Taxpayers with foreign income have additional IRS forms they must complete each tax season to avoid penalties.
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Under the current law, Required Minimum Distributions (RMDs) are the minimum amounts that an Individual Retirement Account (IRA) owner must withdraw annually starting after the year that he or she reaches age 72. IRA owners are responsible for taking the correct RMD each year from their IRA.
Each year, the IRS assesses thousands of tax penalties for filing tax returns, required forms and making payments late. Taxpayers frequently fail to challenge these penalties and in many cases, the taxpayer didn’t understand that a penalty had been asserted or the IRS mailed the penalty notice to the wrong address.
The IRS has announced several new pass-through entity reporting requirements to be introduced for the 2021 tax year. The new requirements serve to provide greater detail to partners and shareholders of pass-through entities to assist them in preparing their respective tax returns. Most notable of these requirements are the Schedules K-2, K-3 and Section 1061 Worksheet A.
Unresolved IRS tax problems only get worse over time. In addition to penalties and interest accruing, options to dispute the tax issue become fewer. Thus, it is important to respond to any IRS notice prior to the required response date.
The Coronavirus, Aid, Relief and Economic Security Act (CARES Act) allowed employers to defer the deposit and payment of the employer’s share of Social Security taxes from March 27, 2020 through December 31, 2020. This was done to provide a much-needed financial boost for Americans during the height of the coronavirus pandemic.
In 2010, the Affordable Care Act (ACA) was passed and signed into law, requiring employers with 50 or more full-time employees to offer minimum essential coverage to at least 95 percent of their full-time employees. If coverage isn’t offered or if the coverage offered isn’t affordable, the employer can face an IRS assessment known as an Employer Shared Responsibility Payment (ESRP). It’s important for employers to understand how to navigate the ACA and ESRP reporting requirements and processes.
To assess taxpayers’ income without their agreement, the IRS is typically required to go through a lengthy procedure. There is, however, one exception to this requirement, which is the math error exception under Section 6213 of the Internal Revenue Code. Under this code section, the IRS can assess additional tax due to a math or clerical error on the taxpayer’s return.
Unresolved IRS tax problems can continue to worsen over time. In addition to penalties and interest accruing, options to dispute tax issues become fewer, making it essential to respond to any IRS notice in a timely manner. In cases where this isn’t possible or was simply overlooked, however, there may still be other options to dispute IRS tax assessments, penalties or collection actions.
