2020 Form 1040 Virtual Currency Question

Taxpayers who own virtual currency, also known as “cryptocurrency,” may be confused about how to respond to a question on the 2020 Form 1040, U.S. Individual Tax Return, now due May 17, 2021 (extended from April 15, 2021).  The IRS recently clarified part of the question, but did not answer all the questions taxpayers have about the inquiry, nor how the IRS will use taxpayer responses for enforcement purposes. The 2019 Form 1040 was the first time any question was …

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Two Biden Administration Proposals May Increase The Amount of Tax Collected From A Decedent’s Estate

First, the Biden Administration has proposed significantly reducing the current gift and estate tax exemption, which will result in increases of gift and estate tax imposed on large estates.  Second, a proposal to eliminate the “step-up in cost basis” benefit for taxpayers on assets at death, which will result in more capital gain taxes being paid when those assets are sold.  The IRS imposes tax on certain gifts made during life and property transferred at death. Gifts during life are …

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2021 Income Tax Return Filing Season Deadlines

Because of the global pandemic, the IRS extended the filing deadline for taxpayers’ 2019 Income Tax Returns.  This left many wondering whether the IRS would extend the filing deadlines for 2020 tax returns—generally March 15, 2021 for entity returns, and April 15, 2021 for individual returns.  The IRS recently announced the filing deadlines for the 2021 filing season will not be automatically extended, like they were last year. The IRS announced last week that the upcoming 2021 filing deadlines (for …

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COVID-19 and Recent IRS Relief to Taxpayers Having Payment Problems

On November 2, 2020, the Internal Revenue Service announced a new program, the Taxpayer Relief Initiative (“TRI”), to help taxpayers who are unable to pay their taxes because of the pandemic. Taxpayers who owe taxes and cannot not pay have always had options such as installment agreements and offers in compromise, but now they have more flexible options. Currently, there are over 20 million taxpayers (individual, business, and specialty taxpayers) who owe the IRS back tax debt. Here are some …

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IRS Makes it Easier to Qualify for an Installment Agreement

The IRS recently changed its rules regarding monthly Installment Agreements, making it easier for individual taxpayers to get into one.  Now, taxpayers with unpaid balance of assessments (total balance not including accruing but unassessed penalties and interest) less than $250,000 can pay their balance over 72 months (or the remaining time on the collection statute, whichever is less), without having to provide any financial information. Previously, the IRS only allowed taxpayers with unpaid balance of assessments below $100,000 to qualify …

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What happens to my bitcoin when I die?

Cryptocurrency is a digital or virtual currency that is becoming more widely used in business transactions. Last year alone, over $335 billion dollars was held in cryptocurrencies. The IRS has taken the position that cryptocurrencies are not currencies at all. Instead, they are characterized as property or goods and therefore taxed and treated likewise.  Digital currencies have value and must be reported as assets, as part of the value of an estate. This means tax-basis must be tracked. Many challenges …

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Important Pro-Employer Amendments to the CARES Act

Important Pro-Employer Amendments to the CARES Act On June 4, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020, which amended the PPP loan provisions of the CARES Act in several helpful ways. These provisions include: Extending the time for which PPP Loan funds can be spent, and still be eligible for forgiveness, to 24 weeks from origination of the loan, or through December 31, 2020, whichever is earlier; Reducing the percentage of PPP Funds …

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Now May Be the Best Time to Resolve IRS Tax Debts

With many Americans out of work, or living on reduced income due to the global pandemic, they may no longer be able to pay the IRS if they have outstanding tax liabilities. When an IRS tax debt cannot be paid in full, the IRS provides three alternatives for collecting funds from a taxpayer: (1) Installment Agreement (several versions); (2) Offer in Compromise; or (3) Currently Not Collectible Status. Under an Installment Agreement, the IRS will agree to accept monthly payments …

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Coronavirus Tax Relief for Individuals

On March 13, 2020, President Donald Trump declared a national emergency pursuant to because of the rapidly spreading coronavirus.  The President instructed the Secretary of the Treasury to provide relief from tax deadlines to Americans, all of whom have been adversely affected by the COVID-19 emergency.  In response, the Department of the Treasury and the Internal Revenue Service issued several notices which, among other things, postpone this year’s tax-filing and payment deadlines from April 15, 2020 to July 15, 2020.  …

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Unfiled Tax Returns and IRS Visits

If you have unfiled federal income tax returns, you might receive a personal visit from an IRS employee.  The IRS recently announced that it hired additional Revenue Officers (IRS collection employees) who will be making house calls to taxpayers missing one or more returns in a prior year, and who earn over $100,000.  These unannounced visits began in February 2020. The IRS has already contacted these non-filers by correspondence (generally by mail), notifying them of missing returns, so they should …

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