Economic Impact Payments (EIP) – Is it too late for me to get my stimulus check?

First, those $1200 checks are officially referred to as Economic Impact Payments or EIP. So if you’re looking for information, you’ll know what to search for.

Second, for the most up-to-date and accurate information about these payments, go to https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments.

The good news? It’s not too late to receive an EIP. Anyone receiving SSI, Social Security Disability, Social Security and Veterans Benefits, will have their EIP will be deposited into their account just as their monthly benefits are. This is automatic, nothing else needs to be done.

Anyone who already filed their 2019 federal tax return, will also receive their EIP automatically. The money will be deposited into the account listed on that return or a check will be mailed to the address on the return.

For those who didn’t file their 2019 federal tax return, the EIP will be sent automatically IF their 2018 federal tax return was filed. The money will be deposited into the account listed on that return or a check will be mailed to the address on the return.

What if I haven’t filed my federal tax returns for 2018 and 2019 and I don’t receive SSI, Social Security benefits or Veterans benefits? Don’t panic. In 2021, you can file a 2020 federal tax return and request the EIP.

How will the COVID-19 pandemic affect the tax season?

By now, everyone has heard of the coronavirus or COVID-19. Likely it has affected almost everyone in one way or another – working fewer hours, cancelling of events, closing of schools and so on.

But what about that tax return you’ve been meaning to get to? Unfortunately, many VITA (volunteer income tax assistance) sites have reduced their hours or closed altogether so as limit exposure. Despite this, the deadline to file returns remains April 15th. While this date could be extended, it has not as of this writing. Filing a timely return should result in a timely refund.

The IRS, like many other federal agencies, has issued a COVID-19 response as seen here https://www.irs.gov/coronavirus. Even if you are rushing to file your return, please remember that not all tax preparation sites and preparers are the same.  Be on the lookout for scammers. https://www.irs.gov/newsroom/irs-choose-tax-preparers-carefully-tax-return-preparer-fraud-makes-irs-2019-dirty-dozen-list-of-tax-scams

IRS Refunds May Be Delayed

Any taxpayer filing a return claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit, will have to wait longer for their IRS refund. The law prohibits the IRS from releasing these refunds until mid-February. February 22nd is the earliest these refunds will be released; with most coming the first week in March.

Taxpayers can check the status of their IRS refunds at https://www.irs.gov/refunds and the status of their Wisconsin refunds at https://www.revenue.wi.gov/Pages/Apps/TaxReturnStatus.aspx.

Remember that all taxpayers’ refunds are subject to delay if the IRS or Wisconsin Department of Revenue is seeking to verify identify, questioning any items on a return or reject a return.

For more information, see https://www.irs.gov/individuals/refund-timing or https://www.revenue.wi.gov/Pages/Individuals/home.aspx.

IRS Tries New Approach to Collect Taxes

In November, the IRS announced its Revenue Agents are going to be meeting with individual taxpayers to encourage compliance with the federal tax system. The IRS believes that these face-to-face meetings will help clarify questions, improve filing compliance and ease the burden of paying off tax debt. For more on this initiative, please see the IRS website. https://www.irs.gov/newsroom/special-irs-efforts-to-focus-on-tax-compliance-education-begin

Getting your taxes in order

While it might seem that the holidays are an odd time to start thinking about your taxes, it’s the right time.

To get your tax life organized, start by creating a folder (virtual or paper) for all those documents you’ll start receiving in January. When received, having a specific place for those W-2’s and 1099 forms, will make it much easier to find them when you ready to file your return.

In the folder, keep a list of the items you expect. How do you know what you should receive? Start by reviewing your last tax return. If you have a job(s), you should receive a W-2 or 1099. Perhaps you have some investments, paid student loan interest, received payments from a pension or Social Security.

If you have children, you will need their full name, date of birth and Social Security Number. Are you and the other parent filing separate returns? Then check your court order to determine who gets to claim the children as dependents for 2019.

For any questions on taxes, the IRS website contains many helpful publications. https://www.irs.gov/forms-instructions

Where can I find income tax help?

Not sure how to get an answer to your tax question? Here are some of the best resources.

How do I calculate tax withholding?

With the Tax Cuts and Jobs Act, the way in which withholding is calculated has changed. Some people were able to make that change early. However, others haven’t thought about how the changes might affect their withholding amounts. The IRS announced that the W-4 form is undergoing revisions. So it’s important to understand what to do and how to do. Remember the W-4 form tells your employer how much to withhold in federal taxes from your paycheck. Many states, who have income tax, also have a similar form for state taxes.

First, it’s always a good idea to review your W-4 form each year or whenever you have a life change (marriage, divorce, new baby, etc.). A new W-4 isn’t required, but like a will, it’s important to ensure the W-4 reflects your current financial situation.

Second, a change in jobs or the addition of a 2nd or 3rd job, should prompt a review of the W-4 forms.

Third, calculating withholding is very different today than it was three years ago. Changes have been made and no one wants to find themselves owing a large amount in federal income taxes at the end of the year, simply because they didn’t review their W-4.

The IRS has a withholding estimator. It’s located at https://www.irs.gov/payments/tax-withholding. Read the instructions and you should be able to better estimate your federal income tax obligations.

Can I be thrown in jail for not filing my tax return or for owing the IRS money?

First, take a deep breathe. Second, open any mail you have received from the IRS via the U.S. Postal Service. The IRS does not contact people via e-mail and rarely begins calling people without sending letters first. Third, know that there are ways to work with the IRS to settle the issue without going to jail. Finally, understand that very few people actually end up with a jail sentence because they failed to file a tax return or owe the IRS money. It is a very rare circumstance.

So what should you do?

If you received a phone call, do not call the number back. You can call 800-829-1040
7 a.m. to 7 p.m. local time to speak to an actual IRS employee. You can also call any phone numbers on any of the notices you received. This should help ensure you don’t fall victim to a scam. When you call, the IRS agent will provide you with their employee ID number. Be sure to write it down. If you need the person to repeat the number, ask.

If you receive a letter from the IRS, read the letter. What is it telling you or asking you to do? The letters are not always easy to understand, but give it a try. Perhaps they want you to send additional information or question why you didn’t file a tax return? Do your best to comply with the letter. Also be aware of any deadlines in the letter. Do not miss any deadlines.

If you receive an e-mail message from the IRS, delete it immediately. The IRS does not communication via e-mail. It is highly likely the e-mail is scam.

 

Don’t be fooled by tax scam calls

Are you one of the many people who received a phone call saying that you back taxes? And that if you don’t pay, you could be put in jail?

Hundreds of people are receiving these calls daily. Scammers call the unsuspecting citizen, claim to be a revenue agent, IRS official or tax collector. The scammer then informs the innocent person they owe hundreds or thousands of dollars in back tax debt. “It must be paid immediately”, the scary voice on the phone says, or “you will be arrested and jailed.” The voice then demands payment via a credit card or bank account.

If your lucky, you recognize this call as a scam to get money or steal your identity. Unfortunately, some people panic and give in and provide personal information, such as their social security number, credit card number or bank account data.

What should you do if you receive one of these calls? First, do NOT give them any personal information. You should, however, report the call to law enforcement, including the phone number where the call originated. You should also report the call to the Internal Revenue Service at  phishing@irs.gov (Subject: ‘IRS Phone Scam’).

If you believe that you might owe back taxes, you should contact a tax professional. CPA’s, enrolled agents and attorneys can determine whether you have legitimate tax debt and then assist you resolving those debts.

Be aware of the dangers of providing any personal data over the phone. Be cautious when receiving calls about debts you have no knowledge. Be prepared and know your rights.

IRS Notices Do’s and Don’ts

You skim through your mail and you see a letter from the Internal Revenue Service. Your heart beats faster and faster. Your palms sweat. Your head spins. What do you do?

  •  Don’t ignore the notice.
  • Stay calm.
  •  Open the envelope and read the entire notice. Sometimes the notices are difficult to understand.  You may have to read the notice more than once to understand what it means.
  • Reply as soon as possible. You should call the number listed on the notice. The IRS has very flexible hours. Some offices are open as early as 7:00am to 7:00pm local time.
  •  Don’t hang up. You may have to wait on hold. Calls are answered in the ordered received, so if you hang up, your call goes back into the queue.
  •  Have pen and paper ready. Each agent is required to identify themselves by name (for example, Ms. Brown) and ID number (1001687278).
  •  Sometimes the letters have specific instructions for replying in writing instead of replying by phone.
  •  Review the letter for deadlines. The IRS has specific deadlines for responding, submitting documents and contesting findings. It is important that you meet the imposed deadlines.
  •  Keep a copy of the notice with your tax records. Keep copies of any letters or documents you send to the IRS with your tax records.
  •  The IRS contacts taxpayers via letter using the US Postal Service.
  •  Don’t give someone calling from the IRS your personal information (for example, social security number, birth date, credit card number, etc.) unless you have verified that they are from the Internal Revenue Service.
  • Don’t respond to e-mail messages allegedly from the IRS. The IRS does not correspond with taxpayers via e-mail.
  •  Get help if you are confused or have trouble resolving your tax debt. Wisconsin Judicare operates a low-income taxpayer clinic. You can call us at 800-472-1638 or call your local taxpayer advocate. For Wisconsin, the number is 855-833-8231. For other states, see http://www.irs.gov/Advocate/Local-Taxpayer-Advocate.