It is never too early to begin planning for retirement. Individual retirement accounts provide tax incentives for people to make investments that can provide financial security when they retire. These accounts can be with a bank or other financial institution, a life insurance company, mutual fund or stockbroker.

A traditional IRA is the most common type of individual retirement account. IRAs let earnings grow tax deferred. Individuals pay taxes on investment gains only when they make withdrawals. Depositors may be able to claim a deduction on their individual federal income tax return for the amount they contributed to an IRA.

What to consider before investing in a traditional IRA

• A traditional IRA is a tax-advantaged personal savings plan where contributions may be tax deductible.
• Generally, the money in a traditional IRA isn't taxed until it's withdrawn.
• There are annual limits to contributions depending on the person's age and the type of IRA.
• When planning when to withdraw money from an IRA, taxpayers should know that:
  • They may face a 10% penalty and a tax bill if they withdraw money before age 59½ unless they qualify for an exception.
  • Usually, they must start taking withdrawals from their IRA when they reach age 73 (age 72 if they turned 72 in 2022). For tax years 2019 and earlier, that age was 70½.
  • Special distribution rules apply for IRA beneficiaries.

Differences between a Roth and a traditional IRA

A Roth IRA is another tax-advantaged personal savings plan with many of the same rules as a traditional IRA, but there are exceptions:

• A taxpayer can't deduct contributions to a Roth IRA.
• Qualified distributions are tax free.
• Roth IRAs don't require withdrawals until after the death of the owner.

Other types of IRAs

• Simplified Employee Pension – A SEP IRA is set up by an employer. The employer makes contributions directly to an IRA set up for each employee.
• Savings Incentive Match Plan for Employees – A SIMPLE IRA allows the employer and employees to contribute to an IRA set up for each employee. It is suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan.
• Payroll Deduction IRA – Employees set up a traditional or a Roth IRA with a financial institution and authorize a payroll deduction agreement with their employer.
• Rollover IRA – The IRA owner receives a payment from their retirement plan and deposits it into an IRA within 60 days.

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 +1-305-274-5811.

Source : IRS      

When disaster strikes, Americans can always be counted on to help. That help comes in countless ways, but often the easiest way to help is by donating money to charities.

Sadly, criminals are just as likely to answer the call after a disaster or emergency as the millions of people who open their wallets. Scammers solicit donations to fake charities and can pose as employees of legitimate charities or federal agencies to dupe disaster victims trying to get disaster relief.

Although some legitimate charities do contact people out of the blue, people should always be suspicious of unsolicited contact.

Taxpayers donating money should keep a few things in mind:

• Use the IRS Tax Exempt Organization Search tool to find or verify qualified charities. Donations to these real charities may be tax deductible.
• Research a charity before sending a donation to confirm that the charity is real and to know whether the donation is tax deductible.
• Always get a receipt and keep a record of the donation.
• Review bank and credit card statements closely to make sure donation amounts are accurate.

Keep scammers' tricks in mind:

• Legitimate charities do not ask for gift cards, cash, or wire transfers.
• Scammers may claim to work for the IRS or another government agency.
• Thieves may pose as a representative of a legitimate charity to ask for money or private information from well-intentioned taxpayers.
• Scammers can change their caller ID to make it appear they are a legitimate organization calling from a legitimate phone number.
• Scammers make vague and sentimental claims but give no specifics about how your donation will be used.
• Scammers set up bogus websites using names that sound like real charities.
• Bogus organizations often claim a donation is tax deductible when it's not.

Disaster victims should know:

Disaster victims can call the IRS disaster assistance line at 866-562-5227. IRS representatives will answer questions about tax relief or disaster-related tax issues.

Donating to a charity is a great way to help others after a disaster or emergency. If taxpayers suspect a scam or fraud, they can report it to The Federal Trade Commission

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 +1-305-274-5811

Source : IRS      

The Internal Revenue Service announced the annual inflation adjustments for more than 60 tax provisions for tax year 2024, including the tax rate schedules and other tax changes. Revenue Procedure 2023-34 provides detailed information about these annual adjustments.

New for 2024

Starting in calendar year 2023, the Inflation Reduction Act reinstates the Hazardous Substance Superfund financing rate for crude oil received at U.S. refineries, and petroleum products that entered into the United States for consumption, use, or warehousing. The tax rate is the sum of the Hazardous Substance Superfund rate and the Oil Spill Liability Trust Fund financing rate. For calendar years beginning in 2024, the Hazardous Substance Superfund financing rate is adjusted for inflation. For calendar year 2024 crude oil or petroleum products entered after

Dec. 31, 2016, will have a tax rate of $0.26 cents a barrel.

Highlights of changes in Revenue Procedure 2023-34:

The tax year 2024 adjustments described below generally apply to income tax returns filed in 2025. The tax items for tax year 2024 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
   
• Marginal rates: For tax year 2024, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly).

The other rates are:

35% for incomes over $243,725 ($487,450 for married couples filing jointly)
32% for incomes over $191,950 ($383,900 for married couples filing jointly)
24% for incomes over $100,525 ($201,050 for married couples filing jointly)
22% for incomes over $47,150 ($94,300 for married couples filing jointly)
12% for incomes over $11,600 ($23,200 for married couples filing jointly)

The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).
 

• The Alternative Minimum Tax exemption amount for tax year 2024 is $85,700 and begins to phase out at $609,350 ($133,300 for married couples filing jointly for whom the exemption begins to phase out at $1,218,700). For comparison, the 2023 exemption amount was $81,300 and began to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption began to phase out at $1,156,300).
   
• The tax year 2024 maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers who have three or more qualifying children, an increase of from $7,430 for tax year 2023. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
   
• For tax year 2024, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $315, an increase of $15 from the limit for 2023.
   
• For the taxable years beginning in 2024, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $640, an increase of $30 from taxable years beginning in 2023.
   
• For tax year 2024, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,800, an increase of $150 from tax year 2023, but not more than $4,150, an increase of $200 from tax year 2023. For self-only coverage, the maximum out-of-pocket expense amount is $5,550, an increase of $250 from 2023. For tax year 2024, for family coverage, the annual deductible is not less than $5,550, an increase of $200 from tax year 2023; however, the deductible cannot be more than $8,350, an increase of $450 versus the limit for tax year 2023. For family coverage, the out-of-pocket expense limit is $10,200 for tax year 2024, an increase of $550 from tax year 2023.
   
• For tax year 2024, the foreign earned income exclusion is $126,500, increased from $120,000 for tax year 2023.
   
• Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000, increased from $12,920,000 for estates of decedents who died in 2023.
   
• The annual exclusion for gifts increases to $18,000 for calendar year 2024, increased from $17,000 for calendar year 2023.
         
• The maximum credit allowed for adoptions for tax year 2024 is the amount of qualified adoption expenses up to $16,810, increased from $15,950 for 2023.

• Items unaffected by indexing:

  By statute, certain items that were indexed for inflation in the past are currently not adjusted.

• The personal exemption for tax year 2024 remains at 0, as it was for 2023. This elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
   
• For 2024, as in 2023, 2022, 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
   
• The modified adjusted gross income amount used by taxpayers to determine the reduction in the Lifetime Learning Credit provided in § 25A(d)(2) is not adjusted for inflation for taxable years beginning after Dec. 31, 2020. The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns).

• 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 +1-305-274-5811.17 SW 88^th ST, Mi1773

    

  Source : IRS 

•  

On Giving Tuesday and as part of Charity Fraud Awareness Week, the Internal Revenue Service highlighted its continued support of international efforts to fight fraud and charity scams.

The IRS supports this effort as part of its ongoing commitment to fight fraud against charities, businesses and individuals. It's estimated that charitable organizations lose 5% of their revenue each year to fraud, according to the Fraud Advisory Panel, a UK-based organization that leads the effort in organizing Charity Fraud Awareness Week, which runs from Nov. 27-Dec. 1.

Charities, regulators, agencies, law enforcement and other not-for-profit stakeholders around the world work together to raise awareness about fraud and cybercrime that affect charities. During this week of awareness, supporters actively discuss fraud and cybercrime, share best practices and offer helpful resources.

"We thank the Fraud Advisory Panel for the important work that goes into Charity Fraud Awareness Week and for reminding donors to remain vigilant," said IRS Director of Exempt Organizations and Government Entities Robert Malone. "Unfortunately, charity scammers look for opportunities to take advantage of situations, such as natural disasters, when exempt organizations are making an effort to help. Donors and charitable organizations alike should remain vigilant to protect their assets from fraudsters. I urge donors to verify a charity's tax-exempt status at Tax Exempt Organization Search before donating goods, services or money."

Be aware of fake charities

In addition to cybercrime targeting charities, criminals also create fake charities. To learn more about how scammers use fake charities, read the IRS' Dirty Dozen tax scams for 2023. Taxpayers should verify legitimate and qualified charities using the Tax Exempt Organization Search tool. Donors should never feel pressured to give immediately.

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 +1-305-274-5811.

Source : IRS     

Following a dramatically improved 2023 filing season thanks to Inflation Reduction Act (IRA) investments, the Internal Revenue Service has targeted IRA resources on strengthening enforcement, with announcements on new initiatives to pursue high-income, high-wealth individuals who do not pay overdue tax bills and complex partnerships.

The IRS announced new initiatives to ensure large corporations pay taxes owed. As these initiatives to improve compliance among high-income individuals, complex partnerships and large corporations ramp up, the IRS is continuing its work to improve customer service and modernize core technology infrastructure, most notably with the launch of business tax account.

Ensuring large corporations and high-income, high-wealth individual taxpayers pay taxes owed

The IRS is working to ensure large corporate and high-income individual filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

• Large foreign-owned corporations transfer pricing initiative: The IRS is increasing compliance efforts on the U.S. subsidiaries of foreign companies that distribute goods in the U.S. and do not pay their fair share of tax on the profit they earn of their U.S. activity. These foreign companies report losses or exceedingly low margins year after year through the improper use of transfer pricing to avoid reporting an appropriate amount of U.S. profits. To crack down on this strategy, the IRS is sending compliance alerts to approximately 150 subsidiaries of large foreign corporations to reiterate their U.S. tax obligations and incentivize self-correction.

• Expansion of the Large Corporate Compliance program: The IRS' Large Business & International Division's (LB&I) Large Corporate Compliance (LCC) program focuses on noncompliance by using data analytics to identify large corporate taxpayers for audit. LCC includes the largest and most complex corporate taxpayers with average assets of more than $24 billion and average taxable income of approximately $526 million per year. As new accountants come on board in early 2024, LB&I is expanding the program by starting an additional 60 audits of the largest corporate taxpayers selected using a combination of artificial intelligence and subject matter expertise in areas such as cross-border issues and corporate planning and transactions.

• Cracking down on abuse of repealed corporate tax break: Following the 2017 repeal of a provision of the code that provided a deduction for producing goods in the U.S., the IRS received hundreds of claims collectively seeking more than $6 billion in refunds, with a significant portion of filers claiming the deduction for the first time. The IRS launched a campaign to address noncompliance and review high-risk claims in this area. IRS efforts have been incredibly successful in ensuring revenue is collected. The efforts have recently been supported by a significant win in the Tenth Circuit Court of Appeals, which sided with the Tax Court and IRS in denying a refund claim based on a $1.8 billion deduction. This will have far-reaching benefits to the IRS' ongoing efforts in this space.

• Prioritization of high-income cases: The IRS has been ramping up efforts to pursue high-income, high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt. These efforts are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Building off earlier successes that collected $38 million from more than 175 high-income earners, dozens of revenue officers are focusing on these high-end collection cases in the coming fiscal year. As announced in September, the IRS has begun contacting about 1,600 new taxpayers in this category that owe hundreds of millions of dollars in taxes.

·       The IRS has now collected $122 million dollars in 100 of these already assigned 1,600 cases. Examples of cases closed since the Inflation Reduction Act passed follow:

·        

o   An individual last month was ordered to pay more than $15 million in restitution. The individual falsified millions of dollars of personal expenses as deductible business expenses and financed construction of a 51,000-square-foot mansion, including expenses of interior and exterior construction costs; an outdoor pool and pool house; and tennis, basketball and bocce courts. The individual falsified millions of dollars of expenses for luxury vehicles, artwork, country club memberships and homes for his children.
 

o   An individual last week pled guilty to filing false tax returns and skimming more than $670,000 from his business. The individual spent $110,000 on personal expenses and $502,000 on gambling.
 

o   An individual was sentenced to 54 months in federal prison for fraudulently obtaining $5 million in COVID relief loans for sham businesses. The individual then spent the money on himself, purchasing Ferrari, Bentley and Lamborghini cars.

Improving taxpayer service

The IRS is focused on helping taxpayers get it right the first time — claiming the credits and deductions for which they're eligible and avoiding back-and-forth with the agency when errors arise. To help taxpayers get it right, the IRS is working toward taxpayers being able to seamlessly interact with the agency in the ways that work best for them on the phone, in-person and online.

The IRS is expanding in-person service and meeting taxpayers where they are, particularly those in underserved and rural communities. The IRS is continuing to expand Taxpayer Assistance Centers across the country while also starting a special series of events to help taxpayers living in areas far from the agency's in-person offices.

• Community Assistance Visits: In these new Community Assistance Visits, the IRS will set up a temporary Taxpayer Assistance Center to give taxpayers from hard-to-reach areas an opportunity to meet face-to-face with IRS customer service representatives. The IRS has conducted seven events in Paris, Texas; Alpena, Michigan; Hastings, Nebraska; Twin Falls, Idaho; Juneau, Alaska; Lihue, Hawaii; and Baker City, Oregon. Many of the taxpayers served at these events had exhausted all other options for IRS services. The feedback from IRS employees, taxpayers and the host sites have all been very positive. Currently, two additional locations have been identified to host Community Assistance Visits in Ciales, Puerto Rico and Gallup, New Mexico.

Opening Taxpayer Assistance Centers: Currently, the IRS has opened or reopened the following 50 Taxpayer Assistance Centers since the passage of the Inflation Reduction Act, including eight additional centers since the first anniversary of the law's enactment:

• Taxpayer Assistance Center hiring update: As of September 23, the IRS has hired 745 employees to staff Taxpayer Assistance Centers. This represents a 31% net increase in Taxpayer Assistance Center staffing compared to fiscal year 2022, and IRS continues to hire to replace departing staff. Taxpayer Assistance Centers have served about 235,000 more taxpayers in fiscal year 2023 than fiscal year 2022, an 18% increase.

Taxpayers deserve the same functionality in their online accounts that they experience with their bank or other financial institutions. As detailed in the Strategic Operating Plan, in the next five years, taxpayers will be able to securely file all documents and respond to all notices online and securely access and download their data and account history. The IRS has hit or has in-progress several milestones toward this goal, including the launch of business tax account, the expansion of its Document Upload Tool to accept responses to nearly all notices and letters, and the launch of digital mobile-adaptive forms.

• Business tax account: IRS launched the first phase of business tax account that over time will allow business taxpayers to check their tax payment history, make payments, view notices, authorize powers of attorney and conduct other business with the IRS. This initial phase allows unincorporated sole proprietors who have an active Employer Identification Number to set up a business tax account, where they can view their business profile and manage authorized users. Future improvements will allow taxpayers to use their business tax accounts to view letters or notices, request tax transcripts, add third parties for power of attorney or tax information authorizations, schedule or cancel tax payments and store bank account information.

• Respond to notices online: Taxpayers are now able to respond to notices online. Until filing season 2023, when taxpayers received notices for things like document verification, they had to respond through the mail. During filing season 2023, taxpayers were able to respond to 10 of the most common notices for credits like the Earned Income and Health Insurance Tax Credits online, saving them time and money. As of September 29, the IRS has received more than 32,000 responses to notices via the online tool.

• Enable taxpayers to submit mobile-friendly forms: The IRS is enabling taxpayers to submit mobile-friendly forms with the launch of the first three forms. These forms are adaptive for mobile device screen and can be submitted electronically when completed. This is also an important milestone toward the IRS goal of meeting taxpayers where they are and allowing them to interact with the IRS in the ways that work best for them. An estimated 15% of Americans rely solely on mobile phones for their internet access — they do not have broadband at home — so it is important to make forms available in mobile-friendly formats. The first three forms launched at the end of September.
   
  • Form 15109, Request for Tax Deferment. Taxpayers can provide information related to their entry and exit from service in combat ones, contingency operations or hazardous duty stations.
     
  • Form 14039, Identity Theft Affidavit. Taxpayers can provide information related to the fraudulent use of their and/or dependent identity.
     
  • Form 14242, Reporting Abusive Tax Promotions and/or Preparers. Taxpayers use this form to provide detail information about tax schemes.
     
  • A fourth form, Form 13909, Tax-Exempt Organization Complaint, will launch later this fall. At least 20 of the most-used tax forms will launch in early 2024.

In addition, the IRS continues to expand the functionality of several online platforms:

• Individual account: The IRS continues to deploy enhanced capabilities for individual accounts, following the May launch of virtual assistance and live chat. Taxpayers can now validate their bank accounts and save multiple accounts, eliminating the need to re-enter bank account information every time they make a payment. This feature launched at the end of September.

• Tax professional account: The IRS continues to provide enhanced capabilities for tax professionals' online accounts, helping practitioners manage their active client authorizations on file with the Centralized Authorization File (CAF) database, which stores the information on individuals authorized to act on a taxpayer's behalf. Other enhancements put into place in September 2023 allow tax professionals to view their client's tax information, including balance due amounts. Tax Pro Account users can now also withdraw from their active authorizations online in real time.

Modernizing Technology

On the technology side, the IRS is modernizing decades-old technology to drive the agency's efforts to provide world class customer service and protect taxpayers' data.

• Enable taxpayers to submit mobile-friendly forms: The IRS is enabling taxpayers to submit mobile-friendly forms with the launch of the first three forms. These forms are adaptive for mobile device screen and can be submitted electronically when completed. This is also an important milestone toward the IRS goal of meeting taxpayers where they are and allowing them to interact with the IRS in the ways that work best for them. An estimated 15% of Americans rely solely on mobile phones for their internet access — they do not have broadband at home — so it is important to make forms available in mobile-friendly formats. The first three forms launched at the end of September.
   
  • Form 15109, Request for Tax Deferment. Taxpayers can provide information related to their entry and exit from service in combat ones, contingency operations or hazardous duty stations.
     
  • Form 14039, Identity Theft Affidavit. Taxpayers can provide information related to the fraudulent use of their and/or dependent identity.
     
  • Form 14242, Reporting Abusive Tax Promotions and/or Preparers. Taxpayers use this form to provide detail information about tax schemes.
     
  • A fourth form, Form 13909, Tax-Exempt Organization Complaint, will launch later this fall. At least 20 of the most-used tax forms will launch in early 2024.

In addition, the IRS continues to expand the functionality of several online platforms:

• Individual account: The IRS continues to deploy enhanced capabilities for individual accounts, following the May launch of virtual assistance and live chat. Taxpayers can now validate their bank accounts and save multiple accounts, eliminating the need to re-enter bank account information every time they make a payment. This feature launched at the end of September.

• Tax professional account: The IRS continues to provide enhanced capabilities for tax professionals' online accounts, helping practitioners manage their active client authorizations on file with the Centralized Authorization File (CAF) database, which stores the information on individuals authorized to act on a taxpayer's behalf. Other enhancements put into place in September 2023 allow tax professionals to view their client's tax information, including balance due amounts. Tax Pro Account users can now also withdraw from their active authorizations online in real time.

Modernizing Technology

On the technology side, the IRS is modernizing decades-old technology to drive the agency's efforts to provide world class customer service and protect taxpayers' data.

• Enable taxpayers to submit mobile-friendly forms: The IRS is enabling taxpayers to submit mobile-friendly forms with the launch of the first three forms. These forms are adaptive for mobile device screen and can be submitted electronically when completed. This is also an important milestone toward the IRS goal of meeting taxpayers where they are and allowing them to interact with the IRS in the ways that work best for them. An estimated 15% of Americans rely solely on mobile phones for their internet access — they do not have broadband at home — so it is important to make forms available in mobile-friendly formats. The first three forms launched at the end of September.
   
  • Form 15109, Request for Tax Deferment. Taxpayers can provide information related to their entry and exit from service in combat ones, contingency operations or hazardous duty stations.
     
  • Form 14039, Identity Theft Affidavit. Taxpayers can provide information related to the fraudulent use of their and/or dependent identity.
     
  • Form 14242, Reporting Abusive Tax Promotions and/or Preparers. Taxpayers use this form to provide detail information about tax schemes.
     
  • A fourth form, Form 13909, Tax-Exempt Organization Complaint, will launch later this fall. At least 20 of the most-used tax forms will launch in early 2024.

In addition, the IRS continues to expand the functionality of several online platforms:

• Individual account: The IRS continues to deploy enhanced capabilities for individual accounts, following the May launch of virtual assistance and live chat. Taxpayers can now validate their bank accounts and save multiple accounts, eliminating the need to re-enter bank account information every time they make a payment. This feature launched at the end of September.

• Tax professional account: The IRS continues to provide enhanced capabilities for tax professionals' online accounts, helping practitioners manage their active client authorizations on file with the Centralized Authorization File (CAF) database, which stores the information on individuals authorized to act on a taxpayer's behalf. Other enhancements put into place in September 2023 allow tax professionals to view their client's tax information, including balance due amounts. Tax Pro Account users can now also withdraw from their active authorizations online in real time.

Modernizing Technology

On the technology side, the IRS is modernizing decades-old technology to drive the agency's efforts to provide world class customer service and protect taxpayers' data.

• Digitalization: The IRS also continues to make significant progress scanning and e-filing paper returns.
   
  • As of October, the IRS had scanned more than 1 million forms during the 2023 calendar year — more than 480,000 Forms 940, 579,000 Forms 941 and more than 90,000 Forms 1040. Digitization has far-reaching implications for improving IRS service. Digitizing paper returns will eliminate errors that result from manually inputting data from paper returns, which will speed up processing, reduce storage costs and allow IRS to focus more resources on customer service. Once paper returns are digitized, extracting the data will enable IRS customer service employees to answer taxpayer questions and resolve issues more quickly and accurately. Customer service employees do not currently have easy access to the information from paper returns and other correspondence submitted by mail. Digitization and data extraction will give them access to that information they need to better serve taxpayers.

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 +1-305-274-5811.

Source : IRS      

Employers that offer educational assistance programs can also use those programs to help pay their employees' student loans.

Though educational assistance programs have been available for many years, the option to use them to pay student loans is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.

Traditionally, educational assistance programs have been used to pay for books, equipment, supplies, fees, tuition and other education expenses for the employee. These programs can now also be used to pay principal and interest on an employee's qualified education loans. Payments made directly to the lender, as well as those made to the employee, qualify. By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

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 +1-305-274-5811.

Source: IRS      

Los empleadores que ofrecen programas de asistencia educativa también pueden usar esos programas para ayudar a pagar los préstamos estudiantiles de sus empleados.

Aunque los programas de asistencia educativa han estado disponibles durante muchos años, la opción de usarlos para pagar préstamos estudiantiles está disponible solo para pagos realizados después del 27 de marzo de 2020. Según la ley actual, esta opción estará disponible hasta el 31 de diciembre de 2025.

Tradicionalmente, los programas de asistencia educativa se han usado para pagar libros, equipos, materiales, cuotas, matrícula y otros gastos educativos del empleado. Estos programas ahora también se pueden usar para pagar el capital y los intereses de los préstamos educativos calificados de un empleado. Los pagos realizados directamente al prestamista, así como los realizados al empleado, califican. Por ley, los beneficios libres de impuestos bajo un programa de asistencia educativa están limitados a $5,250 por empleado por año. Normalmente, la asistencia proporcionada por encima de ese nivel está sujeta a impuestos como salario.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS     

The Deductibility of Medical Expenses

Individual taxpayers may be able to claim medical expense deductions on their tax returns. However, the rules can be challenging, and qualifying can be difficult.

5 key points

Here are five points to keep in mind:

1. You must itemize to claim the deduction and have a lot of expenses. The medical expense deduction can be claimed only to the extent your unreimbursed costs exceed 7.5% of your adjusted gross income. If your total itemized deductions in 2023 will exceed your standard deduction, moving or “bunching” nonurgent medical procedures and other controllable expenses into this year may allow you to exceed the 7.5% floor and benefit from the deduction.

2. Health insurance premiums may help. These can total thousands of dollars a year. You may be able deduct the portion of the premiums that you pay for employer-provided health coverage, but only if they aren’t taken out of your paycheck pre-tax. Long-term care insurance premiums are also included as medical expenses, subject to limits based on age.

3. Transportation counts. The cost of getting to and from medical appointments counts as a medical expense. This includes taxis, public transportation or using your own vehicle. Vehicle costs can be calculated at 22 cents a mile for miles driven in 2023, plus tolls and parking. Alternatively, you can deduct certain actual costs (such as for gas and oil) that directly relate to your medical transportation.

4. Controllable costs are key. These include the costs of glasses, hearing aids, dental work, mental health counseling and other ongoing expenses in connection with medical needs. Purely cosmetic expenses generally aren’t eligible. Prescription drugs (including insulin) qualify, but over-the-counter medications and supplements such as aspirin and vitamins don’t. The services of therapists and nurses can qualify if they relate to medical conditions.

5. Don’t overlook smoking-cessation and weight-loss programs. Amounts paid for participating in smoking-cessation programs and for prescribed drugs designed to alleviate nicotine withdrawal are deductible. However, nonprescription nicotine gum and patches aren’t. A weight-loss program is deductible if undertaken as treatment for a disease diagnosed by a physician. Deductible expenses include fees paid to join a program and attend periodic meetings. The cost of diet food isn’t deductible.

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 +1-305-274-5811.

Source : Thomson Reuters      

The IRS provided guidance on the federal tax status of refunds of state or local taxes and certain other payments made by state or local governments to individuals. The IRS previously provided guidance on state payments made in 2022 in news release IR-2023-23, IRS issues guidance on state tax payments to help taxpayers.

The guidance is being issued as part of the IRS's efforts to provide additional certainty to states and their residents regarding the federal income tax consequences of state payments made to taxpayers.

In 2022, a number of states implemented programs to provide payments to certain individuals residing in their states. Many of these programs were related, directly or indirectly, to the various consequences of the Coronavirus Disease 2019 (COVID-19) pandemic, and the programs varied in terms of the types of payments, payment amounts and eligibility criteria. IRS issues guidance on state tax payments to help taxpayers addressed the federal tax treatment of these 2022 payments.

Notice 2023-56 describes certain types of state payments to individuals and the federal tax treatment of those payments. This updates the previous guidance, which only described the taxability of payments made during 2022. Today's notice also requests comments regarding the application of the rules described in this notice, as well as specific aspects of state payment programs or additional situations on which federal income tax guidance would be helpful.

Most taxpayers receiving state tax refunds do not have to include the state tax refund in income for federal tax purposes. As a general rule, taxpayers who choose the standard deduction on their federal income tax returns do not owe federal income tax on state tax refunds.

The vast majority of taxpayers claim the standard deduction. For instance, in tax year 2021, 90% of individuals claimed the standard deduction instead of itemizing their deductions.

Taxpayers who itemize their deductions on their federal income tax returns and receive a state tax refund must include the refund in income only if they deducted the state tax paid. Because of the $10,000 limit on itemized deductions for state income and property taxes, some itemizers are not able to deduct all of the state taxes they paid and do not need to include a refund in income.

Spillover payments under 2022 programs covered by IRS issues guidance on state tax payments to help taxpayers

Some of the 2022 programs included in IRS issues guidance on state tax payments to help taxpayers provided for certain state payments under the program to be made in early 2023. To the extent that the news release provided that taxpayers can exclude the state payment received in 2022 from federal income, this treatment also applies in 2023. This means taxpayers who did not get a payment under the program during 2022 may exclude from federal income a state payment provided under the 2022 program but actually received in 2023.

State general welfare programs

Payments made by states under legislatively provided social benefit programs for the promotion of the general welfare are not included as income on an individual recipient's federal income tax return.

To qualify for the general welfare exclusion, state payments must be paid from a governmental fund, be for the promotion of general welfare (that is, based on the need of the individual or family receiving such payments), and not represent compensation for services.

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 +1-305-274-5811.

Source: IRS      

Teachers often buy classroom supplies with their own money. The Educator Expense Deduction helps them get some of that money back. Eligible teachers and administrators can deduct part of the cost of technology, supplies and training from their taxes. They can claim this deduction only for expenses that weren't reimbursed by their employer, a grant or other sources.

Who is an eligible educator

The taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Things to know about this deduction

Educators can deduct up to $300 of trade or business expenses that weren't reimbursed. If two married educators are filing a joint return, the limit rises to $600. These taxpayers can't deduct more than $300 each.

Qualified expenses are amounts the taxpayer paid themselves during the tax year.

Here are some of the expenses an educator can deduct

• Professional development course fees.
• Books and supplies.
• COVID-19 protective items to stop the spread of the disease in the classroom.
• Computer equipment, including related software and services.
• Other equipment and materials used in the classroom.

If you have any questions regarding 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 +1-305-274-5811.

Source: IRS      

El Servicio de Impuestos Internos les recuerda a los contratistas elegibles que construyen o reconstruyen sustancialmente viviendas calificadas como viviendas de eficiencia energética, que podrían calificar para un crédito tributario de hasta $5,000 por vivienda.

El monto del crédito depende de los requisitos de elegibilidad tal como el tipo de vivienda, la eficiencia energética de la vivienda y la fecha en que alguien compra o renta. Este importante crédito se amplió como parte de la Ley de Reducción de la Inflación de 2022.

Elegibilidad para constructores y viviendas

Para calificar, los contratistas elegibles deben construir o reconstruir sustancialmente una vivienda con eficiencia energética calificada. También deben ser propietarios de la vivienda y tener una base en ella durante la construcción, y deben venderla o rentarla a una persona para usarla como residencia.

Las viviendas también deben ser categorías específicas de viviendas unifamiliares (incluidas las prefabricadas) o viviendas multifamiliares bajo los programas conocido como Energy Star. Además, deben estar ubicadas en los Estados Unidos y cumplir con los requisitos de ahorro de energía aplicables según el tipo de vivienda y la fecha de venta.

Requisitos y cantidad del crédito para 2023 y años posteriores

Para viviendas adquiridas entre 2023 y 2032, el monto del crédito oscila entre $500 y $5,000 según los estándares que se cumplan, que incluyen:

• Requisitos del programa Energy Star
• Requisitos del programa de vivienda lista para el consumo de cero energía
• Requisitos salariales vigentes

Requisitos y montos del crédito antes de 2023

Para viviendas adquiridas antes de 2023, el monto del crédito es de $1,000 o $2,000, dependiendo de los estándares cumplidos, que incluyen:

• Certificar que la casa tiene un nivel anual de consumo de energía de calefacción y refrigeración que es al menos un 50% (o un 30% para ciertas casas prefabricadas) menor que el de una casa comparable que cumple con ciertos estándares de energía, con mejoras en los componentes de la envolvente del edificio que representan al 1/5 (o 1/3 para ciertas casas prefabricadas) de la reducción
• Cumplir con ciertas reglas federales de casas prefabricadas
• Cumplir con ciertos requisitos de Energy Star

Cómo reclamar el crédito correctamente

Los contratistas elegibles deben cumplir con todos los requisitos bajo la Sección 45 L del Código de Impuestos Internos (IRS, por sus siglas en inglés) antes de reclamar el crédito. Puede encontrar directrices de cómo interpretar la Sección 45L en el Aviso 2008-35 (en inglés) (y el Aviso 2008-36 (en inglés) para viviendas fabricadas).

Use el  Formulario 8908, Crédito por la construcción de nuevas viviendas con eficiencia energética (en inglés), para reclamar el crédito bajo la Sección 45L. 

El IRS alienta a los contratistas elegibles a que tengan un buen mantenimiento de registros de todos los documentos requeridos para respaldar un reclamo por el Crédito de la Sección 45L.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente : IRS     

Starting a new business can seem overwhelming for new entrepreneurs or even seasoned professionals. The IRS has resources to help new business owners understand the tax responsibilities of running a business.

Here are a few things any entrepreneur needs to do when starting their business.

Choose a business structure

The form of business determines which income tax return a business needs to file. The most common business structures are:

• Sole proprietorship: An unincorporated business owned by an individual. There's no distinction between the taxpayer and their business.
• Partnership: An unincorporated business with ownership shared between two or more members.
• Corporation: Also known as a C corporation. It's a separate entity owned by shareholders.
• S Corporation: A corporation that elects to pass corporate income, losses, deductions and credits through to the shareholders.
• Limited Liability Company: A business structure allowed by state statute. If a single-member LLC does not elect to be treated as a corporation, the LLC is a "disregarded entity," and the LLC's activities should be reflected on its owner's federal tax return as a sole proprietorship.

Choose a tax year

A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:

• Calendar year: 12 consecutive months beginning January 1 and ending December 31.
• Fiscal year: 12 consecutive months ending on the last day of any month except December.

If an individual files their first tax return using the calendar tax year and later begins business as a sole proprietor, becomes a partner in a partnership, or becomes a shareholder in an S corporation, they must continue to use a calendar tax year unless they get IRS approval to change it or meet one of the exceptions listed in the instructions to Form 1128, Application To Adopt, Change, or Retain a Tax Year.

Apply for an Employer Identification Number

An EIN is also called a Federal Tax Identification Number. It's used to identify a business. Most businesses need one of these numbers, but some don't. For example, a sole proprietor without employees who doesn't file any excise or pension plan tax returns doesn't need an EIN. The EIN checklist on IRS.gov can help business owners know if they need an EIN.

It's important for a business with an EIN to keep the business mailing address, location and responsible party up to date. EIN holders should report changes in the responsible party to the IRS within 60 days.

Have all employees complete these forms:

•  I-9, Employment Eligibility Verification U.S. Citizenship and Immigration Services
•  W-4, Employee's Withholding Certificate

Pay business taxes

The form of business determines what taxes should be paid and how to pay them.

Visit the state's website

Prospective business owners should visit their state's website for info about state tax requirements.

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 +1-305-274-5811

Source : IRS      

Natural disasters can strike without warning. Sometimes even the most diligent taxpayers are left without the important personal and financial records they need. People may need documentation for tax purposes, federal or state assistance programs or insurance claims.

Here are some steps that can help them reconstruct their important records.

Tax records

• Taxpayers can get free federal tax return transcripts immediately using Get Transcript on IRS.gov.
• They can also order transcripts by calling 800-908-9946 and following the prompts.
• People who use a tax professional to file taxes should keep their contact information in a safe place.

Financial statements

Financial statements from credit card companies or banks are usually available online. People can also contact their bank to get paper copies of statements.

Property records

• Homeowners may be able to contact the title company, escrow company or bank that handled the purchase of their home or other property to get documents related to their home.
• Many property records are available online from tax assessors or other government agencies. Check local government websites for information.
• 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.
• Insurance companies often keep records related to property maintained in a home. Taxpayers should keep their property insurance contacts handy.
• Car owners can research the current fair-market value of most vehicles via resources 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 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 +1-305-274-5811.

Source : IRS      

The Internal Revenue Service announced tax relief for individuals and businesses affected by the terrorist attacks in the State of Israel. These taxpayers now have until Oct. 7, 2024, to file various federal returns, make tax payments and perform other time-sensitive tax-related actions.

IRS provided relief to certain taxpayers who, due to the terrorist attacks, may be unable to meet a tax-filing or tax-payment obligation, or may be unable to perform other time-sensitive tax-related actions. The IRS will continue to monitor events and may provide additional relief.

Filing and Payment Relief

This notice postpones various tax filing and payment deadlines that occurred or will occur during the period from Oct. 7, 2023, through Oct. 7, 2024 (postponement period). As a result, affected individuals and businesses will have until Oct. 7, 2024, to file returns and pay any taxes that were originally due during this period. Among other things, this includes:

• Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief. So, these individuals filing on extension have more time to file, but not to pay.
• Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023. Similarly, these corporations have more time to file, but not to pay.
• 2023 individual and business returns and payments normally due on March 15 and April 15, 2024. So, these individuals and businesses have both more time to file and more time to pay.
• Quarterly estimated income tax payments normally due on Jan. 16, April 15, June 17 and Sept. 16, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, April 30 and July 31, 2024.
• Calendar-year tax-exempt organizations whose extensions run out on Nov. 15, 2023.
• Retirement plan contributions and rollovers.

In addition, the penalty for failure to make payroll and excise tax deposits due on or after Oct. 7, 2023 and before Nov. 6, 2023, will be abated as long as the deposits are made by Nov. 6, 2023.

Who Qualifies for Relief?

• Any individual whose principal residence or business entity or sole proprietor whose principal place of business is in Israel, the West Bank or Gaza (the covered area).
• Any individual, business or sole proprietor, or estate or trust whose books, records or tax preparer is located in the covered area.
• Anyone killed, injured, or taken hostage due to the terrorist attacks.
• Any individual affiliated with a recognized government or philanthropic organization and who is assisting in the covered area, such as a relief worker.

The IRS automatically identifies taxpayers whose principal residence or principal place of business is located in the covered area based on previously filed returns and applies relief. Other eligible taxpayers can obtain this relief by calling the IRS disaster hotline at 866-562-5227. Alternatively, international callers may call 267-941-1000.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS for the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

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 +1-305-274-5811.

Source : IRS      

The Internal Revenue Service further postponed tax deadlines for most California taxpayers to Nov. 16, 2023. In the wake of last winter's natural disasters, the normal spring due dates had previously been postponed to Oct. 16.

As a result, most individuals and businesses in California will now have until Nov. 16 to file their 2022 returns and pay any tax due. Fifty-five of California's 58 counties—all except Lassen, Modoc and Shasta counties—qualify. IRS relief is based on three different FEMA disaster declarations covering severe winter storms, flooding, landslides, and mudslides over a period of several months.

The IRS normally provides relief, including postponing various tax filing and payment deadlines, for any area designated by the Federal Emergency Management Agency (FEMA). As long as their address of record is in a disaster-area locality, individual and business taxpayers automatically get the extra time, without having to ask for it. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

What returns and payments qualify for the Nov. 16 deadline?

Eligible returns and payments include:

• 2022 individual income tax returns and payments normally due on April 18.
• For eligible taxpayers, 2022 contributions to IRAs and health savings accounts.
• Quarterly estimated tax payments normally due on April 18, June 15 and Sept. 15.
• Calendar-year 2022 partnership and S corporation returns normally due on March 15.
• Calendar-year 2022 corporate and fiduciary income tax returns and payments normally due on April 18.
• Quarterly payroll and excise tax returns normally due on May 1, July 31 and Oct. 31.
• Calendar-year 2022 returns filed by tax-exempt organizations normally due on May 15.

Other returns, payments and time-sensitive tax-related actions also qualify for the extra time. See the IRS disaster relief page for details.

Do taxpayers need to do anything to benefit from this relief?

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.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer's federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The tax relief is part of a coordinated federal response to the damage caused by these disasters and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.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 +1-305-274-5811.

Source : IRS      

The Treasury Department and Internal Revenue Service issued proposed regulations related to the increased tax credit or deduction amounts for clean energy facilities and projects if taxpayers satisfy certain prevailing wage and registered apprenticeship (PWA) requirements.

Generally, these new proposed rules provide guidance on the PWA requirements, enacted as part of the Inflation Reduction Act, for certain green energy facilities or projects.

The Inflation Reduction Act provides increased credit or deduction amounts that generally apply for taxpayers who satisfy certain PWA requirements regarding the construction, installation, alteration or repair of a qualified facility, qualified property, qualified project, qualified equipment or for certain energy facilities.

Under the tax law, the increased credit or deduction amount is generally equal to the base amount multiplied by five if the taxpayer satisfies the PWA requirements. There are certain limited exceptions where a taxpayer may be eligible for an increased credit amount without satisfying the PWA requirements.

The proposed regulations would provide guidance to taxpayers intending to claim the increased credit or deduction amounts and those intending to transfer increased credit amounts. Additionally, the proposed regulations would provide guidance for taxpayers that initially fail to satisfy the PWA requirements but seek to cure the failure by complying with certain correction and penalty procedures. Finally, the proposed regulations would provide rules concerning specific PWA recordkeeping and reporting requirements.

Also, the IRS released frequently asked questions and Publication 5855 which is an overview of the prevailing wage and apprenticeship requirements and the applicable credits.

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 +1-305-274-5811.

Source: IRS     

Los ladrones siempre buscan nuevas maneras para estafar a los contribuyentes desprevenidos. Los estafadores se hacen pasar por el IRS por teléfono o correo electrónico, en persona, por correo o servicio de entrega, y le cuestan a la gente su tiempo y dinero. Al mantenerse alerta contra estafas, los contribuyentes pueden protegerse.

Los estafadores pueden hacerse pasar por el IRS por correo; los contribuyentes deben conocer los hechos

Una de las estafas más recientes implica que el correo llegue en un sobre de cartón de un servicio de entrega o del Servicio Postal de los Estados Unidos (USPS). La carta adjunta incluye el encabezado del IRS y la redacción de que el aviso es "en relación con su reembolso no reclamado". La información de contacto no pertenece al IRS, pero el correo parece oficial. Esta estafa busca información personal confidencial de los contribuyentes, incluidas las fotos de la licencia de conducir, que los ladrones de identidad pueden usar para robar el reembolso del contribuyente y otra información financiera confidencial.

Ahora es más fácil detectar cuando se trata de un estafador en la puerta y no el IRS

Los estafadores también pueden aparecer en la puerta haciéndose pasar por agentes del IRS y crear confusión, no solo para los contribuyentes, sino también para las agencias locales de cumplimiento de la ley. A medida que esta estafa se ha desarrollado, ha aumentado la confusión de los contribuyentes acerca de las visitas domiciliarias de los funcionarios de cobros de impuestos del IRS.

Para ayudar a combatir estas estafas, el IRS anunció recientemente que pondrá fin a la mayoría de las visitas no anunciadas a los contribuyentes por parte de los funcionarios de cobros de impuestos de la agencia. En lugar de las visitas no anunciadas, los funcionarios de cobros de impuestos se comunicarán con los contribuyentes a través de una carta de cita, conocida como Carta 725-B, y programarán una reunión de seguimiento. Esto ayudará a los contribuyentes a sentirse más preparados cuando sea el momento de reunirse.

Los contribuyentes que reciben una solicitud del IRS por correo o por teléfono siempre pueden comunicarse con el servicio al cliente del IRS para autenticarla.

Los estafadores también pueden comunicarse con los contribuyentes electrónicamente

Los contribuyentes deben estar atentos a una ola de estafas tributarias durante el verano, ya que los ladrones de identidad continúan enviando correos electrónicos y mensajes de texto prometiendo reembolsos de impuestos u ofertas para ayudar a "arreglar" los problemas tributarios. Pueden hacerse pasar por el IRS o profesionales de impuestos, instando al contribuyente a hacer clic en enlaces fraudulentos para que los ladrones de identidad puedan robar información personal valiosa.

Los contribuyentes deben recordar: el IRS nunca inicia el contacto con respecto a una factura o reembolso de impuestos por correo electrónico, mensaje de texto o redes sociales.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente : IRS     

The Department of the Treasury and the Internal Revenue Service issued proposed regulations identifying certain monetized installment sale transactions and substantially similar transactions as listed transactions – abusive tax transactions that must be reported to the IRS.

Material advisors and certain participants in these listed transactions are required to file disclosures with the IRS and are subject to penalties for failure to disclose these transactions.

The IRS listed monetized installment sales this year as part of the agency's Dirty Dozen list of common tax scams and schemes.

Monetized installment sale transactions generally include the following elements:

• A seller of appreciated property, or a person acting on the seller's behalf, identifies a buyer who is willing to purchase the property in exchange for cash or other property. 
   
• The seller enters into an agreement to sell the property to an intermediary in exchange for an installment obligation, which provides for interest payments from the intermediary to the seller. 
   
• The seller then purportedly transfers the property to the intermediary, although the intermediary never actually takes title or takes title to the property only briefly before transferring title to the buyer in exchange for the buyer's cash or other property. 
   
• The seller also obtains a loan with an agreement that provides for interest payments from the seller to the lender that equal the amount of interest that the intermediary pays the seller under the installment obligation. 
   
• Both the installment agreement and the loan provide for interest due over the same periods, with principal due in a balloon payment at or near the end of the term of the installment agreement and loan. 
   
• The sales proceeds received by the intermediary from the buyer, reduced by certain fees, are provided to the lender to fund the loan to the seller or transferred to an escrow account of which the lender is a beneficiary. 
   
• The lender agrees to repay these amounts to the intermediary over the course of the term of the installment obligation.
   
• The seller then treats the sale as an installment sale under section 453 on a federal income tax return for the year of the purported sale and defers recognition of gain until the year in which the seller receives the principal balloon payment.

Written comments regarding the proposed regulations must be submitted by Sept. 3, 2023. A public hearing has been scheduled for Oct. 12, 2023.

Report tax fraud

As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405

Fax: 877-477-9135

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 +1-305-274-5811.

Source : IRS      

By law, all taxpayers have the right to finality of tax matters. For example, taxpayers have the right to know when the IRS has finished an audit. This is one of ten basic rights — known collectively as the Taxpayer Bill of Rights.

Here's what taxpayers should know about their right to finality:

• Taxpayers have the right to know:
  • The maximum amount of time they have to challenge the IRS's position.
  • The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. 
  • When the IRS has finished an audit.
     
• The IRS generally has three years from the date taxpayers file their returns to assess any additional tax for that tax year.
   
• There are some limited exceptions to the three-year rule, including when taxpayers fail to file returns for specific years or file false or fraudulent returns. In these cases, the IRS can assess tax for that tax year at any time.
   
• The IRS generally has 10 years from the assessment date to collect unpaid taxes. The IRS can't extend this 10-year period unless the taxpayer agrees to extend the period as part of an installment agreement to pay tax debt or a court judgment allows the IRS to collect unpaid tax after the 10-year period.
   
• There are circumstances when the 10-year collection period may be suspended. This can happen when the IRS can't collect unpaid tax due to the taxpayer's bankruptcy or there's an ongoing collection due process proceeding involving the taxpayer.
   
• A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.
   
• Generally, a taxpayer can be subject to only one audit per tax year. The IRS may reopen an audit for a previous tax year if the agency finds it necessary. This could happen, for example, if a taxpayer files a fraudulent 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 +1-305-274-5811.

Source : IRS      

Crooks are always looking for new ways to scam unsuspecting taxpayers. Scammers impersonate the IRS by phone or email, in person, or by mail or delivery service – and cost people their time and money. By staying vigilant against schemes and scams, taxpayers can protect themselves.

Scammers can pose as the IRS by mail – taxpayers should know the facts

One of the newest and more devious schemes involves mail coming in a cardboard envelope from either a delivery service or the United States Postal Service (USPS). The enclosed letter includes the IRS masthead and wording that the notice is "in relation to your unclaimed refund." The contact information does not belong to the IRS, but the mailing looks official. This scheme seeks sensitive personal information from taxpayers – including driver's license photos – that can be used by identity thieves to steal the taxpayer's refund and other sensitive financial information.

It's now easier to spot when it's a scammer at the door and not the IRS

Scam artists may also appear at the door posing as IRS agents, creating confusion for not just the taxpayers but also local law enforcement agencies. As this scam has grown, taxpayer confusion about home visits by IRS revenue officers has increased.

To help combat these scams, the IRS recently announced that it is ending most unannounced visits to taxpayers by agency revenue officers. In place of the unannounced visits, revenue officers will instead contact taxpayers through an appointment letter, known as a 725-B Letter, and schedule a follow-up meeting. This will help taxpayers feel more prepared when it is time to meet.

Taxpayers who receive a request from IRS in the mail or by phone can always contact IRS customer service to authenticate it.

Scammers may also contact taxpayers electronically

Taxpayers should be on the lookout for a summer surge of tax scams as identity thieves continue sending email and text messages promising tax refunds or offers to help "fix" tax problems. They may pose as the IRS or tax professionals, urging the taxpayer to click fraudulent links so the identity thieves can steal valuable personal information.

Taxpayers should remember: the IRS never initiates contact regarding a bill or tax refund by email, text or social media.

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 +1-305-274-5811.

Source : IRS      

The Internal Revenue Service reminds eligible contractors who build or substantially reconstruct qualified new energy efficient homes that they might qualify for a tax credit up to $5,000 per home.

The actual amount of the credit depends on eligibility requirements such as the type of home, the home's energy efficiency and the date when someone buys or leases the home. This important credit was expanded as part of the Inflation Reduction Act of 2022.

Eligibility for builders and homes

To qualify, eligible contractors must construct or substantially reconstruct a qualified new energy efficient home. They also must own the home and have a basis in it during the construction, and they must sell or lease the home to a person for use as a residence.

The homes must also be specified categories of single-family (including manufactured) or multifamily homes under Energy Star programs, be located in the United States, and meet applicable energy saving requirements based on home type and acquisition date.

Requirements and credit amounts for 2023 and after

For homes acquired in 2023 through 2032, the credit amount ranges from $500 to $5,000, depending on the standards met, which include:

• Energy Star program requirements
• Zero energy ready home program requirements
• Prevailing wage requirements

Requirements and credit amounts before 2023

For homes acquired before 2023, the credit amount is $1,000 or $2,000, depending on the standards met, which include:

• Certifying that the home has an annual level of heating and cooling energy consumption that is at least 50% (or 30% for certain manufactured homes) less than that of a comparable home that meets certain energy standards, with building envelope component improvements accounting for at least 1/5 (or 1/3 for certain manufactured homes) of the reduction
• Meeting certain federal manufactured home rules
• Meeting certain Energy Star requirements

Properly claiming the credit

Eligible contractors must meet all requirements under Internal Revenue Code Section 45L prior to claiming the credit. Guidance interpreting Section 45L may be found in Notice 2008-35 (and Notice 2008-36, for manufactured homes).

Use Form 8908, Energy Efficient Home Credit, to claim the Section 45L credit. 

The IRS encourages eligible contractors to practice good recordkeeping of all documents required to support a claim for the Section 45L credit.

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 +1-305-274-5811.

Source : IRS     

Being Self- Employed, What Sort of Deductions Can I Take?

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

If I Have a Large Capital Gain this Year, What Can I Do?

If you have a large capital gain this year from an investment, it may be advisable to hold onto the investment until next year to put the gain into next year's taxes. You may also want to sell off any investments that you have that are losing value at the moment to claim your losses.

What Investments Can I Make to Help Defer Taxes?

The interest gained from state and local bonds is usually exempt from federal income taxes. These investments generally pay back at a lower interest rate than commercial bonds of similar quality.

Since Treasury Bonds are similarly exempt from state and local income tax, they can be a particularly good investment for those who are in high tax brackets and live in high-income-tax states.

What Retirement Plans are Available to Aid in the Deferral of Taxes?

You have the ability to invest some of the money that you would have paid in taxes to add to your retirement fund. Many employers will offer the opportunity to defer a portion of your earnings and contribute them directly to your retirement account. Some of them may even match a portion of your savings. If this is the case, it is always advisable to save at least the amount that your employer will match. This will give you an automatic 100% gain on your money.

If you are self-employed, look into getting a Keogh, SIMPLE or a SEP IRA.

What other ways can I defer this year's income?

If you own your business you may want to postpone sending certain invoices to ensure that you will receive payment in the following tax year. This can help greatly if some of this income would push you into a higher tax bracket. You may want to accelerate paying for expenses to cover your taxes in the current 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 +1-305-274-5811.

Source : Thomson Reuters      

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

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

If you have any questions regarding 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 +1-305-274-5811.

Source : Thomson Reuters      

Los negocios y las organizaciones exentas de impuestos deben estar atentas a las señales reveladoras de afirmaciones engañosas relacionadas con el Crédito por retención de empleados (ERC). Los estafadores y los promotores sin escrúpulos continúan publicando anuncios publicitarios agresivos, solicitudes por correo directo y promociones en línea para obtener el crédito. Muchos de estos anuncios tergiversan y exageran enormemente quién puede calificar para el ERC, que a veces también se denomina ERTC o Crédito tributario por retención de empleados.

Cualquiera que reclame indebidamente el ERC tendrá que devolverlo, posiblemente con multas e intereses. El IRS no quiere que eso suceda. Los empleadores deben saber qué es el crédito y quién califica y estar atentos a las señales de advertencia de una estafa. Y deben confiar en el consejo de un profesional de impuestos de confianza, no en mercadeo agresivo o propuestas no solicitadas.

Acerca del ERC

El ERC es un crédito tributario reembolsable de la era de COVID, diseñado para empleadores que siguieron pagando a empleados mientras estaban cerrados debido a orden gubernamental relacionada con COVID-19, o que tuvieron una disminución requerida en los ingresos brutos durante los períodos de elegibilidad. El crédito solo puede ser reclamado por empresas elegibles y organizaciones exentas de impuestos que tuvieron empleados durante un tiempo específico.

Cualquier persona que esté considerando reclamar el ERC debe revisar cuidadosamente los requisitos de elegibilidad específicos en la página Crédito por retención de empleados. Los empleadores elegibles que necesitan ayuda para reclamar el crédito deben trabajar con un profesional de impuestos de confianza.

Las señales de alerta de una estafa de ERC incluyen:

• Llamadas o anuncios no solicitados que mencionan un "proceso de solicitud fácil".
• Declaraciones de que el promotor o la empresa pueden determinar la elegibilidad del ERC en cuestión de minutos o antes de cualquier discusión sobre la situación tributaria del empleador. El Crédito por retención de empleados es un crédito complejo que requiere una revisión cuidadosa antes de aplicar.
• Altos cargos por adelantado para reclamar el crédito.
• Tarifas a base de un porcentaje del monto del reembolso del ERC reclamado.
• Promotores que dicen a las empresas que reclamen el ERC porque no tienen nada que perder. Quienes reciban el crédito indebidamente podrían tener que devolverlo, junto con intereses y multas considerables.
• Promotores que le dicen a los negocios que ignoren los consejos de su profesional de impuestos de confianza.

Estos promotores pueden mentir sobre los requisitos de elegibilidad. Además, cualquier persona que use los servicios de este promotor podría correr el riesgo de que alguien intente robar su identidad o usar su información para tomar una parte del crédito reclamado indebidamente.

Cómo los promotores atraen a las víctimas

El IRS continúa viendo una variedad de maneras en que los promotores pueden atraer a empresas, grupos sin fines de lucro y otros para que soliciten el crédito.

• Mercadeo agresivo. Los anuncios de ERC aparecen en casi todas partes, incluso en la radio, la televisión y en línea, así como en llamadas telefónicas y mensajes de texto.
• Correo directo. Algunos promotores de ERC están enviando cartas a los contribuyentes de grupos inexistentes como el "Department of Employee Retention Credit" ("Departamento de Crédito por retención de empleados"). Los estafadores crearán estas cartas para que parezcan correspondencia oficial del IRS o un correo oficial del gobierno con un lenguaje que insta a la acción inmediata.
• Omitir detalles clave. Los promotores externos del ERC a menudo no explican con precisión los requisitos de elegibilidad o cómo calcular el crédito. Pueden presentar argumentos amplios que sugieran que todos los empleadores son elegibles sin evaluar las circunstancias individuales de un empleador. Además, muchos promotores no les dicen a los empleadores que no pueden reclamar el ERC sobre los salarios que informaron como costos de nómina si recibieron el alivio del préstamo del Programa de Protección de Cheques de Pago.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS     

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.

Partnership taxation up close

Unlike regular corporations, partnerships aren’t subject to income tax. Instead, each partner is taxed on the earnings of the partnership, even if the earnings aren’t distributed. Similarly, if a partnership has a loss, the loss is passed through to the partners. (However, various rules may prevent partners from currently using their shares of the 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.

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 items that may require special treatment 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 for the year just ended.

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.

Questions?

While the pass-through taxation of partnerships offers many advantages, it also has some quirks that can be confusing. Contact us with whatever questions you may have.

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 +1-305-274-5811.

Source: Thomson Reuters     

As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they'll be able to deduct up to $300 of out-of-pocket classroom expenses for 2023 when they file their federal income tax return next year.

This is the same limit that applied in 2022, the first year this provision became subject to inflation adjustment. Before that, the limit was $250. The limit will rise in $50 increments in future years based on inflation adjustments.

This means that an eligible educator can deduct up to $300 of qualifying expenses paid during the year. If they're married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?

Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide who worked in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What's deductible?Educators can deduct the unreimbursed cost of:

Books, supplies and other materials used in the classroom.

• Equipment, including computer equipment, software and services.
• COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention.
• Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.

Qualified expenses don't include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

For 2022 tax returns being filed now: Don't forget to claim educator expenses

For those who received a tax filing extension, qualify for a disaster extension, or for any other reason are still working on their 2022 return, the IRS reminds educators that the rules for claiming the deduction are the same as they are for 2023. For those who obtained an extension, the filing deadline is Oct. 16, 2023. But taxpayers can avoid processing delays by filing before that date.

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 +1-305-274-5811.

Source : IRS      

Update tax withholding

When a taxpayer divorces or separates, they usually need to update their proper tax withholding by filing with their employer a new Form W-4, Employee's Withholding Certificate. If they receive alimony, they may have to make estimated tax payments. Taxpayers can figure out if they're withholding the correct amount with the Tax Withholding Estimator on IRS.gov.

Tax treatment of alimony and separate maintenance

• Amounts paid to a spouse or a former spouse under a divorce decree, a separate maintenance decree or a written separation agreement may be alimony or separate maintenance for federal tax purposes.
• Certain alimony or separate maintenance payments are deductible by the payer spouse, and the recipient spouse must include it in income.

Rules related to dependent children and support

Generally, the parent with custody of a child can claim that child on their tax return. If parents split custody fifty-fifty and aren't filing a joint return, they'll have to decide which parent claims the child. If the parents can't agree, taxpayers should refer to the tie-breaker rules in Publication 504, Divorced or Separated Individuals. Child support payments aren't deductible by the payer and aren't taxable to the payee.

Not all payments under a divorce or separation instrument – including a divorce decree, a separate maintenance decree or a written separation agreement – are alimony or separate maintenance. Alimony and separate maintenance doesn't include:

• Child support
• Noncash property settlements – whether in a lump-sum or installments
• Payments that are your spouse's part of community property income
• Payments to keep up the payer's property
• Use of the payer's property
• Voluntary payments

Child support is never deductible and isn't considered income. Additionally, if a divorce or separation instrument provides for alimony and child support and the payer spouse pays less than the total required, the payments apply to child support first. Only the remaining amount is considered alimony.

Report property transfers, if needed

Usually, if a taxpayer transfers property to their spouse or former spouse because of a divorce, there's no recognized gain or loss on the transfer. People may have to report the transaction on a gift 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 +1-305-274-5811.

Source: IRS

The Oct. 16, 2023, extension filing deadline is coming up, and many taxpayers who requested an extension are now choosing a tax return preparer. Most tax return preparers provide honest, quality service, but there are some bad apples out there – from unethical preparers to outright scammers. When hiring an individual or firm to prepare a tax return, taxpayers need to understand how to choose a tax preparer wisely and what questions to ask.

Things to consider when choosing a tax return preparer

• Ensure the preparer signs and includes their PTIN. By law, anyone who is paid to prepare or help prepare federal tax returns must have a valid Preparer Tax Identification Number. Paid preparers must sign and include their PTIN on any tax return they prepare. 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. Taxpayers should avoid these unethical tax return preparers.
• Make sure the preparer is available year-round. If questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.
• Review the preparer's history. Taxpayers can check with the Better Business Bureau for information about the preparer, any disciplinary actions, and the license status for credentialed preparers. Other resources include: the State Board of Accountancy's website for CPAs; the State Bar Association for attorneys; and the IRS Directory of Federal Tax Return Preparers for enrolled agents, or verify an enrolled agent's status online.
• Ask about service fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax return preparers who claim they can get larger refunds than their competitors.
• Ensure their preparer offers IRS e-file. The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit. 
• Understand the preparer's credentials and qualifications. Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification. Tax return preparers who participate in the Annual Filing Season Program may represent taxpayers in limited situations if they prepared and signed the tax return.

Once a taxpayer has selected a tax preparer, they should stay vigilant

• Good preparers ask to see records and receipts. They'll also ask questions to determine the client's total income, deductions, tax credits and other items. Taxpayers should avoid a tax return preparer who e-files using pay stubs instead of W-2s. This is against IRS rules.
• Taxpayers should review the tax return before signing it and ask questions if something is unclear or inaccurate.
• Any refund should go directly to the taxpayer – not into the preparer's bank account. Taxpayers should check the routing and bank account number on the completed return and make sure they're accurate.
• Taxpayers are responsible for filing a complete and correct tax return. They should never sign a blank or incomplete return and never hire a tax return preparer who asks them to do so.

Taxpayers can report preparer misconduct to the IRS using Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax return preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit

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 +1-305-274-5811.

Source: IRS      

El Servicio de Impuestos Internos anunció alivio tributario para las personas y empresas afectadas por Idalia en cualquier parte de Carolina del Sur. Estos contribuyentes ahora tienen hasta el 15 de febrero de 2024 para presentar varias declaraciones de impuestos federales individuales y comerciales, y realizar pagos de impuestos. Esto es similar al alivio proveído en varias partes de la Florida.

El IRS está ofreciendo alivio a cualquier área designada por la Agencia Federal para el Manejo de Emergencias (FEMA). Todos los 46 condados de Carolina del Sur califican. Las personas y hogares que residen o tienen un negocio en estos condados son elegibles para alivio tributario. La lista actual de localidades elegibles siempre está disponible en la página de Alivio en situaciones de desastre en IRS.gov.

Alivio de presentación y pago

El alivio tributario pospone varios plazos de presentación y pago de impuestos que ocurrieron a partir del 29 de agosto 2023, hasta el 15 de febrero de 2024 (periodo de extensión). Como resultado, las personas y empresas afectadas tendrán hasta el 15 de febrero de 2024 para presentar declaraciones y pagar los impuestos que originalmente adeudaban durante este período.

Esto significa, por ejemplo, que el plazo del 15 de febrero de 2024 ahora aplica a:

• Individuos que tenían una extensión válida para presentar su declaración de 2022 que vencía el 16 de octubre de 2023. Sin embargo, el IRS señaló que debido a que los pagos de impuestos relacionados con estas declaraciones de 2022 vencían el 18 de abril de 2023, esos pagos no elegibles para este alivio.
• Pagos trimestrales de impuestos estimados que normalmente vencen el 15 de septiembre de 2023 y el 16 de enero de 2024.
• Las declaraciones trimestrales de impuestos sobre la nómina y el consumo que normalmente vencen el 31 de octubre de 2023 y el 31 de enero de 2024.
• Asociaciones de año calendario y corporaciones S cuyas extensiones de 2022 vencen el 15 de septiembre de 2023.
• Corporaciones de año calendario cuyas extensiones de 2022 vencen el 16 de octubre de 2023.
• Organizaciones exentas de impuestos de año calendario cuyas prórrogas vencen el 15 de noviembre de 2023.

Además, las multas por no realizar depósitos de impuestos sobre la nómina y el consumo adeudados a partir del 29 de agosto de 2023 y antes del 13 de septiembre de 2023 se reducirán siempre que los depósitos se realicen antes del 13 de septiembre de 2023.

La página de Ayuda y alivio por emergencia en casos de desastre para las personas y los negocios tiene detalles acerca de otras declaraciones, pagos y acciones relacionadas con impuestos que son elegibles para el tiempo adicional.

El IRS proporciona automáticamente la presentación y el alivio de multas a cualquier contribuyente con una dirección registrada con el IRS ubicada en el área del desastre. Por lo tanto, los contribuyentes no necesitan comunicarse con la agencia para obtener este alivio.

Es posible que un contribuyente afectado no tenga una dirección ubicada en el área del desastre registrada con el IRS, por ejemplo, porque se mudó al área del desastre después de presentar su declaración. En este tipo de circunstancias únicas, el contribuyente afectado podría recibir un aviso de multa por presentación tardía o pago atrasado del IRS por el período de aplazamiento. El contribuyente debe llamar al número que figura en el aviso para que se elimine la multa.

Además, el IRS trabajará con cualquier contribuyente que viva fuera del área del desastre, pero cuyos archivos necesarios para cumplir con una fecha límite que ocurra durante el período de aplazamiento se encuentren en el área afectada. Contribuyentes elegibles para el alivio que viven fuera del área de desastre deben comunicarse con el IRS al 866-562-5227. Esto también incluye a los trabajadores que ayudan en las actividades de socorro que están afiliados a un gobierno reconocido como una organización filantrópica.

Alivio tributario adicional

Las personas y empresas en un área de desastre declarada por el gobierno federal que sufrieron pérdidas relacionadas con el desastre no aseguradas o no reembolsadas pueden optar por reclamarlas en la declaración del año en que ocurrió la pérdida (en este caso, la declaración de 2023 que normalmente se presenta el próximo año), o la declaración del año anterior (2022). Los contribuyentes tienen tiempo adicional, hasta seis meses después de la fecha de vencimiento de la declaración de impuestos federales del contribuyente para el año del desastre (sin tener en cuenta cualquier extensión del tiempo para presentar) para hacer la elección. Deben asegurarse de escribir el número de declaración de FEMA – DR-3597-EM − en cualquier declaración que reclama una pérdida. Consulte la Publicación 547 (SP), Hechos Fortuitos, Desastres y Robos para detalles.

Los pagos calificados de ayuda en casos de desastre generalmente se excluyen del ingreso bruto. En general, esto significa que los contribuyentes afectados pueden excluir de sus ingresos brutos las cantidades recibidas de una agencia gubernamental para gastos personales, familiares, de manutención o funerarios razonables y necesarios, así como para la reparación o rehabilitación de su vivienda, o para la reparación o reposición de su contenido. Ver la Publicación 525 (en inglés) para detalles.

Es posible que haya alivio adicional disponible para los contribuyentes afectados que participen en un plan de jubilación o un acuerdo de jubilación individual (IRA). Por ejemplo, un contribuyente puede ser elegible para recibir una distribución especial por desastre que no estaría sujeta al impuesto adicional de distribución anticipada del 10% y le permite al contribuyente distribuir los ingresos en tres años. Los contribuyentes también pueden ser elegibles para realizar un retiro por dificultades económicas. Cada plan o IRA tiene reglas y pautas específicas que deben seguir sus participantes.

El IRS puede brindar ayuda adicional en casos de desastre en el futuro.

El alivio tributario es parte de una respuesta federal coordinada a causa de los daños por estas tormentas y se basa en las evaluaciones de daños locales realizadas por FEMA. Para obtener información acerca de la recuperación ante desastres, visite DisasterAssistance.gov

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.

Fuente: IRS    

The Internal Revenue Service reminded individuals and businesses in most of California and parts of Alabama and Georgia that their 2022 federal income tax returns and tax payments are due on Monday, Oct. 16, 2023. The normal due date of April 18 was postponed for many residents of these states in the wake of natural disasters earlier this year.

The IRS normally provides relief, including postponing various tax filing and payment deadlines, for any area designated by the Federal Emergency Management Agency (FEMA). As long as their address of record is in a disaster-area locality, individual and business taxpayers automatically get the extra time, without having to ask for it.

What areas qualify for the Oct. 16 deadline?

• Thirteen counties in Alabama due to severe storms, straight-line winds and tornadoes starting on Jan. 12. The disaster area includes Autauga, Barbour, Chambers, Conecuh, Coosa, Dallas, Elmore, Greene, Hale, Mobile, Morgan, Sumter and Tallapoosa counties.
• Fifty-five of California's 58 counties - all except Lassen, Modoc and Shasta counties. IRS relief is based on three different FEMA disaster declarations covering various jurisdictions and event time frames.
• Nine counties in Georgia due to severe storms, straight-line winds and tornadoes beginning on Jan. 12. The disaster area includes Butts, Crisp, Henry, Jasper, Meriwether, Newton, Pike, Spalding and Troup counties.

The current list of eligible localities is always available on the disaster relief page on IRS.gov.

What returns and payments qualify for the Oct. 16 deadline?

Eligible returns and payments include:

• 2022 individual income tax returns and payments normally due on April 18.
• For eligible taxpayers, 2022 contributions to IRAs and health savings accounts.
• Quarterly estimated tax payments normally due on April 18, June 15 and Sept. 15.
• Calendar-year 2022 partnership and S corporation returns normally due on March 15.
• Calendar-year 2022 corporate and fiduciary income tax returns and payments normally due on April 18.
• Quarterly payroll and excise tax returns normally due on May 1 and July 31.
• Calendar-year 2022 returns filed by tax-exempt organizations normally due on May 15.

Other returns, payments and time-sensitive tax-related actions also qualify for the extra time. See the IRS disaster relief page for details.

For those planning ahead, is relief available for Hurricane Idalia and the Hawaii wildfires?

Yes, but primarily for individuals and businesses who already requested extensions to file their 2022 returns. In general, these taxpayers now have until Feb. 15, 2024, to file. As a reminder, this is more time to file, not to pay. Details vary but currently, relief is available to:

• Forty-nine counties in Florida.
• Twenty-eight counties in Georgia.
• All 46 counties in South Carolina.
• Maui and Hawaii counties in Hawaii.

Other relief

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 with relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed in early 2024), or the return for the prior year (that is, the 2022 return normally filed in 2023). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these disasters and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.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 +1-305-274-5811.

Source: IRS     

Most taxpayers who requested an extension of time to file for their 2022 federal income tax return will have until Monday, October 16, 2023, to file. 
 

Although October 16 is the last day for most people to file, some taxpayers may have more time. These taxpayers include: 

• Those serving in or in support of the Armed Forces in an area designated as a combat zone or contingency operation. They typically have at least 180 days after they leave the combat zone to file returns and pay any taxes due. For more information, see IRS Publication 3, Armed Forces’ Tax Guide. 

• If you’re a citizen or resident alien working abroad, refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for details. 

• Taxpayers in federally declared disaster areas who already had valid extensions. For more details, see the disaster relief page on IRS.gov.
   

Here are some key reminders for extension filers. 

Tax Filing Information 

Nearly everyone can e-file their tax return for free through IRS Free File. The program is available on IRS.gov now through October 16. E-filing is easy, safe, and the most accurate way for people to file their tax returns. The TAS website has additional information on Free File options and additional information on options for filing a tax return.
Filing when a refund is due: 

Taxpayers who are able should use direct deposit to get their tax refund electronically deposited into their financial account. If you are filing a paper return, check the Where to File Tax Returns webpage or the Form instructions to determine the correct address for where to mail it. 

Paying a tax balance:

Taxpayers who cannot pay in their balance in full should pay as much as possible when filing and evaluate payment options to resolve any remaining balance and avoid or reduce any further potential penalties and interest.  

If you did not already make a payment, the best way to pay is online from a checking or savings account with IRS Direct Pay, by debit or credit card (this option has an associated fee), or by Electronic Funds Withdrawal when you e-file. The TAS website has additional Get Help information on many topics related to paying taxes. 

Taxpayers can always check their account balance, view payments made, view prior tax accounts, or view and apply for payment options online. For more information about online accounts, see our TAS Tax Tip: Create an Online Account to view your balances, make payments, get transcripts, and more and the IRS’s Frequently Asked Questions About Online Account. 

Missed Tax Filing Deadline

What should taxpayers do about a missed filing deadline? Anyone who did not file or request an extension by this year’s deadline, or misses the October 16 extension date, should file and pay as soon as possible. (See the ‘Filing’ section above for more filing related information.) This will stop additional interest and penalties from accruing.  

See the Filing Past Due Tax Returns page on IRS.gov for more information. The TAS website has additional information on the consequences of not filing. 

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 +1-305-274-5811

Source : TAS     

Se acerca la fecha límite de presentación del 16 de octubre de 2023, y muchos contribuyentes que solicitaron una prórroga ahora están considerando contratar los servicios de un preparador de declaraciones de impuestos. La mayoría de los preparadores de declaraciones de impuestos proveen un servicio honesto y de calidad, pero hay algunos sin escrúpulos por ahí, desde preparadores poco éticos hasta estafadores absolutos. Al contratar a una persona o empresa para preparar una declaración de impuestos, los contribuyentes deben entender cómo elegir cuidadosamente a un preparador de impuestos y qué preguntas hacer.

Algunas recomendaciones al escoger un preparador de declaraciones de impuestos:

• Asegúrese de que el preparador firme e incluya su número de identificación de preparador de impuestos. Por ley, cualquier persona a la que se le pague para preparar o ayudar a preparar declaraciones de impuestos federales debe tener un Número de Identificación de Preparador de Impuestos válido. Los preparadores deben firmar las declaraciones e incluir su PTIN en cualquier declaración de impuestos que preparen. No firmar una declaración es una señal de alerta de que el preparador puede estar buscando obtener una ganancia rápida prometiendo un gran reembolso o cobrando tarifas basadas en el tamaño del reembolso. Los contribuyentes deben evitar estos preparadores de declaraciones de impuestos poco éticos.
• Asegúrese de que su preparador esté disponible todo el año. Si surgen preguntas sobre una declaración de impuestos, es posible que los contribuyentes deban comunicarse con el preparador después de que termine la temporada de impuestos.
• Revise el historial del preparador. Los contribuyentes pueden consultar con la Agencia de mejores negocios (BBB, por sus siglas en inglés) (en inglés) para obtener información sobre el preparador, cualquier acción disciplinaria y el estado de la licencia para los preparadores acreditados. Otros recursos incluyen: el sitio web de la Junta Estatal de Contabilidad para CPA; el Colegio de Abogados del Estado; y el Directorio de Preparadores de Impuestos Federales del IRS (en inglés) para agentes inscritos, o verifique el estado de un agente inscrito (en inglés) en línea.
• Preguntar acerca de cuotas. Los Contribuyentes deben evitar usar preparadores de impuestos que basan sus cuotas en un porcentaje del reembolso o que ofrecen depositar el monto total o parcial de su reembolso a sus propias cuentas financieras. Deben tener cuidado con preparadores de impuestos que dicen que pueden obtener un reembolso mayor que sus competidores.
• Preguntar si su preparador planifica usar la presentación electrónica. El IRS emite la mayoría de los reembolsos en menos de 21 días para los contribuyentes que presentan electrónicamente y eligen el depósito directo.
• Entender las credenciales y calificaciones del preparador. Los abogados, contadores públicos y agentes inscritos pueden representar a cualquier cliente ante el IRS en cualquier situación. El Directorio de preparadores de declaraciones de impuestos federales y calificaciones selectas del IRS (en inglés) puede ayudar a identificar a muchos preparadores por tipo de credencial o calificación. Los preparadores de impuestos que participan en el Programa anual de temporada de impuestos (en inglés) pueden representar a los contribuyentes en situaciones limitadas si prepararon y firmaron la declaración de impuestos.

Una vez que un contribuyente ha seleccionado un preparador de impuestos, no debe bajar la guardia

• Los buenos preparadores piden ver los registros y recibos. También harán preguntas para determinar los ingresos totales del cliente, deducciones, créditos tributarios y otros artículos. Los contribuyentes deben evitar a un preparador de declaraciones de impuestos que presente electrónicamente usando talones de pago en lugar de un Formulario W-2. Esto va en contra de las reglas del IRS.
• Los contribuyentes deben revisar la declaración de impuestos antes de firmarla y hacer preguntas si algo no está claro o incorrecto.
• Cualquier reembolso debe ir directamente al contribuyente, no a la cuenta bancaria del preparador. Los contribuyentes deben verificar la ruta y el número de cuenta bancaria en la declaración completa y asegurarse de que sean precisos.
• Los contribuyentes son responsables de presentar una declaración de impuestos completa y correcta. Nunca deben firmar una declaración en blanco o incompleta y nunca contratar a un preparador de declaraciones de impuestos que les pida que lo hagan.

Los contribuyentes pueden reportar la mala conducta del preparador al IRS usando el Formulario 14157 (SP), Queja contra el Preparador de Declaraciones de Impuestos. Si un contribuyente sospecha que un preparador de declaraciones de impuestos presentó o cambió su declaración de impuestos sin su consentimiento, debe presentar el Formulario 14157-A, Declaración jurada de fraude o conducta indebida del preparador de declaraciones de impuestos (en inglés)

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS     

If your child has been awarded a scholarship, that’s cause for celebration. For some students, a scholarship means the difference between going to the college of their choice and starting at community college, or even not going at all. But be aware that scholarships may bring tax consequences.

Generally, but not always

Scholarships (and fellowships) are generally tax-free for students at elementary, middle and high schools, as well as those attending college, graduate school or accredited vocational schools. It doesn’t matter if the scholarship makes a direct payment to the individual or reduces tuition.

However, subject to limited exceptions, a scholarship isn’t tax-free if the payments are linked to services that the student performs as a condition for receiving the award, even if the services are required of all degree candidates. Therefore, a stipend a student receives for required teaching, research or other services is taxable, even if the student uses the money for tuition or related expenses.

What if you, or a family member, is fortunate enough to be an employee of an educational institution that provides reduced or free tuition to employees and their families? Such a reduction in tuition isn’t included in the employee’s income or subject to tax.

Returns and recordkeeping

If a scholarship is tax-free and the student has no other income, the award doesn’t have to be reported on a tax return. However, any portion of an award that’s taxable as payment for services is treated as wages. Estimated tax payments may have to be made if the payor doesn’t withhold enough tax.

The student should receive a Form W-2, “Wage and Tax Statement,” showing the amount of these wages and the amount of tax withheld. But any portion of the award that’s taxable must be reported even if no Form W-2 is received.

Basic rules

These are just a few of the basic rules. Other rules and limitations may apply. For example, if your child’s scholarship is taxable, it may limit other higher education tax benefits to which you or your child are entitled. As we approach the new school year, best wishes for your child’s success. Please contact us if you wish to discuss this or any other tax matter.

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 +1-305-274-5811.

Source: Thomson Reuters      

Family businesses make up a huge percentage of companies in the United States and produce much of the country’s gross domestic product. Often defined as companies that are majority owned by a single family with two or more family members involved in their management, family businesses can be a significant source of wealth. However, they may also potentially face higher fraud risks.

Major obstacles involved

Why might family businesses be more vulnerable to fraud than other companies? For one thing, prevention efforts can be hampered by loyalty and affection. One of the biggest obstacles to fraud prevention is simply acknowledging that someone in the family could be capable of initiating or overlooking unethical or illegal activities.

But like any other business, family enterprises should include internal controls that make fraud difficult to perpetrate. It may be awkward to exercise authority over members of one’s own family, but someone needs to take charge if or when issues arise. Sometimes family businesses need to hit the reset button and reestablish a hierarchy and process of authority while moving forward with the enterprise.

Advantage of independent advice

Of course, the person in charge potentially could be the one defrauding the company. That’s why independent auditors and legal advisors are critical. Your family business should look outside its immediate circles of relatives and friends and retain professional advisors who can be objective when assessing the company. Audited financial statements from independent accountants protect the business and its stakeholders.

If your company is large enough to have a board of directors, it should include at least one outsider who’s strong enough to tell you things you may not want to hear. In some extreme cases, members of all-family boards have been known to work together to bilk their companies. This becomes much more difficult when collusion requires the assistance of an outsider.

Punishing the perpetrator

Another factor that makes preventing fraud in family businesses hard is how they tend to handle fraud incidents. Even when legal action is an option, families rarely can bring themselves to pursue action against one of their own. Sometimes families choose to save the fraudster from public scandal or punishment rather than maintain ethical professional standards. Many fraud perpetrators know that.

If you discover a family member is committing fraud, consult with a trusted attorney or accountant. An advisor may want to explain to the perpetrator the illegality and possible consequences of the fraudulent actions. If such interventions don’t work, however, you and other family members may have no choice but to seek prosecution.

Avoid blind trust

There are plenty of advantages to working with family members, but you also need to watch for pitfalls. To maintain high ethical standards and prevent fraud, rely on professional advisors and nonfamily officers to provide perspective and objective advice. Contact us for help with internal controls.

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 +1-305-274-5811.

Source : Thomson Reuteurs   

The Internal Revenue Service announced tax relief for individuals and businesses affected by Idalia, anywhere in South Carolina. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments. This is similar to relief already being provided in most of Florida.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). All 46 counties in South Carolina qualify. Individuals and households that reside or have a business in these counties qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from Aug. 29, 2023, through Feb. 15, 2024 (postponement period). As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 15, 2024, deadline will now apply to:

• Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief.
• Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
• Calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, 2023.
• Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
• Calendar-year tax-exempt organizations whose extensions run out on Nov. 15, 2023.

In addition, penalties for the failure to make payroll and excise tax deposits due on or after Aug. 29, 2023, and before Sept. 13, 2023, will be abated as long as the deposits are made by Sept. 13, 2023.

The IRS disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer's federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. Be sure to write the FEMA declaration number – DR-3597-EM − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by this storm and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.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 +1-305-274-5811.

Source: IRS      

To gift or not to gift? It’s a deceptively complex question. The temporary doubling of the gift and estate tax exemption (to an inflation-adjusted $12.92 million in 2023) is viewed by many as a “use it or lose it” proposition. In other words, if you have a large estate, you should make gifts now to take advantage of the high exemption before it sunsets at the end of 2025 (or sooner if lawmakers decide to reduce it earlier).

But giving away wealth now isn’t right for everyone. Depending on your circumstances, there may be tax advantages to keeping assets in your estate.

Lifetime gifts vs. bequests at death

The primary advantage of making lifetime gifts is that, by removing assets from your estate, you shield future appreciation from estate taxes. But there’s a tradeoff: The recipient receives a “carryover” tax basis, meaning that the recipient assumes your basis in the asset. If a gifted asset has a low basis relative to its fair market value (FMV), then a sale will trigger capital gains tax on the difference.

An asset transferred at death, however, receives a “stepped-up” basis equal to its date-of-death FMV. That means the recipient can sell it with little or no capital gains tax liability. So, the question becomes, which strategy has the lower tax cost: transferring an asset by gift (now) or by bequest (later)?

The answer depends on several factors, including the asset’s basis-to-FMV ratio, the likelihood that its value will continue appreciating, your current or potential future exposure to gift and estate taxes, and the recipient’s time horizon (how long you expect the recipient to hold the asset after receiving it).

3 examples

Let’s looks at some examples. To keep things simple, we’ll always assume that you and your heirs are subject to tax on capital gains at a rate of 23.8% (the top capital gains rate of 20% plus the 3.8% rate on net investment income) and that the gift and estate tax rate is 40% of amounts in excess of the applicable exemption.

Example #1. You have $8 million in publicly traded securities with a $3 million basis and $3 million in other assets. You haven’t used any of your exemption amount. If you give the securities to your son, who sells them immediately for $8 million, he’ll owe $1.19 million in capital gains taxes [23.8% × ($8 million - $3 million)].

Suppose, instead, that you hold the securities for life, that the inflation-adjusted exemption in the year you die is $14 million, that the securities’ value has grown to $11 million, and that your other assets have grown to $4 million. If your son inherits the securities, he’ll receive a stepped-up basis of $11 million and can sell them tax-free. Your estate will be subject to estate taxes of $400,000 [40% × ($15 million - $14 million exemption)]. In this scenario, holding the securities is the better strategy from a tax perspective.

Example #2. Same facts as in the first example, except that your son plans to hold the securities for life rather than sell them. In this scenario, gifting the securities now is the better strategy because, by holding them, your son avoids capital gains taxes and there’s no estate tax because the future appreciation on the securities is removed from your estate.

Example #3. Again, the same facts as in the first example, except that when you die the exemption has dropped to $8 million, so your estate is subject to estate taxes of $2.8 million [40% × ($15 million - $8 million exemption)]. In this scenario, gifting the securities now results in a substantially lower tax bill, even if your son sells them immediately.

These three examples are highly simplified to illustrate the decision-making process. In the real world, many other factors may affect the overall economics, including an asset’s income-earning potential, the applicability of state income and estate taxes, and potential changes in capital gains and gift and estate tax rates.

Dealing with uncertainty

Determining whether to hold or gift assets is challenging because the best course of action may depend on future events. Work with your tax and estate planning advisors to monitor legislative developments and adjust your estate plan accordingly. And consider tools for building flexibility into your plan to soften the blow of future tax changes.

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 +1-305-274-5811.

Source: Thomson Reuters     

The Internal Revenue Service warned taxpayers to be on the lookout for a summer surge of tax scams as identity thieves continue pounding out a barrage of email and text messages promising tax refunds or offers to help 'fix' tax problems.

The latest email schemes touch on a variety of topics, but many center around promises about a third round of Economic Impact Payments. The IRS is seeing hundreds of complaints daily pouring into phishing@irs.gov about this scam, which has an embedded URL link that takes people to phishing website to steal sensitive taxpayer information.

The IRS is also receiving reports of emails urging people to "Claim your tax refund online," and text messages that the person's tax return was "banned" by the IRS. These scams are riddled with spelling errors and awkward phrasing, but they consistently try to entice people to click on a link.

"The IRS is seeing a wave of these summer scams relentlessly pounding taxpayers," said IRS Commissioner Danny Werfel. "People are being flooded with these email and text messages, but we want them to avoid getting swept up in these terrible scams. Taxpayers should be wary; remember, don't click on links from questionable sources."

As part of the Security Summit effort, the IRS has been working in partnership with state tax administrators, tax professionals and the nation's tax industry to warn people about identity theft risks, including the ongoing push by scammers to trick people into sharing personal information through email, texts and phone calls. The Security Summit is currently in the middle of a special summer news release series aimed increasing awareness among tax professionals on ways to protect themselves – and their clients – against identity theft.

At the same time, the IRS and Security Summit continue to warn taxpayers against the most recent wave of activity involving tax scammers. Here are some highlights:

The Economic Impact Payment scheme

This is currently the highest volume email scheme the IRS is seeing. Emails messages are hitting inboxes with titles like: "Third Round of Economic Impact Payments Status Available." The IRS routinely sees hundreds of taxpayers forwarding these messages each day; the IRS has seen thousands of these emails reported since the July 4 holiday period.

The third round of Economic Impact Payments occurred in 2021, more than two years ago. And this particular scheme, which plays off this real-world tax event, has been around since then. But while the stimulus payments ended long ago, the related scheme has evolved and changed as scam artists look for new ways to adjust their message to trick people.

Taxpayers shouldn't be fooled by this message for many reasons. For example, these emails are routinely riddled with spelling errors and factual inaccuracies, like this example:

"Dear Tax Payer, We hope this message finds you well. We are writing to inform you abount an important matter regarding your recent tax return filing. Our record indicate that we have received your tax return for the fiscal inconsistencies or missing information that require your attention and clarification. You will receive a tax refund of $976.00 , We will process this amount once you have submitted the document we need for the steps to claim your tax refund.

Sender : INTERNAL REVENUE SERVICE"

Like many scams, this email urges people to click on a link so they can complete their "application." Instead, it takes the taxpayer to a website where identity thieves will try to harvest valuable personal information.

The misleading "You may be eligible for the ERC" claim

The IRS has observed a significant increase in false Employee Retention Credit (ERC) claims. The ERC, sometimes also called the Employee Retention Tax Credit or ERTC, is a pandemic-related credit for which only select employers qualify.

Scam promoters are luring people to improperly claim the ERC with "offers" online, in social media, on the radio, or through unsolicited phone calls, emails and even mailings that look like official government letters but have fake agency names and usually urge immediate action. These unscrupulous promoters make false claims about their company's legitimacy and often don't discuss some key eligibility factors, limitations and income tax implications that affect an employer's tax return. It's important to watch for warning signs such as promoters who say they can quickly determine someone's eligibility without details, and those who charge up-front fees or a fee based on a percentage of the ERC claimed.

Anyone who improperly claims the ERC must pay it back, possibly with penalties and interest.

Eligible employers who need help claiming the ERC should work with a trusted tax professional. False ERC claims were so widespread this year that the IRS added them to its annual Dirty Dozen list of tax scams. Details about eligibility, how to properly claim the credit, and how to report promoters are available at Employee Retention Credit.

The "Claim your tax refund online" scheme

Identity thieves know that the concept of free or overlooked money is tempting for people. So the IRS routinely sees email and text schemes playing off tax refunds and suggesting people have somehow missed getting their tax refund.

A variation hitting inboxes in recent weeks has a blue headline proclaiming people should "Claim your tax refund online."

Again, there are telltale warning signs, including misspellings and urging people to click a link for help to "claim tax refund." Here's one example:

"We cheked an error in the calculation of your tax from the last payment, amounting to $ 927,22. In order for us to return the excess payment, you need to create a E-Refund after which the funds will be credited to your specified bank. Please click below to claim your tax refund. If we are unable to complete within 3 days, all pending will be cancelled."

The "Help You Fix-It" text scheme

In another text scam seen in recent weeks, identity thieves come up with a name on a text message that tries to sound official, like "govirs-accnnt2023." They then send a variety of messages that say there's a problem with a person's tax return but, not to worry, the anonymous sender of the text message can help resolve the problem if they click on a link.

Like others, there are many red flags on these text messages, including misspellings and factual inaccuracies:

"MSG … IRS: Your federal return was ban-by the IRS. Don't worry, we'll help you fix it. Click this link."

The "Delivery Service" scam at your door

Earlier this month, the IRS warned taxpayers to be on the lookout for a new scam mailing that tries to mislead people into believing they are owed a refund. The new scheme involves a mailing that arrives in a cardboard envelope from a delivery service. The enclosed letter includes the IRS masthead and wording that the notice is "in relation to your unclaimed refund."

Receive a scam message?

People that receive these scams by email should send the email to phishing@irs.gov. People can forward the message, but IRS cybersecurity experts prefer to see the full email header to help them identify the scheme.

If people are victims after clicking and entering their information, they should report the email to phishing@irs.gov – but they should also file a complaint with Treasury Inspector General for Tax Administration and visit IdentityTheft.gov and Identity Theft Central.

More important reminders about scams

The IRS and Security Summit partners regularly warn people about common scams, including the annual IRS Dirty Dozen list.

Taxpayers and tax professionals should be alert to fake communications from scammers posing as legitimate organizations in the tax and financial community, including the IRS and the states. These messages can arrive in the form of an unsolicited text or email to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft, including phishing and smishing.

The IRS never initiates contact with taxpayers by email, text or social media regarding a bill or tax refund.

As a reminder: Never click on any unsolicited communication claiming to be the IRS as it may surreptitiously load malware. It may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.

Individuals should never respond to tax-related phishing or smishing or click on the URL link. Instead, the scams should be reported by sending the email or a copy of the text/SMS as an attachment to phishing@irs.gov.

Taxpayers can also report scams to the Treasury Inspector General for Tax Administration or the Internet Crime Complaint Center. The Report Phishing and Online Scams page at IRS.gov provides complete details. The Federal Communications Commission's Smartphone Security Checker is a useful tool against mobile security threats.

The IRS also warns taxpayers to be wary of messages that appear to be from friends or family but that are possibly stolen or compromised email or text accounts from someone they know. This remains a popular way to target individuals and tax preparers for a variety of scams. Individuals should verify the identity of the sender by using another communication method; for instance, calling a number they independently know to be accurate, not the number provided in the email or text.

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 +1-305-274-5811.

Source : IRS      

El Servicio de Impuestos Internos les advirtió hoy a los contribuyentes que estén atentos a una oleada de estafas tributarias durante el verano, ya que los ladrones de identidad siguen enviando una gran cantidad de mensajes de correo electrónico y de texto a través de los cuales prometen reembolsos u ofertas para ayudar a "solucionar" problemas tributarios.

Las estafas por correo electrónico más recientes tocan una variedad de temas, pero muchas se centran en promesas acerca de una tercera ronda de Pagos de impacto económico. El IRS está recibiendo cientos de quejas diarias en phishing@irs.gov acerca de esta estafa, que tiene un enlace URL incluido que lleva a la gente a un sitio web de phishing para robar información confidencial de los contribuyentes.

El IRS también está recibiendo informes de correos electrónicos que instan a la gente a "Reclamar su reembolso de impuestos en línea", y mensajes de texto que dicen que la declaración de impuestos de la persona fue "rechazada" por el IRS. Estas estafas están llenas de errores ortográficos y frases raras, pero constantemente intentan que la gente pulse un enlace.

"El IRS está viendo una ola de estas estafas veraniegas que atacan continuamente a los contribuyentes," dijo el Comisionado del IRS Danny Werfel. "La gente está siendo inundada con estos correos electrónicos y mensajes de texto, pero queremos que eviten caer en estas terribles estafas. Los contribuyentes deben ser cautelosos; recuerden, no pulsen en enlaces de fuentes dudosas."

Como parte del esfuerzo de la Cumbre de Seguridad, el IRS ha estado trabajando en asociación con administradores de impuestos estatales, profesionales de impuestos y la industria de impuestos de la nación para advertir a la gente acerca de los riesgos del robo de identidad, que incluye el continuo empuje de los estafadores para engañar a la gente a compartir información personal a través de correo electrónico, textos y llamadas telefónicas. La Cumbre de Seguridad se encuentra actualmente en medio de una serie especial de comunicados de prensa de verano destinados a aumentar la concienciación entre los profesionales de impuestos acerca de las maneras para protegerse a sí mismos - y a sus clientes - contra el robo de identidad.

Al mismo tiempo, el IRS y la Cumbre de Seguridad continúan advirtiendo a los contribuyentes contra la más reciente ola de actividad de los estafadores tributarios. Aquí están algunos puntos destacados:

Estafa de Pago de impacto económico

Esta es actualmente la estafa de correo electrónico de mayor volumen que el IRS está viendo. Los mensajes de correo electrónico llegan a los buzones con títulos como: " Estatus disponible de la tercera ronda de Pagos de impacto económico". El IRS rutinariamente ve cientos de contribuyentes que reenvían estos mensajes cada día; el IRS ha visto miles de estos correos electrónicos reportados desde el día feriado del 4 de julio.

La tercera ronda de Pagos de impacto económico se produjo en 2021, hace más de dos años. Y esta estafa en particular, que se basa en este evento tributario real, ha existido desde entonces. Pero mientras que los pagos de estímulo terminaron hace mucho tiempo, la estafa relacionada ha evolucionado y cambiado a medida que los estafadores buscan nuevas maneras de ajustar su mensaje para engañar a la gente.

Los contribuyentes no deben dejarse engañar por este mensaje por muchas razones. Por ejemplo, estos correos suelen estar llenos de errores ortográficos y errores de hechos reales, como en este ejemplo en inglés:

"Dear Tax Payer, We hope this message finds you well. We are writing to inform you abount an important matter regarding your recent tax return filing. Our record indicate that we have received your tax return for the fiscal inconsistencies or missing information that require your attention and clarification. You will receive a tax refund of $976.00 , We will process this amount once you have submitted the document we need for the steps to claim your tax refund.

Sender : INTERNAL REVENUE SERVICE"

Al igual que muchas estafas, este correo electrónico insta a la gente a hacer clic en un enlace para que puedan completar su "solicitud." En lugar de eso, lleva al contribuyente a un sitio web en el que los ladrones de identidad intentarán recopilar valiosa información personal.

El reclamo incorrecto de "Usted puede ser elegible para el ERC"

El IRS ha observado un aumento significativo de solicitudes falsas del ERC. El ERC, a veces también llamado Crédito Tributario por Retención de Empleados (ERTC), es un crédito relacionado con la pandemia del cual solo ciertos empleadores pueden ser elegibles.

Los promotores de estafas continúan atrayendo a la gente a reclamar indebidamente el Crédito por retención de empleados (ERC) con "ofertas" en línea, en los medios sociales, en la radio, o a través de llamadas telefónicas, correos electrónicos no solicitados e incluso correos postales que parecen cartas oficiales del gobierno, pero tienen nombres falsos de agencias y por lo general instan a una acción inmediata. Estos promotores sin escrúpulos hacen promesas falsas sobre la legitimidad de su empresa y a menudo no hablan de algunos factores clave de elegibilidad, limitaciones e implicaciones tributarias que afectan a la declaración de impuestos de un empleador. Es importante estar atento a las señales de alerta, como los promotores que dicen que pueden determinar rápidamente la elegibilidad de alguien sin detalles, y los que cobran honorarios por adelantado o una tarifa a base de un porcentaje del ERC reclamado.

Cualquiera que reclame indebidamente el ERC debe devolverlo, posiblemente con multas e intereses.

Los empresarios elegibles que necesiten ayuda para reclamar el ERC deben trabajar con un profesional de impuestos de confianza. Este año, han sido tantas las reclamaciones indebidas del ERC que el IRS la incluyo en su lista anual de estafas tributarias, la Docena Sucia. Los detalles acerca de la elegibilidad, cómo reclamar correctamente el crédito y cómo denunciar a los promotores están disponibles en Crédito por retención de empleados.

La estafa de "Reclame su reembolso de impuestos en línea"

Los ladrones de identidad saben que el concepto de dinero gratis o pasado por alto es tentador para la gente. Por eso, el IRS ve a menudo mensajes de correo electrónico y de texto que juegan con la idea de que la gente no ha recibido su reembolso de impuestos.

Una variante que está llegando a los correos electrónicos en las últimas semanas tiene un titular azul que proclama que la gente debe "Reclamar su reembolso de impuestos en línea".

Una vez más, hay señales de alerta que delatan, como errores de ortografía e instar a la gente a hacer clic en un enlace para obtener ayuda para "reclamar el reembolso de impuestos." He aquí un ejemplo en inglés:

"We cheked an error in the calculation of your tax from the last payment, amounting to $ 927,22. In order for us to return the excess payment, you need to create a E-Refund after which the funds will be credited to your specified bank. Please click below to claim your tax refund. If we are unable to complete within 3 days, all pending will be cancelled."

La estafa del mensaje de texto "Ayuda para arreglarlo"

En otra estafa de mensajes de texto vista en las últimas semanas, los ladrones se inventan un nombre en un mensaje de texto que intenta sonar oficial, como "govirs-accnnt2023". Después, envían una serie de mensajes que dicen que hay un problema con la declaración de una persona, pero, que no hay que preocuparse, el remitente anónimo del mensaje de texto puede ayudar a resolver el problema si se hace clic en un enlace.

Al igual que otros, hay muchas señales de alarma en estos mensajes de texto, como errores de ortografía e información incorrecta:

"MSG … IRS: You federal return was ban-by the IRS. Don't worry, we'll help you fix it. Click this link."

La estafa del "servicio de entrega" a domicilio

A principios de este mes, el IRS advirtió a los contribuyentes que estuvieran atentos a un nuevo correo fraudulento que intenta engañar a la gente haciéndoles creer que se les debe un reembolso. La estafa consiste en un correo que llega en un sobre de cartón de un servicio de entrega. La carta adjunta incluye el encabezado del IRS y el mensaje de que el aviso es "con relación a su reembolso no reclamado".

Las personas que reciban estas estafas por correo electrónico deben enviar el mensaje a phishing@irs.gov. La gente puede reenviar el mensaje, pero los expertos en ciberseguridad del IRS prefieren ver el encabezado completo del correo electrónico para ayudarles a identificar la estafa.

Si las personas son víctimas después de haber pulsado e ingresado su información, deben informar del correo electrónico a phishing@irs.gov, pero también deben presentar una queja ante el Inspector General del Tesoro para la Administración Tributaria y visitar RobodeIdentidad.gov y Centro informativo sobre el robo de identidad.

Recordatorios importantes adicionales acerca de estafas

El IRS y los socios de la Cumbre de Seguridad advierten regularmente a la gente acerca de estafas comunes, que incluye la lista anual de la Docena Sucia del IRS.

Los contribuyentes y los profesionales de impuestos deben estar en alerta ante comunicaciones falsas de estafadores que se hacen pasar por organizaciones legítimas de la comunidad tributaria y financiera, incluyendo el IRS y los estados. Estos mensajes pueden llegar a través de un texto o correo electrónico no solicitado para atraer a víctimas desprevenidas para que proporcionen información personal y financiera valiosa que puede conducir al robo de identidad, incluyendo phishing y smishing.

El IRS nunca inicia contacto con los contribuyentes por correo electrónico, texto o medios sociales en relación con una factura o reembolso de impuestos. Como recordatorio: Nunca pulse en ninguna comunicación no solicitada que afirme ser del IRS, ya que puede cargar malware de forma encubierta. También puede ser una manera de que hackers malintencionados carguen un ransomware que impida al usuario legítimo acceder a su sistema y a sus archivos.

Las personas nunca deben responder a phishing o smishing relacionado con impuestos ni oprimir el enlace URL. En cambio, las estafas deben denunciarse enviando el correo o una copia del texto/SMS a phishing@irs.gov.

Los contribuyentes también pueden denunciar las estafas al Inspector General del Tesoro para la Administración Tributaria (en inglés) o al Centro de Denuncias de Delitos por Internet (en inglés). La página Reporte práctica fraudulenta de pesca de información en IRS.gov proporciona detalles completos. El Verificador de Seguridad de Teléfonos Inteligentes (en inglés) de la Comisión Federal de Comunicaciones es una herramienta útil contra las amenazas a la seguridad móvil.

El IRS también advierte a los contribuyentes que tengan cuidado con los mensajes que parecen ser de amigos o familiares pero que posiblemente son cuentas de correo electrónico o de texto robadas o comprometidas de alguien que conocen. Esta sigue siendo una manera popular de atacar a personas y preparadores de impuestos para una variedad de estafas. Las personas deben verificar la identidad del remitente a través de otro método de comunicación; por ejemplo, llamando a un número que sepan de manera independiente que es correcto, no al número proporcionado en el correo electrónico o mensaje de texto.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS      

Elective pay allows applicable entities, including tax-exempt and governmental entities that would otherwise be unable to claim certain credits because they do not owe federal income tax, to benefit from some clean energy tax credits. By choosing this election, the amount of the credit is treated as a payment of tax and any overpayment will result in a refund.

Applicable entity eligibility

Applicable entities can use elective pay. Applicable entities include:

• Tax-exempt organizations such as public charities, private foundations, social welfare organizations, labor organizations, business leagues and others
• States and political subdivisions such as local governments or Indian tribal governments
• U.S. territories and their political subdivisions
• Agencies and instrumentalities of state, local, tribal and U.S. territorial governments
• Alaska Native corporations
• The Tennessee Valley Authority
• Rural electric cooperatives

How to receive the elective payment

For an eligible entity to receive an elective payment, they need to take the following steps:

1. Identify the project or activity they are pursuing and satisfy all requirements for the applicable credit.
2. Determine the correct tax year, which determines the due date of the tax return.
3. Complete the pre-filing registration process with the IRS. More information about this process will be available later in 2023. 

After the pre-filing registration process is complete and the requirements for the applicable credit have been satisfied, the eligible entity can claim and receive an elective payment by choosing the election on their annual tax return along with any form required to claim the relevant tax credit.

Applicable entities need their own Employee Identification Number (EIN) or Tax Identification Number (TIN) to complete the pre-filing registration process. Applicable entities that don't otherwise have a filing requirement cannot use or borrow the EIN of a related entity.

Eligible credits:

• Production Tax Credit for Electricity from Renewables
• Clean Electricity Production Tax Credit
• Investment Tax Credit for Energy Property
• Clean Electricity Investment Tax Credit
• Low-Income Communities Bonus Credit
• Credit for Carbon Oxide Sequestration
• Zero-Emission Nuclear Power Production Credit
• Advanced Energy Project Credit
• Advanced Manufacturing Production Credit
• Credit for Qualified Commercial Clean Vehicles
• Alternative Fuel Vehicle Refueling Property Credit
• Clean Hydrogen Production Tax Credit
• Clean Fuel Production Credit

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 +1-305-274-5811.

Source : IRS      

Businesses and tax-exempt organizations should watch out for telltale signs of misleading claims involving the Employee Retention Credit. Scammers and unscrupulous promoters continue to run aggressive broadcast advertising, direct mail solicitations and online promotions for the credit. Many of these ads wildly misrepresent and exaggerate who can qualify for the ERC, which is sometimes also called ERTC or the Employee Retention Tax Credit.

Anyone who improperly claims the ERC will have to pay it back, possibly with penalties and interest. The IRS doesn't want that to happen. Employers should know what the credit is and who qualifies and be on the lookout for the warning signs of a scam. And they should rely on the advice of a trusted tax professional, not aggressive marketing or unsolicited proposals.

About the ERC

The ERC is a refundable COVID-era tax credit designed for employers that kept paying employees while shut down because of a COVID-19 related government order or that had a requisite decline in gross receipts during the eligibility periods. The credit can be claimed only by eligible businesses and tax-exempt organizations that had employees during specific time periods.

Anyone considering claiming the ERC should carefully review the specific eligibility requirements at IRS.gov/erc. Eligible employers who need help claiming the credit should work with a trusted tax professional.

Warning signs of an ERC scam include:

• Unsolicited calls or advertisements mentioning an “easy application process.”
• Statements that the promoter or company can determine ERC eligibility within minutes or before any discussion of the employer's tax situation. The Employee Retention Credit is a complex credit that requires careful review before applying.
• Large upfront fees to claim the credit.
• Fees based on a percentage of the refund amount of ERC claimed.
• Promoters telling businesses to claim the ERC because they have nothing to lose. Those who improperly receive the credit could have to repay it – along with substantial interest and penalties.
• Promoters telling businesses to ignore the advice of their trusted tax professional.

These promoters may lie about eligibility requirements. In addition, anyone using these promoter's services could be at risk of someone trying to steal their identity or use their information to take a cut of the improperly claimed credit.

How the promoters lure victims

The IRS continues to see a variety of ways that promoters can lure businesses, non-profit groups and others into applying for the credit.

• Aggressive marketing. ERC ads are appearing almost everywhere, including radio, television and online as well as phone calls and text messages.
• Direct mailing. Some ERC promoters are sending letters to taxpayers from non-existent groups like the "Department of Employee Retention Credit." Scammers will create these letters to look like official IRS correspondence or an official government mailing with language urging immediate action.
• Leaving out key details. Third-party promoters of the ERC often don't accurately explain eligibility requirements or how to calculate the credit. They may make broad arguments suggesting that all employers are eligible without evaluating an employer's individual circumstances. In addition, many promoters don't tell employers that they can't claim the ERC on wages that they reported as payroll costs if they received Paycheck Protection Program loan forgiveness.

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 +1-305-274-5811.

Source : IRS      

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

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

Business Documents To Keep For One Year

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

Business Documents To Keep For Three Years

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

Business Documents To Keep For Six Years

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

Business Records To Keep Forever

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

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

Personal Documents To Keep For One Year

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

Personal Documents To Keep For Three Years

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

Personal Documents To Keep For Six Years

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

Personal Records To Keep Forever

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

Special Circumstances

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

If you have any questions about essential accounting for your business, domestic taxes, international taxes, representation before the IRS, tax implications of real estate transactions or financial statements, call us at +1-305-274-5811.

Source : Thomson Reuters      

If the IRS selects your tax return for audit (also called examination), it doesn’t automatically mean something is wrong. 

The IRS performs audits by mail or in person. The notice you receive will have specific information about why your return is being examined, what documents if any they need from you, and how you should proceed. 

Once the IRS completes the examination, it may accept your return as filed or propose changes. These changes may affect the amount of tax you owe or the amount of your refund. 

Got an IRS notice saying they are auditing your tax return?

If you are unable to understand the notice, you can use our Did you get a notice from the IRS? section on our Home page that allows you to enter the notice or letter number to find out more about it, what action you may need to take, and where in the IRS process it falls. Or you can go to our Taxpayer Roadmap directly to see where your tax return is within the IRS process, how the return got there, and what’s next. Once in the Roadmap, you can still look up a specific notice if it isn’t already listed to find out what to do next. 

Type of audit/examination and what to do for each type8

The IRS notice should confirm whether the audit is being conducted by correspondence (by mail) or in person. The actions you need to take will depend on how the audit is being conducted. 

• For correspondence audits, see our Audits by Mail Get Help page for a summary of how the process works and what actions you should take. 
• For in person audits, see our Audits in Person Get Help page for a summary of how the process works and what actions you should take. 

You can also visit the IRS Audits page for more information about why your return may have been selected and more details on how far back IRS can go to examine a return, how long it may take, and more. You can also read Publication 3468, IRS Examination Process. 

Sometimes IRS offers alternative methods to reply or submit documentation

When you review the IRS notice, there may be special circumstances in which the IRS may offer digital alternatives for submitting documentation or working with the IRS examiner. See our NTA Blog: Lifecycle of a Tax Return: Correspondence Audits: Increased Communication Alternatives Are in Progress for more information on two available alternatives. The IRS article, Accelerating Digital Communications to Solve Pandemic Challenges and Improve the Taxpayer Experience, also discusses digital options. 

However, taxpayers must be invited to participate in these digital options, Secure Messaging and the Document Upload Tool (DUT). So, again, review your notice carefully to see if one or both of these options are available in your case and for information on how to use them. 

What if you find out the IRS already closed their initial audit?

If you receive a tax bill for an additional tax amount the IRS assessed (added to your account) or a change in a credit you claimed and you disagree with the subsequent amount the IRS says you owe, see our Audit Reconsideration Get Help page for next steps you can take. 

You may request audit reconsideration if you: 

• Did not respond to or appear for your original audit, 
• Moved and did not receive correspondence from the IRS, 
• Have additional information to present that you did not provide during your original audit, or 
• Disagree with the assessment from the audit. 

You can also see Publication 3598, What You Should Know About the Audit Reconsideration Process, for more details on what you need to do to resolve the issue. 

What can I do if I need further help dealing with the IRS audit process?

If you need or want assistance in dealing with an IRS audit or reconsideration, you have the right to representation. This means you can hire an attorney, certified public accountant (CPA), or enrolled agent to represent you before the IRS. Know that: 

• Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. 
• Taxpayers who are heading to an interview with the IRS may select someone to represent them. Taxpayers who retain representation don’t have to attend with their representative unless the IRS formally summons them to appear. 
• In most situations, the IRS must suspend an interview if a taxpayer requests to consult with a representative, such as an attorney, certified public accountant, or enrolled agent. 
• Any attorney, CPA, enrolled agent, enrolled actuary, or other person permitted to represent a taxpayer before the IRS, who’s not disbarred or suspended from practice before the IRS, will need to submit a signed written Power of Attorney to represent a taxpayer before the IRS before the IRS can discuss your case with them. 

We recommend that you learn about the credentials and qualifications of tax representatives before choosing one. You can also use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to help you find tax professionals in your area who currently hold professional credentials recognized by the IRS. 

You may be eligible for free representation (or representation for a nominal fee) through a Low Income Taxpayer Clinic. To qualify for assistance from an LITC, generally a taxpayer’s income must be below a certain threshold (the income ceilings for the 2022 calendar year can be found on the page link above), and the amount in dispute with the IRS is usually less than $50,000. Each clinic will determine if you meet the income ceilings and other criteria before it agrees to represent you. See Publication 4134, Low Income Taxpayer Clinic List, to find a LITC near you or by calling the IRS toll-free at 800-829-3676. 

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 +1-305-274-5811.

Source : TAS      

Scammers sometimes use stolen Social Security numbers to file fraudulent tax returns and collect refunds. To prevent this, the IRS scans every tax return for signs of fraud. If the system finds a suspicious tax return, the IRS reviews the return and sends a letter to the taxpayer letting them know about the potential ID theft. The IRS won't process the suspicious tax return until the taxpayer responds to the letter.

The IRS may send these identify fraud letters to taxpayers:

• Letter 5071C, Potential Identity Theft with Online Option: This tells the taxpayer to use an online tool to verify their identity and tax return information. If the taxpayer didn't file, they can let the IRS know with the online tool.
• Letter 4883C, Potential Identity Theft: This tells the taxpayer to call the IRS to verify their identity and tax return information. If the taxpayer didn't file, they can call the Taxpayer Protection Program hotline number on the letter.
• Letter 5747C, Potential Identity Theft In Person Appointment: This tells the taxpayer to verify their identity and tax return information in person at a local Taxpayer Assistance Center. If the taxpayer didn't file, they can call the Taxpayer Protection Program hotline number on the letter.
• Letter 5447C, Potential Identity Theft Outside the U.S.: This tells the taxpayer to use an online tool or to call the IRS to verify their identity and tax return information. If the taxpayer didn't file, they can let the IRS know with the online tool.

Taxpayers should follow the steps in the letter

The identity theft letter will tell the taxpayer the steps they need to take. Taxpayers should follow those steps to resolve the matter with the IRS.

Victims of identity theft can find more resources on reporting and recovering from ID theft with the Federal Trade Commission: IdentityTheft.gov.

If the taxpayer received an IRS identity theft letter, they don't need to file an identity theft affidavit

If taxpayers need to give the IRS a heads up that they're a victim of identity theft or that they think they may be a victim, they can file Form 14039, Identity Theft Affidavit. If a taxpayer has already received an IRS letter about identity theft, they don't need to file an affidavit.

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 +1-305-274-5811.

Source : IRS     

Anyone saying "I do" this summer should review a few tax-related items after the wedding. Big life changes, including a change in marital status, often have tax implications. Here are a few things couples should think about after they tie the knot.

Name and address changes

People who change their name after marriage should report it to the Social Security Administration as soon as possible. The name on a person's tax return must match what is on file at the SSA. If it doesn't, it could delay any tax refund. To update information, taxpayers should file Form SS-5, Application for a Social Security Card. The form is available on SSA.gov, by calling 800-772-1213 or at a local SSA office.

If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, people should send the IRS Form 8822, Change of Address. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or by visiting their local post office.

Double-check withholding

After getting married, couples should consider changing their withholding. Newly married couples must give their employers a new Form W-4, Employee's Withholding Allowance within 10 days. If both spouses work, they may move into a higher tax bracket or be affected by the additional Medicare tax. They can use the Tax Withholding Estimator on IRS.gov to help complete a new Form W-4. Taxpayers should review Publication 505, Tax Withholding and Estimated Tax for more information.

Filing status

Married people can choose to file their federal income taxes jointly or separately each year. For most couples, filing jointly makes the most sense, but each couple should review their own situation. If a couple is married as of December 31, the law says they're married for the whole year for tax purposes.

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 +1-305-274-5811.

Source : IRS      

Kids are expensive. Whether someone just brought a bundle of joy home from the hospital, adopted a teen from foster care, or is raising their grandchild. There are several tax breaks that can help.

• Get the child a Social Security or Individual Tax Identification number
  To claim parental tax breaks, the taxpayer must have their child or dependent's Social Security number, Adoption Tax Identification Number or Individual Tax Identification number. Confirming a child's birth is the only way the IRS can verify that the parent is eligible for the credits and deductions they claim on their tax return.
   
• Check withholding
  A new family member might make taxpayers eligible for new credits and deductions, which can greatly change their tax liability. They can use the IRS Withholding Estimator to check their withholding. Taxpayers should provide their employer with an updated Form W-4, Employee's Withholding Certificate, if they want to change how much tax is withheld from their paycheck.

Check eligibility for these tax credits and deductions

• Child Tax Credit
  Taxpayers who claim at least one child as their dependent on their tax return may be eligible for the Child Tax Credit. For help figuring out if a child qualifies for this credit, taxpayers can check Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?
   
• Child and Dependent Care Credit
  If taxpayers paid someone to take care of their children or another member of their household while they work, they may qualify for the Child and Dependent Care Credit regardless of their income. Taxpayers who pay for daycare expenses may be eligible to claim up to 35% of their daycare expenses with certain limits.
   
• Adoption Tax Credit
  This credit lets families who are in the adoption process during the tax-year claim eligible adoption expenses for each eligible child. Taxpayers can apply the credit to international, domestic, private and public foster care adoptions.
   
• Earned Income Tax Credit
  The Earned Income Tax Credit helps low- to moderate-income families get a tax break. If they qualify, taxpayers can use the credit to reduce the taxes they owe – and maybe increase their tax refund.
   
• Credit for Other Dependents
  Taxpayers with dependents who don't qualify for the Child Tax Credit may be able to claim the Credit for Other Dependents. Taxpayers can use the Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents tool on IRS.gov to help determine if they are eligible to claim the credit. They can claim this credit in addition to the Child and Dependent Care Credit and the Earned Income Credit.

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 +1-305-274-5811.

Source: Thomson Reuters      

The Internal Revenue Service announced expansive tax relief for Hawaii wildfire victims in Maui and Hawaii counties. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in these counties qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Filing and Payment Relief

The tax relief postpones various tax filing and payment deadlines that occurred from Aug. 8, 2023, through Feb. 15, 2024 (postponement period). As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 15, 2024, deadline will now apply to:

• Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief.
• Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
• Calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, 2023.
• Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
• Calendar-year tax-exempt organizations whose extensions run out on Nov. 15, 2023.

In addition, penalties for the failure to make payroll and excise tax deposits due on or after August 8, 2023, and before September 7, 2023, will be abated as long as the deposits are made by Sept. 7, 2023.

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

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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.

Additional Tax Relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer's federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. Be sure to write the FEMA declaration number – DR-4724-HI − on any return claiming a loss. See Publication 547 for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525 for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.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 +1-305-274-5811.

Source : IRS      

Is the amount due on the tax bill accurate?

• If yes, see our group of payment options under our Paying Taxes Get Help pages. Start with the I Can’t Pay My Taxes Here you can see information about and steps to follow if you:

• Can pay the full amount now or can pay it within 120 days
• Need to make monthly payments
• Want to apply for an Offer in Compromise that may allow you to pay less than the full amount you owe
• Can’t make any sort of payment now

You can also visit IRS’s Payments page for payment options.

If the amount owed is only due to penalties and interest, see our TAS Tax Tips: Why Do I Owe a Penalty and Interest and What Can I Do About It? for steps to follow.

If you have a balance due, don’t delay in trying to resolve it. Sometimes, the timing of your actions is very important and you don’t want to miss a deadline and lose certain taxpayer rights.

• If no, see our I Need Help Resolving My Balance Due Get Help page.

This Get Help page can guide you through the steps to take if:

• Someone has stolen your identity
• Your IRS account doesn’t show all payments you made to the IRS
• You need to make a change to a tax return you’ve already filed
• You filed a tax return with your spouse and all or part of your refund was applied to a debt only your spouse owes
• You owe tax because your spouse didn’t report deductions or didn’t include income on your joint tax return
• The person who prepared your tax return changed your tax return information without your permission

If the IRS sent you a notice about something being incorrect on your 2021 return, see our TAS Tax Tip: What if I receive an IRS notice that says something is wrong with my 2022 tax return? or our Issues & Errors Get Help topic pages. Also check the IRS’s Help for taxpayers and tax professionals: Special filing season alerts page for special alerts related to current year tax return processing issues.

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 +1-305-274-5811.

Source : TAS     

The Internal Revenue Service announced tax relief for individuals and businesses affected by Idalia in parts of Florida. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, 46 of Florida's 67 counties qualify. Individuals and households that reside or have a business in these counties qualify for tax relief, but any area added later to the disaster area will also qualify. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Filing and Payment Relief

The tax relief postpones various tax filing and payment deadlines that occurred from Aug. 27, 2023, through Feb. 15, 2024, (postponement period). As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 15, 2024, deadline will now apply to:

• Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief.
• Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
• Calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, 2023.
• Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
• Calendar-year tax-exempt organizations whose extensions run out on Nov. 15, 2023.

In addition, penalties for the failure to make payroll and excise tax deposits due on or after Aug. 27, 2023, and before Sept. 11, 2023, will be abated as long as the deposits are made by Sept. 11, 2023.

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

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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.

Additional Tax Relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer's federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. Be sure to write the FEMA declaration number – DR-3596-EM − on any return claiming a loss.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by this storm and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.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 +1-305-274-5811.

Source: IRS      

El Servicio de Impuestos Internos anunció alivio tributario para las personas y empresas afectadas por Idalia en partes de Florida. Estos contribuyentes ahora tienen hasta el 15 de febrero de 2024 para presentar varias declaraciones de impuestos federales individuales y comerciales, y realizar pagos de impuestos.

El IRS está ofreciendo alivio a cualquier área designada por la Agencia Federal para el Manejo de Emergencias (FEMA, por sus siglas en inglés). Actualmente, 46 de los 67 condados de Florida califican. Las personas y hogares que residen o tienen un negocio en estos condados son elegibles para alivio tributario, pero otras áreas que se añadan más adelante también pueden ser elegibles para el mismo alivio. La lista actual de localidades elegibles siempre está disponible en la página de Alivio en situaciones de desastre en IRS.gov.

Alivio de presentación y pago

El alivio tributario pospone varios plazos de presentación y pago de impuestos que ocurrieron a partir del 27 de agosto 2023, hasta el 15 de febrero de 2024 (periodo de extensión). Como resultado, las personas y empresas afectadas tendrán hasta el 15 de febrero de 2024 para presentar declaraciones y pagar los impuestos que originalmente adeudaban durante este período.

Esto significa, por ejemplo, que el plazo del 15 de febrero de 2024 ahora aplica a:

• Individuos que tenían una extensión válida para presentar su declaración de 2022 que vencía el 16 de octubre de 2023. Sin embargo, el IRS señaló que debido a que los pagos de impuestos relacionados con estas declaraciones de 2022 vencían el 18 de abril de 2023, esos pagos no elegibles para este alivio.
• Pagos trimestrales de impuestos estimados que normalmente vencen el 15 de septiembre de 2023 y el 16 de enero de 2024.
• Las declaraciones trimestrales de impuestos sobre la nómina y el consumo que normalmente vencen el 31 de octubre de 2023 y el 31 de enero de 2024.
• Asociaciones de año calendario y corporaciones S cuyas extensiones de 2022 vencen el 15 de septiembre de 2023.
• Corporaciones de año calendario cuyas extensiones de 2022 vencen el 16 de octubre de 2023.
• Organizaciones exentas de impuestos de año calendario cuyas prórrogas vencen el 15 de noviembre de 2023.

Además, las multas por no realizar depósitos de impuestos sobre la nómina y el consumo adeudados a partir del 27 de agosto de 2023 y antes del 11 de septiembre de 2023 se reducirán siempre que los depósitos se realicen antes del 11 de septiembre de 2023.

La página de Ayuda y alivio por emergencia en casos de desastre para las personas y los negocios tiene detalles acerca de otras declaraciones, pagos y acciones relacionadas con impuestos que son elegibles para el tiempo adicional.

El IRS proporciona automáticamente la presentación y el alivio de multas a cualquier contribuyente con una dirección registrada con el IRS ubicada en el área del desastre. Por lo tanto, los contribuyentes no necesitan comunicarse con la agencia para obtener este alivio.

Es posible que un contribuyente afectado no tenga una dirección ubicada en el área del desastre registrada con el IRS, por ejemplo, porque se mudó al área del desastre después de presentar su declaración. En este tipo de circunstancias únicas, el contribuyente afectado podría recibir un aviso de multa por presentación tardía o pago atrasado del IRS por el período de aplazamiento. El contribuyente debe llamar al número que figura en el aviso para que se elimine la multa.

Además, el IRS trabajará con cualquier contribuyente que viva fuera del área del desastre, pero cuyos archivos necesarios para cumplir con una fecha límite que ocurra durante el período de aplazamiento se encuentren en el área afectada. Contribuyentes elegibles para el alivio que viven fuera del área de desastre deben comunicarse con el IRS al 866-562-5227. Esto también incluye a los trabajadores que ayudan en las actividades de socorro que están afiliados a un gobierno reconocido como una organización filantrópica.

Alivio tributario adicional

Las personas y empresas en un área de desastre declarada por el gobierno federal que sufrieron pérdidas relacionadas con el desastre no aseguradas o no reembolsadas pueden optar por reclamarlas en la declaración del año en que ocurrió la pérdida (en este caso, la declaración de 2023 que normalmente se presenta el próximo año), o la declaración del año anterior (2022). Los contribuyentes tienen tiempo adicional, hasta seis meses después de la fecha de vencimiento de la declaración de impuestos federales del contribuyente para el año del desastre (sin tener en cuenta cualquier extensión del tiempo para presentar) para hacer la elección. Deben asegurarse de escribir el número de declaración de FEMA – DR-3596-EM − en cualquier declaración que reclama una pérdida.

Los pagos calificados de ayuda en casos de desastre generalmente se excluyen del ingreso bruto. En general, esto significa que los contribuyentes afectados pueden excluir de sus ingresos brutos las cantidades recibidas de una agencia gubernamental para gastos personales, familiares, de manutención o funerarios razonables y necesarios, así como para la reparación o rehabilitación de su vivienda, o para la reparación o reposición de su contenido.

Es posible que haya alivio adicional disponible para los contribuyentes afectados que participen en un plan de jubilación o un acuerdo de jubilación individual (IRA). Por ejemplo, un contribuyente puede ser elegible para recibir una distribución especial por desastre que no estaría sujeta al impuesto adicional de distribución anticipada del 10% y le permite al contribuyente distribuir los ingresos en tres años. Los contribuyentes también pueden ser elegibles para realizar un retiro por dificultades económicas. Cada plan o IRA tiene reglas y pautas específicas que deben seguir sus participantes.

El IRS puede brindar ayuda adicional en casos de desastre en el futuro.

El alivio tributario es parte de una respuesta federal coordinada a causa de los daños por estas tormentas y se basa en las evaluaciones de daños locales realizadas por FEMA. Para obtener información acerca de la recuperación ante desastres, visite DisasterAssistance.gov.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS     

Cómo Denunciar las Estafas Tributarias

Estafas de Phishing

El phishing es una estafa típicamente realizada a través del correo electrónico no solicitado y/o sitios web en los que se presentan como sitios legítimos y engañan a las víctimas incautas a proporcionar información personal y financiera.

Denuncie ante phishing@irs.gov todos los correos electrónicos no solicitados que afirman ser del IRS o de una función vinculada con el IRS. Si usted ha experimentado alguna pérdida de dinero debido a un incidente relacionado con el IRS, por favor denúncielo ante el Inspector General para la Administración del Tesoro (TIGTA) (en inglés) y presente una queja ante la Comisión Federal de Comercio (FTC) a través de su Asistente de Quejas (en inglés), para hacer la información disponible para los investigadores.

Promotores de estafas tributarias abusivas o Preparadores de declaraciones fraudulentas

Las estafas tributarias abusivas comunes incluyen los planes contra las leyes tributarias, los negocios basados en la casa, los fideicomisos y los del extranjero.

Para denunciar los promotores de estos tipos de planes de estafas o de cualquier otro tipo que usted tenga conocimiento, pero que no se incluyeron en la lista anterior, por favor envíe un Formulario de denunciaPDF debidamente completado, junto con cualquier material promocional, al Centro Principal de Desarrollo:

Por correo:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135

Transacciones abusivas que involucran un plan de ahorros para la jubilación

La línea de teléfono directa para las transacciones abusivas ofrece a las personas una manera de compartir información (de forma anónima, si se prefiere) sobre los refugios tributarios abusivos y los asuntos emergentes que pueden ser abusivos en los planes de ahorros para la jubilación.

Averigüe qué transacciones enumeradas han sido determinadas por el IRS ser transacciones de evasión de impuestos y cómo denunciarlas (en inglés).

Transacciones abusivas que involucran una organización exenta de impuestos

Las organizaciones exentas de impuestos son, a veces, utilizadas por las entidades con fines de lucro como  las partes firmantes de favor en las transacciones abusivas de evasión de impuestos.

Visite la página sobre las Transacciones Abusivas de Evasión de Impuestos de las Organizaciones Exentas  (en inglés), para obtener información sobre cómo denunciar estas estafas (en inglés) utilizando el Formulario 13909, Formulario (referido) de queja de las organizaciones exentas (en inglés)PDF.

Refugios tributarios y transacciones abusivos

El IRS mantiene una línea de teléfono directa sobre los refugios tributarios abusivos (en inglés) que las personas pueden utilizar para proporcionar información (de forma anónima, si se prefiere) sobre los refugios tributarios abusivos. La Oficina de Análisis de los Refugios Tributarios está principalmente interesada en las transacciones potencialmente abusivas que pueden ser empleadas por muchos contribuyentes y podrían plantear un riesgo de cumplimiento significativo para el IRS.

¿Cómo se denuncian las sospechas de actividad de fraude tributario?

• La tabla de referencia rápida describe cómo denunciar las sospechas de actividad de fraude tributario en diferentes situaciones.
• Recursos estatales sobre el robo de identidad (en inglés) – Información estatal sobre qué hacer si usted o sus empleados son víctimas de robo de identidad.  
• Los empleadores y profesionales de impuestos deben notificar a los estados de cualquier divulgación de los Formularios W-2 u otra información de la identidad, enviando un correo electrónico a StateAlert@taxadmin.org.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente : IRS      

SABE UD. QUE PUEDE BENEFICIARSE DE UN CRÉDITO DE ENERGÍA?

Ciertos Créditos de Energía son Elegibles para Pago Electivo Bajo Lay de Reducción de la Inflación

Pago electivo permite que entidades elegibles, incluidas las entidades gubernamentales y exentas de impuestos que generalmente no podían reclamar los créditos tributarios porque no adeudan impuestos federales sobre el ingreso, se beneficien de algunos créditos tributarios de energía limpia. Al elegir esta opción, la cantidad del crédito se trata como un pago de impuestos y cualquier pago en exceso resultará en un reembolso.

Elegibilidad de la entidad

Las entidades aplicables pueden usar el pago electivo. Las entidades aplicables incluyen (en inglés):

• Organizaciones exentas de impuestos como organizaciones benéficas públicas, organizaciones benéficas privadas, organizaciones de bienestar social, organizaciones laborales, ligas comerciales y otras
• Estados y subdivisiones políticas como gobiernos locales o gobierno tribales indígenas
• Territorios de EE. UU. y sus subdivisiones políticas
• Agencias e instrumentos de gobierno estatales, locales, tribales y territoriales de EE. UU.
• Corporaciones de nativos de Alaska
• La Autoridad del Valle de Tennessee
• Cooperativas eléctricas rurales

Cómo recibir el pago electivo

Para que una entidad eligible reciba un pago electivo debe seguir los siguientes pasos:

1.    Identificar el proyecto o actividad que desarrollan y cumplir con todos los requisitos para el crédito aplicable.

2.    Determinar el año tributario correcto que determina la fecha límite de la declaración de impuestos.

3.    Completar la inscripción antes de la presentación de impuestos con el IRS. Información adicional acerca de este proceso estará disponible más adelante en 2023.

Una vez que se complete el proceso de inscripción antes de la presentación y se cumplen con los requisitos para el crédito aplicable, la entidad eligible puede reclamar y recibir un pago electivo marcando la elección en su declaración anual de impuestos junto con cualquier formulario requerido para reclamar el crédito tributario correspondiente.

Las entidades aplicables necesitan su propio EIN o TIN para completar el proceso de inscripción previa a la presentación. Las entidades aplicables que de otro modo no tienen el requisito de presentar impuestos no pueden usar ni tomar prestado el EIN de una entidad relacionada.

Créditos elegibles:

• Crédito tributario por la producción de electricidad de fuentes renovables
• Crédito tributario por producción de energía limpia
• Crédito tributario de inversión por propiedad energética 
• Crédito tributario por inversión en electricidad limpia
• Crédito de bonificación para comunidades de bajos ingresos
• Crédito por captura de óxido de carbono
• Crédito de producción de energía nuclear de cero emisiones
• Crédito de proyecto de energía avanzada
• Crédito de producción de manufactura avanzada
• Crédito para vehículos limpios comerciales calificados
• Crédito de propiedad para el reabastecimiento de combustible alternativo
• Crédito tributario para la producción de hidrogeno limpio
• Crédito de producción de combustible limpio

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS     

Organize tax records. Create a system that keeps all important information together. Taxpayers can use a software program for electronic recordkeeping or store paper documents in clearly labeled folders. They should add tax records to their files as they receive them. Organized records will make tax return preparation easier and may help taxpayers discover overlooked deductions or credits.

Identify filing status. A taxpayer's filing status is used to determine their filing requirements, standard deduction, eligibility for certain credits and the correct amount of tax they should pay. If more than one filing status applies to a taxpayer, they can get help choosing the best one for their tax situation with Interactive Tax Assistant, What Is My Filing Status. Changes in family life — marriage, divorce, birth and death — may affect a person's tax situation, including filing status and eligibility for certain tax credits and deductions.

Understand adjusted gross income (AGI). AGI and tax rate are important factors in figuring taxes. AGI is the taxpayer's income from all sources minus any adjustments and deductions. Generally, the higher a taxpayer's AGI, the higher their tax rate and the more tax they pay. Tax planning can include making changes during the year that lower a taxpayer's AGI.

Check withholding. Since federal taxes operate on a pay-as-you-go basis, taxpayers need to pay most of their tax as they earn income. Taxpayers should check that they're withholding enough from their pay to cover their taxes owed especially if their personal or financial situations change during the year. To check withholding, taxpayers can use the IRS Withholding Estimator. If they want to change their tax withholding, taxpayers should provide their employer with an updated Form W-4. Changing withholding and having more withheld may lower their AGI and affect their tax bill or expected refund.

Make address and name changes. Notify the United States Postal Service, employers and the IRS of any address change. To officially change a mailing address with the IRS, taxpayers must compete Form 8822, Change of Address, and mail it to the correct address for their area. For detailed instructions, see page 2 of the form. Report any name change to the Social Security Administration. Making these changes as soon as possible will help make filing their tax return easier.

Save for retirement. Saving for retirement can also lower a taxpayer's AGI. Contributing money to a retirement plan at work and to a traditional IRA also reduces taxable income.

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 +1-305-274-5811.

Source : IRS  

En respuesta al continuo mercadeo agresivo relacionado al Crédito de Retención de Empleados, el Servicio de Impuestos Internos renovó una advertencia para que las empresas estén en alerta de señales reveladoras acerca de las declaraciones erróneas relacionadas al crédito.

El IRS y los profesionales de impuestos continúan viendo una gran cantidad de publicidad agresiva en la televisión, por correo directo y promociones en línea relacionados al Crédito de Retención de Empleados. Aunque el crédito sí es real, promotores agresivos están extremadamente malinterpretando y exagerando quién es elegible para reclamar este crédito.

El IRS se está enfocando más en el trabajo relacionado a auditorias e investigaciones criminales que tengan que ver con estos reclamos. Empresas, organizaciones exentas a impuestos y otros que estén considerando reclamar este crédito deben revisar cuidadosamente los requisitos oficiales para este programa limitado antes de hacerlo. Aquellos que reclamen este crédito indebidamente se enfrentan a acción de seguimiento del IRS.

"El mercadeo agresivo del Crédito de Retención de Empleados sigue engañando a empresas inocentes y a otros", comentó el Comisionado del IRS Danny Werfel. "Promotores agresivos presentan declaraciones erróneas acerca de este crédito. Ellos pueden recibir tarifas enormes y dejar a quienes reclaman el crédito en riesgo a que se le nieguen su reclamo o a enfrentar situaciones en donde tengan que reembolsar el crédito".

El Crédito de Retención de Empleados (ERC, por sus siglas en inglés), también conocido como el Crédito tributario de retención de empleados o ERTC, es un crédito tributario legítimo. Muchas empresas reclamaron legítimamente el crédito durante la pandemia. El IRS ha añadido personal para manejar los reclamos del ERC, que es un proceso que requiere mucho tiempo ya que implica declaraciones de impuestos enmendadas.

"Este bombardeo de mercadeo por promotores significa que el IRS está recibiendo muchos reclamos inválidos, lo que también requiere de más tiempo y esfuerzo de nuestro personal para poder trabajar en los reclamos legítimos del Crédito de Retención de Empleados", dijo Werfel. "El IRS comprende la importancia de estos créditos y apreciamos la pacencia de las empresas y profesionales de impuestos en lo que seguimos trabajando arduamente para procesar reclamos válidos lo más rápido posible mientras nos protegemos del fraude".

El IRS ha emitido avisos acerca de estafas agresivas del ERC desde el año pasado y este tema se incluyó en la lista de estafas tributarias Docena sucia que personas deben de evitar.

Esta es una prioridad continua en muchas maneras y el IRS sigue incrementando el desempeño en el área de cumplimiento relacionado al ERC. El IRS ha capacitado a auditores para que analicen los reclamos de ERC de mayor riesgo y la división de Investigaciones criminales del IRS está trabajando en identificar el fraude y a los promotores de reclamos fraudulentos.

El IRS le recuerda a cualquiera que reclame indebidamente el ERC que debe de reembolsar la cantidad recibida, posiblemente con multas e interés. Una empresa o grupo exento a impuestos pueden encontrarse en una peor posición económica si tiene que reembolsar el crédito que si nunca lo reclama en primer lugar. Así que es importante que evite caer en una estafa.

Cuando es reclamado adecuadamente, el ERC es un crédito tributario reembolsable diseñado para empresas que continuaron pagando a empleados mientras cerraron debido a la pandemia COVID-19 o tuvieron disminuciones significativas en los ingresos brutos durante los períodos de elegibilidad. El crédito no está disponible para individuos.

Señales de advertencia acerca del mercadeo agresivo de ERC

Hay consejos importantes que las personas deben tener en cuenta acerca del Crédito de Retención de Empleados. Las señales de aviso incluyen:

• Llamadas no solicitadas de promotores que mencionan un "proceso de solicitud sencillo".
• Declaraciones que dicen que el promotor o compañía pueden determinar la elegibilidad de ERC en solo minutos.
• Tarifas enormes de antemano para poder reclamar el crédito
• Tarifas basadas en un porcentaje de la cantidad del reembolso del Crédito de Retención de Empleados que fue reclamado. Esto es un aviso similar para contribuyentes regulares, quienes también deben evitar a preparadores de impuestos que basan sus tarifas en la cantidad del reembolso.
• Declaraciones agresivas de un promotor que afirman que la empresa que recibe la solicitación es elegible antes de discutir la situación tributaria del grupo. En realidad, el Crédito de Retención de Empleados es un crédito complejo que requiere un análisis detallado antes de solicitarlo.
• El IRS también observa sugerencias extremadamente agresivas de comerciantes que urgen a empresas a reclamar ya que no tienen nada que perder. En realidad, aquellos que reciban el crédito indebidamente pueden tener que reembolsarlo – al igual de pagar interés y multas significativas.

Estos promotores pueden mentir sobre los requisitos de elegibilidad. Además, aquellos que usan los servicios de estas compañías pueden correr el riesgo de que alguien use el crédito como una manera de robar la identidad del contribuyente o de quedarse con una porción del crédito que fue reclamado indebidamente.

Cómo los promotores atraen a sus víctimas

El IRS sigue observando varias maneras que promotores atraen a empresas, grupos exentos a impuestos y a otros para que reclamen el crédito.

• Mercadeo agresivo. Esto se puede ver en un sinnúmero de lugares, incluyendo la radio, televisión y en línea al igual que llamadas y mensajes de texto.
• Correo directo. Algunos terceros que promueven el ERC envían cartas falsas a contribuyentes de parte de grupos falsos como el "Departamento del Crédito de Retención de Empleados". Estas cartas pueden parecerse a una carta oficial del IRS o correo oficial del gobierno con lenguaje urgiendo acción inmediata.
• Omitir detalles claves. Promotores terceros del ERC usualmente no explican adecuadamente los requisitos de elegibilidad o cómo se calcula el crédito. Hacen argumentos generales sugiriendo que todos los empleadores son elegibles sin evaluar las circunstancias individuales de un empleador.
• Por ejemplo, solo las empresas en inicio de recuperación son elegibles para el ERC en el cuarto trimestre de 2021, pero los promotores no explican este límite. 
• Como mencionado, puede que los promotores no informen a los contribuyentes que tienen que reducir las deducciones de salario reclamadas en su declaración de impuestos comercial por la cantidad del Crédito de Retención de Empleados. Esto causa un efecto dominó de problemas tributarios para la empresa.
• Participación en el Programa de protección de pago. Además, muchos de estos promotores no les dicen a los empleadores que no pueden reclamar el ERC para salarios que fueron reportados como costos de nómina si fueron obtenidos como parte del alivio de préstamos del Programa de protección de pago.

Cómo se pueden proteger las empresas y otros

El IRS les recuerda a empresas, a grupos exentos a impuestos y otros que son el enfoque de estos promotores que existen pasos sencillos que pueden tomar para protegerse de reclamar indebidamente el Crédito de Retención de Empleados.

• Trabajen con un profesional de impuestos de confianza. Empleadores elegibles que necesiten ayuda al reclamar el crédito deben trabajar con un profesional de impuestos de confianza; el IRS urge a personas que no dependan del consejo de aquellos que solicitan estos créditos. Promotores que hacen mercadeo sobre este tema tienen como fin hacer dinero y en muchos casos no ven por el interés de aquellos que lo reclaman.
• No reclamen a menos que crean que tienen elegibilidad legitima para poder reclamar este crédito. Detalles sobre el crédito están disponibles en IRS.gov y, como mencionado, un profesional de impuestos de confianza – no alguien promoviendo el crédito – puede proveer consejo profesional clave acerca de ERC.
• Para reportar abuso relacionado al ERC, envíe por fax o correo postal el Formulario 14242 (SP), Informar Sospechas de Promociones Tributarias o
  Preparadores de Impuestos AbusivosPDF junto con cualquier material de apoyo al Centro de desarrollo de información en la Oficina de investigaciones de promotores.

Dirección:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135

Cómo reclamar adecuadamente el crédito ERC

Hay requisitos de elegibilidad muy específicos para poder reclamar el ERC. Hay partes técnicas que requieren análisis. Pueden reclamar el ERC en una declaración de impuestos comercial original o enmendada para salarios elegibles pagados del 13 de marzo de 2020 al 31 de diciembre de 2021. Sin embargo, los empleadores tuvieron que haber:

• Sufrido una suspensión total o parcial de operaciones debido a órdenes de una autoridad gubernamental apropiada (en inglés) limitando el comercio, viajes o reuniones debido a COVID-19 durante 2020 o los primeros tres trimestres de 2021,
• Experimentado una disminución significativa en los ingresos brutos durante 2020 (en inglés) o una disminución en los ingresos brutos durante los primeros tres trimestres de 2021 (en inglés), ó,
• Fueron elegibles para ser un negocio en inicio de recuperación (en inglés) para el tercer o cuarto trimestre de 2021.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente : IRS     

Summertime is the perfect time for a mid-year tax checkup. A tax checkup will help you avoid being surprised with a potentially large tax bill and may help uncover ways you can save throughout the rest of the year. It is also a good time to account for any life changes that may affect your overall tax liability.

Get organized

• Collect and keep your records and receipts. Record keeping can help you identify sources of income, track deductible expenses, and make preparing a complete and accurate tax return easier.
• Notify the IRS if your address changes and notify the Social Security Administration of a legal name change.
• Create and/or sign into your individual IRS online account to view your federal tax records, manage communication preferences, make payments and more.

Perform a paycheck check-up

Pay close attention to your paystubs to help prevent end-of year surprises. Make sure the earnings are correct and that you have the proper amount of tax withheld. As time passes, life events like marriage, divorce, having a child, buying a home, or a change in income may affect your taxes. The IRS’s Tax Withholding Estimator will help you assess your income tax, credits, adjustments, and deductions, and determine whether you need to change your tax withholding. If a change is recommended, the estimator will provide instructions to update your withholding with your employer either online or by submitting a new Form W-4, Employee’s Withholding Allowance Certificate.

Remember, most income is taxable. This includes the following sources and more:

• unemployment income;
• refund interest;
• income from the gig economy; and
• virtual currencies.

Consider making estimated tax payments

If you receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits, or pension and annuity income, you should make quarterly estimated tax payments. Log in to your online account to make a payment online or go to IRS.gov/payments.

Review your retirement contributions

Review contributions to your retirement plan, such as 401(k) and Individual Retirement Accounts (IRAs). If you want to maximize your contributions, run the numbers to see how much you need to save from your remaining paychecks this year. Increasing pre-tax retirement contributions reduces your taxable income for the year you contribute.

Report changes that may affect your health insurance Marketplace premiums

If you have health insurance through your state’s health insurance marketplace established under the Affordable Care Act, it is important to report changes that may affect your premiums.

Changes in circumstances to report to the Marketplace include:

• Changes in household income (including lump sum distributions from Social Security, retirement accounts, etc.);
• Birth or adoption;
• Marriage or divorce;
• Moving to a different address;
• Gaining or losing eligibility for other health care coverage; or
• Other changes affecting income and your family.

If you want to see how a change of circumstance might affect your Premium Tax Credit (PTC), you can use the PTC Change Estimator. Remember to contact your Marketplace to report a change of circumstances.

Plan your health flexible spending arrangements

Check the balance of your flexible spending arrangement (FSA). FSAs allow you to put some of your pre-tax income toward qualifying medical, dental, and vision expenses, along with other health-related products and services. In 2023, workers can contribute up to $3,050.

While there are some provisions that may let your roll over some money into the next year, most FSAs are “use-or-lose.” Start thinking now about how you might use remaining funds in the second half of the year to ensure you don’t lose the money you contributed to your FSA account.

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 +1-305-274-5811.

Source : TAS 

Many people move during the summer. Taxpayers who are selling their home may qualify to exclude all or part of any gain from the sale from their income when filing their tax return.

Ownership and use

To claim the exclusion, the taxpayer must meet ownership and use tests. During the five-year period ending on the date of the sale, the homeowner must have owned the home and lived in it as their main home for at least two years.

Gains

Taxpayers who sell their main home for a capital gain may be able to exclude up to $250,000 of that gain from their income. Taxpayers who file a joint return with their spouse may be able to exclude up to $500,000. Homeowners excluding all the gain do not need to report the sale on their tax return unless a Form 1099-S was issued.

Losses

Some taxpayers experience a loss when their main home sells for less than what they paid for it. This loss is not deductible.

Multiple homes

Taxpayers who own more than one home can exclude the gain only on the sale of their main home. They must pay taxes on the gain from selling any other home.

Reported sale

Taxpayers who don't qualify to exclude all of the taxable gain from their income must report the gain from the sale of their home when they file their tax return. Anyone who chooses not to claim the exclusion must report the taxable gain on their tax return. Taxpayers who receive Form 1099-S, Proceeds from Real Estate Transactions, must report the sale on their tax return even if they have no taxable gain.

Mortgage debt

Generally, taxpayers must report forgiven or canceled debt as income on their tax return. This includes people who had a mortgage workout, foreclosure or other canceled mortgage debt on their home. Taxpayers who had debt discharged, in whole or in part on a qualified principal residence can't exclude that debt from income unless it was discharged before January 1, 2026, or a written agreement for the debt forgiveness was in place before January 1, 2026.

Possible exceptions

There are exceptions to these rules for some individuals, including persons with a disability, certain members of the military or intelligence community and Peace Corps workers.

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 +1-305-274-5811.

Source : IRS 

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

What should I do if I get correspondence regarding my tax ret

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

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

• Taxpayer Advocate Service’s Taxpayer Roadmap: Use the ‘Did you get a notice from the IRS?’ look-up feature to find a simplified explanation of why it is being sent. Then click on the ‘See notice details’ area to find a fuller explanation of why it is being sent, what this means for you and what next steps you should take. It also provides additional links to related resources you may need to see or use to provide missing information. 
• Taxpayer Advocate Service’s Get Help pages: These webpages provide detailed instructions to help you resolve the most common issues we see by yourself. They are grouped by categories. For return processing issues, start with I Got a Notice From the IRS. Then if needed review specific topics that apply to your situation like, I Made a Mistake on My Return or I Need Help Resolving My Balance Due. 
• IRS’s Understanding Your IRS Notice or Letter page: These pages explain why notices are sent and contain a search feature to find your specific notice and related information. 

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

Do I need to reply? 

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

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

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

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

When to respond 

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

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

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

How and where to reply 

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

What if I want to talk to someone? 

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

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

The IRS encourages taxpayers to make use of the IRS.gov website and its online resources, like Tax Law Questions to get questions answered and find resources to resolve problems. 

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

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

Wait – I still need help 

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

If you 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 +1-305-274-5811.

Source : TAS     

When preparing to file your federal tax return, don't forget your contributions to charitable organizations. Your donations (up to 10% of taxable income) can add up to a nice tax deduction for your corporation.

Here are a few tips to help make sure your contributions pay off on your tax return:

You cannot deduct contributions made to specific individuals, political organizations and candidates, the value of your time or services and the cost of raffles, bingo, or other games of chance. To be deductible, contributions must be made to qualified organizations. Cash contributions must be substantiated by a bank record, or a receipt, letter or other written communication from the donee organization indicating the name of the organization, the date of the contribution, and the amount of the contribution. In addition, if the contribution is $250 or more, a written acknowledgement showing the amount of cash contributed, any property contributed, and a description and a good faith estimate of the value of any goods or services provided in return for the contribution or statement that no goods or services were provided in return for the contribution, is required. Non-cash contributions over $500 must be supported by an attachment to the return which states the kind of property contributed, along with the method used to determine its fair market value. Form 8283, Non-cash Charitable Contributions is required for contributions with a claimed value of more than $5,000. Contributions which exceed the 10% limitation can be carried over for five years.

Organizations can tell you if they are qualified and if donations to them are deductible. IRS.gov has a Tax Exempt Organization Search online tool to help you see if an organization is qualified. In addition, taxpayers can call IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500. Be sure to have the organization's correct name and its headquarters location, if possible. Churches, synagogues, temples, mosques and governments are not required to apply for this exemption in order to be qualified. Alternatively, contact us for more information!

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 +1-305-274-5811.

Source: Thomson Reuters  

Whether someone is entering the workforce for the first time or changing jobs, filling out new hire paperwork can feel overwhelming. One of the forms employees must complete is a W-4, Employee's Withholding Certificate. This form tells employers how much money to withhold from the employee's pay for federal income tax.

It's important for employees to know the correct amount of tax to withhold so they don't owe too much money when filing their tax return or have too much money withheld from their paychecks.

Get tax withholding right

Federal income tax is a pay-as-you-go tax. Taxpayers pay the tax through their employers as they earn or receive income during the year. Employers take out – or withhold – income tax from employee paychecks and pay it to the IRS in the taxpayer's name.

If an employee doesn't have enough tax withheld, they may face an unexpected tax bill and a possible penalty when they file a tax return next year. If they overpay or have too much tax withheld during the year, the employee will likely get a tax refund when they file their tax return. Adjusting the tax withheld up front may mean a bigger paycheck throughout the year.

Form W-4, Employee's Withholding Certificate

New employees must complete Form W-4 so that their employer can withhold the correct amount of federal income tax from their pay. Employees should read the instructions carefully. The employer will base the amount of withholding on the information the employee provides on their W-4 and how much the employee earns.

People can also submit a new W-4 when their personal or financial situation changes and they want to update their withholding.

Taxpayers can use the Tax Withholding Estimator

If a taxpayer isn't sure how much tax they should have withheld, they can use the Tax Withholding Estimator tool on IRS.gov to:

• Estimate their federal income tax withholding.
• See how their refund, take-home pay or tax due is affected by their withholding amount.

Not all workers are employees

Workers are classified as either contractors or employees according to certain rules. Workers who are independent contractors need to pay their taxes directly to the IRS. Depending on how much they earn, they may need to pay estimated tax on a quarterly basis.

Keep tax forms in a safe place

Form W-2, Wage and Tax Statement, is a taxpayer's record of the income they received throughout the year and the amount of money withheld for federal, state, local and other taxes. Employers typically send these out in late January each year. Taxpayers should keep all the tax documents they receive and store them in a safe place so they are available for filing an accurate 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 +1-305-274-5811.

Source: IRS   

The volatility in the stock market may have caused the value of your retirement account to decrease. But if you have a traditional IRA invested in stocks, a decline may provide a valuable opportunity by allowing you to convert your traditional IRA to a Roth IRA at a lower tax cost.

Traditional vs. Roth

Here are some key differences between these two types of accounts:

Traditional IRA. Contributions to a traditional IRA may be deductible, depending on your modified adjusted gross income (MAGI) and whether you (or your spouse) participate in a qualified retirement plan, such as a 401(k). Funds in the account grow tax-deferred.

However, you generally must pay income tax on withdrawals. You’ll also face a penalty if you withdraw funds before age 59½, unless you qualify for an exception. And you may face an even larger penalty if you don’t take your required minimum distributions (RMDs) after you reach age 73 (up from 72 for 2022 and going up to age 75 if you don’t reach age 73 before Jan. 1, 2033).

Roth IRA. Roth IRA contributions aren’t deductible. But withdrawals (including earnings) are tax-free as long as you are age 59½ or older and the account has been open at least five years. Plus, you’re allowed to withdraw contributions at any time tax- and penalty-free. In addition, you won’t be subject to RMDs.

If you won’t need the money for retirement, you can let the entire Roth IRA balance continue to grow tax-free for the benefit of your heirs. Beneficiaries generally will be required to take distributions, but the distributions will be tax free. (There could be estate tax consequences at your death if you have a very large estate.)

However, the ability to contribute to a Roth IRA is subject to limits based on your MAGI. Fortunately, no matter how high your income, you’re eligible to convert a traditional IRA to a Roth. But you’ll have to pay income tax on the amount converted.

Conversion considerations

If you’ve been considering a Roth conversion and your traditional IRA has lost value, converting now instead of waiting could minimize your tax hit. You’ll also avoid tax on future appreciation if the value of your account goes back up.

Before converting, take time to think through the details. Here are two key issues to consider:

1. Money to pay the tax bill. If you don’t have the cash on hand to cover the taxes owed on the conversion, you may have to dip into your retirement funds, eroding your nest egg. The more money you convert and the higher your tax bracket, the bigger the tax hit.

2. When you plan to retire. Typically, you wouldn’t convert a traditional IRA to a Roth IRA if you expect to retire soon and will start drawing down on the account right away. Usually, the goal is to allow the funds to grow and compound over time without any tax erosion.

Stretch out the tax bill

If the idea of paying the tax bite related to converting from a traditional IRA to a Roth IRA is daunting or simply unaffordable, consider a gradual conversion. It’s not an all-or-nothing process, so you can stretch out the tax bill over time, depending on how long you expect to wait to retire.

Suppose you have $100,000 in a traditional IRA. You could, for example, convert that in five steps: $20,000 per year for five years. We can estimate what the tax bite will be at varying steps.

Right for you?

There are also other issues that need to be considered before executing a Roth IRA conversion. If this sounds like something you’re interested in, contact us to discuss whether a conversion is right for you.

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 +1-305-274-5811.

Source :Thomson Reuters 

The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning July 1, 2023.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the new rates:

• 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
• 4.5% for the portion of a corporate overpayment exceeding $10,000.
• 7% for underpayments (taxes owed but not fully paid).
• 9% 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 are computed from the federal short-term rate determined during April 2023. See the revenue ruling for details.

Revenue Ruling 2023-11PDF announcing the rates of interest, will appear in Internal Revenue Bulletin 2023-23, dated June 5, 2023.

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 +1-305-274-5811.

Source : IRS   

Expanded Clean Energy Credits, Helping Workers Pay Off Student Loans, 1099-K Rules and More

The Internal Revenue Service  urged business taxpayers to begin planning now to take advantage of tax-saving opportunities and get ready for reporting changes that take effect in 2023.

During National Small Business Week, April 30 to May 6, the IRS is joining the Small Business Administration and others in both the public and private sector to celebrate the hard work, ingenuity and dedication of America’s small businesses and their contributions to the economy.

With next year’s filing deadline nearly a year away, entrepreneurs still have time to identify possible tax benefits, take action to qualify for them and then claim them when they file in 2024. They also have time to plan for reporting changes and even claim overlooked tax benefits from the recent past.

Cutting energy costs for small businesses

The Inflation Reduction Act (IRA), enacted last summer, includes provisions that can save small business owners money on energy costs. For example:

• Small businesses can receive a tax credit covering 30% of the cost of switching over to low-cost solar power, lowering operating costs and protecting against volatile energy prices. 
• Small business building owners can receive a tax credit up to $5 per square foot to support energy efficiency improvements that deliver lower utility bills.
• Through the Clean Commercial Vehicle Credit, small businesses that use vehicles such as trucks and vans can benefit from tax credits up to 30% of purchase costs for clean commercial vehicles, like electric and fuel cell models that meet applicable requirements. There is no limit on the number of Clean Commercial Vehicle credits a business can claim.

These credits are nonrefundable, so businesses can't get back more on the credit than they owe in taxes.

Employee Retention Credit: Claim it if eligible but avoid ERC scams   

Eligible employers who overlooked the Employee Retention Credit (ERC) when they filed payroll tax returns for 2020 and 2021 can still claim it by filing an amended federal payroll tax return.

At the same time, the IRS has warned businesses not to fall victim to one of the many ERC-related scams being promoted online, in social media, on the radio and even phone calls and emails. Anyone who improperly claims the ERC has to pay it back, possibly with penalties and interest, so it’s important to avoid getting scammed. 

Among other things, scammers misrepresent many features of the ERC and in some cases are merely using the credit as a ploy to steal the taxpayer’s identity or take a cut of the taxpayer’s improperly claimed credit. Eligible employers who need help claiming the credit should work with a trusted tax professional, not one of these scammers. ERC scams are so widespread this year that the IRS added them to its annual Dirty Dozen list of tax scams.

The ERC is designed to help employers who kept paying their employees while shut down during the pandemic or who suffered a significant decline in gross receipts during the eligibility period. The ERC is a payroll tax credit, not an income tax credit, and it was available only during 2020 and 2021.

Most eligible employers who overlooked the credit can still claim it by filing Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, available on IRS.gov. Form 941-X filers and businesses that file other types of returns can visit IRS.gov/ERC for details, forms and instructions.

Educational assistance programs can be used to pay student loans

Employers who have educational assistance programs can use them to help pay student loan obligations for their employees. 

Though educational assistance programs have been available for many years, the option to use them to pay student loans has been available only for payments made after March 27, 2020, and, under current law, will continue to be available until Dec. 31, 2025.

Traditionally, educational assistance programs have been used to pay for books, equipment, supplies, fees, tuition and other education expenses for the employee. These programs can now also be used to pay principal and interest on an employee’s qualified education loans. Payments made directly to the lender, as well as those made to the employee, qualify.

By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

Employers who don’t have an educational assistance program may want to consider setting one up. In a tight labor market, worthwhile fringe benefits such as educational assistance programs can help employers attract and retain good workers.

These programs must be in writing and cannot discriminate in favor of highly compensated employees. For information on other requirements, see Publication 15-B, Employer’s Tax Guide to Fringe Benefits. For details on what qualifies as a student loan, see Chapter 10 in Publication 970, Tax Benefits for Education. 

More people will receive 1099-Ks

Starting in 2023, businesses and other taxpayers who receive more than $600 in income from third-party settlement organizations, including popular payment apps, may receive Forms 1099-K, Payment Card and Third Party Network Transactions. Typically, they’ll receive these reporting forms during January 2024.

The $600 reporting threshold is lower than it’s been in the past. For that reason, some people and businesses may receive a Form 1099-K that didn’t receive one in previous years.

There are no changes to what counts as income or how tax is calculated. For business taxpayers, most income is taxable, even if it’s not reported to them on a 1099 or another form issued by a third party.
The 1099-K reports various business transactions, including income from: 

• A business the taxpayer owns.
• Self-employment. 
• Activities in the gig economy.
• The sale of personal items and assets.

Good recordkeeping is key. For more information, visit the Understanding Your Form 1099-K page on IRS.gov.

Other tax benefits

From business start-up expenses and the home office deduction to the qualified business income deduction and the health-insurance deduction for self-employed individuals, there are a variety of tax benefits that may be available to entrepreneurs and other business owners. 

For details on these and other tax benefits see Publication 535, Business Expenses. Details on another major expense for most businesses, depreciation of buildings, equipment and other assets can be found in Publication 946, How to Depreciate Property.

Yet another worthwhile resource for any small business is the agency’s Publication 334, Tax Guide for Small Business. All these publications are available 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 +1-305-274-5811.

Source : IRS     

The Internal Revenue Service warned taxpayers to be on the lookout for a new scam mailing that tries to mislead people into believing they are owed a refund.

The new scheme involves a mailing coming in a cardboard envelope from a delivery service. The enclosed letter includes the IRS masthead and wording that the notice is "in relation to your unclaimed refund."

Like many scams, the letter includes contact information and a phone number that do not belong to the IRS. But it also seeks a variety of sensitive personal information from taxpayers – including detailed pictures of driver's licenses – that can be used to by identity thieves to try obtaining a tax refund and other sensitive financial information.

"This is just the latest in the long string of attempts by identity thieves posing as the IRS in hopes of tricking people into providing valuable personal information to steal identities and money, including tax refunds," said IRS Commissioner Danny Werfel. "These scams can come in through email, text or even in special mailings. People should be careful to watch out for red flags that clearly mark these as IRS scams."

The Security Summit – a coalition between the IRS, state tax administrators and the nation's tax industry – continue to warn people to protect their personal information to protect against tax-related identity theft as well as scams like this.

In this new scam, there are many warning signs that can be seen in many similar schemes via email or by text. An unusual feature of this scam is that it tries tricking people to email or phone very detailed personal information in hopes of stealing valuable information.

The letter tells the recipients they need to provide "Filing Information" for their refund. This includes some awkwardly worded requests like this:

"A Clear Phone of Your Driver's License That Clearly Displays All Four (4) Angles, Taken in a Place with Good Lighting."

The letter proceeds for more sensitive information including cellphone number, bank routing information, Social Security number and bank account type, followed by a poorly worded warning:

"You'll Need to Get This to Get Your Refunds After Filing. These Must Be Given to a Filing Agent Who Will Help You Submit Your Unclaimed Property Claim. Once You Send All The Information Please Try to Be Checking Your Email for Response From The Agents Thanks"

This letter contains a variety of warning signs, including odd punctuation and a mixture of fonts as well as inaccuracies.

For example, the letter says the deadline for filing tax refunds is Oct. 17; the deadline for people on extension for their 2022 tax returns is actually Oct.16, and those owed refunds from last year have time beyond that. And the IRS handles tax refunds, not "unclaimed property."

Important reminders about scams

The IRS and Security Summit partners regularly warn people about common scams, including the annual IRS Dirty Dozen list.

Taxpayers and tax professionals should be alert to fake communications posing as legitimate organizations in the tax and financial community, including the IRS and states. These messages can arrive in the form of an unsolicited text or email to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft, including phishing and smishing.

The IRS never initiates contact with taxpayers by email, text or social media regarding a bill or tax refund.

As a reminder: Never click on any unsolicited communication claiming to be the IRS as it may surreptitiously load malware. It may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.

Individuals should never respond to tax-related phishing or smishing or click on the URL link. Instead, the scams should be reported by sending the email or a copy of the text/SMS as an attachment to phishing@irs.gov. The report should include the caller ID (email or phone number), date, time and time zone, and the number that received the message.

Taxpayers can also report scams to the Treasury Inspector General for Tax Administration or the Internet Crime Complaint Center. The Report Phishing and Online Scams page at IRS.gov provides complete details. The Federal Communications Commission's Smartphone Security Checker is a useful tool against mobile security threats.

The IRS also warns taxpayers to be wary of messages that appear to be from friends or family but that are possibly stolen or compromised email or text accounts from someone they know. This remains a popular way to target individuals and tax preparers for a variety of scams. Individuals should verify the identity of the sender by using another communication method; for instance, calling a number they independently know to be accurate, not the number provided in the email or text.

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 +1-305-274-5811.

Source : IRS  

Sadly, many businesses have been forced to shut down recently due to economic challenges. If this is your situation, we can help you meet the various tax responsibilities that go with closing a business.

Tax returns

Of course, a business must file a final income tax return and some other related forms for the year it closes its doors. The type of return to be filed depends on the type of business you have. Here’s a rundown of the basic requirements:

Sole proprietorships. Your tax preparer will need to file the usual Schedule C, “Profit or Loss from Business,” with your individual return (Form 1040) for the year you close the business. You may also need to report self-employment tax.

Partnerships. A partnership must file Form 1065, “U.S. Return of Partnership Income,” for the year it closes. The “final return” box must be checked, and the same must be done on Schedule K-1, “Partner’s Share of Income, Deductions, Credits, etc.”

All corporations. Form 966, “Corporate Dissolution or Liquidation,” must be filed if you adopt a resolution or plan to dissolve a corporation or liquidate any of its stock.

C corporations. Form 1120, “U.S. Corporate Income Tax Return,” must be filed for the year you close, with the “final return” box checked.

S corporations. Form 1120-S, “U.S. Income Tax Return for an S Corporation,” must be filed for the year of closing. The “final return” box must be checked on this form as well as on Schedule K-1.

All businesses. Other forms may need to be filed to report sales of business property and asset acquisitions if you sell your business.

Employees and contract workers

If you have employees, you must pay them final wages and compensation owed, make final federal tax deposits and report employment taxes. Failure to withhold or deposit employee income tax, Social Security tax and Medicare tax can result in full personal liability for what’s known as the “Trust Fund Recovery Penalty.”

If you’ve paid any contractors at least $600 during the calendar year in which you close your business, you must report those payments on Form 1099-NEC, “Nonemployee Compensation.”

Other tax issues

If your business has a retirement plan for employees, you’ll want to terminate the plan and distribute benefits to participants. There are detailed notices, funding, timing and filing requirements that must be met by a terminating plan. There are also complex requirements related to Flexible Spending Accounts, Health Savings Accounts and other programs for your employees.

We can assist you with many other complicated tax issues related to closing your business, including debt cancellation, use of net operating losses, freeing up any remaining passive activity losses, depreciation recapture and possible bankruptcy issues.

We can also advise you on the length of time you need to keep business records. In addition, you’ll need to cancel your Employer Identification Number and close your IRS business account.

If your business is unable to pay all the taxes it owes, we can explain the available payment options. Contact us to discuss these issues and get answers to any questions.

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 +1-305-274-5811.

Source : Thomson Reuters     

El Servicio de Impuestos Internos advirtió a los contribuyentes que estén atentos a un nuevo correo fraudulento que intenta engañar a las personas haciéndoles creer que se les debe un reembolso.

El nuevo esquema implica un correo que llega en un sobre de cartón de un servicio de entrega. La carta adjunta incluye el encabezado del IRS y la redacción de que el aviso es "en relación con su reembolso no reclamado".

Como muchas estafas, la carta incluye información de contacto y un número de teléfono que no pertenece al IRS. Pero también busca una variedad de información personal confidencial de los contribuyentes, incluyendo imágenes detalladas de licencias de conducir, que los ladrones de identidad pueden usar para intentar obtener un reembolso de impuestos y otra información financiera confidencial.

"Esta es unas de las últimas series largas de intentos de ladrones de identidad que se hacen pasar por el IRS con la esperanza de engañar a las personas para que proporcionen información personal valiosa para robar identidades y dinero, incluyendo los reembolsos de impuestos", dijo el comisionado del IRS, Danny Werfel. "Estas estafas pueden llegar por correo electrónico, mensajes de texto o incluso en correos especiales. Las personas deben tener cuidado y estar atentos a señales de alerta que las marcan claramente como estafas del IRS".

La Cumbre de Seguridad, una coalición entre el IRS, los administradores de impuestos estatales y la industria tributaria de la nación, continúa advirtiendo a las personas que protejan su información personal para protegerse contra el robo de identidad relacionado con los impuestos y estafas como esta.

En esta nueva estafa, hay muchas señales de advertencia que se pueden ver en muchos esquemas similares por correo electrónico o por mensaje de texto. Una característica inusual de esta estafa es que intenta engañar a las personas para que envíen por correo electrónico o por teléfono información personal muy detallada con la esperanza de robar información valiosa.

La carta les dice a los destinatarios que deben proporcionar "Información de presentación" para su reembolso. Esto incluye algunas solicitudes redactadas con torpeza como esta:

"A Clear Picture of Your Driver's License That Clearly Displays All Four (4) Angles, Taken in a Place with Good Lighting." (Una imagen clara de su licencia de conducir que muestra claramente los cuatro (4) ángulos, tomado en un lugar con buena iluminación.)

La carta continúa con información más confidencial, incluyendo el número de teléfono celular, la información de ruta bancaria, el número de Seguro Social y el tipo de cuenta bancaria, seguida de una advertencia mal redactada:

"You'll Need to Get This to Get Your Refunds After Filing. These Must Be Given to a Filing Agent Who Will Help You Submit Your Unclaimed Property Claim. Once You Send All The Information Please Try to Be Checking Your Email for Response From The Agents Thanks" (Necesitará obtener esto para obtener sus reembolsos después de la presentación. Estos deben entregarse a un agente de presentación que lo ayudará a presentar su reclamo de propiedad no reclamada. Una vez que envíe toda la información, intente revisar su correo electrónico para obtener una respuesta de los agentes gracias)

Esta carta contiene una variedad de señales de advertencia, que incluyen puntuación extraña y una combinación de fuentes e inexactitudes.

Por ejemplo, la carta dice que la fecha límite para presentar los reembolsos de impuestos es el 17 de octubre; la fecha límite para las personas en la extensión de sus declaraciones de impuestos de 2022 es en realidad el 16 de octubre, y aquellos con reembolsos adeudados del año pasado tienen tiempo más allá de eso. Y el IRS maneja los reembolsos de impuestos, no la "propiedad no reclamada".

Recordatorios importantes sobre estafas

Los socios del IRS y la Cumbre de Seguridad advierten regularmente a las personas sobre estafas comunes que incluye la lista anual Docena Sucia del IRS.

Los contribuyentes y profesionales de impuestos deben estar alertas a las comunicaciones falsas que se hacen pasar por organizaciones legítimas en la comunidad tributaria y financiera, incluyendo el IRS y los estados. Estos mensajes pueden llegar en forma de un mensaje de texto o correo electrónico no solicitado para atraer a las víctimas desprevenidas para que proporcionen información personal y financiera valiosa que puede conducir al robo de identidad, incluyendo el phishing y el smishing.

El IRS nunca inicia el contacto con los contribuyentes por correo electrónico, mensaje de texto o redes sociales con respecto a una factura o reembolso de impuestos.

Como recordatorio: nunca haga clic a ninguna comunicación no solicitada que afirme ser del IRS, ya que puede cargar malware de forma encubierta. También puede ser una forma en que los piratas informáticos malintencionados carguen ransomware que impide que el usuario legítimo acceda a su sistema y archivos.

Las personas nunca deben responder al phishing o smishing relacionado con los impuestos ni hacer clic al enlace URL. En su lugar, las estafas deben denunciarse enviando el correo electrónico o una copia del texto/SMS como archivo adjunto a phishing@irs.gov. El informe debe incluir el identificador de llamadas (correo electrónico o número de teléfono), fecha, hora y zona horaria, y el número que recibió el mensaje.

Los contribuyentes también pueden denunciar estafas al Inspector general del Tesoro para la administración tributaria (en inglés) o al Centro de quejas de delitos en Internet (en inglés). La página Reporte práctica fraudulenta de pesca de información en IRS.gov proporciona detalles completos. El Comprobador de seguridad de teléfonos inteligentes (en inglés) de la Comisión Federal de Comunicaciones es una herramienta útil contra las amenazas de seguridad móvil.

El IRS también advierte a los contribuyentes que tengan cuidado con los mensajes que parecen ser de amigos o familiares, pero que posiblemente sean cuentas de correo electrónico o de texto robadas o comprometidas de alguien que conocen. Esta sigue siendo una forma popular de dirigirse a individuos y preparadores de impuestos para una variedad de estafas. Las personas deben verificar la identidad del remitente usando otro método de comunicación; por ejemplo, llamando a un número que ellos mismos saben que es correcto, no al número provisto en el correo electrónico o mensaje de texto.

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 +1-305-274-5811.

Source : IRS  

When employers hire people with disabilities or make their business accessible to employees and customers with disabilities, they may be eligible for certain tax benefits. These tax benefits encourage employers to hire qualified people with disabilities and off-set some of the costs of providing accommodations.

Disabled Access Credit

The Disabled Access Credit is a non-refundable credit for small businesses that have expenses for providing access to people with disabilities. An eligible small business is one that earned $1 million or less or had no more than 30 full-time employees in the previous year. Small businesses claim the 50% credit for eligible access expenditures by filing Form 8826, Disabled Access Credit. The business can claim the credit each year they have access expenditures. For details on access expenditures, see Form 8826.

Barrier removal tax deduction

The architectural barrier removal tax deduction encourages businesses of any size to remove architectural and transportation barriers that helps people with disabilities and the elderly get around more easily. Businesses may claim a deduction of up to $15,000 a year for qualified expenses on items that normally must be capitalized. Businesses claim this deduction by listing it as a separate expense on their income tax return. The tax return must be filed on time.

Businesses may use the Disabled Access Credit and the architectural tax deduction together in the same tax year if the expenses meet the requirements of both benefits.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit is available to employers for hiring individuals who have consistently faced significant barriers to employment. This includes people with disabilities and veterans.

The maximum amount of tax credit for employees who worked 400 or more hours of service is:

• $2,400 or 40% of up to $6,000 of first year wages for qualifying individuals.
• $9,600 or 40% of up to $24,000 of first year wages for certain qualified veterans.

A 25% rate applies to wages for individuals who work at least 120 hours but less than 400 hours for the employer.

To claim the credit, an employer must first get certification that an individual is eligible. Employers do this by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency within 28 days after the eligible worker begins work. Employers should not submit this form to the IRS. They should contact their state workforce agency with questions about Form 8850.

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 +1-305-274-5811.

Source : IRS 

Finding work can be a hard for anybody and certain groups face even bigger challenges. The Work Opportunity Tax Credit is extended through the end of 2025 to help employers that hire workers certified as members of these groups that face barriers to employment:

• People who receive:
  • Long-term family assistance
  • Long-term unemployment
  • Supplemental Nutrition Assistance Program benefits
  • Supplemental Security Income
  • Temporary Assistance for Needy Families
• Formerly incarcerated individuals
• Qualified unemployed veterans, including disabled veterans
• Designated community residents living in Empowerment Zones or Rural Renewal Counties
• People referred to vocational rehabilitation programs
• Summer youth employees living in Empowerment Zones

Certification requirement

To claim the credit, an employer must first get certification that an individual is eligible. To do this, the employer submits IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency within 28 days after the eligible worker begins work. Employers should not submit this form to the IRS. They should contact their state workforce agency with questions about processing Form 8850.

Figuring and claiming the credit

Eligible businesses claim the Work Opportunity Tax Credit on their federal income tax return. It's generally based on wages paid to eligible workers during the first year of employment. After the employer receives the Form 8850 certification from the state workforce agency, they can:

• Figure the credit with Form 5884, Work Opportunity Credit
• Claim it on Form 3800, General Business Credit

Special rule for tax-exempt organizations

A special rule allows tax-exempt organizations to claim the credit only for hiring qualified veterans who began work for the organization before 2026. After the employer receives the Form 8850 certification from the state workforce agency, these organizations claim the credit against payroll taxes on Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations. IRS recommends that qualified tax-exempt employers don't reduce their required deposits as they wait for the tax credit.

Limitations on the credits

For a taxable business, the credit is limited to the business' income tax liability. Unused credit is subject to the normal carry-back and carry forward rules. For qualified tax-exempt organizations, the credit is limited to the amount of the employer's share of Social Security tax it owes on wages it paid to qualifying employees.

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 +1-305-274-5811.

Source : IRS   

Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies and businesses are treated differently when it's time to file a tax return. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation.

Whether someone is having fun with a hobby or running a business, if they accept more than $600 for goods and services using online marketplaces or payment apps, they could receive a Form 1099-K. Profits from the sale of goods, including personal items, and services is taxable income that must be reported on tax returns.

There are a few other things people should consider when deciding whether their project is a hobby or business. No single thing is the deciding factor. Taxpayers should review all of the factors to make a good decision.

How taxpayers can decide if it's a hobby or business

These questions can help taxpayers decide whether they have a hobby or business:

• Do they carry out the activity in a businesslike manner and keep complete and accurate books and records?
   
• Does the time and effort they put into the activity show they intend to make a profit?
   
• Does the activity make a profit in some years – if so, how much profit does it make?
   
• Can they expect to make a future profit from the appreciation of the assets used in the activity?
   
• Do they depend on income from the activity for their livelihood?
   
• Are any losses due to circumstances beyond their control or are the losses normal for the startup phase of their type of business?
   
• Do they change their methods of operation to improve profitability?
   
• Do the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business?

Whether taxpayers have a hobby or run a business, good record keeping is always key when it's time to file taxes.

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 +1-305-274-5811.

Source : IRS      

The IRS and tax professionals continue to see a barrage of aggressive broadcast advertising, direct mail solicitations and online promotions involving the Employee Retention Credit. While the credit is real, aggressive promoters are wildly misrepresenting and exaggerating who can qualify for the credits.

The IRS has stepped up audit and criminal investigation work involving these claims. Businesses, tax-exempt organizations and others considering applying for this credit need to carefully review the official requirements for this limited program before applying. Those who improperly claim the credit face follow-up action from the IRS.

"The aggressive marketing of the Employee Retention Credit continues preying on innocent businesses and others," said IRS Commissioner Danny Werfel. "Aggressive promoters present wildly misleading claims about this credit. They can pocket handsome fees while leaving those claiming the credit at risk of having the claims denied or facing scenarios where they need to repay the credit."

The Employee Retention Credit (ERC), also sometimes called the Employee Retention Tax Credit or ERTC, is a legitimate tax credit. Many businesses legitimately apply for the pandemic-era credit. The IRS has added staff to handle ERC claims, which are time-consuming to process because they involve amended tax returns.

"This continual barrage of marketing by advertisers means many invalid claims are coming into the IRS, which also means it takes our hard-working employees longer to get to the legitimate Employee Retention Credits," Werfel said. "The IRS understands the importance of these credits, and we appreciate the patience of businesses and tax professionals as we continue to work hard to get valid claims processed as quickly as possible while also protecting against fraud."

The IRS has been issuing warnings about aggressive ERC scams since last year, and it made the agency's list this year of the Dirty Dozen tax scams that people should watch out for.

This is an ongoing priority area in many ways, and the IRS continues to increase compliance work involving ERC. The IRS has trained auditors examining ERC claims posing the greatest risk, and the IRS Criminal Investigation division is working to identify fraud and promoters of fraudulent claims.

The IRS reminds anyone who improperly claims the ERC that they must pay it back, possibly with penalties and interest. A business or tax-exempt group could find itself in a much worse cash position if it has to pay back the credit than if the credit was never claimed in the first place. So, it's important to avoid getting scammed.

When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees while shut down due to the COVID-19 pandemic or that had a significant decline in gross receipts during the eligibility periods. The credit is not available to individuals.

Warning signs of aggressive ERC marketing

There are important tips that people should be wary of involving the Employee Retention Credit. Warning signs to watch out for include:

• Unsolicited calls or advertisements mentioning an "easy application process."
• Statements that the promoter or company can determine ERC eligibility within minutes.
• Large upfront fees to claim the credit.
• Fees based on a percentage of the refund amount of Employee Retention Credit claimed. This is a similar warning sign for average taxpayers, who should always avoid a tax preparer basing their fee on the size of the refund.
• Aggressive claims from the promoter that the business receiving the solicitation qualifies before any discussion of the group's tax situation. In reality, the Employee Retention Credit is a complex credit that requires careful review before applying.
• The IRS also sees wildly aggressive suggestions from marketers urging businesses to submit the claim because there is nothing to lose. In reality, those improperly receiving the credit could have to repay the credit – along with substantial interest and penalties.

These promoters may lie about eligibility requirements. In addition, those using these companies could be at risk of someone using the credit as a ploy to steal the taxpayer's identity or take a cut of the taxpayer's improperly claimed credit.

How the promoters lure victims

The IRS continues to see a variety of ways that promoters can lure businesses, tax-exempt groups and others into applying for the credit.

• Aggressive marketing. This can be seen in countless places, including radio, television and online as well as phone calls and text messages.
• Direct mailing. Some ERC mills are sending out fake letters to taxpayers from the non-existent groups like the "Department of Employee Retention Credit." These letters can be made to look like official IRS correspondence or an official government mailing with language urging immediate action.
• Leaving out key details. Third-party promoters of the ERC often don't accurately explain eligibility requirements or how the credit is computed. They may make broad arguments suggesting that all employers are eligible without evaluating an employer's individual circumstances.
  • For example, only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021, but promoters fail to explain this limit.
  • Again, the promoters may not inform taxpayers that they need to reduce wage deductions claimed on their business' federal income tax return by the amount of the Employee Retention Credit. This causes a domino effect of tax problems for the business.
• Payroll Protection Program participation. In addition, many of these promoters don't tell employers that they can't claim the ERC on wages that were reported as payroll costs if they obtained Paycheck Protection Program loan forgiveness.

How businesses and others can protect themselves

The IRS reminded businesses, tax-exempt groups and others being approached by these promoters that there are simple steps that can be taken to protect themselves from making an improper Employee Retention Credit.

• Work with a trusted tax professional. Eligible employers who need help claiming the credit should work with a trusted tax professional; the IRS urges people not to rely on the advice of those soliciting these credits. Promoters who are marketing this ultimately have a vested interest in making money; in many cases they are not looking out for the best interests of those applying.
• Don't apply unless you believe you are legitimately qualified for this credit. Details about the credit are available on IRS.gov, and again a trusted tax professional – not someone promoting the credit – can provide critical professional advice on the ERC.
• To report ERC abuse, submit Form 14242, Report Suspected Abusive Tax Promotions or Preparers. People should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or PreparersPDF, and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135

Properly claiming the ERC

There are very specific eligibility requirements for claiming the ERC. These are technical areas that require review. They can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020, and Dec. 31, 2021. However, to be eligible, employers must have:

• Sustained a full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel or group meetings because of COVID-19 during 2020 or the first three quarters of 2021,
• Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
• Qualified as a recovery startup business for the third or fourth quarters of 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 +1-305-274-5811.

Source : IRS     

Después de que alguien con un requisito de presentación fallece, su cónyuge o representante sobreviviente debe presentar la declaración de impuestos final de la persona fallecida. En la declaración de impuestos final, el cónyuge sobreviviente o representante debe anotar que la persona falleció. El IRS no necesita una copia del certificado de defunción u otra prueba de defunción.

Por lo general, el representante que presenta la declaración de impuestos final se nombra en el testamento de la persona o es designado por un tribunal. A veces, cuando no hay un cónyuge sobreviviente o un representante designado, un representante personal presentará la declaración final y adjuntará el Formulario 1310, Información sobre una persona que reclama el reembolso debido a un contribuyente fallecido (en inglés).

Qué debe saber acerca de la presentación final de la declaración de impuestos

Generalmente, la declaración final de la declaración de impuestos de una persona fallecida se prepara y presenta de la misma manera que si la persona estuviera viva.

• La declaración debe informar todos los ingresos hasta la fecha del fallecimiento y reclamar todos los créditos y deducciones elegibles.
• Si la persona fallecida no presentó declaraciones de impuestos para los años anteriores a su muerte, es posible que su cónyuge o representante sobreviviente tenga que presentar declaraciones del año anterior.
• El IRS considera que el cónyuge sobreviviente estuvo casado durante el año completo en que falleció su cónyuge si no se vuelve a casar durante ese año.
• El cónyuge sobreviviente es elegible para usar el estado civil "casado que presenta una declaración conjunta" o "casado que presenta una declaración por separado".
• Los mismos plazos tributarios se aplican a las declaraciones finales. Si, por ejemplo, la persona fallecida murió en 2022, su declaración final vence el 18 de abril de 2023, a menos que el cónyuge sobreviviente o representante tenga una prórroga para presentar.
• Al realizar la presentación electrónica, el cónyuge sobreviviente o representante debe seguir las instrucciones proporcionadas por el software de impuestos para los requisitos correctos de firma y anotación.
• Para las declaraciones en papel, el declarante debe escribir "deceased" (fallecido), el nombre de la persona y la fecha de fallecimiento en la parte superior.

Quién debe firmar la declaración de impuestos

La persona que debe firmar la declaración es:

• Todo representante designado deberá firmar la declaración. Si es una declaración conjunta, el cónyuge sobreviviente también debe firmarla.
• Si no hay un representante designado, el cónyuge sobreviviente que presenta una declaración conjunta debe firmar la declaración y escribir en el área de la firma, "presentación como cónyuge sobreviviente".
• Si no hay representante designado ni cónyuge sobreviviente, la persona a cargo de la propiedad de la persona fallecida debe presentar y firmar la declaración como "personal representative" (representante personal).

Incluir otros documentos con la declaración final de impuestos

Los representantes designados por el tribunal deben adjuntar una copia del documento judicial que muestre su nombramiento. Los representantes que no sean designados por el tribunal deben incluir el Formulario 1310, Información sobre una persona que reclama el reembolso debido a un contribuyente fallecido (en inglés) para reclamar cualquier reembolso. Los cónyuges sobrevivientes y los representantes designados por el tribunal no necesitan completar este formulario.

Si se deben impuestos, el contribuyente debe enviar el pago con la declaración o visitar la página Realice un pago de impuestos de IRS.gov para conocer otras opciones de pago. Si no pueden pagar el monto adeudado de inmediato, pueden calificar para un plan de pago o un acuerdo de pago a plazos.

Viudo o viuda elegible

Los cónyuges sobrevivientes con hijos dependientes pueden presentar una solicitud como cónyuge sobreviviente elegible durante dos años después de la muerte de su cónyuge. Este estado civil para efectos de la declaración les permite usar tasas de impuestos conjuntas y la cantidad de deducción estándar más alta si no detallan las deducciones.

Si tiene alguna pregunta sobre contabilidad esencial para negocios,  impuestos nacionales, impuestos internacionales, representación ante el IRS, implicación de impuestos nacionales en transacciones de bienes inmuebles o estados financieros, llámenos al +1-305-274-5811.  

Fuente: IRS 

The Internal Revenue Service published proposed regulations in the Federal Register related to certain requirements that must be met for critical mineral and battery components for the new clean vehicle credit.

The critical mineral and battery component requirements apply to vehicles placed in service on or after April 18, 2023, the day after the Notice of Proposed Rulemaking is published in the Federal Register.

New clean vehicles placed in service on or after April 18, 2023, are subject to the critical mineral and battery component requirements even if the vehicle was ordered or purchased before April 18, 2023.

The Inflation Reduction Act (IRA) allows a maximum credit of $7,500 per vehicle, consisting of $3,750 in the case of a vehicle that meets certain requirements relating to critical minerals and $3,750 in the case of a vehicle that meets certain requirements relating to battery components.

To check if a specific make and model meets the critical mineral and battery components, visit Fuel Economy.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 +1-305-274-5811.

Source : IRS      

Most people feel a sense of relief after filing their income tax returns each year. But even if you’ve successfully filed your 2022 return with the IRS, there may still be some issues to bear in mind. Here are three important things to know:

1. You can check on your refund. The IRS has an online tool that can tell you the status of your refund. Go to irs.gov and click on “Get Your Refund Status.” You’ll need your Social Security number, filing status and the exact refund amount.

2. You can file an amended return if you forgot to report something. In general, you can file an amended tax return and claim a refund within three years after the date you filed your original return or within two years of the date you paid the tax, whichever is later. So, if you file your 2022 tax return on April 18, 2023 (the due date for 2022 returns), you’d typically have until April 18, 2026, to file an amended return.

However, there are a few situations when you have longer to file an amended return. For example, the statute of limitations for bad debts is longer than the usual three-year time limit for most items on your tax return. In general, you can amend your tax return to claim a bad debt for seven years from the due date of the tax return for the year that the debt became worthless.

3. You can throw out some tax records. You should keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. The statute of limitations is generally three years after you file your return.

That means you can probably dispose of most tax-related records for the 2019 tax year and earlier years. (If you filed an extension for your 2019 return, hold on to your records until at least three years from when you filed the extended return.)

However, the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%.

You’ll need to hang on to certain tax-related records longer. For example, keep actual tax returns indefinitely so you can prove to the IRS that you filed legitimately. (There’s no statute of limitations for an audit if you didn’t file a return or you filed a fraudulent one.)

Keep records associated with a retirement account until you’ve depleted the account and reported the last withdrawal on your tax return, plus three (or six) years. And retain records related to real estate or investments for as long as you own the asset so you can prove your tax basis, plus at least three years after you sell it and report the sale on your tax return. (You may want to keep these records for six years if to be extra safe.)

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 +1-305-274-5811.

Source : Thomson Reuters    

Business Bartering Is Taxable

During these times of high inflation, many cash-challenged businesses have bartered for goods and services instead of paying dollars for them. If your company gets involved in such transactions, remember that the fair market value of goods that you receive is taxable income. And if you exchange services with another business, the transaction results in taxable income for both parties.

A couple of examples

Let’s say a computer consultant agrees to exchange services with an advertising agency. Both parties will be taxed on the fair market value of the services received. This is the amount they’d normally charge for the same services. If the parties agree to the value of the services in advance, that will be considered the fair market value unless contrary evidence exists.

In addition, if services are exchanged for property, income is realized. Say a construction company does work for a retail business in exchange for unsold inventory. The contractor will incur income equal to the inventory’s fair market value.

Barter exchanges

Many businesses join barter clubs that facilitate these transactions. Generally, these clubs use a system of “credit units” that are awarded to members who provide goods and services. The credits can be redeemed for goods and services from other members.

Bartering is generally taxable in the year it occurs. If you participate in a barter club, however, you may be taxed on the value of credit units at the time they’re added to your account — even if you don’t redeem them for actual goods and services until a later year.

By January 31 of each year, a barter club will send participants a Form 1099-B, “Proceeds from Broker and Barter Exchange Transactions,” which shows the value of cash, property, services and credits that they received from exchanges during the previous year. The IRS will also receive this information.

If you join a barter club, expect to provide your Social Security number or employer identification number. You’ll also be asked to certify that you aren’t subject to backup withholding. Unless you make this certification, the club will withhold tax from your bartering income.

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 +1-305-274-5811.

Source : IRS      

After someone with a filing requirement passes away, their surviving spouse or representative should file the deceased person's final tax return. On the final tax return, the surviving spouse or representative should note that the person has died. The IRS doesn't need a copy of the death certificate or other proof of death.

Usually, the representative filing the final tax return is named in the person's will or appointed by a court. Sometimes when there isn't a surviving spouse or appointed representative, a personal representative will file the final return and attach Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer.

Things to know about filing the final tax return

Generally, the final individual income tax return of a deceased person is prepared and filed the same way as if the person were alive.

• The return must report all income up to the date of death and claim all eligible credits and deductions.
• If the deceased person did not file individual income tax returns for the years before their death, their surviving spouse or representative may have to file prior year returns.
• The IRS considers the surviving spouse married for the full year their spouse died if they don't remarry during that year.
• The surviving spouse is eligible to use filing status "married filing jointly" or "married filing separately."
• The same tax deadlines apply for final returns. If, for example, the deceased person died in 2022, their final return is due by April 18, 2023, unless the surviving spouse or representative has an extension to file.
• When e-filing, the surviving spouse or representative should follow the directions provided by the tax software for the correct signature and notation requirements.
• For paper returns, the filer should write "deceased," the person's name and the date of death across the top.

Who should sign the tax return

Here's who should sign the tax return:

• Any appointed representative must sign the return. If it's a joint return, the surviving spouse must also sign it.
• If there isn't an appointed representative, the surviving spouse filing a joint return should sign the return and write in the signature area, "filing as surviving spouse."
• If there's no appointed representative and no surviving spouse, the person in charge of the deceased person's property must file and sign the return as "personal representative."

Other documents to include with the final tax return

Court-appointed representatives should attach a copy of the court document showing their appointment. Representatives who aren't court-appointed must include Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer to claim any refund. Surviving spouses and court-appointed representatives don't need to complete this form.

If tax is due, the filer should submit payment with the return or visit the payments page of IRS.gov for other payment options. If they can't pay the amount due immediately, they may qualify for a payment plan or installment agreement.

Qualifying widow or widower

Surviving spouses with dependent children may be able to file as a Qualifying Surviving Spouse for two years after their spouse's death. This filing status allows them to use joint return tax rates and the highest standard deduction amount if they don't itemize deductions.

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 +1-305-274-5811.

Source : IRS   

When a taxpayer can't pay their full tax liability or if paying would cause financial hardship, they may want to consider applying for an Offer in Compromise. This agreement between a taxpayer and the IRS settles a tax debt for less than the full amount owed. The goal is a compromise that's in the best interest of both the taxpayer and the agency. The application fee for an offer in compromise is $205. Low-income taxpayers don't have to pay this fee, and they should check if they meet the definition of low-income in the instructions for Form 656, Offer in Compromise.

When reviewing applications, the IRS considers the taxpayer's unique set of facts and special circumstances affecting their ability to pay including their:

• Income.
• Expenses.
• Asset equity.

The Offer in Compromise Booklet has detailed information

The booklet covers everythingPDF a taxpayer needs to know about submitting an Offer in Compromise including:

• Eligibility.
• Costs to apply.
• Application process.
• Forms.

The booklet is also available in Spanish. Taxpayers should download and use the latest version of the OIC booklet to avoid processing delays.

Taxpayers can also watch a how-to video series on Offer in Compromise

The IRS has a free how-to video series on Offer in Compromise available in English, Spanish and Simplified Chinese. The playlist has easy-to-find information that taxpayers need to know when they consider and apply for an OIC. Topics in the series include:

• Overview of the OIC process, forms and pre-qualifier tool.
• Step-by-step guides for completing Forms 433-A and 433-B OIC. These are collection information statements which are required for both individual and business-related offers.
• Step-by-step example of how to complete Form 656, Offer in Compromise.
• Checklist of everything that's needed to submit a valid offer.

Taxpayers can see if they're eligible with the pre-qualifier tool 

Taxpayers can enter their financial information and tax filing status in the tool to calculate a preliminary offer amount. The tool is only a guide. The IRS will make the final decision on whether to accept the taxpayer's application.

Beware of offer in compromise mills

Offers in compromise are an important program to help people who can't pay to settle their federal tax debts. But "offer in compromise mills" can aggressively promote offers in compromise in misleading ways to people who clearly don't meet the qualifications, often costing taxpayers thousands of dollars. Taxpayers can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool.

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 +1-305-274-5811.

Source: IRS 

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as a result of tornadoes, severe storms and flooding that occurred from April 12 to 14. This means that individuals and households that reside or have a business in Broward County qualify for tax relief. Other areas added later to the disaster area will also qualify for the same relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on April 12, 2023, and is based on an April 27 FEMA disaster declaration. As a result, affected individuals and businesses will have until Aug. 15, 2023, to file returns and pay any taxes that were originally due during this period.

This means that taxpayers will have until Aug. 15 to file any 2022 individual income tax returns and various business returns that were originally due on April 18. They will also have until Aug. 15 to pay any tax originally due on these returns. Taxpayers will get the extra time, even if they failed to request a tax-filing extension by April 18.

Among other things, this also means that eligible taxpayers will have until Aug. 15 to make 2022 contributions to their IRAs and health savings accounts.

The Aug. 15 deadline also applies to the quarterly estimated tax payments, normally due on April 18 and June 15.

The Aug. 15 deadline also applies to the quarterly payroll and excise tax returns normally due on May 1 and July 31, 2023. In addition, penalties on payroll and excise tax deposits due on or after April 12 and before April 27, will be abated as long as the tax deposits were made by April 27, 2023.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

Affected individual taxpayers who need more time to file, beyond the Aug. 15 deadline, must file their extension requests on paper using Form 4868. That's because e-file options for requesting an extension are not available after April 18.

By filing this form, disaster-area taxpayers will have until Oct. 16 to file, though tax payments are still due by Aug. 15. Visit IRS.gov/extensions for details.

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

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

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed in early 2024), or the return for the prior year (that is, the 2022 return normally filed in 2023). Be sure to write the FEMA declaration number – 4709-DR − 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 these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.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 +1-305-274-5811.

Source : IRS      

On Feb. 10, 2023, the IRS provided details clarifying the federal tax status involving special payments made to taxpayers by 21 states in 2022. During a review, the IRS determined that in the interest of sound tax administration and other factors, taxpayers in many states did not need to report these payments on their 2022 tax returns. Consequently, the IRS will not challenge the taxability of state payments related to general welfare and disaster relief.

This means people in the following states don't need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but the determination applies only to the special supplemental Energy Relief Payment received.

Taxpayers can see a listing of individual states and the federal tax treatment of their special state refunds or rebates listed on this State Payments chart.

In addition, many people in Georgia, Massachusetts, South Carolina, and Virginia will not include special state 2022 tax refunds as income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and the recipient either claimed the standard deduction for tax year 2022 or itemized their tax year 2022 deductions but did not receive a tax benefit.

Taxpayers who filed before Feb. 10 in these areas and meet these requirements should check their tax return to make sure they paid tax on a state refund before filing an amended return. In addition, taxpayers in this situation who used a tax professional can consult with them to determine whether an amended return is necessary.

If an amended return is needed, taxpayers who submitted their original 2022 tax return electronically can also file their amended return electronically and may select direct deposit for any resulting refund. Filing electronically cuts out the mail time and including direct deposit information on an electronically submitted form provides a convenient and secure way to receive refunds faster.

Taxpayers also have the option to submit a paper version of the Form 1040-X, Amended U.S Individual Income Tax Return, and receive a paper check. They should follow the instructions for preparing the paper form, but they should mail it to:

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0052

Direct deposit is not available on amended returns submitted on paper.

No matter how a taxpayer files the amended return, they can still use the Where's My Amended Return? online tool to check its status.

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 +1-305-274-5811.

Source: IRS   

The Treasury Department and Internal Revenue Service issued proposed regulations identifying certain micro-captive transactions as "listed transactions" and certain other micro-captive transactions as "transactions of interest."

Listed transactions are abusive tax transactions that must be reported to the IRS. Transactions of interest are tax transactions that have the potential for tax avoidance or evasion that must also be reported to the IRS.

Tax law generally allows businesses to create "captive" insurance companies to protect against insurance risks and provides that certain small non-life insurance companies can choose to pay tax only on their investment income under Internal Revenue Code section 831(b) ("micro-captives"). In abusive micro-captive structures, promoters, accountants or wealth planners persuade owners of closely held entities to participate in schemes that lack many of the attributes of genuine insurance.

The IRS previously identified certain micro-captive transactions as transactions of interest in Notice 2016-66. Recent court decisions in the Sixth Circuit and the U.S. Tax Court ruled that the IRS lacks authority to identify listed transactions and transactions of interest by notices, such as Notice 2016-66, and must instead identify such transactions by following the notice and public comment procedures that apply to regulations.

Treasury and the IRS disagree with these decisionsPDF that the IRS lacks authority to identify listed transactions by notice and continue to defend listing notices in litigation except in the Sixth Circuit. Treasury and the IRS will, however, no longer take the position that transactions of interest can be identified without complying with notice and public comment procedures. Treasury and the IRS issued the proposed regulations to ensure that these decisions do not disrupt the IRS' ongoing efforts to combat abusive tax shelters throughout the nation.

The IRS has consistently disallowed the tax benefits claimed by taxpayers in abusive micro-captive structures. Some taxpayers have challenged the IRS position disallowing these micro-captive tax benefits in court, but none has been successful. To the contrary, the Tax Court has now sustained the IRS' disallowance of the claimed tax benefits in three different cases.

Treasury and the IRS intend to finalize these proposed regulations after due consideration of public comments in 2023 and intend to issue proposed regulations identifying additional listed transactions in the near future.

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 +1-305-274-5811.

Source : IRS  

In some cases, homeowners move to new residences, but keep their present homes and rent them out. If you’re thinking of doing this, you’re probably aware of the financial risks and rewards. However, you also should know that renting out your home carries potential tax benefits and pitfalls.

Rental real estate rules

If you’re no longer personally using your home at all, you’re generally treated as a regular real estate landlord once you begin renting it out. That means you must report rental income on your tax return, but you’re also entitled to offsetting deductions for the money you spend on utilities, operating expenses, incidental repairs and maintenance (for example, fixing a leak in the roof).

Additionally, you can claim depreciation deductions for the home. You may be able to fully offset rental income with allowable landlord deductions.

Passive activity rules

However, under the passive activity loss (PAL) rules, you may not be able to currently deduct the rent-related deductions that exceed your rental income unless an exception applies. Under the most widely applicable exception, the PAL rules won’t affect your converted property for a tax year in which your adjusted gross income doesn’t exceed $100,000, you actively participate in running the home-rental business, and your losses from all rental real estate activities in which you actively participate don’t exceed $25,000.

You should also be aware that potential tax pitfalls may arise from renting your residence. Unless your rentals are strictly temporary and are made necessary by adverse market conditions, you could forfeit an important tax break for home sellers if you finally sell the home at a profit. In general, you can escape tax on up to $250,000 ($500,000 for married couples filing jointly) of gain on the sale of your principal home. However, this tax-free treatment is conditioned on your having used the residence as your principal residence for at least two of the five years preceding the sale. So, renting your home out for an extended time could jeopardize a big tax break.

What if you don’t rent out your home long enough to jeopardize your principal residence exclusion? The tax break you would have gotten on the sale (the $250,000/$500,000 exclusion) won’t apply to the extent of any depreciation allowable with respect to the rental or business use of the home for periods after May 6, 1997. It also won’t apply to any gain allocable to a period of nonqualified use (any period during which the property isn’t used as the principal residence for you, your spouse or former spouse) after December 31, 2008. A maximum tax rate of 25% will apply to this gain (attributable to recapture of depreciation deductions).

Selling at a loss

Some homeowners who bought at the height of the market may ultimately sell at a loss. In such situations, the loss is available for tax purposes only if the owner can establish that the home was in fact converted permanently into income-producing property. Here, a longer lease period helps an owner.

However, if you’re in this situation, be aware that you may not wind up with much of a loss for tax purposes. That’s because the beginning basis (the cost for tax purposes) when the home is first converted to a rental property is equal to the lesser of actual cost or the property’s fair market value when it’s converted to rental property. So, if a home was bought for $300,000, converted to a rental when it was worth $250,000, and ultimately sold for $225,000, the loss would be only $25,000. Keep in mind that depreciation deductions while it was a rental property also reduce basis.

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 +1-305-274-5811.

Source: Thomson Reuters      

Whether you’ve filed your 2022 tax return or soon will, one thing you don’t want to experience is a surprise. Many older people are caught off guard when they find that some of their Social Security benefits are taxable.

How much might you have to pay? Depending on your other income, between 50% and 85% of your Social Security benefits could be hit with federal income tax. (There could also be state tax.) This doesn’t mean you’ll pay 50% to 85% of your benefits back to the government. It means you may have to include 50% to 85% of them in your income subject to regular tax rates.

Calculate provisional income

To determine how much, if any, of your benefits are taxed, you must calculate your “provisional income.” Doing so involves adding certain amounts (for example, tax-exempt interest from municipal bonds) to the adjusted gross income on your tax return.

If you file jointly, you’ll need to add your spouse’s income, and then further add half of the Social Security benefits that you and your spouse received during the year. The result is your joint provisional income.

If you file a joint tax return and your joint provisional income isn’t above $32,000, none of your Social Security benefits are taxed. If your provisional income is $32,001 to $44,000, you must report up to 50% of your Social Security benefits as income. If your provisional income is more than $44,000, you need to report up to 85% of your Social Security benefits as income on Form 1040.

For single taxpayers, if your provisional income is between $25,001 and $34,000, you must report up to 50% of your Social Security benefits as income. And if your provisional income is more than $34,000, the general rule is that you need to report up to 85% of your Social Security benefits as income.

Sidestep a surprise

If you aren’t paying tax on your Social Security benefits now because your income is below the floor, or you’re paying tax on only 50% of those benefits, an unplanned increase in your income can have a significant tax cost. Not only will you pay tax on the additional income, but you may also have to pay tax on (or on more of) your Social Security benefits and you may get pushed into a higher tax bracket.

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 +1-305-274-5811.

Source: Thomson Reuters       

The Internal Revenue Service issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.

The IRS and tax professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit.

"While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits," said Acting IRS Commissioner Doug O'Donnell. "Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they're using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this."

The IRS has been warning about this scheme since last fall, but there continue to be attempts to claim the ERC during the 2023 tax filing season. Tax professionals note they continue to be pressured by people wanting to claim credits improperly. The IRS Office of Professional Responsibility is working on additional guidance for the tax professional community that will be available in the near future.

People and businesses can avoid this scheme, and by not filing improper claims in the first place. If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.

Businesses should be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.

What is the ERC?

The ERC is a refundable tax credit designed for businesses who continued paying employees while shut down due to the COVID-19 pandemic or who had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021. Eligible taxpayers can claim the ERC on an original or amended employment tax return for a period within those dates.

To be eligible for the ERC, employers must have:

• sustained a full or partial suspension of operations due to orders from an appropriate governmental authorityPDF limiting commerce, travel or group meetings due to COVID-19 during 2020 or the first three quarters of 2021,
• experienced a significant decline in gross receipts during 2020PDF or a decline in gross receipts during the first three quarters of 2021PDF, or
• qualified as a recovery startup businessPDF for the third or fourth quarters of 2021.

As a reminder, only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021. Additionally, for any quarter, eligible employers cannot claim the ERC on wages that were reported as payroll costs in obtaining PPP loan forgiveness or that were used to claim certain other tax credits.

To report tax-related illegal activities relating to ERC claims, submit by fax or mail a completed Form 14242, Report Suspected Abusive Tax Promotions or PreparersPDF and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail: Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135

Employers should also report instances of fraud and IRS-related phishing attempts to the IRS at phishing@irs.gov and Treasury Inspector General for Tax Administration at 800-366-4484.

Go to IRS.gov to learn more about eligibility requirements and how to claim the Employee Retention Credit:

• For qualified wages paid after March 12, 2020, and before Jan. 1, 2021 – Notice 2021-20PDF, Notice 2021-49PDF, and Revenue Procedure 2021-33PDF
• For qualified wages paid after Dec. 31, 2020, and before July 1, 2021 – Notice 2021-23PDF, Notice 2021-49PDF and Revenue Procedure 2021-33PDF
• For qualified wages paid after June 30, 2021, and before Oct. 1, 2021 – Notice 2021-49PDF and Revenue Procedure 2021-33PDF
• For qualified wages paid after Sept. 30, 2021, and before Jan. 1, 2022 – Notice 2021-49PDF and Notice 2021-65PDF

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 +1-305-274-5811

Source : IRS           

Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS form that is used to report certain payment transactions.

If taxpayers receive a Form 1099-K, they should use that information with their other tax records to determine their correct tax liability. Taxpayers must report all their income on their tax return unless it's excluded by law, regardless of whether they receive a Form 1099-K.

Taxpayers will receive Form 1099-K for business transactions, including income from:

• A business the taxpayer owns.
• Self-employment.
• Activities in the gig economy.
• The sale of personal items and assets.

Money received as a gift or for reimbursement does not require a 1099-K. Taxpayers can minimize the chance of an error by asking friends or family members to correctly designate that type of payment as a non-business-related transaction. The taxpayer should also make a note of what the payment was for and who sent it. Good recordkeeping is key.

What to do when a Form 1099-K is incorrect

Some taxpayers may have received a Form 1099-K for the sale of personal items, or Form 1099-K may have been issued in error – such as for transactions between friends and family, or expense sharing.

If the information is incorrect on the Form 1099-K, taxpayers should contact the issuer immediately. The issuing organization's name appears in the upper left corner on the form. Taxpayers should keep a copy of all correspondence with the issuer for their records.

If a taxpayer receives a Form 1099-K in error and the taxpayer cannot obtain a corrected Form 1099-K, the taxpayers should follow the IRS' updated guidance at Understanding Your Form 1099-K.

1099-K reporting threshold for tax year 2023

The American Rescue Plan of 2021 changed the reporting threshold requirement for payment apps, also known as third-party settlement organizations. The IRS announced that the new Form 1099-K reporting threshold will start in tax year 2023.

• The old threshold was $20,000 and 200 transactions per year. This applies to tax year 2022 and prior years.
• The new threshold is more than $600. This applies to tax year 2023 and future years.

The threshold change means some people may receive a Form 1099-K who have not received one in the past. There are no changes to what counts as income or how tax is calculated.

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 +1-305-274-5811.

Source: IRS 

The IRS estimates almost $1.5 billion in refunds remain unclaimed because people haven't filed their 2019 tax returns yet. The average median refund is $893 for this year, and the IRS has done a special state-by-state calculation to show how many people are potentially eligible for these refunds.

"The 2019 tax returns came due during the pandemic, and many people may have overlooked or forgotten about these refunds," said IRS Commissioner Danny Werfel. "We want taxpayers to claim these refunds, but time is running out. People face a July 17 deadline to file their returns. We recommend taxpayers start soon to make sure they don't miss out."

Under the law, taxpayers usually have three years to file and claim their tax refunds. If they don't file within three years, the money becomes the property of the U.S. Treasury.

But for 2019 tax returns, people have more time than usual to file to claim their refunds. Usually, the normal filing deadline to claim old refunds falls around the April tax deadline, which is April 18 this year for 2022 tax returns. But the three-year window for 2019 unfiled returns was postponed to July 17, 2023, due to the COVID-19 pandemic emergency. The IRS issued Notice 2023-21 on Feb. 27, 2023, providing legal guidance on claims made by the postponed deadline.

The IRS estimates the midpoint for the potential unclaimed refunds for 2019 to be $893. That means half of the refunds are more than $893 and half are less.

"With the pandemic taking place when the 2019 tax returns were originally due, people faced extremely unusual situations. People may have simply forgotten about tax refunds with the deadline that year postponed all the way into July," Werfel said. "We frequently see students, part-time workers and others with little income overlook filing a tax return and never realize they may be owed a refund. We encourage people to review their records and start gathering records now, so they don't run the risk of missing the July deadline."

By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2019. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2019, the credit was worth as much as $6,557. The EITC helps individuals and families whose incomes are below certain thresholds in 2019. Those who are potentially eligible for EITC in 2019 had incomes below:

• $50,162 ($55,952 if married filing jointly) for those with three or more qualifying children;
• $46,703 ($52,493 if married filing jointly) for people with two qualifying children;
• $41,094 ($46,884 if married filing jointly) for those with one qualifying child, and;
• $15,570 ($21,370 if married filing jointly) for people without qualifying children.

The IRS reminds taxpayers seeking a 2019 tax refund that their checks may be held if they have not filed tax returns for 2020 and 2021. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans.

Current and prior year tax forms (such as the tax year 2019 Forms 1040 and 1040-SR) and instructions are available on the Forms, Instructions & Publications page or by calling toll-free 800-TAX-FORM (800-829-3676).

Need to file a 2019 tax return? Several options to get key documents

Although it's been several years since 2019, the IRS reminds taxpayers there are ways they can still gather the information they need to file this tax return. But people should start early to make sure they have enough time to file before the July deadline for 2019 refunds. Here are some options:

• Request copies of key documents: Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2019, 2020 or 2021 can request copies from their employer, bank or other payers.
• Use Get Transcript Online at IRS.gov. Taxpayers who are unable to get those missing forms from their employer or other payers can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool. For many taxpayers, this is by far the quickest and easiest option.
• Or request a transcript. Another option is for people to file Form 4506-T with the IRS to request a "wage and income transcript." A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498 and IRA contribution information. Taxpayers can use the information from the transcript to file their tax return. But plan ahead – these written requests can take several weeks; people are strongly urged to try the other options first.

Based on tax information currently available, the IRS estimated how many people in each state may be entitled to a tax refund. The actual refund amount will vary based on a household's tax situation.