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Archive | Tax Time

Tax day now July 15

Treasury, IRS extend filing deadline and federal tax payments regardless of amount owed

WASHINGTON—The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.

Even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically, said IRS Commissioner Chuck Rettig. Filing electronically with direct deposit is the quickest way to get refunds. Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds. As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding  and your patience. Im incredibly proud of our employees as we navigate through numerous different challenges in this very rapidly changing environment.

The IRS will continue to monitor issues related to the COVID-19 virus, and updated information will be posted on a special coronavirus page  https://www.irs.gov/coronavirus on IRS.gov.

This announcement comes following the Presidents emergency declaration last week pursuant to the Stafford Act. The Stafford Act is a federal law designed to bring an orderly and systematic means of federal natural disaster and emergency assistance for state and local governments in carrying out their responsibilities to aid citizens. It was enacted in 1988.

Treasury and IRS will issue additional guidance as needed and continue working with Congress, on a bipartisan basis, on legislation to provide further relief to the American people.

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Treasury: Small business taxpayers provided tax assistance

Penalties and Interest Waived for 30 days for Some Sales, Use and Withholding Tax Filers

LANSING, Mich.  Small businesses that have experienced disrupted operations due to the COVID-19 pandemic now have additional time to make their sales, use and withholding tax monthly payment, according to the Michigan Department of Treasury.

Effective immediately, small businesses scheduled to make their monthly sales, use and withholding tax payments on March 20 can postpone filing and payment requirements until April 20. The state Treasury Department will waive all penalties and interest for 30 days.

The past week has been hard for small businesses owners across the state as we work to mitigate the spread of coronavirus, Gov. Gretchen Whitmer said. Allowing them more time to pay their monthly tax payments will help us provide some much-needed assistance. I will continue doing everything I can to ensure our small businesses have the support they need during this time. We will get through this together.

Specific information about Treasury providing tax assistance to small businesses due to COVID-19 can be found in SUW Penalty and Interest Waiver Notice [ https://www.michigan.gov/documents/treasury/SUW_Penalty_and_Interest_Waiver_Notice_684145_7.pdf ].

Our small businesses are important drivers of Michigans economy, State Treasurer Rachael Eubanks said. This change will provide some help to businesses as they navigate their way through this state and national emergency.

The waiver is not available for accelerated sales, use or withholding tax filers. Businesses with questions should call the Treasury Business Tax Call Center at 517-636-6925.

To learn more about Michigans taxes, go to www.michigan.gov/taxes [ https://www.michigan.gov/taxes ]or follow the state Treasury Department on Twitter at@MITreasury [ http://www.twitter.com/mitreasury ].

Information around this outbreak is changing rapidly. The latest information is available at*Michigan.gov/Coronavirus* [ https://www.michigan.gov/Coronavirus ]and*CDC.gov/Coronavirus* [ https://www.cdc.gov/Coronavirus ].

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Check your refund

Tax Tip 2020-36

Taxpayers can check the status of their refund on IRS.gov or the IRS2Go App

Taxpayers who filed their 2019 tax return and are waiting for their refund can check their refund status by going to IRS.gov and clicking on Get Your Refund Status to access the Where’s My Refund? tool [ https://www.irs.gov/refunds ].

People can check the status of their tax return about 24 hours after the IRS acknowledges receipt of an electronically filed tax return and up to four weeks after a taxpayer mails a paper return. The Wheres My Refund? tool updates once every 24 hours, usually overnight, so taxpayers only need to check once a day.

Taxpayers can also check their refund status, make a payment, and find free tax prep help through the IRS2Go app  [ https://www.irs.gov/newsroom/irs2goapp] for their mobile device.

Taxpayers will need three things to use the tool:

  • Their Social Security number 
  • Their tax filing status 
  • The exact amount of the refund claimed on their tax return 

Once the taxpayer enters that information the tool will display the progress of their tax return through the following stages:

  • Return received 
  • Return approved 
  • Refund sent 

Taxpayers should use the IRS2Go app or the official Wheres My Refund? tool at IRS.gov to avoid scammers who may create look-alike sites in an attempt to steal sensitive personal information. They should go directly to IRS.gov and not rely on search engine results or click on links to refund sites they receive by email or text.

In certain instances, a taxpayer will need to call the IRS, such as:

* It has been 21 days or more since they electronically filed their tax return 

* It has been more than six weeks since they mailed their return 

* When the Wheres My Refund? results tell the taxpayer to contact the IRS 

More information:

* Refunds Information https://www.irs.gov/refunds/about-wheres-my-refund

* Refunds FAQs https://www.irs.gov/refunds/tax-season-refund-frequently-asked-questions 

* Direct Deposit https://www.irs.gov/refunds/get-your-refund-faster-tell-irs-to-direct-deposit-your-refund-to-one-two-or-three-accounts 

* Amended Returns https://www.irs.gov/filing/wheres-my-amended-return

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Taxpayers should know the signs of a phone scam

Taxpayers should be aware that aggressive criminals pose as IRS agents in hopes of stealing money or personal information. The tax filing season is a prime time for phone scams because people are thinking about taxes.

Here are some tell-tale signs of a tax scam along with actions taxpayers can take if they receive a scam call.

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. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. 

* Threaten to immediately bring in local police or other law enforcement groups to have the taxpayer arrested for not paying. 

* Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed. 

* Call out of the blue about an unexpected tax refund.

Taxpayers who receive these phone calls should:

* Hang up the phone immediately. 

* Report the call to TIGTA using their IRS Impersonation Scam Reporting form [https://www.treasury.gov/tigta/contact_report_scam.shtml] or by calling 800-366-4484. 

* Report the number to phishing@irs.gov and be sure to put IRS Phone Scam in the subject line. 

More information:

Tax Scams and Consumer Alerts [ https://www.irs.gov/newsroom/tax-scams-consumer-alerts ]

Report Phishing and Online Scams [ https://www.irs.gov/privacy-disclosure/report-phishing ]

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Five steps taxpayers can take now to protect against identity theft

All taxpayers should make sure they’re doing everything they can to prevent a thief from stealing their identity.

Tax-related ID theft occurs when someone uses a taxpayers stolen personal information to file a tax return claiming a fraudulent refund. The thieves use personal information like a stolen Social Security number.

The IRS and its partners are constantly working to combat these types of crimes, but they can’t do it alone. Taxpayers play an important role when it comes to preventing identify theft.

Here are some tips to help taxpayers protect themselves against identity theft. Taxpayers should:

*Always use security software.* This software should have firewall and anti-virus protections

*Use strong, unique passwords.* They should also consider using a password manager.

*Learn to recognize and avoid phishing emails, threatening calls and texts from thieves.* These scammers pose as legitimate organizations such as banks, credit card companies, and even the IRS.

*Not click on links in unsolicited emails or messages from unknown senders.* Also, people shouldn’t click on links or download attachments from emails that seem suspicious, even if they appear to be from senders they know.

*Protect personal information and that of any dependents.* For example, people shouldn’t routinely carry around their Social Security cards. They should also make sure tax records are secure. 

*More information:

Publication 4524, Security Awareness for Taxpayers [ https://www.irs.gov/pub/irs-pdf/p4524.pdf ]

Identity Theft Central [ https://www.irs.gov/identity-theft-central ]

Taxpayer Guide to Identity Theft [ https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft ]

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Some reasons taxpayers should e-file their taxes

Tax Tip 2020-25

Some taxpayers still use the old-school method of filing their tax returns: on paper. For these people, now is the time to switch and file electronically.

All taxpayers should consider joining the more than 138 million taxpayers who used IRS e-file last year. Here are the top reasons why taxpayers should file electronically in 2020:

*Its safe and secure.

IRS e-file meets strict security guidelines. It uses modern encryption technology to protect tax returns. The IRS continues to work with states and tax industry leaders [ https://www.irs.gov/newsroom/security-summit ] to protect tax returns from tax-related identity theft [ https://www.irs.gov/identity-theft-fraud-scams ]. This effort has helped put safeguards in place to make electronic tax filing a safe and secure option.

*E-file is often free.

Most taxpayers can use online software to e-file for free through IRS Free File https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free. This program is available only on IRS.gov and is for taxpayers who earned less than $69,000 in 2019. Another option, Free File Fillable Forms https://www.irs.gov/e-file-providers/before-starting-free-file-fillable-forms, is available to all taxpayers regardless of income.

Many taxpayers may also qualify to have their taxes e-filed for free through IRS volunteer programs https://www.irs.gov/individuals/free-tax-return-preparation-for-you-by-volunteers. Volunteer Income Tax Assistance offers free tax preparation to people who generally earned $56,000 or less. The Tax Counseling for the Elderly program helps people who are 60 or older.

*Its also available through other convenient options.

Taxpayers can buy commercial tax software https://www.irs.gov/e-file-providers/efile-with-commercial-software to e-file right from their home computer if they dont qualify for Free File software. They can also ask their tax preparer https://www.irs.gov/e-file-providers/authorized-irs-e-file-providers-for-individuals to e-file their tax return. The bottom line is that e-file is much more convenient than filling out and mailing paper tax forms.

*Its accurate and easy.

E-file https://www.irs.gov/filing/e-file-options helps taxpayers avoid mistakes, such as an incorrect Social Security number. Taxpayers who e-file receive an acknowledgement from the IRS within minutes, telling them their return has been accepted. If a return is rejected, the acknowledgement says why the IRS rejected the tax return.

*People who e-file get faster refunds.

When taxpayers e-file and use direct deposit https://www.irs.gov/refunds/get-your-refund-faster-tell-irs-to-direct-deposit-your-refund-to-one-two-or-three-accounts for their refund, in most cases they can get their money in less than 21 days. On the other hand, if they mail a paper tax return to the IRS and request a refund check in the mail, it can take up to six weeks. Thats a difference of three weeks! Also, since e-filed returns are generally more accurate, there probably won’t be additional delays. Delays can be caused when the IRS finds mistakes that must be fixed before the agency can send a refund.

*It can be used whether a taxpayer is getting a refund or needs to make a payment.

Taxpayers who owe taxes can e-file early and set up an automatic payment on any day until the April deadline. They can pay electronically from their bank account with IRS Direct Pay. Taxpayers can visit IRS.gov for information on other payment options https://www.irs.gov/payments.

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Filing taxes 101: Common errors taxpayers should avoid

IRS Tax Tip 2020-20

Filing a tax return electronically reduces errors because the tax software does the math, flags common errors and prompts taxpayers for missing information.

Using a reputable tax preparer – including certified public accountants, enrolled agents or other knowledgeable tax professionals – can also help avoid errors. Mistakes can result in a processing delay, which can mean it takes more time to get a refund.

Here are some common errors to avoid when preparing a tax return:

Missing or inaccurate Social Security numbers. Each SSN on a tax return should appear exactly as printed on the Social Security card.

Misspelled names. Likewise, a name listed on a tax return should match the name on that person’s Social Security card.

Incorrect filing status. Some taxpayers choose the wrong filing status. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.

Math mistakes. Math errors are one of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Taxpayers should always double check their math. Better yet, tax prep software does it automatically.

Figuring credits or deductions. Taxpayers can make mistakes figuring things like their earned income tax credit, child and dependent care credit, and the standard deduction. Taxpayers should always follow the instructions carefully. For example, a taxpayer who’s 65 or older, or blind, should claim the correct, higher standard deduction if they’re not itemizing. The Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions. Attach any required forms and schedules.

Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for a taxpayer to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.

Unsigned forms. An unsigned tax return isn’t valid…period. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have a valid power of attorney Taxpayers can avoid this error by filing their return electronically and digitally signing it before sending it to the IRS.

Filing with an expired individual tax identification number. If a taxpayer’s ITIN is expired, they should go ahead and file using the expired number. The IRS will process that return and treat it as a return filed on time. However, the IRS won’t allow any exemptions or credits to a return filed with an expired ITIN. Taxpayers will receive a notice telling the taxpayer to renew their number. Once the taxpayer renews the ITIN, the IRS will process return normally.

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Know the difference between standard and itemized deductions

IRS Tax Tip 2020-17

It’s a good idea for people to find out if they should file using the standard deduction or itemize their deductions. Deductions reduce the amount of taxable income when filing a federal income tax return. In other words, they can reduce the amount of tax someone owes.

Individuals should understand they have a choice of either taking a standard deduction or itemizing their deductions. Taxpayers can use the method that gives them the lower tax. Due to tax law changes in the last couple years, people who itemized in the past might not want to continue to do so, so it’s important for all taxpayers to look into which deduction to take.

Here are some details about the two methods to help people understand which they should use:

Standard deduction

The standard deduction amount adjusts every year and can vary by filing status. The standard deduction amount depends on the taxpayer’s filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don’t itemize deductions are entitled to a higher standard deduction.

Most filers who use Form 1040 or Form 1040-SR, U.S. Tax Return for Seniors, can find their standard deduction on the first page of the form.

Taxpayers who can’t use the standard deduction include:

*A married individual filing as married filing separately whose spouse itemizes deductions.

*An individual who files a tax return for a period of less than 12 months. This could be due to a change in their annual accounting period.

*An individual who was a nonresident alien or a dual-status alien during the year. However, nonresident aliens who are married to a U.S. citizen or resident alien can take the standard deduction in certain situations.

Itemized deductions 

Taxpayers may need to itemize deductions because they can’t use the standard deduction. They may also itemize deductions when this amount is greater than their standard deduction.

Taxpayers who itemize file Schedule A, Form 1040, Itemized Deductions or Form 1040-SR, U.S. Tax Return for Seniors.

A taxpayer may benefit by itemizing deductions for things that include:

*State and local income or sales taxes

*Real estate and personal property taxes

*Mortgage interest

*Mortgage insurance premiums

*Personal casualty and theft losses from a federally declared disaster

*Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income

Individual itemized deductions may be limited. Schedule A, Form 1040 Instructions can help determine what limitations may apply.

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Jan. 31 filing deadline for employers, other businesses to file wage statements

WASHINGTON — With just a few days remaining until the deadline, the Internal Revenue Service reminds employers and other businesses that January 31 is the filing deadline for submitting wage statements and forms for independent contractors with the government.

Employers must file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. The January 31 deadline also applies to certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors.

This deadline helps the IRS fight tax fraud by making it easier to verify income reported on individual tax returns. The IRS no longer grants an automatic extension of time to file Form W-2. Requests for more time to file must be submitted before the due date. Only certain reasons, such as a death or natural disaster are allowed. Details can be found on the instructions for Form 8809, Application for Extension of Time To File Information Returns.

Failure to file these forms correctly and timely may result in penalties. The IRS recommends employers and other businesses to e-file as the quickest, most accurate and convenient way to file these forms.

Taxpayers: Steps to take if no W-2

Most taxpayers get their Form W-2, Wage and Tax Statement, by the end of January. Taxpayers need their W-2s to file accurate tax returns, as the form shows an employee’s income and taxes withheld for the year.

Taxpayers who haven’t received their W-2 by the end of February should, as a first step, contact their employer. Taxpayers should ask their current or former employer for a copy of their W-2. Be sure the employer has the correct address. Additional information for taxpayers is available at IRS.gov.

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Improved Tax Withholding Estimator

Helps workers target the refund they want; shows how to fill out new 2020 W-4

WASHINGTON—The Internal Revenue Service has launched a new and improved Tax Withholding Estimator, designed to help workers target the refund they want by having the right amount of federal income tax taken out of their pay.

The Tax Withholding Estimator, now available on IRS.gov, incorporates the changes from the redesigned Form W-4, Employee’s Withholding Certificate, that employees can fill out and give to their employers this year.

The IRS urges everyone to see if they need to adjust their withholding by using the Tax Withholding Estimator to perform a Paycheck Checkup. If an adjustment is needed, the Tax Withholding Estimator gives specific recommendations on how to fill out their employer’s online Form W-4 or provides the PDF form with key parts filled out.

To help workers more effectively adjust their withholding, the improved Tax Withholding Estimator features a customized refund slider that allows users to choose the refund amount they prefer from a range of different refund amounts. The exact refund range shown is customized based on the tax information entered by that user.

Based on the refund amount selected, the Tax Withholding Estimator will give the worker specific recommendations on how to fill out their W-4. This new feature allows users who seek either larger refunds at the end of the year or more money on their paychecks throughout the year to have just the right amount withheld to meet their preference.

The new Tax Withholding Estimator also features several other enhancements, including one allowing anyone who expects to receive a bonus to indicate whether tax will be withheld. In addition, improvements added last summer continue to be available, including mobile-friendly design, handling of pension income, Social Security benefits and self-employment tax.

Starting in 2020, income tax withholding is no longer based on an employee’s marital status and withholding allowances, tied to the value of the personal exemption. Instead, income tax withholding is generally based on the worker’s expected filing status and standard deduction for the year. In addition, workers can choose to have itemized deductions, the Child Tax Credit and other tax benefits reflected in their withholding for the year.

It is important for people with more than one job at a time (including families in which both spouses work) to adjust their withholding to avoid having too little withheld. Using the Tax Withholding Estimator is the most accurate way to do this. As in the past, employees can also choose to have an employer withhold an additional flat-dollar amount each pay period to cover, for example, income they receive from the gig economy, self-employment, or other sources that is not subject to withholding.

For more information about the updated Tax Withholding Estimator and the redesigned 2020 Form W-4, visit IRS.gov.

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