by | Dec 27, 2021 | Tax Tips and News
As recovery efforts spread across parts of the south in the wake of the December 10 tornadoes, the Internal Revenue Service is expanding its effort to give affected taxpayers in the region a helping hand.
The IRS has expanded its previously issued relief package to now encompass affected taxpayers not only in Kentucky, but also in Tennessee and Illinois.
This means taxpayers within the federal disaster area as declared by the Federal Emergency Management Agency (FEMA)—whether they were hit by tornadoes, severe thunderstorms or floods—can receive the same tax breaks and revised deadlines as Kentucky storm victims.
Those who live or own a business in specified counties in Illinois and Tennessee are due the same relief measures as affected taxpayers in Kentucky.
Illinois:
- Bond
- Cass
- Coles
- Effingham
- Fayette
- Jersey
- Macoupin
- Madison
- Montgomery
- Morgan
- Moultrie
- Pike
- Shelby
Tennessee:
- Cheatham
- Decatur
- Dickson
- Dyer
- Gibson
- Lake
- Obion
- Stewart
- Weakley
The IRS says it will provide the same measure of relief to any taxpayer once their county is added to the federal disaster declaration.
To access a complete up-to-date list of eligible counties and other locations, see the IRS disaster relief webpage on the IRS site.
What are the terms of the relief?
The IRS relief package basically gives qualified taxpayers within the now-expanded federal disaster area until May 16, 2022, to file and pay a whole array of federal taxes. The relief applies to individuals and businesses alike.
Some of the taxes that now have a May 16 deadline for taxpayers within the disaster area include:
- 2021 individual income tax returns that would otherwise be due April 18;
- 2021 business returns that are normally due in March and April;
- Quarterly estimated income tax payments that would ordinarily be due January 18 and April 18 (individuals can skip their January fourth-quarter estimated tax payment and simply include it with their 2021 return when they file);
- Quarterly payroll and excise tax returns otherwise due on January 31 and May 16.
For a complete list of returns, payments and other tax-related actions that qualify for additional time to file or pay, see the IRS disaster relief webpage.
No action is required to receive the tax relief
The terms of the IRS relief package are automatic; that is, they are in force for any qualified taxpayers who live or work within the bounds of the federal disaster area. As counties are added to the disaster area, so are they added to the IRS relief package.
No need for taxpayers to call the IRS and ask if they qualify for relief; IRS systems are programmed to check the taxpayer’s address on record and automatically apply the terms of relief if the address is within the disaster area.
Taxpayers who are within the disaster area, however, and get a notice of late filing or late payment with a due date that falls within the December 10—May 16 time frame, should call the number printed on the notice to have the penalty abated.
Individual taxpayers and businesses who suffered uninsured or unreimbursed losses in the disaster can choose to claim their losses one of two ways: taxpayers can either claim these losses in the year they occurred (the 2021 return filed next year) or on the return for the prior year—in this case, 2020.
No matter which way the losses are claimed, Illinois taxpayers should write the FEMA declaration number 3577EM on their return making a claim. Tennessee taxpayers should use declaration number 3576EM.
Publication 547, Casualties, Disasters and Thefts, has additional information on how to claim a loss from natural disasters.
For more information on disaster recovery and the federal government’s coordinated response to the storms, visit DisasterAssistance.gov.
Source: IR-2021-252
– Story provided by TaxingSubjects.com
by | Dec 21, 2021 | Tax Tips and News
As the phrase goes, all good things come to an end, and the Internal Revenue Service is saying just that about the advance payments of the Child Tax Credit, or CTC.
In December, families who have qualified for the advance payments of the credit will get their final installment of the advance payments.
The party, however, is only half over.
Qualified taxpayers get to claim the other half of the total tax credit on their 2021 income tax return that’s filed in the new year. Since it’s a refundable credit, they’ll get the refund even if they don’t owe any tax due.
The advance payments of the CTC are ending
The last batch of advance payments—most of them arriving via direct deposit—are going out to more than 36 million American families and total some $16 billion.
The advance payments of the credit were made possible by the American Rescue Plan legislation, which allowed more than 200 million payments worth a total of $93 billion. For those families that qualified, each advance payment could be up to $300 per month for each child under age 6, and up to $250 per month for each child age 6 through 17.
Some details on the December payments include:
- Families will see the direct deposit payments in their accounts starting December 15. Like the prior payments, the vast majority of families will receive them by direct deposit.
- For those receiving payments by paper check, be sure to allow extra time, through the end of December, for delivery by mail.
- Payments are going to eligible families who filed a 2019 or 2020 federal income tax return. Returns processed by December 1 are reflected in these payments. This includes people who don’t typically file a return but either during 2020 successfully filed a return to register for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov, or in 2021 successfully filed a return by using the Non-filer Sign-up Tool for advance CTC.
- Families who did not get a July, August, September, October or November payment and are getting their first monthly payment this month will still receive their total advance payment amount for the year (which is half of their total Child Tax Credit). This means that the total advance payment amount will be made in one December payment.
File to get the rest of the credit
Qualified taxpayers who didn’t get any advance payments of the Child Tax Credit can still claim the full amount of the credit by filing a 2021 federal income tax return, which is due in April.
Those taxpayers who received advance CTC payments have to file a 2021 income tax return to claim the remaining half of the credit. In so doing, they’ll compare the advance Child Tax Credit payments they got in 2021 with the total amount of the CTC the are qualified to claim.
The IRS says it will send out Letter 6419 in January, telling taxpayers the total amount of advance Child Tax Credit payments they received and the number of qualified children that were claimed to get the credit.
Taxpayers should keep this letter and file it with their other tax records.
For more information, visit Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return on the IRS website. Other resources can be found on the IRS special advance CTC 2021 page, also on IRS.gov.
Source: IR-2021-249
– Story provided by TaxingSubjects.com
by | Dec 21, 2021 | Tax Tips and News
The Internal Revenue Service has put a little more cushion into its standard mileage rates, so taxpayers won’t have such a big bite taken out of their pockets by fuel prices.
The rates for 2022, which take effect on January 1, will be used to figure the deductible cost of operating a vehicle for business, charitable, medical or moving purposes.
The 2022 standard mileage rates cover the use of a car as well as vans, pickups or panel trucks:
- 58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021,
- 18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021 and
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.
Business rates are based on an annual IRS study of the costs, both fixed and variable, of operating an automobile. The rates for medical purposes and moving purposes are both based on variable costs.
It’s a different deduction landscape
Taxpayers need to remember that what they can deduct from their taxes is a shorter list than it used to be. The Tax Cuts and Jobs Act, for example, also did away with the miscellaneous itemized deduction for unreimbursed employee expenses.
Also gone is the deduction for moving expense due to a new job. Now, that deduction is limited to active duty members of the Armed Forces who move under orders to a permanent change of station. See Moving Expenses for Members of the Armed Forces for more details.
The IRS reminds taxpayers that they can always opt to calculate the actual costs of using their vehicle, rather than using the standard mileage rates.
Taxpayers have to use the standard mileage rate in the first year their car is available for business use. After that, they can use either the standard mileage rate or actual expenses. If the vehicle is leased, however, they’re locked into the standard mileage rate for the entire lease period—including renewals—if that’s what the taxpayer chose at the beginning of the lease process.
The optional standard mileage rates and the maximum vehicle cost to figure the allowance under the Fixed and Variable Rate (FAVR) plan, are contained in Notice 22-03, which also contains other vehicle-related information.
Source: IR-2021-251
– Story provided by TaxingSubjects.com
by | Dec 21, 2021 | Tax Tips and News
How do you protect your tax business from cybersecurity threats?
The months leading up to filing season are packed with studying tax law changes, learning software updates, training seasonal staff, and—of course—the holidays. During the pre-season hustle, it’s easy to forget one of the most important ingredients for a successful tax business: an up-to-date data security plan.
To help tax professionals get the information they need to avoid the latest data security threats, Drake Software sponsored a webinar hosted by Right Networks Director of Firm Technology Strategy Roman Kepczyk, CPA, CITP, CGMA—who has also been a technology consultant for more than 400 CPA firms.
In “Cyber Security Essentials for Tax & Accounting Firms,” Kepczyk covers a number of critical topics:
- In the News: Cyber Headlines
- Threat Awareness
- Cyber Security-It’s the Law!
- Proactive Solutions
- What to Do if You Suspect a Breach
- Minimize Your Firm’s Exposure
To watch the webinar, visit RightNetworks.com/Webinar-Archive-Cybersecurity-Essentials.
– Story provided by TaxingSubjects.com
by | Dec 18, 2021 | Tax Tips and News
Drake Software, LLC (“Drake”) is aware of the recently disclosed Apache Log4j Remote Code Execution Vulnerability, and has taken the following steps to ensure the continued protection of its operations and customers.
Actions
Upon receiving cybersecurity threat intelligence reports last week regarding this vulnerability, Drake’s Operations and Cybersecurity teams began investigating potential impacts to our systems, products, and services and implementing proactive risk mitigations. The following are examples of some of the actions taken:
- Information about the Apache Log4j vulnerability was collected from sources such as the Cybersecurity & Infrastructure Security Agency, Apache Software Foundation, and crowdsourced data collected on Github
- Potential use of Log4j in Drake’s software products was assessed
- Drake network perimeter defenses were tuned to explicitly identify and block log4j exploit attempts
- Potential exposures in third-party software, systems, and services were investigated
- Drake’s security event tracking and alerting system was configured to alert on log4j exploit attempts and indicators of system compromise
- Daily security vulnerability scans were configured to hunt for vulnerable systems within Drake’s networks
- A third-party cybersecurity consulting team was brought in to perform external security testing
Results of Analysis
- Products
- Drake’s products are not directly susceptible to the Log4j vulnerability. Drake does not incorporate Log4j code into the software it develops, nor does it use log4j for logging functions in online products.
- Administrative Infrastructure
- Some third-party software products used in Drake’s internal operations were identified as having potential exposures. These systems were, and continue to be, isolated from Internet exposure, and have been scheduled for patching as vendors release their fixes. Drake has found no indication of system compromise associated with the Log4J vulnerabilities in Drake’s environment.
- Third-party Service Providers
- Drake has found no indication that third-party services, relied upon by Drake, have had a compromise associated with the Log4J vulnerabilities.
Ongoing Vigilance
Drake expects this issue to evolve over time, and will continue to actively monitor internal operations and third-party software, system, and service provider advisories, as well as apply additional recommended mitigations as necessary.
– Story provided by TaxingSubjects.com
by | Dec 17, 2021 | Tax Tips and News
The Internal Revenue Service is moving quickly to do its part in relief efforts targeting tornado victims in Kentucky.
Around December 10, Kentucky residents were hit by a trifecta of terror: tornadoes, severe thunderstorms and flooding. Many small communities were nearly wiped off the map; unfortunately, casualties are still being counted.
The IRS says taxpayers in the affected areas now have until May 16, 2022, to file various tax returns and make tax payments. The extended deadline applies to all taxpayers within the current federal disaster area as declared by the Federal Emergency Management Agency (FEMA), which presently covers Caldwell, Fulton, Graves, Hopkins, Marshall, Muhlenberg, Taylor, and Warren counties.
The IRS says additional counties, once they are included in the disaster declaration by FEMA, will automatically be added to the tax relief package—even if those locations are in neighboring states.
What does the tax relief do?
This tax relief package postpones various deadlines for filing and paying taxes that would have been due starting on December 10. Qualified taxpayers, both individual and business, now have until May 16 to file their returns and pay any taxes that were originally due during the December 10-to-May 16 time frame.
Since 2021 individual income tax returns are ordinarily due April 18 next tax season, the IRS relief package pushes that deadline back to May 16 for the Kentucky storm victims. This would include business return filers who would otherwise have 2021 returns due on March 15 and April 18.
Here are some other provisions of the Kentucky relief package:
- Farmers who choose to skip making estimated tax payments and who usually file their returns by March 1 have until the May 16 deadline to file their 2021 return and pay any tax due;
- Taxpayers in the disaster area have until May 16 to make their 2021 IRA contributions;
- Taxpayers making estimated tax payments can skip their fourth-quarter tax payment normally due on Jan. 8, 2022, and simply include that payment with the 2021 return when they file on May 16;
- Businesses’ quarterly payroll and excise tax returns due January 31 and May 2 now also have a May 16 due date;
- If taxpayers receive penalty notices on payroll and excise tax deposits normally due between December 10 and December 27, those penalties will be abated by the IRS – as long as the deposits are made by December 27.
For more information on a wide variety of returns, payments and other tax-related actions that qualify for the extended deadline, visit the IRS website’s disaster relief page. It’s also the source for the most up-to-date list of counties and states included in the FEMA disaster declaration.
There’s no action needed from taxpayers
The provisions of the IRS relief package are automatic; that is, taxpayers do not have to contact the IRS to either register for relief or to make sure they qualify. IRS systems automatically make that determination, based on the taxpayer’s address of record on file with the agency.
Taxpayers in the disaster area should remember, however, if they get a late-filing or late-payment notice from the IRS with a filing, payment or deposit due date that falls within the December 10—May 16 postponement time frame, they should contact the IRS at the number printed on the notice to have the penalty abated.
Those taxpayers claiming a loss on their taxes from the tornadoes and other storms in the disaster area have two ways to make a claim of uninsured or unreimbursed losses.
Taxpayers can either claim the storm losses in the year that they occurred—meaning 2021 return now due from storm victims by May 16—or they can claim the loss on the return for the prior year, which would be 2020 in this case.
No matter which method taxpayers choose, they should write the FEMA declaration number 4630DR on any return claiming a loss. Publication 547 has details on claiming a disaster-related loss.
For more information on the federal government’s coordinated response to these storms and disaster recovery, visit DisasterAssistance.gov.
Source: IR-2021-248
– Story provided by TaxingSubjects.com
![Cyber Security Essentials for Tax & Accounting Firms [Webinar]](https://arnoldandcompany.com/wp-content/uploads/2021/12/cyber-security-essentials-for-tax-accounting-firms-webinar.png)
Arnold & Company, LLC