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Quarterly Estimated Tax Payments & Overseas Filing Deadlines - Reminder

If you are making quarterly estimated tax payments to the IRS, the due date for the April 1 – May 31 quarter of the year is June 15th, 2022.

If you are a U.S Citizen or Green Card Holder living abroad or in active military service and have not filed your taxes yet, the deadline is also on June 15th.

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.

IRS Issues Answers to FAQ About 2021 Child Tax Credit (3/3)

Q: What happens if two different taxpayers claimed the CTC for the same qualifying child?

A: In some cases, a child meets all the IRS tests to be a qualifying child for multiple taxpayers. Generally, however, only one taxpayer may claim the child for the CTC. As a result, the IRS may reject a return because the taxpayer claimed the CTC for a child already listed on a return filed earlier by someone else. If this situation arises with your return, you will need to submit a paper return instead of filing electronically. You will then receive an IRS notice detailing next steps, so that IRS personnel can determine which taxpayer may actually claim the credit.

IRS Issues Answers to FAQ About 2021 Child Tax Credit (2/3)

Q: How do I respond to a notice saying that the IRS changed the CTC amount on my return?

A: If you agree with the change made, you do not need to respond at all. However, if you believe the IRS made a mistake, you can call the number shown on the letter you received. Remember, you have the right to appeal any IRS decision.

IRS Issues Answers to FAQs About 2021 Child Tax Credit (1/3)

The maximum credit amounts and income limits for the Child Tax Credit differed in 2021 from other years. In addition, many taxpayers received advance CTC payments, and had to reconcile these payments with their actual credit amount on their 2021 tax returns. The IRS recently provided information to help taxpayers who still have questions about their 2021 CTC.

Q: I filed my return electronically but made a mistake reconciling my CTC. What should I do?

A: Wait to hear from the IRS, and understand that the processing of your return may be delayed. DO NOT file an amended return. In most cases, IRS personnel will simply correct your CTC amount and adjust your refund amount or amount of tax you owe accordingly. You will receive an official IRS notice by mail that explains the change.

Why Some Taxpayers May Receive IRS Letters

If the IRS needs to contact a taxpayer, the agency will generally send a letter in the mail rather than emailing or calling. Taxpayers may receive IRS letters for many reasons, including:

- The taxpayer owes tax and did not pay it with their return or set up a payment plan.
- The IRS has a question about a tax return or needs more information to process it.
- The IRS has made an adjustment to a tax return or refund amount.
- The IRS needs to verify a taxpayer's identity.

If you receive an IRS letter in the mail, do not ignore it, but also do not panic. Some IRS notices do not require the taxpayer to take any action, while others advise the taxpayer of an issue that can be readily resolved. In many cases, you will not need to respond to the letter. For example, if an IRS notice simply informs you of a minor change made to your return or your refund amount, you can just file it with your tax records for future reference.

However, if the letter asks you to provide the IRS with additional information, you should respond as quickly as possible. Pay special attention to whether the notice includes a deadline to respond. Taxpayers who fail to reply to an IRS letter by a specified deadline may face penalties or forfeit their appeal rights.

You have the right to appeal any IRS decision about your tax return or the amount of tax you owe. If you do not understand an IRS notice or believe the IRS has made an error, a tax professional can help you figure out the situation and plan your next steps.

Missed the April 18 IRS Deadline? File Now to Reduce Penalties

The IRS due date for filing 2021 tax returns has passed, but taxpayers who missed the deadline still have many reasons to file as soon as possible. Both those who owe tax and those entitled to refunds will benefit from filing a 2021 return without further delay.

If you owe tax and did not request an automatic filing extension, filing your return now will minimize the late filing penalty. Even if you did request an extension, remember that the extension applies only to filing your return, not to paying your tax. By estimating how much tax you owe and paying now, you can reduce other IRS penalties and interest charges.

Some federal tax credits are also refundable, meaning that if you qualify, you may receive an IRS refund even if you owed no tax or had no tax withheld during the year. However, you generally must file a return to claim these credits and receive your refund. Common refundable credits include the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), Recovery Rebate Credit, and Child and Dependent Care Credit.

Refund Scams - Did You Know?

As tax filing season ends and individuals start receiving their refunds, taxpayers should be aware of a refund scam that may be making the rounds.

The scammer starts by stealing taxpayer information through hacks, uses the stolen information to file a tax return, and then gets the refund deposited into the victim's account. They then contact the victim and pretend to be the IRS saying that it was a mistaken deposit and to return the money to them. The scammers may make threats for you to return the 'erroneous deposit' using a recorded call message, or pose as debt collection agency officials acting on behalf of the IRS.

The IRS has established procedures for taxpayers to follow in the genuine case of a mistaken refund that can be found here: https://www.irs.gov/taxtopics/tc161.

Possible Reasons for 2021 IRS Tax Refund Delays

Most taxpayers who file their returns electronically and request direct deposit generally receive their IRS refunds within 21 days. However, a variety of factors can result in longer return processing times. The IRS recently reminded taxpayers of the most common causes of tax refund delays, including:

- The return was mailed on paper instead of filed electronically. Filing a paper return typically doubles the expected wait time for a refund.
- The IRS needs more information to process the return. In this case, you will generally receive an IRS letter requesting the information.
- The return did not include banking information for direct deposit, so the IRS must mail a paper check.
- The return includes a request for an Injured Spouse refund allocation.

The IRS cannot provide information about refund status until at least 21 days after a return was electronically filed, or six weeks after a paper return was mailed.

IRS Where's My Refund Tool: https://www.irs.gov/refunds.

Filing Extensions and Minimizing Penalties – Did You Know?

Taxpayers who request an automatic extension to file their 2021 federal income tax returns may file anytime up until October 17th, 2022. Remember, however, that an IRS extension is only an extension to file tax returns, NOT an extension to pay any tax owed. Taxes not paid by the April 18th payment deadline may be subject to late penalties and interest charges.

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.

You should still file your taxes, even if you can't pay, as the failure-to-file penalty may be 10 times more than the failure-to-pay penalty.

IRS Online Payment Portal: https://www.irs.gov/payments

Multiple IRS Deadlines Fall on April 18th – Important Reminders

2021 INDIVIDUAL FEDERAL TAX RETURN FILING: U.S. resident individual and joint tax filers, along with U.S. citizens must file 2021 Form 1040 or 1040-SR and pay any tax due. If you cannot file your return by the deadline, request an automatic filing extension to October 17th. However, if you expect to owe tax, estimate the amount and pay it by April 18th to avoid late payment penalties.

FIRST 2022 QUARTERLY ESTIMATED TAX PAYMENTS: If you earn income and either do not pay federal taxes through paycheck withholding or do not expect your withholding to cover your 2022 tax obligations, you may need to make quarterly estimated tax payments. In particular, this requirement applies to many self-employed taxpayers and “gig economy” workers. The first quarterly estimated payments for 2022 are due on April 18th, 2022.

DEADLINE FOR 2021 IRA AND HSA CONTRIBUTIONS: You may be able to treat contributions made by April 18th to your IRA or health savings account (HSA) as 2021 contributions, provided you have not reached your 2021 contribution limit.

2021 FEDERAL TAX AND 2022 ESTIMATED TAX DEADLINES FOR CORPORATIONS: Corporations must file their 2021 federal income tax returns and pay any tax due, and also make their first 2022 estimated income tax payments, by April 18th.

The IRS urges taxpayers who cannot pay the tax they owe to file by the April 18th deadline and pay what they can. By making a payment in any amount now and setting up a payment plan, you may be able to reduce penalties and interest charges.

Foreign Bank and Financial Accounts Reporting – Did You Know?

Taxpayers with foreign accounts, such as bank accounts or mutual funds, generally must disclose this information on their tax returns. In most cases, U.S. individuals, trusts, estates and businesses with foreign accounts that totaled over $10,000 any time in 2021 must also file a foreign bank accounts report, or FBAR by April 15, 2022.

The official name of the FBAR form is FinCEN Form 114, Report of Foreign Bank and Financial Accounts. FinCEN stands for the Financial Crimes Enforcement Network, a separate agency from the IRS. You must submit the FBAR directly to FinCEN – you cannot file it with your tax return. The standard FBAR filing deadline is April 15, although filers typically qualify for an automatic extension to October 15.

We specialize in tax preparation and bookkeeping services.

01/25/2023

Filing Deadline for W-2 and 1099 Forms

Taxpayers who paid employees or independent contractors in 2022 are reminded to file all required payment reporting forms by January 31, 2023.

If you operate a business and pay employees, you generally must file a Form W-2 for each employee with the Social Security Administration (SSA) by January 31. You must also send each employee a copy of their W-2

January 31 is also the deadline for 1099 forms if you are required to file 1099-MISC and 1099-NEC forms.

A business tax professional can help you determine whether you need to file W-2 or 1099 forms, and may also be able to help you submit the forms electronically.

01/23/2023

Year-End Transactions Can Change Your 2022 Tax Refund – Did You Know?

Now is the time to prepare to file your 2022 tax return, and the IRS is reminding taxpayers that certain end-of-year financial transactions might have significant tax impacts. Tax withholding from paychecks does not ordinarily take into account income sources like yearly or holiday bonuses, stock dividends, or selling real estate or other property at a profit. If you receive such income, you might end up getting a smaller tax refund than you have been anticipating, or even owing tax and penalties for underpayment.

In addition, the IRS reminds taxpayers that if they have outstanding debts like unpaid taxes from previous years, past-due child or spousal support, or overdue student loan payments, their 2022 tax refunds might be reduced by these amounts under the Treasury Offset Program (TOP).

A tax professional can help you determine the tax implications of income you received late in 2022.

01/16/2023

Opening Date for 2023 Tax Filing Season

The IRS will begin accepting 2022 tax returns for processing on January 23, 2023. Taxpayers may file their returns before that date, but may need to wait until January 23 or later to get confirmation that the return was accepted. The filing deadline for 2022 returns is April 18, 2023.

If you have a federal tax refund coming, you can track it by using the Where's My Refund tool (link below) once the IRS has accepted your return.

To avoid processing delays, make sure that your return is complete and free from errors. A tax professional can help you file an accurate return electronically and set up direct deposit, so that your refund comes as quickly as possible.

IRS Where's My Refund? Tool: https://www.irs.gov/refunds

01/09/2023

Quarterly Estimated Tax Payments - Reminder

If you are making quarterly estimated tax payments to the IRS, the due date for the September 1st - December 31st, 2022 quarter of year is January 17th, 2023.

For payments made using IRS Direct Pay, you can make payments until 11:45PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.

01/05/2023

IRS Delays Implementation of New Form 1099-K Rules – Did You Know?

The American Rescue Plan Act (ARPA) of 2021 changed the IRS reporting rules for payments sent through third-party payment processors like PayPal and CashApp. The new rules require payment processors to send a Form 1099-K to all recipients of $600 or more in payments for goods or services during a year. These rules were to take effect beginning with tax year 2022.

However, the IRS has now announced that 2022 will be treated as a “transition year” for the ARPA provisions regarding 1099-K forms. As a result, payment processors may choose to follow the previous rules, which stated that a Form 1099-K must only be sent if a business or individual received over $20,000 in payments through more than 200 transactions. The new $600 threshold will take full effect in tax year 2023.

Therefore, if you received between $600 and $20,000 for goods or services through a payment processor in 2022, with 200 or fewer transactions, you may or may not receive a Form 1099-K. Note that this transition policy applies only to the sending of 1099-K forms. You must still report all taxable income you receive through a third-party processing platform to the IRS, regardless of whether you receive a tax form showing the income. A tax professional can help you determine which payments you received may be taxable.

12/30/2022

Standard Mileage Rates for 2023 – Did You Know?

The IRS has updated the 2023 standard mileage rates for vehicle uses that qualify for a tax deduction. These rates apply for most passenger vehicles, including cars, vans, SUVs and pickup trucks.

- 65.5 cents per mile for business use of a vehicle (up 3 cents from midyear 2022)
- 22 cents per mile for certain medical purposes or moving purposes for qualified active-duty Armed Forces members (same as midyear 2022)
- 14 cents per mile for vehicle use for qualifying charitable work (unchanged)

In most cases, taxpayers who qualify to claim a vehicle expense deduction may either use the standard mileage rate or actual expenses to figure their deduction. However, if you use your car or truck for business, you generally must use the standard rate for the first year you put the vehicle in service if you want to preserve this option for future years.

A tax professional can help you determine whether the standard mileage rate or actual expenses will result in a larger deduction in your circumstances. Keep in mind that if you choose to deduct actual expenses, you will need to keep detailed records of all vehicle-related costs.

12/19/2022

'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. Many taxpayers will receive year-end income statements from employers, banks, stock issuers and other sources in January and early February.

The most common documents include:

- W-2 forms from your employers, showing your wages and any taxes withheld
- Forms 1099-INT and 1099-DIV showing your interest and dividend income
- Forms 1099-MISC and 1099-NEC showing gig economy and other self-employment earnings, along with rents, royalties and other miscellaneous income
- Form 1099-K from payment processing services like PayPal and CashApp if you received $600 or more in payments through one of these platforms for goods or services
- Records of virtual currency (including crypto) transactions
- Charity donation receipts
- Health Insurance statements (like Form 1095)
- Proof of qualifying educational expenses (like Form 1098-T)
- Mortgage interest statements

12/13/2022

December 31 IRA Deadline – Did You Know?

Many taxpayers with IRAs must take a withdrawal from their accounts each year, called a required minimum distribution (RMD). In general, taxpayers who will be 72 years of age or older by the end of this year must take a 2022 RMD from their traditional, SIMPLE or SEP IRA. Holders of Roth IRAs typically do not need to take RMDs.

The deadline for most 2022 RMDs is December 31. However, a different deadline applies if you turned 72 in 2022, and will be taking your first RMD. In this case, you may take your first RMD at any time until April 1, 2023, as long as you then take your second RMD by December 31, 2023. RMDs are generally taxable in the year when you receive the money.

Failure to take an RMD by the deadline, or withdrawing an insufficient amount, may result in a 50% tax penalty on the amount that was not withdrawn as required.

Many workplace retirement plans, such as 401(k) plans, have similar RMD rules. Taxpayers who inherited any type of IRA (including Roth) may also have to take RMDs. Your IRA trustee or administrator can help you determine whether you must take a 2022 RMD and if so, the correct amount. A tax professional can help you properly report the RMD and figure any tax due on it.

12/05/2022

Spike in Tax-related Gift Card Scams – Did You Know?

The holiday season can bring a lot of joy, but unfortunately, it also brings a new wave of scammers trying to cheat people out of their hard-earned money. Many scammers impersonate the IRS or other government agencies and demand payment in gift cards.

In one common version of the scam, a caller posing as an IRS agent threatens a person with tax and/or criminal penalties if the person does not immediately pay off a fictitious tax debt. The scammer may also send threatening text, email or voice messages with a callback number. Ultimately, the scammer demands that the person make payment by purchasing gift cards and sharing the card numbers and PINs.

If you get a call or message from anyone demanding payment in gift cards, hang up or do not reply. The IRS will never call a taxpayer to demand payment in gift cards, prepaid debit cards or wire transfers. If you have legitimate concerns about your tax situation, including back taxes you may owe, a tax professional can help you handle the problem in a safe, secure way. To help protect others, you can report possible tax scams to [email protected].

11/29/2022

Giving Tuesday and Charitable Donations - Did You Know?

Millions of Americans will contribute to their favorite charities on Giving Tuesday (November 29), and throughout the holiday season. Charitable donations are often described as tax-deductible, but whether you can claim a deduction for your contribution depends on several factors.

First, you generally must itemize deductions on your tax return to claim a deduction for charitable donations. Therefore, your donation will not be deductible if you use the standard deduction. Note that the special rules that allowed taxpayers who did not itemize to deduct certain monetary donations in 2020 and 2021 have now expired. A tax professional can help you determine whether itemizing deductions would be advantageous for you.

If you do itemize deductions, you may generally deduct donations of money or property to any eligible tax-exempt charity. If you are unsure whether an organization qualifies to receive tax-deductible donations, the IRS Tax-Exempt Organization Search tool (link below) can help.

Tax-Exempt Organization Search: https://www.irs.gov/charities-non-profits/tax-exempt-organization-search

11/22/2022

Potentially Taxable Events – Did You Know?

In addition to traditional income sources like employee wages and business profits, there are a number of other activities and transactions that the IRS classifies as potentially taxable. It is important to consider all of these “taxable events” for your tax return.

The most commonly overlooked taxable events include:

- Investment income, including receiving stock dividends or cashing in bonds
- Converting a traditional IRA to a Roth IRA
- Forgiveness (discharge) of a loan or other debt, including student loans
- Sale of assets such as vehicles, musical instruments, or a home at a gain (that is, for more than you paid to purchase the assets)
- Sale or exchange of cryptocurrency (like Bitcoin), or making purchases with cryptocurrency
- Withdrawing funds from a retirement plan (or from the cash value of a life insurance policy if you withdraw more than you have paid in premiums)
- Gifts and inheritances

A tax professional can advise you about which events in your life may have tax implications, and how to properly report those events. For example, in some cases, you may only need to declare the event to the IRS if the amount of money involved exceeds a minimum threshold, known as an “exclusion.”

11/15/2022

Charitable Contributions Can Reduce Tax on IRA Distributions – Did You Know?

In general, distributions from a traditional IRA are taxable income. However, if you have a traditional IRA and are age 70 1/2 or older, you may have the option of making tax-free charitable contributions through your IRA. A qualified charitable distribution (QCD) is a contribution made directly to an eligible charity from IRA funds. The account trustee, such as a bank or investment broker, must arrange and execute the contribution.

A QCD counts toward your annual required minimum distribution (RMD). Therefore, if you do not need funds from your traditional IRA this year, making a QCD may enable you to satisfy RMD rules without owing tax on the distribution. You must report QCDs on your tax return on the line for IRA distributions, but you may usually report the taxable portion of a QCD as zero.

Limitations on the nontaxable amount of a QCD may exist, depending on factors like your recent IRA contribution amounts. A tax professional can help you verify your eligibility to make a tax-free QCD, and properly arrange and report the transaction to comply with all IRS rules.

11/09/2022

Charitable Donations - Did You Know?

If you are thinking of making charitable donations by year-end, the IRS has a tool to make it easier to get information about charitable organizations. The Tax Exempt Organization Search website offers additional information as well as a mobile-friendly interface.

Search tool: hhttps://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations

11/01/2022

2023 Healthcare Open Enrollment - Did You Know?

The 2023 open enrollment period for Marketplace health insurance starts today, November 1, 2022, and ends December 15, 2022. Plans will start January 1, 2023.

Once the Open Enrollment period is over, you will only be able to enroll if there's a qualifying life event for the Special Enrollment Period.

Enrollment can be done at https://healthcare.gov, and a simple checklist of documents you'll need can be found here: https://marketplace.cms.gov/outreach-and-education/marketplace-application-checklist.pdf.

10/28/2022

Tax Considerations for People Changing Marital Status – Did You Know? (2/2)

A person is considered married for tax purposes if they are married on the last day of the year. Therefore, the IRS urges all taxpayers whose marital status changes during 2022 to consider several possible impacts on their taxes. In particular, for taxpayers who get married this year, or become divorced or legally separated, these issues may come into play:

UPDATING YOUR WITHHOLDING: Generally, if your marital status changes, you will need to file a new Form W-4 with your employer(s) so that your paycheck withholding may be adjusted accordingly. If you also have self-employment income or work multiple jobs, you may wish to use the IRS Withholding Estimator tool (link below) to check your withholding amounts. If you pay estimated taxes, you may need to adjust your payments based on your new marital status.

CHANGING FILING STATUS: If you are married as of December 31, 2022, you may select either Married Filing Jointly or Married Filing Separately status on your 2022 federal tax return. For many couples, joint filing may result in lower tax, but exceptions exist. If you are divorced or legally separated as of December 31, you may file under Single or, if you qualify, Head of Household status. Head of Household filers receive a larger standard deduction and other tax benefits.

A tax professional can help you sort out any tax issues related to your change in marital status, including choosing the most advantageous filing designation.

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator

10/04/2022

Reasons to File a 2021 Federal Tax Return

Some taxpayers are not required to file federal tax returns, generally because their income falls below the filing threshold. However, choosing not to file a return may mean missing out on a tax refund. Therefore, the IRS urges all Americans who may qualify for a tax refund to file a 2021 return by the extension filing deadline of October 17, 2022 or earlier if possible.

Even if you had no tax withheld from your pay in 2021 and made no estimated tax payments, you may still be entitled to a refund if you qualify for certain federal tax credits, including:

Recovery Rebate Credit: If you were eligible for a third economic impact payment (EIP, also called a stimulus payment) in 2021, but did not receive it or got less than the full amount, you may be able to claim this credit.
Earned Income Tax Credit (EITC): Working taxpayers who had $57,414 or less in 2021 income may qualify for this credit, depending on their filing status and number of dependents. For those with dependents, the credit amount can be as high as $6,728.

Both of these credits are fully refundable, meaning that if you qualify, you may receive the credit as an IRS refund even if you owe no tax for 2021.

Child Tax Credit (CTC): You may be eligible for this credit if you had a qualifying child of age 17 or younger in 2021.
American Opportunity Tax Credit (AOTC): You may qualify for this credit if you, your spouse, or your dependent was enrolled at least half time at an institution of higher learning (such as a college, university or trade school) in 2021.

The CTC is fully refundable, while the AOTC is partially refundable.

You may also be eligible for a federal tax refund if your employer(s) withheld taxes from your paychecks, or if you made estimated tax payments at any time in 2021.