Category: NEWS

June 11th, 2020 by Oscar

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

Posted in INDIVIDUALS, NEWS

June 4th, 2020 by Oscar

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. 

Posted in NEWS

May 28th, 2020 by Oscar

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.

Posted in NEWS

May 14th, 2020 by Oscar

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:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. 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.

Posted in NEWS

May 7th, 2020 by Oscar

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:

  1. 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.
  2. 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.
  3. Era menor de 17 años al final del año tributario 2019.
  4. Es ciudadano estadounidense, nacional de los Estados Unidos o residente de los EE. UU.
  5. 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:

  1. Las personas con dependientes mayores de 17 años no recibirán más dinero para esos dependientes.
  2. 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

Posted in INDIVIDUALS, NEWS

April 2nd, 2020 by Oscar

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 qualifying child.

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 tax.

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 the return.

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.

Posted in NEWS

March 19th, 2020 by Oscar

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

This payment relief includes:

Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.

Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.

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

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.

The IRS reminds individual taxpayers the easiest and fastest way to request a filing extension is to electronically file Form 4868 through their tax professional. Businesses must file Form 7004.

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

Posted in NEWS

January 30th, 2020 by Oscar

Some businesses and other payers take out backup withholding from payments they make to certain people. These entities should remember their upcoming filing deadlines.

Description of backup withholding
The person or business paying the taxpayer doesn’t generally withhold taxes from certain payments. They don’t do this because it’s assumed the taxpayer will report and pay taxes on this income when they file their federal tax return. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is what’s known as backup withholding. If a payer does backup withholding, they are required to deposit that withholding on those payments with the IRS.

Form 945, Annual Return of Withheld Federal Income Tax
Businesses and other payers must report backup withholding and any other federal income tax withheld from nonpayroll payments on Form 945. The deadline for filing Form 945 for tax year 2019 is Friday, January 31, 2020. However, if the payer made deposits on time and in full, the deadline is Monday, February 10, 2020.  

Information Returns
The information returns listed below are used to report backup withholding for tax year 2019. They’re generally due to the IRS on Friday, February 28, 2020, for paper filers and Tuesday, March 31, 2020, for electronic filers. 

These information returns are 
Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.
Form 1099-DIV, Dividends and Distributions
Form 1099-G, Certain Government Payment
Form 1099-INT, Interest Income
Form 1099-K, Payment Card and Third-Party Network Transactions
Form 1099-MISC, Miscellaneous Income
Form 1099-OID, Original Issue Discount
Form 1099-PATR, Taxable Distributions Received from Cooperatives
Form W-2G, Certain Gambling Winnings

1099-MISC and nonemployee compensation
There’s a different filing due date for Form 1099-MISC when reporting nonemployee compensation. When this form is used to report this in box 7 of the 1099-MISC, it’s due to the IRS by January 31. This due date applies whether the payer is submitting the form on paper or electronically.

Because of this, it’s important for people to remember a Form 1099-MISC has two possible due dates when filed electronically:

Friday, January 31 to report nonemployee compensation payments
Tuesday, March 31 to report all other payments

When filing 1099-MISC, the payer should separate the transmission of nonemployee compensation from other payments.

Information return filing extensions
A payer can request a 30-day extension to file any of the information returns listed above by filing Form 8809, Application for Extension of Time to File Information Returns. An extension is usually granted automatically.

However, the IRS does not automatically grant an extension for someone filing Form 1099-MISC reporting nonemployee compensation payments. Payers who need a 30-day extension to file this form must meet one of the criteria listed on line 7 of Form 8809.

Posted in INDIVIDUALS, NEWS, SMALL BUSINESSES

January 2nd, 2020 by Oscar

The Internal Revenue Service today issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019; 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019, and 14 cents per mile driven in service of charitable organizations.

The business mileage rate decreased one half of a cent for business travel driven and three cents for medical and certain moving expense from the rates for 2019. The charitable rate is set by statute and remains unchanged.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than five vehicles used simultaneously.

Posted in INDIVIDUALS, NEWS

December 19th, 2019 by Oscar

Después de presentar su declaración de impuestos, un contribuyente sabe si recibirá un reembolso. A veces, sin embargo, el reembolso de un contribuyente será por una cantidad diferente de la que espera. Estas son algunas de las razones por las que el reembolso de un contribuyente podría ser menor de lo esperado.

Las transacciones financieras que ocurren a finales de año pueden tener un impacto tributario inesperado si la retención del impuesto federal de 2019 de un contribuyente es menor que su responsabilidad tributaria para el año. Ciertas transacciones pueden afectar la retención de impuestos de 2019 y afectar el reembolso anticipado del contribuyente el próximo año. Esto incluye cosas como bonos de fin de año y vacaciones; dividendos de acciones; distribuciones de ganancias de capital de fondos mutuos y acciones; bienes raíces u otras propiedades vendidas con ganancias. Si esto sucede, los contribuyentes todavía pueden hacer un pago de impuestos estimados trimestralmente directamente al IRS para el año tributario 2019. La fecha límite para realizar un pago para el cuarto trimestre de 2019 es el miércoles, 15 de enero de 2020.

El reembolso de un contribuyente se puede usar para pagar otras deudas que un contribuyente debe. Todo o parte de un reembolso puede ir para cubrir una deuda de un contribuyente: impuesto federal vencido; impuesto estatal; deudas estatales de compensación por desempleo; manutención infantil y manutención conyugal; otras deudas federales no tributarias, como préstamos estudiantiles. Un contribuyente recibe un aviso si su deuda cumple con los criterios contra una cantidad adeudada. El IRS emite cualquier reembolso restante en un cheque o depósito directo como el contribuyente solicitó originalmente en la declaración.

Posted in INDIVIDUALS, NEWS