TaxMama’s TaxQuips We Win and We Lose

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Today TaxMama®  wants to update you about some IRS announcements that may affect your tax life.

 

 

 

Dear Family,

The IRS is putting out Tax Tips on a daily basis, as they have for several years now. The only problem is, they seem to be recycling old news and not updating it for this year’s COVID19 practices.

For instance, an otherwise good outline on filing amended returns, Form 1040X, doesn’t include the information, that for the first time, we are able to file the 2019 (only) 1040X electronically – and should do so (since the IRS still hasn’t caught up with the paper mail).

The IRS has reopened the opportunity to file for the extra $500 economic impact benefit  for having a dependent. If you have not yet filed a tax return and didn’t use the nonfiler tool, you have until September 30, 2020 to file a claim for that extra $500. If you really need this money now, please read the instructions slowly – they are not long. Otherwise, sit back and wait until you file your 2020 tax return next year.

Here’s some great news, though – a win for the good guys.
The IRS has agreed to turn off the computer process that’s automatically sending out balance due notices – until they finish opening all the mail.

(Back story) Last month, someone at our IRS Issue Management Resolution System (IMRS) meeting was pointing out that his clients were getting past-due notices from the IRS, even though they had paid their taxes – by check.  Since the IRS is still opening all the mail and posting the information to the taxpayers’ accounts, those paper payments are not showing up – even if the check was deposited. (It goes through different processes and hands.) The big problem, aside from the false balance due, is that taxpayers would have to respond in writing and the IRS wouldn’t open that letter for a long time. So the computer would keep spewing out notices until the balance turned into a lien and, potentially a levy on the taxpayer’s accounts.

We pointed out to the IRS that this is a totally lose-lose situation, a waste of everyone’s time, terrifying taxpayers who acted in good faith – and would cause extra work for everyone.

Within about 3-4 weeks after that discussion, the IRS turned off that system
Hip, Hip, Hooray!!!

(SEE, who says the IRS doesn’t listen?)

Some losses/confusions – now and for the future.

On a related note – the CARES Acts have allowed employers to delay submitting all their payroll tax deposits until next year, while being able to get some tax credits for providing family leave and a variety of other employment issues.
However, the IRS has been sending out notices to those employers for underpaying their payroll taxes. I think the IRS software folks are still trying to figure out the mathematical algorithms to track the deferrals of the payments; identify/log when they will be due; take into the account the tax credits that are allowable for the payroll and family leave credits, and the taxes. So if you or your clients get underpayment notices on payroll taxes, you may just have to reach out to the IRS directly to sort out the balances due and penalty abatements. I really DO wish Congress would think it through when they make complicated law changes. This may take a while to sort out. Regardless, the effects will span at least two years.

Those payroll tax withholding deferrals announced by the President. This allows employers to stop withholding the employee’s Social Security portion from their paycheck (6.2%). Sounds like good news right? But the truth is, all those employees will need to REPAY this next year before April 30th. And where will they get that money then?

TaxMama’s advice? If you are working and earning a paycheck, don’t fall for this.
Tell your boss to take the normal withholding. OR start saving up to pay it back next year.

Folks who are not working and could really use some help get no benefit from this kind of a short-term benefit. What they need are jobs.

And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free.
Where? Where else? At www.TaxMama.com .

Reminder – Some Helpful IRS Links

IRS CoronaVirus updates – https://www.irs.gov/coronavirus

Which IRS services are open and available – keep an eye on this link
https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

IRS Electronic Options
https://www.irs.gov/newsroom/irsgov-helps-taxpayers-get-tax-information-they-need-find-tools-for-filing-paying-checking-accounts-and-answering-questions

IRS Online Assistance Available
https://www.irs.gov/newsroom/irs-urges-taxpayers-to-use-electronic-options-outlines-online-assistance

Dealing with audit or collections issues – IRS is keeping this page up to date
https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program

Of course, all the filing and paying deadlines – including taxpayers overseas whose June 15th filing deadline has been pushed back to July 15th.
https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers?

And a great chart:
How to Use the Tools on IRS.gov to Get Your Economic Impact Payment
https://www.irs.gov/newsroom/how-to-use-the-tools-on-irsgov-to-get-your-economic-impact-payment

There are lots more things going on – watch the information in the IRS Newsroom –
https://www.irs.gov/newsroom  and TaxMama.com

And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com .

Incidentally, I don’t know if you know – TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves.

To make comments please drop into the TaxQuips Forum.

 

 

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