New Tax Relief Measures Provide Savings for Florida Residents
Save on tools and supplies with Florida’s tax holiday.
Florida Announces Tax Relief for Victims of Tropical Storm Debby
In response to the devastating impact of Tropical Storm Debby, the IRS has announced extended tax relief for affected Floridians. With new deadlines extending into 2025, residents and businesses in the hardest-hit areas can now focus on recovery without the immediate pressure of looming tax obligations. Learn more about the specific relief measures and how to take advantage of them during this challenging time.
IRS Delays Form 1099-K Reporting Threshold: A Detailed Update for Taxpayers
📷 📣 Important Update: IRS Delays Form 1099-K Reporting Threshold for 2023! 📅
The IRS has some news that will make tax season a bit smoother for everyone. They’ve decided to delay the implementation of the new $600 reporting threshold for Form 1099-K for the year 2023, and here’s why:
To reduce confusion among taxpayers, tax professionals, and payment processors.
To make 2023 a transition year, where reporting is only required if you receive over $20,000 and have more than 200 transactions.
But wait, there’s more! Looking ahead to 2024, the IRS plans to introduce a $5,000 reporting threshold, aligning it with the $600 threshold required by the American Rescue Plan Act. The goal? Minimizing the reporting burden and making it easier for you to stay compliant.
Here are 5 key takeaways to keep in mind as of November 2023:
1️⃣ The IRS has your back with a delay to make the transition smoother.
2️⃣ For 2023, report only if you exceed $20,000 in earnings and 200 transactions.
3️⃣ Get ready for a $5,000 threshold in 2024.
4️⃣ This change aligns with the American Rescue Plan Act.
5️⃣ Stay informed and compliant – it’s a win for everyone!
Questions? Reach out to Cloud Accounting Professionals for guidance. 💼🔍
The IRS drafts new Form 1040-SR tax return for seniors & 1040 updates for 2019
On July 2019, The Internal Revenue Service (IRS) has posted a draft version of 1040 tax return for senior citizens, calling this new form 1040-SR U.S. Tax Return for seniors. The draft for the new Form 1040-SR has improved its font sizes and removed the shading around some of the boxes to improve contrast for taxpayers with declining vision. The draft also includes a “Standard Deduction chart” so that taxpayers can “add the number of boxes checked in the ‘Age/Blindness’ section of the Standard Deduction area.” Along with this new Form 1040-SR U.S. Tax Return for senior citizens, the IRS also has a new draft of Schedule R, which will be “the credit for the elderly or disabled.”
For the next filing tax season taxpayers are expected to be presented with a more updated Form 1040 Tax Return that will come with a few drastic changes but not really. Since last filing season Form 1040 had to be shortened due to the 2017 mandatory tax law. For example, it is said that the signature box will be moved to page 2, in order to make more space for entering names of a spouse and children. Also, the Health care coverage checkbox will be removed since it’s no longer mandatory to have health insurance. The Earned Income credit, additional child tax credit, American opportunity credit, and some other line related subjects are to change position.
Did you know that if you have homeowners Insurance and there’s a Hurricane that causes damages to your home? You may qualify for a Tax Deduction?
If you live in Florida, you know that nothing says summer more than the word “hurricane” and now we are officially in the hurricane/tropical storm season. If you’ve ever experienced any hurricane or tropical storm before, you know very well that you should start preparing for the worst-case scenario now rather than ending up completely washed out.
Whether you rent or own a home, insurance can be a lifesaver especially for any out of our hand situations such as a hurricane. First check with your home insurance policy. Even if you have a $250 deductible, a hurricane-related claim might fall under a different deductible (which can sometimes be higher.)
If there is a hurricane, you may also want to protect your important documents. You can do so by storing them in a sealed container that is elevated from the floor, to avoid being damaged if there is flooding. Flood insurance is also a good idea since South Florida is prone to flooding in heavy rains. Be careful though as some water-related damage might not necessarily fall under a hurricane claim.
Congress Approves the Taxpayers First Act Reform Bill
On Tuesday, July 2nd, 2019, The U.S. President, Trump, has signed the Taxpayers First Act filing bill into law.
The bill is to make improvements to the Internal Revenue Services, such as modernizing technology, updating their customer service techniques, helping any tax-related identity theft victims by securing their rights.
The bill also makes limitations on the types of tax receivables that private debt collection services can assign, it may remove any taxpayer if their income is only based on disability insurance and if their income doesn’t exceed 200% of the applicable poverty level.
The Installment agreements that is offered by a private debt collector would increase its maximum length from five years to seven years.
This bill directs the IRS to create an online platform to allow taxpayers to prepare and file for the Forms 1099.
The IRS will be required to notify any organizations before revoking their exempt status for failure to file a return for three years, the IRS is to notify that it has no records of a return for two or more years. The revocation will occur after the third year and the failure to file penalty fee is to increase to $330.
If there are any tax-related identity theft victims or any suspects of identity theft the IRS will make it a single point of contract to notify the taxpayers. The penalty for improper use of information by a tax return preparer, and if the use or disclosure is made in connection to identity theft the penalty in some cases will increase. For each disclosure, the penalty will be $1,000 (instead of $250) and the annual maximum will be $50,000 (instead of $1,000).
I Missed the Filing Deadline! What Happens Now?
This year’s individual deadline for 2015 was April 18, 2016. What happens if it was missed? The urgency in getting your taxes filed is really dependent upon whether you’re expecting a refund or you owe additional taxes.
If you are unable to file your return by the original due date, the IRS allows you to file an extension giving you an additional six months to file your taxes. It is important to note that this is simply an extension of time to file your taxes and not an extension of time to pay any amounts due. If you do not pay the anticipated balance owed by the original due date, you may be subject to additional interest and penalties.
I’m Getting a Refund
If you are expecting a refund, you have until April 18, 2019, in order to file your return and claim the money due to you. You are currently providing an interest-free loan to the government. If the statute of limitations runs out prior to filing your return, the government gets to keep your money.
I Will Have a Balance Due
If you anticipate that you will owe taxes, then the situation becomes much more difficult. If you did not file for an extension, you are now subject to both interest and penalties. In addition, unlike being in a refund situation, if you do not file a return when a balance is owed, the government has an unlimited time to demand payment. In some instances, they will file a tax return on your behalf and send you a bill for any balance they believe you owe.
There are a number of penalties that you become subject to when you do not file your return with a balance owed. The failure to file penalty (FTF) is assessed at a monthly rate of 5% of your balance. The maximum amount of the penalty is 25% of any amount owed.
The failure to pay penalty (FTP) is incurred when you fail to pay the estimated amount owed by the April 15th deadline. It is assessed at a rate of 0.5% of the balance owed per month up to a 25% maximum of the amount due.
In cases where both penalties apply, the failure to file penalty is reduced by the failure to pay penalty. These two penalties are automatically assessed by the IRS.
If you have a balance due, you may also be subject to underpayment penalties. These can vary depending on your specific circumstance.
Even if you are unable to pay the amount owed to the IRS, it is imperative that you file your return. The IRS will then allow you to work with them on a payment plan to pay off your debt. In some extreme cases, you may be eligible to negotiate an offer in compromise with the IRS allowing you to pay a significantly reduced portion of the balance that you owe. The eligibility requirements for being approved for an offer in compromise from the IRS are very stringent. Your tax professional can help you in walking through this process and determining your eligibility.
If this is the first time you have missed the filing deadline, there may be some good news for you. The IRS has a first-time abatement penalty waiver which allows qualifying taxpayers to eliminate failure to file and failure to pay penalties for a single return period.
In order to qualify, taxpayers must not have been subject to any significant amount of penalties in the previous three years. You must also be in compliance with all other filing and payment obligations.
Taxes are already difficult enough. Missing the due date without a timely filed extension makes things that much more complicated for taxpayers who owe money to the IRS. Consult your tax advisor for help with all your options to get back into the IRS’s good graces.
Identity Protection PINs
IRS acknowledges an error in letters sent with Identity Protection PINs
The Internal Revenue Service (IRS) has just announced that taxpayers will be receiving Identity Protection Personal Identity Number (IP PIN) letters with a mistake. The IP PIN helps the IRS verify a taxpayer’s identity and accept their electronic or paper tax return. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN.
The notice on the CP01A incorrectly indicates the IP PIN issued is to be used for filing the 2014 tax return when the number is supposed to be used for the 2015 tax return.
Thankfully this issue shouldn’t affect anything else involving the IP PIN Process.
More information about the CP01A:
CP01A (https://www.irs.gov/Individuals/Understanding-Your-CP01A-Notice)
Security Awareness for Taxpayers
As tax season will be underway the tax scams are picking up.
Here are a few things you can do in order to protect yourself from these scams according to the IRS.
Note that the IRS will never:
1) Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
2) Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3) Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4) Ask for credit or debit card numbers over the phone.
5) Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you don’t owe taxes, or have no reason to think that you do:
1) Do not give out any information. Hang up immediately.
2) Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
3) Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
More information:
Security Summit Identity Theft Tips Overview
Tax Scams
IRS websites:
https://www.irs.gov/uac/Tax-Scams-Consumer-Alerts
https://www.irs.gov/uac/IRS-Urges-Public-to-Stay-Alert-for-Scam-Phone-Calls
