When you rollover funds from one retirement plan to another, a missed rollover occurs if you can’t complete the rollover within 60 days. A missed rollover results in a taxable distribution. However, there have always been certain specific situations that provide for exceptions to this rule, but any reasons outside that limited list required the taxpayer to request a Private Letter Ruling (PLR) from the IRS. The PLR request process could result in some significant costs for lawyers and fees. Rev Proc 2016-47: Missed Rollover Waivers Recently the IRS published a new procedure for handling an expanded list of exceptions for a missed rollover. This procedure, Rev. Proc. 2016-47, outlines eleven possible exceptions to the missed rollover rule. The eleven exceptions are: an error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates; the distribution, having been made in the form of a check, was […]
When filling out your tax return, it’s allowable to deduct the amount of your regular IRA contribution when filing even though you may not have already made the contribution. You’re allowed to make an IRA contribution for tax year 2015 up to the original filing deadline of your tax return. This year, that date is April 18, 2016. The problem is that sometimes we file the tax return way early in the year, and then we forget about the IRA contribution. As of the posting of this article, you have 1 week to make your contribution to your IRA to have it counted for tax year 2015. What To Do If You Miss the Deadline If you don’t make the contribution on time, you’re in for some nasty surprises unless you take some corrective actions. If you find yourself on April 19, 2016 without having made your IRA contribution and […]
Recently the IRS issued a memo regarding the recent uptick in the occurrence of email phishing scams this year. Below is the text of the warning memo (IR-2016-28): Consumers Warned of New Surge in IRS E-mail Schemes during 2016 Tax Season; Tax Industry Also Targeted WASHINGTON – The Internal Revenue Service renewed a consumer alert for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season. The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information. Variations of these scams can be seen via text messages, and the communications are being reported in every section […]
When filling out your tax return this year, you may have questions about dependents – such as who can be claimed on your return. Claiming a dependent can have a significant impact on your return, including increasing exemptions and possibly increasing certain credits like the Earned Income Credit and various others. The IRS recently published Tax Tip 2016-08, which lists ten facts about dependents and exemptions. Below is the list of facts, along with some additional information that I’ve included (my comments are in italics): Exemptions and Dependents: TopTen Tax Facts Most people can claim an exemption on their tax return. It can lower your taxable income. In most cases, that reduces the amount of tax you owe for the year. Here are the top 10 tax facts about exemptions to help you file your tax return. E-file Your Tax Return. Easy does it! Use IRS E-file to file a complete […]
The IRS recently announce the standard rates for business mileage deductions, along with the rates for moving, medical travel and charitable travel. There were reductions in the primary categories, as you will see in the list below. This is reflective of the reduction in fuel costs over the past year, and is part of a study done annually to determine the fixed and variable costs of operating an automobile. As of January 1, 2016, the following standard rates apply for operating a car, pickup, van, or panel truck, for the various categories: 54¢ per mile for business (was 57.5¢ per mile in 2015) 19¢ per mile for moving purposes (was 23¢ in 2015) 19¢ per mile for medical purposes (also was 23¢ in 2015) 14¢ per mile for charitable purposes (unchanged) The standard mileage rates are used by anyone who keeps a log of miles for the various categories to […]
Sometimes charitable work involves travel – such as for the Red Cross, for example. Did you know that your travel expenses for charitable work can be a tax deduction? Recently the IRS sent out a Summertime Tax Tip (2015-12) that outlines some valuable information about this deduction. Tips on Travel While Giving Your Services to Charity Do you plan to donate your services to charity this summer? Will you travel as part of the service? If so, some travel expenses may help lower your taxes when you file your tax return next year. Here are several tax tips that you should know if you travel while giving your services to charity: Qualified Charities. In order to deduct your costs, your volunteer work must be for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are qualified, and do not need to apply to […]
If you find yourself without all of the information to file your tax return on time, or if you just haven’t got the time to fill out the forms, you can always file for an extension of time to file. This is an automatic extension of six months – to October 15 in most cases. This is only an extension of the time to file your return, not an extension of the time to pay any tax due. You should send the tax due (your estimate of course) by April 15. In an earlier article, we covered the fact that you should file your tax return on time, even if you can’t pay. This applies here as well, but in general you should pay if you’ve calculated that you owe. Here are seven important things you need to know about filing an extension: File on time even if you can’t […]
Oftentimes folks with low incomes don’t see the need to file a tax return. Much of the time this is the correct way to go – after all, why go through the hassle and expense of filing a tax return for no purpose? Unfortunately, many of these folks who didn’t file a tax return are actually due a refund of withheld tax, and possibly even tax credits that they weren’t aware of. The IRS has compiled a list of approximately 1 million taxpayers who didn’t file a tax return in 2011, and this group is due a total of approximately $1 billion in refunds. The problem is that in order to claim these refunds, the tax return for 2011 has to be filed by April 15, 2015 – 3 years after the original filing date. If you don’t file by then, the refund is lost to you forever. Recently the […]
Since we’re in the middle of income tax preparation season, I thought it was appropriate to share some of the tips that the IRS has put forth. Today’s tip is to take advantage of direct deposit for your tax refund. It can be very handy to have this option specified on your tax return, as you’ll see below. It’s faster, more secure, and much more convenient than the old paper check method. Below is the text of IRS’ Tax Tip 2015-23, which details some of the reasons that it makes sense to use direct deposit for your tax refund.
Although there are literally tax preparers standing on the street corners (sometimes in ridiculous costumes), it can be tough to find a qualified income tax preparer near you. Of course, word of mouth is a good way to find a preparer, by way of your family or friends – but what if you still can’t find a qualified tax preparer that you can trust?
The IRS produces a list each year of the “dirty dozen” tax scams that they and taxpayers deal with. I’ve kept track of these over the past several years, so I’ve included the changes to rankings from 2012 to this year for those items in the list that continue to be listed. Topping the list this year is phone scams, which was first listed in the dirty dozen in 2014, at #2.
Since the Affordable Care Act has been in place for over a year now, it’s important to understand what affects the health care law will have on you and your tax situation. Recently the IRS issued a Health Care Tax Tip (HCTT-2015-06) which details how the health care law can effect you. The actual text of the Tip is reproduced below:
Tax filing season is upon us! As you consider all of your options for filing your return this year, you might consider some of the exploring free tax filing for your return. Recently the IRS published their IRS Tax Tip 2015-06, which details information about two of the options for free tax filing that you might be able to take advantage of. The actual text of the Tip is below:
Even though there are only a few more weeks left in the calendar year, there are a few things that you can do to avoid some serious and consequential tax surprises come April next year. The IRS recently published their Special Edition Tax Tip 2014-21 which details some of the steps you could take now to avoid these surprises. Still Time to Act to Avoid Surprises at Tax-Time Even though only a few months remain in 2014, you still have time to act so you aren’t surprised at tax-time next year. You should take steps to avoid owing more taxes or getting a larger refund than you expect. Here are some actions you can take to bring the taxes you pay in advance closer to what you’ll owe when you file your tax return:
There has been a rash of phone scams going on this year – scammers posing as IRS agents that is. I haven’t personally received any of the calls, but I’ve had calls from several clients who have gotten these calls. They can be very disconcerting, to say the least. In the typical phone scam, the caller contacts you out of the blue, and seems to have information about your home address, or bank, or other somewhat personal information. They then tell you that you owe a pile of taxes and you have to pay up now or the local police will be on the way to see you. They will readily take your credit or debit card information right now, over the phone. The flip side is that they’ll say you have a refund coming and will ask for your bank account information so that they can transfer it to […]
When you have a 401k plan and hard times befall you, you may wonder if there is a way to get your hands on the money. In some cases you can get to the funds for a hardship withdrawal, but if you’re under age 59½ you will likely owe the 10% early withdrawal penalty. (The term 401k is used throughout this article, but these options apply to all qualified plans, including 403b, 457, etc.) Generally it’s difficult to withdraw money from your 401k, that’s part of the value of a 401k plan – a sort of forced discipline that requires you to leave your savings alone until retirement or face some significant penalties. Many 401k plans have options available to get your hands on the money, but most have substantial qualifications that are tough to meet. Your withdrawal of money from the 401k plan will result in taxation of the […]
Sometimes you need access to a previous year tax return copy, and dadgummit you just pitched the box of tax copies from 2011, thinking you couldn’t possibly need it again! There are ways to get this information – some easier than others. First of all, if you prepared and filed your own return using one of the commercial programs, and you’ve maintained your access to the program over the years, you should be able to go back and re-print a copy of the return from that year. This is the quick and simple method. If you had a tax professional prepare and file the return for you, she should have a copy of your return – if not the fileable copy, then at least a client’s or preparer’s copy, which should be adequate for fulfilling most requirements. Many preparers retain these copies, with supporting documentation, for many years for just […]
Now here’s some legislation that I could get behind! Recently, House Representative Steve Stockman (R-TX) introduced a bill in response to the IRS’ lame excuse of a “computer glitch” that purportedly erased all of the incriminating evidence from the agency’s computers. This was part of the testimony offered by former IRS Exempt Organizations Division director Lois Lerner in response to the accusation that her division targeted organizations critical of the current administration. Stockman’s bill provides that if the IRS can use lame, flimsy excuses to avoid prosecution, taxpayers should be allowed to use similar excuses. The actual text of the bill follows below:
So – you’re considering your income tax return (or maybe you’ve already filed) and you’re wondering if there are things you need to know with regard to Obamacare. Fortunately, it’s not much (for most folks), for your 2013 return anyhow. Next year will be a different story. The IRS recently produced their Health Care Tax Tip HCTT-2014-10 which lists some tips about how the health care law impacts your 2013 tax return. The actual text of the Tip is below: 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 […]
When filing your tax return you want to make sure that you don’t make mistakes. Mistakes can be costly in terms of additional tax and penalties, as well as the extra time and grief they can cause you. Most of the time using e-filing software can help you to avoid these mistakes, but you should check over the return anyhow to make certain you haven’t fat-fingered something or if something didn’t go wrong with the software. The IRS recently issued their Tax Tip 2014-46, which lists out 8 common mistakes that folks make on their tax return, and how to avoid them where possible. The actual text of the Tip follows below: Eight Common Tax Mistakes to Avoid We all make mistakes. But if you make a mistake on your tax return, the IRS may need to contact you to correct it. That will delay your refund. You can avoid […]