The IRS launched its Information Returns Intake System (IRIS) for tax year 2022. Then, starting tax year 2023, if you have 10 or more information returns, you must file them electronically. (Learn more about this in our Changes to the Electronic Filing Requirement in 2024 article.) So how do you know if you should use IRIS or eFile360 to e-file your information returns? Let’s compare the two. As a business owner, CPA, accounting clerk, or HR professional, we know you’re busy, so we’ll cut right to the chase: Pros of IRIS Free service E-file any 1099 form Cons of IRIS Only works with 1099 forms You need an Employer Identification Number (EIN), which you probably have. Requires an IRIS Transmitter Control Code (TCC), which you need to apply for. It can take up to 45 days for your TCC application to be processed. eFile360 vs. IRIS IRISeFile360CostFreeStarting at $4.25 per recipientForms1099s1099s, 1098s, W-2, and ACAIdeal ForBusiness owners, government agencies, software developers, and third-party filersBusiness owners, accounting clerks, CPAs, and HR professionalsGetting StartedMust apply for and receive a TCC, which can take up to 45 days, before e-filingE-file right away, no strings attached The primary difference between choosing eFile360 and IRIS is whether you want the responsibility of e-filing tax forms or if you want to delegate that responsibility to a team of experts who have e-filed various tax forms since 2009. The IRS calls the e-filer a “responsible official,” regardless of whether they are an issuer (meaning you only e-file for your business) or a transmitter (meaning you e-file for your business and other businesses). When to Choose eFile360 for Your E-filing Needs If you need to e-file 1098, ACA, or W-2 forms, or you need to e-file quickly, eFile360 is your best e-filing partner. Whether you need to e-file for your business or for your clients, we provide bulk pricing and all data is …
Identity Theft Red Flags Tax Pros Should Know
Recently, the IRS, state tax agencies, and the U.S. tax industry hosted a Security Summit to help taxpayers combat identity theft refund fraud. In this article, we’ll share our top takeaways from the Summit as well as a few other red flags and best practices to help you protect your clients’ information and your business from identity theft. Identity Theft Red Flags As a tax professional, you need to be vigilant while watching out for identity theft red flags, both in your business and for your clients. Here is a list of red flags to watch out for that pertain to your business: Experiencing slow or unexpected computer or network responsiveness, such as software or actions taking longer than usual to process. Noticing the computer cursor moving or numbers changing without any input from the mouse or keyboard. Unexpectedly being locked out of a network or computer system. Beware of these identity theft red flags when talking to and working on behalf of your clients: When a client is notified that an IRS online account was created for them, but they did not create it. Their IRS online account was accessed without their knowledge. The IRS disabled their online account. A client received a tax transcript that they did not request. Their personal information changes without the client requesting it. They receive incorrect balance due or other notices from the IRS, which do not match the tax return you filed on their behalf. When a client calls or emails you, saying they are responding to a call or email you never made. They receive funds without having filed a tax return. Receiving more e-file receipts than you actually filed. A client’s tax returns are rejected due to someone else already using their Social Security number on another return. Receiving IRS authentication letters (5071C, 6331C, 4883C, 5747C) even when no tax return has been filed. A client’s information return details …
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What You Need to Know About the IRS Going Paperless
You’ve probably heard about the IRS’s Paperless Processing Initiative by now, so let’s dive into what it means for you. What is the Paperless Processing Initiative? The IRS's new initiative for paperless processing aims to reduce the use of paper by up to 200 million pieces every year, while also decreasing processing times by 50% and speeding up the process of sending refunds by several weeks. Not only will it allow the IRS to process digitized tax returns and forms, but it will also allow taxpayers to submit digital tax returns and forms – even on mobile! What Does Going Paperless Look Like? Starting in the 2024 filing season, taxpayers will be able to go paperless. This means you can: Submit all correspondence, non-tax forms, and responses digitally Continue to submit paper returns and correspondence if you prefer E-file 20 additional tax forms, including amendments to Forms 940, 941, 941-SS and 941 (PR) Complete and submit at least 20 of the most used non-tax forms from your mobile device Starting in filing season 2025, you will be able to: Complete and submit over 150 of the most used non-tax forms from your mobile device Access your historical tax data in a digital format eFile360 Can Help You Go Paperless Go paperless today by signing up for a free eFile360 account. With an eFile360 account, you can e-file 1099, 1098, W‑2, and ACA forms; view the status of submitted forms; manage payer and recipient information; and more. …
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Changes to Electronic Filing Requirements in 2024
If you file Forms 1099 or W-2, among others, then you need to know the return threshold changes to the electronic filing requirements in 2024 so you can plan accordingly for tax season. The New E-filing Threshold In an effort to increase efficiency while better-serving taxpayers, the IRS has reduced the e-filing return threshold from 250 to 10. This new threshold goes into effect on January 1, 2024. Previously, the threshold was met by each return type. This new threshold is in aggregate, meaning that filers will total all of their return types to see if they meet the 10-return threshold. Does This New Threshold Apply to You? The 10-return threshold is applicable for these return types: Partnership returns Corporate income tax returns Unrelated business income tax returns Withholding tax returns Certain information returns Registration statements Disclosure statements Notifications Actuarial reports Certain excise tax returns Other Considerations These regulations also affect corporations and partnerships in additional ways. Corporations can no longer be exempt from e-filing their returns if they report less than $10 million in total assets at the end of their taxable year. Partnerships with more than 100 partners need to e-file their returns. They also must follow the aggregate 10-return threshold, including their partnership return. Available Waivers Limited situations allow for exemptions and waivers. Exemptions are granted to members of specific religious communities that prohibit the use of technology. Waivers, on the other hand, are permitted in certain circumstances, such as limited internet access, economic hardship caused by e-filing, or lack of proficiency in digital technology adoption. In order to be approved, these groups must demonstrate a sincere effort to e-file and provide evidence that e-filing would result in significant financial difficulties. To request a waiver, individuals must complete Form 8508, Application …
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Taxpayers Can Now Amend Taxes Electronically
The Internal Revenue Service (IRS) recently announced a change in the process for amending forms and corrections filing. Here’s the latest on this change and the changes related to it. You Can Now Amend Taxes Electronically Recently, the IRS announced that you can amend taxes electronically for Forms 1040 and 1040-SR for the tax years 2019, 2020, and 2021, as well as Forms 1040-NR and 1040-PR for the tax year 2021. The IRS also shared information that a new checkbox was added to the forms listed above in order for taxpayers to indicate that a superseding return is being filed electronically. Form 1040-X is the one that allows you to amend taxes should you have a need, and you are still able to file a paper copy if you’d like. The IRS just expanded the ability to amend taxes to include electronically, too. When You Should Amend Taxes There are several instances where you should amend taxes. The following situations are all worthy of an effort to amend taxes: You noticed you’ve missed an opportunity to claim a tax deduction or credit – whether the amended refund you get will be substantially or even slightly larger is of no consequence. If the deduction or tax credit is worth it to you, you should do it – and it’s even easier now because you can amend taxes electronically. You chose the wrong tax filing status by mistake. You don’t have to keep the same status year after year, and it’s easy to get into a routine and forget to double-check this information. You have added or removed dependents in your living situation but haven’t reported that change on your tax return. You forgot to claim taxable income on your tax return. It’s easy to forget and lots of people have side hustles. Make sure yours are included, even if they aren’t a huge or majority percentage of your overall yearly earned or passive income. You mistakenly claimed an expense, deduction, or credit that you aren’t actually eligible for at this time. Math or clerical …
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7 IRS Tax Tips for Businesses in 2022
The IRS Newsroom has a section of their website dedicated to IRS Tax Tips, and we’ve compiled the best ones from 2022 related to business taxes. Non-employee Compensation & Backup Withholding In an IRS Tax Tip from July 2022, the agency reminds businesses that if they hire independent contractors, they aren’t responsible for withholding the employer portion of income, Social Security, or Medicare taxes. But any compensation equal to or more than $600 paid to these non-employees must be reported on Form 1099-NEC. In order to file this information return, you must know the nonemployee’s TIN, which can be one of the following numbers: Social Security Number (SSN), Employer Identification Number (EIN), individual taxpayer identification, or adoption taxpayer identification. Because of this nonemployee relationship to the business, these businesses are sometimes stuck in situations where the payer (your business) is required to withhold taxes from payments known as backup withholding (the current rate is 24%). Business Taxes & Travel Deductions Another July post from the IRS tax tips page talks about the importance of knowing what business travel expenses are tax deductible. Generally, these travel expenses must be “ordinary and necessary.” For example, it would be considered tax-deductible to stay in a regular hotel room for an industry conference but booking a penthouse suite or other luxury room will not be. Travel tickets and fares – Uber, train rides, plane tickets, and the like – are deductible. Lodging, business calls, and even laundry or dry cleaning are included, and these deductions aren’t just reserved for corporate employees – self-employed individuals can take advantage as well! For a more thorough list of the deductions, check out this IRS article. And for a bonus explanation about enhanced business meal deductions, check out this article. Spear Phishing Threats Some of our favorite IRS tax tips come in the form of …
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