NEW DUE DATES
September 15, 2020
3rd quarter estimated tax payments due for IRS and many states
Extended income tax returns due for corporations and partnerships
Please plan to send me any remaining documentation by Sept. 15th to complete 2019 extended individual tax returns.
September 30, 2019
Extended income tax returns due for trusts
October 15, 2020
Extended 2019 individual returns due for IRS and many states (Nov. 1 for Virginia)
|
MINI-REFUNDS
In the next couple of months, some taxpayers will receive small checks or direct deposits from the IRS, most less than $30. This is due to a rule that requires the IRS to pay interest on any refunds paid more than 45 days after the return is filed.
Due to the extended deadline this year, many people filed between April 15th and July 15th, but IRS must still pay interest on refunds sent out during this time as if the return had been filed by April 15th.
So, if you receive some interest from IRS for tax year 2019, it is not in error--feel free to spend it!
|
|
IRS has acknowledged that, due to increased safety protocols surrounding COVID-19, they are running behind on processing the mail that is piling up in trailers outside their facilities--this includes paper returns, notice responses and especially payments. This problem exists for many state taxing authorities as well. Several of my clients have received notices stating they still have a balance due, even though they mailed a check on time.
This Accounting Today article details the issue and the official IRS guidelines: do not cancel any checks you have mailed to taxing authorities, disregard balance-due notices if you know you have paid, and wait for longer than usual before contacting the IRS about any recently filed returns. They will count payments as being made on the date they received the check, not the date it was cashed, so you will not incur lateness penalties. If you already cancelled an uncashed check, IRS will not charge a fee for the bad check, but do make the payment again as soon as possible.
Paying online is the best way to ensure your payment is processed immediately: here is the IRS payment portal, where you can also pay estimated taxes and installment plans.
Otherwise, for the moment we will just have to wait for IRS to finish processing 2019 returns, and then any erroneous balances due in their records should be corrected. Let me know if you receive any other IRS notice and are unsure what it is regarding.
|
We have all been spending more time at home lately, and many people have found a side project that earns them some income. Though we always need to report this taxable income, how it is reported and whether we can take certain deductions depends on whether the work is an actual business, or just a hobby.
On this page, IRS lists nine good questions to ask when determining whether your side income is a business or a hobby. There are several factors to consider when defining a business or hobby, mostly revolving around whether you are set up to make a profit. A reasonable loss is allowed in the first year of a business, but several years of taking business deductions without netting any income will look suspicious to IRS.
When we begin preparation of your 2020 tax returns, list any income from new sources for me and, if you believe it should count as a business, any business-related expenses. If you are making a significant amount of income at a new self-employed job, please contact me now so we can determine whether you should be paying any estimated taxes in advance.
|
|