Wednesday, May 22, 2013

IRS Releases 2013 Tax Season Stats

Updated statistics from the IRS show continued growth in e-filing of returns.

So far in 2013, more than 43 million people have self-prepared and e-filed returns from home, an increase of more than four percent compared to the prior year.

Through May 10, the IRS received more than 43.6 million self-prepared e-file returns, up from 41.7 million a year earlier. E-filed returns from tax professionals increased slightly, reaching almost 70.4 million.

In all, almost 114 million tax returns came in through e-file this year, up from 112.1 million at this point last year. Other highlights from the season:

During 2013, the IRS issued more than 101 million refunds worth almost $268 billion.

Almost 80 percent of refunds used direct deposit.

So far in 2013, the IRS Web site has been accessed more than 300 million times, up almost 25 percent compared with the same time last year.


IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication

Keep the Child Care Credit in Mind for Summer



If you are a working parent or look for work this summer, you may need to pay for the care of your child or children. These expenses may qualify for a tax credit that can reduce your federal income taxes. The Child and Dependent Care Tax Credit is available not only while school’s out for summer, but also throughout the year. Here are eight key points the IRS wants you to know about this credit.

1. You must pay for care so you – and your spouse if filing jointly – can work or actively look for work. Your spouse meets this test during any month they are full-time student, or physically or mentally incapable of self-care.

2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There is an exception to this rule for a spouse who is full-time student or who is physically or mentally incapable of self-care.

3. You must pay for the care of one or more qualifying persons. Qualifying children under age 13 who you claim as a dependent meet this test. Your spouse or dependent who lived with you for more than half the year may meet this test if they are physically or mentally incapable of self-care.

4. You may qualify for the credit whether you pay for care at home, at a daycare facility outside the home or at a day camp. If you pay for care in your home, you may be a household employer. For more information, see Publication 926, Household Employer's Tax Guide.

5. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person. It can be up to 35 percent of your expenses, depending on your income.

6. You may use up to $3,000 of the unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying person.

7. Expenses for overnight camps or summer school tutoring do not qualify. You cannot include the cost of care provided by your spouse or a person you can claim as your dependent. If you get dependent care benefits from your employer, special rules apply.

8. Keep your receipts and records to use when you file your 2013 tax return next year. Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

For more details about the rules to claim this credit, see Publication 503, Child and Dependent Care Expenses. You can get both publications at IRS.gov or have them mailed by calling 800-TAX-FORM (800-829-3676).


IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication

Thursday, May 2, 2013

What every student should know about summer jobs and taxes


Planning a summer job during your break from school? That’s great, but keep in mind that you do  have to pay taxes on the money you earn from that job. Here are a few tips about earning money and paying taxes.

• Be sure you fill out Form W-4, Employee’s Withholding Allowance Certificate. Your employer uses this form to determine the amount of tax to withhold from your paycheck. If you have more than one job, you should make sure all your employers are withholding enough taxes to cover your total income tax liability. To ensure your withholding is correct, use the IRS Withholding Calculator on IRS.gov

• When determining how much income to report, include all the money you earned while working. This usually means wages, salaries and tips. 

• In some jobs, like waiting tables, you may receive tips from customers. Tips are considered income, just like your hourly wages. Therefore, you must pay tax on them. This includes tips customers give you directly, tips customers charge on credit cards and your share of the tips you split with your co-workers. For more information about reporting your tips, read Publication 531, Reporting Tip Income. 

• Many students do odd jobs over the summer to make extra cash. Earnings you receive from self-employment, including jobs like babysitting and lawn mowing – are subject to income tax. 

• If you have net income of $400 or more from self-employment, you will have to pay self-employment tax. This pays for your Social Security and Medicare benefits, which are normally paid for by withholding from wages. The self-employment tax is figured on Form 1040, Schedule SE. Net income is the money you earned after any deductions are subtracted, such as business expenses.

• If you are in the ROTC and participated in advanced training, the subsistence allowance you received is not taxable. However, active duty pay, suchas pay received during summer advanced camp, is taxable.

Now that you’re working this summer, you may be wondering whether you’ll have to file a tax return. The answer depends on a number of factors from how much you’re making to whether or not your parents claim you as their dependent. You can read the rules and dollar thresholds in Publication 501, Exemptions, Standard Deduction and Filing Information, or use the IRS interactive tool to find out.


IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication

Getting married this summer? Wedding season is in full swing!


Congratulations! You have tied the knot and cut the cake. Here are some simple steps to make your first, joint- income tax return less stressful.

Step 1

Marriage can mean a change in name. Make sure that the names you enter on your first tax return match the names and Social Security numbers on file with the Social Security Administration. For example, if the wife is taking the husband’s surname, she should file Form SS-5, Application for a Social Security Card, to notify SSA of the change in her name.

Step 2:

No matter when you get married this year, even on Dec. 31, 2013, you are considered to have been married for the entire year for tax purposes. If both you and your spouse work, your combined income may place you in a higher tax bracket. To make sure you are having enough taxes taken out of your paychecks, check your withholding. The IRS Withholding Calculator will help you figure the correct amount of withholding for a married couple. Making a change to your withholding now can eliminate or reduce a tax bill when it’s time to file your tax return. Use Form W-4, Employee’s Withholding Allowance Certificate, to make the needed adjustments and give the form to your employer.

Step 3:

Let the IRS know your new address by completing IRS Form 8822, Change of Address. Mail the completed form to the address listed on Page 2 of this form.

Step 4:

The U.S. postmaster will also want to make sure the post office has your correct address. So, don’t forget to notify U. S. Postal Service when you move, so it can forward any IRS correspondence or refunds.

Step 5: 

Just in case you forgot to invite your employer to the wedding, make sure you let them know about any name and address changes. This will ensure you receive your Form W-2, Wage and Tax Statement, after the end of the year. Make sure banks or other payers that may send you year-end tax statements have your updated name and address as well.

Step 6:

Select the right tax form. Choosing the right individual income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.

Step 7: 

Choose the best filing status. A person’s marital status on Dec. 31 determines whether the person is considered married for that year. Generally, the tax law allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but usually, filing jointly is more beneficial. When it comes to wedding planning, details are important. Why not take these steps now to be sure your first tax season as a married couple goes smoothly as well?


IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication

Perform a Retirement Savings Check-up

Are you on track to save enough to live the way you want to during your retirement? The middle of the year is a good time to check whether you’re taking full advantage of all your retirement savings opportunities because you still have the rest of the year to adjust your contributions.

Employer-sponsored retirement plan

Join the plan - If you haven’t already, join your employer’s retirement plan as soon as you can to increase your retirement savings. Many retirement plans have quarterly or semi-annual entry dates.

Contact your employer immediately to find out when you can participate in the plan, and then join on the next entry date.

Salary deferral contributions - If your employer’s plan allows you to contribute to the plan, remember that you can decrease your taxable income by making pre-tax salary deferral contributions. Many plans allow salary deferral elections to be submitted at anytime, so review your contribution rate to ensure you are contributing as much as you can.

The maximum annual salary deferral contributions allowed for 2013 are:
$17,500 to 401(k) or 403(b) plans
$12,000 to SIMPLE plans

If you are 50 or older by the end of the year, your plan may allow you to make additional catch-up contributions of:

$5,500 to 401(k) or 403(b) plans
$2,500 to SIMPLE plans

Your employer’s plan may match some part of your salary deferral contributions. For example, your employer may contribute 50 cents for each dollar that you contribute to the plan from your salary up to a certain amount. Contact your employer for details and adjust your salary deferrals to take full advantage of matching contributions.

Individual Retirement Arrangements (IRAs)

For 2013, you may be able to contribute to a traditional or Roth IRA the smaller of:
$5,500 ($6,500 if you are age 50 or older), or your taxable compensation for the year.
This is the most that you can contribute, regardless of whether the contributions are to one or more traditional or Roth IRAs or whether all or part of the contributions are nondeductible. Some factors may limit or eliminate your ability to contribute to an IRA (for example, your age, modified adjusted gross income, filing status and amount of compensation). Also, the amount of traditional IRA contributions that you can deduct from your taxable income depends on whether you or your spouse were covered for any part of the year by an employer retirement plan if your income is above certain thresholds. Remember, saving for retirement requires planning! That is why you should periodically review your retirement savings goals, savings options and annual contributions to maximize your retirement savings.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication