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If you, like me, joined millions of other taxpayers in filing for an extension this year, be sure to check your calendar: October 15 is the due date to file your 2019 tax return. To avoid late filing penalties, you need to file on or before the October 15 deadline. If you owe taxes, you’ll want to pay as soon as possible to reduce any penalties and interest. Timely File Your Return Even on extension, the rules for timely filing your return still apply. That means that you need to have your return postmarked on or before midnight on October 15, 2020. If you want a little extra breathing room, do it as soon as possible. If you’re filing electronically, the same general rules apply: you’ll want your return postmarked electronically on or before midnight on October 15, 2020. Under the Regs (§ 301.7502-1(d)), that means that the return is…

In May of this year, the Internal Revenue Service (IRS) attempted to retroactively impose rules on stimulus checks being paid out under the CARES Act to incarcerated persons. They did so by posting an FAQ on the IRS website, claiming that, “A Payment made to someone who is incarcerated should be returned to the IRS by following the instructions about repayments.” As I wrote at the time, there was one problem: there is no such limitation in the CARES Act. Now, it appears that a federal judge agrees. The Order On September 24, 2020, Judge Phyllis J. Hamilton of the U.S. District Court for the Northern District of California issued an Order (downloads as a PDF) granting a motion for preliminary injunction requiring the U.S. Department of Treasury and the IRS to stop withholding CARES Act stimulus funds on the basis of an incarcerated status. The injunction was filed as part…

It’s very likely that you’re reading this from your home—even if you’re working. As the coronavirus pandemic continues to spread across the country, many of us are finding that the new normal means not leaving the house, or at least not for work anyway. How dramatic are the numbers? A Federal Reserve Bank of Dallas report found that of all those employed in May, 35.2% worked entirely from home, compared to just 8.2% in February. Further, a whopping 71.7% of US workers who could work from home did so in May. Some folks who are staying home do so for safety and convenience, while others are required by their employer or the state or local government to remain at home; in Pennsylvania, for example, by Order of the Governor, “Telework Must Continue Where Feasible.” With big name companies extending work-from-home until the end of the year, next summer, or as…

Let’s talk about audits. I know, they can be scary, but they’re in the news a lot right now, thanks to the New York Times series focusing on President Trump’s taxes. As a result, questions about audits top the list of questions you’re asking. So let’s clear up a few things. What are my chances of being audited? Pretty small, actually. According to Internal Revenue Service (IRS) data, for all returns filed for tax years 2010 through 2018, the agency examined 0.60% of individual returns and 0.97% of all corporation returns. In fiscal year 2019 – the last year for which data is available – the IRS audited 680,543 individual tax returns – or about .4%. That works out to about one out of every 250 taxpayers. You have better odds of getting into Harvard or meeting your partner on a blind date (yes, really). Can I get audited even…

I haven’t seen President Trump’s tax returns. I’m going to start there. No matter how many times I’ve been asked today to offer my “take” on the returns, I can’t give a more honest answer than, “I haven’t seen the returns.” I have, however, read the very detailed article from the New York Times, which can be found here. I’m not inclined to summarize it for you – you can read it on your own – and I’m not going to do an op-ed on the piece. If you are a regular reader, you’ll know that it’s not my style to play guessing games. But as I continued to be asked about the piece this evening, what did occur to me is that there are a number of issues raised in the piece that can be confusing for ordinary taxpayers like you and me. So here are some answers to…

The new per diem numbers are now out – a little earlier than normal. It’s important to note that they are not effective until October 1, 2020. These numbers are to be used for per diem allowances paid to any employee on or after October 1, 2020, for travel away from home. The Internal Revenue Service (IRS) allows the use of per diem (that’s Latin meaning “for each day” – remember, lawyers love Latin) rates to make reimbursements easier for employers and employees. Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business rather than using actual expenses. Here’s How Per Diem Typically Works A per diem rate can be used by an employer to reimburse employees for combined lodging and meal costs, or meal costs alone. Per diem payments are not part of the employee’s wages for tax purposes…

Did you file for an extension for your 2019 federal income tax return? If so, you have about a month remaining to file: the deadline to file your federal income tax return on extension is on or before October 15, 2020. October 15 is the same deadline to file a federal income tax return on extension in any normal year. But since this year has been anything but normal, some taxpayers may not be aware of the due date. 2020 Wasn’t A Normal Year The Internal Revenue Service (IRS) gives you six months from the due date to get your tax return in – and still be timely – if you for an extension. If you do the quick math for individuals, that’s April 15 + six months = October 15. But here’s where it gets tricky. This year, because of COVID, the due date was July 15, not April…

Wondering where your stimulus check might be? It may soon be on its way to you. The Internal Revenue Service (IRS) has announced that about 50,000 individuals whose respective portions of the Economic Impact Payment (EIP, or stimulus check) were diverted to pay their spouse’s past-due child support will finally be getting their share. These catch-up payments are due to be issued in early-to-mid-September. They will be mailed as checks to any eligible spouse who submitted Form 8379, Injured Spouse Allocation, along with your 2019 federal income tax return, or in some cases, their 2018 return. You do not need to take any action to get your money. The IRS will automatically issue the portion of the stimulus check that was applied to the other spouse’s debt. This is consistent – albeit a little later – than was previously announced. The Taxpayer Advocate had advised that a fix was on the way. (You can read…

Feeling overwhelmed and not sure how to handle those overdue notices from the Internal Revenue Service (IRS)? You aren’t the only one. Taxpayers have been complaining about the receipt of notices showing a balance due with impossible deadlines. How many notices went out? According to the Taxpayer Advocate, during the pandemic-related shutdown, the IRS generated more than 20 million notices; however, these notices were not mailed to taxpayers. So, the IRS started mailing them out. Simultaneously, in June, the estimated backlog of unopened IRS mail stood at 11 million. That means that taxpayer checks remained uncashed. The IRS recently noted that “If a taxpayer mailed a check (either with or without a tax return), it may still be unopened in the backlog of mail the IRS is processing due to COVID-19.” The combination of unopened mail and past-due notices has heightened anxiety and tempers. On August 19, 2020, House Ways and Means Committee Chairman Richard…

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