Category: Tax Tips

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IRS plans to delay this year’s tax filing deadline to mid-May – CNNPolitics

IRS plans to delay this year's tax filing deadline to mid-May - CNNPolitics
Last year, the IRS moved the deadline to July 15, giving Americans an additional three months to file their taxes.
“Almost a year later, we are still grappling with the massive economic, logistical and health challenges wrought by this devastating pandemic,” wrote Raskin and Pascrell in a letter sent to the IRS earlier this week.
In a separate statement, Crapo noted that major Covid stimulus bills passed by Congress over the past year have made several changes to the tax system.
“The various coronavirus relief programs created over the last year, including the bill signed into law just last week, have resulted in a large amount of extra paperwork for taxpayers this year and have required tax preparation firms to constantly update their systems,” Crapo said.

Delays are already piling up

As of March 5, the IRS had yet to process 6.7 million of the 2020 returns that had been filed since February 12. It had processed nearly 49 million. The agency has processed about 88% of the returns it received compared with 96% on roughly the same time frame last year.
In addition to processing tax returns, the IRS is also in the process of sending out a third round of about 150 million stimulus payments. As of Wednesday, about 90 million had been sent out.
The $1.9 trillion Covid relief bill signed into law by President Joe Biden also directs the IRS to send out periodic payments for an expanded child tax credit, as well as handle several other changes like waiving income taxes on up to $10,200 in unemployment benefits received in 2020 for households earning less than $150,000, helping laid-off workers who faced surprise tax bills on their jobless benefits.
The IRS has yet to provide guidance to the jobless who have already filed their 2020 tax returns. If the agency can’t come up with an automatic way to adjust returns reporting unemployment income, filers may have to send in amended returns, although the IRS is not recommending they do so at this time.
The IRS recently provided instructions and a worksheet for those who have yet to complete their 2020 returns and who will report unemployment compensation. It guides the jobless through filling out the correct amounts on Schedule 1 of Form 1040.
Backers of this provision are among those who urged the IRS to delay the filing deadline.

Still working through last year’s backlog

The agency started the year already behind. At the end of December, it still had millions of tax year 2019 returns to be processed. Many IRS workers were sent to work from home during the pandemic, leading to a backlog of paper returns. At one point last year, the pile up of unopened mail had to be kept in trailers.
“They are already behind,” said Nina Olson, who previously served as the IRS’ national taxpayer advocate and is now executive director of the Center for Taxpayer Rights.
“They didn’t get through all of the 2020 work before they had to start the 2021 filing season. So this year is going to be a real challenge,” she added.
More on Covid-19 relief
The IRS further extended the federal tax deadline to June 15 for people in Texas, Oklahoma and Louisiana who were hit hard by February storms.
Even though the IRS extended its deadline, that doesn’t mean individual states will. If they don’t, that means that filers in those states may need to file by April 15 anyway, unless they file for an automatic extension.
That’s because states often use one’s federal adjusted gross income or federal taxable income as the starting point to determine a filer’s income subject to state taxes.
At the moment, Maryland is the only state to have extended its filing deadline, to July 15. Other states have stuck with their original filing date, which is April 15 in most instances, according to the Federation of Tax Administrators.
Some states’ current dates differ. They are Hawaii, April 20; Delaware and Iowa, April 30; Virginia, May 3; and Louisiana, May 17.
This story has been updated with additional details Wednesday.

This content was originally published here.

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Federal funding shortfall to IRS threatens US sanctions enforcement on Russian oligarchs – CNNPolitics

Federal funding shortfall to IRS threatens US sanctions enforcement on Russian oligarchs - CNNPolitics

A funding shortfall in the latest Ukraine aid package could affect the Internal Revenue Service criminal investigations unit that tracks the luxury yachts, apartments and other hidden assets of Russia’s elite, raising the possibility that the US enforcement of sanctions might have some gaps or pull resources from other priorities.

This content was originally published here.

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Don’t Tip the IRS – Diversifying – Podcast on CNN Audio

Don’t Tip the IRS - Diversifying - Podcast on CNN Audio

Understanding how your taxes work can help you get a bigger return, and, in the long run, it can help you build wealth! This week, Delyanne covers everything from tax brackets to tax breaks with Duke Alexander Moore, better known as Duke Loves Taxes. Plus, professor of tax law Dorothy Brown explains how some of the richest people in the country take tax exemptions to the next level, and how systemic racism shows up in who pays what.

This content was originally published here.

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IRS: Tax filing season will start February 12 – CNN

IRS: Tax filing season will start February 12 - CNN
To get that money in full, your 2020 income must be less than $75,000 a year if you’re single, or $150,000 if married filing jointly. Heads of household earning less than $112,500 will also qualify for a full payout. Eligible tax filers with children under 17 years of age will receive even more.
To secure payment, you must claim the refundable Recovery Rebate Credit. The credit will be awarded in the same amount as the stimulus payment for which you are eligible. Refundable credits reduce your tax liability dollar-for-dollar. If a credit exceeds your tax liability, the rest will be sent to you as a refund.
“Given the pandemic, this is one of the nation’s most important filing seasons ever. [The February 12] start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible,” said IRS Commissioner Chuck Rettig.
To avoid late filing penalties, the deadline for filing your tax return remains April 15 — unless you file for an automatic six-month extension.

This content was originally published here.

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Opinion: Comey and McCabe IRS audits are a warning sign with a long history – CNN

Opinion: Comey and McCabe IRS audits are a warning sign with a long history - CNN
But presidents and executive appointees of all political stripes have also been enticed by what they saw as the potential of these agencies to carry out personal and political agendas.
This has been especially true of the IRS. After a number of scandals in the 1940s and early 1950s involving corrupt agents, the IRS underwent extensive reforms, including changing its name from the Bureau of Internal Revenue to the Internal Revenue Service, a change meant to emphasize the agency’s commitment to the public. But even as it was undergoing that overhaul, the IRS had become a key tool of J. Edgar Hoover, the longtime director of the Federal Bureau of Investigation (FBI). The FBI relied on IRS records as part of its surveillance of domestic activists, in particular targeting leaders of the civil rights movement.
Presidents and their administrations also relied on the agency for political purposes. During the Kennedy administration, Attorney General Robert F. Kennedy received a memorandum from labor leaders Victor and Walter Reuther that outlined ways to use administrative agencies like the IRS, the FBI and the Federal Communications Commission to counter “the growing strength of the radical right.” This led to the creation of the Ideological Organizations Project, which targeted right-wing groups and challenged their tax-exempt status.
By the time President Richard Nixon took office, then, the idea of weaponizing the IRS was already well established. His innovation — one that resonates with the Comey and McCabe audits — was to use the agency to target his personal enemies. During investigations into administration wrongdoing, White House Counsel John Dean testified that Nixon’s lengthy enemies list had been forwarded to the IRS with the suggestion that the agency investigate their tax returns.
Nixon’s IRS chief Johnnie Mac Walters refused. But the agency did deny tax exempt status to a number of liberal organizations; in one of the cases that went to court, a judge found that the organization had been “singled out for selective treatment for political, ideological and other improper reasons.”
Intent matters in cases like these, which is why it’s so important that we know about the Ideological Organizations Project and Nixon’s enemies list. IRS decisions often have political consequences without necessarily having political motives.
In the 1970s, the IRS began working to remove tax-exempt status from private schools that engaged in racial discrimination. This affected religious schools like Bob Jones University that argued such discrimination was part of their belief system, and became a major event in the rise of a more active religious right.
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Likewise, a change in IRS procedure in the 2000s and 2010s applied greater scrutiny to tax-exempt requests for organizations with political-sounding names, which for years was exaggerated as a coordinated effort by the Obama administration to target conservative groups (and President Barack Obama did acknowledge findings of individual singling out of conservative groups as “intolerable” and “inexcusable” failures of oversight and demanded greater accountability as a result).
In response to the news of the Comey and McCabe audits, the IRS chief has asked for an inspector general’s investigation into the decision to audit the FBI leaders. That investigation will begin the important work of uncovering whether the audits were politically motivated. But while it is underway, the administration, with help from Congress, should work to strengthen the firewalls between the White House and federal agencies, while making clear that those agencies are an indispensable part of what makes this country work — and making them more transparent, functional and ethical is a key part of the administration’s larger goal of safeguarding our democratic system.

This content was originally published here.