February 16, 2023

A few minutes spent reviewing income tax withholding early in the year helps set a taxpayer up for success all year long. The Tax Withholding Estimator on IRS.gov makes it easy to figure out how much to withhold.

This online tool helps employees withhold the correct amount of tax from their wages. It also helps self-employed people who have wage income estimate their quarterly tax payments.

The Tax Withholding Estimator does not ask for personally identifiable information, such as name, Social Security number, address and bank account numbers. The IRS doesn’t save or record the information users enter in the Estimator.

Why use the Tax Withholding Estimator
Using this tool to estimate tax withholding can help taxpayers avoid unpleasant surprises. Having too little withheld can result in a tax bill or even a penalty at tax time. Having too much withheld may result in a projected refund, which could mean less money in the taxpayer’s pocket during the year. The Tax Withholding Estimator can help taxpayers decide how much to withhold to get to a balance of zero or to a desired refund amount.

Taxpayers can use the results from the Tax Withholding Estimator to decide if they should:

• Complete a new Form W-4, Employee’s Withholding Allowance Certificate and submit it to their employer, or
• Make an additional estimated tax payment to the IRS.

Before using the tool, taxpayers may want to gather a few documents, including:

• Pay stubs for all jobs. If the taxpayer married filing jointly, they would also need their spouses’ pay stubs.
• Forms W-2 from employers to estimate their annual income.
• Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan.
• Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy.
• Form 1099-INT for interest received.
• Other income documents and records of virtual currency transactions.

People do not need these documents use the tool but having them will help taxpayers estimate 2023 income and answer other questions asked during the process. The Tax Withholding Estimator results will only be as accurate as the information the taxpayer enters.

The Tax Withholding Estimator isn’t for taxpayers who

• Only have pension income – They can read more about pension and annuity withholding on IRS.gov.
• Have more complex tax situations – This includes taxpayers who owe certain taxes such as the alternative minimum tax and people with long-term capital gains or qualified dividends.

Tax On Wheels, LLC is available to assist you with this or any other tax related needs. Give us a call at 803 732-4288 if we can be of assistance to you

 

February 10, 2023

WASHINGTON – The Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022.

The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.

During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.

In addition, many people in Georgia, Massachusetts, South Carolina and Virginia also will not include state payments in income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit.

The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation.

The IRS is aware of questions involving special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022. A variety of state programs distributed these payments in 2022 and the rules surrounding their treatment for federal income tax purposes are complex. While in general payments made by states are includable in income for federal tax purposes, there are exceptions that would apply to many of the payments made by states in 2022.

To assist taxpayers who have received these payments file their returns in a timely fashion, the IRS is providing the additional information below.

Refund of state taxes paid

If the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit (for example, because the $10,000 tax deduction limit applied) the payment is not included in income for federal tax purposes.

Payments from the following states in 2022 fall in this category and will be excluded from income for federal tax purposes unless the recipient received a tax benefit in the year the taxes were deducted.

• Georgia
• Massachusetts
• South Carolina
• Virginia

General welfare and disaster relief payments

If a payment is made for the promotion of the general welfare or as a disaster relief payment, for example related to the outgoing pandemic, it may be excludable from income for federal tax purposes under the General Welfare Doctrine or as a Qualified Disaster Relief Payment.  Determining whether payments qualify for these exceptions is a complex fact intensive inquiry that depends on a number of considerations.

The IRS has reviewed the types of payments made by various states in 2022 that may fall in these categories and given the complicated fact-specific nature of determining the treatment of these payments for federal tax purposes balanced against the need to provide certainty and clarity for individuals who are now attempting to file their federal income tax returns, the IRS has determined that in the best interest of sound tax administration and given the fact that the pandemic emergency declaration is ending in May, 2023 making this an issue only for the 2022 tax year, if a taxpayer does not include the amount of one of these payments in its 2022 income for federal income tax purposes, the IRS will not challenge the treatment of the 2022 payment as excludable for income on an original or amended return.

Payments from the following states fall in this category and the IRS will not challenge the treatment of these payments as excludable for federal income tax purposes in 2022.

• Alaska[1]
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Hawaii
• Idaho
• Illinois[2]
• Indiana
• Maine
• New Jersey
• New Mexico
• New York²
• Oregon
• Pennsylvania
• Rhode Island

For a list of the specific payments to which this applies, please see this chart.

Other payments

Other payments that may have been made by states are generally includable in income for federal income tax purposes.  This includes the annual payment of Alaska’s Permanent Fund Dividend and any payments from states provided as compensation to workers.

March 29, 2021

The IRS continues to issue the third round of Economic Impact Payments to eligible individuals, with payments being issued as a direct deposit or by mail as a paper check or prepaid EIP debit card. No action is needed by most eligible people to receive a third Economic Impact Payment automatically.

Check Get My Payment to see if a third payment is scheduled People can check to see if the their third payment has been scheduled using the Get My Payment tool on IRS.gov. The tool does not show the amount of the third Economic Impact Payment.

The form of payment for the third EIP may be different than earlier stimulus payments. More people are receiving direct deposits, while those receiving a payment in the mail may get a paper check or an EIP Card. IRS and the Treasury Department urge eligible people to check Get My Payment and see whether their payment has been scheduled for delivery as a direct deposit or by mail as a check or EIP card.

Watch the mail for paper checks and EIP Cards Paper checks will arrive by mail in a white envelope from the U.S. Department of the Treasury. For those taxpayers who received their tax refund by mail, this paper check will look similar, but will have Economic Impact Payment in the memo field.

The EIP Card will also come in a white envelope prominently displaying the seal of the U.S. Department of the Treasury. The card has the Visa name on the front and the issuing bank, MetaBank, N.A. on the back. Information included with the card will explain that this is an Economic Impact Payment. Each mailing will include instructions on how to securely activate and use the card.

EIP cards issued for any of the three rounds of payments are not reloadable. Recipients will receive a separate card and will not be able to reload funds onto an existing card.

EIP Cards are safe, convenient, and secure
These cards provide certain protections against fraud, loss, and other errors. They can be used to make purchases online or in stores anywhere Visa® Debit Cards are accepted.

Cardholders can use the cards to do any of the following without paying a fee:

• Transfer funds to a personal bank account
• Make signature or PIN-debit purchases anywhere Visa Debit Cards are accepted — in stores, online or by phone
• Get cash back with a PIN debit purchase where available
• Get cash from in-network ATMs
• Get a replacement EIP Card, if needed
• Check their card balance online, through a mobile app or by phone

The EIP Card is sponsored by the Bureau of the Fiscal Service and is issued by Treasury’s financial agent, MetaBank, N.A. The IRS does not determine who receives a prepaid debit card.

For more information about these cards people can visit EIPcard.com. The latest details about the third round of Economic Impact Payments are available on IRS.gov.

As always, please feel free to contact Tax On Wheels, LLC at 803 732-4288 for assistance with this or any other tax matter.

March 3 2017

Taxpayers who did not file a tax return for 2013 may be one of the nearly 1 million who may be due a refund from that year. Taxpayers must claim their part of almost $1 billion by this year’s April 18 tax deadline. To claim a refund, taxpayers must file a 2013 federal income tax return. Here are some facts about unclaimed refunds:

• The unclaimed refunds apply to people who did not file a federal income tax return for 2013. The IRS estimates that half the potential refunds are more than $763.
• Some people, such as students and part-time workers, may not have filed because they had too little income to require them to file a tax return. They may have a refund waiting if they had taxes withheld from their wages or made quarterly estimated payments. A refund could also apply if they qualify for certain tax credits, such as the Earned Income Tax Credit.
• The law generally provides a three-year window to claim a tax refund. For 2013 returns, the window closes on April 18, 2017.
• The law requires that taxpayers properly address, mail and postmark their tax returns by April 18, 2017, to claim their refund.
• After three years, unclaimed refunds become property of the U.S. Treasury. There is no penalty for filing a late return if taxpayers are due a refund.
• The IRS may hold 2013 refunds if taxpayers have not filed tax returns for 2014 and 2015. The U.S. Treasury will apply the refund to any federal or state tax owed. Refunds may also be held  to offset unpaid child support or past due federal debts such as student loans.
• Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for prior years should ask for copies from employers, banks or other payers. Taxpayers unable to get these copies can request a wage and income transcript either online or by mail.  Taxpayers can also file Form 4506-T to get a transcript.
• The three-year window also usually applies to a refund from an amended return. In general, you must file Form 1040X, Amended U.S. Individual Income Tax Return, within three years from the date you filed your original tax return. You can also file it within two years from the date you paid the tax, if that date is later than the three-year rule. That means the deadline for most people to amend their 2013 tax return and claim a refund will expire on April 18, 2017.

Current and prior year tax forms and instructions are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Filing prior year returns can be tricky. Amending returns for any year can be downright confusing.  This is not something most people will want to undertake on their own.  Let us help you.  If you would like to receive assistance in claiming your prior year refunds or amending any return just give Tax On Wheels, LLC a call at 803 732-4288.  We specialize in bringing taxpayers up to date on their tax filings.

Additional IRS Resources:

• IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2013 Federal Income Tax Return

IRS YouTube Videos:

• Amending My Return – English | Spanish | ASL
• Refund: Claim It or Lose It – English | Spanish | ASL

March 30, 2016

The New York State Department of Taxation and Finance, and the New York Department of State’s Division of Consumer Protection, are highlighting five ways that the seven million New Yorkers who receive tax refunds can make smart decisions with their money.

• Save–Use your tax refund to bolster your emergency savings. This could help you avoid credit card debt and resulting interest payments if something unforeseen happens. Financial experts suggest having at least three months’ worth of savings to cover all your fixed expenses, such as mortgage or rent, utilities, food, and insurance.
• Maintenance–If you’ve never had the extra money to build that new deck or put in those new kitchen cabinets that you’ve always wanted, now might be the time. In addition to improving the look and functionality—and possibly increasing the overall value—of your home, many home improvements qualify for tax benefits as well. Any project considered a capital improvement is exempt from sales tax.
• Avoid debt–Your tax refund can put a sizable dent in—or even erase—your credit card debt. If you pay it off now, you won’t continue to pay interest charges. Your tax refund can also help to pay off your student loans earlier.
• Retirement planning–Investing your tax refund now for the future is smart financial planning. There are many ways to save for retirement, including adding your refund money to your 401(k). If your employer doesn’t offer a 401(k) option, then consider opening an IRA. The sooner you start saving for retirement, the more time your money has to grow.
• Training–To earn that promotion or switch career paths you often need additional training and education. You can spend your tax refund on college courses to help you in your career. You could also invest in a 529 College Savings Plan to help pay for your child’s future education.

“There’s no harm in treating yourself, of course—you’ve earned it!” says New York State Commissioner of Taxation and Finance Jerry Boone. “But making a smart decision now can help pave the way to a better financial situation down the road.”

“Foresight and education are keys to being a smart consumer,” said Acting Secretary of State Rossana Rosado. “These suggestions provide New Yorkers with some of the options available to help them secure a better financial future.”

For more information contact Tax On Wheels, LLC at 803 732-4288

March 22, 2016

Although we are located in South Carolina, we prepare tax returns for clients all across the country including the state of New York.

For the past few weeks, the state of New York has been on a bit of a tear locking up rogue tax preparers, as have many other jurisdictions including the IRS.  But New York has made a special effort to post the name and image of tax preparers who have been arrested for various scams involving bogus tax returns to the tune of about one a week. (Scroll to the bottom of this article for more details on the arrests).

In light of their recent activities, the state of New York has posted what we think is a pretty good guide to choosing a tax preparer and we would like to share their guide with our readers.  Of course, we think Tax On Wheels, LLC is an excellent choice for your tax preparation needs and we will be happy to assist you with your tax return.  Simply give us a call at 803 732-4288 and we will take it from there.

Following Recent Statewide Tax Preparer Arrests, NYS Tax Department and the NYS Division of Consumer Protection Issue Alert

Tax Department launches new webpage and checklist for taxpayers who are considering hiring a tax preparer.

The New York State Department of Taxation and Finance and the Division of Consumer Protection today issued a consumer warning to the seven million taxpayers who have yet to file income tax returns.

“In light of the recent arrests of tax preparers across New York State, we’re urging taxpayers to ask the right questions before trusting someone with their private information,” said New York State Commissioner of Taxation and Finance Jerry Boone. “Each year, we receive thousands of tax returns based on stolen identities, some of which are submitted by unethical tax preparers. If you choose to hire a tax preparer, follow these easy steps to ensure that the preparer is honest and qualified.”

“The Division of Consumer Protection strongly urges all New Yorkers to practice due diligence when selecting a tax preparer,” said Acting NYS Secretary of State Rossana Rosado. “Always get the terms and total cost of the service in writing. Avoid any tax preparer who charges a percentage of your tax refund as part of the fee. Most important, if you suspect you’re being defrauded by a tax preparer, report that individual to the Tax Department immediately.”

Before you hire a tax preparer

While millions of New Yorkers prepare their taxes without the services of a paid tax preparer, the Tax Department and Division of Consumer Protection encourage taxpayers who are considering a paid preparer to ask these four questions:

• Are you registered with the IRS and New York State? New York State registered preparers must meet continuing education requirements and minimum qualifications. Attorneys, certified public accountants, and IRS enrolled agents aren’t required to register but do have other professional requirements. Ask to see the preparer’s registration certificate or proof that he or she isn’t required to register. (You can also verify that a tax preparer is registered online.)

• How much will it cost? Ask to see a list of fees. The fees should be directly related to the services provided and not the refund amount. Also, by law, preparers cannot charge to e-file in NYS.
• How will I receive my refund? A refund should never be deposited into a preparer’s bank account. The fastest and safest way to receive your refund is to have it directly deposited into your bank account.
• Will you sign the return? A completed tax return must be signed by both the taxpayer and the preparer. Preparers must also include their federal preparer tax identification number (PTIN) or social security number, and either their NYS registration number or exclusion code. You should never hire a preparer who won’t sign your return, and never sign a return before it’s fully prepared.

Taxpayers should also ensure that the preparer will:

• base the tax return on actual records and receipts,
• e-file the return, and
• be available after the tax return is filed in case questions arise.

Taxpayers can also contact the Better Business Bureau to see whether a tax preparer has a history of consumer complaints.

New York is one of only four states to regulate the tax preparer industry. While most tax preparers are honest and provide excellent service to their clients, taxpayers must remain vigilant to protect themselves from individuals who file fraudulent returns or misuse personal information.

New webpage and checklist for taxpayers

To help taxpayers screen potential tax preparers, the Tax Department published a new checklist available at its Tips for hiring a tax preparer webpage. Before hiring a tax preparer, use the checklist as a guideline when visiting or calling prospective preparers.

File a complaint

If you’re aware of a tax preparer who has engaged in illegal or improper conduct, contact the NYS Tax Department’s Office of Professional Responsibility at (518) 530-HELP (option #2) or file a tax preparer complaint online. The Tax Department will review your complaint promptly and, where appropriate, take corrective action, which may include sanctions.

Recent arrests

• Two Broome County Tax Preparers and Nine “Clients” Charged with Tax Fraud
• NYS Tax Commissioner Announces Arrest of a Yorktown Heights Tax Preparer
• NYS Tax Department and Onondaga County District Attorney Announce Arrest of Syracuse Tax Preparer
•  New York State Tax Commissioner and Richmond County District Attorney Announce the Arrest of a Staten Island Tax Preparer
• NYS Tax Commissioner Announces Another Tax Preparer Arrest in Onondaga County

February 8, 2016

We have been informed that the IRS has released significant funding for tax refunds with an effective date of Wednesday February 10, 2016.

This is good news for those of you waiting on a federal refund.  According to previously issued statements by the IRS, 90% of you will have good news waiting for you at the bank soon. ;+)

No word yet on state refunds.

January 28, 2016

We are receiving inquiries regarding how long it will take to receive tax refunds this year due to extra scrutiny the IRS is performing to prevent fraudulent tax refunds.  This morning the IRS issued the following notice.

WASHINGTON — The Internal Revenue Service today reminded taxpayers that it issues 90 percent of refunds in less than 21 days. The best way to check the status of a refund is online through the “Where’s my Refund?” tool at IRS.gov or via the IRS2Go phone app.

“As February approaches, more and more taxpayers want to know when they can expect their refunds,” said IRS Commissioner John Koskinen. “There aren’t any secret tricks to checking on the status of a refund. Using IRS.gov is the best way for taxpayers to get the latest information.”

Many taxpayers are eager to know precisely when their money will be arriving, but checking “Where’s My Refund” more than once a day will not produce new information. The status of refunds is refreshed only once a day, generally overnight.

“Where’s My Refund?” has the most up to date information available about your refund. Taxpayers should use this tool rather than calling.

Taxpayers can use “Where’s My Refund?”  to start checking on the status of their return within 24 hours after IRS has received an e-filed return or four weeks after receipt of a mailed paper return. “Where’s My Refund?” has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent.

The IRS2Go phone app is another fast and safe tool taxpayers can use to check the status of a refund. In addition, users can use the app to find free tax preparation help, make a payment, watch the IRS YouTube channel, get the latest IRS news, and subscribe to filing season updates and tax tips. The app is free for Android devices from the Google Play Store or from the Apple App Store for Apple devices.

Users of both the IRS2Go app and “Where’s my Refund” tools must have information from their current, pending tax return to access their refund information.

The IRS reminded taxpayers there’s no advantage to calling about refunds. IRS representatives can only research the status of your refund in limited situations: if it has been 21 days or more since you filed electronically, more than six weeks since you mailed your paper return, or “Where’s My Refund?” directs you to contact us. If the IRS needs more information to process your tax return, we will contact you by mail.

The IRS continues to strongly encourage the use of e-file and direct deposit as the fastest and safest way to file an accurate return and receive a tax refund. More than four out of five tax returns are expected to be filed electronically, with a similar proportion of refunds issued through direct deposit.

See the “What to Expect for Refunds in 2016” page for more.

Please feel free to contact Tax On Wheels, LLC  at 803 732-4288 if you need assistance with your tax refund.

When it comes to filing a federal tax return, many people discover that they either get a larger refund or owe more tax than they expected. But this type of tax surprise doesn’t have to happen to you. One way to prevent it is to change the amount of tax withheld from your wages. You can also change the amount of estimated tax you pay. Here are some tips to help you bring the amount of tax that you pay in during the year closer to what you’ll actually owe:

•    New Job.   When you start a new job, you must fill out a Form W-4, Employee’s Withholding Allowance Certificate. Your employer will use the form to figure the amount of federal income tax to withhold from your pay. Use the IRS Withholding Calculator on IRS.gov to help you fill out the form. This tool is easy to use and it’s available 24/7.

•    Estimated Tax.  If you get income that’s not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, dividends or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay it four times a year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure the tax.

•    Life Events.  Make sure you change your Form W-4 or change the amount of estimated tax you pay when certain life events take place. A change in your marital status, the birth of a child or buying a new home can change the amount of taxes you owe. You can usually submit a new Form W–4 anytime.

•    Changes in Circumstances.  If you receive advance payment of the premium tax credit in 2014 it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

For more see Publication 505, Tax Withholding and Estimated Tax. You can get it on IRS.gov, or call 800-TAX-FORM (800-829-3676) to get it by mail.

Additional IRS Resources:

• Publication 5152: Report changes to the Marketplace as they happen  English | Spanish

IRS YouTube Videos:  

• Premium Tax Credit: Changes in Circumstances – English| Spanish
• Premium Tax Credit – English | Spanish | ASL
• IRS Withholding Calculator – English | Spanish | ASL

IRS Podcasts:

 

• Premium Tax Credit: Changes in Circumstances – English| Spanish

 

• Premium Tax Credit – English | Spanish
• IRS Withholding Calculator – English | Spanish

IRS Tax Tip 2013-60

Certain financial debts from your past may affect your current federal tax refund. The law allows the use of part or all of your federal tax refund to pay other federal or state debts that you owe.

Here are six facts from the IRS that you should know about tax refund ‘offsets.’

1. A tax refund offset generally means the U.S. Treasury has reduced your federal tax refund to pay for certain unpaid debts.
2. The Treasury Department’s Financial Management Service is the agency that issues tax refunds and conducts the Treasury Offset Program.
3. If you have unpaid debts, such as overdue child support, state income tax or student loans, FMS may apply part or all of your tax refund to pay that debt.
4. You will receive a notice from FMS if an offset occurs. The notice will include the original tax refund amount and your offset amount. It will also include the agency receiving the offset payment and that agency’s contact information.
5. If you believe you do not owe the debt or you want to dispute the amount taken from your refund, you should contact the agency that received the offset amount, not the IRS or FMS.
6. If you filed a joint tax return, you may be entitled to part or all of the refund offset. This rule applies if your spouse is solely responsible for the debt. To request your part of the refund, file Form 8379, Injured Spouse Allocation.

Tax On Wheels, LLC is available to assist you with offsets and refunds.  Simply call us at 803 732-4288.