Federal Tax Posts

Even if you can’t pay your tax bill, you can avoid excessive penalties by taking certain steps. The IRS recommends that you file your tax return or request an extension and pay what you can to minimize penalties and interest. Not filing will result in a failure-to-file penalty of 5% of the unpaid tax required to be reported, per month or part of a month. [...]

A reminder: Taxpayers receiving Social Security (SS) benefits may have to pay federal income tax on a portion of those benefits. For example, up to 85% of a taxpayer’s benefits may be taxable if he or she is: 1) filing single, head of household or qualifying widow or widower with more than $34,000 income, 2) married filing jointly with more than $44,000 income, 3) married [...]

Many U.S. taxpayers don’t speak English well enough to understand their rights and responsibilities under tax law. That includes their eligibility for federal stimulus checks and other tax relief during the COVID-19 crisis. To reach as many people as possible, the IRS translates tax information into multiple languages. To get information in one of those languages, taxpayers can click on the language dropdown tab at [...]

If you owe money to the IRS, a bill may be coming your way soon. As a result of office closures due to the COVID-19 crisis, the IRS had been unable to mail some previously printed “balance due” notices. But the notices will be delivered to taxpayers in the next few weeks as IRS operations continue to reopen, according to the tax agency. An insert [...]

COVID-19-affected investors and businesses involved in New Markets Tax Credit transactions are granted deadline relief. The extension applies to community development entities (CDEs) and qualified active low-income community businesses (QALICBs) working in low-income communities. IRS Notice 2020-49 provides a CDE or QALICB with a deadline extension for certain time-sensitive acts due to be performed on or after April 1, 2020, and before Dec. 31, 2020. [...]

Proposed IRS regulations define real property for Section 1031 like-kind exchanges. Under the Tax Cuts and Jobs Act, Sec. 1031 like-kind exchange rules are limited to exchanges of real property completed after Dec. 31, 2017. The proposed regs reflect this change by amending the existing regs to add a definition of real property. The proposed regulations also provide a rule addressing a taxpayer’s receipt of [...]

Reminder: The extended deadline for paying estimated taxes is about a month away. If you pay estimated taxes, be aware that the first and second quarter payments for tax year 2020, which were originally due April 15 and June 15, are now due July 15. Individuals and corporations that make quarterly estimated tax payments have until July 15 to make their payment without penalty. The [...]

A leave-sharing program is one an employer sets up where employees can donate their vacation, sick or personal leave in exchange for the employer making cash payments to a tax-exempt organization. The IRS just provided guidance on leave-sharing programs that provide relief to COVID-19 victims. Specifically, Notice 2020-46 provides that cash payments employers make, under leave-sharing programs, to tax-exempt organizations providing relief to COVID-19 victims, [...]

Proposed IRS regulations would allow deductions for certain medical expenses. The U.S. tax code allows taxpayers to claim itemized deductions for eligible medical expenses to the extent they exceed 7.5% of adjusted gross income in 2020. Under the proposed regs, payments for direct primary care arrangements and for membership in a health care sharing ministry could be deducted. Also proposed: These payments could be reimbursed [...]

Childcare and adult dependent care can be expensive. That’s especially true for essential workers with dependents, now that schools and many traditional care services are closed during the COVID-19 crisis. The IRS is reminding taxpayers that they may be able to claim a valuable tax credit if they pay for care for qualified persons. The IRS defines a taxpayer’s qualifying person as a dependent who [...]

Large dollar tax refunds may not get proper scrutiny, according to a recent report. The Treasury Inspector General for Tax Administration (TIGTA) audited the handling of tax refunds that exceeded $2 million for income, estate, gift and certain excise taxes for non-C-corporation taxpayers or exceed $5 million for C corporations. Tax law requires that such refunds be examined by the IRS and then reviewed by [...]

The IRS announced on June 4 that interest rates will decrease for the 3rd calendar quarter starting July 1. The rates will be 3% for overpayments (2% for a corporation), 0.5% for the portion of a corporate overpayment exceeding $10,000, 3% for underpayments, and 5% for large corporate underpayments. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For [...]

In a website message, IRS Commissioner Charles Rettig explained that the agency is reopening facilities in various states after curtailing operations because of the COVID-19 pandemic. The IRS is now bringing more employees back into its offices to do work that can’t be performed remotely. The first phase includes certain employees in Kentucky, Texas and Utah. The next steps include opening offices in the following [...]

The IRS has provided a safe harbor for taxpayers that develop renewable energy projects. For some projects that began construction in 2016 or 2017, Notice 2020-41 adds an extra year to the 4-year “continuity safe harbor” provided in existing guidance. This is to reflect that COVID-19 has caused delays in the supply chain for components needed to complete energy projects. The Notice also provides other [...]