WASHINGTON — The Internal Revenue Service today reminded small businesses that recent tax reform legislation lowered the backup withholding tax rate to 24 percent and the withholding rate that usually applies to bonuses and other supplemental wages to 22 percent. The agency also urged employers to encourage their employees to check their withholding using the IRS Withholding Calculator. [Read more…]
The tax filing deadline has come and gone, but tax scammers continue to work. Again this year, the IRS highlights the twelve top scams in its “Dirty Dozen” list. These scams are often aggressive and happen throughout the year.
The schemes run the gamut from simple refund inflation scams to complex tax shelter deals. A common theme throughout all: scams put taxpayers at risk.
Here is a recap of the first six scams in this year’s Dirty Dozen. Each one includes a link where taxpayers can go to learn more about that scam. This is the first tip of two tips recapping the list of all 12 scams. [Read more…]
IRS urges businesses to e-file cash transaction reports; It’s fast, easy and free
WASHINGTON — The Internal Revenue Service today urged businesses required to file reports of large cash transactions to take advantage of the speed and convenience of filing these reports electronically.
Although businesses have the option of filing Form 8300, Report of Cash Payments Over $10,000, on paper, many have already found that e-filing is a faster, more convenient and cost-effective way to meet the reporting deadline. The form is due 15 days after a transaction and there’s no charge for the e-file option.
Electronically filing Form 8300 is a secure way for businesses to send sensitive information to the IRS. Although many cash transactions are legitimate, information reported on this form can help stop those who evade taxes, profit from the drug trade and engage in terrorist financing and other criminal activities. The government can often trace money from these illegal activities through the payments reported on this and other cash reporting forms.
Businesses that file Form 8300 electronically get free, automatic acknowledgment of receipt when they file. In addition, electronic filing is more accurate, reducing the need for follow-up correspondence with the IRS.
To file Form 8300 electronically, a business must set up an account with the Financial Crimes Enforcement Network’s BSA E-Filing System. For more information, interested businesses can call the BSA E-Filing Help Desk at 866-346-9478 or email them at BSAEFilingHelp@fincen.gov. The help desk is available Monday through Friday from 8 a.m. to 6 p.m. Eastern time.
For more informationabout the reporting requirement, see FS-2019-1, available on IRS.gov. Among other things, the fact sheet includes reporting scenarios for specific businesses, such as automobile dealerships, taxi companies, landlords, colleges and universities, homebuilders and bail-bonding agents. It also lists other resources on IRS.gov related to reporting cash transactions of more than $10,000.
The best way for taxpayers to check the status of their refund is to use the Where’s My Refund? tool on IRS.gov. This tool gives taxpayers access to their tax return and refund status anytime. All they need is internet access and three pieces of information:
- Their Social Security number
- Their filing status
- The exact whole dollar amount of their refund
Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. Where’s My Refund? includes a tracker that displays progress through three stages: the IRS receives the tax return, then approves the refund, and sends the refund.
Where’s My Refund? Updates once a day, so taxpayers don’t need to check more often.
Generally, the IRS issues most refunds in less than 21 days, but some may take longer. IRS phone and walk-in representatives can research the status of refunds only if it’s been 21 days or more since a taxpayer filed electronically, or more than six weeks since they mailed a paper return. Taxpayers can also contact the IRS if Where’s My Refund? directs them to do so.
Understanding Tax Return Preparer Credentials and Qualifications
Tax Topic 254 – How to Choose a Tax Return Preparer
Choosing a Tax Professional
Filing for Individuals
e-File Options for Individuals
Paying Your Taxes
What to Expect for Refunds in 2019
Tax Reform: Basics for Individuals and Families
IRS kicks off 2019 tax-filing season as tax agency reopens; Use IRS.gov to avoid phone delays
The Internal Revenue Service successfully opened the 2019 tax-filing season today as the agency started accepting and processing federal tax returns for tax year 2018. Despite the major tax law changes made by the Tax Cuts and Jobs Act, the IRS was able to open this year’s tax-filing season one day earlier than the 2018 tax-filing season.
More than 150 million individual tax returns for the 2018 tax year are expected to be filed, with the vast majority of those coming before the April tax deadline. Through mid-day Monday, the IRS had already received several million tax returns during the busy opening hours.
“I am extremely proud of the entire IRS workforce. The dedicated IRS employees have worked tirelessly to successfully implement the biggest tax law changes in 30 years and launch tax season for the nation,” said IRS Commissioner Chuck Rettig. “Although we face various near- and longer-term challenges, our employees are committed to doing everything we can to help taxpayers and get refunds out quickly.”
Following the government shutdown, the IRS is working to promptly resume normal operations.
“The IRS will be doing everything it can to have a smooth filing season,” Rettig said. “Taxpayers can minimize errors and speed refunds by using e-file and IRS Free File along with direct deposit.”
The IRS expects the first refunds to go out in the first week of February and many refunds to be paid by mid- to late February like previous years. The IRS reminds taxpayers to check “Where’s My Refund?” for updates. Demand on IRS phones during the early weeks of tax season is traditionally heavy, so taxpayers are encouraged to use IRS.gov to find answers before they call.
April deadline; help for taxpayers through e-file, Free File
The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.
With major changes made by the Tax Cuts and Jobs Act, the IRS encouraged taxpayers seeking more information on tax reform to consult two online resources: Publication 5307, Tax Reform: Basics for Individuals and Families, and Publication 5318; Tax Reform What’s New for Your Business. For other tips and resources, visit IRS.gov/taxreform or check out the Get Ready page on IRS.gov.
The IRS expects about 90 percent of returns to be filed electronically. Choosing e-file and direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund.
The IRS Free File program, available at IRS.gov, gives eligible taxpayers a dozen options for filing and preparing their tax returns using brand-name products. IRS Free File is a partnership with commercial partners offering free brand-name software to about 100 million individuals and families with incomes of $66,000 or less. About 70 percent of the nation’s taxpayers are eligible for IRS Free File. People who earned more than $66,000 may use Free File Fillable Forms, the electronic version of IRS paper forms.
Most refunds sent in less than 21 days; EITC/ACTC refunds starting Feb. 27
The IRS expects to issue more than nine out of 10 refunds in less than 21 days. However, it’s possible a tax return may require additional review and take longer. “Where’s My Refund?” has the most up to date information available about refunds. The tool is updated only once a day, so taxpayers don’t need to check more often.
The IRS also notes that refunds, by law, cannot be issued before Feb. 15 for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. This applies to the entire refund — even the portion not associated with the EITC and ACTC. While the IRS will process the EITC and ACTC returns when received, these refunds cannot be issued before Feb. 15. Similar to last year, the IRS expects the earliest EITC/ACTC related refunds to actually be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2019, if they chose direct deposit and there are no other issues with the tax return.
“Where’s My Refund?” on IRS.gov and the IRS2Go mobile app remain the best way to check the status of a refund. “Where’s My Refund?” will be updated with projected deposit dates for most early EITC and ACTC refund filers on Feb. 17, so those filers will not see a refund date on “Where’s My Refund?” or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so these filers should not contact or call about refunds before the end of February.
This law was changed to give the IRS more time to detect and prevent fraud. Even with the EITC and ACTC refunds and the additional security safeguards, the IRS still expects to issue more than nine out of 10 refunds in less than 21 days. However, it’s possible a particular tax return may require additional review and a refund could take longer. Even so, taxpayers and tax return preparers should file when they’re ready. For those who usually file early in the year and are ready to file a complete and accurate return, there is no need to wait to file.
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 e-file.
Free tax help
Low- and moderate-income taxpayers can get help filing their tax returns for free. Tens of thousands of volunteers around the country can help people correctly complete their returns.
To get this help, taxpayers can visit one of the more than 12,000 community-based tax help sites that participate in the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. To find the nearest site, use the VITA/TCE Site Locator on IRS.gov or the IRS2Go mobile app.
No matter who prepares a federal tax return, by signing the return, the taxpayer becomes legally responsible for the accuracy of all information included. IRS.gov offers a number of tips about selecting a preparer and information about national tax professional groups.
The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing. This includes Forms W-2 from employers and Forms 1099 from banks and other payers. Doing so will help avoid refund delays and the need to file an amended return.
The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax returns on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.
Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process.
The IRS urges taxpayers to take advantage of the many tools and other resources available on IRS.gov.
The IRS continues to work with state tax agencies and the private-sector tax industry to address tax-related identity theft and refund fraud. As part of the Security Summit effort, stronger protections for taxpayers and the nation’s tax system are in effect for the 2019 tax filing season.
The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to taxpayers but will help the IRS, states and the tax industry provide additional protections, and tighter security requirements will better protect tax software accounts and personal information.
Renew ITIN to avoid refund delays
Many Individual Taxpayer Identification Numbers (ITINs) expired on Dec. 31, 2018. This includes any ITIN not used on a tax return at least once in the past three years. Also, any ITIN with middle digits of 73, 74, 75, 76, 77, 81 and 82 (Example: 9NN-73-NNNN) is now expired. ITINs that have middle digits 70, 71, 72 or 80 expired Dec. 31, 2017, but taxpayers can still renew them. Affected taxpayers should act soon to avoid refund delays and possible loss of eligibility for some key tax benefits until the ITIN is renewed. An ITIN is used by anyone who has tax-filing or payment obligations under U.S. tax law but is not eligible for a Social Security number.
It can take up to 11 weeks to process a complete and accurate ITIN renewal application. For that reason, the IRS urges anyone with an expired ITIN needing to file a tax return this tax season to submit their ITIN renewal application soon.
Sign and validate electronically filed tax returns
All taxpayers should keep a copy of their tax return. Some taxpayers using a tax filing software product for the first time may need their adjusted gross income (AGI) 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 2017 tax return. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
What taxpayers should know about amending a tax return
Taxpayers who discover they made a mistake on their tax returns after filing can file an amended tax return to correct it. This includes things like changing the filing status, and correcting income, credits or deductions.
Here are some tips for taxpayers who need to amend a tax return.
- Complete and mail the paper Form 1040X, Amended U.S. Individual Income Tax Return. Taxpayers must file an amended return on paper whether they filed the original return on paper or electronically. Filers should mail the Form 1040X to the address listed in the form’s instructions. However, taxpayers filing Form 1040X in response to a notice received from the IRS, should mail it to the address shown on the notice.
- If taxpayers used other IRS forms or schedules to make changes, they should attach those schedules to their Form 1040X.
- Taxpayers should not amend a tax return to correct math errors; the IRS will make the math corrections for the taxpayers.
- Taxpayers should also not amend if they forgot to include a required form or schedule. The IRS will mail a request about the missing item.
- Anyone amending tax returns for more than one year will need a separate 1040X for each tax year. They should mail each tax year’s Form 1040X in separate envelopes.
- Taxpayers should wait for the refund from their original tax return before filing an amended return. They can cash the refund check from the original return before receiving any additional refund.
- Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
- Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax – usually April 15 – whichever is later.
- Taxpayers can track the status of an amended return three weeks after mailing using “Where’s My Amended Return?” Processing can take up to 16 weeks.
IRS offers guidance on recent 529 education savings plan changes
WASHINGTON — The Internal Revenue Service and Department of the Treasury today announced their intent to issue regulations on three recent tax law changes affecting popular 529 education savings plans.
Notice 2018-58, addresses a change included in the 2015 Protecting Americans From Tax Hikes (PATH) Act, and two changes included in the 2017 Tax Cuts and Jobs Act (TCJA). Taxpayers, beneficiaries, and administrators of 529 and Achieving a Better Life Experience (ABLE) programs can rely on the rules described in this notice until the Treasury Department and IRS issue regulations clarifying these three changes.
The PATH Act change added a special rule for a beneficiary of a 529 plan, usually a student, who receives a refund of tuition or other qualified education expenses. This can occur when a student drops a class mid-semester. If the beneficiary recontributes the refund to any of his or her 529 plans within 60 days, the refund is tax-free.
The Treasury Department and the IRS intend to issue future regulations simplifying the tax treatment of these transactions. Re-contributions would not count against the plan’s contribution limit.
One of the TCJA changes allows distributions from 529 plans to be used to pay up to a total of $10,000 of tuition per beneficiary (regardless of the number of contributing plans) each year at an elementary or secondary (k-12) public, private or religious school of the beneficiary’s choosing.
Rollovers to an ABLE account
The second TCJA change allows funds to be rolled over from a designated beneficiary’s 529 plan to an ABLE account for the same beneficiary or a family member. ABLE accounts are tax-favored accounts for certain people who become disabled before age 26, designed to enable these people and their families to save and pay for disability-related expenses.
The regulations would provide that rollovers from 529 plans, together with any contributions made to the designated beneficiary’s ABLE account (other than certain permitted contributions of the designated beneficiary’s compensation) cannot exceed the annual ABLE contribution limit — $15,000 for 2018. For more information about other TCJA provisions, visit IRS.gov/taxreform.
Everyone should know how the IRS contacts taxpayers. This will help people avoid becoming a victim of scammers who pretend to be from the IRS with a goal of stealing personal information.
Here are some facts about how the IRS communicates with taxpayers:
- The IRS doesn’t normally initiate contact with taxpayers by email.
- The agency does not send text messages or contact people through social media.
- When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. Fraudsters will send fake documents through the mail, and in some cases will claim they already notified a taxpayer by U.S. mail.
- Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, the IRS sends a letter or written notice to a taxpayer in advance, but not always.
- IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit.
- Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice.
- IRS revenue officers and agents routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.
- When visited by someone from the IRS, the taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential.
Motivator excursions, meetings and different kinds of worker travel are basic courses for businesses to prepare, compensate and inspire their best representatives and chiefs. In any case, off-site work occasions can likewise be a legitimate land mine. From wounds to ambushes to liquor related episodes, your independent venture needs laborers’ comp scope to be set up for the different issues that can surface on work-supported treks—and possibly prompt exorbitant claims.
Here are probably the most widely recognized significant issues that jump up amid worker excursions and gatherings, alongside genuine circumstances:
In 2006, Danny Douglas, a PC bolster examiner for Advertisement Astra in Overland Stop, Kansas, went to an organization supported “group building” occasion at an indoor go-truck hustling office. Representatives were given a short get up and go discuss an up and coming item and were then isolated into groups and told they could win prizes by going the quickest. While adjusting a bend at 25 miles for every hour, Douglas was tossed from his go-truck and arrived on his side and endured a broke rib and lung damage that required prompt medical procedure.
His organization at first declined to pay laborers pay since it guaranteed the movement was willful; a judge later decided that the organization must pay specialists’ comp, as indicated by SafetyNewsAlert.com. The case in the long run achieved the Kansas Incomparable Court, which concurred that it seemed likely that Douglas was required to either be working or at the go-truck office, however said the state’s specialist remuneration board expected to reconsider the case utilizing an alternate test.
A previous Microsoft director in the Assembled Kingdom, Simon Negus, was fired for “untrustworthiness” after he was professedly observed kissing another Microsoft worker at an Atlanta meeting in 2009. The organization rejected Negus the next September and sued him for $126,000—some portion of his 2008 marking reward—and for another piece of his vacation pay, as indicated by Bloomberg. Negus later counter-sued. For another situation of asserted offense, no less than one programming designer was laid off from his manager in 2013 after a tech blogger caught him and another engineer making jokes sexual in nature about “dongles” at PyCon, a Python designer meeting in Santa Clause Clara, California, as indicated by ArsTechnica.com.
Sickness and sustenance harming.
Legionnaire’s sickness is maybe the most scandalous instance of a noteworthy ailment episode amid a tradition (of the American Army in 1976). Be that as it may, representatives becoming ill amid a business related occasion isn’t so bizarre, truly. There’s dependably the hazard that representatives they will get sustenance harming or get an infectious ailment when going for work. Prior this year, indeed, in excess of 100 participants of—amusingly—a nourishment security summit in Baltimore, Maryland clearly got tired after one of the dinners, as per NBC News. Around 12 hours after the dinner, numerous visitors revealed queasiness, the runs and different side effects regularly connected with nourishment borne ailments. No participants were hospitalized and nourishment security overseers couldn’t promptly find the reason for the disease. Episodes, for example, this are simply one more motivation behind why organizations ought to consider a laborers’ pay protection design.
At the point when outside the workplace—notwithstanding when actually on the clock—in some cases representatives can get stuck in an unfortunate situation. A judge in Guadalupe Area, Texas, Mike Wiggins, was captured on medicate ownership when going to a gathering in 2012. A laborer at the inn where the meeting was occurring noticed pot amid the gathering and followed it back to Wiggins’ room, as per KWTX.com.
Following stages: Would you say you are hoping to deal with your representatives all the more viably however don’t have room schedule-wise to stay aware of the most recent research and patterns in ability administration? We have you secured with the week by week Little Business Ahead Bulletin. Join today and begin accepting the week after week pamphlet stuffed with the most recent devices and assets to enable you to maintain an effective business.
Veterans owed refunds for overpayments attributable to disability severance payments should file amended returns to claim tax refunds
WASHINGTON — The Internal Revenue Service today is advising certain veterans who received disability severance payments after January 17, 1991, and included that payment as income that they should file Form 1040X, Amended U.S. Individual Income Tax Return, to claim a credit or refund of the overpayment attributable to the disability severance payment.
This is a result of the Combat-Injured Veterans Tax Fairness Act passed in 2016.
Most veterans who received a one-time lump-sum disability severance payment when they separated from their military service will receive a letter from the Department of Defense with information explaining how to claim tax refunds they are entitled to; the letters include an explanation of a simplified method for making the claim. The IRS has worked closely with the DoD to produce these letters, explaining how veterans should claim the related tax refunds.
Statute of Limitations
The amount of time for claiming these tax refunds is limited. However, the law grants veterans an alternative timeframe – one year from the date of the letter from DoD. Veterans making these claims have the normal limitations period for claiming a refund or one year from the date of their letter from the DoD, whichever expires later. As taxpayers can usually only claim tax refunds within 3 years from the due date of the return, this alternative time frame is especially important since some of the claims may be for refunds of taxes paid as far back as 1991.
Amount to Claim
Veterans can submit a claim based on the actual amount of their disability severance payment by completing Form 1040X, carefully following the instructions. However, there is a simplified method. Veterans can choose instead to claim a standard refund amount based on the calendar year (an individual’s tax year) in which they received the severance payment. Write “Disability Severance Payment” on line 15 of Form 1040X and enter on lines 15 and 22 the standard refund amount listed below that applies:
- $1,750 for tax years 1991 – 2005
- $2,400 for tax years 2006 – 2010
- $3,200 for tax years 2011 – 2016
Claiming the standard refund amount is the easiest way for veterans to claim a refund, because they do not need to access the original tax return from the year of their lump-sum disability severance payment.
All veterans claiming refunds for overpayments attributable to their lump-sum disability severance payments should write either “Veteran Disability Severance” or “St. Clair Claim” across the top of the front page of the Form 1040X that they file. Because all amended returns are filed on paper, veterans should mail their completed Form 1040X, with a copy of the DoD letter, to:
Internal Revenue Service
333 W. Pershing Street, Stop 6503, P5
Kansas City, MO 64108
Veterans eligible for a refund who did not receive a letter from DoD may still file Form 1040X to claim a refund but must include both of the following to verify the disability severance payment:
- A copy of documentation showing the exact amount of and reason for the disability severance payment, such as a letter from the Defense Finance and Accounting Services (DFAS) explaining the severance payment at the time of the payment or a Form DD-214, and
- A copy of either the VA determination letter confirming the veteran’s disability or a determination that the veteran’s injury or sickness was either incurred as a direct result of armed conflict, while in extra-hazardous service, or in simulated war exercises, or was caused by an instrumentality of war.
Veterans who did not receive the DoD letter and who do not have the required documentation showing the exact amount of and reason for their disability severance payment will need to obtain the necessary proof by contacting the Defense Finance and Accounting Services (DFAS).