Open the Plain White Envelope!

You know that sinking feeling that you tossed something really important into the garbage? Apparently that dreaded goof came true for some names on the U.S. Treasury Department’s mailing list. They threw away a plain, white envelope that looked like junk mail but actually contained a prepaid debit card for their federal Economic Impact Payment – part of coronavirus relief.  The card is worth at least $1,200 to each person. In mid-May, Treasury moved to speed up delivery of some payments by issuing prepaid debit cards. Until then, the payments had been issued as electronic bank deposits and paper checks.  … Continue reading

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Pandemic Unemployment Benefits Are Income

The federal government recently added $600 a week to unemployment insurance benefits now being drawn by millions of workers.  The extra cash was among three new benefits in the Coronavirus Aid, Relief and Economic Security Act (CARES), which took effect late in March. Generous as that is, though, workers might want to set aside some money for income taxes. The fact is, Congress has not exempted those $600-a-week payments or the regular unemployment benefits from federal taxes. With several types of pandemic payments underway, taxpayers might be baffled about tax impacts. For example, the well-publicized stimulus payments of up to $1,200 per … Continue reading

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The Fix-It Form Goes Electronic, Finally!

The Internal Revenue Service has promoted electronic filing for years, to the point where more than 90 percent of taxpayers are sending federal tax returns and other reports directly to its computers.  But there’s been one big exception. The only way for taxpayers to change an individual income tax return after filing it has been by sending a paper Form 1040-X through the mail. Commissioner Charles Reddig now has announced that, after years of trying, the IRS has “overcome the unique challenges related to the 1040-X” and succeeded in moving it online. Beginning this summer, taxpayers will be able to amend … Continue reading

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More Virus-related Relief From The Feds

The federal government has found another way deep in the nooks and crannies of tax codes to help taxpayers in financial pain from the coronavirus epidemic. The Internal Revenue Service now is allowing mid-year changes to “cafeteria plans,” such as health Flexible Spending Arrangements (FSA), so that workers who use them can deal with losses of income, unexpected bills and, perhaps, postponements of health care appointments.  Typically, the employees must tell employers which cafeteria plans they wish to use and how much of their wages to place in them during a firm enrollment period each year. The money goes into … Continue reading

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RMDs In The Year Of Coronavirus

We’ve written recently about ways to tap a retirement account for extra money during the coronavirus emergency.  But what about the flip side – holding in tax-deferred money that was scheduled to be withdrawn from an IRA or 401(k)? It winds up that Congress temporarily suspended the rule on Required Minimum Distributions (RMD) in its coronavirus relief law.  In short, retired workers can just omit the withdrawals they would have to take from their retirement accounts this year. It’s a one-time offer, good just for tax year 2020. Normally, when workers reach age 72 – it was 70½ until recently … Continue reading

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Workers Can Tap IRAs To Cope With Coronavirus Finances

American workers under the age of 59½ generally haven’t been able to reach into their IRAs without paying stiff penalties. But the federal government temporarily has changed that in the throes of the coronavirus epidemic. In March, the CARES Act (Coronavirus Aid, Relief and Economic Security Act) opened retirement plans to as much as $100,000 worth of penalty-free withdrawals for coronavirus victims. That gives workers and their families another lifeline from their own funds to endure the emergency, even if many would view it as a last resort. By the way, the temporary change also is available from some other … Continue reading

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IRS: Track Your Coronavirus Payment

First came “Where’s My Refund?”, a way for taxpayers to track refunds from  their federal tax returns. Now, with more than 80 million Americans due for coronavirus relief dollars, the Internal Revenue Service is going online again with a tracking service for those Economic Impact Payments. “Get My Payment,” which is located on the IRS Web site (www.irs.gov) , gives taxpayers a quick way to discover how much they will receive in payments and when the deposits might arrive. It tracks either electronic payments or paper checks. To use “Get My Payment,” taxpayers must provide a few identification details, including … Continue reading

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The Very Latest Word On Minnesota Estimated Taxes

Here is a late-breaking update about estimated payments of Minnesota income taxes. As noted in our previous post, the Minnesota Department of Revenue is requiring individual taxpayers to submit estimated taxes for the first quarter of the 2020 tax year by April 15. Those payments were not postponed by the emergency actions involving coronavirus. On Friday (April 10), Minnesota Revenue announced three formulas that will avoid penalties, interest or extra taxes. Taxpayers will be safe if they base the payments on: 90 percent of their estimated tax liability for 2020 or 100 percent of the taxes they paid for the … Continue reading

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Minnesotans: New Tax Day Details

By now, everyone knows that Tax Day has been pushed back to July 15. That’s the new deadline for individual taxpayers to file 2019 returns and to pay their taxes. Both federal and Minnesota governments gave us some more time because of the severe disruptions caused nationwide by the coronavirus disease emergency.  So, original due date, April 15, now looks like just another day in tax season for many of us.  Here are a few details Minnesotans will appreciate about the three-month delay: ·   It’s automatic. There are no applications or extension forms required. File and pay by July 15, and you’re … Continue reading

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How Now, New 1040?

The Internal Revenue Service is streamlining again for the 2019 tax filing season. Its basic form for individual taxpayers, the IRS Form 1040, is a bit shorter and has some convenient changes.  Among them, the tax agency has trimmed the paperwork by dropping three numbered schedules from its main package.  The 1040 for 2018 included six of those related schedules. The IRS did help senior citizens with a new, optional twist. Taxpayers who are 65 and older – born before Jan. 2, 1955 – can choose a customized version named. the “1040-SR.”  One convenience is a handy chart showing standard deduction … Continue reading

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