Uncategorized

The IRS has made some important tweaks to Form 1099-MISC for the 2024 tax year. One key change is that Box 13 is now dedicated to the Foreign Account Tax Compliance Act (FATCA) filing requirement. As a result, what were originally Boxes 13-17 have been renumbered to Boxes 14-18.

Here’s a quick rundown:

• ✅ Box 13: Use this to indicate FATCA filing requirements.
• ✅ Box 14: Report excess golden parachute payments.
• ✅ Box 15: Include payments under NQDC plans.
• ✅ Box 16: Report state-withheld taxes.
• ✅ Box 17: Include the payer’s state number.
• ✅ Box 18: Report state income.

📌 Electronic Funds Withdrawal – You can pay using funds from your bank account when your tax return is e-filed. There is no charge by the IRS for using this payment method, and payment can be arranged by your tax return preparer, allowing for the e-filing of your return and submitting an electronic funds withdrawal request at the same time.

📌 Direct Pay – You can schedule and make a payment directly from your checking or savings account using IRS Direct Pay. There is no fee for this service, and you will receive an email notification when the funds have been withdrawn. Payments, including estimated tax payments, can be scheduled up to 30 days in advance. You can change or cancel the payment up to two business days before the scheduled payment date.

📌 Electronic Federal Tax Payment System – This is a more sophisticated version of the IRS’s Direct Pay that allows not only federal income tax but also employment, estimated, and excise tax payments to be made over the internet or by phone from your bank account. The system includes a robust authentication process to ensure the security of the site and your private information. This is a free service. Payments, which can be scheduled up to 365 days in advance, can be changed or canceled up to two days before the scheduled payment date. You can use IRS Form 9783 to enroll in the system or enroll at EFTPS.gov – but do so well in advance of the date when a payment is due, as the government will use U.S. mail to send you a personal identification number (PIN), which you will need to access your EFTPS account.

📌 Send a Check – You can also pay the old-fashioned way by sending in a check along with a payment voucher. The payment voucher – IRS Form 1040-V – includes the information needed to associate your payment with your IRS account. IRS addresses for where to send the payment and your check are included with Form 1040-V.

📌 Pay with Cash – Taxpayers without bank accounts or those who prefer to pay in cash can do so at participating 7-Eleven stores. Taxpayers can do this at more than 7,000 locations nationwide. Visit IRS.gov/paywithcash for instructions on how to pay with cash. There is a small charge for making a cash payment, and the maximum amount is $1,000 per payment. Don’t wait until the last minute, as it can take up to a week for the IRS to receive the cash payment.

Let’s say you own a business that sells machinery. If you sell $5,000 worth of machinery in December, under the cash method, that amount is not recorded in the books until the customer hands you the money or you receive the check.

Under the accrual method, the \$5,000 is recorded as revenue immediately when the sale is made, even if you receive the money in January and thus pay taxes on it.

The same principle applies to expenses. If you receive an electric bill for $1,700, under the cash method, the amount is not added to the books until you pay the bill.

However, under the accrual method, the $1,700 is recorded as an expense the day you receive the bill.

The Offer in Compromise, or OIC, was created to accomplish two goals:

1. ✅ It allows American taxpayers who are unable to pay the full amount of their tax debt a way to negotiate a payment that aligns with their ability to pay.
2. ✅ It provides the IRS with the ability to collect at least a portion of the amount owed to them.

The process is neither simple nor fast—it generally takes one to two years for both sides to agree on an amount to be paid. Even so, it has certain advantages for both sides.

An Offer in Compromise generally allows for a resolution to be accomplished outside of court, with the agreed-to payment reflective of income and assets rather than the actual amount of debt that has accrued. Though it may seem a loss for the IRS, the agency often recovers more through settling than they might through aggressive collection efforts.