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How COVID-19 Will Affect Self-Employment Taxes in 2020

By Todd Whalen - June 15, 2020

Those who are self-employed enjoy far more freedom than most, but they are also forced to endure more stress when it comes to taxes. As if things weren’t complicated enough for the self-employed, COVID-19 has thrown a wrench into the normal tax payment routine for 2020.

Between shifting deadlines and new credits, self-employed Americans have quite a few updates to keep track of this year; this quick guide may make it easier to manage these amendments, but working with a qualified professional is the surest way to know nothing has been overlooked.

Updated Filing Deadlines

Ordinarily, self-employed Americans are required to pay their first quarter taxes on Tax Day—April 15. Because the IRS extended the federal tax filing deadline, they also essentially waived those first-quarter payments for the time being. The new deadline to file federal taxes is July 15; those who have yet to file their 2019 taxes, and who are expecting a refund, are encouraged to do so now since refunds will still be processed as normal.
It’s possible that some self-employed people have still not filed their 2019 taxes at this point. While that’s fine from a legal standpoint considering the extended deadline, it may prove complicated (or at least less than ideal) down the road once you see how the updated quarterly deadlines are scheduled to play out.

Since July 15 is the new deadline for filing 2019 taxes, it comes as no surprise that it’s also the new deadline for self-employed Americans to file their quarterly estimated taxes for the first quarter of 2020 considering the two deadlines usually coincide. Unfortunately, because this initial deadline is delayed by several months, it is also the deadline for self-employed individuals to file their quarterly estimated taxes for the second quarter, meaning the estimated tax payments for the entire first half of the year are due on July 15.

Though this might seem lofty, it’s worth noting that the first and second quarter payments would ordinarily be due on April 15 and June 15 respectively, so the July 15 deadline echoes the interest and penalty-free deferment of tax payments that the IRS announced for the 2019 tax year in some measure, but also speaks to the fact that the country is attempting to make up for lost time in the second half of the year.

Following the first and second quarters, deadlines for filing quarterly estimated tax payments will remain unchanged. In summation, all 2020 deadlines are as follows:
  • First quarter — July 15
  • Second quarter — July 15
  • Third quarter — September 15
  • Fourth quarter — January 15, 2021
This means that, although self-employed Americans got a reprieve from paying estimated quarterly taxes in the first half of the year, they must be prepared to make up that ground come July.

With these deadlines in mind, it’s also important to remember that there are some other factors that may affect your taxes for 2020 as a result of COVID-19 if you are self-employed.

Impact of The Families First Coronavirus Response and CARES Acts

On March 18, the Families First Coronavirus Response Act was passed with the expressed intention of providing those who are self-employed (or who own their own business) some financial relief through refundable tax credits.

This means that, as a self-employed person, you could be eligible for a tax credit equivalent to a qualified sick leave amount which is determined by your average daily income. Similarly, you may also be eligible for a family leave equivalent amount in the form of a tax credit.

Naturally, because this act was passed in response to the coronavirus pandemic, these credits are only provided to individuals who have proper documentation available showing that they were unable to work as a result of COVID-19, either because they were exhibiting symptoms themselves, or because they had to care for a child who was out of school due to the virus without any option for alternative child care. That is to say, you cannot receive a tax credit because you missed work due to falling ill with influenza under this new act as a self-employed individual.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act may also impact how self-employed individuals are taxed for 2020, since it broadened unemployment eligibility and many self-employed people are drawing unemployment benefits for the first time.

Your tax situation for 2020 may be further affected depending upon whether you chose to partake in other features of the CARES Act, like the Paycheck Protection Program or
Economic Injury Disaster Loans.

It’s clear that COVID-19 has not only altered the timeline when it comes to self-employment taxes in 2020, but it has also added a number of potential complications and extra considerations.

What Does This Mean for You?

Though it’s true that your 2019 taxes are not technically due yet, and the first two quarters of 2020’s quarterly estimated tax payments are not past due either, waiting could prove more of a headache than simply getting them all out of the way now.
If you wait until everything is technically due, your 2019 taxes and the first two quarters of 2020 will all be due on the same day, and you’ll be left scrambling at the last minute to gather all of the necessary documents and file them on time.

Rather than waiting until the eleventh hour, contact Advanced Tax Solutions and be proactive about your taxes. We can set up a payment plan for you so that the IRS doesn’t institute one; this is far preferable to allowing the IRS to choose your payment amounts.

Plus, when you work with professionals like the Advanced Tax Solutions team, you can rest assured that even a complicated tax year like 2020 will be handled deftly.

Don’t wait until the last minute and let your taxes pile up to cause undue stress—get in touch with us today to minimize that effect that COVID-19 has on your self-employment taxes this year. 

2020 Stimulus Checks — What You Need to Know

By Todd Whalen - May 1, 2020

The first thing on everyone’s mind at the moment is the $1200 stimulus check they’re expecting from the government—perhaps you’ve already received yours, or perhaps you’re still eagerly waiting. In any case, you likely have some pressing questions about the 2020 stimulus checks, and we’re here to offer simplified answers.

How Are The 2020 Stimulus Checks Distributed?

If you filed taxes in 2018 and/or 2019 and your income qualifies you for a stimulus check, then the IRS has your information on file, and you’ll receive the check automatically. 
Assuming that your most recent tax return included your correct direct deposit information, then you can expect an infusion of funds to arrive in your account seamlessly. If your banking information (or address) has changed since your most recent tax return, use the IRS portal to update it.
The good news is, if the IRS cannot locate any banking data for you, they’ll simply mail you a check. This means you’ll have to wait longer to receive stimulus funds, but you can rest assured that they will reach you. 

Who Qualifies For Payment?

Any single person whose most recent AGI (Annual Taxable Income listed in your tax return) is $75,000 or less will receive a payment of $1,200. For single individuals who make more than $75,000, the payment is reduced by 5% incrementally until reaching the $99,000 mark. Anyone who makes more than $99,000 a year will not receive a stimulus check. 
Married couples making less than a combined $150,000 AGI will receive $2,400; payments follow the same incremental phasing out in 5% blocks until being eliminated once a couple’s combined AGI reaches $198,000. 

Each qualifying child adds up to $500 to the payment, but that amount is subject to the same 5% reduction. 

It’s worth noting that if your AGI has gone up considerably since 2018 and you have yet to file your 2019 taxes, you could obtain some extra money by holding off on filing. Although stimulus  checks are technically meant to be based on the 2020 tax year, the government is forced to rely upon the most recent information they have on record; if you made $70,000 in 2018, but now make $80,000, you could enjoy the full benefits of the stimulus check by simply waiting to file your taxes, and you won’t have to pay that money back.

What About Special Circumstances?

If you don’t have a filing requirement (such as people who receive social security), then the IRS will still send you a payment so long as you update your banking information through their portal. 
If you owe the IRS, money, you can still receive your stimulus check without fear that the IRS will come after you. The same is true if you haven’t filed taxes for many years. In fact, this is an excellent opportunity to get back in the good graces of the IRS since most of their collections division is currently shut down, giving you time to figure out a payment plan. 

If we can help you establish a plan for turning your 2020 stimulus check into an opportunity for rectifying financial issues, please call 303-753-6040.

What to Do If You Haven’t Filed Taxes in Years?

By Todd Whalen - March 12, 2020

What to Do if You Haven’t Filed Taxes in Years?

Why Is It Important to File an Annual Tax Return?

Do you have unfiled tax returns? Many people receive a tax refund but end up owing the Internal Revenue Service for unpaid taxes because of not filing a tax return. If this is you, don’t wait to file your return or you could risk being charged with a crime.  The IRS does not forget about or overlook unfiled taxes and they will eventually catch up to you. If it’s been one year or several years since you filed a tax return, or if you’ve never filed, you need a tax return professional with the training, experience, and skills to handle your tax filing situation.

We only have three years to file a tax return and claim any refund that is due to us, but the Internal Revenue Service has 10 years to request an unfiled tax return. If you owe the government unpaid taxes, the IRS will assess a 5% penalty to your unpaid tax liability each month that it is not paid after the filing deadline and after 5 months (25%) the penalties continue at ½ of a percent. Any penalties that are being assessed for unfiled tax returns could be causing your tax debt to continue to grow larger every day.

What Can the IRS Do to Collect Back Taxes?
In many cases, the IRS can file a Substitute for Return (SFR) if you have not filed a tax return on your own for several years. They usually use the worst filing status possible for unfiled tax returns and do not allow exemptions for dependents, or apply for any available child credits. They can use an estimate of your gross business income, disallow any business expenses, and send you a huge bill that eventually becomes a legal debt. This can easily lead to enforcement of collection actions such as levies and liens that you are not prepared for or expecting.

When this action is taken the SFR does not take into account any deductions you may have been entitled to, so your best option would be to go back and protest these old returns that the IRS has filed so that your tax bill is accurate and you can take advantage of any deductions for which you qualify. The IRS takes filing annual tax returns very seriously, and usually, the penalty for failure to file is even higher than the penalty for failure to pay back taxes.

Are There Any Tax Payment Options Should You Consider?
Although the thought of being charged with a crime and having the IRS attach your wages and/ or drain your bank account is scary, there are ways to handle this scenario. When someone needs help with unfiled tax returns, many times there are large balances due.  In cases like these, an Offer in Compromise can be the ideal resolution for many people. An Offer in Compromise means that the IRS will accept less money than is owed to settle the entire tax burden. There are specific rules you must follow to qualify for this solution. You are required to provide very detailed financial and personal information which is used to determine your ability to pay now and what they believe you can pay with an installment plan. There are many variables that factor into what the IRS will accept.

The Denver based tax professionals at Advanced Tax Solutions are here to help you work out this situation in your best interests. We understand the processes involved, how the IRS operates, and how they value income and assets. We offer professional Offer in Compromise tax services in Denver to help assure you get the best possible outcome.

Get the Help You Need Today
We understand that finding a solution to your tax problems caused by not filing a tax return can be an intricate process. Don’t try to negotiate your tax issues alone! Advanced Tax Solutions has years of experience in the area of helping people with unfiled tax returns. We will walk you through the process of filing old returns when you need someone you can trust. If you’re facing the daunting prospect of filing old tax returns, reach out to our team of tax professionals today.

Call us at our Denver office at (303) 753-6040 to schedule a free consultation for the help you need. Our goal is to help you put your tax problems far behind you. We keep our prices reasonable, so you can have one less financial burden to think about. Contact us today, and let’s get started.


Filing Unfiled Tax Returns

By Todd Whalen - September 17, 2019

The following video contains important information about filing unfiled tax returns that you will want to consider BEFORE trying to get back into the tax system. In the video, Todd Whalen, the founder of Advanced Tax Solutions, CPA, PC, addresses everything from what the IRS wants you to file (not necessarily all the old years), if you can get in trouble or go to jail for not filing, considerations about the tax protester movement, and more. If you owe back tax returns to the IRS this information may save you a lot of headaches, ease your fears, and may even save you some money. If you are ready to file unfiled tax returns, our 20-year veteran shares all the information you need to get started. Knowledge is power when dealing with the IRS.

Questions about filing unfiled tax returns? Contact the experienced tax resolution professionals at Advanced Tax Solutions.

Understanding IRS Wage Garnishment

By Todd Whalen - August 22, 2019

What is Wage Garnishment?

A wage garnishment is a type of levy where every time you get paid, your employer is required by law to send a portion of your wages to a creditor or person to whom you owe money. Common reasons for wage garnishment include unpaid child support, consumer debts, student loans, and tax levies. If you have failed to pay your taxes, you could be at risk for IRS wage garnishment. If this happens, the IRS will not take all of your pay, but anything over and above a small exemption amount determined by how often you are paid, your filing status, and your personal tax exemptions will be turned over to the IRS to pay down your debt. Your wages are garnished until the debt is paid in full. If you cannot pay your tax debt, establishing a payment plan with the IRS for repayment of your tax debt is one way to stop IRS wage garnishment and can leave you with more of your paycheck to pay bills and maintain a normal lifestyle.

IRS Garnishment Rules

Before an IRS levy or garnishment can be made:
  • You will receive a Demand for Payment of the amount due.
  • If you fail to pay this invoice, you will receive a letter (known as Form 1058) entitled “Final Notice of Intent to Levy and Your Rights to a Hearing.”
  • You will have 30 days to file an appeal.
  • If you do not file an appeal within this time frame, the IRS must wait an additional 15 days to ensure the appeal isn’t in the mail.
  • Once this time has passed, the IRS can seize your assets, bank accounts, and wages without further notice.
A garnishment can do significant damage to your credit report and will impact your income, so it’s always a best to avoid IRS wage garnishment if possible. If you receive a Demand for Payment, it is important to quickly take steps to fix your tax problems.

How to Stop IRS Wage Garnishment

Establishing a payment plan for repayment of your tax debt is one way to stop an IRS wage garnishment. Appealing the decision is another way to avoid garnishment, but there’s no guarantee your appeal will work. If you are already experiencing a wage garnishment, you still have some options, including:
  • Borrowing money to pay your tax debt. There is a process called a lien subordination, where IRS has the ability to remove a lien long enough for you to borrow money if it is in their best interest.
  • Having the debt placed as uncollectable under the IRS’s Fresh Start program. Depending on the amount of tax debt you owe, you may be able to get a lien released.
  • Submitting an Offer in Compromise. An OIC permanently settles the debt for less than you owe. It is best to have a tax professional handle this process for you.

Advanced Tax Solutions has extensive experience negotiating deals with the Internal Revenue Service. We will be able to determine the best method of dealing with the IRS for repayment of your tax debt. We are adept at getting the best deal for our clients and giving them peace of mind by knowing their tax debt situation is being handled by professionals. If you are facing IRS wage garnishment, get in touch with our experienced team of Denver tax professionals today for help. Dealing with the IRS can be stressful and complicated, which is why Advanced Tax Solutions offers IRS garnishment help to ease your burdens. Call our office in Denver any time at (303) 753-6040, and let us help you find the solution. Our goal is to help you put your tax problems far behind you as quickly as possible. Contact us today, and let’s get started.
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