The due date for filing Tax Year 2022 Form W-2 and other wage statements (including Forms W-2AS, W-2CM, W-2GU, W-2VI, W-3SS, W-2c, and W-3c) with the SSA were January 31, 2023.  This deadline was applicable for filing under paper forms or electronically. Anyone with one or more employees to whom payments ($600 or more in wages even if there was no withheld income, social security, or Medicare tax) are made must file forms W-2 and W-3.  This includes non-cash payments also for the employee’s services in the trade or business during 2022. Anyone required to file Form W-2 must file Form W-3 to transmit Copy A of Form W-2. Even employers with only one household employee must file Form W-3 to transmit Copy A of Form W-2. If an error is discovered on an employee’s Form W-2 after sending it to the SSA, submit a Form W-2c, Corrected Wage, and Tax Statement. File Form W-3c, Transmittal of Corrected Wage, and Tax Statement whenever the employer files a Form W-2c with the SSA.

Extension Available for 30 Days

One can request a 30-day extension to file Form W-2 by submitting a complete application on Form 8809. However, the extension is not automatic, and it will be granted only in “extraordinary circumstances or catastrophe”.

Penalties for Failure to File

It’s important for employers to send W-2s to their employees and file them to SSA by the W-2 deadline (Jan 31, 2023) otherwise heavy penalties for late submissions or wrong information will be imposed. Penalties apply to the person or employer required to file Form W-2. The penalties apply to both paper filers and e-filers. The IRS can impose penalties for one or a combination of the below reasons.

• Failure to file correct information returns by the due date.
• Failure to furnish correct payee statements and /or Civil damages for fraudulent filing of Forms W-2.
• Failure to file and failure to furnish penalties.

Penalties for intentional disregard of filing and payee statement requirements are $580 and, have increased due to adjustments for inflation. The higher penalty amounts apply to returns required to be filed after December 31, 2022. The penalties for each information return or payee statement for the tax season 2023 are clearly stated by IRS in this link. Taxpayers will receive an IRS notice through mail about the penalties if imposed.  If one likes to dispute the penalty, one can still contact the IRS explaining the reason through a formal letter. But it is advisable to engage a tax professional who can understand your situation and guide you accordingly.

Generally, an employer needs to furnish Copies B, C, and 2 of Form W-2 to their employees by January 31, 2023. The employer will meet the “furnish” requirement if the form is properly addressed and mailed on or before the due date. If employment ends before December 31, 2022, an employer may furnish copies to the employee at any time after employment ends, but no later than January 31, 2023. Employers may furnish Forms W-2 to employees on IRS official forms or on acceptable substitute forms.

IRS Audit Group is a tax audit representation firm from Los Angeles, California. The Company has a team of certified tax lawyers experienced in state tax and federal tax. Regardless of client location, the tax experts can review your audit situation and we represent the IRS on behalf of the taxpayers for a better outcome in favor of the client. Please contact us for more information. https://irsauditgroup.com/contact/

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Tax Season 2023 has already started, and the deadline is Apr 18, 2023, for the 2022 tax filing.  While preparing tax returns, taxpayers are expected to have completed all relevant and important paperwork in hand.  This aids in the accuracy of tax filing.  There are chances of errors and omissions in the tax filing which results in the delayed filing as well as delayed tax refunds.  A tax preparation checklist will keep you organized and help you feel less stressed when it’s time to file your taxes.  There are multiple benefits if you engage a Certified Tax Professional as well.

Benefits of Engaging a Certified Tax Professional

Numerous credits, exemptions, and deductions can significantly reduce your tax obligation.  It is good to hire a tax professional who goes through such minute details and prepares the tax return to reduce obligation in compliance with IRS rules.  Such tax professionals will thoroughly examine the tax details,  and at the same time, the tax professional will take all care to avoid the burden of an IRS audit at a later stage.  If you own a business or have a complicated personal tax return, engaging a tax professional is especially advantageous. Here are a few advantages of engaging tax professionals.

• Helps to develop a Tax Strategy
• Knows how to represent clients for tax audits.
• Knows how to make a report taking into account the audit.
• Reduce errors.

Tax Filing Modes

Whether you’re an individual or a business owner, you need to pay taxes under every head of income received.  IRS recommends filing taxes electronically to get accurate filing and faster refunds.  Two ways to transmit tax returns electronically are:

• By personal computer with online filing using tax prep software
• Through an e-file provider or tax professional who is an electronic return originator (ERO).
• Use IRS Free File or Fillable Forms for individuals with an adjusted gross income is $73,000 or less.
• Use a Free Tax Return Preparation website for Qualifying Taxpayers

Basic Documents Required to File Your Tax

• Personal Information includes your name, Social Security Card and number, Date of Birth, Home address, copy of last year’s federal and state tax returns, Bank Account number, and routing number to receive your refund by direct deposit.
• Dependent Information is needed when you claim someone is dependent on you. You need the dependent’s name, Social Security Number, and Date of Birth.
• Sources of Income include several different forms documenting the income you received in 2022. Some common ones include:
• W2s from your employer
• 1099-G for unemployment income and state and local tax refunds.
• 1099-R and SSA-1099 for retirement plan distributions and Social Security benefits.
• Records of any transition involving cryptocurrency
• Self-Employment and Business include the documents showing income earned as an independent contractor, record of all business income and expenses, documentation of home expenses, and records of business assets to be depreciated along with date and cost placed in service.
• Deductions lower your taxable income and increase your refund or decrease the amount of tax you owe. If you itemize deductions, you need information on medical expenses, premium paid for long-term insurance, real estate taxes, tax paid with your vehicle registration, documentation of casualty loss, and charitable donations.
• Tax Credits show expenses for higher education, Child Care costs, Adoption costs, and purchase of Health Insurance.
• Estimated Tax Payments are when you are self-employed and earn money that doesn’t have federal and state income tax withheld; you may have to make estimated tax payments. It includes estimated payments made during the year, prior year refunds applied to the current year, and any amounts paid with an extension.
• Proof of Losses is various financial losses faced that can be deductible. It may be stocks or other investments or records of any non-business bad debts that are not collectible.

IRS Audit Group is a Tax Audit Representation Firm located in Los Angeles, California.  Irrespective of the location, our tax audit experts help clients across the country by representing them during IRS audits.  With 15 years of experience in the industry, we do not outsource our services.  A dedicated tax professional will be engaged with you from the beginning till resolving the case.  Please contact us for further queries https://irsauditgroup.com/contact/

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IRS announces an extension of the deadline for filing tax returns to victims of severe winter storms, flooding, and mudslides in California beginning January 8, 2023. Taxpayers from the FEMA announced designated areas now have until May 15, 2023, to file for returns or request extensions.

Who is Eligible?

• Individuals who reside and businesses whose principal place of operations falls under these designated areas are eligible for such an extended deadline.
• Also, workers and volunteers affiliated with government-recognized organizations who assist the relief activities are also eligible, if they are injured or killed as a result of a disaster.
• Apart from the taxpayers within the affected areas, individuals and businesses not located in the IRS-designated disaster area can call the disaster assistance hotline at 1-866-562-5227, and explain their situation to the assistor. After self-identifying, telephone assistors will manually code the accounts for relief.
• Even individuals and businesses who suffered uninsured and unreimbursed disaster-related losses can choose to claim on the tax filing for 2022 or tax returns for 2023 (next year). Again, they should be eligible based on the FEMA-declared designated areas.

These eligible taxpayers will have until May 15 to make 2022 contributions to their IRAs and health savings accounts. They will not get penalties for failure to pay estimated tax installments as long as such payments are paid on or before May 15, 2023. Further to the new deadline, taxpayers can also make their fourth quarter estimated tax payments on May 15 normally due on January 17, 2023, and April 18, 2023.

What is Relief?

This relief helps taxpayers to claim a deduction for the disaster loss, additional time to file the tax returns for 2022 and waive penalties for late filing. Taxpayers with an IRS address of record located in the designated area will automatically receive such relief. Despite this, if they receive notice of late filing or late payment penalty, IRS advises calling the number on the notice to abate the penalty.

How to Apply?

While filing their returns, eligible taxpayers should notify the name of the disaster by writing it in blue or black ink at the top of the form. California Taxpayers can mention “California, severe winter storms, flooding, and mudslides” on top of their forms. If filing electronically, taxpayers should submit disaster information according to the software instructions. They can also seek certified tax professionals who will assist in reviewing the tax situation and help to file to ensure accuracy. In a few cases, the IRS may contact the affected taxpayers for collection and examination of the matter. They are obligated to explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. Therefore, engaging a tax professional is advisable to avoid an IRS audit notice later.

Additional information and instructions are provided in this FTB publication on the procedure to claim the tax deductions. Further California’s Franchise Tax Board (FTB) has detailed explanations of disaster types, application instructions, and claiming procedures in this link to help taxpayers and businesses. IRS also recommends that taxpayers visit the FAQ section for disaster victims before applying under the tax circumstances for accurate filing.

IRS Audit Group is a tax audit representation firm in Los Angeles, California. Usually, in a few cases, the IRS may ask for more information to validate the tax return filings. But rarely, IRS may like to audit your tax information through a letter of notice via Mail. In such cases, it is important to engage a tax professional like ours to represent your audit. Our licensed professionals comprise qualified CPAs and IRS Enrolled Agents. They can analyze your tax situation and help alleviate your burden. Please contact us for more information. https://irsauditgroup.com/contact/

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The Internal Revenue Service (IRS) will begin accepting tax filings on January 23, 2023. This time IRS has hired more employees to help the taxpayers for a seamless experience. Taxpayers can contact IRS customer representatives through telephone and online tools as given in this link. People can also visit the IRS official website to check on the basic question under the FAQ section before contacting the customer representative team.

IRS Free Service Programs

IRS has various free services to help taxpayers with tax filing.

• The IRS’s Volunteer Income Tax Assistance and Tax Counselling for the Elderly programs are few that offer free basic tax return preparation to qualified individuals. Eligibility for the same can be checked on the above links.
• IRS Free File Program also opened on Jan 13, 2023. The service providers in this program will accept completed returns and file them electronically once it is open on Jan 23. This free file program is available only for taxpayers with AGI (Adjusted Gross Income) of $73,000 or less in 2022.
• For people in the service like the military community, the department of defense provides a free tax resource called MilTax. It includes software for tax preparation and electronic filing. It offers individualized assistance from tax advisers and up-to-date tax filing information. With MilTax, qualified taxpayers can file a federal tax return and up to three state taxes electronically for free.

Many software providers and tax professionals are already preparing taxpayers’ returns and will file them once the window is open. Therefore, IRS advises taxpayers to choose their tax professionals wisely. There are various types of tax return preparers, including enrolled agents, certified public accountants, tax attorneys, and others who don’t have professional credentials. It has even provided guidelines on selecting tax preparers through this link.

Importance of IRS Tax Credits

The IRS recommends individuals and tax professionals review their tax situations, so they don’t miss out on important tax credits like Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). IRS even set an awareness day on Jan 27, 2023, to make them understand the benefits of the EITC program. EITC helps low- and moderate-income workers and families.

Information on IRS Refunds

Taxpayers are advised to collect and submit accurate information for error-free returns filing. This will avoid delays in processing refunds if any. If taxpayers choose direct deposit and there are no issues with their tax return, then IRS expects that most taxpayers will get their refund within 21 days of filing electronically. But taxpayers with EITC and ACTC will receive their refunds in mid-February due to processing time in identifying fraudulent refunds under the 2015 PATH Act. Taxpayers can check their refund status through Where’s My Refund? Link. This link will show an updated status by February 18, 2023, for early EITC/ACTC filers. Further, individuals can securely log in to their IRS Online Account to access personal tax account information, such as the balance, payments made, and tax records, including adjusted gross income.

National Due Date to File a 2022 Tax Return

This year the due date for tax season 2023 will be April 18, instead of April 15, unlike last year. Weekends and the District of Columbia’s Emancipation Day holiday affect the deadline, and thus the extension is given for the individuals. The taxpayers also need to file for an extension before Apr 18, if they need time to file the tax returns. Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.

Key Deadlines to Remember

IRS Audit Group

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys. We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation. But our certified professionals cooperate and work with all IRS offices across the country. Please contact us for more information. https://irsauditgroup.com/contact/

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The Work Opportunity Tax Credit (WOTC) is a federal tax credit that businesses can use to offset the cost of hiring people from specific target groups who have consistently encountered significant barriers to employment. WOTC initiatives help to improve workplace diversity and make it easier for all citizens to acquire decent jobs.

The Consolidated Appropriation Act, 2021 authorized the extension of the Work Opportunity Tax Credit until December 31, 2025. This means taxpayers can claim the credit on or before Dec 31, 2025, for such eligible hiring. Needless to say, WOTC is only for one time per employee and cannot be claimed for re-hired.

Eligible Businesses for WOTC

There is no specific limit on business size to be eligible under this scheme. Any size of business is eligible for the work opportunity tax credit if it hires candidates from qualified groups. This credit is available to both taxpayers and certain tax-exempt employers operating in the United States and some U.S. territories. Basically, the employers must fall under the below criteria as

• Taxpayers that can claim the credit against income taxes
• Tax-exempt employers can claim the credit only against payroll taxes and only for wages paid to members of the qualified veteran targeted group.

Target Groups Qualified under WOTC

Any employers can claim WOTC for the below-targeted groups under section 51 of the Code. The employee must be a certified member of any one of the following groups to proceed with the claim.

• Veterans
• Recipients state assistance under part A of title IV of the Social Security Act (SSA)
• Individuals who have previously served time in prison or who have been convicted of a felony
• People who live in empowerment zones or rural renewal counties
• Individuals who have been referred to an employer after completing a rehabilitation plan or program
• People whose families receive supplemental nutrition assistance under the Food and Nutrition Act of 2000
• Recipients of supplemental security income benefits under title XVI of the SSA
• Individuals experiencing long-term unemployment

How much can be claimed?

The amount of tax credit under the WOTC program varies based on the employee’s target group, total hours worked, and total qualified wages earned. For instance,

• If the qualified employee has worked for at least 400 hours and is still in the first year of employment, WOTC is equal to 40% of up to $6,000 wages paid or incurred with a maximum credit of $2,400 for an employee
• If the eligible employee has 120 to 399 hours of service, then a 25% rate applies to wages
• Up to $24,000 in wages may be considered in determining the WOTC for certain qualified veteran targeted group

 Procedure to Claim WOTC

Taxpayers and Tax-exempt organizations can apply through different IRS Forms to claim WOTC. But all need to complete Form 8850 which is a Pre-Screening Notice and Certification Request to certify that the employee is qualified under the target group. These documents must be submitted to the State Workforce Agency not the IRS within 28 days of the new employee’s start date. Once the State Workforce Agency certifies the employee, Taxpayers can file Form 5884 (Work Opportunity Credit) and tax-exempt employers file Form 5884-C (Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans) to claim the WOTC.

IRS Audit Group is a Tax Audit Representation Firm in Los Angeles, California. Our Tax professionals act on the behalf of the taxpayer during an IRS audit. The IRS audit process can terrify some taxpayers but the Taxpayer Bill of Rights states that individuals can seek help from an IRS tax representative like us to represent them during the IRS audit. Don’t Panic, if you have received a mail for IRS Audit but act fast by contacting us immediately for the next step.

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The IRS tax filing deadline has ended for most individual taxpayers for the season 2022. In case, if you have not done the tax filing by the end of the deadline which was on April 18, 2022, it is important to know the consequences as well as other options. People who qualify for tax exempt or who don’t owe taxes will not receive any penalties and interests. But it is different for those who have the liability to pay tax. They need to file tax return as soon as they can do it in order to reduce penalties and interest.

For the tax season 2022, IRS advised that individuals who owe taxes need to file returns and pay as much as possible on/before Jun 14, 2022, to avoid hefty fines. It also recommended to use the electronic filing options for faster processing. Similarly, the fastest and easiest way to pay the taxed is with IRS Direct Pay.

IRS Late Filing Penalty Structure

Missing the deadline of June 14 will typically result in a failure-to-file penalty, which is also known as a minimum late filing penalty. The minimum fine is $435 or 100% of the unpaid tax, whichever is smaller, if the return is more than 60 days late. If the taxpayer owes $435 or less in taxes, the penalty will be equivalent to that amount. The minimum fine will be at least $435 if they owe more than that.

Under the normal calculation, this penalty is 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. Once the taxpayer files return, the late filing penalty will no longer be charged. In addition, once the tax is paid, the separate late-payment penalty and interest will also stop growing. None of these costs need not be calculated by the taxpayer. The IRS will instead send them a bill for any overdue sum.

Late Filing Options for Tax Season 2022

Even if the taxpayers have not filed the returns before the April deadline, they can do so electronically through Free-File service. Those who qualify can avail this free-file service until October 17, 2022. If you are not eligible for IRS Free File, then you can e-file using Free File Fillable Forms. The IRS paper forms used in this option are electronic counterparts. It helps individuals who are comfortable filing their own taxes where the e-filing does the part of the math.

Sometimes, taxpayers may miss the deadline because they were not able to pay the taxes, which in case they can opt for payment plan with the IRS. The best way to apply is to use the IRS Online Payment Agreement tool. Once the online process is complete, you’ll receive immediate notification of whether the agreement is approved. IRS provides two types of online payment plans as follows

• Short-term payment plan: If the entire amount owed, including taxes, penalties, and interest, is less than $100,000 and the payment period is 120 days or less.
• Long-term payment plan: If the total amount payable for the tax, penalties, and interest is less than $50,000 and the payment period is greater than 120 days. If IRS approves long-term payment plan, a setup fee can be charged depending on the taxpayers’ income.

If you are not eligible for an online payment plan, you may also request an installment agreement by submitting Form 9465, “Installment Agreement Request”, with the IRS. If the IRS approves your IA, a setup fee may apply depending on your income.

Can You Avoid the Penalties?

The penalties for late filing, late payment, and interest on unpaid taxes pile up quickly, so it’s crucial to file as soon as possible. A taxpayer who files after the deadline can, however, under some circumstances, be eligible for penalty relief. Those who received a penalty may call the IRS at the number listed on their notification and explain why they were unable to file and pay on time.

Administrative penalty reduction is frequently available to taxpayers who have a history of timely filing and payment. Generally, a taxpayer is eligible if they have been timely filing and paying taxes for the last three years and meet additional criteria.

IRS Audit Group is a Tax Audit Representation company in Los Angeles, California with a team of Tax Professionals, CPAs, Enrolled Agents, and Tax Attorneys. They are primarily specialized in IRS Audit Representation. We provide free consultation to understand your tax problems. Contact us: https://irsauditgroup.com/contact/

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The Section 501(c)(3) Internal Revenue Code specifies that any Tax-exempt organizations need to be organized and operated exclusively for exempt purposes. Also, it needs to ensure that none of its earnings inure to any private shareholder or individual.  In this context, the private inurement means that the assets of the organization must not be used to benefit a single person excessively.

Here are a few types of Exempt Organizations.

• Charitable Organizations
• Churches and Religious Organizations
• Private Foundations
• Political Organizations
• Other Non-profits

  The IRS requires most tax-exempt organizations to file annual tax returns. Even though most tax-exempt non-profit organizations do not pay federal taxes, these entities are required to file an informational return with the IRS.  Hence, such entities need to file their IRS return for this tax season 2022.

 The annual reporting return for tax-exempt organizations is referred to as a Form 990. Most of the tax-exempt organizations need to file an annual return, and it can be done electronically. The financial activity of an organization determines which form it must file, as shown in the chart below.

 The deadline for the tax season 2022 has been fixed as May 16 to file IRS return by the tax-exempt organizations. Taxpayers who need more time to file beyond the May 16 deadline can request Form 8868 which is the Application for Extension of Time to File an Exempt Organization Return. This form will provide a 6-month automatic extension. Extending the time to file a return does not extend the deadline to pay tax in circumstances where tax is payable. Organizations requesting an extension are encouraged to complete Form 8868 electronically, according to the IRS.

Extended Support From IRS

IRS helps taxpayers, board members, volunteers, and officers in filling returns to comply with their tax filing obligations. Therefore, it lists few modernized e-File (MeF) providers who have passed the IRS Assurance Testing System (ATS) requirements for Software Developers of electronic Exempt Organizations. The list of such service providers can be found using the below IRS webpage

https://www.irs.gov/charities-non-profits/tax-year-2021-exempt-organizations-modernized-e-file-mef-providers

IRS Audit Group is a Tax Audit Representation firm in Los Angeles, California. We are a team of tax attorneys having hands-on experience in dealing with IRS audit process. We help you file your tax return for 2022 complying with all obligations and represent you on IRS audit. Contact us to get free consultation to understand your issues. https://irsauditgroup.com/contact/

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Qualified Opportunity Fund (QOF) is an investment vehicle formed as a company or partnership with the goal of investing in property within Qualified Opportunity Zones. This program was formed per the 2017 Tax Cuts and Jobs Act to provide a tax incentive for private, long-term investment in economically distressed communities. There are thousands of low-income communities in all 50 states, the District of Columbia and five U.S. territories that are designated as Qualified Opportunity Zones. Taxpayers can invest in these zones through Qualified Opportunity Funds. This type of opportunity funds assists taxpayers in giving tax advantages and rewards to investors.

Certain types of businesses cannot be included in opportunity funds, even if it falls within opportunity zones. Following are types of business which are not included in opportunity funds.

• Golf courses
• Country clubs
• Massage parlors
• Hot tub facilities
• Suntan facilities
• Racetracks or other facilities used for gambling
• Liquor stores

Eligibility Criteria

To certify and maintain a Qualified Opportunity Fund, an entity must:

• Be a partnership, corporation, or LLC that is treated as a partnership or corporation, and it must have filed a federal income tax return;
• Be organized for the purpose of investing in Qualified Opportunity Zone property under the laws in one of the 50 states, the District of Columbia, a U.S. possession, or a federally recognized Indian tribal government: and
• Hold 90% of its assets in Qualified Opportunity Zone property.

IRS Form Required to Certify as a Qualified Opportunity Fund

The entity must file Form 8996, QOF, with the qualifying partnership or corporation’s federal tax return each year to attest and retain its status as a Qualified Opportunity Fund. The entity must file Form 8996 by the due date for 2022 tax return (including extensions).

Form 8996 is used to:

• Certify the corporation or partnership is organized to invest in Qualified Opportunity Zone property.
• Report that it meets the 90% investment standard of section 1400Z-2.
• Figure the penalty if it fails to meet the 90% investment standard.

Benefits to the Taxpayers

The QOF basically provides tax deferral to the capital gains if the taxpayer elects to do so. The basis in the QOF investment becomes zero when one elect to defer the gain. The longer the investment in the QOF, the higher the basis grows. The tax benefit received is determined by the length of time one retains the Qualified Opportunity Fund investment. For instance

• After five years, a taxpayer who defers gains through a Qualified Opportunity Fund investment obtains a 10% step-up in tax basis
• It will be followed by another 5% step-up after seven years. Note that the taxpayer must have invested before December 31, 2019, to receive the entire 15% step-up in tax base. The taxpayer will have held the investment in the fund for seven years when the tax is triggered at the end of 2026, thereby qualifying for the 15% increase in tax basis.
• If the taxpayer holds the investment in the QOF for at least 10 years, then such taxpayer may be able to permanently exclude gain resulting from a qualifying investment when it is sold or exchanged.

A team of tax attorneys from IRS Audit Groups helps taxpayers in filling their IRS return for 2022. We are certified tax lawyers who represent taxpayers during any IRS audit. We can resolve common tax problems to complex audit sessions to help comply our clients. Get free consultation by calling or filling the enquiry from our website below

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What is FBAR?

According to the Bank Secrecy Act, one must declare and keep records of certain foreign financial accounts, such as bank accounts, brokerage accounts, and mutual funds, to the Treasury Department every year. The accounts are reported on a Financial Crimes Enforcement Network (FinCEN) Form 114 called a Report of Foreign Bank and Financial Accounts (FBAR). The annual due date for filing FBARs for foreign financial accounts is April 15^th of every year.

Who must file FBAR?

A citizen, resident, corporation, partnership, limited liability company, trust, or estate in the United States must file an FBAR to report if they have a financial interest in or signature or other authority over at least one financial account located outside the United States and its aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

However, you are exempt from reporting foreign financial accounts if they are:

• Correspondent/Nostro accounts
• Owned by a governmental entity
• Owned by an international financial institution
• Maintained a U.S. military banking facility,
• Held in an individual retirement account (IRA) of which you’re an owner or beneficiary,
• Held in a retirement plan of which you’re a participant or beneficiary, or
• Part of a trust of which you’re a beneficiary,  if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.

Further taxpayers don’t have to file an FBAR for the tax year 2022 if you meet the following criteria:

• All your foreign financial accounts are reported on a consolidated FBAR, or
• You jointly own all your foreign financial accounts with your spouse and:
  • You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly owned accounts on a timely-filed signed FBAR.

Note: Your eligibility for this exception is unaffected by your filing status, such as married-filing-jointly or married-filing-separately.

How to file the FBAR?

The FBAR must be filed online using FinCEN’s (Financial Crimes Enforcement Network) BSA E-Filing System. The FBAR is not filed with the federal tax return. You need to call FinCEN’s Resource Centre to request an exemption from e-filing if you want to file your FBAR on paper. If FinCEN authorises your request, you will get a printed FBAR form to fill out and mail to the IRS.

If you wish someone else to file your FBAR on your behalf, fill out FinCEN Report 114a, Record of Authorization to Electronically File FBARs, and provide it to them. FinCEN Report 114a is not submitted with the FBAR; instead, retain it for your records and make it available to FinCEN or the IRS upon request.

Deadline to file for the Tax year 2021

The FBAR is an annual report that is due on April 15 of the year reported. If taxpayers miss the FBAR annual due date of April 15, they will get an automatic extension until October 15. To file the FBAR, you do not need to request an extension.

More information related FBAR filing and other resources available on the IRS website here – https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar

IRS Audit Group are a team of Tax Professionals, CPAs, Enrolled Agents and Tax Attorneys, primarily specializing in Internal Revenue Services (IRS) Tax Audit Representation. We resolve your tax audit issues and represent on behalf of you to the IRS. Call us to get free consultation from our tax professional to understand our Tax audit concerns.

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As the internet economy grows, business entities find tax regulations increasingly complex, which impends growth and thus hinders business entry into new markets. Online payments made it easy for businesses to manage payment details and accept transactions without visiting banks and even without adding customer accounts. This tax payment makes it easy for businesses to calculate and collect the correct relevant taxes without having to understand the complexities of tax regulations or rates.

To facilitate  2022 tax filing in such transactions, IRS has instructed the payment processors like Venmo and Cash App to send the Form  1099-K to users who accept money for selling goods & services. It includes those who transact in cryptocurrency using these payment processors. In summary, 1099-K is an IRS instruction form to be filed by the payment processing companies and shared with users so taxpayers can verify and include it in their income tax filing. Form 1099-K will report the total gross income in Box 1a received during the year without considering any adjustments, discounts, or refunds.

Did You Get The Form 1099-K?

Not all the users who make transactions through these platforms will be receiving the form. IRS defines a few eligibility criteria. If you received payments in the prior calendar year, then in such a case you should have received Form 1099-K, and here is the summary.

• From payment card transactions (e.g. debit, credit, or stored-value cards), and/or
• In settlement of third-party payment network transactions above the minimum reporting thresholds as follows:
  • For returns for calendar years prior to 2022:
    • Gross payments that exceed $20,000, AND
    • More than 200 such transactions
  • For returns for calendar years after 2021:
    • Gross payments that exceed $600, AND
    • Any number of transactions

If you are using multiple payment processors, each company will be sending a separate Form 1099-K. This form will include all transaction details including taxable non-taxable payments. Non-taxable transactions can be money received from friends, share for home rent from roommates or as gifts, and more.

How will I Receive My 1099-K Tax Forms?

Qualified users will be notified in the app and send an email to the address on file. As soon as the taxpayers receive notifications about 1099-K, they can follow the instructions from the app on what to do next. These forms will be sent out on or before Jan 31^st and the gain/loss statement will be made available on or before Feb 15^th.

What to do with Form 1099-K?

It is an information form that provides a record of all tractions of your business income that happened through the payment processing platform. Therefore, IRS advises reporting this business income in your Tax Return 2022. The gross receipts on the tax returns are calculated from the total income of the business for the tax year.  Therefore, taxpayers should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return. If already included, taxpayers can keep it as a record and cross verify all the income is reported properly.

If there is any mismatch or incorrect information like wrong Tax identification number, incorrect gross income, in Form 1099-K, taxpayers can contact the payment processors through the telephone number listed in the Form.

IRS Audit Group, a tax audit representation agency in Los Angeles is serving the taxpayers in solving issues received from the IRS through its decades of expertise. Get Free Consultation with one of our tax attorneys to discuss your tax issues to take a comprehensive approach.

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