WASHINGTON — The Internal Revenue Service today began a busy 2007 filing season that features telephone excise tax refunds, a new refund deposit feature and recently enacted tax breaks that may require extra attention from taxpayers.
“Taxpayers will have a number of new tax benefits and features available this year,” IRS Commissioner Mark W. Everson said. “We encourage taxpayers to take a few minutes to review these changes, particularly those involving the recently enacted tax law provisions. The IRS will do everything it can to minimize the impact on taxpayers.”
This week, the agency is sending 17 million 1040 tax packages for 2006 to taxpayers who have previously filed paper returns. The number of paper tax booklets being mailed to Americans continues to decline as more people opt for electronic filing. The IRS expects to process about 136 million individual tax returns for 2006, with more than half of those filed electronically.
Among the major changes taking place this year:
Telephone Excise Tax Refund. Individual taxpayers will be able to request a refund if they paid the federal excise tax on long-distance or bundled service. The government stopped collecting the federal excise tax on long-distance service in August and announced plans to provide refunds of these taxes billed after Feb. 28, 2003, and before Aug. 1, 2006. More than 146 million individual taxpayers are expected to request the refund.
To request the refunds, taxpayers have several options:
Individual taxpayers can request the refund by using the standard amounts, which are based on the total number of exemptions claimed on the 2006 federal income tax return. Choosing the standard amount saves taxpayers the time and trouble of digging through 41 months of old phone bills. The standard amounts are $30 for a person filing a return with one exemption, $40 for two exemptions, $50 for three exemptions and $60 for four or more exemptions. For example, a married couple filing a joint return with two dependent children (for a total of four exemptions) will be eligible for the maximum standard amount of $60. To get the standard amount, eligible individual taxpayers will fill out an additional line on their regular 2006 1040 return. (Line 71 on Form 1040; Line 42 on Form 1040A; Line 9 on Form 1040EZ.)
Alternatively, individual taxpayers who want to request a refund of the actual amount of tax paid should figure that amount using Form 8913 and report it on their income tax return.
Businesses and tax-exempt organizations can also request a refund under a different procedure; more information is available at IRS.gov.
New 1040EZ-T Form. For people who don’t need to file a regular tax return, the IRS has developed a special, shorter form to allow them to request the telephone refund. Copies of the Form 1040EZ-T will be available on IRS.gov, over the phone and at a variety of other locations. The IRS encourages people who qualify for the 1040EZ-T to file electronically through the Free File program, which will be available for free beginning later this month. More than 10 million taxpayers who aren’t normally required to file a tax return may be able to use this new form. Taxpayers can either request the standard amount on this form or attach a Form 8913 to request actual amounts.
Recent Tax Law Enactments. The IRS is taking a number of steps to help taxpayers get the information they need to take advantage of tax law provisions enacted in December after IRS forms went to print.
This new legislation affects a number of areas of tax law, but the most significant effect on individual taxpayers involves the deductions for state and local sales tax, higher education tuition and fees, and educator expenses.
Taxpayers can visit IRS.gov for updated information on the late legislation. The IRS will conduct a special mailing of Publication 600, which will include the state and local sales tax tables and instructions for claiming the sales tax deduction on Schedule A (Form 1040), to 6 million taxpayers who also receive the 2006 Form 1040 package this month.
For taxpayers using a paper Form 1040, they will have to follow special instructions if they are claiming any of the three deductions. The key paper 1040 Forms went to print in November, so taxpayers will have to make special notations to claim the deductions if they use these paper forms. Specific details are available on IRS.gov. For people using IRS e-file or Free File, tax software will be updated to include the three key tax provisions, and e-file will get the refunds to taxpayers faster than paper returns.
“As we always do, we encourage taxpayers who think they may claim these deductions to file electronically,” Everson said. “They will get their refunds faster through e-file. Even more importantly, e-file will greatly reduce the chances for making an error compared to claiming the deductions on the paper 1040.”
The IRS will not be able to process tax returns claiming any extender-related deductions until early February. All other returns can be filed and processed as normal. Whether claiming an extender provision or not, the IRS notes that using IRS e-file is the most accurate way to file any return and the quickest way for taxpayers to receive their refunds. Based on filings last year, only about 930,000 tax returns claimed any of the three extender provisions by Feb. 1.
New Split Refund Option. For the first time, taxpayers can split their refunds among up to three accounts held by up to three different U.S.financial institutions, such as banks, mutual funds, brokerage firms or credit unions. To split their direct-deposit refunds among two or three different accounts or financial institutions, taxpayers should complete the new Form 8888, Direct Deposit of Refund to More Than One Account. Taxpayers can also continue to use the direct deposit line on the Forms 1040 to electronically send their refunds to one account.
Free File Improvements. The free electronic filing program begins later this month featuring improvements to benefit the 95 million taxpayers — 70 percent of all taxpayers — who qualify for the program. Free File, a partnership between the IRS and the private sector Free File Alliance, is available for taxpayers who earn $52,000 or less. This year, the program features an agreement by private sector partners to remove Refund Anticipation Loans (RALs) as well as other ancillary offerings from the program.
IRS.gov, E-file Helps Taxpayers
Given the large number of changes this year, there are several easy options for taxpayers to turn to for help. IRS.gov will have information on all the tax changes and new features this year. Key features include:
1040 Central. This is a one-stop online shop for people hunting key forms, looking for what’s new in the tax code and answers to frequently asked questions.
Where’s My Refund? Once taxpayers file their tax return, they can track their refund through the online tool “Where’s My Refund?” at IRS.gov. Taxpayers will need some of the exact information from their tax return in order to use the tool. Access this secure Web site to find out if the IRS has processed the tax return and sent the refund.
Filing electronically will prevent problems for many taxpayers sorting through this year’s changes. With IRS e-file, taxpayers can get their refunds in half the time of filing a paper tax return and receiving a refund check, even faster with direct deposit. IRS computers also quickly and automatically check for errors or other missing information, making e-filed returns more accurate and reducing the chance of getting an error letter from the IRS.
“With all the changes taking place, this is a good year for paper filers to try e-file,” Everson said. “We remind taxpayers that e-filing is fast, secure and reliable.”
Taxpayers consistently give high marks to e-file in satisfaction surveys. E-file ranks as one of the government’s most popular programs, according to the American Customer Satisfaction Index. And in a survey of users of Free File, 97 percent said they would recommend it to others.
Showing posts with label tax info. Show all posts
Showing posts with label tax info. Show all posts
Tuesday, February 26, 2008
Sunday, February 10, 2008
Your fast, easy alternative to filing paper returns!
IRS e-file for Individuals
Your fast, easy alternative to filing paper returns!
Filing tax returns online has never been easier....In fact, 80 million people used e-file in 2007. e-file supports this growing trend toward electronic tax filing and payment with benefits like:
Faster Refunds
Greater Accuracy
Secure and confidential submission
No paper return to mail
File now, pay later
Quick confirmation
e-file is accessible 24 hours a day, 7 days a week!
Your fast, easy alternative to filing paper returns!
Filing tax returns online has never been easier....In fact, 80 million people used e-file in 2007. e-file supports this growing trend toward electronic tax filing and payment with benefits like:
Faster Refunds
Greater Accuracy
Secure and confidential submission
No paper return to mail
File now, pay later
Quick confirmation
e-file is accessible 24 hours a day, 7 days a week!
Tuesday, February 5, 2008
5 taxpayer traps for 2008
In her annual report to Congress, the nation's taxpayer advocate lays out the problems you may face when filing this year.
Delayed tax returns and late tax code changes are among the most serious problems facing taxpayers today, according to taxpayer advocate Nina Olson in an annual report to Congress Wednesday.
The National Taxpayer Advocate is appointed by the Treasury Secretary and is charged with representing taxpayer interests before the IRS and Congress.
Among 29 of the most serious taxpayer problems outlined in the report, here are five that Olson detailed:
Missed deductions
Late-year tax law changes, and delays in processing those changes, mean some payers could miss out on tax deductions.
The IRS finalizes its Form 1040 and form 1040A in November. If law changes are made later in the year, taxpayers might not receive updated forms and could file inaccurate returns, Olson said. Taxpayers using tax preparation software face the same problem.
While middle-class taxpayers welcome last month's approved alternative minimum tax patch, which shields them from an old tax law for the wealthy not adjusted for inflation, the late tax law change could affect taxpayers claiming the Child and Dependent Care Credit or other credits, Olson said. This also means tax refund delays for millions.
Refund delays
About 80 percent of taxpayers receive a refund when they file their returns, Olson said, citing the IRS, and for low-income families, refunds are particularly important.
Taxpayers who take the Earned Income Tax Credit, for example, could be significantly impacted by refund delays.
"For some taxpayers, a delay of two to four weeks in receiving the refund could mean eviction, inability to pay the high heating bills that arise during winter, or defaulting on credit card bills from the holiday season," Olson wrote in her report to Congress.
Among families receiving EITC benefits for the 2005 tax year, the average refund amount was $3,093.46, or about 20 percent of the average adjusted gross income, $15,484.52, of those taking the credit, Olson noted.
Refund anticipation loans
Refund anticipation loans sold by tax preparers are "disproportionately targeted toward low-income taxpayers and may exploit those taxpayers' trust in their preparers as well as their lack of financial sophistication," according to Olson.
In addition, some tax preparers have a financial incentive to inappropriately inflate refund amounts, and taxpayers might not completely understand that the refund anticipation loan is separate from filing a tax return, she wrote.
The IRS says it is proposing steps to restrict these practices among tax preparers.
Identity theft
Too often, victims of identity theft receive more scrutiny from the IRS than the perpetrators of identity theft, Olson wrote, noting that identity theft could lead to the delay or denial of refunds, the assessment of tax debts reflecting a fraudulent filer's return, and victims being required to prove their identity to the IRS every year.
If a thief uses another's social security number to report false wages, the IRS system doesn't interpret the duplicate filing as identity theft situation, she said. Instead, the innocent taxpayer's refund is reduced, frozen or the system creates a balance due, according to the advocate's report.
If there is a balance due as a result of two returns filed under the same social security number, the IRS will begin collection actions against the innocent taxpayer, her report notes.
While it has made some improvements, "The IRS has not done enough to improve identity theft procedures for victims of identity theft or to secure its filing system from fraudulent filers," Olson said.
Taxpayer assistance troubles
Shortcomings at IRS-sponsored taxpayer assistance centers are making it difficult for taxpayers requiring face-to-face assistance to get help with their tax returns, the report said.
Taxpayers seeking assistance face inconvenient locations, lack of services, payment problems, and questions deemed by the center to be "out-of-scope," or too complex for IRS employees or volunteers to answer, according to Olson.
While the IRS now acknowledges that there will always taxpayers that require face-to-face assistance in order to comply with tax laws, "the next step is to ensure that Taxpayer Assistance Centers are adequately staffed to meet the needs of that population and adequately trained to answer the questions most likely to be asked by that population," Olson wrote.
Additionally, Olson said a taxpayer bill of rights, outlining what taxpayers have a right to expect from their government's tax system and what the government has a right to expect from its taxpayers, will benefit both taxpayers and tax administration.
The full annual report to Congress from the National Taxpayer Advocate can be found here on the IRS Web site
Delayed tax returns and late tax code changes are among the most serious problems facing taxpayers today, according to taxpayer advocate Nina Olson in an annual report to Congress Wednesday.
The National Taxpayer Advocate is appointed by the Treasury Secretary and is charged with representing taxpayer interests before the IRS and Congress.
Among 29 of the most serious taxpayer problems outlined in the report, here are five that Olson detailed:
Missed deductions
Late-year tax law changes, and delays in processing those changes, mean some payers could miss out on tax deductions.
The IRS finalizes its Form 1040 and form 1040A in November. If law changes are made later in the year, taxpayers might not receive updated forms and could file inaccurate returns, Olson said. Taxpayers using tax preparation software face the same problem.
While middle-class taxpayers welcome last month's approved alternative minimum tax patch, which shields them from an old tax law for the wealthy not adjusted for inflation, the late tax law change could affect taxpayers claiming the Child and Dependent Care Credit or other credits, Olson said. This also means tax refund delays for millions.
Refund delays
About 80 percent of taxpayers receive a refund when they file their returns, Olson said, citing the IRS, and for low-income families, refunds are particularly important.
Taxpayers who take the Earned Income Tax Credit, for example, could be significantly impacted by refund delays.
"For some taxpayers, a delay of two to four weeks in receiving the refund could mean eviction, inability to pay the high heating bills that arise during winter, or defaulting on credit card bills from the holiday season," Olson wrote in her report to Congress.
Among families receiving EITC benefits for the 2005 tax year, the average refund amount was $3,093.46, or about 20 percent of the average adjusted gross income, $15,484.52, of those taking the credit, Olson noted.
Refund anticipation loans
Refund anticipation loans sold by tax preparers are "disproportionately targeted toward low-income taxpayers and may exploit those taxpayers' trust in their preparers as well as their lack of financial sophistication," according to Olson.
In addition, some tax preparers have a financial incentive to inappropriately inflate refund amounts, and taxpayers might not completely understand that the refund anticipation loan is separate from filing a tax return, she wrote.
The IRS says it is proposing steps to restrict these practices among tax preparers.
Identity theft
Too often, victims of identity theft receive more scrutiny from the IRS than the perpetrators of identity theft, Olson wrote, noting that identity theft could lead to the delay or denial of refunds, the assessment of tax debts reflecting a fraudulent filer's return, and victims being required to prove their identity to the IRS every year.
If a thief uses another's social security number to report false wages, the IRS system doesn't interpret the duplicate filing as identity theft situation, she said. Instead, the innocent taxpayer's refund is reduced, frozen or the system creates a balance due, according to the advocate's report.
If there is a balance due as a result of two returns filed under the same social security number, the IRS will begin collection actions against the innocent taxpayer, her report notes.
While it has made some improvements, "The IRS has not done enough to improve identity theft procedures for victims of identity theft or to secure its filing system from fraudulent filers," Olson said.
Taxpayer assistance troubles
Shortcomings at IRS-sponsored taxpayer assistance centers are making it difficult for taxpayers requiring face-to-face assistance to get help with their tax returns, the report said.
Taxpayers seeking assistance face inconvenient locations, lack of services, payment problems, and questions deemed by the center to be "out-of-scope," or too complex for IRS employees or volunteers to answer, according to Olson.
While the IRS now acknowledges that there will always taxpayers that require face-to-face assistance in order to comply with tax laws, "the next step is to ensure that Taxpayer Assistance Centers are adequately staffed to meet the needs of that population and adequately trained to answer the questions most likely to be asked by that population," Olson wrote.
Additionally, Olson said a taxpayer bill of rights, outlining what taxpayers have a right to expect from their government's tax system and what the government has a right to expect from its taxpayers, will benefit both taxpayers and tax administration.
The full annual report to Congress from the National Taxpayer Advocate can be found here on the IRS Web site
Tuesday, January 29, 2008
What is the Tax Directory Project?
Research for the Tax Directory Project was commenced in December, 1998. During the ensuing four months tax related search terms entered by surfers at major search engines were examined to determine what information taxpayers were looking for during tax season. In all, over 360 million search terms were checked. This resulted in a list of nearly 4,000 unique tax related search terms entered by nearly 500,000 web surfers during the 1999 tax season.
There are thousands of web sites that have something to do with tax. However, we observed, that there are were no comprehensive web sites that offer a broad cross section of tax information. From the list of tax related search terms WorldWideWeb Tax began writing this tax directory to answer the tax questions you have.
This Tax Directory was launched on November 1, 1999 for the upcoming tax season. The Tax Directory was rebuilt during 2003 and relaunched on December 1, 2003 for the upcoming tax season.
There are thousands of web sites that have something to do with tax. However, we observed, that there are were no comprehensive web sites that offer a broad cross section of tax information. From the list of tax related search terms WorldWideWeb Tax began writing this tax directory to answer the tax questions you have.
This Tax Directory was launched on November 1, 1999 for the upcoming tax season. The Tax Directory was rebuilt during 2003 and relaunched on December 1, 2003 for the upcoming tax season.
Friday, January 25, 2008
Deal struck to send checks to taxpayers
Compromise would provide $600 rebates to most taxpayers in effort to spur spending and head off recession. High-income earners are mostly left out.
Congressional leaders and Bush administration officials agreed Thursday on a $150 billion stimulus measure aimed at keeping the economy from falling into recession.
Most single taxpayers would get $600 and most two-wage households would get at least $1,200. The deal includes an additional amount of $300 per child. A total of 116 million taxpayers will receive checks of some size.
The main exception: higher-income taxpayers or individuals earning $75,000 or more or couples earning $150,000 or more. They would get reduced rebate checks, or none at all, depending on their income.
The deal was announced Thursday afternoon by Speaker of the House Nancy Pelosi, D-Calif., House Minority Leader John Boehner, R-Ohio, and Treasury Secretary Henry Paulson.
more...http://money.cnn.com/2008/01/24/news/economy/stimulus_package/index.htm?postversion=2008012421
Congressional leaders and Bush administration officials agreed Thursday on a $150 billion stimulus measure aimed at keeping the economy from falling into recession.
Most single taxpayers would get $600 and most two-wage households would get at least $1,200. The deal includes an additional amount of $300 per child. A total of 116 million taxpayers will receive checks of some size.
The main exception: higher-income taxpayers or individuals earning $75,000 or more or couples earning $150,000 or more. They would get reduced rebate checks, or none at all, depending on their income.
The deal was announced Thursday afternoon by Speaker of the House Nancy Pelosi, D-Calif., House Minority Leader John Boehner, R-Ohio, and Treasury Secretary Henry Paulson.
more...http://money.cnn.com/2008/01/24/news/economy/stimulus_package/index.htm?postversion=2008012421
Tuesday, January 22, 2008
Depreciation and Section 179 Expense
Increased section 179 limits. The maximum section 179 deduction you can elect for qualified section 179 property placed in service in 2007 has increased to $125,000 ($160,000 for qualified enterprise zone and qualified renewal community property). This limit is reduced by the amount by which the cost of qualified property placed in service during the tax year exceeds $500,000.
For qualified section 179 Gulf Opportunity (GO) Zone property, the maximum section 179 deduction is higher than the deduction for most other section 179 property.
Depreciation limits on electric vehicles. The higher maximum depreciation deduction for a passenger automobile that is an electric vehicle does not apply to electric vehicles placed in service after December 31, 2006.
Limited reduction in Liberty Zone tax benefits. The special depreciation allowance for qualified New York Liberty Zone property does not apply to property placed in service after December 31, 2006 (except for qualified nonresidential real property and qualified residential rental property).
For qualified section 179 Gulf Opportunity (GO) Zone property, the maximum section 179 deduction is higher than the deduction for most other section 179 property.
Depreciation limits on electric vehicles. The higher maximum depreciation deduction for a passenger automobile that is an electric vehicle does not apply to electric vehicles placed in service after December 31, 2006.
Limited reduction in Liberty Zone tax benefits. The special depreciation allowance for qualified New York Liberty Zone property does not apply to property placed in service after December 31, 2006 (except for qualified nonresidential real property and qualified residential rental property).
Monday, January 21, 2008
Employee or Independent Contractor?
Whether someone who works for you is an employee or an independent contractor is an important question. The answer determines your liability to pay and withhold Federal income tax, social security and Medicare taxes, and Federal unemployment tax.
In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee. These facts fall into three main categories:
In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee. These facts fall into three main categories:
- Behavioral Control – Facts that show whether the business has a right to direct and control. These include...http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html
- Financial Control – Facts that show whether the business has a right to control the business aspects of the worker’s job include...http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html
- Type of Relationship – Facts that show the type of relationship include...http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html
For a worker who is considered your employee, you are responsible for:
Withholding Federal income tax,
Withholding and paying the employer social security and Medicare tax,
Paying Federal unemployment tax (FUTA)
Issuing Form W-2, Wage and Tax Statement, annually,
Reporting wages on Form 941, Employer’s Quarterly Federal Tax Return.
For a worker who is considered an independent contractor, you may be responsible for issuing Form 1099-MISC, Miscellaneous Income, to report compensation paid.
The status of certain workers is specifically determined by law; these workers are known as statutory employees and statutory non-employees. See Publication 15-A, Employer’s Supplemental Tax Guide, for more information.
If you would like for the IRS to determine whether or not a worker is considered an employee, please submit Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Sunday, January 20, 2008
Charitable Contributions - Individuals
New recordkeeping requirements for cash contributions. You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. The written communication must include the name of the charity, date of the contribution, and amount of the contribution. For more information, see Publication 526, Charitable Contributions.
Contributions to donor advised funds. You cannot deduct a contribution to a donor advised fund after February 13, 2007, if the sponsoring organization is a war veterans' organization, a fraternal society, or a nonprofit cemetery company. There are also other circumstances in which you cannot deduct your contribution to a donor advised fund. Generally, a donor advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. For details, see Internal Revenue Code section 170(f)(18).
Filing fee for easements on buildings in historic districts. A new $500 filing fee must be paid for each qualified conservation contribution after February 12, 2007, that is an easement on a building in a registered historic district, if the claimed deduction is more than $10,000. See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13).
Contributions to donor advised funds. You cannot deduct a contribution to a donor advised fund after February 13, 2007, if the sponsoring organization is a war veterans' organization, a fraternal society, or a nonprofit cemetery company. There are also other circumstances in which you cannot deduct your contribution to a donor advised fund. Generally, a donor advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. For details, see Internal Revenue Code section 170(f)(18).
Filing fee for easements on buildings in historic districts. A new $500 filing fee must be paid for each qualified conservation contribution after February 12, 2007, that is an easement on a building in a registered historic district, if the claimed deduction is more than $10,000. See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13).
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