When hiring a company to handle payroll and payroll tax, employers should carefully choose their payroll service provider. This can help a business avoid missed deposits for employment taxes and other unpaid bills.
When hiring a company to handle payroll and payroll tax, employers should carefully choose their payroll service provider. This can help a business avoid missed deposits for employment taxes and other unpaid bills.
Most of these businesses provide quality service but there are some who don't have their clients' best interests in mind. Each year, there are a few payroll service providers who don't submit their client's payroll taxes and closedown abruptly. The damage hits their unsuspecting clients hard.
Typically, these clients remain legally responsible for paying the taxes due, even if the employer sent funds to the payroll service provider for required deposits or payments.
Employers need to understand their payroll and employment tax responsibilities and choose a trusted payroll service. Here are a couple options:
- A certified professional employer organization. Typically, CPEOs are solely liable for paying the customer's employment taxes, filing returns, and making deposits and payments for the taxes reported related to wages and other compensation. An employer enters into a service contract with a CPEO and then Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement, is submitted to IRS. Employers can find a CPEO on the Public Listings page of IRS.gov.
- Reporting agent. This is a payroll service provider that informs the IRS of its relationship with a client using Form 8655, Reporting Agent Authorization, which is signed by the client. Reporting agents must deposit a client's taxes using the Electronic Federal Tax Payment System and can exchange information with the IRS on behalf of a client, such as to resolve an issue. They are also required to provide clients a written statement reminding the employer that it, not the reporting agent, is ultimately responsible for the timely filing of returns and payment of taxes.
IRS encourages employers to enroll in EFTPS and make sure its payroll service provider uses EFTPS to make tax deposits. It's free and it gives employers safe and easy online access to their payment history when deposits are made under their Employer Identification Number, enabling them to monitor whether their payroll service provider is meeting its tax deposit responsibilities.
Employers should contact the IRS about any bills or notices received, especially payments managed by a third party. Call the number on the bill, write to the IRS office that sent the bill, or contact the IRS business tax hotline at 800-829-4933.
Catalano, Caboor & Co. works with multiple reputable payroll companies that we recommend.
More information:
Employment Taxes
Outsourcing Payroll and Third Party Payers
Third Party Arrangement Chart
CPEO Customers – What You Need to Know
Reporting Agents File
The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.
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Clutch has just announced the top accounting firms as part of their Small Business Solidarity program. We are thrilled to announce that Clutch has named Catalano, Caboor & Co. a top accounting firm in Chicago for 2020!
Catalano, Caboor & Co. is a Top Accounting Firm in Chicago
At Catalano, Caboor & Co., we put our clients before everything else. We offer innovative, quality services in a responsive and timely manner. We pride ourselves on our long-lasting business relationships with our clients and the effective solutions we provide.
We understand that it’s essential to choose a trustworthy accounting firm. That’s what we’re here for! We provide high-quality services that you can put your trust in.
Clutch has just announced the top accounting firms as part of their Small Business Solidarity program. We are thrilled to announce that Clutch has named Catalano, Caboor & Co. a top accounting firm in Chicago for 2020!
Based in Washington, DC, Clutch is a B2B ratings and reviews platform. Their team conducts independent research into B2B companies by directly interviewing the past clients of companies on their site. These verified reviews allow them to fairly and transparently rate and rank service providers.
“The importance of finding a quality accountant cannot be overstated. To make informed decisions about your business, it is absolutely critical to have access to accurate and comprehensive financial information,” said David Goosenberg, a business development analyst at Clutch. “Each of these Chicago-based firms has excelled at delivering quality accounting services to B2B clients in a wide variety of industries.”
We are also featured on The Manifest, Clutch’s sister site. The Manifest is another B2B resource that features business tips and advice. We are thrilled to be ranked as a top financial accounting firm in Chicago on the Manifest!
We are thankful for each and every one of our wonderful customers, especially those that took the time to leave us a review on Clutch! Hear what they had to say about us.
“Our tax savings are fabulous, and they've found deductions that our previous firm didn't. We're more up-to-date with our record-keeping, and they've given us good guidance. Based on our tax savings, their work pays for itself. We're much more financially sound, and their work is very well received.” – Owner, Web Design Agency
When our customers succeed, we succeed! This award and our perfect 5-star rating on Clutch are all thanks to you, our amazing clients!
Taxpayers can use online tool to start checking on the status of refund 24 hours after the IRS acknowledges receipt of the taxpayer’s e-filed tax return.Currently, the IRS is experiencing delays in processing paper tax returns due to limited staffing as a result of COVID-19.
Taxpayers can use the Where’s My Refund? tool to start checking on the status of refund 24 hours after the IRS acknowledges receipt of the taxpayer’s e-filed tax return. Currently, the IRS is experiencing delays in processing paper tax returns due to limited staffing as a result of COVID-19.
The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who filed a paper tax return and expect a refund may experience a significant delay beyond the normal time frame of four to six weeks from the time they mailed the return. The IRS will process these returns in the order received and there is no need to file a second tax return or call the IRS.
Taxpayers can access the Where’s My Refund? tool two ways:
•Visiting IRS.gov
•Downloading the IRS2GO app
To use the tool, taxpayers will need:
•Their Social Security number or Individual Taxpayer Identification Number
•Tax filing status
•The exact amount of the refund claimed on their tax return
The tool displays progress in three phases:
•Return received
•Refund approved
•Refund sent
The tool is updated once every 24 hours, usually overnight, so there’s no need to check the status more often.
Where’s My Refund? follows a tax return from receipt to completion. It will tell the taxpayer when their return is in received status and if the refund is in approved or sent status. When the status changes to approved, it means the IRS is preparing to send the refund as a direct deposit to the taxpayer’s bank account or directly to the taxpayer in the mail by check to the address used on their return. Taxpayers should wait five days after the IRS sends the refund as a direct deposit to check with their bank. It could take several weeks before a refund check is received by mail.
Taxpayers who file an amended return should check out the Where’s My Amended Return? tool.
More information:
Refund FAQs
IRS YouTube videos:
When Will I Get My Refund?
Qualified individuals affected by COVID-19 may be able to withdraw up to $100,000 from their eligible retirement plans, including IRAs, between Jan. 1 and Dec. 30, 2020...
Qualified individuals affected by COVID-19 may be able to withdraw up to $100,000 from their eligible retirement plans, including IRAs, between Jan. 1 and Dec. 30, 2020.
These coronavirus-related distributions aren’t subject to the 10% additional tax that generally applies to distributions made before reaching age 59 and a half, but they are still subject to regular tax. Taxpayers can include coronavirus-related distributions as income on tax returns over a three-year period. They must repay the distribution to a plan or IRA within three years.
Some plans may have relaxed rules on plan loan amounts and repayment terms. The limit on loans made between March 27 and Sept. 22, 2020 is raised to $100,000. Plans may suspend loan repayments due between March 27 and Dec. 31, 2020.
Qualifications for relief
The law defines a qualifying person as someone who:
- Has tested positive and been diagnosed with COVID-19
- Has a dependent or spouse who has tested positive and been diagnosed with COVID-19
Experiences financial hardship due to them, their spouse or a member of their household:- Being quarantined, furloughed or laid off or having reduced work hours
- Being unable to work due to lack of childcare
- Closing or reducing hours of a business that they own or operate
- Having pay or self-employment income reduced
- Having a job offer rescinded or start date for a job delayed
Employers can choose whether to implement these coronavirus-related distribution and loan rules.Qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions aren't changed. Administrators can rely on an individual's certification that they’re a qualified person.
Required minimum distributions
People who already took a required minimum distribution from certain retirement accounts in 2020 can now roll those funds back into a retirement account.
The 60-day rollover period has been extended to Aug. 31, 2020.
Under the relief, taxpayers with required minimum distributions from certain retirement plans can skip them this year. Distributions that can be skipped were due in 2020 from a defined-contribution retirement plan. These include a 401(k) or 403(b) plan, as well as an IRA. Among the people who can skip them are those who would have had to take the first distribution by April 1, 2020. This waiver does not apply to defined-benefit plans.
More information
Guidance for Coronavirus-Related Distributions and Loans from Retirement Plans Under the CARES Act
Coronavirus-related relief for retirement plans and IRAs questions and answers
Guidance on Waiver of 2020 Required Minimum Distributions
DuPage County announced 5/12/20 it will launch Reinvest DuPage, a grant relief program developed in partnership with Choose DuPage for small businesses and independent contractors.
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People can check the status of their tax return about 24 hours after the IRS acknowledges receipt of an electronically filed tax return and up to four weeks after a taxpayer mails a paper return. The Where’s My Refund? tool updates once every 24 hours, usually overnight, so taxpayers only need to check once a day.
Taxpayers who filed their 2019 tax return and are waiting for their refund can check their refund status by going to IRS.gov and clicking on Get Your Refund Status to access the Where's My Refund? tool.
People can check the status of their tax return about 24 hours after the IRS acknowledges receipt of an electronically filed tax return and up to four weeks after a taxpayer mails a paper return. The Where’s My Refund? tool updates once every 24 hours, usually overnight, so taxpayers only need to check once a day.
Taxpayers can also check their refund status, make a payment, and find free tax prep help through the IRS2Go app for their mobile device.
Taxpayers will need three things to use the tool:
- Their Social Security number
- Their tax filing status
- The exact amount of the refund claimed on their tax return
Once the taxpayer enters that information the tool will display the progress of their tax return through the following stages:
- Return received
- Return approved
- Refund sent
Taxpayers should use the IRS2Go app or the official Where’s My Refund? tool at IRS.gov to avoid scammers who may create look-alike sites in an attempt to steal sensitive personal information. They should go directly to IRS.gov and not rely on search engine results or click on links to refund sites they receive by email or text.
In certain instances, a taxpayer will need to call the IRS, such as:
- It has been 21 days or more since they electronically filed their tax return
- It has been more than six weeks since they mailed their return
- When the Where’s My Refund? results tell the taxpayer to contact the IRS
More information:
2/14/20 Facebook Live Brief presentation "Should you be an employee or an independent contractor" by Catalano, Caboor & Co. CPA Jeff Hansen skip to 5:21
The final QBI regulations offer three avenues for a rental real estate activity to be considered a trade or business eligible to generate QBI: (1) the rental activity qualifies as a Sec. 162 trade or business; (2) it rents to specific related parties; or (3) it satisfies the requirements of a proposed safe harbor.
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It's very common to look for ways to help people and communities affected after a natural disaster or tragic event. Unfortunately, imposters pop up to try and take donations away from those who really need them. You want to make sure your money gets in the hands of the charities you want to help. Make sure to do your research before donating to a charity, and help prevent others from becoming a victim of fraud by reporting scams to your state consumer protection office or the Federal Trade Commission.
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Taxpayers should be aware of tax law changes related to alimony and seperation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.
Divorce or separation may have an effect on taxes
Taxpayers should be aware of tax law changes related to alimony and separation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.
Here are some facts that will help people understand these changes and who they will impact:
- The law relates to payments under a divorce or separation agreement. This includes:
- Divorce decrees.
- Separate maintenance decrees.
- Written separation agreements.
- In general, the taxpayer who makes payments to a spouse or former spouse can deduct it on their tax return. The taxpayer who receives the payments is required to include it in their income.
- Beginning Jan. 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after Dec. 31, 2018.
- If an agreement was executed on or before Dec. 31, 2018 and then modified after that date, the new law also applies. The new law applies if the modification does these two things:
- It changes the terms of the alimony or separate maintenance payments.
- It specifically says that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.
- Agreements executed on or before Dec. 31, 2018 follow the previous rules. If an agreement was modified after that date, the agreement still follows the previous law as long as the modifications don’t do what’s described above.
More Information:
Publication 504, Divorced or Separated Individuals
Publication 5307, Tax Reform Basics for Individuals and Families
New basis-consistency requirements make defensible valuations of inherited property even more important.
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While the issue of whether employees are properly classified as exempt is always an issue that could potentially arise.
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The TCJA dramatically changed tax planning related to marriage and divorce in many ways often indirect and unexpected that could have varied and adverse impact on different people.
The agency just debuted it’s official Instagram account, IRSNews, which users can access on their computer or smartphone using the Instagram app.
Taxpayers can now get tax tips and helpful news from the IRS on Instagram. The agency just debuted it’s official Instagram account, IRSNews, which users can access at www.instagram.com/irsnews or on their smartphone using the Instagram app.
Last year’s tax reform law brought many tax law changes that will affect virtually every taxpayer. The IRS Instagram account will share taxpayer-friendly information to help people better understand these changes.
The IRS will use its new Instagram account it to:
- Provide the latest tax scam information to help taxpayers keep their personal data secure.
- Better serve young adults, the majority of whom use Instagram.
- Share information in Spanish and other languages.
- Reinforce messages the IRS promotes on its other social accounts.
October 15 is the filing deadline for taxpayers who requested an extension for their 2017 tax return. However, those who have an extension should mark this coming Monday, Oct. 15 as the deadline to file.
While the deadline is just around the corner, there are still things these taxpayers can remember to make sure they file a complete and accurate return. Here are a few tips and reminders for taxpayers who have not yet filed.
October 15 is the filing deadline for taxpayers who requested an extension for their 2017 tax return. However, those who have an extension should mark this coming Monday, Oct. 15 as the deadline to file.
While the deadline is just around the corner, there are still things these taxpayers can remember to make sure they file a complete and accurate return. Here are a few tips and reminders for taxpayers who have not yet filed:
File by Oct. 15. Taxpayers with extensions should file their tax returns by Monday, Oct. 15. If they owe, they should pay as much as possible to reduce interest and penalties. IRS Direct Pay allows individuals to securely pay from their checking or savings accounts. These taxpayers can consider an installment agreement, which allows them to pay over time.
There is more time for the military. Military members and those serving in a combat zone generally get more time to file. These taxpayers typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.
There is also more time in certain disaster areas. People who have an extension and live or work in a disaster area often have more time to file. The disaster relief page on IRS.gov has more information.
Taxpayers owed a refund should use Direct Deposit. The fastest way for taxpayers to get their refund is to combine direct deposit and e-file.
There are IRS online payment options for taxpayers who owe. Taxpayers who requested an extension should have paid the tax they owed by the deadline back in April. Taxpayers who find they still owe taxes can pay them with IRS Direct Pay. It’s the simple, quick and free way to pay from a checking or savings account. For other payment options, taxpayers can visit the Paying Your Taxes page on IRS.gov.
Keep a copy of tax return. Taxpayers should keep a copy of their tax return and all supporting documents for at least three years.
Taxpayers can view their account information. Individual taxpayers can go to IRS.gov/account and login to view their balance, payment history, pay their taxes and access tax records through Get Transcript. Before setting up an account, taxpayers should review Secure Access: How to Register for Certain Online Self-Help Tools to make sure they have the information needed to verify their identities.
The IRS on Wednesday 9/26/18 provided the 2018–2019 special per-diem rates, including the transportation industry meal and incidental expenses rates, the rate for the incidental-expenses-only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.
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The IRS urges everyone who works as an employee and who also has income from other sources to perform a paycheck checkup now.
The IRS urges everyone who works as an employee and who also has income from other sources to perform a Paycheck Checkup now. For example, certain individuals often need to pay estimated or additional tax. This includes taxpayers who have certain types of income from the sharing economy, interest, dividends, self-employment, capital gains, or prizes and awards. A Paycheck Checkup can help these taxpayers avoid an unexpected year-end tax bill and possibly a penalty when they file their 2018 tax return next year.
Individuals can do a checkup using the Withholding Calculator on IRS.gov or read Publication 505, Tax Withholding and Estimated Tax. This is especially important in 2018 due to tax changes taking effect this year. These changes are part of the Tax Cuts and Jobs Act
Here are some things for employees with other sources of income to consider:
- Taxpayers usually must pay at least 90 percent of the tax they owe during the year through withholding, estimated tax payments or a combination of the two. An estimated tax penalty will normally apply to a taxpayer who pays too little tax.
- Taxpayers can use their results from the calculator to help fill out their Form W-4 and adjust their income tax withholding. Taxpayers should submit their new W-4 to their employer as soon as possible.
- Many employees who also receive income from other sources may be able to forgo making estimated tax payments. They can instead increase the amount of income tax withheld from the paychecks they earn as an employee by claiming fewer withholding allowances on their Form W-4.
- In some cases, changing withholding allowances alone doesn’t result in enough taxes withheld. If this happens, a taxpayer can also use the Form W-4 to ask their employer to withhold an additional flat-dollar amount each pay period.
- For taxpayers who do need to make estimated payments, Form 1040-ES, Estimated Tax for Individuals, can help taxpayers figure these payments. It includes a useful worksheet for figuring the right amount to pay. Taxpayers can go to IRS.gov/payments for information on all payment options.
More Information:
Tax Reform
Whether serving up slices, mowing lawns or ringing up groceries, here's what kids and their parents should know about summer jobs and taxes
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Speaking at AICPA ENGAGE 2018, skateboarding legend Tony Hawk credited his accountants with making his skateboard company, Birdhouse, and the Tony Hawk Foundation successful. He also shared some of the key lessons he learned from becoming an entrepreneur.
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The Tax Cuts and Jobs Act includes changes to moving, mileage and travel expenses
The Tax Cuts and Jobs Act includes changes to moving, mileage and travel expenses:
Move-related vehicle expense
The new law suspends the deduction for tax years beginning after Dec. 31, 2017, through Jan. 1, 2026. During the suspension, no deduction is allowed for use of an auto as part of a move using the mileage rate listed in IRS Notice 2018-03.
This does not apply to members of the Armed Forces on active duty who move related to a permanent change of station.
Unreimbursed employee expenses
The Act also suspends all miscellaneous itemized deductions subject to the 2 percent of adjusted gross income floor. This change affects unreimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.
For additional guidance, see IRS Notice 2018-42.
Standard mileage rates for 2018
The standard mileage rates for the use of a car, van, pickup or panel truck for 2018 remain:
- 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017.
- 18 cents per mile driven for medical purposes, a 1 cent increase from 2017.
- 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.
Increased depreciation limits
The recent legislation also increases the depreciation limitations for passenger autos placed in service after Dec. 31, 2017, for purposes of computing the allowance under a fixed and variable rate plan. The maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after Dec. 31, 2017.
For additional details, see the May 25, 2018 IRS news release: Law change affects moving, mileage and travel expenses.
Last year's Tax Cuts and Jobs Act brought good news for taxpayers who claim the child tax credit. The law doubled the credit amount, increased the refundable portion, expanded the credit's scope and broadened the pool of eligible taxpayers.
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While many people take summer vacations, data thieves do not. Phishing emails and telephone scams continue to pop up around the country. The IRS reminds everyone to be vigilant to avoid becoming a victim.
While many people take summer vacations, data thieves do not. Phishing emails and telephone scams continue to pop up around the country. The IRS reminds everyone to be vigilant to avoid becoming a victim.
Here are some things for taxpayers to remember so they can keep their personal data safe:
- The IRS does not leave pre-recorded, urgent messages asking for a call back. In one scam, the victim is told if they do not call back, a warrant will be issued for their arrest. Other variations may include the threat of other law-enforcement agency intervention, deportation or revocation of licenses. The IRS will never threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
- Criminals can fake or “spoof” caller ID to appear to be anywhere in the country, including from an IRS office. This prevents taxpayers from being able to verify the true call number. If a taxpayer gets a call from the IRS, they should hang up and call the agency back at a publicly-available phone number.
- If a taxpayer receives an unsolicited email that appears to be from the IRS, they should report it by sending it to phishing@irs.gov. Some people might also receive an email from a program closely linked to the IRS, such as the Electronic Federal Tax Payment System. Recipients should also send these emails to phishing@irs.gov.
- The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
There are special circumstances when the IRS will call or come to a home or business. This includes situations when a taxpayer has an overdue tax bill or when the IRS needs to secure a delinquent tax return or a delinquent employment tax payment.
More Information:
The IRS warns the nation’s business, payroll and human resource communities about a growing W-2 email scam. Criminals use this scheme to gain access to W-2 and other sensitive tax information that employers have about their employees.
The IRS warns the nation’s business, payroll and human resource communities about a growing W-2 email scam. Criminals use this scheme to gain access to W-2 and other sensitive tax information that employers have about their employees.
The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.
This W-2 scam puts workers at risk for tax-related identity theft. The IRS recommends that all employers educate employees about this scheme, especially those in human resources and payroll departments. These employees are usually the first targets. Here are five warning signs about the W-2 scam:
- The thief poses as a company executive, school official or other leader in the organization.
- These scam emails often start with a simple greeting. It can be something like, “Hey, you in today?”
- The crook sends an email to one employee with payroll access. The sender requests a list of all employees and their Forms W-2. The thief may even specify the format in which they want the information.
- The thieves use many different subject lines. The criminal might use words like “review,” “manual review” or “request.” In some cases, the thief may send a follow up email asking for a wire transfer.
- Because payroll officials believe they are corresponding with an executive, it may take weeks for someone to realize a data theft occurred. The criminals usually try to use the information quickly, sometimes filing fraudulent tax returns within a day or two.
This scam is such a threat to taxpayers and to tax administration that a special IRS reporting process has been set up. Anyone who thinks they were a victim of this scam can visit Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers to find out how to report it.
Adoptive parents around the country may qualify for a tax credit. Parents who either adopted a child or tried to adopt a child may claim the adoption credit. Here are 9 things you should know about this credit.
Adoptive parents around the country may qualify for a tax credit. Parents who either adopted a child or tried to adopt a child may claim the adoption credit. Here are nine things you should know about this credit.
- Credit. The credit is nonrefundable. This means the credit may only reduce a taxpayer’s tax liability to zero. If the credit is more than the tax owed, the taxpayer can’t receive an additional amount as a refund.
- Credit carryover. Taxpayers can carry any unused credit forward to the next year. This happens when the credit is more than the tax owed. In other words, taxpayers who have an unused credit in tax year 2017 can use it to reduce their taxes for 2018. Taxpayers can carry any remaining credits for up to five years, or until they fully use the credit, whichever comes first.
- Exclusion. If the taxpayer’s employer helped pay for the adoption through a qualified adoption assistance program, the taxpayer may qualify to exclude that amount from tax.
- Eligibility. An eligible child is an individual under age 18. It can also be an individual of any age who is physically or mentally unable to care for themselves.
- Special needs child. Special rules apply to taxpayers who adopted an eligible U.S. child with special needs. The taxpayers may be able to take the exclusion even if they didn't pay any qualified adoption expenses.
- Qualified expenses. Adoption expenses must be directly related to the adoption of the child. The expenses must also be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.
- Domestic or foreign adoptions. In most cases, taxpayers can claim the credit whether the adoption is domestic or foreign. However, the rules for which year a taxpayer can claim qualified expenses differ between these two types of adoption.
- No double benefit. Depending on the adoption’s cost, taxpayers may be able to claim both the tax credit and the exclusion. However, they can’t claim both a credit and exclusion for the same expenses.
- Income limits. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount a taxpayer can claim depending on the amount of their income.
Tax time is in full swing, and like every year the scams are in full effect! The IRS is busy this time of year, and that makes it much easier for scammers to try to take your hard earned money.
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Over the years, taxpayers have concocted a lot of zany arguments to justify their tax breaks. Here are 12 creative ones that the courts decided did not quite work.
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Employers should use these updated withholding rules for 2018, putting them into effect as soon as possible but no later than Feb. 15, the IRS said. Until then, employers should continue to use the 2017 withholding tables.
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Special thanks to Jeff Burgess for making this possible.
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For all retailers and servicepersons conducting business in taxing jurisdictions whose sales tax rate is changing effective January 1, 2018
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It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely. This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.
These are ten tips for taxpayers to remember when selecting a preparer.
It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely. This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.
Here are ten tips for taxpayers to remember when selecting a preparer:
- Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
- Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to the verify enrolled agent status page on IRS.gov or check the directory.
- Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.
- Ask to E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit.
- Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 17 due date. Avoid fly-by-night preparers.
- Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.
- Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form.
- Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return.
- Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN.
- Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.
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With the Tax Cuts and Jobs Act headed for the President's desk shortly, many clients may be asking what they can do before year-end to best position themselves for tax savings, and to avoid or soften the impact of disappearing deductions.
With the Tax Cuts and Jobs Act headed for the President's desk shortly, many clients may be asking what they can do before year-end to best position themselves for tax savings, and to avoid or soften the impact of disappearing deductions.
Since most of the changes will go into effect next year, there's still a narrow window of time before year-end to soften or avoid the impact of crackdowns and to best position yourself for the tax breaks that may be heading your way. Here's a quick rundown of last-minute moves you should think about making.
Lower tax rates coming. The Tax Cuts and Jobs Act will reduce tax rates for many taxpayers, effective for the 2018 tax year. Additionally, many businesses, including those operated as passthroughs, such as partnerships, may see their tax bills cut.
The general plan of action to take advantage of lower tax rates next year is to defer income into next year. Some possibilities follow:
- . . . If you are about to convert a regular IRA to a Roth IRA, postpone your move until next year. That way you'll defer income from the conversion until next year and have it taxed at lower rates.
- . . . Earlier this year, you may have already converted a regular IRA to a Roth IRA but now you question the wisdom of that move, as the tax on the conversion will be subject to a lower tax rate next year. You can unwind the conversion to the Roth IRA by doing a recharacterization-making a trustee-to-trustee transfer from the Roth to a regular IRA. This way, the original conversion to a Roth IRA will be cancelled out. But you must complete the recharacterization before year-end. Starting next year, you won't be able to use a recharacterization to unwind a regular-IRA-to-Roth-IRA conversion.
- . . . If you run a business that renders services and operates on the cash basis, the income you earn isn't taxed until your clients or patients pay. So if you hold off on billings until next year-or until so late in the year that no payment will likely be received this year-you will likely succeed in deferring income until next year.
- . . . If your business is on the accrual basis, deferral of income till next year is difficult but not impossible. For example, you might, with due regard to business considerations, be able to postpone completion of a last-minute job until 2018, or defer deliveries of merchandise until next year (if doing so won't upset your customers). Taking one or more of these steps would postpone your right to payment, and the income from the job or the merchandise, until next year. Keep in mind that the rules in this area are complex and may require a tax professional's input.
- . . . The reduction or cancellation of debt generally results in taxable income to the debtor. So if you are planning to make a deal with creditors involving debt reduction, consider postponing action until January to defer any debt cancellation income into 2018.
Disappearing or reduced deductions, larger standard deduction. Beginning next year, the Tax Cuts and Jobs Act suspends or reduces many popular tax deductions in exchange for a larger standard deduction. Here's what you can do about this right now:
- Individuals (as opposed to businesses) will only be able to claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the total of (1) state and local property taxes; and (2) state and local income taxes. To avoid this limitation, pay the last installment of estimated state and local taxes for 2017 no later than Dec. 31, 2017, rather than on the 2018 due date. But don't prepay in 2017 a state income tax bill that will be imposed next year - Congress says such a prepayment won't be deductible in 2017. However, Congress only forbade prepayments for state income taxes, not property taxes, so a prepayment on or before Dec. 31, 2017, of a 2018 property tax installment is apparently OK.
- The itemized deduction for charitable contributions won't be chopped. But because most other itemized deductions will be eliminated in exchange for a larger standard deduction (e.g., $24,000 for joint filers), charitable contributions after 2017 may not yield a tax benefit for many because they won't be able to itemize deductions. If you think you will fall in this category, consider accelerating some charitable giving into 2017.
- The new law temporarily boosts itemized deductions for medical expenses. For 2017 and 2018 these expenses can be claimed as itemized deductions to the extent they exceed a floor equal to 7.5% of your adjusted gross income (AGI). Before the new law, the floor was 10% of AGI, except for 2017 it was 7.5% of AGI for age-65-or-older taxpayers. But keep in mind that next year many individuals will have to claim the standard deduction because many itemized deductions have been eliminated. If you won't be able to itemize deductions after this year, but will be able to do so this year, consider accelerating "discretionary" medical expenses into this year. For example, before the end of the year, get new glasses or contacts, or see if you can squeeze in expensive dental work such as an implant.
Other year-end strategies. Here are some other last minute moves that can save tax dollars in view of the new tax law:
- The new law substantially increases the alternative minimum tax (AMT) exemption amount, beginning next year. There may be steps you can take now to take advantage of that increase. For example, the exercise of an incentive stock option (ISO) can result in AMT complications. So, if you hold any ISOs, it may be wise to postpone exercising them until next year. And, for various deductions, e.g., depreciation and the investment interest expense deduction, the deduction will be curtailed if you are subject to the AMT. If the higher 2018 AMT exemption means you won't be subject to the 2018 AMT, it may be worthwhile, via tax elections or postponed transactions, to push such deductions into 2018.
- Like-kind exchanges are a popular way to avoid current tax on the appreciation of an asset, but after Dec. 31, 2017, such swaps will be possible only if they involve real estate that isn't held primarily for sale. So if you are considering a like-kind swap of other types of property, do so before year-end. The new law says the old, far more liberal like-kind exchange rules will continue apply to exchanges of personal property if you either dispose of the relinquished property or acquire the replacement property on or before Dec. 31, 2017.
- For decades, businesses have been able to deduct 50% of the cost of entertainment directly related to or associated with the active conduct of a business. For example, if you take a client to a nightclub after a business meeting, you can deduct 50% of the cost if strict substantiation requirements are met. But under the new law, for amounts paid or incurred after Dec. 31, 2017, there's no deduction for such expenses. So if you've been thinking of entertaining clients and business associates, do so before year-end.
- Under current rules, alimony payments generally are an above-the line deduction for the payor and included in the income of the payee. Under the new law, alimony payments aren't deductible by the payor or includible in the income of the payee, generally effective for any divorce decree or separation agreement executed after 2017. So if you're in the middle of a divorce or separation agreement, and you'll wind up on the paying end, it would be worth your while to wrap things up before year end. On the other hand, if you'll wind up on the receiving end, it would be worth your while to wrap things up next year.
- The new law suspends the deduction for moving expenses after 2017 (except for certain members of the Armed Forces), and also suspends the tax-free reimbursement of employment-related moving expenses. So if you're in the midst of a job-related move, try to incur your deductible moving expenses before year-end, or if the move is connected with a new job and you're getting reimbursed by your new employer, press for a reimbursement to be made to you before year-end.
- Under current law, various employee business expenses, e.g., employee home office expenses, are deductible as itemized deductions if those expenses plus certain other expenses exceed 2% of adjusted gross income. The new law suspends the deduction for employee business expenses paid after 2017. So, we should determine whether paying additional employee business expenses in 2017, that you would otherwise pay in 2018, would provide you with an additional 2017 tax benefit. Also, now would be a good time to talk to your employer about changing your compensation arrangement-for example, your employer reimbursing you for the types of employee business expenses that you have been paying yourself up to now, and lowering your salary by an amount that approximates those expenses. In most cases, such reimbursements would not be subject to tax.
Please keep in mind that we've described only some of the year-end moves that should be considered in light of the new tax law. If you would like more details about any aspect of how the new law may affect you, please do not hesitate to call.
With research and budgeting, animal lovers can enjoy the companionship their pets offer without threatening their financial goals.
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The Internal Revenue Service issued the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be...
The Internal Revenue Service issued the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
- 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
- 14 cents per mile driven in service of charitable organizations.
The business mileage rate and the medical and moving expense rates each increased 1 cent per mile from the rates for 2017. The charitable rate is set by statute and remains unchanged.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. These and other requirements are described in Rev. Proc. 2010-51.
Notice 2018-03, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
On December 13, the Conference Committee reached an agreement in principle on reconciling the Senate and House versions of their tax bill.
On December 13, the Conference Committee reached an agreement in principle on reconciling the Senate and House versions of their tax bill.
Key features include:
- . . . a flat corporate tax rate of 21%;
- . . . a repeal of the corporate alternative minimum tax;
- . . . a top individual tax rate of 37%; and
- . . . an election to choose either a property tax deduction or a state and local income tax deduction, up to $10,000.
Useful information for all individuals, and businesses required to pay Illinois Income Tax.
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With the online holiday shopping season in full swing, it’s the perfect time for all taxpayers to take steps to protect their identities and personal data. The IRS partnered with state tax agencies, the tax industry and other groups across the country to encourage all taxpayers to think about data protection.
With the online holiday shopping season in full swing, it’s the perfect time for all taxpayers to take steps to protect their identities and personal data. The IRS partnered with state tax agencies, the tax industry and other groups across the country to encourage all taxpayers to think about data protection.
Information on these five topics remains relevant year-round:
Eight Steps to Keep Online Data Safe
Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:
- Shop at familiar online retailers.
- Avoid unprotected Wi-Fi.
- Learn to recognize and avoid phishing emails that pose as a trusted source.
- Keep a secure machine.
- Use passwords that are strong, long and unique.
- Use multi-factor authentication when available.
- Sign up for account alerts.
- Encrypt sensitive data and protect it with a password.
Recognize Phishing Email Scams
The IRS reminds people to be on the lookout for new, sophisticated email phishing scams. These scams not only endanger someone’s personal information, but they can also affect a taxpayer’s refund in 2018. Even if an email is from a known source, people should use caution because cybercrooks are very good at mimicking trusted businesses, friends and family.
Five Steps Data Breach Victims Can Take
People who are the victim of a data breach should consider these five steps to help protect their sensitive information that can be used on a tax return:
- Determine what information the thieves compromised.
- Consider taking advantage of credit monitoring services offered to victims.
- Place a freeze on credit accounts to prevent access to credit records.
- Reset passwords on online accounts.
- Use multi-factor authentication when available.
Thieves Use W-2 Scam to get Employee Data
The IRS warns the nation’s business, payroll and human resource communities about a growing W-2 email scam. Criminals use this scheme to gain access to W-2 and other sensitive tax information that employers have about their employees. The IRS recommends that all employers educate employees about this scheme, especially those in human resources and payroll departments.
Five Signs of Small Business Identity Theft
Business filers should be alert for signs of identity theft. They should contact the IRS if they experience any of these issues:
- The IRS rejects an e-filed return saying it already has one with that identification number.
- The IRS rejects an extension to file request saying it already has a return with that identification number.
- The filer receives an unexpected tax transcript.
- The filer receives an IRS notice that doesn’t relate to anything they submitted.
- The filer doesn’t receive expected or routine mailings from the IRS.
More information
This article contains a compasion of the Bills. We will keep you updated as future progress is made.
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Small business identity theft is a big business. Just like individuals, businesses can be victims too. Thieves use a business’s information to file fake tax returns or get credit cards.
Small business identity theft is a big business. Just like individuals, businesses can be victims too. Thieves use a business’s information to file fake tax returns or get credit cards.
Identity thieves are more sophisticated than they used to be. They know the tax code and filing practices and how to get valuable data. The IRS has seen a sharp increase in fraudulent business tax forms. These include Forms 1120, 1120S and 1041, as well as Schedule K-1. These affect business, partnership, estate and trust filers.
Signs of Identity Theft
Business filers should be alert for signs of identity theft. They should contact the IRS if they experience any of these issues:
- The IRS rejects an e-filed return saying it already has one with that identification number.
- The IRS rejects an extension to file request saying it already has a
return with that identification number.
- The filer receives an unexpected tax transcript.
- The filer receives an IRS notice that doesn’t relate to anything they submitted.
- The filer doesn’t receive expected or routine mailings from the IRS.
New Procedures to Protect Businesses in 2018
The IRS, state tax agencies and software providers have ways to detect suspicious returns. However, some new measures can help validate returns in advance. The IRS and states are asking businesses and tax professionals to help verify if a tax return is legitimate. These procedures are new for 2018. Software for business tax returns will ask questions related to:
- The person authorized to sign the return
- Payment history
- Parent company information
- Past deductions
- Filing history
More information
In a nutshell, to account for inflation, many amounts increased, but some stayed at 2017 levels. As you implement 2017 year-end tax planning strategies, be sure to take these 2018 adjustments into account in your planning. (Just keep in mind that some of these amounts may change if Congress passes a new tax law.)
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Taxpayers who are victims of a disaster might need to reconstruct records to prove their loss. Doing this may be essential for tax purposes, getting federal assistance, or insurance reimbursement.
Taxpayers who are victims of a disaster might need to reconstruct records to prove their loss. Doing this may be essential for tax purposes, getting federal assistance, or insurance reimbursement.
Here are 12 things taxpayers can do to help reconstruct their records after a disaster:
- Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov, or use their smartphone with the IRS2Go mobile phone app. They can also call 800-908-9946 to order them by phone.
- To establish the extent of the damage, taxpayers should take photographs or videos as soon after the disaster as possible.
- Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of appropriate documents.
- Home owners should review their insurance policy as the policy usually lists the value of a building to establish a base figure for replacement.
- Taxpayers who made improvements to their home should contact the contractors who did the work to see if records are available. If possible, the home owner should get statements from the contractors to verify the work and cost. They can also get written accounts from friends and relatives who saw the house before and after any improvements.
- For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, the taxpayer can contact the attorney who handled the trust.
- When no other records are available, taxpayers can check the county assessor’s office for old records that might address the value of the property.
- There are several resources that can help someone determine the current fair-market value of most cars on the road. These resources are all available online and at most libraries:
- Kelley’s Blue Book
- National Automobile Dealers Association
- Edmunds
- Taxpayers can look on their mobile phone for pictures that show the damaged property before the disaster.
- Taxpayers can support the valuation of property with photographs, videos, canceled checks, receipts, or other evidence.
- If they bought items using a credit card or debit card, they should contact their credit card company or bank for past statements.
- If a taxpayer doesn’t have photographs or videos of their property, a simple method to help them remember what items they lost is to sketch pictures of each room that was impacted.
More Information:
- Publication 547, Casualties, Disasters, and Thefts
- Publication 584, Casualty, Disaster, and Theft Loss Workbook
- Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
- Publication 2194, Disaster Resource Guide for Individuals and Businesses
- Federal Emergency Management Agency
- Small Business Administration
- Disasterassistance.gov
Small businesses might be vulnerable to several types of fraud, including identity theft, payroll fraud and return fraud. However, entrepreneurs can take steps to protect their companies.
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Taxpayers who requested an extension of time to file their federal tax returns have until Oct.16 to double-check their returns for tax benefits that people often overlook. These taxpayers still have time to see if they can benefit from these four credits.
Taxpayers who requested an extension of time to file their federal tax returns have until Oct.16 to double-check their returns for tax benefits that people often overlook. These taxpayers still have time to see if they can benefit from these four credits.
Earned Income Tax Credit
The Earned Income Tax Credit – also known as EITC and EIC – benefits people who work and who have low-to-moderate incomes. This credit reduces the amount of tax owed and may result in a refund. To qualify for this credit, a person must meet certain requirements. They must also file a tax return.
Child Tax Credit
This is a credit of up to $1,000 per qualifying child. Taxpayers who claim this credit – but who do not qualify for the full amount – may also be able to take the additional child tax credit.
Saver’s Credit
This credit helps low-to-moderate-income workers save for retirement. It is also known as the Retirement Savings Contributions Credit.
American Opportunity Credit
A credit for tuition, enrollment fees, and class material for the first four years of higher education. The amount of this credit is up to $2,500 per eligible student per year.
Taxpayers should check IRS.gov/credits-deductions to learn more about other credits they may be qualified to claim when they file. Taxpayers who must file their 2016 taxes by October 16 should consider filing electronically using IRS e-file.
Additional filing information for taxpayers in disaster areas and combat zones:
Although Oct. 16 is the last day for most people to file, some still have more time. This includes taxpayers in places recently hit by hurricanes that are federally-declared disaster areas. It also includes members of the military and others serving in a combat zone who have at least 180 days after they leave the combat zone to file returns and pay their taxes due.
Every year, millions of taxpayers ask for an extra six months to file their taxes. These taxpayers should have paid the tax they owed by the April deadline, but those who requested an extension should mark Monday, Oct. 16 as the extension deadline for 2017. While the deadline normally falls on Oct. 15, that date falls on a Sunday this year so the due date is moved to the next business day.
Every year, millions of taxpayers ask for an extra six months to file their taxes. These taxpayers should have paid the tax they owed by the April deadline, but those who requested an extension should mark Monday, Oct. 16 as the extension deadline for 2017. While the deadline normally falls on Oct. 15, that date falls on a Sunday this year so the due date is moved to the next business day.
Here are seven reminders for taxpayers who have not yet filed:
- File by Oct. 16. Taxpayers with extensions should file their tax returns by Oct. 16. If they owe, they should pay as much as possible to reduce interest and penalties. IRS Direct Pay allows individuals to securely pay from their checking or savings accounts. These taxpayers can consider an installment agreement, which allows them to pay over time.
- More Time for the Military. Military members and those serving in a combat zone generally get more time to file. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.
- More Time in Disaster Areas. People who have an extension and live or work in a disaster area often have more time to file. The disaster relief page on IRS.gov has more information.
- Use Direct Deposit. The fastest way for taxpayers to get their refund is to combine direct deposit and e-file.
- Use IRS Online Payment Options. Taxpayers who find they still owe taxes can pay them with IRS Direct Pay. It’s the simple, quick and free way to pay from a checking or savings account. For other payment options, taxpayers can click on the “Payments” tab on the IRS.gov home page.
- Keep a Copy of Tax Return. Taxpayers should keep a copy of their tax return and all supporting documents for at least three years. Among other things, this will make filing next year’s return easier. When a taxpayer e-files their 2017 return, for example, they will often need the adjusted gross income amount from their 2016 return.
The Internal Revenue Service has issued an annual update of per diem rates for use in substantiating expenses when traveling away from home on or after Oct. 1. The notice includes the rates and list of high-cost localities for purposes of the high-low substantiation method. The new rates will be in effect from Oct. 1, 2017, to Sept. 30, 2018.
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The IRS offers some tips to recover losses and reconstruct tax records, following the devastation caused by a natural disaster, such as the case recently with Hurricanes Harvey and Irma.
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Taxpayers may be able to deduct certain expenses of moving to a new home because they started or changed job locations. Here are some useful tax tips.
Taxpayers may be able to deduct certain expenses of moving to a new home because they started or changed job locations. Use Form 3903, Moving Expenses, to claim the moving expense deduction when filing a federal tax return.
Home means the taxpayer’s main home. It does not include a seasonal home or other homes owned or kept up by the taxpayer or family members. Eligible taxpayers can deduct the reasonable expenses of moving household goods and personal effects and of traveling from the former home to the new home.
Reasonable expenses may include the cost of lodging while traveling to the new home. The unreimbursed cost of packing, shipping, storing and insuring household goods in transit may also be deductible.
Who Can Deduct Moving Expenses?
- The move must closely relate to the start of work. Generally, taxpayers can consider moving expenses within one year of the date they start work at a new job location.
- The distance test. A new main job location must be at least 50 miles farther from the employee’s former home than the previous job location. For example, if the old job was three miles from the old home, the new job must be at least 53 miles from the old home. A first job must be at least 50 miles from the employee’s former home.
- The time test. After the move, the employee must work full-time at the new job for at least 39 weeks in the first year. Those self-employed must work full-time at least 78 weeks during the first two years at the new job site.
Different rules may apply for members of the Armed Forces or a retiree or survivor moving to the United States.
Here are a few more moving expense tips from the IRS:
- Reimbursed expenses. If an employer reimburses the employee for the cost of a move, that payment may need to be included as income. The employee would report any taxable amount on their tax return in the year of the payment.
- Nondeductible expenses. Any part of the purchase price of a new home, the cost of selling a home, the cost of entering into or breaking a lease, meals while in transit, car tags and driver’s license costs are some of the items not deductible.
- Recordkeeping. It is important that taxpayers maintain an accurate record of expenses paid to move. Save items such as receipts, bills, canceled checks, credit card statements, and mileage logs. Also, taxpayers should save statements of reimbursement from their employer.
- Address Change. After any move, update the address with the IRS and the U.S. Post Office. To notify the IRS file Form 8822, Change of Address.
The federal income tax is a pay-as-you-go system. Employers generally withhold tax from workers’ wages. Taxpayers also often have taxes withheld from certain other income including pensions, bonuses, commissions and gambling winnings.
People who do not pay tax through withholding, like the self-employed, generally pay estimated tax. In addition, those who earn income such as dividends, interest, capital gains, rent and royalties are usually required to make estimated tax payments.
Each year, because of life events like changes to household income or family size, some people get a larger refund than they expect while others find they owe more tax.
To prevent a tax-time surprise, the IRS offers these tips.
The federal income tax is a pay-as-you-go system. Employers generally withhold tax from workers’ wages. Taxpayers also often have taxes withheld from certain other income including pensions, bonuses, commissions and gambling winnings.
People who do not pay tax through withholding, like the self-employed, generally pay estimated tax. In addition, those who earn income such as dividends, interest, capital gains, rent and royalties are usually required to make estimated tax payments.
Each year, because of life events like changes to household income or family size, some people get a larger refund than they expect while others find they owe more tax.
To prevent a tax-time surprise, the IRS offers these tips:
- New Job. When starting a new job, an employee must fill out a Form W-4, Employee's Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from regular pay, bonuses, commissions and vacation allowances. The IRS Withholding Calculator tool on IRS.gov is easy for taxpayers to use to figure how much tax to withhold to avoid surprises.
- Estimated Tax. People who have income not subject to withholding may need to pay estimated tax. Those expecting to owe $1,000 or more than taxes withheld from their wages may also need to make estimated tax payments to avoid penalties. The worksheet in Form 1040-ES, Estimated Tax for Individuals, helps to figure the tax.
- Life Events. A change in marital status, the birth of a child or the purchase of a new home can change the amount of taxes a taxpayer owes. The Managing Your Taxes After a Life Event page on IRS.gov provides resources to explain the tax impact of these changes. In most cases, an employee can submit a new Form W–4 to their employer anytime.
Many parents send their children to summer day camps while they work or look for work. The IRS urges those who do to save their paperwork for the Child and Dependent Care Tax Credit. Eligible taxpayers may be able claim it on their taxes in 2018 if they paid for day camp or for someone to care for a child, dependent or spouse during 2017.
Many parents send their children to summer day camps while they work or look for work. The IRS urges those who do to save their paperwork for the Child and Dependent Care Tax Credit. Eligible taxpayers may be able claim it on their taxes in 2018 if they paid for day camp or for someone to care for a child, dependent or spouse during 2017.
Here are a few key facts to know about this credit:
- Qualifying Person. The care must have been for “qualifying persons.” A qualifying person can be a child under age 13. A qualifying person can also be a spouse or dependent who lived with the taxpayer for more than half the year and is physically or mentally incapable of self-care.
- Work-Related Expenses. The care must have been necessary so the taxpayer could work or look for work. For those who are married, the care also must have been necessary so a spouse could work or look for work. This rule does not apply if the spouse was disabled or a full-time student.
- Earned Income. The taxpayer -- and their spouse if married filing jointly -- must have earned income for the tax year. Special rules apply to a spouse who is a student or disabled.
- Credit Percentage/Expense Limits. The credit is worth between 20 and 35 percent of allowable expenses. The percentage depends on the income amount. Allowable expenses are limited to $3,000 for care of one qualifying person. The limit is $6,000 if the taxpayer paid for the care of two or more.
- Care Provider Information. The name, address and taxpayer identification number of the care provider must be included on the return. The childcare provider cannot be the taxpayer’s spouse, dependent or the child's parent.
- IRS Interactive Tax Assistant tool. Use Am I Eligible to Claim the Child and Dependent Care Credit? tool on IRS.gov to help determine if eligible to claim the credit.
- Dependent Care Benefits. Special rules apply for people who get dependent care benefits from their employer. See Form 2441, Child and Dependent Care Expenses, has more on these rules. File the form with a tax return.
- Special Circumstances. Since every family is different, the IRS has a series of exceptions to the rules in the qualification process. These exceptions allow a greater number of families to take advantage of the credit. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
Even if the childcare provider is a sitter in the home, taxpayers may qualify for the credit. Taxpayers who pay someone to come to their home and care for their dependent or spouse may be a household employer. They may have to withhold and pay Social Security and Medicare tax and pay federal unemployment tax. Find more on that in IRS Publication 926, Household Employer's Tax Guide.
Students and teenagers often get summer jobs. This is a great way to earn extra spending money or to save for later. The IRS offers these 7 tax tips for taxpayers with a summer job.
Students and teenagers often get summer jobs. This is a great way to earn extra spending money or to save for later. The IRS offers a few tax tips for taxpayers with a summer job:
- Withholding and Estimated Tax. Students and teenage employees normally have taxes withheld from their paychecks by the employer. Some workers are considered self-employed and may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year.
- New Employees. When a person gets a new job, they need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay. The IRS Withholding Calculator tool on IRS.gov can help a taxpayer fill out the form.
- Self-Employment. A taxpayer may engage in types of work that may be considered self-employment. Money earned from self-employment is taxable. Self-employment work can be jobs like baby-sitting or lawn care. Keep good records on money received and expenses paid related to the work. IRS rules may allow some, if not all, costs associated with self-employment to be deducted. A tax deduction generally reduces the taxes you pay.
- Tip Income. Employees should report tip income. Keep a daily log to accurately report tips. Report tips of $20 or more received in cash in any single month to the employer.
- Payroll Taxes. Taxpayers may earn too little from their summer job to owe income tax. Employers usually must withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer, in a timely manner.
- Newspaper Carriers. Special rules apply to a newspaper carrier or distributor. If a person meets certain conditions, then they are self-employed. If the taxpayer does not meet those conditions, and are under age 18, they may be exempt from Social Security and Medicare taxes.
- ROTC Pay. If a taxpayer is in a ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive may not be taxable, see Publication 3 for details.
Unlike many entities, not-for-profits can select a fiscal year end. A thoughtfully chosen year end may produce more meaningful financial statements, ease reporting requirements and even save the organization money.
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One of the most confusing questions clients ask their accountants is: what do I do with my tax records and how long do I need to keep them?
To: All retailers and servicepersons conducting business in taxing jurisdictions whose sales tax rate is changing, effective July 1, 2017
Effective July 1, 2017, certain taxing jurisdictions have imposed a local sales tax or changed their local sales tax rate on general merchandise sales.
The following taxes are affected:
• business district sales tax
• county public facilities tax
• county school facilities tax
• home rule sales tax
• non-home rule sales tax
These local sales taxes are referred to in this bulletin as “locally imposed sales tax.” You must adjust your cash register and any computer program so that beginning on July 1, 2017, you will collect and pay the correct sales tax. You need to contact your software vendor if you use software to create your forms.
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Taxpayers who pay work-related expenses out of their own pocket may be able to deduct them. Generally, employee business expenses are deductible if they are more than two percent of adjusted gross income. In most cases, they go on IRS Schedule A, Itemized Deductions.
Taxpayers who pay work-related expenses out of their own pocket may be able to deduct them. Generally, employee business expenses are deductible if they are more than two percent of adjusted gross income. In most cases, they go on IRS Schedule A, Itemized Deductions.
Other key points about employee business expenses:
- They must be Ordinary and Necessary. People can only deduct unreimbursed expenses that are ordinary and necessary to their work as an employee. An ordinary expense is one that is common and accepted in the industry. A necessary expense is appropriate and helpful to a business.
- Expense Examples. Some potentially deductible costs include:
- Required work clothes or uniforms not appropriate for everyday use.
- Supplies and tools for use on the job.
- Business use of a car.
- Business meals and entertainment.
- Business travel away from home.
- Business use of a home.
- Work-related education.
This list is not all-inclusive. Special rules apply for reimbursed expenses by an employer. IRS Publication 529, Miscellaneous Deductions, and Publication 463, Travel, Entertainment, Gift and Car Expenses, provide more details.
3. Forms to Use. In most cases, expenses are reported using Form 2106 or Form 2106-EZ. IRS Schedule A may also be used.
4. Educator Expenses. K-12 teachers may be able to deduct up to $250 of certain expenses paid in 2016. These may include books, supplies, equipment and other materials used in the classroom. They are an adjustment to income rather than an itemized deduction. In other words, people do not need to itemize to claim them. IRS Publication 529 has more.
5. Keep Records. The IRS urges people to keep good records for proof of income and expenses and also as a reminder not to overlook anything. IRS Publication 17, Your Federal Income Tax, has more on what to keep.
Taxpayers who have adopted or tried to adopt a child in 2016 may qualify for a tax credit. Here are nine important things about the
adoption credit.
Taxpayers who have adopted or tried to adopt a child in 2016 may qualify for a tax credit. Here are ten important things about the adoption credit:
- The Credit. The credit is nonrefundable, which may reduce taxes owed to zero. If the credit exceeds the tax owed, there is no refund of the additional amount. In addition, if an employer helped pay for the adoption through a written qualified adoption assistance program, that amount may reduce any taxes owed.
- Maximum Benefit. The maximum adoption tax credit and exclusion for 2016 is $13,460 per child.
- Credit Carryover. If the credit exceeds the tax owed, taxpayers can carry any unused credit forward. For example, the unused credit in 2016 can reduce taxes for 2017. Use this method for up to five years or until the credit is fully used, whichever comes first.
- Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themselves.
- Qualified Expenses. Adoption expenses must be reasonable, necessary and directly related to the adoption of the child. Types of expenses may include adoption fees, court costs, attorney fees and travel.
- Domestic or Foreign Adoptions. Taxpayers can usually claim the credit whether the adoption is domestic or foreign. However, there are different rules regarding the timing of expenses for each type of adoption.
- Special Needs Child. A special rule may apply if the adoption is of an eligible U.S. child with special needs. Under this special rule, taxpayers can claim the tax credit, even if qualified adoption expenses were not paid.
- No Double Benefit. In some instances both the tax credit and the exclusion may be claimed but not for the same expenses.
- Income Limits. The credit and exclusion are subject to income limitations. These may reduce or eliminate the claimable amount.
If you need a CPA who specializes in Adoption Tax Credits please contact Jeff Hansen.
The Internal Revenue Service posted confirmation on its website that it is giving calendar-year C corporations a six-month filing extension, despite statutory language that specifies a five-month extension for calendar-year C corporations.
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Taxpayers with children may qualify for certain tax benefits. Parents should consider child-related tax benefits when filing their federal tax return.
Taxpayers with children may qualify for certain tax benefits. Parents should consider child-related tax benefits when filing their federal tax return:
- Dependent. Most of the time, taxpayers can claim their child as a dependent. Use the Interactive Tax Assistant to help determine who can be claimed as a dependent. Taxpayers can generally deduct $4,050 for each qualified dependent. If the taxpayer’s income is above a certain limit, this amount may be reduced. For more on these rules, see Publication 501, Exemptions, Standard Deduction and Filing Information.
- Child Tax Credit. Generally, taxpayers can claim the Child Tax Credit for each qualifying child under the age of 17. The maximum credit is $1,000 per child. Taxpayers who get less than the full amount of the credit may qualify for the Additional Child Tax Credit. Use the Interactive Tax Assistant to determine if a child qualifies for the Child Tax Credit. For more information, see Schedule 8812 and Publication 972, Child Tax Credit.
- Child and Dependent Care Credit. Taxpayers may be able to claim this credit if they paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. Taxpayers must have paid for care so that they could work or look for work. Use the Interactive Tax Assistant to determine if a child qualifies for the Child Tax Credit. See Publication 503, Child and Dependent Care Expenses, for more on this credit.
- Earned Income Tax Credit. Taxpayers who worked but earned less than $53,505 last year should look into the EITC. They can get up to $6,269 in EITC. Taxpayers may qualify with or without children. Use the 2016 EITC Assistant tool at IRS.gov or see Publication 596, Earned Income Tax Credit, to learn more.
EITC and ACTC Refunds. Because of new tax-law change, the IRS cannot issue refunds before Feb. 15 returns that claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). This applies to the entire refund, even the portion not associated with these credits. The IRS will begin to release EITC/ACTC refunds starting Feb. 15. However, the IRS expects the earliest of these refunds to be available in bank accounts or debit cards during the week of Feb. 27, as long as there are no processing issues with the tax return and the taxpayer chose direct deposit. Read more about refund timing for early EITC/ACTC filers.
- Adoption Credit. It is possible to claim a tax credit for certain costs paid to adopt a child. For details, see Form 8839, Qualified Adoption Expenses.
- Education Tax Credits. An education credit can help with the cost of higher education. Two credits are available: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits may reduce the amount of tax owed. If the credit cuts a taxpayer’s tax to less than zero, it could mean a refund. Taxpayers may qualify even if they owe no tax. Complete Form 8863, Education Credits, and file a return to claim these credits. Taxpayers can use the Interactive Tax Assistant tool on IRS.gov to see if they can claim them. Visit the IRS’s Education Credits web page to learn more on this topic. Also, see Publication 970, Tax Benefits for Education.
- Student Loan Interest. Taxpayers may be able to deduct interest paid on a qualified student loan. They can claim this benefit even if they do not itemize deductions. Use the Interactive Tax Assistant to determine if interest paid on a student or educational loan is deductible. For more information, see Publication 970.
- Self-employed Health Insurance Deduction. Taxpayers who were self-employed and paid for health insurance may be able to deduct premiums paid during the year. See Publication 535, Business Expenses, for details.
Self-employed taxpayers normally earn income by carrying on a trade or business. Here are 6 important tips from the IRS for the self-employed.
Self-employed taxpayers normally earn income by carrying on a trade or business. Here are six important tips from the IRS for the self-employed:
- Self-Employed Taxpayers. Sole proprietors and independent contractors are two types of self-employment. Taxes can be complex for the self-employed. Check out the IRS Self Employed Individuals Tax Center.
- Estimated Tax. Self-employed taxpayers generally need to make quarterly estimated tax payments. IRS Publication 505, Tax Withholding and Estimated Tax, has details on making those payments.
- Schedule C or C-EZ. Self-employed taxpayers must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with their Form 1040. For expenses less than $5,000, use Schedule C-EZ. Each form’s instructions provide the rules for which form to use.
- SE Tax. For those making a profit, self-employment and income tax may need to be paid. Self-employment tax includes Social Security and Medicare taxes. Use Schedule SE, Self-Employment Tax, to figure the tax.
- Allowable Deductions. Taxpayers can deduct expenses paid to run a business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in the industry. A necessary expense is one that is helpful and proper for a trade or business.
- When to Deduct. In most cases, taxpayers can deduct expenses in the year paid or incurred. Some costs must be ‘capitalized,’ however. This means deducting the cost over a number of years.
All taxpayers should keep a copy of their tax return.
If taxpayers receive Social Security benefits, they may have to pay federal income tax on part of those benefits. These IRS tips will help taxpayers determine if they need to do so.
If taxpayers receive Social Security benefits, they may have to pay federal income tax on part of those benefits. These IRS tips will help taxpayers determine if they need to do so.
- Form SSA-1099. If taxpayers received Social Security benefits in 2016, they should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of their benefits.
- Only Social Security. If Social Security was a taxpayer’s only income in 2016, their benefits may not be taxable. They also may not need to file a federal income tax return. If they get income from other sources, they may have to pay taxes on some of their benefits.
- Interactive Tax Tools. Taxpayers can get answers to their tax questions with this helpful tool, Are My Social Security or Railroad Retirement Tier I Benefits Taxable, to see if any of their benefits are taxable. They can also visit IRS.gov and use the Interactive Tax Assistant tool.
- Tax Formula. Here’s a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable.
- Base Amounts. The three base amounts are:
- $25,000 – if taxpayers are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2016
- $32,000 – if they are married filing jointly
- $0 – if they are married filing separately and lived with their spouse at any time during the year
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
This IRS YouTube video walks taxpayers through the steps of how to use the IRS “Where’s my refund?” tool. The online tool gives personalized up to date tracking information on a refunds’ status. Nine out of 10 refunds are issued within 21 days when sent electronically and using direct deposit.
Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, which can be filed by small exempt organizations that meet certain gross receipts and assets tests, now has 29 help icons on various parts of the form that link to explanations, instructions and other resources.
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Easy, safe and fast — that’s direct deposit. It’s the best way to get a tax refund. Eighty percent of taxpayers choose it every year. The IRS knows taxpayers have a choice of how to receive their refunds.
Easy, safe and fast — that’s direct deposit. It’s the best way to get a tax refund. Eighty percent of taxpayers choose it every year. The IRS knows taxpayers have a choice of how to receive their refunds.
IRS Direct Deposit:
- Is Fast. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit. Use direct deposit for paper tax returns, too.
- Is Secure. Since refunds go right into a bank account, there’s no risk of having a paper check stolen or lost in the mail. This is the same electronic transfer system used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts.
- Is Convenient. There’s no need to wait for a refund check to come in the mail.
- Is Easy. Choosing direct deposit is easy. With e-file, just follow the instructions in the tax software. For paper returns, the tax form instructions serve as a guide. Make sure to enter the correct bank account and routing number.
- Has Options. Taxpayers can split a refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. The U.S. Treasury Department offers a retirement account. It’s called a MyRA account. Designate all or a part of a refund to a new MyRA account. Simply mark the “savings” box in the refund section of the return. Use IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), to deposit a refund in up to three accounts. Do not use Form 8888 to designate part of a refund to pay tax preparers.
Taxpayers should deposit refunds into accounts in their own name, their spouse’s name or both. Avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a tax refund from a joint return. Taxpayers should check with their bank for direct deposit rules.
There is a limit of three electronic direct deposit refunds made into a single financial account or pre-paid debit card. The IRS will send a notice and a refund check in the mail to taxpayers who exceed the limit. Find tips about direct deposit and the split refund option in Publication 17, Your Federal Income Tax. View, download and print tax products anytime at IRS.gov/forms.
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
Additional IRS Resources:
The Internal Revenue Service provided procedures for same-sex married couples to recompute the estate or gift tax applicable exclusion amount and the generation-skipping transfer tax exemption amount in light of the Supreme Court's Windsor decision.
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The odds are against people who make New Year's resolutions, with research suggesting that less than half of resolutions will be kept six months later. Here are tips for following through on financial objectives, beginning with setting goals that are specific, measurable and realistic.
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Some tax attributes, such as net operating losses attributable to the decedent, may be lost when a decedent-taxpayer dies, but proper planning for elderly or sick clients can allow practitioners to realize substantial tax savings for these clients.
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The Internal Revenue Service issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
The Internal Revenue Service issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 53.5 cents per mile for business miles driven, down from 54 cents for 2016
- 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
- 14 cents per mile driven in service of charitable organizations
The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
If you are divorcing or recently divorced, taxes may be the last thing on your mind. However, these events can have a big impact on your wallet. Alimony and a name or address change are just a few items you may need to consider. Here are some key tax tips to keep in mind.
If you are divorcing or recently divorced, taxes may be the last thing on your mind. However, these events can have a big impact on your wallet. Alimony and a name or address change are just a few items you may need to consider. Here are some key tax tips to keep in mind:
- Child Support. Child support payments are not deductible and if you received child support, it is not taxable.
- Alimony Paid. You can deduct alimony paid to or for a spouse or former spouse under a divorce or separation decree, regardless of whether you itemize deductions. Voluntary payments made outside a divorce or separation decree are not deductible. You must enter your spouse's Social Security Number or Individual Taxpayer Identification Number on your Form 1040 when you file.
- Alimony Received. If you get alimony from your spouse or former spouse, it is taxable in the year you get it. Alimony is not subject to tax withholding so you may need to increase the tax you pay during the year to avoid a penalty. To do this, you can make estimated tax payments or increase the amount of tax withheld from your wages.
- Spousal IRA. If you get a final decree of divorce or separate maintenance by the end of your tax year, you can’t deduct contributions you make to your former spouse's traditional IRA. You may be able to deduct contributions you make to your own traditional IRA.
- Name Changes. If you change your name after your divorce, be sure to notify the Social Security Administration. File Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov or call 800-772-1213 to order it. The name on your tax return must match SSA records. A name mismatch can cause problems in the processing of your return and may delay your refund. Health Care Law Considerations.
- Special Marketplace Enrollment Period. If you lose health insurance coverage due to divorce, you are still required to have coverage for every month of the year for yourself and the dependents you can claim on your tax return. You may enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period, if you lose coverage due to a divorce.
- Changes in Circumstances. If you purchase health insurance coverage through the Health Insurance Marketplace, you may get advance payments of the premium tax credit. If you do, you should report changes in circumstances to your Marketplace throughout the year. These changes include a change in marital status, a name change, a change of address, and a change in your income or family size. Reporting these changes will help make sure that you get the proper type and amount of financial assistance. This will also help you avoid getting too much or too little credit in advance.
- Shared Policy Allocation. If you divorced or are legally separated during the tax year and are enrolled in the same qualified health plan, you and your former spouse must allocate policy amounts on your separate tax returns to figure your premium tax credit and reconcile any advance payments made on your behalf. Publication 974, Premium Tax Credit, has more information about the Shared Policy Allocation. For more on this topic, see Publication 504, Divorced or Separated Individuals. You can get it on IRS.gov/forms at any time.
Understanding your tax obligation is one key to business success. When you start a business, you need to know about income taxes, payroll taxes and much more. Here are five IRS tax tips that can help you get your business off to a good start.
Understanding your tax obligation is one key to business success. When you start a business, you need to know about income taxes, payroll taxes and much more. Here are five IRS tax tips that can help you get your business off to a good start:
- Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you file.
- Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, you can use IRS Direct Pay to make them. It’s the fast, easy and secure way to pay from your checking or savings account.
- Employer Identification Number (EIN). You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
- Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.
- Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. You’re eligible for the credit if you have fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities. For more information on your health care responsibilities as an employer, see the Affordable Care Act for Employers page on IRS.gov.
Get all the basics of starting a business on IRS.gov at the Small Business and Self-Employed Tax Center.
Do you plan to donate your time to charity before years end? If you travel for it, you may be able to lower your taxes. Here are some tax tips that you should know about deducting charity-related travel expenses.
Do you plan to donate your time to charity before years end? If you travel for it, you may be able to lower your taxes. Here are some tax tips that you should know about deducting charity-related travel expenses:
- Qualified Charities. To deduct your costs, you must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. Ask the group about its status before you donate. You can also use the Select Check tool on IRS.gov to check a group’s status.
- Out-of-Pocket Expenses. You may be able to deduct some of your costs including travel. They must be necessary while you are away from home. All costs must be:
o Unreimbursed,
o Directly connected with the services,
o Expenses you had only because of the services you gave, and
o Not personal, living or family expenses.
- Genuine and Substantial Duty. Your charity work has to be real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
- Value of Time or Service. You can’t deduct the value of your time or services that you give to charity. This includes income lost while you serve as an unpaid volunteer for a qualified charity.
- Travel You Can Deduct. The types of expenses that you may be able to deduct include: o Air, rail and bus transportation, o Car expenses, o Lodging costs, o Cost of meals, and o Taxi or other transportation costs between the airport or station and your hotel.
- Travel You Can’t Deduct. Some types of travel do not qualify for a tax deduction. For example, you can’t deduct your costs if a significant part of the trip involves recreation or vacation.
For more on these rules, see Publication 526, Charitable Contributions. You can get it on IRS.gov/forms at any time.
Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return.
Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return:
- Itemize. You can only claim your medical expenses that you paid for in 2015 if you itemize deductions on your federal tax return.
- Income. Include all qualified medical costs that you paid for during the year, however, you only realize a tax benefit when your total amount is more than 10 percent of your adjusted gross income.
- Temporary Threshold for Age 65. If you or your spouse is age 65 or older, then it’s 7.5 percent of your adjusted gross income. This exception applies through Dec. 31, 2016.
- Qualifying Expenses. You can include most medical and dental costs that you paid for yourself, your spouse and your dependents including:
- The costs of diagnosing, treating, easing or preventing disease.
- The costs you pay for prescription drugs and insulin.
- The costs you pay for insurance premiums for policies that cover medical care qualify.
- Some long-term care insurance costs.
Exceptions and special rules apply. Costs reimbursed by insurance or other sources normally do not qualify for a deduction. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses. You can get it on IRS.gov/forms anytime.
- Travel Costs Count. You may be able to deduct travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 23 cents per mile for 2015.
- No Double Benefit. You can’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.
- Use the Tool. Use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. It can answer many of your questions on a wide range of tax topics including the health care law.
Special tax rules may apply to some children who receive investment income. The rules may affect the amount of tax and how to report the income. Here are five important points to keep in mind if your child has investment income.
Special tax rules may apply to some children who receive investment income. The rules may affect the amount of tax and how to report the income. Here are five important points to keep in mind if your child has investment income:
1. Investment Income. Investment income generally includes interest, dividends and capital gains. It also includes other unearned income, such as from a trust.
2. Parent’s Tax Rate. If your child's total investment income is more than $2,100 then your tax rate may apply to part of that income instead of your child's tax rate. See the instructions for Form 8615, Tax for Certain Children Who Have Unearned Income.
3. Parent’s Return. You may be able to include your child’s investment income on your tax return if it was less than $10,500 for the year. If you make this choice, then your child will not have to file his or her own return. See Form 8814, Parents' Election to Report Child's Interest and Dividends, for more.
4. Child’s Return. If your child’s investment income was $10,500 or more in 2015 then the child must file their own return. File Form 8615 with the child’s federal tax return.
5. Net Investment Income Tax. Your child may be subject to the Net Investment Income Tax if they must file Form 8615. Use Form 8960, Net Investment Income Tax, to figure this tax.
Refer to IRS Publication 929, Tax Rules for Children and Dependents. You can get related forms and publications on IRS.gov.
The Internal Revenue Service, states and the tax industry remind you that online threats and annoyances abound. There are viruses, worms, Trojans, bots, spyware and adware – all fall under the malicious programs (malware) umbrella.
The Internal Revenue Service, states and the tax industry remind you that online threats and annoyances abound. There are viruses, worms, Trojans, bots, spyware and adware – all fall under the malicious programs (malware) umbrella.
How do you protect your computer from hackers and identity thieves? You need security software and to keep it turned on. You also need security on all of your digital devices, including laptops, tablets and mobile phones.
The IRS, state tax agencies and the tax professional industry are asking for your help in their effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference.
That’s why we launched a public awareness campaign that we call Taxes. Security. Together. We’ve also launched a series of security awareness tips that can help protect you from cybercriminals.
Tens of thousands of new malware programs launch each day, making the use of security software essential to safe internet use. These malware programs can disable your computer, install viruses that give cybercriminals control, steal your data, track your keystrokes to give criminals your passwords and many other malicious acts.
Here are a few basic steps to help protect your computer:
- Use pre-installed security software. Many computers come pre-installed with firewall and anti-virus protections. A good broad-based anti-malware program should be able to protect you from viruses, Trojans, spyware and adware.
- Turn on automatic updates. Set your security software to update automatically so it can be upgraded as threats emerge. Also, make sure your security software is on at all times.
- Investigate your security software options. Search out trusted sources to learn more about security software options. This will help you decide if you should invest in security software that gives you even stronger protections and options.
- Consider encryption software. If you retain important financial documents, such as prior-year tax returns, on your computer, consider investing in encryption software to prevent unauthorized access by hackers or identity thieves.
- Protect your children. If your children also use the same device, make sure it has parental control options to protect your children from malicious websites. Educate your children about the threats of opening suspicious web pages, emails or documents.
- Set password protections for all devices. Whether it’s your computer, tablet or mobile phone, always set a password requirement for accessing the device. If it is lost or stolen, your device is still protected from access.
- Protect your wireless network. Set password and encryption protections for your wireless network. If your home or business Wi-Fi is unsecured it also allows any computer within range to access your wireless and steal information from your computer.
- Never download “security” software from a pop-up ad. A pervasive ploy is a pop-up ad that indicates it has detected a virus on your computer. It urges you to download a security software package. Don’t fall for it. It most likely will install some type of malware. Reputable security software companies do not advertise in this manner.
- Avoid downloads from suspicious sources. Never open a PDF document or picture attached in an email from an unknown source. It may contain malware.
The IRS, state tax agencies and the tax industry joined as the Security Summit to enact a series of initiative to help protect you from tax-related identity theft in 2017. You can help by taking these basic steps.
To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. Also read Publication 4524, Security Awareness for Taxpayers.
The Chicago Amusement Tax applies to paid television programming, including satellite TV. The Federal Communications Act exempts satellite TV providers from having to collect local taxes, but it does not exempt customers from having to pay them.
Because many businesses were previously unaware of their obligation to pay the Amusement Tax, the Department is offering to accept the payment of Amusement Tax from July 1, 2015 to the date of payment, waiving all interest and penalties, and waiving all liability for periods before July 1, 2015 (including Amusement Tax, interest and penalties), for any business that applies to the Department by December 31, 2016. Any business that wishes to accept this offer should submit the 2016 Voluntary Disclosure Application for Business Subscribers of Satellite Television Services.
The Chicago Amusement Tax applies to paid television programming, including satellite TV. The Federal Communications Act exempts satellite TV providers from having to collect local taxes, but it does not exempt customers from having to pay them.
Chicago businesses that subscribe to and use satellite TV in the City of Chicago are required to pay the Amusement Tax directly to the Chicago Department of Finance. This includes bars, restaurants and all other businesses that subscribe to satellite TV.
The attached Informational Bulletin provides information regarding the obligation to remit the Chicago Amusement Tax for business subscribers of satellite TV. You may be subject to this tax if you subscribe to satellite TV.
Voluntary Disclosure - Special Limited Time Offer
Because many businesses were previously unaware of their obligation to pay the Amusement Tax, the Department is offering to accept the payment of Amusement Tax from July 1, 2015 to the date of payment, waiving all interest and penalties, and waiving all liability for periods before July 1, 2015 (including Amusement Tax, interest and penalties), for any business that applies to the Department by December 31, 2016. Any business that wishes to accept this offer should submit the 2016 Voluntary Disclosure Application for Business Subscribers of Satellite Television Services.
Generally, the statute of limitations is six years for non-filers. If a business chooses not to participate in this program and the Department later determines that there is Amusement Tax liability, the business may be assessed tax, interest, and penalties for all periods under statute.
Additional Questions?
Additional tax information and forms can be found at www.cityofchicago.org/finance.
You may also contact them by email at revenuedatabase@cityofchicago.org or by phone at (312) 747-4747.
The IRS does not initiate contact with taxpayers by email, text message or social media to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
The IRS does not initiate contact with taxpayers by email, text message or social media to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
Report all unsolicited email claiming to be from the IRS to phishing@irs.gov. If you or a client has experienced a monetary loss because of an IRS-related incident, report it to the Treasury Inspector General Administration (TIGTA) and file a complaint with the Federal Trade Commission (FTC).
Victims of Hurricane Matthew that took place beginning on October 7, 2016 in parts of Virginia may qualify for tax relief from the Internal Revenue Service. The President has declared that a major disaster exists in the Commonwealth of Virginia. Following the recent disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in the independent cities of Chesapeake, Newport News, Norfolk and Virginia Beach will receive tax relief.
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A new federal law moves up the W-2 filing deadline for employers and small businesses to Jan. 31. The new law makes it easier for the IRS to find and stop refund fraud. It also delays some taxpayer refunds. Those taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit won’t see refunds until Feb.15, at the earliest.
A new federal law moves up the W-2 filing deadline for employers and small businesses to Jan. 31. The new law makes it easier for the IRS to find and stop refund fraud. It also delays some taxpayer refunds. Those taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit won’t see refunds until Feb.15, at the earliest.
Here are some key points to keep in mind:
- Protecting Americans from Tax Hikes (PATH) Act. Enacted last December, the new law means employers need to file their copies of Forms W-2 by Jan. 31. These forms also go to the Social Security Administration. The new deadline also applies to certain Forms 1099. Those reporting nonemployee compensation such as payments to independent contractors submitted to the IRS are due Jan. 31. Employers have long faced a Jan. 31 deadline in providing copies of these forms to their employees. That date won’t change.
- Different from past deadline. Employers normally had until the end of February, if filing on paper, or the end of March, if filing electronically, to send in copies of these forms. The IRS is working with the payroll community and other partners to spread the word.
- Helps stop fraud or errors. The new Jan. 31 deadline will help the IRS to spot errors on returns filed by taxpayers. Having these W-2s and 1099s sooner will make it easier for the IRS to verify legitimate tax returns and get refunds to taxpayers eligible to receive them. The changes will allow the IRS to send some tax refunds faster.
- Some refunds delayed. Certain taxpayers will get their refunds a bit later. By law, the IRS must hold refunds for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. This means the whole refund, not just the part related to the EITC or ACTC.
- File tax returns normally. Taxpayers should file their returns as they normally do. The IRS issues more than nine out of 10 refunds in less than 21 days. However, some returns may need further review. Whether or not claiming EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date. Consider this fact when making major purchases or paying debts.
- Use IRS.gov online tools. Starting Feb. 15, the best way to check the status of a refund is with the Where's My Refund? tool on IRS.gov or the IRS2Go Mobile App.
A name change can have an impact on your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name.
A name change can have an impact on your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:
- Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
- Make Dependent’s Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.
If you adopted a child who does not have a Social Security number, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.
- Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.
- Report Changes in Circumstances when they happen. If you enrolled in health insurance coverage through the Health Insurance Marketplace you may receive the benefit of advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace when they happen throughout the year. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit.
With hurricane season underway, the IRS offers advice to those impacted by storms and other natural disasters. Here are some tips to help you prepare for such events.
With hurricane season underway, the IRS offers advice to those impacted by storms and other natural disasters. Here are some tips to help you prepare for such events:
- Use Electronic Records. You may have access to bank and other financial statements online. If so, your statements are already securely stored there. You can also keep an additional set of records electronically. One way is to scan tax records and insurance policies onto an electronic format. You may want to download important records to an external hard drive, USB flash drive or burn them onto CD or DVD. Be sure you keep duplicates of your records in a safe place. For example, store them in a waterproof container away from the originals. If a disaster strikes your home, it may also affect a wide area. If that happens, you may not be able to retrieve the records that are stored in that area.
- Document Valuables. Take photos or videos of the contents of your home or business. These visual records can help you prove the value of your lost items. They may help with insurance claims or casualty loss deductions on your tax return. You should also store these in a safe place. For example, you might store them with a friend or relative who lives out of the area.
- Count on the IRS for Help. If you fall victim to a disaster, know that the IRS stands ready to help. You can call the IRS disaster hotline at 866-562-5227 for special help with disaster-related tax issues.
- Get Copies of Prior Year Tax Records. If you need a copy of your tax return, you should file Form 4506, Request for Copy of Tax Return. The usual fee per copy is $50. However, the IRS will waive this fee if you are a victim of a federally declared disaster. If you just need information that shows most line items from your tax return, you can request a free transcript. The quickest way to get a copy of your tax transcript is to use the Get Transcript application. You can also get it if you call 1-800-908-9946. Two other options are to file Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, or Form 4506-T, Request for Transcript of Tax Return.
Get IRS tax forms and publications on IRS.gov/forms at any time.
If you received an extension of time to file your 2015 federal tax return, you have until Oct. 17 to double check your return and information on it that is related to the Affordable Care Act. The health care law includes the individual shared responsibility provision and the premium tax credit that may affect your return.
If you received an extension of time to file your 2015 federal tax return, you have until Oct. 17 to double check your return and information on it that is related to the Affordable Care Act. The health care law includes the individual shared responsibility provision and the premium tax credit that may affect your return.
Many people already have minimum essential coverage. If this applies to you, you'll simply report your coverage when you file your tax return by checking a box on your Form 1040, 1040A or 1040EZ.
Most taxpayers simply need to check a box on their tax return to indicate you had health coverage for all of 2015. For any month that you or anyone in your family did not have minimum essential coverage, you need to either claim or report a coverage exemption or make a shared responsibility payment when you file your tax return.
If you enrolled in health coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. If you benefited from advance payments of the premium tax credit, you must file a federal income tax return to reconcile your advance credit payments, even if you’re otherwise not required to file. Failing to file will prevent you from receiving advance credit payments in future years.
The Interactive Tax Assistant tool can help you determine if you qualify for an exemption, if you need to make a payment, or if you are eligible for the premium tax credit. Taxpayers can visit IRS.gov/aca for additional information on how the Affordable Care Act affects their return.
Remember that filing electronically is the easiest way to file a complete and accurate tax return. Electronic filing options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.
Before filing the 2015 return, be sure to make a copy and keep it and all supporting documents for a minimum of three years. Doing so will make it easier to fill out a 2016 return next year. In addition, you will often need the adjusted gross income amount from your 2015 return to properly e-file your 2016 return.
For more information about the Oct. 17 extension deadline for filing 2015 tax returns, see IRS Special Edition Tax Tip 2016-14 and news release IR-2016-130.
If you are a farmer or rancher forced to sell your livestock because of the drought that affects much of the nation, special IRS tax relief may help you. The IRS has extended the time to replace livestock that their owners were forced to sell due to drought. If you’re eligible, this may help you defer tax on any gains you got from the forced sales. The relief applies to all or part of 37 states and Puerto Rico affected by the drought.
Here are several points you should know about this relief.
If you are a farmer or rancher forced to sell your livestock because of the drought that affects much of the nation, special IRS tax relief may help you. The IRS has extended the time to replace livestock that their owners were forced to sell due to drought. If you’re eligible, this may help you defer tax on any gains you got from the forced sales. The relief applies to all or part of 37 states and Puerto Rico affected by the drought.
Here are several points you should know about this relief:
- Defer Tax on Drought Sales. If the drought caused you to sell more livestock than usual, you may be able to defer tax on the extra gains from those sales.
- Replacement Period. You generally must replace the livestock within a four-year period to postpone the tax. The IRS can extend that period if the drought continues.
- IRS Grants More Time. The IRS has added one more year to the replacement period for eligible farmers and ranchers. The one-year extension of time generally applies to certain sales due to drought.
- Livestock Sales that Apply. If you are eligible, your gains on sales of livestock that you held for draft, dairy or breeding purposes apply.
- Livestock Sales that Do Not Apply. Sales of other livestock, such as those you raised for slaughter or held for sporting purposes and poultry, are not eligible.
- Areas Eligible for Relief. The IRS relief applies to any farm in areas suffering exceptional, extreme or severe drought conditions during any weekly period between Sept. 1, 2015, and Aug. 31, 2016. The National Drought Mitigation Center has listed all or parts of 37 states and Puerto Rico that qualify for relief. Any county that borders a county on the NDMC’s list also qualifies.
- 2012 Drought Sales. This extension immediately impacts drought sales that occurred during 2012.
- Prior Drought Sales. However, the IRS has granted previous extensions that affect some of these localities. This means that some drought sales before 2012 are also affected. The IRS will grant additional extensions if severe drought conditions persist.
Get more on this relief in Notice 2016-60 on IRS.gov. This includes a list of states and counties where the IRS relief applies. For more on these tax rules see Publication 225, Farmer’s Tax Guide on IRS.gov.
Keep a copy of your tax return. If you filed an extension and face the Oct. 17, 2016, filing deadline, you may need your Adjusted Gross Income amount from your 2014 tax return to file. Get a transcript of your prior year’s return at www.irs.gov/transcript.
The updated rates are effective for per-diem allowances paid to any employee on or after Oct. 1, 2016, for travel away from home on or after that date, and supersede the rates in Notice 2015-63, which provided the rates for Oct. 1, 2015, through Sept. 30, 2016.
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The Internal Revenue Service issued an alert to taxpayers not to respond to the latest tax fraud scheme, an emailed CP2000 notice claiming to be related to an Affordable Care Act tax underpayment. The alert emphasizes that the IRS does not communicate with taxpayers about their taxes by email.
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Older baby boomers need to pay attention to deadlines for withdraw required amounts of money from retirement accounts when they turn 70-and-a-half. Missing a deadline can trigger a 50% tax penalty.
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No, seriously. It's a VR game. About accounting. At first, anyway...
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Renting out a vacation property to others can be profitable. If you do this, you must normally report the rental income on your tax return. You may not have to report the rent, however, if the rental period is short and you also use the property as your home. Here are some tips that you should know.
Renting out a vacation property to others can be profitable. If you do this, you must normally report the rental income on your tax return. You may not have to report the rent, however, if the rental period is short and you also use the property as your home. Here are some tips that you should know:
- Vacation Home. A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
- Schedule E. You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax.
- Used as a Home. If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received. For more about these rules, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
- Divide Expenses. If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between rental use and personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use.
- Personal Use. Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also considered personal use.
- Schedule A. Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
- Rented Less than 15 Days. If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income. In this case you deduct your qualified expenses on Schedule A.
This review of developments in individual income taxation covers new laws, cases, regulations and Internal Revenue Service guidance, including new due-diligence requirements for preparers of returns claiming the child tax credit and the American opportunity tax credit.
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Americans have serious money issues. Nearly half the people in this country say they don't have enough money saved to cover even a $400 emergency expense, and a third of Americans regularly carry credit card debt.
Financial education alone won't fix all of the problems Americans face. But consider that since schools invested in sex education in the 1980s and 1990s, teen pregnancies have declined dramatically. Imagine what could happen if people learned the basics about money.
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With all the planning and preparation that goes into a wedding, taxes may not be high on your summer wedding checklist. However, you should be aware of the tax issues that come along with marriage. Here are some basic tips to help with your planning.
Please listen to Catalano, Caboor & Co.'s Jerry Catalano on Radio Wedding Expo Show's podcast giving accounting advice to soon to be married couples.
With all the planning and preparation that goes into a wedding, taxes may not be high on your summer wedding checklist. However, you should be aware of the tax issues that come along with marriage. Here are some basic tips to help with your planning:
- Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov, by calling 800-772-1213 or from your local SSA office.
- Change tax withholding. A change in your marital status means you must give your employer a new Form W-4, Employee's Withholding Allowance Certificate. If you and your spouse both work, your combined incomes may move you into a higher tax bracket or you may be affected by the Additional Medicare Tax. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information.
- Changes in circumstances. If you or your spouse purchased a Health Insurance Marketplace plan and receive advance payments of the premium tax credit in 2016, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace when they happen. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance credit payments are paid directly to your insurance company on your behalf to lower the out-of-pocket cost you pay for your health insurance premiums. Reporting changes now will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance, which may affect your refund or balance due when you file your tax return.
- Address change. Let the IRS know if your address changes. To do that, send the IRS Form 8822, Change of Address. You should also notify the U.S. Postal Service. You can ask them online at USPS.com to forward your mail. You may also report the change at your local post office. You should also notify your Health Insurance Marketplace when you move out of the area covered by your current health care plan.
- Tax filing status. If you’re married as of Dec. 31, that’s your marital status for the whole year for tax purposes. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to figure the tax both ways to find out which status results in the lowest tax.
- Select the right tax form. Choosing the right income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. You must claim itemized deductions on a Form 1040, not a Form 1040A or Form 1040EZ.
State income taxes or property taxes could cost you thousands of dollars every year. High sales taxes or gas taxes could slowly drain your funds every time you pull out your wallet.
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Accounting is one of the most important areas for keeping your company profitable. As you start out and your company grows, software can only take you so far. Accountants can help your company move forward. Here are five reasons why your business needs an accountant in all stages of your growth.
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Did you move due to a change in your job or business location? If so, you may be able to deduct your moving expenses, except for meals. Here are the top tax tips for moving expenses.
Did you move due to a change in your job or business location? If so, you may be able to deduct your moving expenses, except for meals. Here are the top tax tips for moving expenses.
In order to deduct moving expenses, your move must meet three requirements:
- The move must closely relate to the start of work. Generally, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.
- Your move must meet the distance test. Your new main job location must be at least 50 miles farther from your old home than your previous job location. For example, if your old job was three miles from your old home, your new job must be at least 53 miles from your old home.
- You must meet the time test. After the move, you must work full-time at your new job for at least 39 weeks in the first year. If you’re self-employed, you must meet this test and work full-time for a total of at least 78 weeks during the first two years at your new job site. If your income tax return is due before you’ve met this test, you can still deduct moving expenses if you expect to meet it.
See Publication 521, Moving Expenses, for more information about these rules. It’s available on IRS.gov/forms anytime.
If you can claim this deduction, here are a few more tips from the IRS:
- Travel. You can deduct transportation and lodging expenses for yourself and household members while moving from your old home to your new home. You cannot deduct your travel meal costs.
- Household goods and utilities. You can deduct the cost of packing, crating and shipping your things. You may be able to include the cost of storing and insuring these items while in transit. You can deduct the cost of connecting or disconnecting utilities.
- Nondeductible expenses. You cannot deduct as moving expenses any part of the purchase price of your new home, the cost of selling a home or the cost of entering into or breaking a lease. See Publication 521 for a complete list.
- Reimbursed expenses. If your employer later pays you for the cost of a move that you deducted on your tax return, you may need to include the payment as income. You report any taxable amount on your tax return in the year you get the payment.
- Address Change. When you move, be sure to update your address with the IRS and the U.S. Post Office. To notify the IRS file Form 8822, Change of Address.
Premium Tax Credit – Changes in Circumstances.
If you or anyone in your family purchased health coverage through the Marketplace and had advance payments of the premium tax credit paid in advance to your insurance company to lower your monthly premiums, it is important to report life changes to the Marketplace when they happen. Moving to a new address is one change you should report. Other things to report include changes in your income, employment, family size, and gaining or losing eligibility for other coverage. Reporting life changes as they happen allows the Marketplace to adjust your advance credit payments. This will help you avoid a smaller refund or unexpectedly owing taxes when you file your tax return.
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The Internal Revenue Service today warned taxpayers against telephone scammers targeting students and parents during the back-to-school season and demanding payments for non-existent taxes, such as the “Federal Student Tax.”
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Every taxpayer has a set of fundamental rights. The “Taxpayer Bill of Rights” takes the many existing rights in the tax code and groups them into 10 categories. You should know these rights when you interact with the IRS. Publication 1, Your Rights as a Taxpayer, highlights a list of your rights and the agency’s obligations to protect them. Here is a summary of the Taxpayer Bill of Rights.
Every taxpayer has a set of fundamental rights. The “Taxpayer Bill of Rights” takes the many existing rights in the tax code and groups them into 10 categories. You should know these rights when you interact with the IRS. Publication 1, Your Rights as a Taxpayer, highlights a list of your rights and the agency’s obligations to protect them. Here is a summary of the Taxpayer Bill of Rights:
- The Right to Be Informed. You have the right to know what is required to comply with the tax laws. You are entitled to clear explanations of the laws and IRS procedures on all tax forms, instructions, publications, notices and correspondence. You have the right to know about IRS decisions affecting your accounts and clear explanations of the outcomes.
- The Right to Quality Service. You have the right to receive prompt, courteous and professional assistance in your dealings with the IRS and the freedom to speak to a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.
- The Right to Pay No More Than the Correct Amount of Tax. You have the right to pay only the amount of tax legally due, including interest and penalties. You should also expect the IRS to apply all tax payments properly.
- The Right to Challenge the IRS’s Position and Be Heard. You have the right to object to formal IRS actions or proposed actions and provide justification with additional documentation. You should expect that the IRS will consider your timely objections and documentation promptly and fairly. If the IRS does not agree with your position, you should expect a response.
- The Right to Appeal an IRS Decision in an Independent Forum. You are entitled to a fair and impartial administrative appeal of most IRS decisions, including certain penalties. You have the right to receive a written response regarding a decision from the Office of Appeals. You generally have the right to take your case to court.
- The Right to Finality. You have the right to know the maximum amount of time you have to challenge an IRS position and the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. You have the right to know when the IRS concludes an audit.
- The Right to Privacy. You have the right to expect that any IRS inquiry, examination or enforcement action will comply with the law and be no more intrusive than necessary. You should expect such proceedings to respect all due process rights, including search and seizure protections. The IRS will provide, where applicable, a collection due process hearing.
- The Right to Confidentiality. You have the right to expect that your tax information will remain confidential. The IRS will not disclose information unless authorized by you or by law. You should expect the IRS to take appropriate action against employees, return preparers and others who wrongfully use or disclose your return information.
- The Right to Retain Representation. You have the right to retain an authorized representative of your choice to represent you in your dealings with the IRS. You have the right to seek assistance from a Low Income Taxpayer Clinic if you cannot afford representation.
- The Right to a Fair and Just Tax System. You have the right to expect fairness from the tax system. This includes considering all facts and circumstances that might affect your underlying liabilities, ability to pay or ability to provide information timely. You have the right to receive assistance from the Taxpayer Advocate Service if you are experiencing financial difficulty or if the IRS has not resolved your tax issues properly and timely through its normal channels.
Olympic athletes who bring home medals also bring home cash — $25,000 for gold, $15,000 for silver and $10,000 for bronze — paid for by the United States Olympic Committee. Like any prize winner, from a jackpot hitter to a Nobel Prize recipient, the athletes are taxed because Olympic medals and cash bonuses are considered income.
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If you pay for college in 2016, you may receive some tax savings on your federal tax return, even if you’re studying outside of the U.S. Both the American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe, but only the AOTC is partially refundable.
Here are a few things you should know about education credits.
If you pay for college in 2016, you may receive some tax savings on your federal tax return, even if you’re studying outside of the U.S. Both the American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe, but only the AOTC is partially refundable.
Here are a few things you should know about education credits:
- American Opportunity Tax Credit ‒ The AOTC is worth up to $2,500 per year for an eligible student. This credit is available for the first four years of higher education. Forty percent of the AOTC is refundable. That means, if you’re eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any tax.
- Lifetime Learning Credit ‒ The LLC is worth up to $2,000 per tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
- Qualified expenses ‒ You may use only qualified expenses paid to figure your credit. These expenses include the costs you pay for tuition, fees and other related expenses for an eligible student to enroll at, or attend, an eligible educational institution. Refer to IRS.gov for more on the rules that apply to each credit.
- Eligible educational institutions ‒ Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify. If you aren’t sure if your school is eligible:
- Ask your school if it is an eligible educational institution, or
- See if your school is on the U.S. Department of Education’s Accreditation database.
- Form 1098-T ‒ In most cases, you should receive Form 1098-T, Tuition Statement, from your school by February 1. This form reports your qualified expenses to the IRS and to you. The amounts shown on the form may be either: (1) the amount you paid for qualified tuition and related expenses, or (2) the amount that your school billed for qualified tuition and related expenses; therefore, the amounts shown on the form may be different than the amounts you actually paid. Don’t forget that you can only claim an education credit for the qualified tuition and related expenses that you paid in the tax year and not just the amount that your school billed.
- Income limits ‒ The education credits are subject to income limitations and may be reduced, or eliminated, based on your income.
- Interactive Tax Assistant tool ‒ To see if you’re eligible to claim education credits, use the Interactive Tax Assistant tool on IRS.gov.
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Many taxpayers who made their next-day employment tax deposits on Tuesday, May 31, or semi-weekly employment tax deposits on Thursday, June 2, 2016, were incorrectly sent notices that their deposits were late.
The IRS apologizes for any inconvenience, and no taxpayer action is required. IRS systems have been corrected and impacted taxpayer accounts will be updated.
Many taxpayers who made their next-day employment tax deposits on Tuesday, May 31, or semi-weekly employment tax deposits on Thursday, June 2, 2016, were incorrectly sent notices that their deposits were late.
The IRS apologizes for any inconvenience, and no taxpayer action is required. IRS systems have been corrected and impacted taxpayer accounts will be updated.
If you are in the U. S. Armed Forces, there are special tax breaks for you. For example, some types of pay are not taxable. Certain rules apply to deductions or credits that you may be able to claim that can lower your tax. In some cases, you may get more time to file your tax return. You may also get more time to pay your income tax. Here are some tips to keep in mind.
If you are in the U. S. Armed Forces, there are special tax breaks for you. For example, some types of pay are not taxable. Certain rules apply to deductions or credits that you may be able to claim that can lower your tax. In some cases, you may get more time to file your tax return. You may also get more time to pay your income tax. Here are some tips to keep in mind:
- Deadline Extensions. Some members of the military, such as those who serve in a combat zone, can postpone some tax deadlines. If this applies to you, you can get automatic extensions of time to file your tax return and to pay your taxes.
- Combat Pay Exclusion. If you serve in a combat zone, your combat pay is partially or fully tax-free. If you serve in support of a combat zone, you may also qualify for this exclusion.
- Moving Expense Deduction. You may be able to deduct some of your unreimbursed moving costs on Form 3903. This normally applies if the move is due to a permanent change of station.
- Earned Income Tax Credit or EITC. If you get nontaxable combat pay, you may choose to include it in your taxable income. Including it may boost your EITC, meaning you may owe less tax and could get a larger refund. In 2015, the maximum credit for taxpayers was $6,242. The average amount of EITC claimed was more than $2,400. Figure it both ways and choose the option that best benefits you. You may want to use tax preparation software or consult a tax professional to guide you.
- Signing Joint Returns. Both spouses normally must sign a joint income tax return. If your spouse is absent due to certain military duty or conditions, you may be able to sign for your spouse. You may need a power of attorney to file a joint return. Your installation’s legal office may be able to help you.
- Reservists’ Travel Deduction. Reservists whose reserve-related duties take them more than 100 miles away from home can deduct their unreimbursed travel expenses on Form 2106, even if they do not itemize their deductions.
- Uniform Deduction. You can deduct the costs of certain uniforms that you can’t wear while off duty. This includes the costs of purchase and upkeep. You must reduce your deduction by any allowance you get for these costs.
- ROTC Allowances. Some amounts paid to ROTC students in advanced training are not taxable. This applies to allowances for education and subsistence. Active duty ROTC pay is taxable. For instance, pay for summer advanced camp is taxable.
- Civilian Life. If you leave the military and look for work, you may be able to deduct some job search expenses. You may be able to include the costs of travel, preparing a resume and job placement agency fees. Moving expenses may also qualify for a tax deduction.
For more, refer to Publication 3, Armed Forces’ Tax Guide. It is available on IRS.gov/forms any time.
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IRS Podcasts:
You retire to an income-tax-free state and you don’t expect to pay any income tax. So imagine the surprise a former California couple in their 60s got when they went to a tax preparer in Tennessee for help with their 2015 federal tax return, and she gave them the news that they owed $1,200 in taxes to Tennessee on their capital gains, interest and dividend income, thanks to the 6% state “Hall Tax.”
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August is here, which means one thing: Back-to-school shopping! While kids are excited to break open new supplies, some parents struggle with how to pay for it all. Luckily, tax-free weekends in states around the nation will help parents buy the clothes and supplies their children need for the upcoming school year.
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If there’s one thing we all have in common, it’s that no one enjoys filing taxes. But, according to recent studies, millennials feel particularly anxious about the annual process.
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The above-the-line deduction that teachers can claim for classroom expenditures was recently made permanent, adjusted for inflation and expanded. Here's a look at the new rules and how to take advantage of them.
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Outlined in this article are five ways to run your not-for-profit more effectively, inspired by our panel of nonprofit executives.
Please contact our CPAs Steve Caboor or Jeff Hansen for your not-for-profit audits or accounting needs.
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It can be hard to understand taxes. But the IRS provides many free products and services in Spanish and other languages on IRS.gov. Here are some ways that you can get help from the IRS this summer.
It can be hard to understand taxes. But the IRS provides many free products and services in Spanish and other languages on IRS.gov. Here are some ways that you can get help from the IRS this summer:
- Get answers 24/7. You can go to the IRS website at any time. It offers tax help in Spanish to both individuals and businesses. Help is also available in Chinese, Korean, Vietnamese and Russian.
- Use IRS e-file. If you still need to file your 2015 taxes, you should choose to e-file your tax return. IRS e-file is safe, easy and the most accurate way to file. It is available through Oct. 17. Visit IRS.gov and choose the appropriate language pull-down from the top right-hand corner.
- Get tax forms and publications. View and download several tax forms and publications. Many items are translated and available on the webpage for each language’s webpage.
- Check out IRS2Go. The free IRS app is available in English and Spanish. Use it with an iPhone, iPad or Android mobile device. With IRS2Go you can:
o Get your refund status.
o Make a payment.
o Find free tax preparation assistance
o Watch IRS YouTube videos.
o Get tax news updates.
o Follow the IRS.
- Request an interpreter. You can access oral interpreters in over 300 languages when interacting face to face or over the phone with IRS employees through the use of the OPI (over the phone interpreter services).
- Get health care tax information. The IRS website also has information about the Affordable Care Act tax provisions to educate individuals and businesses on how the health care law may affect them. You will find information about the law and its provisions, legal guidance, frequently asked questions and links to additional resources. Links to information in Spanish, Chinese, Korean, Vietnamese and Russian are available.
- Use IRS online tools. Check the status of your refund, make a payment or use the Get Transcript tool. All provide step-by-step instructions in various languages.
- Get the latest IRS news. You can get the most up-to-date IRS information in Spanish on the IRS website. Don’t forget to sign up to get Spanish tax tips by email.
- Connect with the IRS on Twitter. Get the latest IRS tax news and information in Spanish through Twitter @IRSenEspanol.
IRS YouTube Videos:
Get Tax Help in Spanish – English | Spanish | ASL
The IRS shares some advice on fixing a return.
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The tax credit for research-and-development activities is a valuable incentive for taxpayers to help fund and encourage innovation. However, taxpayers must maintain sufficient documentation to prove that their expenses qualify, as this article examines in detail. Catalano Caboor & Co. currently partners with Titan Armor for R & D documentation.
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Tax scammers work year-round; they don’t take the summer off. The IRS urges you to stay vigilant against calls from scammers impersonating the IRS. Here are several tips from the IRS to help you avoid being a victim.
Tax scammers work year-round; they don’t take the summer off. The IRS urges you to stay vigilant against calls from scammers impersonating the IRS. Here are several tips from the IRS to help you avoid being a victim:
- Scams use scare tactics. These aggressive and sophisticated scammers try to scare people into making an immediate payment. They make threats, often threaten arrest or deportation, or they say they’ll take away your driver’s or professional license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls.” Emails will often contain a fake IRS document with a phone number or an email address for you to reply.
- Scams spoof caller ID. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
- Scams use phishing email and regular mail. Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. This makes the scheme look official.
- Scams cost victims over $38 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of more than one million contacts since October 2013. TIGTA is also aware of more than 6,700 victims who have collectively reported over $38 million in financial losses as a result of tax scams.
The real IRS will not:
- The IRS will not call you about your tax bill without first sending you a bill in the mail.
- Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
- Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card or any specific type of tender.
- Ask for credit or debit card numbers over the phone.
- Threaten to bring in police or other agencies to arrest you for not paying.
- Threaten you with a lawsuit.
If you don’t owe taxes or have no reason to think that you do:
- Do not provide any information to the caller. Hang up immediately.
- Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
- You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
IRS Tax Tips provide valuable information throughout the year. IRS.gov offers tax help and info on various topics including common tax scams, taxpayer rights and more.
IRS YouTube Videos:
IRS Podcasts:
Tax Scams – English | Spanish
Many students get summer jobs. It’s a great way to earn extra spending money or to save for later. Here are some tips for students with summer jobs.
Many students get summer jobs. It’s a great way to earn extra spending money or to save for later. Here are some tips for students with summer jobs:
1. Withholding and Estimated Tax. If you are an employee, your employer normally withholds tax from your paychecks. If you are self-employed, you may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments on set dates during the year. This is essentially how our pay-as-you-go tax system works.
2. New Employees. When you get a new job, you need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.
3. Self-Employment. Money you earn working for others is taxable. Some work you do may count as self-employment. These can be jobs like baby-sitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct those costs. A tax deduction generally reduces the taxes you pay.
4. Tip Income. All tip income is taxable. Keep a daily log to report your tips. You must report $20 or more in cash tips received in any single month to your employer. And you must report all of your yearly tips on your tax return.
5. Payroll Taxes. You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count for your coverage under the Social Security system.
6. Newspaper Carriers. Special rules apply to a newspaper carrier or distributor. If you meet certain conditions, you are self-employed. If you do not meet those conditions, and are under age 18, you may be exempt from Social Security and Medicare taxes.
7. ROTC Pay. If you’re in ROTC, active duty pay, such as pay you get for summer advanced camp, is taxable. Other allowances you may receive may not be taxable, see Publication 3 for details.
The Internal Revenue Service has closed down its electronic filing PIN tool after noticing suspicious activity.
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CPA personal financial planners can help married same-sex couples navigate changes to Medicare access to ensure they are receiving appropriate benefits.
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Day camps are common during the summer months. Many parents enroll their children in a day camp or pay for day care so they can work or look for work. If this applies to you, your costs may qualify for a federal tax credit. Here are 10 things to know about the Child and Dependent Care Credit.
Day camps are common during the summer months. Many parents enroll their children in a day camp or pay for day care so they can work or look for work. If this applies to you, your costs may qualify for a federal tax credit. Here are 10 things to know about the Child and Dependent Care Credit:
- Care for Qualifying Persons. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 generally qualify.
- Work-related Expenses. Your expenses for care must be work-related. In other words, you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they are physically or mentally incapable of self-care.
- Earned Income Required. You must have earned income. Earned income includes wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care.
- Joint Return if Married. Generally, married couples must file a joint return. You can still take the credit, however, if you are legally separated or living apart from your spouse.
- Type of Care. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.
- Credit Amount. The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on your income.
- Expense Limits. The total expense that you can use in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.
- Certain Care Does Not Qualify. You may not include the cost of certain types of care for the tax credit, including:
- Overnight camps or summer school tutoring costs.
- Care provided by your spouse or your child who is under age 19 at the end of the year.
- Care given by a person you can claim as your dependent.
- Keep Records and Receipts. Keep all your receipts and records for when you file taxes next year. You will need the name, address and taxpayer identification number of the care provider. You must report this information when you claim the credit on Form 2441, Child and Dependent Care Expenses.
- Dependent Care Benefits. Special rules apply if you get dependent care benefits from your employer.
Keep in mind this credit is not just a summer tax benefit. You may be able to claim it at any time during the year for qualifying care. IRS Publication 503, Child and Dependent Care Expenses, provides complete details on all the rules. Get it anytime on IRS.gov.
Additional IRS Resources:
Self-insured employers, applicable large employers and health coverage providers are reminded that the June 30 deadline to electronically file information returns with the IRS is approaching. The deadline to provide information returns to employees or responsible individuals was March 31. While the deadline to file paper information returns with the IRS was May 31, electronic filers have more time. This chart provides a reminder about the upcoming filing requirement and the June 30, 2016 deadline.
Self-insured employers, applicable large employers and health coverage providers are reminded that the June 30 deadline to electronically file information returns with the IRS is approaching. The deadline to provide information returns to employees or responsible individuals was March 31. While the deadline to file paper information returns with the IRS was May 31, electronic filers have more time. This chart provides a reminder about the upcoming filing requirement and the June 30, 2016 deadline.
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Action
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Electronic Filing Due Dates in 2016 for…
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Applicable Large Employers – Including Those That Are Self-Insured
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Self-insured Employers That Are Not Applicable Large Employers
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Coverage Providers – Other Than Self-Insured Applicable Large Employers*
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Electronically -File 1094-B and 1095-B with the IRS
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Not Applicable **
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June 30*
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June 30*
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Electronically File 1094-C and 1095-C with the IRS
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June 30*
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Not Applicable
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Not Applicable
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*If you file 250 or more Forms 1095-B or Forms 1095-C, you must electronically file them with the IRS. Electronically filing ACA information returns requires an application process separate from other electronic filing systems. Additional information about electronic filing of ACA Information Returns is on the Affordable Care Act Information Reporting (AIR) Program page on IRS.gov and in Publications 5164 and 5165.
**Applicable large employers that provide employer-sponsored self-insured health coverage to non-employees may use either Forms 1095-B or Form 1095-C to report coverage for those individuals and other family members.
This chart applies only for reporting in 2016 for coverage in 2015. In future years, the due dates will be different; see IRS Notice 2016-04 for information about these dates.
Before paying for additional insurance when renting a car, people should check their own auto insurance and credit cards to see what type of coverage they already have. These sources of coverage may be cheaper than the rates charged by the rental company.
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For families with children and aging parents, it’s important to make sure everyone guards their personal information online and at home.
It may be time for “the conversation.”
For families with children and aging parents, it’s important to make sure everyone guards their personal information online and at home.
It may be time for “the conversation.”
The IRS, state revenue departments and the tax industry have teamed up to combat identity theft in the tax arena. Our theme: Taxes. Security. Together. Working in partnership with you, we can make a difference.
Especially in families that use the same computer, students should be warned against turning off any security software in use or opening any suspicious emails. They should be instructed to never click on embedded links or download attachments of emails from unknown sources.
Identity thieves are just one of many predators plying the Internet. And, actions by one computer user could infect the machine for all users. That’s a concern when dealing with personal financial details or tax information.
Kids should be warned against oversharing personal information on social media. But oversharing about home addresses, a new family car or a parent’s new job gives identity thieves a window into an extra bit of information they need to impersonate you.
Aging parents also are prime targets for identity thieves. If they are browsing the Internet, they made need to the same conversation about online security, avoiding spam email schemes and oversharing on social media.
They may also need assistance for someone to routinely review charges to their credit cards, withdrawals from their financial accounts. Unused credit cards should be canceled. An annual review should be made of their credit reports at annualcreditreport.com to ensure no new accounts are being opened by thieves, and reviewing the Social Security Administration account to ensure no excessive income is accruing to their account.
Seniors also are especially vulnerable to scam calls and pressure from fraudsters posing as legitimate organizations, including the Internal Revenue Service, and demanding payment for debts not owed. The IRS will never make threats of lawsuit or jail or demand that a certain payment method, such as a debit card, be made.
Fraudsters will try to trick seniors, telling them they have won a grand prize in a contest or that a relative needs money – anything to persuade a person to give up personal information such as their Social Security number or financial account information.
Some simple steps – and a conversation – can help the young and old avoid identity theft schemes and scammers.
To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.
If you are a small employer, there is a tax credit that can put money in your pocket. The small business health care tax credit benefits employers that...
If you are a small employer, there is a tax credit that can put money in your pocket. The small business health care tax credit benefits employers that:
- offer coverage through the small business health options program, also known as the SHOP marketplace
- have fewer than 25 full-time equivalent employees
- pay an average wage of less than $50,000 a year
- pay at least half of employee health insurance premiums
Here are five facts about this credit:
- The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.
- To be eligible for the credit, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace, or qualify for an exception to this requirement.
- The credit is available to eligible employers for two consecutive taxable years beginning in 2014 or later. You may be able to amend prior year tax returns to claim the credit for tax years 2010 through 2013 in addition to claiming this credit for those two consecutive years.
- You can carry the credit back or forward to other tax years if you do not owe tax during the year.
- You may get both a credit and a deduction for employee premium payments. Since the amount of your health insurance premium payments will be more than the total credit, if you are eligible, you can still claim a business expense deduction for the premiums in excess of the credit. For more information, see the small business health care tax credit page on IRS.gov.
For information about insurance plans offered through the SHOP Marketplace, visit Healthcare.gov.
Starting with 2016 returns, business entity investors’ Schedules K-1 are due before the investors’ returns are due, and foreign account information (FBAR) is due (and can be extended) when the individual returns are due.
Here’s a brief recap of the new federal tax return deadlines.
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Effective June 1, 2016, the combined sales tax rate for locations currently within the territory of the DuPage Water Commission will decrease by 0.25 percent, due to the DuPage Water Commission Sales Tax expiring on May 31, 2016, as required by Public Act 96-1389.
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Some startup businesses are using crowdsourcing services to gather input from a large number of people and test their ideas and business strategies.
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It’s important to know how many full-time employees you have because two provisions of the Affordable Care Act – employer shared responsibility and employer information reporting for offers of minimum essential coverage – apply only to applicable large employers. Employers average the number of their full-time employees, including full-time equivalents, for the months from the previous year to see whether they are considered an applicable large employer.
It’s important to know how many full-time employees you have because two provisions of the Affordable Care Act – employer shared responsibility and employer information reporting for offers of minimum essential coverage – apply only to applicable large employers. Employers average the number of their full-time employees, including full-time equivalents, for the months from the previous year to see whether they are considered an applicable large employer.
Whether your organization is an ALE for a particular calendar year depends on the size of your workforce in the preceding calendar year. To be an ALE, you must have had an average of at least 50 full-time employees – including full-time-equivalent employees – during the preceding calendar year. So, for example, you will use information about the size of your workforce during 2016 to determine if your organization is an ALE for 2017.
In general:
- A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
- A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
- An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.
There are many additional rules on determining who is a full-time employee, including what counts as hours of service.
For more information, see the Information Reporting by Applicable Large Employers and the Employer Shared Responsibility Provisions pages on IRS.gov/aca.
It’s no secret that tax refund fraud is big business for scammers. The Internal Revenue Service (IRS) estimates it paid $3.1 billion in identity theft fraudulent refunds in filing season 2014. During that same time, the IRS stopped attempts to collect an additional $22.5 billion in fraudulent refunds (GAO study downloads as a pdf).
IRS Commissioner John Koskinen has noted before that stopping fraud requires IRS to be a step ahead of the scammers. Congress thinks it has a plan to do just that. There’s just one problem: in the attempt to slow tax refund fraud, millions of families may have a longer wait next tax season to get their refund.
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Retirees searching for income who also want to give to charity are drawn to charitable remainder trusts and charitable gift annuities. You get lifetime payouts, and the charity gets its share when you die. What if there was a way to fund these with your Individual Retirement Account dollars?
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If you are a self-employed landscaper or gardener, be sure to view the IRS webinar “Business Taxes for the Self-Employed: The Basics.”
If you are a self-employed landscaper or gardener, be sure to view the IRS webinar “Business Taxes for the Self-Employed: The Basics.” Here are some topics included in the webinar or on IRS.gov that you should know:
- Accounting Method. An accounting method is a set of rules about when to report income and expenses. Many small businesses use the cash method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Find out more in IRS Publication 538, Accounting Periods and Methods.
- Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. You may need to pay self-employment tax as well as income tax if you make a profit. Self-employment tax includes Social Security and Medicare taxes. With estimated tax payments, you pay taxes at various times during the year to ensure you don’t have a large tax bill when you file your tax return. Use IRS Direct Pay, the fast, easy and secure way to pay from your checking or savings account.
- Tax Forms. There are two forms to report self-employment income. You must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet other conditions. See the form instructions to find out if you can use the form. Use Schedule SE, Self-Employment Tax, to figure your SE tax. If you owe this tax, make sure you file the schedule with your federal tax return.
- Allowable Deductions. You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business. View the webinar “Small Business Owners: Get All the Tax Benefits You Deserve” to learn more.
- Business Use of a Vehicle. If you use your car or truck for your business, you may be able to deduct the costs to operate the vehicle for the business use. Refer to IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses for details.
If you are self-employed, visit IRS.gov for all your tax needs. Knowing the tax rules can help your business start, grow and succeed. For example, see IRS Publication 4902, Tips for the Cosmetology and Barber Industry.
If you need tax assistance with your existing business or help getting your business started please contact us: (630) 261-0550
If you are self-employed, visit IRS.gov for all your tax needs. Knowing the tax rules can help your business start, grow and succeed. For example, see IRS Publication 4902, Tips for the Cosmetology and Barber Industry. Here are some of the topics included in this booklet or detailed on IRS.gov:
- Business Structure. One of the first things you need to decide is the type of structure for your business. The most common types are sole proprietor, partnership or corporation. You may have employees or rent space to someone who is self-employed. Visit IRS.gov for tips on starting and operating your business.
- Report Tip Income. All tips you receive are taxable income. If you have employees who receive $20 or more in cash tips in any one month, they must report them to you. You must withhold federal income, Social Security and Medicare taxes on the reported tips. Learn more about these rules in the IRS video Reporting Tips.
- Business Expenses. You can deduct ordinary and necessary expenses that you pay to run your business. An ordinary expense is a common and accepted cost for that type of business. A necessary expense is a cost that is proper for that business. For example, cosmetologists are often required to get a license or pay for a permit or certification. See Publication 535, Business Expenses for more on this topic.
- Estimated Tax. If you are self-employed you may need to make estimated tax payments each year. If you do not pay enough tax during the year, you may owe a penalty. Use Form 1040-ES, Estimated Tax for Individuals to figure the tax. Direct Pay, available on IRS.gov, now offers you the fastest and easiest way to make these payments.
- Depreciation of Assets. You can deduct the cost of some assets over a number of years. For example, if you buy equipment and furniture, you should depreciate the cost of those items since you will normally use them for more than one year. Check out the IRS webinar Depreciation Basics to learn more.
- Filing Your Taxes. If you have employees, the IRS offers electronic filing options for your federal payroll tax returns. IRS e-file is fast, safe and accurate. You'll also receive an electronic acknowledgment when the IRS accepts your e-filed return. You can use EFTPS to make any federal tax payments.
- Keeping Records. Everyone in business must keep records. You must have good records to support the income, expenses and credits that you report. Good records can help you keep track of your business. They can also increase the likelihood of business success. Watch the IRS video Good Recordkeeping Helps Avoid Headaches at Tax Time to find out some of the best practices.
Small Business Week is May 1–7, and the IRS is highlighting some of its most popular educational products, videos and webinars to help your small business thrive. A good example is the webinar: “Tax Related Guidance for Child Care Providers.” The online resource can help business owners and operators learn how to report common tax items linked with this type of business.
Small Business Week is May 1–7, and the IRS is highlighting some of its most popular educational products, videos and webinars to help your small business thrive. A good example is the webinar: “Tax Related Guidance for Child Care Providers.” The online resource can help business owners and operators learn how to report common tax items linked with this type of business. Here are some of the topics included in the webinar:
Child Care Income. The presentation covers the various income items that you must report. These include items such as:
- Income from contracts specifying charges, terms and responsibilities.
- Diaper charges.
- Late pick-up or early drop-off fees.
- Registration fees.
Child Care Expenses. The webinar discusses allowable business expenses, including:
- The business must be a for-profit activity.
- The expense must be ordinary and necessary.
- Only the business use portion of an expense may be deductible if the expense has elements of both personal and business use.
- You must make a reasonable allocation to determine the business use.
- Amounts you spend for personal or family reasons are not deductible.
Special Rules. The tax law contains specific rules in areas where business expenses are difficult to separate from personal expenses. For example, the webinar covers the special method you would use to compute the business use percentage of a home available only for day care service providers.
Other Expenses. Other expenses common to child care businesses are discussed, including:
- Food consumed by your daycare recipients.
- Supplies such as games, books, child-proofing devices and toys.
Other topics include the USDA Food Reimbursement Program, depreciation rules and much more. Check out this and other IRS webinars and videos to celebrate Small business Week 2016 at http://www.irsvideos.gov/.
The Treasury Inspector General for Tax Administration issued an alert Friday 4/22/16 warning that it has received information that callers impersonating IRS employees or the Treasury Department are demanding payments on iTunes Gift Cards.
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You may be tempted to forget about your taxes once you’ve filed but some tax planning done now may benefit you later. Now is a good time to set up a system so you can keep your tax records safe and easy to find. Here are some IRS tips to give you a leg up on next year’s taxes.
You may be tempted to forget about your taxes once you’ve filed but some tax planning done now may benefit you later. Now is a good time to set up a system so you can keep your tax records safe and easy to find. Here are some IRS tips to give you a leg up on next year’s taxes:
- Take action when life changes occur. Some life events can change the amount of tax you owe. Examples include a change in marital status or the birth of a child. When these happen, you may need to change the amount of tax withheld from your pay. To do that, file a new Form W-4, Employee's Withholding Allowance Certificate, with your employer. Use the IRS Withholding Calculator tool on IRS.gov to help you fill out the form.
- Report changes in circumstances to the Health Insurance Marketplace. If you enroll in insurance coverage through the Health Insurance Marketplace for 2016 coverage, you should report changes in circumstances to the Marketplace when they happen. Report events such as changes in your income or family size. Doing so will help you avoid getting too much or too little financial assistance.
- Keep records safe. Print and keep a copy of your 2015 tax return and supporting records together in a safe place. This includes W-2 Forms, Forms 1099, bank records and records of your family’s health care insurance coverage. If you ever need your tax return or records, it will be easier for you to get them. For example, you may need a copy of your tax return if you apply for a home loan or financial aid for college. You should use your tax return as a guide when you do your taxes next year.
- Stay organized. Make tax time easier. Have your family put tax records in the same place during the year. That way you won’t have to search for misplaced records when you file next year.
- Shop for a tax preparer. If you want to hire a tax preparer to help you with tax planning, start your search now. Choose your tax preparer wisely. Use the Directory of Tax Return Preparers tool on IRS.gov to find tax preparers in your area with the credentials and qualifications that you prefer.
- Think about itemizing. You may be able to lower your taxes if you itemize deductions instead of taking the standard deduction. Owning a home, paying medical expenses and qualified donations to charity could mean more tax savings. See the instructions for Schedule A, Itemized Deductions, for a list of deductions.
Stay informed. Subscribe to IRS Tax Tips to get emails about tax law changes, how to save money and much more. You can also get Tax Tips on IRS.gov or IRS2Go, the IRS mobile app. You’ll receive Tips each weekday in the tax filing season and three days a week in summer. You will also get Special Edition Tax Tips at other times during the year.
Owning a restaurant is not a one-size-fits-all endeavor—the recipe isn’t exact, but the key ingredients are the same. From food trucks to five-star dining, this guide will inform small business owners of the financial checkpoints for opening a new restaurant.
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April 18 was this year’s deadline for most people to file their federal tax return and pay any tax they owe. If you are due a refund there is no penalty if you file a late tax return. If you owe tax, and you failed to file and pay on time, you will most likely owe interest and penalties on the tax you pay late. To keep interest and penalties to a minimum, you should file your tax return and pay the tax as soon as possible. Here are some facts that you should know.
April 18 was this year’s deadline for most people to file their federal tax return and pay any tax they owe. If you are due a refund there is no penalty if you file a late tax return. If you owe tax, and you failed to file and pay on time, you will most likely owe interest and penalties on the tax you pay late. To keep interest and penalties to a minimum, you should file your tax return and pay the tax as soon as possible. Here are some facts that you should know.
1. Two penalties may apply. One penalty is for filing late and one is for paying late. They can add up fast. Interest accrues on top of the penalties.
2. Penalty for late filing. If you file your 2015 tax return more than 60 days after the due date or extended due date, the minimum penalty is $205 or, if you owe less than $205, 100 percent of the unpaid tax. Otherwise, the penalty can be as much as five percent of your unpaid taxes each month up to a maximum of 25 percent.
3. Penalty for late payment. The penalty is generally 0.5 percent of your unpaid taxes per month. It can build up to as much as 25 percent of your unpaid taxes.
4. Combined penalty per month. If both the late filing and late payment penalties apply, the maximum amount charged for the two penalties is 5 percent per month.
5. File even if you can’t pay. Filing on time and paying as much as you can will keep your interest and penalties to a minimum. If you can’t pay in full, getting a loan or paying by debit or credit card may be less expensive than owing the IRS. If you do owe the IRS, the sooner you pay your bill the less you will owe.
6. Payment Options. Explore your payment options on our website at IRS.gov/payments. For individuals, IRS Direct Pay is a fast and free way to pay directly from your checking or savings account. The IRS will work with you to help you resolve your tax debt. Most people can set up a payment plan using the Online Payment Agreement tool on IRS.gov.
7. Late payment penalty may not apply. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 18 due date.
Each year, the IRS mails millions of notices and letters to taxpayers for a variety of reasons. If you receive correspondence from IRS, here are 10 things to know.
Each year, the IRS mails millions of notices and letters to taxpayers for a variety of reasons. If you receive correspondence from us:
- Don’t panic. You can usually deal with a notice simply by responding to it.
- Most IRS notices are about federal tax returns or tax accounts. Each notice has specific instructions, so read your notice carefully because it will tell you what you need to do.
- Your notice will likely be about changes to your account, taxes you owe or a payment request. However, your notice may ask you for more information about a specific issue.
- If your notice says that the IRS changed or corrected your tax return, review the information and compare it with your original return.
- If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.
- If you don’t agree with the notice, you need to respond. Write a letter that explains why you disagree, and include information and documents you want the IRS to consider. Mail your response with the contact stub at the bottom of the notice to the address on the contact stub. Allow at least 30 days for a response.
- For most notices, you won’t need to call or visit a walk-in center. If you have questions, call the phone number in the upper right-hand corner of the notice. Be sure to have a copy of your tax return and the notice with you when you call.
- Always keep copies of any notices you receive with your tax records.
- Be alert for tax scams. The IRS sends letters and notices by mail. We don’t contact people by email or social media to ask for personal or financial information. If you owe tax, you have several payment options. The IRS won’t demand that you pay a certain way, such as prepaid debit or credit card.
- For more on this topic, visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom center of the home page. Also, see Publication 594, The IRS Collection Process. You can get it on IRS.gov/forms at any time.
If you need to make a payment visit IRS.gov/payments or use the IRS2Go app to make payment with Direct Pay for free, or by debit or credit card through an approved payment processor for a fee.
34 Tax Day 2016 Deals, Discounts and Freebies
This year, most of us get three extra days to file our federal income tax. Since Emancipation Day falls on April 15, Tax Day 2016 has been pushed back to April 18, except if you live in Massachusetts and Maine where you’ll be celebrating Patriots’ Day that Monday; you have have until Tuesday, April 19 to file.
But no matter what the tax deadline is where you live, you can take advantage of many special tax season offers. Here are food freebies, last-minute tax filing deals and more for Tax Day, April 18.
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You can fix mistakes or omissions on your tax return by filing an amended tax return. If you need to file one, these 10 tips can help.
You can fix mistakes or omissions on your tax return by filing an amended tax return. If you need to file one, these tips can help.
1. Must be filed on paper. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your tax return. It can’t be e-filed. You can get the form on IRS.gov/forms at any time. See the Form 1040X instructions for the address where you should mail your form.
2. Amend to correct errors. File an amended tax return to correct errors or make changes to your original tax return. For example, you should amend to change your filing status, or to correct your income, deductions or credits.
3. Don’t amend for math errors, missing forms. You normally don’t need to file an amended return to correct math errors on your original return. The IRS will automatically correct those for you. Also, do not file an amended return if you forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail you a request for them in most cases.
4. Form 1095-A, Health Insurance Marketplace Statement, errors. Some taxpayers may receive a second Form 1095-A because the information on their initial form was incorrect or incomplete. If you filed a 2015 tax return based on the initial Form 1095-A and claimed the premium tax credit using incorrect information from either the federally-facilitated or a state-based Health Insurance Marketplace, you should determine the effect the changes to your form might have on your return. Comparing the two Forms 1095-A can help you assess whether you should file an amended tax return, Form 1040X.
5. Three-year time limit. You usually have three years from the date you filed your original tax return to file Form 1040X to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. That means the last day for most people to file a 2012 claim for a refund is April 18, 2016 (April 19 for taxpayers in Maine and Massachusetts). See the Form 1040X instructions for special rules that apply to some claims.
6. Separate forms for each year. If you are amending more than one tax return, prepare a 1040X for each year. You should mail each year in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X. Check the form’s instructions for where to mail your return.
7. Attach other forms with changes. If you use other IRS forms or schedules to make changes, make sure to attach them to your Form 1040X.
8. When to file for corrected refund. If you are due a refund from your original return, wait to get it before filing Form 1040X to claim an additional refund. Amended returns take up to 16 weeks to process.
9. Pay additional tax. If you owe more tax, file your Form 1040X and pay the tax as soon as you can to avoid possible penalties and interest from being added to your account. Use IRS Direct Pay to pay your tax directly from your checking or savings account.
10. Track your amended return. You can track the status of your amended tax return three weeks after you file with ‘Where’s My Amended Return?’ It is available in English, Spanish, Chinese, Vietnamese and Russian. The tool can track the status of an amended return for the current year and up to three years back. If you have filed amended returns for multiple years, you can check each year, one at a time.
Some taxpayers will be receiving an IRS letter about the premium tax credit; this letter is also known as a 12C letter. Be sure to read your letter carefully and respond timely. Here are answers to questions you may have about this letter.
Some taxpayers will be receiving an IRS letter about the premium tax credit; this letter is also known as a 12C letter. Be sure to read your letter carefully and respond timely. Here are answers to questions you may have about this letter.
Why am I getting this letter?
The IRS sent you this letter because the Marketplace notified us that they made advance payments of the premium tax credit on your behalf to your or your family's insurance company last year.
- You also received this letter because – when you filed your individual 2015 tax return – you didn’t reconcile the advance payments of the premium tax credit. To reconcile, you use Form 8962, Premium Tax Credit, to compare the advance payments with the amount of your credit. Filing your tax return without including Form 8962 will delay your refund and prevent you from receiving advance credit payments in future years.
What do I need to do now?
- You must respond to the letter, even if you disagree with the information in it. If you disagree, send the IRS a letter explaining what you think is in error.
- If you received this letter, but didn’t enroll in health insurance through the Marketplace, you must let the IRS know.
- The letter outlines the information you should provide in your response, which includes:
- A copy of the Form 1095-A, Health Insurance Marketplace Statement, that your Marketplace sent earlier this year
- A completed Form 8962
- The second page of your tax return, which includes the “Tax and Credits” and “Payments” sections, showing the necessary corrections and your signature. You must complete either the line for “excess advance premium tax credit repayment” or the line for “net premium tax credit.”
- If you originally filed a Form 1040EZ tax return, you must transfer the information from your Form 1040EZ to a Form 1040A and include it with your response to the 12C letter.
Is there anything else I need to know?
- If you need your Form 1095-A, you should contact your Marketplace directly. The IRS does not issue and cannot provide that information to you.
- Do not file a Form 1040X, Amended U.S. Individual Income Tax Return. Once you respond to the letter, the IRS uses the information you provide to process your tax return.
- You can mail or fax your response. Be sure to include a copy of the letter with your response. Use the mailing address and fax number in the letter to respond.
For more information about the health care law and the premium tax credit, visit IRS.gov/aca for more information.
If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax. Here are seven tax tips for gifts and the gift tax.
If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax. Here are seven tax tips for gifts and the gift tax.
- Nontaxable Gifts. The general rule is that any gift is a taxable gift. However, there are exceptions to this rule. The following are nontaxable gifts:
- Gifts that do not exceed the annual exclusion for the calendar year,
- Tuition or medical expenses you paid directly to a medical or educational institution for someone,
- Gifts to your spouse
- Gifts to a political organization for its use, and
- Gifts to charities.
2. Annual Exclusion. For 2015, the annual exclusion is $14,000. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you give a gift to someone else, the gift tax usually does not apply until the value of the gift exceeds the annual exclusion for the year.
3. No Tax on Recipient. Generally, the person who receives your gift will not have to pay taxes on it.
4. Gifts Not Deductible. Making a gift does not ordinarily affect your taxes. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
5. Forgiven Debt and Certain Loans. The gift tax may also apply when you forgive a debt or give a loan that is interest-free or below the market interest rate.
6. Gift-Splitting. You and your spouse can give a gift up to $28,000 to a third party without making it a taxable gift. You can consider that one-half of the gift be given by you and one-half by your spouse.
7. Filing Requirement. You must file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if any of the following apply:
- You gave gifts to at least one person (other than your spouse) that amount to more than the annual exclusion for the year.
- You and your spouse are splitting a gift. This is true even if half of the split gift is less than the annual exclusion.
- You gave someone (other than your spouse) a gift of a future interest that they can’t actually possess, enjoy, or from which they’ll receive income later.
- You gave your spouse an interest in property that will terminate due to a future event.
For more information, see Publication 559, Survivors, Executors, and Administrators. You can view, download and print tax products on IRS.gov/forms anytime.
IRS YouTube Videos:
Gift Tax – English | ASL
If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax. Here are seven tax tips for gifts and the gift tax.
If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax. Here are seven tax tips for gifts and the gift tax.
- Nontaxable Gifts. The general rule is that any gift is a taxable gift. However, there are exceptions to this rule. The following are nontaxable gifts:
- Gifts that do not exceed the annual exclusion for the calendar year,
- Tuition or medical expenses you paid directly to a medical or educational institution for someone,
- Gifts to your spouse
- Gifts to a political organization for its use, and
- Gifts to charities.
2. Annual Exclusion. For 2015, the annual exclusion is $14,000. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you give a gift to someone else, the gift tax usually does not apply until the value of the gift exceeds the annual exclusion for the year.
3. No Tax on Recipient. Generally, the person who receives your gift will not have to pay taxes on it.
- Gifts Not Deductible. Making a gift does not ordinarily affect your taxes. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
- Forgiven Debt and Certain Loans. The gift tax may also apply when you forgive a debt or give a loan that is interest-free or below the market interest rate.
- Gift-Splitting. You and your spouse can give a gift up to $28,000 to a third party without making it a taxable gift. You can consider that one-half of the gift be given by you and one-half by your spouse.
- Filing Requirement. You must file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if any of the following apply:
- You gave gifts to at least one person (other than your spouse) that amount to more than the annual exclusion for the year.
- You and your spouse are splitting a gift. This is true even if half of the split gift is less than the annual exclusion.
- You gave someone (other than your spouse) a gift of a future interest that they can’t actually possess, enjoy, or from which they’ll receive income later.
You gave your spouse an interest in property that will terminate due to a future event.
For more information, see Publication 559, Survivors, Executors, and Administrators. You can view, download and print tax products on IRS.gov/forms anytime.
IRS YouTube Videos:
Do you own a small business or run a tax-exempt organization with fewer than 25 full-time equivalent employees? If you do, the Small Business Health Care Tax Credit can help you provide insurance to your employees. You may be able to save on your taxes if you paid for at least half of their health insurance premiums. Here are seven tax tips about this credit.
Do you own a small business or run a tax-exempt organization with fewer than 25 full-time equivalent employees? If you do, the Small Business Health Care Tax Credit can help you provide insurance to your employees. You may be able to save on your taxes if you paid for at least half of their health insurance premiums. Here are seven tax tips about this credit:
- Maximum Credit. The maximum credit is 50 percent of premiums paid by small business employers. The maximum credit is 35 percent of premiums paid by small tax-exempt employers, such as charities.
- Number of Employees. You must have fewer than 25 full-time employees, or a combination of full-time and part-time employees. For example, two half-time employees equal one full-time employee for purposes of the credit.
- Average Annual Wages. For 2015, the average annual wages of your employees must have been less than $52,000. The IRS will adjust this amount for inflation each year.
- Half the Premiums. You must have paid a uniform percentage, at least 50%, of the cost of premiums for all enrolled employees.
- Qualified Health Plan. Generally, you must have purchased a qualified health plan from a Small Business Health Options Program, or SHOP, Marketplace. There are limited exceptions to this requirement.
- Two Year Limit. As of 2014, an eligible employer may claim the credit only for two consecutive taxable years.
- Tax Forms to Use. Employers use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. Small businesses employers claim the credit on the annual income tax return. Small tax-exempt employers claim it on Form 990-T, Exempt Organization Business Income Tax Return.
If you are a small business employer and the credit is more than your tax liability for the year, you can carry the unused credit back or forward to other tax years. If you are a small tax-exempt employer, the credit is refundable, so even if you have no taxable income you may receive a refund (so long as it does not exceed your income tax withholding and Medicare tax liability for the year).
The Internal Revenue Service has some advice for taxpayers that may prevent them from being the victim of a tax scam: Don’t be fooled by scammers. Stay safe and be informed. Here are some of the most recent IRS-related scams to be on the lookout for.
The Internal Revenue Service has some advice for taxpayers that may prevent them from being the victim of a tax scam: Don’t be fooled by scammers. Stay safe and be informed. Here are some of the most recent IRS-related scams to be on the lookout for:
Telephone Scams. Aggressive and threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding payment.
Note that the IRS will never:
- Call to demand immediate payment over the phone or call about taxes owed without first having mailed you a bill.
- Threaten to immediately bring in local police or other law enforcement groups to have you arrested for not paying.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone or threaten to bring in local police or other law enforcement groups to have you arrested for not paying.
Scammers Change Tactics. The IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone. The latest variation on this scam uses the current tax filing season as a hook. Scam artists call saying they are from the IRS and have received your tax return, and they just need to verify a few details to process it. The scam tries to get you to give up personal information such as a Social Security number or personal financial information, such as bank numbers or credit cards.
Tax Refund Scam Artists Posing as TAP. In this new email scam targeting taxpayers, people are receiving emails that appear to come from the Taxpayer Advocacy Panel, a volunteer board that advises the IRS on issues affecting taxpayers. They try to trick you into providing personal and financial information. Do not respond or click the links in these emails. If you receive an email that appears to be from TAP regarding your personal tax information, forward it to phishing@irs.gov.
E-mail, Phishing and Malware Schemes. The IRS has seen an approximate 400 percent surge in phishing and malware incidents so far in the 2016 tax season.
The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.
Variations of these scams can be seen via text messages, and the communications are being reported in every section of the country.
When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. The sites ask for Social Security numbers and other personal information, which could be used to help file false tax returns. The sites also may carry malware, which can infect your computer and allow criminals to access your files or track your keystrokes to gain information.
If you get a ‘phishing’ email, the IRS offers this advice:
- Don’t reply to the message.
- Don’t give out your personal or financial information.
- Forward the email to phishing@irs.gov. Then delete it.
- Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.
More information on how to report phishing or phone scams is available on IRS.gov.
Additional IRS Resources:
IRS YouTube Video:
Podcasts:
If you get income from tips, you should know some things about tips and taxes. Here are a few tips from the IRS to help you file and report your tip income correctly.
If you get income from tips, you should know some things about tips and taxes. Here are a few tips from the IRS to help you file and report your tip income correctly:
- Show all tips on your return. You must report tip income. This includes the value of non-cash tips such as tickets, passes or other items.
- All tips are taxable. You must pay tax on all tips you received during the year. This includes tips directly from customers and tips added to credit cards. This also includes your share of tips received from a tip-splitting agreement with other employees.
- Report tips to your employer. If you receive $20 or more in any one month, you must report your tips for that month to your employer by the 10th day of the next month. Only include cash and check and credit card tips you received. Your employer must withhold federal income, Social Security and Medicare taxes on the reported tips.
- Keep a daily log of tips. Use Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tips. This will help you report the correct amount of tips on your tax return.
For more on this topic, see Publication 531, Reporting Tip Income. You can get it on IRS.gov.
If you use your home for business, you may be able to deduct expenses for the business use of your home. If you qualify, you can claim the deduction whether you rent or own your home. You may use either the simplified method or the regular method to claim your deduction. Here are six tips that you should know about the home office deduction.
Must-Know Tips about the Home Office Deduction
If you use your home for business, you may be able to deduct expenses for the business use of your home. If you qualify, you can claim the deduction whether you rent or own your home. You may use either the simplified method or the regular method to claim your deduction. Here are six tips that you should know about the home office deduction:
- Regular and Exclusive Use. As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:
- Your principal place of business, or
- A place where you meet clients or customers in the normal course of business, or
- A separate structure not attached to your home. Examples could include a garage or a studio.
2. Simplified Option. If you use the simplified option, multiply the allowable square footage of your office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save you time because it simplifies how you figure and claim the deduction. It will also make it easier for you to keep records. This option does not change the rules for claiming a home office deduction.
3. Regular Method. This method includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid may qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid may qualify. The amount you can deduct usually depends on the percentage of your home used for business.
4. Deduction Limit. If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited.
5. Self-Employed. If you are self-employed and choose the regular method, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. You can claim your deduction using either method on Schedule C, Profit or Loss From Business. See the Schedule C instructions for how to report your deduction.
6.Employees. You must meet additional rules to claim the deduction if you are an employee. For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Schedule A, Itemized Deductions.
For more on this topic, see Publication 587, Business Use of Your Home. You can view, download and print IRS tax forms and publications on IRS.gov/forms anytime.
If you paid for work-related expenses out of your own pocket, you may be able to deduct those costs. In most cases, you can claim allowable expenses if you itemize on IRS Schedule A, Itemized Deductions. You can deduct the amount that is more than two percent of your adjusted gross income. Here are five other facts you should know.
If you paid for work-related expenses out of your own pocket, you may be able to deduct those costs. In most cases, you can claim allowable expenses if you itemize on IRS Schedule A, Itemized Deductions. You can deduct the amount that is more than two percent of your adjusted gross income. Here are five other facts you should know:
- Ordinary and Necessary. You can only deduct unreimbursed expenses that are ordinary and necessary to your work as an employee. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is appropriate and helpful to your business.
- Expense Examples. Some costs that you may be able to deduct include:
- Required work clothes or uniforms not approSixpriate for everyday use.
- Supplies and tools you use on the job.
- Business use of your car.
- Business meals and entertainment.
- Business travel away from home.
- Business use of your home.
- Work-related education.
This list is not all-inclusive. Special rules apply if your employer reimbursed you for your expenses. To learn more, check out Publication 529, Miscellaneous Deductions. You should also refer to Publication 463, Travel, Entertainment, Gift and Car Expenses.3.
3. Forms to Use. In most cases, you report your expenses on Form 2106 or Form 2106-EZ. After you figure your allowable expenses, you then list the total on Schedule A as a miscellaneous deduction.
4. Educator Expenses. If you are a K-12 teacher, you may be able to deduct up to $250 of certain expenses you paid in 2015. These may include books, supplies, equipment and other materials used in the classroom. You claim this deduction as an adjustment on your return, rather than an itemized deduction. For more on this topic see Publication 529.
5. Keep Records. You must keep records to prove the expenses you deduct. For what records to keep, see Publication 17, Your Federal Income Tax.
Did you receive income from a foreign source in 2015? Are you a U.S. citizen or resident who worked abroad last year? If you answered ‘yes’ to either of those questions, here are seven tips to keep in mind about foreign income.
Did you receive income from a foreign source in 2015? Are you a U.S. citizen or resident who worked abroad last year? If you answered ‘yes’ to either of those questions, here are seven tips to keep in mind about foreign income:
1. Report Worldwide Income. By law, U.S. citizens and residents must report their worldwide income. This includes income from foreign trusts and foreign bank and securities accounts.
2. File Required Tax Forms. You may need to file Schedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may also need to file Form 8938, Statement of Specified Foreign Financial Assets. In some cases, you may need to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts. Visit IRS.gov for more information.
3. Review the Foreign Earned Income Exclusion. If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on up to $100,800 of your wages and other foreign earned income in 2015. See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, for more details.
4. Don’t Overlook Credits and Deductions. You may be able to take a tax credit or a deduction for income taxes paid to a foreign country. These benefits can reduce your taxes if both countries tax the same income.
5. Additional Child Tax Credit. You cannot claim the additional child tax credit if you file Form 2555, Foreign Earned Income, or 2555-EZ, Foreign Earned Income Exclusion.
6. Tax Filing Extension is Available. If you live outside the U.S. and can’t file your tax return by the April 18 due date, you may qualify for an automatic two-month extension until June 15. This extension also applies to those serving in the U.S. military abroad. You will need to attach a statement to your tax return explaining why you qualify for the extension.
7. Get IRS Tax Help. Check the international services site for the types of help the IRS provides, including how to contact your local office internationally. All IRS tax tools and products are available at IRS.gov.
For more on this topic refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. You can get all IRS tax products on IRS.gov/forms.
Mark Hughes crunched a whole lot of numbers and talked to a bunch of people in order to bring you as clear, definitive, and detailed a reply to rumors and speculation as he can right now. It’s a lot of information, comparisons, box office numbers, estimates, and points.
Please click here to read the article.
There are factors at play beyond simply procrastinating. Is filing an extension on your taxes really smart? Or are you just delaying the inevitable?
Please click here to read the article.
If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Saver’s Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit.
If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Saver’s Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit:
- Formal Name. The formal name of the Saver’s Credit is the Retirement Savings Contribution Credit. The Saver’s Credit is in addition to other tax savings you get if you set aside money for retirement. For example, you may also be able to deduct your contributions to a traditional IRA.
- Maximum Credit. The Saver’s Credit is worth up to $4,000 if you are married and file a joint return. The credit is worth up to $2,000 if you are single. The credit you receive is often much less than the maximum. This is partly because of the deductions and other credits you may claim.
- Income Limits. You may be able to claim the credit depending on your filing status and the amount of your yearly income. You may be eligible for the credit on your 2015 tax return if you are:
- Married filing jointly with income up to $61,000
- Head of household with income up to $45,750
- Married filing separately or a single taxpayer with income up to $30,500
- Other Rules. Other rules that apply to the credit include:
- You must be at least 18 years of age.
- You can’t have been a full-time student in 2015.
- No other person can claim you as a dependent on their tax return.
- Contribution Date. You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, you can contribute to an IRA by the due date of your tax return and still have it count for 2015. The due date for most people is April 18, 2016.
Form 8880. File Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit.
If you can’t pay your taxes in full, the IRS will work with you. Past due debts like taxes owed, however, can reduce your federal tax refund. The Treasury Offset Program can use all or part of your federal refund to settle certain unpaid federal or state debts, to include unpaid individual shared responsibility payments. Here are five facts to know about tax refund offsets.
If you can’t pay your taxes in full, the IRS will work with you. Past due debts like taxes owed, however, can reduce your federal tax refund. The Treasury Offset Program can use all or part of your federal refund to settle certain unpaid federal or state debts, to include unpaid individual shared responsibility payments. Here are five facts to know about tax refund offsets.
- Bureau of the Fiscal Service. The Department of Treasury’s Bureau of the Fiscal Service, or BFS, runs the Treasury Offset Program.
- Offsets to Pay Certain Debts. The BFS may also use part or all of your tax refund to pay certain other debts such as:
- Federal tax debts.
- Federal agency debts like a delinquent student loan.
- State income tax obligations.
- Past-due child and spousal support.
- Certain unemployment compensation debts owed to a state.
- Notify by Mail. The BFS will mail you a notice if it offsets any part of your refund to pay your debt. The notice will list the original refund and offset amount. It will also include the agency that received the offset payment. It will also give the agency’s contact information.
- How to Dispute Offset. If you wish to dispute the offset, you should contact the agency that received the offset payment. Only contact the IRS is your offset payment was applied to a federal tax debt.
- Injured Spouse Allocation. You may be entitled to part or the entire offset if you filed a joint tax return with your spouse. This rule applies if your spouse is solely responsible for the debt. To get your part of the refund, file Form 8379, Injured Spouse Allocation. If you need to prepare a Form 8379, you can prepare and e-file your tax return for free using IRS Free File.
Health Care Law: Refund Offsets and the Individual Shared Responsibility Payment
While the law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment, if you owe a shared responsibility payment, the IRS may offset your refund against that liability.
The IRS encourages you to file an accurate tax return. Take extra time if you need it. If you make an error on your return then it will likely take longer for the IRS to process it. That could delay your refund. You can avoid many common errors by filing electronically. IRS e-file is the most accurate way to file your tax return.
The IRS encourages you to file an accurate tax return. Take extra time if you need it. If you make an error on your return then it will likely take longer for the IRS to process it. That could delay your refund. You can avoid many common errors by filing electronically. IRS e-file is the most accurate way to file your tax return.
Here are nine common tax-filing errors to avoid:
1. Wrong or Missing Social Security Numbers. Be sure you enter all SSNs on your tax return exactly as they are on the Social Security cards.
2. Wrong Names. Be sure you spell the names of everyone on your tax return exactly as they are on their Social Security cards.
3. Filing Status Errors. Some people use the wrong filing status, such as Head of Household instead of Single. The Interactive Tax Assistant on IRS.gov can help you choose the right status. If you e-file, tax software helps you choose.
4. Math Mistakes. Math errors are common. Tax preparation software does the math for e-filers.
5. Errors in Figuring Tax Credits or Deductions. Many filers make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit, and the standard deduction. If you’re not e-filing, follow the instructions carefully when figuring credits and deductions. For example, if you’re age 65 or older or blind, be sure you claim the correct, higher standard deduction.
6. Incorrect Bank Account Numbers. Choose direct deposit for your refund. It’s easy and convenient. However, be sure to use the right routing and account numbers on your return. The fastest and safest way to get your tax refund is to combine e-file with direct deposit.
7. Forms Not Signed. An unsigned tax return is like an unsigned check – it’s not valid. Both spouses must sign a joint return. You can avoid this error by e-filing your taxes since you must digitally sign your tax return before you send it to the IRS.
8. Electronic Filing PIN Errors. When you e-file, you sign your return electronically with a Personal Identification Number. If you know last year’s e-file PIN, you can use that. If you don’t know it, enter the Adjusted Gross Income from the 2014 tax return that you originally filed with the IRS. Do not use the AGI amount from an amended return or a return that the IRS corrected.
9. Health Care Reporting Errors. The most common health care reporting errors that taxpayers make involve failing to claim a coverage exemption and not reconciling advance payments of the premium tax credit. If you don’t have qualifying health care coverage but meet certain criteria, you might be eligible to claim an exemption from coverage and avoid an unnecessary payment when you file your tax return. If you enrolled in health coverage through the Health Insurance Marketplace and received advance credit payments, you must file a tax return to reconcile the advance payments made on your behalf with the amount of your actual premium tax credit.
What started out as a solemn religious ceremony on the Emerald Isle has slowly but surely transformed into one of the banner days in American capitalism. As everything from NBA jerseys to Bud Light bottles turns green on March 17, it seems as though brands have figured out how to squeeze every nook and cranny out of the festive holiday.
Come Thursday, everyone will plan on “turning Irish,” breaking out their colors and staying at the bar just slightly longer than usual. St. Patrick’s Day is a full-fledged business entity, so let’s take a look at just how much we really plan on celebrating & spending.
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If you did not file a tax return for 2012, you may be one of nearly one million taxpayers who may be due a refund from that year. If you are, you must claim your share of almost $950 million by April 18. To claim your refund, you must file a 2012 federal income tax return. Here are the facts you need to know about unclaimed refunds:
If you did not file a tax return for 2012, you may be one of nearly one million taxpayers who may be due a refund from that year. If you are, you must claim your share of almost $950 million by April 18. To claim your refund, you must file a 2012 federal income tax return. Here are the facts you need to know about unclaimed refunds:
- The unclaimed refunds apply to people who did not file a federal income tax return for 2012. The IRS estimates that half the potential refunds are more than $718.
- Some people, such as students and part-time workers, may not have filed because they had too little income to require filing a tax return. They may have a refund waiting if they had taxes withheld from their wages or made quarterly estimated payments. A refund could also apply if they qualify for certain tax credits, such as the Earned Income Tax Credit.
- If you didn’t file a 2012 return, the law generally provides a three-year window to claim a refund from that year. For 2012 returns, the window closes on April 18, 2016 (or April 19 for taxpayers in Maine and Massachusetts).
- The law requires that you properly address, mail and postmark your tax return by that date to claim your refund.
- If you don’t file a claim for a refund within three years, the money becomes the property of the U.S. Treasury. There is no penalty for filing a late return if you are due a refund.
- The IRS may hold your 2012 refund if you have not filed tax returns for 2013 and 2014. The U.S. Treasury will apply the refund to any federal or state tax you owe. It also may use your refund to offset unpaid child support or past due federal debts, such as student loans.
- If you’re missing Forms W-2, 1098, 1099 or 5498 for prior years, you should ask for copies from your employer, bank or other payer. If you can’t get copies, get a free transcript by mail that provides the information you need by going to IRS.gov. You can also file Form 4506-T to get a transcript. Order your transcript early. Transcripts arrive in five to 10 calendar days at the address we have on file for you.
Current and prior year tax forms and instructions are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Some 48 million Americans have received a tax refund from the federal government so far this year, and what they do with the money is as varied as the country itself.
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Federal income tax refunds totaling $950 million may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2012. To collect the money, these taxpayers must file a 2012 tax return with the IRS no later than this year's April tax deadline.
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Recent legislation made the 100% exclusion of gain from the sale of qualified small business stock permanent, ending years of uncertainty as the amount fluctuated. It's time to revisit this tax break.
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Money you paid for higher education in 2015 can mean tax savings in 2016. If you, your spouse or your dependent took post-high school coursework last year, there may be a tax credit or deduction for you. Here are some facts from the IRS about key tax breaks for higher education.
Money you paid for higher education in 2015 can mean tax savings in 2016. If you, your spouse or your dependent took post-high school coursework last year, there may be a tax credit or deduction for you. Here are some facts from the IRS about key tax breaks for higher education.
The American Opportunity Credit (AOTC) is:
- Worth up to $2,500 per eligible student.
- Used only for the first four years at an eligible college or vocational school.
- For students earning a degree or other recognized credential.
- For students going to school at least half-time for at least one academic period that started during or shortly after the tax year. Claimed on your tax return using Form 8863, Education Credits.
The Lifetime Learning Credit (LLC) is:
- Worth up to $2,000 per tax return, per year, no matter how many students qualify.
- For all years of higher education, including classes for learning or improving job skills.
- Claimed on your tax return using Form 8863, Education Credits.
The Tuition and Fees Deduction is:
- Claimed as an adjustment to income.
- Claimed whether or not you itemize.
- Limited to tuition and certain related expenses required for enrollment or attendance at eligible schools.
- Worth up to $4,000.
Additionally:
- You should receive Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. Your school also sends a copy to the IRS.
- You may only claim qualifying expenses paid in 2015.
- You can’t claim either credit if someone else claims you as a dependent.
- You can’t claim either AOTC or LLC and the Tuition and Fees Deduction for the same student or for the same expense, in the same year.
- Income limits could reduce the amount of credits or deductions you can claim.
- The Interactive Tax Assistant tool on IRS.gov can help you check your eligibility.
You can trim your taxes and save on your energy bills with certain home improvements. Here are some key facts to know about home energy tax credits.
You can trim your taxes and save on your energy bills with certain home improvements. Here are some key facts to know about home energy tax credits:
Non-Business Energy Property Credit
- Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
- The other part of the credit is not a percentage of the cost. It is for the actual cost of certain property. This may include items like water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
- This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
- Your main home must be located in the U.S. to qualify for the credit.
- Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
- You may claim the credit on your 2015 tax return if you didn’t reach the lifetime limit in past years. Under current law, this credit is available through Dec. 31, 2016.
Residential Energy Efficient Property Credit
- This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
- Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
- There is no dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
- The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
- This credit is available through 2016.
Use Form 5695, Residential Energy Credits, to claim these credits. For more information on this topic, refer to the form’s instructions. You can get IRS forms anytime on IRS.gov/forms.
Here are the best ways to get federal tax help from the IRS ‘en español’.
Here are the best ways to get federal tax help ‘en español’:
- Get Answers in Spanish 24/7. IRS.gov/espanol offers a wealth of tax information in Spanish. You can check the status of your tax refund with the online tool “¿Dónde está mi reembolso?” Use the “Asistente EITC” tool to check if you qualify for the Earned Income Tax Credit. You may qualify for the credit if you earned less than $53,267 in 2015.
- Try IRS E-file. Whether you do your own taxes or pay a tax preparer, you should e-file your tax return. IRS e-file is safe, easy and secure. If you owe taxes, you can e-file early and pay by the April 18 deadline.
- Get Health Care Tax Information. The IRS website has information about the Affordable Care Act tax provisions in both English and Spanish. The pages explain the individual shared responsibility provision and the premium tax credit and their effect on the tax return you’re filing in 2016. You can find information about the law, the latest news, frequently asked questions and links to additional resources on these pages.
- Get Up-to-Date at the Multimedia Center. Watch YouTube video tax tips and listen to IRS podcasts in Spanish.
- Get Tax Forms and Publications. Visit IRS.gov/espanol to get several tax forms and publications in Spanish.
- Visit the IRS Spanish Newsroom. You’ll see the IRS’s most recent news releases, tax tips and information in the Spanish newsroom.
- Stay Connected through Twitter en Español. Get the latest tax information and helpful tax tips in Spanish on Twitter. Follow the national IRS Spanish Twitter Account @IRSenEspanol.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
IRS YouTube Videos:
Each year, people fall prey to tax scams. That’s why the IRS sends a list of its annual “Dirty Dozen.” Stay safe and be informed – don’t become a victim.
Each year, people fall prey to tax scams. That’s why the IRS sends a list of its annual “Dirty Dozen.” Stay safe and be informed – don’t become a victim.
If you get involved in illegal tax scams, you can lose money or face stiff penalties, interest and even criminal prosecution. Remember, if it sounds too good to be true, it probably is. Be on the lookout for these scams:
Identity theft.Identity theft, especially around tax time, is at the top of the “Dirty Dozen” list again this year. The IRS continues to aggressively pursue criminals who file fraudulent returns using someone else’s Social Security number. The IRS is making progress on this front. Remain vigilant to avoid becoming a victim.
Telephone scams. Threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding payment.
Phishing. Phishing scams typically use unsolicited emails or fake websites that appear legitimate but are attempting to steal your personal information. The IRS will not send you an email about a bill or tax refund out of the blue. Don’t click on strange emails and websites that may be scams to steal your personal information.
Return Preparer Fraud.
About 60 percent of taxpayers use tax professionals to prepare their returns. While most tax professionals provide honest, high-quality service, there are some dishonest ones who set up shop each filing season to perpetrate refund fraud, identity theft and other scams. Be on the lookout for unscrupulous tax return preparers. Choose your preparer wisely.
Offshore Tax Avoidance.
Hiding money and income offshore is a bad bet. If you have money in offshore banks, it’s best to contact the IRS to get your taxes in order.
The IRS offers the Offshore Voluntary Disclosure Program to help you do that.
Inflated Refund Claims.
Be on the lookout for anyone promising inflated tax refunds. Also be wary of anyone who asks you to sign a blank return, promises a big refund before looking at your tax records or charges fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word of mouth via trusted community groups to find victims.
Fake Charities.
Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. If you are making a charitable contribution, you should take a few extra minutes to ensure your hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools you need to check out the status of charitable organizations. Be wary of charities with names that are similar to familiar or nationally-known organizations.
Falsely Padding Deductions on Returns.
Don’t give in to the temptation to inflate deductions or expenses on your tax return. Think twice before overstating deductions such as charitable contributions, inflating claimed business expenses or including credits that you are not entitled to receive, such as the Earned Income Tax Credit or Child Tax Credit. Complete an accurate return.
Excessive Claims for Business Credits.
Don’t make improper claims for fuel tax credits. The credit is generally limited to off-highway business use, including use in farming. It is generally not available to most taxpayers. Also avoid misuse of the research credit. If it doesn’t apply to your business and you don’t meet the criteria, don’t make the claim.
Falsifying Income to Claim Credits.
Don’t invent income to erroneously claim tax credits. A scam artist may try to talk you into doing this. You should file the most accurate tax return possible because you are legally responsible for what is on your return. Falling prey to this scam may mean you have to pay back taxes, interest and penalties. In some cases, you may even face criminal prosecution.
Abusive Tax Shelters.
Avoid using abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. Be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, seek an independent opinion regarding these complex situations or offers. Most taxpayers pay their fair share, and so should you.
Frivolous Tax Arguments.
Using frivolous tax arguments to avoid paying taxes can have serious financial consequences. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying taxes. The law is crystal clear that people must pay their taxes. For decades, the federal courts have consistently upheld the tax laws. The penalty for filing a frivolous tax return is $5,000.
Tax scams can take many forms beyond the “Dirty Dozen.” The best defense is to remain alert. Additional information about tax scams is available on IRS social media sites, including YouTube and Tumblr , where people can search “scam” to find all the scam-related posts.
Additional IRS Resources:
IRS YouTube Video:
Podcasts:
Tax Scams --English | Spanish
The key to teaching children about personal finance issues is to start early and bring up the issue frequently, experts say. Three experts discuss the value of financial skills, how to instill them in children and the role that schools can play in financial education.
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Just when you think you’ve seen and heard it all, in walks a client with an absolutely ludicrous tax deduction. Here are six outraggeous tax deductions that were requested.
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On Thursday, the Internal Revenue Service issued a publication that outlines a new examination process that will govern examinations of taxpayers undertaken by the IRS’ Large Business and International Division. The examination process, which will be effective May 1, 2016, includes new procedures for refund claims while an examination is underway.
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A TIGTA investigation into the data breach discovered last May brings the total number of taxpayers whose tax transcripts were potentially compromised to 724,000
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This year, you may receive one or more forms that provide information about your 2015 health coverage. These forms are 1095-A, 1095-B and 1095-C. This tip is part of a series that answers your questions about these forms.
This year, you may receive one or more forms that provide information about your 2015 health coverage. These forms are 1095-A, 1095-B and 1095-C. This tip is part of a series that answers your questions about these forms.
Form 1095-A, Health Insurance Marketplace Statement, provides you with information about your health care coverage if you or someone in your family enrolled in coverage through the Health Insurance Marketplace.
Here are the answers to questions you’re asking about Form 1095-A:
Will I get a Form 1095-A?
- The Marketplace will send you a Form 1095-A if you, your spouse or a dependent enrolled in coverage for 2015. Most individuals did not enroll in Marketplace coverage and will not receive this form.
- The Marketplace may send you more than one Form 1095-A if any of these apply:
- Members of your household were not all enrolled in the same health plan
- You updated your family information during the year
- You switched plans during the year
- You had family members enrolled in different states
- The Form 1095-A is not new, but some people may receive it for the first time this year.
How do I use the information on my Form 1095-A?
- This form provides information about your Marketplace coverage, including the names of covered individuals and which months they were covered last year.
- Use the information from Form 1095-A to complete Form 8962, Premium Tax Credit, and reconcile advance payments of the premium tax credit or – if you are eligible – to claim the premium tax credit on your tax return.
- If you received advance payments, which are shown on lines 21-33 of Form 1095-A, you must file a tax return, and include Form 8962, even if you are not otherwise required to file a return. Filing your return without reconciling your advance payments will delay your refund and may affect future advance credit payments.
- If Form 1095-A, Part II shows coverage for you and everyone in your family for the entire year, you can simply check the full-year coverage box on your tax return to satisfy the individual shared responsibility provision.
- If there were months that you did not have coverage, you should determine if you qualify for an exemption from the requirement to have coverage. If not, you must make an individual shared responsibility payment.
- Do not attach Form 1095-A to your tax return - keep it with your tax records.
What if I don’t get my Form 1095-A?
- If you are expecting to receive a Form 1095-A, you should wait to file your 2015 income tax return until you receive this form. Filing before you receive this form may delay your refund.
- The IRS does not issue and cannot provide you with your Form 1095-A. If you are expecting a form and do not get one, you should contact your Marketplace. Visit your Marketplace’s website to find out the steps you need to follow to get a copy of your Form 1095-A online.
- You can find more information about your Form 1095-A from the Health Insurance Marketplace.
Depending upon your circumstances, you might also receive Forms 1095-B and 1095-C. For information on these forms, see our Questions and Answers about Health Care Information Forms for Individuals.
When you receive an IRS notice, you may get a knot in the pit of your stomach even before you open it. Every year the IRS sends millions of letters and notices. (This is the way the agency contacts taxpayers, not by calling them out of the blue and threatening to put them in jail or by sending emails demanding payment—those are scams.)
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If your facts are right and you feel adventurous, here are some unusual deductions taxpayers managed to get approved. Admittedly, some had to take the IRS to court to get their deduction approved.
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This year, you may receive one or more forms that provide information about your 2015 health coverage you had in 2015. These forms are 1095-A, 1095-B and 1095-C. This tip is part of a series that answers your questions about these forms.
This year, you may receive one or more forms that provide information about your 2015 health coverage you had in 2015. These forms are 1095-A, 1095-B and 1095-C. This tip is part of a series that answers your questions about these forms.
Form 1095-B, Health Coverage, provides you with information about your health care coverage if you, your spouse or your dependents enrolled in coverage through an insurance provider or self-insured employer last year.
Here are the answers to questions you’re asking about Form 1095-B:
Will I get a Form 1095-B?
- You will receive Form 1095-B - which is a new form this year – from your insurance provider if you had insurance for you or your family members.
- The term “health insurance providers” includes insurance companies, some self-insured employers, and government agencies that run Medicare, Medicaid or CHIP.
- You are likely to get more than one form if:
- You had coverage from more than one provider
- You changed coverage or employers during the year
- If different members of your family received coverage from different providers
How do I use the information on my Form 1095-B?
- This form provides information about your health coverage, including who was covered, and when the coverage was in effect.
- If Form 1095-B, Part IV, Column (d), shows coverage for you and everyone in your family for the entire year, you can simply check the full-year coverage box on your tax return.
- If you did not have coverage for the entire year, use Form 1095-B, Part IV, Column (e), to determine the months when you or your family members had coverage. If there were months that you did not have coverage, you should determine if you qualify for an exemption from the requirement to have coverage. If not, you must make an individual shared responsibility payment.
- You are not required to file a tax return solely because you received a Form 1095-B if you are otherwise not required to file a tax return.
- Do not attach Form 1095-B to your tax return - keep it with your tax records.
What if I don’t get my Form 1095-B?
- You might not receive a Form 1095-B by the time you are ready to file your 2015 tax return, and it is not necessary to wait for it to file.
- The information on these forms may assist in preparing a return, and you, however you can prepare and file your return using other information about your health insurance.
- The IRS does not issue and cannot provide you with your Form 1095-B. For questions about your Form 1095-B, contact the coverage provider. See line 18 of the Form 1095-B for a contact number.
Depending upon your circumstances, you might also receive Forms 1095-A and 1095-C. For information on these forms, see our Questions and Answers about Health Care Information Forms for Individuals.
There are many reasons why you may need a copy of your tax return information from a prior year. Transcripts are free and available for the most current tax year after the IRS has processed the return. You can also get them for the past three tax years. If you don’t have your copy, the IRS can help. Here are the types of transcripts to choose from.
There are many reasons why you may need a copy of your tax return information from a prior year. Transcripts are free and available for the most current tax year after the IRS has processed the return. You can also get them for the past three tax years. If you don’t have your copy, the IRS can help. Here are the types of transcripts to choose from:
- Tax Return Transcript. A return transcript shows most line items from your tax return just as you filed it. It also includes any forms and schedules you filed with your return. However, it does not reflect changes made to the return after you filed it. If you are applying for a mortgage, most mortgage companies require a tax return transcript and participate in our Income Verification Express Service program. If you are applying for financial aid, you can use the IRS Data Retrieval Tool on the FAFSA website to import your tax return information to your financial aid application. In both of these cases, you won’t have to request a transcript directly from the IRS.
- Tax Account Transcript. This transcript shows any adjustments made by you or the IRS after you filed your return. It shows basic tax return data, like marital status, type of return, adjusted gross income and taxable income, and other transactions such as payments you made.
Here’s how to get a transcript:
- Order Online. The fastest way to get a Tax Return or Account transcript is through the ‘Get Transcript’ tool available on IRS.gov. Although the IRS temporarily stopped the online viewing and printing of transcripts, Get Transcript still allows you to order your transcript online and receive it by mail. Just click the “Get Transcript by Mail” button to have a paper copy sent to your address of record.
- Order by phone. You can also order by phone at 800-908-9946 and follow the prompts.
- Order by mail. To order your tax return transcript by mail, complete and mail either Form 4506-T or Form 4506T-EZ. Form 4506-T can also be used to request other tax records: tax account transcript, record of account, wage and income and verification of non-filing.
If you need an actual copy of your tax return, they are generally available for the current tax year and as far back as six years. The fee per copy is $50. Complete and mail Form 4506 to request a copy of your tax return. Mail your request to the IRS office listed on the form for your area. If you live in a federally declared disaster area, you can get a free copy of your tax return. Visit IRS.gov for more disaster relief information.
Plan ahead. Delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. You should allow 30 days to receive a transcript ordered by mail and 75 days for copies of your tax return.
A variety of products designed specifically for women cost more and offer less value than similar products for men -- a phenomenon known as the "pink tax." Women do have some options for addressing this problem.
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The Internal Revenue Service further postponed the due date for a new reporting requirement under which estates must report the value of estate assets to the IRS and beneficiaries. The postponement is designed to give the IRS time to issue proposed regulations.
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Scams using the IRS as a lure continue. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.
Scams using the IRS as a lure continue. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.
Be wary if you get an out-of-the-blue phone call or automated message from someone who claims to be from the IRS. Sometimes they say you owe money and must pay right away. Other times they say you are owed a refund and ask for your bank account information over the phone. Don’t fall for it. Here are several tips that will help you avoid becoming a scam victim.
The real IRS will NOT:
- Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
- Demand tax payment and not allow you to question or appeal the amount you owe.
- Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
- Ask for your credit or debit card numbers over the phone.
- Threaten to bring in local police or other agencies to arrest you without paying.
- Threaten you with a lawsuit.
If you don’t owe taxes or have no reason to think that you do:
- Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
- You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.
If you think you may owe taxes:
- Ask for a call back number and an employee badge number.
- Call the IRS at 800-829-1040. IRS employees can help you.
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.
If you get a ‘phishing’ email, the IRS offers this advice:
- Don’t reply to the message.
- Don’t give out your personal or financial information.
- Forward the email to phishing@irs.gov. Then delete it.
- Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.
More information on how to report phishing or phone scams is available on IRS.gov
If you receive Social Security benefits, you may have to pay federal income tax on part of your benefits. These IRS tips will help you determine if you need to pay taxes on your benefits.
If you receive Social Security benefits, you may have to pay federal income tax on part of your benefits. These IRS tips will help you determine if you need to pay taxes on your benefits.
- Form SSA-1099. If you received Social Security benefits in 2015, you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of your benefits.
- Only Social Security. If Social Security was your only income in 2015, your benefits may not be taxable. You also may not need to file a federal income tax return. If you get income from other sources you may have to pay taxes on some of your benefits.
- Interactive Tax Assistant. You can get answers to your tax questions with this helpful tool and see if any of your benefits are taxable. Visit IRS.gov and use the Interactive Tax Assistant tool.
- Tax Formula. Here’s a quick way to find out if you must pay taxes on your Social Security benefits: Add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.
- Base Amounts. The three base amounts are:
- $25,000 – if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2015
- $32,000 – if you are married filing jointly
- $0 – if you are married filing separately and lived with your spouse at any time during the year
Whether they’ve lost that loving feeling or they’ve wised up about inflated prices on Valentine’s Day, young people can learn a thing or two from long marrieds and save a few bucks.
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Children may help reduce the amount of taxes owed for the year. If you’re a parent, here are several tax benefits you should look for when you file your federal tax return.
Children may help reduce the amount of taxes owed for the year. If you’re a parent, here are several tax benefits you should look for when you file your federal tax return:
- Dependents. In most cases, you can claim your child as a dependent. You can deduct $4,000 for each dependent you are entitled to claim. You must reduce this amount if your income is above certain limits. For more on these rules, see Publication 501, Exemptions, Standard Deduction and Filing Information.
- Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more information, see Schedule 8812 and Publication 972, Child Tax Credit.
- Child and Dependent Care Credit. You may be able to claim this credit if you paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. You must have paid for care so that you could work or look for work. See Publication 503, Child and Dependent Care Expenses, for more on this credit.
- Earned Income Tax Credit. You may qualify for EITC if you worked but earned less than $53,267 last year. You can get up to $6,242 in EITC. You may qualify with or without children. Use the 2015 EITC Assistant tool at IRS.gov to find out if you qualify. See Publication 596, Earned Income Tax Credit, to learn more.
- Adoption Credit. You may be able to claim a tax credit for certain costs you paid to adopt a child. For details see Form 8839, Qualified Adoption Expenses.
- Education Tax Credits. An education credit can help you with the cost of higher education. Two credits are available. The American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the credit reduces your tax to less than zero, you may get a refund. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file a return to claim these credits. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim them. Visit the IRS’s Education Credits Web page to learn more on this topic. Also, see Publication 970, Tax Benefits for Education.
- Student Loan Interest. You may be able to deduct interest you paid on a qualified student loan. You can claim this benefit even if you do not itemize your deductions. For more information, see Publication 970.
- Self-employed Health Insurance Deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid during the year. This may include the cost to cover your children under age 27, even if they are not your dependent. See Publication 535, Business Expenses, for details.
You can get related forms and publications on IRS.gov.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
IRS YouTube Videos:
- Earned Income Tax Credit - English
- Earned Income Tax Credit - Get It Right – English
- Education Tax Credits – English
IRS Podcasts:
Farms include ranches, ranges and orchards. While some may raise cattle, poultry or fish and others grow fruits or vegetables, all will report their farm income on Schedule F, Profit or Loss from Farming. If you own a farm or ranch, here are 10 tax tips.
Farms include ranches, ranges and orchards. While some may raise cattle, poultry or fish and others grow fruits or vegetables, all will report their farm income on Schedule F, Profit or Loss from Farming. If you own a farm or ranch, here are 10 tax tips:
- Crop insurance. Insurance payments from crop damage count as income. Generally, you should report these payments in the year you get them.
- Sale of items purchased for resale. If you sold livestock or items that you bought for resale, you must report the sale. Your profit or loss is the difference between your selling price and your basis in the item. Basis is usually the cost of the item. Your cost may also include other expenses such as sales tax and freight.
- Weather-related sales. Bad weather such as a drought or flood may force you to sell more livestock than you normally would in a year. If so, you may defer tax on the gain from the sale of the extra animals.
- Farm expenses. Farmers can deduct ordinary and necessary expenses they paid for their business. An ordinary expense is a common and accepted cost for that type of business. A necessary expense means a cost that is proper for that business.
- Employee wages. You can deduct wages you paid to your farm’s full- and part-time workers. You must withhold Social Security, Medicare and income taxes from their wages.
- Loan repayment. You can only deduct the interest you paid on a loan if the loan is used for your farming business. You can’t deduct interest you paid on a personal loan.
- Net operating losses. If your expenses are more than income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid in prior years. You may also be able to lower your tax in future years.
- Farm income averaging. You may be able to average some or all of the current year's farm income by spreading it out over the past three years. This may cut your taxes if your farm income is high in the current year and low in the prior three years.
- Tax credit or refund. You may be able to claim a tax credit or refund of excise taxes you paid on fuel used on your farm for farming purposes.
- Farmers Tax Guide. For more details on this topic see Publication 225, Farmer’s Tax Guide. You can get it on IRS.gov/forms anytime. You can order it on IRS.gov/orderforms to have it mailed to you.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
Illinois, and Chicago in particular, attracted $330 million in film and television production work in 2015, the Illinois Film Office reported today, with 291 projects shooting here.
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Several trends are changing the way companies hire CFOs. Women and minorities are earning more of the open spots. In addition, more companies are hiring investment bankers and people with previous CFO experience.
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Taxpayers may not like receiving IRS Form 1099, and in some cases, are happy to be missing an IRS Form 1099. Businesses may not like sending them out. Perhaps no one likes 1099s except the IRS. The agency loves them because they easily allow matching data against tax returns.
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Jerry Catalano offers small business tips on creating a great working staff.
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AN INFORMATIVE MEETING about the Illinois Filmmakers 30% Tax Credit will take place Wednesday, Jan. 27, 2016 to explain how to wend your way through the qualifications to obtain the credit when your film is completed and getting ready to hit the screens.
Organized by Joe Orlandino’s Atlas Media and Stage 32, the knowledgeable main speaker is Catalano Caboor & Co.'s very own, Christine Fitch, who is 1 of 8 people listed on the Illinois Film Office’s list of accountants to contact about the process. Fitch will also answer questions.
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Most people file a tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. Here are 6 tips to help you find out if you should file a tax return.
Most people file a tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. Here are six tips to help you find out if you should file a tax return:
- General Filing Rules. Whether you need to file a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and under age 65 you must file if your income was at least $10,300. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to gov/filing to find out if you need to file.
- Premium Tax Credit. If you enrolled in health insurance through the Health Insurance Marketplace in 2015, you may be eligible for the premium tax credit. You will need to file a return to claim the credit. If you chose to have advance payments of the premium tax credit sent directly to your insurer during 2015 you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The form will have information that will help you file your tax return
- Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
- Earned Income Tax Credit. Did you work and earn less than $53,267 last year? You could receive EITC as a tax refund, if you qualify, with or without a qualifying child. You may be eligible for up to $6,242. Use the 2015 EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return to claim it.
- Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.
- American Opportunity Tax Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You, your spouse or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file it with your return to claim the credit. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim the credit. Learn more by visiting the IRS’ Education Credits Web page.
The instructions for Forms 1040, 1040A or 1040EZ list income tax filing requirements. You can also use the Interactive Tax Assistant tool on IRS.gov. Look for “Do I need to file a return?” under general topics to see if you need to file. The tool is available 24/7 to answer many tax questions. Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
IRS YouTube Videos:
IRS Podcasts:
The Affordable Care Act requires you and your dependents to have health care coverage, an exemption from the coverage requirement, or make a shared responsibility payment for any month without coverage or an exemption with your return. This law will affect your federal income tax return when you file this year.
The Affordable Care Act requires you and your dependents to have health care coverage, an exemption from the coverage requirement, or make a shared responsibility payment for any month without coverage or an exemption with your return. This law will affect your federal income tax return when you file this year.
Here are five things you should know about exemptions from the health care law’s coverage requirement and the individual shared responsibility payment that will help you get ready to file your tax return:
- You may be eligible to claim an exemption from the requirement to have coverage and are not required to make a payment. If you qualify for an exemption, you will need to file Form 8965, Health Coverage Exemptions, with your tax return. You can claim most exemptions when you file your tax return. However, you must apply for certain exemptions in advance through the Health Care Insurance Marketplace.
- If you receive an exemption through the Marketplace, you’ll receive an Exemption Certificate Number to include when you file your taxes. If you have applied for an exemption through the Marketplace and are still waiting for a response, you can put “pending” on your tax return where you would normally put your ECN.
- You do not need to file a return solely to report your coverage or to claim a coverage exemption. If you are not required to file a federal income tax return for a year because your gross income is below your return filing threshold, you are automatically exempt from the shared responsibility provision for that year and do not need to take any further action to secure an exemption.
- If you file a tax return and your income is below the filing threshold for your filing status, you should use Part II of Form 8965, Coverage Exemptions for Your Household Claimed on Your Return, to claim a coverage exemption. You should not make a shared responsibility payment if you are exempt from the coverage requirement because you have income below the filing threshold.
- If you do not have qualifying coverage or an exemption for the year, you will need to make an individual shared responsibility payment for each month without coverage or an exemption when you file your return. Examples and information about figuring the payment are available on the IRS Calculating the Payment page
Tax time is upon us again, and 2016 brings some tax changes you need to know about. By knowing about them, you'll be better able to take steps that will leave you prepared both this year and next. Here are the 10 biggest tax changes you should know about.
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The Minnesota Society of Certified Public Accountants recently surveyed its CPA members in public accounting on the most outrageous tax deductions clients tried to take on their tax returns. The resulting list shows that, more often than not, clients just don’t know which deductions are allowed.
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Winning Powerball, or receiving other types of windfalls, can lead people to make ruinous financial mistakes. CPA financial planners identify five major mistakes made by people who become rich overnight, and suggest ways to avoid them.
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When clients die, tax practitioners can take a number of steps on their clients' individual income tax returns for their final year that can help the family save on taxes.
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All of our CPAs are on the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.
Many people use a tax professional to prepare their taxes. Tax professionals with an IRS Preparer Tax Identification Number (PTIN) can prepare a return for a fee. If you choose a tax pro, you should know who can represent you before the IRS. There are new rules this year, so the IRS wants you to know who can represent you and when they can represent you.
Many people use a tax professional to prepare their taxes. Tax professionals with an IRS Preparer Tax Identification Number (PTIN) can prepare a return for a fee. If you choose a tax pro, you should know who can represent you before the IRS. There are new rules this year, so the IRS wants you to know who can represent you and when they can represent you. Choose a tax return preparer wisely.
Representation rights, also known as practice rights, fall into two categories:
- Unlimited Representation
- Limited Representation
Unlimited representation rights allow a credentialed tax practitioner to represent you before the IRS on any tax matter. This is true no matter who prepared your return. Credentialed tax professionals who have unlimited representation rights include:
Limited representation rights authorize the tax professional to represent you if, and only if, they prepared and signed the return. They can do this only before IRS revenue agents, customer service representatives and similar IRS employees. They cannot represent clients whose returns they did not prepare. They cannot represent clients regarding appeals or collection issues even if they did prepare the return in question. For returns filed after Dec. 31, 2015, the only tax return preparers with limited representation rights are Annual Filing Season Program Participants.
The Annual Filing Season Program is a voluntary program. Non-credentialed tax return preparers who aim for a higher level of professionalism are encouraged to participate.
Other tax return preparers have limited representation rights, but only for returns filed before Jan. 1, 2016. Keep these changes in mind and choose wisely when you select a tax return preparer.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
IRS YouTube Videos:
IRS Podcasts:
The Illinois Department of Revenue says taxpayers will have to wait until after March 1 to receive income tax refunds.
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You should be encouraged to save for retirement without worrying you may not have the liquidity you need. Here’s how to help get money when necessary without incurring the onerous 10% tax on early withdrawals.
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Effective January 1, 2016, certain taxing jurisdictions have imposed a local sales tax or changed their local sales tax rate on general merchandise sales.
The following taxes are affected:
- home rule sales tax
- county home rule sales
- tax business district sales tax
These local sales taxes are referred to in this bulletin as “locally imposed sales tax.”
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The IRS, the states and the tax industry urge you to be safe online and remind you to take important steps to help protect your tax and financial information and guard against identity theft. Treat your personal information like cash – don’t hand it out to just anyone.
The IRS, the states and the tax industry urge you to be safe online and remind you to take important steps to help protect your tax and financial information and guard against identity theft. Treat your personal information like cash – don’t hand it out to just anyone.
Your Social Security number, credit card numbers, and bank and utility account numbers can be used to steal your money or open new accounts in your name. Every time you are asked for your personal information think about whether you can really trust the request. In an effort to steal your information, scammers will do everything they can to appear trustworthy.
The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.
Here are some best practices you can follow to protect your tax and financial information:
Give personal information over encrypted websites only. If you’re shopping or banking online, stick to sites that use encryption to protect your information as it travels from your computer to their server. To determine if a website is encrypted, look for “https” at the beginning of the web address (the “s” is for secure). Some websites use encryption only on the sign-in page, but if any part of your session isn’t encrypted, the entire account and your financial information could be vulnerable. Look for https on every page of the site you’re on, not just where you sign in.
Protect your passwords. The longer the password, the tougher it is to crack. Use at least 10 characters; 12 is ideal for most home users. Mix letters, numbers and special characters. Try to be unpredictable – don’t use your name, birthdate or common words. Don’t use the same password for many accounts. If it’s stolen from you – or from one of the companies with which you do business – it can be used to take over all your accounts. Don’t share passwords on the phone, in texts or by email. Legitimate companies will not send you messages asking for your password. If you get such a message, it’s probably a scam. Keep your passwords in a secure place, out of plain sight.
Don’t assume ads or emails are from reputable companies. Check out companies to find out if they are legitimate. When you’re online, a little research can save you a lot of money and reduce your security risk. If you see an ad or an offer that looks too good, take a moment to check out the company behind it. Type the company or product name into your favorite search engine with terms like “review,” “complaint” or “scam.” If you find bad reviews, you’ll have to decide if the offer is worth the risk. If you can’t find contact information for the company, take your business and your financial information elsewhere. The fact that a site features an ad for another site doesn’t mean that it endorses the advertised site, or is even familiar with it.
Don’t overshare on social media – Do a web search of your name and review the results. Mostly likely, the results while turn up your past addresses, the names of people living in the household as well social media accounts and your photographs. All of these items are valuable to identity thieves. Even a social media post boasting of a new car can help thieves bypass security verification questions that depend on financial data that only you should know. Think before you post!
Back up your files. No system is completely secure. Copy important files and your federal and state tax returns onto a removable disc or a back-up drive, and store it in a safe place. If your computer is compromised, you’ll still have access to your files.
Save your tax returns and records. Your federal and state tax forms are important financial documents you may need for many reasons, ranging from home mortgages to college financial. Print out a copy and keep in a safe place. Make an electronic copy in a safe spot as well. These steps also can help you more easily prepare next year’s tax return. If you store sensitive tax and financial records on your computer, use a file encryption program to add an additional layer of security should your computer be compromised.
To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.
Employer benefits, opportunities and requirements under the health care law are dependent upon the employer’s workforce size.
Employer benefits, opportunities and requirements under the health care law are dependent upon the employer’s workforce size.
The vast majority of employers fall below the workforce size threshold for applicable large employers. Generally, an employer with 50 or more full-time employees or equivalents will be considered an applicable large employer. Applicable large employers can find a complete list of resources and the latest news at the Applicable Large Employer Information Center on IRS.gov/aca.
If you have:
Regardless of size, all employers that provide self-insured health coverage to their employees must file an annual return reporting certain information for each employee they cover.
More information for employers of all sizes is available on IRS.gov/aca
Congress passed a $1.1 trillion spending measure that extends a number of important tax provisions, and makes several of them permanent.
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No doubt you’ve heard that warning to beware of phishing many times. But phishing remains a problem because it works. To help taxpayers understand the dangers of phishing and malware, the IRS, state revenue departments and the tax industry released the second in a series of special tax tips.
No doubt you’ve heard that warning to beware of phishing many times. But phishing remains a problem because it works. To help taxpayers understand the dangers of phishing and malware, the IRS, state revenue departments and the tax industry released the second in a series of special tax tips.
Learn more about this special series of tax tips and the “Taxes. Security. Together.” campaign.
Beginning in 2016, providers of minimum essential coverage must report certain information to the IRS and to covered individuals about the individual’s health coverage in 2015.
Beginning in 2016, providers of minimum essential coverage must report certain information to the IRS and to covered individuals about the individual’s health coverage in 2015.
Taxpayers will use this information, which will be provided on Form 1095-B, Health Coverage Information Return or Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, when they file their tax returns to verify the months that they had minimum essential coverage and satisfied the individual shared responsibility provision. The IRS will use the information on the statements to verify the months of the individual’s coverage.
Employers that sponsor self-insured group health plans are subject to information reporting requirements, with respect to the self-insured group health plan coverage. This means employers of any workforce size that sponsor a self-insured group health plan must comply with these information reporting requirements. An employer that is an applicable large employer must use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C to report information for employees who enrolled in the employer-sponsored self-insured health coverage. An employer that is not an applicable large employer should not file Forms 1094-C and 1095-C, but should instead file Forms 1094-B and 1095-B to report information for employees who enrolled in the employer-sponsored self-insured health coverage. The deadlines for reporting about 2015 coverage are the same as those provided above: February 29, 2016 for filing this information with the IRS – or March 31, 2016 if filing el ectronically – and February 1, 2016 for sending the form to the employee.
Other providers of minimum essential coverage will file Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage Information Return, with the IRS. For entities that provided minimum essential coverage in 2015, the deadline is February 29, 2016 – or March 31, 2016 if filing electronically. The Form 1095-B must contain the name and taxpayer identification numbers for each covered individual. It must also include the months that each covered individual was enrolled in coverage and entitled to receive benefits for at least one day of that month.
Coverage providers also must send the Form 1095-B to the person identified as the responsible individual on the form. The responsible individual generally is the person who enrolls one or more individuals, which may include him or herself, in minimum essential coverage. For 2015 coverage, the deadline for providing this form to individuals is February 1, 2016.
For more about the information reporting requirements for coverage providers, including self-insured employers, see our Questions and Answers on IRS.gov/aca. For more information, see our Determining if an Employer is an Applicable Large Employer page.
Nowadays, financial planning throughout the year – with an eye particularly on taxes – isn’t just for the wealthy. Advance planning is also rewarding for most middle-income individuals.
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The Internal Revenue Service on Thursday issued the standard mileage rates for business use of an automobile and for driving for medical or moving purposes for 2016. Both are lower than they were in 2015.
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Much attention was paid to the tangible property regulations this last year because most businesses had to adopt accounting method changes for the 2014 tax year. But there are still parts of the regulations that are important for the coming filing season for 2015 returns, which this article discusses in depth, including specific accounting method changes.
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It’s time to have a word about your password.
Many of us use the same sign-on and password over and over for our online accounts.
That’s why phishing scams, which often seek password information, are so successful. Once a criminal has your password for one account, it’s highly likely you’ve used the same sign-on information for other accounts.
It’s time to have a word about your password.
Many of us use the same sign-on and password over and over for our online accounts.
That’s why phishing scams, which often seek password information, are so successful. Once a criminal has your password for one account, it’s highly likely you’ve used the same sign-on information for other accounts.
The IRS, state revenue departments and the tax industry have teamed up to combat identity theft in the tax arena. Our theme: Taxes. Security. Together. Working in partnership with you, we can make a difference.
That’s why we have all agreed to new stronger standards that you will see when you access your tax software products for 2016 and file your taxes. These include:
- A password that has eight or more characters, including upper case, and lower case letters as well as numbers and a special character.
- New features include a timed lockout and limits on unsuccessful log-in attempts.
- You must complete three security questions.
- Tax software partners must verify email addresses. In many cases, this means a PIN will be sent to your email or text that you must use to verify your address before you can proceed with your tax software.
These are just a few of the new protections that will be in place for the 2016 tax season to protect you from identity thieves. Most of the protections we are taking may not be visible to you, but they will add layers of protection nonetheless, adding new and stronger protections during tax time.
While we are taking these steps, it’s a good time for you to think about the passwords you use for other accounts. You should always use strong passwords with a mix of letters, numbers and special characters. Do not use the same password for multiple accounts. The longer, the better. And change your passwords regularly.
We all have a role to play in fighting identity theft. Join with us to fight identity theft.
To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. Also read Publication 4524, Security Awareness for Taxpayers.
The theft of your identity, especially personal information such as your name, Social Security number, address and children’s names, can be traumatic and frustrating. In this online era, it’s important to always be on guard.
The theft of your identity, especially personal information such as your name, Social Security number, address and children’s names, can be traumatic and frustrating. In this online era, it’s important to always be on guard.
The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.
Here are seven steps you can make part of your routine to protect your tax and financial information:
1. Read your credit card and banking statements carefully and often – watch for even the smallest charge that appears suspicious. (Neither your credit card nor bank – or the IRS – will send you emails asking for sensitive personal and financial information such as asking you to update your account.)
2. Review and respond to all notices and correspondence from the Internal Revenue Service. Warning signs of tax-related identity theft can include IRS notices about tax returns you did not file, income you did not receive or employers you’ve never heard of or where you’ve never worked. 3. Review each of your three credit reports at least once a year. Visit annualcreditreport.com to get your free reports.
4. Review your annual Social Security income statement for excessive income reported. You can sign up for an electronic account at www.SSA.gov.
5. Read your health insurance statements; look for claims you never filed or care you never received.
6. Shred any documents with personal and financial information. Never toss documents with your personally identifiable information, especially your social security number, in the trash.
7. If you receive any routine federal deposit such as Social Security Administrator or Department of Veterans Affairs benefits, you probably receive those deposits electronically. You can use the same direct deposit process for your federal and state tax refund. IRS direct deposit is safe and secure and places your tax refund directly into the financial account of your choice.
To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
IRS YouTube Videos:
IRS Podcasts:
IRS Identity Theft FAQ: Going After The Bad Guys – English | Spanish
The Affordable Care Act requires applicable large employers to file information reporting returns with the IRS and employees. ALEs are generally those employers with 50 or more full-time employees, including full-time equivalent employees in the preceding calendar year.
The Affordable Care Act requires applicable large employers to file information reporting returns with the IRS and employees. ALEs are generally those employers with 50 or more full-time employees, including full-time equivalent employees in the preceding calendar year.
The vast majority of employers are not ALEs and are not subject to this health care tax provision. However, those who are must use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information about offers of health coverage and enrollment in health coverage for their employees.
Here are eight things ALEs should know about the information returns they must file at the beginning of 2016.
1. Form 1095-C is used to report information about each employee who was a full-time employee of the ALE member for any month of the calendar year.
2. Form 1094-C must be used to report to the IRS summary information for each employer, and to transmit Forms 1095-C to the IRS.
3. ALEs file a separate Form 1095-C for each of its full-time employees, and a transmittal on Form 1094-C for all of the returns filed for a given calendar year.
4. Employers that offer employer-sponsored self-insured coverage use Form 1095-C to report information to the IRS and to employees about individuals who have minimum essential coverage under the employer plan.
5. The information reported on Form 1094-C and Form 1095-C is used in determining whether an employer owes a payment under the employer shared responsibility provisions.
6. Form 1095-C is used by the IRS and the employee in determining the eligibility of the employee for the premium tax credit.
7. An ALE may satisfy this requirement by filing a substitute form, but the substitute form must include all of the information required on Form 1094-C and Form 1095-C and satisfy all form and content requirements as specified by the IRS.
8. Forms 1094-C and 1095-C, or a substitute form must be filed regardless of whether the ALE member offers coverage, or the employee enrolls in any coverage offered.
For more information, see the instructions for Forms 1094-C and 1095-C or the Employer Information Reporting FAQs for Forms 1094-C and 1095-C on IRS.gov/aca.
Updated procedures on penalties imposed for failing to file the Report of Foreign Bank and Financial Accounts provide consistency and help taxpayers know what to expect.
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The holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions. Here are six more tips that you should keep in mind.
The holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions. Here are six more tips that you should keep in mind:
- Give to qualified charities. You can only deduct gifts you give to a qualified charity. Use the IRS Select Check tool to see if the group you give to is qualified. You can deduct gifts to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.
- Keep a record of all cash gifts. Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.
- Household goods must be in good condition. Household items include furniture, furnishings, electronics, appliances and linens. These items must be in at least good-used condition to claim on your taxes. A deduction claimed of over $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.
- Additional records required. You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.
- Year-end gifts. Deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.
- Special rules. Special rules apply if you give a car, boat or airplane to charity. If you claim a deduction of more than $500 for a noncash contribution, you will need to file another form with your tax return. Use Form 8283, Noncash Charitable Contributions to report these gifts. For more on these rules, visit IRS.gov.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
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On 11/24/15 The IRS warned tax practitioners that an email phishing scam is being used to attempt to capture IRS e-Services usernames and passwords (IRS QuickAlert (11/24/15)). According to the IRS, emails are being sent to tax preparers asking them to update their e-Services information, but these emails are not coming from the IRS. The IRS warns practitioners not to click on any links in these emails.
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Form 1095-B, Health Coverage, is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment.
Form 1095-B, Health Coverage, is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment.
Minimum essential coverage includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, and other coverage the Department of Health and Human Services designates as minimum essential coverage.
By January 31, 2016, health coverage providers should furnish a copy of Form 1095-B, to you if you are identified as the “responsible individual” on the form.
The “responsible individual” is the person who, based on a relationship to the covered individuals, the primary name on the coverage, or some other circumstances, should receive the statement. Generally, the recipient should be the taxpayer who would be liable for the individual shared responsibility payment for the covered individuals. A recipient may be a parent if only minor children are covered individuals, a primary subscriber for insured coverage, an employee or former employee in the case of employer-sponsored coverage, a uniformed services sponsor for TRICARE, or another individual who should receive the statement. Health coverage providers may, but aren't required to, furnish a statement to more than one recipient.
The Form 1095-B sent to you may include only the last four digits of your social security number or taxpayer identification number, replacing the first five digits with asterisks or Xs. In general, statements must be sent on paper by mail or hand delivered, unless you consent to receive the statement in an electronic format. The consent ensures that you will be able to access the electronic statement. If mailed, the statement must be sent to your last known permanent address, or, if no permanent address is known, to your temporary address.
Employers with 50 or more full-time employees, including full-time equivalent employees, in the previous year use Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information required about offers of health coverage and enrollment in health coverage for their employees. Form 1095-C is used to report information about each employee.
Employers with 50 or more full-time employees, including full-time equivalent employees, in the previous year use Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information required about offers of health coverage and enrollment in health coverage for their employees. Form 1095-C is used to report information about each employee.
Employers that offer employer-sponsored self-insured coverage also use Form 1095-C to report information to the IRS and to employees about individuals who have minimum essential coverage under the employer plan and therefore are not liable for the individual shared responsibility payment for the months that they are covered under the plan. An employer must furnish a Form 1095-C to each of its full-time employees by January 31 of the year following the year to which the Form 1095-C relates.
Employers will meet the requirement to furnish Form 1095-C to an employee if the form is properly addressed and mailed on or before the due date. If the regular due date falls on a Saturday, Sunday, or legal holiday, employers may file by the next business day. The Form 1095-C that employers send may include only the last four digits of the employee’s social security number, replacing the first five digits with asterisks or Xs.
Forms 1095-C must be sent on paper by mail or hand delivered, unless the employee consents to receive the statement in an electronic format. The consent ensures that the employee can access the electronic statement. If mailed, the statement must be sent to the employee’s last known permanent address, or if no permanent address is known, to the employee’s temporary address.
Individuals who worked for multiple employers that are required to file Form 1095-C may receive a Form 1095-C from each employer.
Business startup costs are treated very differently for financial accounting purposes than for tax purposes, and their tax treatment can be complicated.
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Achieving a Better Life Experience (ABLE) accounts can be set up by taxpayers with disabilities, their parents or guardians, or anyone who holds power of attorney. Among the many advantages of these accounts is that they are disregarded when determining whether participants qualify for federal needs-based programs.
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Fictional forensic accountants will appear on TV as well as on the movie screen in 2016. If you find you need one in real life please contact our CPA John Dyckman for forensic accounting services.
Just in time for the 2016 tax season, Mireille Enos will star in The Catch and plays Alice Vaughan a female forensics accountant whose career specialty is exposing fraud for a living.
A few weeks before her wedding, she uncovers her husband-to-be’s financial deceit when he fails to return home. Checking her banking records online, she learns he has drained her account and is forced to ask herself, “A woman who uncovers fraud for a living gets taken for everything she’s worth?”
Later in 2016, Ben Affleck will star in The Accountant as a mild-mannered forensic accountant who moonlights as a hitman. The Accountant has a scheduled release date of October 7, 2016, right before the October 15th extension deadline.
MyRA, the new retirement savings account intended for people with taxable compensation income but who lack access to an employer-sponsored retirement plan, is launched nationwide.
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If you enrolled in insurance coverage through the Health Insurance Marketplace, you are required to report changes to the Marketplace when they happen, like changes to your household income or family size, because they may affect your eligibility for the advance payments of the premium tax credits.
If you enrolled in insurance coverage through the Health Insurance Marketplace, you are required to report changes to the Marketplace when they happen, like changes to your household income or family size, because they may affect your eligibility for the advance payments of the premium tax credits.
Changes in circumstances that you should report to the Marketplace include, but are not limited to:
- increases or decreases in your household income, including lump sum payments like a lump sum payment of Social Security benefits
- the birth or adoption of a child
- starting a job with health insurance
- gaining or losing your eligibility for other health care coverage
For the full list of changes you should report, visit HealthCare.gov.
Reporting changes will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. Getting too little could mean missing premium assistance to reduce your monthly premiums. Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan.
Victims of the severe storms and flooding that took place beginning on October 1, 2015 in parts of South Carolina may qualify for tax relief from the Internal Revenue Service.
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If you are a farmer or rancher forced to sell your livestock because of the drought that affects much of the nation, special IRS tax relief may help you. The IRS has extended the time to replace livestock that their owners were forced to sell due to drought. If you’re eligible, this may help you defer tax on any gains you got from the forced sales. The relief applies to all or part of 48 states and Puerto Rico affected by the drought. Here are several points you should know about this relief.
If you are a farmer or rancher forced to sell your livestock because of the drought that affects much of the nation, special IRS tax relief may help you. The IRS has extended the time to replace livestock that their owners were forced to sell due to drought. If you’re eligible, this may help you defer tax on any gains you got from the forced sales. The relief applies to all or part of 48 states and Puerto Rico affected by the drought. Here are several points you should know about this relief:
- Defer Tax on Drought Sales. If the drought caused you to sell more livestock than usual, you may be able to defer tax on the extra gains from those sales.
- Replacement Period. You generally must replace the livestock within a four-year period to postpone the tax. The IRS can extend that period if the drought continues.
- IRS Grants More Time. The IRS has added one more year to the replacement period for eligible farmers and ranchers. The one-year extension of time generally applies to certain sales due to drought.
- Livestock Sales that Apply. If you are eligible, your gains on sales of livestock that you held for draft, dairy or breeding purposes apply.
- Livestock Sales that Do Not Apply. Sales of other livestock, such as those you raised for slaughter or held for sporting purposes and poultry, are not eligible.
- Areas Eligible for Relief. The IRS relief applies to any farm in areas suffering exceptional, extreme or severe drought conditions during any weekly period between Sept. 1, 2014, and Aug. 31, 2015. The National Drought Mitigation Center has listed all or parts of 48 states and Puerto Rico that qualify for relief. Any county that borders a county on the NDMC’s list also qualifies.
- 2011 Drought Sales. This extension immediately impacts drought sales that occurred during 2011.
- Prior Drought Sales. However, the IRS has granted previous extensions that affect some of these localities. This means that some drought sales before 2011 are also affected. The IRS will grant additional extensions if severe drought conditions persist.
Get more on this relief in Notice 2015-69 on IRS.gov. This includes a list of states and counties where the IRS relief applies. For more on these tax rules see Publication 225, Farmer’s Tax Guide on IRS.gov.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
New due dates enacted this summer should make for a better workflow and solve the problem of late Schedules K-1, which made it difficult to file a timely, accurate return under the prior-law deadlines.
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The IRS continues to warn consumers to guard against scam phone calls from thieves intent on stealing their money or their identity. Criminals pose as the IRS to trick victims out of their money or personal information. Here are several tips to help you avoid being a victim of these scams.
The IRS continues to warn consumers to guard against scam phone calls from thieves intent on stealing their money or their identity. Criminals pose as the IRS to trick victims out of their money or personal information. Here are several tips to help you avoid being a victim of these scams:
- Scammers make unsolicited calls. Thieves call taxpayers claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via phishing email.
- Callers try to scare their victims. Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.
- Scams use caller ID spoofing. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.
- Cons try new tricks all the time. Some schemes provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. Others use emails that contain a fake IRS document with a phone number or an email address for a reply. These scams often use official IRS letterhead in emails or regular mail that they send to their victims. They try these ploys to make the ruse look official.
- Scams cost victims over $23 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 736,000 scam contacts since October 2013. Nearly 4,550 victims have collectively paid over $23 million as a result of the scam.
The IRS will not:
- Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
- Demand that you pay taxes and not allow you to question or appeal the amount you owe.
- Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
- Ask for your credit or debit card numbers over the phone.
- Threaten to bring in police or other agencies to arrest you for not paying.
If you don’t owe taxes, or have no reason to think that you do:
- Do not give out any information. Hang up immediately.
- Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
If you know you owe, or think you may owe tax:
- Call the IRS at 800-829-1040. IRS workers can help you.
Phone scams first tried to sting older people, new immigrants to the U.S. and those who speak English as a second language. Now the crooks try to swindle just about anyone. And they’ve ripped-off people in every state in the nation.
Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
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The bad news for Social Security recipients is that nonexistent inflation means no cost-of-living increase for Social Security payments next year. The good news for workers is that there will also be no increase in the amount of wages subject to Social Security taxes (old age, survivor and disability insurance).
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Taxpayers and practitioners are still waiting for Congress to agree on a package extending all currently expired tax breaks. Here's a look at the expired provisions and the actions that are pending to extend them.
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Congress has not yet extended the many tax incentives that expired at the end of last year. But businesses can still do a number of things before the year is out to reduce their 2015 taxes.
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Crowdfunding is an Internet campaign to raise money for businesses and other purposes. How this new funding source is treated for tax purposes is not certain, but this article suggests some possible approaches.
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If you’ve ever been told that you could make easy money and it sounds too good to be true, it probably is. Pyramid schemes often sound like enticing business deals, but fraudsters may use this “business model” - to take advantage of you. Before you invest your time and money, it’s important to ask good questions and do some research on the company.
Among the important developments in estate and trust taxation this year were the final regulations on how an estate can elect portability of a deceased spouse's unused estate tax exemption and an IRS ruling on the taxability of income in respect of a decedent in a grantor trust.
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The Affordable Care Act requires any person or organization that provides minimum essential coverage, including employers that provide self-insured group health plans, to report this coverage to the IRS and furnish statements to the covered individuals.
The Affordable Care Act requires any person or organization that provides minimum essential coverage, including employers that provide self-insured group health plans, to report this coverage to the IRS and furnish statements to the covered individuals.
These reporting requirements affect:
- Health insurance issuers or carriers
- The executive department or agency of a governmental unit that provides coverage under a government-sponsored program
- Plan sponsors of self-insured group health plan coverage
- Sponsors of coverage that the Department of Health and Human Services has designated as minimum essential coverage
For purposes of reporting by applicable large employers, minimum essential coverage means coverage under an employer-sponsored plan.
Minimum essential coverage does not include fixed indemnity coverage, life insurance or dental or vision coverage.
Minimum essential coverage does include:
Government-sponsored programs
- Medicare part A, most Medicaid programs, CHIP, most TRICARE, most VA programs, Peace Corps, DOD Non-appropriated Fund Program
Employer sponsored coverage
- In general, any plan that is a group health plan under ERISA, which includes both insured and self-insured health plans. Importantly, employer plans that cover solely excepted benefits, such as stand-alone vision or dental plans, are not MEC
Individual market coverage
- Includes qualified health plans enrolled in through the federally facilitated and state-based marketplaces and most health insurance purchased individually and directly from an insurance company
Grandfathered plans
- Generally, any plan that existed before the ACA became effective and has not changed
Miscellaneous MEC
- Other health benefits coverage recognized by the Department of Health and Human Services as MEC
For more information, see our Questions and Answers on Information Reporting by Health Coverage Providers on IRS.gov/aca.
Under the Affordable Care Act, certain employers -- called applicable large employers – are subject to the employer shared responsibility provisions. An employer that is subject to the employer shared responsibility provisions may choose to offer affordable minimum essential coverage that provides minimum value to its full-time employees and their dependents, or to potentially owe an employer shared responsibility payment to the IRS. Many employers already offer coverage that is sufficient to avoid owing a payment.
Under the Affordable Care Act, certain employers -- called applicable large employers – are subject to the employer shared responsibility provisions. An employer that is subject to the employer shared responsibility provisions may choose to offer affordable minimum essential coverage that provides minimum value to its full-time employees and their dependents, or to potentially owe an employer shared responsibility payment to the IRS. Many employers already offer coverage that is sufficient to avoid owing a payment.
Whether an you are an applicable large employer, and are therefore subject to the employer shared responsibility provisions, depends on the size of the your workforce. The vast majority of employers fall below the workforce size threshold and, therefore, are not subject to the employer shared responsibility provisions.
You will determine each year – based on your average employee count for the 12 months of the prior year – whether you’re an applicable large employer for the current year. Just for 2015, an employer may measure over any consecutive six-month period during 2014, rather than measuring all 12 months of 2014.
A full-time employee is an employee with at least 130 hours of service in a calendar month. To determine your number of your full-time equivalent employees for each month, you combine the number of hours of service for all non-full-time employees – up to 120 hours per employee – and divide the total by 120.
If you had fewer than 50 full-time employees in the preceding year, including full-time equivalent employees, you are not an applicable large employer for the current year. If you had 50 or more full-time employees in the preceding year, including full-time equivalent employees, you are an applicable large employer for the current year. However, for 2015, employers with fewer than 100 full-time employees, including full-time equivalent employees, in 2014 will not be subject to an employer shared responsibility payment if they meet certain conditions. Question 34 on the employer shared responsibility employer shared responsibility provision questions and answers page on IRS.gov/aca provides more details regarding these conditions. All types of employers can be applicable large employers, regardless of the nature of the organization; this includes, for example, tax-exempt organizations and government entities.
For more information about how to determine whether your organization is an applicable large employer, including special rules for seasonal workers, new employers, and related employers, see Determining if an Employer is an Applicable Large Employer.
For more information on the employer shared responsibility provisions in general, see IRS.gov/aca. For more information on the information reporting responsibilities that apply to applicable large employers see our Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers.
You are allowed a premium tax credit only for health insurance coverage you purchase through the Marketplace for yourself or other members of your tax family. However, to be eligible for the premium tax credit, your household income must be at least 100, but no more than 400 percent of the federal poverty line for your family size. An individual who meets these income requirements must also meet other eligibility criteria.
You are allowed a premium tax credit only for health insurance coverage you purchase through the Marketplace for yourself or other members of your tax family. However, to be eligible for the premium tax credit, your household income must be at least 100, but no more than 400 percent of the federal poverty line for your family size. An individual who meets these income requirements must also meet other eligibility criteria.
The amount of the premium tax credit is based on a sliding scale, with greater credit amounts available to those with lower incomes. Based on the estimate from the Marketplace, you can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums. These payments are called advance payments of the premium tax credit. If you do not get advance credit payments, you will be responsible for paying the full monthly premium.
If the advance credit payments are more than the allowed premium tax credit, you will have to repay some or all the excess. If your projected household income is close to the 400 percent upper limit, be sure to consider the amount of advance credit payments you choose to have paid on your behalf. You want to consider this carefully because if your household income on your tax return is 400 percent or more of the federal poverty line for your family size, you will have to repay all of the advance credit payments made on behalf of you and your family members.
For purposes of claiming the premium tax credit for 2014 for residents of the 48 contiguous states or Washington, D.C., the following table outlines household income that is at least 100 percent but no more than 400 percent of the federal poverty line:
|
Federal Poverty Line for 2014 Returns
|
|
|
100% of FPL
|
.
|
400% of FPL
|
|
One Individual
|
$11,490
|
up to
|
$45,960
|
|
Family of two
|
$15,510
|
up to
|
$62,040
|
|
Family of four
|
$23,550
|
up to
|
$94,200
|
The Department of Health and Human Services provides three federal poverty guidelines: one for residents of the 48 contiguous states and Washington D.C., one for Alaska residents and one for Hawaii residents. For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period for coverage for that year. As a result, the premium tax credit for 2014 is based on the guidelines published in 2013. The premium tax credit for coverage in 2015 is based on the 2014 guidelines. You can find all of this information on the HHS website.
Use our Interactive Tax Assistant tool to find out if you are eligible for the premium tax credit. For more information, see the instructions to Form 8962 and the Questions and Answers on the Premium Tax Credit on IRS.gov/aca.
Victims of the Valley and Butte fires that began Sept. 12 in parts of California may qualify for tax relief from the Internal Revenue Service.
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Research shows that the percentage of adult-aged children living with their parents is higher than it has been in decades. For parents, profound financial risks can emerge when they continue to financially support their children.
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Want to own a piece of movie history? Buying and selling collectibles can be tricky. Here's what you need to know for tax purposes.
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Amounts paid to an employee under an accountable plan for tickets to a sporting event must meet several conditions, in addition to the usual accountable plan requirements, to be deductible as a business expense by the employer.
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The new ACA Information Center for Applicable Large Employers page on IRS.gov features information and resources for employers of all sizes on how the health care law may affect them if they fit the definition of an applicable large employer.
The new ACA Information Center for Applicable Large Employers page on IRS.gov features information and resources for employers of all sizes on how the health care law may affect them if they fit the definition of an applicable large employer.
The web page includes the following sections:
- What’s Trending for ALEs,
- How to Determine if You are an ALE,
- Resources for Applicable Large Employers, and
- Outreach Materials.
Visitors to the new page will find links to:
- Detailed information about tax provisions including information reporting requirements for employers,
- Questions and answers, and
- Forms, instructions, publications, health care tax tips, flyers and videos.
Although the vast majority of employers will not be affected, you should determine if you are an applicable large employer. If you averaged at least 50 full-time employees, including full-time equivalent employees, during 2014, you are most likely an ALE for 2015. If you have fewer than 50 full-time employees, you may be considered an applicable large employer if you share a common ownership with other employers. As an applicable large employer, you should be taking steps now to prepare for the coming filing season.
In 2016, applicable large employers must file an annual information return – and provide a statement to each full-time employee – reporting whether they offered health insurance, and if so, what insurance they offered their employees.
If you will file 250 or more information returns for 2015, you must file the returns electronically through the ACA Information Reports system. You should review draft Publication 5165, Guide for Electronically Filing Affordable Care Act (ACA) Information Returns, now for information on the communication procedures, transmission formats, business rules and validation procedures for returns that you must transmit in 2016.
Victims of the severe storms, tornadoes, straight-line winds, flooding, landslides, and mudslides that took place beginning on July 11 in parts of Kentucky may qualify for tax relief from the Internal Revenue Service. The disaster area was enlarged this week to include Leslie County.
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The Internal Revenue Service issued its annual updates of per diem rates for use in substantiating certain business expenses taxpayers incur when traveling away from home on or after Oct. 1 2015. It contains the transportation industry meals and incidental expenses rates, the rate for the incidental-expenses-only deduction and the rates and list of high-cost localities for purposes of the high-low substantiation method.
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Learn five ways to help not-for-profits implement controls to prevent fraud within their organizations, or detect and put a stop to it.
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The Small Business Administration will offer grants to small businesses in 39 states to help pay the cost of scouting out sales opportunities abroad such as taking part in export trade shows or overseas marketing campaigns. Interested firms should contact their local office of international trade.
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For purposes of the health care law, the information that health coverage providers, including employers that provide self-insured coverage, report to the IRS includes the following…
For purposes of the health care law, the information that health coverage providers, including employers that provide self-insured coverage, report to the IRS includes the following:
- The name, address, and employer identification number of the provider
- The responsible individual’s name, address, and taxpayer identification number – or date of birth if a TIN is not available
- If the responsible individual is not enrolled in the coverage, providers may, but are not required to, report the TIN of the responsible individual
- The name and TIN, or date of birth if a TIN is not available, of each individual covered under the policy or program and the months for which the individual was enrolled in coverage and entitled to receive benefits
- For coverage provided by a health insurance issuer through a group health plan, the name, address, and EIN of the employer sponsoring the plan, and whether the coverage is a qualified health plan enrolled in through the Small Business Health Options Program – known as SHOP – and the SHOP’s identifier
A taxpayer identification number is an identification number used by the IRS in the administration of tax laws. Taxpayer identification numbers include Social Security numbers.
Reporting of TINs for all covered individuals is necessary for the IRS to verify an individual’s coverage without the need to contact the individual.
If health coverage providers are unable to obtain a TIN after making a reasonable effort to do so, the provider may report a covered individual’s date of birth in lieu of a TIN. A health coverage provider will not be subject to a penalty if it demonstrates that it properly solicited the TIN.
In addition to the information it reports to the IRS for each covered individual listed on the information return, a health coverage provider must include a phone number for the provider’s designated contact person – if any – that the individual recipient of the statement can contact for answers to questions about information on the statement.
For information about when and how to report this information, see our Questions and Answers on Information Reporting by Health Coverage Providers on IRS.gov/aca.
Small-business tax rule No. 1: Don't mess with the IRS.
But that doesn't mean you should cheat yourself. Take every legal deduction you can. Here are a dozen that even savvy small-business owners and entrepreneurs sometimes forget.
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Each year, many people get a larger refund than they expected. Some find they owe a lot more tax than they thought they would. If this happened to you, review your situation to prevent another tax surprise. Did you marry? Have a child? Have a change in income? Some life events can have a major effect on your taxes. You can bring the tax you pay closer to the amount you owe. Here are some key IRS tips to help you come up with a plan of action.
Each year, many people get a larger refund than they expected. Some find they owe a lot more tax than they thought they would. If this happened to you, review your situation to prevent another tax surprise. Did you marry? Have a child? Have a change in income? Some life events can have a major effect on your taxes. You can bring the tax you pay closer to the amount you owe. Here are some key IRS tips to help you come up with a plan of action:
- New Job. When you start a new job, you must fill out a Form W-4, Employee's Withholding Allowance Certificate and give it to your employer. Your employer will use the form to figure the amount of federal income tax to withhold from your pay. Use the IRS Withholding Calculator on IRS.gov to help you fill out the form. This tool is easy to use and it’s available 24/7.
- Estimated Tax. If you earn income that is not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, dividends or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay it four times a year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure the tax.
- Life Events. Check to see if you need to change your Form W-4 or change the amount of estimated tax you pay when certain life events take place. A change in your marital status, the birth of a child or buying a new home can change the amount of taxes you owe. In most cases, you can submit a new Form W–4 to your employer anytime.
- Changes in Circumstances. If you are receiving advance payments of the premium tax credit, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.
Even though it is not tax season, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams
Even though it is not tax season, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:
- Scams use scare tactics. These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.
- Scams use caller ID spoofing. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
- Scams use phishing email and regular mail. Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.
- Scams cost victims over $20 million. The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.
The real IRS will not:
- Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
- Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
- Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
- Ask for credit or debit card numbers over the phone.
- Threaten to bring in police or other agencies to arrest you for not paying.
If you don’t owe taxes or have no reason to think that you do:
- Do not provide any information to the caller. Hang up immediately.
- Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
- You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
If you know you owe, or think you may owe taxes:
- Call the IRS at 800-829-1040. IRS workers can help you if you do owe taxes.
Stay alert to scams that use the IRS as a lure. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.
People often change their job in the summer. If you look for a job in the same line of work, you may be able to deduct some of your job search costs. Here are some key tax facts you should know about if you search for a new job.
People often change their job in the summer. If you look for a job in the same line of work, you may be able to deduct some of your job search costs. Here are some key tax facts you should know about if you search for a new job:
- Same Occupation. Your expenses must be for a job search in your current line of work. You can’t deduct expenses for a job search in a new occupation.
- Résumé Costs. You can deduct the cost of preparing and mailing your résumé.
- Travel Expenses. If you travel to look for a new job, you may be able to deduct the cost of the trip. To deduct the cost of the travel to and from the area, the trip must be mainly to look for a new job. You may still be able to deduct some costs if looking for a job is not the main purpose of the trip.
- Placement Agency. You can deduct some job placement agency fees you pay to look for a job.
- First Job. You can’t deduct job search expenses if you’re looking for a job for the first time.
- Substantial Job Break. You can’t deduct job search expenses if there was a long break between the end of your last job and the time you began looking for a new one.
- Reimbursed Costs. Reimbursed expenses are not deductible.
- Schedule A. You usually deduct your job search expenses on Schedule A, Itemized Deductions. You’ll claim them as a miscellaneous deduction. You can deduct the total miscellaneous deductions that are more than two percent of your adjusted gross income.
- Premium Tax Credit. If you receive advance payments of the premium tax credit it is important that you report changes in circumstances, such as changes in your income or eligibility for other coverage, to your Health Insurance Marketplace. Other changes that you should report include changes in your family size or address. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.
For more on job hunting refer to Publication 529, Miscellaneous Deductions. You can get IRS tax forms and publications on IRS.gov/forms at any time.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Your health insurance company may request that you provide them with the social security numbers for you, your spouse and your children covered by your policy. This is because the Affordable Care Act requires every provider of minimum essential coverage to report that coverage by filing an information return with the IRS and furnishing a statement to covered individuals. The information is used by the IRS to administer – and individuals to show compliance with – the health care law.
Your health insurance company may request that you provide them with the social security numbers for you, your spouse and your children covered by your policy. This is because the Affordable Care Act requires every provider of minimum essential coverage to report that coverage by filing an information return with the IRS and furnishing a statement to covered individuals. The information is used by the IRS to administer – and individuals to show compliance with – the health care law.
Health coverage providers will file an information return, Form 1095-B, Health Coverage, with the IRS and will furnish statements to you in 2016, to report coverage information from calendar year 2015.
The law requires coverage providers to list social security numbers on this form. If you don't provide your SSN and the SSNs of all covered individuals to the sponsor of the coverage, the IRS may not be able to match the Form 1095-B with the individuals to determine that they have complied with the individual shared responsibility provision.
Your health insurance company may send a letter that discusses these new rules and requests social security numbers for all family members covered under your policy. The IRS has not designated a specific form for your health insurance company to request this information. The Form 1095-B will provide information for your income tax return that shows you, your spouse, and individuals you claim as dependents had qualifying health coverage for some or all months during the year. You do not have to attach Form 1095-B to your tax return. Keep it with your other important tax documents.
Anyone on your return who does not have minimum essential coverage, and who does not qualify for an exemption, may be liable for the individual shared responsibility payment.
The information received by the IRS will be used to verify information on your individual income tax return. If you refuse to provide this information to your health insurance company, the IRS cannot verify the information you provide on your tax return and you may receive an inquiry from the IRS. You also may receive a notice from the IRS indicating that you are liable for a shared responsibility payment.
For more information, see our Questions and Answers about Reporting Social Security Numbers to Your Health Insurance Company on IRS.gov/aca.
We all make mistakes so don’t panic if you made one on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return if you forgot to claim a tax credit or deduction. Here are ten tips from the IRS if you need to amend your federal tax return.
We all make mistakes so don’t panic if you made one on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return if you forgot to claim a tax credit or deduction. Here are ten tips from the IRS if you need to amend your federal tax return.
1. When to amend. You should amend your tax return if you need to correct your filing status, the number of dependents you claimed, or your total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return.
Note: If, as allowed by recent legislation, you plan to amend your tax year 2014 return to retroactively claim the Health Coverage Tax Credit, see IRS.Gov/HCTC first for more information.
2. When NOT to amend. In some cases, you don’t need to amend your tax return. The IRS usually corrects math errors when processing your original return. If you didn’t include a required form or schedule, the IRS will send you a notice via U.S. mail about the missing item.
3. Form 1040X. Use Form 1040X to amend a federal income tax return that you filed before. Make sure you check the box at the top of the form that shows which year you are amending. Since you can’t e-file an amended return, you’ll need to file your Form 1040X on paper and mail it to the IRS.
Form 1040X has three columns. Column A shows amounts from the original return. Column B shows the net increase or decrease for the amounts you are changing. Column C shows the corrected amounts. You should explain what you are changing and the reasons why on the back of the form.
4. More than one year. If you file an amended return for more than one year, use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS. See "Where to File" in the instructions for Form 1040X for the address you should use.
5. Other forms or schedules. If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file the form. If you don’t, this will cause a delay in processing.
6. Amending to claim an additional refund. If you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund. You may cash the refund check from your original return. Amended returns take up to 16 weeks to process. You will receive any additional refund you are owed.
7. Amending to pay additional tax. If you’re filing an amended tax return because you owe more tax, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
8. Corrected Forms 1095-A. If you or anyone on your return enrolled in qualifying health care coverage through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement. You may have also received a corrected Form 1095-A. If you filed your tax return based on the original Form 1095-A, you do not need to file an amended return based on a corrected Form 1095-A. This is true even if you would owe additional taxes based on the new information. However, you may choose to file an amended return.
In some cases, the information on the new Form 1095-A may lower the amount of taxes you owe or increase your refund. You may also want to file an amended return if:
- You filed and incorrectly claimed a premium tax credit, or
- You filed an income tax return and failed to file Form 8962, Premium Tax Credit, to reconcile your advance payments of the premium tax credit.
Before amending your return, if you received a letter regarding your premium tax credit or Form 8962 you should follow the instructions in the letter.
9. When to file. To claim a refund file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.
10. Track your return. You can track the status of your amended tax return three weeks after you file with “Where’s My Amended Return?” This tool is available on IRS.gov or by phone at 866-464-2050.
You can get Form 1040X on IRS.gov/forms at any time.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Paying off debts is an admirable goal, but it's important to remember that some debts are more urgent than others. In this article, a financial planner explains which debts should take priority, starting with your mortgage.
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You've found the perfect business idea, one that seems to add up from every angle and couldn't be better for you and your future plans. The only problem is that you don't have the capital to open the doors. Well, unfortunately this is a rather significant problem for a small business startup ... particularly in today's lending environment.
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As not-for-profit organizations expand their reach, many are unaware that they may be creating nexus in states where they have previously had a limited presence.
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The Internal Revenue Service reminds truckers and other owners of heavy highway vehicles that in most cases their next federal highway use tax return is due Monday, Aug. 31, 2015.
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There are many perks a company can offer employees that are cost-effective and won't add to employees' tax bills. Some of these benefits include free food, flexible scheduling and vacation time.
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Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Alimony and a name change are just a few items you may need to consider. Here are some key tax tips to keep in mind if you get divorced or separated.
Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Alimony and a name change are just a few items you may need to consider. Here are some key tax tips to keep in mind if you get divorced or separated.
- Child Support. If you pay child support, you can’t deduct it on your tax return. If you receive child support, the amount you receive is not taxable.
- Alimony Paid. If you make payments under a divorce or separate maintenance decree or written separation agreement you may be able to deduct them as alimony. This applies only if the payments qualify as alimony for federal tax purposes. If the decree or agreement does not require the payments, they do not qualify as alimony.
- Alimony Received. If you get alimony from your spouse or former spouse, it is taxable in the year you get it. Alimony is not subject to tax withholding so you may need to increase the tax you pay during the year to avoid a penalty. To do this, you can make estimated tax payments or increase the amount of tax withheld from your wages.
- Spousal IRA. If you get a final decree of divorce or separate maintenance by the end of your tax year, you can’t deduct contributions you make to your former spouse's traditional IRA. You may be able to deduct contributions you make to your own traditional IRA.
- Name Changes. If you change your name after your divorce, notify the Social Security Administration of the change. File Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov or call 800-772-1213 to order it. The name on your tax return must match SSA records. A name mismatch can delay your refund.
Health Care Law Considerations
- Special Marketplace Enrollment Period. If you lose your health insurance coverage due to divorce, you are still required to have coverage for every month of the year for yourself and the dependents you can claim on your tax return. Losing coverage through a divorce is considered a qualifying life event that allows you to enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period.
- Changes in Circumstances. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, you should report changes in circumstances to your Marketplace throughout the year. Changes to report include a change in marital status, a name change and a change in your income or family size. By reporting changes, you will help make sure that you get the proper type and amount of financial assistance. This will also help you avoid getting too much or too little credit in advance.
- Shared Policy Allocation. If you divorced or are legally separated during the tax year and are enrolled in the same qualified health plan, you and your former spouse must allocate policy amounts on your separate tax returns to figure your premium tax credit and reconcile any advance payments made on your behalf. Publication 974, Premium Tax Credit, has more information about the Shared Policy Allocation.
For more on this topic, see Publication 504, Divorced or Separated Individuals. You can get it on IRS.gov/forms at any time.
If you move your home you may be able to deduct the cost of the move on your federal tax return next year. This may apply if you move to start a new job or to work at the same job in a new location.
If you move your home you may be able to deduct the cost of the move on your federal tax return next year. This may apply if you move to start a new job or to work at the same job in a new location. In order to deduct your moving expenses, your move must meet three requirements:
1. Your move must closely relate to the start of work. In most cases, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.
2. Your move must meet the distance test. Your new main job location must be at least 50 miles farther from your old home than your prior job location. For example, let’s say that your old job was three miles from your old home. To meet this test, your new job must be at least 53 miles from your old home.
3. You must meet the time test. You must work full-time at your new job for at least 39 weeks the first year after the move. If you’re self-employed, you must also meet this test. In addition you must work full-time for a total of at least 78 weeks during the first two years at the new job site. If your tax return is due before you meet the time test, you can still claim the deduction if you expect to meet it.
See Publication 521, Moving Expenses, for more information about the rules.
If you qualify for this deduction, here are a few more tips from the IRS:
- Travel. You can deduct certain transportation and lodging expenses while moving. This applies to costs for yourself and other household members while moving from your old home to your new home. You may not deduct your travel meal costs.
- Household goods and utilities. You can deduct the cost of packing, crating and shipping your property. This may include the cost to store or insure the items while in transit. You can deduct the cost to disconnect or connect utilities at your old and new homes.
- Expenses you can’t deduct. You may not deduct:
- Any part of the purchase price of your new home.
- The cost of selling your home.
- The cost of breaking or entering into a lease.
See Publication 521for more examples.
- Reimbursed expenses. If your employer later pays you for the cost of a move that you deducted on your tax return, you may need to include the payment as income. You must report any taxable amount on your tax return in the year you get the payment.
- Address change. When you move, make sure to update your address with the IRS and the U.S. Post Office. To notify the IRS, file Form 8822, Change of Address.
At issue is whether the Boston Bruins hockey club may deduct 100% of the costs it incurred to provide its players and staff with meals while travelling to away games. The case poses the IRS and Tax Court with some fairly interesting questions concerning the deductibility of employee fringe benefits.
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Skimping on time off could be bad for your career, finances, and personal relationships.
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Sure, there are application fees. But what about exam fees, costs to send exam scores, school visits, orientation, and tutors and application consultants? With some advance planning, you can help clients anticipate and budget for the hidden costs outlined in this article.
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In a move designed to fight taxpayer identity theft and tax fraud, the Internal Revenue Service will eliminate automatic extensions of time to file forms in the W-2 series, starting in 2017. Under the new rules, one 30-day nonautomatic extension may be granted, but the filer must demonstrate a compelling reason for it.
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About 40% of women claim their Social Security benefits as soon as they can, at age 62. This means that they may have their benefits decreased by up to 30%. The issue is especially significant for women, because they are much more likely than men to have Social Security as their only source of income.
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Unmarried co-owners of two residences each qualified for mortgage-interest deductions on up to $1.1 million of acquisition indebtedness, the 9th Circuit Court of Appeals held. This decision reverses a Tax Court case that applied the limit on a per-residence basis.
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Following the emergence of new variations of widespread tax scams, the Internal Revenue Service issued another warning to taxpayers to remain on high alert and protect themselves against the ever-evolving array of deceitful tactics scammers use to trick people.
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When you start a business, a key to your success is to know your tax obligations. You may not only need to know about income tax rules, but also about payroll tax rules. Here are five IRS tax tips that can help you get your business off to a good start.
When you start a business, a key to your success is to know your tax obligations. You may not only need to know about income tax rules, but also about payroll tax rules. Here are five IRS tax tips that can help you get your business off to a good start.
1. Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you will file.
2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, use IRS Direct Pay to pay them. It’s the fast, easy and secure way to pay from your checking or savings account.
3. Employer Identification Number. You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
4. Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.
5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.
The employer shared responsibility provisions of the Affordable Care Act affect employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees). These employers’ are called applicable large employers. ALEs must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.
Employers also have information reporting responsibilities regarding minimum essential coverage they offer or provide to their fulltime employees. Employers must send reports to employees and to the IRS on new forms the IRS created for this purpose.
Many taxpayers are surprised to discover that the Internal Revenue Service, while conducting a civil investigation, has been pursuing a criminal investigation against them at the same time. This article discusses the dangers to taxpayers posed by these parallel investigations and considerations for practitioners who represent these taxpayers
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Illinois homeowners are taxed by a complex web of local government authorities. There are almost 8,500 local government units in the state, and 6,026 can raise taxes -- the highest number in the U.S.
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The Tax Court disallowed a taxpayer's claimed loss, which consisted of payments owed him for services he provided to a company that was part of a Ponzi scheme, because he had never included the amounts in his taxable income.
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If you are hiding income from the taxman, are you at risk three years, six, or more? Even if you did your best with your taxes, you might be worried. Taxes are horribly complex, and even innocent activities might be interpreted as suspect. It pays to know how far back you can be asked to prove your income, expenses, bank deposits and more. Start with the basic rule that the IRS usually has three years after you file to audit you.
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If you, your spouse or a dependent are heading off to college in the fall, some of your costs may save you money at tax time. You may be able to claim a tax credit on your federal tax return. Here are some key IRS tips that you should know about education tax credits:
If you, your spouse or a dependent are heading off to college in the fall, some of your costs may save you money at tax time. You may be able to claim a tax credit on your federal tax return. Here are some key IRS tips that you should know about e tax credits:
• American Opportunity Tax Credit. The AOTC is worth up to $2,500 per year for an eligible student. You may claim this credit only for the first four years of higher education. Forty percent of the AOTC is refundable. That means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes.
• Lifetime Learning Credit. The LLC is worth up to $2,000 on your tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
• One credit per student. You can claim only one type of education credit per student on your tax return each year. If more than one student qualifies for a credit in the same year, you can claim a different credit for each student. For instance, you can claim the AOTC for one student, and claim the LLC for the other.
• Qualified expenses. You may use qualified expenses to figure your credit. These include the costs you pay for tuition, fees and other related expenses for an eligible student. Refer to IRS.gov for more on the rules that apply to each credit.
• Eligible educational institutions. Eligible schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify. If you aren’t sure if your school is eligible:
o Ask your school if it is an eligible educational institution, or
o See if your school is on the U.S. Department of Education’s Accreditation database.
• Form 1098-T. In most cases, you should receive Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. This form reports your qualified expenses to the IRS and to you. The amounts shown on the form may be different than the amounts you actually paid. That might happen because some of your related costs may not appear on the form. For instance, the cost of your textbooks may not appear on the form. However, you still may be able to include those costs when you figure your credit. Don’t forget that you can only claim an education credit for the qualified expenses that you paid in that same tax year.
• Nonresident alien. If you are in the United States on an F-1 Student Visa, the tax rules generally treat you as a nonresident alien for federal tax purposes. To find out more about your F-1 Student Visa status, visit U.S. Immigration Support. To learn more about resident and nonresident alien status and restrictions on claiming the education credits, refer to Publication 519, U.S. Tax Guide for Aliens.
• Income limits. These credits are subject to income limitations and may be reduced or eliminated, based on your income.
Visit IRS.gov and use the Interactive Tax Assistant tool to see if you are eligible to claim education credits. Visit the IRS Education Credits Web page to learn more. Also see Publication 970, Tax Benefits for Education. You can get it on IRS.gov/forms at any time.
The IRS recommends that you always keep a copy of your tax return for your records. You may need copies of your filed tax returns for many reasons. For example, they can help you prepare future tax returns. You’ll also need them if you have to amend a prior year tax return. You often need them when you apply for a loan to buy a home or to start a business. You may need them if you apply for student financial aid.
The IRS recommends that you always keep a copy of your tax return for your records. You may need copies of your filed tax returns for many reasons. For example, they can help you prepare future tax returns. You’ll also need them if you have to amend a prior year tax return. You often need them when you apply for a loan to buy a home or to start a business. You may need them if you apply for student financial aid.
If you can’t find your copies, the IRS can provide a transcript of the tax information you need, or a copy of your tax return. Here’s more information, including how to get your federal tax return information from the IRS:
- Transcripts are free and you can get them for the current year and the past three years. In most cases, a transcript includes the tax information you need.
- A tax return transcript shows most line items from the tax return that you filed. It also includes items from any accompanying forms and schedules that you filed. It doesn’t reflect any changes you or the IRS may have made after you filed your original return.
- A tax account transcript includes your marital status, the type of return you filed, your adjusted gross income and taxable income. It does include any changes that you or the IRS made to your tax return after you filed it.
- You can order your free transcripts online, by phone, by mail or fax at this time.
- The IRS has temporarily stopped the online functionality of the Get Transcript application process on the IRS.gov website that delivered your transcript immediately. The IRS is making modifications and further strengthening security for the online service. While you can still use the Get Transcript tool to order your transcript, the IRS will send it to you via mail to the last address we have on file for you.
- To order your transcript online and have it delivered by mail, go to IRS.gov and use the Get Transcript tool.
- To order by phone, call 800-908-9946 and follow the prompts.
- To request an individual tax return transcript by mail or fax, complete Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses and individuals who need a tax account transcript should use Form 4506-T, Request for Transcript of Tax Return.
- You should receive your transcript within five to 10 days from the time the IRS receives your request. Please note that ordering your transcript online or over the phone are the quickest options.
- Keep in mind that the method you used to file your return and whether you have a refund or balance due affects your current year transcript availability. Use this chart to determine when you can order your transcript.
- If you need a copy of your filed and processed tax return, it will cost $50 for each tax year. You should complete Form 4506, Request for Copy of Tax Return, to make the request. Mail it to the IRS address listed on the form for your area. Copies are generally available for the current year and past six years. You should allow 75 days for delivery.
Mortgage Applicants. If you are applying for a mortgage, most mortgage companies only require a tax return transcript for income verification purposes and participate in our IVES (Income Verification Express Service) program. If you need to order a transcript, please follow the process described above and have it mailed to the addresswe have on file for you. Please plan accordingly and allow for time for delivery.
Disaster Victims. If you live in a federally declared disaster area, you can get a free copy of your tax return. Visit IRS.gov for more disaster relief information.
Financial Aid Applicants. If you are applying for financial aid, you can use the IRS Data Retrieval Tool on the FAFSA website to import your tax return information to your financial aid application. The temporary shutdown of the Get Transcript tool does not affect the Data Retrieval Tool. You may also click on their help page for more information.
If you need a copy of your transcript you should follow the information above to request it as soon as possible. It takes 5 to 10 calendar days for transcripts to arrive at the address the IRS has on file for you.
Identity Theft Victims. Did you receive a notice from the IRS about a suspicious return? Has the IRS notified you that it did not accept your e-filed return because of a duplicate Social Security Number? If you answered yes to either question, then you may be a victim of tax-related identity theft. If you are a tax-related identity theft victim you first need to file the Identity Theft Affidavit. If you are waiting for the IRS to resolve your case but need a transcript, you will need to call our Identity Protection Specialized Unit line to process your request. You can call the Unit at 800-908-4490. For more information please review our Taxpayer Guide to Identity Theft.
Tax forms are available 24/7 on IRS.gov/forms. You can also call 800-829-3676 to get them by mail.
Credit cards are important financial tools today. But they are also easy to misuse. Here are five tips for millennials who understand that they need credit cards to build a credit history, but don't want to fall victim to late fees, soaring interest rates or massive debt.
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Once you’re handed a college diploma, moving back in with your parents can feel like a step backward. But if you approach the situation with purpose, it can get you on a better financial footing than some of your peers.
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In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year.
In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year.
- Exclusion of Gain. You may be able to exclude part or all of the gain from the sale of your home. This rule may apply if you meet the eligibility test. Parts of the test involve your ownership and use of the home. You must have owned and used it as your main home for at least two out of the five years before the date of sale.
- Exceptions May Apply. There are exceptions to the ownership, use and other rules. One exception applies to persons with a disability. Another applies to certain members of the military. That rule includes certain government and Peace Corps workers. For more on this topic, see Publication 523, Selling Your Home.
- Exclusion Limit. The most gain you can exclude from tax is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.
- May Not Need to Report Sale. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.
- When You Must Report the Sale. You must report the sale on your tax return if you can’t exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions. If you report the sale, you should review the Questions and Answers on the Net Investment Income Tax on IRS.gov.
- Exclusion Frequency Limit. Generally, you may exclude the gain from the sale of your main home only once every two years. Some exceptions may apply to this rule.
- Only a Main Home Qualifies. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.
- First-time Homebuyer Credit. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules, see Publication 523.
- Home Sold at a Loss. If you sell your main home at a loss, you can’t deduct the loss on your tax return.
- Report Your Address Change. After you sell your home and move, update your address with the IRS. To do this, file Form 8822, Change of Address. You can find the address to send it to in the form’s instructions on page two. If you purchase health insurance through the Health Insurance Marketplace, you should also notify the Marketplace when you move out of the area covered by your current Marketplace plan.
The Affordable Care Act contains specific responsibilities for employers. The size and structure of your workforce – small, large, or part of a group – helps determine what applies to you. Employers with 50 or more full-time equivalent employees will need to file an annual information return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions. All employers that are applicable large employers are subject to the Employer Shared Responsibility provisions, including federal, state, local, and Indian tribal government employers.
The Affordable Care Act contains specific responsibilities for employers. The size and structure of your workforce – small, large, or part of a group – helps determine what applies to you. Employers with 50 or more full-time equivalent employees will need to file an annual information return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions. All employers that are applicable large employers are subject to the Employer Shared Responsibility provisions, including federal, state, local, and Indian tribal government employers.
An employer’s size is determined by the number of its employees. Generally, if your organization has 50 or more full-time or full-time equivalent employees, you will be considered a large employer. For purposes of this provision, a full-time employee is an individual employed on average at least 30 hours of service per week.
Under the Employer Shared Responsibility provisions, if an applicable large employer does not offer affordable health coverage that provides a minimum level of coverage to their full-time employees and their dependents, the employer may be subject to an Employer Shared Responsibility payment. They must make this payment if at least one of its full-time employees receives a premium tax credit for purchasing individual coverage through the Health Insurance Marketplace.
The Employer Shared Responsibility provisions generally are effective at the beginning of this year. Employers will use information about the number of employees they have and those employees’ hours of service during 2014 to determine if they are an applicable large employer for 2015.
If you are a self-insured employer – that is, an employer who sponsors self-insured group health plans – you are subject to the information reporting requirements for providers of minimum essential coverage whether or not you are an applicable large employer under the employer shared responsibility provisions.
For more information, visit the employer shared responsibility page. For information about transition relief available for employers related to the shared responsibility provision, visit IRS.gov/aca.
The Affordable Care Act requires you and each member of your family to have qualifying health care coverage, qualify for an exemption from the responsibility to have minimum essential coverage, or make an individual shared responsibility payment when you file your federal income tax return. For purposes of ACA, qualifying health care coverage is also known as minimum essential coverage.
The Affordable Care Act requires you and each member of your family to have qualifying health care coverage, qualify for an exemption from the responsibility to have minimum essential coverage, or make an individual shared responsibility payment when you file your federal income tax return. For purposes of ACA, qualifying health care coverage is also known as minimum essential coverage.
Minimum essential coverage includes:
Health plans offered in the individual market – plans offered by a health insurance issuer licensed by a state, including a qualified health plan offered through the federally-facilitated or a state-based Health Insurance Marketplace
Grandfathered health plans – plans that were in existence on March 23, 2010 and haven’t been changed in ways that substantially cut benefits or increase costs for consumers – for more information, visit HealthCare.gov
Government-sponsored programs
- Medicare Part A
- Medicaid, except for certain programs
- The Children's Health Insurance Program, better known as CHIP
- Coverage under the TRICARE program, except for certain programs
- Coverage consisting of the medical benefits package for eligible veterans
- Civilian Health and Medical Program of the Department of Veterans Affairs
- Comprehensive health care for children suffering from spina bifida who are the children of Vietnam veterans and veterans of covered service in Korea
- A health plan for Peace Corps volunteers
- The Non-appropriated Fund Health Benefits Program of the Department of Defense
Employer-sponsored plans – coverage that you have through your employer, including:
- A plan or coverage offered in the small or large group market within a state
- A self-insured group health plan for employees
- The Non-appropriated Fund Health Benefits Program of the Department of Defense
- A governmental plan, such as the Federal Employees Health Benefits Program
- COBRA coverage
- Retiree coverage
Other coverage designated by the Department of Health and Human Services
- Coverage under Medicare Part C – Medicare Advantage
- Refugee Medical Assistance
- Employer coverage provided to business owners who are not employees
- Coverage under a group health plan provided through insurance regulated by a foreign government if it meets certain requirements
Minimum essential coverage does not include coverage that may provide limited benefits.
Oct. 15 is the last day to file 2014 tax returns for most people who requested an automatic six-month extension. However, you can file any time before Oct. 15 if you have all your required tax documents. If you are one of the nearly 13 million taxpayers who asked for more time to file your federal tax return this year, you don’t need to wait until Oct. 15 extension deadline to file your return. You can file now if you are ready. As you prepare to file, here are some things that you should know:
Oct. 15 is the last day to file 2014 tax returns for most people who requested an automatic six-month extension. However, you can file any time before Oct. 15 if you have all your required tax documents. If you are one of the nearly 13 million taxpayers who asked for more time to file your federal tax return this year, you don’t need to wait until Oct. 15 extension deadline to file your return. You can file now if you are ready. As you prepare to file, here are some things that you should know:
- A Refund May be Waiting. If you are due a refund, you should file as soon as possible to get it.
- Try Easy-to-Use Tools on IRS.gov. Use the EITC Assistant to see if you’re eligible for the credit. Use the Interactive Tax Assistant tool to get answers to common tax questions, including new Health Care Law topics. Use these interactive tools to find out if you’re eligible to claim the premium tax credit, qualify for an exemption or if you must make a payment.
- Use IRS Direct Pay. If you owe taxes the best way to pay them is with IRS Direct Pay. It’s the simple, quick and free way to pay from your checking or savings account. Just click on the ‘Pay Your Tax Bill’ icon on the IRS home page.
- Understand the Health Care Law’s effect on your taxes. The Affordable Care Act requires you, your spouse, and your dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a payment when you file. If you purchased coverage through the Marketplace, you may be eligible for the premium tax credit and need to use Form 8962, Premium Tax Credit, to reconcile any advance payments made on your behalf. If you do not file a 2014 tax return you will not be eligible for advance payments or cost-sharing reductions to help pay for your Marketplace health insurance coverage in 2016. Filing as soon as possible, using your most current Form 1095-A, Health Insurance Marketplace Statement, will substantially increase your chances of avoiding a gap in receiving this help.
- Missed Deadline? File as Soon as You Can. If you did not request an extension by April 15, you should file and pay as soon as you can anyway. This will stop the interest and penalties that you will owe. IRS Direct Pay offers you a free, secure and easy way to pay your tax directly from your checking or savings account. There is no penalty for filing a late return if you are due a refund. The sooner you file, the sooner you’ll get it.
- Don’t Forget the Oct. 15 Deadline. If you aren’t ready to file yet, remember to file by Oct. 15 to avoid a late filing penalty. If you owe and can’t pay all of your taxes, pay as much as you can to reduce interest and penalties for late payment. Use the Online Payment Agreement tool to ask for more time to pay. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return as soon as you can and pay as much as you can.
- More Time for the Military. Some people have more time to file. This includes members of the military and others serving in a combat zone. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.
Whether workers are legally defined as employees or independent contractors will affect a company's taxes and liabilities. To make matters more complicated, federal and state regulators may have different definitions.
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Do you plan to donate your services to charity this summer? Will you travel as part of the service? If so, some travel expenses may help lower your taxes when you file your tax return next year. Here are several tax tips that you should know if you travel while giving your services to charity.
Do you plan to donate your services to charity this summer? Will you travel as part of the service? If so, some travel expenses may help lower your taxes when you file your tax return next year. Here are several tax tips that you should know if you travel while giving your services to charity.
- Qualified Charities. In order to deduct your costs, your volunteer work must be for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are qualified, and do not need to apply to the IRS. Ask the group about its IRS status before you donate. You can also use the Select Check tool on IRS.gov to check the group’s status.
- Out-of-Pocket Expenses. You may be able to deduct some costs you pay to give your services. This can include the cost of travel. The costs must be necessary while you are away from home giving your services for a qualified charity. All costs must be:
o Unreimbursed,
o Directly connected with the services,
o Expenses you had only because of the services you gave, and
o Not personal, living or family expenses.
- Genuine and Substantial Duty. Your charity work has to be real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
- Value of Time or Service. You can’t deduct the value of your services that you give to charity. This includes income lost while you work as an unpaid volunteer for a qualified charity.
- Deductible travel. The types of expenses that you may be able to deduct include:
o Air, rail and bus transportation,
o Car expenses,
o Lodging costs,
o The cost of meals, and
o Taxi or other transportation costs between the airport or station and your hotel.
• Nondeductible Travel. Some types of travel do not qualify for a tax deduction. For example, you can’t deduct your costs if a significant part of the trip involves recreation or a vacation.
For Americans taking a vacation, attending a concert, or working on their home or garden this summer, this season comes with its own unique consumer challenges. Learn the top five money and scam alerts for this time of year:
For Americans taking a vacation, attending a concert, or working on their home or garden this summer, this season comes with its own unique consumer challenges. Learn the top five money and scam alerts for this time of year:
- Don’t buy gas additives that claim to increase fuel mileage. Even though gas prices go up in the summer, the Environmental Protection Agency has not found any product that significantly improves gas mileage, and some could damage a car’s engine or increase exhaust emissions.
- Unlicensed home repair or landscaping contractors may come to your door to offer services. Always research contractors, pay for services upon completion--not ahead of time--and consider using a signed contract outlining the work to be done and the exact price.
- Interested in a summer concert or festival? If you buy tickets from a major vendor, remember surcharges and additional fees may be tacked onto the listed price. Some venues require the same credit card used to purchase tickets be presented when the tickets are picked up, so if you’re buying tickets for someone as a gift, they may have difficulty getting them at will-call.
- When renting a beach or lake house for vacation, make sure the property actually exists. Do your homework before paying--check out the owner or rental company, consult maps, and read the lease carefully. Pay with an online payment service or a credit card so you can dispute the charges if something goes wrong.
- When flying, make sure you’re aware of the airline’s baggage charges and their policy when it comes to bumping passengers. A lot of airlines “bump” depending on how late you checked in, so check in ASAP!
This tax tip is updated to clarify that self-insured employers that are not applicable large employers, those with fewer than 50 full-time or full-time equivalent employees in the preceding calendar year, should file Form 1095-B. Self-insured employers that are applicable large employers should report health coverage information on Form 1095-C. This tip does not apply to information reporting on health care coverage of individuals who are not employees or entitled to coverage because of a relationship to an employee.
This tax tip is updated to clarify that self-insured employers that are not applicable large employers, those with fewer than 50 full-time or full-time equivalent employees in the preceding calendar year, should file Form 1095-B. Self-insured employers that are applicable large employers should report health coverage information on Form 1095-C. This tip does not apply to information reporting on health care coverage of individuals who are not employees or entitled to coverage because of a relationship to an employee.
All providers of health coverage, including employers that provide self-insured coverage, must file annual returns with the IRS reporting information about the coverage and about each covered individual. Insurance Companies must report on coverage under employer plans that are insured.
Employers should report this information on Forms 1094-B and 1095-B or on Forms 1094-C and 1095-C, depending on whether the employer is an applicable large employer for purposes of the employer shared responsibility provisions. An applicable large employer is generally defined as an employer that employed an average of at least 50 full-time employees – including full-time equivalent employees – in the preceding calendar year. `
As coverage providers, employers providing self-insured coverage that are not applicable large employers must:
- Report the coverage on a Form 1095-B, Health Coverage, filed with the IRS, accompanied by a Form 1094-B transmittal. While filers of more than 250 Forms 1095-B must e-file, the IRS allows and encourages entities with fewer than 250 forms to e-file.
- Furnish a copy of the 1095-B to a “responsible individual,” the person who should be the statement recipient. For employer coverage the statement recipient generally is the employee. Providers, including self-insured employers, may electronically furnish the Form 1095-B if the recipient consents.
If an employer providing self-insured coverage is an applicable large employer, it generally reports information regarding coverage of an individual on Form 1095-C instead of Form 1095-B. Form 1095-C combines reporting for two provisions of the Affordable Care Act for these employers. However, when reporting coverage of an individual who was not a full-time employee for any month of the year, an applicable large employer may choose to use Form 1095-B.
The information reporting requirements are first effective for coverage provided in 2015. Thus, health coverage providers will file information returns with the IRS in 2016, and will furnish statements to individuals in 2016, to report coverage information in calendar year 2015.
The information that a provider must report to the IRS includes the following:
- The name, address, and employer identification number of the provider.
- The statement recipient’s name, address, and taxpayer identification number, or date of birth if a TIN is not available. If the statement recipient is not enrolled in the coverage, providers may, but are not required to, report the TIN.
- The name and TIN, or date of birth if a TIN is not available, of each individual covered under the policy or program and the months for which the individual was enrolled in coverage and entitled to receive benefits.
For more information, see Questions and Answers on Information Reporting by Health Coverage Providers on IRS.gov/aca. Employers who provide self-insured coverage should review Publication 5215, Responsibilities for Health Coverage Providers. Applicable large employers should review Publication 5196, Reporting Requirements for Applicable Large Employers.
The IRS issued final regulations on the correct place for taxpayers to file claims for refund or credit (T.D. 9727). The new rules generally require taxpayers filing claims for refund or credit to file their claim with the IRS service center at which the taxpayers currently would be required to file a tax return for the type of tax to which the claims relate. Under the previous rules, a claim for credit or refund generally had to be filed with the service center serving the internal revenue district in which the tax was paid.
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With some retirees living to age 95 and beyond, people need to plan carefully to make sure they have enough money to last in retirement. This article looks at common missteps people saving for retirement are making.
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If you have insurance through the Health Insurance Marketplace, you may be getting advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Changes in your income or family size may affect your premium tax credit. If your circumstances have changed, the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving. You should report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur.
If you have insurance through the Health Insurance Marketplace, you may be getting advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Changes in your income or family size may affect your premium tax credit. If your circumstances have changed, the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving. You should report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur.
Changes in circumstances that you should report to the Marketplace include:
- an increase or decrease in your income
- marriage or divorce
- the birth or adoption of a child
- starting a job with health insurance
- gaining or losing your eligibility for other health care coverage
- changing your residence
To estimate the effect that changes in your circumstances may have upon the amount of premium tax credit that you can claim - see this change in circumstances estimator.
Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. Getting too little could mean missing out on premium assistance to reduce your monthly premiums.
Repayments of excess premium assistance may be limited to an amount between $300 and $2,500 depending on your income and filing status. However, if advance payments of the premium tax credit were made, but your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation. Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan.
Changes in circumstances also may qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find Information about special enrollment at HealthCare.gov.
Regardless of size, all employers that provide self-insured health coverage to their employees are treated as coverage providers. These employers must file an annual return reporting certain information for each employee they cover.
Regardless of size, all employers that provide self-insured health coverage to their employees are treated as coverage providers. These employers must file an annual return reporting certain information for each employee they cover.
As coverage providers, these employers must:
- File a Form 1095-B, Health Coverage, with the IRS, accompanied by a Form 1094-B transmittal. Filers of more than 250 Forms 1095-B must e-file. The IRS allows and encourages entities with fewer than 250 forms to e-file.
- Furnish a copy of the 1095-B to the responsible individual – generally the primary insured, employee, parent or uniformed services sponsor. You may electronically furnish the Form 1095-B.
If a provider is an applicable large employer also providing self-insured coverage, it reports covered individuals on Form 1095-C instead of Form 1095-B. Form 1095-C combines reporting for two provisions of the Affordable Care Act for these employers.
The information reporting requirements are first effective for coverage provided in 2015. Thus, health coverage providers will file information returns with the IRS in 2016, and will furnish statements to individuals in 2016, to report coverage information in calendar year 2015.
The information that a provider must report to the IRS includes the following:
- The name, address, and employer identification number of the provider.
- The responsible individual’s name, address, and taxpayer identification number, or date of birth if a TIN is not available. If the responsible individual is not enrolled in the coverage, providers may, but are not required to, report the TIN of the responsible individual.
- The name and TIN, or date of birth if a TIN is not available, of each individual covered under the policy or program and the months for which the individual was enrolled in coverage and entitled to receive benefits.
For more information, see Questions and Answers on Information Reporting by Health Coverage Providers on IRS.gov/aca. Employers who provide self-insured coverage should review Publication 5125, Responsibilities for Health Coverage Providers. Applicable large employers should review Publication 5196, Reporting Requirements for Applicable Large Employers.
Miscellaneous deductions can cut taxes. These may include certain expenses you paid for in your work if you are an employee. You must itemize deductions when you file to claim these costs. So if you usually claim the standard deduction, think about itemizing instead. You might pay less tax if you itemize. Here are some IRS tax tips you should know that may help you reduce your taxes:
Miscellaneous deductions can cut taxes. These may include certain expenses you paid for in your work if you are an employee. You must itemize deductions when you file to claim these costs. So if you usually claim the standard deduction, think about itemizing instead. You might pay less tax if you itemize. Here are some IRS tax tips you should know that may help you reduce your taxes:
Deductions Subject to the Limit. You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income. These include expenses such as:
- Unreimbursed employee expenses.
- Job search costs for a new job in the same line of work.
- Some work clothes and uniforms.
- Work-related travel and transportation.
- The cost you paid to prepare your tax return.
Deductions Not Subject to the Limit. Some deductions are not subject to the two percent limit. They include:
- Certain casualty and theft losses. In most cases, this rule applies to damaged or stolen property you held for investment. This may include property such as stocks, bonds and works of art.
- Gambling losses up to the total of your gambling winnings.
- Losses from Ponzi-type investment schemes.
Millions of people enjoy hobbies. They can also be a source of income. Some of these types of hobbies include stamp or coin collecting, craft making and horse breeding. You must report any income you get from a hobby on your tax return. How you report the income is different than how you report income from a business. There are special rules and limits for deductions you can claim for a hobby. Here are four basic tax tips you should know if you get income from your hobby:
Millions of people enjoy hobbies. They can also be a source of income. Some of these types of hobbies include stamp or coin collecting, craft making and horse breeding. You must report any income you get from a hobby on your tax return. How you report the income is different than how you report income from a business. There are special rules and limits for deductions you can claim for a hobby. Here are four basic tax tips you should know if you get income from your hobby:
- Business versus Hobby. A key feature of a business is that you do the activity to make a profit. This differs from a hobby that you may do for sport or recreation. There are nine factors to consider when you determine if you do the activity to make a profit. Make sure you base your decision on all the facts and circumstances of your situation. Refer to Publication 535, Business Expenses to learn more. You can also visit IRS.gov and type “not-for-profit” in the search box.
- Allowable Hobby Deductions. You may be able to deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful or appropriate. See Publication 535 for more on these rules.
- Limits on Expenses. As a general rule, you can only deduct your hobby expenses up to the amount of your hobby income. If your expenses are more than your income, you have a loss from the activity. You can’t deduct that loss from your other income.
- How to Deduct Expenses. You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may fall into three types of expenses. Special rules apply to each type. See Publication 535 for how you should report them on Schedule A, Itemized Deductions.
So you want to be debt-free, but it's taking a while to get there. Yep, the road to financial freedom can be a long and overwhelming one. We spend quite a bit of time on our devices, so incorporating them into our financial goals can serve as a regular reminder to stay on track.
Here are a handful of mobile apps and sites that can help you stay motivated and on track as you work on paying down debt and improving your credit score.
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Inheriting a house may seem like winning the lottery, but you need to be prepared to make a number of tough financial and emotional decisions.
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With the dramatic changes in the employment landscape in recent years, more people are looking to work from home and find freelance work. The problem is that there are many rip-off work-from-home outfits that claim to find you jobs for an upfront fee. They're just trying to make a quick buck off you. Below are some sites and companies Clark has determined to be legitimate. Of course, you should check them out thoroughly yourself before getting involved. Good luck!
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A poorly drafted lease agreement resulted in a lessor's having to recognize a large amount of income at the beginning of the lease term. Annette Nellen, CPA, CGMA, Esq., examines a recent Tax Court decision that upheld not only a large deficiency, but also accuracy-related penalties, and suggests what the taxpayer could have done differently.
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Here are six steps for getting back on track if you're 40 or older with little or no retirement savings.
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It can be hard to understand taxes. It can be much harder if English is not your first language. The IRS provides many free products and services in Spanish on IRS.gov/espanol. Here are some tips on tax help “en Español” that you can get from the IRS this summer:
How to Get Tax Help “en Español”
It can be hard to understand taxes. It can be much harder if English is not your first language. The IRS provides many free products and services in Spanish on IRS.gov/espanol. Here are some tips on tax help “en Español” that you can get from the IRS this summer:
- Get answers 24/7. You can access IRS.gov/espanol at any time. It offers tax help to both individuals and businesses. You can even get help in Spanish for some specific types of work. This includes tax centers for agricultural workers and truckers. If you’re facing financial difficulty, visit “Centro Tributario para Asistir a Contribuyentes Desempleados.”
- Get tax forms and publications. View and download several tax forms and publications in Spanish from IRS.gov/espanol.
- Check out IRS2Go. The free IRS app is available in English and Spanish. Use it with an iPhone, iPad or Android mobile device. With IRS2Go you can:
- Get your refund status.
- Watch IRS YouTube videos.
- Get tax news updates.
- Follow the IRS.
- Get health care tax information. The IRS website also has information about the Affordable Care Act tax provisions in both English and Spanish to educate individuals and businesses on how the health care law may affect them. The pages provide information about tax provisions that are in effect now and those that will go into effect in the future. Visitors will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.
- Use IRS online tools. Check the status of your refund through ¿Dónde está mi reembolso?” Use the “Asistente EITC” tool to find out if you’re eligible for the Earned Income Tax Credit.
- Get the latest on new tax laws. You can get the most up-to-date information on tax law changes by typing “Noticias en Español” in the IRS.gov search box. Don’t forget to sign up to get Spanish tax tips by email.
- Connect with the IRS on Twitter. Get the latest IRS tax news and information in Spanish through Twitter @IRSenEspanol.
- Get tips at the Multimedia Center. Video tax tips and audio podcasts on various IRS topics are available in English and Spanish. Search using the keywords “Centro Multimediático.”
Remember that the official IRS website address is IRS.gov. Don’t be fooled by sites that end in .com, .net, .org or any ending other than .gov.
Victims of the severe storms and flooding that took place beginning on May 24, 2015 in parts of Wyoming may qualify for tax relief from the Internal Revenue Service.
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This article addresses practical concepts related to the formation and maintenance of a nonprofit corporation, the various tax benefits it can receive ...
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The IRS has been wielding a little known Code section — Section 280E, to be exact — to wage war on medicinal and recreational marijuana facilities. Section 280E provides that no deduction — other than the cost to purchase or grow the marijuana inventory, or Cost of Goods Sold (COGS) — shall be allowed for any amount incurred in a business that consists of “trafficking in controlled substances.” And while marijuana may have been legalized in several states for medicinal or recreational purposes, because the drug finds itself on Schedule I of the Controlled Substances Act, the IRS has the ammunition necessary to deny all non-COGS deductions – things like rent, utilities, wages, supplies, etc… – of any facility that buys and sells the drug.
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If you received advance payments of the premium tax credit in 2014 under the health care law, you should file your 2014 tax return as soon as possible this summer to ensure you can timely receive advance payments next year from your Marketplace.
If you received advance payments of the premium tax credit in 2014 under the health care law, you should file your 2014 tax return as soon as possible this summer to ensure you can timely receive advance payments next year from your Marketplace.
If advance payments of the premium tax credit were paid on behalf of you or an individual in your family in 2014, and you do not file a 2014 tax return, you will not be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for your Marketplace health insurance coverage in 2016. This means you will be responsible for the full cost of your monthly premiums and all covered services. In addition, we may contact you to pay back some or all of the 2014 advance payments of the premium tax credit.
Because Marketplaces will determine eligibility for advance tax credit payments and cost-sharing reductions for the 2016 coverage year this fall, it will substantially increase your chances of avoiding a gap in receiving this help if you file your 2014 tax return with Form 8962 electronically as soon as possible.
If you missed the April 15 deadline or received an extension to file until Oct. 15, you should file your return as soon as possible. You should not wait to file. File now to reconcile any advance credit payments you received in 2014 and to maintain your eligibility for future premium assistance.
Remember that filing electronically is the best and simplest way to file a complete and accurate tax return as it guides you through the process and does all the math.
For more information about the Affordable Care Act and the premium tax credit, visit IRS.gov/aca.
It’s never too late to show a child—from a preschooler to a college kid—why and how to become responsible with money. To help teach young people about money, the Federal Deposit Insurance Corporation (FDIC) has some articles for the different school grades.
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Each year the IRS mails millions of notices and letters to taxpayers. If you receive a notice from the IRS, here is what you should do:
Each year the IRS mails millions of notices and letters to taxpayers. If you receive a notice from the IRS, here is what you should do:
- Don’t Ignore It. You can respond to most IRS notices quickly and easily. It is important that you reply right away.
- Follow Instructions. Read the notice carefully. It will tell you if you need to take any action to resolve the matter. You should follow the instructions.
- Correction Notice. If it says that the IRS corrected your tax return, you should review the information provided and compare it to your tax return.
If you agree, you don’t need to reply unless a payment is due.
If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.
- Premium Tax Credit. The IRS may send you a letter asking you to clarify or verify your premium tax credit information. The letter may ask for a copy of your Form 1095-A, Health Insurance Marketplace Statement. You should follow the instructions on the letter that you receive. This will help the IRS verify information and issue the appropriate refund.
- No Need to Visit IRS. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. You should have a copy of your tax return and the notice with you when you call.
- Keep the Notice. Keep a copy of the notice you get from the IRS with your tax records.
Watch Out for Scams. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not initiate contact with taxpayers by email, text or social media.
Parents sending a kid off to college this fall have lengthy shopping lists, from those extra-long sheets for dorm beds to notebooks and flash drives. Your teen also needs to land on campus with some money smarts.
The Taxpayer Advocate Service has developed several tools for individuals and employers to assist in estimating their ACA related credits and payments. Because these tools provide only an estimate, you should not rely upon them as an accurate calculation of the information you will report on your tax return. You should use these estimators only as a guide to assist you in making decisions regarding your tax situation
The Taxpayer Advocate Service has developed several tools for individuals and employers to assist in estimating their ACA related credits and payments. Because these tools provide only an estimate, you should not rely upon them as an accurate calculation of the information you will report on your tax return. You should use these estimators only as a guide to assist you in making decisions regarding your tax situation.
The Premium Tax Credit Change Estimator can help you estimate how your premium tax credit will change if your income or family size changes during the year. This estimator tool does not report changes in circumstances to your Marketplace. To report changes and to adjust the amount of your advance payments of the premium tax credit you must contact your
