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Internal Revenue Service Goals for 2020 - Part 2

The Internal Revenue Service (IRS) has goals to accomplish in 2020 just like everyone else. Some of their goals might be considered ambitious, but it’s always best aim high. That is especially true when it comes to providing guidance related to defining changes created by the Tax Cuts and Jobs Act (TCJA).
There are about 100 topics that need some sort of written clarification. To provide all that by September would be a remarkable feat, since the Taxpayer First Act signed last year still needs to have a written plan about how it will be applied. How all this will happen we still do not know, but we can look forward to some guidance given on very popular topics that were impacted by the TCJA.
The deductions related to Meals and Entertainment were shaken up by the TCJA. These expenses can now only be deducted up to 50%. A clarification may be issued soon that will explain when these meals are deductible and when they do not qualify. Many companies are waiting for the IRS to compl…

Internal Revenue Service Goals for 2020 - Part 1

The focus of the Internal Revenue Service (IRS) going into 2020 is to apply the changes stated in the Taxpayer First Act. This law was signed in July 2019 and is supposed to have a detailed written plan, that brings it from the page to real life by September 2020. The goal behind it is to change how the IRS interacts with taxpayers, handles appeals, and upgrade the technology it uses.
This will create an independent Office of Appeals to handle taxpayer challenges. Until then, there is a Taxpayer First Act Office which oversees guiding these changes into reality. Before anything happens, the IRS wants to hear feedback and gather information from the private sector, lawmakers, and even IRS employees. This gathering period could last until February. The idea is to be able to present IRS leadership with different options to choose from that can be used to implement the new law. This could mean restructuring the IRS employee base as we know it to better assist taxpayers, or outside c…

Keeping Up With The Speed of Change: Where Can You Be Taxed?

When a person has an income, they typically pay taxes on it. The more they make, the higher rate of tax they pay. This has been the accepted pattern of life. When it comes to a business, people generally expect that pattern to continue. However, this is not always the case. For example, the Tax Cuts and Jobs Act (TCJA) changed the corporate tax code so that all businesses will be taxed at the flat rate of 21%. Another reason is that it has been proven that some companies have made billions but paid little or no taxes on that income.
This is because the companies and their subsidiaries were placed all around the world. As a result of this, they were taxed based on where they were located. This is scheme is not new but is now being implemented in a very sophisticated way. Reporting income in low tax countries has become an even more tempting option with the growing digital economy. Governments around the world are banding together to fight back and get their share of profits that …

New Mileage Rates Released and What They Mean

The standard mileage rates that can be used to deduct the costs of operating a vehicle for business uses have been updated. When it comes to driving for business (57.5 cents per mile) or for moving (17 cents per mile), the rates have come down when compared to 2019. A half cent for business driving and 3 cents for the purpose of moving. One reason for this is that the mileage rate for business use is based on a yearly study of different costs related to using cars, trucks, vans, and pick-ups. Taxpayers always have the option using the actual cost of using their vehicle, instead of the mileage rate.
The Internal Revenue Service (IRS) stated that under the Tax Cuts and Jobs Act (TCJA) only members of the Armed Forces on active duty, who are moving under orders, can claim a deduction for moving expenses. A taxpayer cannot combine the business mileage rate, with any other depreciation method. There are other limitations that have been put in place for business owners who use vehicl…

The IRS Has Plans for Growth in 2020

The Criminal Investigations unit of the Internal Revenue Service (IRS) had a 91.2% conviction rate last year. This is impressive, but at the same time, Criminal Investigations has been prosecuting fewer cases each year for the past few years. This is because IRS Special Agents are retiring faster than they can be hired and trained. Looking forward, IRS leaders feel they are in a prime position to hire and change this trend.
By adding employees and investing in technology to have a more data driven approach to different investigations, IRS Criminal Investigations looks to grow their investigations, indictments, and overall prison sentences going forward. While cryptocurrency is a new area the IRS is focusing on, they are continuing to give their attention to employment tax. This will be a point of emphasis considering that it is a large part of what funds the federal government. The abusive return preparer program is also experiencing growth, which serves as a protection for Ta…

How to Become A Whistleblower

Whistleblowers have certainly made the news in recent months, for a variety of reasons. Did you know that the Internal Revenue Service (IRS) is always willing to listen to individuals if they have information about potential tax cheats? It’s true. They have a dedicated office that open to those who have “specific and credible information” to provide.
The process starts by filling out an official form. This can lead to an award between 15-30% of the total liability collected, including penalties and interest. Before going off to point the finger at companies or individuals, remember that these awards are discretionary and cannot be challenged. If the IRS does decide to start a case, it will take years before it will be resolved. They will only move ahead if certain thresholds are met. They want to make sure that the Criminal Investigations unit is not being used as a tool to solve personal problems. Those who are accused have a right to privacy, just like the accuser. So, the…

New Way to Start A Job in 2020

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When starting a new job, every employee gets a Form W-4. This will tell the employer how much money to withhold from the paycheck. These withholding amounts can lead to owing taxes after filing or getting a refund. As a result of the Tax Cuts and Jobs Act (TCJA) from 2017, this form has been changed.
Instead of checking off “allowances” to be used, it will ask for actual dollar amounts. This means that new employees will need to consider outside sources of income to make sure that the right amount is withheld in the eyes of the Internal Revenue Service (IRS). This is a controversial point for some because it may allow an employer to see if their employees have a second job. It will also require coordination with married couples to make sure that neither spouse under-withholds, which will lead to a tax bill the next year. The instructions must be read very carefully. Taking your time and filing the form in correctly will save a lot of money and anxiety in the future.