Abbo Tax CPA

IRS Warns of New Identity Theft Text Scam Related to COVID Stimulus Payments Ever since Congress authorized the U.S. Treasury to send Economic Impact Payments (EICs, also called stimulus payments) to millions of Americans during 2020, scammers have been seeking ways to use the program to steal EIPs and personal information. A new scam involves using text messages and a fake website to steal taxpayers' identities. Americans targeted in this scam receive a text message stating ...that they have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required The message includes a link to a fake website that looks like the official IRS Get My Payment portal for EIPs. (A link to the legitimate IRS portal is included below.) Instead of going only to the IRS through an encrypted connection, any personal data entered into the bogus website (such as Social Security and bank account numbers) goes directly to the scammers. If you receive any text message similar to the one quoted above, it is a scam DO NOT RESPOND. The IRS does not send unsolicited text or email messages of this sort. To help the IRS and federal law enforcement track and close down this scam, you can take a screenshot of the text message and email it to [email protected]. Include the phone number where you received the text, the number that it came from, and the date and time of the incident (including your time zone) in your email message. In addition, federal agencies are reminding all Americans that the IRS does not and never has accepted gift cards as a form of payment for any tax-related purpose. Anyone claiming to represent the IRS who requests payment in gift cards is a scammer. Hang up immediately to stay safe and protect your personal data. Official IRS Get My Payment Portal for EIPs: https://www.irs.gov/coronavirus/get-my-payment

2020 Charitable Contributions Deduction Did You Know? Ordinarily, only taxpayers who itemize deductions may deduct charitable contributions on their federal tax returns. However, the CARES Act allows many people who do not itemize to claim a deduction for 2020 cash contributions to IRS-approved charities. Tax deductions lower a person's tax bill by reducing taxable income. In general, individuals and couples who do not itemize deductions may deduct up to $300 for cash contr...ibutions made to qualifying charitable organizations in 2020. Qualifying organizations include many nonprofits dedicated to educational, religious, literary, and disaster and hunger relief activities. The IRS provides an online search tool (link below) to help taxpayers determine whether a particular charity qualifies to receive tax-deductible donations. As a reminder for those who do itemize deductions, the CARES Act also sets the 2020 cash contributions itemized deduction limit at 100% of adjusted gross income (AGI) for most taxpayers, a temporary increase from the usual limit of 60% of AGI. Qualifying 2020 cash contributions in excess of the limit may be carried over as deductions for tax year 2021. A tax professional can help you determine whether your contributions qualify for these special rules, and how to claim your deduction if so. IRS Charitable Organizations Search Tool: https://www.irs.gov/charitie/tax-exempt-organization-search

Giving Tuesday and Charitable Donations - Did You Know? Giving Tuesday is an annual event that highlights charitable giving after Thanksgiving. If you are considering charitable donations, you may be able to donate to a Donor-Advised Fund (DAF) every two or three years instead of every year. This may qualify you to receive tax benefits now, allow the amount to grow tax-free, and the decision on which qualified charity to fund can be made later.... If you are 70.5 years or older, you may also be able to make a qualified charitable distribution (QCD) directly from your IRA this year. QCDs may allow the donation to be deducted from your income. A tax advisor can help you structure your charitable giving. The IRS has released a tool to make it easier to get information about qualified charitable organizations. The Exempt Organizations Select Check tool can be found at: https://www.irs.gov/charitie/tax-exempt-organization-search.

Paying Estimated Tax to Avoid Penalties Did You Know? With more and more people deriving income from a variety of sources, including side jobs, self-employment and gig economy work, the IRS has reported a substantial increase in the number of Americans who underpay federal income tax during the year. Underpayment can lead to an unpleasant spring tax surprise, including substantial penalties and interest charges. If a significant portion of your income is not subject to pa...ycheck withholding, you may need to make quarterly estimated tax payments to avoid incurring an Estimated Tax Penalty for 2020. Common income types that may necessitate making estimated tax payments include: - Business income, which includes rental income, as well as income from self-employment and gig economy work (working for a rideshare service, mowing lawns, etc.) - Royalties and grants, including grants in support of artistic or educational endeavors - Interest, dividend and alimony payments - Unemployment Insurance (UI) and Social Security benefits It is critical for those who have received UI benefits in 2020 to learn whether they must make estimated tax payments before the year ends. Many state unemployment agencies have not withheld taxes from the federal $600-per-week federal UI benefit that was paid under the CARES Act from late March through July, or from the temporary $300 weekly federal UI payment recently implemented by Executive Order. Therefore, even those who had tax withheld from their UI benefits may not have paid enough in federal taxes to avoid penalties. The IRS encourages Americans who have received any form of non-employee income in 2020 to do a midyear tax checkup, and begin making estimated tax payments immediately if necessary. The third-quarter estimated tax payment deadline was September 15, 2020, but those who missed the deadline can minimize penalties by making a payment as soon as possible. Fourth-quarter estimated tax payments are due January 15, 2021, although taxpayers may generally skip the fourth-quarter payment if they file a 2020 return and pay all tax due by February 1, 2021. In most cases, taxpayers will avoid 2020 tax penalties if their paycheck withholding and/or estimated tax payments for the year add up to at least 90% of their 2020 tax, or 100% of their 2019 tax, whichever is lower. A tax professional can help you determine whether you need to make estimated tax payments this year, along with when and how much to pay. IRS online payment portal: https://www.irs.gov/payments

Renewing ITINs - Did You Know? Individual Taxpayer Identification Numbers are used for taxpayers who are required for U.S. tax purposes to have a U.S. taxpayer identification number but do not qualify to get a social security number. If you use an ITIN, you should check if it expires this year. If it does, information about how to renew your ITIN can be found at: https://www.irs.gov/credits-deduct//how-do-i-renew-my-itin. Keeping your ITIN current helps avoid tax refund and... processing delays. Taxpayers who have not used their ITIN to file a federal return at least once in the last three years will see their number expire Dec. 31, 2020. ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of the year.