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Social security recipients will automatically receive economic impact payments Social Security Recipients Will Automatically Receive Economic Impact Payments In a Treasury Department press release, the Treasury Department and the IRS have announced that social security beneficiaries will not need to file a simple return to receive an economic impact payment and that the payment will be automatic. ... Background. In a March 30, 2020 Information Release, the IRS provided details on the distribution of economic impact payments that are part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, PL 116-136, 3/27/2020). In the Information Release, the IRS stated that distribution of economic impact payments would begin in the next three weeks and would be distributed automatically, with no action required for most people. However, the IRS also stated that people who did not file a 2018 or 2019 federal income tax return, including individuals who typically are not required to file a return, would need to submit a simple" tax return to receive the stimulus payment. (IR 2020-61, 3/30/2020) See, IRS releases details on receiving coronavirus economic impact payments (04/01/2020). No need to file return. The Treasury Department’s press release states that social security beneficiaries who are not typically required to file tax returns will not need to file a simple tax return to receive an economic impact payment. Instead the payments will be automatically deposited into their bank accounts. According to the press release, the IRS will use the information on Form SSA-1099 to distribute $1,200 economic impact payments to Social Security recipients who did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits.

IRS warns of tax scams related to economic impact payments IRS issues warning about Coronavirus-related scams; watch out for schemes tied to economic impact payments IRS-Criminal Investigation warns of possible COVID-19 economic impact payment scams...Continue reading

IRS issues draft form for advance payment of employer credits due to COVID-19 Draft Form 7200, Advance Payment of Employer Credits Due to COVID-19 Draft instructions for Form 7200...Continue reading

Dear Client: We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19 (commonly referred to as the Coronavirus). Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout. In addition to the summary of IRS actions and earlier-enacted federal tax legislation that I previously sent you, I now want to update you on the tax-related provisions...Continue reading

Independent contractor versus employee In September of 2019, Governor Newsom signed Assembly Bill (AB) 5 into law. The new law addresses the employment status of workers when they are claimed to be an independent contractor and not an employee. 1. Q. What is AB 5 and what does it do? A. AB 5 is a bill the Governor signed into law in September 2019 addressing employment status when a hiring entity claims that the person it hired is an independent contractor. AB 5 requires ...Continue reading

IRS releases details on receiving coronavirus economic impact payments IR 2020-61, 3/30/2020 Economic impact payments: What you need to know In an Information Release, the Treasury Department and IRS have announced that distribution of economic impact payments, made as part of the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136, 3/27/2020, the Act), will begin in the next three weeks and will be distributed automatically, with no action required for most peop...Continue reading

Taxes: Payroll taxes are increasing. For 2011 and 2012, employees received a two-percentage-point reduction in payroll taxes. Payroll tax rates will now revert to their pre-2011 levels, which could mean approximately $120 billion less in take-home pay for all Americans. When the payroll tax cut first went into effect, the extra take-home pay seemed to help people reduce debt, increase savings, or purchase durable goods (items lasting three years or longer, such as cars and wa...shing machines). A payroll tax increase will likely have the opposite effect. Income taxes will remain the same for most Americans, and those rates are now permanent. Not only are income tax rates rising to 39.6% for individuals earning more than $400,000 a year ($450,000 for married couples), exemptions and deductions are being limited for individuals earning more than $250,000 a year ($300,000 for married couples). There is also the additional health insurance tax of 0.9% on individuals earning more than $250,000, which was part of the Affordable Care Act. In all, the economic drag from this tax increase will be less than what it would have been if the income threshold was set at $250,000, so I guess that’s a positive. The capital gains tax rate and qualified dividend tax rate for people earning more than $400,000 will increase from 15% to 20%. There is also the additional 3.8% health insurance tax on investment income applicable to everyone making more than $250,000another part of the Affordable Care Actso the actual tax rate is 23.8%. At least the qualified dividend tax rate wasn’t increased to the same level as the income tax rate. Taxing capital gains and dividends at different rates creates an incentive for businesses to favor share buybacks over paying dividends, which isn’t always in shareholders’ best interests. The AMT was fixed so it won’t capture millions more people in its clutches. It was also indexed for inflation so Congress will no longer need to adjust it annually. The expanded earned income tax credit, child tax credit, and college tax credit that were part of the 2009 stimulus were extended for five years. Many business tax breaks were also extended (for example, research tax credits). I found it encouraging that companies will get 50% bonus depreciation for 2013. In 2011, businesses could fully expense investment in capital equipment, which encouraged investment by lowering tax bills. In 2012, that was cut to 50%. The estate tax exemption level was kept at $5 million, but the tax rate was increased from 35% to 40%. The exemption amount was indexed to inflation. See more

Education Tax Credits: The IRS provided some key facts for the American Opportunity Credit and Lifetime Learning Credit that allow taxpayers to offset higher education costs. The American Opportunity Credit can be up to $2,500, with up to $1,000 refundable. It is available for the first four years of postsecondary education while the student is pursuing an undergraduate degree. The Lifetime Learning Credit can be up to $2,000 and includes all years of postsecondary education, as well as courses to acquire or improve job skills. This credit does not require a student to be pursuing a degree or other recognized credential. IRS Tax Tip 2012-37.

DRP... are your aware of rules for filing?

Energy Efficient Building Deduction: IRC Sec. 179D allows taxpayers to deduct the cost of energy-efficient property installed in commercial buildings. A new notice modifies previous guidance in Notice 2006-52 (2006-1 CB 1175) and Notice 2008-40 (2008-1 CB 725) by providing an additional set of energy savings percentages. The applicable energy savings percentages are 25% for interior lighting systems, 15% for HVAC and hot water systems, and 10% for the building envelope. The new percentages are effective for property placed in service after 5/11/12. Notice 2012-22, 2012-11 IRB .

Ten Tax Benefits for Parents Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. ... Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit. Child and Dependent Care Credit You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses. Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included. For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses. Children with Earned Income If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501. Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate. For more information see IRS Publication 929, Tax Rules for Children and Dependents. Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income. For more information see IRS Publication 970, Tax Benefits for Education. Student loan Interest You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent. For more information see the IRS website. See more

Bartering Income: The IRS reminds small business owners that the fair market value of property or services received through barter is taxable income. Barter exchanges, whether operated out of a physical office or through the Internet, generally are required to issue Form 1099-B to its members and the IRS. Income from bartering is taxable in the year it is performed and may result in ordinary income, capital gains or losses, or nondeductible personal losses. Bartered goods and services used as part of compensation packages are subject to the same employment tax withholding and information reporting as cash compensation. For more information, see the Bartering Tax Center on www.irs.gov . IRS Tax Tip 2012-33.