Online Tax Filing Blog

IRS Delays Filing Deadline For Boston Area Taxpayers

Wed, 17 Apr 2013 07:27:00 PDT

The Internal Revenue Service today, April 17, 2013, announced a three-month tax filing and payment extension to Boston area taxpayers and others affected by Monday’s explosions. Monday's bombing occurred on the traditional tax filing deadline. Acting IRS Commissioner Steven Miller said the agency wants the victims and others affected by the bombings to have the time they need to finish their taxes.

This relief applies to all individual taxpayers who live in Suffolk County, Mass., including the city of Boston. It also includes victims, their families, first responders, others impacted by this tragedy who live outside Suffolk County and taxpayers whose tax preparers were adversely affected.

Under the relief announced today, the IRS will issue a notice giving eligible taxpayers until July 15, 2013, to file their 2012 returns and pay any taxes normally due April 15. No filing and payment penalties will be due as long as returns are filed and payments are made by July 15, 2013. By law, interest, currently at the annual rate of 3 percent compounded daily, will still apply to any payments made after the April deadline.

The IRS will automatically provide this extension to anyone living in Suffolk County. If you live in Suffolk County, no further action is necessary by taxpayers to obtain this relief. However, eligible taxpayers living outside Suffolk County can claim this relief by calling 1-866-562-5227 starting Tuesday, April 23, and identifying themselves to the IRS before filing a return or making a payment. Eligible taxpayers who receive penalty notices from the IRS can also call this number to have these penalties abated.

Eligible taxpayers who need more time to file their returns may receive an additional extension to Oct. 15, 2013, by filing Form 4868 by July 15, 2013.

Top 10 Most Overlooked Tax Deductions

Fri, 12 Apr 2013 11:41:00 PDT

The tax deadline is fast approaching and we are here to make sure you do not throw away your hard earned money by missing tax deductions. One of the ways you can reduce your tax liability is to decrease your taxable income by taking advantage of tax deductions.

In our latest infographic, we take a look at the Top 10 Most Overlooked Tax Deductions, to help you keep more money in your pocket!

IRS Will Start Accepting Tax Returns January 30th

Sat, 12 Jan 2013 05:07:00 PST

The Internal Revenue Service announced that they plan to open the 2013 filing season and begin processing individual income returns on January 30^th. Due to the late tax law changes enacted on January 2, this announcement means that the IRS will begin accepting e-filed tax returns for the vast majority of U.S. tax filers on January 30^th.

The IRS estimates that the remaining households will be able to start filing in late February or into March because of the needs for more extensive form and processing system changes. This group of filers includes people claiming residential energy credits, depreciation of property or general business credits.

The late opening of filing season follows the passage of extensive tax changes in The American Taxpayer Relief Act of 2012 (ARTA) by Congress on January 1,2013. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms before it can begin accepting tax returns.

TaxSlayer’s Simple Steps to Get Your Refund Back ASAP!

1. File Now! No need to wait.

· TaxSlayer.com is up to date on the recent laws and has been accepting e-filed tax returns since January.

· TaxSlayer will submit your return to the IRS as soon as the IRS begins accepting them. Filing your return now will place you one step closer to receiving your refund.

2. E-file is the best way to go!

· Even the IRS Acting Commissioner states that- ‘The best option for taxpayers is to file electronically.’

· More than 80% of tax returns were e-filed.

· There is no advantage to filing a paper return. Taxpayers will receive their refund much faster by using e-file with direct deposit.

Whose returns will be accepted starting January 30?

The IRS anticipates that the vast majority (about 120 Million tax returns) of all taxpayers returns will be accepted starting January 30. The IRS will be accepting returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming (1) the state and local sales tax deduction, (2) higher education tuition and fees deduction and (3) educator expenses deduction.

Who Cannot File Until Later?

There are several forms that were affected by the late passed legislation that require more extensive updating. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future. Below we have listed a full list of forms that are affected and cannot be filed on January 30:

Form 3800 General Business Credit
Form 4136 Credit for Federal Tax Paid on Fuels
Form 4562 Depreciation and Amortization (Including Information on Listed Property)
Form 5074 Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands
Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations
Form 5695 Residential Energy Credits
Form 5735 American Samoa Economic Development Credit
Form 5884 Work Opportunity Credit
Form 6478 Credit for Alcohol Used as Fuel
Form 6765 Credit for Increasing Research Activities
Form 8396 Mortgage Interest Credit
Form 8582 Passive Activity Loss Limitations
Form 8820 Orphan Drug Credit
Form 8834 Qualified Plug-in Electric and Electric Vehicle Credit
Form 8839 Qualified Adoption Expenses
Form 8844 Empowerment Zone and Renewal Community Employment Credit
Form 8845 Indian Employment Credit
Form 8859 District of Columbia First-Time Homebuyer Credit
Form 8864 Biodiesel and Renewable Diesel Fuels Credit
Form 8874 New Markets Credits
Form 8900 Qualified Railroad Track Maintenance Credit
Form 8903 Domestic Production Activities Deduction
Form 8908 Energy Efficient Home Credit
Form 8909 Energy Efficient Appliance Credit
Form 8910 Alternative Motor Vehicle Credit
Form 8911 Alternative Fuel Vehicle Refueling Property Credit
Form 8912 Credit to Holders of Tax Credit Bonds
Form 8923 Mine Rescue Team Training Credit
Form 8932 Credit for Employer Differential Wage Payments
Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit

“Where’s My Refund?” Tool Has New Design

Mon, 17 Dec 2012 04:16:00 PST

The new design of the IRS tool, “Where’s My Refund?” will give you personalized refund information based on the processing of your 2012 tax return. In years past, the “Where’s My Refund?” tool allowed taxpayers to find out exactly when they would be receiving their refund. The new design will include a tracker that displays progress through 3 stages:

1. Return Received

2. Refund Approved

3. Refund Sent

The “Where’s My Refund?” tool will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. So in a change from previous tax seasons, taxpayers will not get an estimated refund date right away. According to the IRS, updates to refund status will be made once a day, usually at night.

Use “Where’s My Refund?” To Check The Status of Your Refund

To use “Where’s My Refund” you will need to have your tax return handy so you can provide your social security number, filing status and the exact whole dollar amount of your refund.

The IRS Says Take These Steps Below To File An Accurate Tax Return and Get Your Refund Fast

· Using e-file is the best way to file an accurate tax return, and combining e-file with direct deposit is the fastest way for you to get your refund.

· Take these steps to ensure your tax return is processed as quickly as possible.

– file electronically,

– submit an accurate, error-free return,

– verify the correct social security number or taxpayer identification number for yourself, your spouse and your dependents,

– verify you have used the correct mailing address,

– use the correct bank account and routing number if you choose direct deposit,

· The IRS works hard to issue refunds as quickly as possible, but some tax returns take longer to process than others for many reasons, including when a return:

– includes errors,

– is incomplete,

– needs further review,

– is impacted by identity theft or fraud,

– includes Form 8379, Injured Spouse Allocation, which could take up to 14 weeks to process

The main message to take away from this post is that even though the IRS issued most refunds last year in less than 21 days, it is possible that your tax return may require additional review and take longer. With this in mind, the IRS urges tax payers to not count on getting their refund by a certain date in order to make major purchases or pay other financial obligations.

Retirement Plans Can Make Loans Or Hardship Distributions to Sandy Victims

Sat, 08 Dec 2012 05:28:00 PST

The Internal Revenue Service announced on November 16, 2012, that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Sandy and members of their families. 401(k) plan participants, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, and state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and opened hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.

Retirement plans can provide this relief to employees and certain members of their families who live or work in the disaster area. To qualify for this relief, hardship withdrawals must be made by February 1, 2013.

The IRS is also relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. As a result, eligible retirement plan participants will be able to access their money more quickly with minimum red tape. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.

This broad-based relief means that a retirement plan can allow a Sandy victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent that lived or worked in the disaster area.

Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features. In addition, the plan can ignore the limits that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement. Ordinarily, retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less. Under current law, hardship distributions are generally taxable. Also, a 10 percent early-withdrawal tax usually applies.

Further details are in the IRS Announcement 2012-44.

What filing status should I choose when filing my taxes?

Fri, 07 Dec 2012 05:16:00 PST

As the end of 2012 winds down, it is important to know which filing status applies to you and how it will affect the amount of taxes you could owe. Your federal tax filing status, which is based on your marital and family situation, is used to determine your filing requirements, eligibility for certain credits, what your standard deduction is, whether you must file a return and your correct tax. Your marital status on the last day of the year determines your status for the entire year. If more than one filing status applies to you, you may choose the one that gives you the lowest tax obligation.

Single - Your filing status is single if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status. For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife. The Standard Deduction for taxpayer's filing as Single is $5,950 for the 2012 tax year.

Married Filing Jointly - A married couple may file a joint return together. If your spouse died during the year, you may still file a joint return with that spouse for the year of death. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions. If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. The Standard Deduction for Married Filing Jointly is $11,900 for the 2012 tax year.

Married Filing Separate - You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. If you and your spouse do not agree to file a joint return, you have to use this filing status unless you qualify for head of household status. The Standard Deduction for Married Filing Separate will be $5,950 for the 2012 tax year. NOTE- when one spouse itemizes deductions the other spouse cannot claim the standard deduction, and therefore must itemize to claim their allowable deductions.

Head of Household - You may be able to file as head of household if you meet all the following requirements. The Standard Deduction for Head of Household will be $8,700 for the 2012 tax year.

You are unmarried or "considered unmarried" on the last day of the year; and

You paid more than half the cost of keeping up a home for the year; and

A "qualifying person" lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the "qualifying person" is your dependent parent, he or she does not have to live with you.

Qualifying Widow(er) with a Dependent Child - You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. For example, if your spouse died in 2010 and you have not remarried, you may be able to use this filing status for 2011 and 2012. This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). This status does not entitle you to file a joint return.

FILING STATUS FOR YOUR STATE RETURNS

When creating your state return you have the option to choose from Resident, NonResident and Part Year status (based on the state you live in).

Resident- generally you are considered a resident of a state if you have a permanent place to live in that state for the entire tax year regardless of brief, infrequent absences.

Part Year and Non-resident status is determined on a state-by-state basis. You can view the guidelines for your particular state by logging in to our program, clicking State Section > select the state name from the drop down menu > Create State return.

For more information about filing status see Pub 501, Exemptions, Standard Deduction, and Filing Information available on the IRS Website.

8 Tax Tips To Increase Your 2012 Tax Refund

Mon, 03 Dec 2012 07:25:00 PST

Very soon after Thanksgiving, many Americans start to think about Christmas and shopping! Black Friday, Small Business Saturday, Cyber Monday, and the new comer Giving Tuesday- it seems the list goes on and on with reasons to shop. However, very shortly after all the shopping has died down January 1 brings the New Year and our mind quickly rationalizes…. How in the world am I going to pay for all this stuff?!! After agonizing moments of panic have passed, most people realize that they may be due a refund this year from their taxes and problem solved!

Although TaxSlayer.com can’t promise everyone a refund, we can say if you follow these 8 tips you should be on your way to a refund that should help you pay down your holiday debt!

1. Charitable Donations- Take your gently worn goods to the Salvation Army or Goodwill. Clean out your closet before the end of the year and receive a potential deduction that you will benefit from. Now is also the time to start looking for all the cash donation receipts that you have received throughout the year. Remember, the IRS needs you to substantiate every penny- so hold on to those receipts!

2. Review your paycheck stub- Most people forget that they may have donated through their job or paid Union dues. Always hold on to your last paycheck stub and review it for deductions. If you have any questions on whether something is tax deductible or not use our helpful knowledge base. We have hundreds of articles that can help.

3. Child and Dependent care- Do you pay daycare expenses for a qualifying child that is under the age of 13 or had a dependent who was physically or mentally disabled and lived with you for more than half the year? Did you pay for summer camp that specializes in soccer or computers? If so, you need to start getting your receipts in order to claim the Child and Dependent care credit.

4. IRA contributions- Normally, you have to claim your deductions by December 31, 2012 in order to take it on your tax return. But if you qualify to deduct IRA contributions, you can make a contribution by April 16, 2013 and claim it on your 2012 tax return. If you are in desperate circumstances this late deduction may be worth looking at in the near future.

5. State taxes paid- If you were one of the ‘unlucky ones’ and owed state income taxes you may qualify to deduct that payment on your 2012 tax return. If you owed your state income taxes and you paid them in 2012 you can deduct those as an itemized expense. Review your check register and get your deduction this year!

6. Alimony payments- Unfortunately, all relationships don’t work out. If you and your former spouse have called it quits and you have to pay alimony don’t forget to write off those alimony payments. Just look at it as the bright side to ending the relationship J. And for the former spouse that is receiving alimony- your monthly payments are taxable and you must include them on your tax return. One last point- child support isn’t eligible to be written off unless it is stated as an alimony payment in the divorce decree.

7. Review your filing status- Most people don’t understand the power of choosing the correct filing status. If you recently had a major life event such as getting married you can choose between Married Filing Joint versus Married Filing Separate. In most cases, it will benefit most couples to file Married Filing Joint. If you are unmarried and paid more than half the cost to keep up your home and have a qualifying dependent then choosing Head of Household versus Single will benefit you. In addition, most people don’t know that they could claim a qualifying relative (such as a brother, sister, parent, or grandparent to name a few) that doesn’t live with them. This could possibly change you from Single to Head of Household and/ or give you an extra deduction. Check out our knowledge base for more information on filing status.

8. Change your withholdings- Now is the time to look at your withholdings. If you started working, received a raise, or took a pay cut these things could have an impact on your tax return for the upcoming year. Go to your personnel department and look at your withholdings to make sure they are in line to meet your expectations for the New Year. If they aren’t, complete another W-4 and submit it.

Following these 8 tax tips will get you on your way to receiving the biggest refund for 2012.

If you like what you have read, pass it along to a friend and please give me ‘like’. I always love comments so please feel obliged to leave them for me. Thanks and good luck with increasing your refund!

6 Tips To Make Filing Your Taxes Easier

Mon, 03 Dec 2012 04:01:00 PST

With all of the events and festivities of the holiday season, we tend to forget that the tax-filing season is right around the corner. There is still a lot of time left until the April income tax filing deadline, but why wait until the last minute to get your affairs in order? In order for you to receive a speedier refund, it helps to file your return as soon as possible. In order to file earlier in the tax season, you can take the steps below to prepare yourself for the tax filing season.

1. Consider year-end tax decisions that will reduce your taxable income, such as giving to charity.

The IRS encourages both individuals and corporations to make donations to charities by offering deductions for your contributions. However, receipts detailing the items and amounts donated must be saved and included with your tax return. If you have already made charitable donations throughout the year, make sure you find the records.

2. Locate Last Year’s Tax Return

Looking at your last year’s return can provide you with some helpful information.

· Withholding information

· Information about how certain income may have been treated, such as capital gains

TaxSlayer.com’s Premium Edition allows you to compare your prior year return, filed with TaxSlayer, at the click of a button. By comparing your two returns, this feature helps to alert you to a potential mistake or problem with your return.

· TaxSlayer.com also allows you to transfer prior year tax information. By pulling your information forward, it helps to save you time and makes filing even easier because you do not have to find your prior year return.

3. Gather work related receipts

If you purchased an item, such as a uniform or supplies needed for your job, and you were not reimbursed by your employer for the expense, then the item is deductible. Also, if you are self-employed, many items you use to conduct or promote your business may be deductible as well.

4. Find Social Security information for new additions to your family

Be sure to have on hand any social security numbers of any children that you had or have adopted over the last year. You will need this information to receive the child tax credit and file with dependents.

5. Set aside IRA contribution proofs

The primary benefits of contributing to an IRA are the tax deductions and the tax-deferred or tax-free growth on earnings. Generally, any contributions that you or your spouse, if applicable, made to a Traditional IRA qualify as a deduction on your return. Sometimes this deduction may be limited. With that in mind, taxpayers should set aside proofs of this contribution. The preferred examples of proof are the form of a cancelled check or brokerage statements.

· In 2012, taxpayers under 50 years of age are allowed to contribute $5,000 per person to their IRAs.

· Those over 50 years of age may contribute $6,000.

6. Collect your W-2 and 1099s

Keep in mind, you will generally not start receiving your W-2 and 1099 forms until the end of January. It is important that when you do receive these documents that you review them closely.

What to look for on your W-2

· Make sure the withholding amounts are accurate

· Makes sure that the gross wages reported on the W-2 form match what you have actually earned.

If there is a discrepancy, be sure to contact your human resources or payroll department and have them reissue you a corrected W-2.

What to look for on your 1099 statements

· Check that the proceeds reported on your 1099 match your records

· Be sure to find out the cost basis of the securities you have sold, so that when you file your tax return you have all the necessary information at hand.

The Fiscal Cliff: Learn How It Could Impact How Much Everyone Owes

Tue, 20 Nov 2012 04:24:00 PST

Last week we talked about the expiring Bush Tax Cuts and what that could mean for the 2013 tax brackets. This week we are discussing what the Fiscal Cliff means for the list of the expiring benefits and how all taxpayers will be affected. Without Congressional action before the end of December, almost everyone will be hit will some type of tax increase. Be sure to check the list for items that will apply to you to get an idea of how your tax situation will be impacted.

American Opportunity Tax Credit Expires

Who Is Impacted: Lower Income Families

The American Opportunity Tax Credit will expire after 2012. The AOTC, which expanded and renamed the already-existing Hope credit, could be claimed for tuition and certain fees you may have paid for higher education for a credit of up $2,500.

Student Loan Interest

Who Is Impacted: Lower to moderate income taxpayers

A deduction of $2,500 is allowed for interest paid on loans for higher education. If this benefit is allowed to expire, the deduction will only be able to be claimed by eligible taxpayers for the first 60 months (5 years) of interest payments (currently there is no time provision). In addition, the income phase-out levels are reduced to $40,000- $55,000 for single filers and $60,000- $75,000 for married joint filers. The current phase-out range is $60,000- $75,000 for single filers and $120,000- $150,000 for married joint filers.

Child Tax Credit

Who Is Impacted: Lower income taxpayers who have children

Since 2003, the child tax credit has been $1,000 for each qualified child of a taxpayer who is under the age of 17 at the end of the calendar year. However, at the end of 2012 this provision will expire, and beginning in 2013, the credit will revert to $500 per child.

Child & Dependent Care Credit

Who Is Impacted: Lower income working taxpayers with children

As part of the Bush-era tax cuts, the maximum expenses qualifying for child and dependent care credit were raised from $2,400 ($4,800 for two or more qualifiers) to $3,000 ($6,000 for two or more qualifiers) and the income-based maximum credit percentage was raised from 30% to 35%. However, these increases are scheduled to revert to the back to the previous/ lower amounts in 2013.

Earned Income Tax Credit

Who Is Impacted: Lower income taxpayers with three or more children

In 2009, a credit category for three or more children was added, providing an increased credit for taxpayers with three or more qualifying children. However, the earned income tax credit will expire at the end of 2012.The expiration will reduce the maximum credit for individuals with three or more children by $650 in 2013. Note: Other changes that enhanced and simplified the credit computation are also set to expire.

Payroll Tax and Self-Employment Tax

Who Is Impacted: All working taxpayers

Both the payroll withholding tax and self-employment tax rate have been reduced by 2% points for two years, Beginning in 2013, payroll FICA withholding will return to 6.2% (up from 4.2%0 and self-employment tax will return to 12.4% (up from 10.4%).

Itemized Deduction Phase-Out

Who Is Impacted: Higher income families who itemize their deductions

Beginning in 2013, higher income taxpayers will again be subject to the phase-out of itemized deductions. The following itemized deductions are subject to phase-out: taxes, interest (except investment interest), charitable contributions, employee job expenses and other miscellaneous itemized deductions (excluding gambling and casualty or theft losses). If the itemized deductions are subject to the limit, the total of all itemized deductions is reduced by the smaller of:

1) 3% of the amount by which the AGI exceeds the annual limit, or

2) 80% of the itemized deductions that are affected by the limit.

The threshold amounts for 2013 have not been announced yet but will be inflation-adjusted amounts from 2009, which were $83,400 for married taxpayers filing separately and $166,800 for all others.

Exemption Phase-Out

Who Is Impacted: Higher income families

In 2012, each taxpayer is entitled to a $3,800 tax exemption for themself, their spouse, and each dependent. Beginning in 2013, a phase-out of the exemptions will return for higher income taxpayers. The threshold amounts for 2013 have not been announced.

*Please keep in mind that this is not a complete list of all the tax benefits that may be affected if Congressional action is not taken.

It is important to point out that Congress could and probably will extend some of these provisions. The reason we provide our customers with this information is to let them know of these important changes, so they can review their tax situation and plan for all the possible scenarios. A helpful tool we found for reviewing your possible tax situation was a "Fiscal Cliff" Calculator by The Tax Policy Center. In using their Fiscal Cliff Calculator, you can compare the 2013 law if policies are allowed to expire completely, also known as “the Fiscal Cliff”, the 2013 Senate Democratic plan and the 2013 Republication plan. Check out the Tax Policy Center’s Fiscal Cliff Calculator and see how the amount of taxes you owe will be affected by each proposed plan.

Bush Tax Cuts Expiring and What That Could Mean For You

Mon, 12 Nov 2012 04:55:00 PST

When filing your taxes this upcoming year, you will be filing your taxes for 2012 and therefore can determine the amount of taxes you owe by the 2012 income tax brackets. However, the current Bush-Era tax cuts are about to expire and you may be affected. There are three possible scenarios for the 2013 tax brackets, and Congress has until December 31, 2012 to decide.

How Much You Will Owe When You File In 2013

When you file your 2012 taxes before April 15, 2013, the amount of taxes you owe are determined by the 2012 tax bracket rates listed below. Keep in mind that the “taxable income” used in this table is not your gross income. Taxable income is generally some or all items of income that are reduced by expenses and other deductions.

How The Expiring Tax Cuts Could Affect You

The Bush tax cuts are set to expire at the end of 2012, while this may not affect the amount you will owe this upcoming year, the first paycheck you earn in 2013 will fall under the new tax bracket. The 2013 income tax brackets apply to money that you earn during 2013.There are three possible scenarios on how the 2013 tax brackets could affect you and Congress only has until the end of December to decide.

Three Most Likely Scenarios For The 2013 Tax Brackets

1. Tax Brackets Proposed by President Obama: Expiration of the Bush-era tax cuts expire for high income taxpayers only. *Married filing separately, has not yet been determined.

2. Congress Proposed Tax Brackets: Bush tax cuts extended for all taxpayers. *Married filing separately, has not yet been determined.

3. If they cannot reach a compromise: Bush tax cuts expire for everyone. *Married filing separately, has not yet been determined.

There is also a chance that the tax brackets for 2013 might differ slightly from one of the above scenarios. It may be several months before anyone has a clear indication on what the 2013 tax brackets will be. We will let you know when Congress has reached a decision and the 2013 tax brackets are finalized.

Tax Relief For Victims Of Hurricane Sandy

Fri, 09 Nov 2012 03:48:00 PST

When Hurricane Sandy hit in late October, over 60 million Americans were affected. That means that out of every 5 Americans, 1 is facing some kind of recovery from the storm. If you are one of these many Americans that are facing material loss or damage, or were affected by this super-storm, you could be eligible for some tax relief. Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced November 2, 2012 that affected taxpayers in Connecticut, New Jersey and New York will receive tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA.

Areas Eligible for Tax Relief

The areas where relief applies currently include:

· In Connecticut: Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County

· In New Jersey: Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, Somerset and Union

· In New York : Bronx, Kings, Nassau, New York, Queens, Richmond, Rockland, Suffolk and Westchester

Tax Relief for Victims Of Hurricane Sandy

The IRS states, “the tax relief postpones various tax filing and payment deadlines that occurred starting in late October. As a result, affected individuals and businesses will have until Feb. 1, 2013 to file these returns and pay any taxes due”.

· This includes the fourth quarter individual estimated tax payment, normally due Jan. 15, 2013. It also includes payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on Oct. 31, 2012 and Jan. 31, 2013 respectively.

· It also applies to tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period.

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

The IRS automatically provides this relief to any taxpayer located in the disaster area. Taxpayers need not contact the IRS to get this relief.

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

Helping Those in Need

If you find yourself in the position to help others affected by Hurricane Sandy, your financial contributions to organization like the American Red Cross or any other qualified charity are tax-deductible. In order for charitable deductions to be considered tax-deductible, they must be made to qualified, tax-exempt organizations. For more information about helping the victims of Sandy and donating to the Red Cross, visit the Red Cross website today!

Tax Scam Alert: IRS Warns About Phony Websites

Tue, 06 Nov 2012 04:58:00 PST

The Internal Revenue Service is warning about a new tax scam using a website that mimics the IRS e-Services online registration page. Criminals are using it to lure people into providing personal and financial information that may be used to steal the victim’s identity.

The actual IRS e-services page offers web-based products for tax preparers and payers, not the general public. The website is said to look almost identical to the real one. The IRS states that, “The address of the official IRS website is www.irs.gov. Do not be misled by sites claiming to be the IRS but ending in .com, .net. .org or other designations instead of .gov”.

The IRS advises users who find a suspicious website that claims to be the IRS to send the URL by email to phishing@irs.gov using the subject line “Suspicious Website.”

401k Contribution Limits for 2013

Mon, 29 Oct 2012 05:26:00 PDT

On October 18, 2012, the IRS announced the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2013. In general, many of the pension plan limitations will change for 2013 due to the in the cost-of-living index. However, other pension plan limitations will remain unchanged. Details include:

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $5,500.

The income-phase out range for deduction for taxpayers making contributions to a traditional IRA is:

o The income-phase out range for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) are between $59,000 and $69,000, up from $58,000 and $68,000 in 2012.

o $95,000 to $115,000, for married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, up from $92,000 to $112,000 in 2012.

o $178,000 and $188,000, for married couples filing jointly with an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, up from $173,000 and $183,000 in 2012.

The AGI phase-out range for taxpayers making contributions to a Roth IRA is:

o $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012.

o $112,000 to $127,000 for singles and heads of household, up from $110,000 to $125,000 in 2012.

o $0 to $10,000 for a married individual filing a separate return who is covered by a retirement plan at work, which did not increase from 2012.

The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is:

o $59,000 for married couples filing jointly, up from $57,500 in 2012

o $44,250 for heads of household, up from $43,125 in 2012

o $29,500 for married individuals filing separately and for singles, up from $28,750 in 2012.

Do I have to claim tips on my tax return?

Mon, 29 Oct 2012 05:22:00 PDT

Reporting your tip income correctly is not difficult. You must do three things.

1. Keep a daily tip record.

2. Report tips to your employer.

3. Report all of your tips on your income tax return.

Keep a Daily Tip Record

It is important for you to keep a record of your daily tips, so you can report your tips accurately to your employer and on your tax return, and prove your tip income if your return is ever audited.

How to keep a daily tip record. There are two simple ways to keep a daily record. You can either:

· Write information about your tips in a tip diary, or

· Keep copies of document that show your tips

It is important to note that you do not need to write the amount of any service charge that your employer adds to a customer’s bill and then pays you and treats as wages, in your tip dairy. This is part of your wages, not a tip.

Report Tips To Your Employer

Why you should report your tips to your employer. You must report tips to your employer so that:

· They can withhold federal income tax and social security and Medicare taxes

· They can report the correct amount of your earning to the Social Security Administration, and

· You can avoid the penalty for not reporting tips to your employer.

What tips to report. Report to your employer only, cash, check, and debit and credit card tips that you receive. If your total tips for any 1 month are less than $20, do not report the tips for that month to your employer.

If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive.

How to report. If your employer does not give you any other way to report tips, you can use Form 4070. Fill in the information asked for on the form, sign and date the form, and give it to your employer. If you do not use Form 4070, give your employer a statement with the following information every month.

· Your name, address and social security number

· Your employer’s name, address, and business name

· The month in which you received tips

· The total tips required to be reported for that period

When to report. Give your report for each month to your employer by the 10^th of the next month.

What if I do not report my tips to my employer?

Report All of Your Tips on Your Income Tax Return

How to report tips. Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1.

Can I deduct the Mortgage Interest Deduction?

Mon, 29 Oct 2012 05:16:00 PDT

One of the most confusing tax breaks for taxpayers is the mortgage interest tax deduction. If you were one of the many taxpayers this year that were eligible to deduct mortgage interest but did not, you left a lot of money on the table by overpaying your taxes. It is important to know who is and who is not eligible for the mortgage interest tax deduction, so that you can save yourself some money or stay out of trouble with the IRS for a claimed deduction that you do not qualify for.

Mortgage Interest Deduction

The mortgage interest deduction allows taxpayers who own their homes to reduce their taxable income by the amount of interest paid on the loan, which is secured by their principal residence or a second home. The amount of mortgage interest you can deduct each year is limited.

Home Acquisition Debt

You cannot deduct more than $1,000,000 ($500,000 if married and filing separately) of home acquisition debt. Home acquisition debt means any loan whose purpose is to acquire, construct, or substantially improve a qualified home.

Home Equity Debt

You may not deduct interest that is more than $100,000 of home equity debt. Home equity debt means any loan whose purpose is not to acquire, construct, or substantially improve a new home, or any loan used to sustainably improve a home but exceeded the home acquisition debt limit.

Who Can Deduct Mortgage Interest?

The interest you pay on a mortgage or a home equity line of credit for your primary residence or a second home can be deducted from your income when you:

· File taxes on Form 1040 and itemize your deductions on Schedule A.

· Have secured debt on a qualified home in which you have an ownership interest.

Many people believe that these conditions are simple, but understanding how they apply to different ownership situations can be somewhat complicated. Below we will explain some of the different ownership situations, and how the mortgage interest deduction applies.

Multiple Owners

When multiple people buy a home together, each owner can deduct the amount of interest they pay, only if they itemize their deductions on Schedule A. Lenders typically send out a mortgage interest statement at the end of the tax year to indicate the total interest paid on the mortgage. Taxpayers are responsible for deducting the correct amount of interest they paid, regardless of whose name or Social Security number is listed on the mortgage interest statement received, as long as they are a legal owner of the property.

Paying Someone Else’s Mortgage

If you help make mortgage payments for a child or friend while they are unemployed, you cannot claim the mortgage interest deduction for someone else’s debt unless you are a legal owner of the property.