If you lose your job, you may qualify for unemployment benefits. While these payments may come as a relief, it’s important to remember that they may be taxable. Here are five key facts about unemployment compensation:
1. Unemployment is Taxable. You must include all unemployment compensation as income for the year. You should receive a Form 1099-G, Certain Government Payments by Jan. 31 of the following year. This form will show the amount paid to you and the amount of any federal income tax withheld.
2. Paid Under U.S. or State Law. There are various types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws. For more information, see Publication 525, Taxable and Nontaxable Income.
3. Union Benefits May be Taxable. You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and your contributions to the fund are not deductible. In that case, you only include as income any amount that you got that was more than the contributions you made.
4. You May have Tax Withheld. You can choose to have federal income tax withheld from your unemployment. You can have this done using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.
5. Visit IRS.gov for Help. If you’re facing financial difficulties, you should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of events such as job loss. For example, if your income decreased, you may be eligible for certain tax credits, like the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill check the Payments tab on IRS.gov to review your options. In many cases, the IRS can take steps to help ease your financial burden.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS References:
IRS YouTube Videos:
The premium tax credit is a credit for certain people who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace. Claiming the premium tax credit may increase your refund or lower the amount of tax that you would otherwise owe.
If you did not get advance credit payments in 2015, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. You must file Form 8962 to claim the PTC on your tax return.
You can take the PTC for 2015 if you meet all of these conditions.
For at least one month of the year, all of the following were true:
- An individual in your tax family was enrolled in a qualified health plan offered through the Marketplace.
- The individual was not eligible for minimum essential coverage, other than coverage in the individual market.
- The portion of the enrollment premiums for the month for which you are responsible was paid by the due date of your tax return.
To be an applicable taxpayer, you must meet all of the following requirements:
- For 2015, your household income is at least 100 percent but no more than 400 percent of the Federal poverty line for your family size.
- No one can claim you as a dependent on a tax return for 2015.
- If you were married at the end of 2015, you must generally file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements.
Individuals can use the Premium Tax Credit Flow Chart to determine if they are eligible for the credit. Answer the yes-or-no questions in the chart – or via the accessible text – and follow the arrows to find out if you may be eligible for the premium tax credit. You can also use our interactive tool, Am I eligible to claim the Premium Tax Credit? to find out if you are eligible.
If you received the benefit of advance credit payments in 2015, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file an income tax return for this purpose even if you are otherwise not required to file a return. You’ll file Form 8962, Premium Tax Credit, with your tax return to reconcile the credit.
Remember, that filing electronically is the easiest way to file a complete and accurate tax return as the software does the math and guides you through the filing process. Electronic filing options include: free Volunteer Assistance, IRS Free File, commercial software, and professional assistance.
Taxpayer Bill of Rights: The Right to Be Informed
FS-2016-7, February 2016
In 2014, the Internal Revenue Service adopted a Taxpayer Bill of Rights (TBOR) that has become a cornerstone document to provide the nation's taxpayers a better understanding of their fundamental rights when dealing with the agency.
Not only has the IRS highlighted these 10 rights for taxpayers, they have also been shared extensively on a continuing basis with IRS employees since then. The TBOR adopted by the IRS in 2014 includes the same 10 fundamental rights that were placed by Congress in the Internal Revenue Code (IRC) in late 2015. IRC section 7803(a)(3) now requires the IRS Commissioner to ensure that IRS employees are familiar with and act in accordance with the 10 fundamental rights that make up the TBOR.
The TBOR takes the multiple existing rights embedded in the tax code and groups them into 10 categories, making them easier to find, understand and use. A list of your rights as a taxpayer and IRS obligations to protect them can be found in IRS Publication 1, Your Rights as a Taxpayer.
It includes The Right to Be Informed.
Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.
What you can expect:
- Certain notices must include the amount (if any) of the tax, interest, and certain penalties you owe and must explain why you owe these amounts.
- When the IRS fully or partially disallows your claim for refund, it must explain the specific reasons why.
- Help with Understanding Your IRS Notice or Letter is available online at IRS.gov.
- If the IRS proposes to assess tax against you, it must provide you in its initial letter, which allows for review by an independent Office of Appeals, an explanation of the entire process from examination (audit) through collection, and explain that the Taxpayer Advocate Service may be able to assist you.
- If you enter into a payment plan, known as an installment agreement, the IRS must send you an annual statement that provides how much you owe at the beginning of the year, how much you paid during the year, and how much you still owe at the end of the year.
- You can access current and prior year IRS forms and publications at IRS.gov or have hard copies mailed by calling toll-free 800-829-3676.
- IRS also uses several social media tools that provide helpful tax information to a broad audience, including Twitter, YouTube, Tumblr and the IRS2Go free mobile app.
To find out more about the TBOR and what it means to you visit: http://www.taxpayeradvocate.irs.gov
In addition to the Taxpayers Bill of Rights, the IRS is committed to ensuring that your civil rights are also protected. Taxpayers are not subjected to discrimination based on race, color, national origin, reprisal, disability, age, sex (including sexual orientation and pregnancy discrimination), religion, or parental status in programs or services conducted by the IRS or on its behalf. If a taxpayer believes he or she has been discriminated against, a written complaint can be emailed to email@example.com or mailed to the IRS Civil Rights Division.
The IRS also has a robust source of tax information available to Spanish-speaking taxpayers online at IRS.gov/espanol. Versions of Publication 1, Your Rights as a Taxpayer, are also posted online at IRS.gov in English, Spanish, Chinese, Korean, Russian and Vietnamese. By making this important publication available in multiple languages, the IRS hopes to increase the number of Americans who know and understand their rights under the tax law. Additionally, the IRS has programs in place to assist taxpayers with limited English proficiency and to provide reasonable accommodations for taxpayers with disabilities.
IRS Publication 1, Your Rights as a Taxpayer
Additional IRS Resources
· Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund
· Publication 594, The IRS Collection Process
Over 44,000 non-credentialed tax return preparers have elected to participate in the IRS Annual Filing Season Program and received a Record of Completion. This already exceeds last year’s 41,000+ participants.
The deadline to complete the required continuing education was Dec. 31, but for those who obtained the CE and did not get a Record of Completion, it’s not too late.
A preparer only needs to renew his or her PTIN and sign the online Circular 230 consent. View a video tutorial for a demonstration how to sign the C230 consent.
After the filing season is over (April 18), preparers will no longer be able to sign and participate in the program for 2016.
The benefits of participation are 1) retention of limited practice rights and 2) inclusion in the online preparer directory on IRS.gov.
For returns filed after Dec. 31, 2015, non-credentialed tax return preparers have no representation rights for clients unless they participate in the Annual Filing Season Program. More information about limited practice rights is available.
Written by Ronald Marini | Posted in Tax Payments • Tax Planning • Tax Refund • Tax Return
While most taxpayers get a refund from the IRS when they file their taxes, some do not. The IRS offers several Payment Options for those who owe taxes. Here are eight tips for those who owe federal taxes.
Tax bill payments. If you get a bill from the IRS this summer, you should pay it as soon as possible to save money. You can pay by check, money order, cashier’s check or cash. If you cannot pay it all, consider getting a loan to pay the bill in full. The interest rate for a loan may be less than the interest and penalties the IRS must charge by law.
Electronic Funds Transfer. It’s easy to pay your tax bill by electronic funds transfer. Just visit IRS.gov and use the Electronic Federal Tax Payment System. You may also use EFTPS to pay your taxes by phone at 800-555-4477.
Credit or debit card payments. You can also pay your tax bill with a credit or debit card. Even though the card company may charge an extra fee for a tax payment, the costs of using a credit or debit card may be less than the cost of an IRS payment plan. To pay by credit or debit card, contact one of the processing companies listed at IRS.gov.
More time to pay. You may qualify for a short-term agreement to pay your taxes. This may apply if you can fully pay your taxes in 120 days or less. You can request it through the Payment Agreement application at IRS.gov. You may also call the IRS at the number listed on the last notice you received. If you can’t find the notice, call 800-829-1040 for help. There is generally no set-up fee for a short-term agreement.
Installment Agreement. If you can’t pay in full at one time and can’t get a loan, you may want to apply for a monthly payment plan. If you owe $50,000 or less, you can apply using the IRS Payment Agreement application. If approved, IRS will notify you immediately. You can arrange to make your payments by direct debit. This type of payment plan helps avoid missed payments and may help avoid a tax lien that would damage your credit.
Taxpayers may also apply using IRS Form 9465, Installment Agreement Request. If you owe more than $50,000, you must also complete Form 433F, Collection Information Statement. For approved payment plans the one-time user fee is $105 for standard and payroll deduction agreements. The direct debit agreement fee is $52. The fee is $43 if your income is below a certain level.
Offer in Compromise. The IRS Offer-in-Compromise program allows you to settle your tax debt for less than the full amount you owe. An OIC may be an option if you can’t fully pay your taxes through an installment agreement or other payment alternatives.
The IRS may accept an OIC if the amount offered represents the most IRS can expect to collect within a reasonable time. Click here to see if you may be eligible before you apply. We will notify you of other options if an OIC is not right for you.
Fresh Start. If you’re struggling to pay your taxes, the IRS Fresh Start initiative may help you. Fresh Start makes it easier for individual and small business taxpayers to pay back taxes and avoid tax liens.
Check withholding. You may be able to avoid owing taxes in future years by increasing the taxes your employer withholds from your pay. To do this, file a revised Form W-4, Employee’s Withholding Allowance Certificate, with your employer. The IRS Withholding Calculator tool at IRS.gov can help you fill out a new W-4.
Posted by Tax Connections: https://www.taxconnections.com/taxblog/eight-tips-for-taxpayers-who-owe-taxes/