Federal Tax Posts

Generally, individuals can roll funds from one IRA into another within 60 days, tax-free. The IRS may waive the 60-day rule when the failure to meet the deadline is due to events out of the reasonable control of the taxpayer. In one case, a taxpayer received an IRA distribution and failed to meet the rollover deadline. She contended that the financial institution that issued the [...]

Don’t fall for misleading ads that claim you can easily resolve your tax debt for “pennies on the dollar,” warns the IRS. These ads made the IRS 2020 list of “Dirty Dozen” top scams that target taxpayers. While it’s true that taxpayers who owe more than they can pay can seek an “Offer in Compromise” (OIC) from the IRS, unscrupulous companies exaggerate the chances of [...]

Here’s a reminder for taxpayers using the IRS’s Income Verification Express Service (IVES). July 31 is the deadline for providing an electronic signature and certifying the update of your account. The IVES program is used by mortgage lenders and others in the financial community to confirm the income of a borrower during the processing of a loan application. In order to update its records and [...]

Some people missed the July 15 federal tax filing deadline. If a person is entitled to a refund, there’s no penalty for filing late. But if there’s a balance due, penalties and interest began accruing on unpaid taxes on July 16, 2020. The IRS urges anyone who owes tax and didn’t file (and didn’t request an extension) to file as soon as possible. If a [...]

So you’ve filed your income tax return, you’re getting a refund, and you’re eager to receive it. The IRS says it normally issues most refunds in less than 21 days. Taxpayers who mailed their tax return will experience a longer wait. Using the IRS’s “Where’s My Refund?” tool, you can check the status of your refund. Its tracker displays progress through three phases: Return Received, [...]

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 [...]