Download Volume 12, Issue 11 Document Here

BizBoost News
Volume 12, Issue 11
For distribution 11/28/22; publication 12/01/22

9 Things to Do Before Year-End to Reduce Your Tax Bill

Who doesn’t want to pay fewer taxes? The key to minimizing your tax bill is to plan ahead and select the strategies that work for your situation. When April 15, 2023 rolls around, it’s simply too late for tax planning, so now is the time to be proactive and save on your 2022 taxes.

Here are nine ideas to try.

1.      Maximize Retirement Contributions Through Your Employer’s 401(k) Plan
This type of plan allows you to contribute pre-tax dollars to retirement, and contributions directly reduce taxable wage income. While contributions to IRAs and other types of retirement accounts can be done after year-end/up through the due date of your tax return, deferrals through an employer 401(k) plan must be completed by year-end, so make sure you will be able to contribute the desired amount for the year by 12/31. For tax year 2022, you can contribute up to $20,500 if under age 50, and $27,000 if 50 or older by year-end.

2.      Harvest Investment Losses to Offset Capital Gains
If you have sold stock or other property that has generated capital gains, consider whether you have investment losses you can generate before year-end to reduce the overall capital gain you report/pay tax on. For example, if you have stock you’ve held for some time that has consistently been in a loss position, selling by year-end will allow you to offset those other capital gains – and also possibly find a better use for those funds that were invested.

It is always ideal to time capital gains and losses in the same year if you can because they can offset each other, and you are only able to deduct up to $3,000 of overall loss per year. So, if you have a large capital gain in one year and a large capital loss in the next, you will have had to pay tax on that capital gain in that first year, but then might not fully realize the benefit of the loss in the latter year for a number of years, because of that $3,000 per year limitation (unless other capital gains come up to offset it). If they happen in the same year, they would be netted together and the tax benefit would be fully received in the current year. Timing is everything!

3.      Bunch Deductions So You Can Itemize
Because the Tax Cuts and Jobs Act (TCJA) both increased the standard deduction and capped the deduction for state and local income taxes paid when itemizing at $10,000, many taxpayers are finding that they benefit more from taking the standard deduction. However, this prevents them from receiving any direct benefit/deduction for certain expenses, like charitable donations and health care costs over a certain level. One way around this is to strategically time the payment of these costs so you can bunch them together and take advantage of itemizing deductions every other year. For example, if you already made donations earlier in the year and know that you plan to for 2023, consider paying your 2023 donations early/by year-end 2022 in order to exceed the standard threshold and take advantage of itemizing for the upcoming tax year.

4.      Defer Income
If you are self-employed or an independent contractor, consider delaying invoicing clients for work to time it so you receive the income in January 2023 instead of December 2022. This will allow you to keep that income off of your 2022 return, and therefore hold off on paying tax on that income for another year.

5.      Donate Appreciated Stock to Charity
The benefits of doing this are two-fold: you avoid capital gains/tax and also receive a charitable deduction for the appreciated value of the stock. Just be sure that you are actually going to itemize and won’t be taking the standard deduction, because the charitable deduction benefit is only available to you if you itemize deductions. 6.      Purchase Business Equipment 

If you are a business owner and have been thinking about purchasing equipment for your business (machinery, computers, software, a vehicle, etc.), now is the time to do it! With the expanded accelerated depreciation options that came out of the Tax Cuts and Jobs Act (which will be reduced in future years), many of these items qualify for significantly higher deductions – possibly even 100 percent. Whereas in prior years you may have had to deduct the cost of these items over a number of years, you will now likely be able to deduct them fully in the year purchased, or at least take a much higher first-year deduction. This will reduce the profit of your business, which directly reduces your taxable income and tax liability.

7.      Install Solar Panels
Consider installing solar panels on your home prior to year-end to take advantage of the newly enhanced solar tax credit. When you install a solar system, 30 percent of your total project costs can be claimed as a credit on your IRS tax. So, if you spend $10K on the system, you will directly reduce your tax bill by $3,000.

The 30 percent credit will be in effect through 2032, after which the credit decreases to 26 percent for systems installed in 2033 and 22 percent for systems installed in 2034.  The tax credit expires in 2035 unless renewed by Congress.

8.      Invest in a Qualified Opportunity Zone Fund
As part of the Tax Cuts and Jobs Act, taxpayers can now defer payment of capital gains tax to 2026 by investing the proceeds of a sale in a qualified opportunity zone. These zones are located all over the country and were designated as areas that would benefit from economic development. Tax can be deferred on the portion of the gain that was used to benefit the distressed zone.

The investment must be made within 180 days of the sale that generated the capital gains, so if you’ve already had a property sale in 2022 and would like to explore this, you’ll want to pay attention to the timeframe and act accordingly.

9.     Meet With Your Tax Professional to Review Your Projected Tax Bill and Discuss Strategies
It can be extremely beneficial to meet with your tax professional before year-end and review a projection of your tax situation for the year, discussing possible strategies for reducing your tax bill. You may be able to strategize to get yourself in a lower tax bracket and allow for taking advantage of more deductions and credits, which might not be available to you at a higher income level.

In order for your tax professional to project your tax liability for the year, you’ll need to provide information regarding your income for the year – pay stubs, Profit & Loss reports if you have a business, information regarding investment income, as well as details regarding any other types of income or any changes to your situation from the prior year.

Schedule a time with your tax professional in November or early December so you have time to take any necessary actions to reduce your tax bill for the year!

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “9 Things to Do Before Year-End to Reduce Your Tax Bill” is available now! Subscribe here: [link]

Who doesn’t want to pay fewer taxes? The key to minimizing your tax bill is to plan ahead and select the strategies that work for your situation. Learn more in our latest blog article: [link]  

When April 15, 2023 rolls around, it’s simply too late for tax planning, so now is the time to be proactive and save on your 2022 taxes! Learn more in our latest blog article: [link]

#BusinessTip:If you are a business owner and have been thinking about purchasing equipment for your business, doing it now can reduce your tax bill! With the expanded accelerated depreciation options that came out of the Tax Cuts and Jobs Act, many equipment items qualify for significantly higher deductions. Learn more: [link]

#TaxTip: Schedule a time with your tax professional in November or early December so you have time to take any necessary actions to reduce your tax bill for the year! Learn more about how to starting preparing for tax season here: [link]

DID YOU KNOW… One way to reduce your tax bill is to maximize retirement contributions through your employer’s 401(k) plan. This type of plan allows you to contribute pre-tax dollars to retirement, and contributions directly reduce taxable wage income. For tax year 2022, you can contribute up to $20,500 if under age 50, and $27,000 if 50 or older by year-end. Learn more here: [link]

It can be extremely beneficial to meet with your tax professional before year-end and review a projection of your tax situation for the year, discussing possible strategies for reducing your tax bill. Learn more in our latest blog article: [link]

DID YOU KNOW… By getting started early, you may be able to strategize with your tax professional to get yourself in a lower tax bracket and allow for taking advantage of more deductions and credits. Sign up for our newsletter to learn more: [link]

Download Volume 12, Issue 10 Document Here

BizBoost News
Volume 12, Issue 10
For distribution 11/14/22; publication 11/17/22

SECURE Act and Required Minimum Distributions Proposed IRS Regulations

When the SECURE Act went into effect on January 1, 2020, there were many open questions from tax professionals and taxpayers about Required Minimum Distributions (RMDs) and how certain provisions of the new legislation should be treated. Some of the language in a number of the provisions was not defined well or was left open to substantial interpretation. However, earlier this year, the U.S. Department of Treasury released proposed regulations under the SECURE Act, which help to provide a window into the IRS interpretation of this law.

The proposed regulations provided much-needed clarification on a number of SECURE Act provisions. Some of the most notable items include:

1.      “Eligible Designated Beneficiary” (EDB) Clarifications.
One of the most significant changes made by the SECURE Act was the implementation of the 10-Year Rule, which requires most non-spouse beneficiaries to distribute the entirety of their inherited retirement accounts by the end of the tenth year after the decedent’s death. However, some individuals who are EDBs are allowed to “stretch out” post-death RMDs and not conform to the new 10-year payment rules. The regulations further clarify elements of the EDB qualifications, including:

• At what point does a minor child of the IRA owner/retirement plan account holder reach the age of majority? Under previous guidance it was thought that a minor child would reach age of majority based on state law, which could be as late as 26 if the child is still in school. However, these regulations clarify that such minors reach the age of majority on their 21^st birthday, so the 10-Year-Rule kicks in at that time.
• What constitutes a disabled beneficiary under the EDB rules? The regulations confirm that the definition of “disability” under IRC Section 72(m)(7) should be used to determine if a beneficiary is an EDB. The individual must be unable to perform any job because of a physical or mental impairment that can be expected to result in death or last indefinitely (or, in the case of a disabled child, the regulations clarify that the beneficiary must have a physical or mental impairment that results in marked or severe functional limitations that are expected to result in death or last indefinitely). Furthermore, the regulations add a “safe harbor” that a beneficiary is considered disabled if they’ve been deemed so by the Social Security Administration.

2.      Timing of 10-Year-Rule Deadline.
For designated non-EDBs, the entire inherited retirement account must be withdrawn in its entirety within 10 years after the death of the IRA owner/retirement plan participant’s death. The regulations make it clear that the deadline is December 31^st of the 10^th year, not the 10-year anniversary of the date of death.

3.      Certain Non-EDBs are Subject to Both the 10-Year-Rule and Annual RMDs in Years One Through Nine.
To the surprise of some taxpayers and tax practitioners, certain non-EDBs are subject to the annual RMD rule in the years leading up to the 10-year payment deadline. A non-EDB is subject to the annual RMD requirement if the IRA owner/retirement plan participant died after his or her required beginning date (RBD), which is the date by which the first RMD would have been due. The RBD for a traditional IRA owner born before 7/1/1949 is April 1^st of the year following the year the owner turns 70.5; if born after 6/30/49, it is April 1^st of the year following the year the owner becomes age 72. For a retirement plan participant, the RBD is the later of April 1^st of the year the participant turns age 72 or retires from the company offering the plan. If the owner or retirement plan participant died before his or her RBD, there is no annual RMD requirement for the non-EDB – only the 10-year payment rule must be satisfied.

4.      Trust as Designated Beneficiary/Eligibility for 10-Year Distribution Rule.
The regulations clarify that the following requirements must be met in order for a trust to be treated as a designated beneficiary (certain “see-through” trusts):

• The trust is valid under state law
• The trust is irrevocable or will become irrevocable upon the death of the individual who established the trust
• The trust beneficiaries are identifiable from the trust document
• A copy of the trust instrument is provided to the IRA trustee or retirement plan administrator

If the trust meets these four criteria by 9/30 of the year following the year of death of the IRA owner/retirement plan participant, then the trust beneficiaries are considered beneficiaries for computing the post-death RMDs, and the 10-Year Rule applies. However, for trusts that don’t meet these rules, the trust beneficiaries cannot be considered designated beneficiaries, and the existing five-year rule applies instead.

There are many other clarifying details in the Treasury’s proposed regulations, so be sure to review the language to gain additional insight into the various topics covered. While the regulations are still proposed and subject to change, taxpayers are required to take into account a good-faith interpretation of the SECURE Act, so complying with these proposed regulations is an appropriate step in satisfying that requirement.

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “SECURE Act and Required Minimum Distributions Proposed IRS Regulations” is available now! Subscribe here: [link]

When the SECURE Act went into effect on January 1, 2020, there were many open questions from tax professionals and taxpayers about Required Minimum Distributions (RMDs) and how certain provisions of the new legislation should be treated. Learn about the recently proposed regulations in our latest blog article: [link]  

Earlier this year, the U.S. Department of Treasury released proposed regulations under the SECURE Act, which help to provide a window into the IRS interpretation of this law. Learn more in our latest blog article: [link]

When the SECURE Act went into effect on January 1, 2020, there were many questions about Required Minimum Distributions (RMDs) and how certain provisions of the new legislation should be treated. Find out how the recent proposed regulations clarify this topic here: [link]

The proposed regulations released this year provide a much-needed clarification on a number of SECURE Act provisions. Some of the most notable items include:

• “Eligible Designated Beneficiary” (EDB) Clarifications
• Timing of 10-Year-Rule Deadline
• Certain Non-EDBs are Subject to Both the 10-Year-Rule and Annual RMDs in Years One Through Nine
• Trust as Designated Beneficiary/Eligibility for 10-Year Distribution Rule

 Learn more here: [link]

DID YOU KNOW... Under previous guidance, it was thought that a minor child would reach age of majority based on state law, which could be as late as 26 if the child is still in school. However, the recent regulations under the SECURE Act clarify that such minors reach the age of majority on their 21st birthday, so the 10-Year-Rule kicks in at that time. Learn more here: [link]

While the recent regulations under the SECURE Act are still just proposed and subject to change, taxpayers are required to take into account a good-faith interpretation of the SECURE Act, so complying with these proposed regulations is an appropriate step in satisfying that requirement. Learn more in our latest blog article: [link]

The recent proposed regulations under the SECURE Act by the U.S. Department of Treasury clarify details regarding numerous topics. Sign up for our newsletter to learn more about these changes: [link]

Download Volume 12, Issue 9 Document Here

BizBoost News
Volume 12, Issue 9
For distribution 10/31/22; publication 11/03/22

Filing a Final Return for a Deceased Taxpayer

Dealing with the passing of a loved one in your family can be overwhelming. Unfortunately, tax requirements are one of the many items you’ll need to address, but we can help you through the process. Here is a little more about what’s required.  

A final tax return in the year the loved one passes away will need to be filed. Whether or not they were legally married at the time of passing will dictate who files the return. It will either be the surviving spouse or the estate administrator (or a person they hire).

Surviving Spouse

• The IRS considers someone married for the entire year, provided that the surviving spouse doesn’t remarry during the year.
• The surviving spouse can choose their filing status, whether it be married filing jointly or married filing separately.
• When filing the final return for the deceased spouse, it is necessary to include the taxpayer’s date of death.
• The surviving spouse will file the customary 1040 tax return form and report all income and deductions as they did when the decedent was alive.
• If an overpayment of taxes occurs, the surviving spouse will receive a refund. If a balance is owed, the surviving spouse must pay it or enter into an installment agreement.

Personal Representative or Administrator

According to the IRS, a personal representative of an estate is an executor, administrator, or anyone who is in charge of a decedent’s property. Generally, this person is named in a decedent’s will to administer the estate and distribute property according to the decedent’s wishes. An administrator is usually appointed by the court if no will exists, if no executor was named in the will, or if the named executor can’t or won’t perform their duties.

As with the case of a surviving spouse, either the personal representative or administrator will file the final 1040 tax return form for the deceased taxpayer, including the date of death. The return will include all income and deductions that the deceased taxpayer is entitled to claim (generally, all income received/expenses paid prior to death).

If taxes are owed to the IRS, the personal representative or administrator is responsible to remit payment from the decedent’s assets to the IRS. Alternatively, if the deceased taxpayer has an overpayment of taxes and is owed a refund, the personal representative or administrator must file Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, with the return.

Due Date

The final return is due by the regular April tax deadline unless an extension to file has been submitted, which would push the deadline to October.

If we can help you with the tax requirements of a death in your family, please reach out anytime.

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Filing a Final Return for a Deceased Taxpayer” is available now! Subscribe here: [link]

Dealing with the passing of a loved one in your family can be overwhelming. Unfortunately, tax requirements are one of the many items you’ll need to address, but we can help you through the process. Learn more in our latest blog article: [link]  

When a loved one dies, a final tax return in the year the loved one passes away will need to be filed. Whether or not they were legally married at the time of passing will dictate who files the return. Learn more in our latest blog article: [link]

DID YOU KNOW… According to the IRS, a personal representative of an estate is an executor, administrator, or anyone who is in charge of a decedent’s property. This person is named in a decedent’s will to administer the estate and distribute property according to the decedent’s wishes. Learn more: [link]

DID YOU KNOW…You have to file a final tax return when a loved one dies. Learn more about this process here: [link]

DID YOU KNOW… If taxes are owed to the IRS, the personal representative or administrator is responsible to remit payment from the decedent’s assets to the IRS. Alternatively, if the deceased taxpayer has an overpayment of taxes and is owed a refund, the personal representative or administrator must file Form 1310 with the return. Learn more here: [link]

Filing a final tax return for a deceased taxpayer can be confusing. Learn more about how this process works in our latest blog article: [link]

Do you know who is responsible for filing your deceased loved one’s final tax return? Sign up for our newsletter to learn more: [link]

Download Volume 12, Issue 8 Document Here

BizBoost News
Volume 12, Issue 8
For distribution 10/17/22; publication 10/20/22

Checklist for Clean Books

Keeping your business’s books clean all year long can help to provide more accurate financial statements and reports as well as an easier tax time. Here is a checklist of activities to perform periodically to keep your books clean.  

• 1.      Make sure all bank accounts are reconciled.
• 2.      Make sure all credit card accounts are reconciled.
• 3.      Update year-end inventory balance, if applicable.
• 4.      Review liability accounts and balance statements.
• 5.      Check for any old, uncleared items in the bank and credit card registers.
• 6.      Verify that there are no negative numbers on the financial statements, or provide an explanation as to why. With limited exceptions, generally the only legitimate negative numbers would be depreciation, owner's equity and refunds.
• 7.      Make sure the Chart of Accounts is clean. Merge duplicate or similar categories. Eliminate any "other" expenses (for example, "Advertising – Other"), as well as “miscellaneous” accounts. Sort the Chart of Accounts alphabetically.
• 8.      Categorize any transactions listed as “Uncategorized Expenses,” “Ask my accountant,” or similar clearing account.
• 9.      Review P&L Detail sorted by name for consistency in categorizing.
• 10.  Enter the credit card charges through the end of December. With the cutoff date of credit cards, sometimes you must wait for the statement in February to get transactions from the last week of December.
• 11.  Pull an Open Invoice report and clear out any old invoices that are not accurate. Deleting an invoice should only be done if a client is on a cash basis, not accrual. It will affect the tax return if you delete or change any invoice the client files on accrual basis.
• 12.  Pull an Unpaid Bills report to see if any bills need to be deleted. Remember the rule on cash/accrual basis.
• 13.  Ensure that the Profit & Loss is showing “Gross Wages,” not net. This helps match financial statements with payroll reports. Match to Tax & Wage Summary provided by payroll processor.
• 14.  Separate out “Officer Gross Wages” from employee gross wages on the Profit & Loss report.
• 15.  If the owner made any deposits to the business bank account, show the deposit as a loan or capital contribution (equity). You can also show the money deposited as an offset to the owner's draw account.
• 16.  Check for eligible 1099 vendors, and make sure you have the proper forms in place to process their 1099 forms by January 31^st.
• 17.  If a company has more than one vehicle, make sure they are listed separately, showing gas, insurance, repairs and registration per vehicle. Get the percentage of business use for each vehicle.
• 18.  At year end, if you are using QuickBooks, set the Closing Date Password once everything is clean. If you are using another software, find out how to lock the balances for the prior year.   

Keeping your books clean will help you make better business decisions on data that is more accurate. 

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Checklist for Clean Books” is available now! Subscribe here: [link]

Keeping your business’s books clean all year long can help to provide more accurate financial statements and reports as well as an easier tax time. Learn more in our latest blog article: [link]  

Do you check your business’s books throughout the year? This can help keep reports accurate and make taxes easier. Learn more in our latest blog article: [link]

#BusinessTip
When it comes to keeping your business’s books clean:
1. Make sure all bank accounts are reconciled.
2. Make sure all credit card accounts are reconciled.
3. Update year-end inventory balance, if applicable.
4. Review liability accounts and balance statements.
Access our full checklist here: [link]

DID YOU KNOW… Keeping your business’s books clean throughout the year can help you make better business decisions. Learn more here: [link]

Do you know how to keep your business’s books clean? Sign up for our newsletter to access our full checklist of activities to perform periodically:[link]

#BusinessTip
When it comes to keeping your business’s books clean:
1. Pull an Unpaid Bills report to see if any bills need to be deleted. Remember the rule on cash/accrual basis.
2. Ensure that the Profit & Loss is showing “Gross Wages,” not net. This helps match financial statements with payroll reports. Match to Tax & Wage Summary provided by payroll processor.
3. Separate out “Officer Gross Wages” from employee gross wages on the Profit & Loss report.
Access our full checklist here: [link] 

Keeping your business’s books clean will help you make better business decisions on data that is more accurate.  Learn more in our latest blog article: [link]

Download Volume 12, Issue 7 Document Here

BizBoost News
Volume 12, Issue 7
For distribution 10/03/22; publication 10/06/22

The “Dirty Dozen” IRS Tax Scams for 2022

Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. Below are five of the most common tax scams impacting taxpayers today, as well as tips to not become a victim:

• 1.      Pandemic-related scams. Criminals still use the COVID-19 pandemic to steal people's money and identity with phishing emails, social media posts, phone calls, and text messages. These actions can lead to sensitive personal information being stolen, which scammers will use to harm victims in multiple ways, including trying to file a fraudulent tax return. Some of the scams people should continue to be on the lookout for include Economic Impact Payment and tax refund scams, unemployment fraud, fake employment offers on social media, and bogus charities that steal taxpayers' money. Read more at https://www.irs.gov/newsroom/irs-continues-with-dirty-dozen-this-week-urging-taxpayers-to-continue-watching-out-for-pandemic-related-scams-including-theft-of-benefits-and-bogus-social-media-posts on pandemic-related scams.
• 2.      Offer in Compromise “mills.” If you owe the IRS a substantial amount of money that you are having trouble paying, you could fall victim to marketing claims of Offer in Compromise (OIC) "mills." An Offer in Compromise is a real IRS term for an agreement between the taxpayer and the IRS that creates a payment plan based on the taxpayer’s situation. The mills make ridiculous claims about how they can settle a person's tax debt for pennies on the dollar. The reality is that taxpayers pay the OIC mill a fee to get the same deal they could have gotten themselves by working directly with the IRS. These "mills" tend to be especially visible right after the filing season ends and taxpayers are trying to resolve their tax issues, perhaps after receiving a balance due notice in the mail, but they remain a problem all year long. Read more at https://www.irs.gov/newsroom/dirty-dozen-irs-urges-anyone-having-trouble-paying-their-taxes-to-avoid-anyone-claiming-they-can-settle-tax-debt-for-pennies-on-the-dollar-known-as-oic-mills on Offer in Compliance “mills”.
• 3.      Potentially abusive arrangements. This group comprises of four types of transactions that are wrongfully promoted and likely to trigger an IRS audit in the future. These include using charitable remainder annuity trusts to eliminate taxable gains, contributing to Maltese (or other foreign) individual retirement arrangements, participating in foreign captive insurance arrangements, and using monetized installment sales. Read more at https://www.irs.gov/newsroom/irs-warns-taxpayers-of-dirty-dozen-tax-scams-for-2022 on these particular abusive arrangements.
• 4.      Suspicious Communication. These forms of communication are designed to trick, surprise, or scare someone into responding before thinking. The IRS warns taxpayers to be on the lookout for suspicious activity across four common types of communication: email, social media, telephone, and text messages. Criminals use these bogus communications to trick victims into providing sensitive personal financial data, money, or other information. This information can be used to file false tax returns, access financial accounts, or for other schemes. Read more at https://www.irs.gov/newsroom/dirty-dozen-scammers-use-every-trick-in-their-communication-arsenal-to-steal-your-identity-personal-financial-information-money-and-more on suspicious communication.
• 5.      Spear Phishing Attacks. Spear phishing is an email scam where criminals try to steal client data and tax preparers' identities to file fraudulent tax returns for refunds. Spear phishing can be directed towards any type of business or organization, so everyone needs to be on high alert and skeptical of strange emails requesting financial or personal information. For example, a recent spear phishing email used the IRS logo and a variety of subject lines such as "Action Required: Your account has now been put on hold" to steal tax professionals' software preparation credentials. The scam email will direct users to a website that shows the logos of several popular tax software preparation providers, and clicking on one of these logos will prompt a request for tax preparer account credentials. The IRS has observed similar spear phishing emails claiming to be from "tax preparation application providers." Tax pros and taxpayers should not respond or take any of the steps outlined in any such questionable emails. Read more athttps://www.irs.gov/newsroom/dirty-dozen-irs-security-summit-reiterate-recent-warning-to-tax-professionals-and-other-businesses-of-dangerous-spear-phishing-attacks on spear phishing scams.
•  

Please take care to protect your personal financial information. For more on the IRS Dirty Dozen List, visit https://www.irs.gov/newsroom/dirty-dozen  on the IRS website.

***

Tweets

Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. 

Criminals still use the COVID-19 pandemic to steal people's money and identity with phishing emails, social media posts, phone calls, and text messages. These actions can lead to sensitive personal information being stolen, which scammers will use to harm victims in multiple ways, including trying to file a fraudulent tax return. 

Suspicious forms of communication are designed to trick, surprise, or scare someone into responding before thinking. The IRS warns taxpayers to be on the lookout for suspicious activity across four common types of communication: email, social media, telephone, and text messages. 

If you owe the IRS a substantial amount of money that you are having trouble paying, you could fall victim to marketing claims of Offer in Compromise (OIC) "mills." An Offer in Compromise is a real IRS term for an agreement between the taxpayer and the IRS that creates a payment plan based on the taxpayer’s situation. 

Spear phishing is an email scam where criminals try to steal client data and tax preparers' identities to file fraudulent tax returns for refunds. Spear phishing can be directed towards any type of business or organization, so everyone needs to be on high alert and skeptical of strange emails requesting financial or personal information. 

There are four types of transactions that are wrongfully promoted and likely to trigger an IRS audit in the future.

Do you know the five most common tax scams impacting taxpayers?

Download Volume 12, Issue 6 Document Here

BizBoost News
Volume 12, Issue 6
For distribution 9/19/22; publication 9/22/22

Estimated Tax Payments – Do They Apply to You?

There are two ways to make income tax payments to the IRS throughout the year: through the withholding amount on your paycheck, and through making estimated tax payments. If you have ever wondered about estimated tax payments, this article will explain what they are, if you need to make them, and how to make them if they are required for your tax situation.

Although you may never have had to worry about them before, a change in your income/situation may put you in a position of needing to make estimated tax payments during the year. If you fail to make estimated payments (and therefore fail to pay taxes on your income as you earn it), you may be in for a nasty surprise come tax time: a hefty tax bill along with an unwelcome penalty from the IRS.

Who is required to pay estimated tax payments?

In general, you are required to make quarterly estimated tax payments if both of the following apply:

1.      You expect to owe at least $1,000 in federal tax after subtracting federal tax withholding and credits, and
2.      You expect your federal withholding and credits to be less than the smaller of:

There are additional rules for some type of taxpayers, such as farmers and fishermen.

If you receive your main income via paycheck as an employee who receives a W-2, chances are you won’t be subject to this requirement as long as your employer is withholding the proper amounts from your paychecks. The amount withheld is determined by the information on Form W-4 that you complete when you are hired.

What if you have income, but no paycheck? What if you have lots of income in addition to your paycheck? Chances are you will need to make estimated tax payments (or adjust your withholding). Most taxpayers who are subject to making estimated tax payments are those who have a large amount of income on which there is no tax withholding, including interest, dividend, capital gains, rental/royalty, or business income.

If you receive a paycheck, you can avoid making estimated payments by increasing your W-2 withholdings enough to cover any additional tax liabilities. Make sure to double check with your employer, to ensure that the correct information is being used to calculate your tax withholdings.

If you do have additional income and you don’t get a paycheck, or you do, but you simply don’t want to withhold more from your paycheck, you will need to make estimated tax payments.

What information do I need?

In order to determine the proper amount of estimated tax payments to make, you’ll need to approximate your adjusted gross income, taxable income, taxes, credits, and other deductions. Start with your prior year return information, and make changes based on what you know will be different. Form 1040-ES, which can be found on the IRS website, includes an Estimated Tax Worksheet to help you with this process.

When are these payments due?

Estimated tax payments are generally made in four installments. Payments are due by April 15th, June 15th, September 15th, and January 15th of the next year. These dates are based on quarterly payment periods (you pay tax on income earned during each applicable quarterly period); however, notice that the payment due dates aren’t all three months apart.

As a side note, you are not required to make the final payment on January 15th if you file your current year tax return by February 1st and pay the entire balance due with your return.

Where and how do I make my quarterly estimated tax payments?

There are various ways of making estimated tax payments for the current year, including:

Why should I consider making estimated tax payments?

The main reason is to avoid penalties and interest on underpayments. This can happen if your income varies a lot from year to year; you can get surprised by the changes. 

Penalties and interest can add up quickly. They are calculated based on the number of days you are late – so, even if you’re already behind, don’t panic! You can address the situation now and minimize the dollar amount of penalties you are hit with.

Getting on track with making proper and timely estimated tax payments may help you in the long run. Getting hit with a large tax bill on April 15th is no fun, and by breaking your tax liability down into four installment payments, you may be doing yourself a big favor in forcing yourself to set those funds aside and having them available to make your payments (while simultaneously keeping the IRS at bay).

This can also help you to avoid a “snowballing” problem in the future – if you end up with a large bill that you cannot pay all at once, and you get on a payment plan with the IRS, it can be difficult to play catch-up.

Staying on top of your estimated tax payments requires you to be more disciplined and aware of your tax responsibilities as a taxpayer and/or business owner. If you need help getting these calculated or set up, please reach out any time.

***

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Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Estimated Tax Payments – Do They Apply to You?” is available now! Subscribe here: [link]

There are two ways to make income tax payments to the IRS throughout the year: through the withholding amount on your paycheck, and through making estimated tax payments. Learn more in our latest blog article: [link]  

If you have ever wondered about estimated tax payments, our latest blog article will explain what they are, if you need to make them, and how to make them if they are required for your tax situation. Access the article here: [link]

Although you may never have had to worry about them before, a change in your income/situation may put you in a position of needing to make estimated tax payments during the year. If you fail to make estimated payments (and therefore fail to pay taxes on your income as you earn it), you may be in for a nasty surprise come tax time. Learn more here: [link]

In general, you are required to make quarterly estimated tax payments if both of the following apply:

1. You expect to owe at least $1,000 in federal tax after subtracting federal tax withholding and credits, and

2. You expect your federal withholding and credits to be less than the smaller of:

Learn more here: [link]

If you receive your main income via paycheck as an employee who receives a W-2, chances are you won’t need to make estimated tax payments, as long as your employer is withholding the proper amounts from your paychecks. The amount withheld is determined by the information on Form W-4 that you complete when you are hired. Learn more here: [link]

What if you have income, but no paycheck? What if you have lots of income in addition to your paycheck? Chances are you will need to make estimated tax payments (or adjust your withholding). Learn more in our latest blog article: [link]

In order to determine the proper amount of estimated tax payments to make, you’ll need to approximate your adjusted gross income, taxable income, taxes, credits, and other deductions. Start with your prior year return information, and make changes based on what you know will be different. Form 1040-ES, which can be found on the IRS website, includes an Estimated Tax Worksheet to help you with this process. Sign up for our newsletter to learn more: [link]

Download Volume 12, Issue 5 Document Here

BizBoost News
Volume 12, Issue 5
For distribution 9/05/22; publication 9/08/22

Employee Retention Credit Update

The Employee Retention Credit (ERC) was rolled out in March 2020 as part of the CARES Act to help businesses with the cost of keeping employees on payroll through the COVID-19 pandemic. It is a tax break in the form of refundable employment tax credits for those businesses that qualify.

Although the ERC is no longer available for the 2022 tax year, many businesses are still waiting to receive the credit or are working to claim it retroactively for prior quarters. Therefore, this remains a hot topic and there are a few important updates and reminders to be aware of.

Businesses Can Retroactively Claim the ERC

Some employers who qualified for the ERC for quarters in 2020 and 2021, but didn’t file a claim at the time, may think they have missed out on taking advantage of this opportunity. However, businesses have three years from the filing of the original IRS Form 941 (Employer’s Quarterly Federal Tax Return) to file amended returns to claim the credits. The qualifications and credit amounts are as follows:

For 2020:

For 2021:

Employee Retention Credit IRS Penalty Relief

The IRS stipulates that businesses must reduce their deductible payroll expenses on their income tax returns by the amount of the credit received or to be received, and this reduction must occur on the tax return for the year the credit is related to. This causes an increase to the bottom-line profit and associated income tax due, and in many cases triggers penalties for employers who did not remit enough in estimated taxes due to the jump in taxable profit.

The penalties may be even higher for employers who are still waiting to receive the credit, because it would create a hardship for them to remit the additional tax without having received the refund, so they wait even longer to pay their income taxes due – which causes the penalties to grow.

Per a news release from April 2022, the IRS is aware of this situation and has indicated that taxpayers may be eligible for relief from penalties if they can show reasonable cause and not willful neglect for failing to pay. While lack of funds is not generally accepted as reasonable cause, the underlying reason of not having received the ERC refund that triggered the additional tax could be.

Alternatively, another possibility is to claim relief using the First Time Penalty Abatement program, which can be used if the taxpayer:

Beware of Scam ERC Providers

There are a number of “specialty” providers popping up who are offering to recalculate the ERC for a percentage of the “take” or who are using an overly aggressive interpretation of the rules that likely wouldn’t hold up if scrutinized by the IRS. While many businesses legitimately qualify for the ERC, some of these providers are using risky practices to maximize the credit amount, which if later found to be wrong could lead to anything from civil penalties to criminal tax fraud. The IRS has a five-year statute of limitations on these ERC claims, so even if they aren’t yet auditing claims now, they very well could (and likely will) in the future.

So, what signs or red flags should you look for? You should be wary of working with any providers who:

If you have further questions about the ERC or any other taxes, feel free to contact us any time. 

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Employee Retention Credit Update” is available now! Subscribe here: [link]

Do you know the Employee Retention Credit qualifications and credit amounts for the 2020 tax year? Find the list and learn more about recent ERC updates here:[link]

The Employee Retention Credit (ERC) was rolled out in March 2020 as part of the CARES Act to help businesses with the cost of keeping employees on payroll through the COVID-19 pandemic. It is a tax break in the form of refundable employment tax credits for those businesses that qualify. Learn more in our latest blog article: [link]  

Although the Employee Retention Credit is no longer available for the 2022 tax year, many businesses are still waiting to receive the credit or are working to claim it retroactively for prior quarters. Therefore, this remains a hot topic and there are a few important updates and reminders to be aware of. Learn more in our latest blog article: [link]

Some employers who qualified for the Employee Retention Credit for quarters in 2020 and 2021, but didn’t file a claim at the time, may think they have missed out on taking advantage of this opportunity. However, businesses have three years from the filing of the original IRS Form 941 (Employer’s Quarterly Federal Tax Return) to file amended returns to claim the credits. Learn more here: [link]

There are a number of “specialty” providers popping up who are offering to recalculate the Employee Retention Credit for a percentage of the “take” or who are using an overly aggressive interpretation of the rules that likely wouldn’t hold up if scrutinized by the IRS. Learn what red flags you should be aware of here: [link]

Do you know the Employee Retention Credit qualifications and credit amounts for the 2021 tax year? Learn more about recent ERC updates here: [link]

Have you kept up-to-date on the Employee Retention Credit? Sign up for our newsletter to learn more about the recent ERC updates: [link]

Download Volume 12, Issue 4 Document Here

BizBoost News
Volume 12, Issue 4
For distribution 8/22/22; publication 8/25/22

Do You Have a Bank Account in a Country Outside of the United States?

If you have a bank account in a foreign country, you may need to disclose it to a branch of the government that fights financial crimes. This is what tax professionals call FBAR reporting. FBAR stands for Foreign Bank and Financial Accounts Report.

Your foreign bank accounts may also impact your tax returns. Let’s take a look at this requirement.

FinCEN and FBAR

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury that collects and analyzes data on financial transactions for the purposes of protecting the financial system from illicit use and combating domestic and international money laundering and related financial crimes.

If you have a financial interest in or signature authority over a foreign financial account (including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account) exceeding certain thresholds, the Bank Secrecy Act (BSA) may require you to report the account yearly to the Department of Treasury by electronically filing a FinCEN 114, Report of Foreign Bank and Financial Accounts (FBAR).

Who Must File?

United States persons are required to file an FBAR if:

1) The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States, and

2) The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

By definition, United States persons include U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Exceptions to the Reporting Requirement

There are filing exceptions for the following United States persons or foreign financial accounts:

• Certain foreign financial accounts jointly owned by spouses

• United States persons included in a consolidated FBAR

• Correspondent/Nostro accounts

• Foreign financial accounts owned by a governmental entity

• Foreign financial accounts owned by an international financial institution

• Owners and beneficiaries of U.S. IRAs

• Participants in and beneficiaries of tax-qualified retirement plans

• Certain individuals with signature authority over, but no financial interest in, a foreign financial account

• Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust)

• Foreign financial accounts maintained on a United States military banking facility

Reporting and Filing Information

A person who holds a foreign financial account may have a reporting obligation even when the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR.

The IRS can waive the penalty for failure to timely file or request an extension for any person required to file an FBAR for the first time. Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty that generally starts at $10,000 (adjusted for inflation) per violation for non-willful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 (as adjusted for inflation) or 50 percent of the balance in the account at the time of the violation, for each violation.

The FBAR is a calendar year report and is due April 15th of the year following the calendar year being reported, with a 6-month extension available. FinCEN will grant filers failing to meet the FBAR due date of April 15th an automatic extension to October 15th each year. A specific extension request is not required. The FBAR must be filed electronically through Fin-CEN’s BSA E-Filing System. The FBAR is not filed with a federal income tax return.

U.S. Taxpayers Holding Foreign Financial Assets May Also Need to File IRS Form 8938

Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed with an income tax return. Those foreign financial assets could include foreign accounts reported on an FBAR.

The Form 8938 filing requirement is in addition to the FBAR filing requirement. Form 8938 must be filed by certain U.S. taxpayers living in the U.S. and holding foreign financial assets with an aggregate value exceeding $50,000 ($100,000 MFJ) on the last day of the tax year, or more than $75,000 ($150,000 MFJ) at any time during the year.

Delinquent FBAR Submission Procedures

Taxpayers who have not filed a required FBAR and are not under a civil examination or a criminal investigation by the IRS, and have not already been contacted by the IRS about a delinquent FBAR, should file any delinquent FBARs and include a statement explaining why the filing is late. Select a reason for filing late on the cover page of the electronic form or enter a customized explanation using the ‘Other’ option. If unable to file electronically you may contact FinCEN’s Regulatory Helpline at 800-949-2732 or 703-905-3975 (if calling from outside the United States) to determine acceptable alternatives to electronic filing.

The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.

Schedules K-2 and K-3 – Do They Impact the FBAR?

The new K-2 and K-3 schedules must be filed by all pass-through entities (partnerships, S corporations, etc.) with items of international tax relevance, including those with foreign partners and international activities. These new schedules were created to provide more clarity for shareholders and partners as it relates to calculating their U.S. income tax liability or international-related deductions, credits, etc. (for example, information necessary to fill out the Foreign Tax Credit form and calculate the credit amount).

However, these schedules are separate from the FBAR filing, which involves disclosing an interest in and/or authority over certain foreign accounts, and doesn’t directly impact income tax liability or calculation of deductions and credits. While the passthrough entities subject to the K-2/K-3 filing requirements may have their own FBAR filing requirements as it pertains to the accounts that are generating the income/deduction/other items reported on these schedules, this is not necessarily related to any FBAR reporting requirement at the individual shareholder/partner level.

Foreign bank accounts, foreign income, and foreign taxes are highly complex in their reporting requirements and their effect on taxes. It is recommended that you work with your tax professional to ensure that you are fully in compliance with disclosing all the required foreign activity and data that pertains to your specific situation.

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Do You Have a Bank Account in a Country Outside of the United States?” is available now! Subscribe here: [link]

If you have a bank account in a foreign country, you may need to disclose it to a branch of the government that fights financial crimes. This is what tax professionals call FBAR reporting. Learn more in our latest blog article: [link]  

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury that collects and analyzes data on financial transactions for the purposes of protecting the financial system from illicit use and combating domestic and international money laundering and related financial crimes. If you have a financial interest in or signature authority over a foreign financial account exceeding certain thresholds, the Bank Secrecy Act (BSA) may require you to report the account yearly to the Department of Treasury. Learn more in our latest blog article: [link]

United States persons are required to file an FBAR if:

1) The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States, and

2) The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. Learn more here: [link]

The new K-2 and K-3 schedules must be filed by all pass-through entities (partnerships, S corporations, etc.) with items of international tax relevance, including those with foreign partners and international activities. Learn more here: [link]

DID YOU KNOW…There are filing exceptions for United States persons or foreign financial accounts in regards to the FBAR (Foreign Bank and Financial Accounts Report). Learn more in our latest blog article: [link]

Foreign bank accounts, foreign income, and foreign taxes are highly complex in their reporting requirements and their effect on taxes. Learn more in our latest blog article: [link]

In our latest blog article, we explain the filing requirements regarding international bank accounts, as well as how to complete the reporting requirements and who is exempt. Sign up for our newsletter to learn more: [link]

Download Volume 12, Issue 3 Document Here

BizBoost News
Volume 12, Issue 3
For distribution 8/08/22; publication 8/11/22

Understanding the Puzzle of Varying IRS Authorizations

When working with a tax professional or other professionals that want access to your IRS information, you might be asked to sign IRS forms that serve as legal authorization documents. There are a few different forms that grant varying powers to the people requesting them. This article will help you understand the differences among the forms you might be asked to sign. 

IRS Form 8879: e-File Signature Authorization

The most common one is authorization to file your tax return. This is done on Form 8879, IRS e-file Signature Authorization. A tax professional will ask you to sign this form before e-filing your return for you. It is only good for the year you are filing the tax return; it has to be redone each year. The tax professional keeps this form in their records.

This form does not allow your tax preparer to speak to the IRS for you in any way; it only allows the e-file process to be complete.  

IRS Form 2848: Power of Attorney

Only three kinds of people can legally represent you in front of the IRS: attorneys, CPAs, and Enrolled Agents (EAs). If you have hired a person with one of these credentials to answer an IRS letter on your behalf, represent you in an IRS audit, or speak to the IRS for you in any other way, they will ask you to sign a Power of Attorney (POA).  

By definition, a Power of Attorney (POA) allows a taxpayer to designate an individual to discuss items listed on the POA with the IRS and represent them before the IRS. A Power of Attorney is good for six years, but can be extended by submitting a new POA. Additionally, a POA can be updated to revoke access to representing a taxpayer.

When completing a Power of Attorney, the following information will be required on the document:

1.      Taxpayer information (name, address, taxpayer identification number, daytime phone number)
2.      Representative(s) name, address, contact information, and/or CAF (centralized authorization file) number or PTIN (preparer tax identification number)
3.      Items the representative is allowed to discuss with the IRS, the tax form in question, and the year(s) (this is where the taxpayer can control the scope of the POA)
4.      Although less common, the taxpayer can authorize their representative to perform additional acts, such as signing a return on the taxpayer’s behalf or disclosing information to a third party
5.      Taxpayer’s signature and date
6.      Representative’s signature, date, and licensing information

Form 8821: Tax Information Authorization

If you are applying for a loan, the company granting the loan needs to verify your income, and they will typically do that by accessing your tax returns in the IRS records. This is where the Tax Information Authorization is used.

A Tax Information Authorization gives a person the legal right to review some confidential taxpayer information. It does not allow the representative to act on a taxpayer’s behalf to resolve tax issues.

Completing a Tax Information Authorization allows any individual, corporation, firm, organization, or partnership you designate to receive your confidential IRS information (verbally or in writing) for the type of tax and year(s) you agree to.

When completing a Tax Information Authorization, the following information will be required on the document:

1.      Taxpayer information (name, address, taxpayer identification number, daytime phone number)
2.      Designee(s) name, address, contact information, and/or CAF (centralized authorization file) number or PTIN (preparer tax identification number), if applicable
3.      Tax information the designee is allowed to receive from the IRS, the tax form in question, and the year(s)
4.      Taxpayer’s signature and date

Other Ways to Grant IRS Authorization

Third Party Designee

There is a check box in the signature area on certain tax forms where you can appoint a person that the IRS can contact if they have questions about the return. This person can also provide the IRS with any missing information as well as check on refund or return status. The scope of their authority is specific to that one return and issues related to processing the return. It is good for one year.  

A third-party designee does not have to be a tax professional; it can be a relative or friend who you trust with your financial information. We advise you to be very careful using this option; it’s a simple checkbox with a lot of power.

Verbal Approval

If you are in a phone conversation with the IRS, you can bring into the call someone who can speak for you. This authorization is only good for the one phone call.  

Granting IRS Authorization

While these forms may appear similar, they each allow for different levels of access to a taxpayer’s confidential income tax information. Understanding the difference and being careful with whom you authorize can help you avoid complications in the future. 

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Understanding the Puzzle of Varying IRS Authorizations” is available now! Subscribe here: [link]

When working with a tax professional or other professionals that want access to your IRS information, you might be asked to sign IRS forms that serve as legal authorization documents. There are a few different forms that grant varying powers to the people requesting them. Learn more in our latest blog article: [link]  

Authorization to file your tax return is done on Form 8879, IRS e-file Signature Authorization. A tax professional will ask you to sign this form before e-filing your return for you. It is only good for the year you are filing the tax return; it has to be redone each year. Learn more in our latest blog article: [link]

Only three kinds of people can legally represent you in front of the IRS: attorneys, CPAs, and Enrolled Agents (EAs). If you have hired a person with one of these credentials to answer an IRS letter on your behalf, represent you in an IRS audit, or speak to the IRS for you in any other way, they will ask you to sign a Power of Attorney (POA). Learn more here: [link]

If you are applying for a loan, the company granting the loan needs to verify your income, and they will typically do that by accessing your tax returns in the IRS records. This is where the Tax Information Authorization is used. A Tax Information Authorization gives a person the legal right to review some confidential taxpayer information. It does not allow the representative to act on a taxpayer’s behalf to resolve tax issues. Learn more here: [link]

DID YOU KNOW... There is a check box in the signature area on certain tax forms where you can appoint a person that the IRS can contact if they have questions about the return. This person can also provide the IRS with any missing information as well as check on refund or return status. Learn more here: [link]

While IRS tax authorization forms may appear similar, they each allow for different levels of access to a taxpayer’s confidential income tax information. Understanding the difference and being careful with whom you authorize can help you avoid complications in the future. Learn more in our latest blog article: [link]

Do you know the differences between IRS tax authorization forms? Sign up for our newsletter to access our full article explaining these differences: [link]

Download Volume 12, Issue 2 Document Here

BizBoost News
Volume 12, Issue 2
For distribution 7/25/22; publication 7/28/22

Where’s My IRS Refund?

Did you know the IRS provides a tool on their website that allows taxpayers to check their refund status? The good news is you don’t have to rely on your tax professional to access this information; you can access it directly yourself.

Here’s the direct link: https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp

How do I get started?

The “Where’s My Refund” tool can provide refund information for the three most current tax years. You’ll need the following information in order to complete the query:

After entering in the requested information correctly, a progress bar will appear showing three stages:

The IRS processes most returns within 21 days, but occasionally a tax return may require additional review. Some of the most common delays in refund processing include:

What happens if the refund is sent, but not received?

The “Where’s My Refund” tool will tell you what date your refund was sent to your bank account for direct deposit. If the refund hasn’t been received timely, take the following steps:

1.      Check with your financial institution
2.      Verify that the routing and bank account numbers on your return are correct
3.      If it’s determined that an error was made when providing routing or account information, the direct deposit will be returned to the IRS and they will issue a paper check through the mail instead. 

What if I don’t have online access?

Taxpayers can call the IRS Refund Hotline at 800-829-1954. Be sure to have the same information on hand (SSN, filing status, refund amount) when using their automated system to inquire about refund status.

How do I check the status of my state tax refund?

If your state collects income tax, it is possible to check the status of your return online or by automated phone service. While each state uses a slightly different system to check the refund status, having your SSN and refund amount will be needed. Some states may also require your date of birth, filing status, or zip code. Use an internet search engine to determine the correct state website lookup tool.

Want more information?

The IRS has a page describing the Where’s My Refund tool. You can access it using this link: https://www.irs.gov/refunds

***

Tweets

Insert a link to your newsletter, website or blog before you post these:

Our latest blog: “Where’s My IRS Refund?” is available now! Subscribe here: [link]

Did you know the IRS provides a tool on their website that allows taxpayers to check their refund status? The good news is you don’t have to rely on your tax professional to access this information; you can access it directly yourself. Learn more in our latest blog article: [link]

The “Where’s My Refund” tool can provide tax refund information for the three most current tax years. You’ll need the following information in order to complete the query:

•Social Security (or ITIN) number

•Filing Status (ex: married filing jointly)

•Exact refund amount listed on your tax return

Learn more in our latest blog article: [link]

The “Where’s My Refund” tax tool will tell you what date your tax refund was sent to your bank account for direct deposit. If the refund hasn’t been received timely, there are steps you can take. Find out what these steps are here: [link]

The IRS processes most returns within 21 days, but occasionally a tax return may require additional review. Some of the most common delays in refund processing include:

•If the return has errors or is incomplete

•If the filer is the victim of identity theft or fraud

•If credits aren’t properly accounted for

Learn more here: [link]

DID YOU KNOW… If internet access is not available, taxpayers can call the IRS Refund Hotline at 800-829-1954 to check on their refund status. Learn more here: [link]

If your state collects income tax, it is possible to check the status of your return online or by automated phone service. While each state uses a slightly different system to check the refund status, having your SSN and refund amount will be needed. You can use an internet search engine to determine the correct state website lookup tool. Learn more in our latest blog article: [link]

Have you heard of the IRS tool, “Where’s My Refund?” This is a great resource for tracking your tax refund status. Sign up for our newsletter to learn more: [link]