| IRS News for Business - Late July 2018 Please share this email with your members, clients, staff, colleagues and anyone who may benefit from it. ►UPCOMING WEBINARS Understanding Tax Scams and Abusive Schemes: July 19 Web Conference Register now for the web conference, "Understanding Tax Scams and Abusive Schemes", on Thursday, July 19. This conference will provide an overview of:
►Recent IRS Videos Here is a video tax tip from the IRS: How to Maintain, Monitor and Protect Your EFIN English Subscribe today: The IRS YouTube channels provide short, informative videos on various tax related topics in English, Spanish and ASL. Aquí un consejo en video del IRS: Phishing-Malware Español | Inglés | ASL Suscríbase hoy: Los canales del IRS en YouTube brindan videos cortos e informativos en una variedad de temas tributarios en español, inglés y ASL. The IRS Video Portal contains video and audio presentations on topics of interest to small businesses, individuals and tax professionals. You will find video clips of tax topics, archived versions of live panel discussions and webinars. ►TAX REFORM Tax reform allows people with disabilities to put more money into ABLE accounts, expands eligibility for Saver’s Credit
►NEWS Attend Data Security Sessions at the IRS Nationwide Tax Forums The topic of data security is featuring prominently at the IRS Nationwide Tax Forums this summer. Tax practitioners are encouraged to attend any and all of the following security seminars presented by the IRS:
The second of the 2018 Forums opens Tuesday at National Harbor in the Washington, D.C. area. To register, visit the IRS Nationwide Tax Forum website Security Summit Partners Launch New Client Data Protection Awareness Campaign The IRS and its Security Summit partners this week kicked off a summertime security awareness campaign: "Protect Your Clients; Protect Yourself: Tax Security 101." This new effort by the IRS, state tax agencies and the nation's private-sector tax industry seeks to help tax professionals protect their client and personal data from cyber thieves. To mark the start of the campaign, the IRS revised Publication 4557, Safeguarding Taxpayer Data, to better reflect the current threats to tax professionals. The IRS also created a new product, Publication 5293, Data Security Resource Guide for Tax Professionals, which highlights a compilation of IRS.gov resources for tax preparers. Certain Veterans Can Claim Refund or Credit of Taxes Paid on Disability Severance Payments As a result of the Combat-Injured Veterans Tax Fairness Act of 2016, certain veterans who paid tax on disability severance payments after Jan. 17, 1991, can claim a credit or refund for those payments. The Department of Defense (DoD) is alerting over 130,000 affected veterans by mail. Visit IRS.gov for details. Disaster Resources:
The Disaster Assistance Self-Study provides the basic information needed to assist taxpayers in a disaster. It provides the volunteer practitioner disaster representative member with information on distributing Disaster Kits, computing gains/losses as the result of a disaster, information about administrative tax relief and information about the psychological effects of a disaster on its victims. IRS News: IRS offers summer tips for temporary jobs, marriage, deductions and credits IRS News Release - IR-2018-149, July 12, 2018 Media Relations Office, Washington, D.C. Media Contact: www.irs.gov/newsroom. 202.317.4000 Public Tax Questions: 800.829.1040 IRS offers summer tips for temporary jobs, marriage, deductions and credits WASHINGTON – Before starting a summer job, taking a vacation or sending the kids off to camp, the Internal Revenue Service wants taxpayers to know that some summertime activities may qualify for tax credits or deductions. The IRS also recommends that taxpayers check the amount of their withholding taxes now to help avoid surprises next filing season. Here are some tips from the IRS that may help taxpayers lower taxes and avoid issues with their taxes: 1. Worker classification matters. As with other workers, business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status. 2. Summer workers may be exempt from tax withholding. Workers may not earn enough from summer jobs to owe income tax, but employers usually must withhold Social Security and Medicare taxes from pay. If self-employed or an independent contractor, workers need to pay their own Social Security and Medicare taxes, even if they have no income tax liability. This is important because these taxes count toward coverage under the Social Security system. Normally, employees receive a Form W-2, Wage and Tax Statement, from their employer (even if they don’t work there anymore) to account for the summer’s work by Jan. 31 of the following year. The Form W-2 shows the amount of earnings. It also shows withholdings for state and federal taxes, Social Security, Medicare wages and tips. Employees use the information on this form when they file their annual tax returns. 3. Check withholding. For those who work a seasonal or part-year job, checking withholding now can help make sure employers withhold the right amount of tax. Taxpayers who work part of the year should check early in the employment period to determine an accurate amount for their withholding. The Withholding Calculator on IRS.gov helps employees determine whether they need to submit a new Form W-4, Employee's Withholding Allowance Certificate to their employer. It estimates income, credits, adjustments and deductions for most financial situations. Employees can use their results from the calculator to fill out the form and adjust their income tax withholding. They must give their updated forms to their employers to take effect. 4. Getting married? Newlyweds can help make wedded bliss last longer by doing a few things now to avoid problems at tax time. First, report any name change to the Social Security Administration before filing next year’s tax return. Then, report any address change to the United States Postal Service, any employers and the IRS to ensure receipt of tax-related items. Finally, use the Withholding Calculator at IRS.gov to make sure withholding is correct now that there are two people to consider. This is especially important for families with more than one wage earner, for taxpayers who have more than one job at a time, or for those who have children. For best results, do it as soon as possible. 5. Clean out, donate, deduct. If they are in good condition, those long-unused items found during spring or summer cleaning and donated to a qualified charity may qualify for a tax deduction. Taxpayers must itemize deductions to deductcharitable contributions, and be sure to have proof of all donations. 6. Help with service project, deduct mileage. While there’s no tax deduction for time donated toward a charitable cause, driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2018. Keep good records of mileage. 7. Get tax credit for summer day camp expenses. Many working parents must arrange for care of their younger children under 13 years of age during the school vacation period. A popular solution — with favorable tax consequences — is a day camp program. Unlike overnight camps, the cost of day camp may count as an expense towards the Child and Dependent Care Credit. See IRS Publication 503, Child and Dependent Care Expenses, for more information. 8. Refunds require a tax return. Although workers may not have earned enough money from a summer job to require filing a tax return, they may still want to file when tax time comes around. It is essential to file a return to get a refund of any income tax withheld. There is no penalty for filing a late return for those receiving refunds, however, by law, a return must be filed within three years to get its refund. Otherwise, the money becomes property of the U. S. Treasury. For details about any of these topics, visit IRS.gov/GetReady. —30— Veterans owed refunds for overpayments attributable to disability severance payments should file amended returns to claim tax refunds IR-2018-148, July 11, 2018 WASHINGTON — The Internal Revenue Service today is advising certain veterans who received disability severance payments after January 17, 1991, and included that payment as income that they should file Form 1040X, Amended U.S. Individual Income Tax Return, to claim a credit or refund of the overpayment attributable to the disability severance payment. This is a result of the Combat-Injured Veterans Tax Fairness Act passed in 2016. Most veterans who received a one-time lump-sum disability severance payment when they separated from their military service will receive a letter from the Department of Defense with information explaining how to claim tax refunds they are entitled to; the letters include an explanation of a simplified method for making the claim. The IRS has worked closely with the DoD to produce these letters, explaining how veterans should claim the related tax refunds. Statute of Limitations The amount of time for claiming these tax refunds is limited. However, the law grants veterans an alternative timeframe – one year from the date of the letter from DoD. Veterans making these claims have the normal limitations period for claiming a refund or one year from the date of their letter from the DoD, whichever expires later. As taxpayers can usually only claim tax refunds within 3 years from the due date of the return, this alternative time frame is especially important since some of the claims may be for refunds of taxes paid as far back as 1991. Amount to Claim Veterans can submit a claim based on the actual amount of their disability severance payment by completing Form 1040X, carefully following the instructions. However, there is a simplified method. Veterans can choose instead to claim a standard refund amount based on the calendar year (an individual’s tax year) in which they received the severance payment. Write “Disability Severance Payment” on line 15 of Form 1040X and enter on lines 15 and 22 the standard refund amount listed below that applies:
Special Instructions All veterans claiming refunds for overpayments attributable to their lump-sum disability severance payments should write either “Veteran Disability Severance” or “St. Clair Claim” across the top of the front page of the Form 1040X that they file. Because all amended returns are filed on paper, veterans should mail their completed Form 1040X, with a copy of the DoD letter, to: Internal Revenue Service 333 W. Pershing Street, Stop 6503, P5 Kansas City, MO 64108 Veterans eligible for a refund who did not receive a letter from DoD may still file Form 1040X to claim a refund but must include both of the following to verify the disability severance payment:
—30— Technical Guidance Notice 2018-60 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under section 417(e)(3), and the 24-month average segment rates under section 430(h)(2) of the Internal Revenue Code. ►EMPLOYERS AND BUSINESS OWNERS:
Want to see if the letter your client got is really from the IRS? Many (but not all) IRS letters and notices listed here. If you're an individual taxpayer, you can use this tool to view:
We send out emails each time there’s a new tax scam. It gets confusing to remember all of them. You don’t have to! This page lists ALL scams targeting taxpayers, tax professionals and others Loads of info here, including:
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►Tax Tips Taxpayers can visit IRS.gov for tools to help with a wide range of tax topics Tax Tip 2018-108 July 16, 2018 Finding answers to tax questions is only a few key clicks away. Millions of taxpayers use the following self-help tools on IRS.gov to easily find what they need: · IRS Free File. Taxpayers with an extension of time to file their return until October 15 can use IRS Free File to prepare and e-file their tax return. Free File allows them to use brand-name commercial tax software at no cost. It is available for anyone with income below $64,000. · Where’s My Refund? Taxpayers waiting for their refund can use Where's My Refund? to check the status of a refund. This tool is available at IRS.gov or the IRS2Go mobile app. Refund updates are available within 24 hours after the IRS receives the e-filed return or four weeks after the agency receives a mailed paper return. · Paying a tax bill. IRS Direct Pay is the safe, easy and free way to pay taxes or estimated tax directly from a checking or savings account. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out. The Direct Pay tool has five simple steps to pay in a single online session and is also available with the IRS2Go mobile app. · Tax account online. Taxpayers can use this tool to view their federal tax account balance, select IRS Direct Pay, debit or credit card or apply for an installment agreement. Before accessing their tax account online, taxpayers must authenticate their identity through the secure access process. · Online payment agreement. Taxpayers who can’t pay their taxes in full can apply for an online payment agreement. Using the Direct Debit payment plan option allows certain taxpayers to make monthly payments. · Interactive tax assistant. Taxpayers can find reliable answers to tax questions with the interactive tax assistant. This tax law resource asks a series of questions and immediately provides answers on a variety of tax law topics. · Exempt organizations tool. Anyone looking to make a charitable donation can use the tax exempt organization search tool. This tool allows users to search for and verify a charity’s status. The results include links to check each organization’s federal tax status and filings. · Tax map. Taxpayers can use the IRS tax map to quickly find forms, publications, frequently asked questions and news. More Information: · Tax Topic 152, Refund information · Tax Topic 161, Returning an erroneous refund – paper check or direct deposit · Tax Topic 203, Refund offsets for unpaid child support, certain federal and state debts, and unemployment compensation debts Published: 07/16/18 |