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Showing posts from September, 2020

5 Key Points About Bonus Depreciation

1. Under current law, 100% bonus depreciation will be phased out in steps for property placed in service in calendar years 2023 through 2027. Under current law, 100% bonus depreciation will be phased out in steps for property placed in service in calendar years 2023 through 2027. Thus, an 80% rate will apply to property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, and a 0% rate will apply in 2027 and later years. For certain aircraft (generally, company planes) and for the pre-January 1, 2027 costs of certain property with a long production period, the phaseout is scheduled to take place a year later, from 2024 to 2028. Of course, Congress could pass legislation to extend or revise the above rules. 2. Bonus depreciation is available for new and most used property In the past, used property didn’t qualify. It currently qualifies unless:  The taxpayer previously used the property and The property was acquired in certain forbidden transactions (generally acquisit

IRS Past Due Notices

The IRS has temporarily halted certain outgoing mail. Due to a backlog of unopened mail created by the COVID-19 lockdown, payments from taxpayers that have a balance due may not have been posted to their accounts. As a result, the IRS will suspend automatic mailing of follow-up notices that remind taxpayers to make payments. “This temporary adjustment to processing is intended to lessen any possible confusion that might be associated with delays in processing correspondence received from taxpayers,” the agency said. For taxpayers who mailed payments that haven’t yet been opened, the payments will be credited on the day the payment was received. Click for more info.

Hurricane Laura Tax Relief

Victims of Hurricane Laura in Louisiana qualify for tax relief. The IRS has announced that taxpayers impacted by the hurricane that began on Aug. 22, 2020, and who reside or have a business in a designated federal disaster area qualifying for individual assistance, have more time to make tax payments and file returns. The relief generally applies to deadlines occurring on or after Aug. 22, 2020, postponing those deadlines to Dec. 31, 2020. Currently, the disaster areas include Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis and Vernon parishes. (More localities will be added later.)  For more information click here.  

Payroll Tax Deferral

The IRS has released guidance on deferring employee Social Security tax withholding under President Trump’s executive action. The guidance in Notice 2020-65 is brief and many employers still have questions and challenges about how, and whether, to implement deferral by the start date. The optional deferral applies to wages paid from Sept. 1 through Dec. 31, 2020 for employees paid less than $4,000 during a bi-weekly pay period. It postpones (but doesn’t forgive) withholding and remittance of the employee share of Social Security tax until the period beginning on Jan. 1, 2021 and ending on April 30, 2021. Penalties, interest, and additions to tax will begin on May 1, 2021 for unpaid taxes.

What Happens If an Individual Can’t Pay Taxes

While you probably don’t have any problems paying your tax bills, you may wonder: What happens in the event you (or someone you know) can’t pay taxes on time? Here’s a look at the options. Most importantly, don’t let the inability to pay your tax liability in full keep you from filing a tax return properly and on time. In addition, taking certain steps can keep the IRS from instituting punitive collection processes. Common penalties The “failure to file” penalty accrues at 5% per month or part of a month (to a maximum of 25%) on the amount of tax your return shows you owe. The “failure to pay” penalty accrues at only 0.5% per month or part of a month (to 25% maximum) on the amount due on the return. (If both apply, the failure to file penalty drops to 4.5% per month (or part) so the combined penalty remains at 5%.) The maximum combined penalty for the first five months is 25%. Thereafter, the failure to pay penalty can continue at 0.5% per month for 45 more months. The combined penalti