Taxpayers who are late filing their 2020 and 2021 returns might be able to benefit from automatic penalty abatements. In a recently released publication, the IRS details the requirements needed to qualify for this abatement. This penalty relief applies to some individuals, businesses and non-profit organizations. The reason for this unusual IRS decision is the fact that payment due notices were suspended during the pandemic. Since this may have caused taxpayers to forget their tax obligation, this relief is being granted. Who is affected? Taxpayer filing forms 1040, 1041, 1120 series and 990 ..read more

Have you received an unexpected IRS check recently? You may have been the lucky recipient of a refund of penalties you have paid to the IRS. As part of the Covid-19 relief measures taken, the IRS have automatically removed many late filing and late payment penalties on tax years 2019 and 2020. This is relevant to US citizens who filed their 2019 or 2020 tax returns late, and were hit with penalties for late filing and late payment of taxes. With the IRS removing those penalties, the taxpayers who already paid the penalties were refunded. This has been a windfall for people who were late filin ..read more

General Rule regarding Charitable Deductions We mentioned in a previous article that under the current US tax law, in order to specifically benefit from charitable donations and other itemized deductions which a taxpayer expends during the year, the total of those expenditures must generally exceed the standard deduction which every taxpayer is entitled to.  In general, these thresholds are $12,550 for taxpayers filing as single or married filing separately; $18,800 for those filing as Head of Household; and $25,100 for married taxpayers filing jointly. In describing tax concepts, we oft ..read more

There is an election which a US citizen taxpayer and his or her nonresident alien spouse (i.e. non-US citizen or non-US resident) can make, whereby the spouse is treated as if he or she is also a US person, and therefore, they can file a joint US tax return, which can save on US taxes, because the tax rate for married filing jointly is lower, as the tax rate thresholds are higher. As a simple example, let’s say the husband is a US citizen with a salary of $100,000 and US qualified dividends and capital gains totaling $20,000 for the year 2021 (for the moment, we’ll say the wife has no income ..read more

After almost two years of very weak phone service, the IRS have taken representatives away from their processing departments, and have assigned them to call centres to answer incoming calls. This means that it has once again become possible to speak to an IRS representative and sometimes have issues resolved over the phone. This is a huge advantage over paper correspondence which still has processing times of a few months. Although many prefer to hire a professional accountant to represent them before the IRS, here we present you with some pointers and tips to calling the IRS and representing ..read more

The IRS have published updates in preparation for filing your 2022 tax return. Here we bring you the most relevant and up to date information. Child tax credit The advance child tax credits that were issued for tax year 2021 (for US residents only) were a one-time event and will not be repeated in 2022. Similarly, the enhanced child tax credit for dependents under 6 and over 18 years of age has expired. This means that only qualifying children under the age of 17 are eligible for child tax credit, which remains $2000. The refundable portion of child tax credit is $1500 in 2022, an increase fr ..read more

Tax year 2022 has been a challenging year for IRS communication as the agency struggles to recover their pre-pandemic pace. Slow in the best of times, the IRS response times have reached an all-time low in some departments during 2022. Whilst they claim to be catching up on their delays, the current processing time for paper filed returns can be a year or longer. Whilst extremely frustrating for taxpayers, there is not much that can be done to expedite the process. This highlights the importance of filing tax returns electronically whenever possible to ensure faster processing. Us citizens ar ..read more

Overview The tax year 2021 had a number of newsworthy tax breaks and other benefits to US taxpayers.  Now, with the 2022 tax year approaching we though it a good idea to review which of those breaks/benefits no longer exist, which of those remain, but are substantially changed, and which of those remain with subtle changes. Although there were congressional attempts at extending all or some of the expiring benefits, none were successful, and there does not appear to be any expectation of them re-appearing soon. Stimulus/Economic Impact Payments/Recovery Rebate Credit These are different ..read more

One of the growth areas in our firm in recent years has been the preparation of Form 990, Return of Organization Exempt from Income Tax and its related schedules, otherwise known as the tax return for nonprofit organizations.  But it should be noted at the outset that the term Nonprofit organization is generally a state designation, whereas Tax-Exempt organization is the IRS designation.  Now of course, those words “tax exempt” sound great to every operator of a business or service organization.  But here we are referring to corporations, foundations, etc. which are included un ..read more