IRS officially opens tax season today, begins processing returns and refunds
As Forbes contributor Kelly Phillips Erb noted in her column today, the 2014 tax-filing season has officially begun.
The IRS will begin processing e-filed returns, accepting paper returns, and preparing refunds. Phillips Erb said taxpayers’ refunds will arrive sooner if they use a combination of e-file and direct deposit.
“The IRS indicates that on average, refunds are issued within about ten days after acceptance of your return (though they advise that you can expect to wait up to twenty-one days),” she wrote. “You can check your refund status online using the “Where’s My Refund?” tool, but the IRS asks that you only check once a day – they don’t update more than that.”
Obama power plays: An IRS tea party showdown – Tax filing season opens today
Scroll down to about the middle of the Politico Morning Tax tipsheet for January 31, and under the “Happy Tax Season” heading, you will see a nugget about three tax experts’ expectations for the 2014 tax-filing season.
One expert, Representative Charles Boustany Jr. (R-LA), chair of the Ways and Means subcommittee charged with IRS oversight, said: “This year is pivotal for the IRS – will it be able to restore public trust, will it make improvements to protect taxpayer identities and dollars, and will it be able to accurately administer the Obamacare subsidies?”
Tax filing in 2014: Seven new rules and nine wacky deductions
As the Christian Science Monitor wrote earlier this week: “Tax season is here, so it's time to ensure you're ready to get the most out of your filing. We're here to help you navigate the new rules for 2014 and alert you to some strange, wacky, but wonderful deductions you probably had no idea existed. When January 31 (the first day to file taxes this year) rolls around, you'll be ready – with education and pet moving deductions in tow.”
So what’s an example of a “wacky deduction” that the Christian Science Monitor cited? Clarinet lessons.
“A clarinet and lessons can be considered tax deductible if a doctor has recommended playing the instrument as a method of correcting an overbite,” the article stated. “This isn’t the only strange medical write-off however: others include support stockings, wigs for those who have lost hair due to a disease, and many more, according to IRS publication 502.
“Not tax deductible: earplugs for parents of children taking clarinet lessons.”
Five top tax-advantaged investments for 2014
In a contributed article to CNBC.com, Andrew Osterland wrote that financial advisors generally counsel their clients not to invest for the sole purpose of reducing their tax liabilities because it can end badly.
With the increase in top marginal income tax rates last year and the introduction of new investment income taxes to finance the Affordable Care Act, individuals should consider investments and strategies that offer better after-tax returns in a higher tax environment. Osterland provided five such strategies in his article.
GOP doesn’t embrace Obama tax plan
President Obama’s proposal to expand the Earned Income Tax Credit (EITC) for the working poor is not being embraced by Republicans, complicating any chances for one of the few legislative initiatives in this week’s State of the Union address, Bernie Becker of The Hill wrote on January 31.
Key GOP lawmakers said they remain concerned about the large number of improper EITC payments that get circulated each year, even as conservative economists and Representative Paul Ryan (R-WI) have called for taking another look at the tax break.
“My biggest concern is just the amount of fraud,” said Representative Kevin Brady (R-TX), a senior House Ways and Means Committee member, according to the article. “Too much of it is not going to the families that actually need it. And again, our biggest goal is to get people into better jobs so they don’t have to rely on the Earned Income Tax Credit.”
Becker wrote: “Ways and Means Chairman Dave Camp (R-MI) and other Republican tax writers also remain fixated on their increasingly long-shot goal of overhauling the tax code – and have suggested that any changes to the tax credit are not a priority, and would be accomplished through tax reform.”
Three tips to make standard cost accounting more effective
Even though this is from last week, I still thought it was informative. In an article for Business Finance magazine, Chris Crowder, a senior manager in the accounting and assurance practice at LBMC, provided three steps that should be incorporated into a company’s inventory accounting processes to assist in managing its standard cost.
“By assigning and using standard costs for inventory, companies are making projected estimates of the expected value of inventory (on a per-item basis) based on historical information and other accumulated data such as pricing quotations from vendors,” he wrote. “The most basic problem with that approach is that anything other than ‘actual cost’ is not acceptable under Generally Accepted Accounting Principles (GAAP). GAAP requires that inventory be stated at actual cost – using FIFO, LIFO, or weighted average; however, standard cost may be acceptable as long as it materially approximates ‘actual cost.’”
The four dark clouds hovering over Cloud accounting software
Frank Stitely, CPA, managing member of CPA and business advisory firm Stitely & Karstetter, wrote an article for CPA Trendlines on the four Cloud accounting risks that are currently ignored by many, if not most, Cloud vendors, as well as two ways you can still craft an effective Cloud accounting solution for your clients.