As the tax season deadline approaches, the IRS is granting extensions to taxpayers in Maine and Rhode Island due to weather-related issues. Automatic extensions are also available for certain groups, such as citizens living outside the U.S. or members of the military. Despite the approaching deadline, tax filing statistics show that filers are not rushing to submit their returns, but tax refunds are on the rise. The IRS is testing a pilot program called Direct File in 12 states, offering taxpayers a free option to file directly with the IRS.
For those looking for additional tax planning techniques, qualified charitable distributions (QCD) for individuals over 70 1/2 and the Saver’s Credit for eligible individuals are often overlooked tax breaks. A recent survey shows that many Americans live paycheck to paycheck, highlighting the importance of tax savings and budgeting. Visa and Mastercard recently settled a long-standing court battle with merchants, allowing retailers to offer discounts for using certain bank cards or payment methods that cost less for them. However, caution should be exercised to not overspend.
Scam emails are on the rise during tax season, with the IRS warning about phishing and smishing attempts. Vigilance is key to avoiding falling victim to these scams, and unsolicited communications should be reported to the IRS. The U.S. Department of the Treasury has implemented enhanced fraud detection processes to combat check fraud, which has increased significantly since the pandemic. Financial institutions are required to file suspicious activity reports for potential fraud, with the number of filings doubling in 2022 compared to the previous year.
Recent court decisions have addressed various tax matters, including the economic substance doctrine, U.S. operations of private equity companies, and the issue of mootness in tax cases. The Supreme Court heard oral arguments in a case involving the valuation of stock in closely-held businesses funded by life insurance proceeds. Important tax deadlines are approaching, with individual federal income tax returns due on April 15 (or file for an extension), and extended deadlines for certain states and tax-exempt organizations. Additionally, the IRS continues to hire new employees, and the ABA Section of Taxation is seeking volunteers for its Law Student Tax Challenge.
