Big news from the IRS that we’ve been waiting on for a while — how will charitable donations of virtual currency be treated for tax purposes? Forbes summarizes things for us:
The Internal Revenue Service (IRS) has issued guidance for donors (and charities) on the FAQ page of its website. The IRS addressed whether gifting virtual currency to a charity could result in income, gain, or loss. The IRS confirmed that if you donate virtual currency to a charitable organization, you will not recognize income, gain, or loss from the donation. That’s the same result as giving stock or other appreciated assets, which are also characterized as capital assets.
The IRS also explained how to calculate the value of a gift of virtual currency to a charity; addressed the charity’s responsibilities for gifts of virtual currency; and reviewed charity reporting requirements to the IRS.
UPDATED 12/31/2021: Due to a new law, Illinois S-Corps and Partnerships should generally now pay quarterly IL state (not federal) taxes through the business, rather than personally. This post below is about how to pay IRS and IL taxes personally; here’s how to make IL business tax payments.
There are multiple options for paying personal quarterly estimated taxes. You can a) have your tax preparer create vouchers for you, that you then print and mail with a check; b) prepare your own vouchers for the IRS and IL DoR; c) pay online.
As of March 2020, federal and state agencies and the Postal Service are having so many challenges with paper-mailed checks and vouchers that we are encouraging everyone to make any tax payments online.
If you want to pay online, the easiest way to do this is to use IRS Direct Pay and IDOR MyTaxIllinois. Paying online offers confirmation that the payment made it to the agency, reducing the chance of issues down the road, especially if the check is lost in the mail or routed incorrectly in the processing department. It also allows taxpayers to be very clear about what type of tax and tax period are being submitted, again eliminating confusion on the part of the agency and preventing future problems.
If you are paying online, I recommend making payments one day before the due dates, as sometimes it takes overnight for the agencies’ systems to process payments. The funds are usually pulled from your bank account the same day or one day later, so there is very little wiggle room.
You do not have to have an account with either the IRS or IL DoR in order to make payments using these methods.
Internal Revenue Service (IRS)
For the IRS, once you get to the site, select the following options (noted in the screen shot below) — 1) the reason for the payment, 2) the form you would be mailing in if you weren’t doing this online, and 3) the year to which the payment should apply… for example, for 4th-quarter 2019 personal estimated taxes, you’d select the following:
Here’s a nice little video that walks you through the process of verifying your identity.
Illinois Department of Revenue (IDOR)
For the IDOR, go to the MyTax Illinois site (if you already have an account for sales taxes or another reason — do not log in, unless you are making business tax payments), and then click the “> Make an IL-1040, IL-1040-ES, or IL-505-I payment” link (see print screen below).
Then follow the instructions for making a quarterly estimated tax payment; it will make you enter your personal information (SSN, etc.) and ask you what kind of tax payment you wish to make.
It may require you to enter your driver’s license information or your AGI from a past tax return to confirm identity and get your IL-PIN.
Then it will take you to a Payment Information page.
You’ll want to select “IL-1040 Estimated Payment” and enter your tax year. Make sure it’s for the correct year and quarter — this is very important. The example below is for the fourth quarter of 2021.
Then, enter your payment information and click the Submit button.
It will require you to enter and confirm your email address before clicking OK.
Make sure to print the confirmation screen, even though they will send you an email receipt — every once-in-a-while IDOR fails to push the request through, and the amount is not debited or recorded. If you have the print-screen, you can prove you attempted to pay it on-time and that the mistake was theirs.
It will also include a confirmation code, the date/time of the request, the reporting period and amount, and bank withdrawal information. You can click “Printable Confirmation” or just print the webpage to pdf.
Please make sure to note how much you paid to each agency and on which dates — and let your tax preparer know this information as well. Securely uploading copies of the final confirmation screen to your tax preparer or bookkeeper is a great practice, so they can easily store the info in your file.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
The new federal tax law, which went into effect for 2018 tax returns filed in 2019, is so ridiculously difficult and complex, that our old friend the W-4 form — which is used to help W-2 employees calculate the amount of taxes that should be withheld from each paycheck — is now a giant monster that overwhelms even those of us with countless hours of continuing education on the tax code.
That said, even in their blog they recommend using the IRS Tax Withholding Estimator instead, because the W-4 is so arduous at this point. We’ve gone from a half-page easy-peasy form that anyone can follow, to a monster — but if you want your taxes withheld properly, you’ve simply got to do one or the other (the new W-4 or the online withholding estimator).
In any case, thanks for making this a little easier on folks, Gusto! You explained it better than I’ve been doing, anyway.
CPA Practice Advisor has released their annual estimated timeline for when a taxpayer is likely to receive their refund based on when they file, based on what we currently know about the upcoming tax season and projections based on prior years. They point out that the TCJA tax reform is still affecting many Americans’ ability to file timely, that Congress often delays tax season by issuing last-minute tax laws in December, and the IRS is also delaying refunds on tax returns that include the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Barring any of these issues, here’s what they’re predicting.
IRS Accepts Between These Dates===>Direct Deposit Sent (Or Check Mailed)
1/20/19 – 1/24/19 — > Friday 1/31/20 *
1/27/19 – 1/31/19 — > Friday 2/7/20
2/3/19 – 2/7/19 — > Friday 2/14/20 **
2/10/19 – 2/14/19 — > Friday 2/21/20 **
2/17/19 – 2/21/19 — > Friday 2/28/20
2/24/19 – 2/28/19 — > Friday 3/6/20
3/2/19 – 3/6/19 — > Friday 3/20/20 ***
3/9/19 – 3/13/19 — > Friday 3/27/20
3/16/19 – 3/20/19 — > Friday 4/3/20
3/23/19 – 3/27/19 — > Friday 4/10/20
* = IRS may delay tax filing season by one week or more due to changes in tax law.
** = Returns with EITC or CTC may have refunds delayed until late February to verify credits.
*** = Filing during peak season can result in slightly longer waits.
3/29/19 – 4/3/19 — > Friday 4/17/20
4/6/19 – 4/10/19 — > Friday 4/24/20
4/13/19 – 4/12/19 — > Friday 5/1/20
4/20/19 – 4/24/19 — > Friday 5/8/20
4/27/19 – 5/1/19 — > Friday 5/15/20
5/4/19 – 5/8/19 — > Friday 5/22/20
5/11/19 – 5/15/19 — > Friday 5/29/20
5/18/19 – 5/22/19 — > Friday 6/5/20
5/25/19 – 5/29/19 — > Friday 6/12/20
6/1/19 – 6/5/19 Friday 6/19/20
IMPORTANT: If you file electronically (using an online tax program or preparer), the IRS will notify you of the actual date they “accepted” your return. This is often 1-3 days from the time you actually hit the “file” button, and it is this date that you need to use for the above chart.
Taxpayers who mail a paper version their income tax return can expect at least a 3-4 week delay at the front-end of the process, as the return has to be digitized before it can be processed.
A few days ago, the IRS released info on which tax benefits will increase next year due to inflation (guessing the silly old limit on deductible gifts is still going strong/ would love to see that one indexed some day); see the list here:
