by MEA Tax Advisors | Sep 30, 2020 | Tax Tips and News
Taxpayers affected by Hurricane Sally have been given tax relief by the Internal Revenue Service. They now have until Jan. 15, 2021 to file various individual and business returns and make payment of tax due.
The IRS is offering the relief to areas designated qualified for individual disaster assistance by the Federal Emergency Management Agency (FEMA). At present, Baldwin, Escambia and Mobile counties in Alabama have been so designated, but taxpayers in locations that are added later to the disaster declaration – whether in Alabama or other neighboring states – will automatically get the same filing and payment relief.
The current list of eligible locations is always available on the disaster relief page on IRS.gov.
The tax relief postpones various tax filing and payment deadlines that occurred, starting on Sept. 14, 2020. As a result, affected individuals and businesses will have until Jan. 15, 2021, to file returns and pay any taxes that were originally due during this period.
This means individuals who had a valid extension to file their 2019 return due to run out on Oct. 15, 2020, will now have until Jan. 15, 2021, to file.
The IRS notes, however, that because tax payments related to these 2019 returns were due on July 15, 2020, those payments are not eligible for this relief.
Quarterly tax payments were extended.
The Jan. 15, 2021 deadline also applies to quarterly estimated income tax payments due on September 15, 2020, and the quarterly payroll and excise tax returns normally due on November 2, 2020. It also applies to tax-exempt organizations that operate on a calendar-year basis that had a valid extension due to run out on November 16. Businesses with extensions also have additional time including, among others, calendar-year corporations whose 2019 extensions run out on October 15.
In addition, penalties on payroll and excise tax deposits due on or after Sept. 14 and before Sept. 29 will be abated as long as the deposits are made by September 29.
For details on other returns, payments and tax-related actions qualifying for the additional time, see the IRS disaster relief page on IRS.gov.
Do not call the IRS!
The IRS automatically applies filing and penalty relief to any taxpayer with an address on file with the agency that’s located within the disaster area. Taxpayers don’t need to contact the IRS in order to get the relief.
If a taxpayer within the disaster area gets a late-filing or late-payment penalty notice from the IRS with an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer can call the phone number on the notice to have the penalty abated.
The IRS will also work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the disaster area.
Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
How do you claim disaster-related losses?
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2020 return normally filed next year), or the return for the prior year (2019).
Taxpayers should write the FEMA declaration number – 4563 − for Hurricane Sally in Alabama on any return claiming a loss. Publication 547 has details.
Source: “IRS provides tax relief for victims of Hurricane Sally; Oct. 15 deadline, other dates extended to Jan. 15“
– Story provided by TaxingSubjects.com
by MEA Tax Advisors | Sep 24, 2020 | Tax Tips and News
American agriculture is in the grip of a major drought, with many farmers and ranchers forced to sell off major portions of their herds to avoid starvation.
While the Internal Revenue Service can’t make it rain, the IRS can give struggling livestock producers other kinds of relief.
New measures give producers more time to replace the livestock they were forced to sell off while deferring tax on gains from the forced sales.
Who qualifies?
To qualify for relief, the farm or ranch must be in a county or other jurisdiction that’s been designated eligible for federal assistance, or contiguous to a designated county. Notice 2020-74 lists applicable regions in some 46 states, the District of Columbia, and four U.S. territories.
Generally, the relief applies to capital gains realized by eligible farmers an ranchers on sales of livestock held for draft, dairy, or breeding purposes. Sales of other livestock – such as animals raised for slaughter or held for sporting purposes, or poultry – aren’t eligible.
Qualifying sales must be solely due to drought, flooding, or some other severe weather that caused the region to be designated as eligible for federal assistance.
Livestock generally has to be replaced within a four-year period, rather than the usual two-year period. The IRS is also authorized to extend the replacement period even more if the drought continues.
The notice outlines that the one-year extension gives eligible producers until the end of the tax year after the first drought-free year to replace livestock lost in forced sales. Details – including an example of how the provision works – is available in Notice 2006-82, available on IRS.gov.
What is the window of eligibility?
The IRS provides the extension to farms and ranches located in the applicable region that qualified for the four-year replacement period if any county included in the applicable region is listed as suffering exceptional, extreme or severe drought during any week between Sept. 1, 2019, and Aug. 31, 2020.
The determination is made by the National Drought Mitigation Center.
The upshot of all this is that qualified farmers and ranchers whose drought-sale replacement period was slated to expire at the end of this year, Dec. 31, 2020 in most cases, now have until the end of their next tax year.
Because the normal drought-sale replacement period is four years, the extension immediately impacts drought sales that took place in 2016. The replacement periods for some drought sales before 2016 are also affected, due to previous drought-related extensions affecting some of those localities.
For more information on reporting drought sales and other farm-related tax issues, check out Publication 225, Farmer’s Tax Guide, on IRS.gov.
Source: IR-2020-219
– Story provided by TaxingSubjects.com
by MEA Tax Advisors | Sep 21, 2020 | Tax Tips and News
Some nine million letters are being sent later this month in a special mailing to people who haven’t had a need to file a tax return but may qualify for a Economic Impact Payment (EIP). The letters will encourage them to see if they’re eligible for an EIP.
The notices also let the recipients know there’s an Oct. 15 deadline to register for an EIP, and they can use the special Non-Filers: Enter Payment Info Here tool on IRS.gov to do it.
“The IRS continues to work hard to reach people eligible for these payments,” said IRS Commissioner Chuck Rettig. “These mailings are the latest step by the IRS to reach as many people as possible for these important payments. We are releasing this state-by-state information so that state and local leaders and organizations can better understand the size of this population in their communities and assist them in claiming these important payments. Time is running out to claim a payment before the deadline.”
The letters are part of a final stage of the IRS’s outreach and public awareness campaign on the Economic Impact Payments that started in March. The effort included IRS reaching out to thousands of partner groups across the country—including partner groups working with underserved communities, people experiencing homelessness, and those whose primary language isn’t English.
So far, the IRS says some seven million people have already used the Non Filers Tool to register for a payment.
The September letters will be sent from an IRS address and will be sent to people who haven’t filed a return for either 2018 or 2019. IRS research shows these are people who don’t typically have a tax return filing requirement because they appear to have very low incomes based on Forms W-2 and 1099, and other third-party statements available to the IRS.
The IRS cautions that receiving a letter is not a guarantee of eligibility. An individual is likely eligible for an Economic Impact Payment if they:
- are a U.S. citizen or resident alien;
- have a work-eligible Social Security number; and
- can’t be claimed as a dependent on someone else’s federal income tax return.
For more information on eligibility requirements, see the Economic Impact Payment eligibility FAQs on IRS.gov.
The IRS has released a state-by-state breakdown of the non-filer letters to be mailed. California leads the pack with 1.18 million letters to be received by the state’s citizens. Wyoming and Vermont hold down the smallest part of the spectrum, with 14,000 and 13,000 recipients respectively.
Who needs to file?
The IRS emphasizes that anyone required to file either a 2018 or 2019 tax return should file the tax return and not use the Non-Filers Tool. The online tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are homeless.
Those unable to access the Non-Filers Tool may submit a simplified paper return following the steps described in the Economic Impact Payment FAQs on IRS.gov.
Anyone using the Non-Filers Tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.
Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.
– Story provided by TaxingSubjects.com
by MEA Tax Advisors | Sep 19, 2020 | Tax Tips and News
Many Oregon taxpayers are dealing with the damage caused by recent wildfires and severe storms. While victims have been forced to flee their homes beneath a smoky, orange sky, at least they have one less thing to worry about: The looming October 15 tax extension deadline.
The Internal Revenue Service yesterday announced, “Victims of the Oregon wildfires and straight-line winds that began on September 7 now have until January 15, 2021 to file various individual and business tax returns and make tax payments.” Here’s a list of some tax-related deadlines that are affected by the relief:
- September 15 quarterly estimated income tax payments
- October 15 individual income tax extensions
- October 15 calendar-year corporation extensions
- November 2 excise tax payments
- November 16 calendar-year tax-exempt extensions
The IRS also says that “penalties on payroll and excise tax deposits due on or after September 7 and before September 22 will be abated as long as the deposits are made by September 22, 2020.” Keep in mind that this tax relief does not apply to the July 15 tax payment deadline.
Who qualifies for tax relief due to Oregon wildfires and straight-line winds?
You can qualify for the new tax extension deadline if the Federal Emergency Management Agency has officially declared where you live to be a “disaster area.” Currently, the following counties have been identified for tax relief:
- Clackamas
- Douglas
- Jackson
- Klamath
- Lane
- Lincoln
- Linn
- Marion
Be sure to bookmark “Tax Relief in Disaster Situations” on the IRS website for the most up-to-date list of affected areas. As with other natural disasters, the areas eligible for relief may grow depending on the path taken by the fire and storms. Even if no further damage is caused, FEMA can still continue to identify areas for relief as they continue surveying the situation.
What do I have to do to qualify for wildfire tax relief in Oregon?
If the address on record with the IRS falls inside a disaster area, you don’t have to do anything to benefit from the new deadlines. That isn’t to say that people won’t receive late-filing notices from the IRS. In that case, the IRS says “the taxpayer should call the number on the notice to have the penalty abated.”
Relief workers, charities, and taxpayers who have business dealings inside the disaster area may also qualify for tax relief. These individuals and organizations will need to call 866.562.5227 to speak with IRS representatives to receive tax relief.
Is tax relief available for other disaster areas?
Since hurricanes, tornadoes, and earthquakes seem to be a permanent fixture in national headlines, it’s important to remember that this tax relief generally becomes available whenever any large-scale natural disaster strikes. If you are the victim of a recent natural disaster, visit the IRS disaster relief page to see if your area has received tax relief.
Source: IR-2020-215
– Story provided by TaxingSubjects.com
MEA Tax Advisors