Two enterprising women packing up items they sold for shipping. (Photo by Kampus Production) A major contributor to the Tax Gap is unreported taxable income. The Internal Revenue Service thought it was going to be able to collect more when Congress new reporting rules were included in American Rescue Plan Act (ARPA) of 2021. ARPA dramatically reduced the income level at which third-party, e-commerce payment platforms — such as eBay, PayPal, Etsy, CashApp, and Venmo, — must issue 1099-K forms to sellers who got money through them. It was set to drop from $20,000 to $600 beginning in 2023. That... Read more →
Paying taxes
Long-time ol' blog readers know I regularly nag remind them to make sure their payroll withholding is correct. The tax goal is to have the amount of income taxes taken out each pay period to be as close as possible to what you owe when you file your return. Adjusting that amount can get you to that target. That's accomplished by completing a new Form W-4 with your new withholding details, as discussed in my post earlier this year on how to get your tax withholding just right. OK, maybe I am a bit of a tax nag. Withholding changes... Read more →
In February 2022, the Internal Revenue Service announced that it was suspending several automatic tax notices. The move was prompted in large part by the massive backlog of tax filings that piled up when the agency closed offices as a precaution early in the COVID-19 pandemic. Now, taxpayers can expect those mailings to resume, starting with 2022 balance due notices. Current CP14s going out first: IRS Deputy Commissioner for Collection and Operations Support Darren Guillot, who was part of an American Bar Association tax conference panel in Washington, D.C., last week, said that approximately 5-to-8 million CP14 Notices, should start... Read more →
Photo by Markus Winkler Tax Day came and went, and you weren't part of the annual Internal Revenue Service's every earner is invited party. It happens. Maybe a personal emergency took precedence. Perhaps you meant to get the job done, but it took longer than you planned and exasperated, you just said, "Later!" Or you discovered you owe, but don't have the money and thought, "What's the point?" The point, regardless of why you didn't get your Form 1040 (or Form 4868 to get a six-month extension) to the IRS on time, is that your continued procrastination could cost you.... Read more →
It's Tax Day 2023, meaning there literally are just hours left to finish your Form 1040 and get it to, or at least on its way, to the Internal Revenue Service. If you're still working on your tax return, here are five final tips for all y'all ultimate tax procrastinators. 1. File something. You need to send the IRS either your 2022 Form 1040 or Form 4868. You can submit either electronically, which the IRS recommends and is the option most taxpayers choose. That gives you until midnight in your time zone to punch send on your computer keyboard. But... Read more →
Tax filing time is ticking away. Make the most of these dwindling hours leading to the Tax Day deadline. (Photo by KoolShooters) If you've put off your tax filing until now, the day before your return is due, don't panic. You've still got time — but not much — to do the tax job right. These 10 last-minute filing tips can help you get the job done by tomorrow's April 18 deadline. 1. Determine whether you need to file. Most Americans who earn money, be it through full-time jobs or self-employment or investment income, do have to fill out a... Read more →
April's flowers are a delight, and you can enjoy them as soon as you finish up the month's tax tasks. (Photo by Eilis Garvey on Unsplash) Welcome to the first full week of April, the month that tends to bring out conflicted feelings in most of us. While most of us are delighted that we can put away our winter coats and enjoy the arrival of spring flowers, April's arrival also means that millions of us still must confront our annual tax filing tasks. If you've yet to file your 2022 return, here are six tax tasks to consider as... Read more →
Photo by Annie Spratt on Unsplash Unless we're getting a big refund, most of us put off dealing with our taxes. That's happening again this filing season. The Internal Revenue Service reports that through March 10, it had received 63.4 million returns. That's about the same number of returns it received at the same point last year. If 2023 filings continue to follow the 2022 pattern, then the IRS is still waiting for more than 100 million returns. Some people have good reasons for the delay. Their tax situations are complicated, taking time to sort through. Others are missing necessary... Read more →
… and some special instructions for those who owe $1 or less or $1 million or more. While bank checks may seem antiquated to most people today, some people still like to pay that way. That includes writing a check to cover their tax bill. (Photo by Steve Shook via Flickr CC) Since most of us e-file our taxes, it's only natural that when we owe, we pay Uncle Sam electronically, too. But most is not all. Some folks still file paper returns. And some taxpayers who do e-file still prefer to pay with an old fashioned, handwritten paper check... Read more →
Credit cards are a popular way to pay taxes, but there are several other ways to e-pay what you owe the IRS. (Photo by Mika Baumeister on Unsplash) Mark this day. Tax Day is more than a month away, but I finished up the ol' 1040 today. Really! As expected, and as usual, my tax calculations revealed that we owe Uncle Sam a couple hundred bucks. So I went to my Electronic Federal Tax Payment System (EFTPS) account and scheduled payment of our 2022 tax amount for April 18, as well as our 2023 estimated tax payments for that day... Read more →
Back in the darkest days of the COVID-19 pandemic when companies and workers were struggling due to health-related shutdowns, they were given a bit of a tax reprieve. The Trump Administration on Aug. 8, 2020, issued executive memo that called for the deferral of the payroll tax portion of the Federal Insurance Contributions Act (FICA) tax that goes toward Social Security. The White House argued that the move would put more money into workers' hands, give employers some financial breathing room, and keep the economy moving during the initial coronavirus closures. There was a lot of political consternation about the... Read more →
What better topic for Thanksgiving than tax turkeys and how to avoid them. Our first tax turkey, represented by this solo strutting showy bird, is incorrect withholding. (Photo by Chris Henry on Unsplash) Thanksgiving, a time of gathering with family you haven't seen for a while. But sometimes, even when we get along with our relatives, we need a break from all that familial reconnecting. You could take a walk. Or check out a calming app. Or take care of a tax task. To help with that third suggestion, the rest of this Thanksgiving week (and weekend) the ol' blog... Read more →
UPDATE, Nov. 5, 2022, 10:25 p.m. CDT: The Houston Astros win game 6 by a 4-1 score and are 2022 World Series Champions! Houston Astros mascot Orbit hopes to trade in his extra-large regular season cap tonight for a 2022 World Series Champion one. (Photo by Kay Bell) The Houston Astros will play what fans, including me, hope is their last game of the 2022 Major League Baseball season tonight in Minute Maid Park. If they beat the Philadelphia Phillies, they get to hoist the World Series trophy in front of their hometown fans. Some H-Town businesses, however, might be... Read more →
If you've put off your tax filing until this last weekend before the absolutely final extended tax deadline of Oct. 17, don't panic. You've still got a little bit of time to do the tax job right. Image courtesy National Taxpayer Advocate Tax Day for ultra-procrastinators is just days away. Monday, Oct. 17, to be precise. There's no way to make up for lost tax time on this final filing weekend. But these 8 last-minute extended filing tips plus one for next filing season can help you finally get the job done on time. 1. Get your tax documents in... Read more →
If you've yet to file a 2019 or 2020 tax year return, you should get to work on that oversight soon. Like get them done by Sept. 30 soon. By meeting that end-of-this-month date, you may be able to avoid the usual late-filing penalty. It's typically assessed at a rate of 5 percent per month, up to 25 percent of the unpaid tax. And since the 2019 and 2020 due dates are long gone, that could be a substantial abated amount, depending on how much tax you owe. Helping both taxpayers and tax agency: The Internal Revenue Service's penalty relief... Read more →
The COVID-19 pandemic ignited an explosion of side hustles, with many folks cobbling together multiple independent operations to replace traditional jobs lost to the virus. The U.S. economy has picked up, and many businesses are forcing bringing their former and work-from-home staff back into the office. But side hustles remain popular. Most side hustle for more than money: Even where they have wage-paying work, many Americans also have side jobs, according to a survey by Insuranks, a small business insurance marketplace. Ninety-three percent of the adults surveyed by Insuranks said they have an added job alongside their main employment positions.... Read more →
Photo by Mikhail Nilov Just when you thought it was safe to go to your mailbox, the tax bogeyman is back. The Internal Revenue Service says it has — again — sent out some confusing, and potentially incorrect tax notices. This time it's balance due notices. This is getting to be a bad habit. Earlier this year, taxpayers who had filed and paid taxes while the IRS was operating under COVID-19 pandemic constraints received automatically issued notices that the IRS couldn't find their 1040 forms. The problem then was due to the millions of backlogged paper returns that stacked up... Read more →
Houston Astros' mascot Orbit generally stays in no-income-tax Texas in doing his job, so he doesn't have to worry about jock taxes. (Photo by Kay Bell) What are you doing this Fourth of July weekend? In addition to the traditional cookouts and fireworks, many folks across the United States head out to ballparks. I love the Independence Day break because it means more day baseball. I'm not going to any Major League Baseball (MLB) games in person this year, but you can be sure that I'll be watching them on television, starting this afternoon. MLB got a late start this... Read more →
With inflation at historic levels, U.S. families are re-examining their budgets. Uncle Sam recently did the same with his money, or rather the Congressional Budget Office (CBO) did. What this federal agency within the government's legislative branch found was surprising. The word that the CBO actually used was unexplained in connection with the robust growth of tax collections. Unexplained income tax revenue: "Tax collections in both 2020 and 2021 were larger than the currently available data on economic activity would suggest," according to the CBO report "The Budget and Economic Outlook: 2022 to 2032" issued on May 24. "That unexplained... Read more →
June 14, 2022, at 6:45 a.m. That's the precise point from which the Internal Revenue Service will never be the same. Darren Guillot, IRS Deputy Commissioner of Small Business/Self Employed Collection & Operations Support, offered that assessment today in announcing the agency's expansion of artificial intelligence voice bots. That date and time was when the agency flipped the switch on so-called authenticated voice bots. This new artificial intelligence system can complete more elaborate tax paying tasks for taxpayers. More importantly, it allows taxpayers using the bots to avoid the hold times they would have faced if they called an IRS... Read more →