Tax Filings Archives | Rick Norris

CPA Tax Tip: High Tech Tax Tools to Help You

I know, don’t trust the government when it gives you something free. But in the area of phone tapping, drones, and internet bugging, it probably won’t compromise your privacy too much to take advantage of the high tech candy. Here are some of the IRS tips to help you:

Are you on the go but need the latest tax information at your fingertips? There’s an app for that. The latest version of the innovative IRS2Go app is now available.

Here’s what you can do with the redesigned IRS Smartphone app IRS2Go, version 4.0, available in English and Spanish:

Check the status of your refund. The new version of IRS2Go includes an easy-to-use refund status tracker so taxpayers can follow their tax return step-by-step throughout the IRS process. Just enter your Social Security number, filing status and your expected refund amount. You can start checking on the status of your refund 24 hours after the IRS confirms receipt of an e-filed return or four weeks after you mail a paper return. Since the IRS posts refund updates on a daily basis, there’s no need to check the status more than once each day.
Find free tax preparation. You may qualify for free tax help through the IRS Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs. A new tool on IRS2Go will help you find a VITA location. Just enter your ZIP code and select a mileage range to see a listing of VITA/TCE sites near you. Select one of the sites and your Smartphone will show an address and map to help you navigate.
Get tax records. You can request a copy of your tax bill or a transcript of your tax return using IRS2Go. The post office will deliver to your address on record.
Stay connected. You can interact with the IRS by following the IRS on Twitter @IRSnews, @IRStaxpros and @IRSenEspanol. You can also watch IRS videos on YouTube, register for email updates or contact the IRS using the “Contact Us” feature.

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IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

IRS Small Business Tax Calendar

Running a small business is cumbersome. The last thing a business owner needs is to keep a tax calendar. However, to not know some of the small business tax deadlines can be costly. Check out the IRS site https://www.tax.gov/calendar/ for a complete calendar by month for all of your tax needs. For example:

Thu	3	Deposit payroll tax for payments on Dec 26-28 if the semiweekly deposit rule applies.
Fri	4	Deposit payroll tax for payments on Dec 29 – Jan 1 if the semiweekly deposit rule applies.
Wed	9	Deposit payroll tax for payments on Jan 2-4 if the semiweekly deposit rule applies.
Thu	10	Employers: Employees are required to report to you tips of $20 or more earned during Dec 2012
Fri	11	Deposit payroll tax for payments on Jan 5-8 if the semiweekly deposit rule applies.
Tue	15	Individuals: Pay the final installment of your 2012 estimated tax. Use Form 1040-ES.
Tue	15	Farmers and fishermen: Pay your estimated tax for 2012. Use Form 1040-ES.
Tue	15	Employers: Deposit payroll tax for Dec 2012 if the monthly deposit rule applies.
Wed	16	Deposit payroll tax for payments on Jan 9-11 if the semiweekly deposit rule applies.
Fri	18	Deposit payroll tax for payments on Jan 12-15 if the semiweekly deposit rule applies.
Thu	24	Deposit payroll tax for payments on Jan 16-18 if the semiweekly deposit rule applies.
Fri	25	Deposit payroll tax for payments on Jan 19-22 if the semiweekly deposit rule applies.
Wed	30	Deposit payroll tax for payments on Jan 23-25 if the semiweekly deposit rule applies.
Thu	31	File Form 720 for the fourth quarter of 2012.
Thu	31	Furnish Forms 1098, 1099 and W-2G to recipients for certain payments during 2012. Furnish Form W-2 to employees who worked for you during 2012.
Thu	31	File Form 730 and pay the tax on wagers accepted during Dec 2012.
Thu	31	Deposit any FUTA tax owed through Dec 2012.
Thu	31	File Form 2290 and pay the tax for vehicles first used in Dec 2012.
Thu	31	Files Forms 940, 941, 943, 944 and/or 945 if you did not deposit all taxes when due.
Thu	31	File your tax return if you did not pay your last installment of esimated tax by January 15th

Check the appropriate boxes on the site to taylor it to your needs. Whether a small business or individual, always check with your tax advisor if unsure about any tax issue.

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Informed Giving: Even in Tough Times, Non-Profit Organizations Need You

For over three decades I have experienced charitable giving on several levels: 1) Like most people, I support those organizations that are dear to me, 2) I have sat or sit on non-profit boards, usually as Treasurer, but occasionally President., 3) As a CPA, I have obviously counselled people on their contributions, the most of exciting of those was a donation of a Picasso.

But, in order to donate correctly, you should follow the rules set out by the tax code and the IRS:
1. Tax-exempt status. Contributions must be made to
qualified charitable organizations to be deductible. Ask the charity about its
tax-exempt status, or look for it on IRS.gov in the Exempt Organizations Select
Check, an online search tool that allows users to select an exempt organization
and check certain information about its federal tax status as well as
information about tax forms an organization may file that are available for public
review. This search tool can also be used to find which charities have had
their exempt status automatically revoked. Don’t hand out cash to street vendors unless you are sure they represent a legitimate company.

2. Itemizing. Charitable contributions are deductible
only if you itemize deductions using Form 1040, Schedule A. A real bummer for those who are not wealthy enough to own a home, or have other deductions that qualify them.

3. Fair market value. Cash contributions and the fair
market value of most property you donate to a qualified organization are
usually deductible. Special rules apply to several types of donated property,
including cars, boats, clothing and household items. If you receive something
in return for your donation, such as merchandise, goods, services, admission to
a charity banquet or sporting event only the amount exceeding the fair market
value of the benefit received can be deducted.

4. Records to keep. You should keep good records of
any donation you make, regardless of the amount. All cash contributions must be
documented to be deductible – even donations of small amounts. A cancelled
check, bank or credit card statement, payroll deduction record or a written
statement from the charity that includes the charity’s name, contribution date
and amount usually fulfill this record-keeping requirement. When donating things like clothes, take pictures, itemize, and always get a receipt.

5. Large donations. All contributions valued at $250
and above require additional documentation to be deductible. For these, you
should receive a written statement from the charity acknowledging your
donation. The statement should specify the amount of cash donated and/or
provide a description and fair market value of the property donated. It should
also say whether the charity provided any goods or services in exchange for
your donation. If you donate non-cash items valued at $500 or more, you must
also complete a Form 8283, Noncash Charitable Contributions, and attach the
form to your return. If you claim a contribution of noncash property worth more
than $5,000, you typically must obtain a property appraisal and attach it to
your return along with Form 8283. Obviously, I had to obtain a written appraisal of the Picasso, and fill out the form.

Don’t wait until December 31 to figure this out. Collect your donation receipts in a big envelope throughout the year. Then, match them to your checks and credit cards.

6. Timing. If you pledge to donate to a qualified
charity, keep in mind that for most taxpayers contributions are only deductible
in the tax year they are actually made. For example, if you pledged $500 in
September but paid the charity just $200 by Dec. 31 of that same year, only
$200 of the pledged amount may qualify as tax-deductible for that tax year.
End-of-year donations by check or credit card usually qualify as tax-deductible
for that tax year, even though you may not pay the credit card bill or have
your bank account debited until after Dec. 31.

For more information, see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property.

Source: IRS

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Frivolous Constitutional Claims Against Taxes

Thirty years ago, I lived around the corner from the San Fernando Valley Main Post Office in Van Nuys. My CPA tax filing season ended on April 14, so I was home on the night of April 15. I used to walk my dog down to the Post Office that night and watch the people depositing their tax returns at 10:00 pm. Cars were lined up Sherman Way onto the freeway offramp conjesting the slow lane for about a quarter of a mile.

My favorite pasttime were the people picketing on the sidewalk telling people not to fiile tax returns because it was a violation of the Constitution. I didn’t let on I was a CPA, but wanted to know their reasoning.

There are piles of case law that has rejected Congress’s right to tax. Here are a few from: https://www.irs.gov/pub/irs-utl/friv_tax.pdf

Contention: Taxpayers do not have to file returns or provide financial information because of the protection against self-incrimination found in the Fifth Amendment.

There is no constitutional right to refuse to file an income tax return on the ground that it violates the Fifth Amendment privilege against self-incrimination. As the Supreme Court has stated, a taxpayer cannot “draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.” (So, don’t take the 5th, it may land you in 3 to 5 in a penitentiary.)

2. Contention: Compelled compliance with the federal income tax laws is a form of servitude in violation of the Thirteenth Amendment.

“If the requirements of the tax laws were to be classed as servitude, they would not be the kind of involuntary servitude referred to in the Thirteenth Amendment.” (It may feel like slavery, but not the kind imagined in the 13th Amendment.)

3. MY FAVORITE, Contention: Federal Reserve Notes are not income.

Proponents of this contention assert that Federal Reserve Notes currently used in the United States are not valid currency and cannot be taxed because Federal Reserve Notes are not gold or silver and may not be exchanged for gold or silver.

The Court has completely obliterated this contention, so don’t try it.

As a CPA, we don’t really consider any basic contention to taxes constitutionality. Don’t get convinced by a protester, or it can cost you your freedom. Speak to your CPA or tax advisor before you do anything in the tax arena.

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Deadline Tax Filing Tips from the IRS

Back in the 1980’s I lived in the San Fernando Valley near the main post office. At about 9 pm on April 15th, I would walk my dog to the post office to watch the late tax filers. A line of cars always stretched around the corner and up the 405 Sherman Way freeway offramp up into the slow lane. But the best part were the anti-tax people protesting the existence of the income tax. They would be picketing in front of the post office telling drivers not to throw their returns into the large canvass bins manned by postal employees. What a circus, I loved it.

If you are one of those last minute people, here are some tips from the IRS:

1. File electronically Most taxpayers file electronically.
If you haven’t tried it, now is the time! The IRS has processed more than 1
billion individual tax returns safely and securely since the nationwide debut
of electronic filing in 1990. In fact, 112 million people — 77 percent of all
individual taxpayers — used IRS e-file last year.

2. Check the identification numbers Carefully check
identification numbers — usually Social Security numbers — for each person
listed. This includes you, your spouse, dependents and persons listed in
relation to claims for the Child and Dependent Care Credit or Earned Income Tax
Credit. Missing, incorrect or illegible Social Security numbers can delay or
reduce a tax refund.

3. Double-check your figures If you are filing a paper
return, double-check that you have correctly figured the refund or balance due.

4. Check the tax tables If you e-file, the software will do
this for you. If you are using Free File Fillable Forms or a paper return,
double-check that you used the right figure from the tax table for your filing
status.

5. Sign your form You must sign and date your return. Both
spouses must sign a joint return, even if only one had income. Anyone paid to
prepare a return must also sign it and enter their Preparer Tax Identification
Number.

6. Send your return to the right address If you are mailing
a return, find the correct mailing address at www.irs.gov.
Click the Individuals tab and the “Where to File” link under IRS Resources on
the left side.

7. Pay electronically Electronic payment options are
convenient, safe and secure methods for paying taxes. You can authorize an
electronic funds withdrawal, or use a credit or a debit card. For more
information on electronic payment options, visit www.irs.gov.

8. Follow instructions when mailing a payment People
sending a payment should make the check payable to the “United States Treasury”
and should enclose it with, but not attach it to, the tax return or the Form
1040-V, Payment Voucher, if used. The check should include the Social Security
number of the person listed first on the return, daytime phone number, the tax
year and the type of form filed.

9. File or request an extension to file on time By the
April 17 due date, you should either file a return or request an extension of
time to file. Remember, the extension of time to file is not an extension of
time to pay.

10. Visit IRS.gov Forms, publications and helpful
information on a variety of tax subjects are available at www.irs.gov.

If you hire a CPA to help you file, you don’t have to worry about these things. But, just like dancing, everything in taxes depends on timing. So, make sure you stay in step, or it can cost you penalties or delays. Discuss this with a tax professional before making any decisions.

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Congress Gives Small Businesses a 1099 Reporting Break

Congress is sending a tax bill to the President that will ease up the 1099 reporting requirements created by the Health Bill. The 1099 provision required businesses, charities and state and local governments to file a 1099 form with the Internal Revenue Service to report annual purchases from contractors above $600. The bill also would repeal the following:

Business payments of $600 or more made to a corporation;
Amounts paid in consideration for property and other gross proceeds for both property and services; and
Payments of $600 or more made to a service provider by recipients of income from rental real estate.

For more information see the Senate bill under Accounting today. The President is expected to sign it into law.

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