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Most Social Security and Railroad Retirement recipients don’t need to file a return or provide information to get an Economic Impact Payment

Posted on 15 April, 2020 at 10:43 Comments comments (0)
Most Social Security and Railroad Retirement recipients don’t need to file a return or provide information to get an Economic Impact Payment

Many people are receiving Economic Impacts Payments to help with the effects of the Coronavirus (COVID-19) pandemic. Among people getting payments for $1,200 are those who receive Social Security retirement, disability (SSDI), or survivor benefits and Railroad Retirement benefits. This includes those who don’t normally file a tax return and are not claimed as a dependent on someone else’s return.
Here are some things for these folks to know about the payment:
  • Eligible Social Security (including SSDI) and Railroad Retirement beneficiaries whose benefits are reported on a Form 1099 SSA or RRB will not need to file a tax return or provide information to receive a payment. However, those recipients who have qualifying children under age 17 must provide information through the Non-Filers: Enter Payment Info tool to claim the $500 payment per child.
  • Even though these beneficiaries are not typically required to file a tax return, they will still receive a payment.
  • Social Security (including SSDI) and Railroad Retirement beneficiaries who don’t file a tax return who have qualifying children under age 17 must use Non-Filers: Enter Payment Info to claim the $500 payment per child.
  • Economic Impact Payments will be sent automatically to this group of people the same way they receive their Social Security retirement, disability (SSDI), or survivor benefits or their Railroad Retirement benefits.

The IRS continues to explore ways to see if Economic Impact Payments can be made automatically to SSI recipients and those who receive veteran’s disability compensation, pension or survivor benefits from the Department of Veterans Affairs and who did not file a tax return for the 2018 or 2019 tax years. People in these groups can either use Non-Filers: Enter Payment Info option now or wait as the IRS continues to review automatic payment options to simplify delivery for these groups.
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Taxpayers must only pay what they owe

Posted on 5 February, 2020 at 10:03 Comments comments (0)
Taxpayers must only pay what they owe
When taxpayers complete their tax returns, some of them will owe money when they file. Here’s the thing…they have the right to pay only the amount of tax that is legally due.
This is one of ten Taxpayer Bill of Rights. They are fundamental rights taxpayers have when dealing with the IRS. One of which is the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly. 
This means taxpayers are entitled to:
  • File for a refund if the they believe they overpaid.

  • Write or call the IRS office that sent the taxpayer a notice or bill. Taxpayers can do this if they believe the notice or bill is incorrect in any way. When challenging information in a bill or notice, taxpayers should be ready to provide copies of any records that may help correct the error. If the taxpayer is correct, the IRS will make the necessary adjustment to their account and send a corrected notice.

  • Amend a tax return if they discover an error. They can also amend this return if there were mistakes in their filing status, income, deductions or credits.

  • Request any amount owed be removed if it’s more than the correct amount due.

  • Request the IRS remove any interest from their account if the IRS caused unreasonable errors or delays.

  • Submit an offer in compromise, asking the agency to accept less than the full tax debt, if the taxpayer believes they don’t owe all or part of the debt.
More information:
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Many taxpayers don’t realize they could benefit from the earned income tax credit

Posted on 3 February, 2020 at 10:59 Comments comments (199)
Many taxpayers don’t realize they could benefit from the earned income tax credit
The earned income tax credit benefits millions of taxpayers who qualify by putting more money in their pockets. This money can help with things like food, gas, clothing and even saving for a rainy day.
Here’s some information for people who often miss out on claiming the credit:
Native Americans:
As with all taxpayers, Native Americans can claim the credit if they meet basic rules.
  • Taxpayers must have earned income. In other words, they must receive income as an employee, or from owning or operating their own business.
  • This includes home-based businesses and work in the service industry, construction and farming.
Grandparents:
Grandparents who work and are also raising grandchildren can also benefit from the EITC. These individuals who are caring for their grandchildren should find out if they qualify. It’s important because they’re often not aware they could claim these children for the EITC.
The EITC is a refundable tax credit. This means those who qualify and claim the credit could pay less federal tax, pay no tax, or even get a tax refund. Grandparents who are the primary caretakers of their grandchildren – as with all taxpayers – should remember these facts about the credit:
  • A grandparent who works and has a qualifying child may be eligible for the EITC, even if the grandparent is 65 years of age or older.
  • The grandchild must meet the qualifying child requirements for EITC.
  • Special rules and restrictions  apply if the child’s parents or other family members also qualify for EITC. 
  • Eligible grandparents must file a tax return and claim the credit, even if they don’t owe any tax or aren’t required to file.
Taxpayers living in rural areas:
Many taxpayers living in small towns and rural areas may qualify for EITC. Here are some things that people living in these areas should know about the credit and how it can benefit them:
  • EITC is a refundable tax credit. This means those who qualify and claim the credit could pay less federal tax, pay no tax, or even get a tax refund.
  • To get the credit, taxpayers must file a tax return and claim the credit, even if they don’t owe any tax or aren’t required to file.
  • Unmarried workers without a qualifying child who earn less than $15,570 may qualify for a smaller amount of the credit.
Taxpayers can use the EITC Assistant to determine if they qualify for EITC. Available in English and Spanish, this tool also estimates the amount of the taxpayer’s credit.
More Information:
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Gig economy work can affect a taxpayer’s bottom line

Posted on 22 January, 2020 at 10:41 Comments comments (0)
Gig economy work can affect a taxpayer’s bottom line

Taxpayers who work in the gig economy need to understand how their work affects their taxes. A little pre-planning can help make sure gig economy workers are prepared when it’s time to file their tax return.
First things first, here’s a quick overview of the gig economy:
The gig economy is also referred to as the on-demand, sharing or access economy. People involved in the gig economy earn income as a freelancer, independent worker or employee. They use technology to provide goods or services. This includes things like renting out a home or spare bedroom and providing car rides.
Here are some things taxpayers should know about the gig economy and taxes:
  • Money earned through this work is usually taxable.

  • There are tax implications for both the company providing the platform and the individual performing the services.

  • This income is usually taxable even if the:
       o Taxpayer providing the service doesn’t receive an 
          information return, like a Form 1099-MISC, Form
          1099-K,  or Form W-2. 
        o Activity is only part-time or side work.
        o Taxpayer is paid in cash.

  • People working in the gig economy are generally required to pay:  
        o Income taxes.
        o Federal Insurance Contribution Act or Self-
           employment Contribution Act tax.
        o Additional Medicare taxes.

  • Independent contractors may be able to deduct business expenses. These taxpayers should double check the rules around deducting expenses related to use of things like their car or house. They should remember to keep records of their business expenses.

  • Special rules usually apply to rental property also used as a residence during the tax year. Taxpayers should remember that rental income is generally fully taxable.

  • Workers who do not have taxes withheld from their pay have two ways to pay their taxes in advance. Here are these two options:
          o Gig economy workers who have another job where
             their employer withholds taxes from their paycheck
             can fill out and submit a new Form W-4. The
             employee does this to request that the other 
             employer withholds additional taxes from their 
             paycheck. This additional withholding can help cover
             the taxes owed from their gig economy work.
          o The gig economy worker can make quarterly
             estimated tax payments. They do this to pay their
             taxes and any self-employment taxes owed
             throughout the year.
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Adults can pass on these tips to teach teens online safety

Posted on 5 December, 2019 at 9:52 Comments comments (0)
Adults can pass on these tips to teach teens online safety
Adults teach their kids how to drive, balance a checkbook and cook. It’s also a good idea to teach younger users how to explore the internet with caution.
All internet users should be mindful of risks people can take when they share devices, shop online and interact on social media. Teens and younger users – like others who are less experienced with technology – often put themselves at risk by leaving a trail of personal information for fraudsters and con artists to follow.
Taxpayers might find the phrase “online security” overwhelming but, it doesn’t have to be. Even those who aren’t super tech savvy – no matter their age – can stay safe online. Here are some tips adults can pass on to the kids in their lives:
  • Remember security is important.
    No one should reveal too much information about themselves. People can keep data secure by only providing what is necessary. This reduces online exposure to scammers and criminals. For example, birthdays, addresses, age and especially Social Security numbers are some things that should not be shared freely. In fact, people should not routinely carry a Social Security card in their wallet or purse.

  • Use software with firewall and anti-virus protections.
    People should make sure security software is always turned on and can automatically update. They should encrypt sensitive files stored on computers. Sensitive files include things like tax records, school transcripts, and college applications. They should use strong, unique passwords for each account. They should also be sure all family members have comprehensive protection for their devices…particularly on shared devices.

  • Learn to recognize and avoid scams.
    Everyone should be on the lookout for scams. Thieves use phishing emails, threatening phone calls and texts to pose as IRS employees or other legitimate government or law enforcement agencies. People should remember to never click on links or download attachments from unknown or suspicious emails. If someone calls asking for personal information, folks should remember not to give out such details.

  • Protect personal data
    Adults should advise children and teens and other youngers users to shop at reputable online retailers. Treat personal information like cash; don't leave it lying around.

  • Know the risk of public Wi-Fi.
    Connection to Wi-Fi in a mall or coffee shop is convenient and often free, but it may not be safe. Hackers and cybercriminals can easily steal personal information from these networks. Always use a virtual private network when connecting to public Wi-Fi.
More information:
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Here’s how taxpayers can avoid the hooks of phishing scams

Posted on 4 December, 2019 at 10:30 Comments comments (0)
Here’s how taxpayers can avoid the hooks of phishing scams
Knowledge and awareness. Those two things can protect taxpayers and their family members from getting caught up in a phishing scam.
A phishing scam is often an unsolicited email or a website that looks like a legitimate site designed to trick users. The scams convince people into providing personal and financial information.  Scam emails can arrive to personal and work accounts on computers, smartphones and tablets. 
Phishing scams often use one or more of these tactics. The scammers:
  • Pose as a trusted bank, favorite retail store, government agency, or even a tax professional.
  • Tell the taxpayer there’s something wrong with their account.
  • Tell the recipient they’re in violation of a law.
  • Tell the taxpayer to open a link in email or download an attachment.
  • Send the taxpayer a familiar looking – but fake – website and ask them to log in to it.
Thieves do these to trick taxpayers into revealing account numbers and passwords. The thieves secretly download malicious software on to someone’s device to collect personal information. The criminal might also try to fool the recipient into sending money to the scammers.
It’s important to remember that the IRS never:
  • Calls to demand immediate payment using a specific payment method such as a prepaid debit card, iTunes gift card or wire transfer.
  • Asks a taxpayer to make a payment to a person or organization other than the U.S. Treasury.
  • Threatens to immediately bring in local police or other law-enforcement groups saying they can have the taxpayer arrested for not paying.
  • Demands taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
When in doubt, taxpayers can always check the status of their taxes by registering at IRS.gov. From there, taxpayers can check their account balance for the current tax year or any previous tax year with a balance due.
Taxpayers who receive an IRS-related or tax-themed phishing email should forward it to [email protected] Taxpayers can also report scam letters and phone calls to [email protected] as well as the Treasury Inspector General for Tax Administration.
More information:

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Four common tax errors that can be costly for small businesses

Posted on 21 November, 2019 at 11:04 Comments comments (0)
Four common tax errors that can be costly for small businesses

A small business owner often wears many different hats. They might have to wear their boss hat one day, and the employee hat the next. When tax season comes around, it might be their tax hat.
They may think of doing their taxes as just another item to quickly cross off their to-do list. However, this approach could leave taxpayers open to mistakes when filing and paying taxes.
Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. Using IRS Free File or a certified public accountant is the easiest ways to avoid these kinds of errors.
Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:
Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.
Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers.  If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.
Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.
Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.       
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Members of the military can check out these resources to help answer tax questions

Posted on 12 November, 2019 at 11:30 Comments comments (0)
Members of the military can check out these resources to help answer tax questions
When it comes to taxes, members of the military often have unique circumstances. IRS.gov has info on several topics that affect current and former military personnel, as well as their families. Here are resources where people can go to find more information.
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Farmers and ranchers affected by drought have extra time to sell livestock

Posted on 29 October, 2019 at 11:45 Comments comments (1)
Farmers and ranchers affected by drought have extra time to sell livestock
Drought can be devastating to farmers and ranchers. Those who were forced to sell livestock due to drought may get extra time to replace the livestock. They may also have more time to defer tax on any gains from the forced sales.
Here are some facts to help farmers understand how the deferral works and if they are eligible.
  • The one-year extension gives eligible farmers and ranchers until the end of the tax year after the first drought-free year to replace the sold livestock.

  • The farmer or rancher must be in an applicable region. An applicable region is a county designated as eligible for federal assistance, as well as counties contiguous to that county.

  • The farmer’s county, parish, city or district included in the applicable region must be listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center. All or part of 32 states, plus Guam, the U.S. Virgin Islands and the Commonwealths of Puerto Rico and the Northern Mariana Islands, are listed. The list of applicable regions is in Notice 2019-54 on IRS.gov.
     
  • The relief applies to farmers who were affected by drought that happened between Sept. 1, 2018, and Aug. 31, 2019.
     
  • This relief generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes.

  • Sales of other livestock, such as those raised for slaughter or held for sporting purposes, or poultry are not eligible.
     
  • To qualify, the sales must be solely due to drought, flooding or other severe weather causing the region to be designated as eligible for federal assistance.
     
  • The farmers generally must replace the livestock within a four-year period, instead of the usual two-year period.
     
  •  Because the normal drought sale replacement period is four years, this extension immediately effects drought sales that occurred during 2015. However, because of previous drought-related extensions affecting some of these areas, the replacement periods for some drought sales before 2015 are also affected.

  • Details, including an example of how this provision works, can be found in Notice 2006-82 on IRS.gov.
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People can help improve communities and learn new skills as IRS-certified volunteer

Posted on 16 October, 2019 at 14:06 Comments comments (0)
People can help improve communities and learn new skills as IRS-certified volunteer
It might not seem like the obvious choice, but one way for people to help others in their community is by volunteering with the IRS. The agency is looking for people to prepare tax returns at free tax preparation sites across the country.
People can sign up through the Volunteer Income Tax Assistance program, which is celebrating its 50th anniversary this year. People can be a part of this long-standing program by visiting the sign-up page on IRS.gov today.
The IRS and its community partners continue to look for people around the country to become IRS-certified volunteers. Many IRS partners are now accepting new volunteers to join one of these programs for the 2020 filing season. Both these programs offer invaluable help to America’s taxpayers:
 
  • Volunteer Income Tax Assistance offers free tax return preparation to eligible taxpayers who generally earn $55,000 or less.
  • Tax Counseling for the Elderly is mainly for people age 60 or older. Although the program focuses on tax issues unique to seniors, all taxpayers can usually get assistance. AARP participates in the TCE program through AARP Tax-Aide.
Many volunteers return to the program year after year. Here are several reasons why:
  • Volunteers can work flexible hours. Volunteers can generally choose their own hours and days to volunteer. The programs are usually open from mid-to-late-January through the tax filing deadline in April. Some sites are even open all year.
  • VITA and TCE sites are often close to home. More than 11,000 sites were set up in neighborhoods all over the country for 2018. These free tax help sites are in places like community centers, libraries, schools and shopping malls.
  • No prior experience needed. Volunteers receive specialized training to become IRS-certified. They can also choose from a variety of roles to serve. VITA and TCE programs want volunteers of all backgrounds and ages, as well as individuals who are fluent in other languages.
  • The IRS provides free tax law training and materials. Volunteers receive training materials at no charge. The tax law training covers how to prepare basic federal tax returns electronically. The training also covers tax topics like deductions and credits.
  • Tax pros can earn continuing education credits. Enrolled agents and non-credentialed tax return preparers can earn continuing education credits when volunteering as a VITA/TCE instructor, quality reviewer or tax return preparer.
More Information:
IRS Free Tax Return Preparation Programs
Link and Learn Taxes
Tax Topic 101: IRS Services – Volunteer Tax Assistance, Outreach Programs, and Identity Theft
IRS YouTube Videos:
Volunteer Income Tax Assistance Recruitment – English | Spanish | ASL
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