Federal Tax News for Individuals

Got a Letter from the IRS?

Receiving a letter from the IRS may make you go weak in the knees. Don't panic, but do read the letter, the tax agency says. The IRS may simply have a question about your return or inform you of a change to your account or the letter may request payment. Don't ignore it. Instead, read it carefully, right away.

Most IRS communication deals with a specific issue and prompt action could minimize any extra charges. Contact us with questions. If you owe more tax and you're struggling to pay it, several options are available. Only reply if the letter instructs you to do so. If you dispute the IRS findings, the letter will likely instruct you how to proceed. Click here for more.

Summer Travel: Beware of the New Fees!

If you're traveling this summer, you might be familiar with all the taxes and fees that are added to airplane fares. These include a 7.5% federal excise tax and other government-imposed fees. Recently, the U.S. Department of Transportation issued a rule that airlines must refund full fares, including taxes and fees, when passengers are owed refunds for tickets.

In the past, airlines weren't required to refund any amount for nonrefundable tickets. But if an airline changes or cancels a flight, it now usually must refund a nonrefundable fare's entire amount. Airlines may offer a travel voucher, but ticketholders are entitled to receive a full cash or original form of payment refund.

What to Do if Your Offer in Compromise is Rejected

Taxpayers who can't pay the full tax they owe may request an offer in compromise (OIC) from the IRS. That's a way to settle your tax debt for less than is owed. The IRS states that it generally approves an OIC from an eligible taxpayer if it's reasonable. But suppose your OIC is rejected. If that happens, you have 30 days from the receipt of the rejection letter to file an appeal by submitting Form 13711 (Request for Appeal of OIC). You can also request an appeal by sending a letter to the IRS with certain information. You'll need to explain why you're disputing any items in the rejection letter and provide facts and documentation to support your position. Learn more here.

Moving to a New Home?

Summer will be here in just a few weeks, and that's a time when many people move. If moving includes selling your home, at tax filing time you may qualify to exclude some or all gain from the sale. To claim the exclusion, you must meet ownership and use tests: During the five-year period ending on the date of sale, you must have owned the home and lived in it for at least two years. If qualified, you may be able to exclude a capital gain of up to $250,000 from your income ($500,000 if you file a joint tax return with your spouse). This exclusion is available on your main home only, and a loss isn't deductible. Additional rules apply and some exceptions exist. Contact us with questions.

Don't Overlook Paying Tax on Gig Economy Income

A popular way for young people to earn money is through the "gig economy." That means they provide on-demand work, goods or services, often through an online platform. Many fully employed people also do gig work to supplement their income. The IRS wants gig workers to know that any money they earn this way is taxable income, regardless of the form of payment. Taxpayers who earn more than $600 may be sent a Form 1099. They may need to make estimated quarterly payments on the income and pay employment tax. For gig workers to stay on the right side of tax issues, good recordkeeping is essential. Include details such as the date, time, customer name if possible, as well as the fee you earned and miscellaneous. Click here for more details from the IRS.

Categories: June 2024, Monthly Bulletins
Tags: Tax

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