FAQs about the Identity Protection Personal Identification Number (IP PIN).

For more information about Identity Theft, visit IRS’s Identity Theft Central site and our Identity Theft Get Help page.

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       

How COVID-19 Legislation May Affect Your Taxes

Posted by Admin Posted on Jan 11 2021

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The Consolidated Appropriations Act (CAA), signed into law Dec. 27, 2020, provides extensive relief in response to the COVID-19 pandemic, such as another round of “recovery rebate” payments to individuals and an expansion of the Paycheck Protection Program (PPP) for businesses and other employers. The legislation includes some tax relief as well.

A brief overview

Here’s a brief overview of some of the tax-related provisions that may affect you or your business:

Individuals

  • Permanent reduction of adjusted gross income (AGI) floor to 7.5% for medical expense deductions
  • Extended nonitemizer deduction for up to $300 of cash donations ($600 for married couples filing jointly) to qualified charities through 2021
  • Extended 100% of AGI deduction limit for cash donations to qualified charities through 2021
  • Extended exclusion for certain employer payments of student loans through 2025

Businesses and other employers

  • Clarification of tax treatment for PPP loans, certain loan forgiveness and other financial assistance under COVID-19 legislation
  • Extended payroll tax credits for paid leave required under the Families First Coronavirus Response Act (FFCRA) through March 2021
  • Extended and expanded tax credits for retaining employees under the Coronavirus Aid, Relief and Economic Security (CARES) Act through June 2021
  • 100% business meals deduction for food and beverages provided by restaurants in 2021 and 2022
  • Extended Work Opportunity credit through 2025
  • Extended New Markets credit through 2025
  • Extended family medical leave credit through 2025

More details

This is just a brief look at some of the most significant tax-related provisions in this 5,500+ page legislation. Contact us for more details on how the CAA may affect you.

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    

Second round of Economic Impact Payments have begun

Posted by Admin Posted on Jan 11 2021

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The IRS began delivering a second round of Economic Impact Payments (EIP 2) as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans.

Payments are automatic for eligible taxpayers

No action is required by eligible individuals to receive this second payment, as the payments are automatic.

As with the first round of payments issued under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, most recipients will receive these payments by direct deposit. For Social Security and other beneficiaries who received the first round of payments via Direct Express, they will receive this second payment the same way. Anyone who received the first round of payments earlier this year but doesn’t receive a payment via direct deposit will generally receive a check or, in some instances, a debit card.

Who is eligible and how much will I receive?

Generally, if you have adjusted gross income (AGI) for 2019 up to $75,000 for single individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced by 5% of the amount by which your AGI exceeds the applicable threshold above.

The second round of payments, or “EIP 2,” is up to $600 for single taxpayers and up to $1,200 for married couples filing a joint return. In addition, those with qualifying children will also receive up to $600 for each qualifying child. Dependents who are 17 and older are not eligible for the child payment.

When will I receive the payment?

Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of January 4, 2021. Payments are automatic and you should not contact your financial institution with questions about payment timing. Paper checks began to be mailed out on December 30. The current round of stimulus payments should be completed by Jan. 15, according to the bill’s text.

Can I track my payment?

Taxpayers can use the IRS’s Get My Payment tool, in English or Spanish, to see payment information.

Get My Payment will let you confirm:

  • That we sent your second Economic Impact payment, also known as a stimulus payment.
  • That we sent your first payment. Some people received their first Economic Impact Payment in partial payments. If you received partial payments, the application will show only the most recent.
  • Your payment type: direct deposit or mail.

Note: Data is updated once per day overnight, so there’s no need to check back more than once per day.

IRS phone assistors and the Taxpayer Advocate Service do not have additional information beyond what’s available on IRS.gov and in the Get My Payment application.

What if I did not get a payment previously, but I qualify?

Eligible individuals who did not receive an Economic Impact Payment – either the first or the second payment – will be able to claim a Recovery Rebate Credit (RRC) when they file their 2020 tax returns in 2021. People will see the EIPs referred to as the RRC on Form 1040 or Form 1040-SR since the EIPs are an advance payment of the RRC.

Please note that the new tax law provision now allows families to receive payments for the taxpayers and qualifying children of the family who have work-eligible Social Security Numbers (SSNs). If you file jointly with your spouse and only one individual has a valid SSN, the spouse with a valid SSN will receive up to a $600 payment and up to $600 for each qualifying child claimed on the 2019 tax return. However, if neither has a valid SSN, no payment will be allowed even if their qualifying child has a valid SSN. People in this group who don’t receive an EIP, can claim an RRC when they file their 2020 tax returns.

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

Follow these tips to help prevent common tax return filing issues and refund delays

Posted by Admin Posted on Jan 11 2021

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Ready to file your tax return? Stop and check out these tax tips before you file to avoid delays and pass “go” with confidence.

Use your Form W-2, not your pay stub, to verify your income. Your employer generally has until February 1 to issue your Form W-2, and you should wait to receive it before you file. In case you didn’t know, IRS computer systems compare the income that is reported on your tax return to what has been reported to IRS. When income and/or federal income tax withholding don’t match, this can cause a delay in the processing of the return and any refund.

Double check that your information is correct for yourself and your dependents. Check name spellings, taxpayer identification numbers, dates of birth, addresses, and your bank account information for accuracy. Be aware that you must have valid Social Security numbers for all your dependents before filing or that may not only delay processing of your tax return, but in certain instances disqualify you for some refundable credits, like the Earned Income Tax Credit.

Don’t forget your W-2s, 1099s, and other attachments. This includes Form 8962 if you are claiming the Premium Tax Credit and Form 1099-G if you received unemployment benefits. Any income document that shows federal income tax was withheld must be attached to your return, if you are filing by paper. If you are filing electronically, follow the software provider’s instructions. If you are unable to obtain your W-2 (or other information returns like Form 1099, K-1, etc.) from your employer, because they closed, you can call the IRS for assistance at 1-800-829-1040, but you must wait until after February 1.

In January, some people who received unemployment benefits in 2020 will get a Form 1099-G, Certain Government Payments, from the agency paying the benefits. The agency will either automatically send a hard copy or, if the agency does not mail the form, recipients will need to visit the agency’s website to get an electronic version of the form.

Also, taxpayers who received a federal tax refund in 2020 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns. In January 2021, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.

You need a Form 1098-T from an eligible educational institution to claim education expenses. Eligible educational institutions have until January 31, to provide this form on paper or electronically to students. If not received by January 31, you’ll need to contact the Institution.

Be aware of tax software that imports prior year data automatically. If you are using the same software as the prior year, you’ll want to check that only the current year information is present, and that prior year data didn’t transfer over which may cause an error. So, double check your figures before hitting submit.

Find a free event

Our local Taxpayer Advocate offices around the country are offering virtual events, during January 2021, that go over these tips in more detail. In addition, some events will include more information about us and how we can help, should you need it throughout the year. Don’t worry if you can’t make one of these scheduled events though, as you can always download our one-page flyer showing these tips or print this page to review as you complete 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 : IRS       

Taxpayers who don’t itemize can take a special $300 charitable contribution deduction on 2020 tax returns

Posted by Admin Posted on Jan 11 2021

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The Coronavirus Aid, Relief and Economic Security (CARES) Act includes several temporary provisions designed to help charities. These include higher elective limits for charitable cash contribution made by certain corporations, higher deduction limits for individuals and businesses for certain food donations made to food banks and other eligible charities, and a special $300 deduction.

The special $300 charitable contribution deduction is available to individual taxpayers who choose to take the standard deduction rather than itemizing their deductions. So, if you do not file Schedule A, Itemized Deductions, with your 2020 Form 1040 series income tax return, you can still take this $300 deduction ($150 deduction if your filing status is married filing separately) if your charitable cash donations qualify.

Prior to the CARES act change charitable contribution deductions could only be claimed on Schedule A and did not directly affect the adjusted gross income you reported on your tax return.

Please note that this article discusses only the special $300 charitable contribution deduction for individuals. For more information about other Coronavirus related tax relief provisions, visit IRS.gov/coronavirus.

What is allowed?

Charitable cash donations of up to $300 made to qualifying organizations before December 31, 2020, are now deductible for individuals who choose to use the standard deduction rather than itemizing their deductions.

Cash donations include those made by check, credit card or debit card. They don’t include donated services, household items, securities or other property.

What donations are considered allowable?

Though cash donations to most charitable organizations qualify, some do not. Before making a donation, people should check the special Tax Exempt Organization Search (TEOS) tool on IRS.gov to make sure the organization qualifies and is eligible for tax-deductible donations.

Where do I claim it on my tax return?

The donation amount will be reported on Form 1040 series tax returns. Review the related form instructions for exactly where to report it on the form.

Forms and instructions can be found on IRS.gov at Forms, Instructions & Publications.

What records do I need to keep?

By law, special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining a receipt or acknowledgement letter from the charity before filing a tax return and retaining a cancelled check or credit card receipt.

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

6 Key Tax Q&As for 2021

Posted by Admin Posted on Jan 11 2021

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Right now, you may be more concerned about your 2020 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 2021.

Not all tax figures are adjusted for inflation and, even if they are, they may be unchanged or change only slightly each year because of low inflation. In addition, some tax amounts can only change with new tax legislation. Here are six commonly asked (and answered) Q&As about 2021 tax-related figures:

1. How much can I contribute to an IRA for 2021? If you’re eligible, you can contribute $6,000 a year into a traditional or Roth IRA, up to 100% of your earned income. If you’re age 50 or older, you can make another $1,000 “catch up” contribution. (These amounts are the same as they were for 2020.)

2. I have a 401(k) plan through my job. How much can I contribute to it? For 2021, you can contribute up to $19,500 to a 401(k) or 403(b) plan. You can make an additional $6,500 catch-up contribution if you’re age 50 or older. (These amounts are also the same as they were for 2020.)

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? In 2021, the threshold for when a domestic employer must withhold and pay FICA for babysitters, house cleaners and other domestic employees is increasing to $2,300 from $2,200 for 2020.

4. How much do I have to earn in 2021 before I can stop paying Social Security tax on my salary? The Social Security tax wage base is $142,800 for 2021, up from $137,700 for 2020. 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. What’s the standard deduction for 2021? The Tax Cuts and Jobs Act eliminated the tax benefit of itemizing deductions for many people by significantly increasing the standard deduction and reducing or eliminating various itemized deductions. For 2021, the standard deduction amount is $25,100 for married couples filing jointly (up from $24,800 for 2020). For single filers, the amount is $12,550 (up from $12,400) and, for heads of households, it’s $18,800 (up from $18,650).

So, if the amount of your itemized deductions (such as charitable gifts and mortgage interest) are less than the applicable standard deduction amount, you won’t benefit from itemizing for 2021.

6. How much can I give to one person without triggering a gift tax return in 2021? The gift tax annual exclusion for 2021 is $15,000, unchanged from last year. This amount is only adjusted 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   

IS THE PERSON AT YOUR DOOR REALLY FROM THE IRS?

Posted by Admin Posted on Dec 14 2020

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In certain situations, the IRS may send an employee out to your residence or place of business to collect past due taxes or conduct an audit of your return. With in-person scams continuing to take place across the country, the Taxpayer Advocate Service wants you to know how and when the IRS may contact you in person to help you protect yourself against possible in-person scams.

Eight things to know about in-person contacts from the IRS:

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

There are special circumstances when the IRS will come to your home or business.

These include:

When you have an overdue tax bill;

When the IRS needs to secure a delinquent tax return or a delinquent employment tax payment;

To tour a business as part of an audit; or As part of a criminal investigation.
 

Revenue Officers are IRS employees who work cases that involve an amount owed or a delinquent tax return. Generally, Revenue Officer home or business visits are unannounced.

Revenue Officers carry two forms of official identification, a pocket commission and a HSPD-12 card. Both forms of ID have a photo of the employee and serial numbers. You can (and should) ask to see both IDs before discussing any sensitive or personal information. You may also call the IRS at a phone number provided by the Revenue Officer to confirm his or her identity.

The IRS can assign certain cases to private collection agencies (PCAs) after notifying you in writing. These PCAs will never visit you at your home or business.

The IRS will not ask you to make a payment to anyone other than to the U.S. Department of the Treasury.

Revenue Agents are IRS employees conducting audits. They may call you to set up appointments, but not without having first notified you by mail. Therefore, by the time a Revenue Agent visits you at your home or business, you will be aware of the audit.

An IRS Criminal Investigator may visit your home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment.

When interacting with you, Revenue Officers have the responsibility to educate you about the Taxpayer Bill of Rights (TBOR) and identify economic hardships if you have an outstanding federal tax debt and payment creates a hardship. They also have the responsibility to consider other means of resolving tax debts, including installment agreements and offers in compromise.

IRS employees do not:

Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer.

Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe.

Threaten to bring in local police, immigration officers, or other law-enforcement to have you arrested for not paying. The IRS cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

If you believe you were visited by someone impersonating the IRS, you can find information on how to report scams here.

Need help with a specific tax problem?

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers' rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn't working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.
Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

Read more about the kinds of problems TAS handles and how we may be able to assist you with yours.

For current information about IRS operations during the COVID-19 pandemic, please visit irs.gov.

If you have any questions regarding accounting, domestic taxation, 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   

How to Confirm the Identity of a Field Revenue Officer If They Come Knocking at Your Door

Posted by Admin Posted on Dec 14 2020

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In certain situations, the IRS may send an employee out to your residence or place of business to collect past due taxes or conduct an audit of your return. With in-person scams continuing to take place across the country, the Taxpayer Advocate Service wants you to know how and when the IRS may contact you in person to help you protect yourself against possible in-person scams.

Eight things to know about in-person contacts from the IRS:

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

There are special circumstances when the IRS will come to your home or business.

These include:

When you have an overdue tax bill;

When the IRS needs to secure a delinquent tax return or a delinquent employment tax payment;

To tour a business as part of an audit; or As part of a criminal investigation.

Revenue Officers are IRS employees who work cases that involve an amount owed or a delinquent tax return. Generally, Revenue Officer home or business visits are unannounced.

Revenue Officers carry two forms of official identification, a pocket commission and a HSPD-12 card. Both forms of ID have a photo of the employee and serial numbers. You can (and should) ask to see both IDs before discussing any sensitive or personal information. You may also call the IRS at a phone number provided by the Revenue Officer to confirm his or her identity.

The IRS can assign certain cases to private collection agencies (PCAs) after notifying you in writing. These PCAs will never visit you at your home or business.

The IRS will not ask you to make a payment to anyone other than to the U.S. Department of the Treasury.

Revenue Agents are IRS employees conducting audits. They may call you to set up appointments, but not without having first notified you by mail. Therefore, by the time a Revenue Agent visits you at your home or business, you will be aware of the audit.

An IRS Criminal Investigator may visit your home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment.

When interacting with you, Revenue Officers have the responsibility to educate you about the Taxpayer Bill of Rights (TBOR) and identify economic hardships if you have an outstanding federal tax debt and payment creates a hardship. They also have the responsibility to consider other means of resolving tax debts, including installment agreements and offers in compromise.

IRS employees do not:

Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer.

Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe.

Threaten to bring in local police, immigration officers, or other law-enforcement to have you arrested for not paying. The IRS cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

If you believe you were visited by someone impersonating the IRS, you can find information on how to report scams here.

Need help with a specific tax problem?

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers' rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn't working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.
Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

Read more about the kinds of problems TAS handles and how we may be able to assist you with yours.

For current information about IRS operations during the COVID-19 pandemic, please visit irs.gov.

If you have any questions regarding accounting, domestic taxation, 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 ARE THE ADVANTAGES OF PREPAYING A MORTGAGE, AND SHOULD I IF I CAN?

Posted by Admin Posted on Dec 14 2020

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It is highly recommended that you prepay as much of your mortgage as possible every month, which will drastically reduce the total amount that you pay.

However, there are times where this could be disadvantageous.

If you are in a situation where you don't have funds to cover three to six months of expenses, it is recommended that you save that amount before you pay additional amounts on your mortgage.

If you have a large amount of credit card debt, over the long run, you will save more money by knocking down those high interest loans first.

There also may be times where that money would be more wisely invested in the market, depending on the expected rate of return versus how much you would save in early payments.

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 SIGNIFICANTLY DOES MY ADDRESS AFFECT MY INSURANCE?

Posted by Admin Posted on Dec 14 2020

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There is a big difference in the premiums that people pay in the suburbs where there is much less traffic congestion as opposed to people that live in big cities with many accidents per capita. Usually this is judged by the zip code of which you register as 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  

RENEW INDIVIDUAL TAXPAYER IDENTIFICATION NUMBERS BEFORE THEY EXPIRE

Posted by Admin Posted on Dec 14 2020

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Earlier this year, the IRS issued a reminder to certain Individual Taxpayer Identification Numbers (ITIN) holders whose ITINs expire on December 31, 2020. An individual taxpayer’s failure to timely renew an ITIN may result in a delay of a refund claimed on a 2020 federal income tax return.

The renewal process can take up to sixty days or more, so it is critical to begin the process of renewal now.

Who needs to renew?

Taxpayers who expect to file a federal tax return during 2021 and whose ITIN contains the middle digits 88 (For example: 9NN-88-NNNN) or 90, 91, 92, 94, 95, 96, 97, 98, or 99.

Note: Taxpayer ITINs need to be renewed even if the taxpayer has used it in the last three years.

The IRS may have already sent you a notice about this, but if you did not take action yet, please do so to avoid problems later.

How do I renew an ITIN?

To renew an ITIN, a taxpayer must complete a Form W-7 and submit all required documentation. Taxpayers submitting a Form W-7 to renew their ITIN are not required to attach a federal tax return. However, taxpayers must still note a reason for needing an ITIN on the Form W-7. See the Form W-7 instructions for detailed information.

Taxpayers with an expiring ITIN have the option to renew ITINs for their entire family at the same time. Those who have received a renewal letter from the IRS can choose to renew the family's ITINs together, even if family members have an ITIN with middle digits that have not been identified for expiration. Family members include the tax filer, spouse and any dependents claimed on the tax return.

See our Getting An ITIN help page or the IRS’s reminder page for more information about ways to submit the Form W-7 application package.

How do I avoid errors?

Double check your Form W-7 for missing entries.

Ensure you attach all required documentation (e.g., medical records, school records, identification documents like a valid passport, etc.).

Ensure all required signatures are on the Form W-7.

If you have any questions regarding accounting, domestic taxation, 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       

INTRAFAMILY LOANS AND A FAMILY BANK

Posted by Admin Posted on Dec 14 2020

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Among the primary goals of estate planning is to put in writing how you want your wealth distributed to loved ones after your death. But what if you want to use that wealth to help a family member in need while you’re still alive? This has become an increasingly common and pressing issue this year because of the COVID-19 pandemic and changes to the U.S. economy.

One way to help family members hit hard by job loss or increased debt is through an intrafamily loan or even by establishing a full-fledged family bank.

Structure loans carefully

Lending can be a way to provide your family financial assistance without triggering unwanted gift taxes. As long as a loan is structured in a manner similar to an arm’s-length loan between unrelated parties, it won’t be treated as a taxable gift.

This means, among other steps, documenting the loan with a promissory note and charging interest at or above the applicable federal rate (which is now historically low). You’ll also need to establish a fixed repayment schedule and ensure that the borrower has a reasonable prospect of repaying the loan.

Even if taxes aren’t a concern, intrafamily loans offer important benefits. For example, they allow you to help your family financially without depleting your wealth or creating a sense of entitlement. Done right, these loans can promote accountability and help cultivate the younger generation’s entrepreneurial capabilities by providing financing to start a business.

Maybe open a bank

Too often, however, people lend money to family members with little planning or regard for potential unintended consequences. Rash lending decisions may lead to misunderstandings, hurt feelings, conflicts among family members and false expectations. That’s where a family bank comes into play.

A family bank is a family-owned and funded entity — such as a dynasty trust, a family limited partnership or a combination of the two — designed for the sole purpose of making intrafamily loans. Often, family banks can offer financing to family members who might have difficulty obtaining a loan from a bank or other traditional funding sources, or lend at more favorable terms.

By “professionalizing” family lending activities, a family bank can preserve the tax-saving power of intrafamily loans while minimizing negative consequences. The key to avoiding family conflicts and resentment is to build a strong governance structure that promotes communication, decision making and transparency.

Establishing guidelines regarding the types of loans the family bank is authorized to make — and allowing all family members to participate in the decision-making process — ensures that family members are treated fairly and avoids false expectations.

Learn more

More than likely, someone in your extended family has faced difficult financial circumstances this year. Contact us to learn more about intrafamily loans.

If you have any questions regarding accounting, domestic taxation, 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         

NEWLY EXPANDED ‘CLOSING A BUSINESS’ INFORMATION PROVIDES STEP-BY-STEP ACTIONS

Posted by Admin Posted on Dec 14 2020

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Closing your business can be a difficult and challenging task. The Taxpayer Advocate Service (TAS) partnered with IRS to expand its Closing a Business page to help business owners understand the specific actions needed, from a federal tax perspective, for each type of business.

However, before you make the decision to close, if it is due to financial reasons related to the coronavirus, please use TAS’s COVID-19 Business Tax Relief Tool to see if you qualify for new employer tax credits that may help you stay in business. Read more about the benefits of this tool before you try.

If ultimately you do need to close your business, whether you have a sole proprietorship, partnership or corporation, the information on this page will help you understand:

What forms you need to file;

How to report the income you receive; and,

How to claim the expenses you incur before closing your business.

Remember to also check your state responsibilities when closing a business.

TAS Resources

COVID-19 Business Tax Relief Tool

Coronavirus (COVID-19) Tax Relief

Taxpayer Advocate Service Help

The Taxpayer Advocate Service (TAS) is uniquely positioned to assist all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. If you qualify for our help, an advocate will be with you at every turn and do everything possible to assist through the process.

Currently, TAS is open to virtually serve taxpayers who find themselves in hardship situations or dealing with IRS tax problems they’ve been unable to resolve directly with the IRS. Visit our Contact Us page to learn more.

If you have any questions regarding accounting, domestic taxation, 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      

HANDLE MUTUAL FUNDS CAREFULLY AT YEAR END

Posted by Admin Posted on Dec 14 2020

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As we approach the end of 2020, now is a good time to review any mutual fund holdings in your taxable accounts and take steps to avoid potential tax traps. Here are some tips.

Avoid surprises

Unlike with stocks, you can’t avoid capital gains on mutual funds simply by holding on to the shares. Near the end of the year, funds typically distribute all or most of their net realized capital gains to investors. If you hold mutual funds in taxable accounts, these gains will be taxable to you regardless of whether you receive them in cash or reinvest them in the fund.

For each fund, determine how large these distributions will be and get a breakdown of long-term vs. short-term gains. If the tax impact will be significant, consider strategies to offset the gain. For example, you could sell other investments at a loss.

Buyer beware

Avoid buying into a mutual fund shortly before it distributes capital gains and dividends for the year. There’s a common misconception that investing in a mutual fund just before the ex-dividend date (the date by which you must own shares to qualify for a distribution) is like getting free money.

In reality, the value of your shares is immediately reduced by the amount of the distribution, so you’ll owe taxes on the gain without actually achieving an economic benefit.

Seller beware, too

If you plan to sell mutual fund shares that have appreciated in value, consider waiting until just after year end so you can defer the gain until 2021 — unless you think you’ll be subject to a higher rate next year. In that scenario, you’d likely be better off recognizing the gain and paying the tax this year.

When you do sell shares, keep in mind that, if you bought them over time, each block will have a different holding period and cost basis. To reduce your tax liability, it’s possible to select shares for sale that have higher cost bases and longer holding periods (known as the specific identification method), thereby minimizing your gain (or maximizing your loss) and avoiding higher-taxed short-term gains.

Think beyond taxes

Investment decisions shouldn’t be driven by tax considerations alone. You also need to know your risk tolerance and keep an eye on your overall financial goals. Nonetheless, taxes are still an important factor. Contact us to discuss these and other year-end strategies for minimizing the tax impact of your mutual fund holdings.

If you have any questions regarding accounting, domestic taxation, 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      

TAXABLE VS. TAX-ADVANTAGED: WHERE TO HOLD INVESTMENTS

Posted by Admin Posted on Dec 04 2020

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When investing for retirement or other long-term goals, people usually prefer tax-advantaged accounts, such as IRAs, 401(k)s or 403(b)s. Certain assets are well suited to these accounts, but it may make more sense to hold other investments in traditional taxable accounts.

Know the rules

Some investments, such as fast-growing stocks, can generate substantial capital gains, which may occur when you sell a security for more than you paid for it.

If you’ve owned that position for over a year, you face long-term gains, taxed at a maximum rate of 20%. In contrast, short-term gains, assessed on holding periods of a year or less, are taxed at your ordinary-income tax rate — maxing out at 37%. (Note: These rates don’t account for the possibility of the 3.8% net investment income tax.)

Choose tax efficiency

Generally, the more tax efficient an investment, the more benefit you’ll get from owning it in a taxable account. Conversely, investments that lack tax efficiency normally are best suited to tax-advantaged vehicles.

Consider municipal bonds (“munis”), either held individually or through mutual funds. Munis are attractive to tax-sensitive investors because their income is exempt from federal income taxes and sometimes state and local income taxes. Because you don’t get a double benefit when you own an already tax-advantaged security in a tax-advantaged account, holding munis in your 401(k) or IRA would result in a lost opportunity.

Similarly, tax-efficient investments such as passively managed index mutual funds or exchange-traded funds, or long-term stock holdings, are generally appropriate for taxable accounts. These securities are more likely to generate long-term capital gains, which have more favorable tax treatment. Securities that generate more of their total return via capital appreciation or that pay qualified dividends are also better taxable account options.

Take advantage of income

What investments work best for tax-advantaged accounts? Taxable investments that tend to produce much of their return in income. This category includes corporate bonds, especially high-yield bonds, as well as real estate investment trusts (REITs), which are required to pass through most of their earnings as shareholder income. Most REIT dividends are nonqualified and therefore taxed at your ordinary-income rate.

Another tax-advantaged-appropriate investment may be an actively managed mutual fund. Funds with significant turnover — meaning their portfolio managers are actively buying and selling securities — have increased potential to generate short-term gains that ultimately get passed through to you. Because short-term gains are taxed at a higher rate than long-term gains, these funds would be less desirable in a taxable account.

Get specific advice

The above concepts are only general suggestions. Please contact our firm for specific advice on what may be best for you.

Sidebar: Doing due diligence on dividends

If you own a lot of income-generating investments, you’ll need to pay attention to the tax rules for dividends, which belong to one of two categories:

  • Qualified. These dividends are paid by U.S. corporations or qualified foreign corporations. Qualified dividends are, like long-term gains, subject to a maximum tax rate of 20%, though many people are eligible for a 15% rate. (Note: These rates don’t account for the possibility of the 3.8% net investment income tax.)
  • Nonqualified. These dividends — which include most distributions from real estate investment trusts and master limited partnerships — receive a less favorable tax treatment. Like short-term gains, nonqualified dividends are taxed at your ordinary-income tax rate.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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

The Right to Be Informed

Posted by Admin Posted on Dec 03 2020

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Taxpayers have the right to know what they need to do to comply with tax laws. They are entitled to clear explanations of the law and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

What This Means for You

If you receive a notice fully or partially disallowing your refund claim, including a refund you claim on your income tax return, it must explain the specific reasons why the claim is being disallowed. IRC § 6402(l)

Generally, if you owe a penalty, each written notice of such penalty must provide an explanation of the penalty, including the name of the penalty, the authority under the Internal Revenue Code, and how it is calculated. IRC § 6751(a)

During an in-person interview with the IRS as part of an audit, the IRS employee must explain the audit process and your rights under that process. Likewise, during an in-person interview with the IRS concerning the collection of your tax, the IRS employee must explain the collection process and your rights under that process. IRC § 7521(b)(1)

Generally, the IRS uses Publication 1, Your Rights as a Taxpayer to meet this requirement.

The IRS must include on certain notices the amount (if any) of the tax, interest, and certain penalties you owe and must explain why you owe these amounts. IRC § 7522

The IRS must inform you in certain publications and instructions that when you file a joint income tax return with your spouse, both of you are responsible for all tax due and any additional amounts due for that tax year, unless “innocent spouse” relief applies. RRA 98 § 3501(a)

The IRS must inform you in Publication 1 Your Rights as a Taxpayer and all collection related notices that in certain circumstances you may be relieved of all or part of the tax owed with your joint return. This is sometimes referred to as “innocent spouse relief.” RRA 98 § 3501(b)

The IRS must explain in Publication 1 Your Rights as a Taxpayer how it selects which taxpayers will be audited. RRA 98 § 3503

If the IRS proposes to assess tax against you, it will send you a letter providing the examination report, stating the proposed changes, and providing you with the opportunity for a review by an Appeals Officer if you respond generally within 30 days. This letter, which in some cases is the first communication from the examiner, must provide an explanation of the entire process from examination (audit) through collection and explain that the Taxpayer Advocate Service may be able to assist you. RRA § 3504

Generally, Publication 3498, The Examination Process, or Publication 3498-A The Examination Process (Audits by Mail) is included with this letter.

If you enter into a payment plan, known as an installment agreement, the IRS must send you an annual statement that provides how much you owe at the beginning of the year, how much you paid during the year, and how much you still owe at the end of the year. RRA § 98 3506, Treas. Reg. § 301.6159-1(h)

You have the right to access certain IRS records, including instructions and manuals to staff, unless such records are required or permitted to be withheld under the Internal Revenue Code, the Freedom of Information Act, or the Privacy Act. Certain IRS records must be available to you electronically.

If the IRS is proposing to adjust the amount of tax you owe, you will typically be sent a statutory notice of deficiency, which informs you of the proposed change. This notice provides you with a right to challenge the proposed adjustment in Tax Court without first paying the proposed adjustment. To exercise this right, you must file a petition with the Tax Court within 90 days of the date of the notice being sent (or 150 days if the taxpayer’s address on the notice is outside the United States or if the taxpayer is out of the country at the time the notice is mailed). Thus, the statutory notice of deficiency is your ticket to Tax Court. IRC §§ 6212; 6213(b)

For more information about the United States Tax Court, see the Court’s taxpayer information page.

The IRS should ensure that its written guidance and correspondence is accessible, consistent, written in plain language, and easy to understand.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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   

HOW SHOULD UNMARRIED COUPLES PROTECT THEIR ESTATE AND FINANCIAL HOLDINGS?

Posted by Admin Posted on Dec 03 2020

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Here are some important steps to take for couples that are unmarried:

  • Draft wills. The chances of the intentions being followed through with after a death are greater if both partners make wills. Without wills, the probability of the unmarried surviving partner having no rights is more likely.
  • Think about owning property together. This is a way to guarantee that property will pass to the other joint owner at the time of the other's death due to the right of survivorship.
  • Make a durable power of attorney. This will permit the partner to sign papers and checks and take care of other financial issues on his/her behalf should one become incapacitated.
  • Make a health care proxy. Also known as a medical power of attorney, this permits the partner to talk on your behalf to make medical decisions, should you become injured.
  • Have a living will. This lets your wishes regarding artificial feeding and other measures to prolong your life be known.

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

Here’s what taxpayers can do now to Get Ready to file taxes in 2021

Posted by Admin Posted on Dec 03 2020

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Check their withholding and make any adjustments soon

Since most taxpayers typically only have a few pay dates left this year, checking their withholding soon is especially important. It's even more important for those who:

  • Received a smaller refund than expected after filing their 2019 taxes this year.
  • Owed an unexpected tax bill last year.
  • Experienced personal or financial changes that might change their tax liability.

Some people may owe an unexpected tax bill when they file their 2020 tax return next year, if they didn't have enough withheld throughout the year. To avoid this kind of surprise, taxpayers should use the Tax Withholding Estimator to perform a quick paycheck or pension income checkup. Doing so helps them decide if they need to adjust their withholding or make estimated or additional tax payments now.

Gather tax documents and keep them for at least three years

Everyone should come up with a recordkeeping system. Whether it's electronic or paper, they should use a system to keep all important information in one place. Having all needed documents on hand before they prepare their return helps them file a complete and accurate tax return. This includes:

  • Their 2019 tax return.
  • Form W-2 from employers.
  • Form 1099 from banks and other payers.
  • Forms 1095-A from the marketplace for those claiming the premium tax credit.
  • Form 1099-NEC, Nonemployee Compensation.
  • Notice 1444, Your Economic Impact Payment.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and virtual currencies. Therefore, taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years.

Confirm mailing and email addresses

To make sure forms make it to the taxpayer on time, people should confirm now that each employer, bank and other payer has the taxpayer's current mailing address or email address. Typically, forms start arriving by mail or are available online in January.

Remember these new things when preparing for the 2021 tax filing season

  • Taxpayers may be able to claim the recovery rebate credit if they met the eligibility requirements in 2020 and one of the following applies to them:
    • They didn't receive an Economic Impact Payment in 2020.
    • They are single and their payment was less than $1,200.
    • They are married, filed jointly for 2018 or 2019 and their payment was less than $2,400.
    • They didn't receive $500 for each qualifying child.
  • Taxpayers who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income to anyone who received interest totaling at least $10.

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 are a valuable benefit for taxpayers with disabilities

Posted by Admin Posted on Dec 03 2020

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Living with a disability can come with additional expenses. Achieving a Better Life Experience accounts are authorized tax-advantaged 529A accounts that help disabled people pay qualified disability-related expenses.

Here are some key things people should know about these accounts.

Annual contribution limit

  • The limit remains $15,000 in 2020.
  • 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 2020, this amount is $12,490 in the continental U.S., $15,600 in Alaska and $14,380 in Hawaii. 

Saver's credit

  • ABLE account designated beneficiaries may now 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 Contributions PDF. 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 now 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 $15,000 annual contribution limit would be met by parents contributing $10,000 to their child's ABLE account and rolling over $5,000 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, as long as 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      

CREDIT FOR THE ELDERLY OR DISABLED

Posted by Admin Posted on Dec 03 2020

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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

Security Summit partners warn taxpayers of new COVID-related text scam

Posted by Admin Posted on Dec 03 2020

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The Internal Revenue Service, state tax agencies and the tax industry are warning of a new text scam created by thieves that trick people into disclosing bank account information under the guise of receiving the $1,200 Economic Impact Payment.

The IRS, states and industry, working together as the Security Summit, remind taxpayers that neither the IRS nor state agencies will ever text taxpayers asking for bank account information so that an EIP deposit may be made.

"Criminals are relentlessly using COVID-19 and Economic Impact Payments as cover to try to trick taxpayers out of their money or identities," said IRS Commissioner Chuck Rettig. "This scam is a new twist on those we've been seeing much of this year. We urge people to remain alert to these types of scams."

The scam text message states: "You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment …" The text includes a link to a fake phishing web address.

This fake phishing URL, which appears to come from a state agency or relief organization, takes recipients to a fraudulent website that impersonates the IRS.gov Get My Payment website. Individuals who visit the fraudulent website and then enter their personal and financial account information will have their information collected by these scammers.

People who receive this text scam should take a screen shot of the text message that they received and then include the screenshot in an email to phishing@irs.gov with the following information:

The IRS does not send unsolicited texts or emails. The IRS does not call people with threats of jail or lawsuits, nor does it demand tax payments on gift cards.

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 to mask key business transcript details; protect taxpayers from identity theft

Posted by Admin Posted on Dec 03 2020

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Moving to protect business taxpayers from identity theft, the Internal Revenue Service announced that starting December 13 it will begin masking sensitive data on business tax transcripts.

The announcement provides 30 days for stakeholders to make any adjustments. The IRS began informing tax professionals of this change during the summer Nationwide Tax Forums. The agency previously masked sensitive data on individual tax transcripts two years ago.

A tax transcript is a summary of a tax return. Transcripts are often used by tax professionals to prepare prior year tax returns or represent the client before the IRS. Lenders and others use tax transcripts for income verification purposes.

Here's what is visible on the new tax transcript:

  • Last four digits of any Employer Identification Number listed on the transcript: XX-XXX1234
  • Last four digits of any Social Security number or Individual Tax Identification Number listed on the transcript: XXX-XX-1234
  • Last four digits of any account or telephone number
  • First four characters of the first, and last name for any individual (first three characters if the name has only four letters)
  • First four characters of any name on the business name line
  • First six characters of the street address, including spaces
  • All money amounts, including wage and income, balance due, interest and penalties

For both the individual and business tax transcript, there is space for a Customer File Number. The Customer File Number is an optional 10-digit number that can be created usually by third parties that allow them to match a transcript to a taxpayer. The Customer File Number field will appear on the transcript when that number is entered on Line 5 of Form 4506-T, Request for Transcript of Tax Return, and Form 4506T-EZ.

Here's how it would work for a taxpayer seeking to verify income for a lender:

1.   The lender will assign a 10-digit number, for example, a loan number, to the Form 4506-T. The Form 4506-T may be signed and submitted by the taxpayer or signed by the taxpayer and submitted by the lender.

2.   The Customer File Number assigned by the requestor on the Form 4506-T will populate on the transcript. The requestor may assign any number except the taxpayer's Social Security number or Employer Identification Number.

3.   Once received by the requester, the transcript's Customer File Number serves as the tracking number to match it 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 Criminal Investigation releases Fiscal Year 2020 Annual Report; identifies $2.3 billion in tax fraud

Posted by Admin Posted on Nov 25 2020

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The Internal Revenue Service released the Criminal Investigation Division's annual report, highlighting the agency's successes and criminal enforcement actions taken in fiscal year 2020, the majority of which occurred during COVID-19. A key achievement was the identification of over $10 billion in tax fraud and other financial crimes.

"The special agents and professional staff who make up Criminal Investigation continue to perform at an incredibly high-level year after year," said IRS Commissioner Chuck Rettig. "Even in the face of a global pandemic, the CI workforce initiated nearly 1,600 investigations and identified $2.3 billion in tax fraud schemes. This is no small feat during a challenging year, and their work is critical to protecting taxpayers and the integrity of our tax system."

Key focuses of CI in fiscal year 2020 included COVID-19 related fraud, cybercrimes, with an emphasis on virtual and cryptocurrencies, traditional tax investigations, international tax enforcement, employment tax, refund fraud and tax-related identity theft.

In response to COVID-19 related crimes, CI special agents quickly adapted their investigative techniques to initiate cases into fraudulent claims for Economic Impact Payments, Paycheck Protection Program loans, and refundable payroll tax credits from the Coronavirus Aid, Relief, and Economic Security Act.

"This year, more than any in recent memory, demonstrated the extraordinary agility and adaptability of the CI workforce," said Jim Lee, Chief of CI. "Clearly, unscrupulous individuals sought to exploit the economic safeguards put in place to buttress a nation in crisis. These individuals and groups were instead met with a cadre of special agents determined to thwart their efforts."

In fiscal year 2020, CI initiated 1,598 cases, applying 73% of its time to tax related investigations. The number of CI special agents increased by one percent, following special agent hiring to offset planned retirements. CI continued increasing its usage of data analytics and strengthening its international partnerships to assist in finding the most impactful cases. One important partnership remained the Joint Chiefs of Global Tax Enforcement (J5); a transnational committee comprised of tax organizations from five countries. In FY 2020 alone, more information was shared regarding cryptocurrency, tax crimes, and related enforcement, than in the previous ten years combined. CI also saw the first guilty pleas for a case under the J5 umbrella.

As the only federal law enforcement agency with jurisdiction over federal tax crimes, CI has one of the highest conviction rates in federal law enforcement − at 90.4%. The high conviction rate reflects the thoroughness of CI investigations and the high caliber of CI agents. CI is routinely called upon by prosecutors and partner agencies across the country to lead financial investigations on a wide variety of financial crimes.

"While the annual report is an excellent summation of the hard work and dedication exhibited by CI, this year's report takes on special significance," Lee said. "This report unequivocally reflects the efforts of a workforce undaunted by unprecedented personal and professional challenges. I am profoundly grateful to serve with the men and women of CI."

The 2020 report is interactive, summarizes a wide variety of CI activity during the year and features examples of cases from each field office on a wide range of financial crimes. The federal fiscal year begins October 1 and ends on September 30.

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       

Get Ready for Taxes: Get ready now to file 2020 federal income tax returns

Posted by Admin Posted on Nov 25 2020

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The Internal Revenue Service  encourages taxpayers to take necessary actions this fall to help them file their federal tax returns timely and accurately in 2021, including special steps related to Economic Impact Payments (EIP).

This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to prepare for the 2021 tax return filing season ahead.

Steps taxpayers can take now to make tax filing easier in 2021

Taxpayers should gather Forms W-2, Wage and Tax Statement, Forms 1099-MISC, Miscellaneous Income, and other income documents to help determine if they're eligible for deductions or credits. They'll also need their Notice 1444, Your Economic Impact Payment, to calculate any Recovery Rebate Credit they may be eligible for on their 2020 Federal income tax return.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and virtual currencies.

Taxpayers with an Individual Taxpayer Identification Number (ITIN) should ensure it hasn't expired before they file their 2020 federal tax return. If it has, IRS recommends they submit a Form W-7, Application for IRS Individual Taxpayer Identification Number, now to renew their ITIN. Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits.

Taxpayers can use the Tax Withholding Estimator on IRS.gov to help determine the right amount of tax to have withheld from their paychecks. If they need to adjust their withholding for the rest of the year time is running out, they should submit a new Form W-4, Employee's Withholding Certificate, to their employer as soon as possible.

Taxpayers who received non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income, may have to make estimated tax payments. Payment options can be found at IRS.gov/payments.

New in 2021: Those who didn't receive an EIP may be able to claim the Recovery Rebate Credit

Taxpayers may be able to claim the Recovery Rebate Credit if they met the eligibility criteria in 2020 and:

  • They didn't receive an Economic Impact Payment this year, or
  • Their Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018) plus $500 for each qualifying child.
  • For additional information about the Economic Impact Payment, taxpayers can visit the Economic Impact Payment Information Center.

Received interest on a federal tax refund? Remember these are taxable; include when filing

Taxpayers who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income, to anyone who received interest totaling at least $10.

Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a 2020 federal tax refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer.

EITC/ACTC-related refunds should be available by first week of March

By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund − even the portion not associated with EITC or ACTC. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they chose direct deposit and there are no other issues with their tax return. Taxpayers should use Where's My Refund? for their personalized refund 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:  IRS       

The Tax Impact of Business Property Remediation

Posted by Admin Posted on Nov 25 2020

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If your company faces the need to “remediate” or clean up environmental contamination, the money you spend can be tax-deductible as ordinary and necessary business expenses. Unfortunately, every type of environmental cleanup expense cannot be currently deducted — some cleanup costs must be capitalized (spread over multiple years for tax purposes).

To lower your current year tax bill as much as possible, you’ll want to claim as many immediate income tax benefits as allowed for the expenses you incur. So, it’s a good idea to explore the tax impact of business property remediation before you embark on the project. If you’ve already done cleanup during 2020, review the costs closely before filing your 2020 tax return.

Deduct vs. capitalize

Generally, cleanup costs are currently deductible to the extent they cover “incidental repairs” — for example, encapsulating exposed asbestos insulation. Other deductible expenses may include the actual cleanup costs, as well as expenses for environmental studies, surveys and investigations, fees for consulting and environmental engineering, legal and professional fees, and environmental “audit” and monitoring costs.

You may also be able to currently claim tax deductions for cleaning up contamination that your business caused on your own property (for example, removing soil contaminated by dumping wastes from your own manufacturing processes and replacing it with clean soil) — if you acquired that property in an uncontaminated state.

On the other hand, remediation costs generally must be capitalized if the remediation:

  • Adds significantly to the value of the cleaned-up property,
  • Prolongs the useful life of the property, or
  • Adapts the property to a new or different use.

In addition, you’ll likely need to capitalize the costs if the remediation makes up for depreciation, amortization or depletion that’s been claimed for tax purposes, or if it creates a separate capital asset that’s useful beyond the current tax year.

However, parts of these types of remediation costs may qualify for a current deduction. It depends on the facts and circumstances of your situation. For instance, in one case, the IRS required a taxpayer to capitalize the costs of surveying for contamination various sites that proved to be contaminated, but the agency allowed a current deduction for the costs of surveying the sites that proved to be uncontaminated.

Complex treatment

Along with federal tax deductions, state or local tax incentives may be available for cleaning up contaminated property. The tax treatment for the expenses can be complex. If you have environmental cleanup expenses, we can help plan your efforts to maximize the deductions available.

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    

Catching Up On Catch-up Contributions

Posted by Admin Posted on Nov 25 2020

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When it comes to retirement planning, many people tend to focus on two things: opening a retirement savings account and then eventually drawing funds from it. However, there are other important aspects to truly doing everything you can to grow your nest egg.

One of them is celebrating your 50th birthday. This is because those age 50 or older on December 31 of any given year can start making “catch-up” contributions to their employer-sponsored retirement plans that year (assuming the plan allows them). These are additional contributions to certain accounts beyond the regular annual limits.

Maybe you haven’t yet saved as much for retirement as you’d like to. Or perhaps you’d just like to make the most of tax-advantaged savings opportunities. Whatever the case may be, now is a good time to get caught up on the 2020 catch-up contribution amounts because you might be able to increase your contributions for the year.

401(k)s and SIMPLEs

Under 401(k) limits for 2020, if you’re age 50 or older, you can contribute an extra $6,500 after you’ve reached the $19,500 maximum limit for all employees. That’s a total of $26,000.

If your employer offers a Savings Incentive Match Plan for Employees (SIMPLE) instead, your regular contribution maxes out at $13,500 in 2020. If you’re 50 or older, you’re allowed to contribute an additional $3,000 — or $16,500 in total for the year.

But be sure to check with your employer because, while most 401(k) plans and SIMPLEs offer catch-up contributions, not all do.

Self-employed plans

If you’re self-employed, retirement plans such as an individual 401(k) — or solo 401(k) — also allow catch-up contributions. A solo 401(k) is a plan for those with no other employees. You can defer 100% of your self-employment income or compensation, up to the regular 2020 aggregate deferral limit of $19,500, plus a $6,500 catch-up contribution in 2020. But that’s just the employee salary deferral portion of the contribution.

You can also make an “employer” contribution of up to 20% of self-employment income or 25% of compensation. The total combined employee-employer contribution is limited to $57,000, plus the $6,500 catch-up contribution.

IRAs, too

Catch-up contributions to non-Roth accounts not only can enlarge your retirement nest egg, but also can reduce your 2020 tax liability, generally if made by Dec. 31, 2020.

Keep in mind that catch-up contributions are available for IRAs, too. The deadline for 2020 IRA contributions isn’t until April 15, 2021, but deductible contributions may be limited or unavailable based on your income and whether you (or your spouse) is covered by a retirement plan at work. Please 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    

TAXABLE VS. TAX-ADVANTAGED: WHERE TO HOLD INVESTMENTS

Posted by Admin Posted on Nov 18 2020

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When investing for retirement or other long-term goals, people usually prefer tax-advantaged accounts, such as IRAs, 401(k)s or 403(b)s. Certain assets are well suited to these accounts, but it may make more sense to hold other investments in traditional taxable accounts.

Know the rules

Some investments, such as fast-growing stocks, can generate substantial capital gains, which may occur when you sell a security for more than you paid for it.

If you’ve owned that position for over a year, you face long-term gains, taxed at a maximum rate of 20%. In contrast, short-term gains, assessed on holding periods of a year or less, are taxed at your ordinary-income tax rate — maxing out at 37%. (Note: These rates don’t account for the possibility of the 3.8% net investment income tax.)

Choose tax efficiency

Generally, the more tax efficient an investment, the more benefit you’ll get from owning it in a taxable account. Conversely, investments that lack tax efficiency normally are best suited to tax-advantaged vehicles.

Consider municipal bonds (“munis”), either held individually or through mutual funds. Munis are attractive to tax-sensitive investors because their income is exempt from federal income taxes and sometimes state and local income taxes. Because you don’t get a double benefit when you own an already tax-advantaged security in a tax-advantaged account, holding munis in your 401(k) or IRA would result in a lost opportunity.

Similarly, tax-efficient investments such as passively managed index mutual funds or exchange-traded funds, or long-term stock holdings, are generally appropriate for taxable accounts. These securities are more likely to generate long-term capital gains, which have more favorable tax treatment. Securities that generate more of their total return via capital appreciation or that pay qualified dividends are also better taxable account options.

Take advantage of income

What investments work best for tax-advantaged accounts? Taxable investments that tend to produce much of their return in income. This category includes corporate bonds, especially high-yield bonds, as well as real estate investment trusts (REITs), which are required to pass through most of their earnings as shareholder income. Most REIT dividends are nonqualified and therefore taxed at your ordinary-income rate.

Another tax-advantaged-appropriate investment may be an actively managed mutual fund. Funds with significant turnover — meaning their portfolio managers are actively buying and selling securities — have increased potential to generate short-term gains that ultimately get passed through to you. Because short-term gains are taxed at a higher rate than long-term gains, these funds would be less desirable in a taxable account.

Get specific advice

The above concepts are only general suggestions. Please contact our firm for specific advice on what may be best for you.

Sidebar: Doing due diligence on dividends

If you own a lot of income-generating investments, you’ll need to pay attention to the tax rules for dividends, which belong to one of two categories:

  • Qualified. These dividends are paid by U.S. corporations or qualified foreign corporations. Qualified dividends are, like long-term gains, subject to a maximum tax rate of 20%, though many people are eligible for a 15% rate. (Note: These rates don’t account for the possibility of the 3.8% net investment income tax.)
  • Nonqualified. These dividends — which include most distributions from real estate investment trusts and master limited partnerships — receive a less favorable tax treatment. Like short-term gains, nonqualified dividends are taxed at your ordinary-income tax rate.

If you have any questions regarding accounting, domestic taxation, 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

REFINANCING YOUR HOME

Posted by Admin Posted on Nov 18 2020

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Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.

Generally, for taxpayers who itemize, the “points” paid to obtain a home mortgage may be deductible as mortgage interest. Points paid to obtain an original home mortgage can be, depending on circumstances, fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, the interest deduction for points is determined by dividing the points paid by the number of payments to be made over the life of the loan. This information is usually available from lenders. Taxpayers may deduct points only for those payments made in the tax year. For example, a homeowner who paid $2,000 in points and who would make 360 payments on a 30-year mortgage could deduct $5.56 per monthly payment, or a total of $66.72 if he or she made 12 payments in one year.

However, if part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off.

Other closing costs — such as appraisal fees and other non-interest fees — generally are not deductible. Additionally, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken.  Please contact us if you've recently refinanced, and we can be a big help!

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

PLANNING FOR THE NET INVESTMENT INCOME TAX

Posted by Admin Posted on Nov 18 2020

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Despite its name, the Tax Cuts and Jobs Act (TCJA) didn’t cut all types of taxes. It left several taxes unchanged, including the 3.8% tax on net investment income (NII) of high-income taxpayers.

You’re potentially liable for the NII tax if your modified adjusted gross income (MAGI) exceeds $200,000 ($250,000 for joint filers and qualifying widows or widowers; $125,000 for married taxpayers filing separately). Generally, MAGI is the same as adjusted gross income. However, it may be higher if you have foreign earned income and certain foreign investments.

To calculate the tax, multiply 3.8% by the lesser of 1) your NII, or 2) the amount by which your MAGI exceeds the threshold. For example, if you’re single with $250,000 in MAGI and $75,000 in NII, your tax would be 3.8% × $50,000 ($250,000 - $200,000), or $1,900.

NII generally includes net income from, among others, taxable interest, dividends, capital gains, rents, royalties and passive business activities. Several types of income are excluded from NII, such as wages, most nonpassive business income, retirement plan distributions and Social Security benefits. Also excluded is the nontaxable gain on the sale of a personal residence.

Given the way the NII tax is calculated, you can reduce the tax either by reducing your MAGI or reducing your NII. To accomplish the former, you could maximize contributions to IRAs and qualified retirement plans. To do the latter, you might invest in tax-exempt municipal bonds or in growth stocks that pay little or no dividends.

There are many strategies for reducing the NII tax. Consult with one of our tax advisors before implementing any of them. And remember that, while tax reduction is important, it’s not the only factor in prudent investment decision-making.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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

LIVING THE DREAM OF EARLY RETIREMENT

Posted by Admin Posted on Nov 18 2020

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Many people dream of retiring early so they can pursue activities other than work, such as volunteering, traveling and pursuing their hobbies full-time. But making this dream a reality requires careful planning and diligent saving during the years leading up to the anticipated retirement date.

It all starts with retirement savings accounts such as IRAs and 401(k)s. Among the best ways to retire early is to build up these accounts as quickly as possible by contributing the maximum amount allowed by law each year.

From there, consider other potential sources of retirement income, such as a company pension plan. If you have one, either under a past or current employer, research whether you can receive benefits if you retire early. Then factor this income into your retirement budget.

Of course, you’re likely planning on Social Security benefits composing a portion of your retirement income. If so, keep in mind that the earliest you can begin receiving Social Security retirement benefits is age 62 (though waiting until later may allow you to collect more).

The flip side of saving up enough retirement income is reducing your living expenses during retirement. For example, many people strive to pay off their home mortgages early, which can possibly free up enough monthly cash flow to make early retirement feasible.

By saving as much money as you can in your retirement savings accounts, carefully planning your Social Security strategies and cutting your living expenses in retirement, you just might be able to make this dream a reality. 

If you have any questions regarding Essential Business Accounting, Domestic Taxation, 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: Check tax withholdings now as the last quarter of 2020 begins

Posted by Admin Posted on Nov 02 2020

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WASHINGTON — The Internal Revenue Service today reminded taxpayers that now is the perfect time to review their tax withholding and payments to avoid a surprise when filing next year.

An adjustment or two made now may boost take home pay or allow taxpayers to pay more in the last quarter of 2020 to avoid a surprise tax bill.

Some things to consider that will affect taxes owed in 2020 include:

  • Coronavirus tax relief – Tax help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19).
  • Disasters such as wildfires and hurricanes – Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.
  • Unemployment compensation – Millions of Americans got taxable unemployment compensation, many of them for the first time. Taxes can be withheld from their benefits.
  • Job loss – IRS Publication 4128, Tax Impact of Job Loss PDF, explains how this unfortunate circumstance can create new tax issues.
  • Workers moving into the gig economy due to the pandemic – IRS advises people earning income in the gig economy to consider quarterly estimated tax payments to stay current.
  • Life changes such as marriage or childbirth – Getting married or having a child are just a couple of life events that can affect your refund or how much you owe.

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, over withhold their taxes every year which typically results in a refund. The average refund in 2020 was well over $2,400.

Taxpayers can pay electronically, throughout the year, online, by phone or with a mobile device and the IRS2Go app. They can choose an electronic payment option to schedule estimated tax payments and receive email notifications about their payments.

Taxpayers can also visit IRS.gov/account to view their taxes owed, payment history and key tax return information from their most recent tax return as originally filed and, if they have one, they'll see details about their payment plan.

Regarding refunds

IRS reminds people that there are many factors that affect the timing of a refund. The fastest way to get a tax refund is by filing electronically and choosing Direct Deposit. IRS issues most refunds in less than 21 days, but it's possible it can take longer.

Tax Withholding Estimator

The IRS launched an improved Tax Withholding Estimator tool last summer to make it easier for everyone to have the right amount of tax withheld during the year. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It's also an important step for those who made withholding adjustments in 2020, had a major life change or were adversely affected by the pandemic.

The tool offers workers, as well as retirees, self-employed individuals and other taxpayers, a more user-friendly step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments.

The tax withholding estimator has several key features for ease of use:

  • Plain language throughout the tool to improve comprehension.
  • The ability to more effectively target at the time of filing either a tax due amount close to zero or a refund amount.
  • A progress tracker to help users see how much more information they need to input.
  • The ability to move back and forth through the steps, correct previous entries and skip questions that don't apply.
  • Enhanced tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
  • Self-employment tax for a user who has self-employment income in addition to wages or pensions.
  • Automatic calculation of the taxable portion of any Social Security benefits.
  • A mobile-friendly design.

In addition, the new Tax Withholding Estimator makes it easier to enter wages and withholding for each job held by the taxpayer and their spouse, as well as separately entering pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and each spouse and clearly explains what the taxpayer should do next.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, International Taxation, IRS Representation, U.S. Tax Implications of Real Estate Transactions or Financial  tatements, please give us a call at 305-274-5811.                                   

Source : IRS

Newly expanded ‘Closing a Business’ information provides step-by-step actions

Posted by Admin Posted on Nov 02 2020

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Closing your business can be a difficult and challenging task. The Taxpayer Advocate Service (TAS) partnered with IRS to expand its Closing a Business page to help business owners understand the specific actions needed, from a federal tax perspective, for each type of business.

However, before you make the decision to close, if it is due to financial reasons related to the coronavirus, please use TAS’s COVID-19 Business Tax Relief Tool to see if you qualify for new employer tax credits that may help you stay in business. Read more about the benefits of this tool before you try.

If ultimately you do need to close your business, whether you have a sole proprietorship, partnership or corporation, the information on this page will help you understand:

  • What forms you need to file;
  • How to report the income you receive; and,
  • How to claim the expenses you incur before closing your business.

Remember to also check your state responsibilities when closing a business.

TAS Resources

Taxpayer Advocate Service Help

The Taxpayer Advocate Service (TAS) is uniquely positioned to assist all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. If you qualify for our help, an advocate will be with you at every turn and do everything possible to assist through the process.

Currently, TAS is open to virtually serve taxpayers who find themselves in hardship situations or dealing with IRS tax problems they’ve been unable to resolve directly with the IRS. Visit our Contact Us page to learn more.

If you have any questions regarding Essential Business Accounting, Domestic Taxation, International Taxation, IRS Representation, U.S. Tax Implications of Real Estate Transactions or Financial  tatements, please give us a call at 305-274-5811.                                   

Source: TAS