Every answer to every possible question you may have about your stimulus payment check, can be found here:

https://www.irs.gov/coronavirus/get-my-payment-frequently-asked-questions#bank

I just received the following Press Release from the IRS:

Taxpayers should be aware of Coronavirus-related scams

Taxpayers should be on the lookout for IRS impersonation calls, texts and email phishing attempts about the coronavirus or COVID-19 Economic Impact Payments. These scams can lead to tax-related fraud and identity theft.

Here’s what taxpayers should know:

• The IRS will not call, email or text you to verify or request your financial, banking or personal information.
• Watch out for websites and social media attempts to request money or personal information. The official website is IRS.gov.
• Don’t open surprise emails that look like they’re coming from the IRS or click on attachments or links.
• Taxpayers should not provide personal or financial information or engage with potential scammers online or over the phone.
• Forward suspicious emails to phishing@irs.gov, then delete.
• Go to IRS.gov for the most up-to-date information.

Here’s what people should know about the Economic Impact Payments:

• The IRS will automatically deposit Economic Impact Payments into the bank account taxpayers provided on their 2019 or 2018 tax return for a direct deposit of their tax refund.
• Those without a direct deposit account on file may be able to provide their banking information online through a new secure tool, Get My Payment.
• Anyone who is eligible for an Economic Impact Payment and doesn’t provide direct deposit information will receive a payment mailed to the last address the IRS has on file.
• The IRS does not charge a fee to issue the payment.

Scammers may:

• Ask an individual to sign over their Economic Impact Payment check to them.
• Ask for verification of personal or banking information.
• Suggest that they can get someone tax refund or Economic Impact Payment faster by working on their behalf.
• Issue a bogus check, often in an odd amount, then tell a person to call a number or verify information online in order to cash it.

Official IRS information about the COVID-19 pandemic and Economic Impact Payments can be found on the Coronavirus Tax Relief page on IRS.gov. The IRS encourages people to share this information with family and friends. Many people who normally don’t normally file a tax return may not realize they’re eligible for an Economic Impact Payment.

More information:
Report Phishing and Online Scams
Tax Scams

According to Spidell, a tax analysis and education company:

Economic impact payment direct deposit portal open (04-15-20)

The IRS opened its direct deposit portal on its website this morning. By clicking on the “Get My Payment” button at www.irs.gov/coronavirus/economic-impact-payments, taxpayers can:

• Enter their bank account information if they hadn’t previously requested direct deposit on a return, or if they want to update their information;
• Confirm the payment type: direct deposit or check; and
• Check their payment status.

Taxpayers wanting to add their bank account information to speed up the receipt of their payment must provide the following information:

• Their AGI from their most recent tax return submitted, either 2019 or 2018;
• The refund or amount owed from their latest filed tax return; and
• Bank account type, account and routing numbers.

Comment: It appears that if a taxpayer does not qualify for a payment due to income level, after entering the requested information a message stating “Payment Status Not Available” and a link to information on eligibility rules will be displayed.

Non-filers who receive Social Security Income will receive their stimulus checks because the IRS will get payment information from the SSA. However, what if you are among the many who neither filed a tax return in 2018 and 2019? Eligible U.S. citizens or permanent residents who had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019 and were not otherwise required to file a federal income tax return for 2019, and didn’t plan to can use the IRS portal to sign up for payment. Simply click on the link below:

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

Who will receive the Economic Impact Payment automatically without taking additional steps?

Most eligible U.S. taxpayers will automatically receive their Economic Impact Payments including:

• Individuals who filed a federal income tax for 2018 or 2019
• Individuals who receive Social Security retirement, disability (SSDI), or survivor benefits
• Individuals who receive Railroad Retirement benefits

If you are concerned that payment will be delayed because the IRS doesn’t have your banking information, please know that a portal will be available in the very near future for you to provide this information to them.

I’ve had dozens of questions relating a variety of tax and economic topics. These are the most common ones:

Q. I’m self-employed, a sole proprietor (or in some cases a freelancer or gig worker). Can I apply for unemployment?
A. Yes you may. In normal circumstances, you would not be able to because you haven’t paid into the system. But these are different times and allowances are being made to help us all. In CA go to https://www.edd.ca.gov/unemployment/filing_a_claim.htm to file a claim

Q. I did not file a tax return for 2018 or 2019 because I was on Social Security and had no other income. Will I get a stimulus check automatically or do I have to file a return to get the check?
A. Yes, you will get the check automatically. There is no need to file an abbreviated tax return. At first, this was a requirement but the IRS realized that it can pick up your bank account info from the roles at SSA. So that’s what they are doing. They will provide you with a direct deposit of the stimulus check into your bank account.

Q. What if I didn’t have a filing requirement for the last two years and I wasn’t collecting social security? How will they know to send me a check?
A. Right now nothing is in place to help you. As soon as the IRS releases information about how people can go online to make sure they receive their EIP, they will let you know. Info on this should be coming out this week. Go to: https://www.irs.gov/coronavirus to check on recent developments. I understand they will be setting up a portal to deal with individuals in these situations.
You may also file an EIP tax return. Most tax pros are equipped to handle this. Or go to www.irs.gov and file it yourself. Click on the Free File button on the home page.

Q. Do I have to do anything, file any forms, to get the new extension to July 15? When must I pay my taxes?
A. No additional paperwork required; no extension need be filed. It’s automatic for both federal and CA. the extension includes time to pay not only your 2019 tax liability free of penalty and interest. July 15 is also the new due date for your first two installments of your estimated tax payments for 2020, normally due April 15 and June 15.

Q. I got a call from the IRS saying they don’t have my direct deposit information. Is it okay to provide them with that information over the phone or was that a scam? I hung up on them.
A. Yes, hanging up was the right thing to do because indeed it was a SCAM! Beware, the scammers are out there taking advantage of you during this trying time. Remember: The IRS will NEVER call you or email you. They always deal through snail mail correspondence.

Q. I tried to call the IRS this week to set up an installment agreement for the taxes I owe but no one answered the phones. Are they overwhelmed right now?
A. As a matter of fact, there are no phone operators on duty, so forget about calling them. They have also suspended collection activity for the duration. And the Practioner Hotline is closed as well. Many tax matters, such as setting up installment agreements can be dealt with online. Go to: www.irs.gov to set up your payment plan. You can also do many other things: apply for an EIN, get transcripts of your account, and check the status of your refund, among others. Their website has become a handy tool.

Q. My business needs help! I don’t know which loan to apply for: the Disaster Assistance or the Payroll Protection Loan.
A. The disaster assistance loan caps at $10,000 and may be forgiven if you use the funds for operating expenses. You may apply for it directly with the Small Business Administration (SBA) The payroll protection loan can be for much higher amounts and in addition to operating expenses, it covers 8 weeks of payroll for your employees. You must apply for this loan through your bank. Go to: https://www.sba.gov and click on the golden ruler bar at the top “Corona virus (COVID-19): Relief options and Additional Resources.”

Please note that on April 9 the IRS announced that Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time to file and pay their 2019 taxes to July 15, 2020. Initially, only individuals were allowed this automatic extension.

If additional time is needed to file and pay, you may file an extension to October 15,2020. This extension must be filed by July 15, 2020. Also, any tax due (you may need to estimate) must be paid by July 15. There is no further extension granted of time to pay.

If you have a tax question, please write to me at bonnie@taxpertise.com.

California is under the Shelter in Place mandate and it’s a little freaky out there. All these crazy changes to our way of life, our way of shopping (do you have enough toilet paper yet?), to our economy. Temporary, we expect. We hope. Of course one thing doesn’t ever change, does it? And you know I’m talking about taxes.

The IRS has just announced today that the new filing and payment deadline for your 2019 individual income tax return is July 15, 2020. You do not have to file any additional paperwork to enjoy the new extension. It is automatic.

And if you are anticipating a refund, it is wise to file early so you can get your money sooner.

Having to pay is a different story. It’s natural to want to put that off to the last minute. The good news is that the IRS has extended your payment deadline to July 15, 2020. So if you have a liability, you may pay it at that time without being charged any interest or penalties. This good news includes an extension for the payment of your first installment of 2020 estimated tax payments. Those may be paid by July 15 as well without penalty or interest.

According to Spidell Publishing, an education resource for tax professionals:

“Any person with a federal income tax payment due April 15, 2020, who is affected by the COVID-19 emergency is eligible for the following relief:

• Deferral of up to $1 million in aggregate for all taxpayers other than C corporations, regardless of filing status (so the $1 million limit applies to joint filers); or
• Deferral of up to $10 million in aggregate for C corporations (the $10 million limit applies at the consolidated group level if the corporation is part of a consolidated group).

The relief only applies to:

• 2019 income tax payments due on April 15, 2020 (including self-employment taxes); and
• The April 15, 2020, estimated income tax payment due on April 15, 2020, for the 2020 taxable year (including self-employment taxes).

This federal relief is granted under IRC §7508A, which California conforms to. As a result, we believe California conforms to the July 15 payment extension.”

Stay safe, stay healthy. We will make it through this!

You may realize that your income is below the threshold for filing a 2019 income tax return and to save the irritation and fees for filing, you don’t do it. That’s completely acceptable and possibly reasonable. I say possibly, because there are many good reasons to file. And why? Because you may be entitled to money back from the IRS.

The IRS sums it up with not just one, but five reasons you may want to file:

Find out the general reasons to file
In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed – in this case, you must file if you had at least $400 in self-employment income – or can be claimed as a dependent of someone else. There are other reasons when a taxpayer must file. The Interactive Tax Assistant can help someone determine if they the need to file a return.

Refund Potential – Look at tax withheld or paid
Here are a few questions for taxpayers to ask themselves:

• Did your employer withhold federal income tax from your pay?
• Did you make estimated tax payments?
• Did you overpay last year and have it applied to this year’s tax?

If the answer is “yes” to any of these questions, you could be due a refund. You must file a tax return to get their money.

Look into whether you can claim the earned income tax credit
A working taxpayer who earned less than $55,592 last year could receive the EITC as a tax refund. You must qualify and may do so with or without a qualifying child. You can check eligibility by using the 2019 EITC Assistant on IRS.gov. Taxpayers need to file a tax return to claim the EITC.

Child tax credit or credit for other dependents
Taxpayers can claim the child tax credit if they have a qualifying child under the age of 17 and meet other qualifications. Other taxpayers may be eligible for the credit for other dependents. This includes people who have:

• Dependent children who are age 17 or older at the end of 2019
• Parents or other qualifying individuals they support

The Child-Related Tax Benefits tool can help people determine if they qualify for these two credits.

Education credits
There are two higher education credits that reduce the amount of tax someone owes on their tax return. One is the American opportunity tax credit and the other is the lifetime learning credit. You, your spouse or your dependent must have been a student enrolled at least half time for one academic period to qualify. You may qualify for one of these credits even if you don’t owe any taxes. Form 8863, Education Credits is used to claim the credit when filing the tax return.

And note that if your total income for the year is $69,000 or less you qualify to file for free. Go to www.irs.gov and press the button for Free File to connect to a service that charges no fees for filing your 2019 income tax return.

More information:
Schedule 8812 (Form 1040), Child Tax Credit
Publication 972, Child Tax Credit
Free Tax Return Preparation for Qualifying Taxpayers
Choosing a tax professional
Free File
Let Us Help You

The scammers are out there and they just don’t stop. By now you know better than to worry if someone from the IRS calls (it’s never them; they correspond by Snail Mail only)/ Taxpayers should be on the lookout for new variations of tax-related scams. In the latest twist on a scam related to Social Security numbers, scammers claim to be able to suspend or cancel the victim’s SSN. It’s yet another attempt by con artists to frighten people into returning ‘robocall’ voicemails.

Scammers may mention overdue taxes in addition to threatening to cancel the person’s Social Security Number (SSN). If taxpayers receive a call threatening to suspend their SSN for an unpaid tax bill, they should just hang up.

Make no mistake…it’s a scam.

Taxpayers should not give out sensitive information over the phone unless they are positive they know the caller is legitimate. When in doubt –hang up. Here are some telltale signs of this scam. The IRS and its authorized private collection agencies will never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, iTunes gift card or wire transfer. The IRS does not use these methods for tax payments.
• Ask a taxpayer to make a payment to a person or organization other than the U.S. Treasury.
• Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
• Demand taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

Taxpayers who don’t owe taxes and have no reason to think they do should:

• Report the call to the Treasury Inspector General for Tax Administration.
• Report the caller ID and callback number to the IRS by sending it to phishing@irs.gov. The taxpayer should write “IRS Phone Scam” in the subject line.
• Report the call to the Federal Trade Commission. When reporting it, they should add “IRS Phone Scam” in the notes.

Taxpayers who owe tax or think they do should:

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

So don’t be fooled. Don’t subject yourself to undue stress. If you still have doubts, consult with your tax professional to determine the legitimacy of any calls or correspondence you receive.

With summer almost here, many students will turn their attention to making money from a summer job. Whether it’s flipping burgers or filing documents, the IRS wants student workers to know some facts about their summer jobs and taxes.

Not all the money they earn will make it to their pocket because employers must withhold taxes from their paycheck. Here are some tax tips young individuals should know when starting a summer job.

New employees:  Employees – including those who are students – normally have taxes withheld from their paychecks by their employer. When anyone gets a new job, they need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the new employee’s pay. The Withholding Calculator on IRS.gov can help a taxpayer fill out this form.

If your total income from all sources for the year will be less than $12,000 you will likely not be required to file a tax return. Therefore, you should indicate “Exempt” on your Form W4 so that your employer does not withhold federal and state income taxes from your pay. Otherwise, you would need to file a return to get that money refunded to you.

Self-employment: Students who do odd jobs over the summer to make extra cash are self-employed. This include jobs like baby-sitting or lawn care. Money earned from self-employment is taxable, and self-employed workers may be responsible for paying taxes directly to the IRS. One way they can do this is by making estimated tax payments on a quarterly basis during the year. Read up on this at www.irs.gov or check with your tax pro to determine when and how much you should pay in. In addition to income tax, payment in the form of Self-employment tax  which funds your Social Security and Medicare accounts is required.

Tip income: Students working as waiters or camp counselors who earn tips as part of their summer income should know tip income is taxable. They should keep a daily log to accurately report tips. They must report cash tips to their employer for any month that totals $20 or more.

Payroll taxes: This tax pays for benefits under the Social Security system. While students may earn too little from their summer job to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a student is self-employed, Social Security and Medicare taxes may still be due and are generally paid by the student.

Reserve Officers’ Training Corps pay: If a student is in an ROTC program, and receives pay for activities such as summer advanced camp, it is taxable. Other allowances the student may receive – like food and lodging – may not be taxable. The Armed Forces’ Tax Guide on IRS.gov provides details.

More Information:
Tax rules for students
Is My Tip Income Taxable?
Do I Have Income Subject to Self-Employment Tax?

For 2018 a complicated tax reform bill the “Tax Cuts and Jobs Act (TCJA) took effect promising to help the middle and lower classes enjoy bigger take home pay and lower tax liabilities. Tax rates dropped, the standard deduction doubled. This was major stuff. The biggest tax reform act since 1986.

So how is it shaking out? The IRS reported today, February 28, 2019, that the average refund at this point in the filing season is now up 1.3 percent over last year based on 47.7 million individual returns processed thus far in 2019 compared 49.2 million returns processed in 2018. Not a significant leap but still, it’s something positive.

On the other hand, there have been a lot of complaints. For many the new tax law isn’t working out as anticipated and many taxpayers are experiencing much smaller refunds and they wonder why. People are confused and angry.

Let’s examine some of the reasons. As with all tax reform, the new bill involved a lot of giving with one hand and slapping across the face with the other. Explained below are various reasons that your refund is much lower than expected:

1. Compare your 2018 income and withholdings against your 2017 income tax return. For some the reason is simply that income has increased but insufficient tax was withheld or paid in the form of estimates to cover the additional liability.
2. The standard deduction has essentially doubled. However, personal exemptions have been removed ($4,050 for each person listed on the tax return) making the benefit of the increased standard deduction negligible or completely insignificant or worse yet, throwing you into a higher liability.
3. For those who itemize with totals above the standard deduction for their filing status, it doesn’t matter to them that the standard deduction has doubled. But it definitely hurts to lose the personal exemption. For those in the middle class, this could be an increase in tax liability of nearly $1,000 or in some cases substantially more.
4. Itemized deductions have also been trimmed. No longer can you deduct employee business expenses, tax preparation software or tax preparation fees, portfolio management advisory fees, safe deposit rental fees among other miscellaneous itemized deductions. Also, the amount of taxes you can deduct in 2018 (real estate taxes, state income taxes, DMV fees, etc.) has been capped at $10,000. If you are a high earner, you likely have a large state tax liability. Say bye bye to any deduction greater than $10,000.
5. Even though tax rates decreased, your refund may be less because you elected to take home a larger net pay. Your withholding was adjusted downward so could enjoy a bigger paycheck throughout the year. This action will reduce your refund or put you in the position of owing Uncle Sam.
6. There may have been other taxable events this year that are out of the norm. Perhaps you sold investments or collected unemployment or began receiving Social Security benefits. Or you may have experienced other taxable transactions that increased your liability.
7. Here’s a strange one: your income decreased but it caused a reduction in the Earned Income Credit and therefore a lower refund.

These are the main causes. The best idea is to review your 2017 tax return and compare it to your 2018 data to see if you can find any other reason(s) why your refund is lower. Your tax pro can assist you with this process.