Economic Impact Payment Deadline

In response to Covid-19 Congress authorized a stimulas check of up to $1200 per person, $2400 per married couple who file jointly, as well as $500 per eligible dependent under the age of 17.

The Treasury Department and IRS would like to remind you the deadline to claim this money is October 15.

There is no requirement that you must actually earn an income or pay taxes in order to get the stimulus check. According to the IRS, US Citizens, Permanent Residents, and Qualifying Resident Aliens who meet the following guidelines are eligible. 1) You have a valid Social Security Number 2) You are not claimed as a dependent of another taxpayer 3) You have an AGI of <$75K if Single, or <$112.5K Head of Household, or <$150K Married Filing Joint

If you normally don’t file, you can use the IRS Non-Filers tool to claim your stimulus check. Use this link: IRS Non Filer Tool even if you earned nothing last year, or are homeless, or have been unemployed.

The credit will be claimed on your 2020 Tax Return. If your tax situation is different from 2019, you do not have to pay back excess stimulus money. For example, if your qualifying child for the $500 credit turns 17 in 2020 and you no longer qualify for the child portion, you will NOT be required to pay it back. On the other hand, if you have a baby in 2020, you will be entitled to the additional $500 stimulus “credit”.

If you wish to return your EIP check, write Void in the endorsement and return the check. Do not staple, bend, or paper clip the check. If you cashed the check, and was to repay it, then make a payment to “US Treasury” and write 2020 EIP, your Taxpayer Identification Number (Social Security No) and include a brief reason for returning it. Here is more details on what to do and where to mail it: Economic Impact Payment Info

Updated I-9 Form starting May 1st

A new version of the I-9 Employment Eligibility Verification form has been issued. The new version is dated 10/21/19 and will be mandatory May 1, 2020.

You can start using the new version anytime, and will have to use it in May. Current employees don’t need to fill out a new one, but re-verifications will have to be done on the new form after May 1st.

Remember Form 1-9 are not to be stored with the employee files. Make sure to note any expiration dates of documents used to verify eligibility to work so you can ask the employee to fill out a new one before that date.

There is an electronic version as well as a paper version here: US Citizenship & Immigration Services

New 2020 Form W-4

The IRS has redesigned the Form W-4 which is supposed to make it easier for employees to calculate how much to withhold in taxes. Since the Tax Cuts Jobs Act eliminated the standard deduction and many other deductions many filers have discovered they owe more in taxes. The old form and tax tables did not reflect these changes and many found themselves owing at year end.

The good news: If there are no changes, then your current employees do not need to fill out the revised Form W-4. Also payroll services are now equipped to enter the new Step 4 information.

The bad news: Employees will struggle to understand the revision. Marital status is now (c) near the top of the form, and number of exemptions is in Step 3. Step 4 is a convoluted way to calculate how much additional taxes should be withheld due to a second job or other sources of taxable income.

If you owed taxes on your 2018 or 2019 taxes, you may want to consider asking for additional taxes to be withheld. Take the amount extra needed and divide by number of pay periods left in the year. An employee is allowed to change their withholding at any time!

As always talk to your tax preparer or CPA, and revisit the Form W-4 if you experience a change in jobs, get married, or have a child.

IRS Releases New Forms and New Schedules

The new IRS Form 1040 replaces the old 1040A, 1040EZ, and 1040. It’s a half page double sided form supported by six new numbered schedules in addition to the old Schedule A, B, C, D, E and F.

There is an IRS cheat sheet to help you figure out what Schedule 1-6 your should use now. Also there is still the checkbox for whether or not you have full-year health coverage. IRS reminds taxpayers the law was still in effect for 2018. Income from Schedules C, D, E and F are now reported on a Schedule 1. AGI is now line 7 (not 37) so be careful when using other forms that ask for it. Tax payments have been consolidated into one line and use Schedule 5 with the 10 lines you were used to. If you want to designate another person to discuss your return with the IRS, use Schedule 6.

The new 2018 Insruction booklet can be found here. California did not update its tax law to conform with the new federal rules, which means you can still claim your itemized deductions on the state return. Anything that was deductible last year is still deductible, and state tax rates have not changed.

IRS will need at least a year to recover from government shutdown

Jeff Stein - Washington Post

The Internal Revenue Service has told lawmakers it would return from the government shutdown buried in millions of unanswered taxpayer letters, weeks behind schedule on training for workers and in need of hiring thousands of new employees for this tax filing season, according to two House aides.

The National Taxpayer Advocate, a government watchdog group that oversees the tax collector, has also told House staffers that it is likely to take at least a year for the IRS to return to normal operations, according to the two House aides, who spoke on the condition of anonymity because they were not authorized to speak publicly about the numbers.

The watchdog group told House staffers that the recovery would take between 12 and 18 months, one House aide said. These numbers assume the government does not shut down again in three weeks.

The IRS did not respond to a request for comment.

The Trump administration ordered more than 30,000 employees back to work without pay to prepare for tax filing season, which is set to begin next week. But about 8,000 workers have claimed a hardship exemption to not return to work, while an additional 5,700 workers could not be reached, the House aide said.

President Donald Trump announced a deal on Friday to fund the government for three weeks, a deal that includes no additional funding for a wall along the U.S.-Mexico border. That plan cleared the Senate on Friday afternoon and was signed by Trump later that night.

But challenges to the IRS, as well as other agencies, are expected to persist after the longest shutdown in government history.

For instance, the IRS has a backlog of 5 million unanswered pieces of mail from taxpayers, up from 2.5 million on Jan. 16, IRS officials have told House aides. With in-person taxpayer assistance centers closed during the shutdown, the IRS was receiving more than 700,000 pieces of mail every day, up from 200,000 pieces of mail daily as of Jan. 16.

The government shutdown also delayed training for IRS employees, who must be taught how to implement changes to the tax code passed by Republicans in 2017. About 2,000 recently hired IRS employees also need to be trained before they can start answering taxpayer questions over the phone.

Concerns are also mounting over the service's information technology, as a hardware glitch on Tax Day last year crashed the IRS's online filing systems. The IRS is also losing 25 IT staffers every week since the shutdown began, with many finding other jobs, one House aide said, citing a briefing by IRS officials earlier in the week.

New regulations clarifying the more complex parts of the law have also come out at a significantly slower pace during the shutdown, and tax attorneys and accountants say they struggled to get IRS officials on the phone for help.

But some IRS employees are glad to be going back to work. Jenny Brown, a union leader and IRS employee in Ogden, Utah, has been concerned about her mortgage and car loan payments. She and four other IRS workers at home texted each other during Trump's Rose Garden speech, hoping the rumors were true. A fifth called to ask if she was watching.

"Everybody's happy. It's great news, though we're all like, 'Is it signed yet? Is it signed yet?' We're ready for this to be over," Brown said. "We're ready to get back to work, and we're looking forward to some pay. I just hope it doesn't start again in three weeks."

CA Sales Tax & State of Emergency

Emergency tax or fee relief is available from the California Department of Tax & Fee Administration (CDTFA) - formerly the CA Board of Equalization (BOE) - for business owners and feepayers directly affected by disasters declared as state of emergencies.

Relief may include the extension of tax return due dates, relief of penalty and interest, or replacement copies of records lost due to disasters.

State of CA Emergencies 2018

7/2018 San Diego, Santa Barbara, and Siskiyou - Fire

6/2018 Lake - Fire

4/2018 Amador, Fresno, Kern, Mariposa, Merced, Stanislaus, Tulare, and Tuolumne - Rain

1/2018 Santa Barbara and Ventura - Fire

For a full list see:

http://www.cdtfa.ca.gov/services/state-of-emergency-tax-relief.htm

IRS AWARDS TAX FILING EXTENSION FOR SANTA BARBARA COUNTY

Santa Barbara County residents and businesses qualify for a tax-filing extension from the Internal Revenue Service (IRS).

As result of the Presidential disaster declaration, the IRS is permitted to postpone certain deadlines for taxpayers living in or with a principal business in Santa Barbara County.  Certain deadlines falling on or after Dec. 4, 2017 and before April 30, 2018, may be granted additional time to file through April 30, 2018. This includes 2017 individual income tax returns normally due on April 17, 2018. It also includes the fourth quarter estimated tax payment normally due on Jan. 16, 2018.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief.  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, residents should call the IRS disaster hotline at 866-562-5227.

For more information, please see the IRS press release linked here. For questions, call the IRS disaster hotline at 866-562-5227.

Here is a link to the official IRS webpage:

 https://www.irs.gov/newsroom/tax-relief-for-victims-of-wildfires-flooding-mudflows-and-debris-flows-in-california

IRS Grants 1-Day Filing Extension After System Outage

April 17, 2018

The Internal Revenue Service is giving taxpayers a one-day extension to file and pay their taxes after experiencing technical difficulties with its online filing system on Tuesday.

The agency announced shortly before 7pm Eastern that it systems were back online and that individuals and businesses with a filing or payment deadline of April 17 will now have until Wednesday, April 18.