Get this fixed. . .

Posted by on Jun 16, 2010 in e file, Information, Opinions, Preparer regulations, Tax Preparation | 0 comments

Today I received notices from my local IRS Sr. Stakeholder Liaison. In his bulletin I found attached three documents/fliers on different things. The two that bother me are bulleted below.

  • Preparer e-File Mandate: Paid tax return preparers that prepare 100 or more individual or trust returns in 2011 will be required to e-file. That number drops to 10 for 2012. If you not already an Electronic Return Originator, start the the process.  Find out more at e-file Made Easy. You can also watch a U-Tube video. 
  • Return Preparer Regulations: IRS will soon implement new registration, testing, and continuing education requirements for all tax professionals. All {not my emphasis} paid tax return preparers must apply for a Preparer Tax Identification Number (PTIN) and register under a new system, projected to be available in September 2010. Beginning in 2011, there will be new testing and continuing education requirements for any paid tax return preparer who is not an attorney, certified public accountant, or enrolled agent. All paid preparers will come under the rules of Circular 230.

 The e-File Mandate I have already made mention of, but would like to point out one more time that this is great for the IRS but assuredly they need to come up with a plan to exclude taxpayers who do not want to e-file. Mandating 100% for us is like telling only our clients, they have to e-file. Not everyone wants to. Not to mention some software providers charge extra for us to offer this service. One scenario is the college student who is also a single mother barely making any money but yet required to file, depending on where she goes is going to be charged additional fees because now she has to e-file. {Preparer to client – “Because our firm prepares more than 100 returns we have to e-file your return and it cost $XX.xx to do this” – Fair?}

Alrighty then. . .

The second bullet, Return Preparer Regulations, this one, this one burns my hind cheeks. Now don’t get me wrong I am all for preparer regulation, yet who’s making this up? The people? By the people, for the people? Really? Examine then this situation. . . .

Now this is a great idea, but when one says all, shouldn’t that mean all? The Lawyer who has passed the bar is qualified to prepare and represent clients in tax matters. Yet Lawyers are exempt from the new testing and continuing education requirements. Because they passed the bar? What is his/her tax knowledge? Is he being tested for his competency in tax law? Not by the IRS. CPA’s, same question. What is your tax background? Are you keeping up with the preparers regulations on testing and education? You don’t have to.

As a taxpayer, who do you want doing your taxes? Someone who is being regulated and tested by the IRS, who has proven their skills as a preparer to the IRS. Or do you want someone whose specialty is divorce law and litigation, or someone who is certified at preparing and analyzing financial reports such as balance sheets, income and loss statements, or setting up an accounting system for large corps.

Now maybe I am getting this all wrong but when we say, “all return preparers” lets mean all of us. CPA’s, Lawyers, EA’s and the soon to be “enrolled” and regerstared preparers. That would be all.

So Mr. Doug, fix this. “All paid tax return preparers must apply for a Preparer Tax Identification Number (PTIN) and register under a new system. New testing and continuing education requirements for any paid tax return preparer. All paid preparers will come under the rules of Circular 230.”

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Electronic Filing Mandate

Posted by on Jun 11, 2010 in Choosing a preparer, Filling Status, Preparer, Tax Preparation | 0 comments

The IRS has been making changes to the Electronic Filing Mandate that originated in H.R. 3548 as  predicted when it first came out.

At this point in time they are saying for this next tax season they “anticipate” asking requiring preparers who do 100 or more returns to file electronically and then lower that threshold to 10 for the next filing season.  They are doing this because they expect low volume preparers may need more time to get signed up and familiar with the process.  They will also be looking at a waiver process so if there is an extreme hardship for a tax preparing firm they may obtain extra time to get into compliance.  They are also stating that taxpayers may need some convincing so if a tax client wishes to opt out there may be a way to do so.

As you can tell there is a lot of “supposes” and “may be’s” in this statement……the IRS isn’t completely finished with what they are planning for this next tax season.  As I hear more, I’ll make sure to update you.

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What Tax Form Do You Need To Use?

Posted by on Jan 11, 2010 in Form 1040 Information, Information, Tax Preparation | 0 comments

         To file your 2009 individual tax return, you’ll have to decide which form to use…unless you e-file (Highly recommended). If you file electronically, the software should automatically select the simplest and best form for you.

           Whether you use e-file or prepare on paper, using the simplest form will help avoid costly errors or processing delays. And remember, if you file electronically, it speeds up the processing of your tax return and the delivery of your refund.

Here are things to consider when deciding which IRS form to file.

Use the 1040EZ if:

  • Your taxable income is below $100,000
  • Your filing status is Single or Married Filing Jointly
  • You and your spouse – if married — are under age 65 and not blind
  • You are not claiming any dependents
  • Your interest income is$1,500 or less
  • You are not claiming the additional standard deduction for real estate taxes, taxes on the purchase of a new motor vehicle, or disaster losses

Use the 1040A if:

  • Your taxable income is below $100,000
  • You have capital gain distributions
  • You claim certain tax credits
  • You claim deductions for IRA contributions, student loan interest, educator expenses or higher education tuition and fees

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. You must use the 1040 if:

  • Your taxable income is $100,000 or more
  • You claim itemized deductions
  • You are reporting self-employment income
  • You are reporting income from sale of property

All IRS forms, instructions and information about e-file can be found at www.IRS.gov.

 

Links:

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Five Important Facts about Dependents and Exemptions

Posted by on Jan 7, 2010 in Deductions, Exemptions, Filling Status, Form 1040 Information, Information | 0 comments

          When you prepare to file your 2009 tax return, there are two things that will factor into your tax situation: dependents and exemptions. Here, the IRS gives you five important facts that you should know about dependents and exemptions before you file your 2009 tax return.

  1. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether or not you must file a return depends on several factors, including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and, any advance Earned Income Tax Credit payments you received.
  2. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2009 tax return. Exemption amounts are reduced for taxpayers whose adjusted gross income is above certain levels, depending on your filing status.
  3. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.
  4. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
  5. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

         For more information on exemptions, dependents and whether or not you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available on IRS.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).

 
Links:

This information was provided by the IRS via IRS TAX TIP 2010-04 copied and pasted here to reach more people.

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Special Edition Tax Tip 2009-12

Posted by on Nov 10, 2009 in Uncategorized | 0 comments

            Well not the post I was hoping to get out next, but when you have days. . . .  Below is a copy of an e-news release. I am busy trying to get the blog rolls up and complete today or at least for another hour or so. I hope to work on the Quotes tomorrow.


Creative Commons License photo credit: MSVGDon't Fall!

Seven Facts about the Non-business Energy Property Credit 

Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.

Here are seven things the IRS wants you to know about the Non-business Energy Property Credit:

  1. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
  2. The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
  3. To qualify as “energy efficient” for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
  4. Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers’ Website.
  5. Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
  6. The improvements must be made to the taxpayer’s principal residence located in the United States.
  7. To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.

For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/recovery.

Links:

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An IRS reminder.

Posted by on Nov 6, 2009 in e file, Information, Tax Preparation, Things forgotten | 0 comments

            The IRS (as stated below) says they had 107,831 refund checks returned to them because of incorrect addresses. {Is yours one of them?} This resulting in over 123 mil. Due to taxpayers who over paid. [okay 123.5 million divided by 107,831, equals and average refund amount per check of $1,1453.31]  Are you one of them? If you had e-filed and used direct deposit, you’d already have your refund. The other thing I ask, of those, I wonder how many if not wonder if all of these are self prepared returns?

Please read the below IRS notice…

IRS Seeks to return $123.5 Million in Undeliverable Refunds to Taxpayers
IRS Reminds Taxpayers to Use E-file and Direct Deposit

WASHINGTON — The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million in the form of 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

Average undeliverable refunds rose by 16 percent this year, which is in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in tax law likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool 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 2008 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

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

The IRS encourages taxpayers to choose direct deposit when they file their returns because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns.

The IRS also encourages taxpayers to 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.

 

Listen to an Audio File for Podcast
Watch Video: Undelivered Refunds
Watch Video: Track Your Refund 

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Form 1040 “New for 2009, Filing”

Posted by on Oct 29, 2009 in Form 1040 Information, Information, Tax Preparation | 0 comments

color and form            Well the IRS has released its “draft” of the 2009 Form 1040. Clicking the photo on the right will take you in a new window so you can see it if you like. 

The only change in the “Income” section is line 19. It is still for “Unemployment compensation”, but they added the phrase “. . . in excess of $2,400 per recipient (see page 27)” This is done so that those who are not aware (and prepare their own returns) that this is something new. If you need clarification, please visit Unemployment Compensation at the IRS site for Tax Changes for Individuals. 

 

            In the section for “Adjusted Gross Income”, line 23 now reads, “Educator expenses (see page 29)”. So, what used to be there is “Archer MSA deduction. Attach Form 8853” is no more. For more information on Archer MSA deduction please see Publication 696. 

            Line 34 now reads “Tuition and fees deduction. Attach Form 8917”, it used to be, “Jury duty pay you gave to your employer” This is not something new, just reworded from last years form. 

            Those are the only notable first glance changes to page one. Now . . .

 Page two.  (I did that in my best Paul Harvey voice I could muster.) 

            In the “Tax and Credits” area, line 39c from last year is gone (if you’ll remember this was a “check box” if you increased your standard deduction using your real estate taxes). 

         Line 40 is now “a” and “b”. “A” is the standard “Itemized deductions (from Schedule A) or tour standard deduction” which, as normal is listed on the left side of the form. Now part “b”. This reads “If you are increasing your standard deduction by certain real estate taxes, new motor vehicle taxes, or a net disaster loss, attach Schedule L (a new Form) and check here (see page 35)” and has a corresponding check box.


(I’ll talk more about the new schedules in other upcoming post) 

         Line 42 is the same ol thing but now reads “Exemptions. If line 38 is $125,100 or less and you did not provide housing to a Midwestern displaced individual, multiply $3,650 by the number on line 6d. Otherwise, see page 37” 

         Lines 47 through 55 are the same with two notable differences. This is the credit section of this part. They are rearranged (what was line 47 is now down on line 50 and such). The credit for the elderly or disabled is no longer listed there. Schedule R Although that line has been omitted altogether, the credit has not, it is still a viable credit. You’ll just enter it on line 53 and put a check in the box for other credit forms (this is “c”). 

Okay now for “Other Taxes”, well nothing new in that section. 

In the “Payments” section line 63 reads “Making work pay and government retiree credits. Attach Schedule M”. Again, I’ll talk more about the new schedules in other upcoming post.

          Line 66 “Refundable education credit from Form 8863, line 16” this is new for the American Opportunity Credit.

          So there are the basics of the new form and what is new and so forth. To further prepare yourself for the upcoming filing season please view the instructions for the new 2009 return.

 

Creative Commons Licensephoto credit: nalilo

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