By law, business taxpayers who pay or receive nonemployee compensation of $600 or more must report these payments to the IRS. They do this using Form 1099-NEC, Nonemployee Compensation.
Generally, payers must file Form 1099-NEC by January 31. For 2021 tax returns. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.
Nonemployee compensation may be subject to backup withholding if a payee has not provided a Taxpayer Identification Number to the payer or the IRS notifies the payer that the payee provided a TIN that does not match their name in IRS records.
A TIN can be one of the following numbers: Social Security; Employer Identification (EIN); Individual Taxpayer Identification (ITIN); or Adoption Taxpayer Identification
What is backup withholding?
Backup withholding can apply to most kinds of payments reported on Forms 1099 and W-2G. The person or business paying the taxpayer doesn’t generally withhold taxes from certain payments; however, there are 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 The payer’s requirement to withhold taxes from payments not otherwise subject to withholding is known as backup withholding. The current backup withholding tax rate is 24%.
El IRS está revisando las declaraciones de impuestos presentadas antes de que el Plan de Rescate Estadounidense de 2021 se convirtiera en ley en marzo para determinar la cantidad tributable correcta de la compensación por desempleo y los impuestos. Para los contribuyentes elegibles, esto podría resultar en un reembolso, una reducción del saldo adeudado o ningún cambio.
Los esfuerzos del IRS para corregir los pagos en exceso de compensación por desempleo ayudarán a la mayoría de los contribuyentes afectados a evitar presentar una declaración de impuestos enmendada. Algunos contribuyentes recibirán reembolsos, que se emitirán periódicamente, y a algunos se les aplicará el pago en exceso a los impuestos adeudados u otras deudas. Para algunos, no habrá cambios.
La Ley del Plan de Rescate Estadounidense de 2021 excluyó hasta $10,200 en compensación por desempleo por contribuyente del pago de impuestos en 2020. Los contribuyentes no deberán pagar impuestos en los primeros $10,200 de la compensación por desempleo. Este no es el monto del reembolso que recibirán los contribuyentes.
La agencia también hace correcciones para el Crédito tributario por ingreso del trabajo (EITC), el Crédito tributario de prima y el Crédito de recuperación de reembolso afectados por la exclusión.
El IRS puede ajustar las declaraciones de impuestos para aquellos que son solteros sin hijos y que son elegibles para el EITC. El IRS también puede ajustar las declaraciones de impuestos en las que se reclamó el EITC y se identificó a los niños calificados.
Los contribuyentes que tengan hijos calificados y sean elegibles nuevamente para el EITC después de que se calcule la exclusión pueden tener que presentar una declaración enmendada para reclamar nuevos beneficios.
Si el IRS ajusta la declaración de impuestos de alguien, el contribuyente recibirá una carta dentro de aproximadamente 30 días, explicando qué tipo de ajuste se hizo y el monto del ajuste. Los tipos de ajustes incluyen un reembolso, pago de la deuda del IRS o desagravio de pago por otras deudas autorizadas. Los desagravios incluyen impuestos federales atrasados, impuestos estatales sobre ingresos, deudas estatales de compensación por desempleo, manutención infantil, manutención del cónyuge o ciertas deudas federales no tributarias, como préstamos estudiantiles.
Los contribuyentes deben guardar cualquier aviso del IRS para sus archivos y revisar su declaración de impuestos después de recibir cualquier aviso del IRS.
It’s important for taxpayers to understand how selling their home may affect their tax return. When filing their taxes, they may qualify to exclude all or part of any gain from the sale from their income.
Here are some key things homeowners should consider when selling a home:
Ownership and use To claim the exclusion, the taxpayer must meet ownership and use tests. During a 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 and have a gain from the sale 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.
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 only exclude the gain 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 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.
Possible exceptions There are exceptions to these rules for some individuals, including persons with a disability, certain members of the military, intelligence community and Peace Corps workers.
The Internal Revenue Service reminded taxpayers living and working outside of the United States that they must file their 2020 federal income tax return by Tuesday, June 15. This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship.
Just as most taxpayers in the United States are required to timely file their tax returns with the IRS, those living and working in another country are also required to file. An automatic two-month deadline extension is normally granted for those overseas and in 2021 that date is still June 15 even though the normal income tax filing deadline was extended a month from April 15 to May 17.
Benefits and qualifications An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.
A taxpayer qualifies for the special June 15 filing deadline if both their tax home and abode are outside the United States and Puerto Rico. Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15. IRS recommends attaching a statement if one of these two situations apply.
Reporting required for foreign accounts and assets Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.
In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.
Foreign accounts reporting deadline Separate from reporting specified foreign financial assets on their tax return, taxpayers with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2020, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website.
The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) was April 15, 2021, but FinCEN is granting filers who missed the original deadline an automatic extension until October 15, 2021, to file the FBAR. There is no need to request this extension.
Report in U.S. dollars Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.
Both FINCEN Form 114 and IRS Form 8938 require the use of a December 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.
Expatriate reporting Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2020 must file a dual-status alien tax return, and attach Form 8854, Initial and Annual Expatriation Statement. A copy of Form 8854 must also be filed with Internal Revenue Service, 3651 S IH35 MS 4301AUSC, Austin, TX 78741, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85 PDF, Guidance for Expatriates Under Section 877A, for further details.
While the deadline to file and pay federal income taxes has passed for most people, some taxpayers may still be dealing with tax-related issues.
Here are some tips for taxpayers handling some of the most common after-tax-day issues.
Check refund status: Taxpayers can check on their refund using the Where’s My Refund? tool. It is available on IRS.gov. To use this tool, taxpayers need their Social Security number, tax filing status and the exact amount of the refund claimed on their tax return. The tool updates once daily, so there’s no need to check more often.
Check withholding: All taxpayers are encouraged to check their withholding using the Tax Withholding Estimator on IRS.gov. This will help them make sure their employers are withholding the right amount of tax from their paychecks. Doing this now will help avoid an unexpected amount due and possibly a penalty when they prepare and file their taxes next year. Taxpayers can use the results from the Estimator to help complete a new Form W-4 and adjust their income tax withholding with their employer. Taxpayers who receive pension income can use the results to complete a Form W-4P and submit to their payer.
Review payment options: Taxpayers who owe taxes can review all payment options online. These include: paying their taxes owed or making a partial payment; paying by debit card, credit card or digital wallet; or applying online for a payment plan
Carefully consider if they need to amend a tax return: After filing their tax return, taxpayers may find they made an error or forgot to enter something on it. Common errors taxpayers should fix are those made about filing status, income, deductions and credits. Taxpayers usually do not need to file an amended return to fix a math error or if they forgot to attach a form or schedule. Normally, the IRS will correct the math error and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules.
Those expecting a refund from their original return should not file an amended return before the original return has been processed: Currently, it is taking the IRS longer to process mailed documents including paper tax returns and all tax return related correspondence. It is taking the agency more than 21 days to issue refunds for some 2020 tax returns that require review including incorrect recovery rebate credit amounts or returns that used 2019 income to figure the earned income tax credit and additional child tax credit.
The Internal Revenue Service will begin issuing refunds this week to eligible taxpayers who paid taxes on 2020 unemployment compensation that the recently-enacted American Rescue Plan later excluded from taxable income.
The IRS identified over 10 million taxpayers who filed their tax returns prior to the American Rescue Plan of 2021 becoming law in March and is reviewing those tax returns to determine the correct taxable amount of unemployment compensation and tax. This could result in a refund, a reduced balance due or no change to tax (no refund due nor amount owed). These corrections are being made automatically in a phased approach, easing the burden on taxpayers. The first phase is underway and includes the simplest returns. The next phase will include the more complex tax returns which the IRS anticipates will take through the end of summer to review and correct.
The first phase of adjustments is being made for single taxpayers who had the simplest tax returns, such as those filed by taxpayers who did not claim children or any refundable tax credits. The IRS will issue refunds resulting from this effort by direct deposit for taxpayers who provided bank account information on their 2020 tax return. If valid bank account information is not available, the refund will be mailed as a paper check to the address of record. The IRS will continue to send refunds until all identified tax returns have been reviewed and adjusted.
These refunds are subject to normal offset rules, such as past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or certain federal nontax debts (i.e., student loans). The IRS will send a separate notice to the taxpayer if the refund is offset to pay unpaid debts. The IRS will send taxpayers a notice explaining the corrections, which they should expect within thirty days of when the correction is made. Taxpayers should keep any notices they receive for their records. Taxpayers should review their return after receiving their IRS notice(s).
Correction to any Earned Income Tax Credit (EITC) without qualifying children and the Recovery Rebate Credit are being made automatically as part of this process. However, some taxpayers may be eligible for certain income-based tax credits not claimed on their original return, such as the EITC for their qualifying children. If so, they should file an amended tax return if the revised adjusted gross income amount makes them eligible for additional benefits. More complex corrections will begin upon the completion of the first phase and involves couples filing as married filing jointly.
Unemployment compensation is taxable income. The American Rescue Plan excludes $10,200 in 2020 unemployment compensation from income used to calculate the amount of taxes owed. The $10,200 per person exclusion applies to taxpayers, single or married filing jointly, with modified adjusted gross income of less than $150,000. The $10,200 is the amount of income exclusion, not the amount of the refund. Refund amounts will vary and not all adjustments will result in a refund.
The legislation also suspends the requirement to repay excess advance payments of the Premium Tax Credit (excess APTC). If a taxpayer paid an excess APTC repayment amount when they filed their 2020 return, the IRS is also refunding this amount automatically. If the IRS corrects the taxpayer’s account to reflect the unemployment income exclusion, the excess APTC amount that the taxpayer paid will be included in that adjustment. The IRS is also adjusting accounts for those who repaid excess APTC but did not report unemployment compensation on their 2020 tax return.
Por lo general, los ingresos recibidos de cualquier fuente, incluidas las propinas, están sujetos a impuestos. Aquí hay información para ayudar a los contribuyentes a reportar los ingresos de propinas.
Todas las propinas que reciben los contribuyentes son ingresos y están sujetos al impuesto federal sobre el ingreso. Los contribuyentes deben incluir todas las propinas que reciben en sus ingresos brutos. Esto incluye: propinas directamente de clientes; propinas añadidas con tarjetas de crédito y propinas de un acuerdo de reparto de propinas con otros empleados.
El valor de las propinas en formas que no sean en efectivo, como boletos, pases u otros artículos de valor, también es ingreso y está sujeto a impuestos.
Tres cosas pueden ayudar a los contribuyentes a reportar correctamente sus ingresos de propinas: mantener un archivo diario de propinas; declarar propinas a su empleador o declarar todas las propinas en su declaración de impuestos.
Para la mayoría de los contribuyentes individuales, la fecha límite de presentación y pago de impuestos se aplazó para el 17 de mayo (en Texas, 15 de junio). Aquellos que necesitan más tiempo para presentar, pueden solicitar una prórroga para presentar. Los contribuyentes deben solicitar una prórroga para presentar antes del 17 de mayo, o pueden enfrentar una multa por falta de presentación. Esta prórroga les da hasta el 15 de octubre para presentar su declaración de impuestos. Una prórroga de tiempo para presentar no es una prórroga para pagar. Los impuestos deben pagarse no más tardar del 17 de mayo para evitar multas e intereses sobre el monto adeudado después de esa fecha.
Para obtener una prórroga para presentar, el IRS insta a los contribuyentes a tomar una de las siguientes acciones:
Presentar el Formulario 4868 (SP) a través de su profesional de impuestos, software de impuestos
Una prórroga automática de tiempo para presentar se procesará cuando los contribuyentes paguen la totalidad o parte de sus impuestos electrónicamente antes de la fecha de vencimiento del lunes, 17 de mayo. Algunos contribuyentes pueden tener más tiempo para presentar sus declaraciones de impuestos y pagar los impuestos adeudados
Anyone can request an automatic tax-filing extension, but some people get extra time without asking, according to the Internal Revenue Service.
Due to the ongoing pandemic, this year the IRS postponed the usual April 15 deadline for filing individual income tax returns until May 17, 2021. Even so, as is the case every year, many Americans will still need more time to meet their tax-filing obligation.
The IRS estimates that more than 16 million taxpayers will get an automatic extension this filing season, either by filing a form or making an electronic tax payment. But some taxpayers, including disaster victims, those serving in a combat zone and Americans living abroad get more time, even if they don’t ask for it. Here are details on each of these special tax-relief provisions.
Victims of the February winter storms in Texas, Oklahoma and Louisiana have until June 15, 2021, to file their 2020 returns and pay any tax due.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in a federally declared disaster area when at least one area qualifies for FEMA’s Individual Assistance program. Ordinarily, this means that taxpayers need not contact the IRS to get disaster tax relief.
This relief also includes more time for making 2020 contributions to IRAs and other plans and making 2021 estimated tax payments. In some cases, relief is also available to people living outside the disaster area if, for example, they have a business located in the disaster area, have tax records located in the disaster area or are assisting in disaster relief.
Taxpayers outside the United States
U.S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico have until June 15, 2021 to file their 2020 tax returns and pay any tax due.
The special June 15 deadline also applies to members of the military on duty outside the U.S. and Puerto Rico who do not qualify for the longer combat zone extension. Affected taxpayers should attach a statement to their return explaining which of these situations apply.
Taxpayers who don’t qualify for any of these three special situations can still get more time to file by submitting a request for an automatic extension. This will extend their filing deadline until Oct. 15, 2021. But because this is only a tax-filing extension, their 2020 tax payments are still due by May 17.
Another option is to pay electronically and get a tax-filing extension. The IRS will automatically process an extension when a taxpayer selects Form 4868 and makes a full or partial federal tax payment by the May 17 due date using Direct Pay, the Electronic Federal Tax Payment System EFTPS or a debit or credit card. Under this option, there is no need to file a separate Form 4868. Please note, you must register for EFTPS before using.
Taxpayers need to know their correct filing status and be familiar with each option. A taxpayer’s filing status typically depends on whether they are single or married on Dec. 31, which determines their filing status for that entire year.
More than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to owe the least amount of tax.
When preparing and filing a tax return, the filing status affects if the taxpayer is required to file a federal tax return; if they should file a return to receive a refund; their standard deduction amount; if they can claim credits and the amount of tax they should pay.
Here are the five filing statuses:
Single. Normally, this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.
Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
Married filing separately. Married couples can choose to file separate tax returns. When doing so, it may result in less tax owed than filing a joint tax return.
Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.
Qualifying widow or widower with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.