The IRS is open for business … sort of

Just before Trump’s shutdown of the government, a spokesman for the IRS said,

“The IRS is making great progress moving towards the opening of the filing season. Each year, we test our programming and make sure we have the right guidance and instructions ready to go for a successful launch of the filing season.

“We are on track to be able to do that between January and February, and of course as soon as we have completed all of our testing, we’ll come out with a formal announcement for the opening of the filing season.

“The IRS is positioned along with Treasury to have the right personnel and staff available for us to continue with our on-time plans to be able to deliver and open the filing season, so right now we are tracking very well to have another successful filing season in 2019 as we did in 2018.”

Sending refunds and providing taxpayer assistance, however, is a different story …

In late November, the agency came up with a Lapsed Appropriations Contingency Plan for what they’d do if Trump shutdown the government.

9,946 IRS employees are considered essential and would continue working. The balance of the 79,868 would be sent home, without pay.

How could this affect you?

During the shutdown, the IRS will stop:

·       Issuing refunds

·       Processing Form 1040X amended returns

·       All audits

·       Processing paper tax returns that include payments

·       Answering your questions

Needless to say, none of this is good in the light of recent tax law changes and filing season days away.

#IRS, #incometax, #filingseason

It’s that time of the year!

Is it that time of the year for you? I’m not talking about Christmas, or Boxing Day, or National Chocolate Day, or any other holiday you might celebrate in December. I’m talking about the required minimum distribution (RMD) you must take from your IRA before the end of the year if you are 70½ or older.  

Suppose, though, you start digging through your records and discover that you had miscalculated your RMD five years ago. Should you simply forget about it and hope the IRS never catches on? Is there a statue of limitations on such oversights?

According to IRA expert Ed Slott the IRS generally has three years to come after you for an audit or for more money. But apparently there are no special rules for RMDs.

So get out your checkbook and give the Treasury Department what’s due. And while you are in the giving mood this month, take advantage of National Fruitcake Day on Dec. 27 to re-wrap that rock hard, fruit filled holiday cake and give it to someone … anyone.    

Don’t let this oversight wreck your offshore dreams

Are you thinking about buying a vacation or retirement home overseas? Milder climate, lower cost of living, and a sense of adventure are only a few of the reasons U.S. citizens are looking to spend time beyond our shores. But before you take that step, you should understand what the IRS has in store for you if you ignore its rules.

In some countries, such as Costa Rica, you might be advised to set up a corporation to buy and hold the property. And that’s where the IRS steps in …

U.S. citizens who are officers, directors, or shareholders in certain foreign corporations are responsible for filing Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. You would then include this form with your federal tax return.

Suppose didn’t know about that requirement or figured it’s just a home with no income so it’s not a big deal.

Wrong!

The truth is you could be facing a $10,000 penalty for each year you miss filing the form. 

You can go to the IRS’ website (www.irs.gov) and search for more information. And be sure to get a CPA or tax attorney who knows our tax code inside and out before you close on your offshore dream home.   

IRS has good news for long-term-care policyholders

In A Boomer’s Guide to Long-term Care I included a chapter on how your long-term-care premiums might be deductible. The IRS recently announced an increase in those deductibility limits for 2016.

The limits depend on your age and range from $390 to $4,870. 

You can read the details here.