Section 139 of the Internal Revenue Code excludes from a taxpayer’s gross income certain payment to individuals to reimburse or pay for expenses related to a “qualified disaster”. Covid-19 is a federally declared disaster.
BHT&D Certified Public Accountants Blog
The Internal Revenue Service has extended the federal tax return filing date from April 15, 2020 to July 15, 2020.
They have also issued an update on their plan to implement the new paid leave provisions of the Families First Legislation.
The following are other tax related deadlines as of this posting:
Congress has passed a large number of tax changes, including retirement plan issues, that are effective in 2020, as well as extensions through 2020 of a number of tax provisions that had expired or were about to end. While Congress passed these changes Dec. 19, 2019, many are not aware of the implications.
The list of changes is quite large, so we have only included those that are most likely to affect individual tax returns. Here is a run-down on some of the new tax provisions:
If you have unpaid taxes that you haven't yet been making payments toward, it might make you fearful that the IRS will come a-knocking one day to collect on what you owe. Tax debt can quickly snowball from interest, penalties, late fees, and the amount of the taxes due.
However, a lot of the scaremongering surrounding the IRS is largely sensationalized in media and daily conversation. Agents won't come bursting through your door just because you have tax debt. Instead, they must follow due process in accordance with the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA). This means that you will always receive written notice concerning your balance due as well as collection actions and any requests for payment plans or settling your account.
S corporation compensation requirements are often misunderstood and abused by owner-shareholders. An S corporation is a type of business structure in which the business does not pay income tax at the corporate level and instead distributes (passes through) the income, gains, losses, and deductions to the shareholders for inclusion on their individual income tax returns. If there are gains, these distributions are considered return on investment and therefore are not subject to self-employment taxes.
However, if stockholders also work in the business, they are supposed to take reasonable compensation for their services in the form of wages, and of course, wages are subject to FICA (Social Security and Medicare) and other payroll taxes. This is where some owner-shareholders err by not paying themselves a reasonable compensation for the services they provide, some out of unfamiliarity with the requirements and some purposely to avoid the payroll taxes.
Alimony is the term used for payments to a separated spouse or ex-spouse as part of a divorce or separation agreement. Since 1985, to be alimony for tax purposes, the payments:
- Must be in cash, paid to the spouse, ex-spouse, or a third party on behalf of a spouse or ex-spouse;
- Must be required by a decree or instrument incident to a divorce, a written separation agreement, or a support decree;
Tax reform has changed the way most taxpayers need to think about and plan for their taxes. It is no longer business as usual. Advanced planning will become very important long before tax time next year.
For most taxpayers, the most significant change is the increase in their standard deduction, which on the surface seems like a big benefit. But, don’t overlook the fact that the same tax reform that nearly doubled the standard deduction took away the personal exemption as a deduction.
At BHT&D CPAs, we get many questions regarding the documentation required to deduct charitable donations. The documentation required depends on the type and amount of the donation.
- If the cash donation is $250 or less, you may use any of the following as proof of donation:
Although the drop of the corporate tax rate from a top rate of 35% to a flat rate of 21% may be one of the most talked about provisions of the Tax Cuts and Jobs Act (TCJA), C corporations aren’t the only type of entity significantly benefiting from the new law. Owners of non-corporate “pass-through” entities may see some major — albeit temporary — relief in the form of a new deduction for a portion of qualified business income (QBI).
Where’s My Refund? is an interactive tool on the IRS website. Regardless of whether you have split your refund among several accounts, opted for a direct deposit into one account, or asked the IRS to mail you a check, Where’s My Refund? will give you online access to your refund information 24 hours a day and 7 days a week.