Deciding when to File a Tax Return?

April 15th – “The Day of Reckoning”!  Every year, millions of Americans get ready to pay taxes to Uncle Sam, or get ready to collect a tax refund from Uncle Sam; when did this become the great day that it is for taxpayers, and when are we actually required to file a income tax return?  Let’s take a look at the beginnings of the income tax date of April 15 and why it was chosen? 

The first known income tax that Americans were legally required to pay was enacted during the early 1860s, and the Presidency of Abraham Lincoln.  The Civil War was proving very costly to finance, and the President and Congress created the Commissioner of Internal Revenue and enacted a law requiring citizens to pay federal income tax.  This could be considered the start of our modern day income tax.  This income tax was based on principles of graduated or progressive taxation and of withholding income at the source.  The commissioner was given authority to assess, levy and collect federal income taxes.   The authority to enforce tax laws by seizure of property and income and by prosecution.

           

Originally, the deadline for completing and filing your individual income tax was not April 15th.  In the beginning, it was first set for March 1st.  Then, during 1918, Congress pushed the date out to March 15th.  Then, in the great overhaul of 1954, the date was once again moved forward to April 15th, and this is where it remains today. Why April 15th?  The main thought from most scholars say the reasoning is that the date gives the IRS more time to handle the work load and more time to hang on to your money before offering a tax refund.  This date has only been set this way for a little over 50 years.  That’s not very long, in historical terms, and it could possibly be changed again.

           

If you are an individual taxpayer, you are required to file either a return or an extension of time to file (Form 4868) by April 15th.  Corporate and other legal entities are required to file their federal income tax return by March 15th, and if not, they also must file an extension of time to file.  What this extension does not do, is to extend the amount of time you have to pay any taxes due the government.  So, if you are unable to ready your personal or business financial information in a timely manner, and have no reasonable estimate as to the amount of tax you may owe, you can expect to pay some form of penalty.

           

In the years following WWII, the burden of tax responsibility was shared fairly equally by the corporate world and the individual taxpayer.  Today, however, the shift has been toward more responsibility on the part of the individual, and less on the business backs.  To demonstrate how special interests have begun to overtake American politics, during 1867, public opinion was so strong, and the outcry of the general public so loud, that the President and Congress abolished the income tax law in 1872, and from 1872 until 1913 almost all of the revenue for government operation came from the sale of liquor, beer, wine, and tobacco.  Although the income tax did make a small come back in 1894,  it was found unconstitutional in 1895 by the U.S. Supreme Court because it was not apportioned among the states in conformity with the Constitution.

An interesting time during the formation and eventual taxation of America occurred during 1918.  Until that point in time, the vast majority of tax revenue for government funding came from alcoholic beverage sales and high tariffs.  In 1919, Congress passed an amendment to the Constitution that made it illegal to manufacture or sell alcohol; what would replace the revenue?  American federal income tax was the proposed solution, and we’ve been paying since.  Although during the great years known as Prohibition, many “revenue agents” spent their days tracking down “moon shiners” not tax evaders, the American citizen, the individual taxpayer took on the heavy burden of supporting government revenue, and it has become heavier with each passing year.  On a side note, although “moon shining” was illegal, the “moon shiners” still had to pay taxes on the moon shine so they were incarcerated for tax evasion and not “moon shining”.   Taxes seem to always come into play when looking for a way to prosecute someone.

Then, during 1942, the Revenue Act of 1942 was passed and the “New Deal” era was begun.  Since that point in time, government control, power, and expenditures has continued to increase at a phenomenal rate, and today the American taxpayer supports a trillion dollar giant known as the United States government.  This ravenous beast consumes more than 10% of our earned income each year, and if the Social Security Administration has their way, will continue to consume even more of our weekly earnings.  We can foresee no other relief in sight.

           

Currently, all the tax regulations for this country are the responsibility of the Internal Revenue Service, and there are four major divisions of this government office: the Wage and Investment, Small/Business Self-Employed, the Large and Midsize Business and the Tax Exempt and Government Entities.  Each division has responsibilities as they pertain to their individual specialty.

There continues to be talk on the hill to change the way taxes are calculated and collected.  The most common themes are the flat tax and the national sales tax.  Until Congress actually has the courage to step up to the plate and change it, taxes will remain as cumbersome as always.

Create Tax Savings And Transfer Wealth To Your Child With A Roth IRA

Parents must give serious thought to protecting their family through estate tax planning. While life insurance and trusts should be a part of every plan, Roth IRAs can be a simple tool for passing money to your child on a tax-free basis.

Roth IRA

First, we need a quick summary of the Roth IRA. A Roth IRA is an after-tax retirement vehicle that produces huge tax savings because all tax distributions are tax-free. That statement can a bit confusing, so lets break it down. The downside of a Roth IRA is the fact that contributions are not tax deductible as with traditional IRAs or 401(k)s. The upside of a Roth IRA, however, is that all distributions are tax-free once the person reaches the age of 59½. So how can you use a Roth IRA to pass money to your child?

Opening A Roth IRA For Your Child

One of the biggest keys to retirement planning is “time”. The more years you spend saving money for retirement, the more you should have when that blessed day arrives. Imagine if you had started saving for retirement when you were 16. How much bigger would your retirement nest egg be? What if you purchased Microsoft stock in 1990 and watched it split eight times? Okay, that was painful example if you missed that opportunity. Nonetheless, why not do for your child what you didn’t do for yourself?

The fundamental goal of estate planning is to pass as much of your estate as possible to your family on a tax-free basis. You can transfer relatively small amounts of money to your child now. If you have a 16 year-old child with a Roth IRA, you can contribute $5,000 in 2012. That $5,000 is going to grow tax-free for 43 years and be worth quite a bit. A ten percent return would result in the account growing to roughly $200,000 and the full amount would be distributed tax-free. There are other practical advantages to opening a Roth IRA for your child.

As a parent, it is vital that you teach your child the value of money. Opening a Roth IRA gives you the opportunity to sit down and teach your child the value of saving and investing, instead of yelling at them to clean their room. While a parental lecture on the need to save money would typically meet with glassy eyes and yawns, your child’s attitude will undoubtedly change when you are talking about their money.

Work and Maturity Issues

Before you rush out to open a Roth IRA for your child, you must determine if your child is eligible to open an account. To open an account, your son or daughter must be working at least part time for an employer that reports their wages to the IRS. Hiring your child to take out the trash each week is not going to cut it, nor will this strategy work for your 5 year-old. Many teenagers, however, have summer jobs that should suffice for IRS consideration. To avoid any trouble, you should consult with your tax advisor.

A more sublime issue concerns the maturity level of your child. Keep in mind that the Roth IRA will be opened in their name. Your son or daughter will have the legal right to do what they will with the account. It is strongly suggested that you clearly explain the consequences of taking money out of the account [taxes, penalties, being cut out of the will, forced to eat healthy food, grounded for life, etc.] but the decision lies with them. As difficult as it is, try to be objective in evaluating how you child will react to knowing the money is sitting in an account. If you have doubts, you should probably investigate other tax saving strategies.

Opening a Roth IRA for your child can be a very effective means of transferring wealth to your child and teaching important life lessons. If your child exercises restraint, your relatively small contribution to their Roth IRA can grow into a sizeable tax-free nest egg.

Debunking Common Myths About IRAs

According to a recent "Retirement Trends" survey by Fidelity Investments, 96 percent of Americans saving for retirement don't know the current contribution limit for an individual retirement account, with some guessing as low as $1,000. The reality is that for tax year 2012, IRA contribution limits increase to $5,000. $6000 if you’re age 50 or older.

When it comes to knowing the facts about retirement, misperceptions can lead to missed opportunities. Today's workers will face rising health care costs when they retire, as well as declining pension benefits and a higher cost of living. That's why it's important to save as much as possible, and as early as possible, in tax-advantaged accounts like IRAs.

Knowing the facts can help dispel common myths that may keep some investors from making the smart move of saving in an IRA.

* Myth No. 1: My 401(k) savings should be enough.

Nearly one-third of Americans in their prime savings years who have not yet opened an IRA account think their 401(k) savings will be sufficient for retirement, according to the Retirement Trends survey. However, Fidelity estimates that retirees will need approximately 80 percent to 100 percent of their pre-retirement income to live comfortably. Using an IRA now to supplement workplace programs can help investors make sure their savings will continue to grow and last throughout retirement.

* Myth No. 2: I have to come up with thousands of dollars all at once to open an IRA.

For the one in four non-IRA owners surveyed who say they can't afford the initial investment required to open an IRA, opportunities to save even more for retirement may be daunting. But getting started without an initial lump sum is as easy as setting up automatic monthly payments through a Fidelity SimpleStart IRA.

* Myth No. 3: IRAs are for older people with lots of money to save.

The truth is that younger investors could benefit the most by starting to save early because they have time on their side. Nearly two-thirds of young adults have started to save for retirement before age 30, according to the Retirement Trends survey. That's good news; starting to save as early as possible is one of the best ways to prepare for the future.

Child Custody Agreement and Taxes

A child custody agreement can have serious implications on your tax filing and your taxes overall.  This issue should be addressed with your attorney or with your accountant while you are going through the process of negotiating or litigating child custody or a divorce agreement. Waiting until after you have finalized a child custody agreement to investigate the tax impact is not advisable.

State law on child custody does not dictate who gets the tax deductions. If your child custody agreement is entirely silent on this issue, the parent with primary residential or sole custody will have all of the tax benefits available through the children. That party will be able to claim the children as deductions, and so forth.  This can be a significant issue. There are parents who simply assume that if they are paying thousands of dollars per year in support, they will be able to take the children as deductions. Not so. This is incredibly important when you consider that all child support payments are not tax deductible to the payer and they are not taxable to the recipient parent.

Thus, when negotiating your child custody agreement, you must address the issue of how custody will be structured and who will receive the tax benefits. This negotiation should be a part of an overall financial scheme that encompasses a consideration of all issues, including child custody, child support, property, alimony, and tax impact.

The ability to claim head of household instead of married filing separate or even filing single can be incredibly important to your overall tax scheme. You can claim head of household if you have your children for more than 50% of the time. Thus, a head of household tax filing should be a part of the overall negotiating outline in a divorce or separation situation. A child custody agreement that is silent on this issue is really not a well negotiated or written agreement.

Your child custody agreement can address this issue in a number of ways. If your child custody agreement provides for joint shared custody, it must state who has the children for 50% of the time. If you have two children, you can divide that up so that each parent has the possibility of filing for head of household. If you simply have joint custody and one parent has residential custody, you can still provide a head of household deduction to the other parent by wording the agreement in a way that allows for that filing.

There are other tax benefits available to parents that have to be considered when negotiating a child custody agreement. Many or most of those tax benefits are variable depending upon your income level ad whether or not you can claim the child or children as deductions. If you are really thinking through your child custody agreement, you will negotiate all of these benefits. The objective should be to maximize all available benefits for both parties, thereby providing an overall highly advantageous tax impact for your child custody agreement.

Car Donation

Next to wanting to contribute to charitable causes, perhaps your biggest motivation to donate your car is the substantial tax break it can give you. Don’t be misled by information about your return, because the tax breaks you can get from a car donation may not be as big as you think.

If your car donation is worth more than $500, then you should read “Revenue Provisions” in Section 884 of Title VIII. This details the new restrictions on car donations value at more than the aforementioned amount.  

In a nutshell, the provision caps the allowable amount of tax deductions to the gross proceeds received by the recipient (the charitable organization you donate your car to) from the sale of your donated vehicle. When you donate a vehicle with a claimed value of $500 or more, your tax-deductible amount will depend on how the charity uses the vehicle.  For example, if the charity sells the car, then you can only deduct the amount of gross proceeds that the charity received from the sale. On the other hand, if the charity plans to use the car for tax-approved charitable work as approved by the law, you can claim the car’s fair market value.

The same law also requires the charity to provide you with a written acknowledgment of the contribution within 30 days from the day you make the donation. If your recipient gives you a false or fraudulent acknowledgment, they will face a penalty. 

In many instances the tax breaks you get from donating your car are enough to cover (or exceed) the amount you could have sold the car for. Remember that you usually do not have to pay for any paperwork or dealer fees when you donate your car. In the end it is still more sensible to donate you car rather than sell it. This way you don’t only make a profit – you also help worthy causes.

Where’s my Refund?

More than a few people are happy to learn they are due a tax refund after filling out their tax returns. If you are one of these people, here is how to check the status of your refund online.

Before getting into checking your refund status, I feel obligated to mention a few things about tax refunds. One involves the nature of refund and the other involves Internet scams.

If you are getting a sizable refund, you need to give some thought to how much money you are deducting from paychecks or paying in quarterly taxes. While a tax refund may sound like a good thing, it really is not. If you overpay your taxes during the year, you are giving the government a free loan. The IRS does not pay interest on any excessive tax payments, so you are really taking it in the pants by not modifying your tax payments.

The second issue to keep in mind is you can ONLY check the status of your tax refund online by going to the IRS web site. With phishing scams starting to focus on tax issues, you may receive emails regarding any and all facets of tax refunds. These emails are scams! The IRS does not send you emails, and surely doesn’t alert you to the fact you are due a refund. If you want to check on your refund, go to the IRS web site and nowhere else. Do not turn a good thing like a tax refund into a bad thing like identity theft.

To check the status of your tax refund, go to the IRS web site by searching for it in a search engine. Next, click the Where’s My Refund link on the home page. Follow the simple steps, click enter and the status will be shown. FYI, you will need a copy of your tax return.

Once you have completed the above, the IRS software will give you a couple of responses. Summarized, they include the fact the return has been received, but not yet processed; the tax refund has been mailed or wired to your bank account on a particular date; or notice the IRS was unable to deliver the refund to you because of some mailing problem. The IRS will also let you know if the refund is delayed because it has issues with your tax return.

Once again, you may want to tweak your tax payments if you are due a sizable refund. There is little reason to give the government a free loan during the year. 

Capital Assets – Gains and Losses for Taxes

Capital is a unique term when it comes to taxes. If it gains value, you pay a tax. If it loses it, you can write at least some of the loss off.

Practically everything you own is a capital asset. This is true whether you use it for business purposes or personal use. The internal revenue service is very interested in your capital assets. Why? The IRS likes to tax the full gains while sometimes only giving you a small break on loss. Specifically, you have to report and pay taxes on recognized gains of your capital assets when you sell them. Unfortunately, you only get to claim a loss on capital assets if it is an investment such as stocks. Doesn’t seem fair, but that is how the cookie crumbles these days!

Here are some tax issue highlights on capital assets:

1. Generally, you report gains and losses on capital assets by subtracting the price you purchased it for from the price you sold it for. This calculation is reported to the IRS on Schedule D, which should be attached to your 1040 tax return.

2. Capital gains and losses are classified as long-term or short-term. The classification breaks down on, how long you’ve owned the capital asset in question before selling it to someone else. If it has been less than a year, it is a short-term gain or loss. Hold on to it for more than a year and you are looking at a long-term gain or loss when reporting taxes. Each classification requires different tax calculations and you will ultimately pay different amounts of tax.

3. In a bit of good news, you are generally going to pay less tax on a long term capital asset gain.  For the 2012 tax year, the tax rates range to 20 percent.

4. While the IRS is happy to tax all of your capital gains, it has different views towards losses. You can deduct capital losses, but only up to $3,000 each year. 

1099-MISC Forms For Independent Contractors

As we begin 2013, you’re probably not thinking about taxes at all. This is a mistake as deadlines are approaching for issuing and filing 1099s to independent contractors.

What is a 1099 MISC?

Generally speaking, the IRS requires you to report certain payments you made during the year to independent contractors. The 1099-MISC form is a single page on which you report to total amount you paid to the independent contractor during 2012.

The 1099-MISC forms must be issued to any person you paid at least $600 in rents, services or other income payments. For example, if you hired a contractor to renovate a room in your home and paid them $5,000, a 1099-MISC filing would be required. As with practically any IRS filing, there are additional situations that require a 1099 filing. Any payments to attorneys must be reported regardless of the amount. Royalties totaling over $10 also must be reported. Generally, you are not required to report payments to a corporation.

When and What Must Be Filed?

The 1099-MISC form is a multi-layered carbon form, so make sure the information you provide appears clearly on all of the copies. Once you fill out the form, provide Copy B to the person you are reporting to the IRS by January 31, 2013.

Copy A of the 1099-MISC form is intended for the IRS. You must file it by February 28, 2013 if you are sending the form by mail. If you prefer to file electronically, you have until March 31, 2013.

The IRS has made a major effort to cut down on red tape, but you’ll still find it with 1099-MISC filings. In addition to filing the 1099 with the IRS, you must also file a 1096 form. The 1096 form is the “Annual Summary and Transmittal of U.S. Information Returns” form. It is one page and extremely easy to fill out.

Although the IRS has an excellent web site, you can’t download 1099 forms off of it. The official forms are still multi-layered carbon paper, which means you need to get a physical copy. The IRS should send you the forms in the mail. If they don’t, you can order them off the IRS site or call the IRS to have them sent to you. If all else fails, you can usually find the forms at major post office and public library locations. If you fail to file 1099s, the IRS will penalize you $50 per 1099.

More than a few people have grumbled about filling out 1099s so early in the year, but doing so has indirect benefits. You are forced to start organizing your records for 2013.

Tips For Keeping Proper Tax Records For Your Home Business

Tips For Keeping Proper Tax Records For Your Home Business

  

The last thing most people think about when starting a business is doing taxes. But proper planning will make doing your taxes much easier - and keep the IRS happy!

Here are 3 simple tips for keeping proper records:

1. Whenever you buy anything for your business, keep the receipt!

Not only will this make record keeping a lot simpler, but if you are ever audited (having your tax return reviewed in detail by the IRS), you can prove your expenses, and save yourself money.

2. Write down all your income and expenses as they happen.

As your business grows, you'll have more and more activities to keep you busy. The last thing you'll want to do each April 15 is to organize your records for the year. So, it's a good idea to write down all your financial activities as they happen. You'll find preparing your taxes will take less time if you are organized.

3. Learn how to save money on your taxes.

As you learn about taxes, you'll find that there are many deductions (expenses that reduce your income, and therefore your taxes) you can take that are not obvious. When using your home office, you may be able to deduct (at least partially) repairs you make around the house, utilities, your home's value at the time you start your business, and more.

The more you know about taxes, and the more organized you are in keeping records, the more time and money you'll save at the end of every year!

What happens if you don't keep proper records?

Individuals with small businesses are the most likely to have their tax returns audited by the IRS. If you don't have a receipt, you will likely lose the deduction and owe the IRS money.

And while an audit does not have to be feared, you should be prepared - the more organized your records, the easier it will be to prove your case.

If you don't have one, get a file box and some folders at your local office supply store (these supplies are deductible, so keep your receipts!) and create a filing system for your business. Put all your receipts in the proper folders, and put them in a safe place.

Another way to save yourself time is to record all of your business transactions - expenses and income - on a spreadsheet on your computer. Keep a column for income, advertising, supplies, etc. You don't need to be a computer expert. But keeping accurate, organized records will help you save time when you fill out your taxes at the end of the year.

And it can help you plan, by giving you a snapshot or your financial progress whenever you need it. This may come in handy when you need to place ads, borrow money - or take a much needed and well-deserved vacation!

Automobile Tax Expenses

If you use a vehicle for conducting business, you can deduct certain automobile tax expenses from your tax bill. This is true even if you use the vehicle for personal and business needs. One of the traditional write-offs has always been the expenses associated with using a vehicle for business purposes.

The simplest automobile tax expense situation is one in which a vehicle is used entirely for business. For example, if you have a van used for a delivery service and nothing personal, all expenses associated with the van can be written off. This is known as the exclusive use situation. For many small businesses, however, a vehicle will be used for both personal and business reasons.

Where you use a vehicle for both personal and business reasons, you can only deduct the automobile expenses associated with the business use. Keep in mind that driving to and from work is not considered business mileage, while driving from an office to meet a client is considered business mileage.

There are two methods for determining deductible automobile tax expenses. The first is a simple calculation known as the standard mileage deduction. The second is the actual expenses method. You can choose whichever deduction provides you with the biggest deduction unless you lease the car. With a lease, you must use the standard mileage deduction.

The standard mileage rate deduction is a calculation wherein you multiply your total business mileage for the year by a figure provided by the IRS. For of 2012, the amount provided by the IRS is 55.5 cents per mile.


The actual cost expense option is exactly what it sounds like. It is the actual cost associated with using the vehicle for tax purposes for a particular tax year. Automobile tax expenses will include gas, tires, repairs, oil changes, registration costs, licensing, insurance and so on. In many cases, the actual expense deduction will end up being larger than the standard mileage deduction.

Regardless of the method you choose, you must document the automobile tax expenses. This means keeping a mileage book and receipts of anything you intend to deduct.

1031 Exchange Escaping the Certainty of Taxes

‘In this world’, said the great Benjamin Franklin, ‘nothing is certain but death and taxes’. While modern medicine continues to work on a cure for mortality, 1031 exchanges offer a valuable mechanism against the foibles of the taxman. Allowing the exchange of one property for another, this property market trend can help you hold on to money that might otherwise end up with the IRS. How do you know whether you are eligible to take advantage of this great property trend?

The first stipulation is that the two properties involved in the swap be in use for ‘trade or productive purposes’, that is that they are moneymaking concerns of some kind, such as a rental property or holiday home. The property intended for swapping must also reside in the US, though it can be located at any point within.

1031 exchanges necessitate the involvement of what are known as Qualified Intermediaries, who deal with the paperwork involved in the switch, and assume a role akin to a property purchaser. The property to be exchanged is handed over to this intermediary, until the property owner locates a new property, at which point the switch can be made.

This type of property exchange operates under strict guidelines and an exacting timetable. Once the original property is sold, a list of possible replacements must be supplied to the intermediary within forty-five days, while the exchange itself must be completed within one hundred and eighty. The title to both properties must remain intact throughout the entire process, so this is not the time to dissolve any business partnerships that might be involved. Any deviance from these strictures can threaten the entire exchange process.

The properties to be exchanged must also be what is described as ‘like-kind’, meaning that they are roughly comparable. This does not mean that the two properties must echo one another entirely, it simply refers to the fact that the property relinquished and the one to be taken up must both be suitable for use in a similar business or investment related way.

1031 exchanges are not for use on residential homes, and so, for many people, are of little value. But if you own a business property and would like to move premises without losing a sum of money to the taxman, then a 1031 exchange might just be the right choice for you.

10 Ways to Cut Your Property Taxes

Property taxes are decided collectively by school boards, town boards, legislators, and councils. The tax rate is set by collating the amount of funds an area needs. This is then divided that by the “total taxable” assessed value of the area. The tax an individual pays is computed by multiplying the tax rate by the assessed value of your property and then deducting any applicable exceptions. Property taxes are at an all time high. Studies indicate that they have increased more than 35% in five years.

Property is assessed by determining property costs in any given area. Property is valued by studying: the current sale price of properties in the area, costs to be incurred to replace the property, potential realization of property if it is rented, sold, or gifted, and the historical value of a property.

There are a few ways in which you could save on taxes:

1. Check if the state you reside in is offering any rebates.  For example, a money back rebate, energy rebate, capping of taxes, or home owners rebate where under certain conditions you may be eligible to claim a rebate.

2. Ensure that the property is assessed right. This will ensure that you do not have to pay excess taxes. Assert your right to check you assessment report ensure that there are no miscalculations, mistakes, or assumptions. If in any doubt, do put in an appeal. According to statistics almost 50% of the cases win some relief.

3. Check all exemptions allowed according to the law.

4. Buy property jointly with a partner or family member. This way both owners become eligible for tax rebates.

5. Check if your assessment is in according to other properties in your neighborhood. Check with the assessment office or with your neighbors themselves. It helps to know applicable laws. Use the help of a real estate professional to put together a file of properties similar to yours that have a lower assessment. Or, use the bank’s appraisal to support your case. Be sure that the case you gather together is water tight.

6. Use a property consultant to help you save taxes. Some charge a flat fee while others just a percentage of what you save. A professional will check how assessment is done and also if there are any loop holes you can use.

7. There is strength in numbers. Get together with other owners who are also checking or fighting assessments. Check on the National Taxpayers Union Web site http://www.ntu.org   for your rights.

8. Ask your home loan provider whether you are eligible for refund of property taxes paid. Some agreements have a provision for this. Many mortgages have automatic escrow of taxes.  

9. Even before you buy a home find out what the property taxes are in the area and what have been the increases in tax rates.

10. Be sure to read through assessment and tax manuals published by your local authorities. These will give a clear idea of what are the parameters used and what you must do to reduce or pay the correct property taxes.

In order to be money smart you need to get the help of an efficient and dedicated accountant, plan your tax liabilities well, known thoroughly all aspects of Property Tax. If you are prudent, you can benefit by using ways and means to cut your tax burden and liabilities.

IRS to Start Accepting Returns With Education Credits and Depreciation This Week

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IRS To Accept Tax Returns with Education Credits, Depreciation This Week

IR-2013-18, Feb. 8, 2013

WASHINGTON — The Internal Revenue Service announced today that taxpayers will be able to start filing two major tax forms next week covering education credits and depreciation.

Starting Sunday, Feb. 10, the IRS will start processing tax returns that contain Form 4562, Depreciation and Amortization. And on Thursday, Feb. 14, the IRS plans to start processing Form 8863, Education Credits.

This step clears the way for almost all taxpayers to start filing their tax returns for 2012. These forms affected the largest groups of taxpayers who weren’t able to file following the Jan. 30 opening of the 2013 tax season.

The IRS will be able to accept the education credits and depreciation forms following the completion of reprogramming and testing of its systems.  Work continues on preparing IRS systems to accept the remaining tax forms affected by the American Taxpayer Relief Act (ATRA) enacted by Congress on Jan. 2.

The IRS also announced today it will start accepting the remaining forms affected by the January legislation the first week of March.  A specific date will be announced later. Most of those in this group file more complex tax returns and typically file closer to the deadline or obtain an extension. A full list of the forms that will be accepted the first week of March is available on IRS.gov.

Next week’s opening covers two groups of taxpayers using:

• Form 8863, Education Credits. Form 8863 is used to claim two higher education credits -- the American Opportunity Tax Credit and the Lifetime Learning Credit.
• Form 4562, Depreciation and Amortization. Most of the people using the depreciation form tend to file later in the tax season or obtain a six-month extension. Non-1040 business filers using Form 4562 can also file starting Sunday.

For taxpayers using e-file, most software companies are now accepting tax returns with these two forms and will submit them after the IRS begins accepting them next week.

ExpressTaxRefund Explains How Tax Refunds Happen

The highlight of tax seasons is when tax refunds are released.

Forest Hills, NY — (SBWIRE) — 02/05/2013 — Every year from the 1st of January till the 15th of April, everyone hears about taxes. Commercials play for local tax preparation offices, articles are released about this year’s tax projection from the government, and many grumble about having to take the time to prepare their taxes.

Anyone who makes income during the prior year must file income taxes with the Internal Revenue Service, or IRS.Tax refunds happen when a person owes less in taxes than has been paid to the government. Tax refunds often occur when people are eligible to receive a number of tax write offs. When a person is due a tax refund, the government will send a paper check or direct deposit to the person for the amount owed. Tax refunds can range from a few dollars to several thousands. The amount of the refund will be determined by the taxes already paid, income, dependents and write offs, as well as employment position or career field.

“Tax refunds are generally one of the biggest financial gains that many American individuals and families receive in one lump sum.” said ExpressTaxRefund.com spokesperson Michele Tyson. “For many, it is important for tax refunds to be put to good use. Some see tax refunds as found money, but this is not necessarily the case.”

A tax refund may mean that a person is paying more in taxes each pay period than necessary. This can be changed by correcting any claims on your tax form with your employer. These adjustments can usually be made any time during the year.

Deciding whether or not to continue receiving a tax refund, rather than adjusting your withholdings is a decision that must be made individually. Some people believe that their money is most effective when received in many small sums across the year. Others would rather have larger withholdings and receive a larger tax refund in the beginning of the year. Whether or not to receive a tax refund is a personal decision and should be made depending on your monthly income needs and lifestyle. If you need help deciding, you can speak with a financial professional regarding the benefits and liabilities of either decision.

“The best part about receiving a tax refund is the ability to spend it on anything that you want.” said Tyson. “Many people spend their tax refunds shopping, while others choose to save their refund for emergencies or other big ticket item.” “Some strategically wait to purchase a car or put a down payment on a mortgage until tax time.”

Before going out and spending your tax refund on your first idea, take into account your needs. Many families have had a hard time during the recession and are behind on bills or have virtually zero savings. Other individuals and families have recovered from the recession, but are not in the financial position that they wish to be in. A tax refund can be a life saver for many reasons. Whatever you choose to do with your refund remember, tax season (and therefore, a tax refund) comes but once a year.

About ExpressTaxRefund.com
ExpressTaxRefund.com is one of the most trusted tax filing services online. The company has been making it safe and easy for customers to file their tax online since 2002. To learn more, or to securely file tax return online, visit ExpressTaxRefund.com at http://www.expresstaxrefund.com.

Contact:
Michele Tyson
(800) 825-4303

About Tax Refund on ExpressTaxRefund.com

A step-by-step interview collects your tax information.
Our software does all the calculations, checks for errors, 
selects the proper forms and fills them in. You review the return and e-file directly to the IRS.

Get your Tax Return quickly with ExpressTaxRefund.com

ExpressTaxRefund.com gives advice on how to get your Tax Return quickly.

Forest Hills NY  (PRBuzz.com) January 29, 2013 -- For many people, tax refund is the biggest pay check they will receive all year. Thus, they tend to want it as quickly as they can possibly get it.

"There was once a time when the only options you had for filing your taxes were to do them yourself on paper or hire a professional to do them for you," said ExpressTaxRefund.com spokesperson Michele Tyson. "It can be stressful for a person to do their own taxes, especially if they do not have knowledge of up-to-date tax laws."

Even knowledgeable people can miss deductions and tax breaks. And then, after all of the paperwork has been properly filled out, the only option would be to send the forms to the IRS via regular postal mail. You could then expect your refund check to come in the mail within 6-8 weeks after IRS acceptance.

Now you can file your taxes online, and receive your tax return in as little as 10 days.

ExpressTaxRefund.com offers a special software that can help you prepare your taxes yourself. If you have any trouble along the way, customer service is often provided at your disposal. The best news is that many taxpayers can prepare their own taxes within 30 minutes.

When you choose this online option for filing for your tax return, you are actually filing the forms electronically. In most cases, the IRS will accept or deny your return within 48 hours of receiving it. From there, you could have the money deposited into your bank account in as little as 10 days. By using this method, you can have your tax return much faster than the traditional 6-8 weeks.

In order to have your tax return direct deposited, you will need to provide your bank account information. This includes:

The name of your bank
The routing number
The account number

"In addition, you also may need to provide the type of account, like whether it is a checking account or if it is a savings account, that you want your refund deposited into," said Tyson. "Check this information at least twice, to ensure you have entered it all correctly. If there is a mistake made when entering this information, it can delay your deposit."

Filing for your income tax return used to be a lengthy and stressful process. It no longer has to be that way. Take the stress out of filing, and get your return quicker, by filing electronically online with ExpressTaxRefund.com

About ExpressTaxRefund.com
ExpressTaxRefund.com was founded in 2002 with the goal of helping people prepare and file their taxes quickly, easily and affordably. Since then, ExpressTaxRefund.com has grown to become one of the most popular online tax preparation services. For more information about ExpressTaxRefund.com, visit http://www.expresstaxrefund.com.

Contact-
ExpressTaxRefund.com
(800) 829-1954

Fast Tax Refund at ExpressTaxRefund.com

With Express Tax Refund filing your taxes online is fast and easy. A step-by-step interview collects your tax information. Our software does all the calculations, checks for errors, selects the proper forms and fills them in.We calculate your refund amount as you enter your information, so you can see how different deductions and credits effect you in real time.

We offer free customer service support for any tax related questions you may have. Assistance is provided toll free seven days a week. When you're ready, simply E-file your return with a click of the mouse and get your Tax Refund in as little as 7 days!

Filing your taxes online has never been so fast and easy.

Tax Refund Specialists Offer Fast Tax Refund

Approximately 70 percent of taxpayers get a tax refund check each year, and many of these individuals are looking to get a fast tax refund so they can start enjoying that refund check ASAP! The average tax refund totals more than $2,500, so you can't blame those taxpayers who are seeking a fast tax refund, as that's a good chunk of change!

ExpressTaxRefund.com: Tax Refund Specialists Offer Fast Tax Refund

Get Your TaxReturn Quickly!

Many Americans eagerly wait for tax season because of the taxreturn that they anticipate getting. For many people, this is the biggest pay check they will receive all year. Thus, they tend to want it as quickly as they can possibly get it. The following paragraphs will provide you with information you may find useful in getting your taxreturn check fast.There was once a time when the only options you had for filing your taxes were to do them yourself or hire a professional to do them for you. It can be stressful for a person to do their own taxes, especially if they do not have knowledge of up-to-date tax laws. Even knowledgeable people can miss deductions and tax breaks. And then, after all of the paperwork has been properly filled out, the only option would be to send the forms to the IRS via regular postal mail. You could then expect your refund check to come in the mail within 6-8 weeks after IRS acceptance.Now you can file your taxes online, and receive your taxreturn in as little as 10 days.

ExpressTaxRefund.com offers a special software that can help you prepare your taxes yourself. If you have any trouble along the way, customer service is often provided at your disposal. The best news is that many taxpayers can prepare their own taxes within 30 minutes.
When you choose this online option for filing for your taxreturn, you are actually filing the forms electronically. In most cases, the IRS will accept or deny your return within 48 hours of receiving it. From there, you could have the money deposited into your bank account in as little as 10 days. By using this method, you can have your taxreturn much faster than the traditional 6-8 weeks.

In order to have your taxreturn direct deposited, you will need to provide your bank account information. This includes:

• The name of your bank
• The routing number
• The account number

In addition, you also may need to provide the type of account, like whether it is a checking account or if it is a savings account, that you want your refund deposited into. Check this information at least twice, to ensure you have entered it all correctly. If there is a mistake made when entering this information, it can delay your deposit.

Filing for your income taxreturn used to be a lengthy and stressful process. It no longer has to be that way. Take the stress out of filing, and get your return quicker, by filing electronically online with ExpressTaxRefund.com

File Today on ExpressTaxRefund.com!

Are you looking for a fast tax refund? Approximately 70 percent of taxpayers get a tax refund check each year, and many of these individuals are looking to get a fast tax refund so they can start enjoying that refund check ASAP!

The average tax refund totals more than $2,500, so you can’t blame those taxpayers who are seeking a fast tax refund, as that’s a good chunk of change!

There are several options for filing your taxes and there are also a few different options concerning how you get your refund check. In order to get a fast tax refund, you must file your taxes using the proper methods!

The first option for filing your taxes involves using old fashioned paper forms and snail mail. Many are familiar with this method, making it a comfort zone for many taxpayers, but it’s the least desirable option if you’re seeking a fast tax refund because it can take more than a month and a half to get your tax refund!

The second tax filing option is to file electronically and request a paper check. According to the IRS, this is the most popular option and more than 100 million Americans e-filed in 2012. In fact, e-filing is now required for any individual or entity who files more than 10 individual or trust returns. It’s easy and it’s faster than snail-mailing your returns, but it takes time to get a paper check in the mail, so it’s a middle-ground option for individuals who are seeking a fast tax refund.

The best option for individuals who are seeking a fast tax refund in 2013? E-filing and requesting direct deposit of your refund check. Since everything is done electronically, there’s no time wasted in transit! Plus, it’s more secure — there’s no chance your check will get lost or stolen, so you virtually ensure a fast tax refund!

ExpressTaxRefund.com will help you get a fast tax refund in just three easy steps!

At ExpressTaxRefund.com, we specialize in fast tax refunds. In fact, if you file using direct deposit, you can get this year’s tax refund in as little as ten days! Learn more about our tax services.

Questions? Stop by our Help Center for Tax FAQs, guides and tax tools.

IRS Announces Simplified Option for Claiming Home Office Deductions

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year

WASHINGTON — The Internal Revenue Service today announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.

In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

"This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," said Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013."
The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted today on IRS.gov. Revenue Procedure 2013-13 is effective for taxable years beginning on or after Jan. 1, 2013, and the IRS welcomes public comment on this new option to improve it for tax year 2014 and later years.

Tax Relief to Victims of Hurricane Sandy

IRS Provides Tax Relief to Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to Feb. 1, 2013

WASHINGTON –– In the aftermath of Hurricane Sandy, the Internal Revenue Service announced additional tax relief to affected individuals and businesses.

Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Connecticut, New Jersey and New York will receive tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA.

The tax relief postpones various tax filing and payment deadlines that occurred starting in late October. As a result, affected individuals and businesses will have until Feb. 1, 2013 to file these returns and pay any taxes due. This includes the fourth quarter individual estimated tax payment, normally due Jan. 15, 2013. It also includes payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on Oct. 31, 2012 and Jan. 31, 2013 respectively. It also applies to tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period.

The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The IRS automatically provides this relief to any taxpayer located in the disaster area. Taxpayers need not contact the IRS to get this relief.

Beyond the relief provided by law to taxpayers in the FEMA-designated counties, the IRS will work with any taxpayer who resides outside the disaster area but whose books, records or tax professional are located in the areas affected by Hurricane Sandy. All workers assisting the relief activities in the covered disaster areas who are affiliated with a recognized government or philanthropic organization are eligible for relief.  Taxpayers who live outside of the impacted area and think they may qualify for this relief need to contact the IRS at 866-562-5227.

In addition, the IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after the disaster area start date and before Nov. 26, if the deposits are made by Nov. 26, 2012. Details on available relief can be found on the disaster relief page on IRS.gov.

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, individuals should visit disasterassistance.gov.

The IRS wants to assure taxpayers, businesses and tax preparers that it is working aggressively to monitor the situation and provide additional relief as needed.

So far, IRS filing and payment relief applies to the following localities:
In Connecticut (starting Oct. 27): Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;

In Maryland (starting Oct. 26): Somerset County;

In New Jersey (starting Oct. 26): Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren;

In New York (starting Oct. 27): Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster and Westchester;

In Rhode Island (starting Oct. 26): Newport and Washington counties.

When Will I get My Refund?

 

 Find out when you can reasonably expect to receive your federal tax refund.

e-File and Direct Deposit

This video has the details on getting your federal tax refund in a matter of days rather than waiting several weeks.

Tax Season to Begin on January 30th due to IRS Delay.

IRS Plans Jan. 30 Tax Season Opening For 1040 Filers

IR-2013-2, Jan. 8, 2013

WASHINGTON — Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.

The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.

“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”

The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.

“The best option for taxpayers is to file electronically,” Miller said.

The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.

The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.

Who Can File Starting Jan. 30?

The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

Who Can’t File Until Later?

There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.

The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.

As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.
Updated information will be posted on IRS.gov.