Most taxpayers in Georgia dread receiving a contact from the Internal Revenue Service. Fears of an audit, a tax levy or asset seizure come to mind. Unfortunately, there are unscrupulous individuals in the world who choose to prey upon these fears. Fake contacts through telephone calls, emails and text messages have become more common.
Although the most recent government shutdown is over, there may be some long-term impacts for Georgia residents. For example, the IRS says that it is weeks behind in hiring and training staff for the upcoming tax season. It also says that there are millions of unanswered letters from taxpayers that will need to be addressed. The number of letters it received during the shutdown increased because it was the only way for taxpayers to reach the agency.
With the new tax season almost here, the citizens of Georgia should get ready and take the time to make sure that all their financial matters are in order. However, it is also worth noting that this year should be a particularly strenuous year for the IRS. On the one hand, the government shutdown has left this agency severely understaffed, where almost 90 percent of the employees have not shown up to work at some point during the past 25 days. On the other hand, there are new tax laws that are scheduled to go into effect this year, meaning that the agency has to deal with one of the largest changes in the tax code while being severely understaffed.
Those watching television or reading the news in Georgia have probably heard about Michael Cohen. They may also know that he pleaded guilty to tax evasion and was sentenced to prison time. Those who would like to avoid a similar fate can take some steps to do so. For instance, taxpayers should be sure to report all of their income each year when filing a tax return.
If a company based in Georgia or anywhere else has a foreign tax bill of less than 13.125 percent, it will owe a 10.5 global intangible low-tax income tax. This tax is otherwise known as Gilti, and businesses had lobbied the IRS to make changes to how it is assessed. For instance, they wanted to avoid allocating domestic expenses to foreign subsidiaries, but the IRS ruled that half of such expenses must be allocated to foreign subsidiaries.
People engaged in freelance, creative or self-directed businesses in Georgia often have to pay special attention to their taxes. These cautions can also apply to tipped workers of various kinds. While restaurant workers may often receive tax documents that reflect estimated tipped income, other tipped workers like hairstylists, estheticians and personal care service providers may be tempted to avoid reporting their tips on their annual tax returns. Many stylists are not wealthy and may worry that they can ill-afford to pay extra taxes.
In most cases, the IRS has three years to audit a tax return. This is true when a taxpayer in Georgia or anywhere else doesn't understate their income by 25 percent or more. If that does occur, the government now has six years from when a return is filed to examine that return. In the event that a taxpayer fails to file a return, there is no limit to the amount of time the government can pursue taxes owed.
Georgia residents may be aware that banks file what are known as Currency Transaction Reports with the Financial Crimes Enforcement Network when they receive deposits of more than $10,000. This requirement was put into place by the 1970 Currency and Foreign Transactions Reporting Act, which is also known as the Bank Secrecy Act, but a report from the Treasury Inspector General for Tax Administration suggests that the Internal Revenue Service is not making much use of CTRs in their efforts to identify taxpayers who are hiding or underreporting their income.
There may be as many as 9 million Americans who are living abroad. Those who have overseas bank accounts of $10,000 or more need to declare them to the IRS. This could also be the case for those living in Georgia or elsewhere in America who have money in overseas accounts. Those who believe that they have run afoul of reporting guidelines may participate in a voluntary disclosure program.
The Tax Cuts and Jobs Act (TCJA) will have an impact on those who are retired as well as those who are still working. Retirees in Georgia who receive pension or annuity checks must generally pay income taxes on those earnings. While many choose to have taxes withheld on their behalf, others decide to receive the full amount of each check. This means making quarterly tax payments directly to the IRS.