WASHINGTON – The Internal Revenue Service today encouraged taxpayers to take necessary actions this fall to help file federal tax returns timely and accurately in 2021.
This is the second in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to make tax filing easier in 2021.
2020 has been a busy year, with a lot of changes. To make sure taxpayers don’t miss out on tax benefits or make mistakes, they can take a few simple steps now to make filing their taxes easier in 2021.
An important first step to getting taxes ready is to gather all tax records. Having records organized makes preparing a tax return easier. It may also help discover potentially overlooked deductions or credits.
• Most income is taxable, so taxpayers should gather income documents such as Forms W-2 from employers, Forms 1099 from banks and other payers, and records of virtual currencies or other income. This also includes, unemployment income, refund interest and income from the gig economy.
• Beginning in 2020, individuals may receive Form 1099-NEC, Nonemployee Compensation, rather than Form 1099-MISC, Miscellaneous Income, if they performed certain services for and received payments from a business. Please refer to the Instructions for Form 1099-MISC and Form 1099-NEC to ensure clients are filing the appropriate form and are aware of this change.
• Taxpayers may also need Notice 1444, Economic Impact Payment, which shows how much of a payment they received in 2020. This amount is needed to calculate any Recovery Rebate Credit they may be eligible for when they file their federal income tax return in 2021. People who didn’t receive an Economic Impact Payment in 2020 may qualify for the Recovery Rebate Credit when they file their 2020 taxes in 2021.
• To see information from the most recently filed tax return, recent payments and more taxpayers can sign up to view account information online.
• Taxpayers should notify the IRS of address changes and notify the Social Security Administration of a legal name change to avoid delays in tax return processing.
Taxpayers with an Individual Tax Identification Number (ITIN) should ensure it hasn’t expired before filing a tax return in 2021. For example, ITINs not used on a federal tax return at least once in the last three years will expire on Dec. 31, 2020. If the ITIN has expired, IRS recommends taxpayers submit Form W-7, Application for IRS Individual Taxpayer Identification Number, now to renew an ITIN. Taxpayers who fail to renew ITINs before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits.
Time is running out to use the Tax Withholding Estimator, a tool on IRS.gov designed to help determine the right amount of tax to have withheld from paychecks. Taxpayers can use the Tax Withholding Estimator to help determine if adjustments to withholding are necessary. Withholding changes can be made by submitting a new Form W-4 to the taxpayer’s employer.
Taxpayers receiving substantial amounts of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income, should make quarterly estimated tax payments. The last payment for 2020 is due on Jan. 15, 2021. Payment options can be found at IRS.gov/payments.
Tag: IRS
The Internal Revenue Service said Friday it would restart issuing its 500 series of balance-due notices to taxpayers later this month after they were paused on May 9 due to the COVID-19 pandemic.
While the IRS continued to issue most of its notices, the 500 series was temporarily suspended because of a backlog of mail that built up at the IRS while many employees were away from agency facilities due to COVID-19. The IRS came under fire earlier this year for issuing balance due notices with the incorrect dates to taxpayers during the pandemic and agreed to stop sending the notices until it caught up with its backlog of unopened mail.
If you get a letter from IRS that states you owe money we can help. We do a lot or IRS case resolution. Contact us if you receive an IRS letter. info @ sexworkertaxes.com
The deadline to register for an Economic Impact Payment using the Non-Filers tool is extended to November 21, 2020.
The IRS urges people who don’t typically file a tax return – and haven’t received an Economic Impact Payment – to register as quickly as possible using the Non-Filers: Enter Info Here tool on IRS.gov. The tool will not be available after November 21.
This additional time is solely for those who haven’t registered or received their EIP and don’t normally file a tax return. For taxpayers who requested an extension of time to file their 2019 tax return, that deadline is Thursday, October 15.
Most eligible U.S. taxpayers automatically received their Economic Impact Payment. Others who don’t have a filing obligation need to use the Non-Filers tool to register with the IRS to get up to $1,200. Typically, this includes people who receive little or no income.
The Non-Filers tool is secure. It is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.
Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.
Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.
You, yes you, can do your taxes this year. Many of you are done, most of you haven’t started, and a few of you are freaking out. Some of you are thinking: what if I just don’t file? What will happen if I don’t pay? What if I didn’t file last year or the year before that? What will they do to me and will I be in prison with Wesley Snipes?
I have some answers to those questions! You should note that I am not a tax professional, that this is definitely not professional advice and that every situation is unique. Also you should be doing your taxes right now probably, not reading the Internet. But here’s some experience, offered person-to-person, that is not professional counsel.
It is better to do a cruddy job and file than to not file.
When I say “cruddy job,” I don’t mean “making wild guesstimations” or being dishonest. I mean: If you can’t nail some stuff down, forget about it and move on. For instance: Do you not have receipts for some expenses? Big deal: cut them out and forget about it. (These small expense-deductions don’t generally have too much effect on your tax burden anyway.) Err on the side of “hurting” yourself and just plow through it. It’s just not worth making yourself crazy over fifteen bucks!
You can fix your return!
It is easy to amend a return. It’s also easy for the IRS to amend your return: “You do not need to file an amended return due to math errors. The IRS will automatically make that correction.” Intense, right?
It is better to file and not pay than to not file and not pay.
What happened, you spend all your money? That’s okay, pal! Do your taxes, send ’em in, if you have absolutely no money. You will incur not-totally-crazy penalties over time due to not paying, and they will want to talk to you about when you can pay. (Yup, it’s always the broke people that have to pay more in this world.) That’s not ideal, sure! But it’s a lot more ideal than not having filed.
Okay, but should I be scared of the IRS?
The IRS only wants to hear from you. The answer, surprisingly, is a very firm “no”! Not at all! The IRS has some of the nicest, most understanding people I have ever spoken with in my life. True fact.
There’s a lot of TV- and movie-propagated terror about the IRS. (As well, the whole idea of the government and money is anxiety-producing on its own, sure.) And the truth is… well, they kind of used to be a little mean? But that’s actually ancient history. The people at the IRS are some of the funnest people ever! I have had long hilarious conversations with them on the phone. (For real, there are some hilarious ladies down in Atlanta.) IRS employees are like most civil servants; they deal with confused, freaked out and sometimes very dingbatty people (not you, friend!) every day — the kind of people who do not follow directions, particularly. So if you are not a jerk, they will be delighted to speak to you, at length. They will sometimes be like, “Girl, how did you get into this trouble?” and you’ll be like “Oh, haha, I’m a mess! Mistakes happen!” and they’ll be like, “I hear you! I get it!” Do not be afraid. What they want is to hear from you.
Should I be scared of my state tax department?
Actually… well, maybe just a little. The same rules apply as above — they do want to hear from you! — but, for instance, the New York State Department of Taxation and Finance seems to be a little cranky. They want their money, they want it now, and if you don’t give it to them, they will take it. I’m sure there are some wonderful, caring people working in all of America’s fine state tax departments!
What happens if you don’t file?
Have I mentioned that the IRS only wants to hear from you?
No really, what happens if you don’t file and don’t pay?
Great news! Eventually the IRS will do your taxes for you. This is called a substitute return. Doesn’t that sound nice? Well it’s not particularly. For an agency that’s devoted to taxes, they don’t do a very good job at it. (Kidding.) So the good news is that your taxes will be done! The bad news is that they will take your reported income, slot it into the appropriate tax bracket, and say you owe that percentage. So if you made $85,000, bam, you owe 28%.
Also? Lots of people can’t deal with taxes when they’re even going to get money back! People are funny. But you should know that your refund disappears in three years if you don’t file.
What happens if, like, I ignore the IRS?
Well, you’ll get a ton of mail. And the problem with being “in trouble” is that your sense of being in trouble fades really fast. That’s how people are built. Most people pay taxes because they’re scared of the consequences. So, you don’t file one year, and then… nothing that terrible happens! So you’re off to the races. And then you get a scary piece of mail from the IRS, and you ignore it, and… nothing terrible happens again! It’s very easy for the human mind to acclimate to this.
And then, they will make it so that you can’t ignore them. (For instance, your debit card will stop working! Heh.) You should head that off at the pass. The moral being: even if you aren’t scared of the consequences now, you will be later.
Ugh, they sent a letter to everyone I’ve ever worked for! How humiliating!
Nah, it’s not. Years ago, the IRS sent out a letter to people who’d paid me money, informing them they had an interest in having that money for themselves. And half the people who got these letters — caring, decent, professional, adult-type people! — were like “Ha, I got one of these letters last year!” It was a moment of bonding. To be fair, one person was a little judgmental, but you are by no means alone in these issues.
So how do I work out paying if I haven’t paid?
You know how GE and Bank of America don’t pay any taxes? That happens because they’re well-advised. You too should be well-advised. Down the road, if you end up in debt with the IRS, you will likely have a couple of options — usually Offer in Compromise or Payment Plan. These are actually not terribly straightforward. For instance, you can work out a payment plan with the IRS, after filling out quite a lot of paperwork, and having your financial life pretty well-surveilled by them, but the IRS is actually required to ensure that you have enough money and income to meet the payment plan. (They can’t agree to a payment plan that’s onerous.) But that doesn’t mean that, even if you are on an installment plan, that penalties don’t continue to accrue! So, many people find that they’re often better off getting a bank loan. And Offer in Compromise is extremely complicated. With those, for instance, you cannot miss a yearly tax payment for at least the next five years, or the deal is off. So you are going to need to become an expert — but more importantly, you’re also going to need to consult with a real expert.
Ugh, I don’t know what to do!
Guess what? The IRS only wants to hear from you. Also? These things are never as bad as you think. Now go off to your quiet place and do your taxes. I can promise you’ll be happy you did.
HELP I’M PANICKING!
Lots of online tax products are free to use to file an extension. If you can’t do ANYTHING else at all, do that.
1) Tax returns are the only proof of income you have if you’re self-employed and paid mostly, if not entirely, in cash.
2) It’s far better for the IRS to have your numbers to start with than to let them come up with their own.
3) If you get caught after not paying taxes for a number of years and get hit with a five-figure bill, it really sucks.
4) You become another person contradicting the stereotype of sex workers as tax cheats who don’t contribute to society.
5) It makes you (even more) morally superior to GE.
Things you need to file if you are an independent contractor stripper/model/performer/camgirl, an escort, sensual touch provider, etc:
Form 1040
Schedule C for income from a business (you are a business)
Form 8829 for home office deduction (you have a computer in your home where you’re doing business, yes?)
Your receipts for work-related supplies, travel, and other expenses
Records of your income
Even if you lack accurate records, give it your best shot and file. Even if you can’t pay right now, file. Even if what you do is illegal, file (you don’t have to write down what you do. We are all “entertainers”). Read this piece over at the Awl for some good reasons why you should file no matter what. It’s so, so much better to have YOUR realistic numbers than to have the IRS say, “Hey, we have this 1099 from your club, where you sold $1500 in VIP rooms, so we’re assuming that was a normal night for you, so we’re calculating your tax debt based on that,” or “Well, we saw on this 20/20 special about escorts that $2000/hour is a rate people pay in New York, so let’s start there.”
I don’t care if you’re gonna fudge it! Don’t tell me about it. Don’t tell anyone about it, for that matter. I’m not telling you to file because I think we owe it to the country or because I’m a bleeding-heart liberal or because I think the Tea Party is supremely misguided because they aren’t storming the gates of GE and Bank of America to demand they bear their burden of the tax load. I’m telling you to do this because it COVERS YOUR PRETTY PROFESSIONALLY SEXY ASS. Having personally fucked up with taxes before and knowing several dancers and escorts who’ve been in deep shit with the revenuers, I speak from experience when I say it’s to your advantage to stay on top of your taxes.