Friday, November 29, 2013

Charity Scams Information


The IRS is warning the public about few charity scams following recent weather disasters.

These are some of the ways these bogus charity scam operate:

*Watch for claims to be with real charities to gain public trust.
*They use names similar to legitimate charities.
*They use email to steer people to bogus websites that often look like real charity sites.
*They may contact you by phone or email to get them to ‘donate’ money or get your financial information.


Some of the tips offered by the IRS to help taxpayers are:

How do you know is a qualify charity?
Use the Exempt Organizations Select Check tool at IRS.gov to find qualified charities. You can also find legitimate charities at the Federal Emergency Management Agency website, fema.gov.

Is it safe to give information to strangers?
Don’t give your Social Security number, credit card and bank account numbers or passwords to anyone. Scam artists use this information to steal your identity and money.

Is is safe to give cash?
For security and tax record purposes, don’t give or send cash. Contribute by check, credit card or another way that provides documentation of the donation.

If you suspect fraud?
If you suspect tax or charity-related fraud, visit IRS.gov and click on ‘Reporting Phishing’ at the bottom of the home page.

For more information about tax scams and schemes at IRS.gov. Click on ‘Tax Fraud & Abuse’ at the bottom of the home page. You can also get Publication 526 at IRS.gov or call 800-TAX-FORM (800-829-3676).

Source: http://www.irs.gov

Tuesday, November 5, 2013

How to afford college?

College Tax Benefits


Do you qualify for either of two college education tax credits or any of several other education-related tax benefits?


Credits available:
The American Opportunity Tax credit and the Lifetime Learning credit and tuition and fees deduction are available to taxpayers who pay qualifying expenses for an eligible student.

Who are elegible?
Eligible students include the primary taxpayer, the taxpayer’s spouse or a dependent of the taxpayer.
The American Taxpayer Relief Act, enacted Jan. 2, 2013, extended the American opportunity tax credit for another five years until the end of 2017. The new law also retroactively extended the tuition and fees deduction, which had expired at the end of 2011, through 2013. The lifetime learning credit did not need to be extended because it was already a permanent part of the tax code.

For those eligible, including most undergraduate students, the American opportunity tax credit will yield the greatest tax savings. Alternatively, the lifetime learning credit should be considered by part-time students and those attending graduate school. For others, especially those who don’t qualify for either credit, the tuition and fees deduction may be the right choice.

Taxpayer can qualifies for more than one of these benefits, but he/she can only claim one of them for a particular student in a particular year. it does not matter if the taxpayers itemize or claim a standard deduction.

What form is required?
The credits are claimed on Form 8863 and the tuition and fees deduction is claimed on Form 8917.

Higher Education Campus:
All three benefits are available for students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions. None of them can be claimed by a nonresident alien or married person filing a separate return. In most cases, dependents cannot claim these education benefits.

The institution will submit Form 1098-T by the end of January of the following year. This form will show information about tuition paid or billed along with other information. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax benefits.


Other Credits Available?

The American opportunity tax credit explained:

•The credit targets the first four years of post-secondary education, and a student must be enrolled at least half time. This means that expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college do not qualify. Any student with a felony drug conviction also does not qualify.

•Tuition, required enrollment fees, books and other required course materials generally qualify. Other expenses, such as room and board, do not.

•The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.

•The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $180,000 or more and singles, heads of household and some widows and widowers whose MAGI is $90,000 or more.

The Lifetime Learning Credit explained:
The lifetime learning credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the American opportunity tax credit, the limit on the lifetime learning credit applies to each tax return, rather than to each student. Though the half-time student requirement does not apply, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

•Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not.

•The credit equals 20 percent of the amount spent on eligible expenses across all students on the return. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability.

•Income limits are lower than under the American opportunity tax credit. For 2012, the full credit can be claimed by taxpayers whose MAGI is $52,000 or less. For married couples filing a joint return, the limit is $104,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $124,000 or more and singles, heads of household and some widows and widowers whose MAGI is $62,000 or more.

Like the lifetime learning credit, the tuition and fees deduction is available for all levels of post-secondary education, and the cost of one or more courses can qualify. The annual deduction limit is $4,000 for joint filers whose MAGI is $130,000 or less and other taxpayers whose MAGI is $65,000 or less. The deduction limit drops to $2,000 for couples whose MAGI exceeds $130,000 but is no more than $160,000, and other taxpayers whose MAGI exceeds $65,000 but is no more than $80,000.

Other education-related tax benefits that can help many taxpayers, such as:



Scholarship and fellowship grants — generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.

Student loan interest deduction of up to $2,500 per year.

Savings bonds used to pay for college — though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.

Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child’s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the earned income tax credit.


Source: http://www.IRS.gov

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Sunday, April 14, 2013

 Extensions of Time to File Your Tax Return
 
According to the IRS, they are three ways you can request an automatic extension of time to file a U.S. individual income tax return:

  • You can electronically file Form 4868 (PDF), Application For Automatic Extension of Time To File U.S. Individual Tax Return;
  • Pay all or part of your estimate of income tax due using a credit or debit card or by using the Electronic Federal Tax Payment System (EFTPS).   
    • Pay by phone or Internet through one of the service providers listed on the IRS website. Each service provider will charge a convenience fee based on the amount of the tax payment.
    • At the completion of the transaction, you will receive a confirmation number for your records.;
  • File a paper Form 4868 by mail to the appropriate address provided on the form.  

ACKNOWLEDGEMENT:
If you file your Form 4868 electronically you will receive an acknowledgement or confirmation number for your records and you do not need to mail in Form 4868.

PAYMENT INCLUDED:
If you need to pay additional taxes when filing Form 4868 electronically, you may do so through the outside service provider or through e-file. You can refer to your tax software or tax professional for ways to file electronically using e-file services.

FOR FREE:
Several companies offer free filing of Form 4868 through the Free File program that you can access on the IRS.gov website. If you wish to file electronically, be sure to have a copy of last year's tax return. You will be asked to provide the adjusted gross income (AGI) from the return for taxpayer verification.
 
 
 WARNING:
Please be aware that an extension of time to file is NOT an extension of time to pay
 



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Saturday, March 16, 2013

Tax, Accounting, and Auditing: Tax Calendar for March 2013

Tax, Accounting, and Auditing: Tax Calendar for March 2013: Wed March 13 Deposit payroll tax for payments on Mar 6-8 if the semiweekly deposit rule applies.   Fr March 15 Corporations: ...

Tax Calendar for March 2013

  • Wed March 13
    • Deposit payroll tax for payments on Mar 6-8 if the semiweekly deposit rule applies.  
  • Fr March 15
    • Corporations: File Form 1120 for calendar year and pay any tax due. For automatic 6-month extension, file Form 7004 and deposit estimated tax. 
    • Employers: Deposit payroll tax for Feb. if the monthly deposit rule applies.  
    • S Corporations: File Form 1120S for calendar year and pay any tax due. Furnish a copy of Sch. K-1 to each shareholder.
    • File Form 2553 to elect S Corporation status beginning with calendar year 2013. 
    • Electing Large Partnerships: Furnish Sch. K-1 (Form 1065-B) to each partner. 
    • Deposit payroll tax for payments on Mar 9-12if the semiweekly deposit rule applies.
  • Wed March 20
    • Deposit payroll tax for payments on Mar 13-15 if the semiweekly deposit rule applies.  
  • Fr March 22
    • Deposit payroll tax for payments on Mar 16-19 if the semiweekly deposit rule applies.
  • Wed March 27
    • Deposit payroll tax for payments on Mar 20-22 if the semiweekly deposit rule applies.
  • Fr March 29
    • Deposit payroll tax for payments on Mar 23-26 if the semiweekly deposit rule applies
 SOURCE: HTTP//IRS.gov

Did you file your 2009 Tax Return?

The announced that it has $917 Million for People who have not filed a 2009 Income Tax Return

The IRS claim that they are approximately 984,400 taxpayers who did not file a federal income tax return for 2009, and it estimated that if the total refund could reach in the hundred of millions of dollars. However, you must file a return for 2009 by no later than Monday, April 15, 2013.  The average refund considering those estimates are more than $500 per tax return.  (These numbers may varied depending on the taxpayer and this calculation is an arithmetic average.)


What Happens if you do not file by the due date? The money becomes property of the U.S. Treasury.

Would you be assessed with a Penalty for filing a late return that qualiifies for a refund?  No, generally there is no penalty. Although, the tax return must be "Properly filed" (IRS definition) with the IRS.

What happens if I already owe money to the IRS? The refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

Contact your CPA if you have not filed your 2009 tax return.

Source: http://IRS.gov



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Sunday, February 17, 2013

Education Credits and Depreciation issues

The IRS wll begin processing Tax Returns with Education Credits and Depreciation charges this week.  The forms in question are:
  • Form 8863- Education Credits (February 14, 2013)
  • Form 4562- Depreciation and Amortiization (February 10, 2013)
Why the delay?
The IRS will be able to accept the education credits and depreciation forms following the completion of reprogramming and testing of its systems. Work continues on preparing IRS systems to accept the remaining tax forms affected by the American Taxpayer Relief Act (ATRA) enacted by Congress on Jan. 2.
 
What follows next?
 
The remaining forms affected by the January legislation the first week may begin processing earlier in March. A specific date will be announced later. 

Education Credits:
 
Form 8863- Education Credits. Form 8863 is used to claim two higher education credits like the American Opportunity Tax Credit and the Lifetime Learning Credit.
 
Depreciation and Amortization Charges:
 
Form 4562- Depreciation and Amortization. This applies to 1040 business filers.
 
What you mean by the delay?
 
Your tax return will not be processed until the patches are made and your tax refund may be delayed. 
 
 
More information is available on the IRS website or by contacting your CPA.
 
 Source: IRS.GOV
 

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Wednesday, January 9, 2013

January 30, 2013 to begin processing 1040s?

IRS Plans Jan. 30 Tax Season Opening For 1040 Filers

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

The IRS estimate that 120 million households that file early will be affected. The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.
The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.
Why the delay?

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

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

Who can file past Jan 30?  
There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting these tax returns between late February and into March 2013.  Examples of tese forms are: Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms will be available soon on the IRS website-IRS.gov.

Updated information will be posted on IRS.gov.



Wednesday, January 2, 2013

2012 Tax Relief Bill is pass

The US Senate passed a bill extending most of the tax breaks in effect in 2012, including the AMT patch and the extenders provisions.  The bill is expected to pass in the House and be signed into law by the President, soon. Some taxpayer may have to wait again, like they did in 2011, until mid February until the IRS may all adjustments to forms and computer processing code.

This bill was passed because of fear of the economy going into recession on more time. Details will follow, so consult with your tax accountant (i.e., CPA) for more up-to-date information.
Source: IRS.gov


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