A group of Republicans on the House Ways and Means Oversight Subcommittee sent a letter Wednesday 02.18.21 to IRS Commissioner Charles Rettig complaining about the backlog of approximately 11 million unprocessed tax returns from the 2019 tax year. The backlog of unprocessed mail from the pandemic has created a ripple effect that’s continuing into this year’s tax-filing season, which opened last Friday.
The problem isn’t only with the mail, which piled up last year in trailers outside IRS facilities until IRS employees could return to their offices and open it. While most of the millions of pieces of mail have reportedly been opened, much of it remains unprocessed. That’s causing headaches for taxpayers and tax professionals alike, who are coping with past due notices sent automatically by IRS computer systems, even when payments were sent months ago, according to the investigative news site ProPublica. Taxpayers have had trouble with receiving their Economic Impact Payments from last year and are also having trouble reaching the IRS by phone this year, with the agency continuing to be understaffed due to the pandemic and budget cuts in past years.
Read NSA's article here.
§139 of the Internal Revenue Code (the “Code and if you ever tried to read it you will know why they call it Code)”) excludes from a taxpayer’s gross income certain payments to individuals to reimburse or pay for expenses related to a qualified disaster. CONVID-19 is considered a Qualified Disaster in all states....
A “qualified disaster relief payment” is defined by §139(b) of the Code to include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster. Qualified disaster relief payments do not include qualified wages paid by an employer, even those that are paid when an employee is not providing services.
We interpret these expenses to be things like... the purchase of masks, hand sanitizers, computers so you work online or receive education online and probably many others we have not thought of. The employer can deduct and pay this to employees with no tax consequences to the employee.
Thank you to Attorney Jon Alper www.AlperLaw.com for the heads up on this.
When a premature distribution is made, it needs to be marked as a coronavirus-related distribution. The distribution can be made any time in 2020 up to an aggregate limit of $100,000 and the 10% additional tax is waived. You can also spread out the tax burden over three years (2020, 2021, and 2022) or decide to include the entire distribution in your income for the year of the distribution.https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers
A net operating loss (NOL) is when business losses exceed income.
Prior toJanuary 1, 2018, NOLs were able to offset 100% of taxable income. They were allowed to be carried back two years and carried forward for twenty years. You could affirmatively elect with a timely filed return to NOT carryback (the default) and instead carry forward only (permanent, could not change it for that year).
Under the new law effective in 2018, an NOL can offset only 80% of taxable income in any given tax year. NOLs can be carried forward only. The 20-year carryforward period is changed to an indefinite carryforward period NOLs created in tax years beginning before January 1, 2018 are subject to the old rules. Only NOLs generated in tax years beginning after December 31, 2017 are subject to the new rules.
Special hardship exemptions have to be applied for.... and when taxpayer receives an ECN (exemption certificate number) we can input that and the penalty goes away. Has to be applied for....
Here is the link.
If you have not done so, you should explore this.... some possible exemptions.......
Required care of a loved one disrupts your ability to pay living expenses
Marketplace plans are unaffordable
Experience some hardship in obtaining health insurance.
THERE ARE MORE EXEMPTIONS. Have a look.