Vision Accounting

IRS Provides Penalty Relief to Millions of Taxpayers – Did You Know?

As part of ongoing COVID-19 tax relief efforts, the IRS is waiving penalties for many businesses and individuals who file their 2019 or 2020 tax returns late. Eligible taxpayers will not have to pay a late filing penalty in relation to returns for those two years. Those who have already filed their 2019 and/or 2020 returns and paid late filing penalties will receive a refund of the penalty.

This penalty waiver will be automatic for all eligible taxpayers. However, in order to receive penalty relief, taxpayers must file their 2019 and 2020 federal tax returns by September 30, 2022.

Note that this waiver generally applies only to penalties for late filing, and not to penalties assessed for late payment of tax or other reasons.

Quarterly Estimated Tax Payments - Reminder

If you are making quarterly estimated tax payments to the IRS, the due date for the June 1st - August 31st, 2021 quarter of year is Thursday, September 15th, 2022.

For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.

Newlyweds Have Special Tax Considerations – Did You Know?

If you get married in 2022, you may need to update your tax planning and report new information to the IRS and Social Security Administration (SSA). In particular, newly married couples should:

- Report any name changes to the SSA and get a new Social Security Card (link below)
- Report any address changes to the IRS and the U.S. Postal Service
- Recheck their paycheck withholding and/or estimated tax payment amounts. Marriage can affect your tax rate, as well as your deductions and credits. You can use the IRS Withholding Calculator (link below) to make sure you are staying on track.

One of the biggest tax decisions you will need to make as a newly married couple is whether to file separate returns or file jointly. A tax professional can help you determine which status is most advantageous for you.

Social Security Administration: https://www.ssa.gov/myaccount/
IRS Withholding Estimator: https://apps.irs.gov/app/tax-withholding-estimator

Summer Income Tax Reminder - Did You Know? (2/2)

Americans of all ages with summer income from self-employment may need to pay estimated tax on a quarterly basis in order to avoid IRS penalties. Alternatively, if you have self-employment earnings but also work as an employee, the IRS Withholding Estimator tool (link below) can help you determine the correct withholding amount to cover your income and self-employment tax responsibilities.

You may also qualify to reduce your tax by deducting business expenses. A tax professional can help you comply with record keeping requirements, and fully prepare for any tax implications of your summer endeavors.

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator

Summer Income Tax Reminder - Did You Know? (1/2)

Students and other young people who earn summer income, including gig economy and other self-employment income, should prepare now for potential federal tax obligations.

In particular, minors and young adults with self-employment earnings (including gig economy income) of at least $400 must file a federal tax return and may owe self-employment tax in addition to federal income tax.

Lower $600 1099-K Filing Threshold for Payment Processors – Did You Know?

A new IRS rule may affect millions of taxpayers who receive payments through third-party processors like PayPal, Venmo, Zelle and Square. The rule applies to payments for goods and services, including payments for independent contract, freelance and gig economy work.

Beginning in 2022, the annual threshold for filing a 1099-K form is $600 in gross payments for goods and services, with no minimum number of transactions. Payment processors must submit the form to the IRS and provide a copy to the recipient of the payments.

In most cases, you must report payments shown on a Form 1099-K as income on your tax return. Note that the form shows gross payment amounts, which may include processing fees. You generally must report the gross amount on your return, but you may be able to deduct processing fees and other charges as business expenses. A tax professional can help you properly figure your gross income and any deductions you are entitled to claim.