What is a substitute return?

If an individual has taxable income but doesn’t file a return, the IRS can prepare one under its “Substitute for Return” program. In one case, a man received $55,738 in retirement payments and $40 in interest one year but didn’t file a return or pay tax. The IRS prepared a return and informed him that […]

Live outside the US, then file by June 15

The IRS is reminding U.S. citizens and resident aliens that worldwide income (including wages, unearned income and tips) is subject to U.S. income tax, regardless of where taxpayers live or earn income. If you live outside the U.S. or Puerto Rico, you have an automatic two-month filing extension to June 15, 2023. But even with […]

Tax Court dismisses case brought by Whistleblower

A person who provides information about unpaid federal tax to the IRS Whistleblower Office (WBO) may qualify for a cash award. The information must be specific, credible and lead to the collection of tax. One tipster claimed that over 200 fast-food restaurants connected to a franchisor were “skimming cash off sales and not reporting the […]

How big is the tax gap?

The “tax gap” is the difference between the amount of tax owed for a tax year and the amount that’s actually paid on time and voluntarily. How big is it? The Treasury Inspector General for Tax Administration (TIGTA) conducted an audit “to assess the IRS’s process for developing the tax gap estimates.” TIGTA found issues […]

Retirement saving options for your small business: Keep it simple

If you’re thinking about setting up a retirement plan for yourself and your employees, but you’re worried about the financial commitment and administrative burdens involved, there are a couple of options to consider. Let’s take a look at a “simplified employee pension” (SEP) or a “savings incentive match plan for employees” (SIMPLE). SEPs are intended […]

Update on the new Form 1099-K requirements

Can the IRS handle the influx of returns that the new Form 1099-K reporting requirements are expected to generate? Two Republican House Ways and Means Committee members have asked the Government Accountability Office to examine just that. Under the American Rescue Plan Act, third-party settlement organizations, such as PayPal, must file Forms 1099-K with the […]

Myths about filing tax returns

The IRS is on a mission to separate fact from fiction. Specifically, it wants to debunk common myths about filing tax returns, finding refund information and adjusting withholding. First a few facts about this year’s filing season: nine out of 10 refunds were issued within 21 days; as of March 31, the IRS had issued […]

Paperwork you can toss after filing your tax return

Once you file your 2022 tax return, you may wonder what personal tax papers you can throw away and how long you should retain certain records. You may have to produce those records if the IRS audits your return or seeks to assess tax. It’s a good idea to keep the actual returns indefinitely. But […]

New IRS ruling limits deduction and research and experimental expenses

According to a new IRS ruling, after July 31, 2023, businesses may no longer file refund claims or amended returns to deduct research or experimental expenses they failed to deduct in a prior year. The IRS’s reasoning is that Revenue Ruling 58-74 didn’t explain whether taxpayers consistently treated the costs of research and experimental expenses […]

Tennessee storm tax relief

The IRS has provided tax relief to victims of storms in Tennessee that began on March 31, 2023. Taxpayers in the disaster area now have until July 31, 2023, to file various tax returns and to make tax payments. Taxpayers who reside or have a business in the following counties qualify for this tax relief: […]