Federal Tax Posts

The IRS has updated its FAQs on higher education emergency grants to address questions related to the CARES Act. Enacted in 2020, it allows institutions of higher education to use certain funds to support students with expenses and financial needs related to the COVID-19 crisis. For example, the IRS explains that emergency financial aid grants for unexpected expenses, unmet financial need, or expenses related to [...]

The IRS’s Get My Payment tool provides taxpayers with information about the status of their 2021 Economic Impact Payments. So, what information can you expect to receive when using the tool? Among other things, a payment status will inform you of whether your payment has been processed and whether it will be sent by direct deposit or mail. It will also provide a payment date [...]

U.S. Secretary of the Treasury Janet Yellen has called for a global corporate minimum tax rate. “We’re working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” said Yellen. “Together, we can use [the minimum tax rate] to make sure that the global economy thrives based on a more leveled playing field in the [...]

The IRS has announced that the purchase of personal protective equipment (PPE), such as masks, hand sanitizer and sanitizing wipes, purchased for the primary purpose of preventing the spread of the COVID-19, is a deductible medical expense. Amounts paid by an individual taxpayer for PPE for use by the taxpayer, the taxpayer’s spouse or dependents that aren’t compensated for by insurance are otherwise deductible so [...]

With many taxpayers working from home due to COVID-19, you may be wondering about the possibility of claiming home office deductions on your tax return. Unfortunately, employees aren’t currently eligible. However, self-employed homeowners and renters who are otherwise eligible can claim deductions. Deductible expenses include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent. Taxpayers must meet certain requirements to deduct home expenses, and the [...]

When filing your tax return, is it better to take the standard deduction or claim itemized deductions? It depends. The standard deduction changes yearly and is based on filing status and age. Itemizing requires more calculations but can save taxes if the total deductions exceed the standard deduction. Those most likely to benefit from itemizing are those who pay state and local income tax, mortgage [...]

If your business accepts large cash transactions, you may have to report them to the IRS. Generally, a business that receives more than $10,000 in one cash transaction or related transactions must file Form 8300 (Report of Cash Payments over $10,000). Though many cash transactions are legitimate, information on Form 8300 can help the government thwart those who would evade taxes, profit from drug trading, [...]

In Notice 2021-20, the IRS provides guidance on claiming the employee retention tax credit for calendar quarters in 2020. The guidance clarifies details about the credit and describes retroactive changes made under a law enacted recently. Among other things, the guidance explains whether an employer that received a Paycheck Protection Program loan can also claim the employee retention credit for 2020. The notice also explains [...]

The tax filing season is in full swing and a new report is predicting potential problems. A Government Accountability Office (GAO) report has concluded that the IRS “has not fully identified and assessed all risks to the 2021 filing season consistent with enterprise risk management (ERM) practices.” As described in the report, the essential elements of ERM are aligning the ERM process to goals and [...]

A new tax incentive may give disaster relief funds a huge boost to certain donations from corporations. In 2020, the Consolidated Appropriations Act (CAA) established a new category of “qualified disaster relief contributions.” Under the CAA, corporations can deduct up to 100% of their taxable income for contributions to qualified disaster areas. Qualified disasters are those which occurred after Dec. 27, 2019 and before Dec. [...]

It’s full speed ahead for the 2020 tax season now that the IRS is accepting returns. Here are some IRS tips to help you avoid common errors that will slow the filing process and delay a refund if you’re due one. Bring all required Social Security (SS) numbers to your tax appointment and check them for accuracy. Also be sure names are spelled correctly and [...]

The IRS needs to tighten procedures for direct deposit of refunds, according to a recent report. The Treasury Inspector General for Tax Administration (TIGTA) initiated an audit after an internal referral revealed that a program weakness “facilitated an IRS employee being able to divert and steal taxpayer refunds.” TIGTA earlier recommended that the IRS require software developers to modify direct deposit programs. Five vendors didn’t [...]

The IRS may request tax-related information about a U.S. citizen or resident’s foreign bank or other accounts. According to the IRS, the action is in accordance with the Foreign Account Tax Compliance Act (FACTA), and applies even if the U.S. doesn’t have a tax treaty or other agreement to exchange tax information. The FATCA generally requires withholding agents to withhold tax on certain payments to [...]

As a new tax season approaches, the IRS continues dealing with delays due to COVID-19. According to an update on the IRS website, that includes processing millions of unopened tax returns. Refunds due will be sent in 2021 by paper check. To taxpayers expecting responses by mail, the IRS stated: “While we are opening mail within our normal timeframe, processing these responses is taking longer [...]