Erickson & Co., CPA

12/01/2021

Taxpayers generally must make estimated tax payments if they expect to owe $1,000 or more when they file their 2020 tax return.

09/14/2020

Using the Tax Withholding Estimator will help taxpayers avoid surprises next year

Using the IRS Tax Withholding Estimator can help taxpayers have the right amount of tax withheld and avoid surprises when filing next year.
Through withholding from paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.

Income tax withholding is generally based on the taxpayer’s expected filing status and standard deduction. Adjusting withholding on their paychecks or the amount of their estimated tax payments can help prevent penalties. This is especially important for people in the sharing economy those with more than one job and those who experienced major life changes in the last year.

The IRS also reminds people affected by COVID-19 to review their withholding status, particularly those receiving unemployment during this period.

When to check withholding
Taxpayers should check their withholding annually and when life changes occur, such as marriage, birth or adoption of a child or changes in employment. Anyone who changed their withholding earlier this year, received a large refund or tax bill after they filed their 2019 return, should also check their withholding.

09/08/2020

Some taxpayers may need to make estimated tax payments

Small business owners and self-employed people need to make quarterly estimated tax payments.

Here are some important things taxpayers should know about estimated tax payments:

Taxpayers generally must make estimated tax payments if they expect to owe $1,000 or more when they file their 2020 tax return.

Corporations generally must make these payments if they expect to owe $500 or more on their 2019 tax return.
The remaining deadlines for paying 2020 estimated taxes are September 15, 2020 and January 15, 2021.

09/05/2020

Dear Employer,
The Division of Industrial Relations, Workers' Compensation Section would like to make you aware that Nevada employers are required to secure and maintain workers' compensation insurance unless excluded by Nevada Revised Statute (NRS). Workers' compensation coverage is required when you hire one or more employees. There are few exceptions to this requirement.

08/13/2020

What taxpayers should do if they get a letter or notice from the IRS

Every year the IRS mails letters or notices to taxpayers for many different reasons.

Here are some do’s and don’ts for taxpayers who receive one:

Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do.

Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and take the appropriate action.

Don’t reply unless instructed to do so. There is usually no need for a taxpayer to reply to a notice unless specifically instructed to do so. On the other hand, taxpayers who owe should reply with a payment. IRS.gov has information about payment options.

Do take timely action. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return. Acting timely could minimize additional interest and penalty charges.

Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records.

Do respond to a disputed notice. If a taxpayer doesn’t agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub included with the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute. People should allow at least 30 days for the IRS to respond.

Do remember there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of their tax return and letter when calling the agency.

Do avoid scams. The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.
Ela Erickson,CPA

08/06/2020

If you are looking for simple, most economic and user friendly payroll software please check Intuit online payroll.

08/06/2020

Dirty Dozen part 2: Thieves are constantly coming up with ways to scam taxpayers

This is the second of two tips exploring the IRS Dirty Dozen tax scam list. Tax scams tend to rise during tax season or during times of crisis. Scam artists are using the COVID-19 pandemic to try to steal money and information from taxpayers.

Taxpayers should watch out for these scams.

Scammers targeting individuals with limited English proficiency: IRS impersonators and other scammers are targeting groups with limited English proficiency. These scams are often threatening in nature. Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language.

A common one remains the IRS impersonation scam where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Recent immigrants often are the most vulnerable to these scams. They should ignore these threats and not engage the scammers.

Dishonest return preparers: Taxpayers should avoid so-called "ghost" preparers who expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds. Ghost preparers don't sign the tax returns they prepare for taxpayers. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost preparer will prepare but not digitally sign as the paid preparer.

With many tax professionals affected by COVID-19 and their office locations potentially closed, taxpayers should be especially careful to select a credible tax preparer.

Offer in Compromise mills: Taxpayers need to be cautious of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for "pennies on the dollar" through an Offer in Compromise. Dishonest companies oversell the program to unqualified candidates so they can collect a large fee from taxpayers already struggling with debt.

These scams are commonly called OIC "mills," which cast a wide net for taxpayers, charge them pricey fees and churn out applications for a program they're unlikely to qualify for.

Fake payments and repayment demands: A con artist will steal a taxpayer’s identity and bank account information. Then the con artist will file a false tax return and will have the refund deposited into the taxpayer's bank account. Once the direct deposit hits the taxpayer's account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there's been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the refund amount.

Payroll and HR scams: Tax professionals, employers and taxpayers need to be on guard against phishing designed to steal Form W-2s and other tax information. These are called Business Email Compromise or Business Email Spoofing. These scams have used a variety of tactics including requests for wire transfers or payment of fake invoices.

Ransomware: This is malicious software that is often downloaded by the user after clicking on a malicious attachment that encrypts their data making their data inaccessible. In some cases, entire computer networks can be affected. The IRS and its Security Summit partners have advised tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products.

05/27/2020

Challenges

Due to the restrictions that are currently in place, a number of industries remain severely affected. Categories like massage therapy, airport transfers, the beauty industries as well as pet sitting, kennels and many more are yet to recover. If you’re in one or more of these categories, please know that we will be here, ready and waiting to help you when the market returns.

05/27/2020

If someone requested a direct deposit of the payment, why is the IRS mailing it?

There are several reasons why someone’s payment may have been sent by mail. These include:
• The payment was already in process before the bank information was entered.
• The IRS does not have the correct bank account information
• The bank rejects the direct deposit

The IRS will mail the payment to the address they have on file for the taxpayer. Typically, it will take up to 14 days to receive the payment.

05/20/2020

Here’s why some people’s Economic Impact Payment is different than expected.

Some people across the country receive their Economic Impact Payments, some might receive a different amount than they expected.

Eligible individuals receive a payment for $1,200. Two eligible individuals filing a joint return receive $2,400. And, eligible individuals receive up to an additional $500 for each qualifying child who meets the conditions outlined on the Qualifying Child Requirements page.

The Economic Impact Payment is automatic for eligible people who filed a tax return in 2018 or 2019. They’re also automatic for those who aren’t required to file a tax return but who receive:
• Social Security retirement, survivor or disability benefits.
• Railroad Retirement benefits.
• Supplemental Security Income.
• Veterans Affairs benefits.

People who receive less than expected can go to IRS.gov and review this chart to check the payment they should receive. It has examples that use filing status and income to calculate the payment amount.


Here are some common things that help explain what may have happened:

• The taxpayer hasn’t filed a 2019 tax return, and their payment was based on the 2018 return. This could also be the case if the IRS has not finished processing the 2019 return.

• The qualifying child is not under the age of 17. For purposes of the payment, the child’s age is how old they are at the end of the year for the tax return on which the IRS bases the payment amount. If a dependent is 17 or older, they don’t qualify for the additional $500. This includes a parent or other relative, and college students.

• The Economic Impact Payment was offset by past-due child support. While this is the only offset that can affect the payment amount, federal law allows creditors to garnish a payment once it’s deposited into a bank account.

In many instances, eligible taxpayers who received a payment that was smaller than expected may get an additional amount early next year when they file their 2020 federal income tax return.

Anyone with questions about the payment can visit the Economic Impact Payments Information Center. It has answers to questions about eligibility, payment amounts, what to expect, and when to expect it.

COVID Tax Tip 2020-59, May 20, 2020