The Internal Revenue Service today released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011.
Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.
The new law also maintains the income-tax rates that have been in effect in recent years.
Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011 but not later than Jan. 31, 2011. Notice 1036, released today, contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes. Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov in a few days. If you use Quickbooks for your payroll, please update your payroll tax tables. If you are on a payroll service, review or have your CPA review the payroll to assure the reduced amounts were taken.
The IRS recognizes that the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems. For that reason, the agency asks employers to adjust their payroll systems as soon as possible, but not later than Jan. 31, 2011.
For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2011.
Employers and payroll companies will handle the withholding changes, so workers typically won’t need to take any additional action, such as filling out a new W-4 withholding form.
As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms. Publication 919, How Do I Adjust My Tax Withholding?, provides more information to workers on making changes to their tax withholding.
If you have any questions or concerns, consult with your CPA or give me a call at my office.
David C Egan, CPA 718-227-6035
Happy Holidays!
Wednesday, December 22, 2010
Monday, December 6, 2010
2011 Standard Mileage Rate
2011 Standard Mileage Rates
The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 51 cents per mile for business miles driven
• 19 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously. Its either one or the other. Also, you cannot take the standard mileage deduction if you were reimbursed by your employer
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 51 cents per mile for business miles driven
• 19 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously. Its either one or the other. Also, you cannot take the standard mileage deduction if you were reimbursed by your employer
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Thursday, November 11, 2010
Non-Business Energy 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.
Take advatange of this tax credit and save some money on your heating and cooling bills.
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.
Take advatange of this tax credit and save some money on your heating and cooling bills.
Wednesday, November 10, 2010
Lawmakers Are Promising to Fix the Alternative Minimum Tax (AMT)
Lawmakers Are Promising to Fix the Alternative Minimum Tax (AMT).
As a Certified Public Accountant, I have heard this before so to say that I am skeptical would be an understatement. According to the most recent from Congress, they are saying that: “As the leaders of the Congressional tax-writing committees, we want to assure you that Congress is working on legislative relief,” they wrote. “We will work to draft the AMT provision so that, in the aggregate, not one additional taxpayer faces higher taxes in 2010 due to the onerous AMT. Such legislation will allow the personal credits against the AMT and the exemption amounts for 2010 to be set at $47,450 for individuals and $72,450 for married taxpayers filing jointly.”
They added that they planned to enact AMT relief legislation in a form mutually agreeable to Congress and the President.
Understandably, this is no easy task. The issue is even further compounded by the Bush era Tax cuts which are set to expire. These include reduced tax rates for all individuals. However, under the most recent news byte from the Obama Camp, the president would like compromise. What he is referring to is to extend the Tax cuts for certain individuals, and reinstate the old brackets for the rest of us. We will have to wait and see what will happen in 2010.
As a Certified Public Accountant, I have heard this before so to say that I am skeptical would be an understatement. According to the most recent from Congress, they are saying that: “As the leaders of the Congressional tax-writing committees, we want to assure you that Congress is working on legislative relief,” they wrote. “We will work to draft the AMT provision so that, in the aggregate, not one additional taxpayer faces higher taxes in 2010 due to the onerous AMT. Such legislation will allow the personal credits against the AMT and the exemption amounts for 2010 to be set at $47,450 for individuals and $72,450 for married taxpayers filing jointly.”
They added that they planned to enact AMT relief legislation in a form mutually agreeable to Congress and the President.
Understandably, this is no easy task. The issue is even further compounded by the Bush era Tax cuts which are set to expire. These include reduced tax rates for all individuals. However, under the most recent news byte from the Obama Camp, the president would like compromise. What he is referring to is to extend the Tax cuts for certain individuals, and reinstate the old brackets for the rest of us. We will have to wait and see what will happen in 2010.
Tuesday, October 26, 2010
Paying Estimated Taxes - Form 1040ES for 2010
My office is often asked this question, "Why do I have to pay estimated taxes?"
As a general rule, you must pay taxes if both of the following apply to your situation.
1. You expect to owe at least $1,000 in tax for 2010
and
2. You expect your federal withholding and refundable credits to be less than the smaller of:
a. 90% of the tax to be shown on your 2010 tax return (We are speaking about your federal taxes only, i.e. forms 1040, 1040A, 1040EZ...)
or
b. 100% of the tax shown on your 2009 tax return.
You are exempt from this if you were a US Citizen for 2009 or a Resident Alien for 2009, and didn't have to file a tax return for 2009 or had no tax and therefore no taxable income for 2009.
For everyone that makes oer $150,000 or $75,000 if married filing separately, substitute 110% for the 100% listed above. This is the IRS's rules for higher income taxpayers.
Federal Form 1040ES due dates are quarterly and due on the 15th or next business day after the 15th if it falls on a weekend in the following months, April, June, September, & January.
If you mail your payment and it is postmarked by the due date, the post mark is considered the date of payment. Be careful, the IRS is referring to the US Postal Service postmark, not the date you stamped the envelope in your office.
You can also pay your estimated taxes via the IRS's EFTPS, by Check using the EFW system at the IRS or through a third party and use your credit card. These third parties do charge a convenience fee so beware.
As a general rule, you must pay taxes if both of the following apply to your situation.
1. You expect to owe at least $1,000 in tax for 2010
and
2. You expect your federal withholding and refundable credits to be less than the smaller of:
a. 90% of the tax to be shown on your 2010 tax return (We are speaking about your federal taxes only, i.e. forms 1040, 1040A, 1040EZ...)
or
b. 100% of the tax shown on your 2009 tax return.
You are exempt from this if you were a US Citizen for 2009 or a Resident Alien for 2009, and didn't have to file a tax return for 2009 or had no tax and therefore no taxable income for 2009.
For everyone that makes oer $150,000 or $75,000 if married filing separately, substitute 110% for the 100% listed above. This is the IRS's rules for higher income taxpayers.
Federal Form 1040ES due dates are quarterly and due on the 15th or next business day after the 15th if it falls on a weekend in the following months, April, June, September, & January.
If you mail your payment and it is postmarked by the due date, the post mark is considered the date of payment. Be careful, the IRS is referring to the US Postal Service postmark, not the date you stamped the envelope in your office.
You can also pay your estimated taxes via the IRS's EFTPS, by Check using the EFW system at the IRS or through a third party and use your credit card. These third parties do charge a convenience fee so beware.
Tuesday, October 5, 2010
Additional Child Tax Credit
ARRA and the Additional Child Tax Credit
Under the American Recovery and Reinvestment Act (ARRA), more families will be eligible for the additional child tax credit because of a change to the way the credit is figured.
Taxpayers who cannot take full advantage of the child tax credit because the credit is more than the taxes they owe may receive a payment for some or all of the credit not used to offset their taxes. It is a refundable credit, which means taxpayers may receive refunds even when they do not owe any tax.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. Reducing the amount to $3,000 permits more taxpayers to use the additional child tax credit and increases the amount of the payments they may receive.
This change applies to tax years beginning in 2009 and 2010.
Under the American Recovery and Reinvestment Act (ARRA), more families will be eligible for the additional child tax credit because of a change to the way the credit is figured.
Taxpayers who cannot take full advantage of the child tax credit because the credit is more than the taxes they owe may receive a payment for some or all of the credit not used to offset their taxes. It is a refundable credit, which means taxpayers may receive refunds even when they do not owe any tax.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. Reducing the amount to $3,000 permits more taxpayers to use the additional child tax credit and increases the amount of the payments they may receive.
This change applies to tax years beginning in 2009 and 2010.
Wednesday, August 18, 2010
Former Jackson Hewitt Manager Pleads Guilty to Tax Fraud
Be careful when you choose a tax preparer. Choose a CPA.
Former Jackson Hewitt Manager Pleads Guilty to Tax Fraud
Former Jackson Hewitt Manager Pleads Guilty to Tax Fraud
Monday, August 9, 2010
Owe Money to the IRS, Here are Nine Tips to Help
Nine Tips for Taxpayers Who Owe Money to the IRS
Did you end up owing taxes this year? The vast majority of Americans get a tax refund from the IRS each spring, but those who receive a bill may not know that the IRS has a number of ways for people to pay. Here are nine tips for taxpayers who owe money to the IRS.
1. If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS.This is because the IRS's rate of interest tends to be higher than a banks personal loan. Call ahead and get rate information before proceeding with your own payment schedule.
2. You can also pay the bill with your credit card. The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. To pay by credit card contact one of the following processing companies: Official Payments Corporation at 888-UPAY-TAX (also www.officialpayments.com/fed) or Link2Gov at 888-PAY-1040 (also www.pay1040.com) or RBS WorldPay, Inc at 888-9PAY-TAX (also www.payUSAtax.com).
3. You can pay the balance owed by electronic funds transfer, check, money order, cashier’s check or cash. To pay using electronic funds transfer you can take advantage of the Electronic Federal Tax Payment System by calling 800-555-4477 or online at www.eftps.gov.
4. An installment agreement may be requested if you cannot pay the liability in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all returns that are required and be current with estimated tax payments.
5. If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at IRS.gov or consult with your CPA.
6. You can also have your accountant or CPA complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope that you have received from the IRS. The IRS will inform you usually within 30 days whether your request is approved, denied, or if additional information is needed. If the amount you owe is $25,000 or less, provide the highest monthly amount you can pay with your request.
7. You may still qualify for an installment agreement if you owe more than $25,000, but a Form 433F, Collection Information Statement, is required to be completed before an installment agreement can be considered. If your balance is over $25,000, consider your financial situation and propose the highest amount possible, as that is how the IRS will arrive at your payment amount based upon your financial information.
8. If an agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with incomes at or below certain levels, a reduced fee of $43 will be charged.
9. Taxpayers who have a balance due, may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. There is a withholding calculator available on IRS.gov to help taxpayers determine the amount that should be withheld.
For more information about installment agreements and other payment options visit IRS.gov. or contact your local Staten Island Accountant.
Call David C. Egan, CPA @ 718-227-6035 for tax payment / settlement assistance.
Did you end up owing taxes this year? The vast majority of Americans get a tax refund from the IRS each spring, but those who receive a bill may not know that the IRS has a number of ways for people to pay. Here are nine tips for taxpayers who owe money to the IRS.
1. If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS.This is because the IRS's rate of interest tends to be higher than a banks personal loan. Call ahead and get rate information before proceeding with your own payment schedule.
2. You can also pay the bill with your credit card. The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. To pay by credit card contact one of the following processing companies: Official Payments Corporation at 888-UPAY-TAX (also www.officialpayments.com/fed) or Link2Gov at 888-PAY-1040 (also www.pay1040.com) or RBS WorldPay, Inc at 888-9PAY-TAX (also www.payUSAtax.com).
3. You can pay the balance owed by electronic funds transfer, check, money order, cashier’s check or cash. To pay using electronic funds transfer you can take advantage of the Electronic Federal Tax Payment System by calling 800-555-4477 or online at www.eftps.gov.
4. An installment agreement may be requested if you cannot pay the liability in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all returns that are required and be current with estimated tax payments.
5. If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at IRS.gov or consult with your CPA.
6. You can also have your accountant or CPA complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope that you have received from the IRS. The IRS will inform you usually within 30 days whether your request is approved, denied, or if additional information is needed. If the amount you owe is $25,000 or less, provide the highest monthly amount you can pay with your request.
7. You may still qualify for an installment agreement if you owe more than $25,000, but a Form 433F, Collection Information Statement, is required to be completed before an installment agreement can be considered. If your balance is over $25,000, consider your financial situation and propose the highest amount possible, as that is how the IRS will arrive at your payment amount based upon your financial information.
8. If an agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with incomes at or below certain levels, a reduced fee of $43 will be charged.
9. Taxpayers who have a balance due, may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. There is a withholding calculator available on IRS.gov to help taxpayers determine the amount that should be withheld.
For more information about installment agreements and other payment options visit IRS.gov. or contact your local Staten Island Accountant.
Call David C. Egan, CPA @ 718-227-6035 for tax payment / settlement assistance.
Friday, July 30, 2010
Indentity Theft - What You Need To Know
Taxpayers need to be careful to protect their personal information. Identity thieves use many methods to steal personal information and then they use the information to file a tax return and get a refund. Here are 10 things the IRS wants you to know about identity theft so you can avoid becoming the victim of an identity thief.
1. The IRS does not initiate contact with a taxpayer by e-mail.
2. If you receive a scam e-mail claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.
3. Identity thieves get your personal information by many different means, including:
* Stealing your wallet or purse
* Posing as someone who needs information about you through a phone call or e-mail
* Looking through your trash for personal information
* Accessing information you provide to an unsecured Internet site.
4. If you discover a website that claims to be the IRS but does not begin with ‘www.irs.gov’, forward that link to the IRS at phishing@irs.gov.
5. To learn how to identify a secure website, visit the Federal Trade Commission at www.onguardonline.gov
6. If your Social Security number is stolen, another individual may use it to get a job. That person’s employer may report income earned by them to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return.
7. Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don’t know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice.
8. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification – such as a Social Security card, driver’s license, or passport – along with a copy of a police report and/or a completed Form 14039, Identity Theft Affidavit. As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. You should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft.
9. Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your Social Security number.
10. For more information about identity theft – including information about how to report identity theft, phishing and related fraudulent activity – visit the IRS Identity Theft and Your Tax Records Page, which you can find by searching “Identity Theft” on the IRS.gov home page.
Tuesday, July 6, 2010
Excise Tax on Tanning Services - Look out Jersey Shore Cast its going to cost you and extra 10% for that tan
Starting July 1, 2010, many businesses offering tanning services must collect a 10 percent excise tax on the tanning services they provide. This excise tax requirement is part of the Affordable Care Act that was enacted in March 2010.
Here are nine tips on the tanning excise tax that providers must collect.
1. Businesses providing ultraviolet tanning services must collect the 10 percent excise tax at the time the customer pays for the tanning services.
2. If the customer fails to pay the excise tax, the tanning service provider is liable for the tax.
3. The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises.
4. The tax does not apply to spray-on tanning services.
5. If a payment covers charges for tanning services along with other goods and services, the other goods and services may be excluded from the tax if they are separately stated and the charges do not exceed the fair market value for those other goods and services.
6. If the customer purchases bundled services and the charges are not separately stated, the tax applies to the portion of the payment that can be reasonably attributed to the indoor tanning services.
7. The tax does not have to be paid on membership fees for certain qualified physical fitness facilities that offer indoor tanning services as an incidental service to members without a separately identifiable fee.
8. Tanning service providers must report and pay the excise tax on a quarterly basis.
9. To pay the tax, businesses must file IRS Form 720, Quarterly Federal Excise Tax Return using an Employer Identification Number assigned by the IRS. Businesses that don’t already have one can consult with a Certified Public Accountant regarding obtaining one.
For more information about the excise tax on tanning services, IRS Form 720 and other tax provisions of the Affordable Care Act contact your Local Staten Island Accountant or visit the IRS at IRS.gov
Tuesday, June 8, 2010
New 1099 Requirements affect MANY Businesses
Buried in the New Health Care Reform bill is a update to the 1099 filing requirements.
Beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. This is going to create a real accounting nightmare. If your Local CPA hasn't updated you, you should start to obtain vital information that will be needed to prepare your 1099s.
Currently, there is no requirement to file a 1099 to businesses that you buy more than $600 in goods. That is a major difference. For example, If your business buys a computer from Dell for $1000, you will need to 1099 Dell according to the new tax code. The objective here is to close the tax gap, but the consequence is going to be increased cost to small businesses who now need to prepare more 1099s than they have in the past.
These changes do not apply to individuals. So if you the individual pay your Staten Island CPA , in excess of $600 for estate planning; you will not need to prepare a 1099.
Under the new law, the threshold is $600. If your business pays over $600 to an individual or business for goods or services, you will need to issue a 1099. Get started early and collect the information you will need.
Name
Address
and EIN # (Employer ID #) or SS # (Social Security)
If you have any questions about this or need help in planning on how to keep track of the required information. Contact my office at 718-227-6035, David C Egan, CPA.
Beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. This is going to create a real accounting nightmare. If your Local CPA hasn't updated you, you should start to obtain vital information that will be needed to prepare your 1099s.
Currently, there is no requirement to file a 1099 to businesses that you buy more than $600 in goods. That is a major difference. For example, If your business buys a computer from Dell for $1000, you will need to 1099 Dell according to the new tax code. The objective here is to close the tax gap, but the consequence is going to be increased cost to small businesses who now need to prepare more 1099s than they have in the past.
These changes do not apply to individuals. So if you the individual pay your Staten Island CPA , in excess of $600 for estate planning; you will not need to prepare a 1099.
Under the new law, the threshold is $600. If your business pays over $600 to an individual or business for goods or services, you will need to issue a 1099. Get started early and collect the information you will need.
Name
Address
and EIN # (Employer ID #) or SS # (Social Security)
If you have any questions about this or need help in planning on how to keep track of the required information. Contact my office at 718-227-6035, David C Egan, CPA.
Monday, May 17, 2010
The Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit
This is the latest in an effort to make health insurance more affordable to small businesses and not-for-profits.
Who is (generally) eligible?
This is the latest in an effort to make health insurance more affordable to small businesses and not-for-profits.
Who is (generally) eligible?
- Have to provide health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
Cant be too large. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).- Cannot pay your workers too much (Highly compensated managers could hurt your average) A qualifying employer must pay average annual wages below $50,000.
- The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
As with any IRS credit there is a Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Friday, May 7, 2010
Are Fines, Penalties, or Violations Tax Deductible?
Are Fines, Penalties, or Violations Tax Deductible?
No. Neither are parking tickets while on a business meeting or health department violations for your restaurant.
According to Internal Revenue Code Sec 162, you cannot deduct fines or penalties paid to the government. This includes local, state, federal & foreign. Bottom line, the IRS does not want to promote breaking the law.
So even though you may have received that parking ticket because your business meeting ran 15 minutes too late, that expense is not tax deductible.
However, if you are fined by a local government and hire an attorney or CPA to represent you in litigating / addressing the case; those fees are tax deductible.
No. Neither are parking tickets while on a business meeting or health department violations for your restaurant.
According to Internal Revenue Code Sec 162, you cannot deduct fines or penalties paid to the government. This includes local, state, federal & foreign. Bottom line, the IRS does not want to promote breaking the law.
So even though you may have received that parking ticket because your business meeting ran 15 minutes too late, that expense is not tax deductible.
However, if you are fined by a local government and hire an attorney or CPA to represent you in litigating / addressing the case; those fees are tax deductible.
Monday, April 12, 2010
Not Ready to File Yet - Be Sure To File An Extension
Not Ready to File Yet?
Be sure to file an extension for both the Federal (IRS) and the states in which you lived and worked in if applicable.
Remember that an extension is only to extend the date to file, not to pay. In other words, if you think you may owe taxes with your 2009 return, be sure to pay with your extension to reduce interest and penalties. The IRS charges a variety of penalties for not-filing and you can avoid one of their largest ones, Failure to File Penalty, by filing a federal extension. (Form 4868). In order to calculate how much you owe, please consult with your New York CPA.
A blank form 4868 can be found here form the IRS's website. Consult with your preparer if you have questions.
Be sure to file an extension for both the Federal (IRS) and the states in which you lived and worked in if applicable.
Remember that an extension is only to extend the date to file, not to pay. In other words, if you think you may owe taxes with your 2009 return, be sure to pay with your extension to reduce interest and penalties. The IRS charges a variety of penalties for not-filing and you can avoid one of their largest ones, Failure to File Penalty, by filing a federal extension. (Form 4868). In order to calculate how much you owe, please consult with your New York CPA.
A blank form 4868 can be found here form the IRS's website. Consult with your preparer if you have questions.
Tuesday, March 23, 2010
Whitehouse has a page to help Taxpayers with Recovery Act
http://www.whitehouse.gov/Recovery
Look for the tax savings tool link. Click on the link and answer some questions. The site should guide you to some potential tax savings that you or your preparer are not aware of.
As with any reference source, take what you can and discuss the items in questions with your CPA.
Look for the tax savings tool link. Click on the link and answer some questions. The site should guide you to some potential tax savings that you or your preparer are not aware of.
As with any reference source, take what you can and discuss the items in questions with your CPA.
Thursday, March 4, 2010
Ten Facts About Mortgage Debt Forgiveness
A quick Note on Mortgage Debt Forgiveness
If your mortgage debt is partly or entirely Forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants to know about Mortgage Debt.
1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
2. The limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. To qualify, the debt must have been used to buy, build, or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
6. Proceeds of refinanced debt used for other purposes - for example, to pay off credit card debt - do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filing out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the year in which the qualified debt was forgiven.
8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions - such as insolvency - may be applicable. See IRS Form 982 for specific details on this.
9. If your debt is reduced or eliminated you normally will receive a year-end statement. Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Examine your 1099-C carefully. Notify the lender immediately if any of the information shown is not accurate. Particular attention should be paid to Box 2, Amount of Debt Forgiven, and Box 7, The value of your home.
For more information on the Mortgage Forgiveness Debt Relief Act of 2007, contact the IRS or your local Staten Island CPA.
Goldenthal & Suss CPA's & Consultants, P.C.
David C Egan, CPA
465 Belfield Avenue
Staten Island, NY 10312
718-227-6035
If your mortgage debt is partly or entirely Forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants to know about Mortgage Debt.
1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
2. The limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. To qualify, the debt must have been used to buy, build, or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
6. Proceeds of refinanced debt used for other purposes - for example, to pay off credit card debt - do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filing out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the year in which the qualified debt was forgiven.
8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions - such as insolvency - may be applicable. See IRS Form 982 for specific details on this.
9. If your debt is reduced or eliminated you normally will receive a year-end statement. Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Examine your 1099-C carefully. Notify the lender immediately if any of the information shown is not accurate. Particular attention should be paid to Box 2, Amount of Debt Forgiven, and Box 7, The value of your home.
For more information on the Mortgage Forgiveness Debt Relief Act of 2007, contact the IRS or your local Staten Island CPA.
Goldenthal & Suss CPA's & Consultants, P.C.
David C Egan, CPA
465 Belfield Avenue
Staten Island, NY 10312
718-227-6035
Wednesday, February 10, 2010
Ready to file but missing a W-2? Follow these steps.
Are you ready to file your tax return? Employers have until February 1, 2010 to send you a 2009 Form W-2 earnings statement. If you have not received one or more of your W-2s, you can follow theses steps.
Contact Your Employer
If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.
Contact the IRS
If you do not receive your W-2 by February 16th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:
*Employer’s name, address, city and state, including zip code and phone number
*Dates of employment
*An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2009. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
File Your Return
You still must file your tax return or request an extension to file by April 15, even if you do not receive your Form W-2. If you have not received your Form W-2 by April 15th, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.
File a 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, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return. Keep in mind, most tax professionals charge for an ammened return whereas most tax professionals dont charge for an extension to file.
Form 4852, Form 1040X, and instructions are available on the IRS Web site, IRS.gov or you can contact your local CPA.
David C Egan, CPA
(718)227-6035
Contact Your Employer
If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.
Contact the IRS
If you do not receive your W-2 by February 16th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:
*Employer’s name, address, city and state, including zip code and phone number
*Dates of employment
*An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2009. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
File Your Return
You still must file your tax return or request an extension to file by April 15, even if you do not receive your Form W-2. If you have not received your Form W-2 by April 15th, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.
File a 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, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return. Keep in mind, most tax professionals charge for an ammened return whereas most tax professionals dont charge for an extension to file.
Form 4852, Form 1040X, and instructions are available on the IRS Web site, IRS.gov or you can contact your local CPA.
David C Egan, CPA
(718)227-6035
Wednesday, January 27, 2010
Donate to Haiti - Deduct it on your 2009 Return
People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.
Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.
"Americans have opened their hearts to help those affected by the Haiti earthquake," said IRS Commissioner Doug Shulman." This new law provides an immediate tax benefit for the many taxpayers who have made generous donations."
Taxpayers can benefit from their donations, almost immediately, by filing their 2009 returns early, filing electronically and choosing direct deposit. Refunds take as few as ten days and can be directly deposited into a savings, checking or brokerage account, or used to purchase Series I U.S. savings bonds.
The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.
To get a tax benefit, taxpayers must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.
Taxpayers should be sure their contributions go to qualified charities. Most organizations eligible to receive tax-deductible donations are listed in a searchable online database available on IRS.gov under Search for Charities. Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov. Donors can find out more about organizations helping Haitian earthquake victims from agencies such as USAID.
The IRS reminds donors that contributions to foreign organizations generally are not deductible. IRS Publication 526, Charitable Contributions, provides information on making contributions to charities.
Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution. Publication 526 has further details on the recordkeeping rules for cash contributions.
This year’s special Haiti relief provision is modeled on a 2005 law that, in the wake of the Dec. 26, 2004, Indian Ocean tsunami, allowed taxpayers to deduct donations they made during January 2005 as if they made the donations in 2004.
For more information contact your tax professional.
David C Egan, CPA 718-227-6035
Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.
"Americans have opened their hearts to help those affected by the Haiti earthquake," said IRS Commissioner Doug Shulman." This new law provides an immediate tax benefit for the many taxpayers who have made generous donations."
Taxpayers can benefit from their donations, almost immediately, by filing their 2009 returns early, filing electronically and choosing direct deposit. Refunds take as few as ten days and can be directly deposited into a savings, checking or brokerage account, or used to purchase Series I U.S. savings bonds.
The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.
To get a tax benefit, taxpayers must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.
Taxpayers should be sure their contributions go to qualified charities. Most organizations eligible to receive tax-deductible donations are listed in a searchable online database available on IRS.gov under Search for Charities. Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov. Donors can find out more about organizations helping Haitian earthquake victims from agencies such as USAID.
The IRS reminds donors that contributions to foreign organizations generally are not deductible. IRS Publication 526, Charitable Contributions, provides information on making contributions to charities.
Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution. Publication 526 has further details on the recordkeeping rules for cash contributions.
This year’s special Haiti relief provision is modeled on a 2005 law that, in the wake of the Dec. 26, 2004, Indian Ocean tsunami, allowed taxpayers to deduct donations they made during January 2005 as if they made the donations in 2004.
For more information contact your tax professional.
David C Egan, CPA 718-227-6035
Tuesday, January 26, 2010
8 Reasons to File a Tax Return This Year
Do I have to File a Tax Return?
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive. Check with your local CPA or with the IRS.gov. for specific details that may affect your need to file a tax return with the IRS this year. Even if you don’t have to file, here are eight reasons why you may want to file:
1. Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
2. Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
3. Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
4. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
5. Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
6. Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
7. First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
8. Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.
For more information about filing requirements and your eligibility to receive tax credits, visit David C. Egan, CPA 465 Belfield Avenue, Staten Island, NY 10312
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive. Check with your local CPA or with the IRS.gov. for specific details that may affect your need to file a tax return with the IRS this year. Even if you don’t have to file, here are eight reasons why you may want to file:
1. Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
2. Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
3. Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
4. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
5. Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
6. Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
7. First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
8. Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.
For more information about filing requirements and your eligibility to receive tax credits, visit David C. Egan, CPA 465 Belfield Avenue, Staten Island, NY 10312
Thursday, January 14, 2010
NYS Announces New Tax Amnesty (PAID)
New York State Enacts Tax Amnesty Program:
P.A.I.D. Penalty and Interest Discount
The PAID (Penalty and Interest Discount) program gives taxpayers with older unpaid bills the chance to save up to 80% of the penalty and interest they owe.| To take advantage of the program’s savings, you must make all payments by the program’s expiration date, March 15, 2010. If you don’t pay in full by that date:
|  Video: About the PAID Program |
- You can save:
- 80% of accrued penalty and interest on unpaid bills issued on or before December 31, 2003
- 50% of accrued penalty and interest on unpaid bills issued after December 31, 2003 and on or before December 31, 2006.
- Unpaid tax bills are bad for your credit rating and can lead to liens and other enforcement actions.
- We’re increasing our efforts to collect unpaid bills. If you act now and pay what you owe, you can take advantage of the savings and avoid collection actions.
For more information on this and other State and Local tax matters, please contact your accountant at Goldenthal & Suss CPA's & Consulants PC, at 718-227-6035 0r 212-750-7380.
Friday, January 8, 2010
New Preparer Rules on the Horizon-
The Internal Revenue Service kicked off the 2010 tax filing season today by issuing the results of a landmark six-month study that proposes new registration, testing and continuing education of tax return preparers. With more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.
To bring immediate help to taxpayers this filing season, the IRS also announced a sweeping new effort to reach tax return preparers with enforcement and education. As part of the outreach effort, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.
"As tax season begins, most Americans will turn to tax return preparers to help with one of their biggest financial transactions of the year. The decisions announced today represent a monumental shift in the way the IRS will oversee tax preparers," said IRS Commissioner Doug Shulman. "Our proposals will help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation's tax system. In addition, we are taking immediate action to step up oversight of tax preparers this filing season.”
Based on the results of the Return Preparer Review released today, the IRS recommends a number of steps that it plans to implement for future filing seasons, including:
Currently, anyone may prepare a federal tax return for anyone else and charge a fee. While some preparers are currently licensed by their states or are enrolled to practice before the IRS, many do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.
First Step: Letters to 10,000 Preparers
The initiatives announced today will take several years to fully implement and will not be in effect for the current 2010 tax season. In the meantime, the IRS is taking immediate action to step up oversight of preparers for the 2010 filing season.
Beginning this week, the IRS is sending letters to approximately 10,000 paid tax return preparers nationwide. These preparers are among those with large volumes of specific tax returns where the IRS typically sees frequent errors. The letters are intended to remind preparers to be vigilant in areas where the errors are frequently found, including Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit.
Thousands of the preparers who receive these letters will also be visited by IRS Revenue Agents in the coming weeks to discuss their obligations and responsibilities to prepare accurate tax returns. This is part of a broader initiative by the IRS to step up its efforts to ensure paid tax return preparers are assisting clients appropriately. Separately, the IRS will be conducting other compliance and education visits with return preparers on a variety of issues. This is the second best part. I cant wait for all of the "part-time" tax preparers to meet an IRS agent for the first time. Buy stock in whatever company sells Adult Diapers.
In addition, the IRS will more widely use investigative tools during this filing season aimed at determining tax return preparer non-compliance. One of those tools will include visits to return preparers by IRS agents posing as a taxpayer. Third best part, the IRS should call me. I have a list of preparers they could visit and find a treasure trove of tax fraud.
During this effort, the IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate.
Steps Taxpayers Can Take Now to Find a Preparer
In addition to the stepped-up oversight of preparers, Shulman also announced a new outreach effort to help make sure taxpayers choose a reputable preparer this filing season. That’s particularly important because taxpayers are legally responsible for what is on their tax returns -- even if those returns are prepared by someone else.
“Taxpayers should protect themselves from unscrupulous preparers,” Shulman said. “There are some simple steps people can take to choose a reputable tax preparer.”
Most tax return preparers are professional, honest and provide excellent service to their clients. Shulman offered the following points for taxpayers to keep in mind when selecting a tax return preparer:
Resources for Taxpayers this Filing Season
This filing season, the IRS has many free resources to help taxpayers prepare and file their returns.
IRS.gov has a variety of features to help taxpayers. There’s a special section to help taxpayers get information on a variety of Recovery tax benefits. The web site also has information for people who lost a job or experienced financial problems in 2009.
IRS.gov also has information to help people track their refund.
IRS.gov will once again host the IRS Free File program, which allows virtually everyone to file their taxes for free through the web site. Free File and the rest of the IRS e-file program will open later this month.
More Filing Season Resources Available on IRS.gov
To bring immediate help to taxpayers this filing season, the IRS also announced a sweeping new effort to reach tax return preparers with enforcement and education. As part of the outreach effort, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.
"As tax season begins, most Americans will turn to tax return preparers to help with one of their biggest financial transactions of the year. The decisions announced today represent a monumental shift in the way the IRS will oversee tax preparers," said IRS Commissioner Doug Shulman. "Our proposals will help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation's tax system. In addition, we are taking immediate action to step up oversight of tax preparers this filing season.”
Based on the results of the Return Preparer Review released today, the IRS recommends a number of steps that it plans to implement for future filing seasons, including:
- Requiring all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
- Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
- Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
- Extending the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct. This part is great. Every 4 month facility that calls itself it a tax service, is going to be at risk of loss; Finally legislation that will reduce the amount of inaccurate tax returns prepared.
Currently, anyone may prepare a federal tax return for anyone else and charge a fee. While some preparers are currently licensed by their states or are enrolled to practice before the IRS, many do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.
First Step: Letters to 10,000 Preparers
The initiatives announced today will take several years to fully implement and will not be in effect for the current 2010 tax season. In the meantime, the IRS is taking immediate action to step up oversight of preparers for the 2010 filing season.
Beginning this week, the IRS is sending letters to approximately 10,000 paid tax return preparers nationwide. These preparers are among those with large volumes of specific tax returns where the IRS typically sees frequent errors. The letters are intended to remind preparers to be vigilant in areas where the errors are frequently found, including Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit.
Thousands of the preparers who receive these letters will also be visited by IRS Revenue Agents in the coming weeks to discuss their obligations and responsibilities to prepare accurate tax returns. This is part of a broader initiative by the IRS to step up its efforts to ensure paid tax return preparers are assisting clients appropriately. Separately, the IRS will be conducting other compliance and education visits with return preparers on a variety of issues. This is the second best part. I cant wait for all of the "part-time" tax preparers to meet an IRS agent for the first time. Buy stock in whatever company sells Adult Diapers.
In addition, the IRS will more widely use investigative tools during this filing season aimed at determining tax return preparer non-compliance. One of those tools will include visits to return preparers by IRS agents posing as a taxpayer. Third best part, the IRS should call me. I have a list of preparers they could visit and find a treasure trove of tax fraud.
During this effort, the IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate.
Steps Taxpayers Can Take Now to Find a Preparer
In addition to the stepped-up oversight of preparers, Shulman also announced a new outreach effort to help make sure taxpayers choose a reputable preparer this filing season. That’s particularly important because taxpayers are legally responsible for what is on their tax returns -- even if those returns are prepared by someone else.
“Taxpayers should protect themselves from unscrupulous preparers,” Shulman said. “There are some simple steps people can take to choose a reputable tax preparer.”
Most tax return preparers are professional, honest and provide excellent service to their clients. Shulman offered the following points for taxpayers to keep in mind when selecting a tax return preparer:
- Be wary of tax preparers who claim they can obtain larger refunds than others.
- Avoid tax preparers who base their fees on a percentage of the refund.
- Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around months or years after the return has been filed to answer questions about the preparation of the tax return. - Check the person’s credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
- Find out if the return preparer is affiliated with a professional organization that provides its members with continuing education and other resources and holds them to a code of ethics.
Resources for Taxpayers this Filing Season
This filing season, the IRS has many free resources to help taxpayers prepare and file their returns.
IRS.gov has a variety of features to help taxpayers. There’s a special section to help taxpayers get information on a variety of Recovery tax benefits. The web site also has information for people who lost a job or experienced financial problems in 2009.
IRS.gov also has information to help people track their refund.
IRS.gov will once again host the IRS Free File program, which allows virtually everyone to file their taxes for free through the web site. Free File and the rest of the IRS e-file program will open later this month.
More Filing Season Resources Available on IRS.gov
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