We got our first tax statement yesterday. It's our mortgage lender's Form 1098 with details on potentially tax-deductible amounts like loan interest and property taxes. This is just one of the documents that millions of taxpayers are awaiting so they can file their returns. In addition to tax-related home transactions, the various documents that are or soon will be on their way include documents detailing income, be it from wages, contract work or retirement accounts; investments; winnings and/or gambling proceeds; and in some cases, health care information. A handful of these documents must be submitted with Form 1040. Most, however,... Read more →
Taxes
The Rev. Dr. Martin Luther King in Washington, D.C., in 1963 where he delivered his "I Have A Dream" speech. (Photo via Wikimedia) It's Dr. Martin Luther King, Jr. Day 2021. If there's one tiny, thin silver lining to the terrible times we are enduring due to COVID-19 and political unrest, it's that these awful realities should help us focus on Dr. King's efforts. Equal justice: It is the first MLK Day following the creation of the Black Lives Matter movement. The deaths of George Floyd and Breonna Taylor and too many others that sparked this 21st century drive for... Read more →
Four years ago, Congress forced the Internal Revenue Service to again use private collection agents (PCAs). This third deal with debt collectors came after the IRS ended two previous arrangements when they proved to be, shall we say, problematic. Now it looks like the current IRS PCA collaboration also has some issues. Low collection rate: A recent Treasury Inspector General for Tax Administration (TIGTA) report says that the private tax debt collectors currently under IRS contract have brought in just a fraction — 1.79 percent of the total value of accounts — of the $30 billion in unpaid tax they've... Read more →
Soon after Joseph R. Biden trades in his former Vice President honorific for President on Jan. 20, the now-Democratic led Congress will take up the 46th Commander in Chief's COVID-19 relief plan. Millions of Americans, even those who didn't vote for Biden and VP-Elect Kamala Harris, are hoping it passes soon. The key appeal of the plan is more coronavirus relief money. Last year, some House and Senate Republicans joined their Democratic colleagues in calling for the second economic relief payment of $2,000 per person. That was trimmed to $600 per person in the final bill that became law on... Read more →
If you file your tax return as early as you can, mark Feb. 12 on your calendar. That's the day this year that the IRS will start accepting and processing 2020 returns. Are you ready for another wild tax season due to the coronavirus pandemic? Neither am I, but it looks like that's what will happen, at least to some degree. When the Internal Revenue Service today opened Free File, its online, no-cost tax preparation and e-filing option, at essentially the same time as it did last year, I was hopeful we were getting back to tax normal. But alas,... Read more →
Attention early tax return filers. The 2021 tax filing season now is officially, although only partially, open. UPDATE, Jan. 15, 11:20 a.m.: The full 2021 filing season will start on Feb. 12. Details to come shortly in a separate post. UPDATE, Jan. 15, 4:00 p.m.: The IRS opened up its Free File site on Jan. 15. It also announced that it will officially open the full 2021 tax filing season on Feb. 12. That's when the IRS will start accepting and processing all 2020 tax returns, regardless of how they are filed. The Internal Revenue Service announced today that eligible... Read more →
Image via GIPHY If you were part of the millions of taxpayers who didn't get their refunds — and I am seeing on social media that even into 2021, some people are still waiting … — the National Taxpayer Advocate (NTA) feels your pain. NTA Erin M. Collins included that complaint in her list of the 10 most serious problems facing taxpayers. The list is part of the Internal Revenue Service watchdog office's Annual Report to Congress, which was released on Wednesday, Jan. 13. Tax fraud fighting delays: There's a common thread among the 1040s where refunds are delayed. These... Read more →
The Internal Revenue Service is already accepting e-filed business returns and says Free File for eligible individuals to do their taxes and electronically file at no cost will open in mid-January. If you use Free File, get ready. The Internal Revenue Service says it will open in mid-January. UPDATE, Jan. 15, 2021: Soon is here! The IRS opened up its Free File site on Jan. 15. It also announced that it will officially open the full 2021 tax filing season on Feb. 12. That's when the IRS will start accepting and processing all 2020 tax returns, regardless of how they... Read more →
I'm feeling a bit like the Internal Revenue Service's appointments secretary, but this Friday, Jan. 15, is a date when many taxpayers need to take action. Yes, I'm talking about the fourth estimated tax payment due at the end of this week, but also about some final tax year 2019 housekeeping. Specifically, individuals and businesses who were in the paths of some major disasters last year. The timing of those catastrophes prompted the IRS to give taxpayers who had already filed for an extension to finish their 2019 tax returns until Jan. 15, 2021, to complete them. These folks now... Read more →
Millions of taxpayers are facing a deadline at the end of this week. No, unfortunately I am not talking about the Jan. 15 mark that the Internal Revenue Service is required by law to meet in distributing the second round of COVID-19 economic relief payments. I'm talking about paying Uncle Sam instead of getting money from him. The final estimated tax payment for tax year 2020 is due on Friday, Jan. 15. Taking care of taxes yourself: Around 22 million individuals file these extra tax payments, which total four if you make them for the full tax year. They are... Read more →
UPDATE, Jan. 18, 2021: And the jackpots keep growing. No one has hit all the numbers yet in the two nationwide lotteries. The Powerball payout now is $730 million. Mega Millions rises to $850 million. It's the first time in the games' history that both have topped $700 million. Picking lucky numbers from a lottery game dispenser. More than $1 billion is up for grabs in the two nationwide lotteries. The Powerball jackpot is at $550 million. A solo Mega Millions winner will walk away with $600 million. Since I know you've got your lotteries tickets in hand, here are... Read more →
Image: IRS "A Closer Look" In looking back at 2020, the Internal Revenue Service thinks it did a pretty good job, all things considered. That's the assessment from IRS Commissioner Chuck Rettig as his agency released its annual progress report, Internal Revenue Service Progress Update/Fiscal Year 2020 – Putting Taxpayers First. "The COVID-19 pandemic presented some of the greatest challenges to the IRS in its history, both in terms of being able to carry out our mission and in protecting the health and safety of taxpayers and our own workforce," wrote Rettig wrote in the report's opening message. "IRS employees... Read more →
When the Internal Revenue Service issued the first round of COVID-19 economic relief payments as debit cards last year, a lot of them ended up in trash cans. Many folks thought the mailing was just another slick marketing attempt to get them to apply for an added credit card. They tossed those envelopes and the valuable relief cards they contained in the trash. So that this next batch of approximately 8 million COVID relief debit cards now hitting (or at least heading to) mail boxes isn't mistaken for junk mail, the IRS has made changes to the envelope. Clear envelope... Read more →
Misdirected direct deposits of COVID-19 economic relief payments are getting a lot of attention. They should. But this is not a new problem. Lost electronic tax refunds happen every filing season. What is new is the mechanism the Treasury Department established at the end of 2020 to deal with errant Internal Revenue Service direct deposits. A new regulation, the final version of which was published in the Federal Register on Dec. 22, 2020, details how taxpayers report this problem and how the IRS should handle it and get filers their misdirected money. Previously, not the IRS's problem: More of us... Read more →
If you're among those anxiously awaiting your second COVID-19 economic relief payment (EIP), you have one more thing to worry about. Scammers are trying to get their hands on your money before you do. These criminals also are trying to get you to help them do just that. And the latest confusion about delivery of relief money to closed bank accounts could increase coronavirus relief scams. Bad bank account problems: Up to 14 million taxpayers who used tax preparation software to file their returns last year and opted to get advances of their expected refunds on pre-paid debit cards are... Read more →
Photo: Pixabay via Pexels The good news, at least from the reports I'm getting from my family, friends, folks in the tax community and social media, is that people are getting their second COVID-19 economic impact payments (EIPs). This latest round of payments officially is a tax credit known as the Recovery Rebate. It was part of the end-of-year federal funding bill, aka the Consolidated Appropriations Act, 2021 (CAA). The Internal Revenue Service started directly depositing the money, based on information it has in its system, on Dec. 29, two days after the legislation was signed into law. Now the... Read more →
Have you received your $600 COVID-19 economic impact payment (EIP)? If not, then you're probably doing the same thing as Purcival Fairweather. You're checking, double checking and rechecking yet again your bank account to see if the coronavirus cash is finally there. $600 check? More like check my account 600 times. — Purcival Fairweather 🍾 (@purcival) January 2, 2021 But your obsessive bank badgering won't have to go on very much longer. If your EIP doesn't arrive by Jan. 15 or shortly thereafter it's sent out as a debit card or paper U.S. Treasury check, then you're not getting it.... Read more →
Remember when you were a kid and you told mom about the latest misdeed committed by your little brother. Oh, wait. Maybe that's just me reminiscing. And as I recall, while my mother was glad to know when my younger sibling did or was about to do something (I was a proactive big sister!) that was dangerous (he was the more adventurous one), she emphasized that continually tattling about everything Ben did that annoyed me was not productive. And I never got rewarded for my snitching observations. My mother would not have made a very good Internal Revenue Service Whistleblower... Read more →
A new year is time for reassessment and resetting of priorities. That's true in the tax world, too. But to know what needs to be fixed or at least rejiggered, you also have to look back at what went wrong. Again, that applies in to taxes. Not surprisingly, the horrid 2020 offers us plenty, in our personal and professional lives, to re-evaluate. One more time, also a tax world truth. That's why today's Saturday Shout Out — the first of 2021 in this continuing feature; you can read 2020's if you want to reminisce — goes to Howard Gleckman's 2020... Read more →
Photo by Olya Kobruseva via Pexels Happy New Year! Oh, sorry. Was I typing too loud? I'm glad you were able to festively, and I hope safely, ring in 2021. Now that it's here, it also brings a new tax filing season. The Internal Revenue Service's delivery of the second round of COVID-19 relief money shouldn't hamper its handling of 2020 returns, which should officially start later this month. So if the IRS can be ready, so can we. So here are a few tax things to think about and take care of, after, of course, you're fully recovered from... Read more →