Federal Tax Posts

At the start of the new tax season, the IRS is reminding taxpayers to be alert for scam phone calls. Criminals make aggressive calls posing as IRS agents in an attempt to steal money or personal information. Here are tips from the IRS on how spot a scam call. IRS agents will never demand a specific payment type (such as prepaid debit card, gift card, [...]

The Omicron surge of the COVID-19 pandemic continues to interrupt and alter how business gets done. The U.S. Tax Court isn’t immune. It has been announced that several in-person trial sessions in coming weeks will be remote, using the government-customized Zoomgov client. Affected sessions are those set for Atlanta, Cincinnati, New York, Philadelphia, San Francisco, Washington D.C. and Winston-Salem. A session that was to take [...]

The IRS announced that all third-round Economic Impact Payments (EIPs) have been issued. The tax agency is reminding eligible taxpayers how to claim any remaining stimulus payment they’re entitled to on their 2021 income tax returns. Parents of a child born in 2021, or for families who added a new qualifying child in 2021, who didn’t receive a third-round EIP for that child, may be [...]

If you’ve paid or accrued foreign taxes to a foreign country and are subject to U.S. tax on the same income, you may be able to claim a foreign tax credit. Generally, only income, war profits and excess profits taxes qualify for the credit. The IRS recently issued final regulations relating to the foreign tax credit. Among other things, the regs provide guidance on the [...]

How do you determine if a worker is an employee or an independent contractor? The IRS Office of Federal, State, and Local Government recently held a webinar to answer that question. Worker classification is determined by the relationship between a worker and the business, and whether the business can control how tasks are performed. A business controls a worker if it can place restrictions on [...]

Businesses should use Form 1099-NEC, “Nonemployee Compensation,” to report payments of $600 or more to nonemployees during 2021. Be aware that such payments could be subject to backup withholding in certain cases. Payers of nonemployee compensation during 2021 generally are required to file these forms by Jan. 31, 2022. Backup withholding could apply if the recipient of compensation hasn’t provided a Taxpayer Identification Number (TIN) to [...]

The U.S. Tax Court ruled that a married couple’s miniature donkey breeding activity was conducted with a profit motive. The IRS had earlier determined it was a hobby and the couple was liable for taxes and penalties for the two tax years in which they claimed losses of more than $130,000. However, the court found the couple had a business plan, kept separate records and [...]

If you received Economic Impact Payments (EIPs) or advance Child Tax Credit (CTC) payments in 2021, expect to hear from the IRS in January. Letters will be mailed, listing the total EIPs or CTC payments you received. Keep the letters with your tax records. Depending on your eligibility, you may be able to claim an additional EIP, called a Recovery Rebate Credit, on your 2021 [...]

The Treasury Inspector General for Tax Administration (TIGTA), has issued its “Semiannual Report to Congress.” For the second half of fiscal year 2021, TIGTA conducted audits and investigations of the IRS resulting in “recovery, protection and identification of monetary benefits totaling more than $9 billion,” the report said. The report noted concern about the processing of advance Child Tax Credit (CTC) payments, stating that TIGTA [...]

In a report, the Congressional Budget Office (CBO) provides a budget overview for fiscal year 2021. The federal budget deficit in 2021 totaled nearly $2.8 trillion, almost $360 billion less than the deficit in 2020 but about triple the shortfall incurred in 2019. “During the past two years, deficits were much larger than they have been historically because of the economic effects of the coronavirus [...]

The National Taxpayer Advocate (NTA) is reporting that as of late October, the IRS had a backlog of more than 2.7 million unprocessed amended tax returns. The IRS claims the processing time for these returns is about 20 weeks. The NTA, however, says that Taxpayer Advocate Service (TAS) cases indicate that it’s taking the IRS “considerably longer than 20 weeks” to process the returns. This [...]

The IRS is sending out refunds averaging $1,189 to 430,000 taxpayers. This is the latest batch of refunds based on American Rescue Plan Act (ARPA) changes made after many taxpayers had already filed their 2020 returns. Generally, unemployment benefits are taxable income. But, for 2020, the ARPA allows taxpayers with modified adjusted gross income under $150,000 to exclude unemployment benefits of up to $10,200 from [...]

In a recent audit, the Treasury Inspector General for Tax Administration (TIGTA) evaluated the Taxpayer Advocate Service’s (TAS’s) response to CARES Act issues. “TAS has taken numerous actions to assist taxpayers in response to the enactment of the CARES Act,” the audit said. However, the audit determined that “TAS accepted cases that did not meet its criteria and did not properly track CARES Act issues.” [...]

Ten months into the 2021 fiscal year, the estimated federal budget deficit soared to $2.5 trillion, the Congressional Budget Office (CBO) reported. Estimated revenues rose 17% over the same period last FY, which “largely reflects the general strength of the economy over the past year,” the CBO stated. Estimated outlays rose 4%, due to programs related to the pandemic response that “substantially boosted spending” in [...]