Author: Todd Laytham

What is a 1444 / 1444-B Notice?

Todd Laytham

The IRS sent out a notice on our around the time you received your stimulus checks by Direct Deposit or mail.  The Notice looked something like this:

Most taxpayers probably threw away this letter once they verified they received their funds, but this was an important letter stating how much was sent to you and must be included on your 2020 Income Tax Return. 

How do you get or verify this information to prepare your taxes?

Recovery Rebate Credit

The IRS announced last week that, as required by law, all legally permitted first and second round of Economic Impact Payments have been issued. Get My Payment was updated on January 29 to reflect the final payments and will not be updated again. If individuals didn’t receive all or part of their payment, they may be eligible to claim the Recovery Rebate Credit with their 2020 tax return.

Important Notes:

Claiming the wrong amount of the Recovery Rebate Credit will cause the return to require additional IRS review which will delay refund processing. Taxpayers can confirm their stimulus payments either by referencing IRS-mailed Payment Confirmation Notices 1444 and 1444-B, checking their bank account activity, creating/viewing their online account, verifying issued payments through the Get My Payment tool, or requesting an account transcript.

Eligibility for the RRC is based on 2020 tax year information, while the Economic Impact Payments were based on 2019 (or 2018) information.

Additional RRC information on IRS.gov: https://www.irs.gov/newsroom/recovery-rebate-credit

The Covid-19 Aid Bill

Todd Laytham

After months of inaction, Congress overwhelmingly approved a $900 billion emergency relief package. The bill won’t include aid for states and local governments whose revenues have been devastated by the pandemic—a priority among Democrats—nor will it include a broad liability shield for corporations that many Republican leaders had sought.

Here are some highlights of what is included in the legislation:

  • Direct payments, jobless aid and rental assistance: The bill will send a second round of stimulus checks to Americans of $600 for each adult and $600 for each dependent, at a cost of about $166 billion. Payments will begin to phase out for individuals who earned more than $75,000 in 2019. Unemployed workers will also be eligible for $300 a week in enhanced federal unemployment assistance through March 14 next year. Both the direct payments and the extra jobless aid are set at lower levels in the new bill than Congress approved for similar programs earlier this year. An extra $100 subsidy will be offered for some workers who have both wage and self-employment income but whose basic unemployment benefits don’t take into account their self-employment income. The legislation also includes $25 billion in rental assistance to tenants struggling with rent payments and extends a federal eviction prohibition until the end of January.
  • Vaccines, funding for schools and testing and tracing: The bill will provide billions of dollars to state and federal agencies for vaccine distribution, including about $300 million directed to high-risk areas and communities of color. Public schools will receive $54.3 billion. Over $22 billion will go to Covid-19 testing, tracing and mitigation efforts, $2.5 billion of which will be directed to rural communities and communities of color.
  • Airlines, banks and entertainment venues: Airlines will receive more than $15 billion in aid to cover salaries and benefits for workers through the end of March, after Congress separately disbursed $25 billion to the industry under the Cares Act in the spring. Small lenders that focus on low-income and minority communities will receive about $12 billion, and $15 billion will go to entertainment venues such as independent movie theaters and live-event operators.

Why You Need To File Your 2019 Taxes By July 15, 2020

Todd Laytham

By: Laura Saunders, WSJ

July 10, 2020 5:30 am ET

No matter how stressed or financially stretched you are this year, file tax forms with the Internal Revenue Service by July 15. Not doing so will only make your bad situation worse.

The deadly coronavirus pandemic has upended the lives and finances of millions of Americans, leaving the U.S. with about 15 million fewer jobs than in February. In response, the IRS issued a historic emergency declaration easing a host of requirements. For the first time, it delayed the traditional April 15 filing deadline by three months.

Now the July 15 deadline to file 2019 taxes is days away, while many Americans’ lives are still in disarray. Some, feeling overwhelmed, may be tempted to ignore their taxes.

That would be a huge mistake: If you owe Uncle Sam, blowing off tax filings has immediate consequences that compound and are almost impossible to escape, because the IRS is the most powerful creditor in the nation.

“To get its money, the IRS can file a lien on your property that wrecks your credit, seize your bank account, and take your wages. It can even get money from your IRA or 401(k) savings account, and you’ll owe tax on the withdrawal,” says Bryan Skarlatos, a criminal tax attorney with Kostelanetz & Fink in New York.

However, taxpayers can take steps to minimize the damage if they can’t pay in full or at all. With tax debts, small moves can mean big differences.

Here’s an example: Two of the IRS’s most potent penalties are for failure to file a return and failure to pay tax. If someone doesn’t file or pay $1,000 of tax for a year, then the failure-to-file penalty adds $435 to the bill and the failure-to-pay penalty adds $60. The $495 total is often far higher than credit card interest on a similar amount.

Interest is also due on unpaid taxes and penalties. It compounds daily, currently at an annual rate of 3%. In this case it adds another $45 after a year. Smaller penalties may apply as well.

But say this same taxpayer files the IRS form to get an automatic three-month filing extension by July 15 and then files a return by Oct. 15. Even if this person can’t pay the balance due, filing the return on time removes the large failure-to-file penalty. If this person can pay something, the cost can shrink further.

The IRS isn’t known for its mercy, but it has programs and other measures for taxpayers who can’t pay what they owe. These can be confusing, especially for filers who haven’t used them before, so here are steps to take and pitfalls to avoid in this extraordinary tax year.

• File something by July 15. As the example above shows, the failure-to-file penalty is immediate and large.

Be sure your return is accurate, and try to file it by July 15. If that’s impossible, then file IRS Form 4868 by July 15 to get an automatic three-month extension to prepare the form until Oct. 15.

There’s no extension to pay your tax, so interest on what you owe starts accruing on July 15 even though you have an extension to send in the return and may not know exactly what you owe yet.

If you miss these deadlines, file as soon as possible. Bottom line: If you can’t pay, you should still file.

• Know which excuses work. The IRS abates penalties for “reasonable cause,” with the pandemic as a possible cause this year.

Still, the reasonable-cause defense has limits. For example, a family death or serious illness three years ago probably won’t count as an excuse to be late in filing or paying 2019 taxes.

Taxpayers with a clean record until their lapse can often receive a “first-time abatement” because of prior good behavior.

• Understand the IRS’s payment plans. It can be fairly simple to pay back taxes to the IRS. To qualify for a short-term payment agreement, you must owe $100,000 or less in taxes, penalties and interest and be able to pay within 120 days. Usually, this plan can be set up quickly online at IRS.gov. There’s no set-up fee for online agreements.

Taxpayers who need longer than 120 days to pay and owe less than $50,000 can opt for an installment agreement. For many, the online set-up fee is $31 for a plan with direct monthly debits and $149 for one without monthly debits.

• Consider how to raise funds. Mr. Skarlatos warns that penalties and interest continue to compound on unpaid taxes if you use an IRS payment plan. So he recommends borrowing the funds from a bank, a 401(k), a relative or even a credit card, if possible. Congress eased terms for 401(k) loans due to the pandemic.

• Beware of sales pitches promising miracles. For taxpayers who can’t pay the IRS in full, a program known as Offers in Compromise may accept a lower amount in settlement. Some firms promising to secure these offers advertise on radio or TV.

The IRS typically accepts less than 40% of offers it receives. Fees to firms that advertise them can be high and include recurring charges while the IRS considers a proposal over many months.

IRS Commissioner Chuck Rettig urges taxpayers seeking an offer in compromise to check with the IRS first.

“To hear some of these ads, struggling taxpayers can think their tax debts will magically disappear. Many people can avoid unnecessary disappointments and fees by quickly reviewing the program or asking an IRS representative,” he adds.

• If all else fails… The IRS won’t pursue tax debtors if that leaves them without living expenses. In this case, the account is designated as “currently not collectible” and the IRS pauses collections, usually for up to a year. Penalties and interest continue to accrue.

To qualify for this status, says Szu-Ju Chang, an attorney in Las Vegas who has worked extensively with low-income taxpayers, a person will need to provide detailed information about income, expenses, and assets for the IRS to assess.

For more information, contact the Taxpayer Advocate Service or a low-income taxpayer clinic.

https://www.irs.gov/

Gig Economy Tips Taxpayers Should Remember

Todd Laytham

The gig economy, also called sharing or access economy, is activity where taxpayers earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website. While there are many types of sharing economy businesses, ride-sharing and home rentals are two of the most popular.

Here are some things taxpayers should remember:

  • Income from these sources is taxable, regardless of whether an individual receives information returns. This is true even if the work is full-time, part-time or if an individual is paid in cash.
  • Taxpayers may also be required to make quarterly estimated income tax payments and pay their share of Social Security, Medicare or Medicaid taxes.

While providing gig economy services, it is important that the taxpayer is correctly classified.

  • This means the business or the taxpayer must determine whether the individual providing the services is an employee or independent contractor.
  • Taxpayers can use the worker classification page on IRS.gov to see how they are classified.
  • Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is important for taxpayers to keep records of their business expenses.

Since income from the gig economy is taxable, it’s important that taxpayers remember to pay the right amount of taxes throughout the year to avoid owing when they file.

  • An employer typically withholds income taxes from their employees’ pay to help cover income taxes their employees owe.
  • Gig economy workers who are not considered employees have two ways to cover their income taxes:
    • Submit a new From W-4 to their employer to have more income taxes withheld from their paycheck, if they have another job as an employee.
    • Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.

The Gig Economy Tax Center on IRS.gov answers questions and helps gig economy taxpayers understand their tax responsibilities.

To Mask or Not To Mask

Todd Laytham

To mask or Not to mask – THAT is the question

This article from Jason Gay of the Wall Street Journal is entertaining as well as informative.  Are you a mask vigilante or flaunting your mask-lessness?

Either way – the article references 2 of my favorites: Michael Jordan & Darth Vader.  Just like the debates over who was the greatest basketball player or villain – hopefully the debates on masking stay cordial instead of tragic.

https://www.wsj.com/articles/thanks-for-masking-a-case-for-covering-up-11589807255?mod=followjasongay

https://www.clickondetroit.com/news/local/2020/05/09/2-men-arrested-after-allegedly-killing-flint-security-guard-who-told-woman-to-wear-mask/

Thanks for Masking! A Case for Covering Up

Players on FC Erzgebirge Aue’s bench wore masks during a May 16 match.

PHOTO: ROBERT MICHAEL/ZUMA PRESS

By: Jason Gay May 18, 2020 9:07 am ET

I want to talk about masks, because it feels like a hot topic right now, and there aren’t a lot of hot topics in sports at the moment. I mean, I love Michael Jordan as much as anybody, but I’m bored of all these strained debates about Michael Jordan. He was a great basketball player, likely the greatest who ever was. Do we really have to argue this? It’s like listening to people argue about pizza, or sunshine. Jordan’s great! The end.

Back to the masks. Here’s my take: if Yogi Berra had to spend all those years behind the plate wearing a mask, and the sublime hockey goalie Ken Dryden wore a mask, and Darth Vader did, too, I can handle wearing a mask when I’m going to be out in public around other people, and especially when I’m shopping inside a store. It isn’t my favorite thing, but I can do it.

Do you think Darth Vader threw a fit when he got to Costco and they told him to keep his mask on? No, he did not. Darth got his two-pound jar of cheese puffs and left.

I agree that wearing a mask is strange. It was weird to see those photos of soccer players in masks on the bench this weekend. It isn’t my ideal scenario, either. Look at that adorable little drawing of me that runs with this Journal column. You think I enjoy covering up that handsome mug with a mask?

(I have not looked like that drawing in at least 10 years.)

I get it. Wearing a mask is awkward. It can feel restraining. Uncomfortable. If you have glasses, your glasses fog up. I still have no idea if I am putting it on correctly. Half the time I think I’m wearing it inside out. I also have a bandanna, which instantly turns me into the world’s most pathetic stagecoach robber. If I tried to rob a stagecoach right now, all the people in the stagecoach would just laugh and tell the horses to clip-clop away.

But now I have options. At this point, you can pretty much buy a mask with anything on it. Do you want a Pink Floyd “Dark Side of the Moon” mask? Those exist. You want a Georgia Bulldogs mask? You have many options. You want a mask that has cute little illustrations of baby goats on it? It’s a real thing. My 5-year-old has a pink mask with magic unicorns on it, and she loves it!

MORE BY JASON GAY

That’s a lie! She hates it, and I have to chase her around like a baby goat to get her to wear it.

Yes: It was confusing when the government first asked us not to wear masks, that they should be reserved for health-care professionals, then turned around and said: OK, wear ‘em. I know there are differing studies about how much masks help, and it would be silly to think they’re some kind of infallible barrier, but they seem like a reasonable precaution as ordinary life begins to re-open.

At the very least, you’re not touching your face and nose, which apparently we all unknowingly do 400 billion times a day. A mask also feels like good citizenry, especially when we’ve been asking essential workers to wear them for months. I know there are cranks who call mask-wearing “virtue signaling,” because everything has to be cornily politicized these days, but come on. A mask isn’t a podcast tote bag. Don’t be a cynical lame-o! Some signaling is indeed virtuous!

“When we’re out in the public [wearing a mask], we’re signaling this is a pandemic, we’re aware this is happening, and I’m doing my part,” Harvard T.H. Chan School of Public Health assistant professor Joe Allen told the Journal’s Sumathi Reddy last month.

No one’s saying this is fun, but if it helps get the country and economy up and running, I’m game. Think of your neighbors. The people who work in stores—do you think those folks want to be the mask police? No. They just want to get home safe. Same with strangers standing in line or walking past you on the sidewalk. You might not be concerned about your health, but they might be.

I don’t know who said it first, but it’s a smart line: Wearing a mask isn’t about you. It’s about everyone else.

Two New Refundable Payroll Tax Credits Available Now

Todd Laytham

COVID-19 paid leave tax credits for
small and midsize businesses

Small and midsize employers can claim two new refundable payroll tax credits. The paid sick leave credit and the
paid family leave credit are designed to immediately and fully reimburse eligible employers for the cost of providing
COVID-19 related leave to their employees.
Here are some key things to know about these credits.
Coverage
• Employers receive 100% reimbursement for required paid leave.
• Health insurance costs are also included in the credit.
• Employers do not owe their share of social security tax on the paid leave and get a credit for their share of
Medicare tax on the paid leave.
• Self-employed individuals receive an equivalent credit.
Fast funds
• Reimbursement will be quick and easy.
• The credit provides a dollar-for-dollar tax offset against the employer’s payroll taxes
• The IRS will send any refunds owed as quickly as possible.
To take immediate advantage of the paid leave credits, businesses should use funds they would otherwise pay to the
IRS in payroll taxes. If those amounts are not enough to cover the cost of paid leave, employers can request an
expedited advance from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
For details about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov.
Share this tip on social media — #IRSTaxTip: COVID-19 paid leave tax credits for small and midsize businesses.
https://go.usa.gov/xvGyC

Issue Number: COVID Tax Tip 2020-48

Todd Laytham

Tools to help people get their Economic Impact Payment

The IRS has two tools to help millions of taxpayers with their Economic Impact Payment. The payments are $1,200 per eligible person and up to $500 for each qualifying child.

The first tool, Non-filers: Enter Payment Info Here is available – in English and Spanish – for certain taxpayers who don’t normally need to file a return. This free tool allows them to enter basic information so the IRS can issue their payment. The second tool, Get My Payment, allows people to check the status of their payment and provide bank account information if a payment has not been scheduled for delivery.

Who needs to use Non-filers: Enter Payment Info Here?

  • Taxpayers with low- or no-income: Those who don’t normally file a tax return include those with little or no income. This includes single filers who made under $12,200 and married couples who made less than 24,400 in 2019.
  • Taxpayers who receive federal benefits: Eligible SSI and veterans’ beneficiaries who usually don’t file a tax return don’t need to provide information to get a $1,200 payment automatically. However, VA and SSI benefit recipients who don’t normally file a tax return and have children should use the free tool by May 5. This will add the $500 per qualifying child under 17 to the automatic payments. If they miss the May 5 deadline, they will have to file a tax return next year for 2020 to receive the $500 per child.
  • Married individuals must provide additional information for their spouse to claim the full $2,400 payment if their spouse didn’t receive SSA, SSDI, RRB, SSI or VA benefits in 2019 and didn’t have to file a tax return in the last two years. They need to provide this information using the Non-Filer tool before the payment is scheduled otherwise, their payment at this time will be $1,200.

Should these groups use the Non-filers: Enter Payment Info Here tool?

  • Taxpayers who have already filed or who are required to file a 2019 tax return should not use this tool. Using this tool will NOT speed up their Economic Impact Payment and will likely slow down processing of their tax return and receiving any refund.
  • People who already received their payment, even if they did not receive the full amount, should not use this tool.
  • Those who can be claimed as a dependent on someone else’s 2019 tax return are not eligible for the Payment and should not use the tool.

How to use Non-filers: Enter Payment Info Here.
The process is simple, and it only takes a few minutes to complete and submit the request for their Economic Impact Payment. First, taxpayers should visit IRS.gov and go to Non-filers: Enter Payment Info Here. Then provide basic information. The IRS will use this information to confirm the taxpayer’s eligibility, calculate, and send them a payment.
 
No tax will be owed on Economic Income Payments. It will not reduce a taxpayer’s refund or increase the amount owed when on the 2020 tax return filed next year. It will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.

Share this tip on social media — #IRSTaxTip: Tools to help people get their Economic Impact Payment. https://go.usa.gov/xvEwC

Treasury, IRS unveil online application to help with Economic Impact Payments

Todd Laytham
2020 Cornonavirus Stimulus Checks – Economic Impact Payments

Working with the Treasury Department, the Internal Revenue Service today unveiled the new Get My Payment with features to let taxpayers check on their Economic Impact Payment date and update direct deposit information.

With an initial round of more than 80 million Economic Impact Payments starting to hit bank accounts over the weekend and throughout this week, this new tool will help address key common questions. Get My Payment will show the projected date when a deposit has been scheduled, similar to the “Where’s My Refund tool” many taxpayers are already familiar with.

Get My Payment also allows people a chance to provide their bank information. People who did not use direct deposit on their last tax return will be able to input information to receive the payment by direct deposit into their bank account, expediting receipt.

“Get My Payment will offer people with a quick and easy way to find the status of their payment and, where possible, provide their bank account information if we don’t already have it,” said IRS Commissioner Chuck Rettig. “Our IRS employees have been working non-stop on the Economic Impact Payments to help taxpayers in need. In addition to successfully generating payments to more than 80 million people, IRS teams throughout the country proudly worked long days and weekends to quickly deliver Get My Payment ahead of schedule.”

Get My Payment is updated once daily, usually overnight. The IRS urges taxpayers to only use Get My Payment once a day given the large number of people receiving Economic Impact Payments.

How to use Get My Payment
Available only on IRS.gov, the online application is safe and secure to use. Taxpayers only need a few pieces of information to quickly obtain the status of their payment and, where needed, provide their bank account information. Having a copy of their most recent tax return can help speed the process.

  • For taxpayers to track the status of their payment, this feature will show taxpayers the payment amount, scheduled delivery date by direct deposit or paper check and if a payment hasn’t been scheduled. They will need to enter basic information including:
    • Social Security number
    • Date of birth, and
    • ailing address used on their tax return.
  • Taxpayers needing to add their bank account information to speed receipt of their payment will also need to provide the following additional information:
    • Their Adjusted Gross Income from their most recent tax return submitted, either 2019 or 2018
    • The refund or amount owed from their latest filed tax return
    • Bank account type, account and routing numbers

Get My Payment cannot update bank account information after an Economic Impact Payment has been scheduled for delivery. To help protect against potential fraud, the tool also does not allow people to change bank account information already on file with the IRS. 

A Spanish version of Get My Payment is expected in a few weeks.

Don’t normally file a tax return? Additional IRS tool helps non-filers
In addition to Get My Payment, Treasury and IRS have a second a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.

The Non-filers: Enter Payment Info tool, developed in partnership between the IRS and the Free File Alliance, provides a free and easy option designed for people who don’t have a return filing obligation, including those with too little income to file. The new web tool is available only on IRS.gov, and users should look for Non-filers: Enter Payment Info Here to take them directly to the tool.

Non-filers: Enter Payment Info is designed for people who did not file a tax return for 2018 or 2019 and who don’t receive Social Security retirement, disability (SSDI), or survivor benefits and Railroad Retirement benefits. Additional information is available at https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here.

No action needed by most taxpayers
Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Automatic payments will also go in the near future to those receiving Social Security retirement, or disability (SSDI), or survivor benefits and Railroad Retirement benefits.

General information about the Economic Impact Payments is available on a special section of IRS.gov: https://www.irs.gov/coronavirus/economic-impact-payment-information-center.

Watch out for scams related to Economic Impact Payments
The IRS urges taxpayers to be on the lookout for scams related to the Economic Impact Payments. To use the new app or get information, taxpayers should visit IRS.gov. People should watch out for scams using email, phone calls or texts related to the payments. Be careful and cautious: The IRS will not send unsolicited electronic communications asking people to open attachments, visit a website or share personal or financial information. Remember, go directly and solely to IRS.gov for official information.

More information
The IRS will post frequently asked questions on IRS.gov/coronavirus and will provide updates as soon as they are available. 

Johnson County Real Estate Appraisal Appeals

Todd Laytham

Many Johnson County homeowners saw significant increases in the 2020 appraised value.  An appeal must be filed within 30 days of the NOTICE OF APPRAISED VALUE mailing date from the county.

Many property owners have requested that the county extend the informal appeal deadline due to the stay at home orders and COVID-19.  The county acknowledges the problem and by law must continue with the same date of filing an appeal.  The appeal process does not limit or make final the appraised value and you have one more opportunity to request a revaluation.

You must still file the first half of the 2020 tax payment – so do not wait to pay your taxes if you feel it is overvalued.  That will lead to fines or penalties that will cost you more than any tax savings.

If you have a mortgage and paying taxes through escrow, coordinate the filing of the Payment Under Protest with them or submit directly PRIOR to the due date of May 11, 2020.

See the attached letter, information and websites from the County Appraiser on the process for filing an appeal through the Payment Under Protest.

 Unfortunately, the Appraisers Office does not have the authority to extend this date. There is another appeal option available for taxpayers: https://jocogov.org/article/2020/04/03/13124

Payment Under Protest form: https://www.jocogov.org/sites/default/files/documents/TRE/PRApp.pdf

https://www.jocogov.org/dept/appraiser/home

https://www.jocogov.org/dept/treasury-and-financial-management/home

https://www.jocogov.org/dept/treasury-and-financial-management/real-estate-and-personal-property-tax/property-tax-forms

Update: Stimulus Payments and Social Security Recipients

Todd Laytham

The IRS has announced that Social Security recipients will automatically receive economic impact payments.

Those receiving Social Security benefits who don’t typically file a tax return will not need to file an abbreviated (simple) tax return to receive their stimulus payment.  The IRS will use information from Forms SSA-1099 and RRB-1099 to generate payments for these individuals. The payment will be sent as a direct deposit or check, however they normally receive their benefits.

From the IRS news release: “We want to ensure that our senior citizens, individuals with disabilities, and low-income Americans receive Economic Impact Payments quickly and without undue burden,” said Secretary Steven T. Mnuchin. “Social Security recipients who are not typically required to file a tax return need to take no action.”

Based on the latest information I have, the IRS still plans to offer an online portal for the purpose of collecting direct deposit information from taxpayers who have not provided it on their 2018 or 2019 tax return.

Providing account information is not required to receive a stimulus payment.

Checks will be mailed if deposit information is not available.

At this time, I haven’t received guidance regarding low-income taxpayers who are not required to file a return and don’t receive Social Security benefits. My best advice at this time is to wait for further information from the IRS.