IRS | Nesteggg Accounting

New Tool for Non-Filers

The Treasury Department and the Internal Revenue Service launched a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.

IRS offering a tool for those who don’t normally file a return

The non-filer tool, developed in partnership between the IRS and the Free File Alliance, provides a free and easy option designed for people who don’t have a return filing obligation, including those with too little income to file.

How do I use the Non-Filers: Enter Payment Info tool?

For those who don’t normally file a tax return, the process is simple and only takes a few minutes to complete. First, visit IRS.gov, and look for “Non-Filers: Enter Payment Info Here.” Then provide basic information including Social Security number, name, address, and dependents. The IRS will use this information to confirm eligibility and calculate and send an Economic Impact Payment. Using the tool to get your payment will not result in any taxes being owed. Entering bank or financial account information will allow the IRS to deposit your payment directly in your account. Otherwise, your payment will be mailed to you.

Who should use the Non-Filers tool?

This new tool is designed for people who did not file a tax return for 2018 or 2019 and who don’t receive Social Security retirement, disability (SSDI), or survivor benefits or Railroad Retirement benefits. Others who should consider the Non-Filers tool as an option, include:

Lower income: Among those who could use Non-Filers: Enter Payment Info tool are those who haven’t filed a 2018 or 2019 return because they are under the normal income limits for filing a tax return. This may include single filers who made under $12,200 and married couples making less than $24,400 in 2019.

Veterans beneficiaries and Supplemental Security Income (SSI) recipients: The IRS continues to explore ways to see if Economic Impact Payments can be made automatically to SSI recipients and thosewho receive veterans 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.

Social Security, SSDI and Railroad Retirement beneficiaries with qualifying dependents: These groups will automatically receive $1,200 Economic Impact Payments. People in this group who have qualifying children under age 17 may use Non-Filers: Enter Payment Info to claim the $500 payment per child.

Students and others: If someone else claimed you on their tax return, you will not be eligible for the Economic Impact Payment or using the Non-Filer tool.

Tax Filing Payment Extension

Every year taxes are due by midnight April 15, unless that date falls out on a weekend or holiday, in which case it’s pushed back a number of days. Who doesn’t remember the lines to the mailbox at 11:58pm? If you can’t make the deadline though you can request an extension, which buys them an additional six months to submit their returns without facing a failure-to-file penalty. That extension request must be received by April 15th however.

But this year, because of the coronavirus response, filers can take an extra three months to pay the IRS any amounts due. That could be a lifeline for the millions of Americans who are currently scrambling to hang onto their paychecks, or those who have already taken a hit on their income. Your filing or extension however it still due by April 15th.

Using one of the IRS resources for preparing and filing your taxes can make it easier. You can go to IRS.gov and find easy ways to file online, find help, find a tax preparer and even links to software so that you can file on your own.

You Can Appeal

Did you know you have a right to question an IRS determination?

In fact, you, the taxpayer has a right to do so. This is one of ten rights laid out in the Taxpayer Bill of Rights. You also have the right for that challenge to be heard by the agency.

This means you have the right to:

Object to formal IRS actions or proposed actions and provide additional documentation in their response.
Expect the IRS to consider their timely objections and documentation promptly and fairly.
Receive a response if the IRS does not agree with them.

When a taxpayer does not agree with the IRS, they should not only know their rights, but also what to expect. Here are some situations a taxpayer might experience:

A math or clerical error on their tax return. If the IRS sends a notice about a math or clerical error on your tax return, you have 60 days to reply if you disagree. Taxpayers should provide copies of any records to help correct the error. You can also call the number on the notice or bill for help.
- If the IRS agrees. They will make the necessary adjustments to the account and send a corrected notice.
- If the IRS disagrees. The agency will send a notice proposing a tax adjustment. This is called a statutory notice of deficiency. It gives the taxpayer the right to challenge it in the United States Tax Court before paying it. You have 90 days from the date of the notice to respond. You have 150 days if the notice is addressed outside the U.S. The taxpayer information webpage provides more information about the United States Tax Court.
Audit. If a taxpayer submits documentation or objects during a return examination or audit, and the IRS disagrees with them, the agency will issue a statutory notice of deficiency. This notice will explain why the IRS is increasing their tax. The taxpayer may then petition the U.S. Tax Court before paying the tax.
Levy or Lien. If the IRS notifies a taxpayer of plans to levy their bank account or other property, the taxpayer can generally request a hearing before the Office of Appeals. In most cases, the taxpayer can also appeal the proposed or actual filing of a notice of federal tax lien.

Child Tax Credit by the numbers

Taxpayers may be able to claim the child tax credit if they have a qualifying child under the age of 17. Part of this credit can be refundable, so it may give a taxpayer a refund even if they don’t owe any tax.

The taxpayer’s qualifying child must have a Social Security number issued by the Social Security Administration before the due date of their tax return, including extensions.

A dependent who doesn’t have the required SSN may be eligible to be claimed for the credit for other dependents.

Here are some numbers to know before claiming the child tax credit or the credit for other dependents.

$2,000: The maximum amount of the child tax credit per qualifying child.
$1,400: The maximum amount of the child tax credit per qualifying child that can be refunded even if the taxpayer owes no tax.
$500: The maximum amount of the credit for other dependents for each qualifying dependent who isn’t eligible to be claimed for the child tax credit. This can include dependents over the age of 16 and dependents who don’t have the required SSN.
$400,000: The amount of adjusted gross income for taxpayers who are married taxpayers filing a joint return before the credit is reduced.
$200,000: The amount of adjusted gross income for all other taxpayers before the credit is reduced.

The Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents tool helps taxpayers determine if a dependent is eligible to be claimed for either of these credits.

More information:
Whom May I Claim as a Dependent?

Share this tip on social media — #IRSTaxTip: Free IRS programs help many taxpayers prepare and file returns. https://go.usa.gov/xdpUC

Use Multi-Factor Authentication the IRS Urges

Yes, it is the busy season for tax preparers. But that is all the more reason to be careful. The IRS and its Security Summit partners today called on tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products.

Protect yourself and your clients against Identity Theft

Already, nearly two dozen tax practitioner firms have reported data thefts to the IRS this year. Use of the multi-factor authentication feature is a free and easy way to protect clients and practitioners’ offices from data thefts. Tax software providers also offer free multi-factor authentication protections on their Do-It-Yourself products for taxpayers.

“The IRS, state tax agencies and the private-sector tax industry have worked together as the Security Summit to make sure the multi-factor authentication feature is available to practitioners and taxpayers alike,” said Kenneth Corbin, Commissioner of the IRS Wage and Investment division. “The multi-factor authentication feature is simple to set up and easy to use. Using it may just save you from the financial pain and frustration of identity theft.”

Multi-factor authentication means returning users must enter their username/password credentials plus another data point that only they know, such as a security code sent to their mobile phone. For example, thieves may steal passwords but will be unable to access the software accounts without the mobile phones to receive the security codes.

Multi-factor authentication protections are now commonly offered by financial institutions, email providers and social media platforms to protect online accounts. Users should always opt for multi-factor authentication when it is offered but especially with tax software products because of the sensitive data held in the software or online accounts.

The IRS reminded tax professionals to beware of phishing scams that are commonly used by thieves to gain control of their computers. Thieves may claim to be a potential client, a cloud storage provider, a tax software provider or even the IRS in their effort to trick tax professionals to download attachments or open links. These scams often have an urgent message, implying there are issues with the tax professionals’ accounts that need immediate attention.

The IRS also reminds tax professionals that they can track the number of returns filed with their Electronic Filing Identification Number (EFIN) on a weekly basis. This helps ensure EFINS are not being misused. Simply go to e-Services, access the EFIN application and select EFIN status to see a weekly total of returns filed using the EFIN. If there are excessive returns, contact the IRS immediately.

Taxpayers can learn more about identity theft and how to protect themselves at Identity Theft Central on IRS.gov.

Tax professionals can learn more about protecting data, signs of theft or reporting data thefts Identity Theft Information for Tax Professionals. Also, Publication 4557, Safeguarding Taxpayer Data, provides a comprehensive overview of steps to protect computer systems and client data.

New Rules for Tax Exempt Organizations

WASHINGTON – The Internal Revenue Service wants tax-exempt organizations to know about recent tax law changes that might affect them. The Taxpayer Certainty and Disaster Tax Relief Act, passed on Dec. 20, 2019, includes several provisions that may apply to tax-exempt organizations’ current and previous tax years.

Some changes to non-profits’ tax filings

Repeal of ‘parking lot tax’ on exempt employers
This legislation retroactively repealed the increase in unrelated business taxable income by amounts paid or incurred for certain fringe benefits for which a deduction is not allowed, most notably qualified transportation fringes such as employer-provided parking. Previously, Congress had enacted this provision as part of the Tax Cuts and Jobs Act, effective for amounts paid or incurred after Dec. 31, 2017.

Tax-exempt organizations that paid unrelated business income tax on expenses for qualified transportation fringe benefits, including employee parking, may claim a refund. To do so, they should file an amended Form 990-T within the time allowed for refunds. More information on this process can be found at IRS.gov.

Tax simplification for private foundations
The legislation reduced the 2% excise tax on net investment income of private foundations to 1.39%. At the same time, the legislation repealed the 1% special rate that applied if the private foundation met certain distribution requirements.

The changes are effective for taxable years beginning after Dec. 20, 2019.

Exclusion of certain government grants by exempt utility co-ops
Generally, a section 501(c)(12) organization must receive 85% or more of its income from members to maintain exemption.

Under changes enacted as part of the Tax Cuts and Jobs Act, government grants are usually considered income and would otherwise be treated as non-member income for telephone and electric cooperatives. Under prior law, government grants were generally not treated as income, but as contributions to capital.

The 2019 legislation provided that certain government grants made to tax-exempt 501(c)(12) telephone or electric cooperatives for purposes of disaster relief, or for utility facilities or services, are not considered when applying the 85%-member income test. Since these government grants are excluded from the income test, exempt telephone or electric co-ops may accept these grants without the grant impacting their tax-exemption.

This legislation is retroactive to taxable years beginning after 2017.

Due dates for backup withholding forms upon us

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

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

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

Information Returns
Visit IRS.gov for forms and information. 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

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.

Taxpayers Do Have Rights

Taxpayers rights add clarity to dealing with the IRS

You may never experience an audit or need to speak to the IRS about a tax return, but if you do, you do have rights. The Taxpayer Bill of Rights protects all taxpayers working with the IRS. In fact, they lay out the framework to make sure the IRS fairly and impartially carries out tax administration.

These rights are explained on IRS.gov and in Publication 1, Your Rights As A Taxpayer. They describe what taxpayers can expect if they need to work with the IRS on a personal tax matter, such as:
•Filing a return
•Paying taxes
•Responding to a letter
•Going through an audit
•Appealing an IRS decision

To help taxpayers understand their rights, here they are, along with links where people can go for more information.

1.The right to be informed
2.The right to quality service
3.The right to pay no more than the correct amount of tax
4.The right to challenge the IRS’s position and be heard
5.The right to appeal an IRS decision in an independent forum
6.The right to finality
7.The right to privacy
8.The right to confidentiality
9.The right to retain representation
10.The right to a fair and just tax system

Free File an Option

If you are a do-it-yourselfer when it comes to taxes the IRS has opened its IRS Free File – featuring brand-name online tax providers. The portal gives filers a number of options for filing their return online. And though the IRS will not begin reviewing returns until it officially opens the tax season on January 27th, most filers can begin their return now.

Taxpayers whose adjusted gross income was $69,000 or less in 2019 can do their taxes now. The Free File provider will submit the return once the IRS officially opens the 2020 tax filing season on January 27th.

This year the Free File partners are: 1040Now, Inc., ezTaxReturn.com (English and Spanish), FileYourTaxes.com, Free tax Returns.com, H&R Block, Intuit, On-Line Taxes, Inc., Tax ACT, TaxHawk, Inc. and TaxSlayer (English and Spanish).

Since its 2003 debut, Free File has served nearly 57 million taxpayers. Free File is a public-private partnership between the Internal Revenue Service and Free File Inc. (FFI), a consortium of tax software providers who make their Free File products available at IRS.gov/FreeFile.

IRS Year in Review

Even the IRS can’t help but take a look back at the previous year’s accomplishments. The report covers Fiscal Year 2019.

“Internal Revenue Service Progress Update/Fiscal Year 2019 – Putting Taxpayers First” (PDF) provides an overview of a variety of operations across taxpayer service, compliance and support areas. The 41-page document is built around the agency’s six strategic goals.

The report highlights the work of IRS employees supporting the nation’s tax system during the past year. This covers a variety of taxpayer service efforts, including development of a new Taxpayer Withholding Estimator, as well as operations support efforts on areas involving Information Technology modernization, Human Capital Office initiatives and others.

The report also focuses on Criminal Investigation results and efforts involving civil enforcement. Ongoing compliance areas, among them micro-captives, syndicated conservation easements and virtual currency, are also included in the publication.

The report also covers IRS implementation of new tax laws, ranging from steps to put in place provisions of the Tax Cuts and Jobs Act to ongoing work underway on the new Taxpayer First Act of 2019.