How much can you save for retirement in 2020? The Treasury Department has announced inflation-adjusted figures for retirement account savings for 2020: 401(k) contribution limits are up; traditional IRA contribution limits stay the same; almost all the other numbers are up.
The amount you can contribute to your 401(k) or similar workplace retirement plan goes up from $19,000 in 2019 to $19,500 in 2020. The 401(k) catch-up contribution limit—if you’re 50 or older in 2020—will be $6,500 for workplace plans, up from $6,000. But the amount you can contribute to an Individual Retirement Account stays the same for 2020: $6,000, with a $1,000 catch-up limit if you’re 50 or older.
Finding out that you are going to be audited by the IRS can be a little bit scary. However, with the right preparation, anyone can get through it. Here’s what you need to know to survive your IRS audit.
Don’t Ignore The Notice
Once you receive your IRS audit notice, you will usually have 30 days to respond to it; the precise time period will be specified in the notice. You should never ignore any correspondence from the IRS, claiming to not have received the letter won’t hold water in a courtroom. You can’t simply feign ignorance on the basis of not having received the letter.
Thanks to pressure from tax preparation industry, Congress is getting ready to ban the Internal Revenue Service from ever building a free electronic tax filing system.
As ProPublica reports, the effort is a bipartisan one. The House Ways and Means Committee, led by Massachusetts Democrat, Richard Neal, passed the Taxpayer First Act.
The bill would make changes to the IRS and is sponsored by Georgia Democratic Congressman John Lewis and Mike Kelly, a Republican from Pennsylvania.
One of its stipulations would make it illegal for the IRS to create its own online system for tax filing. That’s right, members of Congress are prohibiting a branch of the federal government from providing a much-needed service that would make the lives of all of their constituents much easier.
Most Americans have a smaller total federal income tax bill for 2018 than they did in previous years, thanks to the tax law passed by Congress in 2017. But thanks to changing instructions from the IRS on how to withhold tax, many people will see smaller refunds or may even owe money when they file their tax returns.
So far, the average refund paid to taxpayers is down 8.7% to $1,949, from an average of $2,135 this time in filing season last year, according to the IRS.
It is critical to keep your company’s 401(k) plan in compliance with numerous federal laws and regulations. Plans that are found to be in violation risk expensive penalties and disqualification.
The IRS recently issued this list of 11 potential errors:
1. Has your 401(k) plan document been updated within the past few years to reflect recent law changes?
2. Are the plan’s operations based on the terms of the plan document?
3. Is the plan’s definition of compensation for all deferrals and allocations used correctly?
The Internal Revenue Service announced this week that taxpayers who need to make a payment in cash can now do so at 7-Eleven convenience stores.
While it may seem unusual to pay your taxes where you might otherwise pick up a Slurpee, it caters to a large number of Americans who do not have a bank account or credit card. The Federal Deposit Insurance Corporation estimates one in 13 households in the U.S. do not have a bank account.
“We continue to look for new ways to provide services for our taxpayers … this provides a new way for people who can only pay their taxes in cash without having to travel to an IRS Taxpayer Assistance Center,” said IRS Commissioner John Koskinen.
Are you searching high and low for tax deductions? In the run up to April 15, you aren’t the only one. Unfortunately, it is too late to date checks December 31, 2015! Since taxes are annual, you must think about last year, 2015. Still, if your facts are right and you feel adventurous, here are some unusual deductions taxpayers managed to get approved. Admittedly, some had to take the IRS to court to get their deduction approved.
Cosmetic surgery costs are usually non-deductible, but an exotic dancer named Chesty Love tested this rule. If you want bigger tips, you go bigger, she reasoned. So she decided to go way bigger, shelling out for breast implants that would bloat her bra size to 56-FF. When she wrote off the bill, the IRS said it was nondeductible cosmetic surgery. But in Hess v. Commissioner,the Tax Court allowed tax benefits, allowing her to claim the implants as depreciable assets, a type of stage prop.
On Wall Street, there’s a saying that past performance is no guarantee of future results. When it comes to taxes, however, past performance is a great indicator of the types of deductions that businesses typically take each year.
Last winter the IRS released data on Schedule C filers. Here are some of the most popular tax deductions for small business that were claimed by sole proprietors as determined by the dollar amounts, starting with the largest category. The same types of deductions can be claimed by other entities — C corporations, S corporations, partnerships, and limited liability companies (LLCs) (although there may be slightly different rules for some deductions). See which of these tax deductions for small business apply for your 2015 tax return.
Tax scammers are again at work and your small businesses could be vulnerable just like other consumers. Authorities insist calls from scammers claiming to be with the Internal Revenue Service are on the rise around the country.
Just in case you are not aware of this tax scam, it works on fear and intimidation by the criminals. They call their victims and leave a menacing message on voice mail stating you have a warrant for your arrest because of a tax violation. When you call the number to find out what it is all about, the ruse continues to play out until they talk you into sending them money.
Here’s what you need to protect your business and yourself.
Juries sometimes do strange things, and one in Missouri has ordered a company that buys up consumer debts to pay an astounding $83 million to Maria Guadalupe Mejia of Kansas City. Why, you may ask? The jury said the credit company wrongly tried to collect an erroneous $1,000 credit card bill. Credit.com has an extensive story about this shocker, the woman who sues a debt collector, and then wins $83 Million. KCUR reported the verdict and the jury finding that the defendant–Portfolio Recovery Associates LLC–was guilty of violating the Fair Debt Collection Practices Act.
That law contains many safeguards for borrowers. With the small $1,000 disputed debt, as you might imagine, most of the verdict was for allegedly bad conduct, The verdict called for $250,000 in damages plus a few dollars shy of $83 million in punitive damages. The verdict calls it malicious prosecution, the debt not being hers to begin with.
PRA Group Inc., which owns Portfolio Recovery Associates, sent an email statement to Credit.com: “This outlandish verdict defies all common sense,” wrote spokesman Michael McKeon. “We hope and expect the judge will set aside this inappropriate award, and we plan to file motions to make that request formally in the near term. Any fair reading of the facts of this case makes plain that a verdict of this size is not justice by any means, and cannot stand.”