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

What do I need to know about the Health Care Law for my 2013 Tax Return?

For most people, the Affordable Care Act has no effect on their 2013 federal income tax return. For example, you will not report health care coverage under the individual shared responsibility provision or claim the premium tax credit until you file your 2014 return in 2015. 

However, for some people, a few provisions may affect your 2013 tax return, such as increases in the itemized medical deduction threshold, the additional Medicare tax and the net investment income tax.
Here are some additional tips:

Filing Requirement: If you do not have a tax filing requirement, you do not need to file a 2013 federal tax return to establish eligibility or qualify for financial assistance, including advance payments of the premium tax credit to purchase health insurance coverage through a Health Insurance Marketplace. Learn more at HealthCare.gov.

W-2 Reporting of Employer Coverage: The value of health care coverage reported by your employer in box 12 and identified by Code DD on your Form W-2 is not taxable. Learn more.
Information available about other tax provisions in the health care law: More information is available on IRS.gov regarding the following tax provisions: Premium Rebate for Medical Loss Ratio, Health Flexible Spending Arrangements, and Health Saving Accounts.

More Information

Find out more tax-related provisions of the health care law at IRS.gov/aca
Find out more about the Health Insurance Marketplace at HealthCare.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

Early Retirement Plan Withdrawals and Your Taxes

Taking money out early from your retirement plan may trigger an additional tax. Here are seven things from the IRS that you should know about early withdrawals from retirement plans:

1. An early withdrawal normally means taking money from your plan before you reach age 59½.

2. If you made a withdrawal from a plan last year, you must report the amount you withdrew to the IRS. You may have to pay income tax as well as an additional 10 percent tax on the amount you withdrew.

3. The additional 10 percent tax does not apply to nontaxable withdrawals. Nontaxable withdrawals include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

4. A rollover is a type of nontaxable withdrawal. Generally, a rollover is a distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan. You usually have 60 days to complete a rollover to make it tax-free.

5. There are many exceptions to the additional 10 percent tax. Some of the exceptions for retirement plans are different from the rules for IRAs.

6. If you make an early withdrawal, you may need to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with your federal tax return.

7. The rules for retirement plans can be complex. The fast, safe and free way to prepare and e-file your tax return is to use IRS Free File. Free File offers brand-name software or online fillable forms for free. Free File software will pick the right tax forms, do the math and help you get the tax benefits you’re due. No matter how you prepare your taxes, you should always file electronically with IRS e-file. More than 80 percent of taxpayers e-file for faster refunds or for easier electronic payment options.

More information on this topic is available on IRS.gov.

Additional IRS Resources:

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, March 17, 2014

Tips for Self-Employed Taxpayers

If you are an independent contractor or run your own business, there are a few basic things to know when it comes to your federal tax return. Here are six tips you should know about income from self-employment:

  • Self-employment income can include income you received for part-time work. This is in addition to income from your regular job.
  • You must file a Schedule C, Profit or Loss from Business, orSchedule C-EZ, Net Profit from Business, with your Form 1040.
  • You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes. Use Schedule SE, Self-Employment Tax, to figure the tax. Make sure to file the schedule with your tax return.
  • You may need to make estimated tax payments. People typically make these payments on income that is not subject to withholding. You may be charged a penalty if you do not pay enough taxes throughout the year. 
  • You can deduct some expenses you paid to run your trade or business. You can deduct most business expenses in full, but some must be ’capitalized.’ This means you can deduct a portion of the expense each year over a period of years.
  • You can deduct business costs only if they are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business. 

    Visit the Small Business and Self-Employed Tax Center on IRS.gov for all your federal tax needs. You can also get IRS tax forms and publications on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
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, March 13, 2014

Help Yourself by Filing Past-Due Tax Returns

Most citizens voluntarily file their tax returns and pay their taxes. Most people explain it by saying they want to pay their fair share. Others file to get a refund, claim a credit or avoid breaking the law.
 
There are times when normally law-abiding citizens fail to file. Why? IRS research shows that sometimes people don’t file in years their filing status changes, such as due to the death of a spouse or divorce. Emotional or financial reasons may cause a person to not file. Or it could simply be due to procrastination.

Unfortunately, failing to file a return creates additional problems. This is the 20th fact sheet in the Tax Gap series and will help taxpayers better understand the importance of filing past-due returns.

Your need to file is largely determined by your age, filing status and gross income. You can determine whether you needed to file in a prior year by checking the “Do You Have to File” section in the instructions of the Form 1040 for the year in question.
Why file a tax return?
Taxpayers are required by law to file an income tax return for any year in which a filing requirement exists.

There are numerous practical reasons to file tax returns. Important programs like federal aid to higher education require applicants to submit copies of tax returns to qualify for loans. Lending institutions also may require copies of filed returns for buying a home or financing a business.

And the filing of tax returns can have a tremendous impact on your future. A person’s lifetime earnings as reported to the IRS and the Social Security Administration are the basis for Social Security retirement and disability benefits as well as Medicare. Reported income is also the source for state benefits such as unemployment compensation and industrial insurance.
What happens if you do not file?
Not filing a federal tax return can be costly — whether you end up owing more or missing out on a refund. The IRS may also impose a wide range of civil and criminal sanctions on persons who fail to file returns. 

If you owe tax and your return was not filed by the due date, including extensions, you may be subject to the failure to file penalty, unless you have reasonable cause for not filing. If you did not pay your tax in full by the due date for the return, not including extensions of time to file, you also may be subject to the failure to pay penalty, unless you have reasonable cause for your failure to pay.  Additionally, interest is charged on taxes not paid by the due date; even if you have an extension of time to file. Interest is also charged on penalties.

The IRS continues to identify people who have a filing requirement but have failed to file a return.  
By law the IRS may file a substitute return for you if you do not voluntarily file. A series of letters is first sent explaining the possible action IRS may take as part of the Substitute for Return Program. 

If you do not file a return or otherwise indicate disagreement such as by requesting to exercise your appeal rights, the IRS will file a basic return for you. An IRS-prepared return will not include any of your additional exemptions or expenses. The IRS will compute the tax liability and send you a bill for the tax that will also include interest and penalties.

If a substitute return has already been filed for you by the IRS, you should still file your own return to claim any additional items. The IRS will generally adjust your account to reflect the corrected figures. 
What are the consequences of not filing a tax return?
Here are some things to consider:
  • Failure to file penalty. If you owe taxes, a delay in filing may result in a "failure to file" penalty, also known as the “late filing” penalty, and interest charges. The longer you delay, the larger these charges grow. It may result in penalty and interest charges that could increase your tax bill by 25 percent or more.
  • Losing your refund. There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether. In cases where a return is not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund.
  • EITC. Individuals who are entitled to the Earned Income Tax Credit must file their return to claim the credit even if they are not otherwise required to file. The return must be filed within three years of the due date in order to receive the credit.
  • Statutes of limitation.After the expiration of the refund statute, not only does the law prevent the issuance of a refund check, it also prevents the application of any credits, including overpayments of estimated or withholding taxes, to other tax years that are underpaid.On the other hand, the statute of limitations for IRS to assess and collect any outstanding balances does not start until a return has been filed.In other words, there is no statute of limitations for assessing and collecting the tax if no return has been filed.
What should you do?

Regardless of your reason for not filing, file your tax return as soon as possible. You can contact a tax professional or the IRS for help with filing delinquent returns. 

If you are unable to fully pay any tax due on the late returns, do not let this prevent you from filing as payment options may be available. For more details, ask your tax professional or an IRS representative.

Filing tax returns and paying the correct amount of tax is good citizenship. Conscientiously discharging this duty contributes to our nation’s well being and provides peace of mind. And failing to file returns can jeopardize a family’s financial security and future.
For more information on how to file a tax return for a prior year, visit the IRS Web site at IRS.gov, call the IRS Tax Help Line at 1-800-829-1040 or visit your local IRS office
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 11, 2014

IRS Offers Advice on How to Choose a Tax Preparer

FS-2014-5, February 2014

Many people hire a professional when it’s time to file their tax return. If you pay someone to prepare your federal income tax return, the IRS urges you to choose that person wisely. Even if you don’t prepare your own return, you’re still legally responsible for what is on it.
Here are some tips to keep in mind when choosing a tax preparer:
  • Check to be sure the preparer has a PTIN.  All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. In addition to making sure they have a PTIN, ask the preparer if they belong to a professional organization and attend continuing education classes.
  • Check the preparer’s history.  Check with the Better Business Bureau to see if the preparer has a questionable history. Check for disciplinary actions and for the status of their licenses. For enrolled agents, check with the IRS Office of Enrollment. (Enrolled agents are licensed by the IRS and are specifically trained in federal tax planning, preparation and representation.) For certified public accountants, check with the state board of accountancy. For attorneys, check with the state bar association. Ask about service fees.  Avoid preparers who base their fee on a percentage of your refund or those who say they can get larger refunds than others can. Always make sure any refund due is sent to you or deposited into your bank account. Taxpayers should not deposit their refund into a preparer’s bank account.
  • Ask to e-file your return.  Make sure your preparer offers IRS e-file. Any paid preparer who prepares and files more than 10 returns for clients generally must file the returns electronically. IRS has safely processed more than 1.2 billion e-filed tax returns.
  • Make sure the preparer is available.  Make sure you’ll be able to contact the tax preparer after you file your return - even after the April 15 due date. This may be helpful in the event questions come up about your tax return.
  • Provide records and receipts.  Good preparers will ask to see your records and receipts. They’ll ask you questions to determine your total income, deductions, tax credits and other items. Do not use a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.
  • Never sign a blank return.  Don’t use a tax preparer that asks you to sign a blank tax form.
  • Review your return before signing.  Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
  • Ensure the preparer signs and includes their PTIN.  Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.
  • Report abusive tax preparers to the IRS.  You can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
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

2014 IRS Nationwide Tax Forums

The 2014 IRS Nationwide Tax Forum will be held in the following cities:

Chicago, IL - July 1 - 3
San Diego, CA - July 15 - 17
New Orleans, LA - July 22 - 24
National Harbor, MD (Washington, D.C.Area) - August 19 - 21
Orlando, FL - August 26 - 28

I know I will be attending one of these events. :)

Also, please contact your national association, like the National Association of Enrolled Agents (NAEA) or the National Association of Tax Professionals (NATP) for your discount codes. With the discount code, you will save $10 for the final registration fee of $215 (they will ask for your membership number).

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

Help Yourself: Visit IRS.gov

IRS Tax Tip 2014-30, March 11, 2014

No matter when you need tax help, the IRS website has you covered. It’s easy to use and provides you with the information you want, when you want it. Here are eight good reasons to visit IRS.gov:
  1. Help Yourself Anytime.  IRS.gov is available 24/7. Bookmark 1040 Central for all your federal tax needs. You can download forms or publications or get answers when you need them. Use the Interactive Tax Assistant tool and the IRS Tax Map for help with many of your tax law questions. Many IRS tools and products are also available in Spanish.

  2. Take Advantage of IRS e-file.  Whether you do your own taxes or hire a preparer, IRS e-file is the safest, easiest and most popular way to file a complete and accurate tax return. And combining e-file with direct deposit is the fastest way for you to get your refund. The IRS issues most refunds in less than 21 days. If you owe taxes, e-file gives you options to file early and pay by the tax deadline.

  3. Use Free File.  You can prepare and e-file your federal taxes for free with IRS Free File. Offered only at IRS.gov, Free File does the hard work for you. If you made $58,000 or less, you can use free tax software. If your income is more than $58,000 and you’re able to prepare your own tax return, use Free File Fillable Forms. This option has the electronic versions of IRS paper forms.

  4. Check Refund Status.  You can track your refund using the ‘Where’s My Refund?’ tool. It’s quick, easy and secure. You can check the status of your return within 24 hours after the IRS has received your e-filed return. If you file a paper return, you can check your refund status four weeks after you mail it. Once IRS approves your refund, ‘Where’s My Refund?’ will give you a date to expect it.

  5. Pay Taxes Online.  Electronic payments are a convenient and safe way to pay taxes. You can authorize an electronic funds withdrawal, use a credit or debit card or enroll in the U.S. Treasury’s Electronic Federal Tax Payment System. If you can’t pay all your taxes in full, you may be able to use the Online Payment Agreement Application to request an installment agreement.

  6. Use the EITC Assistant.  The Earned Income Tax Credit is for working people who earned less than $51,567 in 2013. The credit can be worth up to $6,044. Find out if you’re eligible by using the EITC Assistant tool. You may be among the millions of eligible workers who get the EITC this year.

  7. Figure Your Withholding.  The IRS Withholding Calculator tool can help you avoid having too much or too little income tax withheld from your pay. You can use it anytime throughout the year to stay on target.

  8. Get the Latest Changes.  Learn about tax law changes that may affect your tax return. Special sections of the website highlight changes that affect individual and business taxpayers.
The official IRS website is IRS.gov. Don’t be fooled by other sites that claim to be the IRS, but end in .com, .net, or .org. Some scams use phony websites to get your personal and financial information. Thieves also use the information to commit identity theft or steal your money. Only visit IRS.gov for tax help from 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