Working from home is a convenience employees don't want to surrender, according to recent poll. Conducting business from your home is still an option is you're self-employed, and you also might be able to claim the home office tax deduction. Working from home has its own unique distractions, but almost half of employees who do their job from their homes say they would quit rather than return to a full 40 hours a week in their offices. (Photo by Ketut Subiyanto) Among the slew of presidential actions taken by Donald J. Trump since his return this week to the Oval... Read more →
Coronavirus COVID-19
Photo by Kaboompics.com The Internal Revenue Service is sending out holiday gifts this month to around a million people. The recipients are people who were eligible for, but did not claim, the 2021 Recovery Rebate Credit (RRC). By the end of next month, they should have the funds in hand, or directly deposited into their bank accounts. The maximum RRC amount is $1,400 per person, but the exact amount will depend on the individuals’ specific circumstances, such as income, filing status, and number of dependents. Overall, the IRS says it will be delivering about $2.4 billion to the eligible recipients.... Read more →
UPDATE, Nov. 21, 2024: To help payroll companies and other third-party payers assist more clients with resolving incorrect Employee Retention Credit (ERC) claims, the IRS has extended the deadline for third-party payers to use the consolidated claim process. The new deadline is Dec. 31. Originally, the third-party option was set to close Nov. 22. If your company received an incorrect Employee Retention Credit (ERC) payment, you have 10 more days to set things right with the Internal Revenue Service. The deadline to report your erroneous ERC claim and repay a portion of the improperly paid funds is next week, Friday,... Read more →
Photo by Ketut Subiyanto There’s good news for businesses that filed accurate Employee Retention Credit (ERC) claims. The Internal Revenue Service says it has accelerated work on claims of COVID-19 pandemic tax break and is now processing around 400,000 claims. The eligible filings in that group are worth a total of nearly $10 billion. The tax agency was swamped by ERC claims submitted after aggressive, and some potentially predatory, promoters convinced some companies to improperly file ineligible claims well after the pandemic ended. Some promoters called the credit by another name, such as a grant, business stimulus payment, government relief,... Read more →
Even the Internal Revenue Service has acknowledged the Employee Retention Credit (ERC) claim process has been beleaguered by fraud and abuse. That’s why the tax agency stopped accepting new ERC filings last year, and has focused on working through existing claims. While some ERC claimants have received tax credit money for keeping staff on payroll during the height of the coronavirus pandemic, others are getting bad news from the IRS. Their ERC claims have been denied. The unwelcome word is arriving as IRS Letter 105-C. The mailed correspondence means the IRS has found the claim ineligible, and has disallowed, or... Read more →
Treasury Secretary Janet L. Yellen speaking at the Austin, Texas, Internal Revenue Service campus Friday, Sept. 6. The Secretary's remarks included news of progress collecting unpaid taxes from rich nonfilers. (Screen capture from Treasury YouTube video) The U.S. Treasury’s balance has grown recently, thanks to Internal Revenue Service’s success in collecting from high-wealth individuals who neglected to file tax returns. Treasury Secretary Janet L. Yellen and IRS Commissioner Danny Werfel this morning announced that to date $1.3 billion has been recovered from wealthy nonfilers. The new collection effort, kicked off in 2023 and led by dozens of senior employees, focused... Read more →
Labor Day isn't a holiday for some workers. They are on the job helping customers. (Photo by Ron Lach) Happy Labor Day! This holiday, which we celebrate with a three-day weekend, was created in the late 1800s to “recognize the many contributions workers have made to America’s strength, prosperity, and well-being.” States were the first to officially adopt the holiday. New York led the way as the first state to introduce a bill, but Oregon was the first to pass a law, on February 21, 1887, recognizing Labor Day. That year, four more states — Colorado, Massachusetts, New Jersey, and... Read more →
Having trouble making your student loan repayment plan and your budget add up? A workplace benefit that helps cover college debt could help. (Photo by George Becker) School is, or soon will be, starting across the United States. That means students, parents, and teachers are hearing about the variety of educational tax breaks that could help them. But what about all the former students, especially those who took out loans to cover higher education costs? You and your lots of student loans are not forgotten. Almost 43 million U.S. borrowers have federal student loan debt, according to data collected by... Read more →
The Child Tax Credit (CTC) has been one of the most popular since its creation as part of the 1997 Taxpayer Relief Act. Since its $400 per child origin, the credit has increased notably. During the COVID-19 pandemic, the American Rescue Act bumped up the CTC in 2021 to a potential maximum of $3,600 per each child younger than age 6, and $3,000 per child up to age 17. The Internal Revenue Service also sent the credit amounts to qualifying amounts directly to eligible families so they didn’t have to wait until tax filing season to claim the funds. The... Read more →
If you bought your youngsters new back-to-school clothes, you’re probably looking for ways to dispose of the older outfits. Many parents take advantage of hand-me-downs, either within their own immediate family or sharing with other relatives or friends. Others donate the old, outgrown clothes. Giving them to a charity could be a win-win. The nonprofits' recycling not only helps those looking for bargain priced apparel, but in some cases it provides a tax break to filers who itemize. 2017 tax rule changes: That donation deduction, however, hasn’t been claimed as much since enactment of the Tax Cuts and Jobs Act.... Read more →
The Internal Revenue Service is giving businesses that discover they’ve benefited from an incorrect Employee Retention Credit (ERC) claim a chance to correct that error. The tax agency announced today that a it is reopening for a limited time its ERC Voluntary Disclosure Program (VDP). This second ERC disclosure period, which will be open through Nov. 22, will be similar to the original one that ended this spring. In addition to relying on taxpayers to voluntarily correct their wrong ERC claims, the IRS says it also will mail up to 30,000 new letters to reverse or recapture potentially more than... Read more →
In addition to moving more valid Employee Retention Credit (ERC) payments through the system, the Internal Revenue Service says it has stopped $5 billion invalid claims of the business tax credit. The Employee Retention Credit (ERC) saga continues, this time with some good news for businesses awaiting the benefits of the tax credit. The ERC was created in 2020 to help businesses and their staff stay afloat during the COVID-19 pandemic. But a rash of recent claims, many of them questionable filings encouraged by aggressive ERC promoters, created problems for the Internal Revenue Service and legitimate claimants. The IRS instituted... Read more →
Photo by Yan Krukau Some classes have already started. Others, like those in my local suburban Austin school district, begin next week. And most will be underway by the end of August. So, families are hitting the stores, especially in places with back-to-school tax holidays, picking up the supplies that will help their youngsters succeed this semester. But parents and guardians aren’t alone. Teachers also regularly spend their own money to make sure that their students have a positive educational experience. If you’re one of those educators who’s shelling out your own money for classroom supplies, save those receipts. You... Read more →
Photo by Tom Fisk In June, the Treasury Department announced that it netted more than $556 million in airline warrants, issued in connection with COVID-19 relief funds, that had been sold. The airlines issued the stock warrants in 2020 and 2021 as partial compensation for financial assistance and loans that Treasury provided to the airlines during the coronavirus pandemic. Provisions in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); the Consolidated Appropriations Act, 2021; and the American Rescue Plan Act of 2021 gave the federal government the option to purchase shares of airline stock at a set price,... Read more →
When the COVID-19 pandemic was at its worst in 2020 and 2021, Uncle Sam offered help to businesses who kept workers on payroll. But the Employee Retention Credit (ERC), like many tax benefits, was complicated. That's led to wrong claims, so the IRS is asking companies to review their claims, both filed or about to be submitted. The Internal Revenue Service says another major announcement about the Employee Retention Credit (ERC), the tax break created to help companies weather the COVID-19 pandemic’s economic challenges, is on the way. But until then, the agency is urging businesses to re-evaluate their filings.... Read more →
This street art in Barcelona, Spain, isn't exactly what tourists want to see when they visit the capital of Catalonia. Public sentiment against the crush of tourists has prompted the city to seek an increase in its tax on cruise passengers who disembark in the Mediterranean Sea metropolis. (Photo by Mattsjc via Wikimedia Commons) COVID-19 literally is in the rear-view mirror for millions of travelers. After a rush to see new places and revisit old favorites as soon as coronavirus restrictions eased, travel now is returning to pre-pandemic normal. Customers are going back to basics, looking for, as they did... Read more →
IRS urges social media users to give a thumbs down to bad online tax advice, like the non-existent Self Employment Tax Credit. How do you use social media? I get suggestions from neighbors for home repair services and local restaurants. I also check out cat videos. Way too many cat videos. I also interact with reputable tax pros I know, leading to innumerable interesting and informative online tax discussions. Again, this is with trained tax professionals, whom I’ve known online (and some in real life) for years. I do not, however, use social media to get tax tips from strangers... Read more →
An aerial view of planes at John F. Kennedy International Airport in New York City. (Photo by Miguel Ángel Sanz on Unsplash) It will be a while before we get a final accounting of the COVID-19 pandemic costs, but last week we some good and bad tax-related figures connected to the health crisis. On the negative side of the ledger, there are the Employee Retention Credit (ERC) claims. This program that helped businesses keep workers on payroll in 2020 and 2021, but a rash of post-pandemic claims has cost the U.S. Treasury, at last count, $230 billion. There is, however,... Read more →
Unsplash+ in collaboration with Getty Images The Employee Retention Credit (ERC) was created to help businesses stay afloat and keep staff on the payroll during the height of the COVID-19 pandemic. Basically, this tax credit’s benefits — thousands of dollars per employee that eligible companies kept paying — were for the 2020 and 2021 tax years. It has turned into a major tax headache, for both businesses and the Internal Revenue Service. But, says the IRS, it has made progress on evaluating the plethora of claims filed after the pandemic’s peak. And it has some good news for small businesses... Read more →
There’s good news for the Internal Revenue Service’s efforts to get rid of as much paper as possible. The agency’s Document Upload Tool, or DUT, recently received its 1 millionth taxpayer submission. The online option lets taxpayers and tax professionals respond digitally to a wide range of tax issues. One of those issues is potentially underreported income, which prompts the IRS to issue Notice CP2000. With the DUT, taxpayers or their preparers can easily scan the material that answers the notice’s questions and electronically submit it to the agency, said the IRS. DUT growth: The upload tool was launched in... Read more →