IRS Establish Audit Topics & Diverse Community Partners Virtual Event (Save The Date)

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October 2020
Brace Yourself – Stay Prepared
DCP Virtual Holiday Event
CLIENTS ONLY & SPECIAL GUESTS
Save the Date

When: December 4, 2020
Time: 7:00 to 8:30pm
Where: RSVP – You will receive the Zoom Link
This year has brought on various emotions. We have experienced a pandemic, election and income tax season. We will be mailing our your Gift Package. We are asking that you do not open the package until the night of the event. We are going to have a blast! Let’s end the year with some Joy and Laughter!
Accounting Services
Provide Accounting Services, which includes Bookkeeping, Income Tax Preparation, Payroll and Assistant with Tax Issues Learn More
Business Coaching
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An effective business coach can look at your entire outfit and provide recommendations to make it better. A coach can help you with all aspects of your business, from the development of your own business plan, to employee/employer relations, to different payroll system or payroll companies to make your life easier. Learn More (Site is being updated)
The Importance of Keeping A Mileage Log
Under the Tax Cuts and Jobs Act (TCJA), the mileage deduction for employees is no longer available. Sole proprietors, filing on Schedule C, and other business entities are still eligible for a business deduction for the use of their automobile.

Once your audit examination begins, the examiner likes to see this record. If the record is missing or lacking, the IRS examiner knows that your other records probably are lacking, too. This record—the one you probably hate keeping—is the mileage log on your vehicle or vehicles.
The IRS notes that a taxpayer’s failure to keep a mileage log on vehicles indicates that the activity under examination is not being conducted in a businesslike manner.

As a one-owner or husband-and-wife-owned business, regardless of whether it is a corporation, a partnership, or a proprietorship, you file a tax form that asks you for the following information about your vehicles:
  1. Do you have evidence to support the business/investment use claimed? (If “yes,” is the evidence written?)
  2. List your total business/investment miles on each vehicle.
  3. List your total commuting miles on each vehicle.
  4. List your total personal miles on each vehicle.

The IRS requires you to provide related to that tax form:
  1. Send copies of repair receipts, inspection slips, and other records showing total mileage for the year.
  2. Send copies of logbooks and other records to support the business mileage claimed.
  3. Provide a copy of your appointment book or calendar of business activities for the year.
  4. If you are claiming actual expenses, provide copies of paid bills, invoices, and canceled checks for automobile expenses. These would include gas, oil, tires, repairs, insurance, interest, tags, taxes, parking fees, and tolls.
  5. Send a copy of the bill of sale or other verification to establish your basis in the vehicle, including the trade-in of another vehicle.

Note that the IRS is looking for:
  • a match of the repair bill odometer reading with the mileage in your logbook;
  • a match of the inspection slip odometer reading with the mileage in your logbook;
  • the mileage between repair stops, to see whether that ties in with your claimed mileage; and
  • a business purpose that ties in with your appointment book or other calendar of business activities.
Economic Impact Payments & Injured Spouse Relief

When a joint tax return is filed both taxpayers are jointly and individually liable for the tac and any interest or penalty due on the return, even if they later divorce. An injured spouse is a taxpayer who files a joint return and all or part of a refund is, or is expected to be, applied against debts of the other spouse, such as past-due federal tax, child or spousal support, student loans, state income tax, and state unemployment debt. If an injured spouse is not legally obligated to pay the past due debt of the other spouse, and the injured spouse meets other requirements, the injured spouse can file Form 8379, Injured Spouse Allocation, to receive his or her share of a federal tax refund.

The IRS has announced that it will soon send catch-up Economic Impact Payment (EIP) checks to about 50,000 individuals whose portion of the EIP was diverted to pay their spouse’s past-due child support.

These catch-up payments are due to be issued in early-to-mid-September. They will be mailed as checks to any eligible spouse who submitted Form 8379 along with their 2019 federal income tax return, or in some cases, their 2018 return. These spouses do not need to take any action to get their money. The IRS will automatically issue the portion of the EIP that was applied to the other spouse’s debt.

The IRS is aware that some individuals did not file a Form 8379 and did not receive their portion of the EIP for the same reason above. These individuals also do not need to take any action and do not need to submit a Form 8379. The IRS does not yet have a timeframe but will automatically issue the portion of the EIP that was applied to the other spouse’s debt at a later date.
Tax Projection
HOW THE 2020 PAYROLL TAX HOLIDAY WORKS
An executive order signed by President Trump in early August provides a payroll tax holiday for American workers that began on September 1, 2020. The payroll tax holiday has the potential to put more money in workers’ wallets through the end of 2020, but it is only a temporary measure—and will result in double taxes being deducted in early 2021.
Don’t wait until the end of the year to know your income tax liability or refund. If you received Payroll Protection Plan (PPP) I strongly recommend that you calculate your 2020 Income.

If you and/or your spouse are collecting unemployment income, note that this income is subject to income tax when your taxes are prepared in 2021. It is highly recommended that you review your tax potential tax liability in order to be prepared.

TIP – Several stated due to their Tax increase stemming from PPP funds being recognize as income, they wanted to invest money into their company’s infrastructure (Computer, Trucks, Tools, etc).
Several have asked if they gave Diverse Community Partners (TEAM) a bonus would they receive an invoice supporting the funds paid. The answer is YES. We want to thank you the Community for thinking of us and wanting to recognize the DCP’s Team!
Do You Know a Non-Filer?

The IRS has announced that it will start mailing letters to roughly nine million Americans who typically do not file federal income tax returns who may be eligible for, but have not registered to claim, an Economic Impact Payment.

The letters will urge recipients to register at www.irs.gov by October 15 in order to receive their payment by the end of the year. Individuals can receive up to $1,200, and married couples can receive up to $2,400. People with qualifying children under age 17 at the end of 2019 can get up to an additional $500 for each qualifying child.

The letters are being sent to people who have not filed a return for either 2018 or 2019. Based on an internal analysis, these are people who do not typically have a tax return filing requirement because they appear to have very low incomes, based on Forms W-2, 1099s and other third-party statements available to the IRS. Many in this group are still eligible to receive an Economic Impact Payment.

The letter, officially known as IRS Notice 1444-A, is written in English and Spanish and includes information on eligibility criteria and how eligible recipients can claim an Economic Impact Payment on www.irs.gov. The mailing, which will begin around September 24, will be delivered from an IRS address. To help address fraud concern, a copy of the letter is available on www.irs.gov.

Receiving a letter is not a guarantee of eligibility for an Economic Impact Payment. An individual is likely eligible if he or she is a U.S. citizen or resident alien, has a work-eligible Social Security number, and cannot be claimed as dependent on someone else’s federal income tax return. However, there can be a variety of situations that could affect an individual’s eligibility.

The registration deadline for non-filers to claim an Economic Impact Payment through the Non-Filers tool was October 15, 2020. People can also wait until next year and claim it as a refundable credit on their 2020 federal income tax.

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