Tax News

Stimulus three payment schedule updated announced by the IRS on April 1, 2021.

Details on how the time schedule for stimulus three check payments.

The IRS has provided more details and information for the recent changes to unemployment compensation as part of the American Rescue Plan Act, or ARPA - posted April 1, 2021. Get detailed state tax amendment instructions here.

Many taxpayers filed their 2020 return early, millions of whom reported their unemployment benefits on Form 1099-G for the first time in their life. The recently passed stimulus bill made a portion of these benefits tax exempt and taxpayers who already filed did not get to take advantage of this. The IRS has confirmed that those who already filed will be issued a refund for the tax they paid on this income.

Face Masks, sanitizer, and other forms of personal protective equipment are medical expenses if they are used to stop the spread of COVID-19 - posted March 26, 2021.

More details here and on the Medical Expense page. Many qualified medical expenses can be reported in order to lower your taxable income and give you a tax break.

Nearly 7 million 2019 IRS Tax Returns have not been processed - posted February 23, 2021. This might be why your 2020 returns got rejected even though you correctly entered your 2019 AGI.

Read more details here about 2019 AGI rejections and other issues. The IRS is working through their backlog of returns in order to verify taxpayer information and allow the acceptance of e-filed returns. 

The Government Accountability Office (GAO) reports that almost half a million taxpayers did not receive their entire stimulus payment amounts due to distributing complications related to those who have dependents but filed simple/stimulus tax returns. They also report that the IRS had challenges contacting individuals who do not usually file tax returns, as well as those without permanent residences, bank accounts, and internet access. The IRS and Treasury Department stated that taxpayers who filed returns with properly claimed dependents and were received after May 17 were given the correct stimulus payment amount. For taxpayers who did not file proper returns, the IRS is working to adjust payment amounts before the end of July.

Due to severe storms, flooding, and tornado winds in Tennessee that began on March 3, the IRS granted tax relief to Tennessee residents that live in the counties that are affected. This means that their Federal Tax Return Filing and Payment Deadlines was extended to July 15, 2020 (from April 15, 2020). If you missed this deadline, you still have until October 15, 2020 to efile your 2019 returns.

As of July 17, the IRS is allowing chronic condition treatments such as Angiotensin converting enzyme (ACE) inhibitors (for congestive heart failure, diabetes, coronary artery disease) and Inhaled corticosteroids/Peak flow meters (asthma) to be covered by high-deductible health plans (HDHP). Individuals can even apply for these treatments if their health care spending has not surpassed their plans' deductible, without conflicting the rules allowing pretax contributions to their Health Savings Accounts. In addition to this benefit, taxpayers can claim up $117.47 of the $199 cost of a health-and-ancestry kit as medical care.

Virginia tax officials warned Virginia taxpayers who still have not filed their 2018 Virginia State Income Tax Returns that they have until July 1 to e-File Their Returns and claim the State's Tax Relief Refund. This one-time, separate refund (up to $110 as an individual filer or up to $220 as a Married Filing Jointly filer) from the one received when filing a Virginia return is the result of the state tax agency passing legislation in response to the new federal tax law. Though the state law requires Tax Relief Refund checks to be mailed out by October 15, 2019, the state will withhold all or part of these refunds to pay off state, local, and/or IRS debts. 

The IRS released a draft of Form W-4, Employee's Withholding Allowance Certificate, for taxpayers to use for paycheck withholding in 2021 (not this year, 2020). It eliminates withholding allowances and lists options to report income and withholding amounts to meet a taxpayer's paycheck goals. Taxpayers are not required to submit a 2020 W-4 if they already submitted a W-4 on or before 2020.

The U.S. Treasury is cutting tax penalties for taxpayers who did not have enough tax withheld throughout 2018 via paycheck withholding or estimated tax payments. This applies to taxpayers who paid at least 80% of their tax liabilities. The Treasury will release a form for these taxpayers to attach to their 2018 Tax Returns exempting them from penalties. Taxpayers that already filed their returns and paid the penalties may request a refund from the IRS for the amounts they paid to the IRS.

The IRS reported that there are unclaimed tax refunds worth almost $1.4 billion for about 1.2 million taxpayers who have not filed a 2015 Tax Return. These taxpayers must paper file a 2015 Tax Return (previous year tax returns can no longer be e-filed) by April 15, 2019 (April 17, 2019 for taxpayers who live in Massachusetts and Maine) to claim the refunds. 

Democrat House Representatives Sean Casten and Lauren Underwood introduced The Taxpayer Extension Act, which proposes to extend the April 15, 2019 Federal Tax Return deadline to May 20, 2019. This provides 35 additional days for taxpayers to file their returns due to recent tax reform and the government shutdown. They suggest that the extended deadline would give the IRS more time to prepare their filing systems to avoid computer system breakdowns on Tax Day.

Though the government shutdown is still ongoing, the IRS called more than 46,000 employees back to work to process tax refunds. They will also answer phone calls in the coming days, but taxpayers should expect longer wait times. No audits or identity theft cases will be reviewed at this time. The IRS recommends preparing and e-filing 2018 Tax Returns to process refunds faster and minimize errors.

The IRS will be open for accepting and processing 2018 Tax Returns on January 28, 2019. There will be no delay in issuing refunds to taxpayers despite the government shutdown.

The House Ways and Means Committee released the Retirement, Savings, and Other Tax Relief of 2018 tax bill. The bill proposes to renew tax breaks that expired on December 31, 2017 (i.e. the Tuition and Fees Deduction) and provide retirement saving tax help (i.e. eliminate required minimum distributions for savers with less than $50,000 in retirement plans). Since it is not legislation yet, some of these changes might affect 2018 tax returns if Congress passes it.

According to a report by the Government Accountability Office, over 2 in 10 taxpayers will owe money to the IRS next year when they file their 2018 Tax Returns due to not withholding enough taxes from their paychecks.

The IRS reported that 362,000 Americans with over $51,000 in unpaid taxes will be denied for passports or passport renewals as a result of Congress passing the Fixing America's Surface Transportation (FAST) Act in December 2015. 

The IRS released a draft of the 2018 1040 tax form based on the Tax Cuts and Jobs Act. The shorter form is half the size of the current 1040 form and combines all three current 1040 forms (1040, 1040-A, and 1040-EZ) into one 1040 form. This new 1040 Form uses a “building block” approach and the form can be supplemented with six new tax schedules for additional tax credits and deductions (i.e. deduction for teacher expenses and energy tax credits).

As a result of the IRS reactivating a private tax debt collection program, the National Taxpayer Advocate released a report stating that taxpayers assigned to the program are entered into installment programs that they cannot afford. They also report that the program costs the U.S. Treasury more money that it collects from the program. Due to increased IRS impersonating phone scams, the IRS warns taxpayers that they will first contact them via a letter in the mail. 

The IRS released a draft of the W-4 Form that is based on tax code updates from the Tax Cuts and Jobs Act. The 2019 W-4 would be less than two pages. eFile.com is prepared to help you complete this new W-4.