by steve | Mar 3, 2012 | Tax News, Uncategorized
IRS offers different tax credits for all kinds of programs. This tax blog will center around the tax credit and retirement savings.
Tax Credits for Retirement Savings
Eligible Contributions
If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you can be eligible for a tax credit, depending on your age and income.
The Savers Credit:
1. Income limits.
The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and 2011 income of:
a. Single, married filing separately, or qualifying widow(er), with income up to $28,250
b. Head of Household with income up to $42,375
c. Married Filing Jointly, with incomes up to $56,500
2. Eligibility requirements for Savers Credit.
To be eligible for the credit you must be at least 18 years of age and you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person’s return. IRS will cross check tax returns for possible audits, so be careful.
3. Credit amount for the Savers Credit.
If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 ($2,000 if filing jointly). The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.
4. Distributions.
When figuring this credit, you must subtract distributions you received from your retirement plans from the contributions you made.
This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date including extensions for filing the return for the credit year.
5. Other tax benefits.
The Retirement Savings Contributions Credit is in addition to other tax benefits you may receive for retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.
6. Forms.
To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions.
For questions, call us today.
by steve | Feb 9, 2012 | IRS Tax Advice, Tax News, Uncategorized
Each year Tax Law changes are made and in many cases help the taxpayers. Before filing your tax return check on any and all changes that may effect your tax return.
Stay out of a IRS tax audit and by all means take advantage of all tax credits.
Should you have any questions, call us today. As former IRS Agents we can help navigate you through this process
Tax Law Changes for 2011 Federal Tax Returns
Due date of return.
You can file your federal tax return by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia. Thanks DC!
New forms.
In most cases, you must report your capital gains and losses on the new Form 8949, Sales and Other Dispositions of Capital Assets. Then, you report certain totals from that form on Schedule D (Form 1040). If you had foreign financial assets in 2011, you may have to file the new Form 8938, Statement of Foreign Financial Assets, with your return.
Standard mileage rates.
The 2011 rates for mileage are different for January 1 through June 30 than for July 1 through December 31. For business use of your car, you can deduct 51 cents a mile for miles driven the first half of the year and 55 ½ cents for the second half. Medical and moving mileage are both 19 cents per mile for the early half of the year and 23 ½ cents in the latter half.
Standard deduction and exemptions increased, finally!!!
The standard deduction increased for some taxpayers who do not itemize deductions on IRS Schedule A (Form 1040). The amount depends on your filing status.
The amount you can deduct for each exemption has increased $50 to $3,700 for 2011.
Self-employed health insurance deduction. This deduction is no longer allowed on Schedule SE (Form 1040), but you can still take it on Form 1040, line 29.
Alternative minimum tax (AMT)
This years exemption amount increased. The AMT exemption amount has increased to $48,450 ($74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately).
Health savings accounts (HSAs) and Archer MSAs.
The additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses increased to 20 percent. Beginning in 2011, only prescribed drugs or insulin are qualified medical expenses.
Roth IRAs.
If you converted or rolled over an amount from a traditional IRA to a Roth IRA or designated Roth in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.
Alternative motor vehicle credit.
This year you can claim the alternative motor vehicle credit for a 2011 purchase only if the vehicle is a new fuel cell motor vehicle.
First-time homebuyer credit.
The credit expired for most taxpayers for 2011. Sadly!
Some military personnel and members of the intelligence community can still claim the credit in 2011 for qualified purchases.
Health coverage tax credit.
Recent legislation changed the amount of this credit, which pays qualified health insurance premiums for eligible individuals and their families. Participants who received the 65 percent tax credit in any month from March to December 2011 may claim an additional 7.5 percent retroactive credit when they file their 2011 tax return.
Should you need tax help or tax preparation by Former IRS agents call us today.
by steve | Feb 6, 2012 | Tax Help, Uncategorized
Did you recently change your name?
Here are some tax tips to help you through the process.
Tips for Recently Married, Divorced Taxpayers or others who recently had a Name Change
If you changed your name after a recent marriage or divorce, the IRS reminds you to take the necessary steps to ensure the name on your tax return matches the name registered with the Social Security Administration. A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of your return and may even delay your refund.
Here are tips from the IRS for recently married, divorced taxpayers or other individuals who have a name change.
1. Hyphenated Names – If you took your spouse’s last name — or if you hyphenated your last names, you may run into complications if you don’t notify the SSA.
When newlyweds file a tax return using their new last names, IRS computers cannot match the new name with their Social Security number.
2. If you recently divorced and changed back to your previous last name, you’ll also need to notify the SSA of this name change.
3. Informing the SSA of a name change is easy. Simply file a Form SS-5, Application for a Social Security Card, at your local SSA office or by mail and provide a recently issued document as proof of your legal name change.
4. Form SS-5 is available on SSA’s website at http://www.socialsecurity.gov/, by calling 800-772-1213 or at local offices.
Your new card will have the same number as your previous card, but will show your new name.
5. If you adopted your spouse’s children after getting married and their names changed, you’ll need to update their names with SSA too. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number – or ATIN – by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions with the IRS.
The ATIN is a temporary number used in place of an SSN on the tax return. Form W-7A is available on the IRS.gov website or by calling 800-TAX-FORM (800-829-3676).
by steve | Jan 24, 2012 | Tax Help, Uncategorized
If you are a victim of a tax scam you can call us today to get tax relief. We are former IRS agents who know every trick in the book and can find a way to help you.
Here are some tax tips about tax scams.
The Internal Revenue Service receives thousands of reports each year from taxpayers who receive suspicious emails, phone calls, faxes or notices claiming to be from the IRS. Many of these scams fraudulently use the IRS name or logo as a lure to make the communication appear more authentic and enticing. The goal of these scams – known as phishing – is to trick you into revealing your personal and financial information.
The scammers can then use your information – like your Social Security number, bank account or credit card numbers – to commit identity theft or steal your money.
Here are five things the IRS wants you to know about phishing scams from IRS.
1. The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts.
2. The IRS does not initiate contact with taxpayers by email to request personal or financial information. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site:
• Do not reply to the message.
• Do not open any attachments. Attachments may contain malicious code that will infect your computer.
• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing website and entered confidential information, visit the IRS website and enter the search term ‘identity theft’ for more information and resources to help.
3. The address of the official IRS website is www.irs.gov. Do not be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on the suspicious site and report it to the IRS.
4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence. You can forward a suspicious email to phishing@irs.gov. Help all taxpayers and report them today.
5. You can help the IRS shut down these schemes and prevent others from being victimized. Details on how to report specific types of scams and what to do if you’ve been victimized are available at www.irs.gov. Click on “phishing” on the home page.
Do not be a victim!!!
by steve | Jan 24, 2012 | Tax Help, Uncategorized
Interesting Tax Fact about IRS Tax Returns
The IRS corrected 10.6 million “mathematical errors” in taxpayers’ returns in 2010, more than double the 4 million it corrected in 2005, the report said.
But the IRS itself made mistakes – out of 300,000 returns on which it disallowed exemptions for dependent children, it had to restore the exemption just over half the time.
The odds of a tax audit, 1.1%
by steve | Jan 24, 2012 | Tax Help, Uncategorized
You would be shocked on the amount of taxpayers that file the incorrect filing status.
Thousands of taxpayers get audited because they incorrectly file the wrong filing status.
This is an immediate trigger for the IRS. As a result the rest of their tax return get audited.
This is How Determine Your Correct Filing Status for IRS purposes:
Determining your filing status is one of the first steps to filing your federal income tax return.
There are five filing statuses:
1.Single,
2.Married Filing Jointly,
3.Married Filing Separately,
4.Head of Household and
5.Qualifying Widow(er) with Dependent Child.
Your IRS filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax.
You can qualify for more than one filing status.
Here are eight facts about filing status that the IRS wants you to know so you can choose the best option for your situation.
1. Your marital status on the last day of the year determines your marital status for the entire year.
2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
3. Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
4. A married couple may file a joint return together.
The couple’s filing status would be Married Filing Jointly.
5. If your spouse died ( sorry to hear ) during the year and you did not remarry during 2011, usually you may still file a joint return with that spouse for the year of death.
6. A married couple may elect to file their returns separately.
Each person’s filing status would generally be Married Filing Separately.
7. Head of Household generally applies to taxpayers who are unmarried.
You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2009 or 2010, you have a dependent child, have not remarried and you meet certain other conditions.
