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 →
Penalties
The United States' tax system depends on voluntary compliance by taxpayers. But Uncle Sam is no fool. He and his tax collectors are believers of the adage "trust, but verify." The Internal Revenue Service also follows up on that verification with penalties when it finds taxpayers — and the professionals we pay to take care of our taxes — aren't fulfilling our tax responsibilities on our own. The most severe punishments come via criminal tax prosecutions. The IRS also employs civil actions to get due taxes. And many of us are familiar with the various fines and fees that are... Read more →
No person, place, or animal is left untouched after a natural disaster. Florida's cattle ranchers and other agribusinesses were slammed by Hurricane Ian. (Photo by Jo-Anne McArthur on Unsplash) Hurricane Ian hit southwest Florida around three weeks ago. The deadly storm moved across that state, and then, after entering the Atlantic, curved into the Carolinas for a second U.S. landfall. People are still in shock. Some are dealing with property still underwater. All are worrying about how they'll recover. The federal government, through the Federal Emergency Management Agency and Small Business Administration, is offering relief programs. Some folks are looking... Read more →
The October filing extension deadline, which falls on Oct. 17 this year since the 15th is Saturday, is less than a week away. The Internal Revenue Service is waiting on the uber procrastinators to get their filings in by next Monday. But the IRS isn't the only federal financial office awaiting postponed documents. FinCEN also demands extended FBAR filings be in by Oct. 17. Taxable money, but not an IRS issue: FBAR, or Report of Foreign Bank and Financial Accounts, is how FBAR information is the federal government's way of tracking foreign bank and financial accounts owned by U.S. taxpayers.... 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 →
Taxes and COVID-19 have been inextricably linked since the coronavirus reached the United States in 2020. Several federal relief packages were enacted, with the Internal Revenue Service given the task of distributing the payments. The agency had mixed success with this added responsibility. Then there was the backlog of filings that resulted from COVID-related IRS office closures. This was, by all accounts, an unmitigated disaster. The agency is still digging out of its coronavirus paperwork accumulation, and taxpayers are still dealing with problems created when automatic nonpayment penalty notices were issued. Now the IRS is trying to make that somewhat... Read more →
Barclays Bank building in Madrid (Photo by M.Peinado from Alcalá de Henares, España - 001782 - Madrid, CC BY 2.0) It's not a crime to put your money into legitimate foreign financial institutions. However, if the amount meets a certain threshold, you are required to report that money to the U.S. government. When U.S. taxpayers ignore this process, officially known as filing of a Report of Foreign Bank and Financial Accounts, or FBAR, they can face costly consequences. That's the case in the FBAR collection complaint filed Aug. 15 by federal officials seeking judgment against the defendant who, per the... Read more →
Was this you on Tax Day, struggling with your return? If you just decided to chuck it and you owe, you need to file by June 14 or face an added tax penalty. (Photo by Mikhail Nilov) Did you totally miss Tax Day? If so, and you owe the Internal Revenue Service a now overdue payment, the agency says it's not too late. In fact, if you pay up soon, specifically by next Tuesday, June 14, you'll avoid a larger noncompliance charge. Normal tax penalties: Under normal non-filing and non-payment calculations, the IRS assess two penalties. The late-filing penalty is... Read more →
via GIPHY So, you missed Tax Day. It happens. Don't panic. But don't dawdle. The Internal Revenue Service is serious about wanting your tax forms and, of course, any taxes you owe. If you miss the annual deadline, regardless of exactly when it falls, then you'll likely end up facing filing-related penalties, the harshest of which is for not filing at all. Below are four things you need to do now to get out of that penalty jam with as little damage as possible. Plus, there's a fifth tax move that could pay off for folks who aren't legally required... Read more →
The time left until Tax Day 2022 is tick, tick, ticking away. If you're feeling like silent movie legend Harold Lloyd, hanging on by your fingernails as you try to finish your Form 1040 by Monday, April 18, rescue yourself by filing instead for a six-month extension. Most of us are procrastinators at some point in our lives. This tendency to hold back tends to show up when we're facing particularly difficult decisions or tasks. Tax filing time is one of those times. But waiting until the last minute can be costly. If we get in a hurry to meet... Read more →
In 2016, a law change moved the due date for the required filing of Reports of Foreign Bank and Financial Accounts, or FBAR, to coincide with the annual April individual federal tax return deadline. FBAR information is the federal government's way of tracking foreign bank and financial accounts owned by U.S. taxpayers. Since Tax Day gets a lot of attention every year, the date change was seen as a way to make sure more people were aware of FBAR filing requirements. So FBAR filings this year are due on April 18, a few days later than usual due to the... Read more →
I understand not filing until the absolutely latest minute. Been there, done that. I also get why some people delay the inevitable: they owe taxes. Been there, done that, too. Sometimes, that amount due the U.S. Treasury seems impossible to pay. Thankfully, I've never quite been at this stage, but it happens to many filers. The first thing to do if you find yourself in this situation is to not panic. Then look at your options. The Internal Revenue Service offers taxpayers a variety of ways to pay their unexpectedly large tax debts. Pay something — and file — to... Read more →
Volodymyr Zelenskyy, president of Ukraine, made an emotional plea to U.S. lawmakers for more help as his country battles Russian aggression. Screenshot of the address from C-SPAN broadcast. Ukrainian President Volodymyr Zelenskyy spoke directly to members of the U.S. Congress this morning, urging them to do more to protect help his country's efforts to fight Russian invaders. At one point in the virtual speech, delivered remotely from his country's war-torn capital Kyiv, Zelenskyy called on President Joe Biden to be the world's "leader of peace." Hours after the emotional plea, Biden responded. He thanked Zelenskyy for his address, and pledged... Read more →
Some of my friends are done with COVID-19, and have taken to traveling again, both within the United States and abroad. I'm not quite there yet, but if it works for them and I'm not on their flight or cruise ship, good for them. Also good for those who are taking international trips. I get to see their social media photo travelogues, and I know they are being responsible taxpayers. If they owed a major debt to the Internal Revenue Service, which currently is deemed an unpaid tax bill of $55,000 or more, they likely would have had their passports... Read more →
Photo by Lamar Belina from Pexels After pressure from members of Congress, the National Taxpayer Advocate, and the Tax Professionals United for Taxpayer Relief Coalition, a group of organizations formed the to help make this third Covid-affected tax season a bit smoother, the Internal Revenue Service has decided to suspend sending of most taxpayer notices. This latest moratorium on taxpayer notices is the second in less than two weeks. It comes on the heels of the major taxpayer problems created by issuance of automated collection notices, or CP-80s. These alerts normally go out when a taxpayer owes tax, and the... Read more →
The 2022 tax filing season officially begins on Monday, Jan. 24. Some people, however, are not convinced the Internal Revenue Service is ready. The concern isn't just about the millions of 2021 returns that will be flooding the IRS' system, but also the millions of returns the agency is still processing from the previous COVID-affected filing seasons. That backlog and continuing challenges prompted a coalition of tax practitioners and advocacy groups to write the IRS and Treasury Department, urging those leaders to "take steps to ameliorate the situation." Specifically, the representatives from 11 tax and public advocacy organizations want the... Read more →
Photo by Andea Piacquadio from Pexels Back in olden times, taxpayers put their literal signatures on the 1040 forms they filed with the Internal Revenue Service. Now, most of us electronically sign our tax returns. Regardless of which method you use, the end result is the same. If you don't sign your tax return, it's not a valid submission. That oversight cost one expatriate couple $12,697 in tax refunds. The loss recently was affirmed the Federal Circuit Court of Appeals. The ruling gets this weekend's Sunday Shout Out. I'll let you read it yourself. It's not that long (just nine... Read more →
IRS via Twitter The millions of taxpayers who must make estimated tax payments this month get a few more days to come up with the money. Since the usual Jan. 15 deadline is Saturday, and the next business day is Monday's MLK Day federal holiday, the fourth estimated deadline for 2021 payments is Tuesday, Jan. 18. Taxes on self-employment earnings: More than 20 million individuals make these extra tax payments each year. They generally total four, with the payment amounts reflecting earnings that aren't subject to withholding received during four segments of the tax year. Estimated taxes typically are paid... Read more →
The United States has a voluntary compliance tax system. Uncle Sam trusts all of us to follow the tax laws and file and pay any amounts that are due the U.S. Treasury. But Uncle Sam is no fool when it comes to taxes. He also has a system of penalties to encourage or, if we refuse, punish us for not fulfilling our tax responsibilities on our own. The most severe are criminal prosecutions. The Internal Revenue Service also employs civil actions to get taxes due. Most of us, though, are more familiar with the fines and fees that are assessed... Read more →
The big deadline change for 2021 was when the Internal Revenue Service extended the regular income tax filing deadline from April 15 to May 17. But it also made a few more calendar moves, including one that this month affects folks with foreign financial accounts. The IRS left in place the due date for filing Form 114, Report of Foreign Bank and Financial Accounts, usually referred to as FBAR. Sort of. Although the tax agency didn't move the April deadline, it did grant FBAR filers an automatic extension until Oct. 15. That's right. Owners of foreign accounts now face the... Read more →