I represent taxpayers in Tampa, St. Petersburg and Sarasota as well as throughout the state of Florida who have federal and state tax issues. John S. Wood, C.P.A., P.A. is a full-service tax resolution firm helping clients to resolve their tax problems quickly and efficiently.

Unemployed workers likely will not have to file amended tax returns to take advantage of a new federal tax exemption for jobless benefits, the head of the Internal Revenue Service said Thursday.

IRS Commissioner Charles Rettig told lawmakers on a House panel, “We believe we will be able to monitor and we will be able to announce that individuals will not have to file amended returns to be able to take the exclusion for the $10,200 per person.”

Mr. Rettig said officials hoped to make a formal announcement “in the near future.”

The $1.9 trillion Covid stimulus package exempts the first $10,200 of 2020 unemployment benefits from income for households that made under $150,000. The move, which came roughly a month after the tax filing season began, will affect the returns of approximately 40 million Americans and save them about $25 billion.

This change threatened to complicate an already chaotic filing season, which has been disrupted by the effects of the coronavirus pandemic and the late tax-law changes and modifications.

“We’re sensitive to the situation people are in,” Mr. Rettig said. “We believe that we will be able to automatically issue refunds associated” with this new exemption.

He urged taxpayers not to resubmit their returns if they had already filed them until the agency issues additional guidance on the new legislation. For eligible taxpayers who already received refunds, the IRS will go back and issue a second refund associated with the new tax exemption, he said.

If you or someone you know has a federal or state tax issue and you are not sure what to do, call me at 813-514-2920 or contact me by email at jwood@jwoodcpa.com.

John S. Wood, CPA

15310 Amberly Drive, Suite 250

Tampa, FL 33647

Phone: 813-514-2920

www.jwoodcpa.com

I represent taxpayers in Tampa, St. Petersburg and Sarasota as well as throughout the state of Florida who have federal and state tax issues. John S. Wood, C.P.A., P.A. is a full-service tax resolution company helping clients solve their tax problems.

The Treasury Department and Internal Revenue Service announced yesterday that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.

“This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities,” said IRS Commissioner Chuck Rettig. “Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to.”

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

State tax returns

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details

If you or someone you know has a federal or state tax issue and you are not sure what to do, call me at 813-463-8348 or contact me by email at jwood@jwoodcpa.com.

John S. Wood, CPA

John S. Wood, C.P.A., P.A.

15310 Amberly Drive, Suite 250

Tampa, FL 33647

Phone: 813-514-2920

www.jwoodcpa.com

I represent taxpayers in Tampa, St. Petersburg, and Sarasota as well as throughout the state of Florida who have federal and state tax issues. John S. Wood, C.P.A., P.A. is a full-service tax resolution company helping clients to solve their tax problems.

Most people voluntarily file their tax returns and pay their taxes. Most people explain it by saying they want to pay their fair share. Others file to get a refund, claim a credit or avoid breaking the law.

There are times when normally law-abiding citizens fail to file. Why? We find that taxpayers do not file tax returns for one or more years for various reasons and the problem can become overwhelming. Missing all or a portion of their records, personal hardship and/or neglect are one of many reasons people fall behind in filing their taxes. IRS research shows that sometimes people do not file in years their filing status changes, such as due to the death of a spouse or divorce. Emotional or financial reasons may cause a person to not file. Or it could simply be due to procrastination. Unfortunately, failing to file a return creates additional problems.

Why file a tax return?

Taxpayers are required by law to file an income tax return for any year in which a filing requirement exists.

There are numerous practical reasons to file tax returns. Important programs like federal aid to higher education require applicants to submit copies of tax returns to qualify for loans. Lending institutions also may require copies of filed returns for buying a home or financing a business.

And the filing of tax returns can have a tremendous impact on your future. A person’s lifetime earnings as reported to the IRS and the Social Security Administration are the basis for Social Security retirement and disability benefits as well as Medicare. Reported income is also the source for state benefits such as unemployment compensation and industrial insurance.

What happens if you do not file?

Not filing a federal tax return can be costly — whether you end up owing more or missing out on a refund. The IRS may also impose a wide range of civil and criminal sanctions on persons who fail to file returns. 

If you owe tax and your return was not filed by the due date, including extensions, you may be subject to the failure to file penalty, unless you have reasonable cause for not filing. If you did not pay your tax in full by the due date for the return, not including extensions of time to file, you also may be subject to the failure to pay penalty, unless you have reasonable cause for your failure to pay. Additionally, interest is charged on taxes not paid by the due date; even if you have an extension of time to file. Interest is also charged on penalties.

The IRS continues to identify people who have a filing requirement but have failed to file a return.  

By law, the IRS may file a substitute return for you if you do not voluntarily file. A series of letters is first sent explaining the possible action IRS may take as part of the Substitute for Return Program.

If you do not file a return or otherwise indicate disagreement such as by requesting to exercise your appeal rights, the IRS will file a basic return for you. An IRS-prepared return will not include any of your additional exemptions or expenses. The IRS will compute the tax liability and send you a bill for the tax that will also include interest and penalties.

If a substitute return has already been filed for you by the IRS, you should still file your own return to claim any additional items. The IRS will generally adjust your account to reflect the corrected figures. 

What are the consequences of not filing a tax return?

Here are some things to consider:

• Failure to file penalty. If you owe taxes, a delay in filing may result in a “failure to file” penalty, also known as the “late filing” penalty, and interest charges. The longer you delay, the larger these charges grow. It may result in penalty and interest charges that could increase your tax bill by 25 percent or more.
   
• Losing your refund. There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether. In cases where a return is not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund.
   
• EITC. Individuals who are entitled to the Earned Income Tax Credit must file their return to claim the credit even if they are not otherwise required to file. The return must be filed within three years of the due date in order to receive the credit.
   
• Statutes of limitation. After the expiration of the refund statute, not only does the law prevent the issuance of a refund check, but it also prevents the application of any credits, including overpayments of estimated or withholding taxes, to other tax years that are underpaid. On the other hand, the statute of limitations for IRS to assess and collect any outstanding balances does not start until a return has been filed. In other words, there is no statute of limitations for assessing and collecting the tax if no return has been filed.

What should you do?

Regardless of your reason for not filing, file your tax return as soon as possible.

Fortunately, there are ways to approach the problem of unfiled returns.

The IRS maintains a file going back numerous years of all W2s, 1099s, and 1098s (mortgage interest paid) filed in the name of individual taxpayers. John S. Wood, C.P.A., P.A. can determine certain facts from Master File Transcripts, available for those years where the IRS has prepared a Substitute Return. These ‘records of account’ provide Adjusted Gross Income, Taxable Income, Tax, Number of Exemptions, Filing Status and Self Employment Tax. When we take on this kind of case, we will assist in re-filing your returns and our negotiations will be based on our more favorable returns for your benefit.

John S. Wood, C.P.A., P.A. can prepare past returns using various substitute sources when there are missing records. Those returns should be filed as soon as possible in order to avoid accumulated compounding interest. Also, it should be noted that if returns have not been filed in the most recent three tax years, those returns should be prepared immediately in order to claim any refunds that may be due.

If you are unable to fully pay any tax due on the late returns, do not let this prevent you from filing as payment options may be available. 

Filing tax returns and paying the correct amount of tax is good citizenship. Conscientiously discharging this duty contributes to our nation’s well-being and provides peace of mind. And failing to file returns can jeopardize a family’s financial security and future.

If you or someone you know has a federal or state tax issue and you are not sure what to do, call me at 813-463-8348 or by email me at jwood@jwoodcpa.com.

John S. Wood, https://www.jwoodcpa.com/about1.phpCPA

John S. Wood, C.P.A., P.A.

15310 Amberly Drive, Suite 250

Tampa, FL 33647

Phone: 813-514-2920

www.jwoodcpa.com