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McFarlane Law

A Tax Law Firm - 480.991.0032

Q: What if I cannot Pay my Taxes by the July 15 Deadline?

A: Taxpayers should file on time even if they cannot pay their full tax bill

You should file your tax return by the deadline even if they cannot pay the full amount due. Otherwise, you will be assessed a late filing penalty and end up owing even more. If you owe tax, but cannot pay by the July 15, 2020 deadline, you should:

  • File your tax return or request an extension of time to file.

    If you cannot file your return on time, request an extension to file on Form 4868. Without this extension, if you owe 2019 tax, you will face a Failure-To-File penalty. For individual taxpayers, filing also allows you to designate the bank account for your Economic Stimulus Payment on the Form 1040.

  • To get an extension to file, taxpayers must do one of the following:

    • File Form 4868 through your tax professional or tax software.
    • Submit an electronic payment with Direct Pay or through the Electronic Federal Tax Payment System (EFTPS). If you pay by debit, credit card, or digital wallet, you will pay a fee.
  • Even if you cannot full pay, pay whatever you can by the July 15 deadline. There is no extension to pay – only to file. If you owe 2019 tax and do not file or pay in full by the July 15 deadline, you will incur a second penalty – a Failure-To-Pay penalty.

  • Set up a payment plan.

    If you know you will owe 2019 tax but cannot pay by the July 15 deadline, you can obtain a payment plan to make payments over time. Remember that both penalties and interest accrue over time, so it is best to pay as much tax as you can to minimize the penalties and interest.

DO NOT MAIL A SECOND RETURN. The IRS is finally back to work and processing tax returns, issuing refunds and accepting payments. Taxpayers who mailed a tax return will experience a longer wait as mail was held during the IRS shutdown. There is no need to mail a second tax return or call the IRS, as this will really mess things up!

If you have a tax problem and need a Tax Attorney, call:

McFARLANE LAW – A Tax Law Firm

T. 480-991-0032 / e: [email protected]/ net: www.taxlawaz.com

All we do is resolve tax problems! We have years dealing with the local IRS and ADOR agents.

With offices around the Phoenix valley, Tucson, and Flagstaff.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.

The honeymoon is over – Part III

In previous blogs The Honeymoon is Over – It’s Time to Think Taxes! and It's Time to Prepare and File your 2019 Tax returns, I discussed the upcoming, looming tax return filing and payment deadline of July 15. You can extend the time to file, but not to pay – so budget accordingly.

Other extension, deffal or benefits bestowed to Taxpayers due to COVID-19 also expire July 15 or the end of this month. For example, federal IRS tax returns are due or can be extended to October 15. 2019 taxes are due. The $600/month supplemental unemployment payments end. The 2020 tax year estimated tax payments are due. And, anyone who had an installment agreement and deferred monthly payments must now resume those monthly payments or be found in default.

The IRS stated there will be no further extensions. So the Honeymoon ends and tax payments are due. Budget accordingly!

TAX TIIP: U.S. citizens and resident aliens generally have the same filing and payment requirements regardless of where they live. The July 15 postponed deadline also applies to nonresident aliens and foreign entities with a U.S. filing and payment requirement.

TAX TIP, TWO: Taxpayers who still owe 2019 income tax, as well as estimated tax for 2020, must make two separate payments on or by July 15, 2020: One for their 2019 income taxes owed and one for their 2020 estimated tax payments. The two estimated tax payments can be combined into a single payment if you do not owe for back taxes (as the IRS will apply the funds to past due taxes if not properly directed on the payment instrument). The better practice would be to write separate checks (or make a separate electronic payment for each tax period). Be sure to include your SSN or EIN and the tax period and Form number on the memo line so the payment gets properly applied.

When in doubt and need a top Arizona tax lawyer, call:

McFARLANE LAW – A Tax Law Firm

T. 480-991-0032 / e: [email protected]/ net: www.taxlawaz.com

All we do is resolve tax problems! We have years dealing with the local IRS and ADOR agents.

With offices around the Phoenix valley, Tucson, and Flagstaff.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.

Do you have a foreign bank account or own an interest in foreign real estate or in a foreign entity?

The IRS continues its pursuit of “US Citizens” who own a foreign bank account, foreign real estate, interests in a foreign company, and other assets such as brokerage accounts with credit card access. They are looking for US Citizens with foreign based assets who fail to report the existence of those assets.

US Citizens are required to report their worldwide income, but also report their assets such as real estate or business interests on informational returns.

In 2019, tax agencies around the world shared information on 84 million accounts holding foreigners’ assets; this to fight tax avoidance and evasion in their countries. This inquisition was double the efforts made in 2018. Clearly, the IRS and the Dept of Justice are not slowing their hunt for tax evaders. Unfortunately, the process used by the IRS and DOJ drags in many unknowing US Citizens who report annually but do not realize that they must also report the offshore assets and taxable income to the IRS; this despite filing and reporting the income in their foreign country.

If you have a foreign account and have not filed the FINCEN 114 (aka FBAR), you need to visit with a tax attorney at once. The limitations period to assess tax does not expire on unfiled tax returns. So act now!

McFARLANE LAW – A Tax Law Firm

T. 480-991-0032 / e: [email protected]/ net: www.taxlawaz.com

We provide real help for a reasonable fee.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.

Nursing Homes and Care Facilities and Economic Impact Payments

There has been stories that nursing homes and other care facilities have been taking their resident’s/patient’s Economic Impact Payments (EIPs).

If you have a loved-one in a nursing home or other care facility, check to see that the facility has not absconded with the EIP. If so, you may to hire an attorney to send a demand letter to recoup the EIP. Under the IRS guidelines, the EIPs belong to the recipients, not any organizations providing care for the recipients. Be aware and check on this as there has been stories that people and businesses may be taking advantage of vulnerable populations who received the EIPs.

The payments are intended for the recipients, even if a nursing home or other facility or provider receives the person's payment, either directly or indirectly by direct deposit or check. The Social Security Administration (SSA) has issued information on this issue, including how representative payees should handle administering the payments for the recipient. The IRS also noted the Economic Impact Payments do not count as resources that have to be turned over by benefit recipients, such as residents of nursing homes whose care is provided for by Medicaid.

The Economic Impact Payment is considered an advance refund for 2020 taxes, so it is considered a tax refund for benefits purposes. Don’t let the care facilities tell you otherwise.

McFARLANE LAW – A Tax Law Firm

T. 480-991-0032 / e: [email protected]/ net: www.taxlawaz.com

We provide real help for a reasonable fee.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.

The IRS can garnish your Social Security

If you or your spouse collects social security benefits and have been assessed past due taxes or have other debts, those SS benefits may be subject to collection action by the Internal Revenue Service (IRS) and the Arizona Department of Revenue (ADOR). This can be particularly distressing if you are retired and in debt and your only source of income is social security.

The IRS has statutory authority, via the Federal Payment Levy Program, to garnish up to 15 percent of Social Security benefits to pay delinquent taxes. Other creditors, such as banks and credit card companies, cannot touch your Social Security benefits. But when the government is collecting on a debt, those funds are fair game.

The federal government can garnish your benefits for repayment of several types of debts, including:

  • Federal income taxes
  • Federal student loans (even if many years old!)
  • Child support and alimony
  • Non-tax debt owed to other federal agencies
  • Defaulted federal home loans
  • Certain civil penalties

If you plan to travel in retirement, know that the federal government can revoke your passport or deny issuance of a passport if you owe the government an assessed debt in excess of $50,000.

What can you do? Visit with your tax attorney. You may be able to negotiate an installment agreement that might avoid having your SS benefits garnished and allow you to obtain a passport. If you are in arrears with student loan payments, a tax attorney can help you “work out” of that defaulted situation.

Be proactive about addressing your debt problem -- before your one source of retirement income is diverted elsewhere and you are really left struggling! Visit with your Phoenix or Scottsdale tax attorney Stephen McFarlane to learn more.

McFARLANE LAW – A Tax Law Firm

T. 480-991-0032 / e: [email protected]/ net: www.taxlawaz.com

We provide real help for a reasonable fee.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.

Keep Economic Impact Payment Notice with Your 2020 Tax Records

If you received an economic impact payment in 2020 need to keep Notice 1444, entitled Your Economic Impact Payment, with your other 2020 tax records such as W-2s, 1099s, and any virtual currency transactions. This Notice 1444 provides important information about the amount of your payment, how the payment was made, and how to report any payment that was not received.

Note that the IRS mails this Notice 1444 to each recipient’s last known address within 15 days after the payment goes out. It is important for people to keep this Notice 1444for their 2020 tax return preparation next year, especially if you think your payment amount is wrong. When you file your 2020 tax return (in 2021), you can refer to Notice 1444 and claim additional credits, if you are eligible for them.

If you need assistance handling a tax problem with the IRS or ADOR, call
McFARLANE LAW – A Tax Law Firm
T. 480-991-0032 / e: [email protected]/ net: www.taxlawaz.com

We provide real help for a reasonable fee.

We represent clients at all administrative agency and appeal levels, the Arizona Tax Court, and the federal US Tax Court, and throughout Arizona: Phoenix, Glendale, Peoria, Scottsdale, Mesa, Tempe, Chandler, Queen Creek, Yuma, Casa Grande, Tucson, Sierra Vista, Bisbee, Flagstaff, Prescott, Payson, Coconino County, Yavapai County, Maricopa County, Pima County, Cochise County, Pinal County.

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