September 2022 – Larson Accounting Group

30 de September de 2022

FL-2022-19, September 29, 2022
WASHINGTON — Victims of Hurricane Ian that began September 23 in Florida now have until February 15, 2023, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

Following the recent disaster declaration issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain areas will receive tax relief.

Individuals and households affected by Hurricane Ian that reside or have a business anywhere in the state of Florida qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after September 23, 2022, and before February 15, 2023, are postponed through February 15, 2023.

This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until February 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.

The February 15, 2023, deadline applies to the quarterly estimated tax payments, normally due on January 17, 2023 and to the quarterly payroll and excise tax returns normally due on October 31, 2022, and January 31, 2023. Businesses with an original or extended due date also have the additional time, including calendar-year corporations whose 2021 extensions run out on October 17, 2022.

Penalties on payroll and excise tax deposits due on or after September 23, 2022, and before October 10, 2022, will be abated as long as the tax deposits are made by October 10, 2022.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty. For information on services currently available, visit the IRS operations and servicespage at IRS.gov/coronavirus.

The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The localities listed above constitute a covered disaster area for purposes of Treas. Reg. §301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses (including tax-exempt organizations) whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Under section 7508A, the IRS gives affected taxpayers until February 15, 2023 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employment and certain excise tax returns), that have either an original or extended due date occurring on or after September 23, 2022, and before February 15, 2023, will be abated as long as the tax deposits were made by February 15, 2023.

Affected taxpayers that have an estimated income tax payment originally due on or after September 23, 2022, and before February 15, 2023, will not be subject to penalties for failure to pay estimated tax installments as long as such payments are paid on or before February 15, 2023.

The IRS also gives affected taxpayers until February 15, 2023, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2018-58, 2018-50 IRB 990 (December 10, 2018), that are due to be performed on or after September 23, 2022, and before February 15, 2023, are postponed through February 15, 2023.

This relief also includes the filing of Form 5500 series returns that were required to be filed on or after September 15, 2022, and before February 15, 2023, are postponed through February 15, 2023, in the manner described in section 8 of Rev. Proc. 2018-58. The relief described in section 17 of Rev. Proc. 2018-58, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

Unless an act is specifically listed in Rev. Proc. 2018-58, the postponement of time to file and pay does not apply to information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series; to Forms 1042-S, 3921, 3922 or 8027; or to employment and excise tax deposits. However, penalties on deposits due on or after September 23, 2022, and before October 10, 2022, will be abated as long as the tax deposits were made by October 10, 2022.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. See Publication 547 for details.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684, Casualties and TheftsPDF and its instructions.PDF

Affected taxpayers claiming the disaster loss on their return should put the Disaster Designation, “FL Hurricane Ian” in bold letters at the top of the form. Be sure to include the FEMA disaster declaration number, DR-4673-FL– on any return. See Publication 547 for details.

Other Relief

The IRS will waive the usual fees and requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation “FL Hurricane Ian” in bold letters at the top of Form 4506, Request for Copy of Tax ReturnPDF, or Form 4506-T, Request for Transcript of Tax ReturnPDF, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. Taxpayers may download forms and publicationsfrom the official IRS website, IRS.gov.

Source: IRS

by Larson Accounting

28 de September de 2022

The Internal Revenue Service today reminded struggling individuals and businesses, affected by the COVID-19 pandemic, that they may qualify for late-filing penalty relief if they file their 2019 and 2020 returns by September 30, 2022.

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

“We thought carefully about the type of penalties, the period covered and the duration before granting this penalty relief. We understand the concerns being raised by the tax community and others about the September 30 penalty relief deadline,” said IRS Commissioner Chuck Rettig. “Given planning for the upcoming tax season and ongoing work on the inventory of tax returns filed earlier this year, this penalty relief deadline of September 30 strikes a balance. It is critical to us to not only provide important relief to those affected by the pandemic, but this deadline also allows adequate time to prepare our systems and our workstreams to serve taxpayers and the tax community during the 2023 filing season.”

The relief, announced last month, applies to the failure-to-file penalty. The penalty is typically assessed at a rate of 5% per month, up to 25% of the unpaid tax, when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted on IRS.gov.

For anyone who has gotten behind on their taxes during the pandemic, this is a great opportunity to get caught up. To qualify for relief, any eligible income tax return must be filed on or before September 30, 2022.

Those who file during the first few months after the September 30 cutoff will still qualify for partial penalty relief. That’s because, for eligible returns filed after that date, the penalty starts accruing on October 1, 2022, rather than the return’s original due date. Because the penalty accrues, based on each month or part of a month that a return is late, filing sooner will limit any charges that apply.

Unlike the failure-to-file penalty, the failure-to-pay penalty and interest will still apply to unpaid tax, based on the return’s original due date. The failure-to-pay penalty is normally 0.5% (one-half-of-one percent) per month. The interest rate is currently 5% per year, compounded daily, but that rate is due to rise to 6% on October 1, 2022.

Taxpayers can limit these charges by paying promptly. For more information, including details on fast and convenient electronic payment options, visit IRS.gov/payments. Penalty and interest charges generally don’t apply to refunds.

The notice also provides details on relief for filers of certain international information returns when a penalty is assessed at the time of filing. No relief is available for applicable international information returns when the penalty is part of an examination. To qualify for this relief, any eligible tax return must be filed on or before September 30, 2022.

Penalty relief is automatic. This means that eligible taxpayers who have already filed their return do not need to apply for it, and those filing now do not need to attach a statement or other documents to their return. Generally, those who have already paid the penalty are getting refunds, most by the end of September.

Penalty relief is not available in some situations, such as where a fraudulent return was filed, where the penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were finally determined by a court.

This relief is limited to the penalties that the notice specifically states are eligible for relief. For ineligible penalties, such as the failure-to-pay penalty, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First-Time Abate program. Visit IRS.gov/penaltyrelief for details.

This relief doesn’t apply to 2021 returns. Whether or not they have a tax-filing extension, the IRS urges everyone to file their 2021 return soon to avoid processing delays. For filing tips, visit IRS.gov.

by Larson Accounting

20 de September de 2022

The IRS updated information on the Work Opportunity Tax Credit (WOTC), available to employers that hire designated categories of workers who face significant barriers to employment. For employers facing a tight job market, the WOTC may be able to help.

Today’s updates include information on the pre-screening and certification process. To satisfy the requirement to pre-screen a job applicant, on or before the day a job offer is made, a pre-screening notice (Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit) must be completed by the job applicant and the employer.

The Targeted Jobs Tax Credit (TJTC), which preceded WOTC, did not contain a pre-screening requirement. In enacting WOTC to replace the TJTC in 1996, Congress included the requirement that employers pre-screen job applicants before or on the same day the job offer is made. In doing so, Congress emphasized that the WOTC is designed to incentivize the hiring and employment of certain categories of workers.

After pre-screening a job applicant, the employer must then request certification by submitting Form 8850 to the appropriate state workforce agency no later than 28 days after the employee begins work. Other requirements and further details can be found in the instructionsPDF to Form 8850.

WOTC has 10 designated categories of workers. The 10 categories are:

Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients
Certain veterans, including unemployed or disabled veterans
The formerly incarcerated or those previously convicted of a felony
Designated community residents living in Empowerment Zones or Rural Renewal Counties
Vocational rehabilitation referrals
Summer youth employees living in Empowerment Zones
Food stamp (SNAP) recipients
Supplemental Security Income (SSI) recipients
Long-term family assistance recipients
Qualified long-term unemployment recipients.

Although the credit generally is not available to tax-exempt organizations, a special provision allows them to claim the WOTC against the employer’s share of Social Security tax for hiring qualified veterans. These organizations claim the credit on Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Visit the WOTC page for more information.

Source: IRS

by Larson Accounting

8 de September de 2022

For the first time in two decades, the U.S. dollar is equal to the euro in value as Europe grapples with growing recession fears and the fallout from Russia’s war in Ukraine.
The euro matching or dipping below the dollar presents a mostly psychological milestone, some experts say, but central banks and policymakers across the euro zone are likely to face pressure to address depreciation concerns.

“It’s becoming increasingly clear that the Euro zone is heading into recession, even as financial conditions have tightened more than in the US or Japan,” tweeted Robin Brooks

The two currencies reached parity Wednesday morning, according to Bloomberg, after the euro abruptly lost value following the release of worrisome U.S. inflation data.

The euro has been losing ground against the dollar since the start of the year, when it hovered near $1.13, well off its peak of nearly $1.60 in 2008. Live currency data reported by MarketWatch shows the euro slipping just a few hundredths of a cent above the dollar, while Bloomberg and Reuters reported that the euro briefly slipped below a dollar in value.

Analysts say the sinking value of the euro reflects growing risk aversion on the part of investors, who are pouring into dollars ― considered a “safe haven” asset compared with other currencies ― amid concerns about inflation, the war in Ukraine, and recession fears in numerous countries.

Currency markets got a jolt Wednesday morning when the U.S. Bureau of Labor Statistics reported that U.S. prices soared by 9.1 percent in June compared with a year ago, a new peak with inflation running at 40-year highs.

The common currency in 19 European Union member countries has weakened during the months-long war in Ukraine, which has sent shock waves through global food and energy markets. The European Central Bank also lags behind peer institutions such as the Federal Reserve in tackling rising inflation, which swelled to 8.6 percent last month — the highest level since the euro was created in 1999.

The Fed has been aggressively raising interest rates to stem inflation woes, having announced three rounds of increases this year alone, and has signaled that four more scheduled rate hikes are in the works. Although the European Central Bank is also expected to raise rates to bring inflation back to a 2 percent target, it is likely to move at a slower pace: It has penciled in a 0.25 percentage point rate hike for July, while the Fed is widely expected go with a 0.75 percentage point increase, as it did in June.

The stronger dollar is good news for Americans considering a European vacation or buying goods abroad. Conversely, traveling and spending with U.S. dollars have now become pricier for those who earn wages in euros.

European businesses that sell their wares abroad might find that the weaker currency makes their exports more appealing, because the buyer’s currency will be more valuable by comparison. American companies, on the other hand, could face a tougher time exporting their goods abroad.

But more important, some experts argue that a less potent euro portends slower economic growth for Europe. “It’s becoming increasingly clear that the Euro zone is heading into recession, even as financial conditions have tightened more than in the US or Japan,” tweeted Robin Brooks, chief economist at the Institute of International Finance.

After the war in Ukraine began, the Economist Intelligence Unit revised its 2022 euro-zone growth forecast downward from 4 percent to 2 percent. It predicts a 1.6 percent growth rate for 2023. And the euro’s weakness “reflects fears from investors of an impending recession in the euro zone,” said EIU global forecasting director Agathe Demarais.

Stocks were choppy Wednesday after the inflation report. The Dow Jones industrial average plunged nearly 450 points after the data was released, then cut its losses. By late morning, the blue-chip index was down 115 points, or 0.4 percent. The broader S&P 500 index was off 0.1 percent, while the tech-heavy Nasdaq pushed 0.3 percent higher. France’s CAC 40 lost 1.2 percent, while Germany’s DAX index lost 1.7 percent and the pan-European Stoxx 50 lost 1.5 percent.

Source: WP
By: Aaron Gregg, Ellen Francis, Bryan Pietsch and Amy Cheng
Photo: (Dado Ruvic/Reuters)

by Larson Accounting

8 de September de 2022

The Internal Revenue Service reminds taxpayers who pay estimated taxes that the deadline to submit their third quarter payment is September 15, 2022.

Taxpayers not subject to withholding, such as those who are self-employed, investors or retirees, may need to make quarterly estimated tax payments. Taxpayers with other income not subject to withholding, including interest, dividends, capital gains, alimony, cryptocurrency and rental income, also normally make estimated tax payments.

In most cases, taxpayers should make estimated tax payments if they expect:

To owe at least $1,000 in taxes for 2022 after subtracting their withholding and tax credits.
Their withholding and tax credits to be less than the smaller of:
- 90% of the tax to be shown on their 2022 tax return or
- 100% of the tax shown on their 2021 tax return. Their 2021 tax return must cover all 12 months.

Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. Publication 505, Tax Withholding and Estimated Tax, provides more information on estimated tax rules. The worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, has details on who must pay estimated tax.

How to figure estimated tax

To figure estimated tax, individuals must figure their expected Adjusted Gross Income (AGI), taxable income, taxes, deductions and credits for the year.

When figuring 2022 estimated tax, it may be helpful to use income, deductions and credits for 2021 as a starting point. Use the 2021 federal tax return as a guide. Taxpayers can use Form 1040-ES to figure their estimated tax.

The Tax Withholding Estimator on IRS.gov offers taxpayers a clear, step-by-step method to have their employers withhold the right amount of tax from their paycheck. It also has instructions to file a new Form W-4 to give to their employer to adjust the amount withheld each payday.

How to avoid an underpayment penalty

Taxpayers who underpaid their taxes may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return.

To see if they owe a penalty, taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Taxpayers can also see the Form 2210 instructions under the “Waiver of Penalty” section. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:

Casualty, disaster or another unusual situation.
An individual retired after reaching age 62 during a tax year when estimated tax payments applied.
An individual became disabled during a tax year when estimated tax payments applied.
Specific written advice from an IRS agent given in response to a specific written request. The taxpayer must provide copies of both.

The fourth and final 2022 estimated tax payment is due January 17, 2023.

Source: IRS

IRS announces tax relief for victims of Hurricane Ian in Florida

Covered Disaster Area

Affected Taxpayers

Casualty Losses

Other Relief

Reminder: File 2019 and 2020 returns by Sept. 30 to get COVID penalty relief

IRS updates Information on tax credit helping businesses to hire certain categories of workers

The U.S. dollar and the euro are equal for the first time in two decades

IRS: Sept. 15 is the deadline for third quarter estimated tax payments

How to figure estimated tax

How to avoid an underpayment penalty