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What Happens To Your Tax Return When You File It? Learn Why You Should Have A Tax Professional Do Your Tax Return!

Learn What Happens To Your Tax Return When Filed

We thought you should know the importance of finding a tax professional to prepare your tax return this year? Although it is a  secret most people do not talk about, a trained tax practitioner will  most always get a better return and savings for you on your tax return. In addition, would you prefer to have a knowledgeable tax practitioner navigate the process for you if you encounter a problem or would you prefer to navigate the IRS yourself?

Take a look at the insightful chart that the National Taxpayer Advocate put together on how the IRS works when you file your tax return. Here is the chart! When you hire a tax professional their job is to ensure you gain the best tax savings and receive all the appropriate tax credits.

You will always do better when you hire a tax expert who is experienced over your multiple other options. This is a well-known secret the tax community knows but unsuspecting taxpayers are generally uninformed of many tax savings available to them.

Hire a trusted tax professional; you can now find thousands of tax professionals nationally and internationally and connect with them easily at www.taxconnections.com

Tax Professionals: We are requesting your commentary on taxes you save clients this year over a taxpayer preparing it themselves.

 

IRS Announces Taxpayers May Qualify For Significant Tax Benefit: Earned Income Tax Credit

Earned Income Tax Credit(EITC)

The Internal Revenue Service and its partners nationwide remind taxpayers about the Earned Income Tax Credit on January 31, “EITC Awareness Day.” This is the 14th year of the EITC awareness campaign that alerts millions of workers to this significant tax credit.

“The EITC is a vital tax credit that helps millions of hard-working working families around the nation,” said IRS Commissioner Chuck Rettig. “It’s critical that people review the credit to see if they qualify. Increasing awareness about the EITC is important, and the IRS is proud to support the ongoing efforts by partner groups across the country for sharing this critical information with taxpayers.”

There are outreach events and activities scheduled to promote EITC awareness around the country. The EITC is the federal government’s largest refundable federal income tax credit for low- to moderate-income workers. It can give taxpayers a refund even if they owe no tax.
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IRS Relief To Financial Institutions Affected By Tax Law Change Raising Age For Required Minimum Distributions

IRS Law On Required Distributions

The Internal Revenue Service has provided relief to financial institutions that were expected to provide required minimum distribution (RMD) statements to IRA owners by January 31, 2020.

Notice 2020-6 (PDF) clarifies that if an RMD statement is provided for 2020 to an IRA owner who will turn age 70½ in 2020, the IRS will not consider the statement to be incorrect, but only if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) changed the age for which an RMD is first required from age 70½ to 72. Under prior law, financial institutions would have needed to notify IRA owners who attained age 70½ in 2020 about their 2020 RMDs by January 31, 2020.

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IRS And Treasury Issue Guidance For Students With Discharged Student Loans And Their Creditors

IRS And Discharged Student Loans

The Internal Revenue Service and Department of the Treasury issued Revenue Procedure 2020-11 (PDF) that establishes a safe harbor extending relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school.

Relief is also extended to any creditor that would otherwise be required to file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.

The Treasury Department and the IRS have determined that it is appropriate to extend the relief provided in Rev. Proc. 2015-57Rev. Proc. 2017-24 and Rev. Proc. 2018-39 to taxpayers who took out federal and private student loans to finance attendance at nonprofit or other for-profit schools not owned by Corinthian College, Inc. or American Career Institutes, Inc.

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IRS Willing To Consider Requests For Relief From Double Taxation Related To Repatriation

Double Taxation Related To Repatriation

The IRS announced that the agency has become aware of limited circumstances in which it may be appropriate to provide relief from double taxation resulting from application of the repatriation tax under section 965, as amended by the Tax Cuts and Jobs Act (TCJA).

The IRS has determined that in unique circumstances, such as where a corporation paid an unusual dividend for business reasons, not because of the enactment of TCJA, it may be appropriate to provide relief from double taxation. When the same earnings and profits of foreign corporations are taxed both as dividends and under section 965, double taxation could result.

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IRS And Treasury Issue Guidance For Students With Discharged Student Loans And Their Creditors

IRS On Discharged Student Loans

The Internal Revenue Service and Department of the Treasury issued Revenue Procedure 2020-11 (PDF) that establishes a safe harbor extending relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school.

Relief is also extended to any creditor that would otherwise be required to file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.

The Treasury Department and the IRS have determined that it is appropriate to extend the relief provided in Rev. Proc. 2015-57Rev. Proc. 2017-24 and Rev. Proc. 2018-39 to taxpayers who took out federal and private student loans to finance attendance at nonprofit or other for-profit schools not owned by Corinthian College, Inc. or American Career Institutes, Inc.

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Thinking About Giving Gifts To Clients? What Are The IRS Rules On Gift Giving?

IRS Rules On Gift Giving

Gifts can be a great way to say “thank you” to the clients who’ve helped you have a successful year. Some companies choose to send cards, which only cost pennies, but others want to go above and beyond. Sending a gift can make a deeper impression.

Reasons to Give Clients Gifts

Your clients support your business and keep your business afloat. It’s only natural to want to show them appreciation. Giving them tokens of your gratitude for their business can build goodwill and develop a closer relationship. Strong business relationships are so important that a Harvard Business School study found that 85% of professional success comes from people skills.

Giving gifts ensures that you remain in the person’s mind, as it’s hard to forget someone who gave you something nice. While it may not bring it business immediately, if a future business need arises that you can fill, they’re more likely to reach out. If it’s been a while since they brought your company business, it’s a subtle reminder of the work you’ve done for them in the past.

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IRS Issues Standard Mileage Rates For 2020

2020 Standard Mileage Rates

The Internal Revenue Service issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019,
  • 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019, and
  • 14 cents per mile driven in service of charitable organizations.

The business mileage rate decreased one half of a cent for business travel driven and three cents for medical and certain moving expense from the rates for 2019. The charitable rate is set by statute and remains unchanged.

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IRS On 506 Charitable Contribution Deductions

IRS On Charitable Contributions

You can only deduct charitable contributions if you itemize deductions on Form 1040, Schedule A, Itemized Deductions (PDF).

To be deductible, you must make charitable contributions to qualified organizations. Contributions to individuals are never deductible. To determine if the organization that you contributed to qualifies as a charitable organization for income tax deduction purposes, refer to our Tax Exempt Organization Search tool. For more information, see Publication 526, Charitable Contributions and Can I Deduct My Charitable Contributions?

If you receive a benefit from the contribution such as merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can only deduct the amount that exceeds the fair market value of the benefit received.

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Making Large Gifts Now Won’t Harm Estates After 2025

IRS Estate Taxes

The Treasury Department and the Internal Revenue Service issued final regulations confirming that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.

Treasury Decision 9884, available today in the Federal Register, implements changes made by the Tax Cuts and Jobs Act (TCJA), the tax reform legislation enacted in December 2017. Though the final regulations largely adopt the proposed regulations published last November, they also include clarifying technical language addressing concerns raised in several public comments as well as four examples which, among other things, illustrate the impact of inflation adjustments. As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.

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IRS Updates Guidance For Deductible Business, Charitable, Medical And Moving Expenses

IRS

The Internal Revenue Service issued guidance for taxpayers with certain deductible expenses to reflect changes resulting from the Tax Cuts and Jobs Act (TCJA).

Revenue Procedure 2019-46, posted today on IRS.gov, updates the rules for using the optional standard mileage rates in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.

The guidance also provides rules to substantiate the amount of an employee’s ordinary and necessary travel expenses reimbursed by an employer using the optional standard mileage rates. Taxpayers are not required to use a method described in this revenue procedure and may instead substantiate actual allowable expenses provided they maintain adequate records.

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Tax Situations When Taking Care Of A Family Member

IRS LOGO

Families often hire individuals to care for children and dependents in their home, so family members can work or actively look for work. These individuals include babysitters, caretakers, health aides, nannies, private nurses and au pairs. As employers, family members have additional tax responsibilities for their household employee.

Social Security And Medicare Taxes

Both the employee and employer pay Social Security and Medicare taxes (commonly called FICA). This applies if an employer pays cash wages of $2,100 or more to any one household employee. For FICA, both the employer and the employee pay to the IRS 7.65% of wages paid – 6.2% for Social Security and 1.45% for Medicare taxes. An employer generally must withhold the employee’s share of FICA tax from their wages.

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