Category Archives: Tax Preparation

Do you prepare your own tax returns? Does a friend or family member do it? How about a tax preparer?  Either way, learn how to get it done and avoid standing in long lines at PO. There are free filing available. See here.

ax Extension Reminder: Don’t Overlook Special Individual and Small Business Tax Benefits; Choose e-file, e-pay

IRS YouTube Videos:
Oct. 17, 2011 Deadline: English | Spanish | ASL | Podcast
Small Business Health Care Tax Credit Update: English | Spanish | ASL

IR-2011-101, Oct. 12, 2011

WASHINGTON — The Internal Revenue Service today urged taxpayers whose tax-filing extensions run out soon to double check their returns for expandedindividual and business tax benefits, and then file their returns electronically using IRS e-file or the Free File system.

Many of the nearly 10.1 million taxpayers who requested an automatic six-month extension this year have yet to file. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 17 deadline that applies to most people who requested extensions, or the special Oct. 31 deadline that applies to many taxpayers affected by recent natural disasters.

Most taxpayers qualify for e-file regardless of whether they prepare their returns themselves or use a paid preparer and regardless of whether they live in the United States or abroad. In addition, those with incomes at or below $58,000 can file their returns for free using the Free File link on IRS.gov.

Taxpayers who file electronically can also e-pay by authorizing an electronic funds withdrawal or making a credit card payment. The IRS does not charge a fee for processing an electronic funds withdrawal. However, credit-card payments are subject to convenience fees charged by the authorized service providers.

Paper filers, as well as electronic filers, who cannot pay what they owe may be able to set up a payment agreement with the IRS in a matter of minutes. Check out the Online Payment Agreement section on IRS.gov for more information.

Some taxpayers can wait until after Oct. 17, to file. This includes:

• Members of the military and others serving in Iraq, Afghanistan or other combat zone localities. Typically, taxpayers have until at least 180 days after they leave the combat zone to file their returns and pay any taxes due. For details, see Extensions of Deadlines inPublication 3, Armed Forces Tax Guide.
• People affected by Hurricane Irene and other recent natural disasters. Currently, parts of nine states and Puerto Rico are covered by federal disaster declarations, and affected individuals and businesses in these areas have until Oct. 31 to file.

Before filing, the IRS urges eligible small businesses to check out often-overlooked tax benefits such as the new small business health care tax credit. New for 2010, the credit is designed to encourage small employers, those with fewer than 25 full-time equivalent employees who employ low- and moderate-income workers, to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers, including sole proprietors ( Schedule C filers) and farmers (Schedule F filers) that pay at least half of the premiums for single health insurance coverage for their employees. Eligible small businesses first useForm 8941 to figure the credit and then include it as part of the general business credit on their income tax return. Partners in partnerships, S corporation shareholders and estate and trust beneficiaries should check their Schedules K-1 for the amount of the credit passed through to them. Moreinformation about the credit is available on the small business health care tax credit page on IRS.gov.

The IRS reminds small businesses, including farmers and self-employed individuals that operated at a loss during 2010 that they can often get an immediate tax benefit by carrying unused losses back to prior tax years. For details, see Publication 536.

Taxpayers should also check various tax breaks extended or expanded by therecovery law and other recent tax legislation. These include the Making Work Pay Credit for workers and self-employed individuals, the American opportunity credit and other higher education tax benefits for parents and students, residential energy credits for various energy-saving home improvements, the Earned Income Tax Credit for low- and moderate-income workers and working families, and the child tax credit and additional child tax credit for low- and middle-income families.

The IRS reminds U.S. citizens and resident aliens that federal law requires them to report income from all sources, both foreign and domestic, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers also need to fill out Part III of Schedule B, including reporting the country or countries in which the accounts are located. More information on this and other tax requirements and benefits is available on theInternational Taxpayer page on IRS.gov.

What if you  didn’t file a tax return because your income was below threshold? What if you filed return but have not heard back from IRS. Did you move from your present address? If so, how can you notify IRS where to re-direct that money?

Follow these steps:

Unclaimed Refunds

Some people earn income and may have taxes withheld from their wages but are not required to file a tax return because they have too little income. In this case, you can claim a refund for the tax that was withheld from your pay. Other workers may not have had any tax withheld but would be eligible for the refundable Earned Income Tax Credit, but must file a return to claim it.

• To collect this money a return must be filed with the IRS no later than three years from the due date of the return.
• If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury.
• There is no penalty assessed by the IRS for filing a late return qualifying for a refund.
• Current and prior year tax forms and instructions are available on the Forms and Publications page of www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
• Information about the Earned Income Tax Credit and how to claim it is also available on www.irs.gov.

Undeliverable Refunds

Were you expecting a refund check but didn’t get it?

• Refund checks are mailed to your last known address. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service.
• You may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months.
• You can also ensure the IRS has your correct address by filing Form 8822, Change of Address, which is available on www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).
• If you do not have access to the Internet and think you may be missing a refund, you should first check your records or contact your tax preparer. If your refund information appears correct, call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.

You are moving because you or your spouse got a new job. It is stressful on entire family. Will they make new friends? Will you like the new job? Will I be successful? Additionally, is there any tax benefit to the move? See here:

Ten Tax Tips for Individuals Who Are Moving This Summer

Summertime is a popular time for people with children to move since school is out. Moving can be expensive, but the IRS offers 10 tax tips on deducting some of those expenses if your move is related to starting a new job or a new job location.

1. Move must be closely related to start of work Generally, you can consider moving expenses incurred within one year from the date you first reported to a new location, as closely related in time to the start of work.
2. Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous job location was.
3. Time Test You must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location, or at least 78 weeks during the first 24 months if you are self-employed. If your income tax return is due before you’ve satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.
4. Travel You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay to move, but you can only deduct one trip per person.
5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
6. Utilities You can deduct the costs of connecting or disconnecting utilities.
7. Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, drivers license, costs of buying or selling a home, expenses of entering into or breaking a lease, security deposits and storage charges except those incurred in transit.
8. Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your moving expense deduction use Form 3903, Moving Expenses.
9. Reimbursed expenses If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return.
10. Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS.