Bold labels are required.
If you've won or settled a lawsuit this year, you need to be aware that some kinds of awards and settlements are taxable. Moreover, you will be taxed on the entire award or settlement, even though 30% or 40% may have gone to your lawyer. The Tax Cuts & Jobs Act increased the tax rate on qualifying awards and settlements.
If you do owe taxes on your award or settlement, you will generally receive an IRS Form 1099 the following year.
If you're a Minnesota snowbird, you may have been watching Hurricane Dorian with special attention. Was your second home or vacation property damaged? Or, you may have a farm or agricultural property that was damaged in the spring flooding. Either way, you might have a casualty loss deduction to claim on your federal tax return.
If you do, you should be aware that the rules changed with the Tax Cuts and Jobs Act (TCJA).
Many people don't realize that they could lose their passports if they are found to be seriously delinquent in their tax liabilities. This is a relatively new penalty for nonpayment that was created under the 2015 Fixing America's Surface Transportation Act (FAST Act). The Act requires the IRS to certify seriously delinquent debts to the State Department, which will then pull the taxpayer's passport.
What do they mean by "seriously delinquent"? The FAST Act defines that as "an unpaid, legally enforceable federal tax liability" of more than a certain amount, which is adjusted annually for inflation and cost-of-living increases. The threshold amount for 2019 is $52,000 and includes back taxes, penalties and interest.
The IRS doesn't send unsolicited emails at all, and it certainly doesn't email taxpayers about the status of their refunds. That's the first thing you need to know if you receive an email that looks like it came from the IRS.
The agency and its Security Summit partners just announced a new email phishing scam that taxpayers have reported to their [email protected] email address. Phishing is when a scammer attempts to convince a victim to turn over valuable personal information that could be used against them.
Now that the Tax Cuts and Jobs Act is fully in effect, let's take a look at some common tax problems you may be facing as a contractor or "gig economy" worker.
The 2017 Tax Cuts and Jobs Act changed a number of things, eliminating many traditional tax exemptions and raising the standard deduction so that itemizing was much less common. As a result, the IRS recommended that people reconsider their 2018 tax withholdings and offered an online calculator to help.
That calculator, however, was difficult to use and confusing for many taxpayers. Many people therefore failed to perform a withholding checkup and subsequently discovered that they had not withheld enough. They ended up owing taxes unexpectedly.
The IRS taxes cryptocurrency as capital gains, but it requires taxpayers to disclose every transaction, whether or not it resulted in gains or losses. If you have invested in Bitcoin or another digital currency and haven't disclosed it to the IRS, you may not have paid all the taxes due.
At the end of last month, the IRS began sending letters to some 10,000 taxpayers that it suspects may owe taxes on crypto gains. The letters came in two flavors.
The proposed updates for the 2019 tax returns have been released, including a new Form 1040-SR for seniors. The new form for seniors was required by the Bipartisan Budget Act of 2018.
The new 1040-SR will look visually different from past forms. The font size is larger and it is designed with high contrast in mind, which is useful for people with declining vision. In connection to the new 1040-SR, the standard deduction chart includes the instruction to "add the number of boxes checked in the 'Age/Blindness' section of Standard Deduction." Additionally, the IRS updated Schedule R, "Credit for the Elderly or the Disabled."
When the government accuses you of a crime, sometimes it seizes any and all property it believes is tied to that crime. This process is called "civil asset forfeiture." When money and assets are seized, it becomes the taxpayer's burden to prove that they were not involved in or the proceeds of criminal activity -- and that can be hard to do.
Earlier this year, the U.S. Supreme Court ruled that civil asset forfeitures are essentially fines for the purpose of constitutional law. That being the case, the Eighth Amendment's prohibition on "excessive fines" applies to civil asset forfeitures. In other words, these seizures must be reasonable, although what that might mean, exactly, is not clear.
The middle of July is a good time to talk about paying your quarterly estimated taxes because the need to file is not imminent. Estimated taxes are required for many people who own small businesses or are self-employed, including those working as independent contractors for an established company. They also may be required for people who receive income from interest, dividends, capital gains, prizes and awards.
Estimated taxes are due on the 15th of April, June, September and January. You generally must pay 90% of your total estimated tax liability, or 100% of last year's tax liability (whichever is smaller) in order to avoid a penalty. This may include not only income taxes but also the self-employment tax and the alternative minimum tax, if applicable.
Pridgeon & Zoss, PLLC
7301 Ohms Lane, Suite 420
Edina,
MN
55439
Phone: 952-232-0371
Toll Free: 877-221-1651
Fax: 952-835-0201
Edina Law Office Map
© 2019 by Mark A. Pridgeon, Attorney at Law. All rights reserved. Disclaimer
Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters.