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IRS news/announcements

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Estimated reading time: 3 minutes The Internal Revenue Service (IRS) has announced that tax season will open on Friday, February 12, 2021. Yes, on a Friday. The IRS will begin accepting paper and electronic tax returns that day. This is about two weeks later than had been expected. The delay allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes – especially those involving a second round of stimulus checks (Economic Impact Payments, or EIPs). Ways and Means Committee Chairman Richard E. Neal (D-MA) said, about the date, “While I am disappointed that this year’s filing season will begin later than usual, I recognize that the IRS has faced extraordinary challenges throughout the COVID crisis. It’s a relief to know that despite contending with the distribution of two rounds of economic impact payments, facility closures, and other disruptions, the agency…

Estimated reading time: 3 minutes Ready to file your 2020 tax return? The Internal Revenue Service (IRS) hasn’t officially announced the start date to the new season, but the website indicates that Free File is officially open. Free File is available to taxpayers whose adjusted gross income (AGI) was $72,000 or less in 2020. You can find your AGI by looking at line 11 on Form 1040. The amount includes income less any adjustments (sometimes called above-the-line deductions) and is calculated before claiming the standard or itemized deductions. That means that it applies to most taxpayers. Even though there’s no official IRS start date published, if you use Free File, you can do your taxes now. The Free File provider will then submit the return once the IRS officially opens tax season and starts processing tax returns. “As we continue to confront the COVID-19 pandemic, IRS Free File and certain other similar…

Estimated reading time: 3 minutes With all of the last-minute changes to the Tax Code – and those stimulus check reconciliations – it was clear that the Internal Revenue Service (IRS) was going to have to make revisions to tax forms used to file 2020 tax returns (the tax returns that you’ll file in 2021). Most tax professionals expected a delay in getting those forms together, but the IRS has issued a statement confirming that “updates to key federal tax forms and instructions are complete and will be available when Americans begin filing their tax returns.” Most taxpayers file Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors. Last month, the IRS released the very-probably-unless-Congress-does-something-soon final version of Form 1040 for 2020. There were several notable changes to the form for the tax year 2020: you can read about them here. The IRS says that…

The Internal Revenue Service (IRS) has announced that the “Get My Payment” tool is now open. Folks looking for information about their stimulus checks (Economic Impact Payments, or EIPs) can now check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov. The “Get My Payment” tool will allow you to confirm that: Whether the IRS has sent your second stimulus payment.Whether the IRS sent your first stimulus payment. Not that some people received their first stimulus in partial payments; if you received partial payments, the tool will show only the most recent.Whether to expect your stimulus payment by direct deposit or mail. According to the IRS, data is updated once per day overnight, so there’s no need to check more than once per day. The IRS advises folks to use the tool to check on…

The Internal Revenue Service (IRS) is emphasizing that no action is required by eligible taxpayers for the second round of Economic Impact Payments (EIPs, or stimulus checks). As noted earlier, initial direct deposit payments began arriving as early as last night for some and will continue into next week. Paper checks will begin to be mailed on Wednesday, December 30. This second round of checks is part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, passed by Congress last week and signed into law by President Trump on Sunday night. Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of January 4, 2021. At least one bank has suggested that paper checks may be postdated. No matter whether payments are direct deposit or paper checks, they are automatic. There is no magic formula for determining the date that…

Estimated reading time: 1 minute Need an EIN? You’ll have to wait a few days to apply for an EIN online. The IRS has announced that the service is temporarily unavailable: This service will be unavailable from approximately 5 p.m. Eastern time on Wednesday, Dec 23, 2020, until approximately 7 a.m. Eastern time on Monday, January 4, 2021, due to planned maintenance. We apologize for any inconvenience. As with the temporary unavailability of the online installment agreement, this is part of planned maintenance. The service is usually available Monday to Friday, 7 a.m. to 10 p.m. Eastern Standard Time.

If you owe the Internal Revenue Service (IRS), you may be able to apply for a payment plan online to pay off your balance over time – but not right now. The IRS has scheduled a planned outage for the service.The website currently says: This service will be unavailable from approximately 12 a.m. (midnight) Eastern time on Wednesday, December 23, 2020, until approximately 7 a.m. Eastern time on Monday, Jan. 11, 2021, due to planned maintenance. We apologize for any inconvenience. Once the service is back up, you can check out the site to see if you qualify to apply online: You may qualify for a long-term payment plan (installment agreement) if you owe $50,000 or less in combined tax, penalties and interest, and filed all required returns. You may qualify for a short-term payment plan if you owe less than $100,000 in combined tax, penalties and interest. The best…

Estimated reading time: 3 minutes The Internal Revenue Service (IRS) has issued its 2021 standard mileage rates. Beginning on January 1, 2021, the standard mileage rates for the use of a car, van, pickup, or panel truck will be: 56 cents per mile for business miles driven (down from 57.5 cents in 2020)16 cents per mile driven for medical or moving purposes (down from 17 cents in 2020)14 cents per mile driven in service of charitable organizations (currently fixed by Congress) You can find these official rates and more in IRS Notice 2021-02 (downloads as a PDF). If you’re wondering about the difference in the rates for business and medical or moving purposes, there is a reason. The standard mileage rate for business is calculated by using an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas, and oil. In contrast, the…

The Internal Revenue Service (IRS) has issued final regulations relating to section 1031 like-kind exchanges. 1031 Like-Kind Requirements We call them 1031 like-kind exchanges because the rules are found at section 1031 of the Tax Code (clever, I know). The provision allows you to defer tax on gain if – and it’s a big if – you participate in a qualifying like-kind exchange that meets some pretty specific requirements: The property to be exchanged must have been held for productive use in a trade or business or for investment (and must be exchanged for a property similarly held). Personal residences or vacation homes for personal use won’t qualify.The property doesn’t have to be real estate (though it typically is). It cannot be: stock in trade or other property held primarily for sale; stocks, bonds, or notes; other securities or evidences of indebtedness or interest; interests in a partnership; certificates of…

#TaxTwitter has been abuzz about a flurry of notices of intent to levy (CP504) sent to taxpayers this week. The notices appear to have been sent out without regard for individual taxpayers circumstances with tax practitioners reporting receipt by taxpayers previously marked as CNC (currently not collectible), taxpayers with pending offers, and taxpayers who have already resolved liabilities. Typically, when you receive a notice like this, the best plan is to reach out to the Internal Revenue Service (IRS) even if you aren’t sure that you know. Taxpayers are directed to call the number on the notice (for a CP504, that’s 1.800.829.8374); alternatively, some practitioners opt to dial in to the Practitioner Priority Service (PPS). I tried both. For two days. More often than not, I received a recording advising that “due to extremely high call volume,” no one could answer. Then, a disconnect. I finally got a real person…

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