It is five weeks before taxpayers close the books on 2019. There is, of course, plenty of time to procrastinate before the April 15, 2020 filing deadline, but there are still steps to take in 2019 that can help lower the tax obligations or increase that return.
The Internal Revenue Service recently issued a new warning to tax professionals and taxpayers. In a new twist on an old trick, the fraudster threatens to cancel or suspend the victim's Social Security Number (SSN) if they do not pay their overdue tax bill. Initial contact is made via robocalls, then the victim calls the scammer or stays on the line. This is also known as "phishing."
Many embraced cryptocurrency because it had the potential to be a very lucrative investment. It also left few traces of financial activity. The Internal Revenue Service likes seeing records and accountability, so it is no surprise that it stepped in to levy taxes on cryptocurrency or virtual currency.
There may be a variety of reasons why people do not file taxes. It can be a matter where the Internal Revenue Service owes them a refund and they chose not to file, at least before the April 15 deadline.
The Foreign Account Tax Compliance Act (FATCA) became law in 2010. It signaled a significant shift in tax obligation for foreign companies and workers doing business in the United States. In essence, it required businesses, financial institutions, banks, and certain insurance companies around the world to report to the IRS that they had U.S. account holders. This was done to ensure that citizens with foreign accounts or investments still pay their tax obligations here in the United States. Those who the IRS deems are not paying the proper amount can face severe penalties.
The IRS has seemingly bent over backward this year in light of the significant overhaul to the tax code that applied for the first time. Now it announced that it is automatically waiving the estimated tax penalty to 400,000 eligible taxpayers who filed in 2019 (for 2018) but did not claim the for paying at least 80% of their final tax obligation. Down from the usual 90% without penalty, the agency first announced it would lower the penalty threshold to 85% on January 15 and then to 80% on March 22.
The Texas heat can be unbearable, but people of all ages look forward to the summer months. There are many fun things to do for families with young folks not in school, the cost of which can often qualify for tax credits or deductions. Parents of older kids also need to remember that those with part-time work or a full-time seasonal job can file a federal tax return to get back money if they are due to get a refund on money withheld on paychecks.
There’s that old saying that death and taxes are the two things that cannot be avoided. One reason it is still used is that it is true. Nevertheless, this should not prevent taxpayers from asking questions about their tax burden and how to best address notices from the government.
The recent tax season is behind us unless the taxpayer decided to file an extension. With a year under our belt with the new tax laws, it is now a perfect time to reevaluate the number of withholdings used and make any changes with employers as soon as possible. This will sidestep tax season surprises (good or bad), or it can ensure that the taxpayer gets a bigger refund next year.
This tax season has been one for the ages. The IRS seems to understand this better than most and has made several concessions to accommodate frustrated citizens.