Newman Tax & Resolution, Inc.

2020 Tax Filing Deadline for U.S. Taxpayers Abroad Remains June 15, 2021 The IRS recently issued a reminder to American taxpayers living and working outside the U.S. that they must file their 2020 federal tax returns by Tuesday, June 15, 2021. This June 15 deadline applies to U.S. citizens, dual citizens and resident aliens whose tax home and physical dwelling both lie outside the 50 states, D.C. and Puerto Rico. It also applies to active military personnel who were serving o...verseas on their normal filing due date. The IRS recommends attaching a note to your return explaining why you qualify for the special deadline. Ordinarily, members of these groups may file their returns up to two months after the general IRS spring deadline. However, even though the IRS moved the 2020 tax filing deadline for U.S. residents from April 15 to May 17, 2021, the deadline for taxpayers outside the country did not change. Many taxpayers abroad must file IRS returns even if they do not owe tax. For example, If you qualify for the Foreign Earned Income Exclusion or Foreign Tax Credit, which can reduce or eliminate your U.S. tax, you must file an IRS return to claim these benefits. You may have to file one or more forms disclosing your foreign bank accounts and other financial interests. A tax advisor can help you determine your filing requirements.

IRS Begins Issuing Refunds for Eligible Unemployment Benefits Recipients The American Rescue Plan Act (ARPA) retroactively excluded some 2020 unemployment benefits from taxable income. Generally, taxpayers with modified adjusted gross incomes below $150,000 do not have to pay tax on their first $10,200 of 2020 unemployment compensation. Unfortunately, many people who qualify for this exclusion filed their 2020 federal tax returns before the new law took effect in mid-March. T...he IRS has now begun to review and adjust the returns of taxpayers who reported 2020 unemployment income. If the filer overpaid as a result of paying tax on excluded unemployment benefits, the IRS will either issue a special refund or reduce the balance of tax owed. The IRS has begun to adjust the simplest returns affected by ARPA rules for 2020 unemployment benefits. Most of these returns belong to single filers without dependents who did not claim any refundable tax credits. After correcting all these returns and issuing appropriate refunds, IRS personnel will move on to adjust more complicated returns, such as joint returns filed by married couples. Refunds will be sent by direct deposit to those who provided banking information on their 2020 returns, and by paper checks otherwise. The refunds will be subject to offset rules, which allow the IRS to withhold refunds to cover past-due taxes, unpaid child support or other debts. Any taxpayer whose return is adjusted will also receive an IRS notice explaining the changes made. IRS officials have projected that this process will continue throughout the summer. In the meantime, most taxpayers who may have paid tax on excluded unemployment benefits do not have to take further action. Calling the IRS or filing an amended return will not result in a faster refund, and could even delay processing due to the need to reconcile multiple returns.

If you filed prior to the new law on the $10,200 forgiveness on unemployment and make less than $150,000.00 you should get an additional refund soon....

Expanded Child Tax Credit for 2021 with Advance Payments Did You Know? The recently enacted American Rescue Plan Act (ARPA) made important changes to the Child Tax Credit (CTC) for 2021. The Act raises the maximum age for a child to qualify for the CTC from 16 to 17. The maximum credit amount will also increase from the 2019 and 2020 level of $2,000 per child. Qualifying taxpayers will receive a credit of up to $3,600 for each child age 5 or younger, and $3,000 per child ag...e 6 through 17. The increased CTC amount applies for eligible taxpayers with adjusted gross incomes (AGIs) in the following ranges: Single: AGI of $75,000 or less Married Filing Jointly: AGI of $150,000 or less Head of Household: AGI of of $112,500 or less Qualifying taxpayers with AGIs above these limits, but below $200,000 for individuals or $400,000 for joint filers, will still receive a credit of at least $2,000 per child. The 2021 CTC will completely phase out starting with AGIs above the $200,000 / $400,000 threshold. Married taxpayers who file separately typically only receive a partial CTC amount. The CTC will also be fully refundable for 2021, meaning that if the credit reduces your tax to less than zero, you may receive an IRS refund. Furthermore, many people may receive up to 50% of their 2021 CTC in the form of advance payments. The IRS will start issuing these payments periodically beginning in July. The remaining credit amount will be calculated when you complete your 2021 federal tax return. Unless Congress takes additional action, these special CTC provisions will apply ONLY for tax year 2021. The changes have no effect on your 2020 tax return. A tax professional can help you determine whether you qualify for the CTC, and how to claim the credit if you do.

IRS Online Account Did You Know? All taxpayers who can properly verify their identity may set up a personal IRS online account. To create an account, simply visit the IRS View Your Account Information webpage (link below). Maintaining an online account can help you prepare for your federal tax returns, view payment history, see select IRS notices and stay on track with your tax planning and budgeting throughout the year. Setting up an online account will be particularly hel...pful if you are eligible to claim the Recovery Rebate Credit for 2020. The IRS offers this credit to those who qualified for Economic Impact Payments (EIPs, also called stimulus payments) in 2020, but received either no payments or smaller payments than they deserved. To apply for the credit, you need to know the amounts of any EIPs you received. Your IRS online account will display this information. Other information available from your online account includes any balance you owe to the IRS, your payment history (including pending payments), and digital copies of IRS notices you have received. You can also get key information from your most recent tax return, which you may need in order to get your 2020 return filed or determine your eligibility for certain credits and other programs. For detailed information from your past tax returns, you can request a transcript. To set up your account, you will need to go through an identity verification process. Once you have gathered the required documents, registration typically takes about 15 minutes. IRS View Your Account Portal: https://www.irs.gov/payments/view-your-tax-account. If your 2020 federal tax return is already filed, you may check on your refund status here: https://www.irs.gov/refunds.

National 529 College Savings Day on Saturday - Did You Know? If you put money in a 529 account for education, withdrawal of earnings are tax-free if used for qualified educational expenses. Qualified educational expenses include tuition, fees, housing, meals and books. Many states offer a full or partial tax deduction for 529 plan contributions. They may also offer incentives and promotions to encourage families to open and contribute to 529 accounts this coming Saturday for National 529 College Savings Day. The 2017 Tax Cuts and Jobs Act (TCJA) also expanded eligibility for 529 savings plans. Up to $10,000 per year can be used for Kindergarten through Grade 12 education (public, private, or religious schools).

Protecting Against Tax Fraud - Did You Know? The IRS will never: - Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card, or wire transfer... - Demand that you pay the taxes without the opportunity to question or appeal the amount owed - Threaten to bring in local police, immigration officers or other law enforcement officers If an IRS agent shows up, they will always provide two forms of official credentials: a pocket commission and a government identification card. The IRS may also assign certain cases to private debt collectors, but only after giving you written notice. Any payment to the private debt collectors should be made payable to the U.S Treasury.

May 17 IRS Deadline Pay and/or File Now to Avoid Penalties The IRS has extended this year's deadline to May 17, 2021 for federal tax returns that were originally due on April 15. If you have not yet filed your 2020 tax return you should make every effort to do so by May 17. If you cannot submit your 2020 return by the deadline, you can apply for an automatic filing extension to October 15, 2021. The standard way to request the extension is to file IRS Form 4868 by May 17. B...ear in mind that this extension applies only to FILING your return; the payment due date will remain as May 17. Failing to pay the full amount you owe on or before May 17 may result in late fees, interest or other penalties. If you anticipate owing tax, you should estimate the amount and include payment with your Form 4868. Alternatively, if you pay your tax with a debit or credit card or use the IRS Direct Pay or Electronic Federal Tax Payment System portal (see links below), you can get the extension to complete your return by October 15 without filing Form 4868. Simply indicate that your payment is for an automatic filing extension for tax year 2020. If you cannot pay your tax right now due to pandemic-related hardships or other extenuating circumstances, the IRS offers installment payment options that may enable you to reduce or eliminate penalties. A tax professional can help you evaluate your options or get your return filed. IRS Direct Pay portal: https://www.irs.gov/payments/direct-pay Electronic Federal Tax Payment System (EFTPS) portal: https://www.irs.gov//eftps-the-electronic-federal-tax-paym Make IRS payments with a credit or debit card: https://www.irs.gov//pay-your-taxes-by-debit-or-credit-card

Claiming the Recovery Rebate Credit Did You Know? With the May 17 deadline to file 2020 federal tax returns rapidly approaching, many eligible Americans who don't file may risk losing out on a crucial tax credit. The Recovery Rebate Credit is offered to all taxpayers who file their 2020 returns and were underpaid when the IRS distributed 2020 Economic Impact Payments (EIPs, also called stimulus payments). For a variety of reasons, some taxpayers may not have received the EI...Ps that they qualified for in 2020. Others received EIPs, but in smaller amounts than they deserved. Often, this problem occurred because the IRS had outdated information about the person's income or family size. For example, if a child was born or adopted into your family in 2020, the IRS likely did not have this information when calculating EIP amounts. The first round of stimulus payments, called EIP1, included payments of up to $1,200 per individual and $500 per qualifying child. The IRS began sending these payments in spring 2020 and continued sending them throughout the year. The second round (EIP2) included payments of up to $600 per individual and $600 per qualifying child. Most recipients got their EIP2s in January 2021. If the IRS underpaid you during either 2020 EIP round, the Recovery Rebate Credit enables you to receive the balance that you are owed as an IRS refund. However, you can only claim the credit by filing a 2020 tax return, even if you owe no tax and are not usually required to file. A tax professional can help you prepare and file your return electronically so you receive your payment as quickly as possible. You will need to know the amounts of any EIPs you received, which you can get from IRS Notice 1444 (1444-A or 1444-B), or by setting up an online IRS account (link below). Create an online IRS account: https://www.irs.gov/payments/view-your-tax-account.

Refund Amounts - Did You Know? If your refund amount is different than stated on the filed tax return, part or all of your refund may have been used to pay off (offset) past-due federal tax, student loans, state income tax or other past-due debts. You'll receive a notice from the IRS if such an offset occurs that will show the original tax refund amount, the offset amount, as well as the name, address and telephone number of the agency receiving the payment.... If you haven't received your refund yet, you may be able to check the status using the IRS' "Where's my Refund?" tool: https://www.irs.gov/refunds.

Unclaimed 2017 IRS Refunds Deadline Did You Know? The IRS has issued a reminder that time is running out to claim your 2017 tax refund if you did not file a 2017 federal return. The deadline to file a 2017 IRS return and claim your refund is May 17, 2021 After that date, unclaimed 2017 federal tax refunds will become the property of the U.S. Treasury. If you have not yet filed your 2017 return, file today to claim your refund before it's too late.

IRS is cracking down on Businesses that are not qualified for PPP Loans.

How to Set Yourself Up for a Hassle-Free Tax Season (4/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Start Early!... The IRS opens for tax filing season tomorrow, February 12th. With all the unpredictability of life during a pandemic, staying ahead of the tax game is more important than ever. Assemble your records as soon as possible. If you have any questions, a tax advisor can help you identify and organize the documents you need. Tax professionals will have far greater availability early in the tax season than at the last minute.

COVID-Related Emergency Student Aid Not Taxable Did You Know? During 2020, many higher education institutions and other agencies provided emergency financial aid grants to students affected by the coronavirus pandemic. The grants helped students with costs resulting from disruptions of school operations, including expenses for housing, food, remote learning course supplies, and health and child care. These emergency grants are NOT taxable income. Students who received them ...should not include the funds in their gross income on their 2020 federal tax returns. This tax exemption applies to all emergency financial aid grants that students received in 2020 from federal and state agencies, higher education institutions and other scholarship-granting organizations, including Native American tribal authorities and agencies. These grants also do not affect a student's eligibility for the American Opportunity Tax Credit (AOTC), Lifetime Learning Credit (LLC) or education expense tax deduction. If you are a student and paid qualified tuition and school fees in 2020, you may be able to claim a credit or deduction even if you used an emergency grant to pay these expenses. Qualified students do not have to reduce their credit or deduction amount by the amount of their emergency grants. A tax pro can help you determine whether financial aid you received in 2020 qualifies for this tax exemption, and whether you are eligible to claim an education credit or deduction.

How to Set Yourself Up for a Hassle-Free Tax Season (3/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Be Aware of Refund Interest And Stimulus Payments... Because the processing of some tax refunds was delayed in 2020 due to the pandemic, the IRS paid interest to many refund recipients. Unlike refunds themselves, these interest payments are classified as taxable income. If you received a tax refund interest payment, the IRS will send you Form 1099-INT in January, which you will need when preparing your return. Recipients of a 2020 Economic Income Payment (EIP, also called a stimulus payment) should have also received IRS Notice 1444, Your Economic Impact Payment. Make sure to keep this notice handy. If your EIP amount was lower than it should have been, Notice 1444 will give you the information you need to claim a tax refund for the balance owed to you.

How to Set Yourself Up for a Hassle-Free Tax Season (2/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Organize Records of Other Potentially Taxable Transactions... The sale of major assets like stock, a house or any other big ticket item may yield a taxable capital gain. Many cryptocurrency transactions (such as buying and selling Bitcoin) also have tax implications, since the IRS classifies cryptocurrencies as property. Make sure you have complete records of all your significant financial and property transactions during 2020.

How to Set Yourself Up for a Hassle-Free Tax Season (1/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Gather Documents Showing Wage, Business And Other Income... If you work as an employee, you should receive a W-2 from your employer(s) by early February, showing your earnings for the year and the total tax withheld from your paychecks. If you are self-employed (including gig economy work) or own a business, you should receive 1099 forms from your clients showing fees paid to you. Interest and dividend income, along with royalties from past work, are also reported on 1099 forms. Recipients of unemployment benefits (including $600 federal Pandemic Unemployment Assistance payments) and/or taxable Social Security benefits should receive a year-end statement detailing these payments as well. Store all of these documents with your tax records.

IRS & Treasury Delivering Second Round of Stimulus Payments Did You Know? Under the Coronavirus Response and Relief Supplemental Appropriations Act, the federal government has authorized a second round of 2020-2021 Economic Impact Payments (EIPs, also called stimulus payments) for many Americans. The IRS has already begun sending these new EIPs by direct deposit and mailed checks. In most cases, individuals with an adjusted gross income (AGI) of $75,000 or below will receiv...e a new EIP of $600. Joint filers with a combined AGI of $150,000 or less will generally get $600 apiece. In addition, many households may receive additional payments of $600 per qualifying child. Those with higher incomes may receive a smaller EIP or no payment at all. Note that dependents age 17 or older are not eligible for EIPs. The vast majority of eligible Americans, including everyone who received a previous 2020 EIP, should receive these new stimulus payments automatically. There is no need to call the IRS or your bank. Simply watch for a direct deposit to your bank account, an IRS check in the mail or, in some cases, a prepaid debit card in a white envelope bearing an official U.S. Treasury seal. For various reasons, some people who qualify for these EIPs may not receive automatic payments. If you believe you are entitled to a payment but do not receive one, a tax professional may help you claim the amount you are owed as a credit on your 2020 tax return.

Tax Credit, Income and Exclusion Limits Increasing for 2021 Did You Know? As a result of annual IRS cost-of-living adjustments, a number of federal tax credit amounts and income limits will increase in 2021. Here are some of the most significant changes affecting taxpayers at a variety of income levels. EARNED INCOME CREDIT (EIC) CHANGES. The maximum credit amounts for taxpayers with zero, one, two, or three or more children will all increase. For example, the maximum credi...t for a family with three or more children will be $6,728, up from $6,600 in 2020. The income limit to receive the maximum credit, along with the maximum income at which a taxpayer may receive an EIC in any amount, will also rise from 2020 levels. HIGHER EXCLUSION FOR ESTATE TRANSFERS. The lifetime exclusion for estate transfers and bequeathals will be $11,700,000 in 2021, up from $11,580,000 in 2020. However, the annual gift and transfer exclusion limit will remain at $15,000. INCREASED INCOME LIMIT FOR THE LIFETIME LEARNING CREDIT. For couples filing jointly who claim the Lifetime Learning Credit, the gross income level used to calculate a reduction in the credit will rise from $118,000 to $119,000. LARGER ADOPTION CREDIT. The maximum credit for adoption expenses will increase by $140 for 2021, up to $14,440. HIGHER FOREIGN INCOME EXCLUSION. The foreign earned income exclusion amount will be $108,700 in 2021, a $1,100 increase over the 2020 level of $107,600. A tax professional can help you determine whether these and other IRS adjustments could affect your 2021 taxes. If a significant change in your annual tax bill might occur, you may need to adjust your paycheck withholding amount and/or quarterly estimated tax payments.

Some Employees May Still Qualify to Deduct Business Expenses Did You Know? The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the tax deduction for business expenses for most workers classified as employees. However, some employees may still qualify for a deduction by filing the proper form with their federal tax returns. Eligible school employees may claim the Educator Expense Deduction for up to $250 of unreimbursed expenses necessary for their work, such as classroom su...pplies. Qualifying for this deduction generally requires working for at least 900 hours a year as a teacher, principal, counselor or classroom aide at an elementary or secondary school. In addition, employees in the following categories may qualify to deduct business expenses: - Armed Forces reservists, that is, members of the Army and Air National Guards, along with members of the Army, Navy, Air Force, Marine Corps and Coast Guard Reserves - Qualified performing artists classified as employees, such professional dancers, actors and musicians employed by professional companies - State and local government officials categorized as fee-basis workers (typically, these officials must pay self-employment tax) - Employees with work expenses related to a physical or other impairment These employees may be eligible to deduct unreimbursed ordinary and necessary costs related to carrying on their business as employees. Qualifying expenditures might include travel, costumes, workspace adaptations or office supplies. A professional tax advisor can help you determine whether you qualify to deduct business expenses as an employee, and which forms you must file in order to do so.

'Tis the Season for Important Tax Paperwork Keeping your records organized will help make sure you don't miss out on valuable deductions when it is time to file. Some documents to be on the lookout for:... - Wage and income statements (like W-2 or 1099-MISC) - Health Insurance statements (like Form 1095) - Proof of qualifying educational expenses (like Form 1098-T) - Mortgage interest statements - Retirement distribution statements - Investment account statements - Charity donation receipts

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

Lifetime Learning Credit Did You Know? The IRS Lifetime Learning Credit (LLC) can offer substantial tax savings for students or their parents, especially for students who have previously completed four years of higher education. If you paid tuition and school fees in 2020 for yourself, your spouse or a dependent, you may be able to claim an LLC of up to $2,000 on your 2020 tax return. Generally, you may only claim the credit for one member of your household per year. Studen...ts currently taking post-secondary education classes at eligible higher learning institutions may qualify for this credit by meeting BOTH of the following criteria: - They are or were enrolled in higher (post-secondary) education classes for at least one 2020 academic period. An academic period can be a semester, quarter, trimester, summer session, or any other coursework session defined by the school. - The student is taking these higher education classes in pursuit of a degree or other recognized certification, or to acquire or improve job skills. In addition, the taxpayer claiming the credit (usually the student or the student's parent or guardian) must meet the program's income restrictions. Taxpayers with a modified adjusted gross income (MAGI) of $58,000 or less ($116,000 or less for joint filers) generally qualify to claim the full credit. Taxpayers with a MAGI between $58,000 and $68,000 ($116,000 and $136,000 for joint filers) may receive a reduced credit; those with higher incomes cannot claim the LLC. Although the LLC may only be claimed once per tax return, there is no limit to how many times students can qualify for the credit during their lifetimes. Before claiming the LLC for a student in your household, however, check whether the student qualifies for the American Opportunity Tax Credit (AOTC). The AOTC has higher income limits and a higher maximum credit amount ($2,500). In addition, unlike the LLC, the AOTC may be partially refundable if your tax is reduced to less than zero. For students who do not qualify for either the AOTC or LLC, it may still be possible to claim an above-the-line income deduction for tuition and fees. A professional tax advisor can help you determine your eligibility for these valuable education tax credits and deductions.

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.

IRS Extends Deadline to Register for Stimulus Payments Did You Know? The IRS has extended the deadline for some Americans to register to receive their 2020 coronavirus Economic Impact Payments (EIPs, also called stimulus payments). The new deadline of midnight on November 21, 2020 primarily applies to those who are not required to file federal income tax returns, and also have not yet registered for or received their EIPs. Those who meet these criteria are urged to use the ...IRS online non-filers registration tool (link below) to submit their information and receive their EIPs as soon as possible. Choosing the direct deposit option will speed up the payment process. Generally, those who do not provide banking information for direct deposit will receive their stimulus payments by check. Note that for most people who are required to file a 2019 tax return but requested an extension, the deadline to file remains October 15. Federal return filers who qualify for EIPs generally receive their payments automatically; no separate registration is required. Beginning two weeks after they register to receive a payment, those who qualify for EIPs can track the status of their payments by using the online Get My Payment tool (link below). IRS EIP Registration Tool for Non-Filers: https://www.irs.gov/coro/non-filers-enter-payment-info-here IRS Get My Payment EIP Tracking Tool: https://www.irs.gov/coronavirus/get-my-payment

Extensions and FBAR Deadline - Did You Know? For taxpayers who requested extensions to file various 2019 returns, the filing due date for those returns is October 15, 2020. This deadline applies to multiple filings that were originally due on April 15, 2020. (For most of these forms, the filing due date without an extension was subsequently changed to July 15, 2020 by the IRS due to the COVID-19 pandemic.) The October 15 deadline to file under an extension applies to several ...common returns, including: 2019 INDIVIDUAL INCOME TAXES: Most individual taxpayers who requested an automatic extension to file their 2019 federal tax returns must file by October 15. However, additional extensions may be available to some taxpayers affected by recent disasters, including hurricanes and western wildfires. 2019 CORPORATE INCOME TAXES: The October 15 deadline also applies to C corporations that requested an extension to file their 2019 corporate income tax returns (Form 1120). FOREIGN BANK ACCOUNT REPORT (FBAR): Many U.S. taxpayers, including individuals and businesses, must file an annual report of their foreign bank and other financial accounts, called an FBAR. Typically, filing an FBAR is necessary if the total value of a taxpayer's foreign accounts exceeds $10,000 at any time during the calendar year. However, certain accounts, such as those held within a qualified IRA or other retirement plan, may not need to be reported. Most taxpayers who are required to file a 2019 FBAR and have not yet done so must file by October 15. Remember that in general, an extension to file tax returns is NOT an extension to pay any tax due. Therefore, those who have not yet filed but expect to owe 2019 tax should estimate the amount they owe and pay that amount as soon as possible, even if they will not file their returns until October 15. Immediate payment will minimize any interest charges and late payment penalties. A tax professional can help you determine how much to pay and/or if an FBAR is required.

AOTC Tuition Credit Offers Tax Savings for Students or Parents Did You Know? If you, your spouse or any of your dependents are currently enrolled in a higher education program, or were enrolled for a previous academic period in 2020, you may qualify for the American Opportunity Tax Credit (AOTC). The AOTC program allows eligible taxpayers to claim a credit for tuition costs and certain school fees. To qualify for the credit, a student must be taking post-secondary classes ...at an eligible higher learning institution, in pursuit of a degree or other recognized certification or credential. In addition, students must meet ALL of the following eligibility requirements: - They are or were enrolled at least half time for at least one academic period (as defined by the school) in 2020. - They had not completed their first four years of higher education as of January 1, 2020. - Neither the AOTC nor its predecessor, the Hope credit, has been claimed more than four times total for the student, including the current year. - The student and the person claiming the credit (if different from the student) must have a valid taxpayer identification number (TIN) before the due date for the tax return. Additional eligibility criteria may apply to both the student and the educational institution. To claim the full credit, taxpayers must have a modified adjusted gross income (MAGI) of $80,000 or less for individuals, or $160,000 or less for couples filing jointly. A reduced credit may be available for individual taxpayers with a MAGI between $80,000 and $90,000 (between $160,000 and $180,000 for joint filers). Those with higher incomes may not claim the credit. The maximum allowed credit per eligible student is $2,500, up to $1,000 of which may be refundable. You may claim the credit for multiple students in your household if they all meet the eligibility standards. For students who do not qualify, you may still be able to claim either the Lifetime Learning Credit or an above-the-line income deduction for tuition and fees. A tax professional can help you determine which credits and/or deductions provide the greatest tax benefit for you.

Educator Expense Deduction Did You Know? If you are a teacher, principal, counselor, or classroom aide who works at least 900 hours a year in a state-accredited school (grades K-12), you may qualify for the Educator Expense Deduction. This IRS rule allows you to deduct up to $250 on your tax forms ($500 for joint filers who are both educators, but not more than $250 each) for classroom supplies that you purchase at your own expense. Allowed expenses include traditional sch...ool supplies like rulers and markers, computer equipment and software, along with specialty items like athletic gear for physical education classes. A qualified tax advisor can help you determine which of your expenses qualify for the deduction. You may not have to itemize deductions in order to claim the Educator Expense Deduction, but the IRS does require that you have written evidence for every expense. During this hectic back-to-school period when classroom expenses are most likely to occur, it is important to remember to save your receipts.

Unemployment Benefits Are Taxable Income Did You Know? Due to the economic impact of the COVID-19 (coronavirus) pandemic, individuals may have had to file for Unemployment Insurance (UI) benefits for the first time. These benefits include the federal Pandemic Unemployment Assistance (PUA) program created under the CARES Act, which provides an additional $600 per week to many UI benefits recipients. For individuals receiving UI payments in 2020, it is important to understand... the tax treatment of those benefits. Both state and federal unemployment benefits payments are generally taxed as ordinary income by the IRS. As is the case with most regular income sources, recipients of these benefits are required to make tax payments throughout the year. One way that taxpayers can meet this requirement is to request that tax be withheld from their UI payments, which can be done in most states by filing Form W-4V with the state's unemployment benefits office. If no tax is withheld from their UI payments, taxpayers may need to make quarterly estimated tax payments in order to avoid a large tax bill next spring, which could include penalties and interest charges. A tax professional can help UI payment recipients determine whether estimated payments are needed, and how much to pay. The estimated tax payment deadline for the first two quarters of 2020 was July 15, but if an individual missed that deadline, penalties can still be minimized by making a payment as soon as possible. Even if tax is withheld from UI payments, the amount withheld may be incorrect if a person's benefit amount differs from their salary while working. To avoid an unpleasant tax surprise next spring, taxpayers can use the IRS Withholding Estimator tool (link below) to calculate the appropriate withholding amount, and file an updated Form W-4V to request additional withholding if necessary. UI benefits recipients should also do a second checkup with the Withholding Estimator after returning to work, to ensure that their paycheck withholding is accurate going forward. IRS Withholding Estimator tool: https://www.irs.gov/individuals/tax-withholding-estimator

Quarterly Estimated Tax Payments - Reminder If you are making quarterly estimated tax payments to the IRS, the due date for the June 1 - August 31 quarter of the year is September 15. For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.... If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be considered on time if you make it on the next day that's not a Saturday, Sunday, or legal holiday.

2019 Refund Interest Payments - Did You Know? Over 13 million taxpayers who have received or will receive federal income tax refunds for 2019 will also receive an interest payment from the IRS. The 2019 filing and payment deadline change from April 15 to July 15, 2020 due to COVID-19 (coronavirus) was classified as a disaster-related postponement. Therefore, the federal tax code requires the IRS to pay interest starting from April 15 on refunds issued to taxpayers who filed t...heir 2019 returns by July 15. These interest payments will average about $18, and will usually be issued separately from tax refunds. If you provided the IRS with banking information and received your refund by direct deposit, any interest payment you are owed will most likely be automatically deposited to the same account. However, some taxpayers will receive a check in the mail, which can be identified as a refund interest payment by the notation "INT Amount" on the official U.S. Treasury check. Unlike IRS tax refunds themselves, these interest payments are generally taxable and must be reported on the recipient's 2020 federal tax return. Anyone who receives an interest payment of $10 or more will receive Form 1099-INT from the IRS in January. Only individual taxpayers and joint filers are eligible to receive these interest payments, not businesses. Note also that the IRS is not required to pay interest on refunds that were issued before the original April 15 filing deadline.

RMD Repayment or Rollover Deadline - Did You Know? The deadline to return or rollover a Required Minimum Distribution (RMD) for IRA owners, beneficiaries or workplace retirement plan participants is coming up on Monday, August 31. The CARES Act allows most taxpayers with an eligible retirement account, such as a 401(k), 403(b) or traditional IRA, to skip their required minimum distributions (RMDs) for 2020 without penalty. Individuals who received the RMD, including those who... turned 70 in 2019, have the option to return the distribution to their account or other qualified plan. They may also have the option of rolling over to another IRA or qualified retirement plan by August 31, 2020 to avoid taxes on the RMD. Please note that the suspension of the RMD does not apply to qualified defined benefit plans. A tax and financial professional can help you determine the best strategy for handling your 2020 retirement account RMDs.

Charitable Cash Contribution Limits for 2020 Did You Know? As part of the U.S. Treasury's ongoing COVID-19 (coronavirus) relief programs for taxpayers, the IRS has made temporary changes to the rules for deducting charitable contributions on federal tax returns. Normally, taxpayers who itemize deductions on Schedule A can deduct cash charitable contributions up to a specified limit, usually 60% of their adjusted gross income (AGI). For 2020, however, qualified contributions... may be deducted up to 100% of the taxpayer's AGI. (For corporations, the 2020 deduction limit is 25% of taxable income.) Furthermore, qualified contributions above this raised limit may be carried over as a deduction for the next tax year. To qualify for this limit suspension, a contribution must satisfy ALL of these requirements: - It is a cash contribution (that is, a direct contribution of money, not other property) - It is made to a qualifying charitable organization - It is made during calendar year 2020. Note that non-cash property contributions made in 2020 do not qualify for this limit suspension. However, these contributions may still be deducted up to the normal limits (typically 50% of AGI minus the amount of any deducted cash contributions). A tax professional can help you determine if any of your 2020 charitable contributions qualify for the deduction limit suspension, and how to claim your full deduction if so. The IRS also has a tool available for checking exempt organizations: https://www.irs.gov/charities-non-prof/search-for-charities.

New Tax Scams and Identity Theft Warnings Did You Know? The IRS recently posted warnings about new and ongoing tax scams, along with other fraudulent activity related to the COVID-19 (coronavirus) pandemic. The most prevalent and dangerous scams involve identity theft, deceptive advertising, and attempts to cheat taxpayers out of their refunds or economic impact payments (EIPs, also called stimulus payments). - STEALING REFUNDS OR EIPS THROUGH IDENTITY THEFT: Some criminals... steal a taxpayer's Social Security number (SSN), and then file bogus forms with the IRS in order to receive tax refunds or other payments that rightly belong to the taxpayer. - FAKE CHARITIES: Currently, a number of fraudulent charities with names very similar to legitimate organizations are calling taxpayers, claiming that they are collecting funds to help pandemic victims. Actual charities will provide their Employer Identification Numbers (EINs) upon request, so you can look them up and verify that the callers are who they say they are. Most real charities also offer secure online contribution portals. - OFFER-IN-COMPROMISE (OIC) MILLS: You may have heard ads for agencies that can settle people's IRS debts for "pennies on the dollar." Some of these companies charge high fees to submit an OIC application to the IRS on a taxpayer's behalf. Only about one in three OIC proposals are accepted by the IRS, but the companies do not refund fees for rejected applications. If you need help applying, work only with a reputable tax professional. - FAKE PAYMENTS & REFUNDS WITH REPAYMENT DEMANDS: In this very complex scam, identity thieves first obtain a taxpayer's SSN and bank account information, then file a fake IRS return and have the refund deposited into the taxpayer's bank account. A scammer then calls the refund recipient and impersonates an IRS agent, claiming that the refund was issued by mistake and must be returned to the IRS. Often, these scammers demand the "repayment" in the form of gift cards. If you receive a mysterious payment from the IRS, especially if you then receive a phone call demanding repayment, contact your bank and the IRS immediately to report the potential scam. Above all, remember to never share your SSN or any other personal information with anyone unless you are 100% sure who they are and why they need it. If in doubt, hang up or delete the email or text message, then contact the IRS directly to inquire about the issue.

Filing Extensions and Minimizing Penalties Did You Know? Taxpayers who requested an automatic extension to file their 2019 federal income tax returns may file anytime up until October 15, 2020. Remember, however, that an automatic IRS extension is only an extension to file tax returns, NOT an extension to pay any tax owed. Taxes not paid by the July 15, 2020 payment deadline may be subject to late penalties and interest charges. Therefore, taxpayers who have not yet sent an... IRS payment that was due on July 15, including 2019 income tax and first- and second-quarter estimated tax payments for 2020, should submit a payment to the IRS as soon as possible to minimize penalties. Electronic payments may be made using the IRS online payment portal (link below). The IRS urges those who cannot pay what they owe at this time to pay whatever amount they can, and then apply for an installment plan to pay off the remaining balance. Those who did not file a 2019 federal return or automatic extension request by July 15 may face a Failure to File penalty in addition to late fees and interest. It is therefore especially important for these taxpayers to take action as soon as possible. A tax professional can help anyone trying to meet federal tax filing and payment requirements to submit the appropriate forms and applications to the IRS, and start getting back on track. IRS Online Payment Portal: https://www.irs.gov/payments