Thursday, January 24, 2013

Coping with Delayed Tax Season





IRS Offers Advice for Coping with Delayed Tax Season

WASHINGTON, D.C. (JANUARY 23, 2013)

BY MICHAEL COHN
The Internal Revenue Service provided advice to taxpayers Wednesday on dealing with the late opening of tax season on January 30 that could also prove helpful to tax preparers.
For the first time this tax season, the "Where's My Refund?" tool will provide personalized refund timelines for taxpayers.
The IRS noted that it would begin processing most individual income tax returns on Jan. 30 after updating its forms and completing the programming and testing of its processing systems. The IRS contended that it had anticipated many of the tax law changes made by Congress under the American Taxpayer Relief Act, but the final law requires some changes before the IRS can begin accepting tax returns.
Many major software providers are accepting tax returns in advance of the Jan. 30 processing date, the IRS noted. These software providers will hold onto the returns and then electronically submit them after the IRS systems open. The IRS advised taxpayers who use commercial software to check with their provider for specific instructions about when they will accept your return. Software companies and tax professionals then send the returns to the IRS, but the timing of the refunds is determined by IRS processing, which starts Jan. 30.The IRS reiterated that it will not process paper or electronic tax returns before the Jan. 30 opening date, so there is no advantage to filing on paper before then  Using e-file is the best way to file an accurate tax return, the IRS insisted, and using e-file with direct deposit is the fastest way to get a refund.
After the IRS starts processing returns, it expects to process refunds within the usual time frames. Last year, the IRS issued more than nine out of 10 refunds to taxpayers in less than 21 days, and it expects the same results in 2013. Even though the IRS issues most refunds in less than 21 days, some tax returns will require additional review and take longer. To help protect against refund fraud, the IRS has put in place stronger security filters this filing season.
After taxpayers file a return, they can track the status of the refund with the Where’s My Refund?”  tool, which is available on the IRS.gov Web site. This year, instead of an estimated date, the Where’s My Refund? tool will give people an actual personalized refund date after the IRS processes the tax return and approves the refund.
"Where's My Refund?" will be available for use after the IRS starts processing tax returns on Jan. 30. The IRS also provided several tips for using "Where's My Refund?" after it becomes available on Jan. 30:
• Initial information will generally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after mailing a paper return.
• The system updates every 24 hours, usually overnight. There’s no need to check more than once a day.
• “Where’s My Refund?” provides the most accurate and complete information that the IRS has about the refund, so there is no need to call the IRS unless the web tool says to do so.
• To use the “Where’s My Refund?” tool, taxpayers need to have a copy of their tax return for reference. Taxpayers will need their social security number, filing status and the exact dollar amount of the refund they are expecting.
For the latest information about the Jan. 30 tax season opening, tax law changes and tax refunds, visit IRS.gov -  www.irs.gov.



Thursday, January 3, 2013

American "Tax Relief Act"




American "Tax Relief Act" Signed by President Obama

  Pulling back from the “fiscal cliff” at the 13th hour, Congress preserved most of the George W. Bush-era tax cuts and extended many other lapsed tax provisions. Shortly before 2 a.m. Tuesday, the Senate passed the American Taxpayer Relief Act (ATRA), H.R. 8. The House of Representatives approved the bill by a vote of 257 late on Tuesday evening, after plans to amend the bill to include spending cuts were abandoned. The bill was signed by President Obama on Wednesday. Notable items for successful taxpayers include:
 
1 All the individual marginal tax rates under EGTRRA and JGTRRA are retained (10%, 15%, 25%, 28%, 33%, and 35%). A new top rate of 39.6% is imposed on taxable income over $400,000 for single filers, $425,000 for head-of-household filers, and $450,000 for married taxpayers filing jointly ($225,000 for each married spouse filing separately).
2 The personal exemptions and itemized deductions phaseout is reinstated at a higher threshold of $250,000 for single taxpayers, $275,000 for heads of household, and $300,000 for married taxpayers filing jointly.
3 A 20% rate applies to capital gains and qualified dividends for individuals above the top income tax bracket threshold; the 15% rate is retained for taxpayers in the middle brackets. The zero rate is retained for taxpayers in the 10% and 15% brackets.
4 The exemption amount for the AMT on individuals is permanently indexed for inflation. Relief from AMT for nonrefundable credits is retained.
5 The estate and gift tax exclusion amount is retained at $5 million indexed for inflation ($5.12 million in 2012), but the top tax rate increases from 35% to 40% effective Jan. 1, 2013. The estate tax “portability” election, under which, if an election is made, the surviving spouse’s exemption amount is increased by the deceased spouse’s unused exemption amount, was made permanent by the act.
6 If an employer offers a designated Roth 401(k) plan, ATRA will now allow individuals to convert their existing 401(k) to a Roth 401(k) whether or not the individual is allowed to take a distribution from the plan.