News

IR-2023-97, May 4, 2023

WASHINGTON — The Internal Revenue Service reminds taxpayers that making certain energy efficient updates to their homes could qualify them for home energy tax credits.

The credit amounts and types of qualifying expenses were expanded by the Inflation Reduction Act of 2022. Taxpayers who make energy improvements to a residence may be eligible for expanded home energy tax credits.

What taxpayers need to know

Taxpayers can claim the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit for the year the qualifying expenditures are made.

Homeowners who improve their primary residence will find the most opportunities to claim a credit for qualifying expenses. Renters may also be able to claim credits, as well as owners of second homes used as residences. Landlords cannot claim this credit.

IRS encourages taxpayers to review all requirements and qualifications at IRS.gov/homeenergy for energy efficient equipment prior to purchasing. Additional information is also available on energy.gov, which compares the credit amounts for tax year 2022 and tax year 2023.

Energy Efficient Home Improvement Credit

Taxpayers that make qualified energy-efficient improvements to their home after Jan. 1, 2023, may qualify for a tax credit up to $3,200 for the tax year the improvements are made.

As part of the Inflation Reduction Act, beginning Jan. 1, 2023, the credit equals 30% of certain qualified expenses:


Qualified energy efficiency improvements installed during the year which can include things like:

Exterior doors, windows and skylights.
Insulation and air sealing materials or systems.





Residential energy property expenses such as:

Central air conditioners.
Natural gas, propane or oil water heaters.
Natural gas, propane or oil furnaces and hot water boilers.





Heat pumps, water heaters, biomass stoves and boilers.
Home energy audits of a main home.


The maximum credit that can be claimed each year is:


$1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150).
$2,000 per year for qualified heat pumps, biomass stoves or biomass boilers.


The credit is available only for qualifying expenditures to an existing home or for an addition or renovation of an existing home, and not for a newly constructed home. The credit is nonrefundable which means taxpayers cannot get back more from the credit than what is owed in taxes and any excess credit cannot be carried to future tax years.


















Residential Clean Energy Credit

Taxpayers who invest in energy improvements for their main home, including solar, wind, geothermal, fuel cells or battery storage, may qualify for an annual residential clean energy tax credit. Taxpayers may be able to claim a credit for certain improvements other than fuel cell property expenditures made to a second home that they live in part-time and don't rent to others.

The Residential Clean Energy Credit equals 30% of the costs of new, qualified clean energy property for a home in the United States installed anytime from 2022 through 2033.

Qualified expenses include the costs of new, clean energy equipment including:


Solar electric panels.
Solar water heaters.
Wind turbines.
Geothermal heat pumps.
Fuel cells.
Battery storage technology (beginning in 2023).


Clean energy equipment must meet the following standards to qualify for the Residential Clean Energy Credit:


Solar water heaters must be certified by the Solar Rating Certification Corporation or a comparable entity endorsed by the applicable state.
Geothermal heat pumps must meet Energy Star requirements in effect at the time of purchase.
Battery storage technology must have a capacity of at least 3 kilowatt hours.


The credit is available for qualifying expenditures incurred for installing new clean energy property in an existing home or for a newly constructed home. This credit has no annual or lifetime dollar limit except for fuel cell property. Taxpayers can claim this credit each tax year they install eligible property until the credit begins to phase out in 2033.

This is a nonrefundable credit, which means the credit amount received cannot exceed the amount owed in tax. Taxpayers can carry forward excess unused credit and apply it to any tax owed in future years.

Additional information is available at IRS.gov on qualifying residences and information for taxpayers who also use their home for a business.

When it is time to file a tax return, taxpayers can use Form 5695, Residential Energy Credits, to claim the credit. This credit must be claimed for the tax year when the property is installed, not just purchased.

Good recordkeeping and related resources

Taxpayers are encouraged to keep good records of purchases and expenses during the time the improvements are made. This will assist in claiming the applicable credit during tax filing season.

Other resources:


Energy.gov Credit Comparison Chart
Fact Sheet: Frequently asked questions about energy efficient home improvements and residential clean energy property creditsPDF




Resource:https://www.irs.gov/newsroom/irs-going-green-could-help-taxpayers-qualify-for-expanded-home-energy-tax-credits

   US TAX, U.S. TAX
 

IRS Tax Tip 2023-61, May 3, 2023

Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies and businesses are treated differently when it's time to file a tax return. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation.

Whether someone is having fun with a hobby or running a business, if they accept more than $600 for goods and services using online marketplaces or payment apps, they could receive a Form 1099-K. Profits from the sale of goods, including personal items, and services is taxable income that must be reported on tax returns.

There are a few other things people should consider when deciding whether their project is a hobby or business. No single thing is the deciding factor. Taxpayers should review all of the factors to make a good decision.


















How taxpayers can decide if it's a hobby or business

These questions can help taxpayers decide whether they have a hobby or business:


Do they carry out the activity in a businesslike manner and keep complete and accurate books and records?
 
Does the time and effort they put into the activity show they intend to make a profit?
 
Does the activity make a profit in some years – if so, how much profit does it make?
 
Can they expect to make a future profit from the appreciation of the assets used in the activity?
 
Do they depend on income from the activity for their livelihood?
 
Are any losses due to circumstances beyond their control or are the losses normal for the startup phase of their type of business?
 
Do they change their methods of operation to improve profitability?
 
Do the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business?


Whether taxpayers have a hobby or run a business, good record keeping is always key when it's time to file taxes.

More information:


Publication 535, Business Expenses
Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C)
Small Business and Self-Employed Tax Center at IRS.gov
Understanding Your Form 1099-K




U.S. TAX
Resourse: https://www.irs.gov/newsroom/hobby-or-business-heres-what-to-know-about-that-side-hustle
 

IR-2023-94, May 2, 2023

WASHINGTON — Florida storm victims now have until Aug. 15, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as a result of tornadoes, severe storms and flooding that occurred from April 12 to 14. This means that individuals and households that reside or have a business in Broward County qualify for tax relief. Other areas added later to the disaster area will also qualify for the same relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on April 12, 2023, and is based on an April 27 FEMA disaster declaration. As a result, affected individuals and businesses will have until Aug. 15, 2023, to file returns and pay any taxes that were originally due during this period.

This means that taxpayers will have until Aug. 15 to file any 2022 individual income tax returns and various business returns that were originally due on April 18. They will also have until Aug. 15 to pay any tax originally due on these returns. Taxpayers will get the extra time, even if they failed to request a tax-filing extension by April 18.

Among other things, this also means that eligible taxpayers will have until Aug. 15 to make 2022 contributions to their IRAs and health savings accounts.

The Aug. 15 deadline also applies to the quarterly estimated tax payments, normally due on April 18 and June 15.

The Aug. 15 deadline also applies to the quarterly payroll and excise tax returns normally due on May 1 and July 31, 2023. In addition, penalties on payroll and excise tax deposits due on or after April 12 and before April 27, will be abated as long as the tax deposits were made by April 27, 2023.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

Affected individual taxpayers who need more time to file, beyond the Aug. 15 deadline, must file their extension requests on paper using Form 4868. That's because e-file options for requesting an extension are not available after April 18.

By filing this form, disaster-area taxpayers will have until Oct. 16 to file, though tax payments are still due by Aug. 15. Visit IRS.gov/extensions for details.














The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed in early 2024), or the return for the prior year (that is, the 2022 return normally filed in 2023). Be sure to write the FEMA declaration number – 4709-DR − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.gov.

U.S. TAX
Resourse: https://www.irs.gov/newsroom/irs-florida-storm-victims-qualify-for-tax-relief-april-18-deadline-other-dates-extended-to-aug-15

 

IRS Tax Tip 2023-58, April 27, 2023

When a taxpayer can't pay their full tax liability or if paying would cause financial hardship, they may want to consider applying for an Offer in Compromise. This agreement between a taxpayer and the IRS settles a tax debt for less than the full amount owed. The goal is a compromise that's in the best interest of both the taxpayer and the agency. The application fee for an offer in compromise is $205. Low-income taxpayers don't have to pay this fee, and they should check if they meet the definition of low-income in the instructions for Form 656, Offer in Compromise.

When reviewing applications, the IRS considers the taxpayer's unique set of facts and special circumstances affecting their ability to pay including their:


Income.
Expenses.
Asset equity.


The Offer in Compromise Booklet has detailed information

The booklet covers everythingPDF a taxpayer needs to know about submitting an Offer in Compromise including:


Eligibility.
Costs to apply.
Application process.
Forms.


The booklet is also available in Spanish. Taxpayers should download and use the latest version of the OIC booklet to avoid processing delays.

 

 










Taxpayers can also watch a how-to video series on Offer in Compromise

The IRS has a free how-to video series on Offer in Compromise available in English, Spanish and Simplified Chinese. The playlist has easy-to-find information that taxpayers need to know when they consider and apply for an OIC. Topics in the series include:


Overview of the OIC process, forms and pre-qualifier tool.
Step-by-step guides for completing Forms 433-A and 433-B OIC. These are collection information statements which are required for both individual and business-related offers.
Step-by-step example of how to complete Form 656, Offer in Compromise.
Checklist of everything that's needed to submit a valid offer.


Taxpayers can see if they're eligible with the pre-qualifier tool 

Taxpayers can enter their financial information and tax filing status in the tool to calculate a preliminary offer amount. The tool is only a guide. The IRS will make the final decision on whether to accept the taxpayer's application.

Beware of offer in compromise mills

Offers in compromise are an important program to help people who can't pay to settle their federal tax debts. But "offer in compromise mills" can aggressively promote offers in compromise in misleading ways to people who clearly don't meet the qualifications, often costing taxpayers thousands of dollars. Taxpayers can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool.

U.S. TAX
Resourse: https://www.irsvideos.gov/Business/SBTW/Lesson3

 

Lesson 3 - Filing and paying taxes electronically

Introduction and Benefits of E-Filing



Male Host: Hello and welcome to filing and paying taxes electronically.

Thanks for joining us.

Female Host: In this workshop, we'll describe IRS E-File and its benefits for your individual and business returns, as well as describing electronic payment options, so you can determine which is best for your business.

By the end of this workshop, we hope to convince you of the benefits of filing and paying your taxes, electronically.

Male Host: Before we discuss your specific business situation, let's talk about the benefits of electronic filing.

First, e-filing is convenient.

You'll receive a fast electronic acknowledgement that the IRS has received your return.

Second, e-filing is accurate.

There are few risks of math errors and of receiving a letter from the IRS.

If there are any errors on the return, you'll receive an easy to understand error message in plain language.

Third, e-filing is safe.

Your tax information is secure and only authorized IRS employees have access to the system.

Female Host: Fourth, just as you filed electronically, you can receive a refund electronically by providing your bank's routing number; the type of account, either checking or savings; and your account number.

Finally, if you use tax preparation software, the software performs your calculations and highlights needed forms and schedules.

You can buy your own software or you can choose a tax preparer who is an authorized IRS e-file provider.

You may even be eligible to electronically file your federal returns for free through an IRS partner. And signing your return is simple and electronic. You can choose your own 5-digit personal identification number, or pin, to sign your return. For additional information, go to irs.gov/smallbiz with a "z" and go to the Preparing Your Taxes section and choose employment taxes.

Customize this Lesson for your Business

Now, we have some questions and your answers will help us customize a segment for you.

Please answer the following questions as they pertain to you and your business.

How is your business organized?

Choose one now from the selections on your screen.

Is it a sole proprietor, a partnership, a corporation, charity, or non-profit?

Sole Proprietor

As a self-employed sole proprietor when you do file your form 1040 electronically you'll complete a schedule C to report your business income and expenses.

Schedule C is included in the Form 1040 software package you purchased.

So there's no need to purchase additional business tax software.

This software does all of the math and it even calculates depreciation for you.

And if you use a tax preparer their software can take care of everything too.

Partnership

Large partnerships of over 100 partners are required to file electronically.

All other partnerships, however, may choose to voluntarily file their Form 1065 U.S. Return of Partnership Income, electronically, regardless of the number of partners.

A complete list of approved IRS e-file for business providers who offer the Form 1065 e-file product can be found at www.irs.gov.

Just click on the area for "File" and go to the section for "Business & Self-Employed".

There you will find more information, as well as links to companies' websites.

You may be able to enter your return information online using software provided by the Form 1065 e-file provider of your choice.

The provider will then transmit your Form 1065 and Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. to the IRS.

Corporation

(Music playing) Corporations can electronically file Form 1120 U.S. Corporation Income Tax Return, Form 1120-F U.S. Income Tax Return of a Foreign Corporation and Form 1120-S U.S. Income Tax Return for an S Corporation, as well as associated forms and schedules.

Any business taxpayer who files these forms, may electronically file their return through an authorized IRS e-file provider.

A listing of 1120 Return e-file approved providers is available at www.irs.gov If you are a corporate filer, who would like to participate in 1120, 1120F, or 1120S e-file, talk to your tax preparer to see if they offer it to their clients.

Some corporations are required to file electronically.

Those corporations with $10 million or more in total assets, and that file 250 or more returns a year, are required to electronically file their Form 1120, 1120F, and 1120S.

The total number of returns is determined by aggregating all returns regardless of type, that are required to be filed over the calendar year including income tax returns.

Returns required under Section 6033 of the Internal Revenue Code.

information returns, excise tax returns, and employment tax returns. 

Charity or Non-profit

[music playing] Charities and non-profits can electronically file the following forms through an IRS authorized e-file provider: Form 990, Return of Organization Exempt from Income Tax.

Form 990 EZ, the short form.

Form 1120-POL, US Income Tax Return for Certain Political Organizations.

Form 8868, Application for Extension of Time to File an Exempt to Organization Return.

Form 990-PF, Return of Private Foundation and Form 990-N.

Most small tax-exempt organizations whose annual gross receipts are normally $50,000 or less are required to electronically submit Form 990N, also known as the e-Postcard unless they choose to file a complete Form 990 or Form 990EZ.

To complete Form 990N go to irs.gov/990n and follow the directions to register, create, and send your e-Postcard.

Any exempt organization, may electronically file their return through an approved IRS e-file for business provider.

You can access the continuously updated approved providers at www.irs.gov.

Your organization may even be eligible to electronically file the 990 EZ for free through an IRS partner.

If you're a non-profit who would like to participate in 990 e-file, please talk to your tax preparer to see if they offer electronic filing to their clients.

You can find additional information about electronic filing for charities and nonprofits at www.irs.gov.

It is under the charities and nonprofit section.

Additionally, electronic filing of employment returns is available at irs.gov/businesses.

Look for the employment taxes section.

[END]



 

 










Do you pay your taxes electronically?

[music playing] Now, do you pay your taxes electronically?

[silence]

Benefits of Paying Electronically

[Music playing] There are two ways to pay electronically.

Electronic Funds Withdraw, also known as EFW, and the Electronic Federal Tax Payment System, also known as EFTPS.

Electronic Funds Withdrawal

EFW is a way for you to pay money you owe when you file your taxes.

When you use EFW, you authorize the US Department of Treasury, through a treasury financial agent, to transfer money from your bank account to the Treasury account.

You enter your bank routing number, your bank account number, and the account type such as checking or savings, that you want the payment withdrawn from.

This is instantaneous, and there is no charge, but make sure you check with your financial institution about any fees, it may charge.

The payment date is the same as the date the balance due return is filed, and the funds are withdrawn in a single transaction, not in installments.

You can call the IRS e-file Payment Inquiry and Cancellation Service toll free at 1-888-353-4537 to inquire about payments.

Wait seven to ten days after your return was accepted before making inquiries.

Contact the IRS e-Help Desk immediately at 1-866-255-0654 if there is an error in the amount withdrawn.

Additionally, www.irs.gov/payments provides detailed information on electronic payment of taxes.

 

Electronic Filing Tax Payment System (EFTPS)

More than 12 million taxpayers are currently enrolled in the Electronic Filing Tax Payment System, and it is especially useful to business taxpayers with employees because it makes it easy for them to make deposits of withheld employee income and payroll taxes. Also, you can use EFTPS to pay your own quarterly estimated taxes.

In addition, EFTPS is safe, secure and private. It is also available 24/7. You have the ability to schedule payments when you want and you'll receive immediate confirmation of every transaction. Also, you can check up to 16 months of your EFTPS payment history online or by calling EFTPS customer service. You have two options for enrolling in EFTPS, and both are free. Online enrollment is available at www.eftps.gov. You will receive your Personal Identification Number, or PIN, in the mail within five to seven business days.

If you would like to enroll by mail, you can call EFTPS at 1-888-725-7879, Monday - Friday 9 a.m. to 6 p.m. ET and request the enrollment form by mail. You will then receive your PIN within seven business days after your completed form is received by EFTPS. As soon as you receive your PIN, you can begin scheduling payments. If you use eftps.gov, follow the prompts to set your internet password. If you wish to schedule payments by phone, just call 1-800-555-3453.

Also, if you receive a pre-enrollment letter from EFTPS, you can activate your enrollment by calling the same number. You'll need your financial institution's routing number and your account number. 

EFTPS Payment Methods

[Music playing] There are two primary EFTPS payment methods for business owners.

EFTPS direct and EFTPS through a financial institution.

EFTPS Direct is an electronic payment method that allows you to access EFTPS directly, either by phone or online to pay your taxes.

Make sure that you have your PIN and EIN or SSN.

You will be prompted for any other information necessary to complete your tax payment as you go along.

You'll need to submit your tax payment information by 8 P.M. Eastern Time at least one day prior to your due date at EFTPS.gov or check the EFTPS website for the number to call for payment.

After submitting your information, you will immediately receive an electronic funds transfer acknowledgement number to keep for your records.

If you want to cancel a payment you must do so by 11:59 P.M. Eastern Time at least two business days before the scheduled date.

EFTPS will then debit your designated bank account on the date that you schedule.

Your tax data will be reported to the IRS and your records will be updated automatically.

You may check the status and history of any payment you made using EFTPS in the last 16 months at www.EFTPS.gov In the second method, EFTPS through a financial institution, you instruct your financial institution to electronically move funds from your account to the Treasury account.

Not all financial institutions, however, offer this service, so before selecting this option check with your bank to see if they offer this service, how much it costs and if you're eligible to use it. Remember it's your responsibility to initiate payments or to authorize a trusted third party such as a tax professional or payroll service to initiate the payment for you. If you choose to allow your payroll company to make tax payments on your behalf, check with them for specific fees, deadlines and instructions for enrollment in EFTPS.

If your payroll company is not making all of the tax payments through EFTPS, you will need to enroll in EFTPS to make those payments.

Even if you do enroll in a payroll company to pay all of your taxes, it is still a good idea to enroll in EFTPS separately.

This allows you to check on and ensure that your payroll company is making the payments on your behalf.

It also provides flexibility if you ever need to change payroll companies in the future.

For more information on EFTPS go to www.irs.gov and click on the EFTPS logo or go directly to the EFTPS website at www.eftps.gov.

And don't forget to review IRS Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started.

Summary

[Music Playing] Depending on how you answer the questions at the beginning of the workshop, you've learned quite a lot about filing and paying federal income taxes electronically.

We hope we've given you some very convincing reasons to consider filing and paying electronically.

If you're an employer, please join us for the workshop about filing and paying your employment taxes electronically.

We hope you'll take advantage of our IRS e-file and e-pay options.

You now know that e-file and e-pay streamline the tax process and make things easier for you.

Thank you for joining us for this workshop.

Best wishes for your business.

Resourse: https://www.irsvideos.gov/Business/SBTW/Lesson3

 

When an IRS letter arrives, taxpayers don’t need to panic, but they do need to read it

IRS Tax Tip 2023-55, April 24, 2023



Getting a letter from the IRS can make some taxpayers nervous – but there's no need to panic. The IRS sends notices and letters when it needs to ask a question about a taxpayer's tax return, let them know about a change to their account or request a payment.

When an IRS letter or notice arrives in the mail, here's what taxpayers should do:

Read the letter carefully. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes any steps the taxpayer needs to take. A notice may reference changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return. Taking prompt action could minimize additional interest and penalty charges.

Review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records. Typically, a taxpayer will need to act only if they don't agree with the information, if the IRS asked for more information or if they have a balance due.

Take any requested action, including making a payment. The IRS and authorized private debt collection agencies do send letters by mail. Taxpayers can also view digital copies of select IRS notices by logging into their IRS Online Account. The IRS offers several options to help taxpayers who are struggling to pay a tax bill.



 

 








Reply only if instructed to do so. Taxpayers don't need to reply to a notice unless specifically told to do so. There is usually no need to call the IRS. If a taxpayer does need to call the IRS, they should use the number in the upper right-hand corner of the notice and have a copy of their tax return and letter.

Let the IRS know of a disputed notice. If a taxpayer doesn't agree with the IRS, they should follow the instructions in the notice to dispute what the notice says. The taxpayer should include information and documents for the IRS to review when considering the dispute.

Keep the letter or notice for their records. Taxpayers should keep notices or letters they receive from the IRS. These include adjustment notices when the IRS takes action on a taxpayer's account. Taxpayers should keep records for three years from the date they filed the tax return.

Watch for scams. The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure whether they owe money to the IRS can view their tax account information on IRS.gov.

More information:


Understanding Your IRS Notice or Letter
Tax Scams/Consumer Alerts

Resource: https://www.irs.gov/newsroom/when-an-irs-letter-arrives-taxpayers-dont-need-to-panic-but-they-do-need-to-read-it
 

IRS YouTube Videos


Estimated Tax Payments | ASL


IR-2023-78, April 12, 2023

WASHINGTON — The Internal Revenue Service today reminded people that Tax Day, April 18, is also the deadline for first quarter estimated tax payments for tax year 2023.

These payments are normally made by self-employed individuals, retirees, investors, businesses, corporations and others that do not have taxes withheld or employees that don't have enough taxes withheld by their employers throughout the year.

Income taxes are a pay-as-you-go process. This means, by law, taxes must be paid as income is earned or received during the year. Most people pay their taxes through withholding from paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.

Most often, those who are self-employed or in the gig economy need to make estimated tax payments. Similarly, investors, retirees and others often need to make these payments because a substantial portion of their income is not subject to withholding.

Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income. Paying quarterly estimated taxes will usually lessen and may even eliminate any penalties.

Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers and fishers, those who recently became disabled, recent retirees, those who receive income unevenly during the year and casualty and disaster victims.

Due to recent disasters, eligible taxpayers in California, Alabama and Georgia, for example, have until Oct. 16, 2023, to make 2023 estimated tax payments, normally due on April 18, June 15 and Sept. 15. People in other states may have extended deadlines as well; a full list is available on the Tax Relief in Disaster Situations.

 

 






How to pay estimated taxes

Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes. They can also visit IRS.gov/payments to pay electronically.

The best way to make a payment is through IRS online account. There taxpayers can see their payment history, any pending payments and other useful tax information. Taxpayers can make an estimated tax payment by using IRS Direct Pay; Debit Card, Credit Card or Digital Wallet; or the Treasury Department's Electronic Federal Tax Payment System (EFTPS).

For information on other payment options, visit IRS.gov/payments. If paying by check, taxpayers should be sure to make the check payable to the "United States Treasury."

Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.

Tax Withholding Estimator

The IRS urges people to use its Tax Withholding Estimator tool to help ensure the right amount of tax is withheld from their paychecks.

Checking taxes withheld periodically helps to protect against having too little tax withheld and possibly facing an unexpected tax bill or penalty at tax time. It also allows people to check taxes withheld up front, resulting in bigger paychecks throughout the year and likely a smaller refund at tax time.

IRS.gov assistance 24/7

Tax help is available 24/7 on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics and Frequently Asked Questions to get answers to common questions.

The IRS is continuing to expand ways to communicate to taxpayers who prefer to get information in other languages. The IRS has posted translated tax resources in 20 other languages on IRS.gov. For more information, see We Speak Your Language.

US TAX, U.S. TAX
Resource:https://www.irs.gov/newsroom/irs-reminds-taxpayers-of-april-estimated-tax-payment-deadline

IRS Tax Tip 2023-48, April 11, 2023

When a tax return has errors, like typos or math mistakes, it can lead to longer processing times and frustration for taxpayers. Many common errors are easy to avoid by carefully reviewing the tax return.

Before filing their tax return, taxpayers should review their return for a few common issues

Incorrect filing status

If taxpayers are unsure about their filing status, the Interactive Tax Assistant on IRS.gov can help them choose the correct status, especially if more than one filing status applies. Tax software, including IRS Free File, also helps prevent mistakes when selecting a tax return filing status.

Errors in names, birth dates and Social Security numbers

Taxpayers must correctly list the name, date of birth and Social Security number for each person they claim as a dependent on their individual income tax return. They should enter each SSN and name on a tax return exactly as it's printed on the Social Security card.

If a dependent or spouse does not have a Social Security number and isn't eligible to get one, taxpayers can apply for an Individual Tax Identification Number and list that instead.








Not answering the digital assets question

Forms 1040 and 1040-SR for tax year 2022 ask whether, at any time during 2022, the taxpayer received, sold, exchanged, gifted or otherwise disposed of a digital asset or financial interest in any digital asset. Taxpayers must complete this field by checking either "Yes" or "No."

Incorrect routing and account numbers

Taxpayers can request direct deposit of a federal refund into one, two or even three accounts. They should make sure the financial institution routing and account numbers entered on the return are correct. Incorrect numbers can delay a refund or deposit it into the wrong account. Taxpayers should also make sure the name on the account matches the name on the tax return.

Taxpayers can also use their refund to purchase U.S. Savings Bonds.

Not signing and dating the return

If filing a joint return, both spouses must sign and date the return. When taxpayers are self-preparing their taxes and filing electronically, they must sign and validate their electronic tax return by entering their prior year's adjusted gross income (AGI). Taxpayers can review Validating Your Electronically Filed Tax Return if they have questions.

 


Resource: https://www.irs.gov/newsroom/common-errors-on-a-tax-return-can-lead-to-longer-processing-times

IR-2023-76, April 11, 2023

WASHINGTON ― With the April 18 deadline quickly approaching, the Internal Revenue Service wants to debunk common myths with facts about filing taxes, finding refund information and adjusting withholding.

The IRS has a solid tax season underway as the agency continues to process 2022 tax returns and deliver refunds, with nine out of 10 refunds issued in less than 21 days. As of March 31, the IRS sent out almost 63 million refunds worth over $183 billion. This year's average refund so far is $2,910.

Filing myths and facts

Myth: Taxpayers don't need to report income if they didn't receive a Form 1099-K this year.

Fact: All income must be reported unless it's excluded by law. This is true whether or not taxpayers receive a Form 1099-K, or other reporting forms. It is important to report all income to avoid receiving a notice or a bill from the IRS. This includes income from:


Goods created and sold on online platforms.
Investment income.
Part-time or seasonal work.
Self-employment or other business activities.
Services provided through mobile apps.


Money received as a gift or for reimbursement does not require a Form 1099-K. Taxpayers can minimize the chance of receiving one of these forms in error by asking friends or family members to correctly designate those types of electronic payments as a non-business-related transaction when possible. Taxpayers can learn more at Form 1099-K Frequently Asked QuestionsPDF. The IRS will continue to share information about changes to 1099-K reporting for tax year 2023 that will be in effect for the 2024 tax season.

Myth: If a taxpayer requests an extension, they don't need to do anything until Oct. 16.

Fact: It's important to remember that an extension to file is not an extension to pay any tax due. Tax balances are still due on April 18. Taxpayers who request a six-month extension to file their taxes have until Oct. 16, 2023, to file their 2022 federal income tax return. If a taxpayer requests an extension, the IRS encourages them to file their income tax return when they're ready instead of waiting until the Oct. 16 extension deadline.

Any taxpayer, regardless of income, can request an extension to file using IRS Free File at IRS.gov.

If taxpayers are in an area impacted by a FEMA declared disaster, they should check Tax Relief in Disaster Situations to get the latest updates on any postponed deadlines.

Refund myths and facts

Myth: Calling or visiting the IRS in person is the best way to speed up a refund.

Fact: The quickest and best way to check the status of a refund is through the Where's My Refund? tool at IRS.gov or via the IRS2Go mobile app. Although some taxpayers mistakenly believe speaking with the IRS by phone or visiting in-person at an IRS Taxpayer Assistance Center will speed up their tax refund, Where's My Refund? has the most up to date information available about a refund. Those taxpayers with limited internet access can reach Where's My Refund? by calling the automated refund line at 800-829-1954. Taxpayers should call the IRS tax help line (800-829-1040) about refund status only if  Where's My Refund? says to do so.








Myth: Where's My Refund? isn't accurate because there's no deposit date or the refund amount is less than expected.

Fact: The IRS generally issues most refunds in less than 21 days, but it is possible a refund may take longer for various reasons, including if a return is incomplete or needs additional review. This delay could also be caused by transposed numbers or when a tax return is affected by identity theft or fraud. The IRS encourages taxpayers to use the Where's My Refund? tool to check the status of a refund daily. The system generally only updates data once a day – usually overnight.

There are different factors that could cause a tax refund to be smaller or larger than expected. Sometimes it is due to Child Tax Credit amounts, delinquent taxes or past due child support. The IRS will mail taxpayers a letter that explains if these adjustments have been made. The Department of Treasury's Bureau of the Fiscal Service has more information on potential reduced refunds.

Taxpayers should only call the IRS tax help line to talk to a representative if it has been more than 21 days since their tax return was e-filed, or more than six weeks since mailing their return.

Myth: Tax transcripts are a secret way to get a refund deposit date.

Fact: Ordering a tax transcript will not help taxpayers understand the timing of their tax refund, nor will it speed up refund processing. Transcripts are designed to help verify past income and tax filing status for various loan applications and to help with tax preparation. The Where's My Refund? tool remains the fastest and most accurate way to check refund status.

Withholding myth and facts

Myth: Taxpayers don't need to adjust withholding for 2023 if a refund was received this year.

Fact: Taxpayers should frequently check withholding and adjust accordingly. For taxpayers who receive a paycheck from an employer, withholding is the amount of federal income tax withheld from the paycheck. Adjusting tax withholding with an employer is easy and using the Tax Withholding Estimator tool on IRS.gov can help taxpayers determine if they're withholding the right amount.

Taxpayers should also check withholding when there's a change in jobs, income or other life events like marriage or divorce, childbirth, an adoption or home purchase.

The IRS encourages taxpayers to always find the most accurate and up to date information at IRS.gov.

To avoid other common misconceptions about taxes, the IRS also reminds taxpayers to visit the Dirty Dozen tax scams for 2023.


Resource: https://www.irs.gov/newsroom/irs-never-mind-the-myths-find-filing-season-facts-at-irsgov

IR-2023-77, April 11, 2023

WASHINGTON — The Internal Revenue Service said today that taxpayers who filed their federal income taxes early in this year's filing season and reported certain state 2022 tax refunds as taxable income should consider filing an amended return.

On Feb. 10, 2023, the IRS provided details clarifying the federal tax status involving special payments made to taxpayers by 21 states in 2022. During a review, the IRS determined that in the interest of sound tax administration and other factors, taxpayers in many states did not need to report these payments on their 2022 tax returns. Consequently, the IRS will not challenge the taxability of state payments related to general welfare and disaster relief.

This means people in the following states don't need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but the determination applies only to the special supplemental Energy Relief Payment received.

Taxpayers can see a listing of individual states and the federal tax treatment of their special state refunds or rebates listed on this State Payments chart.








In addition, many people in Georgia, Massachusetts, South Carolina, and Virginia will not include special state 2022 tax refunds as income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and the recipient either claimed the standard deduction for tax year 2022 or itemized their tax year 2022 deductions but did not receive a tax benefit.

Taxpayers who filed before Feb. 10 in these areas and meet these requirements should check their tax return to make sure they paid tax on a state refund before filing an amended return. In addition, taxpayers in this situation who used a tax professional can consult with them to determine whether an amended return is necessary.

If an amended return is needed, taxpayers who submitted their original 2022 tax return electronically can also file their amended return electronically and may select direct deposit for any resulting refund. Filing electronically cuts out the mail time and including direct deposit information on an electronically submitted form provides a convenient and secure way to receive refunds faster.

Taxpayers also have the option to submit a paper version of the Form 1040-X, Amended U.S Individual Income Tax Return, and receive a paper check. They should follow the instructions for preparing the paper form, but they should mail it to:

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0052

Direct deposit is not available on amended returns submitted on paper.

No matter how a taxpayer files the amended return, they can still use the Where's My Amended Return? online tool to check its status.

More information


Tax Topic 308, Amended Returns
Amended Return Frequently Asked Questions


Resource: https://www.irs.gov/newsroom/irs-early-filers-who-reported-certain-state-tax-refunds-as-taxable-should-consider-filing-amended-returns

IRS Tax Tip 2023-42, March 30, 2023

It's important for taxpayers to file a federal tax return that has a complete and correct reporting of their income – which may mean including income from sources other than regular wages from an employer. Income from gig economy activities and tip income are two common sources of such income.

Gig economy earnings are taxable

The gig economy is activity where people earn income providing on-demand work, services or goods, such as selling goods online, driving a car for deliveries or renting out property. This income is often received through a digital platform like an app or website.

Taxpayers must report income earned from the gig economy on a tax return, even if the income is:


From part-time, temporary or side work.
Paid in any form, including cash, property, goods or digital assets
Not reported on an information return form like a Form 1099-K, 1099-MISC, W-2 or other income statement.


For more information taxpayers should visit the gig economy tax center page of IRS.gov.








Reporting service industry tips

People who work in restaurants, salons, hotels and similar service industries often receive tips for the customer service they provide. Tips are generally taxable income, and it's important for people working in these areas who regularly receive tips to understand the requirements on reporting tips.

Tips are optional cash or noncash payments customers make to employees.


Cash tips include those received directly from customers, electronically paid tips distributed to the employee by their employer and tips received from other employees under any tip-sharing arrangement. All cash tips must be reported to the employer, who must include them on the employee's Form W-2, Wage and Tax Statement.



Noncash tips are those of value received in any medium other than cash, such as: tickets, passes or other goods or commodities a customer gives the employee. Employees don't report noncash tips to their employer, but they must report the value of them on a tax return.



Any cash tips the employee didn't report to the employer must be reported separately on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to include as additional wages with their tax return. The employee must also pay the employee share of Social Security and Medicare tax owed on those tips.


Employees don't have to report tip amounts of less than $20 per month per employer. For larger amounts, employees must report tips to the employer by the 10th of the month following the month they received the tips.

The employee can use Form 4070, Employee's Report of Tips to Employer, available in Publication 1244, Employee's Daily Record of Tips and Report to Employer, or they can use an employer-provided form or other electronic system used by their employer.

For more information on how to report tips taxpayers should review the Tip Recordkeeping and Reporting page of IRS.gov
Share this tip on social media -- #IRSTaxTip: All income is taxable, including gig economy and tip income. http://ow.ly/XjaX50NuHip


Resource: https://www.irs.gov/newsroom/all-income-is-taxable-including-gig-economy-and-tip-income

Issue Number:    IR-2023-56

Inside This Issue

WASHINGTON – The Internal Revenue Service reaches out in multiple ways to educate taxpayers while ensuring it fairly enforces the nation’s tax laws. There are important factors to keep in mind about when the IRS may initiate direct contact with a taxpayer. 
For people who owe taxes, the IRS provides many different payment options to help taxpayers meet their obligations. Taxpayers can avoid late filing and interest penalties by submitting their tax return and using one of these options to pay what they owe by April 18. 
For those struggling to pay in full by the deadline, the IRS offers several different options. For example, most individual taxpayers qualify for a payment plan and can use the IRS’ Online Payment Agreement to set up a payment plan (including an installment agreement) to pay off an outstanding balance over time. 
People encountering a tax issue, such as an unpaid bill or a question about their taxes, will typically receive multiple letters in the mail from the IRS. People are encouraged to respond to these letters quickly, since interest and penalties can compound quickly.
Most IRS contacts with taxpayers are through regular mail delivered by the United States Postal Service. However, there are limited circumstances when the IRS will come to a home or business as part of a collection investigation, an audit or an ongoing criminal investigation. 
IRS in-person visits
IRS employees that may make face-to-face visits outside an IRS office include revenue officers, revenue agents and IRS Criminal Investigation special agents. IRS employees are trained to respect taxpayer rights, and there are some important facts to keep in mind about the different types of visits. 
Revenue officers are IRS civil enforcement employees who work to resolve compliance issues such as unfiled returns and/or taxes owed – all situations where the taxpayer typically would have received multiple IRS letters in advance. 
These in-person visits may be unscheduled and can be to share information, inform taxpayers of their tax filing and payment obligations and work with taxpayers to resolve their tax issues and bring them into compliance. 
They conduct interviews to gather financial information and provide taxpayers with the necessary steps to become and remain compliant with the tax laws. 






Revenue agents usually conduct in-person field audits that are normally at the taxpayer's home, place of business or accountant's office where the organization’s financial books and records are located. Revenue agents will make contact via mail or phone prior to any visit. 
Revenue officers and agents always carry two forms of official credentials with a serial number and their photo. Taxpayers have the right to see each of these credentials and can also request an additional method to verify their identification. 
Remember, taxpayers should know they have a tax issue before these visits occur since multiple mailings occur. 
More information on identifying legitimate IRS representatives and how to report scams can be found at IRS.gov.  
IRS-CI special agents investigate potential criminal violations of the Internal Revenue Code and related financial crimes. IRS-CI’s investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. IRS-CI special agents always present their law enforcement credentials when conducting investigations. 
IRS-CI may visit a taxpayer’s home or business unannounced during an investigation. However, they will not demand any sort of payment. Learn more about IRS-CI on IRS.gov. 
How to report impersonation scams
If a person doesn’t have a previously known tax issue and suspects someone is trying to impersonate an IRS employee, there are a variety of options to report phone, email and other impersonation scams: 


Report impersonation scams to the Treasury Inspector General for Tax Administration on the IRS Impersonation Scam Reporting Taxpayers can also call 800-366-4484 to report impersonation scams. 



Protect your community by reporting fraud, scams and bad business practices. Report phone scams to the Federal Trade Commission at Report Fraud FTC. 



Report an unsolicited email claiming to be from the IRS or an IRS-related system like the Electronic Federal Tax Payment System to the IRS at phishing@irs.gov. 



For a comprehensive listing of recent tax scams, consumer alerts and how to report them, visit Tax Scams/Consumer Alerts.







Resource: https://www.irs.gov/newsroom/important-details-to-understand-when-the-irs-might-contact-a-taxpayer