Stay informed on the latest tax news and developments, including legislation and rule changes, for effective tax planning and compliance.
A popular small business tax incentive is being targeted by the IRS, which might result in a pricey audit
Businesses seeking the Employee Retention Credit (ERC), a tax incentive for pandemic-stressed companies, must navigate strict eligibility and avoid scams by third-party promoters. Misunderstanding the criteria could result in losing out on the credit or being manipulated into illegal claims, attracting penalties. Amid increasing scam promotions, the IRS urges business owners to understand ERC requirements, consult with a trusted CPA before engaging ERC specialists, and learn to spot red flags like pressure tactics and absence of document requests. Those qualifying should properly file for the credit and amend relevant tax returns.
The federal government makes it possible for municipalities and charity organizations to receive climate bill tax credits
The Treasury and IRS released guidance enabling tax-exempt entities like local governments and nonprofits to access tax credits from the Inflation Reduction Act. Before, these groups couldn't benefit as they lacked profit to offset with credits. Now, they can receive full value payments for clean energy projects, expanding benefits nationwide. This will help entities like schools invest in green initiatives. Furthermore, "transferability" guidance was issued, allowing companies with insufficient tax bills to sell their credits. Together, these changes accelerate climate tech investment and will facilitate deployment of projects to benefit more communities.
'Avoid a surprise at tax time', advises the IRS, by meeting this deadline of June 15
The IRS reminded freelancers, entrepreneurs, and others with non-withheld income of the June 15 deadline for Q2 2023 estimated tax payments. It applies to self-employment earnings, investments, gig work, and others whose employers don’t withhold enough. These payments help avoid penalties and keep finances in check, as noted by financial planner Sean Lovison. Accurate calculations, timely payments, and the “safe harbor” rule can prevent underpayment penalties. Late payment incurs 0.5% of the unpaid balance per month or partial month, up to 25%, plus interest. Electronic payments are encouraged.
IRS tax penalties may be avoided with this one-time tactic
The IRS may waive tax penalties in certain situations through a first-time penalty abatement, according to tax experts. This relief is available to compliant taxpayers who made a one-time mistake. It covers penalties like failure to file or pay and failure to deposit. A history of tax compliance is required and the taxpayer must have a clean record for the past three years. Upon receiving an IRS penalty notice, taxpayers can request an abatement by following the instructions. If the IRS denies the request, taxpayers have the option to appeal.
