Reaves & Co CPA PS

IRS reminds taxpayers, Jan. 16 due date for final 2023 quarterly estimated tax payments

WASHINGTON –The Internal Revenue Service today reminded taxpayers who didn’t pay enough tax in 2023 to make a fourth quarter tax payment on or before Jan. 16 to avoid a possible penalty or tax bill when filing in 2024.
Taxes are normally paid throughout the year by withholding tax from paychecks, by making quarterly estimated tax payments to the IRS or by a combination of both. This is done because taxpayers need to pay most of their tax during the year as income is earned or received.
Who needs to make a payment?
Taxpayers who earn income not subject to tax withholding such as self-employed people or independent contractors should pay their taxes quarterly to the IRS.
In addition, people who owed tax when they filed their current year tax return often find themselves in the same situation again when they file the next year. Taxpayers in this situation normally include:
• Those who itemized in the past but are now taking the standard deduction,
• Two wage-earner households,
• Employees with non-wage sources of income such as dividends,
• Those with complex tax situations and/or
• Those who failed to increase their tax withholding.
What income is taxable?
The IRS reminds taxpayers that most income is taxable, whether it’s unemployment income, refund interest or income from the gig economy and digital assets. When estimating quarterly tax payments, taxpayers should include all forms of earned income, including from part-time work, side jobs or the sale of goods.
Also, various financial transactions, especially late in the year, can often have an unexpected tax impact. Examples include year-end and holiday bonuses, lottery winnings, stock dividends, capital gain distributions from mutual funds, stocks, bonds, virtual currency, real estate or other property sold at a profit.
Delay in requirement for Forms 1099-K
After feedback from taxpayers, tax professionals and payment processors the IRS announced that calendar year 2023 will be treated as another transition year for the reduced reporting threshold of $600. For calendar year 2023, third-party settlement organizations that issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions. The IRS also issued a fact sheet to help people who may receive Forms 1099-K.
How to make an estimated tax payment
The fastest and easiest way to make an estimated tax payment is to do so electronically. Taxpayers have options when paying electronically from their bank account.
• Pay using IRS Direct Pay. This option allows taxpayers to schedule a payment in advance of the Jan. 16 deadline.
• Pay using IRS Online Account. This option allows taxpayers to view their payment history, pending or recent payments and other tax information.
• Pay using Electronic Filing Tax Payment System, or EFTPS. EFTPS is a free system which offers selections such as scheduling payments a year in advance, paying estimated tax payments and tracking and changing scheduled payments.
• Taxpayers also have the option to pay with their debit or credit card. The card processors, not the IRS, charge a fee for the service.
Using these or other electronic payment options ensures that a payment gets credited promptly. More information on other payment options is available at IRS.gov/payments.
Use the Tax Withholding Estimator to keep track
The Tax Withholding Estimator, available on IRS.gov, can often help taxpayers determine if they need to make an estimated tax payment. It also helps them calculate the correct amount of tax to withhold throughout the year based on their complete set of tax facts and circumstances.
Alternatively, taxpayers can use the worksheet included with Form 1040-ES, Estimated Tax for Individuals, or read through Publication 505, Tax Withholding and Estimated Tax, available on IRS.gov.
Plan ahead
It’s never too early to get ready for the tax-filing season. For more tips and resources, check out the Get Ready and Estimated Tax pages on IRS.gov.

Myth: If a taxpayer requests an extension, they don’t need to do anything until Oct. 16.
Fact: It’s important to remember that an extension to file is not an extension to pay any tax due. Tax balances are still due on April 18. Taxpayers who request a six-month extension to file their taxes have until Oct. 16, 2023, to file their 2022 federal income tax return. If a taxpayer requests an extension, the IRS encourages them to file their income tax return when they’re ready instead of waiting until the Oct. 16 extension deadline.
Any taxpayer, regardless of income, can request an extension to file using IRS Free File at IRS.gov.

IRS reminder to many retirees: April 1 is last day to start taking money out of IRAs and 401(k)s
WASHINGTON — The Internal Revenue Service today reminded retirees who turned 72 during 2022 that, in most cases, Sunday, April 1, 2023, is the last day to begin receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s and similar workplace retirement plans.
The payments, called required minimum distributions (RMDs), are normally made by the end of the year. But anyone who reached age 72 during 2022 is covered by a special rule that allows IRA account owners and participants in workplace retirement plans to wait until as late as April 1, 2023, to take their first RMD. In other words, in general, the special April 1 rule applies to IRA owners and other participants in these plans who were born after Dec. 31,1949.
Two payments in the same year
The April 1 RMD deadline only applies to the required distribution for the first year. For all later years, the RMD must be made by Dec. 31.
This means that taxpayers who receive their first required distribution (for 2022) in 2023, on or before April 1, must receive their second RMD (for 2023) by Dec. 31, 2023. Even though the first distribution is actually the required 2022 distribution, it’s taxable in 2023 and reported on the 2023 tax return - along with the regular 2023 distribution.
Types of retirement plans requiring RMDs
These required distribution rules apply to owners of traditional, SEP and SIMPLE IRAs while the original owner is alive. They also apply to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans. RMDs don’t apply to Roth IRAs.

I did just send an email, maybe two, asking for my clients to set up their web portal, and I down loaded tax organizers there!
New thing, scary, but will be good once we are over the bumps!

Final 2022 quarterly estimated tax payment due Jan. 17
WASHINGTON – Many taxpayers make quarterly estimated tax payments during the year to stay current on their taxes, but many who should overlook this step. The Internal Revenue Service today urged those who paid too little tax in 2022 to make a fourth quarter payment on or before Jan. 17 to avoid an unexpected potential tax bill or penalty when they file in 2023.
Taxes are normally paid throughout the year by withholding tax from paychecks or by making quarterly estimated tax payments to the IRS or by a combination of both. Individuals do this because income taxes are pay-as-you-go, meaning taxpayers need to pay most of their tax during the year as income is earned or received.
How to make an estimated tax payment
The fastest and easiest way to make an estimated tax payment is to do so electronically using IRS Direct Pay. Taxpayers can schedule a payment in advance of the January deadline.
Taxpayers can now also make a payment through their IRS Online Account, https://www.irs.gov/payments/your-online-account. There they can see their payment history, any pending or recent payments and other useful tax information. The Electronic Filing Tax Payment System, or EFTPS, is an excellent choice as well.
The IRS does not charge a fee for these services. Plus, using these or other electronic payment options ensures that a payment gets credited promptly. More information on other payment options is available at IRS.gov/payments.

The Downtown Camas Association has a new flyer, please check it out! A great way to support the DCA!

Update & Secure Your records and How to Prepare now for natural disasters (or just an old water tank) https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzUsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMjA4MjkuNjI5MDg3OTEiLCJ1cmwiOiJodHRwczovL3d3dy5yZWFkeS5nb3Yvc2VwdGVtYmVyIn0.I_-PE27CL_zdqMvRm6SsEsU21kTYe2OGAZ3-0O0G2Ag/s/1828895519/br/143225051686-l

Missed the April tax deadline? File and pay by June 14 to avoid a larger penalty and interest
WASHINGTON — The Internal Revenue Service today advised taxpayers who missed the April tax deadline that they can usually avoid a larger penalty by filing their 2021 federal income tax return and paying any tax due by Tuesday, June 14.
To avoid the larger penalty, the IRS must receive the return by June 14. This means that a return mailed on that date will not qualify. For that reason, the IRS urges everyone to file electronically by June 14.
In addition, taxpayers can also limit late-payment penalties and interest charges by paying their tax electronically. The fastest and easiest way to do that is with IRS Direct Pay, a free service available only on IRS.gov. Several other electronic payment options are also available. Visit IRS.gov/Payments for details.
How the penalty works
Those who miss the June 14 cutoff will normally face a minimum late-filing penalty, also known as a failure-to-file penalty. By law, If the return is more than 60 days late, the minimum penalty is either $435 or 100 percent of the unpaid tax, whichever is less. This means that the penalty will equal the tax due if the taxpayer owes $435 or less. If they owe more than $435, then the minimum penalty will be at least $435.
Under the normal calculation, this penalty is 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. Visit IRS.gov/Penalties for details.
The late-filing penalty will stop accruing once the taxpayer files. In addition, the separate late-payment penalty and interest will stop accruing as soon as the tax is paid. The taxpayer need not figure any of these charges. Instead, the IRS will bill them for any amount due.

Penalties | Internal Revenue Service Understand the different types of penalties, how to avoid getting a penalty, and what you need to do if you get one.

Camping at Cresap Bay! It rained a lot but was fun! We did the upper portion of the Ape Caves! Named after the scout troop called the Mt St Helen’s Apes who were the first to explore it back in the 1950’s. Can you see the marshmallow in the tree? Squirrels made off with them!

Snack Fact Of the Day
In 1934, Levi’s became the first company to make jeans for women — decades before it was mainstream for women to wear pants in public

When and how to pay estimated tax
For estimated tax purposes, the year is divided into four payment periods. However, some taxpayers may find it easier to pay estimated taxes weekly, bi-weekly or monthly. Alternative payment periods are allowed if enough tax is paid in by the end of the quarter.
Using an electronic payment option available on irs.gov/payments is the easiest way for individuals, small businesses, self-employed individuals and gig workers to pay federal taxes. It’s fast, easy and secure.
• Taxpayers can use the Electronic Federal Tax Payment System for all their federal tax payments, including federal tax deposits, installment agreement payments and estimated tax payments. In addition, by using the EFTPS, taxpayers can access a history of their payments, so they know how much and when the payments were made.
• Individual Taxpayers can create an IRS Online Account to make their estimated tax payments. Using their account, taxpayers can see their payment history, any pending payments and other useful tax information.
• Individual taxpayers can also make an estimated tax payment by using IRS Direct Pay.
• Individual and Business taxpayers can also make an estimated tax payment by using debit, credit card or digital wallet.
The 2022 Form 1040-ES, Estimated Tax for Individuals, can help taxpayers estimate their first quarterly tax payment. While electronic filing is strongly encouraged, taxpayers may also send estimated tax payments with Form 1040-ES by mail.
Corporations must deposit payments using EFTPS. Additional information is available in Publication 542, Corporations.

Pay taxes due electronically on IRS.gov/Payments
Those who owe taxes can pay quickly and securely via their Online Account, IRS Direct Pay, debit or credit card or digital wallet, or they can apply online for a payment plan (including an installment agreement). Taxpayers paying electronically receive immediate confirmation when they submit their payment. With Direct Pay and the Electronic Federal Tax Payment System (EFTPS), taxpayers can receive email notifications about their payments.

Payments | Internal Revenue Service Pay your taxes, view your account or apply for a payment plan with the IRS.

Taxpayers who owe and missed the April 18 filing deadline should file now to limit penalties and interest; not too late to claim the Child Tax Credit for 2021
WASHINGTON — The Internal Revenue Service encourages taxpayers who missed Monday’s April 18 tax-filing deadline to file as soon as possible. While taxpayers due a refund receive no penalty for filing late, those who owe and missed the deadline without requesting an extension should file quickly to limit penalties and interest.
Families who don’t owe taxes to the IRS can still file their 2021 tax return and claim the Child Tax Credit for the 2021 tax year at any point until April 15, 2025, without any penalty. This year also marks the first time in history that many families with children in Puerto Rico will be eligible to claim the Child Tax Credit, which has been expanded to provide up to $3,600 per child.
File to reduce penalties and interest
Taxpayers should file their tax return and pay any taxes they owe as soon as possible to reduce penalties and interest. An extension to file is not an extension to pay. An extension to file provides an additional six months with a new filing deadline of October 17. Penalties and interest apply to taxes owed after April 18 and interest is charged on tax and penalties until the balance is paid in full.
Filing and paying as much as possible is key because the late-filing penalty and late-payment penalty add up quickly.
Even if a taxpayer can't afford to immediately pay the full amount of taxes owed, they should still file a tax return to reduce possible delayed filing penalties. The IRS offers a variety of options for taxpayers who owe the IRS but cannot afford to pay.
Usually, the failure to file penalty is 5% of the tax owed for each month or part of a month that a tax return is late, up to five months, reduced by the failure to pay penalty amount for any month where both penalties apply. If a return is filed more than 60 days after the due date, the minimum penalty is either $435 or 100% of the unpaid tax, whichever is less.
The failure to pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month until the tax is fully paid or until 25% is reached. The rate is subject to change. For more information see IRS.gov/penalties.
Taxpayers may qualify for penalty relief if they have filed and paid timely for the past three years and meet other important requirements, including paying or arranging to pay any tax due. For more information, see the first time penalty abatement page on IRS.gov.

Penalties | Internal Revenue Service Understand the different types of penalties, how to avoid getting a penalty, and what you need to do if you get one.

This just makes me smile, so I hope it makes you smile too!

For those who make estimated federal tax payments, the first quarter deadline is Monday, April 18
IRS YouTube Videos
Estimated Tax Payments – English | Spanish | ASL
WASHINGTON — The Internal Revenue Service today reminds those who make estimated tax payments such as self-employed individuals, retirees, investors, businesses, corporations and others that the payment for the first quarter of 2022 is due Monday, April 18.
The 2022 Form 1040-ES, Estimated Tax for Individuals, can help taxpayers estimate their first quarterly tax payment.
Income taxes are a pay-as-you-go process. This means, by law, taxes must be paid as income is earned or received during the year. Most people pay their taxes through withholding from paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.
Most often, those who are self-employed or in the gig economy need to make estimated tax payments. Similarly, investors, retirees and others often need to make these payments because a substantial portion of their income is not subject to withholding. Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income. Paying quarterly estimated taxes will usually lessen and may even eliminate any penalties.
Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers and fishers, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for more information.
How to pay estimated taxes
Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes. They can also visit IRS.gov/payments to pay electronically. The best way to make a payment is through IRS Online Account. There taxpayers can see their payment history, any pending payments and other useful tax information. Taxpayers can make an estimated tax payment by using IRS Direct Pay; Debit Card, Credit Card or Digital Wallet; or the Treasury Department's Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. If paying by check, taxpayers should be sure to make the check payable to the "United States Treasury."
Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.
IRS.gov assistance 24/7
Tax help is available 24/7 on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics and Frequently Asked Questions to get answers to common questions.

Payments | Internal Revenue Service Pay your taxes, view your account or apply for a payment plan with the IRS.

Be wary of Crowdfunding, it could be income. Money received through ‘crowdfunding’ may be taxable; taxpayers should understand their obligations and the benefits of good recordkeeping
Understanding Crowdfunding
Crowdfunding is a method of raising money through websites by soliciting contributions from a large number of people. The contributions may be solicited to fund businesses, for charitable donations, or for gifts. In some cases, the money raised through crowdfunding is solicited by crowdfunding organizers on behalf of other people or businesses. In other cases, people establish crowdfunding campaigns to raise money for themselves or their businesses.
Receipt of a Form 1099-K for Distributions of Money Raised Through Crowdfunding
The crowdfunding website or its payment processor may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds by filing Form 1099-K, Payment Card and Third Party Network Transactions, with the IRS. If Form 1099-K is required to be filed with the IRS, the crowdfunding website or its payment processor must also furnish a copy of that form to the person to whom the distributions are made. The American Rescue Plan Act clarifies that the crowdfunding website or its payment processor is not required to file Form 1099-K with the IRS or furnish it to the person to whom the distributions are made if the contributors to the crowdfunding campaign do not receive goods or services for their contributions.
Prior to 2022, the threshold for a crowdfunding website or payment processor to file and furnish a Form 1099-K was met if, during a calendar year, the total of all payments distributed to a person exceeded $20,000 in gross payments resulting from more than 200 transactions or donations.
For calendar years beginning after December 31, 2021, the threshold is lowered and is met if, during a calendar year, the total of all payments distributed to a person exceeds $600 in gross payments, regardless of the number of transactions or donations.
Accordingly, if a crowdfunding website or its payment processor makes distributions of money raised that meet the reporting threshold, and the contributors to the crowdfunding campaign received goods or services for their contributions, then a Form 1099-K is required to be filed with the IRS. Additionally, if the distributions of the money raised are made to the crowdfunding organizer, a copy of the Form 1099-K must be furnished to the organizer; alternatively, if the distributions of the money raised are made directly to individuals or businesses for whom the organizer solicited funds, the Form 1099-K must be furnished to those individuals or businesses that receive amounts that meet the reporting threshold.
A person receiving a Form 1099-K for distributions of money raised through crowdfunding may not recognize the filer’s name on the form. Sometimes the payment processor used by the crowdfunding website, rather than the crowdfunding website itself, will issue the Form 1099-K and be included as the filer on the form. If the recipient of a Form 1099-K does not recognize the filer’s name or the amounts included on the Form 1099-K, the recipient can use the filer’s telephone number listed on the form to contact a person knowledgeable about the payments reported.
Box 1 on the Form 1099-K will show the gross amount of the distributions made to a person during the calendar year, but issuance of a Form 1099-K doesn’t automatically mean the amount reported on the form is taxable to the person receiving the form. As discussed below, the income tax consequences depend on all the facts and circumstances. If the distributions reported on a Form 1099-K are not reported on the tax return of the recipient of the form, the IRS may contact the recipient for more information. The recipient will have the opportunity to explain why the crowdfunding distributions were not reported on the recipient’s tax return.
Tax Treatment of Money Raised Through Crowdfunding
Under federal tax law, gross income includes all income from whatever source derived unless it is specifically excluded from gross income by law. In most cases, property received as a gift is not includible in the gross income of the person receiving the gift.
If a crowdfunding organizer solicits contributions on behalf of others, distributions of the money raised to the organizer may not be includible in the organizer’s gross income if the organizer further distributes the money raised to those for whom the crowdfunding campaign was organized.
If crowdfunding contributions are made as a result of the contributors’ detached and disinterested generosity, and without the contributors receiving or expecting to receive anything in return, the amounts may be gifts and therefore may not be includible in the gross income of those for whom the campaign was organized. Contributions to crowdfunding campaigns are not necessarily a result of detached and disinterested generosity, and therefore may not be gifts. Additionally, contributions to crowdfunding campaigns by an employer to, or for the benefit of, an employee are generally includible in the employee’s gross income.
Taxpayers may want to consult a trusted tax professional for information and advice regarding how to treat amounts received from crowdfunding campaigns.
Recordkeeping for Money Raised Through Crowdfunding
Crowdfunding organizers and any person receiving amounts from crowdfunding should keep complete and accurate records of all facts and circumstances surrounding the fundraising and disposition of funds for at least three years.

Educators, here's one for you!
For the first time, maximum educator expense deduction rises to $300 in 2022, 2021 is still $250, but a little increase for 2022!
What's deductible?
Educators can deduct the unreimbursed cost of:
Books, supplies and other materials used in the classroom.
Equipment, including computer equipment, software and services.
COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention (CDC).
Professional development courses related to the curriculum they teach or the students they teach. For these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.
Qualified expenses don't include expenses for home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

IRS reminds holders of foreign bank and financial accounts of April FBAR deadline
WASHINGTON – The Internal Revenue Service today reminded U.S. citizens, resident aliens and any domestic legal entity that the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15. For additional information about filing deadlines, filers should look to Financial Crimes Enforcement Network’s (FinCEN) website for further information.
Filers missing the April deadlines will receive an automatic extension until Oct. 15, 2022, to file the FBAR. They don’t need to request the extension. See FinCEN’s website for further information.
Who must file an FBAR
The Bank Secrecy Act requires U.S. persons to file an FBAR if they have:
1. Financial interest in, signature authority or other authority over one or more accounts, such as a bank account, brokerage account, mutual fund or other financial account in a foreign country, and
2. The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
Because of this threshold, the IRS encourages U.S. persons or entities with foreign accounts, even relatively small ones, to check if this filing requirement applies to them.
A U.S. person is a citizen or resident of the United States or any domestic legal entity such as a partnership, corporation, limited liability company, estate or trust.
The FBAR must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) and is only available through the BSA E-Filing System website. Taxpayers who are unable to e-file their FBAR must contact FinCEN at 800-949-2732 (703-905-3975 if calling from outside the U.S.) or [email protected].
Penalties for failure to file an FBAR
Those who don't file an FBAR when required may be subject to significant civil and criminal penalties that can result in a fine and/or prison. The IRS will not penalize those who properly reported a foreign account on a late-filed FBAR if the IRS determines there was reasonable cause for late filing.
More details and help available
IRS.gov has several resources available 24 hours a day:
• 2022 FBAR fact sheet
• Report of Foreign Bank and Financial Accounts (FBAR)
• International Taxpayers
• FAQs About International Individual Tax Matters
• FinCEN's website Reporting Maximum Account Value
To help avoid delays with tax refunds, taxpayers living abroad should visit Helpful Tips for Effectively Receiving a Tax Refund for Taxpayers Living Abroad on IRS.gov.

The IRS is going after virtual currency and foreign income. This is part of IRS Email I received today:
Tax Time Guide: IRS reminds taxpayers to report gig economy income, virtual currency transactions, foreign source income and assets
Understand virtual currency reporting and tax requirements
The IRS reminds taxpayers that once again there is a question at the top of Form 1040 and Form 1040-SR asking about virtual currency transactions. All taxpayers filing these forms must check the box indicating either “yes” or “no.” A transaction involving virtual currency includes, but is not limited to:
• The receipt of virtual currency as payment for goods or services provided;
• The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
• The receipt of new virtual currency as a result of mining and staking activities;
• The receipt of virtual currency as a result of a hard fork;
• An exchange of virtual currency for property, goods or services;
• An exchange/trade of virtual currency for another virtual currency;
• A sale of virtual currency; and
• Any other disposition of a financial interest in virtual currency.
If an individual disposed of any virtual currency that was held as a capital asset through a sale, exchange or transfer, they should check “Yes” and use Form 8949 to figure their capital gain or loss and report it on Schedule D (Form 1040).
If they received any virtual currency as compensation for services or disposed of any virtual currency they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type (for example, W-2 wages on Form 1040 or 1040-SR, line 1, or inventory or services from Schedule C on Schedule 1). More information on virtual currency can be found in Instruction for Form 1040 and on IRS.gov.