Author Archives: Taxman

IRS automatically waives estimated tax penalty for eligible 2018 tax filers

August 14, 2019

WASHINGTON — The Internal Revenue Service is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver.

The IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver.

Earlier this year, the IRS lowered the usual 90% penalty threshold to 80% to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by Jan. 15, 2019. The 90% threshold was initially lowered to 85% on Jan 16 and further lowered to 80% on March 22.

The automatic waiver applies to any individual taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year.

“The IRS is taking this step to help affected taxpayers,” said IRS Commissioner Chuck Rettig. “This waiver is designed to provide relief to any person who filed too early to take advantage of the waiver or was unaware of it when they filed.”

Refunds planned for eligible taxpayers who paid penalty
Over the next few months, the IRS will mail copies of notices CP 21 granting this relief to affected taxpayers. Any eligible taxpayer who already paid the penalty will also receive a refund check about three weeks after their CP21 notice regardless if they requested penalty relief. The agency emphasized that eligible taxpayers who have already filed a 2018 return do not need to request penalty relief, contact the IRS or take any other action to receive this relief.

For those yet to file, the IRS urges every eligible taxpayer to claim the waiver on their return. This includes those with tax-filing extensions due to run out on Oct. 15, 2019. The quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package. Those who choose to file on paper can fill out Form 2210 and attach it to their 2018 return. See the instructions to Form 2210 for details.

Because the U.S. tax system is pay-as-you-go, taxpayers are required by law to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by having tax withheld from paychecks, pension payments or Social Security benefits, making estimated tax payments or a combination of these methods.

Like last year, the IRS urges everyone to do a “Paycheck Checkup” and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It’s also an important step for those who made withholding adjustments in 2018 or had a major life change. Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two wage earner households, employees with nonwage sources of income and those with complex tax situations.

To get started, check out the new Tax Withholding Estimator, available on IRS.gov. More information about tax withholding and estimated tax can be found on the agency’s Pay As You Go web page, as well as in Publication 505.

As always, please feel free to contact Tax On Wheels, LLC at 803 732-4288 if we can be of assistance to you with any tax matter.

 

Individuals who need passports should promptly resolve IRS tax debt

February 27, 2019

WASHINGTON ― The Internal Revenue Service today reiterated its warning that taxpayers may not be able to renew a current passport or obtain a new passport if they owe federal taxes. To avoid delays in travel plans, taxpayers need to take prompt action to resolve their tax issues.

In January of last year, the IRS began implementing new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act. The law requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt, which is $52,000 or more. The law also requires State to deny their passport application or renewal. If a taxpayer currently has a valid passport, the State Department may revoke the passport or limit ability to travel outside the United States.

When the IRS certifies a taxpayer to the State Department as owing a seriously delinquent tax debt, they receive a Notice CP508C from the IRS. The notice explains what steps a taxpayer needs to take to resolve the debt. Please note, the IRS doesn’t send copies of the notice to powers of attorney. IRS telephone assistors can help taxpayers resolve the debt, for example, they can help taxpayers set up a payment plan or make them aware of other payment alternatives. Taxpayers shouldn’t delay because some resolutions take longer than others, such as adjusting a prior tax assessment.

When a taxpayer no longer has a seriously delinquent tax debt, because they paid it in full or made another payment arrangement, the IRS will reverse the taxpayer’s certification within thirty days. State will then remove the certification from the taxpayer’s record, so their passport won’t be at risk under this program. The IRS can expedite the decertification notice to the State Department for a taxpayer who resolves their debt, has a pending passport application and has imminent travel plans or lives abroad with an urgent need for a passport.

A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $52,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

Before denying a passport renewal or new passport application, the State Department will hold the taxpayer’s application for 90 days to allow them to:

  • Resolve any erroneous certification issues,
  • Make full payment of the tax debt, or
  • Enter a satisfactory payment arrangement with the IRS.

Ways to Resolve Tax Issues

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full,
  • Paying the tax debt timely under an approved installment agreement,
  • Paying the tax debt timely under an accepted offer in compromise,
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
  • Having requested or have a pending collection due process appeal with a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Relief programs for unpaid taxes

Frequently, taxpayers qualify for one of several relief programs including the following:

  • Payment agreement. Taxpayers can ask for a payment plan with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreement to set up a monthly payment agreement.
  • Offer in compromise. Some taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the tax liability for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to decide the taxpayer’s ability to pay. Taxpayers can use the Offer in Compromise Pre-Qualifier tool to help them decide whether they’re eligible for an offer in compromise.

Subject to change, the IRS also will not certify a taxpayer as owing a seriously delinquent tax debt or will reverse the certification for a taxpayer:

  • Who is in bankruptcy,
  • Who is deceased,
  • Who is identified by the IRS as a victim of tax-related identity theft,
  • Whose account the IRS has determined is currently not collectible due to hardship,
  • Who is located within a federally declared disaster area,
  • Who has a request pending with the IRS for an installment agreement,
  • Who has a pending offer in compromise with the IRS, or
  • Who has an IRS accepted adjustment that will satisfy the debt in full.

For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department of the delinquency and the taxpayer’s passport is not subject to denial during the time of service in a combat zone.

For more on these procedures and the law visit IRS.gov. The IRS first announced this matter in IRS news release IR-2018-7 on Jan. 16, 2018.

If you need help resolving an IRS tax debt issue, give us a call at 803 732-4288 to see how we can help.

The SCDOR to begin accepting Tax returns on Monday, January 28, 2019.

The South Carolina Department of Revenue (SCDOR) and the IRS will begin accepting Individual Income Tax returns on Monday, January 28, 2019.
The SCDOR is encouraging taxpayers to file electronically. “It’s faster, more accurate, and the safest method of filing,” said SCDOR Director Hartley Powell. “Last year, 89% of South Carolinians filed electronically. We hope to exceed that number this year.”
Five things to know for the 2019 filing season:
  1. Filing electronically is the fastest and most secure way to file.
  2. Processing your return and refund is expected to take 6-8 weeks.
  3. Fighting fraud to protect taxpayer dollars is our priority.
  4. State and federal returns are due April 15, 2019.
  5. Check your refund status at dor.sc.gov/refund.
Filing electronically saves you time and money, plus:
  • Automatic calculations reduce the chance of errors;
  • Systematic checkpoints ensure your return is complete before submission; and
  • We receive your return sooner.
Expecting a refund? Processing may take 6-8 weeks.
We will begin processing returns February 4 to allow employers to meet the January 31 W2 submission deadline. Return and refund processing is expected to take 6-8 weeks from February 4 or the date you file, whichever is later. This allows time for the SCDOR to use all available tools to check for fraud and protect your refund. “We’re going to make every effort to issue refunds as quickly and securely as possible, so the right taxpayer ends up with the right refund amount,” said Powell.
Make sure you have all W2s, 1099s, and other withholding information before filing your return because year-end pay stub information may not match what your employer reports to the SCDOR. When the information you provide does not match your employer’s information, it slows down your return and refund.
Stay informed:
Find more resources for the tax season at dor.sc.gov/iit. Connect with us on Facebook and Twitter to stay up-to-date with the latest news, tax tips, and available taxpayer resources.

Tax season is here

December 30 2018

Despite the ongoing government shutdown, tax season is essentially upon us.  If not resolved, the shutdown could delay the official start of tax season, as defined by the date the IRS begins accepting and processing tax returns.

But even though the government may allow themselves to ignore their responsibilities, that privilege does not apply to me and you my friends.  So in the interest of helping you make sure you timely fulfill your tax filing obligations I call your attention to this list of items to bring to your tax appointment. It’s an oldie but a goody.

Otherwise there is not much more you can do right now.  However, you need to be aware that the TCJA (Tax Cuts and Jobs Act) has imposed substantial changes on the tax system.  Everything from the look of the tax forms to the way claiming your dependents impacts your refund has changed.  Almost everything will be different.  So if you are one of those people that just kind of copies everything from last years return onto the current years return, that won’t work this year.

We are here to help.  If you have any questions please do not hesitate to contact Tax On Wheels, LLC at 803 732-4288.  We will be glad to answer your questions free of charge.

New 100-percent depreciation deduction for business taxpayers

October 13, 2018

Tax reform legislation passed in December 2017 includes changes that affect businesses. One of these changes allows businesses to write off most depreciable business assets in the year they place them in service.

Here are some facts about this deduction to help businesses better understand how to claim it:

  • The 100-percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property.
  • Machinery, equipment, computers, appliances and furniture generally qualify.
  • The 100-percent depreciation deduction applies to qualifying property acquired and placed in service after Sept. 27, 2017.
  • Taxpayers who elect out of the 100-percent depreciation deduction for a class of property must do so on a timely filed return. Those who have already timely filed their 2017 return and did not elect out can still do so. These taxpayers have six months from the original filing deadline, to file an amended return. For calendar-year corporations, this means Oct. 15, 2018.
  • The IRS issued proposed regulations with guidance on what property qualifies and rules for qualified film, television and live theatrical productions, and certain plants.
  • For details on claiming the 100-percent depreciation deduction or electing out of claiming it, taxpayers should refer to the proposed regulations or the instructions to Form 4562, Depreciation and Amortization.

And as always, you may contact Tax On Wheels, LLC at 803 732-4288 if you need assistance with this or any other tax issue.

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https://go.usa.gov/xPkUb

Tax Relief for North and South Carolina Victims of Hurricane Florence

Posted September 30, 2018

SC-2018-01, Sept. 24, 2018

SOUTH CAROLINA — Victims of Hurricane Florence that took place beginning on Sept. 8, 2018 in South Carolina may qualify for tax relief from the Internal Revenue Service.

The President has declared that a major disaster exists in the States of North & South Carolina. Following the recent disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in certain counties will receive tax relief.

Individuals in South Carolina who reside or have a business in Chesterfield, Dillon, Georgetown, Horry, Marion and Marlboro counties may qualify for tax relief.

Individuals in North Carolina who reside or have a business in Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Greene, Harnett, Hoke, Hyde, Johnson, Lee, Lenoir, Jones, Moore, New Hanover, Onslow, Pamlico, Pender, Pitt, Richmond, Robeson, Sampson, Scotland, Wayne and Wilson counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 8, 2018 and before Jan. 31, 2019, are granted additional time to file through Jan. 31, 2019. This includes taxpayers who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018. It also includes the quarterly estimated income tax payments due on Sept. 17, 2018 and Jan. 15, 2019, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2018. It also includes tax-exempt organizations that operate on a calendar-year basis and had an automatic extension due to run out on Nov. 15, 2018.

In addition, penalties on payroll and excise tax deposits due on or after Sept. 8, 2018, and before Sept. 24, 2018, will be abated as long as the deposits are made by Sept. 24, 2018.

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.

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

Covered Disaster Area

The counties 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.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Jan. 31, 2019, 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; and employment and certain excise 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 Sept. 8, 2018 and before Jan. 31, 2019.

Affected taxpayers that have an estimated income tax payment originally due on or after Sept. 8, 2018 and before Jan. 31, 2019, will not be subject to penalties for failure to pay estimated tax installments as long as such payments are paid on or before Jan. 31, 2019. The IRS also gives affected taxpayers until Jan. 31, 2019 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Sept. 8, 2018 and before Jan. 31, 2019.

This relief also includes the filing of Form 5500 series returns, (that were required to be filed on or after Sept. 8, 2018 and before Jan. 31, 2019, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, 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. 2007-56, 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 Sept. 8, 2018 and before Sept. 24, 2018, will be abated as long as the tax deposits were made by Sept. 24, 2018.

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 Thefts and its Instructions.

Affected taxpayers claiming the disaster loss on a 2017 return should put the Disaster Designation, “South Carolina, Hurricane Florence” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation “South Carolina, Hurricane Florence” in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, 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 publications from the official IRS website, irs.gov, or order them by calling 800-829-3676. The IRS toll-free number for general tax questions is 800-829-1040.

As always, Tax On Wheels, LLC is available to assist taxpayers with all tax filing needs.  Tax On Wheels, LLC can be reached by calling 803 732-4288.

IRS provides tax relief for victims of Hurricane Florence

September 15, 2018

WASHINGTON — Hurricane Florence victims in parts of North Carolina and elsewhere have until Jan. 31, 2019, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, this only includes parts of North Carolina, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 7, 2018 in North Carolina. As a result, affected individuals and businesses will have until Jan. 31, 2019, to file returns and pay any taxes that were originally due during this period.

This includes quarterly estimated income tax payments due on Sept. 17, 2018, and the quarterly payroll and excise tax returns normally due on Sept. 30, 2018. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2017 extensions run out on Sept. 17, 2018. Taxpayers who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018 will also have more time to file.

In addition, penalties on payroll and excise tax deposits due on or after Sept. 7, 2018, and before Sept. 24, 2018, will be abated as long as the deposits are made by Sept. 24, 2018.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, 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 falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2018 return normally filed next year), or the return for the prior year (2017). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Please feel free to contact Tax On Wheels, LLC at 803 732-4288 if you need assistance in meeting your tax filing obligations.

Taxpayers should know the telltale signs of a scam

June 5, 2018

Many taxpayers recently filed their taxes and may be waiting for a response from the IRS. Because of this summertime tends to be a period when thieves increase their scam attempts. They try to get people to disclose personal information like Social Security numbers, account information and passwords.

To avoid becoming a victim, taxpayers should remember these telltale signs of a scam:

The IRS and its authorized private collection agencies will never:

  • Call to demand immediate payment using a specific method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury. Taxpayers should never make checks out to third parties.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.
  • Use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds.

For anyone who doesn’t owe taxes and has no reason to think they do, they should:

For anyone who owes tax or thinks they do, they can:

  • View tax account information online at IRS.gov to see the actual amount owed. Taxpayers can then also review their payment options.
  • Call the number on the billing notice.
  • Call the IRS at 800-829-1040. IRS workers can help.

More information:

Tax On Wheels, LLC is always available to assist you if you have questions or concerns about being contacted by any taxing authority, including the Internal Revenue Service.  Please feel free to give us a call at 803 732-4288 if we can be of assistance to you.

IRS now billing those who filed but didn’t pay; Many payment options available

May 29, 2018

IRS YouTube Videos:

Easy Ways to Pay My IRS TaxesEnglish | Spanish | ASL

WASHINGTON — The Internal Revenue Service today advised those now receiving tax bills because they filed on time but didn’t pay in full that there are many easy options for paying what they owe to the IRS.

If a tax return was filed but the balance due remains unpaid, the taxpayer will receive a letter or notice in the mail from the IRS, usually within a few weeks. These notices, including the CP14 and CP501, both of which notify taxpayers that they have a balance due, are frequently mailed in the months of June and July.

How to pay

Taxpayers may pay taxes by electronic funds transfer, credit card, check, money order or cash:

  • Taxpayers can use Direct Pay to pay directly from a checking or savings account. This service is free.
  • Taxpayers can take advantage of the Electronic Federal Tax Payment System (EFTPS) to pay by phone or online. EFTPS® is a free service of the U.S. Department of Treasury.
  • Taxpayers may also initiate a debit or credit card payment. The IRS doesn’t charge a fee for this service but the processing company may. Fees vary by company.
  • Taxpayers may pay by check or money order made payable to the United States Treasury (or U.S. Treasury) either in person or through the mail.
  • Taxpayers should not send cash through the mail. They can pay cash at some IRS offices or at a participating PayNearMe location. Some restrictions apply.

Taxpayers who are unable to pay what they owe should contact the IRS as soon as possible. Several payment options are available including:

  • Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes. Online applications to establish tax payment plans, like online payment agreements and installment agreements, are available Monday – Friday., 6 a.m. to 12:30 a.m.; Saturday., 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight.
  • Installment Agreement — Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Taxpayers who don’t qualify for a payment agreement may still pay by installment. Certain fees apply.
  • Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.
  • Offer in Compromise — Some struggling taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

In addition, taxpayers can consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

Even if a taxpayer works out a payment solution with the IRS, the agency may still need to file a Notice of Federal Tax Lien to secure the government’s interest. Federal law requires the lien to establish priority as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. Once the IRS files a lien, it may appear on a taxpayer’s credit report and harm their credit rating. Therefore, it’s important that they work to resolve a tax liability as quickly as possible before lien filing becomes necessary. Once the IRS files a lien, the agency generally cannot issue a Certificate of Release of Federal Tax Lien until the taxpayer pays taxes, penalties, interest and recording fees in full.

Stay current

Taxpayers can take steps now to make sure they don’t fall behind on their taxes in the future. The IRS encourages several key groups of taxpayers to perform a “paycheck checkup” to check if they are having the right amount of tax withholding following recent tax-law changes.

Employees can increase their tax withholding by filling out a new Form W-4, Employee’s Withholding Allowance Certificate, and giving it to their employer. To have more tax withheld, claim fewer withholding allowances or ask the employer to take out a fixed amount of additional tax each pay period. To help figure the right amount to withhold, use the IRS Withholding Calculator  on IRS.gov.

The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. Among other things, the new law changed the tax rates and brackets, revised business expense deductions, increased the standard deduction, removed personal exemptions, increased the child tax credit and limited or discontinued certain deductions. As a result, many taxpayers may need to raise or lower the amount of tax they pay each quarter through the estimated tax system.

The newly revised estimated tax package, Form 1040-ES, now available on IRS.gov, is designed to help taxpayers figure these payments correctly. Among other things, the package includes a quick rundown of key tax changes, income tax rate schedules for 2018 and a useful worksheet for figuring the right amount to pay. The IRS also mailed 1 million Form 1040-ES vouchers with instructions in late March to taxpayers who used the Form 1040-ES last year.

For more information, see Publication 505, Tax Withholding and Estimated Tax.

As always, you should contact Tax On Wheels, LLC at 803 732-4288 if you need assistance in dealing with the IRS or arranging payments on a tax bill.  We are here to help you.