Taxpayers can go to IRS.gov for answers to questions about payments and penalties

by | Sep 11, 2019 | Tax Tips and News

IRS Tax Tip 2019-123, September 9, 2019

Questions about tax payments and penalties come up all year long. Taxpayers can find most answers to these questions on IRS.gov. They can head over to the Let Us Help You page, which features links that take users to information and resources on a wide range of topics related to penalties and payments.

Payments

Payment options

  • This page lays out the different way taxpayers can pay what they owe, from having the payment taken directly from their bank account to using a credit card.

Payment plan

  • Taxpayers who cannot pay what they owe in full have options, which are explained on this page.

View your balance and payment history

  • Individual taxpayers can use this tool to check their account and see things like their payoff amount.

Liens and levies

These links explain what a lien and a levy are, and how taxpayers comply with them.

Resolve a dispute

The Office of Appeals is an independent organization within the IRS that helps taxpayers resolve their tax disputes. This page has links to information that will help taxpayers who received a notice saying their case qualifies to be reviewed by Appeals.

Prevent future tax bill

Taxpayers who owed more than expected when they filed this year have a couple options to help them avoid that when they file next year. These pages have more info about the options.

Penalties

These links take the user to information where they can find out more about topics related to penalties and penalty relief.

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Two education credits help taxpayers with college costs

by | Sep 11, 2019 | Tax Tips and News

IRS Tax Tip 2019-125, September 11, 2019

With school back in session, parents and students should look into tax credits that can help with the cost of higher education. They do this by reducing the amount of tax someone owes on their tax return. If the credit reduces tax to less than zero, the taxpayer may get a refund.

Taxpayers who pay for higher education in 2019 can see these tax savings when they file their tax returns next year. If taxpayers, their spouses or their dependents take post-high school coursework, they may be eligible for a tax benefit.

There are two credits available to help taxpayers offset the costs of higher education. The American opportunity tax credit and the lifetime learning credit may reduce the amount of income tax owed. Taxpayers use Form 8863, Education Credits, to claim the credits.

To be eligible to claim the American opportunity tax credit, or the lifetime learning credit, a taxpayer or a dependent must have received a Form 1098-T from an eligible educational institution.

The American opportunity tax credit is:

  • Worth a maximum benefit up to $2,500 per eligible student.
  • Only for the first four years at an eligible college or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.

The lifetime learning credit is:

  • Worth a maximum benefit up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years.

More information:

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It’s important for tax pros to know the signs they are a cyberthief’s victim

by | Sep 10, 2019 | Tax Tips and News

IRS Tax Tip 2019-124, September 10, 2019

Tax professionals should learn the tell-tale signs that their office may have experienced a data theft. Such thefts could have resulted in fraudulent tax returns filed in their clients’ names.

Here is a list of warning signs that a tax professional or their office may have experienced a data theft:

  • Their clients’ e-filed returns are rejected by the IRS or state tax agencies. This happens because someone else already filed a tax return with their client’s Social Security number.
  • Clients who haven’t filed tax returns begin to receive taxpayer authentication letters from the IRS. The IRS sends letters such as the 5071C, 4883C and 5747C to confirm a taxpayer’s identity for a submitted tax return.
  • Clients who haven’t filed tax returns receive refunds.
  • Clients receive tax transcripts that they didn’t request.
  • Clients who created an IRS Online Services account receive an IRS notice that their account was accessed.
  • Clients who have an account get an IRS emails saying their account is disabled.
  • Clients unexpectedly receive an IRS notice that an IRS online account was created in their names.
  • The number of returns filed with the tax professional’s Electronic Filing Identification Number is higher than the number of clients they have.
  • Tax professionals or clients responding to emails that the firm did not send.
  • Network computers running slower than normal.
  • Computer cursors moving or changing numbers when the user is not even touching the keyboard.
  • Network computers locking out employees.

More information:

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IRS to Self-Employed Taxpayers: Use the Tax Withholding EstimatorNo Dyed Fuel Penalty in Florida,…

by | Sep 8, 2019 | Tax Tips and News

IRS to Self-Employed Taxpayers: Use the Tax Withholding Estimator

According to the IRS, self-employed taxpayers should use the Tax Withholding Estimator when they perform their next “paycheck checkup.”

IR-2019-149 is the latest press release advertising the Tax Withholding Estimator, the agency’s newest online tool: “The estimator is an expanded, mobile-friendly online tool that replaced the Withholding Calculator, which since 2001 had offered workers an online method for checking their withholding.”

The IRS stressed that they needed to develop a new resource to help even more taxpayers manage their tax withholding: “The old calculator lacked features geared to self-employed individuals; the new estimator made changes to address this important group.”

Why Should Taxpayers Perform a Paycheck Checkup?

Tax withholding outreach was a focus of the IRS due to the implementation of the Tax Cuts and Jobs Act. As the IRS explains in Publication 5307, “the Tax Cuts and Jobs Act changed the way taxable income is calculated and reduced the tax rates on that income.” That meant “the IRS had to address and make changes to income tax withholding in response to the new law as soon as possible after it passed.”

Despite a year-long series of press releases reminding taxpayers that they might need to adjust withholding to address these changes, some tax professionals reported clients seeing surprise tax bills. Using the Tax Withholding Estimator is just one way taxpayers can avoid that problem, and accessing it is relatively easy.

How Does the New Tax Withholding Estimator Help Self-Employed Taxpayers?

The Tax Withholding Estimator helps self-employed taxpayers calculate their withholding by letting them enter information that wasn’t accepted by the old calculator: “The estimator allows a user to enter any self-employment income, including income from side gigs or the sharing economy, in addition to wages or pensions.”

Those who regularly used the old IRS Withholding Calculator will notice a number of improvements when they pull up the new Tax Withholding Estimator. Here’s the list provided by the IRS:

  • Plain language throughout to improve taxpayer understanding.
  • The ability to target either a tax due amount close to zero or a refund amount.
  • A new progress tracker to help a user know how much more information they need to enter.
  • The ability to go back and forth through the steps, correct previous entries, and skip questions that don’t apply.
  • Tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
  • Automatic calculation of the taxable portion of any Social Security benefits.

Taxpayers concerned that they won’t pick the correct withholding form after getting the results of the estimator don’t need to worry. The IRS said that users will be given a link to the form corresponding to their entered information—Form W-4 for employees or Form W-4P for pensioners.

Source: IR-2019-149

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