Issue Number: IR-2019-180
Inside This Issue
IRS provides tax inflation adjustments for tax year 2020
WASHINGTON — The Internal Revenue Service today announced the tax year 2020 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2019-44 provides details about these annual adjustments.
The tax law change covered in the revenue procedure was added by the Taxpayer First Act of 2019, which increased the failure to file penalty to $330 for returns due after the end of 2019. The new penalty will be adjusted for inflation beginning with tax year 2021.
The tax year 2020 adjustments generally are used on tax returns filed in 2021.
The tax items for tax year 2020 of greatest interest to most taxpayers include the following dollar amounts:
- The standard deduction for married filing jointly rises to $24,800 for tax year 2020, up $400 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,400 in for 2020, up $200, and for heads of households, the standard deduction will be $18,650 for tax year 2020, up $300.
- The personal exemption for tax year 2020 remains at 0, as it was for 2019, this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
- Marginal Rates: For tax year 2019, the top tax rate remains 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly).
The other rates are:
35%, for incomes over $207,350 ($414,700 for married couples filing jointly);
32% for incomes over $163,300 ($326,600 for married couples filing jointly);
24% for incomes over $85,525 ($171,050 for married couples filing jointly);
22% for incomes over $40,125 ($80,250 for married couples filing jointly);
12% for incomes over $9,875 ($19,750 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly).
- For 2020, as in 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
- The Alternative Minimum Tax exemption amount for tax year 2020 is $72,900 and begins to phase out at $518,400 ($113,400 for married couples filing jointly for whom the exemption begins to phase out at $1,036,800).The 2019 exemption amount was $71,700 and began to phase out at $510,300 ($111,700, for married couples filing jointly for whom the exemption began to phase out at $1,020,600).
- The tax year 2020 maximum Earned Income Credit amount is $6,660 for qualifying taxpayers who have three or more qualifying children, up from a total of $6,557 for tax year 2019. The revenue procedure contains a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
- For tax year 2020, the monthly limitation for the qualified transportation fringe benefit is $270, as is the monthly limitation for qualified parking, up from $265 for tax year 2019.
- For the taxable years beginning in 2020, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,750, up $50 from the limit for 2019.
- For tax year 2020, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,350, the same as for tax year 2019; but not more than $3,550, an increase of $50 from tax year 2019. For self-only coverage, the maximum out-of-pocket expense amount is $4,750, up $100 from 2019. For tax year 2020, participants with family coverage, the floor for the annual deductible is $4,750, up from $4,650 in 2019; however, the deductible cannot be more than $7,100, up $100 from the limit for tax year 2019. For family coverage, the out-of-pocket expense limit is $8,650 for tax year 2020, an increase of $100 from tax year 2019.
- For tax year 2020, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $118,000, up from $116,000 for tax year 2019.
- For tax year 2020, the foreign earned income exclusion is $107,600 up from $105,900 for tax year 2019.
- Estates of decedents who die during 2020 have a basic exclusion amount of $11,580,000, up from a total of $11,400,000 for estates of decedents who died in 2019.
- The annual exclusion for gifts is $15,000 for calendar year 2020, as it was for calendar year 2019.
- The maximum credit allowed for adoptions for tax year 2020 is the amount of qualified adoption expenses up to $14,300, up from $14,080 for 2019.
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Issue Number: IR-2019-181
Inside This Issue
Get Ready for Taxes: Important things to know about tax credits
WASHINGTON – With the tax filing season quickly approaching, the Internal Revenue Service recommends taxpayers take time now to determine if they are eligible for important tax credits.
This is the second in a series of reminders to help taxpayers Get Ready for the upcoming tax filing season. The IRS recently updated its Get Ready page with steps to take now for the 2020 filing season.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable federal income tax credit for working people with low to moderate incomes who meet certain eligibility requirements. Because it’s a refundable credit, those who qualify and claim EITC pay less federal tax, pay no tax or may even get a tax refund. EITC can mean a credit of up to $6,557 for working families with three or more qualifying children. Workers without a qualifying child may be eligible for a credit up to $529.
To get the credit, people must have earned income and file a federal tax return — even if they don’t owe any tax or aren’t otherwise required to file.
Taxpayers can use the EITC Assistant to find out if they are eligible for EITC, determine if their child or children meet the tests for a qualifying child and estimate the amount of their credit.
Child Tax Credit
Taxpayers can claim the Child Tax Credit if they have a qualifying child under the age of 17 and meet other qualifications. The maximum amount per qualifying child is $2,000. Up to $1,400 of that amount can be refundable for each qualifying child. So, like the EITC, the Child Tax Credit can give a taxpayer a refund even if they owe no tax.
The qualifying child must have a valid Social Security number issued before the due date of the tax return, including extensions. For tax year 2019, this means April 15, 2020, or if a taxpayer gets a tax-filing extension, Oct. 15, 2020.
The amount of the Child Tax Credit begins to reduce or phase out at $200,000 of modified adjusted gross income, or $400,000 for married couples filing jointly.
Credit for Other Dependents
This credit is available to taxpayers with dependents for whom they cannot claim the Child Tax Credit. These include dependent children who are age 17 or older at the end of 2019 or parents or other qualifying individuals supported by the taxpayer.
Publication 972, Child Tax Credit, available now on IRS.gov, has further details and will soon be updated for tax year 2019.
Education Credits
Two credits can help taxpayers paying higher education costs for themselves, a spouse or dependent. The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) are claimed on Form 8863, Education Credits. The AOTC is partly refundable.
To get either credit, the taxpayer or student usually must receive Form 1098-T, Tuition Statement, from the school attended. Some exceptions apply. See the instructions to Form 8863 for details.
Interactive Tax Assistant
The IRS urges taxpayers to use the agency’s Interactive Tax Assistant (ITA) to help determine if they can claim any of these credits. The ITA also provides answers to general questions on filing status, claiming dependents, filing requirements and other topics.
Start with IRS.gov for help that includes tools, filing options and other services and resources. Taxpayers increasingly use IRS.gov as their first resource for tax matters. Information in languages other than English is available under the language tab on IRS.gov.
Filing electronically is easy, safe and the most accurate way to file your tax return. There are a variety of free electronic filing options for most taxpayers including using IRS Free File for taxpayers with income below $66,000, or Fillable Forms for taxpayers who earn more. Taxpayers who generally earn $56,000 or less can have their return prepared at a Volunteer Income Tax Assistance site. Tax Counseling for the Elderly sites offer free tax help for all taxpayers, particularly those who are 60 years of age and older.
The Let Us Help You page on IRS.gov features links that take users to information and resources on a wide range of topics.
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(2019-11-19, 12:04 PM)Finance 101 Wrote: Issue Number: IR-2019-180
Inside This Issue
Marginal Rates: For tax year 2019, the top tax rate remains 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly).
- The other rates are:
35%, for incomes over $207,350 ($414,700 for married couples filing jointly);
32% for incomes over $163,300 ($326,600 for married couples filing jointly);
24% for incomes over $85,525 ($171,050 for married couples filing jointly);
22% for incomes over $40,125 ($80,250 for married couples filing jointly);
12% for incomes over $9,875 ($19,750 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly).
Thuế lại tăng mỗi năm, not less   
Tôi chọn cuộc sống cho mình hạnh phúc
chứ không phải sống để người khác ngưỡng mộ!
Issue Number: Tax Tip 2019-149
Taxpayers should be on the lookout for new version of SSN scam
Taxpayers should be on the lookout for new variations of tax-related scams. In the latest twist on a scam related to Social Security numbers, scammers claim to be able to suspend or cancel the victim’s SSN. It’s yet another attempt by con artists to frighten people into returning ‘robocall’ voicemails.
Scammers may mention overdue taxes in addition to threatening to cancel the person’s SSN. If taxpayers receive a call threatening to suspend their SSN for an unpaid tax bill, they should just hang up.
Make no mistake…it’s a scam.
Taxpayers should not give out sensitive information over the phone unless they are positive they know the caller is legitimate. When in doubt –hang up. Here are some telltale signs of this scam. The IRS and its authorized private collection agencies will never:
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, iTunes gift card or wire transfer. The IRS does not use these methods for tax payments.
- Ask a taxpayer to make a payment to a person or organization other than the U.S. Treasury.
- Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
- Demand taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
Taxpayers who don’t owe taxes and have no reason to think they do should:
Taxpayers who owe tax or think they do should:
More information:
Tax Scams and Consumer Alerts
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Issue Number: Tax Tip 2019-164
Four common tax errors that can be costly for small businesses
A small business owner often wears many different hats. They might have to wear their boss hat one day, and the employee hat the next. When tax season comes around, it might be their tax hat.
They may think of doing their taxes as just another item to quickly cross off their to-do list. However, this approach could leave taxpayers open to mistakes when filing and paying taxes.
Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. Using IRS Free File or a certified public accountant is the easiest ways to avoid these kinds of errors.
Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:
Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.
Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers. If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.
Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.
Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.
More information:
Publication 535
Subscribe to IRS Tax Tips
Publication 505, Tax Withholding and Estimated Tax
Publication 15, Circular E, Employer's Tax Guide
Share this tip on social media -- #IRSTaxTip: Four common tax errors that can be costly for small businesses. https://go.usa.gov/xpBfm
Issue Number: IR-2019-191
Inside This Issue[b] [/b]
Get ready for taxes: Important things to know about refunds
WASHINGTON – As tax filing season approaches, the Internal Revenue Service cautions taxpayers not to rely on receiving their refund by a certain date, especially when making major purchases or paying bills. Some tax returns may require additional review and those refunds may take longer.
Many factors affect refund timing
Just as each tax return is unique and individual, so is each taxpayer’s refund. Here are a few things taxpayers should keep in mind if they are waiting on their refund but hear or see on social media that other taxpayers have already received theirs.
Different factors can affect the timing of a refund. The IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.
Even though the IRS issues most refunds in less than 21 days, it’s possible a particular taxpayer’s refund may take longer. Some tax returns require additional review and take longer to process than others. It may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. The IRS will contact taxpayers by mail when more information is needed to process a return.
By law, the IRS cannot issue refunds to people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund, including the portion not associated with the credits. This helps ensure taxpayers receive the refund they're due by giving the IRS more time to detect and prevent fraud.
Using Where’s My Refund?, taxpayers can check the status of their refund within 24 hours after the IRS has received their electronically filed tax return or four weeks after mailing a paper return. It provides a personalized date the taxpayer can expect a refund after the IRS processes the return. Taxpayers should also take into consideration the time it takes to receive a check by mail, or for financial institutions to post the refund to their account.
Year-end bonus, holiday pay and temporary job may affect refund
Various financial transactions, especially those occurring late in the year, can often have an unexpected impact on taxes and any potential refund. Examples include year-end and holiday bonuses, stock dividends, capital gain distributions from mutual funds and stocks, bonds, virtual currency, real estate or other property sold at a profit.
Taxes must be paid as income is earned or received during the year, either through withholding or estimated tax payments. If the amount of tax withheld from salaries or pensions is not enough, the taxpayer may have to make estimated tax payments.
Taxpayers whose 2019 federal income tax withholding unexpectedly falls short of their tax liability for the year, can still make a quarterly estimated tax payment directly to the IRS. The deadline for making a payment for the fourth quarter of 2019 is Jan. 15, 2020.
The Tax Withholding Estimator, available on IRS.gov, can help taxpayers make sure they have the right amount of tax withheld from their pay. For anyone at risk for a tax-time surprise, making an estimated or additional tax payment soon is the fastest solution. Form 1040-ES includes a useful worksheet for figuring the right amount to pay. This form also includes key tax changes and the federal income tax rate schedules for 2019.
A companion publication, Publication 505, Tax Withholding and Estimated Tax, has additional details including worksheets and examples that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or have other special situations.
The fastest and easiest way to make an estimated tax payment is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments.
Taxpayers who pay too little tax during the year, either through withholding or estimated tax payments, may be charged a penalty when they file. In some cases, a penalty may apply if their estimated tax payments are late, even if they are due a refund when they file.
Certain past-due debt reduces refunds
By law, the Department of Treasury's Bureau of the Fiscal Service (BFS) issues IRS tax refunds and conducts the Treasury Offset Program (TOP). Under TOP, BFS may reduce a taxpayer’s refund and offset all or part of the refund. This is done to pay past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or other federal nontax debts, such as student loans.
BFS will reduce the refund to pay off the debt owed and send a notice to the taxpayer if an offset occurs. Any portion of the remaining refund after offset is issued in a check or direct deposited to the taxpayer as originally requested on the return.
Separate from the TOP, refund amounts may also be adjusted due to changes the IRS made to the tax return. When that happens, the taxpayer will get a notice explaining the changes. Where’s My Refund? will also reflect the reasons for the refund offset when it relates to a change on the tax return. IRS.gov has more information about refund offsets.
File electronically and use direct deposit
The vast majority of taxpayers get their refunds faster by filing electronically and using direct deposit. It is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.
Taxpayers select it as their refund method through their tax software and by typing in their bank account number and routing number. Taxpayers can also let their tax preparer know they want direct deposit. It is even also available to the small number of taxpayers still filing by paper.
Refunds should only be deposited directly into accounts that are in the taxpayer’s name, their spouse’s name or both if it’s a joint account. No more than three electronic refunds can be deposited into a single financial account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and will be mailed a paper refund check. Whether a taxpayer files electronically or on paper, direct deposit gives them access to their refund faster than a paper check.
For other tips and resources, check out the Get Ready page on IRS.gov to get a jump on tax season.
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Issue Number: Tax Tip 2019-170
Here’s how taxpayers can avoid the hooks of phishing scams
Knowledge and awareness. Those two things can protect taxpayers and their family members from getting caught up in a phishing scam.
A phishing scam is often an unsolicited email or a website that looks like a legitimate site designed to trick users. The scams convince people into providing personal and financial information. Scam emails can arrive to personal and work accounts on computers, smartphones and tablets.
Phishing scams often use one or more of these tactics. The scammers:
- Pose as a trusted bank, favorite retail store, government agency, or even a tax professional.
- Tell the taxpayer there’s something wrong with their account.
- Tell the recipient they’re in violation of a law.
- Tell the taxpayer to open a link in email or download an attachment.
- Send the taxpayer a familiar looking – but fake – website and ask them to log in to it.
Thieves do these to trick taxpayers into revealing account numbers and passwords. The thieves secretly download malicious software on to someone’s device to collect personal information. The criminal might also try to fool the recipient into sending money to the scammers.
It’s important to remember that the IRS never:
- Calls to demand immediate payment using a specific payment method such as a prepaid debit card, iTunes gift card or wire transfer.
- Asks a taxpayer to make a payment to a person or organization other than the U.S. Treasury.
- Threatens to immediately bring in local police or other law-enforcement groups saying they can have the taxpayer arrested for not paying.
- Demands taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
When in doubt, taxpayers can always check the status of their taxes by registering at IRS.gov. From there, taxpayers can check their account balance for the current tax year or any previous tax year with a balance due.
Taxpayers who receive an IRS-related or tax-themed phishing email should forward it to phishing@irs.gov. Taxpayers can also report scam letters and phone calls to phishing@irs.gov as well as the Treasury Inspector General for Tax Administration.
More information:
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Issue Number: IR-2019-204
Inside This Issue
IRS and TTB formalize process to support processing of claims made to the IRS Whistleblower Office
WASHINGTON – The Internal Revenue Service today announced a process has been formalized with the Alcohol and Tobacco Tax and Trade Bureau (TTB) that puts in place procedures between the IRS and TTB to process claims for whistleblower awards under internal revenue laws that are administered and enforced by TTB.
The IRS and TTB signed a Memorandum of Understanding on Dec. 3, 2019, making these new procedures possible.
"This is another important step in our efforts to make the Whistleblower Program as effective as possible," said Lee D. Martin, Director of the IRS Whistleblower Office. “The IRS Whistleblower Office is always looking to do more for whistleblowers.”
The new procedures enable a partnership with TTB to provide a consistent approach for claims for a whistleblower award administered under Internal Revenue laws.
TTB is a bureau of the Treasury Department and administers provisions of the Internal Revenue laws that impose a federal excise tax on distilled spirits, wine, beer, tobacco products, cigarette papers and tubes, as well as firearms and ammunition.
“The whistleblower program gives us another tool to fight for the level playing field that our law-abiding industry members expect and deserve,” said Nicholas Colucci, TTB’s Assistant Administrator, Field Operations. “We appreciate this opportunity to partner with our colleagues at the IRS.”
Since 2007, the IRS Whistleblower Office made awards totaling more than $811 million based on the collection of more than $5 billion in back taxes, interest and penalties.
For more on the Whistleblower Office go to IRS.gov.
Issue Number: IR-2020-02
IRS opens 2019 tax filing season for individual filers on Jan. 27
WASHINGTON ― The Internal Revenue Service confirmed that the nation’s tax season will start for individual tax return filers on Monday, Jan. 27, 2020, when the tax agency will begin accepting and processing 2019 tax year returns.
The deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020. More than 150 million individual tax returns for the 2019 tax year are expected to be filed, with the vast majority of those coming before the traditional April tax deadline.
“As we enter the filing season, taxpayers should know that the dedicated workforce of the IRS stands ready to help,” said IRS Commissioner Chuck Rettig. “We encourage taxpayers to plan ahead and use the tools and information available on IRS.gov. The IRS and the nation's tax community are committed to making this another smooth filing season."
The IRS set the Jan. 27 opening date to ensure the security and readiness of key tax processing systems and to address the potential impact of recent tax legislation on 2019 tax returns.
While taxpayers may prepare returns through the IRS’ Free File program as well as many tax software companies and tax professionals before the start date, processing of those returns will begin after IRS systems open later this month.
“The IRS encourages everyone to consider filing electronically and choosing direct deposit,” Rettig said. “It’s fast, accurate and the best way to get your refund as quickly as possible.”
Filing electronically flags common errors and prompts taxpayers for missing information. Taxpayers can get free help preparing and filing taxes through IRS Free File online or free tax help from trained volunteers at community sites around the country. The IRS also reminds taxpayers that they don’t have to wait until Jan. 27 to start their tax return or contact a reputable tax preparer.
In addition, IRS tax help is available 24 hours a day on IRS.gov, the official IRS website, where people can find answers to tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.
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