Tax News

From the latest IRS updates to relevant news stories – your guide to tax relief. 

IRS Tax Relief

In a similar fashion to last year, the IRS has announced that they will be extending the 2021 income tax filing and payment deadline.

The Debate Before the Decision

The House of Representatives pressured the IRS to consider moving the deadline stating that taxpayers still face the same challenges as the year prior.

However, many tax experts thought it unlikely that the deadline would get extended. At the start of the year, several reports claimed the IRS had no intention to change the deadline at all.

Nevertheless, the new filing and payment deadline was moved officially from April 15th to May 17th, 2021.

What Does the Extension Mean for You?   

Since the IRS has returned to normal operations, they have actively targeted taxpayers with back taxes or unfiled tax returns to compensate for lost collection time.

Although you now have an extension, do not become complacent. Last year, millions of Americans made the mistake of waiting until the last minute, only for them to miss the deadline.

You must file as soon as possible if you have not yet done so already.

How Can TaxRise Help?

If you missed last year’s filing deadline or have multiple unfiled tax years, you can contact TaxRise to make you compliant. Our tax experts can:

  • Prepare your tax returns.
  • Protect you from IRS collections and penalties.
  • Resolve your tax issues – such as liens, levies, wage garnishments – that were a result of multiple unfiled tax years.

Posted March 25, 2021 | Sean Lawless

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Congressman giving a speech

The newly enacted American Rescue Plan provides Americans with a valuable tax exemption on top of stimulus checks and weekly unemployment compensation.   

Some Taxpayers Can Exclude up to $10,200 in Unemployment Compensation

If your modified adjusted gross income (AGI) is less than $150,000, you don’t have to pay tax on up to $10,200 worth in unemployment compensation received from 2020.  

In the case of married couples filing jointly, $20,400 of unemployment compensation is nontaxable, but only $10,200 per spouse.

For married couples filing separately, each spouse receiving unemployment doesn’t have to pay tax on $10,200 of that unemployment. However, amounts over $10,200 for each individual are still taxable.

Which States Waived States Income Tax on Employment?

These states have waived State income tax on unemployment:

  • California
  • Montana
  • New Jersey
  • Pennsylvania
  • Virginia

And these states passed legislation that waives unemployment benefits for 2020:

  • Maryland
  • Delaware

If You Haven’t Filed Yet

The best way to protect yourself from IRS collections and penalties is to file your 2020 tax returns on time and as soon as possible.

That said, check with your tax preparer before you file and clarify if their tax program already includes the unemployment waiver.

Also, get your filing documents ready, determine how much you received on the first and second stimulus check, and find your unemployment filing forms 1099-G. If you did not get your 1009-G filing form, request a copy of it.

If you cannot file your taxes or do not have access to a tax preparer, TaxRise can file your taxes for you.

If You Have Already Filed

Be sure to contact your tax preparer and ask that they amend your tax return as soon as their tax program is up to date with the waiver. Most likely, tax preparer has already amended your tax return, but it doesn’t hurt to confirm.  

Keep in mind: you could owe less or get a refund with this waiver. However, if you have not gotten your refunds on your tax return – hold on to amend your tax return until you find out where your refund is.

Posted March 25, 2021 | Sean Lawless

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The American Rescue Plan (ARP) will qualify many Americans for a third stimulus check. But this stimulus is slightly different than the first two.

Where Is My Stimulus Check?

If you have not received your stimulus check yet, check its status.

What Are the Differences of the Third Stimulus Check?

The third stimulus check, aka the third economic impact payment, has two primary differences compared to the first two checks.

  1. The third stimulus payment will be larger. As outlined in the ARP, families that qualify will get $1,400 per person – including all claimed dependents. A single person will get $1,400, and a family of four will receive $5,600.
  2. The third stimulus check does not restrict dependents. All dependents claimed on a tax return are eligible for a payment, including elderly relatives, college students, disabled individuals, parents, and grandparents.

The Downside to the Third Stimulus Check

Unfortunately, the third stimulus check is not as robust as its predecessors. Senators used procedural rules to pass the bill quickly through the senate – as a result, the third stimulus is more suspectable to collections.

While the third stimulus check cannot be garnishment for outstanding federal debts such as student loans or tax debt, it can’t protect against all collectors.

The third round of stimulus aid will be directly deposited into peoples’ bank accounts by the federal government. However, debtors with unpaid credit cards or medical bills may have their money seized by companies who have obtained court orders.

Lawmakers are trying to pass laws that would protect stimulus money, but, as of now, companies can garnish your check to satisfy nonfederal debts.

Protect Yourself from IRS Collections

Although TaxRise cannot protect you from private debt collectors, we specialize in defending our clients from IRS collections and penalties.

Posted March 25, 2021 | Sean Lawless

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Small Business Tax Relief

The extension for individuals to file their 2020 federal income taxes moved to May 17, 2021.

However, the extension does not apply to estimated tax payments.

For those that must pay taxes quarterly, the first payment is due Thursday, April 15th, 2021.

How Do I Know If I Make Estimated Tax Payments?

Taxpayers make quarterly estimated tax payments when they do not have withholding tax taken out of their income. Most salary earners don’t have to make quarterly payments because their employer withholds income tax for them.

Commonly, those who are self-employed, in the sharing economy, or have considerable non-wage income, must pay their first quarterly estimated tax on April the 15th.

Examples of income sources that require estimated tax payments include:

  • Interest
  • Dividends
  • Capital Gains
  • Alimony Income
  • Rental Income
  • Retirement Income

What Happens if You Don’t Pay Estimated Taxes?

If you don’t pay on time or enough tax through withholding and estimated tax payments, the IRS may charge you a penalty.

Some individuals are exempt from penalties, such as farmers, fishermen, disaster victims, recently disabled, and those with other unique circumstances.

How Do I Avoid Estimated Tax Penalties?

The best way to avoid a penalty is simply paying the appropriate amount of your quarterly estimated taxes on time.

Nevertheless, times are tough. Many Americans have years of unfiled taxes; some may have just got a collection notice in the mail.

Our team of tax preparers and expert negotiators can file your first quarter estimated taxes before April 15th, and we can resolve any other IRS issues you may be experiencing.

April 15th will be here before you know it – don’t miss it! Contact TaxRise today.

Posted April 8, 2021 | Sean Lawless

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