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  • Dear Santa, I want a deduction!

    Tuesday 27th of November 2012 1:17:20 PM

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    With Christmas right around the corner many Americans are trying to save money where they can. Deals like the ones a shopper gets on Black Friday or its internet equivalent, Cyber Monday, just don’t cut it. Many people have turned to the idea of being able to receive a tax write off for Christmas gifts. The question here is “Can you write off Christmas gifts?”

    The answer is, maybe. It really depends on how you are gifting and to whom you are gifting. For a gift to be written off it is has to be gifted to a qualified charity. Unfortunately gifts purchased for your family members or friends can’t ever be deducted. Keep in mind that the write off must be itemized and the standard tax deduction will be forgone.

    The IRS will recognize establishments such as schools and hospitals as a qualifying charity. Other organizations that are operated for religious, educational or literary purposes do also qualify. If you are gifting to a political party or any individual then at this time you can’t write off the taxes. Before making any Christmas gift contribution to a charity please check that this organization is a qualified charity.

    When it comes time to do your taxes understand that the value of your gift (if it’s not a monetary contribution or brand new item) will be the current fair market value of the gift. If the item is not new you can ask the organization to whom which you are donating to estimate the value. In the event that the total value of your donation is more than $250, a written notice is needed to claim a deduction.

    In addition to your Christmas donations any other charitable contribution will be combined when filing your taxes. It is possible to deduct as much as fifty percent of your AGI (annual gross income) from your donations. In the event that your donations should exceed fifty percent of your AGI then you can carry the deduction forward over the next five years, reducing future taxes.

    Itemizing of your deductions is necessary to write off your Christmas gifts. By doing so you are adding the value of any charitable contributions to other itemized deductions, like mortgage interest or medical expenses. In doing so, you forgo the standard deduction which is normally $5800.00 for a single tax payer or $11,000.00 for married tax payers. Take note that you may benefit from taking the standard deduction if it is greater than itemizing. Make sure to keep track of this.

    Lastly, gifting is good….not always good for your wallet, but a great gesture none the less!

  • Refund Split, Not a Hit!

    Tuesday 20th of November 2012 10:50:51 AM

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    According to the recent report released by the Treasury Inspector General for Tax Administration (TIGTA) the risk for fraud has been increased because the IRS provides an option to allow  tax payers to split their refunds into multiple accounts.

    In 2011 more than 842,000 tax payers opted to take advantage of the “split refund” selection.  The IRS has made this option available to taxpayers since 2007.   This option allows tax payers to split the tax refund in two or three different bank accounts.

    Auditors employed by Treasury Inspector General for Tax Administration (TIGTA) have discovered that the methods that that the IRS are using to guarantee the precision of direct deposit information are not adequate.  This increases the potential for fraud.  Just by offering the option to split the risk of fraud is increased significantly. TIGTA found that approximately $1.6 billion of refunds were split between more than 65,300 bank accounts.  What’s more interesting is that 4,400 of those bank accounts were those of tax preparers’ personal tax returns.  Are these tax preparers redirecting these funds to actually pay for their services or other reasons?

    After careful review of this issue TIGTA has suggested that the IRS should better identify whether it is the tax payer or prepare rerouting these funds into their own bank accounts.  The IRS has agreed and has planned that suitable remedial action is to be taken in the future.

  • Should I File a Tax Return?

    Wednesday 14th of November 2012 10:56:11 AM

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    Some people may not be aware of this but in some cases filing a federal tax return is not necessary.  Many factors way in on this but it has to do with more than just how much income you have taken in over the year in addition to your filing status, age and the type of income you made.  In some cases even if you are not required to file it is advised that you still do because there may be a refund waiting for you.  I’m sure we can all use the extra cash.  You may even qualify for refundable credits.

    On the IRS website you can find many tools to help you figure out whether filing a tax return is necessary.  If you use the Interactive Tax Assistant on the IRS website you will be answering a series of questions to help determine if filing is applicable to you.

    As mentioned before, even if you don’t have to file you may want to file for six major reasons: Federal income tax withheld, Earned Income Tax Credit (EITC), Child Tax Credit, American Opportunity Credit, Adoption Credit and Health Coverage Tax Credit.

    For the case of Federal Income Tax Withheld it is advisable to file in order to retrieve any taxes that may have been held by your employer, if you were making estimated tax payments or overpayment from the prior year’s tax return.

    If you qualify for EITC you will receive a refundable tax credit.  To receive a refund you must file your tax return.  Same theory applies to the Additional Child Tax Credit except you must have at least one qualifying child.

    Students that are in their first four years of postsecondary education can qualify for credit up to $2500.00 of which 40% is refundable.  This means that even if you don’t owe any taxes you will receive $1000.00 cash back for all eligible students.

    If you have adopted a child then you may also receive a refundable tax credit to cover any expenses you paid to adopt a qualified child.

    Lastly, eligible tax payers may also receive a refund on payments made to health insurance premiums.

    For more information about filing please visit the IRS website.

  • Facing the Fiscal Cliff

    Monday 12th of November 2012 12:29:59 PM

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    Economists panic over the possibility of yet another recession as well as a drop in the jobs market if the fiscal cliff isn’t averted. After the January 1st deadline, several tax cuts will terminate and at this point severe cuts to government spending will be triggered.

    Newly re-elected President Barack Obama campaigned and won a pledge allowing tax rates for the wealthy to rise while keeping the tax rates for the middle class to remain the same. Republican officials have suggested a cut in deductions from the wealthy taxpayers rather than cutting rates. President Obama plans a more proactive approach to fixing the budget with tax increases as well as spending cuts. Rather than restricting his plan to private talks with Republican leaders, the White house plans on launching a public campaign.

    The average American family is facing a nearly $3700.00 increase in their tax bill next year. Not to mention that the stock market has had one of the worst weeks of the year due to a drop of more than 2%. These tax increases and the spending cuts that will take effect in year 2013 will be about $600 billion per year, with tax increases being the majority. What this means is that even if these tax increases are temporary it is likely that every American will be paying into it. To make matters worse there are about nine different tax increases due to take effect in 2013. Some of which include increased rates on capital earnings and other investment income, estate tax thresholds are due to lower and top earners are to face a new tax to help finance the Obama healthcare reforms.

    Over the course of the next few weeks Capitol Hill and the White House will be negotiating the issues facing the fiscal cliff. We can only hope that Capitol Hill will withdraw any or all tax increases. The problem here would be that the budget deficit that Washington currently has will carry on, resulting in the attrition of investor assurance in the solidity of the government’s finances. It is a possibility that most likely at least a few of the planned tax increases will actually happen. Those taxpayers that haven’t taken notice to the fiscal cliff will be faced with it sooner than they though.

  • IRS Grants Tax Relief for Hurricane Sandy Victims

    Wednesday 07th of November 2012 12:11:55 PM

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    In the wake of the aftermath of Hurricane Sandy, the Internal Revenue Service (IRS) has extended tax relief to the victims affected by this tragedy, both individual and business.

    Recently the Federal Emergency Management Agency (FEMA) declared disaster assistance to affected taxpayers of Connecticut, New Jersey and New York. The IRS has approved and will provide tax relief. Depending on damages (assessed by FEMA) additional locations may be added.

    As part of the tax relief, the IRS has approved postponement for various filing and payment deadlines that came about late October, thus, allowing taxpayers until February 1, 2013 to file any outstanding returns and make payments of taxes due. Also, 4th quarter tax payments that are regularly due January 15, 2013 may be extended to the new due date. In addition, payroll and excise tax returns as well as any payments due for the 3rd and 4th quarters that would have been due October 31, 2012 and January 31, 2013 have also been extended.

    The IRS has also graciously lifted any penalty for late payment or any interest due as a result of the tax relief. To receive this relief the IRS will automatically extend the relief and no calls need to be made to the IRS.

    If your business is the affected area, the IRS will also work with those taxpayers even if they don’t live in the areas affected by Hurricane Sandy. Also, workers that are assisting with Hurricane Sandy aftermath and are associated with an acclaimed humanitarian or government institute are eligible for tax relief. Additionally, failure to deposit penalties associated with federal payroll and excise tax deposits will be waived by the IRS if said deposits are made by November 26, 2012.

    For more information on disaster relief and tax relief please visit www.disasterassistance.gov and www.irs.gov/uac/Tax-Relief-in-Disaster-Situations

  • Whistleblower Paid $38 Million

    Thursday 01st of November 2012 6:49:19 PM

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    After 4 years of investigation, the IRS pays $38 million to an anonymous whistleblower for helping retrieve somewhere between $127 million to $254 million dollars in corporate taxes.    This case has been the second largest payout to any whistleblower from the IRS.  The largest payout was in the amount of $104 million to Mr. Bradley C. Birkenfeld, a former employee at UBS (Switzerland’s largest bank).

    The anonymous whistleblower was represented by Scott Knott of The Ferraro Law Firm. Mr. Knott would not divulge the identity of either their client nor that of the company that was involved.  Although, we know that the company is amongst one of the Fortune 500 companies in the country.

    The IRS is careful to keep the anonymity of corporate whistleblowers, meaning that he/she was most probably employed (and still maybe) by the company turned in during the four years it took to process the claim by the IRS.

    It is unclear to determine exactly how much the IRS has recovered. According to the IRS’s protocol on how much a whistleblower can be awarded it is likely that the IRS collected upwards of $250 million, thus making the award about 15 to 30 percent of total funds retrieved.

  • ARRA Impact To IRS

    Monday 29th of October 2012 12:16:36 PM

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    The contribution of funds coming from the American Recovery and Reinvestment Act of 2009 (ARRA) to support the spending of the Internal Revenue Service (IRS) for the contracts they made to reprogram their computer systems, update the tax related forms and publications, and to accommodate the taxpayers inquiries on the new tax provisions set by the recovery act by means of customer assistance is the focused of the audit report released by Treasury Inspector General for Tax Administration (TIGTA) recently.

    » Read More

  • Inconsistency within IRS in Closing Delinquent Accounts

    Wednesday 24th of October 2012 6:01:30 PM

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    In the report of Treasury Inspector General for Tax Administration (TIGTA), some IRS employees are found not complying properly with the procedures of closing the accounts of delinquent taxpayers including the asking for manager approval.

    TIGTA identified in their audit with the IRS that 136 currently not collectible cases were encoded incorrectly in the database. There are closing codes in the IRS database that did not match with the case documentation.

    IRS said that they will look thoroughly about this matter and will plan for remedial action. They also agreed with the recommendations of the TIGTA. One of the recommendations is to implement security reviews and reports containing an evaluation to the assistor’s use of system command codes.

    source: Treasury Inspector General for Tax Administration

     

  • You Can Count On TIGTA

    Monday 22nd of October 2012 4:49:37 PM

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    Last week, TIGTA announced that the IRS failed to inform an approximately 1.45 million taxpayers that they can qualify for IRS tax relief in particular those who acquired a penalty that is closed to 181 million US dollars. However, wavers for paying tax penalties called First-Time Abate waver can only be obtained by a taxpayer who had demonstrated full compliance in the past 3 years.

    TIGTA and IRS met half way when they agreed with TIGTA’s recommendation of identifying the First-Time Abate waiver as compliance tool so that the taxpayers will be fully aware that there is a relief given by the IRS to those who have good past compliance history.

    Once again TIGTA proved their worth and concern for all US taxpayers. And so when there is a need to know about the IRS latest activities, seek for TIGTA latest information by visiting their official website. You can also go further in your research on today’s important tax news and useful tax tips by visiting this official blog of 911taxrelief.com.

     

  • CEOs Are Seeking For Congress Action Against Fiscal Cliff

    Thursday 18th of October 2012 3:34:10 PM

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    The president of Business Roundtable (BRT) John Engler shared his sentiments over the apprehension in fiscal cliff. During his speech for Detroit Economic Club, he urged the Congress to find an immediate solution to the coming expiration of tax incentives and the eventual tax rate increase on January 2013 that could affect individuals and businesses.

    According to the Congressional Budget Office, fiscal cliff could bring the United States back into the peril of recession due on the first half of 2013. Joining forces to the expiration of tax provisions is the automatic spending cuts determined by the Budget Control Act.

    Engler beckoned that the expiration of tax provisions and automatic spending cuts “are causing chaos” based from BRT’s most recent quarterly CEO survey. The result shows that the in 10 years, 3rd largest drop for the expectations of hiring, capital investment and sales will happen.

    source: tax-news.com

     

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