Individuals or Families, what do the Coronavirus stimulus-package tax reliefs mean to me?

The Coronavirus Aid, Relief, and Economic Security Act was designed to provide a wealth of assistance for those of us in need, but with so many different options, and changes to our laws it has caused a multitude of questions. With media summarizing important clauses and our government changing the rules as we move forward through this crisis, we are here trying to keep you apprised of what you need to know.

  1. Tax Day –  normally ends April 15 is now July 15 as the IRS division of the Treasury Department has extended filing deadline and federal tax payments regardless of amount owed.
    • If you pay estimated taxes your first estimated payment is alos now due July 15 this year,
    • However, it appears that your second estimated payment is still due on June 15, a full month prior to the first installment this year
  2. Stimulus Payments – Up to a $1200.00 per individual stimulus payment is supposed to be automatic for most taxpayers. For those that need to provide IRS information IRS has the following website setup
    • Filers go here: https://www.irs.gov/coronavirus/get-my-payment
      • IRS is aware that the site has issues and is not always work. Be patient and try back at a later time
      • NOTE – If you filed and had no refund or a balance due, IRS has chosen not to use your account information from that return. IRS will either mail a check or you can try and update your information with the website listed above.
    • Non-Filers go here: https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here
      • DO NOT USE THIS SITE IF YOU ARE A FILER. It will come back with errors or make the filing of your 2019 return more difficult
  3. Existing Installment Agreements – For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended.
    • Further. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer.
    • Note: IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.
  4. New Installment Agreements – If yoo are unable to fully pay your  federal taxes you can still resolve outstanding liabilities by entering into a monthly payment agreement with the IRS.
  5. Automated Liens and Levies – Automatic, systemic liens and levies will be suspended during this period.
    • New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.
    • Note: even though IRS has suspended these collection methods, the IRS is still sending out notices. We still recommend not ignoring these collection notices.
  6. Pension Distributions – There are changes both to Required Minimum Distributions and Early Distributions (distributions taken before you are 59.5 years old):
    • Required minimum distributions (RMDs) – RMD from some retirement accounts for 2020 have been waived, including 401(k), 403(b), and governmental 457(b) plans as well as SEP IRAs, SIMPLE IRAs, and traditional IRAs.
      • TAX OPPORTUNITY – If you don’t need the money this is an opportunity to keep the funds in a tax deferred vehicle
    • Early Withdrawal Penalty – Premature distributions from retirement funds, those made before you are 59 ½, normally incur a 10% penalty in addition to the regular tax.
      • Early withdrawal penalties will now be waived on aggregate distributions of up to $100,000 from certain workplace retirement plans and individual retirement accounts (IRAs) for COVID-19-related purposes.
      • Further the individual can elect to pay the federal income tax on the distribution over 3 years or has the option to repay the distribution within a 3-year period to an eligible retirement plan.
      • MAJOR PITFALL – If you do not replace the money, you still pay income taxes at your ordinary tax rates and income on any investments are no longer tax deferred. We recommend not taking out more than you actually need.

Economic impact payments: What you need to know!


On March 30, 2020, the Treasury Department and the Internal Revenue Service announced that distribution of economic stimulus payments would begin in the next three weeks and will be distributed automatically, with no action required for most people.

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.

Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.

Here’s who won’t get a stimulus check:

  • Single individuals making more than $99,000 (starts phasing out at $75,000).
  • Married couples making more than $198,000 (starts phasing out at $150,000).
  • Children who are 18 years old or younger.
  • College students between age 18 and 24 that are being claimed as dependents on their parent’s tax return.
  • Nonresident aliens.
  • People who haven’t filed 2018 and 2019 tax returns.

How will the IRS know where to send my payment?

If you gave the IRS your banking information when you filed your 2018 or 2019 tax return, that’s where they will deposit your stimulus check. That method should over most filers.

The IRS does not have my direct deposit information. What can I do?

If the IRS doesn’t have your banking information, they will mail your check to the address on the tax return. According to the legislation, the IRS has until the end of 2020 to transfer the payments.

If you haven’t filed a tax return for 2019.

You should know that the IRS will rely on your 2018 forms to get your contact information and look at your adjusted gross income to see if you qualify. IRS will also use the banking information from the 2018 return.

I am not typically required to file a tax return. Can I still receive my payment?

If you are on Social Security and haven’t filed a tax return for a few years, the Treasury Department said that you will not be required to file a simple tax return to receive a stimulus check.

If you need to file a tax return. How long are the economic impact payments available?

If you haven’t filed for either 2018 or 2019, you MUST file at least a simple return immediately. This will qualify you to receive the stimulus. Know that the economic impact payments will be available throughout the rest of 2020. Please contact us and we will be happy to assist you.

Typically self-employed people, freelancers, and contractors can’t apply for unemployment. This bill creates a new temporary Pandemic Unemployment Assistance program through the end of the year to help people who lose work as a direct result of this public health emergency.

I have heard that I will have to pay the Stimulus payment back on my 2020 taxes:

The stimulus payments are essentially an advance on your tax refund for 2020. You will report the credit to reduce the taxes on your 2020 tax return, since however, you already received the payment, there will be an offset and the credit will basically wash itself out to avoid double dipping.


What is the Status of my Stimulus Payment?

The IRS now has a website to assist in helping you get your Economic Impact Payment.The payments, also referred to by some as Stimulus Payments, are automatic for most taxpayers. No further action is needed by taxpayers who filed tax returns in 2018 and 2019 and most seniors and retirees.

Filers: Get Your Payment

Use the “Get My Payment” application to:

  • Check your payment status
  • Confirm your payment type: direct deposit or check
  • Enter your bank account information for direct deposit if we don’t have your direct deposit information and we haven’t sent your payment yet

https://www.irs.gov/coronavirus/get-my-payment

Update your bank account or mailing address

  • If IRS does’t have your direct deposit information from your 2018 or 2019 return – and hasn’t yet sent your payment – use the Get My Payment application to let them know where to send your direct deposit.
  • 2019 Filers: IRS will send your payment using the information you provided with your 2019 tax return. You will not be able to change it.
  • 2018 Filers: If you need to change your account information or mailing address, file your 2019 taxes electronically as soon as possible. That is the only way to let IRS know your new information.

Note: IRS is not currently able to process individual paper tax returns due to the COVID-19 outbreak.


Stimulus for Non-Filers

Enter Your Payment Info Here

If you don’t file taxes, use the “Non-Filers: Enter Your Payment Info Here” application to provide simple information so you can get your payment.

You should use this application if:

  • You did not file a 2018 or 2019 federal income tax return because your gross income was under $12,200 ($24,400 for married couples). This includes people who had no income. Or
  • You weren’t required to file a 2018 or 2019 federal income tax return for other reasons.

Do not use this application if you receive the benefits below. If you receive these benefits, we already have your information and you will receive $1,200.

  • Social Security retirement, disability (SSDI), survivor benefits, Supplemental Security Income (SSI)
  • Recipients of Veterans Affairs benefits
  • Railroad Retirement and Survivor Benefits

Special note: People in these groups who have qualifying children under age 17 can use this application to claim the $500 payment per child.

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here


Special alert: For benefit recipients who don’t file a tax return and have dependents:

SSA, RRB recipients with eligible children need to act by Wednesday to quickly add money to their automatic Economic Impact Payment; IRS asks for help in the ‘Plus $500 Push’

WASHINGTON – The Internal Revenue Service today issued a special alert for several groups of federal benefit recipients to act by this Wednesday, April 22, if they didn’t file a tax return in 2018 or 2019 and have dependents so they can quickly receive the full amount of their Economic Impact Payment.

Their $1,200 payments will be issued soon and, in order to add the $500 per eligible child amount to these payments, the IRS needs the dependent information before the payments are issued. Otherwise, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020.


Economic Injury Disaster Loan or EIDL

Overview

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.

While initially the $10,000 EIDL was supposed to be a grant, this has been a moving target and had since been changed Congress, Now only $1,000 per employee is sent as an advance and becomes a grant based on the number of employees a company has and the balance would be a loan. For instance, an employer with 3 employees would recieve $3,000 which would become a grant when spent correctly and the balance of $7,000. would be a loan.

Eligibility

The SBA’s Economic Injury Disaster Loan provides vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic.

This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19.

Businesses in certain industries may have more than 500 employees if they meet the SBA’s size limits for those industries.

The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.

Notice – Be Aware: Lapse in Appropriations

SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.

Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

Is it really the IRS calling or knocking on your door?

Many taxpayers have encountered individuals impersonating IRS officials – in person, over the telephone and via email. Don’t get scammed. We want you to understand how and when the IRS contacts taxpayers and help you determine whether a contact you may have received is truly from an IRS employee.

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

However, there are special circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations.

Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail.

Note that the IRS does not:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.
  • Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

If you owe taxes:

The IRS instructs taxpayers to make payments to the “United States Treasury.” The IRS provides specific guidelines on how you can make a tax payment at irs.gov/payments.

Here is what the IRS will do:

If an IRS representative visits you, he or she will always provide two forms of official credentials called a pocket commission and a HSPD-12 card. HSPD-12 is a government-wide standard for secure and reliable forms of identification for Federal employees and contractors. You have the right to see these credentials.

Collection

IRS collection employees may call or come to a home or business unannounced to collect a tax debt. They will not demand that you make an immediate payment to a source other than the U.S. Treasury.

The IRS can assign certain cases to private debt collectors but only after giving the taxpayer and his or her representative, if one is appointed, written notice. Private collection agencies will not ask for payment on a prepaid debit card or gift card. Taxpayers can learn about the IRS payment options on IRS.gov/payments. Payment by check should be payable to the U.S. Treasury and sent directly to the IRS, not the private collection agency.

OF COURSE IRS HAS MUDDIED THE WATERS ONCE AGAIN! IRS now has contracted with Private Debt Collectors which actually may call you.

Yes, the Internal Revenue Service began a new private collection program of certain overdue federal tax debts selecting four contractors to implement it, so someone from an outside agency could actually call you. The four agencies are:

  • CBE
    P.O. Box 2217
    Waterloo, IA 50704
    1-800-910-5837
  • ConServe
    P.O. Box 307
    Fairport, NY 14450-0307
    1-844-853-4875
  • Performant
    P.O. Box 9045
    Pleasanton CA 94566-9045
    1-844-807-9367
  • Pioneer
    PO Box 500
    Horseheads, NY 14845
    1-800-448-3531

The IRS will still give taxpayers and their representative written notice that the accounts are being transferred to the private collection agencies. The agencies will send a second, separate letter to the taxpayer and their representative confirming this transfer.

Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. Employees of these collection agencies must follow provisions of the Fair Debt Collection Practices Act and should be courteous and respect taxpayer rights.

Audits

IRS employees conducting audits may call taxpayers to set up appointments or to discuss items with the taxpayers, but not without having first attempted to notify them by mail. After mailing an official notification of an audit, an auditor/tax examiner may call to discuss items pertaining to the audit.

Criminal Investigations

IRS criminal investigators may visit a taxpayer’s home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment.

Beware of Impersonations

Scams take many shapes and forms, such as phone calls, letters and emails. Many IRS impersonators use threats to intimidate and bully people into paying a fabricated tax bill. They may even threaten to arrest or deport their would-be victim if the victim doesn’t comply.

Know Who to Contact

  • Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report phone scams to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
  • Report an unsolicited email claiming to be from the IRS, or an IRS-related component like the Electronic Federal Tax Payment System, to the IRS at phishing@irs.gov.

This article is provided for information purposes only and should not be relied upon for legal or financial advice. We would be happy to discuss how the information in this article affects or may help you. For more details about this matter, please contact our offices at 847-466-7947 of 702-966-2770.

IRS CIRCULAR 230 DISCLOSURE: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.

Posted in Tax

Five Basic Tax Tips for New Businesses

BizPpl
If you start a business, one key to success is to know about your federal tax obligations. You may need to know not only about income taxes but also about payroll taxes. Here are five basic tax tips that can help get your business off to a good start.

 

  1. Business Structure. As you start out, you’ll need to choose the structure of your business. Some common types include sole proprietorship, partnership and corporation. You may also choose to be an S corporation or Limited Liability Company. You’ll report your business activity using the IRS forms which are right for your business type.
  2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. The type of taxes your business pays usually depends on which type of business you choose to set up. You may need to pay your taxes by making estimated tax payments.
  3. Employer Identification Number. You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
  4. Accounting Method. An accounting method is a set of rules that determine when to report income and expenses. Your business must use a consistent method. The two that are most common are the cash method and the accrual method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Under the accrual method, you generally report income in the year that you earn it and deduct expenses in the year that you incur them. This is true even if you receive the income or pay the expenses in a future year.
  5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. Beginning in 2014, the maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

 

For 2015 and after, employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility provision.

This article is provided for information purposes only and should not be relied upon for legal or financial advice. We would be happy to discuss how the information in this article affects or may help you. For more details about this matter, please contact our offices at 847-466-7947 of 702-966-2770.
IRS CIRCULAR 230 DISCLOSURE: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.