Taxbrain® Blog - Online Tax Tips & News

What to do if You Are Missing a W-2

2012-02-21T17:28:00.000-08:00

Still expecting a W-2 from your employer to come in the mail? Now is the time to act if you haven’t received all of them, because by now, you should have received all your W-2s from the jobs you worked at. Employers had up to January 31, 2012 to mail them out.

If you haven’t received your W-2 yet, here is what you should do:

1. Contact your employer. Inquire if and when the W-2 was mailed out, if any, to you. If it was mailed, it could be that the return was sent to an incorrect/incomplete address. After contacting the employer, allow a reasonable amount of time for them to be resent/reissued.

2. Contact the IRS. If by February 14, 2012, you tried step #1 above but either couldn’t find the employer or the employer failed to cooperate, then contact the IRS for assistance at 1-800-829-1049. When you call, you must provide:

a. Your information such as name, address, city and state, including zip code, Social Security number, and phone number

b. Employer information such as name, address, city and state, zip code, and phone number

c. Dates of employment

d. Estimate of the wages you earned; federal tax withheld, etc. The estimate should be based on your last year-to-date final pay stub if possible.

3. File your return. You still must file your return or request an extension to file by April 17, 2012, even though you haven’t received a W-2. If you have completed steps #1 and #2 above, then you may use Form 4852 (Substitute for Form W-2) and attach it to your return. Please note that you can download the Form 4852 from the IRS website and print it. When using Taxbrain to file, complete the Form 4852 by hand, but enter your employer info, wages, withholdings, etc. on the W-2 worksheet. You will need to paper file the return, as Form 4852 is not supported for e-filing on Taxbrain. There may be a delay in any refund due while the information is verified by the IRS.

4. File Form 1040X. On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens to you, you must amend your return by filing a Form 1040X (Amended US Individual Income Tax Return). Amended returns can be generated in Taxbrain by clicking the “amend” link located to the right of your return’s name on while viewing your accounts.

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Taxbrain.com Announces Winner of Free Tax Prep for Life

2012-02-21T17:21:00.000-08:00

Taxpayers win free tax preparation by sharing how they Live More in 80 characters or less.

Tracy, CA – February 9, 2012 – Taxbrain®, a leading provider of online do-it-yourself and full-service tax preparation services, announced the grand prize winner of their “FREE Tax Prep for Life” contest. Jamie Estes, of Missouri, will be awarded free federal and state tax preparation from Taxbrain for the next 25 years! The social media inspired contest celebrated how taxpayers lived more last summer in 80 characters or less – a challenge inspired by Taxbrain’s mission for taxpayers to live more and tax less.

While slightly more than 80 characters, Jamie weighed in with the following Twitter-worthy 138 character missive, “Participated in and contributed to BikeMS. Tax deduction for a great cause, and very healthy because it promotes exercise and well being.”

“We’re proud to award Jamie the grand prize of free tax preparation for life,” said Thomas Rose-Bolden, Director of Marketing, Taxbrain. “She truly embodies the spirit of living more and taxing less.”

“Jamie convincingly captured the spirit of the contest with just a few simple words,” stated Craig I. Petz, Vice-President, “We hope to continue to inspire people to live life to the fullest and leave the taxing part to us.”

An overwhelming amount of entries were submitted through Facebook and after the initial contest launch, entries went viral due to sharing and multiple entries on Twitter. Several daily winners received free Federal and State tax preparation for their 2011 taxes. View a full list of winners and entry submissions at www.facebook.com/taxbrainfans.

About Taxbrain.com® America’s Online Tax Service™
Taxbrain.com is a web-based tax solution delivering online preparation, filing, professional assistance and representation in all 50 states. Taxbrain.com is a full-service online tax center providing tax advice, tools, and resources all year to help taxpayers manage their tax burden with greater confidence and ease. For more information, visit www.taxbrain.com.

About Petz Enterprises, Inc.
Petz Enterprises, Inc. (a closely-held California corporation) is a software development company and a leading provider of tax preparation and filing solutions for the professional and consumer markets, helping to automate and simplify federal, state and local tax compliance. PEI’s Crosslink® line of professional tax software products enable tax practitioners and service bureaus to accurately prepare and file large volumes of individual tax returns. Founded in 1974, Tracy, CA-based PEI is dedicated to serving the needs of the professional tax community and indivihttp://www.blogger.com/img/blank.gifdual taxpayers worldwide. For more information, visit www.petzent.com.

Update: IRS Delays Refunds by Up to a Week

2012-02-13T09:00:00.000-08:00

The IRS had experienced a delay in processing returns that were e-filed and accepted from Monday, February 6, through Friday, February 10, 2012. Any refunds associated with these returns will be delayed by up to one week due to this IRS processing issue. Please note that if you had submitted your return during this time and it was acknowledged, you do not have to resubmit your return again.

For the affected returns, the estimated issue date of the refund will begin to appear on “Where’s My Refund?” beginning Tuesday, February 14.

There seems to be no refund delays for returns that were filing starting on February 11, 2012. Processing tax returns should be back to normal.

If you have questions, we are here to help. Visit Taxbrain.com for free, unlimited customer support via live chat, phone or email.

Vincent Mangiapane, EA
Federal Analyst, Petz Enterprises

Smart Ways to Help Reduce Your Taxes

2012-02-10T09:54:00.000-08:00

Here are a bunch of helpful methods to assist you in reducing your taxable income. These are great tips to use throughout the year when opportunities arise. When planning large purchases or gifts, get into the habit of thinking about how your taxes may be impacted as well.

Medical bills – Save receipts for medical bills, prescriptions and co-pays if you are not using a health savings account. You can take a deduction that will lower your tax liability, if your medical expenses exceed more than 7.5% of your adjusted gross income (AGI).

Invest in a retirement account – You can make a maximum contribution of $16,500 dollars to your 401K account annually. Investing in retirement savings can lower your tax liability by giving you a tax credit.

Buy a house - Paying rent does not provide you with a tax benefit. Owning a home not only means you are building equity, it also lowers your tax liability because mortgage interest is a tax deduction if you meet the income requirements.

Buy a car – Deduction of state and local sales tax for certain new cars, light trucks, motorcycles and motor homes purchased after Feb. 16, 2009 and before Jan. 1, 2012 can lower your tax liability.

Make a charitable donation – Tax free donations are a great way to help an organization or individual in need and lower your taxable income for the next income tax season.

Make an extra mortgage payment – Your home mortgage payment is likely the biggest monthly expense in your household. Use your income tax refund to make an extra payment, or two! Making one extra mortgage payment every year could reduce the lifetime of your loan by up to 5 years.

Pay your property taxes – Real estate taxes are tax deductible. If your property tax bill is due early next year, you might want to pay it now and take the deduction.

Avoid the gift tax – By giving $13,000 or less per year per person you can avoid the gift tax. Gifts over that amount will reduce your lifetime gift tax exclusion, and gifts over the exclusion will be taxed to the giver.

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The Child Tax Credit - 11 Key Points

2012-02-10T09:36:00.000-08:00

The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income. Here are 11 important facts from the IRS about this credit and how it may benefit your family.

1. Amount - With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.

2. Qualification - A qualifying child for this credit is someone who meets the qualifying criteria of seven tests: age, relationship, support, dependent, joint return, citizenship, and residence.

3. Age Test - To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2011.

4. Relationship Test - To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

5. Support Test In order to claim a child for this credit, the child must not have provided more than half of their own support.

6. Dependent Test - You must claim the child as a dependent on your federal tax return.

7. Joint Return Test - The qualifying child can not file a joint return for the year (or files it only as a claim for refund).

8. Citizenship Test - To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.

9. Residence Test - The child must have lived with you for more than half of 2011. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.

10. Limitations - The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

11. Additional Child Tax Credit - If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

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IRS Tax Tip 2012-29

Don’t Let Irene Drench Your Tax Docs, Keep Them Safe!

2011-08-30T10:34:00.000-07:00

With Irene wreaking her havoc this past week on the East Coast, we felt it most appropriate to remind everyone about keeping your financial records safe. Natural disaster can strike at any time. As a result, we need to remind ourselves it is important to backup records in case a disaster comes our way. Without a disaster plan in place, you could face confusion, high levels of stress, or even financial ruin. The following information will show you how to backup your records so you can be prepared in case disaster strikes.

Document Your Valuables

Annually, go room-to-room in your home or business and document each item. Include the value and condition of each item. Here are some methods you can use to document items:

1. Take photos of items
2. Video record items
3. Document on paper the items
4. Input item information into a software program, such as Word or Excel

Backup Your Records Electronically

One of the best and easiest ways to safe-keep your records is to make sure everything is in electronic form. Consider scanning paper documents, photos, and receipts into electronic format. Once all records are in electronic format, you can make copies that you can use for your backup. Backup copies on an external hard drive, CD or DVD, flash drive, or an online storage service. Remember, once you have converted your documents to electronic format, do not automatically assume that you should dispose of them. Certain documents, such as birth certificates and social security cards, preferably should be kept in their original paper format.

Store Records in a Safe Area

Store records in a secure and remote place, preferably away from the town you are in. Consider family members that are willing to assist you (and you can also return the favor for them too). Another option is storing electronic information using an online storage service. There are several companies that offer this service at a very reasonable cost.

Vincent Mangiapane, Enrolled Agent
Taxbrain Online Tax Service
August 30, 2011

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The Wait Is Over!

2011-06-21T14:47:00.000-07:00

It's Finally Here!

Our annual Taxbrain Toolkit to help you...
Live More & Tax Less!

Inside you'll find helpful tips and resources to help you maintain a healthy tax plan all year.

Be informed on current rebate programs, understand how to organize your tax documents and be prepared for 2012!

Toolkit Features:
• W-4 Withholding Tips and Calculators
• Cash Rebate and Tax Credit Programs
• Record Keeping Best Practices
• Answers to Post-Tax-Season Questions

Not using Taxbrain yet? Visit Taxbrain.com today and sign up for a free account!

It’s Tax Day! Are you breathing easy or trying to beat the deadline?

2011-04-18T10:22:00.000-07:00

Due to the observance of Emancipation Day, you have until midnight today, Monday April 18th to file your taxes or request an extension.

Remember, filing for an extension gives you and extension on filing your paperwork, not on an extension on the payment. If you think you may have a balance due, be sure to pay that amount today, to avoid being penalized by the IRS. To file an extension, you can access the federal and state extension forms here.

If you are unsure how to finish your taxes or are finding it too difficult to understand, you should get help from a professional. Taxbrain has CPA’s and IRS Enrolled Agents on-site that can help give you expert advice or file your taxes for you. To learn more, click here.

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Make Sure You Get What Uncle Sam Owes You!

2011-03-29T16:21:00.000-07:00

Check out this informative article about what 5 tax laws changed in 2010 and may affect your return this year. Courtesy of our friends at KTVU.

Click Here!

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Taxbrain.com Launches YOU&US HD Video Tax Preparation Service!

2011-03-21T10:32:00.000-07:00

Click Here to read the full announcement!

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IRS To Start Accepting Schedule A and Other On-Hold Forms Today!

2011-02-14T08:32:00.000-08:00

HAPPY VALENTINE'S DAY!

The IRS has announced that beginning today, February 14th, they will start processing both e-filed and paper returns for forms which were previously delayed.

As a reminder, these forms include:

• Schedule A (Itemized Deductions)
• Form 8917 (Tuition and Fees Deduction)
• Amount on Form 1040, line 23 or Form 1040A, line 16 (Educator Expense deduction)
• Form 4684 (Casualties and Thefts)
• Form 5405 (First-Time Homebuyer Credit and Repayment of Credit)
• Form 8910 (Alternative Motor Vehicle Credit)
• Form 3800 (General Business Credits)

You can still get your refund in as little as 8* days so remember to use e-file & direct deposit when you come back on February 14th to file!

When to Expect Your Refund:

See Full IRS e-file Refund Cycle Chart

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Qualified Taxbrain CPA’s Are Available to Help with Your Return

2011-02-14T03:55:00.000-08:00

Need one-on-one help from a CPA? Taxbrain has certified IRS Enrolled Agents & CPA’s onsite to help with questions and assist you on your specific tax situation.

• Have some general tax questions?
• Not sure you did your forms correctly & need a tax pro to review your return for you?
• Need to resolve unpaid or back taxes?

Frustrated and simply just want to have someone do it for you? We are here to help!
Call Us Now - 1-866-Taxbrain (1-866-829-2724)

Receive Timely Alerts – Keep Your Account Info Current

2011-02-11T08:52:00.000-08:00

It’s important to keep your account information up-to-date to ensure that you always receive valuable updates on your tax return status. Ensure you receive all our valuable information by keeping your mailing and email addresses current at all times. Click Here To Update Your Contact Info Now

Other benefits of your Taxbrain membership include:
• Latest tax law & IRS news
• Ways to maximize your deductions and taxable income
• Special offers and exclusive Taxbrain tips

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Taxbrain Super Bowl Commercial 2011

2011-02-10T11:22:00.000-08:00

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IRS To Start Accepting Schedule A and Other On-Hold Forms February 14th

2011-02-09T15:35:00.000-08:00

Great News and we wanted you to be the first to know!

The IRS has announced that beginning on Monday, February 14th, they will start processing both e-filed and paper returns for forms which were previously delayed.

As a reminder, these forms include:

• Schedule A (Itemized Deductions)
• Form 8917 (Tuition and Fees Deduction)
• Amount on Form 1040, line 23 or Form 1040A, line 16 (Educator Expense deduction)
• Form 4684 (Casualties and Thefts)
• Form 5405 (First-Time Homebuyer Credit and Repayment of Credit)
• Form 8910 (Alternative Motor Vehicle Credit)
• Form 3800 (General Business Credits)

Watch your email as we’ll send you a reminder again on the 14th!

You can still get your refund in as little as 8* days so remember to use e-file & direct deposit when you come back on February 14th to file!

When to Expect Your Refund:

See Full IRS e-file Refund Cycle Chart

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Deductions Delayed by IRS Due to Late Legislation

2011-01-06T13:39:00.000-08:00

Due to the late passage of legislation and changes to IRS regulations, the IRS has announced that Federal individual income tax returns that include the following forms will not be ready to be processed electronically by the IRS until mid-to-late February, 2011:

Itemized deductions on Schedule A – This is due to the state sales tax deduction that was extended
Tuition and Fees Deduction on Form 8917
Educator Expense deduction claimed on Form 1040, line 23 or Form 1040A, line 16
First-Time Homebuyer Credit on Form 5405
Alternative Motor Vehicle Credit on Form 8910
General Business Credits on Form 3800

What Does This Mean For You?

You can still use Taxbrain.com to prepare and file your return.
When e-file opens on January 14, 2011, returns that include at least one of these deductions or credits will not be allowed to be filed electronically until the necessary changes have been made to the IRS tax processing system.
If you try to e-file a return that contains any of these forms, it may result in your return being rejected by the IRS.
It is important to note that during this period of time, the IRS will also be unable to process paper returns that include the affected items. Filing a return by mail instead of waiting to e-file will only result is a greater delay of processing your return.

What We Recommend

If your tax return does not include any of the affected form, prepare and e-file on Taxbrain and get your refund in as little as 8 days.
If your return does include any of the affected forms – no problem!
a. Login to Your Taxbrain Account or Create a FREE Account
b. Answer our brief questionnaire
c. Complete your worksheets & Calculate & Submit Your Refund
d. If you have attempted to e-file any of the affected forms, the IRS will send back a notice, which you can view in your Taxbrain return status page.
e. Once the IRS has updated the e-file rules for these forms, you’ll be able to login to Taxbrain and resubmit your return, it’s that simple!

Not using Taxbrain? Visit Taxbrain.com today and receive unlimited free support!

Vincent Mangiapane, EA
Qualified Professional, Taxbrain Online Tax Service

13M To Get Unexpected Bill From Tax Credit - Money News Story - KTVU San Francisco

2010-12-16T15:55:00.000-08:00

Here's an important announcement, captured by our good friends at KTVU:

13M To Get Unexpected Bill From Tax Credit - Money News Story - KTVU San Francisco

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Taxbrain Tax Refund Calculator

2010-12-08T16:51:00.000-08:00

Have you been wondering how big your tax refund will be? Try the Taxbrain refund calculator below and in six simple steps, we will calculate an approximation of your tax refund or amount you owe.

Estimate Tax Refund Here

Do you owe? See these tips on Smart Ways to Reduce Your Taxes
Getting a refund? Ten Ways to Spend Your Refund

We officially open in early January 2011 for the upcoming tax season. Taxbrain is always available to help you get your prior year tax refund all the way back to 2005!

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Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years...Starting In 2011!

2010-12-08T09:02:00.000-08:00

A reminder for first-time homebuyers who took advantage of the Housing and Economic Recovery Act of 2008 - It's now time to start repaying that loan when filing your 2010 tax return.

Here is the original announcement:

IR-2008-106, Sept. 16, 2008

WASHINGTON — First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

Available for a limited time only, the credit:

- Applies to home purchases after April 8, 2008, and before Jan. 1, 2009.
- Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
- Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including
one-fifteenth of this amount, or $500, as an additional tax on his or her
2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405.

This form, along with further instructions on claiming the first-time homebuyer
credit, will be included in 2008 tax forms and instructions and be available
later this year on IRS.gov, the IRS Web site.

The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.

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Tax Preparation Checklist

2010-12-07T13:38:00.000-08:00

We’ve designed this handy checklist to help you prepare for the upcoming tax season. You probably won’t need every category we have listed so just pick the ones that apply to your tax situation. A few things to note:

• As you receive documents in the mail (like your W-2) check them off the list.
• For items that you are still waiting to receive, highlight them to remind yourself later.

Save time and be organized when it’s time to prepare and file your 2010 tax return on Taxbrain.com.

Personal Data
Social Security Numbers (including spouse and children)
Child care provider(s) (Name, address and employer/Tax ID #)
Alimony paid: Social Security Number

Employment & Income Data
W-2 forms for this year
Unemployment compensation: Forms 1099-G
Miscellaneous income including rent: Forms 1099-MISC
Partnership, S Corporation, & Schedules K-1
Pensions and annuities: Forms 1099-R
Social Security/RR1 benefits: Forms RRB-1099
Alimony received
Jury duty pay
Gambling and lottery winning
Prizes and awards
Scholarships and fellowships
State and local income tax refunds: Form 1099-G

Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses

Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R

Financial Liabilities
Auto loans and leases (account numbers & car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other time deposits

Expenses
Gifts to charity (qualified written statement from charity for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, uniforms, union dues, subscriptions)
Investment expenses
Job-hunting expenses
Job-related education expenses
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid
Tax return preparation expenses and fees

Self-employment Data
Business income: Forms 1099-MISC and/or own records
Partnership SE income: Schedules K-1
Business-related expenses: Receipts, other documents & own records
Farm-related expenses: Receipts, other documents & own records
Employment taxes & other business taxes paid for current year: Payment records

Miscellaneous Tax Documents
Federal, state & local estimated income tax paid for current year: Estimated tax vouchers, cancelled checks & other payment records
IRA, Keogh and other retirement plan contributions: If self-employed, identify as for self or employees
Records to document medical expenses
Records to document casualty or theft losses
Records for any other expenditures that may be deductible
Records for any other revenue or sales of property that may be taxable or reportable

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New IRS “ID Protection PIN” to Assist Filers That are Victims of ID Theft

2010-12-01T07:57:00.000-08:00

The IRS has added a new feature that will allow users to input a 6-digit “ID Protection PIN” when submitting their 2010 tax year returns. Once inputted into Taxbrain, the PIN will be printed on the bottom-right of the Form 1040 (page 2), just to the right of the spouse’s signature area and marked OUO or “Official Use Only”.

In mid January, the IRS will send letters (CP 01A) to affected taxpayers who have already contacted the IRS and are acknowledged by the IRS as being identity theft victims. The letter will include a 6-digit PIN that should not be confused with the electronic signature Self Select 5-digit PIN.

The purpose of the ID Protection PIN is to prevent delays in the processing of returns related to individuals that are victims of ID theft. Last year, many victims of ID theft had their returns delayed for months.

Taxpayers will not be able to retrieve or get a new PIN if they lose it. The IRS PIN does not reside on any database where the IRS help line will have access to it. The taxpayer will have to file the return without the PIN in this situation. There may be a delay in processing the return while the taxpayer’s identity is validated, but the return will still be processed. This PIN will be used internally by the IRS to process returns; as a result, there are no reject codes associated with this PIN.

There is only one field for the ID Protection PIN on the 1040. If the primary taxpayer is the only one to receive a PIN, that PIN should be inputted. If the secondary taxpayer (spouse) is the only one to receive a PIN, that PIN should be used. However, if both taxpayers receive a PIN, only the primary taxpayer’s PIN should be used (spouse’s PIN would not be recognized and return processing may be delayed by the IRS).

If users that do not have an ID Protection PIN assigned to them, but enter in a number anyway (maybe confused with other PINs), the returns will not be delayed by the IRS. The system will automatically recognize that there is not an identity theft indicator on the taxpayer’s account; as a result, the entry will not effect the processing of the return.

Here are a couple more tips about the PIN:

1. The ID Protection PIN does not have an expiration date.
2. The PIN is tax year specific. The PIN issued for the 2010 tax year is only good for the 2010 tax year.
3. The taxpayer cannot back data the PIN for a prior year return. If a taxpayer reports ID theft to the IRS in 2011, but has not yet filed a 2010 return, the taxpayer will be given a PIN for the 2011 tax year (not for the 2010 tax year).
4. A new PIN will be issued systemically for 3 years following the last validated incident of ID theft. The taxpayer will not have to report the ID theft every year.

Taxbrain users will be able to input the PIN on the bottom of the Signature Page worksheet for the coming 2010 tax year returns. Once entered, the PIN will be printed on the bottom-right of the Form 1040 (page 2), just to the right of the spouse’s signature area and marked OUO or “Official Use Only”.

If you are a victim of ID theft, you can call the Identity Theft Specialized Unit of the IRS to report the ID theft or just to inquire if you are already in the IRS system. The number for this special unit at the IRS is 1-800-908-4490.

Not using Taxbrain? Visit Taxbrain.com today and receive unlimited free support!

Vincent Mangiapane, EA
Qualified Professional, Taxbrain Online Tax Service

Expanded Recovery Act Tax Credits Help Homeowners Winterize their Homes, Save Energy; Check Tax Credit Certification Before You Buy, IRS Advises

2010-11-29T10:08:00.000-08:00

IR-2010-110

WASHINGTON — People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2010 tax bill as well.
Last year’s Recovery Act expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit.

Nonbusiness Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2010 federal income tax return. Due to limits based on tax liability, amounts spent on eligible energy-saving improvements in 2009, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when figuring this credit. Also, except for fuel cell property, no cap exists on the amount of credit available.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification.

The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Eligible homeowners can claim both of these credits when they file their 2010 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax owed. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A. Use Form 5695, Residential Energy Credits, to figure and claim these credits.

Find out how to Live More and Tax Less, visit Taxbrain.com!

IRS Seeks to Return $164.6 Million in Undelivered Checks to Taxpayers; Recommends the Use of E-file and Direct Deposit

2010-11-17T14:57:00.000-08:00

Here's an update from the IRS regarding refund checks and the benefits of E-filing.

IR-2010-113, Nov. 17, 2010

WASHINGTON — The Internal Revenue Service is looking to return $164.6 million in undelivered refund checks. A total of 111,893 taxpayers are due one or more refund checks that could not be delivered because of mailing address errors.

“We want to make sure taxpayers get the money owed to them,” said IRS Commissioner Doug Shulman. “If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money.”

A taxpayer only needs to update his or her address once for the IRS to send out all checks due. Undelivered refund checks average $1,471 this year, compared to $1,148 last year. Some taxpayers are due more than one check.

The average dollar amount for returned refunds rose by just over 28 percent this year, possibly due to recent changes in tax law which introduced new credits or expanded existing credits, such as the Earned Income Tax Credit.

If a refund check is returned to the IRS as undelivered, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool also enables taxpayers to check the status of their refunds. A taxpayer must submit his or her Social Security number, filing status and amount of refund shown on their 2009 return. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Taxpayers can receive refunds directly into their bank, split a tax refund into two or three financial accounts or even buy a savings bond.

The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds. E-file combined with direct deposit is the best option for taxpayers; it’s easy, fast and safe.

The public should be aware that the IRS does not contact taxpayers by e-mail to alert them of pending refunds and that such messages are common identity theft scams. The agency urges taxpayers not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that will infect their computers. The best way for an individual to verify if she or he has a pending refund is going directly to IRS.gov and using the “Where’s My Refund?” tool.

Find out how to get your refund in as little as 8 days with E-file and direct deposit, visit Taxbrain.com to learn more!

Tax Tips Today for A Bigger Refund Tomorrow

2010-11-16T10:00:00.000-08:00

We realize that tax laws and credits can be taxing and difficult to understand. To help you live more and tax less next tax year, we created the Taxbrain Toolkit. Inside you'll find helpful tips and resources to help you maintain a healthy tax plan all year.

Toolkit Features:

Record Keeping Tips

W-4 Withholding Tips and Calculators

Cash Rebate and Tax Credit Programs

Answers to Post-Tax-Season Questions

The Taxbrain Toolkit is free and is available for download here.

American Opportunity Tax Credit—Credit set to end in 2010

2010-09-22T20:11:00.000-07:00

The American Opportunity Tax Credit is basically a renaming of the existing Hope Scholarship Tax Credit. A credit of up to $2,500 for the first 4 years of higher education expenses would be available. The credit would be calculated based upon 100% of the first $2,000 of qualified tuition and related expenses, plus 25% of the next $2,000 of such expenses. The credit would begin to phase out at $80,000 of modified AGI (adjusted gross income) for a single taxpayer and $160,000 for married taxpayers. Up to 40% of the credit would be refundable, meaning that you can get a credit that is more than your tax liability.

The American Opportunity Tax Credit would also be allowed for the Alternative Minimum Tax. The credit is only available during the 2009 and 2010 tax years, unless Congress extends this credit.