The Internal Revenue Service today reminded the self-employed, investors, retirees and others with income not subject to withholding that third quarter estimated tax payments for 2020 are due Sept. 15.
Taxes are paid as income is received during the year through withholding from pay, pension or certain government payments such as Social Security or unemployment; and/or making quarterly estimated tax payments.
Who should pay quarterly?
Individuals, including sole proprietors, partners and S corporation shareholders, generally make quarterly estimated tax payments if they expect to owe $1,000 or more when their tax return is filed. Taxpayers with income not subject to withholding, including interest, dividends, capital gains, alimony and rental income, normally make estimated tax payments.
Penalty for underpayment
If a taxpayer underpaid their taxes, they may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return.
In general, taxpayers don’t have to pay a penalty if they meet any of these conditions:
They owe less than $1,000 in tax with their tax return.
Throughout the year, they paid the smaller of these two amounts: a) at least 90% (however, see 2018 Penalty Relief, below) of the tax for the current year; b) 100% of the tax shown on their tax return for the prior year – this can increase to 110% based on adjusted gross income
To see if they owe a penalty, taxpayers should use Form 2210. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:
casualty, disaster or another unusual situation.
an individual retired after reaching age 62 during a tax year when estimated tax payments applied.
an individual became disabled during a tax year when estimated tax payments applied.
Don’t amend for math errors or missing forms. Taxpayers generally don’t need to file an amended return to correct math errors on their original return. The IRS may correct math or clerical errors on a return and may accept it even if the taxpayer forgot to attach certain tax forms or schedules. The IRS will mail a letter to the taxpayer, if necessary, requesting additional information.
Wait until receiving refund for tax year 2019 before filing. Taxpayers who are due refunds from their original tax year 2019 tax return should wait for the IRS to process the return and they receive the refund before filing Form 1040-X to claim an additional refund.
File Form 1040-X to amend. Taxpayers must file using Form 1040-X, Amended U.S. Individual Income Tax Return, to correct their tax return. If they are filing an amend 1040 or 1040-SR for 2019, they can now file electronically using commercial tax-filing software. All other amended returns must still be mailed to the IRS. When filing, taxpayers should indicate the year of the original return and explain all changes made by attaching any forms or schedules. Taxpayers then sign and mail the Form 1040-X to the address listed in the instructions. Taxpayers filing Form 1040-X in response to an IRS letter should mail it to the address shown on the letter.
Amend to correct errors. Taxpayers should correct their return if they find that they should have claimed a different filing status or didn’t report some income. Taxpayers who claimed deductions or credits they shouldn’t have claimed or didn’t claim deductions or credits they could have claimed may need to file an amended return. Changes made on a federal return may also affect state taxes. The taxpayer should contact the state tax agency to see if this is so.
Pay additional tax. Taxpayers who will owe more tax should file Form 1040-X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account for free.
File within three-year time limit. Taxpayers generally have three years from the date they filed their original tax return to file Form 1040-X to claim a refund. They can file it within two years of the date they paid the tax, if that date is later.
Use separate forms if amending more than one tax year. Taxpayers must file a submit a separate Form 1040-X for each tax year to avoid confusion. They should check the box for the calendar year or enter the other calendar year or fiscal year they are amending. The form’s instructions have the mailing address for the amended return.
Track amended return status online. Taxpayers can track the status of their amended tax return in English and Spanish using Where’s My Amended Return? Amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in the system. Before that time, there’s no need to call the IRS unless the tool specifically tells the taxpayer to do so.
El 15 de octubre está a la vuelta de la esquina. Ese es el último día para presentar para la mayoría de las personas que solicitaron una prórroga para su declaración de impuestos de 2019. Estos contribuyentes pueden presentar su declaración en cualquier momento antes del jueves, 15 de octubre si tienen todos los documentos tributarios requeridos. También pueden pagar parte o la totalidad de sus impuestos en cualquier momento en IRS.gov.
Aquí hay algunos recordatorios clave para los que solicitaron prórroga para presentar.
Presente para obtener un reembolso. Cualquier persona a la que se le deba un reembolso debe presentar lo antes posible y usar el depósito directo (en inglés) para que su reembolso de impuestos se deposite electrónicamente de forma gratuita en su cuenta financiera. No hay multa por presentar una declaración tardía para las personas a las que se les debe un reembolso.
Pague el saldo de impuestos lo antes posible. La fecha límite para pagar los impuestos sobre el ingreso de 2019 fue el 15 de julio de 2020. Los contribuyentes pueden verificar el saldo de su cuenta o ver las opciones de pago en línea. Aquellos que deben y no pueden pagar su saldo en su totalidad deben pagar lo más que puedan para reducir los intereses y las multas por pago atrasado.
Presente antes de la fecha límite para evitar multas e intereses. Los contribuyentes deben presentar su declaración antes del jueves, 15 de octubre de 2020 para evitar una multa por no presentar.
Qué deben hacer los contribuyentes ante una fecha límite incumplida. Cualquiera que no haya solicitado una prórroga antes de la fecha límite del 15 de julio de este año debe presentar y pagar lo antes posible. Esto evitará que se acumulen intereses y multas adicionales.
Más tiempo para los militares. Los miembros del ejército y otros (en inglés) que sirven en una zona de combate tienen más tiempo para presentar su declaración. Estos contribuyentes suelen tener hasta al menos 180 días después de salir de la zona de combate para presentar declaraciones y pagar los impuestos adeudados.
The home office deduction allows qualifying taxpayers to deduct certain home expenses on their tax return. With more people working from home than ever before, some taxpayers may be wondering if they can claim a home office deduction when they file their 2020 tax return next year.
Here are some things to help taxpayers understand the home office deduction and whether they can claim it:
Employees are not eligible to claim the home office deduction.
The home office deduction Form 8829 is available to both homeowners and renters.
There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
The term “home” for purposes of this deduction: a) includes a house, apartment, condominium, mobile home, boat or similar property; b) also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse; c) doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.
There are two basic requirements for the taxpayer’s home to qualify as a deduction: a) there must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business; b) the home must be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.
Expenses that relate to a separate structure not attached to the home will qualify for a home office deduction. It will qualify only if the structure is used exclusively and regularly for business.
Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction: a) the simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500; b) when using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.
Childcare or adult dependent care can be a major expense. Fortunately, the child and dependent care credit can provide some relief. Taxpayers who pay for daycare expenses may be eligible to claim up to 35% of what they spend; limits apply.
For the purposes of this credit, the IRS defines a qualifying person as:
• A taxpayer’s dependent who is under age 13 when the care is provided. • A taxpayer’s spouse who is physically or mentally unable to care for themselves and lived with the taxpayer for more than half the year. • Someone who’s physically or mentally unable to take care of themselves and lived with the taxpayer for six months and either: a) The qualifying person was the taxpayer’s dependent or b) They would have been the taxpayer’s dependent except for one of the following: • The qualifying person received gross income of $4,200 or more • The qualifying person filed a joint return • The taxpayer or spouse, if filing jointly, could be claimed as a dependent on someone else’s return
The Internal Revenue Service today reminded people who live and work abroad that they have until Wednesday, July 15, 2020, to file their 2019 federal income tax return and pay any tax due. The usual deadline is June 15.
This extension was included in a wide range of Coronavirus-related relief announced in early April. The extension generally applies to all taxpayers who have an income tax filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.
This means that anyone, including Americans who live and work abroad, nonresident aliens and foreign entities with a U.S. filing and payment requirement, have until July 15 to file their 2019 federal income tax return and pay any tax due.
Under the Families First Coronavirus Response Act, employers can grant paid leave for an employee to take care of their health needs related to COVID -19 or to care for their family members. This relief helps ensure employees are not forced to choose between being paid or staying home to care for themselves, a child or other family member.
In addition to the relief for employees, businesses can claim two new refundable payroll tax credits for granting paid leave to their employees. The paid sick leave credit and paid family leave credit are available for eligible employers who pay qualified sick leave wages and/or qualified family leave wages from April 1, 2020 through December 31, 2020, and who have fewer than 500 employees.
The paid sick leave credit and the paid family leave credit will immediately and fully reimburse employers for the cost of providing COVID-19 related leave to their employees. Here is what employees need to know about paid leave under the CARES Act.
Paid sick leave for workers An employer can allow a full-time employee up to 80 hours of paid sick leave. A part-time employee may be allowed paid sick leave for the number of hours the employee works over a two-week period, if the employee is unable to work or telework because they are:
Subject to federal, state, or local quarantine or isolation orders related to COVID-19
Advised by a health care provider to self-quarantine due to COVID-19
Experiencing COVID-19 symptoms and are seeking a medical diagnosis
Caring for a person subject to federal, state, or local quarantine orders related to COVID-19 or has been advised to self-quarantine
Caring for a child whose school or place of care is closed or care provider is unavailable for reasons related to COVID-19
Experiencing any other substantially similar condition
Employers pay the benefits at 100% of employee’s regular pay up to $511 per day and $5,110 in total for the care of employee’s own health.
For the care of an employee’s family members, employers pay benefits at two-thirds of the employee’s regular pay up to $200 per day and $2,000 total.
Paid family leave to care for child An employer can give up to 10 weeks of paid family leave at two-thirds their regular pay for up to $200 per day and $10,000 total if the employee is unable to work or telework because they’re caring for a child whose:
School or place of care is closed due to COVID-19
Childcare provider is unavailable due to COVID-19
With two weeks of paid sick leave and 10 weeks of paid family leave combined, an employee could receive up to a total of 12 weeks up to $12,000 of paid leave to care for a child.
The Internal Revenue Service today reminds employers affected by COVID-19 about three important new credits available to them.
Employee Retention Credit:
The employee retention credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.
Qualifying employers must fall into one of two categories:
The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.
Employers will calculate these measures each calendar quarter.
Paid Sick Leave Credit and Family Leave Credit:
The paid sick leave credit is designed to allow business to get a credit for an employee who is unable to work (including telework) because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis. Those employees are entitled to paid sick leave for up to 10 days (up to 80 hours) at the employee’s regular rate of pay up to $511 per day and $5,110 in total.
The employer can also receive the credit for employees who are unable to work due to caring for someone with Coronavirus or caring for a child because the child’s school or place of care is closed, or the paid childcare provider is unavailable due to the Coronavirus. Those employees are entitled to paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee’s regular rate of pay or, up to $200 per day and $2,000 in total.
Employees are also entitled to paid family and medical leave equal to 2/3 of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave credit.
Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
Eligible employers are entitled to immediately receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer’s share of Medicare tax on the leave, for the period of April 1, 2020, through Dec. 31, 2020. The refundable credit is applied against certain employment taxes on wages paid to all employees.
How will employers receive the credit?
Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.
Millones de estadounidenses ya recibieron sus pagos de impacto económico a medida que el IRS continúa enviando automáticamente pagos a más individuos. Los contribuyentes elegibles que presentaron declaraciones de impuestos para 2019 o 2018 recibirán automáticamente su pago. El IRS calculará la cantidad a base de los ingresos, el estado civil tributario e información de un dependiente en su declaración de impuestos más reciente.
Mientras que las personas que reciben compensación por incapacidad de Seguridad de Ingresos Suplementario (SSI) y Asuntos de Veteranos (VA) y beneficios de pensión recibirán hasta $1,200 automáticamente, algunas personas en este grupo con niños menores de 17 años pueden recibir hasta $500 adicionales por cada niño calificado y necesitan actuar antes del 5 de mayo para obtenerlo.
Las personas en este grupo que tienen hijos menores de 17 años pueden reclamar los $500 adicionales por niño calificado y tendrán que proporcionar la información de su hijo al IRS a través de la herramienta Non-Filers: Enter Payment Info Here antes del 5 de mayo. Las personas que están casadas también deben proporcionar información adicional al usar la herramienta Non-Filers para reclamar el pago completo de $2,400 si su cónyuge no recibió beneficios de SSA, SSDI, RRB, SSI o VA en 2019 y no tuvo que presentar una declaración de impuestos en los últimos dos años.
Un niño calificado es alguien que:
Es el niño, hijastro, hijo adoptivo elegible, hermano, medio hermano, hermano de crianza o un descendiente de la persona. Un descendiente incluye a niños como un nieto, sobrina o sobrino.
Puede ser reclamado como dependiente en la declaración de impuestos del contribuyente. Para aquellos que no suelen presentar una declaración de impuestos, incluya la información del niño en la herramienta Non-Filers: Enter Payment Info Here antes del 5 de mayo.
Era menor de 17 años al final del año tributario 2019.
Es ciudadano estadounidense, nacional de los Estados Unidos o residente de los EE. UU.
Tiene un número de Seguro Social válido o un número de identificación del contribuyente de adopción.
Algunas personas tienen dependientes mayores. Esto incluye a personas como el padre de un individuo o un estudiante universitario. Aquí hay información que debe saber acerca de los dependientes de 17 o más:
Las personas con dependientes mayores de 17 años no recibirán más dinero para esos dependientes.
La persona reclamada como dependiente en la declaración de impuestos de otra persona no es elegible para el pago de impacto económico de $1,200.
Además de aquellos que reciben beneficios de SSI y los receptores de VA que reciben beneficios de Compensación y Pensión (C&P), los pagos también son automáticos para las personas que normalmente no presentan una declaración de impuestos, pero reciben ciertos pagos. Estos pagos son: beneficios del seguro social para la jubilación, seguro de incapacidad del seguro social, beneficios de sobrevivientes y beneficios de retiro ferroviario
The Treasury Department and the Internal Revenue Service announced that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment.
Who is eligible for
the economic impact payment?
Tax filers with adjusted gross income up to $75,000 for individuals and up to
$150,000 for married couples filing joint returns will receive the full
payment. For filers with income above those amounts, the payment amount is
reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single
filers with income exceeding $99,000 and $198,000 for joint filers with no
children are not eligible.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will
automatically receive an economic impact payment of up to $1,200 for
individuals or $2,400 for married couples. Parents also receive $500 for each
How will the IRS know
where to send my payment?
The vast majority of people do not need to take any action. The IRS will
calculate and automatically send the economic impact payment to those eligible.
For people who have already filed their 2019 tax returns, the IRS will use
this information to calculate the payment amount. For those who have not yet
filed their return for 2019, the IRS will use information from their 2018 tax
filing to calculate the payment. The economic impact payment will be deposited
directly into the same banking account reflected on the return filed.
The IRS does not have
my direct deposit information. What can I do?
In the coming weeks, Treasury plans to develop a web-based portal for individuals
to provide their banking information to the IRS online, so that individuals can
receive payments immediately as opposed to checks in the mail.
I am not typically
required to file a tax return. Can I still receive my payment?
Yes. People who typically do not file a tax return will need to file a simple
tax return to receive an economic impact payment. Low-income taxpayers, senior
citizens, Social Security recipients, some veterans and individuals with
disabilities who are otherwise not required to file a tax return will not owe
How can I file the tax return needed to receive my economic impact payment? IRS will soon provide information instructing people in these groups on how to file a 2019 tax return with simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.
I have not filed my
tax return for 2018 or 2019. Can I still receive an economic impact payment?
Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a
tax return for 2018 or 2019 to file as soon as they can to receive an economic
impact payment. Taxpayers should include direct deposit banking information on
I need to file a tax return. How long are the economic impact payments available? For those concerned about visiting a tax professional in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.