Tax Season 2023 started and one of the important questions that come up during tax season is if you opt to prepare your tax statement or hire a tax professional. It really depends on several factors including financial situation, tax knowledge, time, patience, and effort needed to prepare a tax return. Both of these two options have their own pros and cons, the choice ultimately depends on the personal comfort level with taxes of an individual.

When To File by Yourself?

Preparing your own taxes can be done using tax software or through the IRS website. It is a good option to save a few bucks, but it is not always the best choice.  Here are a set of situations where you can do your own tax filing are:

• The tax situation is simple.
• Financial limitation to save money.
• Good understanding of tax laws and tax preparation process
• Comfortable using tax software.
• Have patience and time to deal with tax preparation.

Disadvantages of Filing Your Own Taxes

There are potential disadvantages while filing your own taxes. Tax filing is more time-consuming especially when there is trouble understanding tax laws. If you have multiple income sources, then it adds more complexity due to numerous tax laws. Using online tax software speeds up the process but it can be difficult to get help if any question arises. Filing your own tax increases the risk of errors which lead to penalties, interest, or even an IRS audit.

Why Hire a Tax Professional?

Hiring a professional tax preparer can be a wise choice for individuals as well as for businesses. Tax Professionals have the knowledge and expertise to minimize the complex tax code and they ensure maximum tax savings and thus minimize the risk of the tax audit. Hiring a professional tax preparer may be necessary for a few scenarios as follows/

• Don’t have time and patience to deal with tax preparations!
• Multiple income sources
• Owning a business or rental property and having a complicated situation.
• Planning to itemize deductions.
• Experienced major life events.
• Have foreign accounts and investments or active stock traders.

Disadvantages of Hiring a Professional

The only crucial disadvantage of choosing a tax professional can be difficulty in finding a trustworthy and experienced tax preparer. Not all tax preparers are equal, some may not have expertise in handling complex tax situations. There are many scammers who pose as legitimate tax preparers.  Hence, it is important to do proper research about potential tax preparers by reviewing their credentials, client testimonials, etc.

To do filing by your own effort or hire a professional depends on personal circumstances and level of comfort with tax laws and the tax preparation process. Doing your own taxes is the finest method to save money if you are confident in your capacity to comprehend the tax rules. If not, it’s likely time to spend the money and employ a tax professional. In the end, you have to balance the worth of your time and money versus your mental health.

IRS Audit Group is a tax audit representation company in Los Angeles, California. We offer a free initial consultation to assist you to comprehend your tax concerns completely and effectively, regardless of whether they are related to California state income taxes or taxes from another jurisdiction. If you need assistance or counseling with tax issues in California or another state, please contact the IRS Audit Group to learn more about our services.

https://irsauditgroup.com/contact/

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Who are Tax Professionals?

Tax professionals are experts who offer tax-related services to individuals, businesses, and organizations. They are knowledgeable and trained in tax laws, rules, and procedures. They can be tax advisors, tax lawyers, enrolled agents, certified public accountants (CPAs), and tax preparers. These experts assist taxpayers in understanding their requirements, preparing and filing tax returns, resolving tax concerns, and making tax-saving plans. They also can help customers with a variety of tax-related concerns, including tax optimization, tax negotiations, tax compliance, and tax audits.

Why do We Need Them?

Filing taxes can be a more confusing and overwhelming process, especially for individuals and businesses that are not familiar with tax codes. This is where tax professionals help clients to solve their queries in filing tax returns. They provide guidance on tax planning and help identify tax-saving opportunities. Working with tax professionals is time-saving as they analyze tax structures, prepare strategies, and finalize the right documents and forms for filing. Tax professionals make sure that the filed returns are accurate and complete to minimize the risk of an IRS audit. They also provide tax audit representation services for the clients if there is any dispute with the IRS to resolve the issue. Tax professionals can reduce your financial burden by assisting in negotiating payment plans or settling debts. An experienced tax professional can help to face the complex world of taxes with confidence.

What are their Qualifications, and Eligibility?

Tax professionals should have IRS Preparer Tax Identification Number (PTIN) that is authorized to prepare federal tax returns. Enrolled agents, certified public accountants, and tax attorneys have unlimited representation rights before the IRS. The eligibility and skills required are as follows.

• Enrolled agents should pass a three-part Special Enrollment Examination and they must complete 72 hours of continuing education every 3 years. They have proficiency in federal tax planning, individual and business tax return preparation, and representation.
• Certified Public Accountants should complete their study in accounting in school or college and clear the Uniform CPA Examination In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education in order to maintain an active CPA license.
• Attorneys should clearly state bar exams and they generally have ongoing continuing education and professional character standards.

Some prepare who don’t have the above credentials have limited representation rights. They can represent only the people for whom they have prepared returns and signed. Annual Filing Season Program Participants who have completed their course program and PTIN holders can also prepare tax returns.

How to Check Tax Preparer Credentials?

There are many individuals who claim to provide services as tax preparers. It is important to know their credentials before engaging in one. Choosing an incorrect tax preparer can result in poor tax filing and can even lead to disputes and tax audits. The IRS maintains a public list of specific tax professionals in order to assist taxpayers in determining the credentials and training of return preparers. Attorneys, CPAs, enrolled agents, enrolled retirement plan agents, enrolled actuaries, and Annual Filing Season Program Record of Completion recipients having valid PTINs for 2022 are listed in the searchable, sortable database along with their names, cities, states, and zip codes.

Who are Ghost Tax Preparers?

Ghost preparers are those who refuse and don’t sign the tax returns they prepare and pretend to be invisible. They refuse to digitally sign it as the paid preparer. prefer taking payment in cash and refusing to provide a receipt. They invent income to qualify their clients for tax credits. They also claim fake deductions to boost the size of the refund and direct the refund into their own bank accounts. IRS advises to beware of such tax preparers. They add more complexity to your filings than simplifying them. All tax preparers must have a valid Prepare Tax Identification Number (PTIN). IRS also makes it mandatory for tax preparers to provide a digital signature and PTIN at the end of the tax filing form.

 How to Select the Suitable One Among the Many Tax Preparers?

When looking for a tax preparer, it is necessary to choose who is knowledgeable, reliable, and professional. Some of the measures to take before selecting a tax preparer are.

• Make sure to choose a tax preparer who can be available in case the IRS examines, returns, and has questions regarding how the filing was prepared.
• Avoid tax preparers who claim they can obtain larger funds.
• Ensure the preparer has PTIN with them.
• Choose the tax preparers who enter the PTIN on tax returns and sign them.
• Consider a Tax preparer who is available around months or years after filing the return so that they can represent on behalf of you if there is an IRS audit.
• Make sure the credentials are checked through the IRS official website.

IRS Audit Group is a tax representation company that has a group of expert tax professionals like layers, enrolled agents, and CPAs. They help clients in resolving their state audits and IRS audits by representing them. IRS Audit Group has its proprietary audit process from the beginning of free consultation with the clients until resolving the issue in favor of the taxpayers. Please contact us for more information. https://irsauditgroup.com/contact/

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The Internal Revenue Service has provided taxpayers with a checklist of reminders to assist them with filing tax returns for the tax season 2023. These quick practices will simplify tax preparation from collecting documents to completing a tax return. But if your tax filing is complex and doesn’t have enough time, it is better to reach a tax professional. Tax professionals know how to file tax returns without any further chances for any IRS audit by filing with accuracy. Engaging a tax professional has various benefits like

• They don’t miss any deductions and tax credits available for you.
• They have up-to-date information on tax codes and new changes. Saves ample time.
• Help eliminate errors and avoid IRS Audit
• Provide the best tax-saving strategies for upcoming tax seasons.
• Investigate past tax returns and amend any missed deductions.

IRS Audit Group is a tax audit representation company in Los Angeles, California. With 15 years of experience, the certified tax professionals, lawyers, and experts of the company have successfully helped clients’ audit processes and understand their IRS taxing authority. IRS Audit Group has a process to follow while doing the tax filing as follows.

• Remember To Report All Types of Income on The Tax Return
• List out income from possible sources such as
• Online platforms that created and sold goods.
• Income from investments
• Part-time or seasonal employment, self-employment, or other business ventures
• Services offered by mobile apps.

Here Are A Few Tips from The IRS Audit Group for All Taxpayers

There are options to use Free Resources for Tax Filing.  The IRS’s Free File program, which is only accessible at www.irs.gov, enables individuals who made $73,000 or less in 2022 to electronically file their taxes for free. Also, there are Free File Fillable Forms, with limited features that anyone may fill out and submit on their own, likewise without cost, regardless of their financial level.

As part of a 21-year agreement with the IRS, top tax software firms make their online products freely accessible through IRS Free File. Seven products are available this year in English and one in Spanish. These products can only be accessed by taxpayers on the IRS website.

The IRS advises using IRS.gov to pay taxes, get refund status updates, and get tax issues answered without having to wait. There is no wait time and no need for an appointment because online tools and information are accessible every day of the year. Particularly useful resources from the IRS include Let Us Help You and the Interactive Tax Assistant.

Individuals can securely log in to their IRS Online Account to obtain personal tax account information, such as the balance, payments made, and tax records, such as adjusted gross income.

For the most recent information on tax changes, scam alerts, programs, goods, and services, download the IRS2Go mobile app, view IRS YouTube videos, or follow the IRS on Twitter, Facebook, LinkedIn, and Instagram.

IRS Audit Group is a tax audit representation company in Los Angeles, California. We can transfer your IRS case to Los Angeles irrespective of your state as IRS is a federal agency. Contact us for a free consultation to review your severity of tax debt. 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 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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IRS defines a “GIG” economy as sharing economy where individuals earn income by providing on-demand work, services, or goods per the flexibility of both parties.  It often involves a digital platform like a website or mobile application.  Examples include ride-hailing apps, food delivery apps, and holiday rental apps.  It’s a growing segment, bringing economic benefits of productivity and employment.

Who has to File Tax Returns Under Gig Economy?

The gig economy is taxable.  Taxpayers need to report the income in their filings, even if the income is.

• From part-time, temporary, or side work,
• Not reported on an information return form – like a Form 1099-K, 1099-MISC, W-2, or other income statement or
• Paid in any form, including cash, property, goods, or virtual currency.

Tax Slab for Gig Workers

A gig worker who is primarily dependent on the Gig Economy needs to consider taxes to be paid as a self-employed taxpayer.  They need to file tax returns for 2021 if their income from self-employment equals or exceeds $400.  Therefore, it is important to keep a record of all receipts to track income, deduct expenses, and complete tax returns.

How to File Your Income Tax Returns as Gig Workers?

Independent contractors or Gig workers, whether it is a full-time, part-time or side job, need to file their tax returns for 2021 using the below forms.

• Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S.  Tax Return for Seniors
• Schedule SE (Form 1040), Self-Employment Tax
• Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)

 In case the filed tax return needs to be modified, use Form 1040-X, Amended U.S.  Individual Income Tax Return.

IRS provides various options to guide the taxpayers in filing their returns.  Below are a few options that can be utilized by any individuals

• IRS Free File — Use free tax prep software or fillable forms based on your income and the forms you must file.
• Volunteer Income Tax Assistance site — Get free, in-person filing help near you.
• Authorized e-file provider — Search the list of tax professionals approved by the IRS for e-filing.
• File your return by mail — Find addresses by the state to mail your tax return.

IRS Audit Group is a Los Angeles-based Tax Audit Representation firm that helps in resolving common tax problems and provides points of clarification on issues such as tax relief, tax fraud, California state tax issues, and other tax debt-related circumstances.  Our certified tax attorneys help taxpayers in facilitating their filings as well as after filing issues like IRS audits.  Contact us to get a free consultation from our staff members to help us understand your problems.  Email: [email protected], Phone: 1-888-300-6670

https://irsauditgroup.com/contact/