It’s TaxQuips time from TaxMama.com^® .
Today TaxMama® wants to talk to you about how the IRS is spending some of the money they got from the Inflation Reduction Act

Dear Family,

When Congress granted the IRS about $80 billion dollars as part of the Inflation Reduction Act (IRA), I heard a lot of screaming and griping. Especially concerns about more aggressive collections and audit actions.

On the other hand, we have all had our complaints about how hard it is to reach the IRS; the IRS losing documents when you send them paper forms or responses; about how many tax forms could not be efiled; and how frustrating it is that you cannot simply respond to the IRS online.

There weren’t many objections from the public when Congress took back about $20 billion from the IRS ($10 billion from each of the next 2 years).

What taxpayers don’t really understand is – these funds are/were being used to make OUR lives easier.

An immediate example is this exciting announcement from the IRS about their paperless project initiative, effective 2024 and 2025 .

As we came to realize, rather forcefully, during the COVID19 shutdowns, the overwhelming mountain of paper tax returns and paper correspondence was choking the system. Even without COVID19 shutdowns, so many documents were either lost, misplaced, or never (MANUALLY) scanned or keyed into a taxpayer’s account.  Yes, they had to be scanned manually, or keyed in manually, so even in normal times, it could take 3 months for paper submissions to appear on a taxpayer’s transcript or in an account.

Many of us in the tax community have been begging the IRS, for years, to be able to submit responses to notices online (some of that finally starting happening last year); to submit disclosures and attachments electronically – so that they can be found in the transcripts and correspondence files; and to make it possible to file several more tax forms electronically.

Well, it’s finally happening. The current IRS Commissioner, Danny Werfel, is moving forward rapidly to bring about the technological improvements that might bring the IRS into the 20^th century. (Perhaps we’re not quite ready for the 21^st century?)

One of his targets is to make many more tasks accessible to taxpayers with mobile phones. He has become aware that, while most people seem to have mobile phones, they might not have access to a reliable (or any) Internet connection at home. Being able to access IRS log-ins, file tax returns, upload copies of documents, and more –  this would make it possible for more taxpayers to address some of their own basic filing, correspondence, and responses to simple notices.

The promise for 2024 is that Taxpayers will be able to digitally submit all correspondence, non-tax forms, and responses to notices; as a result, the IRS estimates more than 94% of individual taxpayers will no longer ever need to send mail to the IRS.

For 2025, expect  that half of paper-submitted correspondence, non-tax forms, and notice responses will be processed digitally. Achieving this milestone will enable up to 60 million paper documents to be processed digitally every year. All paper documents—correspondence, non-tax forms, and notice responses–will be processed digitally by filing season 2026.

And what about paper documents from the past? Up to 1 billion historical documents will be digitized, improving customer service, giving taxpayers access to their data, and ultimately saving IRS approximately $40 million in annual storage costs.

Always liking to look for the silver lining – I think this is fabulous news. Add this digitization to Chuck Rettig’s initiative to expand communications into many more languages – and fewer taxpayers will feel helpless when interacting with the IRS.

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments, please drop into the TaxQuips Forum.

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It’s TaxQuips time from TaxMama.com^® .  
Today TaxMama® wants to talk to you about your business.

Dear Family,

We are getting a lot of questions from tax pros and taxpayers about businesses that keep showing losses. Is the IRS going to look at them and disallow them as businesses – treating them like hobbies?

First let me explain why this is important from a tax reporting perspective.

• A business can deduct all its legitimate operating expenses from the business’ sales and income – either on a Schedule C, or a business entity return (partnership, corporaton, etc.) and deduct losses, as appropriate.
• However, with a hobby, you must report all your income (on Schedule 1) – but you may not deduct your opertating expenses at all. Nowhere. Not on any form. The only thing you may deduct are your cost of goods sold. In other words, hobbyists that lose money don’t get to deduct expenses OR losses.

OK, so what distinguishes a business that keeps losing money, from a hobby?

The Internal Revenue Code lists 8 primary characteristics of a real business in IRC §183.  https://www.law.cornell.edu/uscode/text/26/183

I could spend about 4-8 hours explaining the rules, nuances and ways to ensure your business is not a hobby (and often do teach that concept).

But here are some fundamentals:

• You have a regular job, with a W-2, making enough money to live on – but your business always shows losses. HOBBY.
• The business gives you an opportunity to indulge in an expensive interest (horses, boats, travel, race cars) – and you have heard you can write off the costs. HOBBY.
• Your business keeps showing losses, but you don’t do anyting different from year to year to make it profitable. HOBBY.
  • That can be paraphrased as the definition of insanity: “Someone who keeps doing the same thing over and over again – but expects different results.”[1] (The IRS subscribes to this concept)
• The business doesn’t have a business plan that is reviewed regularly and the business takes steps to change their marketing approach, product mix, pricing, staffing, etc. to become profitable in the next quarter. HOBBY.
• The business expects to show losses for several years due to the nature of their developing product or market (like inventions and manufacturing processes) – and they have a business plan that defines when they expect to be profitable. BUSINESS.
• The business does everything correctly, but an outside force intervenes – and they end up with losses. (A valuable breeding horse dies – and there goes their entire livelihood.) BUSINESS
• The owners are putting significant time into the business, but they don’t have the capital or financing to make it profitable as quickly as they would like. BUSINESS.
• The business is based around a valuable asset that keeps appreciating. So even if the business itself fails – selling the asset will cover all the earlier losses. BUSINESS.
• One more situation – you have no other income, but the business keeps showing losses. What are you living on? In this case, it might be worse than just being a hobby – it might look like substantial unreported income. TAX FRAUD.

As you can see, there are several instances where a business that keeps showing losses can survive IRS scrutiny. In all cases – it involves doing regular tax planning, business planning, and knowing when and how to reposition the business’ focus.

The first three chapters of Small Business Taxes Made Easy deal with this very concept.  https://yourbusinessbible.com/

Hobby loss audits happen to be one of my favorite areas of tax representation. In each case, I have been able to help my clients build convincing documentation to substantiate their honest-to-goodness business intent.

Incidentally, since this is National Small Business Week, the IRS website has outlined some really useful tools for you relating to the life cycle of a business.
https://www.irs.gov/newsroom/national-small-business-week-irsgov-offers-a-z-resources-for-small-businesses

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

[1] Often attributed to Albert Einstein – but, apparently, the source is mystery novelist Rita Mae Brown.
https://www.businessinsider.com/misattributed-quotes-2013-10

It’s TaxQuips time from TaxMama.com® .
Today TaxMama® wants to talk to you about some questions people have asked TaxMama® after making major financial moves and ending up with extra taxes – or none of the tax breaks they were counting on.

Dear Family,

Well, we’ve survived the April 18^th deadline! Many of us are taking a breather. But there is still a lot more work to do. Aside from getting your more complex information to your tax professional, since your return is on extension – perhaps it’s also time to schedule a Tax Planning appointment. We’ll talk about why in just moment by showing the costs to people who acted first – and asked later. [Note: States in Disaster Areas have lots more time – some all the way to October 16th.]

Meanwhile – let me remind everyone, tax pros and taxpayers alike, that if you want to be able to access your IRS accounts, including e-services, you must set up your ID.me account.  The deadline to update your to id.me account is May 15, 2023. After that, your older, more familiar logins will no longer work. The good news is, this one login is meant to connect you to all your IRS accounts – your personal accounts and if you’re a tax pro, your professional accounts. Remember, if you are regularly pulling transcripts, I am pretty sure that this must be updated for your transcript services to continue to work. Here are the links:

• To set up your account on your own
  https://help.id.me/hc/en-us/articles/4402761436823-IRS-How-do-I-verify-for-the-IRS-with-self-service-
• To set up your account with an ID.me video chat agent
  https://help.id.me/hc/en-us/articles/4457297927575-IRS-How-do-I-verify-with-a-Video-Chat-Agent-

Why You Need to ASK First

I know we discussed asking first before acting, last month. But..more questions keep coming in and issues arising that make me cringe at the bad news I have to give.

(Names and locations have been changed for obvious reasons.)

Question 1 – Alice asked TaxMama® about taking substantial deductions for her nursing-related travel. She lived in Virginia. Her nursing agency sent her to a temporary job in Texas for six months. During that time, she paid rent, food and mileage.  Alice wanted to know how to take a deduction for those costs.

After the fact – Answer 1 – Really bad news for Alice! As an employee, not a dime is deductible during 2018 – 2025. (You can thank the Tax Cuts and Jobs Act of 2017 for this.)

Consulting Answer 1 – If Alice had consulted her tax professional, her tax pro would have helped her determine her expected out-of-pocket costs for those six months. Then, comparing it to the compensation she was being offered she would have been able to do one of two things:

1. Turn down the job because after paying all those out of town living expenses, her net income would be substantially lower than simply taking a job locally.
2. Negotiate with her agency to get her reimbursements for her housing, food and mileage.

Either way, there would have been nothing to report on her tax return (reimbursements are not taxable) – but her net cash flow for the year would have been thousands of dollars higher.

Question 2 – Albert owns a home and several rental properties. He refinanced 3 properties last year and pulled out about $500,000 in cash overall. Although he used some of that money to pay off debts, he plans to use most of the money to make repairs or improvements on the property. As of April, the funds for improvements are still sitting in the bank account.

After the fact – Answer 2 – Why is this a problem? You may only deduct the interest on loans used to buy or improve your real estate. That’s called acquisition debt. So none of the interest on the loan amounts in excess of that balance before refinancing is deductible. On any of the properties. So interest at 5.5% on $500,000 (about $27,500) might not be deductible anywhere.

Consulting Answer 2 – If Albert had consulted his tax pro first he would have learned about this issue. This non-deductible interest problem could have been handled one of two ways:

1. Hold off on the refinancing until he was ready to make the repairs – and then use the funds directly to cover those costs. Deposit the proceeds from each loan to that building’s bank account.
2. Needing to wait before getting improvement bids? Deposit the proceeds from each loan to a new, separate account for each property, to be used for the improvements. The IRS does something called tracking – they trace the use and timing of the funds.
   1. For instance, if the funds are deposited to a general bank account, the IRS will treat the money as being used for each of the checks that are drawn after the deposit.
   2. Keeping the funds in a separate “improvement” account will make it possible to deduct the interest on the related business property – and for the home (up to the $750,000 loan limit).
   3. One thing that may be a problem is – while the funds are sitting in those accounts, not being used for improvements, it’s possible that the interest during that time will not be deductible. It might require some research.

Yes, there are some other considerations and potential strategies. That’s why sitting down with your tax pro can preserve your interest expense deductions and decrease your taxes. 

Issue 3 – This is a very common question that arises. People getting their W-2s and suddenly finding out that they didn’t have withholding for the IRS or state. Or that their withholding was far too low. Suddenly, there are balances due and underpayment penalties.

After the fact – Answer 3 – You’re going to hate this answer.
As an employee, it is your responsibility to read your paystub each time. When you see that the withholding isn’t happening, or it seems to be too low – don’t just pocket the extra money gleefully. Contact your payroll department and sort it out as quickly as possible. When you move to/or work in a different state, YOU need to make sure your payroll department is taking withholding for the correct state.

Consulting Answer 3 – Consider sitting down with your tax pro, at least halfway through the year to review your income, withholding, job-related tax benefits for which you might qualify. It’s easier to correct these errors during the year, when you can spread out the cost over several months.  

There are so many more instances where people come to me after they have taken action. It breaks my heart. You can read about them in TaxMama® Forum  – http://iTaxMama.com/AskQuestion . Or ask your own questions.

I know that sometimes it feels like a consultation is a little expensive. But, believe me, the value you get far exceeds the price you pay. In the first two cases I outlined, a one-two hour consultation would have saved each of them thousands of dollars.

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

It’s TaxQuips time from TaxMama.com^® .  
Today TaxMama® wants to talk to you about the new IRS Strategic Plan for using the $80 billon budget effectively – based on feedback they have received .

Dear Family,

Last week the IRS released their 150 page strategic plan on how to use their $80 billion allocation over the next 10 years. The plan has 5 objectives:

1. Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible.
2. Quickly resolve taxpayer issues when they arise.
3. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap.
4. Deliver cutting-edge technology, data, and analytics to operate more effectively.
5. Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers.

Naturally, some people will not be happy with the more aggressive focus on catching higher income tax evaders, non-payers and those who under-report their income. Using “Big Data” and more intensive training for IRS enforcement staff, the IRS will be better able to audit complex businesses with multiple layers of ownership, which are potentially designed to thwart scrutiny.

The good news is that there will not be an increased focus on taxpayers with under $400,000 in income. Their audit rates will not rise above historical levels.

There is a great deal of emphasis on improving and updating computer systems and apps, improving customer service, and providing more online, self-help tools. This will reduce the long waits on telephone calls – and will increase taxpayers’ ability to access data, upload responses, set up payment plans, and more. Some of these tools are already available and growing. Others, we have been begging the IRS to make available for years.

You may notice in this IRS graphic, that they are talking about having an IRS agent call people back.

When it comes to IRS notices, their plan is to start by issuing “soft” notices providing tools for taxpayers to respond and “self-correct.” Using electronic communications to reduce the need for audits.

The good news about these calls and electronic notices is that, properly handled, they will make our lives easier.

The bad news is – taxpayers are already getting phishing emails and calls. So how will we be able to determine which ones really are from the IRS – and which are identity thieves?

They are also investing about $15 million in trying to create a way for taxpayers to file their tax returns directly with the IRS. As you can imagine that faces strong resistance from the major tax software houses – and perhaps tax professionals.

But when it comes to tax professionals, EAs, CPAs and Attorneys have long been aware that the need for our services by clients with simple tax returns (like only W-2s and interest and dividends) is phasing out, as taxpayers get more familiar with tax software.

Overall, taxpayers of the future would be wise to join the “app” age. We’re going to need to get more familiar with online tools, apps for phones and tablets, and how to scan documents, create PDFs and upload and download data – in order to use the IRS self-help tools most effectively. In addition, the IRS is expanding the way we will be able to pay online, via bank accounts, credit card, debit card, and NEW – digital wallets.

Incidentally, the IRS is hiring – all over the country. You may want to consider applying!

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments, please drop into the TaxQuips Forum.

It’s TaxQuips time from TaxMama.com^® .
Today TaxMama® wants to talk to you about errors people have been making in their tax returns this year.

Dear Family,

My goodness, it’s already Spring!

The first day, here in Southern California is mostly gray, threatening to rain…but not quite making good on the threat beyond a few sprinkles. Tomorrow, expect the deluge. I hope your spring is starting out with blooms and blossoms and wonderful scents (and no hay fever).

I will admit, if I knew how to use my [blasted] “smart” phone, which keeps running out of capacity in the blink of an eye, you would be seeing pictures of our amazing rose “tree.” Yes, it looks like the roses are growing on the tree.
(Never mind, as soon as there’s some time, I am getting a significantly better phone!)

Back to taxes. Let’s look at recent problems people have raised.

• Problem: My W-2 shows withholding for the wrong state!
• Or: There’s no withholding on my W-2!

Several people moved to another state during the year, staying with the same employer. They complained that they were surprised when they got their W-2 and their company was still taking withholding for their previous state.

• Solution: Look at your own paystub!

Anytime you move, or make a change in your withholding, take the time to read your paystub carefully. Make sure the withholding is for the correct state. Make sure there is enough withheld for the IRS. If you can’t really read or understand your paystub (or you don’t get one), contact the payroll department and ask them. Please don’t be embarrassed. You don’t want to have to deal with underpayment penalties at the end of the year.

• Problem: I filed for a new LLC this year and made the S corporation election, but there wasn’t any activity. Do I have to file a tax return?

Often, when you simply set up an LLC with a single member, and there is no activity, you can enter that tax ID on the Schedule C and show no activity except the set up fee.

• Solution: You are responsible for treating your entity like a real business.

When you make an S corporation election, you absolutely must file a tax return – and that means by March 15^th of the year – or file for an extension using Form 7004. Even if there is no activity, the Form 1120S and related Schedule K-1 are due on time. Even without activity, there are late filing penalties for the Form 1120S ($220 per month, or part of a month, times the number of shareholders, for up to 12 months); and penalties for the Schedule K-1 ($290 per shareholder). So if you missed the filing deadline on March 15^th, file the return and Schedule K-1, before the end of the month. (You might be able to talk the IRS out of the penalties, though.)

Note: The same S corp rules apply when the LLC is owned by more than one member – then it’s a partnership, with the same filing deadlines and penalties.

• Problem: I own a rental property and haven’t been taking the correct depreciation (or no depreciation) for many years. How do I correct this? Do I have to file an amended return for each of those years? Heck, it could go back for 10 years or more!

We get this kind of question often – from people doing their own tax returns; and from tax professionals who just picked up a new client where the previous preparer just ignored depreciation.

• Solution: There is a short-cut. Don’t despair!

You’re in luck. There is no need to file amended returns for all those years. Which is really good news, since you can only amend the last three years. This limit would cost taxpayers 7 years or more of lost depreciation. Since this happens often, the IRS set up a procedure that they automatically approve. It involves using a Form 3115. It’s a bit complicated, but basically boils down to this.

1. Compute the correct depreciation.
2. Subtract the deprecation previously taken, if any.
3. Enter this additional depreciation on the Schedule E, or business return.
4. If too much depreciation was taken in the past, you will be adding back the excess depreciation on the appropriate Schedule E or business return.
5. Fill out the Form 3115

How do you fill out the Form 3115? Ideally, take all this to a tax professional (an experienced Enrolled Agent, CPA or Tax Attorney). Or try it yourself by watching this detailed webinar by Lisa Ihm, EA of BrassTax.

That’s enough for now. Keep an eye on the IRS Critical Functions page to see the status of their tax return processing, and more.

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments, please drop into the TaxQuips Forum.

It’s TaxQuips time from TaxMama.com® .
Today TaxMama® wants to suggest that you get advice FIRST before making major financial moves.

Dear Family,

Let’s start with the big thing this weekend – changing the clocks to Daylight Savings Time. Remember the old adage “Fall back; spring forward.” So that means we set the clocks forward one hour in order to get more daylight at the end of the day. A few US states and territories don’t participate – just to confuse and confound the rest of us –  I think.

Good news (sort of) from the IRS. They are opening their Taxpayer Assistance Centers (TAC) to walk-ins tomorrow, Saturday March 11^th. This includes TACs all over the country. The instructions are in this IRS announcement. Go very early to secure your place in line. Wrap yourself in something warm and bring a thermos with your favorite hot beverage.

Deadline – Tax returns for partnerships and S corporations are due on March 15^th.  Use Form 7004 to file the extensions. https://www.irs.gov/forms-pubs/about-form-7004  Folks in the counties with disaster areas in California, Alabama and Georgia are not required to file extensions. You have until October 16^th to file the returns (and to pay certain taxes without penalty). Note: Georgia is still showing May 18^th as their deadline.

The Heart of the Matter – Ask First; Act Later

This month, I have had several TaxMama® Forum questions from people wanting to minimize their taxes – after they took some significant financial actions.

• Taxpayer owned a house for decades. His daughter and her husband were living with him – but did not qualify him for head of household. In 2022, he sells the house at a gain well in excess of the $250,000 personal residence exclusion He’s facing a big tax bill.
  • How could he have eliminated that tax bill?
    • Put daughter and/or her husband on title.
      Using their own $250,000 personal residence exclusion, he could have eliminated all the capital gains taxes.
    • Yes, there may be some other gift tax and profit-sharing issues. That’s what tax planning is for.
  • Taxpayer just got their W-2 and noticed that the withholding is for the wrong state. They moved to another state. They never really looked at their paystubs all this time – and now owe a fortune to their current state.
    • How could he have eliminated that tax bill?
    • Anyone making any change in job location or family size, or other life changes must review their paystubs to ensure the withholding is the correct amount – and for the correct state. Verify with the payroll department!
    • In this case, the taxpayer will file a part-year resident return with the state that has all the withholding and wait to get that money back.
    • Then, they will have to file a part-year resident return with their current state – and they will owe 100% of that state’s tax balance, along with penalties and interest for paying late.

Actually, there were several other times in which I had to say, you’re breaking my heart. I wish you had asked first. I just can’t remember them al.

But the message is the same. Please, Please, before spending a lot of money – on just about anything unusual, before withdrawing money from IRAs or retirement accounts, before making gifts, transferring title, or starting businesses, please, please, invest the time and money to meet with a tax professional who is experienced in the area of expertise that you need. It costs so much more to fix problems, than to avoid them in the first place.

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments, please drop into the TaxQuips Forum.

 —-

It’s time for Everything!

People are still asking so many questions about the 2023-2024 EA exam. So we will hold our first annual (complimentary) webinar – please clear some time on your calendar if you are interested in taking the IRS Exams this year.

If you are not currently a tax preparer but think this might be a worthwhile career to explore – DO come and join us. You would be so welcome, too.

Everything You Wanted to Know About the EA Exam,
but didn’t know who to ask:

Date: Tuesday, March 21, 2023
Time: 4:00 pm Pacific
For more information and no-charge sign-up:
https://iTaxMama.com/KickStart-TM

REGISTER NOW – LIMITED SPACE IS AVAILABLE

Incidentally, we are bribing you to join us. Anyone who stays for the entire presentation will get a $100 coupon off the price of the Premium class.

(If you have already signed up for the Premium class in 2023 – AND you sit through the entire presentation – we will send you a $100 refund.)

It’s TaxQuips time from TaxMama.com^® .
Today TaxMama® wants to let you know what kind of support you can expect from the IRS this year – if any.

Dear Family,

As you understand so well, since COVID19, it’s gotten harder than ever to reach a live person at the IRS. And especially someone who has enough training and experience to give you useful information.

(Those of you like to enjoy pain and who appreciate statistics, read Erin Collins’ Taxpayer Advocate’s Report to Congress.)

As I told you last time, the IS working to use that new influx of funds to do more than just increase audits and collections. They are adding more self-service tools – and opening more in-person opportunities.

So What’s New and Improved?

Last week, the IRS announced that people who file their amended returns (Form 1040X) electronically can now receive  their refunds via direct deposit to their bank accounts. Yippee!

What they don’t tell you is – that this is likely to apply to “superseded returns” (for those that know how to take advantage of them) that are filed before the filing deadline, including the extension.

The IRS is opening their in-person Taxpayer Assistance Centers (TAC) (otherwise known as IRS offices) to the public on several Saturdays, once a month from February through May.   You can locate one near you in most (or all) states and Puerto Rico at this URL – https://www.irs.gov/help/irs-face-to-face-saturday-help  . Read the instructions to know what to bring. The staff will be able to help with balances due, audit questions and other issues. The Taxpayer Advocate Service staff will be available. And language interpretation services will also be available.

Self-Service Tools

In addition to being able to check on your refund status, the IRS has several online tools you can use on your own to access your taxpayer account (– or that tax your tax professional can use  on your behalf). You can pull your own transcripts, set up your own payment plans…and more.

• Taxpayer Account – https://www.irs.gov/payments/your-online-account
• Status of Tax Return and Refund – https://www.irs.gov/refunds
• Status of Amended Tax Return – https://www.irs.gov/filing/wheres-my-amended-return
• Get my own transcript – https://www.irs.gov/individuals/get-transcript
• IRS App – IRS2GO – https://www.irs.gov/newsroom/irs2goapp
• IRS Free-File – https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
• Get or Replace your Identity-Protection PIN – https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

Incidentally, in case you didn’t know, the IRS has an Interactive Assistant that might be able to answer some questions for you https://www.irs.gov/help/tax-law-questions

The Scary Meetings

Audits and Appeals meetings can potentially be held online. The online submission of documents isn’t as easy as we would hope yet (for security reasons) – but we’re getting there.

A Hidden Treasure

Although this site isn’t really a secret, I have discovered that most people are not aware of this IRS “Treasure Chest” of resources. (That’s what I call it.) For anyone who wants to do tax research about anything, this is a great place to start.  https://www.irs.gov/privacy-disclosure/foia-library

And More…

There are new capabilities being released all the time. The IRS understands how much less it can cost them if taxpayers can do things on their own, vs paying staff to handle routine tasks. See what’s happening here:
https://www.irs.gov/about-irs/modernizing-tax-processing-systems

Tax Education

As usual, I will be teaching a session at this year’s CSTC 2023 Tax Symposium in June.

Please come and meet me in Las Vegas. If you tell me you’re coming, you’re invited to TaxMama’s® annual dinner on Monday night.

It’s time for Everything!

People are still asking so many questions about the 2023-2024 EA exam. So we will hold our first annual (complimentary) webinar – please clear some time on your calendar if you are interested in taking the IRS Exams this year.

If you are not currently a tax preparer but think this might be a worthwhile career to explore – DO come and join us. You would be so welcome, too.

Everything You Wanted to Know About the EA Exam,
but didn’t know who to ask:

Date: Thursday, March 2, 2023
Time: 10:00 am Pacific
For more information and no-charge sign-up:
https://iTaxMama.com/KickStart-TM

Incidentally, we are bribing you to join us. Anyone who stays for the entire presentation will get a $100 coupon off the price of the Premium class.

(If you have already signed up for the Premium class in 2023 – AND you sit through the entire presentation – we will send you a $100 refund.)

—

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments, please drop into the TaxQuips Forum.

It’s TaxQuips time from TaxMama.com^® .  
Today TaxMama® wants to alert you to issues that will affect your tax return filing, and perhaps tax planning, during 2023  

Dear Family,

Where does the time go?!

Sorry to be posting so late – but the days just seem to flash by. Are you feeling the same sensation?

One reason each day is so full, is there are constant updates that I have to read, or learn about, several meetings with the IRS about systemic problems, and the IRS plans for this coming year, and, of course, answering your questions in the TaxMama® Forum.  http://iTaxMama.com/AskQuestion . Remember, this is a totally complimentary resource for your benefit.

• You may have been hearing the IRS announcements about the CA Middle Class tax refund (from $400 – $1,050). Not taxable for California, but is it taxable for the IRS or not? Several of us have applied pressure on the IRS to give us an answer. Their announcements recommend not filing your tax return until the IRS does issue the announcement – so you don’t end up having to amend.
  (Note: there may be similar issues with other states where 1099-MISC were issued by the state.)
• The IRS’ $80 billion dollars – believe it or not, the IRS is asking stakeholders for their feedback on how to use this money most effectively. Please understand that this money will be disbursed over 10 years – not all at once.
  Currently, this is the allocation they are showing:

• $  3.181 billion  – TAXPAYER SERVICES
• $45.637 billion – ENFORCEMENT
• $25.326 billion – OPERATIONS SUPPORT
• $ 4.750 billion  – BUSINESS SYSTEMS MODERNIZATION

• One of the IRS national directors is holding 30 meetings around the country with tax professionals and associations, community leaders, various industry leaders and more. The goal is to learn each group’s recommendation for areas where they see the funds can improve customer service and functionality for their members. The IRS is actually interested in your feedback. So if you have a constructive suggestion on something specific that can be improved, please let me know as soon as possible and I will pass it along. (Seriously, don’t send me raves, political arguments, or nonsense.) Tell me about the problem you see – and recommend a sensible, practical solution.
  Use this link please – in the TaxMama® Forum:
  https://iTaxMama.com/IRS-80-Billion
• In the meantime, you might be pleased to know that the IRS has hired lots of new phone staff (they are up to 4,000 right now) aiming for 5,000 by the end of the year.

• Some important things that changed for this year’s federal tax return:
  • The filing deadline is April 18^th
    • For people in certain disaster areas in 2023, the deadline is as late as May 15^th – that applies to IRA & HAS contributions as well,
    • For people in certain disaster areas in 2022 – some can still file various 2021 and 2022 forms and make payments, without penalties, as late as February 15^th and March 15^th
  • The Form 1040 has expanded the question about owning, using and trading cryptocurrencies. You are allowed to say NO, only if you owned the currencies, or bought them for cash, but had absolutely no transactions.
  • Another change on page 1 of the Form 1040 – a few lines have been added in the “Wages” area, including a place to enter wages to household employees to whom you didn’t issue a form W-2.

• The $300 charity deduction for people who don’t itemize – gone
• The huge child tax credit has dropped from $3,000 (or $3,600) per child in 2021 to $2,000 per child.
  • AND where the full amount of this credit was refundable in 2021, only $1,500 per child is refundable in 2022.
• The child and dependent care credit – For 2021 Congress raised that to take into account child-care expenses of up to $8,000 per child – for up to two children. The maximum credit was $4,000 per child (50% of the cost). In 2021, the credit was refundable.
  • For 2022, the original non-refundable credit is back – expenses are limited to $3,000 per child (up to 2 children.)

Tax Education

• As usual, I will be teaching a session at this year’s CSTC 2023 Tax Symposium in June. Please come and meet me in Las Vegas. If you tell me you’re coming, you’re invited to TaxMama’s® annual dinner on Monday night.
  

It’s time for Everything!

We have been getting a flood of questions about the 2023-2024 EA exam. So we will hold our first annual (complimentary) webinar – please clear some time on your calendar if you are interested in taking the IRS Exams this year.

Everything You Wanted to Know About the EA Exam,
but didn’t know who to ask:

Date: Thursday, March 2, 2023
Time: 10:00 am Pacific
For more information and no-charge sign-up:
https://iTaxMama.com/KickStart-TM

Incidentally, we are bribing you to join us. Anyone who stays for the entire presentation will get a $100 coupon off the price of the Premium class.

(If you have already signed up for the Premium class in 2023 – AND you sit through the entire presentation – we will send you a $100 refund.)

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

We are starting another EA Exam testing year on May 1, 2023.

With all the IRS office closures, unopened mail and with IRS phone lines having super long waits, the skills of an Enrolled Agent are more valuable than EVER!  This is a great time to improve your tax and representation skills and become an enrolled agent!

Becoming a knowledgeable tax professional isn’t easy. It takes a lot of dedication, math skills, and the flexibility to keep up with the myriad of tax law changes that take place each year.   But it can be done. It’s fun! And oh so lucrative.

TaxMama’s® EA Exam Review Course  is the best way to get a well-rounded tax education.
Becoming an Enrolled Agent (EA) is the fastest way to establish yourself in the field of taxation.

• What IS an Enrolled Agent (EA)?
• How do get licensed?
• How much education and internship do you need?
• And much, much more…

All those questions and more are answered in our free Webinar.