by Tax News | Jul 12, 2025 | Tax Tips and News
An Identity Protection PIN (IP PIN) is a six-digit number issued by the IRS to safeguard your federal tax return from identity theft and fraud. It ensures that only you, or someone you authorize, can file a tax return using your Social Security Number or Individual Taxpayer Identification Number.
Why is an IP PIN Important?
Tax-related identity theft is on the rise, and fraudsters are constantly looking for ways to file false returns to claim refunds. An IP PIN acts as a lock on your tax account, blocking unauthorized returns. Without the correct IP PIN, the IRS will reject any e-filed return or delay the processing of paper returns with your SSN.
Who Should Get an IP PIN?
- Victims of tax-related identity theft
- Anyone who wants to proactively protect their tax return
- Taxpayers who want extra peace of mind during tax season
How to Get an IP PIN
You can obtain an IP PIN through the IRS’s Get an IP PIN tool. The process requires identity verification, including access to your tax and financial records. Once enrolled, you will receive a new IP PIN each calendar year.
Important Things to Remember
- Never share your IP PIN with anyone other than your trusted tax preparer.
- Keep your IP PIN in a secure place – it is valid for one year only.
- The IRS will never ask for your IP PIN via phone, email, or text.
- An IP PIN is not mandatory for most taxpayers but is available for added protection.
Adding an IP PIN to your tax filing routine is a simple step that provides strong protection against fraud. If you have not already, consider applying for one today!
– Article provided by Tax News.
by Tax News | Jul 11, 2025 | Tax Tips and News
Summer wedding bells may have just finished ringing, but tax season will be here before you know it. As newlyweds, it’s important to make a few key updates now to ensure a hassle-free tax filing experience next year. Here’s a quick IRS-backed checklist to help you start married life on a financially smart note.
1. Update Your Name with the SSA
If either of you changed your name, be sure to report it to the Social Security Administration (SSA). Your name and Social Security number must match on your tax return to avoid processing delays.
2. Update Your Address
Moved in together? Let the IRS and the U.S. Postal Service know your new address. Use IRS Form 8822 to notify the IRS directly.
3. Notify Employers
Make sure your employers update your name and address on W-2s. This ensures accurate reporting of your income.
4. Check Your Withholding
Your combined income may bump you into a higher tax bracket. Use the IRS Tax Withholding Estimator to make adjustments via Form W-4. Doing this now can prevent an unexpected tax bill later.
5. Decide How to File
Most couples benefit from filing jointly, but it’s worth considering both options. Filing separately might make sense if one spouse has significant medical expenses or miscellaneous deductions.
6. Consider the Bigger Picture
Buying a home? Starting a business? Adding dependents? All of these life changes come with tax implications. It’s a good time to speak with a tax professional to make a plan tailored for your new life together.
7. Protect Your Identity
Consider signing up for an IRS Identity Protection PIN (IP PIN). This extra step helps prevent tax-related identity theft.
Getting married is a huge milestone. Make sure your taxes reflect your new status to avoid surprises and potentially save money down the road. Congrats, and may your future be as financially smooth as your honeymoon was sweet!
The post Just Married? Here’s Your Tax Checklist for a Smooth Start appeared first on taxPRO Websites.
– Article provided by Tax News.
by Taxing Subjects | Jul 2, 2025 | Tax Tips and News
6 Practical Tips for Managing Difficult Tax Clients
Tax season can bring out the best—and worst—in your clientele. Stress, deadlines, and complex financial issues may cause some tax customers to act impatient, defensive, or outright combative. As a professional tax preparer, knowing how to handle difficult clients is essential for maintaining professionalism, protecting your time, and delivering accurate returns.
Here are six actionable tips for client management for tax preparers when dealing with difficult tax clients.
Set Clear Expectations Early
Before you prepare a single form, make sure your clients understand the scope of your services, timelines, required documents, and associated costs. Provide an onboarding packet or checklist that outlines what they need to bring. This reduces confusion and gives you a reference point if disputes arise.
Pro tip: Share Drake Software’s Client Tax Document Checklist to get clients organized early.
Use Calm, Assertive Communication
Difficult conversations are best handled with a calm tone and steady posture. When tensions rise, try not to match the client’s energy. Instead, use clear, direct language and reframe issues around solutions rather than blame.
Pro tip: Acknowledge the client’s position and present action items. For example, “I understand this is frustrating. Let’s look at what we can do next to resolve it.”
Don’t Skip Documentation
In any case where there’s a dispute or pattern of hostility, make sure you’re documenting conversations and decisions. Keep copies of email threads, engagement letters, and notes from phone calls. If needed, this can help protect you from liability or justify your decisions to the IRS.
Create Boundaries Around Availability
Managing clients during tax season requires time-blocking and structure. Let your clients know your office hours and how to reach you for urgent versus non-urgent needs. Establish boundaries for same-day turnaround and weekend availability — you can even include these details in your voicemail or email signature during peak season.
Empathize, But Stay Professional
Sometimes, tax clients are difficult because they’re anxious about refunds, audits, or unfiled returns. Acknowledge their emotions without taking on their stress. Keep the conversation focused on facts, not feelings.
Pro tip: For example, you could say, “It’s completely normal to feel overwhelmed. We’ll work through this step by step.”
Know When to Say Goodbye
If a client is consistently disrespectful, refuses to follow your advice, or becomes a liability, it may be time to disengage. You have the right to protect your practice and your peace of mind.
Use a disengagement letter to formally end the relationship, outline what work (if any) will be completed, and document how sensitive information will be disposed of on your end.
Ready to Reduce Stress with Your Clients?
Improve your workflow by downloading our Client Checklist to help your tax customers be prepared and reduce friction during intake.
– Article provided by Taxing Subjects.
by Taxing Subjects | Jun 3, 2025 | Tax Tips and News
After a few years of delays, the reporting threshold for third party settlement organizations (TPSOs) reported on a Form 1099-K has officially dropped in 2025. This significant change, which is not the only one affecting Forms 1099-K this year, could affect various kinds of tax situations in ways your clients might not expect.
What is the function of a Form 1099-K?
A Payment Settlement Entity (PSE) must file Form 1099-K annually to report payments made through payment card or third-party network transactions. A PSE:
- Includes merchant acquiring entities (like banks) that process credit/debit card payments.
- Includes TPSOs like payment apps that handle transactions between buyers and sellers.
- Does not include healthcare networks, in-house accounts payable departments, and automated clearinghouses.
A payment card includes credit, debit, or stored-value cards (e.g., gift cards), provided through an established card network. Anyone who receives payments via a payment card or from a TPSO is considered a participating payee.
While it is a reporting form, Form 1099-K does not specify how or whether the reported amounts should be taxed. It simply reports payment activity.
What are the new lowered reporting thresholds for Form 1099-K in 2025?
The IRS has implemented phased reductions in the reporting thresholds for TPSOs, which include payment apps and online marketplaces:
- 2024: TPSOs must report payments exceeding $5,000.
- 2025: The threshold decreases to $2,500.
- 2026 and beyond: A further reduction to $600.
This gradual decrease means more taxpayers will receive Form 1099-K.
What is the scope of Form 1099-K?
In addition to the threshold change, the scope of Form 1099-K has also expanded. The form is issued by payment settlement entities to report:
- Payments made via credit, debit, or stored-value cards.
- Payments settled through third-party networks exceeding the specified thresholds.
It’s essential to note that Form 1099-K reports gross payment amounts without accounting for adjustments such as fees, refunds, or discounts.
What is the impact on gig workers and online sellers?
Individuals engaged in gig work or online sales should be particularly vigilant. Even if income falls below the reporting threshold, all earnings must be reported on tax returns. The lowered thresholds aim to capture a broader range of income, emphasizing the importance of accurate record-keeping.
Are personal transactions subject to reporting requirements?
The IRS distinguishes between business transactions and personal payments. For instance, money received from friends or family as a personal gift or reimbursement is not subject to Form 1099-K reporting. However, payments received for goods or services sold are reportable and taxable.
Let Drake Software make your final push the easiest part of tax season.
Still looking for tax preparation software? It’s not too late to make the switch. Watch Drake Tax in action with a free trial or contact our Sales team for more information.
Note: For detailed information on Form 1099-K and its requirements, refer to the IRS guidelines.
– Article provided by Taxing Subjects.
by Taxing Subjects | Mar 21, 2025 | Tax Tips and News
In 2025, several significant natural disasters have impacted various regions across the United States. In response, the IRS has announced tax relief measures to support affected individuals and businesses. This article outlines the disasters and the corresponding tax relief provisions.
California Wildfires and Straight-Line Winds
Incident Period: January 7, 2025 – January 31, 2025
Affected Area: Los Angeles County, California
IRS Relief Measures:
- Extended Tax Relief for Southern California Wildfire Victims: Affected taxpayers have until October 15, 2025, to file federal individual and business tax returns and make tax payments. This extension applies to deadlines falling between January 7, 2025, and October 15, 2025 for those impacted by.
- Penalties Abatement: Penalties for payroll and excise tax deposits due between January 7 and January 22, 2025, are abated if the deposits were made by January 22, 2025.
Kentucky Severe Storms, Flooding, and Landslides
Incident Period: February 14, 2025, and continuing
Affected Area: Entire state of Kentucky
IRS Relief Measures:
- Extended Deadlines: Affected taxpayers have until November 3, 2025, to file federal individual and business tax returns and make tax payments. This extension applies to deadlines falling between February 14, 2025, and November 3, 2025.
- Penalties Abatement: Penalties for payroll and excise tax deposits due between February 14 and March 1, 2025, are abated if the deposits were made by March 1, 2025.
Hurricane Helene
Incident Period: September 1, 2024, and continuing
Affected Areas: Parts of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, and Tennessee
IRS Relief Measures:
- Extended Deadlines: Affected taxpayers have until May 1, 2025, to file federal individual and business tax returns and make tax payments. This extension applies to deadlines falling between September 1, 2024, and May 1, 2025.
- Penalties Abatement: Penalties for payroll and excise tax deposits due between September 1 and September 15, 2024, are abated if the deposits were made by September 15, 2024.
General Guidance for Affected Taxpayers
Automatic Application of Relief: The IRS automatically applies filing and payment relief to taxpayers with an IRS address of record in the disaster area. Those who moved to the area after filing their last return or whose records are located in the affected area should contact the IRS at 866-562-5227.
Claiming Disaster-Related Losses: Uninsured or unreimbursed disaster-related losses can be claimed on either the tax return for the year the loss occurred or the prior year. To claim these losses, file Form 4684, Casualties and Thefts, and attach it to your individual tax return (Form 1040). If claiming the loss for a prior year, file an amended return using Form 1040-X and include Form 4684. Remember to write the appropriate FEMA disaster declaration number on the forms (e.g., 4856-DR for the California wildfires).
Staying informed about disaster relief options is crucial for effective recovery. Tax professionals and preparers should monitor updates to assist clients in navigating these relief measures.
For further updates, please subscribe to Taxing Subjects.
Resources:
Note: The information provided is based on IRS announcements as of March 10, 2025. Affected taxpayers should consult the IRS or a tax professional for the most current guidance.
– Article provided by Taxing Subjects.
by Taxing Subjects | Feb 4, 2025 | Tax Tips and News
IRS Extends Tax Relief for Southern California Wildfire Victims
The IRS has announced significant tax relief measures for individuals and businesses affected by wildfires and straight-line winds in southern California. These relief measures extend federal tax filing and payment deadlines and provide additional tax benefits to help those impacted recover financially.
Who qualifies for relief?
The relief applies to any area designated by FEMA as part of the federal disaster area. Currently, this includes individuals and businesses in Los Angeles County. More counties may be added as FEMA updates its assessments. Taxpayers can verify eligible areas on the IRS Disaster Relief page.
What are the extended deadlines for filing and payments
Taxpayers in affected areas now have until October 15, 2025, to file federal tax returns and make payments for various deadlines that fall between January 7, 2025, and October 15, 2025. Key deadlines extended include:
- Individual income tax returns and payments (originally due April 15, 2025)
- 2024 IRA and HSA contributions
- Quarterly estimated tax payments due January 15, April 15, June 16, and September 15, 2025
- Quarterly payroll and excise tax returns due January 31, April 30, and July 31, 2025
- Partnership and S corporation returns (originally due March 17, 2025)
- Corporation and fiduciary returns (originally due April 15, 2025)
- Tax-exempt organization returns (originally due May 15, 2025)
Penalties for payroll and excise tax deposits due between January 7 and January 22, 2025, will be abated if the deposits are made by January 22, 2025.
How do my clients access disaster relief?
The IRS automatically applies relief to taxpayers with an IRS address of record in the disaster area. However, those who moved to the area after filing their return or whose necessary records are located in the disaster zone should contact the IRS at 866-562-5227.
Which forms do I need to file for my clients?
The forms required depend on the type of relief your client is claiming:
- For uninsured or unreimbursed disaster-related losses, file Form 4684, Casualties and Thefts, to calculate and report the casualty loss. Attach this form to your client’s individual tax return, typically Form 1040.
- If your client wants to claim the loss in the prior tax year, they will need to file an amended return using Form 1040-X and include Form 4684.
- Be sure to write the FEMA disaster declaration number on the forms (e.g., 4856-DR for the southern California wildfires).
What is the difference between a casualty loss and a casualty gain?
A casualty loss occurs when the cost of repairing or replacing damaged property exceeds the insurance reimbursement or other compensation received. This results in a deductible loss, subject to certain IRS limits.
On the other hand, a casualty gain happens when the insurance reimbursement or compensation received exceeds the property’s cost basis (original purchase price or adjusted value). In this case, the gain may be taxable unless it is deferred under special rules, such as reinvesting in similar property within a specific time frame.
For further clarification or assistance with filing disaster-related taxes, consult IRS Publication 547.
Are there any additional relief options?
The IRS offers additional relief for affected taxpayers, including:
- Disaster-related loss deductions: Uninsured or unreimbursed disaster-related losses can be claimed on either the 2024 or 2025 tax return. Be sure to include FEMA declaration number 4856-DR when filing.
- Exclusion of disaster relief payments from gross income: Payments for necessary personal, family, or property expenses may be excluded from taxable income. Refer to Publication 525 for details.
- Retirement plan relief: Affected taxpayers may qualify for penalty-free disaster distributions or hardship withdrawals from IRAs or other retirement accounts.
Does insurance claim money count as taxable income?
Generally, insurance claim money received for disaster-related losses is not taxable if it is used to restore or replace damaged property. However, if the reimbursement exceeds the original cost of the property, the excess may result in a casualty gain, which could be taxable. Clients should keep detailed records of both the insurance claims and their expenses for repairs or replacements to ensure proper reporting.
Supporting Disaster Recovery
Tax professionals and preparers should stay updated on disaster relief options to support clients effectively. Visit the IRS website for ongoing updates about eligible areas and new measures.
Subscribe to the Drake Tax Taxing Subjects blog for more news and updates like this overview of IRS tax relief options for southern California wildfire victims.
The IRS relief measures are part of a coordinated federal response to assist disaster-affected communities. For additional resources and assistance, visit DisasterAssistance.gov.
– Article provided by Taxing Subjects.
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