WASHINGTON — The Internal Revenue Service and Department of the Treasury issued Revenue Procedure 2020-11 that establishes a safe harbor extending relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school. 

Relief is also extended to any creditor that would otherwise be required to file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.

The Treasury Department and the IRS have determined that it is appropriate to extend the relief provided in Rev. Proc. 2015-57, Rev. Proc. 2017-24 and Rev. Proc. 2018-39 to taxpayers who took out federal and private student loans to finance attendance at nonprofit or other for-profit schools not owned by Corinthian College, Inc. or American Career Institutes, Inc.

The Revenue Procedure provides relief when the federal loans are discharged by the Department of Education under the Closed School or Defense to Repayment discharge process, or where the private loans are discharged based on settlements of certain types of legal causes of action against nonprofit or other for-profit schools and certain private lenders.

Taxpayers within the scope of this revenue procedure will not recognize gross income as a result of the discharge, and the taxpayer should not report the amount of the discharged loan in gross income on his or her federal income tax return. 

Additionally, the IRS will not assert that a creditor must file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure. To avoid confusion, the IRS strongly recommends that these creditors not furnish students nor the IRS with a Form 1099-C.

Revenue Procedure 2020-11 provides relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school.  The IRS will not assert that taxpayers within the scope of the revenue procedure must recognize gross income as a result of the discharge of their student loans.  Additionally, the IRS will not assert that a creditor must file information returns and furnish payee statements for the discharge of any indebtedness within the scope of the revenue procedure.  To avoid confusion, the IRS strongly recommends that these creditors not furnish students nor the IRS with a Form 1099-C.

Revenue Procedure 2020-11 will be in IRB 2020-6, dated February 3, 2020.

Revenue Ruling 2020-03 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.  

The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code. 

Revenue Ruling 2020-03 will be in IRB:  2020-6, dated February 3, 2020.

Notice 2020-08 provides the rules that claimants must follow to make a one-time claim for the credits and payments for biodiesel (including renewable diesel) mixtures and alternative fuels sold or used during calendar years 2018 and 2019.  The notice also provides instructions for how a claimant may offset its taxable fuel liability with the alternative fuel mixture credit for 2018 and 2019, and provides instructions for how a claimant may make certain income tax claims for biodiesel, second generation biofuel, and alternative fuel.  The credits had expired on December 31, 2017, but were retroactively reinstated as part of the Further Consolidated Appropriations Act of 2020.

Notice 2020-08  will be in 2020-07, dated February 10, 2020.

WASHINGTON – Seniors and retirees whose income is under $69,000 a year should explore IRS Free File for free online tax preparation.

Seniors are one of the key constituents for Free File which has served 57 million taxpayers and saved them $1.7 billion since the online filing service debuted in 2003.

Free File – which features 10 brand-name tax software providers – also offers the new Form 1040-SR option for seniors over the age of 65.

“When you’re on a fixed income, every penny saved matters. With Free File, you can save lots of pennies. Free File also does all the hard work for you. It finds the right forms, benefits and does all the math,” said Ken Corbin, commissioner of IRS’ Wage and Investment division.

Free File supports all the major forms that can be filed electronically so even if your return is a bit more complex, you can still use a free service.

Here’s how Free File works:

1. Go to IRS.gov/FreeFile to see all Free File options.
2. Browse each of the 10 offers or use a “look up” tool to help you find the right product. Each Free File partner sets its own eligibility standards generally based on income, age and state residency. But if your adjusted gross income was $69,000 or less, you will find at least one free product to use. Two products are in Spanish.
3. Select a provider and follow the links to their web page to begin your tax return.
4. Complete and e-File your tax return only if you have all the income and deduction records you need. The fastest way to get a refund is by filing electronically and selecting direct deposit. If you owe, use direct pay or electronic options.

Free File providers also offer state tax return preparation, some for free and some for a fee. Again, use the “look up” tool to find the right product. Here’s another plus for Free File: you can use your smart phone or tablet to do your taxes. Just go to IRS.gov/FreeFile on your device. All Free File products are enabled for mobile devices.

Seniors who are not comfortable preparing their own tax return still have other free options. The IRS helps support the Volunteer Income Tax Assistance program and AARP supports the Tax Counseling for the Elderly program. Volunteers will prepare your tax return for you for free. Use the VITA locator tool to find a VITA/TCE location near you.

Free File is available now through October to accommodate extension filers.

IRS YouTube Videos:
IRS Tax Withholding Estimator – English | Spanish

WASHINGTON — The Internal Revenue Service has launched a new and improved Tax Withholding Estimator, designed to help workers target the refund they want by having the right amount of federal income tax taken out of their pay.

The Tax Withholding Estimator, now available on IRS.gov, incorporates the changes from the redesigned Form W-4, Employee’s Withholding Certificate, that employees can fill out and give to their employers this year.

The IRS urges everyone to see if they need to adjust their withholding by using the Tax Withholding Estimator to perform a Paycheck Checkup. If an adjustment is needed, the Tax Withholding Estimator gives specific recommendations on how to fill out their employer’s online Form W-4 or provides the PDF form with key parts filled out.

To help workers more effectively adjust their withholding, the improved Tax Withholding Estimator features a customized refund slider that allows users to choose the refund amount they prefer from a range of different refund amounts. The exact refund range shown is customized based on the tax information entered by that user.

Based on the refund amount selected, the Tax Withholding Estimator will give the worker specific recommendations on how to fill out their W-4. This new feature allows users who seek either larger refunds at the end of the year or more money on their paychecks throughout the year to have just the right amount withheld to meet their preference.

The new Tax Withholding Estimator also features several other enhancements, including one allowing anyone who expects to receive a bonus to indicate whether tax will be withheld. In addition, improvements added last summer continue to be available, including mobile-friendly design, handling of pension income, Social Security benefits and self-employment tax.

Starting in 2020, income tax withholding is no longer based on an employee’s marital status and withholding allowances, tied to the value of the personal exemption. Instead, income tax withholding is generally based on the worker’s expected filing status and standard deduction for the year. In addition, workers can choose to have itemized deductions, the Child Tax Credit and other tax benefits reflected in their withholding for the year.

It is important for people with more than one job at a time (including families in which both spouses work) to adjust their withholding to avoid having too little withheld. Using the Tax Withholding Estimator is the most accurate way to do this. As in the past, employees can also choose to have an employer withhold an additional flat-dollar amount each pay period to cover, for example, income they receive from the gig economy, self-employment, or other sources that is not subject to withholding.

For more information about the updated Tax Withholding Estimator and the redesigned 2020 Form W-4, visit IRS.gov.

WASHINGTON – The Internal Revenue Service today reminded active duty military personnel that IRS Free File offers them multiple options for free federal tax preparation.

Free File is for individuals or families whose adjusted gross income was $69,000 or less last year. Free File is a private-public partnership between the IRS and the Free File Inc.

“The IRS takes special steps to help military members and their families with their taxes, and the Free File program is part of that effort,” said IRS Commissioner Chuck Rettig. “Almost 10% of the IRS workforce are veterans. We greatly appreciate the service to the nation of every veteran and their supportive families, and we will do all we can to assist them.”

For active duty military and their spouses, Free File has a special offer. Individuals and their families who meet the income limitation may choose from any of nine companies without regard to additional eligibility requirements.

The nine special offers are from 1040Now, Inc., FileYourTaxes.com, Free tax Returns.com, H&R Block, On-Line Taxes, Inc., Tax ACT, TaxHawk, Inc., TaxSlayer (English and Spanish) and TurboTax. 

Active duty military stationed in combat zones also have more time to file their tax returns. However, those with spouses and families may opt to file as soon as they are able to claim various tax benefits for which they may be eligible. If only one spouse is present to file a joint return, they must have proper authorization to file a joint tax return on behalf of their spouse.

The IRS will begin processing tax returns on Jan. 27. With Free File, you can use any digital device, personal computer, tablet or smart phone. Free File products are mobile enabled so you can do your taxes on your smart phone or tablet and e-File with your hand-held device.

Here’s how Free File works:

1. Go to IRS.gov/FreeFile to see all Free File options.
2. Military personnel who meet the income requirement can select from any of the nine providers that have “Free for Active Military for Adjusted Gross Income of $69,000 or less” in their offer. Nine of the 10 partners are making the offer. One product is in Spanish.
3. Select a provider and follow the links to their web page to begin your tax return.
4. Complete and e-File your tax return only if you have all the income and deduction records you need. The fastest way to get a refund is by filing electronically and selecting direct deposit. If you owe, use direct pay or electronic options.

Generally, each Free File partner sets additional eligibility requirements that civilian taxpayers must meet. Non-military personnel should use the “look up” tool at IRS.gov/FreeFile to find the best match.

Military members can get more information on their special tax benefits at IRS.gov/military.

Free File is available now through October to accommodate extension filers.

WASHINGTON – Most taxpayers can get an early start on their federal tax returns as IRS Free File – featuring brand-name online tax providers − opens today at IRS.gov/FreeFile for the 2020 tax filing season.

Taxpayers whose adjusted gross income was $69,000 or less in 2019 – covering most people – can do their taxes now, and the Free File provider will submit the return once the IRS officially opens the 2020 tax filing season on Jan. 27 and starts processing tax returns.
 
“Free File online products offer free federal tax return preparation, free electronic filing and free direct deposit of refunds to help get your money faster,” said Chuck Rettig, IRS Commissioner. “The IRS has worked to improve the program for this year, and we encourage taxpayers to visit IRS.gov, and consider using the Free File option to get a head start on tax season.”

For 2020, the Free File partners are: 1040Now, Inc., ezTaxReturn.com (English and Spanish), FileYourTaxes.com, Free tax Returns.com, H&R Block, Intuit, On-Line Taxes, Inc., Tax ACT, TaxHawk, Inc. and TaxSlayer (English and Spanish). 

Since its 2003 debut, Free File has served nearly 57 million taxpayers, saving an estimated $1.7 billion calculated using a conservative $30 tax preparation fee. Free File is a public-private partnership between the Internal Revenue Service and Free File Inc. (FFI), a consortium of tax software providers who make their Free File products available at IRS.gov/FreeFile.

Here’s how Free File works:

1. Go to IRS.gov/FreeFile to see all Free File options.
2. Browse each of the offers or use a “look up” tool to help you find the right product. Each Free File partner sets its own eligibility standards generally based on income, age and state residency. But if the taxpayer’s adjusted gross income was $69,000 or less, they will find at least one free product to use.
3. Select a provider and follow the links to their web page to begin a tax return.
4. Complete and e-File a tax return only if you have all the income and deduction records you need. The fastest way to get a refund is by filing electronically and selecting direct deposit. If you owe, use direct pay or electronic options.

Most companies provide a special offer for active duty military personnel who earned $69,000 or less. Those taxpayers can choose from any participating Free File provider regardless of the company’s other eligibility standards. Free File also can be a valuable tool for younger taxpayers or first-time filers with modest incomes as well as retirees and working families seeking to save money.

Free File providers also offer state tax return preparation, some for free and some for a fee. Again, use the “look up” tool to find the right product. There are two products in Spanish. With Free File, you can even use any digital device, personal computer, tablet or smart phone. Free File products are mobile enabled so you can do your taxes on your smart phone or tablet and e-File with your hand-held device.

You should also know your protections under the IRS Free File program. They include:

• Get a free federal tax return - As long as you qualify for the Free File federal return offer, you must not be charged for preparation and e-filing of a federal tax return.
• Be protected from unnecessary fees - Other than state tax preparation fees and a possible fee if you choose to continue with tax preparation when you don’t qualify for the federal return offer, you must not be offered or solicited marketing, promotional rebates, or any other form of selling activity on the Free File company’s website. Any state preparation or non-qualifying fees must be disclosed on the company’s Free File landing page.
• Be guided in your choices - If you find you don’t qualify for a specific company’s Free File offer after visiting their Free File website, you may return to the IRS.gov Free File website to seek another Free File online offer. Each Free File company will provide you information when you don’t qualify, with the option to select a link to bring you back to IRS.gov Free File site to select another company.
• Get help if you need it - If you need help when you are on the company’s Free File website and doing your taxes, you may refer to the company’s free customer service options.
• Be reminded of Free File - If you used Free File last year, you should receive an email from the same company product that you used, welcoming you back to Free File. The email should include a link to the company’s Free File online program and explain how to file with the program.
• Be protected from bank product fees - As part of Free File, you must not be offered any bank products such as Refund Anticipation Loans or Refund Anticipation Checks.
• Get help finding a free option for you - IRS offers a Free File online Look-up tool to help you find an offer that best meets your needs. 
• Get important information on possible charges for state returns - Many Free File online products offer free state tax preparation. Some charge a state fee. Be sure to read each company’s information carefully.

The IRS also offers Free File Fillable Forms, which is the electronic version of IRS paper forms to any taxpayer regardless of income. That product will be available when IRS opens the tax filing season on Jan. 27. Free File Fillable Forms is best for taxpayers who are comfortable doing their own taxes with little assistance. Free File online products will be available from January through October for extension filers. Taxpayers who cannot meet the April 15 deadline, also can use Free File to file extensions regardless of their income.

Free File is just one way the IRS provides free tax preparation options to taxpayers. Taxpayers wanting more personal help can visit one of thousands of community volunteer sites through the Volunteer Income Tax Assistance program or Tax Counseling for the Elderly offered by AARP. Trained volunteers will prepare returns for free for taxpayers who generally made $56,000 or less.

Taxpayers using their mobile phones or tablets to do their taxes can either go directly to IRS.gov/FreeFile or they can use the IRS2Go app and select “Free Tax Help” to find information on Free File and the VITA locator tool.

IRS YouTube Videos:
Direct Deposit for Your Tax Refund − English

WASHINGTON — With tax season beginning soon, the Internal Revenue Service reminds taxpayers that choosing to have their tax refund directly deposited into their checking or savings account is the fastest way to get their money.

It’s simple, safe and secure. Taxpayers can also get their refund deposited into one, two or three different accounts, if desired.

Eight out of 10 taxpayers get their refunds by using direct deposit. The IRS uses the same electronic transfer system to deposit tax refunds that is used by other federal agencies to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.

Direct deposit also avoids the possibility that a refund check could be lost or stolen or returned to the IRS as undeliverable. And it saves taxpayer money. It costs more than $1 for every paper refund issued, but only a dime for each direct deposit.

Easy to use

A taxpayer simply selects direct deposit as the refund method when using tax software or working with a tax preparer, and then types in their account and routing number. It’s important to double check entries to avoid errors.

The IRS reminds taxpayers they should only deposit refunds directly into accounts that are in their name, their spouse’s name or both if it’s a joint account.

Split refunds

By using direct deposit, a taxpayer can split their refund into up to three financial accounts, including a bank or Individual Retirement Account. Part of the refund can even be used to purchase up to $5,000 in U.S. Series I Savings Bonds.

A taxpayer can split their refund by using tax software or by using IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), if they file a paper return. Some people use split refunds as a convenient option for managing their money, sending some of their refund to an account for immediate use and some for future savings.

No more than three electronic tax refunds can be deposited into a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund will be issued for the refunds exceeding that limit.

E-file plus direct deposit yields fastest refunds

The IRS also encourages taxpayers to file electronically. While a person can choose direct deposit whether they file their taxes on paper or electronically, a taxpayer who e-files will typically see their refund in less than 21 days. Taxpayers can track their refund using "Where’s My Refund?" on IRS.gov or by downloading the IRS2Go mobile app.

“Where’s My Refund?” is updated once daily, usually overnight, so there’s no reason to check more than once per day or call the IRS to get information about a refund. Taxpayers can check “Where’s My Refund?” within 24 hours after the IRS has received their e-filed return or four weeks after receipt of a mailed paper return. “Where’s My Refund?” has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved, and (3) Refund Sent.

Whether through IRS Free File or commercially available software, electronic filing vastly reduces tax return errors, as the tax software does the calculations, flags common errors and prompts taxpayers for missing information.

WASHINGTON — The Internal Revenue Service this week launched a new Gig Economy Tax Center on IRS.gov to help people in this growing area meet their tax obligations through more streamlined information.

“The IRS developed this online center to help taxpayers in this emerging segment of the economy,” said IRS Commissioner Chuck Rettig. “Whether renting out a spare bedroom or providing car rides, we want people to understand the rules so they can stay compliant with their taxes and avoid surprises down the line.”

The gig economy is also known as the sharing, on-demand or access economy. It usually includes businesses that operate an app or website to connect people to provide services to customers. While there are many types of gig economy businesses, ride-sharing and home rentals are two of the most popular.

Educating gig economy workers about their tax obligations is vital because many don’t receive form W-2s, 1099s or other information returns for their work in the gig economy. However, income from these sources is generally taxable, regardless of whether workers receive information returns. This is true even if the work is fulltime, part-time or if the person is paid in cash. Workers may also be required to make quarterly estimated income tax payments, pay their share of Federal Insurance Contribution (FICA), Medicare and Additional Medicare taxes if they are employees and pay self-employment taxes if they are not considered to be employees.

The Gig Economy Tax Center streamlines various resources, making it easier for taxpayers to  find information about the tax implications for the companies that provide the services and the individuals who perform them.

It offers tips and resources on a variety of topics including:

• filing requirements
• making quarterly estimated income tax payments
• paying self-employment taxes
• paying FICA, Medicare and Additional Medicare
• deductible business expenses
• special rules for reporting vacation home rentals

For more information, check out the new Gig Economy Tax Center on IRS.gov.