Tag: IRS

blog&news

ECONOMIC STIMULUS BILL

Your phones are probably ringing with taxpayers wanting to know about their stimulus checks. The below article is not intended to address all potential scenarios but to hit on the stimulus check highlights regarding the questions we are being asked.

What is it?

In simple terms – The Stimulus check is a one-time nontaxable payment sent to all legal residents who are not claimed (or eligible to be claimed) as a dependent on someone else’s tax return and don’t make too much money based on your most recent filed tax return (2018 or 2019).

Who gets what? Things to know…

Stimulus payments will be phased out for certain income levels:

Individuals with a 2019 filing status of Single, MFS or Qualified Widower

  • Phase out begins if AGI over $75,000
  • MFJ, Phase out begins if AGI exceeds $150,000
  • HOH, Phase out begins if AGI is greater than $112,500

Based on the above criteria, how much can they expect?

  • $1,200 for individual.
  • $2,400 for MFJ

Additional $500 per qualifying child under the age of 17.

  • Click HERE for more info on qualifying child.

How does the phaseout work?

For every $100 of income above the threshold, the payment will drop by $5.

  • Example: A single filer with AGI of $75,100 = $1,195 ($1,200-$5).

Is the payment taxable as 2020 income?

No, the Payment is not income and you will not owe tax on your Payment. It will not reduce your refund or increase the amount you owe when you file your 2020 tax return next year. A Payment also will not affect your income for purposes of determining eligibility for federal government assistance or benefit programs.

For additional questions regarding the Economic Impact Payments CLICK HERE

blog&news

PAID PREPARER DUE DILIGENCE LAW

IRS paid preparer due diligence compliance program is not something new to the tax industry, but the IRS is continually adopting new tactics and adding new things to the program. The paid preparer due diligence compliance program includes earned income credit (EITC), the child tax credit (CTC), additional child tax credit (ACTC), the other dependents (ODC), the American opportunity tax credit (AOTC) and the head of household (HOH) filing status.

As a paid preparer the four most important due diligence requirements are:

Complete and submit form 8867 – for each return, you prepare that claims EITC, CTC, ACTC, ODC, AOTC and/or HOH filing status.

Compute the credits based on the facts – Complete the appropriate worksheets for each credit based on information provided by your client.

Ask all the right questions – Ask questions to your clients and document their answeres. also. take lots of notes on verbal interview process. Sometimes, this is not the most pleasant process and involves asking very personal questions but keep in mind the rule of thumb is the more information you get the better it is when it comes to preparer audits.

Keep records – Maintain copies of all documents your client gave you on which you relied on to determine eligibility for the credits or HOH filing status or to compute the amount of the credits.

We all have heard the saying “you can’t be too careful”. Your best option when it comes to Due Diligence Audit is knowing the rules and having the documentation/notes to back it all up!

Preparer Due Diligence Law – Here is the link to the IRS website, which will provide you with a lot more information on this topic.