Monthly News: August 2020

The IRS is continuing to experience enforcement struggles.  In 2019 the audit rate was .4% and 2020 appears to be even lower.  This doesn’t mean you can just not pay your taxes without consequences.  There are several areas that the IRS is focusing their attention.  One is non-filers.   If you have income over $100,000 and you don’t file your return expect attention from the IRS audit team.  Another area they have prioritized is the very wealthy.

The IRS has been criticized for putting too much emphasis on lower-income taxpayers who are taking refundable credits such as Earned income tax credit, child tax credit, premium tax credit and American opportunity tax credit.  There are several other focus areas as well.  For examples: tip reporting noncompliance, Virtual currency, failure to report foreign accounts.  The IRS is relying on data mining software to determine suspicious taxpayer’s activity that will trigger audits.

Students will not be taxed for corona related grants they receive. Colleges and Universities received federal stimulus funds under the CARES Act.  If they awarded emergency financial aid grants to their students, these students will not be required to claim these funds on their tax returns.

If you still haven’t received your tax refund you may have to wait even longer.  The IRS is still behind on issuing tax refunds due to the Coronavirus.  They have processed close to 7% less direct-deposit refunds as of July 17th compared to last year.  Paper returns are even a larger percentage.  Remember go to “Where’s My Refund” on the IRS’s website if you still haven’t received your refund.