Income tax

Tax

Health Tax Credit Tips for Pension Clients

If you have clients receiving pensions from the Pension Benefit Guaranty Corporation or benefits under the Trade Adjustment Assistance programs, they may be eligible for the Health Coverage Tax Credit (HCTC). The HCTC pays 65 percent of qualified health plan premiums for eligible individuals. These individuals can choose to have the 65 percent credit applied either monthly directly to their health plan as their premiums become due, or yearly on their federal tax return as a refund or credit against taxes owed.
A&A

A Conversation with Barry Goldwater: Handling High Net Worth Clients

As CPAs get deeper into financial services and wealth management, they will have to solve more and more complex financial problems which often cut across unfamiliar planning territory. One group of clients many firms hope to close, can be both challenging and rewarding. They are high net worth individuals, those clients who fit into the $10 million-and-above club. If you are fortunate in grabbing the opportunity to inform and perform for high net worth clients, you must stop and think about what is important to this group.What drives and motivates them?
A&A

Computer Theft Endangers Calif. Firm's Clients

A Santa Rosa tax accounting firm is alerting thousands of clients that their private financial records may be in jeopardy after a key computer was stolen from the office, the Santa Rosa (Calif.) Press-Democrat reported.Terry Brown, owner of Tax Service Plus, said a computer containing the records of his firm's 3,000 to 4,000 clients was missing when he arrived at work March 7 and found a back door broken open.He said he's notifying clients by letter what actions they should take to protect themselves against anyone who tries to use the stolen information to open a fraudulen
Tax

IRS’ OIC Changes Affect Delinquent Taxpayers

The Offers in Compromise (OIC) program, through which thousands of delinquent taxpayers negotiate down their debt to the IRS each year, has been revised and the new application package is now available, NAEA E@lert reports. While negotiating an OIC has never been an option for the majority of taxpayers, key features of the program have changed dramatically enough that it will no longer be feasible for some and will be available to others for the first time.
Technology

e-Filing Tip: Form 8886, Reportable Transaction Disclosure Statement

Previously, Form 8886 needed to be e-filed in XML format as part of the electronically filed return. Now, it can also be attached as a PDF.Taxpayers required to file electronically can provide the Form 8886 in either XML as part of the electronic return file or as a PDF attachment. Taxpayers electing to include Form 8886 as a PDF attachment must use the most current version of the form as posted on IRS.gov, Forms and Pubs, and the file should be described as "Form 8886".
Tax

Where's My Refund? Boosts IRS Web Traffic

Use of the IRS Web site has increased 9 percent over this time last year to 83.3 million visits, according to IRS e-News for Tax Professionals. One of the most popular features is Where’s My Refund?, the IRS Internet-based service at which tax preparers and their clients can check the status of a refund anytime from anywhere. Nearly 21 million requests have been received on Where’s My Refund? this year, representing a growth of more than 3.9 million users compared to the same period last year.“Where’s My Refund? is easy to use,” said IRS Commissioner Mark W. Everson.
Tax

8 in 10 Taxpayers Need Professional Help

Almost eight in 10 taxpayers don't have the right date circled to remind them when their tax return is due, and almost half don't know how much their telephone could be worth this tax season, according to H&R Block, Inc. More than 1,000 taxpayers, ages 22 to 64, shared their tax-season thoughts as part of an H&R Block consumer behavior survey.
A&A

Prepaid Phone Retailers Qualify for Refunds

Under the law, retailers and other businesses that sell prepaid phone cards for long-distance service usually qualify for the telephone tax refund. Normally, the phone card retailer, not the phone company that issues the card or the customer who uses the card, is responsible for paying the three-percent federal excise tax.
Tax

40 Frivolous Tax Positions to Avoid

The IRS issued guidance identifying 40 frivolous positions to avoid when filing tax returns. They have no basis for validity in existing law or have been deemed frivolous by the United States Tax Court or other federal court. If these or other frivolous positions are contained in a tax return, taxpayers could face a $5,000 penalty – 10 times the previous maximum.
Tax

How to Apply for an ITIN

Use the January 2007 revision of Form W-7, Application for IRS Individual Taxpayer Identification Number to apply. Attach a valid federal income tax return unless you qualify for an exception, and include your original or certified proof of identity documents.Because you are filing your tax return as an attachment to your ITIN application, you should not mail your return to the address listed in the Form 1040, 1040A or 1040EZ instructions. Instead, send your return, Form W-7 and proof of identity documents to:Internal Revenue ServiceAustin Service CenterITIN OperationP.O.
Tax

Affected Farmers, Fishermen Can Seek IRS Waiver

The Internal Revenue Service announced that farmers and fishermen may ask the IRS to waive any estimated tax penalties if they were affected by the snowstorms that began on February 19, 2007.The timing and suddenness of the storm, as well as the resulting power outages, may have affected the ability of many farmers and fishermen to file their 2006 calendar year return by March 1, 2007. Generally, farmers and fisherman can avoid an estimated tax penalty if they file their returns and pay the full amount of tax shown on their return by March 1, 2007.
Tax

Avoiding a Tax Bite on Inherited IRAs and 401(k)s

Like life insurance, beneficiaries of individual retirement accounts (IRAs) and workplace accounts (401k, 403b and 457 plans) inherit the proceeds directly without having to go through probate court. And IRAs and 401(k)s have become popular in many estate plans in recent years because they are not subject to probate costs. But unlike life insurance, inherited tax-deferred accounts can trigger a big tax bill for beneficiaries if they transfer the funds to their banks before they talk to their accountants or financial advisers, SFGate.com reports.
Tax

IRS Extends Tip Income Program

The IRS has extended the 2007 deadline until June 30 for restaurant or beverage businesses to elect to participate in the Attributed Tip Income Program.The extension is in response to requests from restaurant and beverage industry members and is only applicable for the 2007 calendar year.Normally, eligible establishments must elect to participate in ATIP by Feb.
Tax

How to Avoid Schedule K-1 Errors

A recent study found that many unnecessary notices issued to taxpayers could have been avoided if Schedule K-1 entity information was accurate when the forms were filed and if offsets against income reported on Schedule K-1 were reported correctly.In response, the Internal Revenue Service has provided tips to businesses, individuals and tax professionals to avoid errors involving Schedules K-1.Income, deductions and credits from partnerships, S corporations, estates and trusts are reported to investors on Schedules K-1.
Tax

Tax Change for Donations Sparks Goodwill Reminder

Goodwill Industries is reminding tax preparers that donations of used clothing and household items qualify as tax deductions as long as they are in good condition.“It used to be that people would keep general records and write something like, ’four boxes of clothing’ on a Goodwill receipt,” says George W. Kessinger, President and CEO of Goodwill Industries International.
Tax

IRS Guidance on Car Value Treatment

The Internal Revenue Service and the Treasury Department announced that they will work to publish guidance for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, last-in, first out (LIFO) inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars, reports IRS e-News for Small Businesses.“The accounting issue confronting the automobile industry has been selected for the Industry Issue Resolution (IIR) Program, which provides guidance to help clarify complex tax issues.
Tax

Double-Check Creative, Risky Tax Arguments

Anyone who has ever felt used and abused by the government because they have to fork over hard-earned wages will recognize the protests listed on the IRS document, The Truth about Frivolous Tax Arguments. Just in case you were thinking of challenging Uncle Sam’s authority to impose taxes, you may want to check the results for the many individuals and groups who’ve gone before you in attempting to avoid compliance with federal tax laws, recommends the National Association of Enrolled Agents.
Community News

IRS: Preparers Miss 4.8 Million Phone Refunds

The Internal Revenue Service reports more than 10 million early filers did not request the one-time telephone excise tax refund. And nearly half of those returns — more than 4.8 million — were completed by a tax preparer.In the first release of this year’s weekly filing season statistics, about 30 percent of all taxpayers did not request the telephone tax refund.“Many taxpayers are overlooking this special refund and the chance to get a bigger refund,” IRS Commissioner Mark W. Everson told IRS e-News for Tax Professionals.
Tax

Honda Hybrid Car Credit Update

The Internal Revenue Service announced that purchasers of American Honda Motor Company, Inc., qualified vehicles may continue to claim the Alternative Motor Vehicle Credit. The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Honda sold 12,716 qualifying vehicles to retail dealers in the quarter ending Dec. 31, 2006. This brings the cumulative number of qualified Honda hybrid vehicles sold as of Dec.
Tax

Florida Rep. Proposes Interest Exclusion

Representative Cliff Stearns (R-FL) introduced H.R. 228, a bill designed to encourage savings among low and middle-income taxpayers and by allowing the exclusion of $400 of interest income from gross income ($800 for joint filers). It also would save tax preparers the trouble of tracking down information on small amounts of interest earned. E@lert estimates that this bill is only marginally more likely to pass than another bill recently authored by Rep. Stearns that would require the Ten Commandments to be displayed at the U.S. Capitol.

Pages


Already a member? log in here.