Sunday, September 29, 2019

Here’s what happens after a disaster that leads to relief for affected taxpayers

Disasters can strike without warning, causing damage and destruction. Before the IRS can authorize tax relief, the president must declare a federal disaster. Here's a rundown of tax-related things that usually happen after a disaster:

The IRS gives taxpayers more time to file and pay.

Taxpayers located in a disaster area may have extra time to file returns and pay taxes. The IRS's Twitter account and disaster assistance page provide disaster updates and links to resources. Taxpayers can also call the IRS's disaster line at 866-532-5227.

Taxpayers can qualify for a casualty loss tax deduction.

People who have damaged or lost property due to a federally declared disaster may qualify to claim a casualty loss deduction. They can claim this on their current or prior-year tax return. This may result in a larger refund. The IRS will quickly process these returns.  

People can file for a disaster loan or grant.

The Small Business Administration offers financial help to business owners, homeowners and renters. This help is for those in a federally declared disaster area. To qualify, a taxpayer must have filed all required tax returns.

Taxpayers might need a tax return transcript.

People affected by a disaster can get copies or transcripts of past tax returns for free by submitting one of two forms. These are Form 4506, Request for Copy of Tax Return, and Form 4506-T, Request for Transcript of Tax Return. The taxpayer should state on the form the request is related to a disaster. They should also list the state and type of event. This helps speed up the process.

People should submit a change of address.

After a disaster, people might need to temporarily relocate. Those who move should notify the IRS know about their new address by submitting Form 8822, Change of Address (PDF).
The IRS encourages affected taxpayers to review all federal disaster relief by visiting disasterassistance.gov.

IRS offers videos on wide range of tax topics in American Sign Language

People around the world are celebrating today as International Day of Sign Languages. Taxpayers who sign in American Sign Language can visit YouTube anytime to see IRS ASL videos. The IRS ASL Channel is one of three on YouTube. Each channel offers info about a wide range of tax topics.
All the videos on the ASL channel are presented by someone signing in ASL. Each video also includes audio and closed-captioning. The videos appear in several playlists sorted by topic. One of these playlists specifically highlights the services the IRS provides for people who are deaf or hard of hearing. There’s a series of videos in this playlist for ASL interpreters who need to learn appropriate tax terminology in ASL.
  • Tax Tips – features videos on general tax topics to help people understand their tax responsibilities.
  • ID Theft – includes videos about ID theft that help people recognize scams and know what to do if they think their identity was compromised or stolen.
  • Small Business – videos to help business owners find out what tax credit, deduction and law changes may affect their business.
  • IRS Tax Pros – playlist featuring videos for and about tax preparers.

The filing deadline for extension filers is almost here

It’s almost here…the filing deadline for taxpayers who requested an extension to file their 2018 tax return. This year’s deadline is Tuesday, October 15.
Even though time before the extension deadline is dwindling, there’s still time for taxpayers to file a complete and accurate return. Taxpayers should remember they don’t have to wait until October 15 to file. They can file whenever they are ready.
Taxpayers who did not request an extension and have yet to file a 2018 tax return can generally avoid additional penalties and interest by filing the return as soon as possible and paying the amount owed.
Here are a few tips and reminders for taxpayers who have not yet filed:

Use IRS Free File or other electronic filing options.

Taxpayers can file their tax return electronically for free through IRS Free File. The program is available on IRS.gov through Oct. 15. Filing electronically is easy, safe and the most accurate way to file taxes. Other electronic filing options include using a free tax return preparation sitecommercial software or an authorized e-file provider.

Taxpayers getting a refund should use Direct Deposit.

The fastest way for taxpayers to get their refund is to file electronically and use direct deposit.

There are online payment options.

Taxpayers with extensions should file their tax returns by Oct. 15 and, if they owe, pay as much as possible to reduce interest and penalties. IRS Direct Pay allows individuals to securely pay from their checking or savings accounts. These taxpayers can consider a payment plan, which allows them to pay over time. For other payment options, taxpayers can visit the Paying Your Taxes page on IRS.gov.

There’s more time for the military.

Military members and those serving in a combat zone generally get more time to file. These taxpayers usually have until at least 180 days after they leave the combat zone to file returns and pay any taxes due.

There’s also more time in certain disaster areas.

People who have a valid extension and are in – or affected by – a federally-declared disaster may be allowed more time to file.

Keep a copy of tax return.

Taxpayers should keep a copy of their tax return and all supporting documents for at least three years.

Taxpayers can view their account information.

Individual taxpayers can go to IRS.gov/account and login to:
  • View their balance.
  • See their payment history.
  • Pay their taxes.
  • Access tax records through Get Transcript.
Before setting up an account, taxpayers should review Secure Access: How to Register for Certain Online Self-Help Tools to make sure they have the info needed to verify their identities.

Free webinars cover foreign tax credit and taxes for people working abroad

IRS offers webinars to help small businesses and other employers answer their tax related questions. Taxpayers can visit IRS.gov anytime for a complete list of these webinars.
Below are the details about two of the agency’s upcoming webinars. These free one-hour webinars help taxpayers understand tax obligations for U.S. citizens working abroad and the Foreign Tax Credit:  
An Overview of the Foreign Tax Credit
Date: October 17, 2019, 2 p.m. ET
Click here to register. 
This webinar will cover:
  • The effect of residency status on U.S. taxation.
  • Residency status under U.S. immigration law versus U.S. tax law.
  • How to determine an individual's residency status for U.S. tax purposes.
  • Special tax rules that apply to dual-status aliens.
Tax Obligations of U.S. Individuals Living and Working Abroad
Date: October 17, 2019, 11 a.m. ET
Click here to register. 
This webinar will cover:
  • U.S. income tax obligations of U.S. citizens and resident aliens abroad.
  • Requirements for claiming the foreign earned income exclusion.
  • Employment tax obligations of U.S. citizens and resident aliens abroad.
Here are some additional details about both webinars:
  • Closed captioning is offered.
  • All participants who qualify will receive a certificate of completion. Tax pros can earn up to two Continuing Education Credits in the federal tax category.
  • People can also email questions to cl.sl.web.conference.team@irs.gov.
  • Attendees should log on at least 20 minutes before the start of the webinar. This will allow time for any system checks and trouble-shooting.

Taxpayers should beware of property lien scam

With scam artists hard at work all year, taxpayers should watch for new versions of tax-related scams. One such scam involves fake property liens. It threatens taxpayers with a tax bill from a fictional government agency.
Here are some details about the property lien scam that will help taxpayers recognize it:
  • This scheme involves a letter threatening an IRS lien or levy.
  • The scammer mails the letter to a taxpayer.
  • The lien or levy is based on bogus overdue taxes owed to a non-existent agency.
  • The non-existent agencies might have a legitimate-sounding name like the “Bureau of Tax Enforcement.” There is no such agency.
  • This scam may also reference the IRS to confuse potential victims into thinking the letter is from a real agency.
For anyone who doesn’t owe taxes and has no reason to think they do should:
Taxpayers who do owe tax or think they might owe should:
  • Review their tax account information and payment options at IRS.gov. Reviewing tax account information online will show the taxpayer if they indeed owe the IRS and how much. This is the fastest way to get this information.
  • Call the IRS at 800-829-1040 to confirm the notice if they’re still not sure they owe.

Monday, September 2, 2019

Employers who provide leave might qualify to claim valuable credit

Employers who provide paid family and medical leave to their employees might qualify for a credit that can reduce the taxes they owe. It's called the employer credit for family and medical leave.
Here are some facts about the credit to help employers find out if they might be able to claim it.

To be eligible, an employer must:

  • Have a written policy that meets several requirements (PDF).
  • Provide:
    • At least two weeks of paid family and medical leave to full-time employees.
    • A prorated amount of paid leave for part-time employees.
    • Pay for leave that's at least 50 percent of the wages normally paid to employees.

Applicable dates:

It's available for wages paid in taxable years beginning after December 31, 2017, and before January 1, 2020.

The amount of the credit:

The credit is generally equal to 12.5 to 25 percent of paid family and medical leave for qualifying employees. The percentage is based on how much employers pay each employee for family and medical leave.

Qualifying leave:

The leave can be for any or all the reasons specified in the Family and Medical Leave Act:
  • Birth of an employee's child.
  • Care for the child.
  • Placement of a child with the employee for adoption or foster care.
  • To care for the employee's spouse, child, or parent who has a serious health condition.
  • A serious health condition that makes the employee unable to perform the functions of their job.
  • Any qualifying emergency due to an employee's spouse, child, or parent being on covered active duty in the Armed Forces. This includes the taxpayer being notified of an impending order to covered active duty.
  • To care for a service member who is the employee's spouse, child, parent, or next of kin.

Claiming the credit:

To claim the credit, employers will file two forms with their tax return. These are Form 8994, Credit for Paid Family and Medical Leave and Form 3800, General Business Credit.

These tax tips can help new business owners find success

Starting a business can be very rewarding. It can also be a little overwhelming. From business plans to market strategies, and even tax responsibilities…there are many things to consider. Here’s what new business owners can do to help get off to a good start.
Taxpayers interested in starting a business can find information for some industries on the Industries/Professions Tax Centers webpage. Each state has additional requirements for starting and operating a business. Prospective business owners should visit their state's website for info about state requirements.

Tax pros: Follow the “Security Six” steps to help protect taxpayer data

Tax professionals should review security steps to make sure they are fully protecting sensitive taxpayer data. All tax pros should give their data safeguards a thorough review. Part of this review is following the “Security Six” protections.
Here is more info about these basic protections that everyone – especially tax professionals handling sensitive data – should use:
  1. Anti-virus software
    • This software scans computer files or memory for certain patterns that may indicate there’s malicious software – also called malware – on the device.
    • Anti-virus vendors find new issues and update malware daily. This is why it’s important for users to install the latest updates of the software.
       
  2. Firewalls
    • Firewalls provide protection against outside attackers. The firewall shields computers and networks from malicious or unnecessary web traffic. This helps prevents malicious software from accessing the user’s system.
       
  3. Two-factor authentication
    • Two-factor authentication adds an extra layer of protection beyond a password.
    • The returning user enters credentials like a username and password. Then, there’s another step, such as entering a security code.
       
  4. Backup software or services
    • Users should routinely back up critical files on their computers and hard drives to external sources.
       
  5. Drive encryption
    • Because tax professionals keep sensitive client data on their computers, users should consider drive encryption software.
    • Drive encryption is also knowns as disk encryption. It transforms data on the computer into unreadable files. This means only people who are authorized to access the data can do so.
       
  6. Virtual private network
    • Many tax firms’ employees must occasionally connect to unknown networks or work from home. So, the office should establish an encrypted virtual private network. This allows for a more secure connection.
    • A VPN provides a secure, encrypted tunnel to transmit data between a remote user over the internet and the company network.

Taxpayers have a few more days to file Form 2290 in 2019

Taxpayers who must file Form 2290, Heavy Highway Vehicle Use Tax Return, have more time to do so this year. That said, the deadline will be here before they know it. Taxpayers must file their 2019 Form 2290 by Tuesday, September 3. Normally, the due date is August 31. However, this year the weekend and a federal holiday extended the 2019 date.
All the information needed to file is on the Trucking Tax Center. Taxpayers can use the friendly URL IRS.gov/trucker.
Anyone who has registered or is required to register a heavy highway motor vehicle must file Form 2290. While some taxpayers who file this form are required to do so electronically, all 2290 filers can file online. These taxpayers can use their credit or debit card to pay the Heavy Highway Vehicle Use Tax.
Filing Form 2290 electronically helps speed up the return of an IRS-stamped Schedule 1 to the taxpayer as proof of payment. Taxpayers need Schedule 1 for state registration.
Taxpayers with questions can call the IRS Form 2290 Help Line. It is available between 8 a.m. and 6 p.m. EST:
Taxpayers who want help in person must call 844-545-5640 to schedule an appointment at an IRS office.

Here’s what tax professionals should know about creating a data security plan

Tax pros must create a written security plan to protect their clients’ data. In fact, the law requires them to make this plan. 
Creating a data security plan is one part of the new Taxes-Security-Together Checklist. The IRS and its Security Summit partners created this checklist. It helps tax professionals protect sensitive data in their offices and on their computers.
Many tax preparers may not realize they are required under federal law to have a data security plan. Each plan should be tailored for each specific office. When creating it, the tax professional should take several factors into consideration. This includes things like the company’s size, the nature of its activities, and the sensitivity of its customer information.

Creating a plan

Tax professionals should make sure to do these things when writing and following their data security plans:
  • Include the name of all information security program managers.
  • Identify all risks to customer information.
  • Evaluate risks and current safety measures.
  • Design a program to protect data.
  • Put the data protection program in place.
  • Regularly monitor and test the program.

Selecting a service provider

Companies should have a written contract with their service provider. The provider must:
  • Maintain appropriate safety measures.
  • Oversee the handling of customer information review.
  • Revise the security program as needed.

Monday, July 29, 2019

Taxpayers who need to get a tax transcript should first visit IRS.gov

Taxpayers might need a tax transcript for many reasons, like applying for a mortgage or a student loan. The Let Us Help Youpage on IRS.gov will help taxpayers understand tax transcripts. This page has links to information that will help taxpayers learn about the different types of transcripts and the process of how to get one.

Order a tax transcript

  • From here, taxpayers can visit the pages where they can request a transcript, either online or by mail. Taxpayers can get different Form 1040-series transcript types from this page. 

Transcript types

  • Depending on why a taxpayer needs a transcript will determine which type they need. This page lists detailed information about what is included in the five different types of transcripts.

Frequently asked questions

  • Taxpayers can visit the Q&A page for specific questions about the Get Transcript Online service. They'll find FAQs about getting a transcript both online and by mail. 
However, taxpayers might not need a full transcript. If they only need to find out how much they owe or verify payments they made within the last 18 months, they can visit the view your tax account page.

Good tax planning includes good recordkeeping

Tax planning should happen all year long, not just when someone is filing their tax return.  An important part of tax planning is recordkeeping. Well-organized records make it easier for a taxpayer to prepare their tax return. It can also help provide answers if a taxpayer’s return is selected for examination or if the taxpayer receives an IRS notice.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.
Here are some suggestions to help taxpayers keep good records:
  • Taxpayers should develop a system that keeps all their important info together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.
     
  • Throughout the year, they should add tax records to their files as they receive them. Having records readily at hand makes preparing a tax return easier.
     
  • It may also help them discover potentially overlooked deductions or credits. Taxpayers should notify the IRS if their address changes. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
     
  • Records that taxpayers should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.
     
  • Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
     
  • In general, the IRS suggests that taxpayers keep records for three years from the date they filed the return.
     
  • For business taxpayers, there's no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. The records should confirm income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Tax planning includes determining filing status

Single or married? Kids or no kids? These are just a couple of questions that will help someone determine their tax filing status. Taxpayers usually only think about their filing status when filing their returns. However, this is something to think about all year, especially if it changes.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.

Here are some things about filing status that taxpayers should consider now:

A taxpayer’s filing status is used to determine their:

  • Filing requirements
  • Standard deduction
  • Eligibility for certain credits
  • Correct amount of tax
If more than one filing status applies to someone, they can use the Interactive Tax Assistant to help them choose the one that will result in the lowest amount of tax.

Changes to family life may affect someone’s tax situation. These changes include:

  • Marriage
  • Divorce
  • Birth of a new baby
  • Adoption of a child
  • Death
Typically, a taxpayer’s status on December 31 applies to the entire year for tax purposes. For example, if someone gets married late in the year, for tax purposes they’re considered married for the entire year.
The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Year-round tax planning includes reviewing eligibility for credits and deductions

Tax credits and deductions can mean more money in a taxpayer’s pocket. Most people only think about this when they file their tax return. However, thinking about it now can help make filing easier next year.
This tip is one in a series about tax planning. These tips focus on steps taxpayers can take now to help them down the road.
Taxpayers should be prepared to claim tax credits and deductions. So, here are a few facts about credits and deductions that can help a taxpayer with their year-round tax planning:
  • Taxable income is what’s left over after someone subtracts any eligible deductions from their adjusted gross income. This includes the standard deduction. In fact, most individual taxpayers take the standard deduction. On the other hand, some taxpayers may choose to itemize their deductions because it could lower their AGI even more.
     
  • The Tax Cuts and Jobs Act made changes to itemized deductions. Many individuals who formerly itemized may find it more beneficial to take the standard deduction.
     
  • As a general rule, if a taxpayer’s itemized deductions are larger than their standard deduction, they should itemize. Also, in some cases, taxpayers may even be required to itemize.
     
  • Taxpayers can use the Interactive Tax Assistant to see what expenses they may be able to itemize.
     
  • Taxpayers can subtract tax credits from the total amount of tax they owe. To claim a credit, taxpayers should keep records that show their eligibility for it.
     
  • Here are a few examples of taxpayers who can benefit from certain credits:
  • Properly claiming these tax credits can reduce taxes owed and boost refunds. Taxpayers can check now see if they qualify to claim it next year on their tax return. Some tax credits, like the EITC, are even refundable, which means a taxpayer can get money refunded to them even if they don’t owe any taxes.
The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning. In addition to visiting IRS.gov, they can download the IRS2Go app, watch IRS YouTube videos, and follow the IRS on Twitter and Instagram.

Here’s the 411 on who can deduct car expenses on their tax returns

Taxpayers who have deducted the business use of their car on past tax returns should review whether or not they can still claim this deduction. Some taxpayers can. Some cannot.
Here’s a breakdown of which taxpayers can claim this deduction when they file their tax returns.

Business owners and self-employed individuals

Individuals who own a business or are self-employed and use their vehicle for business may deduct car expenses on their tax return. If a taxpayer uses the car for both business and personal purposes, the expenses must be split. The deduction is based on the portion of mileage used for business.
There are two methods for figuring car expenses:
  1. Using actual expenses
    • These include:
      • Depreciation
      • Lease payments
      • Gas and oil
      • Tires
      • Repairs and tune-ups
      • Insurance
      • Registration fees
         
  2. Using the standard mileage rate
    • Taxpayers who want to use the standard mileage rate for a car they own must choose to use this method in the first year the car is available for use in their business.
    • Taxpayers who want to use the standard mileage rate for a car they lease must use it for the entire lease period. 
    • The standard mileage rate for 2018 is 54.5 cents per mile. For 2019, it‘s 58 cents.
There are recordkeeping requirements for both methods.

Employees

Employees who use their car for work can no longer take an employee business expense deduction as part of their miscellaneous itemized deductions reported on Schedule A.  Employees can’t deduct this cost even if their employer doesn’t reimburse the employee for using their own car. This is for tax years after December 2017. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2% floor.  
However, certain taxpayers may still deduct unreimbursed employee travel expenses, this includes Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials.

Sunday, June 30, 2019

Taxpayers who still haven’t filed their 2018 tax return should do so ASAP

While the federal income tax-filing deadline has passed for most people, some taxpayers did not file an extension and still have not filed their tax returns. These taxpayers should file ASAP. They should do so even if they can’t pay to avoid potential penalties and interest, which can continue to add up quickly.

Here are some things taxpayers in this situation should know:

  • Penalties and interest are only added on unfiled returns if the taxpayer did not pay taxes by the April deadline. Taxpayers who did not file and owe tax should file a tax return and pay as much as they are able to now. If they cannot pay the full amount, they should learn about payment options. These can reduce possible penalties and interest added to the amount the taxpayer owes.
     
  • IRS Free File is available on IRS.gov through October 15.
     
  • Some taxpayers may have extra time to file their tax returns and pay any taxes due. These include:
  • If a return is filed more than 60 days after the April due date, the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. Therefore, if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.
     
  • The IRS provided penalty relief for certain taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
     
  • Other taxpayers filing after the deadline may also qualify for penalty relief. Those who are charged a penalty may contact the IRS and explain why they were unable to file and pay by the due date.
     
  • Taxpayers who have a history of filing and paying on time often qualify for first-time penalty abatement.
     
  • There is no penalty for filing late if a refund is due.