In the weeks and months following the April deadline to file a federal tax return, the IRS verifies the data it receives and issues notices if needed. Georgia residents and others who receive a notice from the IRS should read it carefully and respond in a timely manner. Among the most common types of notices a person can get is a CP2000. It tells a taxpayer that the government has proposed a change to their tax return.
Tax scams seem to be everywhere, and they are most in evidence during income tax season.
Georgia residents who have a side activity in which they earn money may want to deduct related losses on their individual federal tax returns. If the Internal Revenue Service classifies the activity as a hobby, however, losses from the activity cannot be claimed as a deduction. In order to receive tax savings, taxpayers have to be able to verify that the intent of their business is to make a profit.
For most people in Georgia and throughout the country, tax day is the only day in which they give much thought to their state and federal returns. However, those who receive a notice from the government may have to think about them for a little longer. The good news is that fewer than seven people per every 1,000 will receive an audit letter. Furthermore, receiving a letter from the IRS doesn't always indicate bad news.
Georgia residents who are involved in the cryptocurrency market may find their tax filings more complex as the IRS has made efforts to tax crypto income. In Novemeber 2017, the IRS was victorious in a case against Coinbase, a cryptocurrency exchange. As a result of the case, the exchange was required to provide information on more than 14,000 people who traded cryptocurrency between 2013 and 2015. During that period, only 800 to 900 people each year reported capital gains from cryptocurrency investments.
Employers in Georgia have a responsibility to pay payroll taxes for their employees. Tip boxes set up for volunteers, however, have created confusion about employee classification and employer tax obligations. The Internal Revenue Service has addressed this issue in an IRS Chief Counsel Memorandum.