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:
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You’ve still got time to avoid tax surprises
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:
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IRS provides advice for avoiding phone scams
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 […]
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Retrieving a Prior-Year Tax Return Copy
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 […]
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The Dog Ate My Tax Receipts Bill
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:
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Obamacare and Your 2013 Tax Return
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 […]
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Avoiding Mistakes on Your Tax Return
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 […]
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Capital Gains and Losses and Your Tax Return
When you own certain kinds of assets and you sell them, you may incur a capital gain or loss that is applicable to your income tax preparation. If the original purchase price plus applicable expenses associated with the asset (known as the basis) is less than the proceeds that you receive from the sale of the asset, you have incurred a capital gain. On the other hand, if the basis of your asset is greater than the proceeds from the sale, you have incurred a capital loss. Capital gains are taxable to you, using a separate tax rate – and capital losses can be deducted from your capital gains for the year. Excess capital losses (above your capital gains for the year) can be used to reduce your income by up to $3,000 per year, carried forward until used up (or for your lifetime). The IRS recently produced their Tax […]
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Simplified Home-Office Deduction Available
Beginning with your 2013 tax return you have a new option available for calculating the Home-Office deduction – based solely on the square footage of the dedicated space used for the home office. Instead of having to maintain records that are directly and indirectly associated with your home office, you can use the simplified method, which applies a flat $5 rate per square foot to the home office space, up to a maximum of $1,500. The record-keeping and tax preparation simplification is very beneficial: Form 8829 (the usual home-office deduction form) can cause a lot of headaches to prepare, especially if you have more than one home office and you itemize your home mortgage interest and real estate taxes. For a single home office your tax preparation software will do much of the work for you, but complications like a second home office (not that uncommon in these days of […]
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Further Guidance on the One-Rollover-Per-Year Rule for IRAs
As a follow-up to the recent post on this blog The One-Rollover-Per-Year Rule: Revised, the IRS has recently released some additional guidance on the subject, via Announcement 2014-15. As previously mentioned, the IRS has determined to begin using the one-rollover-per-year rule applied to ALL IRAs that the taxpayer owns, rather than only the affected IRAs that have been involved in a rollover. According to the Announcement, the IRS fully acknowledges that the previous understanding of the rule was that it applied on an IRA-by-IRA basis. In fact, there was a Proposed Regulation § 1.408-4(b)(4)(ii) on the books that was to further define the rule as applied only to the involved IRAs. Ever since the Tax Court decided otherwise in the case Bobrow v. Commissioner (TC Memo 2014-21), the rule has been changed. According to the recent announcement though, this will not take affect across the board until January 1, 2015. […]
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Can You Itemize? Or, Should You Itemize?
When you prepare your taxes each year, you’re faced with a decision – itemize deductions or take the standard deduction? Most of the time it’s not a question of whether you can itemize, but rather should you itemize. Most Anyone Can Itemize… This is due to the fact that most anyone can itemize. If you’ve paid state and/or local income or sales taxes, real estate taxes, or paid mortgage interest, you have deductions to itemize. Same goes for charitable contributions. All of these items that you’ve paid out are eligible to be deducted on Schedule A of your tax return, without a lower limit. If you have medical expenses, these can be deductible if the total of your medical expenses are more than 10% of your Adjusted Gross Income (AGI). For 2013 tax returns, if you’re 65 years of age or older, your medical expenses that are more than 7.5% […]
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Your Social Security Benefits: Are They Taxable?
If you’re receiving Social Security benefits, either for disability, retirement, or survivor’s benefits, when you file your tax return you will need to figure out if the benefits you’ve received during the prior year are taxable to you. You’ll receive a Form SSA-1099 from Social Security sometime in the first months of the year, showing what your benefits were in the prior year, as well as any deductions that were made throughout the year – including Medicare premiums (Part B and/or Part D) if applicable, and federal income taxes withheld. But are the benefits taxable to you? At most, 85% of your benefit might be taxed – and it’s possible that none of your benefit is taxable, all dependent upon your total income for the year. See this article for a detailed explanation of How Taxation of Social Security Benefits Works. The IRS recently published their Tax Tip 2014-23, which […]
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Get Your Kids to Help You With Your Taxes
Sometimes as parents we get overwhelmed with the costs of raising kids. What with the high cost of soccer camp, video games, and lessons on the clarinet, it can be woefully expensive raising kids. Sometimes though, there are surprising ways that kids can help out with costs – and your income taxes is one of those places where having kids does help. The IRS recently published their Tax Tip 2014-11 which lists eight ways that having children can help to lower your taxes. The actual text of Tax Tip 2014-11 follows: Eight Tax Savers for Parents Your children may help you qualify for valuable tax benefits. Here are eight tax benefits parents should look out for when filing their federal tax returns this year. Dependents. In most cases, you can claim your child as a dependent. This applies even if your child was born any time in 2013. for more […]
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Where to get IRS Forms and Publications
When you are preparing your taxes, inevitably you run across a form or publication that you need in order to complete your filing. But where can you find all these forms and publications? The IRS recently published their Tax Tip 2014-06, which details information about where you can find these forms and publications. The actual text of the Tip follows below. Four Ways to Get IRS Forms and Publications The IRS offers free tax forms and publications on many topics. Here are four easy ways to get the tax products you need from the IRS: On the Internet. Get everything you need 24 hours a day 7 days a week on www.IRS.gov. To view and download tax products, click on the ‘Forms and Pubs’ tab. Many products appear online before they’re available on paper. Order by phone. Call 1-800-TAX-FORM (1-800-829-3676) Monday through Friday, 7 a.m. to 7 p.m. local time. […]
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Updates to IRS Fees for Installment Agreements and OIC
Just like pretty much everything else in the world, the cost of doing business with the IRS has gone up. The good news is that some fees did not increase for calendar year 2014, but some fees have gone up by significant rates. Installment Agreement This is where you have a balance due to the IRS for unpaid taxes, penalties and interest, and you’re unable to pay the amount at the present time in a lump sum. So you set up an installment agreement with the IRS – where you agree to pay a set amount on a monthly basis until your balance is paid off. If you set up a direct-debit payment plan – where the payment is pulled directly from you bank account – the fee to set this up remains unchanged from 2013 at $52. This is the preferred method to set up such a plan, for […]
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Watch out for scams at tax time
You’ve probably seen news reports about how identity theft is rampant around the time tax returns are being filed. All sorts of nefarious schemes are out there, via the phone or email. The IRS recently published their Special Edition Tax Tip 2014-02, which details the warnings from the IRS about scams. The full text of the Tip is below. IRS Warns of Tax-time Scams 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 tha use the IRS as a lure. Thieves often pose as the IRS using a bogus refund scheme or warnings to pay past-due taxes. […]
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Penalty for Having No Health Insurance
Note: this provision has been repealed beginning with tax year 2019. As you may already be aware, individuals are required to carry health insurance on themselves and their dependents, as of January 1, 2014. This is the mandate set forth in the Affordable Care Act – and of course it’s an important part of making the whole Act work. Small businesses (less than 50 employees) have a similar mandate to provide coverage for employees beginning in 2015, or face penalties themselves. Without mandating insurance coverage for everyone, the system can’t sustain the lower-cost options for folks who desperately need the medical coverage. This includes folks who are not covered by any other means (employer, Medicare, Medicaid or individually-purchased policies) and who have medical problems that require costly care. With the mandate, healthier individuals will also have to pony up and purchase health insurance, so that the overall cost is spread […]
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NUA Allocation Twist – Not as Easy as it Looks
I’ve written much about the Net Unrealized Appreciation (NUA) treatment for company stock in a 401(k) plan – this is the provision that allows you to pull out company stock as part of a full distribution from the plan and get favorable tax treatment for the gain on the stock. More about NUA can be found in this article about Net Unrealized Appreciation Treatment. One of the factors in that article speaks to a special way to allocate the basis (original cost) of the stock. Specifically, if handled correctly, the ordinary income tax on the NUA move can be minimized or eliminated, and the capital gains treatment maximized. However. (As you know, there’s always a however in life!) The problem with this move is that you absolutely must get the 401(k) administrator to go along with your plan – in order to make sure that the 1099R generated by your […]
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You’re Running Out of Time If You Want to Use These 13 Tax Provisions
Every year we say goodbye to certain things that we’ve come to know and love, and certain provisions of the tax law are not excluded from this treatment. Portions of the tax law are intentionally added with short life-spans, and others are retired from time to time as their intended use has either changed or been eliminated. Listed below are the tax provisions (according to the Joint Committee on Taxation) that will be expiring at the end of the year – some we’ll be glad to see go, others we’ll wish would stay around a while. Some will be extended by Congress, either at the last moment or on into the new year, as has happened in the past. Note: This article is aimed toward individual taxpayers rather than businesses, so I’ve only listed those provisions that will have impact on individuals. There are quite a few provisions expiring that […]
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So, What’s Going on at the IRS During the Shutdown?
While the government is in hiatus, what’s going on at the IRS? Well, not a lot. As I understand it, none of the phone lines are being manned, so if you call in for any reason you wind up with the automatons handling your questions. The website is still in operation as well (at least partly). So, you may be able to do a few things, but you’re limited. For example, if you need a transcript of a prior year’s return, I understand that you can request this for yourself – but you can’t ask your accountant or anyone else operating as POA for you to request a transcript. I’ve experienced this myself in attempting to get a transcript for a client – I was shut down. (The same individual had trouble getting a transcript for himself, as the IRS records of his address didn’t match what he was entering […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.