Wang Solutions

The End is Near: Tax-Free Online Purchases May Soon Be a Thing of the Past

The benefits of online shopping are many, from being able to peruse knick-knacks in your PJs, to getting goods delivered right on your doorstep, to saving a little extra cash because online purchases are sales-tax-free. However, an upcoming case in the U.S. Supreme Court’s dockets means we might have to bid adieu to that last perk in the very near future.

On April 17, the Supreme Court will begin hearing oral arguments in South Dakota v. Wayfair. This case will challenge whether states can tax online purchases made from retailers that do not have a physical presence in the state where the wares are being delivered. Currently, if a retailer has set up shop in the state where the online purchase is shipped, the state has elbow room to impose a sales tax.

South Dakota v. Wayfair comes 26 years after Quill Corp. v. North Dakota. In Quill, the Supreme Court ruled that states can’t impose sales and use tax collection obligations on vendors who don’t have an in-state physical presence, based on the “dormant commerce clause.” This sleepy little clause is a judge-created legal doctrine that prevents states from poking their noses into interstate commerce unless authorized by Congress. And since Congress hasn’t stepped in, shoppers have been buying cat mugs and swanky shoes tax-free online for years now.

Of course, states and traditional retailers aren’t too happy about this. States are missing out on a big chunk of revenue when people order online and don’t pay sales tax, and brick and mortar retailers, who are required to pay state and local taxes, feel online vendors have an unfair advantage. And it seems that a state tax that’s already in place that should even the playing ground – the use tax – has been pretty much ignored by most taxpayers across the country.

So, the question at hand in the South Dakota v. Wayfair case is whether the physical presence test, established nearly three decades ago in Quill, is still valid in the e-commerce age. The Supreme Court will mull things over and make their decision sometime in June – and no matter the result, we’ll all still be able to jump online and buy a bunch of stuff we don’t really need.

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

Handle Your Taxes on the Go with the Handy IRS2Go App

Gone are the days of long waits for info: with our smartphones, we can get the scoop on anything we want instantly, including taxes. Although you can always still give the IRS a ring, your best bet is to first check out the IRS2Go mobile app. Chances are, the app has the tax info and services you need, no telephone-hold Muzak required.

The IRS app is totally free and works on any iOS or Android device. You can download an English or Spanish version from Google Play, the Apple App Store, or the Amazon Appstore. With IRS2Go, you can:

• Find Out Where the Heck Your Refund Is – In this age of package tracking and download progress bars, we’ve grown accustomed to being able to see just how much longer it’ll be until we get what we want. In the same vein, the IRS2Go app posts your federal tax refund status just 24 hours after you e-file, or 4 weeks if you mailed it in (and that, ladies and gentlemen, is why you should e-file).
• Make a Panicked Payment – Out on the town having fancy drinks and suddenly realized that your tax payment is due today? No need to run around like a crazy chicken looking for a laptop to use – just whip out the IRS2Go app and send the IRS your money via IRS Direct Pay, or a payment directly from your bank account, or a debit/credit card payment. Don’t worry, if you don’t like panic attacks, you can also use the app to pay ahead of time.
• Get Tips and Tricks – The IRS shares tons of great info about tax topics, and a lot of this can be found in a digestible format on their social media accounts. Instead of watching cute animals falling asleep, you could be using the IRS2Go app to watch helpful IRS Youtube videos, read IRS tweets, and stay connected by signing up for IRS tax tips via e-mail. (Okay, you can read some tax tips and then go back to the snoring puppy).
• Free Tax Prep Assistance – Free is everyone’s favorite word. If you’re eligible, you can use the IRS2Go Free File tool to prep and file your taxes and get your refund process started – right through the phone that you already have in your hand.

Spread the love for the IRS2Go app on social media with the tag #IRSTaxTip. If more people know about this handy-dandy tool, even more features might be added, and we’ll all have more time to track the progress of our package while watching cute animal videos while out on the town.

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

IRS Gives Hurricane Florence Victims Tax Relief and Warns Watch Out for Scammers

Residents of the Carolinas have been hit hard by Hurricane Florence – not just by the main storm itself, but with continued flooding, and the economic aftermath of a hurricane that damaged everything in its path. Donation efforts are underway to help the victims, and the IRS is also doing its part to ensure that the last thing people affected by the storm worry about right now is their taxes.

Upcoming Tax Deadlines Extended for Federally Designated Disaster Areas

The IRS tax relief applies to any FEMA-designated area. As of right now, this only includes parts of North Carolina, but if other regions are added (and they should be), the taxpayers living there will automatically get the same payment and filing relief. Affected taxpayers have until 1/31/19 to file certain individual and business tax returns and to make tax payments, such as:

• Quarterly estimated income tax payments usually due by 9/17/18.
• Quarterly payroll and excise tax return normally due on 9/30/18.
• Businesses with extensions, such as calendar-year partnerships whose 2017 extensions ran out on 9/17/18, will get the extra time as well.
• Taxpayers whose 2017 return-filing extension was due to run out on 10/15/18 also have until the end of January.

For details on these and other situations that qualify for the IRS disaster relief, be sure to visit the official IRS.gov Disaster Assistance and Emergency Relief for Individuals and Businesses page.

Process for Receiving IRS Disaster Tax Relief and Claiming Losses

Luckily, this tax relief is automatically provided by the IRS – hurricane victims definitely shouldn’t have to call up the IRS to chat and figure out what’s up with their taxes. However, if an affected taxpayer DOES end up getting an IRS notice, such as for a late payment penalty, they WILL have to contact the tax agency at the phone number noted on the notice to get the penalty cleared up.

The aforementioned relief just deals with extensions – there’s also the issue of claiming disaster-related losses. In brief, taxpayers in a federally declared disaster area who had unreimbursed/uninsured disaster losses from Hurricane Florence can either claim them on their 2018 return filed next year, or their 2017 return.

Watch Out for Scammers Trying to Capitalize on the Storm’s Destruction

As countless people step up to help the hurricane victims, there are other people out there who are downright awful by trying to make money off the chaos of the catastrophic situation. On 9/18/18, the IRS sent out a warning about natural disaster-related scams. These schemes that mine money and personal information from donors usually start out with the scammer directly contacting you via social media, phone, e-mail, or even in-person. The thieves may impersonate a charity, operate fake websites with names that sound like well-known real charities, or have a fake charity – which you can bet doesn’t donate any proceeds to the disaster victims.

Sometimes scammers will even claim to be working on the IRS’s behalf to help victims file casualty loss claims and get tax refunds, and unfortunately, the individuals already victimized by the hurricane end up also becoming victims of tax fraud. Always always be sure to reach out to the IRS directly to ensure that you’re talking to the official agency.

Rely on Official Charity and Tax Resources

To help avoid scams, potential donors can use the official IRS Tax Exempt Organization Search. This tool helps you find and verify legitimate charities. And no matter what, when giving money, always remember to use a check or credit card instead of hard-to-track-cash, and NEVER give out your personal info to anyone soliciting a donation.

If you’ve been affected by the hurricane and need more information on disaster-related tax issues, remember to visit the IRS disaster relief page at https://www.irs.gov/newsroom/tax-relief-in-disaster-situations or call the IRS Special Services Line directly at 866-562-5227. Hurricane Florence victims – we’re keeping you in our thoughts and doing everything we can to help you.

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

It’s Back to School for Everyone! Time to Do Your Tax Withholding Homework

School is starting up again, and while the little ones learn their ABC’s, you can check your paystub 123’s. Just like taxpayers with complex returns, if you have children or other dependents, you’ll want to give your withholding a review first thing. If you wait, you might end up learning your lesson too late, and be scrambling to find funds to pay down a bigger tax bill than you expected.

That’s why you should use the IRS.gov Withholding Calculator to test whether you’re having the right tax amount taken from your check each pay period. It’s way easier than any math exam you’ve ever had. All you need to do is fill in the blanks with your expected 2018 income, credits, deductions, etc., and then voila! you’ll automatically get your results and the IRS’s recommendations.

If you’re withholding too much each pay period, your Calculator message might say something along the lines of:

Based on the information you previously entered, your anticipated income tax for 2018 is $XXXX. If you do not change your current withholding arrangement, you will have $XXXX withheld for 2018 resulting in an overpayment of $XXX when you file your return. If you want your withholding to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows…

But if you’re not withholding enough (AKA flunking this test), you might see:

Based on your responses, your anticipated income tax for 2018 is $XXXX. If you do not change your current withholding arrangement, you will have $XXX withheld for 2018 leaving $XXXX due when you file your return. To meet your anticipated tax of $XXXX change your current withholding arrangement by claiming X allowances plus an additional amount of $XXX for the balance of 2018. Here’s how…

Wait, why am I doing this again, you might be asking. Well, the recently implemented Tax Cuts and Jobs Act is likely to have some effect on what your correct withholding should be. So here’s a back-to-the-basics study guide of new tax law changes that could affect you if you’re a parent or a caretaker:

Personal Exemption

• The personal exemption that you could formerly claim for yourself, your hubby/wife, and your dependents has been squashed, X’d out, erased from the chalkboard – so don’t plan on getting it. Even though the new tax law also increased the standard deduction, the loss of the personal exemption will likely hit families with 2 or more children hard.

Child Tax Credit – Luckily, some updates to the Child Tax Credit should soften the blow from the end of the personal exemption. Namely:

• Instead of $1000, the maximum credit you can get is now $2000 per qualifying child.
• If your income was previously too high to get in on that Child Tax Credit, you might find out that you qualify for it this year because:
  • The credit phases out now at $200,000 for singles and $400,000 for couples (last year was $75,000 for singles and $110,000 for couples).

Additional Child Tax Credit

• The maximum additional child tax credit jumped from $1000 to $1400.
• It’s also now a refundable credit if you’re all square on your owed federal income tax.

Credit for Other Dependents

• If you support other dependents, there’s a brand new $500 credit up for grabs.
  • To get it, you’ll simply claim it when filing your tax return.
  • “Other” dependents include qualifying children or qualifying relatives, such as your kid at college (who you probably still tell “you can’t do that under my roof,” even though they’re off in their dorm), or an elderly parent (who probably still tells you “you can’t do that under my roof,” even though they’re living in your house).

As you can see, a lot has changed from last year’s tax laws. Even if you’re in the single file…r line, it’s a good idea to put on your thinking cap and figure out your withholding. Once you do this, you can sleep like a baby. Or you can stay up late like an adult at the university of life, reading more about withholding and the new tax laws on IRS.gov.

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

Check Your Check: Avoid Tax Filing Surprises by Reviewing Your Withholding Now

Some surprises are great, like when a shirt rings up below the ticket price, or when your cat sneaks onto the sofa and purrs against your cheek.  Other surprises – not so great, like when your cat leaves you a mangled “gift” on the doorstep, or you get an unexpected tax bill or penalty when you file your 2018 income tax return.

While there’s no sure way to encourage good surprises in life, you can definitely avoid some bad ones. For example, if you’re a taxpayer with high income, a complex return, or someone who gets wages and also pays quarterly estimated taxes for self-employment, it’s a very very good idea check your withholding numbers NOW, in late-summer 2018, to avoid an unforeseen bill when you go to file in 2019.

This is especially important because “The Tax Cuts and Jobs Act” passed back in December of 2017 made some pretty big changes to the tax laws. A few of these include:

• Increasing the standard deduction (For 2018, it almost doubled to $24,000 for joint filers and $12,000 for single filers).
• Removing personal exemptions
• Limiting/discontinuing some deductions. For example—A $10,000 cap on deductions for state and local property, sales and income taxes;
• Changing tax rates and tax brackets

All in all, many taxpayers who itemized in days of yore might find out they’ll pay less tax in 2018 by taking the standard deduction. The key phrase here is “might find out” – it will literally pay off to know your numbers now to avert major complications when you file next year. Just give your paycheck a quick checkup to verify your withholding is in good health. For this DIY review, you’ll need just three things:

• The IRS’s Withholding Calculator
• Your completed 2017 tax return for estimates
• Your most recent paystub

Following the calculator’s guidelines, check that you’re having the right amount of tax taken out of your pay. If your withholding is wonky, you should look into adjusting it ASAP by submitting a new Form W-4 to your employer. The longer you wait, the fewer pay periods you’ll have to withhold the correct amount, which means you’ll shell out a bigger chunk of change on each remaining paycheck. And if your withholding isn’t enough and you don’t make any adjustments this year, you’ll end up shelling out an even bigger chunk of change come tax return filing time.

Even if your withholding looks A-OK today, a change in your personal circumstances could shake things up before the year ends. For example, if you get a raise (yay you!) you should re-check your withholding. And if you do end up adjusting your withholding in mid-2018, you’re gonna’ wanna’ check it again come New Year’s, to make sure it’s still hunky dory for the full-year of 2019.

The IRS’s Withholding Calculator works fine for folks with simpler tax situations, but those of you out there with more elaborate stuff going on will want to take things to the next level with IRS Publication 505, Tax Withholding and Estimated Tax. For example, if you get non-wage income, such as capital gains, Pub. 505 will be your go-to info source. While it’s not as easy-breezy as the calculator, you do get worksheets and examples to help guide you through the maze of complex withholding.

Of course, while the Withholding Calculator and Publication 505 are helpful, but they can’t answer all of your tax-planning questions. If you need specific advice about the new tax laws and how they’ll affect your personal situation, get in contact with your friendly neighborhood tax professional. In the meantime, you can read more about withholding at http://www.irs.gov/withholding, and also get a head-start on prepping for next year’s taxes with IRS.gov/getready.

Remember, it pays off to expect the unexpected, especially with the ripple effects of new tax legislation likely to cause big waves in the filing season.

Sufen Wang, M.S. Accountancy
http://www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

Clock Ticking on Challenging an IRS Levy? Now More Time is On Your Side

Taxpayers may be singing a new tune this year along the lines of “I fought the law and the law…didn’t win because I now have more time to challenge a levy!” It doesn’t have quite the ring of the original song, but it does bode well for individuals and businesses who think they’ve been hit with a wrongful IRS levy or seizure. Based on new legislation, the time limit to file an admin claim/bring civil action jumped from 9 months to 2 years, granting extra time to either procrastinate or make your case known.

A CRASH course in levies: if you have an outstanding tax debt, it doesn’t just slink away. The IRS can place a levy, which makes it perfectly legal for your property to be seized and sold to satisfy your debt, never to be seen by you again. Yes, your car, your house, and your boat are up-for-grabs, along with wages, and moolah in the bank and other financial accounts.

But wait, there’s a twist! Even if the IRS already sold your levied property, you can get it back – and that’s the scenario where the extended 2-year period comes into play. If – and only if – your property was already hocked, you get 24 whole months from the levy date to file an administrative claim to get your stuff back. The IRS points out that, “Usually, wrongful levy claims involve situations where an individual or business believes that either the property belongs to them, or they have a superior claim to the property that the IRS is not recognizing.”

But wait, there’s another twist! If you do make an administrative claim within the extended 2-year period, you score another extension. Depending on which is shorter, the 2-year period for bringing suit is extended for either:

• 12 months from the date you filed the claim; OR
• 6 months from the date the IRS disallowed the claim.

All this only applies to levies made before, on, or after 12/22/17, as long as the previous 9-month period hasn’t expired. Remember that if the IRS still has the property it levied, there’s no time limit for filing that claim – through the motto “sooner is better than later” is always apt.

But wait, there’s one more twist that could spare you the trouble of the prior twists. Anyone who gets the IRS bill, “Final Notice of Intent to Levy and Notice of Your Right to A Hearing,” should immediately get in touch with the IRS. Even at this ultra-super-late-final-notice-why-did-you-wait-so-long-stage, you still might be able to make arrangements to pay your tax liability, instead of having the IRS go to town with a levy.

There are lots of opportunities to clear your tax debt before the IRS comes a-knockin’ for your property. However, if it gets to the point where they’ve already confiscated your belongings, at least now you have a little extra time to get your stuff together to submit that administrative wrongful levy claim to get your stuff back.

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

IRS Planning to Lay Down the Law on Virtual Currency and S Corporations

It looks like the IRS is going to have a busy year, with several new compliance campaigns on the horizon.

First up is in the swampy realm of virtual currencies. Although Bitcoin is the most famous, there are more than 1,500 digital monies floating around out there on the internet, and more are rearing their head each day. So, it was only a matter of time before the IRS upped the ante to make sure taxpayers using cryptocurrencies are doing their digital deals on the up and up.

The IRS didn’t spill too many beans about what they’ll be on the lookout for, other than that “the compliance activities will follow the general tax principles applicable to all transactions in property, as outlined in Notice 2014-21.” In plain English, if a transaction involves a taxable event and tax liabilities should have been reported, the IRS is going to make darn sure that tax liabilities were properly reported.

The tax agency plans to attack the cyber money issue from multiple angles, with treatments such as outreach and examinations. But when dealing with currency with names like “Ethereum,” “Ripple,” and “Stellar” (yes, these are all real), it seems like anything could happen. The IRS urged taxpayers to correct their returns as soon as is feasible, which should grease the wheels for a smoother compliance process all around.

Virtual currency fans won’t be the only taxpayers facing increased scrutiny from the IRS – the tax agency will also be cracking down on S corporations. Only S corps who have been abusing any of the following three rules about pass-through entities need to start gnawing their nails, but it’s a good idea for any such businesses to make sure their tax paperwork is in order.

Specifically, the IRS is going to be laying down the law:

• If an S corporation doesn’t inform a shareholder about the gain on the distribution of appreciated property.
• If an S corporation doesn’t determine that a distribution (property or cash) is properly taxable as a dividend.
• If a shareholder doesn’t report non-dividend distributions in excess of their stock basis that are subject to taxation.

The IRS’ campaign announcements are first and foremost warnings for taxpayers who have been engaging in specific activities to be prepared, and they’re designed to encourage compliance. So S Corporations/shareholders and taxpayers using virtual currency – if you think you may be guilty of any of the above mistakes, now’s your chance to do something – before the big bad wolf comes knocking at your door.

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

Oh Thank Heaven! You Can Pay Income Taxes with Cash at…7-Eleven?

That’s right, you can now visit your local 7-Eleven to buy a nice cold soda, a bag of chips, a lottery ticket…and pay your income taxes. This year, the IRS and the convenience store chain will be making things more convenient for anyone who owes taxes and doesn’t have a bank account, checks, or a credit card.

In the past, any folks who wanted to pay their taxes with cold hard cash needed to travel to an IRS Taxpayer Assistance Center. However, these offices can be few and far between. Now people can quite literally go just around the corner to any 7-Eleven and pay their income taxes with cash. Just remember that a 7-Eleven probably isn’t the safest place to wave around a big wad of money, so stay smart and watchful.

The option is made possible via a partnership between the IRS and ACI Worldwide’s OfficialPayments.com and the PayNearMe Company. Since most 7-Elevens are open all day every day and more than 7,000 stores are participating across the country, paying with cash is almost as easy as paying online. It does take about 5 – 7 business days to process though  — anyone trying to pay by the April 16 filing deadline will be out of luck.

Also, before taxpayers grab their greenbacks and hurry out the door, they must go online to start the payment process. Head over to the IRS.gov payments page, look for the “other ways you can pay” section, select the cash payment option, and read the instructions. You can pay up to $1,000 each time, with a $3.99 charge for each transaction. Just remember to bring extra dough with you for the donuts and coffee.

P.Ssss… Here a preview on what you need to do to pay your taxes by cash… 

Step 1

Visit the Official Payments site and follow the instructions to make a cash payment with PayNearMe.

Step 2

You’ll receive an email from Official Payments confirming your information. The IRS will then verify your information. This process may take two to three days.

Step 3

After the IRS verifies your information, PayNearMe will then send you an email with a link to your payment code and instructions. Either print the payment code at home or send it to your smartphone.

Final step

Go to the retail store listed in the PayNearMe email and ask the clerk to scan or enter your payment code. You will receive a receipt from the store after they accept your cash. This receipt is confirmation of your payment and should be kept for your records. It usually takes two business days for your payment to post to your account.

Really?!  Just write a check and be done with it!

Sufen Wang, M.S. Accountancy
www.sufenwang.com
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

The Tax Reform Bill Passed – Now What Happens at the IRS?

Signing a bill into law with a fancy pen is the easy part. The hard part is what follows: implementing that law efficiently and effectively. Such is the reality of the tax reform bill signed into law on Dec. 22 by President Trump.

As the agency clearly most impacted by the tax reform bill, the Internal Revenue Service will need more than a few upgrades to carry out the changes. This means things like new and improved computer systems, along with training for an expanded IRS workforce so that the agency can provide proper guidance to both tax professionals and taxpayers. Moreover, since support for the tax reform bill was garnered based on certain results claimed by its politician proponents, the agency needs to be able to enforce the law to make those claims come true.

Unfortunately, that’s not likely to happen if the IRS doesn’t receive additional funding. A former IRS commissioner, Lawrence B. Gibbs, explained that the agency won’t be able to “mount a sufficient compliance effort to make sure folks obey their tax obligations under this new law” unless the agency gets more funding. As we’ve seen in the past, the IRS’s service quality ebbs and flows with its available budget.

The problem is that Republicans in Congress have a history of voting to slash the IRS budget, and things don’t look like they’re going to be changing. While talk of the IRS’s fresh new needs has begun to crop up, the word from the House and Senate Appropriations Committees isn’t promising: they’ve proposed a IRS budget in FY 2018 of $120 million less than the FY 2016 funding level. And with those changes from the tax reform law waiting in the wings without any confirmed funding increases, things aren’t looking very bright for the IRS, taxpayers, and tax preparers.