Tax Season 2019: February 2014

Tuesday, February 11, 2014

Appeals Court Rules In Favor Of Independent Tax Preparers

The Circuit Court of Appeals for the District of Columbia today ruled that the IRS has no legal authority to impose nationwide licensing and other requirements on tax-return preparers. The decision upholds the January, 2013, ruling by US District Court Judge James E. Boasberg, which struck down the IRS’s proposed regulations as unlawful.

Appeals case No. 13-5061, Sabina Loving et al v. Internal Revenue Service et al can be found here. The opinion of the court was filed by Circuit Judge Brett Michael Kavanaugh, who wrote in part: “In this case, three independent tax-return preparers contend that the IRS’s new regulations exceed the agency’s authority under the statute. The precise question is whether the IRS’s statutory authority to “regulate the practice of representatives of persons before the Department of the Treasury”
encompasses authority to regulate tax-return preparers. The District Court ruled against the IRS, relying on the text, history, structure, and context of the statute. We agree with the District Court that the IRS’s statutory authority under Section 330 cannot be stretched so broadly as to encompass authority to regulate tax-return preparers. We therefore affirm the judgment of the District Court.”

Both courts rejected the IRS’s claim that tax-preparer licensure was authorized by an 1884 statute (31 U.S.C. § 330) governing the representatives of Civil War soldiers seeking compensation for dead horses.

The Court held, “The IRS may not unilaterally expand its authority through such an expansive, atextual, and a historical reading of Section 330. As the Supreme Court has directed in words that are right on point here, the “fox-in-the-henhouse syndrome is to be avoided . . . by taking seriously, and applying rigorously, in all cases, statutory limits on agencies’ authority.” City of Arlington v. FCC, 133 S. Ct. 1863, 1874 (2013). We affirm the judgment of the District Court.”

“This is a major victory for tax preparers—and taxpayers—nationwide,” said Dan Alban of the Institute for Justice, the lead attorney for the three independent tax preparers who filed the suit. “The court found that Congress never gave the IRS the power to license tax preparers, and the IRS cannot give itself that authority.”

The Institute for Justice claims that more than 350,000 tax return preparers would have been affected by the regulations, and that tens of thousands of mom-and-pop preparers would be put out of business.

The Wall Street Journal, in its assessment of the case, noted that “Big-foot tax preparers like H&R Block and Jackson Hewitt lobbied for the regulation and have been explicit in hoping it will squeeze lower-priced competition.” The drafting of the regulations was overseen by former H&R Block CEO Mark Ernst, and several financial analysts have concluded they benefit the company.

Source: US District Court of Appeals for the District of Columbia at http://www.cadc.uscourts.gov/internet/opinions.nsf/B63C3129A4FE761985257C7C00539949/$file/13-5061-1479431.pdf

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

Inspector General: ACA Will Pose Challenges for IRS

The Office of the Treasury Inspector General (TIGTA) has released a report indicating that when the IRS assumes responsibility for customer service with regard to the Affordable Care Act in 2015, the agency may encounter challenges.

The Affordable Care Act (ACA) includes tax provisions that require individuals to maintain minimum essential coverage (MEC) and that provide for a tax credit (Premium Tax Credit) to offset an individual’s health care expenses. The IRS will impose a penalty on any taxpayer who, after Calendar Year 2013, fails to maintain the MEC for three months or more and does not qualify for an exemption.

The TIGTA audit was initiated to evaluate the IRS’s efforts to provide individuals assistance related to the ACA provisions on obtaining the MEC and the tax credit to offset health care expenses. Starting in October 2013, individuals who seek to acquire the MEC for Calendar Year 2014 will be offered a choice of health plans and the ability to determine their eligibility for a tax credit through one of the State Marketplaces or the Federal Marketplace.

The IRS’s customer service strategy is a collaborative and coordinated effort between the IRS and multiple Federal and State agencies. The strategy includes sufficient plans to 1) perform outreach and education; 2) update or develop tax forms, instructions, and publications; and 3) provide employee training to assist individuals in understanding the requirement to maintain the MEC and the tax implications of obtaining the tax credit to offset the cost of health care insurance.

In a May 2012 Memorandum of Understanding between the IRS and the Department of Health and Human Services (HHS), it was agreed that the HHS would be the lead agency and serve as the “public face” for customer service at the Marketplaces until Calendar Year 2015. Individuals who contact the IRS for ACA assistance will be referred to the HHS’s public website (Healthcare.gov) and toll-free telephone assistance lines. The IRS will also refer individuals to its own recorded telephone messages and self-assistance tools.

In Calendar Year 2015, the IRS will take the lead to provide customer service when individuals begin filing their 2014 tax returns and must include the amount of any Advance Premium Tax Credit payments on their tax return and reconcile it to the allowable amount. The IRS’s customer service will include providing face-to-face assistance at its 390 Taxpayer Assistance Centers located throughout the United States.

However, changes in ACA implementation will create challenges. Depending on the nature of any changes made to ACA tax provisions, the IRS’s strategy and plans to provide customer service, outreach, education, and employee training could be affected. Changes to the provisions could also affect the IRS’s plans to update its tax forms, instructions, and publications.

TIGTA did not make recommendations in this report. A draft of the report was provided to IRS management for review. The IRS did not provide comments on the report.

Source: http://www.treasury.gov/tigta/auditreports/2014reports/201443006fr.html

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, February 8, 2014

Five Great Reasons to E-file

IRS Tax Tip 2014-04, January 31, 2014

Are you still doing your taxes on paper? If so, join the 122 million taxpayers who e-filed last year. They already know that IRS e-file is the best way to file a federal tax return.
Here are five great reasons why you should e-file your tax return:

Accurate and complete. E-file is the best way to file an accurate and complete tax return. The tax software does the math for you, and it helps you avoid mistakes.

Safe and secure. IRS e-file meets strict guidelines and uses the best encryption technology. The IRS has safely and securely processed more than 1.2 billion e-filed individual tax returns since the program began.

Faster refunds. E-filing usually brings a faster refund because there is nothing to mail and your return is less likely to have errors, which take longer to process. The IRS issues most refunds in less than 21 days. The fastest way to get your refund is to combine e-file with direct deposit into your bank account.

Payment options. If you owe taxes, you can e-file early and set an automatic payment date anytime on or before the April 15 due date. You can pay by check or money order, or by debit or credit card. You can also transfer funds electronically from your bank account.

E-file’s easy. You can e-file your federal return through IRS Free File, the free tax preparation program available only at IRS.gov. You can also use commercial tax software or ask your tax preparer to e-file your return. If you qualify, IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly will e-file your return for free.

For more information about IRS e-file, visit IRS.gov.

IRS YouTube Videos:

Welcome to Free File – English
Do It Yourself Free Tax Preparation – English | Spanish | ASL

IRS Podcasts:

Do It Yourself Free Tax Preparation – English | Spanish

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

Tax Season Opens Jan. 31; Changes to IRS Service Options

IRS Special Edition Tax Tip 2014-03, January 30, 2014

The 2014 tax filing season opens on Friday Jan. 31. That is the first day that the IRS will accept 2013 federal income tax returns.

If you are working on your taxes and need tax help, the IRS website has the tax help and information you need.

Taxpayers are strongly encouraged to explore the various self-service, technology-based options that exist for tax help and tax return preparation on IRS.gov. Taxpayers should be aware that due to limited resources, individualized tax help on IRS toll-free lines and Taxpayer Assistance Centers has changed beginning this year. More information on service changes for the 2014 tax season is available on IRS.gov.

The quickest way to get information and help is through IRS.gov. The web site is available 24/7, so you can get tax help any time you need. You may wish to bookmark 1040 Central as your go-to page for tax help. This web page has information and links to many helpful tools, products and services that will help you prepare and file your tax return. They include:

Tax Forms and Publications. Download tax forms and publications. Many publications are also available in Spanish.
IRS Tools. You’ll find several tools and self-service options on IRS.gov to help you with your taxes. Here are just a few:

o Use the Interactive Tax Assistant to answer many of your tax questions.
o Find out if you’re eligible for the Earned Income Tax Credit by using the EITC Assistant.
o Use the AMT Assistant tool to find out if you may need to pay Alternative Minimum Tax.
o Track your refund using the ‘Where’s My Refund?’ tool.

When you are ready to file your tax return beginning Jan. 31, there are several, free options that you should consider. Taxpayers who have visited IRS Taxpayer Assistance Centers in prior years for free tax preparation should be aware that, beginning this year, these offices are no longer offering this service. Other options for free tax preparation include:

Use Free File to e-file for free. Most people e-file their tax return these days. Everyone can use IRS Free File to prepare and e-file their federal taxes for free. The only way to use this program is through the IRS website. If you made $58,000 or less, you can use free tax software. If your income is more than $58,000 and you feel comfortable doing your own taxes, use Free File Fillable Forms. This option has the electronic versions of IRS paper forms.
Get taxes done with VITA or TCE. You may be able to get free tax preparation at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site. IRS-trained volunteers can help you get the tax credits and deductions you’re entitled to claim. The VITA program generally offers free tax return preparation and e-filing to people who earn $52,000 or less. The TCE program offers help mainly to people 60 or older. Thousands of free tax preparation sites around the nation will open in late Jan. and early Feb. Visit IRS.gov to find the one nearest you.

IRS YouTube Videos:

Welcome to Free File – English
Do It Yourself Free Tax Preparation – English | Spanish | ASL
IRS Information Available in Spanish – English | Spanish | ASL
How to Get 1040 Forms - English | Spanish | ASL

IRS Podcasts:

Do It Yourself Free Tax Preparation – English | Spanish
IRS Information Available in Spanish – English | Spanish
How to Get 1040 Forms - English | Spanish

Which Tax Form Should You File?

IRS Tax Tip 2014-03, January 30, 2014

Which form should you use to file your federal income taxes? These days, most people use a computer to prepare and e-file their tax forms. It’s easy, because tax software selects the right form for you. If you file on paper, you’ll need to pick the right form to use.

Before you decide, check out IRS Free File on IRS.gov. It has free tax software or a Fillable Forms option that allows you to fill in your tax forms using a computer. You can e-file the completed forms for free!
If you still prefer paper and pen, here are some tips on how to choose the best form for your situation.
You can generally use the 1040EZ if:

Your taxable income is below $100,000;
Your filing status is single or married filing jointly;
You are not claiming any dependents; and
Your interest income is $1,500 or less.

The 1040A may be best for you if:

Your taxable income is below $100,000;
You have capital gain distributions;
You claim certain tax credits; and
You claim adjustments to income for IRA contributions and student loan interest.

However, reasons you must use the 1040 include:

Your taxable income is $100,000 or more;
You claim itemized deductions;
You are reporting self-employment income; or
You are reporting income from sale of a property.

Read more about which form to use in IRS Publication 17, Your Federal Income Tax. The quickest way to get tax forms and instructions is to visit IRS.gov and click on the ‘Forms & Pubs’ tab. New tax forms often appear online well before the printed forms are available.
You can also have forms mailed to you by calling the IRS at 800-TAX-FORM (800-829-3676), or you can pick them up at a local IRS office. Some libraries and post offices also have tax forms.

IRS YouTube Videos:

Welcome to Free File – English
IRS Tax Forms and Publications - English | Spanish | ASL

IRS Podcasts:

Tax Forms and Publications - English | Spanish

Top 10 Tips about Free Tax Preparation

IRS Tax Tip 2014-02, January 29, 2104

Each year millions of people have their tax returns prepared for free by volunteers. These volunteers are part of the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.
Here are the top 10 tips the IRS wants you to know about VITA and TCE:

The IRS sponsors both the VITA and TCE programs. They work with local community groups to both train and certify volunteers.
The VITA program generally offers free tax return preparation and e-filing to people who earn $52,000 or less.
The TCE program offers help mainly to people age 60 or older. Volunteers specialize in tax issues unique to seniors. AARP is part of the TCE program and helps taxpayers with low to moderate incomes.
VITA and TCE provide free electronic filing. An e-filed tax return is the safest and most accurate way to file. Using e-file combined with direct deposit is the fastest way to get your refund.
Using VITA and TCE may help ensure you get all the tax credits and deductions you’re able to claim. For example, credits that you may qualify for include the Earned Income Tax Credit, the Child Tax Credit and the Credit for the Elderly.
Some sites provide bilingual help for people who speak limited English.
VITA provides free tax assistance to military members and their families. Volunteers help with tax issues related to the military. These include special rules and tax benefits for those serving in combat zones.
At some VITA sites, you can also prepare your own federal and state tax returns using free web-based software. This is an option if you don’t need much help or don’t have a home computer. Volunteers are on site to guide you if you need help. The self-preparation options generally offer free tax return preparation software and e-filing to people who earn $58,000 or less.
For more than 40 years, the IRS has partnered with nonprofit and community organizations to offer these vital services. Thousands of VITA and TCE sites around the nation will open in late Jan. and early Feb.
Visit IRS.gov to find the nearest VITA site. Search the word ’VITA’ and then click on “Free Tax Return Preparation for You by Volunteers.” Site information is also available by calling the IRS at 800-906-9887. To locate the nearest AARP Tax-Aide site, visit aarp.org, or call 888-227-7669.

IRS YouTube Videos:

Welcome to Free File – English
Do It Yourself Free Tax Preparation – English | Spanish | ASL
Free Help Preparing Your Tax Return – English | Spanish | ASL

IRS Podcasts:

Do It Yourself Free Tax Preparation – English | Spanish
Free Help Preparing Your Tax Return – English

Who Should File a 2013 Tax Return?

IRS Tax Tip 2014-01, January 28, 2014
Do you need to file a federal tax return this year? Perhaps. The amount of your income, filing status, age and other factors determine if you must file.
Even if you don’t have to file a tax return, there are times when you should. Here are five good reasons why you should file a return, even if you’re not required to do so:

Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
Earned Income Tax Credit. Did you work and earn less than $51,567 last year? You could receive EITC as a tax refund if you qualify. Families with qualifying children may be eligible for up to $6,044. Use the EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return and claim it.
Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit. To claim it, you need to file Schedule 8812, Child Tax Credit, with your tax return.
American Opportunity Credit. Are you a student or do you support a student? If so, you may be eligible for this credit. Students in their first four years of higher education may qualify for as much as $2,500. Even those who owe no tax may get up to $1,000 of the credit refunded per eligible student. You must file Form 8863, Education Credits, with your tax return to claim this credit.
Health Coverage Tax Credit. Did you receive Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation? If so, you may qualify for the Health Coverage Tax Credit. The HCTC helps make health insurance more affordable for you and your family. This credit pays 72.5 percent of qualified health insurance premiums. Visit IRS.gov for more on this credit.

To sum it all up, check to see if you would benefit from filing a federal tax return. You may qualify for a tax refund even if you don’t have to file. And remember, if you do qualify for a refund, you must file a return to claim it.

The instructions for Forms 1040, 1040A or 1040EZ list income tax filing requirements. You can also use the Interactive Tax Assistant tool on IRS.gov to see if you need to file. The tool is available 24/7 to answer many tax questions.
Additional IRS Resources:

IRS YouTube Videos:

Do I Have To File a Tax Return? – English | Spanish | ASL
Education Tax Credits – English | Spanish | ASL

IRS Podcasts:
Education Tax Credits – English | Spanish
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 Tax-time Scams

IRS Special Edition Tax Tip 2014-02, January 23, 2014

It’s true: tax scams proliferate during the income tax filing season. This year’s season opens on Jan. 31. The IRS provides the following scam warnings so you can protect yourself and avoid becoming a victim of these crimes:

Be vigilant of any unexpected communication purportedly from the IRS at the start of tax season.
Don’t fall for phone and phishing email scams that use the IRS as a lure. Thieves often pose as the IRS using a bogus refund scheme or warnings to pay past-due taxes.
The IRS doesn’t initiate contact with taxpayers by email to request personal or financial information. This includes any type of e-communication, such as text messages and social media channels.
The IRS doesn’t ask for PINs, passwords or similar confidential information for credit card, bank or other accounts.
If you get an unexpected email, don’t open any attachments or click on any links contained in the message. Instead, forward the email to phishing@irs.gov. For more about how to report phishing scams involving the IRS visit the genuine IRS website, IRS.gov.

Here are several steps you can take to help protect yourself against scams and identity theft:

Don’t carry your Social Security card or any documents that include your Social Security number or Individual Taxpayer Identification Number.
Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
Protect your financial information.
Check your credit report every 12 months.
Secure personal information in your home.
Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient.
Be careful when you choose a tax preparer. Most preparers provide excellent service, but there are a few who are unscrupulous. Refer to Tips to Help you Choose a Tax Preparer for more details.

For more on this topic, see the special identity theft section on IRS.gov. Also check out IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.

IRS YouTube Videos:

Tax Scams – English | Spanish | ASL
IRS Efforts on Identity Theft – English | Spanish
Are You a Victim of Identity Theft? – English | Spanish | ASL
Protect Yourself From Identity Theft – English | Spanish | ASL

IRS Podcasts:

Protect Yourself from Identity Theft – English | Spanish
Are You a Victim of Identity Theft? – English | Spanish

Tax Videos from IRS Available To Help You File in 2014

IRS Special Edition Tax Tip 2014-01, January 3, 2014

The 2014 tax filing season begins on Jan. 31. To help you prepare for it, the IRS has several short and informative YouTube videos on a variety of tax topics. These videos are available in English, Spanish and American Sign Language (ASL).

IRS videos have received nearly 6.5 million views. Find them here:

IRS Videos — http://www.youtube.com/irsvideos
ASL Videos — http://www.youtube.com/IRSvideosASL
Multilingual Videos — http://www.youtube.com/IRSvideosMultilingua

You may find some of these videos especially useful as you prepare to file in 2014. They include:

Do-It-Yourself Free Tax Preparation . Helps you find free help from certified volunteers. Learn about becoming involved in the Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs.
Do I Have to File a Tax Return? Learn about the all requirements for filing a tax return.
How to Get 1040 Forms . Tips offered on the quickest way to get various 1040 forms on IRS.gov.
Tax Scams . Tips offered on how to protect personal your information, avoid becoming a tax scam victim and more.
Record-keeping . Learn which financial and tax files to keep and how long to keep them.
Changed Your Name After Marriage or Divorce? Find out what you need to do if you have changed your name before you file your tax return.
Choosing a Tax Preparer . Useful tips on choosing a reputable tax preparer.

The IRS uses social media tools and platforms to share the latest information on tax changes, initiatives, products and services. A full listing of all our social media channels is available on 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

IRS Proposes Guidelines for ACA “Individual Mandate”

The Journal of Accountancy reports that proposed regulations issued by the IRS this week provides guidance on handling the Sec. 5000A “individual mandate” under 2010’s health care reform legislation, including the definition of those government programs that do not provide minimum essential health care coverage (REG-141036-13).

They also provide a hardship exemption for individuals who obtained coverage through an exchange for 2014 during the open enrollment period. Such individuals may claim an exemption for the period before their coverage is effective without obtaining an exemption certificate, notes the Journal of Accountancy.

Under Sec. 5000A, starting this year, a taxpayer is liable for a penalty if the taxpayer or any nonexempt dependent does not have minimum essential health care coverage in a month included in that tax year. Married taxpayers filing a joint return are jointly liable for the payment.

Government programs
Under the proposal, the Medicaid program (42 U.S.C. §1396 et seq.) is considered to provide minimum essential health care coverage, but some Medicaid coverage that provides limited benefits does not.

These limited-coverage programs include coverage of individuals with high medical expenses who would otherwise be ineligible for Medicaid because of their income, optional coverage of family planning services, coverage of tuberculosis-related services, coverage of pregnancy-related services, and coverage that is limited to providing emergency medical care.

However, since each state is allowed to determine what type of coverage to extend to individuals with high medical expenses who would otherwise be ineligible for Medicaid because of their income, the regulations permit the secretary of Health and Human Services (HHS) and the IRS to recognize a state’s Medicaid coverage for such individuals as minimum essential coverage if it is comprehensive enough to qualify.

The proposed regulations also clarify that minimum essential coverage excludes any coverage, whether insurance or otherwise, that consists solely of excepted benefits.
Other sections of the proposal cover specific health care coverage options, including:

Health reimbursement arrangements (HRAs)
Cafeteria plans
Wellness programs
Hardship exemptions

Simplified method for determining premium
For determining whether an individual who is not eligible for coverage under an employer-sponsored plan is exempt from the shared-responsibility payment because the individual cannot afford minimum essential coverage, the final regulations require individuals to calculate the cost of coverage for a bronze-level health insurance plan in an exchange for the individual and all covered family members. When no bronze plan is available that would cover all family members, the final regulations require adding together the premiums for coverage for each individual. In the preamble to the proposed regulations, the IRS is asking for alternative methods for determining the cost of the premiums for family coverage.

Calculating the monthly penalty
The proposed regulations would amend the final regulations on how to calculate the Sec. 5000A penalty. The final regulations provide that the penalty is imposed on the lesser of (1) the sum of monthly penalty amounts “for each individual in the shared responsibility family” (i.e., all nonexempt individuals for whom the taxpayer is liable for a shared-responsibility payment) or (2) the sum of the national average bronze plan premiums for the shared responsibility family. Because the monthly penalty amount is intended to apply only to the individual, and not to the entire family, the proposed regulations amend (1) above to remove the clause “for each individual in the shared responsibility family.” The second part of the formula is unchanged.

Source: Journal of Accountancy at http://www.journalofaccountancy.com/News/20149497.htm

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 Extends Key Deadline for New Tax Break

Deborah L. Jacobs, writing in Forbes Magazine, notes that the IRS released a ruling that will make things considerably easier for married couples to carry over the estate tax exemption of a recently deceased spouse. The agency’s action will also have implications for same-sex married couples, who only during the past year have become entitled to the same federal tax benefits as heterosexual spouses.

The ruling, in Revenue Procedure 2014-18, extends the time to take advantage of this tax break, which has been dubbed “portability”. The ruling was introduced on an interim basis starting in 2011 and made permanent with the American Taxpayer Relief Tax Act of 2012.

By enabling this “portability,” Congress allows widows and widowers to carry over the estate tax exemption of the spouse who died most recently and add it to their own. At current rates this enables married couples to transfer $5.34 million apiece ($10.68 million together) tax-free.
To take advantage of this option, or “elect portability,” the executor handling the estate of the spouse who died must file an estate tax return (IRS Form 706), even if no tax is due. This return is due nine months after death with a six-month extension allowed.
The Revenue Procedure now allows an executor to elect portability for a person who:

Died after Dec. 31, 2010, and on or before Dec. 31, 2013;
Was a citizen or resident of the United States on the date of death; and
Had a surviving spouse.

If you meet these requirements, you can get an extension of time to file Form 706 without going to the costly and time-consuming procedure of getting a Private Letter Ruling from the IRS. But to do that you must file Form 706 by Dec. 31, 2014.
The Revenue Procedure indicates that you should write at the top of the form that the return is “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

Source: Forbes Magazine at http://www.forbes.com/sites/deborahljacobs/2014/01/28/irs-extends-key-deadline-for-new-tax-break/

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 Small Business Tax Center Has Everything You Need

IRS Tax Tip 2014-09, February 7, 2014

You don’t need to be a tax expert to run a business, but knowing the basics about taxes can help you run it better. You’ll find the basics and much more at the IRS.gov Small Business and Self-Employed Tax Center.

Whether you’re new to a business or been with it awhile, the Tax Center can help. You can apply for an Employer Identification Number, get a form or learn about employment taxes. The Center also includes these resources:

IRS Video Portal. Watch helpful videos and webinars on many topics. Find out about filing and paying business taxes or about how the IRS audit process works. Under the ‘Businesses’ tab, look for the ’Small Biz Workshop.’ Watch it when you want to learn the basics about small business taxes.
Online Tools and Educational Products. The list of Small Business products includes the Tax Calendar for Small Businesses and Self-Employed. Install the IRS CalendarConnector tool and access important tax dates and tips right from your smart phone or computer, even when you’re offline.
Small Business Events. Find out about free IRS small business workshops and other events planned in your state.

Go to the Small Business and Self-Employed Tax Center and use the A-Z index to find whatever you need.

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

Report Name Change before You File Taxes

IRS Tax Tip 2014-08, February 6, 2014

Did you change your name last year? Did your dependent have a name change? If the answer to either question is yes, be sure to notify the Social Security Administration before you file your tax return with the IRS.

This is important because the name on your tax return must match SSA records. If they don’t, you’re likely to get a letter from the IRS about the mismatch. And if you expect a refund, this may delay when you’ll get it.

Be sure to contact SSA if:

You got married or divorced and you changed your name.
A dependent you claim had a name change. For example, this would apply if you adopted a child and that child’s last name changed.

File Form SS-5, Application for a Social Security Card, with the SSA to let them know about a name change. You can get the form on SSA.gov by calling 800-772-1213 or at an SSA office.
You can file Form SS-5 at an SSA office or by mail. Your new card will have the same SSN as before but will show your new name.

If you have an adopted child who does not have a SSN, use a temporary Adoption Taxpayer Identification Number on your tax form. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. Get the form on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

IRS YouTube Videos:

Changed Your Name After Marriage or Divorce? - English | Spanish | ASL

IRS Podcasts:

Changed Your Name After Marriage or Divorce? – English | Spanish