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,
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
Some businesses and other payers take out backup withholding from payments
they make to certain people. These entities should remember their upcoming
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.
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
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
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
Recordkeeping is an important part of running a small business. In fact,
keeping good records helps business owners make sure their business stays
Here are some things small business owners should remember about
- Good records will help business owners to monitor the progress of their business, prepare financial statements, identify income source, keep track of expenses and prepare tax returns and support items reported on tax returns.
- Small business owners may choose any recordkeeping system that fits their business. They should choose one that clearly shows income and expenses. Except in a few cases, the law does not require special kinds of records.
- How long an owner should keep a document depends on several factors. These factors include the action, expense and event recorded in the document. The IRS generally suggests taxpayers keep records for three years.
- A good recordkeeping system includes a summary of all business transactions. Businesses usually record these transactions in books called journals and ledgers, which business owners can buy at an office supply store, or keep them electronically. All requirements that apply to hard copy books and records also apply to electronic business records.
- The responsibility to validate information on tax returns is known as the burden of proof. Small business owners must be able to prove expenses to deduct them.
- Business owners should keep all records of employment taxes for at least four years.
- Businesses that keep paper records should keep them in a secure location, preferably under lock and key, such as a desk drawer or a safe.
- Businesses that keep records electronically on a computer should always have an electronic back-up, in case the hard drive crashes.
Posted in NEWS
El Crédito Tributario por Ingreso del Trabajo (EITC, por sus siglas en inglés) beneficia a personas trabajadoras con ingresos bajos a moderados. El año pasado, el crédito promedio fue de $2,455. El EITC no sólo reduce la cantidad de impuestos que una persona debe, sino que también puede darles un reembolso, incluso si no debe ningún impuesto.
A continuación, algunas cosas que las personas deben saber acerca de este
- Los contribuyentes pueden entrar y salir de la elegibilidad para el crédito durante todo el año. Esto puede suceder después de eventos mayores de vida. Debido a esto, es una buena idea que la gente averigüe si califica.
- Para calificar, las personas deben cumplir con ciertos requisitos y presentar una declaración federal de impuestos. Deben presentar una declaración incluso si no adeudan ningún impuesto o no están obligados a presenter.
- Los contribuyentes califican a base de sus ingresos, el número de hijos que tienen y el estado civil tributario que usan en su declaración de impuestos. Para que un niño califique, debe vivir con el contribuyente por más de seis meses del año.
A continuación, entregamos un resumen de los límites de ingresos para los diferentes estados civiles tributarios. Los que trabajan y ganan menos de estas cantidades pueden calificar.
Casado que declara en conjunto:
- Sin hijos: $21,370
- Un hijo: $46,884
- Dos hijos: $52,493
- Tres o más hijos: $55,952
Jefe de familia y soltero:
- Sin hijos: $15,570
- Un hijo: $41,094
- Dos hijos: $46,703
- Tres o más hijos: $50,162
El crédito máximo se basa en el número de hijos del contribuyente. Son los
mismos para todos los estados civiles tributarios:
- Sin hijos: $529
- Un hijo: $3,526
- Dos hijos: $5,828
- Tres o más hijos: $6,557
- Los contribuyentes que presentan con el estado casado presentando
por separado no pueden reclamar el EITC.
Posted in INDIVIDUALS, NEWS
Taxpayers who requested the six-month filing extension should complete their tax returns and file on or before the Oct. 15 deadline.
Filing electronically is easy, safe and the most accurate way to file taxes. There are a variety of electronic filing options. Those options include having tax returns prepared at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site, purchasing commercial software or choosing a reputable tax professional who is also an authorized e-file provider.
About 15 million taxpayers filed for an extension this year. Although Oct. 15 is the last day for most people to file, some may have more time. They include:
- Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.
- Taxpayers in federally-declared disaster areas who already had valid extensions.
Extension filers can file when they are ready and don’t have to wait until
Oct. 15 to file. Taxpayers who did not request an extension and have yet to
file a 2018 tax return can generally avoid additional penalties and interest by
filing the return as soon as possible and paying any taxes owed.
New Form 1040
Form 1040 has been redesigned for tax year 2018. The revised form consolidates Forms 1040, 1040A and 1040-EZ into one form that all individual taxpayers will use to file their 2018 federal income tax return.
The new form uses a “building block” approach that can be supplemented with
additional schedules as needed. Taxpayers with straightforward tax situations
will only need to file the Form 1040 with no additional schedules. People who
use tax software will still follow the steps they’re familiar with from
previous years. Since nearly 90 percent of taxpayers now use tax software, the
IRS expects the change to Form 1040 and its schedules to be seamless for those
who file electronically.
Recordkeeping and adjusted gross income
As a reminder, taxpayers should keep a copy of their tax returns and supporting documents for a minimum of three years. Some taxpayers using a tax-filing software product for the first time may need their adjusted gross income amount from their prior-year tax return to verify their identity.
Taxpayers using the same tax software they used last year will not need to enter their prior year information to electronically sign their 2018 tax return.
IRS Direct Pay offers taxpayers a fast way to pay what they owe. Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration.
Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer does. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and electronic funds withdrawal which is available when e-filing. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”
Eligible taxpayers can set up an online payment agreement in a matter of minutes to pay tax, interest and penalties they may owe. There is no application fee to setup payment plans lasting 120 days or less. In 2019, over 1 million agreements were set up by taxpayers online.
Prepare for next year − Do a ‘Paycheck Checkup’ now
The IRS also urges extension filers to do a “Paycheck Checkup” now. It helps make sure the right amount is being withheld from their checks following tax reform. If a change is needed, there’s still time to adjust withholding during the last quarter of the year.
Taxpayers can use the Tax Withholding Estimator to approximate their 2019 income taxes and proper withholding. The tool compares the estimate to current withholding to help taxpayers decide if they want to change that amount with their employer. Taxpayers should have their 2018 tax return available when using the tool to estimate income, deductions, adjustments and credits for 2019. They will also need their most recent pay stub to compute the amount of withholding so far this year.
Posted in INDIVIDUALS, NEWS
Taxpayers with dependents may qualify to claim a few different tax credits. One of these is the child tax credit. The child tax credit benefits people whose dependent meets a series of tests. If the dependent doesn’t meet those qualifications, the taxpayer may be able to claim the credit for other dependents.
Here’s some info about the credit for other dependents. These details can
help taxpayers find out if they can claim it when they file their taxes next
- A taxpayer can’t claim the credit for other dependents for a child who qualifies for the child tax credit or the additional child tax credit.
- A qualifying individual could be the taxpayer’s older child, parent or cousin. It could even be someone who is not related to the taxpayer. To qualify, the unrelated person must have lived with the taxpayer for the entire tax year.
- The maximum amount of the credit is $500 per qualifying dependent.
- The dependent must be a U.S. citizen, a U.S. national, or a U.S. resident alien.
- Taxpayers who are eligible to claim this credit must list the name and Social Security number or individual taxpayer identification number for each dependent they claim on their tax return.
- The credit begins to phase out at $200,000 of modified adjusted gross income. This amount is $400,000 for married couples filing jointly.
Posted in INDIVIDUALS, NEWS
Starting in 2019, selected taxpayers don’t have to pay a
penalty for not having health insurance and are free to buy plans with lower
costs and no network restrictions.
Small businesses can provide tax free reimbursements to eligible employees to help with out of pocket expenses associated with high deductible health insurance plans. Reimbursements are not subject to payroll taxes. The business is eligible for a tax deduction and doesn’t need to offer a group health insurance plan.
For optimal results, assessments will need to start before open enrollment begins for ACA health insurance plans.
Jorge Enderica CLU ChFC , who has been assisting our clients in their needs for different coverage, can explain how these new provisions work and assess the best course of action for your business and your employees. Call 214-739-5610 by November 1st to request an assessment or click on the following link: https://www.surveygizmo.com/s3/5189057/Health-Insurance-Ad-Assurnet
Posted in NEWS
Millions of people have filed their 2018 tax return, making this a prime time to consider whether their tax situation came out as expected. If not, taxpayers can use their finished 2018 return and, if needed, adjust their withholding. Having their 2018 return handy can make it easier for taxpayers to estimate deductions, credits and other amounts for 2019. Performing a Paycheck Checkup is a good idea for anyone who:
- Adjusted their withholding in 2018, especially those who did so later in the year.
- Owed additional tax when they filed their tax return this year.
- Had a refund that was larger or smaller than expected.
- Had life changes such as marriage, childbirth, adoption, buying a home or income changes.
Since most people are affected by the Tax Cuts and Jobs Act all taxpayers
should check their withholding. They should do a checkup even if they did one
in 2018. This especially includes taxpayers who:
- Have children and claim credits such as the Child Tax Credit.
- Have older dependents, including children age 17 or older.
- Experienced changes to itemized deductions this year.
- Itemized deductions in the past.
- Are a two-income family.
- Have two or more jobs at the same time.
- Only work part of the year.
- Have high income or a complex tax return.
This Tax Withholding Estimator works for most taxpayers. Those with more complex situations may need to use Tax Withholding and Estimated Tax, instead of the Tax Withholding Estimator. This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.
Taxpayers can use the results from the Tax Withholding Estimator to see if they need to complete a new Form W-4, Employee’s Withholding Allowance Certificate, and submit it to their employer. In some instances, the calculator may recommend they have an additional flat-dollar amount withheld each pay period. Taxpayers give this form to their employer and do not send this form to the IRS.
Posted in INDIVIDUALS, NEWS