Wednesday, October 22, 2014

ARE YOU READY TO RECONCILE?

Calculating the ACA’s new Premium Assistance Tax Credit is No Simple Task

If your idea of a good time is a new tax credit that works differently from other credits, that’s calculated per person and per month, and will likely cause the filing season to start late and end early, then 2015 is the year you have been waiting for. Welcome to the Premium Assistance Tax Credit (PATC), compliments of the Affordable Care Act.

The PATC is a complicated new credit based on a number of new concepts that is calculated and reported on new IRS form 8962. The purpose of this post is to give a general overview of the credit and bring awareness to its complexity so that you will be on the lookout for new information as it is released.






 One way the Premium Assistance Tax Credit is different from other credits is that it could produce either positive or negative results for clients. While credits generally benefit a taxpayer, the PATC could require repayment which would cost the taxpayer money and lower their refund or increase their balance due.

Another way the Premium Assistance Tax Credit is different from other credits is that it doesn’t necessarily begin on the tax return; it can begin in the government-run health insurance exchanges, like www.HealthCare.gov, long before the return is filed.

The Affordable Care Act mandate that every American has health insurance at all times sets the standard for minimum essential health insurance coverage and puts limits on the dollar amount individuals and families pay for health insurance. In general terms, when the cost of a heath insurance plan is higher than the government limit, the Premium Assistance Tax Credit can kick in to cover the difference.

For example, if the cost of a desired health insurance plan is $750/month but ACA standards limit the taxpayer’s cost to $500/month, the Federal Government subsidizes the taxpayer by making a payment of $250/month directly to the insurance company on behalf of the taxpayer. When the credit works this way and is paid in advance of the tax filing, it is known as an Advance PATC.

Advance PATC subsidies are calculated when the insurance is purchased and are based on assumptions made by the taxpayer at the time of purchase, like expected household income and family size. However, for many taxpayers, these assumptions will change during the tax year and create a discrepancy between subsidies paid and subsidies allowed. Starting next year taxpayers will be required to reconcile the advance payment assumptions with what actually happened during the tax year and calculate a new PATC amount. If the taxpayer has not received the full amount of eligible PATC in advance, he or she can claim it as a refundable credit when the 1040 is filed. 

However, if the amount of advance PATC is greater than the eligible PATC amount, the taxpayer must repay the overage, requiring them to return money they never actually received.

In addition, taxpayers who did not originally qualify for the Advance PATC, did not take the Advance PATC, or who claimed less than the full amount allowed, but qualify after the reconciliation, can claim the PATC as a refundable credit on Form 1040, line 69.

Information required to reconcile the Advance PATC will be provided on new IRS form 1095-A, Health Insurance Marketplace Statement. This statement, similar to the 1099 series of forms, will be issued by the Health Insurance Marketplaces for each policy purchased through a marketplace and must be sent to taxpayers on or before January 31, 2015 for tax year 2014. It will show the assumptions made when purchasing health insurance and provide a basis for the PATC reconciliation.

While this will affect every taxpayer who purchased insurance through the Marketplaces, it could hit lower-income taxpayers with simpler returns disproportionably hard. For starters, they may not be able to file as early as usual while they wait for their 1095 to arrive in the mail. In addition, the PATC reconciliation is a complicated series of new forms and cannot be taken on the 1040EZ so their tax prep bill is likely to rise.

*Finally, according to IRS attorney Kim Koch, taxpayers who do not complete the PATC reconciliation in 2015 will not be eligible for subsidized health insurance in 2016. Since IRS currently plans to verify the reconciliations in September, that could turn a traditional 6-month extension into something less. Keep that in mind when planning your workload for the fall.
To see the new PATC forms, including new forms 8962, 8965 & 1095, check out the IRS draft forms here: http://apps.irs.gov/app/picklist/list/draftTaxForms.html .

Lower Tax Refunds?

ACA Credits Could Mean Lower Tax Refunds

The Affordable Care Act (ACA) is already proving to be confusing and costly for consumers, with widespread premium increases and plan cancellations. Now, the Centers for Medicare and Medicaid Services (CMS) is warning tax preparers that their clients could face lower refunds in the coming tax season due to excessive tax credits on their 2013 returns.

CMS initially accepted the consumer’s estimates of income and other data, but subsequently verified that data through independent sources. That process revealed some 1.2 million households with income-related data mismatches, and another 966,000 individuals with citizenship or immigration data matching issues, as of May 30th.
 



It is a situation that will require more work on the part of preparers, helping their customers understand and accept lower refunds as appropriate for this year. How the preparers will handle the costs of such additional services will be left to the discretion of each preparer.


The tax credits are paid directly to the insurer if taken in advance, and are capped so that the insurance is affordable for all consumers. The cap is based on household income, ranging from $300 to $1,250 for some single taxpayers and $600 to $2,500 for married taxpayers.

Premium tax credits are available to individuals and families with incomes between 100% of the federal poverty line ($23,550 for a family of four this year) and 400% of the federal poverty line ($94,200 for a family of four) who purchase coverage in the health insurance marketplace in their state. Incomes at 400% or more above the poverty line have no cap and the taxpayer must pay the full amount of the credit.

The problem occurs, according to IRS Publication 5152, because consumers do not update their data to reflect life changes. These changes include a move, an increase or decrease in income, a marriage or divorce, the birth or adoption of a child, incarceration or release from incarceration, starting a job that offers health insurance and whether eligibility for other health care coverage was lost or gained.
The IRS has now closed 85 percent of the immigration and citizenship data issues, and is working to resolve the remaining 115,000 cases. Likewise, there are some 279,000 families with unresolved income issues. Letters have been mailed to these in English and Spanish, requesting supporting documentation.

Tax preparers can find information they need at DrakeHealth, which provides a referral service for preparers and their customers and a variety of cost calculators for healthcare. An overview of the ACA is availablehttp://drake.ws/resources/resources/affordable_care_act.php here. And a range of useful IRS notices can be found at the Taxing Subjects blog.


Sources: Internal Revenue Service Premium Tax Credit at http://www.irs.gov/pub/irs-pdf/p5152.pdf; Centers for Medicare and Medicaid Services at http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2014-Press-releases-items/2014-09-15.html.

2015 PTINs Due Before Dec 31

Any person who prepares, or assists in preparing, a tax return must renew their Preparer Tax Identification Number (PTIN). This includes CPAs and Enrolled Agents as well as independent preparers.

All PTINs expire on Dec. 31 and must be renewed annually. The renewal fee is $63 online at www.IRS.gov/ptin, and new PTIN numbers are $64.25.

Keep up to date by following the IRS Return Preparer Office on Facebook. Click on “Ways to Stay Informed” at www.irs.gov/for-Tax-Pros for the link, along with other tools for staying connected.

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Source: Internal Revenue Service

Wednesday, July 2, 2014

What to do if You Get a Notice from the IRS

IRS Summertime Tax Tip 2014-01

Each year the IRS mails millions of notices. Here’s what you should do if you receive a notice from the IRS:

1. Don’t ignore it. You can respond to most IRS notices quickly and easily. And it’s important that you reply promptly. 

2. IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information.

3. Read it carefully and follow the instructions about what you need to do.

4. If it says that the IRS corrected your tax return, review the information in the notice and compare it to your tax return.

If you agree, you don’t need to reply unless a payment is due.

If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.

5. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. Make sure you have a copy of your tax return and the notice with you when you call.

6. Keep copies of any notices you get from the IRS.

7. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not contact taxpayers by email, text or social media about their tax return or tax account.

For more on this topic visit IRS.gov. Click on ‘Responding to a Notice’ at the bottom left of the home page. Also see Publication 594, The IRS Collection Process. You can get it on IRS.gov or call 800-TAX-FORM (800-829-3676) to get it by mail.


Additional IRS Resources:

IRS YouTube Videos:

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Got a tax question? 

Email:

NGO.TRUNG.EA2011@gmail.com

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

Monday, June 30, 2014

IRS Revenue Procedure 2014-42

The IRS has just released revenue procedure 2014-42 with regards to their Annual Filing Season Program (AFSP).

Here's the link:

http://www.irs.gov/pub/irs-drop/rp-14-42.pdf

According to IRS commissioner, "This voluntary program will be a step to help protect taxpayers during the 2015 filing season."

Did they (the IRS) really think about protecting taxpayers? No way! How about those who will not volunteer to this program? Bottom line, this will confuse taxpayers more than before.

The IRS need to make up their minds about regulated tax return preparers. In my opinion, this voluntary program is very confusing for credentialed tax preparers including attorney, CPAs, and EAs.

On a positive note, this voluntary program concentrates mainly on continuing education. Which, is a good things, since we all need to be updated with our complex tax laws.

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Got a tax question? 

Email:

NGO.TRUNG.EA2011@gmail.com


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

Saturday, June 28, 2014

Taxpayer Bill of Rights

It's about time the IRS adopt this Taxpayer's Bill of Rights....

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Explore your rights and our obligations to protect them.

The Right to Be Informed
The Right to Quality Service
The Right to Pay No More than the Correct Amount of Tax
The Right to Challenge the IRS’s Position and Be Heard
The Right to Appeal an IRS Decision in an Independent Forum
The Right to Finality
The Right to Privacy
The Right to Confidentiality
The Right to Retain Representation
The Right to a Fair and Just Tax System


The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

The Right to Quality Service

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

The Right to Pay No More than the Correct Amount of Tax

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

The Right to Challenge the IRS’s Position and Be Heard

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

The Right to Finality

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

The Right to Privacy

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

The Right to Retain Representation

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

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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

IRS Nationwide Tax Forums are Right Around the Corner

Summertime is here, so the IRS Nationwide Tax Forums are right around the corner.  For many tax professionals, the Forums are an affordable way to stay up-to-date on tax law changes and earn continuing education credits.  Here’s a summary of what to expect and a few tips to help you get the most out of your Forum experience.

There are five Forums this year, starting in Chicago (July 1-3) and ending in Orlando (August 26-28).  Stops in between are San Diego (July 15-17), New Orleans (July 22-24) and Washington, DC (August 19-21). 

The main draw for most participants is continuing education, and those attending every session over the three day period can earn 18 credits.  There is also a keynote address and a plenary session, usually featuring a high-ranking IRS official.  Currently, new IRS commissioner John Koskinen is scheduled to give the keynote speech at the Chicago Forum.
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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

Friday, June 27, 2014

Get Credit for Child and Dependent Care This Summer

IRS Special Edition Tax Tip 2014-16, June 11, 2014

Many parents pay for childcare or day camps in the summer while they work. If this applies to you, your costs may qualify for a federal tax credit that can lower your taxes. Here are 10 facts that you should know about the Child and Dependent Care Credit:
  1. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 usually qualify. For more about this rule see Publication 503, Child and Dependent Care Expenses.

  2. Your expenses for care must be work-related. This means that you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they’re physically or mentally incapable of self-care.

  3. You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care. This rule also applies to you if you file a joint return. Refer to Publication 503 for more details.

  4. As a rule, if you’re married you must file a joint return to take the credit. But this rule doesn’t apply if you’re legally separated or if you and your spouse live apart.

  5. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.

  6. The credit is a percentage of the qualified expenses you pay. It can be as much as 35 percent of your expenses, depending on your income.

  7. The total expense that you can use for the credit in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.

  8. Overnight camp or summer school tutoring costs do not qualify. You can’t include the cost of care provided by your spouse or your child who is under age 19 at the end of the year. You also cannot count the cost of care given by a person you can claim as your dependent. Special rules apply if you get dependent care benefits from your employer.

  9. Keep all your receipts and records. 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 tax return.

  10. Remember that this credit is not just a summer tax benefit. You may be able to claim it for care you pay for throughout the year.
For more on this topic, see Publication 503 on IRS.gov. You can also call 800-TAX-FORM (800-829-3676) to have it mailed to you.
Additional IRS Resources:
IRS YouTube Videos:
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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 Your Records Safe in Case Disaster Strikes

IRS Special Edition Tax Tip 2014-15, June 5, 2014

Some natural disasters are more common in the summer. But major events like hurricanes, tornadoes and fires can strike any time. It’s a good idea to plan for what to do in case of a disaster. You can help make your recovery easier by keeping your tax and financial records safe. Here are some basic steps you can take now to prepare:
  1. Backup Records Electronically.  Many people receive bank statements by email. This is a good way to secure your records. You can also scan tax records and insurance policies onto an electronic format. You can use an external hard drive, CD or DVD to store important records. Be sure you back up your files and keep them in a safe place. If a disaster strikes your home, it may also affect a wide area. If that happens you may not be able to retrieve your records.

  2. Document Valuables.  Take photos or videos of the contents of your home or business. These visual records can help you prove the value of your lost items. They may help with insurance claims or casualty loss deductions on your tax return. You should store them with a friend or relative who lives out of the area.

  3. Update Emergency Plans.  Review your emergency plans every year. Update them when your situation changes. Make sure you have a way to get severe weather information. Have a plan for what to do if threatening weather approaches.

  4. Get Copies of Tax Returns or Transcripts.  Visit IRS.gov to get Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns. If you just need information from your return, you can order a free transcript online or by calling 800-908-9946. You can also file Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return.

  5. Count on the IRS.  If you fall victim to a disaster, know that the IRS stands ready to help. You can call the IRS disaster hotline at 866-562-5227 for special help with disaster-related tax issues.
Visit IRS.gov to get more about IRS disaster assistance. Click on the ‘Disaster Relief’ link in the lower left of the home page. You can also get forms and publications anytime on IRS.gov. To get them in the mail, call 800-TAX-FORM (800-829-3676).
Additional IRS Resources:
IRS YouTube Videos:
IRS Podcasts:
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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, June 26, 2014

New IRS Filing Season Program Unveiled for Tax Return Preparers

Voluntary program to focus on continuing education for unenrolled preparers

The Internal Revenue Service announced today that guidance will soon be issued outlining a new voluntary program designed to encourage education and filing season readiness for paid tax return preparers. The program will be in place to help taxpayers during the 2015 filing season.

The Annual Filing Season Program will allow unenrolled return preparers to obtain a record of completion when they voluntarily complete a required amount of continuing education (CE), including a course in basic tax filing issues and updates, ethics, and other federal tax law courses.

"This voluntary program will be a step to help protect taxpayers during the 2015 filing season,” said IRS Commissioner John Koskinen. “About 60 percent of tax return preparers operate without any type of oversight or education requirements. Our program will give unenrolled return preparers a way to stay to up-to-date on tax laws and changes, which we believe will improve service to taxpayers.”

Tax return preparers who elect to participate in the program and receive a record of completion from the IRS will be included in a database on IRS.gov that will be available by January 2015 to help taxpayers determine return preparer qualifications.

The database will also contain information about practitioners with recognized credentials and higher levels of qualification and practice rights. These include attorneys, certified public accountants (CPAs), enrolled agents, enrolled retirement plan agents (ERPAs) and enrolled actuaries who are registered with the IRS.

“It’s also important to note this program is not to replace the important tax work done by certified public accountants, enrolled agents and attorneys,” Koskinen said. “Tax professionals with recognized credentials will be publicly listed on IRS.gov, and we plan to help inform taxpayers about the professional options available.”

Anyone who prepares all, or substantially all, of any federal tax return or refund claim for compensation is required to obtain a preparer tax identification number (PTIN). The pending guidance will also explain that tax return preparers with a valid PTIN who do not obtain a record of completion as part of the Annual Filing Season Program, or are not an attorney, CPA, enrolled agent, ERPA, or enrolled actuary, may still prepare tax returns, but will not be included in the public directory.

In 2011, the Treasury Department and the IRS issued regulations that mandated testing and CE for paid tax return preparers and created a Registered Tax Return Preparer (RTRP) credential. The RTRP designation was for preparers with valid PTINs, who passed an IRS competency test and completed 15 hours of CE.

Earlier this year, the Court of Appeals for the D.C. Circuit upheld the lower court’s determination that the IRS regulations from 2011 mandating competency testing and CE for paid tax return preparers were invalid. The IRS continues to believe regulation of paid tax return preparers is important for the proper functioning of the U.S. tax system. To that end, the Administration’s Fiscal Year 2015 Budget includes a proposal to explicitly authorize the IRS to regulate all paid tax return preparers.

Prior to the 2013 court decision, over 62,000 return preparers passed an IRS-administered competency test and completed the requirements to become Registered Tax Return Preparers. The Annual Filing Season Program will exempt RTPRs and others who have successfully completed certain recognized national or state tests from the filing season refresher course that will be required for other participants.

The Annual Filing Season Program will be an interim step to help taxpayers and encourage education for unenrolled tax return preparers. The IRS will assess the feasibility of administering a uniform voluntary examination in future years in order to ensure basic return preparer competency.

Annual Filing Season Program – Record of Completion Requirements

In general, non-exempt return preparers with a valid PTIN for the program year will need to complete 18 hours of CE annually from IRS-approved CE providers to obtain an IRS record of completion. The hours will need to include:

  • 6 hours of federal tax filing season refresher course (with a required comprehension test at completion)
  • 10 hours of federal tax law topics
  • 2 hours of ethics

For the first year, a transition rule will apply to prorate the required hours. For a return preparer to obtain a record of completion for the 2015 filing season, a total of 11 hours will need to be earned in 2014, including the six hour refresher course, three hours of other federal tax law topics, and two hours of ethics.

Once the official guidance is issued, IRS-approved CE providers will begin to offer qualifying federal tax filing season refresher courses. A list of all IRS-approved CE providers is available and includes a new column to indicate which providers are planning to offer the qualifying courses. The list is updated daily. For 2015, qualifying courses will be offered through December 31, 2014.

The IRS will begin issuing records of completion to those who have met the requirements in mid-October 2014 after the 2015 PTIN renewal season starts.

Consent to Circular 230 restrictions

As a prerequisite to receiving a record of completion, an individual will be required to consent to the duties and restrictions relating to practice before the IRS in subpart B and section 10.51 of Treasury Department Circular No. 230.

Modification to limited practice permissions

The pending guidance will also announce that effective for tax returns and claims for refunds prepared or signed after December 31, 2015, only unenrolled tax return preparers who have a record of completion under the Annual Filing Season Program for the calendar year of preparation and the calendar year of representation will be permitted to represent taxpayers before the IRS during an examination of a return that they signed or prepared. 

Attorneys, CPAs, and enrolled agents will continue to have unlimited representation rights and can represent clients before any office of the 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


Sunday, April 27, 2014

Thank you for a wonderful 2014 tax season

I had a wonderful tax season and I want to thank everyone for their help. I look forward to next season. 

Thursday, March 20, 2014

10 Tips For Staying Sane During Tax Season

 It’s now halfway through tax season, and you’ve already filed more returns than last year at this time.  Customers are lined up out the door, workflow is dragging, and the stress is mounting. 
It doesn’t help that you have been through this for many years.  In 2014, the requirements are greater than ever before.  Between the certification controversy, the Affordable Care Act, requirements for security of client data and increasing competition, tax prepares continue to face new challenges in this ever-changing industry. 

And the stress can harm you.  Anxiety attacks, heart attacks, vision and hearing problems, and even suicide rates show a measurable increase during tax season. 
But there are ways to keep your sanity during the season.  Here are 10 ideas for staying healthy and sane until after April 15: 
  • Eat Healthy.  The two worst habits during tax season are skipping meals and eating high-fat, high-sugar fast food.  Remember that 28 million Americans are diabetic, and 7 million of those do not know it, according to the National Diabetes Education Program.  Another 78 million Americans are considered pre-diabetic.  This means that control of blood sugar becomes critical in times of stress such as tax season.  Keep fruits and nuts on hand for snacks, and focus on meals that balance protein with vegetables.  By keeping meals healthy, tax preparers can avoid the peaks and valleys of blood sugar, eliminating the fast sugar burn and crash typical of unhealthy eating.
  • Drink water.  Sounds silly, but the best thing you can drink is plain old water.  It keeps you hydrated, but avoids the caffeine and other additives in coffee and tea.  It also avoids the high levels of sugar in sodas, while helping to fight off daytime fatigue.  At all costs, avoid drinking alcohol during tax season.  A single alcoholic drink in the evening disrupts sleep patterns sufficiently to keep you fatigued through the following day.
  • Use ergonomic furniture and equipment.  Remember that a comfortable desk chair is the single most important piece of office equipment you can own.  Invest in a good one, and replace it any time it stops being comfortable.  Make sure you have the right height of desk chair, so that your feet rest comfortably on the floor and your arms are at the right angle for the keyboard. 
  • Get up and move every 30 minutes.  The issue is not just a sedentary lifestyle, but rather stimulation of the spinal cord and brain.  Sitting for hours on end, preparing and approving returns, decreases stimulation to the brain.  Move every 30 minutes to keep sharp.
  • Use your biorhythms to your advantage.  Everyone has a different sleep/work schedule that is “wired” into their bodies.  Some people work best from 9-5, while others work better at night.  Some people work straight through a 7-hour shift, while others need frequent breaks.  And in truth, the biorhythm rules apply to everyone in the office, including the owners.  Learn what your optimal work schedule is, and tailor your day around it. 
These are, of course, the five tough ones.  They require some lifestyle changes and some introspection that may not be easy in the midst of tax season.  So let’s also consider the five “easy” fixes to de-stress at this point:
  • Use a Task List.  I favor the daily “big three, little three” list of six items.  First, prioritize the top three things you need to accomplish today.  The bottom three are things you can get done if you have time, but could also be put off to another day.  And here’s another management technique that may help – “management by ignoring it.”  Many problems resolve themselves within 24 hours with no action at all from you.  It is perfectly all right to put the problem on the top left corner of your desk and ignore it.  If it has not resolved itself in 24 hours, deal with it then.
  • Make time for yourself.  Every day, take at least one hour for yourself, to do something you want to do – watch March Madness, read, go out to breakfast, or just take a nap.  Whatever it is that you do, do it for yourself.  In addition, take half a day each week to spend with your family.  It may seem impossible, but it is not.
  • Check in with your doctor…three times.  The first is a general checkup prior to tax season (you did this, right?), just to make sure there are no problems lurking that could sideline you in the middle of the season.  Remember that you are the single most important person in the office – if anything happens to you, the whole firm and your future suffer.  Get a general physical before tax season.  Then, a quick check-up halfway through the season.  Finally, check in with your doctor to see where you stand at season’s end. 
  • Laugh. Watch a funny YouTube video or read some tweets from your favorite comedian – do something to make yourself laugh.   Laughter breaks tension and relieves stress.  It takes your mind off of that stack of returns on your desk, the 20 emails you need to respond to and the four voicemails you haven’t listened to yet.  And the best part is that you’ll be in a more positive frame of mind when you dive back into your work.
  • Be imperfect.  The customer is not always right, and neither are you.  By admitting that you can make a mistake, you take the stress out of the worst situations.  Bear in mind what we teach our children about mistakes – when you make one, admit it.  Then apologize for it.  Then fix it if you can.  Then forget it and move on.  Your staff and customers will appreciate your honesty and integrity, and will only think more highly of you. 
Simple?  Not always.  But you can survive the stress of tax season and end the busy season with your heart and soul intact.  These 10 tips will help.

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

IRS Has $760 Million for People Who Have Not Filed a 2010 Income Tax Return

IR-2014-30, March 19, 2014

Refunds totaling almost $760 million may be waiting for an estimated 918,600 taxpayers who did not file a federal income tax return for 2010, the Internal Revenue Service announced today. However, to collect the money, a return for 2010 must be filed with the IRS no later than Tuesday, April 15, 2014.

"The window is quickly closing for people who are owed refunds from 2010 who haven't filed a tax return," said IRS Commissioner John Koskinen. "We encourage students, part-time workers and others who haven't filed for 2010 to look into this before time runs out on April 15."
The IRS estimates that half the potential refunds for 2010 are more than $571.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2010 returns, the window closes on April 15, 2014. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2010 refund that their checks may be held if they have not filed tax returns for 2011 and 2012. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than just their refund of taxes withheld or paid during 2010. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2010, the credit is worth as much as $5,666. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2010 were:
  • $43,352 ($48,362 if married filing jointly) for those with three or more qualifying children,
  • $40,363 ($45,373 if married filing jointly) for people with two qualifying children,
  • $35,535 ($40,545 if married filing jointly) for those with one qualifying child, and
  • $13,460 ($18,470 if married filing jointly) for people without qualifying children.
Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2010, 2011 or 2012 should request copies from their employer, bank or other payer.

If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by going to IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.

Individuals who did not file a 2010 return with a potential refund:

State or District
Estimated
Number of
Individuals
Median
Potential
Refund
Total
Potential
Refunds*

Alabama
15,700
$574
$12,473,000
Alaska
4,700
$649
$4,810,000
Arizona
23,800
$508
$17,517,000
Arkansas
8,400
$562
$6,667,000
California
86,500
$519
$69,752,000
Colorado
17,100
$567
$14,061,000
Connecticut
11,700
$620
$10,304,000
Delaware
3,800
$573
$3,126,000
District of Columbia
3,500
$604
$3,080,000
Florida
56,800
$593
$48,407,000
Georgia
28,400
$539
$22,504,000
Hawaii
6,200
$586
$5,413,000
Idaho
3,500
$490
$2,604,000
Illinois
37,900
$626
$32,696,000
Indiana
19,600
$570
$15,478,000
Iowa
9,200
$576
$7,050,000
Kansas
9,300
$522
$6,986,000
Kentucky
11,500
$576
$8,975,000
Louisiana
17,500
$603
$15,579,000
Maine
3,500
$502
$2,373,000
Maryland
20,700
$575
$18,002,000
Massachusetts
21,000
$560
$17,856,000
Michigan
29,200
$597
$24,259,000
Minnesota
12,700
$516
$9,582,000
Mississippi
8,500
$556
$6,769,000
Missouri
17,900
$514
$13,153,000
Montana
2,900
$534
$2,338,000
Nebraska
4,500
$528
$3,368,000
Nevada
11,400
$570
$9,156,000
New Hampshire
3,800
$602
$3,245,000
New Jersey
29,500
$639
$26,712,000
New Mexico
7,200
$572
$5,915,000
New York
57,400
$623
$50,543,000
North Carolina
24,300
$494
$17,538,000
North Dakota
1,900
$600
$1,551,000
Ohio
32,100
$560
$24,508,000
Oklahoma
15,100
$585
$12,246,000
Oregon
14,300
$519
$10,359,000
Pennsylvania
37,400
$614
$31,009,000
Rhode Island
3,000
$598
$2,472,000
South Carolina
10,200
$532
$7,756,000
South Dakota
2,100
$558
$1,605,000
Tennessee
16,300
$559
$12,839,000
Texas
80,600
$588
$71,998,000
Utah
6,100
$518
$4,705,000
Vermont
1,600
$519
$1,136,000
Virginia
26,300
$568
$22,376,000
Washington
24,800
$640
$23,033,000
West Virginia
4,100
$626
$3,534,000
Wisconsin
10,900
$516
$8,423,000
Wyoming
2,200
$648
$2,045,000
Totals
918,600
$571
$759,889,000
                    
                                  * Excluding the Earned Income Tax Credit and other credits.

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

IRS Warns of Pervasive Telephone Scam

IR-2013-84, Oct. 31, 2013

The Internal Revenue Service today warned consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country.

Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.

“This scam has hit taxpayers in nearly every state in the country.  We want to educate taxpayers so they can help protect themselves.  Rest assured, we do not and will not ask for credit card numbers over the phone, nor request a pre-paid debit card or wire transfer,” says IRS Acting Commissioner Danny Werfel. “If someone unexpectedly calls claiming to be from the IRS and threatens police arrest, deportation or license revocation if you don’t pay immediately, that is a sign that it really isn’t the IRS calling.” Werfel noted that the first IRS contact with taxpayers on a tax issue is likely to occur via mail

Other characteristics of this scam include:
  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.
If you get a phone call from someone claiming to be from the IRS, here’s what you should do:
  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.
  • If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
  • If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov.  Please add "IRS Telephone Scam" to the comments of your complaint.
Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes) and solicitations (such as debt relief) that fraudulently claim to be from the IRS.

The IRS encourages taxpayers to be vigilant against phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to phishing@irs.gov.

More information on how to report phishing scams involving the IRS is available on the genuine IRS website, IRS.gov.

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

Tuesday, March 18, 2014

Tax Preparers Assaulted, Shot at This Season

This is some serious situations, and this season is turning dangerous for tax preparers, according to published reports.

Please read the following:

Chicago Heights, Ill.: In mid-February a Liberty Tax preparer pulled a gun on a customer’s boyfriend who police said threatened to beat him up during a dispute over fees. The boyfriend, 34, has reportedly been charged with assault after confronting the preparer over $500 in additional fees that the girlfriend was charged for her return. Police told reporters the preparer, 45, had a valid firearm owner’s ID.

Kirkwood, Mo.: A 53-year-old local man is accused of choking an H&R Block worker earlier this month after reportedly becoming enraged about his “tax situation.” Police told news outlets that the assailant knocked the Block employee to the ground and is now charged with misdemeanor assault. The Block worker reported minor injuries but did not require hospital treatment.

Deerfield Beach, Fla.: A bullet narrowly missed the ear of preparer Michelle Merced as she sat in the office of Dixie Fast Tax in late February. “I wanted [tax season] to be busy with people, not bullets, coming in,” she told news outlets. The shooting was connected to a dispute outside her office and police confirmed that Merced and her staff were not intended targets.

The incidents come on the heels of reports of gunfire and the beating of a preparer in the Detroit office of Tax City Tax Service on February 28 by a 19-year-old local man after the woman he was in the office with couldn’t get her refund in cash. Four people were shot in the scuffle and the preparer told news outlets that she plans tighter security when she re-opens her office.

This is hardly the first season refunds and taxes turned clients and their companions violent. Two years ago, according to reports, a Toledo, Ohio, woman and her son robbed and threatened to shoot their Liberty Tax preparer using a curling iron wrapped in a towel.

LOL where is Jackson Hewitt in this article.  

Retried from: http://www.accountingtoday.com/news/tax-preparers-assaulted-shot-at-this-season-69996-1.html?utm_campaign=tax%20pro%20today-mar%2017%202014&utm_medium=email&utm_source=newsletter&taxpro=1


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

What’s the penalty for not having health insurance?

The tax penalties go into effect in 2014, which means, if you’re uninsured for more than three months in 2014, you may incur the tax penalty and that penalty would be applied when you file your 2014 income tax return.
If you don’t qualify for an exemption to the Affordable Care Act’s mandate to purchase qualifying health coverage, then you will be subject to a tax penalty.
The penalty is phased-in over a three year period.
In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
In 2016, the penalty will be at the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $$2,085 per family).
After 2016, the penalty will be increased annually by the increase to the cost-of-living.
Households with incomes above 400% of FPL will be exempt from paying tax penalties if insurance in their area costs more than 8% of their taxable income, after taking into account employer contributions or tax credits.
People will be able to apply for exemptions to the tax penalty if
  1. they have financial hardships,
  2. religious objections,
  3. if they’re an American Indian,
  4. if they’re uninsured for less than three months,
  5. if they’re an undocumented immigrant,
  6. if they’re incarcerated.

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