Nonresident Aliens Form W-4 Instructions Updated

NSTPInternal Revenue Service (IRS)

Nonresident Aliens Form W-4 Instructions Updated

Nonresident Aliens Form W-4 Instructions Updated Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens, has been updated by the IRS. Form W-4, Employee’s Withholding Certificate, is used by employers to calculate an employee’s correct income tax withholding. (Form W-4, Instructions) For 2020, the IRS completely redesigned Form W-4 to account for the changes to the personal exemption and standard deduction made by the Tax Cuts and Jobs Act (TCJA, PL 115-97). (The TCJA suspended personal exemptions and substantially increased the standard deduction). There is now a five-step process for completing Form W-4. Specific rules apply to determine if an alien individual (that is, an individual who is not a U.S. citizen) is a resident alien or a nonresident alien (NRA) for federal income tax purposes. Generally, if an alien individual does not meet either the "green card test" or the "substantial presence test" for the calendar year, he or she is considered an NRA. (IRS Publication 519, U.S. Tax Guide for Aliens) Generally, withholding calculations are different for NRA employees because NRA employees can only use single filing status (Code Sec. 3402(l)(3)(A)(ii)) and are not entitled to the standard deduction that is built into the withholding tables. (Code Sec. … Read More

IRS Due Diligence Rules for Tax Preparers are Serious Business

NSTPInternal Revenue Service (IRS)

IRS Due Diligence Rules for Tax Preparers are Serious Business.

IRS Due Diligence Rules for Tax Preparers are Serious Business (note from the Editor: the following was sent to the NSTP from the Hartford Insurance Company with permission to share with our members.) By Kelly Phillips Erb Jan. 23, 2020, 4:45 AM Tax filing season can be chaotic. According to the Internal Revenue Service, 155,798,000 individual income tax returns were received in the 2019 filing season, with over half of those returns (80,630,000) filed by tax professionals. That doesn’t include the number of other tax returns filed (like business and partnership tax returns, excise, estate, and gift tax returns, or state tax returns) or other tax compliance activity. Bottom line: Tax professionals are busy year-round. In the months following the last tax filing season, the IRS began reaching out to tax professionals to remind them of the importance of understanding tax law and due diligence responsibilities. The agency particularly focused on tax returns with refundable tax credits like the earned income tax credit and the additional child tax credit, as well as head of household (HOH) filing status claims. Since those credits can result in sizable tax refunds, they are ripe for abuse—even by tax preparers. In an effort to reduce the instances … Read More

Tax ID Theft Victims Fraudulent Return Copy Available

NSTPInternal Revenue Service (IRS)

Tax ID Theft Victims Fraudulent Return Copy Available

Tax ID Theft Victims Fraudulent Return Copy Available As part of its continuing efforts to fight cyber tax crime, the Internal Revenue Service launched a new web page, Identity Theft Central. Among the areas this new IRS.gov section covers, is what to do if you're a victim of tax identity theft. This includes the process of getting a copy of a fraudulent return that was filed in your name. In the case of a 1040 filed by someone pretending to be a taxpayer in order to get a fraudulent refund, most would want to see a copy of the fraudulent return. In response to taxpayer requests, the agency's Fraudulent Return Request Program will send you a copy of the fake return if you are an ID theft victim. Following are the steps to be followed: The form must be completed with your real identifying data. This includes: Your name and Social Security number Your mailing address Tax year(s) of the fraudulent return(s) you are requesting Due to federal privacy laws, you can request the fraudulent return only if your Social Security number was the one used as either the primary or secondary taxpayer on the fraudulent return. Those privacy restrictions mean … Read More

Tax-Exempt Organizations UBIT Refund Guidance

NSTPInternal Revenue Service (IRS)

Tax-Exempt Organizations UBIT Refund Guidance

Tax-Exempt Organizations UBIT Refund Guidance On its website, the IRS has posted instructions for how exempt organizations can claim a refund or credit of the unrelated business income tax they paid with respect to qualified transportation fringe benefits. This fringe benefits provision was retroactively repealed by legislation enacted in December 2019. Background. Before it was repealed, Code Sec. 512(a)(7) required the unrelated business taxation income (UBTI) of tax-exempt organizations, i.e., the base used in computing the UBIT, to be increased by expenses related to qualified transportation fringe benefits (the so-called "church parking tax"). The Code section applied to amounts paid or incurred after December 31, 2017. How to claim a refund or credit resulting from the retroactive repeal. To claim a refund or credit of the UBIT reported on Form 990-T for 2017 or 2018 under Code Sec. 512(a)(7), file an amended Form 990-T as described in the form's instructions and do the following as well: Write "Amended Return" at the top of Form 990-T. If the amended return is being filed only to claim a refund, credit, or adjust information due to the repeal of Code Sec. 512(a)(7), write "Amended Return – Section 512(a)(7) Repeal." Complete the Form 990-T as you … Read More

Online Tax Withholding Estimator Revised by IRS

NSTPInternal Revenue Service (IRS)

Online Tax Withholding Estimator Revised by IRS

Online Tax Withholding Estimator Revised by IRS The Tax Withholding Estimator, an online tool for employees to use to calculate the amount they want withheld from their pay for federal income tax purposes, has been updated by the IRS. For several years, the IRS website had an online worksheet, the Tax Withholding Calculator, to calculate the amount that an employee wanted to be withheld from his or her paycheck. The Calculator was updated to reflect changes made by the Tax Cuts and Jobs Act for 2019. Last year, the IRS replaced the Calculator with the Tax Withholding Estimator. If an adjustment is needed to an employee's paycheck withholding, the Tax Withholding Estimator (Estimator) gives specific recommendations on how to fill out their employer's online Form W-4, Employee's Withholding Certificate, or provides a PDF of Form W-4 with key parts filled out. The Estimator can be found here. The IRS has revised the Estimator to incorporate the changes from the redesigned Form W-4. See IRS FAQs on the final version of 2020 Form W-4. To help workers more effectively adjust their withholding, the revised Estimator features a customized refund slider that allows users to choose the refund amount they prefer from a range … Read More

IRS Field Revenue Officers and How to Confirm Their Identity If They Come Knocking at Your Door: a TAS Tax Tip

NSTPInternal Revenue Service (IRS)

IRS Field Revenue Officers and How to Confirm Their Identity

IRS Field Revenue Officers and How to Confirm Their Identity If They Come Knocking at Your Door: a TAS Tax Tip The Internal Revenue Service (IRS) has begun conducting face-to-face meetings with individual and business taxpayers as a part of a special compliance effort entitled Revenue Officer Compliance Sweep (ROCS). This is an extremely high priority effort where IRS field revenue officers (RO’s) will be working to resolve compliance issues, including missing tax returns and taxes owed, with a special emphasis on payroll taxes. The RO’s will visit areas where there is little to no IRS presence. They will interview taxpayers while gathering financial information to help them become compliant now and remain so in the future. The new effort began Wisconsin, Texas, and Arkansas and will eventually rollout nationwide. To avoid confusion with IRS scam artists and other imposters, the IRS will announce general details about these efforts in specific locations as an important step to raise community awareness around IRS activity during a specified time. Visits from IRS agents shouldn't be confused as a scam. Here’s what to look for: Taxpayers may receive an appointment letter requesting certain information and providing an opportunity to call the IRS to … Read More