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New IRS Details on July Tax Filing Deadline

By: P. Lewis Robinson, CPA

As you might have already heard, due to the coronavirus pandemic, this year’s tax filing and payment deadlines for form 1040 has been extended to July 15 for many taxpayers. We also wanted to update you on a couple new details from the IRS about July tax deadline.

  1. You do not have to use a special form in order to be able to file using the July 15 deadline. If you file a return or an automatic extension request and pay your tax due by July 15, no interest or penalties will be due.
  2. Individuals can ask for an automatic extension of time to file (but not pay) by filing Form 4868 by July 15. The deadline to file these returns remains October 15, 2020 – as it would have been without the three-month filing and payment delay.
  3. The deadline to contribute to an Individual Retirement Account (IRA), Roth IRA, Health Savings Account, or Archer MSA is also extended to July 15.
  4. What DOES NOT qualify for the IRS’s three-month delay?
  • Estate and gift taxes
  • Excise taxes
  • Information returns such as 1099 form and payroll taxes. Congress is considering a payroll tax deferral.
  • Tax items that don’t have April 15 deadlines, such as the March 16 due date for partnership returns

For more information on this or other questions, check the IRS’s FAQs and its page devoted to the coronavirus issues. https://www.irs.gov/coronavirus

For more information about CapSouth Wealth Management, call our office at 800.929.1001 or visit our website at www.capsouthwm.com

CapSouth Partners, Inc., dba CapSouth Wealth Management, is an independent registered Investment Advisory firm. CapSouth does not offer tax, accounting, or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. 

What If I Get Audited?

 

“Audit” is a word that can strike fear into the hearts of taxpayers.  However, the chances of an Internal Revenue Service audit aren’t that high. In 2017, the most recent statistics available, the IRS audited 0.5% of all individual tax returns.[i]

 

Being audited does not necessarily imply that the IRS suspects wrongdoing. The IRS says that an audit is just a formal review of a tax return to ensure information is being reported according to current tax law and to verify that the information itself is accurate.

 

The IRS selects returns for audit using three main methods.

 

Random Selection. Some returns are chosen at random based on the results of a statistical formula.

 

Information Matching. The IRS compares reports from payers – W-2 forms from employers, 1099 forms from banks and brokerages, and others – to the returns filed by taxpayers. Those that don’t match may be examined further.

 

Related Examinations. Some returns are selected for an audit because they involve issues or transactions with other taxpayers whose returns have been selected for examination.

 

There are a number of sound tax practices that may reduce the chances of an audit.

 

Provide Complete Information. Among the most commonly overlooked information is missing Social Security numbers – including those for any dependent children and ex-spouses.

 

Avoid Math Errors. When the IRS receives a return that contains math errors, it assesses the error and sends a notice without following its normal deficiency procedures.

 

Match Your Statements. The numbers on any W-2 and 1099 forms must match the returns to which they are tied. Those that don’t match may be flagged for an audit.

 

Don’t Repeat Mistakes. The IRS remembers those returns it has audited. It may check to make sure past errors aren’t repeated.

 

Keep Complete Records. This won’t reduce the chance of an audit, but it potentially may make it much easier to comply with IRS requests for documentation.

 

To learn more about CapSouth Wealth Management and the services we provide, visit our website at www.capsouthwm.com or call 800.929.1001.  Financial advisors in Dothan, AL, McDonough, GA and Charlotte, NC

 

For more info about the Internal Revenue Service, visit their website at https://www.irs.gov/

 

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.irs.gov/statistics/enforcement-examinations

Tax Tips for Students with Summer Jobs

 

Do you have a child or grandchild working this summer? Well, you might want to share the following tax tips with them!

 

  • If they have a self-employed job this summer, such as being a nanny, babysitter, or landscaper, they may have to pay their estimated tax directly to the IRS because they won’t have an employer withholding taxes for them.
  • In addition, these self-employed students may be able to deduct some of their costs as business expenses. Tell your children or grandchildren to keep detailed records of their expenses this summer.
  • Remember, tip income is taxable too (even if it’s cash).
  • Although your summer worker might not earn enough to owe income tax, they will likely still owe Social Security and Medicare taxes. Most employers will withhold these taxes or if they’re self-employed, they might have to pay these taxes themselves.

 

Do you know a young person trying to earn a little extra income this summer? Share these tips with them to make sure they are up on their tax requirements.

 

To learn more about CapSouth Wealth Management and the services we provide, visit our website at www.capsouthwm.com or call our office at 800.929.1001.

 

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

 

Tip adapted from IRS.gov[i]

 

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.irs.gov/newsroom/tax-tips-for-students-with-summer-jobs

 

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