IRS Tax News

  • 20 Aug 2012 2:14 PM | Anonymous

    Contributing money and property are ways that you can support a charitable cause, but in order for your donation to be tax-deductible, certain conditions must be met. Read on for six things the IRS wants taxpayers to know about deductibility of donations.

    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.

    2. Itemizing. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.

    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.

    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.

    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.

    Bottom line: your support of a qualified charitable organization may provide you with a money-saving tax deduction, but conditions do apply. 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. These publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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  • 20 Aug 2012 2:13 PM | Anonymous

    If you are required to take the Registered Tax Return Preparer test, please check your inbox (or spam folder) for an email from the Return Preparer Office. Schedule your test today to ensure that you can have the time and location of your choosing.

  • 20 Aug 2012 2:12 PM | Anonymous

    The new IRS.gov website will go live on Aug. 30.

    A preview of the new site is available on IRS.gov. Most of your “favorite” links will remain in tact. However, if you linked certain pages on your website to IRS.gov, check them after Aug. 30.

  • 17 Aug 2012 12:04 PM | Anonymous

    If you’ve recently updated your status from single to married, you’re not alone – late spring and summertime is a popular period for weddings. Marriage also brings about some changes with your taxes. Here are several tips for newlyweds from the IRS.

    • Notify the Social Security Administration  It’s important that your name and Social Security number match on your next tax return, so if you’ve taken on a new name, report the change to the Social Security Administration. File Form SS-5, Application for a Social Security Card. The form is available on SSA’s website at www.ssa.gov, by calling 800-772-1213, or visiting a local SSA office.
    • Notify the IRS if you move  IRS Form 8822, Change of Address, is the official way to update the IRS of your address change. Download Form 8822 from IRS.gov or order it by calling 800-TAX-FORM
      (800-829-3676).
    • Notify the U.S. Postal Service  To ensure your mail – including mail from the IRS – is forwarded to your new address, you’ll need to notify the U.S. Postal Service. Submit a forwarding request online at www.usps.com or visit your local post office.
    • Notify your employer  Report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
    • Check your withholding  If you both work, keep in mind that you and your spouse’s combined income may move you into a higher tax bracket. You can use Publication 505, Tax Withholding and Estimated Tax, to help determine the correct amount of withholding for your marital status, and it will also help you complete a new Form W-4, Employee's Withholding Allowance Certificate. Fill out and print Form W-4 online and give it to your employer(s) so the correct amount will be withheld from your pay.
    • Select the right tax form  Choose your individual income tax form wisely because it can help save you money. Newlywed taxpayers may find that they now have enough deductions to itemize on their tax returns rather than taking the standard deduction. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.
    • Choose the best filing status  A person’s marital status on Dec. 31 determines whether the person is considered married for that year for tax purposes. Tax law generally allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but filing jointly is usually more beneficial.

    Bottom line: planning for your wedding may be over, but don’t forget about planning for the tax-related changes that marriage brings. More information about changing your name, address and income tax withholding is available on IRS.gov. IRS forms and publications can be obtained from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    To automatically receive IRS tax tips, visit IRS.gov, click on "News" and select "e-News Subscriptions."

    Links:

    • Form 8822, Change of Address (PDF)
    • Form W-4, Employee's Withholding Allowance Certificate (PDF)
    • Publication 505, Tax Withholding and Estimated Tax (PDF)

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  • 16 Aug 2012 3:45 PM | Anonymous

    College-bound students and their parents sometimes face last minute requests to complete or provide additional information for financial aid applications. 

    The Internal Revenue wants to help by minimizing time spent on the completion of the Department of Education’s Free Application for Federal Student Aid (FAFSA). By using the IRS Data Retrieval Tool, applicants can automatically transfer required tax data from their federal tax returns directly to their FAFSA form.

    This IRS tool is a free, easy and secure way to access and transfer tax return information onto the FAFSA form. Using the tool saves time, improves accuracy and may reduce the likelihood of the school’s financial aid office requesting that you verify the information.

    Here are some tips on using the IRS DRT:

    • Eligibility Criteria  To use the IRS DRT to complete their 2012-2013 FAFSA form, taxpayers must:  
    1. have filed a federal 2011 tax return,
    2. possess a valid Social Security Number,
    3. have a Federal Student Aid PIN (individuals who don’t have a PIN will be given the option to apply for one through the FAFSA application process), and
    4. have not changed marital status since Dec. 31, 2011.
    • Exceptions  If any of the following conditions apply to the student or parents, the IRS Data Retrieval Tool cannot be used for the 2012 FAFSA application:
    1. an amended tax return was filed for 2011,
    2. no federal tax return was filed for 2011,
    3. the federal tax filing status on the 2011 return is married filing separately or
    4. a Puerto Rican or other foreign tax return has been filed.

    Applicants who cannot use the IRS DRT to meet college requests for verification, may need to obtain an official transcript from the IRS. Transcripts are not available until the IRS has processed the related tax return. To order tax return or tax account transcripts, visit IRS.gov and select "Order a Transcript" or call the toll-free Transcript line at 1-800-908-9946.

    In addition, the IRS offers money-saving information for college students and their parents about tax credits and deductions for qualifying tuition, materials and fees.

    Links:

  • 03 Aug 2012 11:29 AM | Anonymous
    The Internal Revenue Service announced on June 22, 2012, important interim changes to strengthen its procedures for issuing Individual Taxpayer Identification Numbers (ITINs) from now through the end of the year. Designed specifically for taxadministration purposes, the IRS issues ITINs only to those who are not eligible to obtain a Social Security Number.

    These interim procedures apply to applicants generally seeking ITINs for the purposes of filing U.S. individual income tax returns. Because the April 17 filing deadline has passed, the IRS anticipates that a small number of taxpayers will need ITINs between now and the end of the year for these purposes.

    Specifically, the procedures apply to most applicants submitting Form W-7, Application for IRS Individual Taxpayer Identification Number. The IRS generally issues ITINs for individuals in these categories during the tax filing season with the submission of a Form 1040, U.S. Individual Income Tax Return.

    You can find additional information about these ITIN changes, including the interim procedures and frequently asked questions and answers, online at www.irs.gov.
  • 03 Aug 2012 11:24 AM | Anonymous
    If you're selling your home, there are a few things you need to know about federal taxes.

    If you make a profit on the sale of your home, you may need to report the profit as a capital gain when you file your taxes. However, if you owned and lived in the home as your main home for at least 2 out of the past 5 years, you may be able to exclude up to $250,000 of the gain ($500,000 for married couples filing jointly). If you are eligible to
    exclude the gain, you don’t need to report the sale on your tax return unless you receive a Form 1099-S, Proceeds from Real Estate Transactions.

    Here are some other points to remember:
    • You cannot deduct a loss from the sale of your main home
    • Special rules may apply when you sell a home for which you received the firsttime homebuyer credit. See Publication 523, Selling Your Home, for details.
    • If the home was used for business or rental purposes, special rules apply.
    • When you move, be sure to update your address with the IRS and the U.S.

    Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change. For more information, see Publication 523, Selling Your Home, available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Publication 523 includes worksheets to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
  • 24 Jul 2012 9:53 AM | Anonymous

    The IRS is sending out warning letters to those paid preparers who did not submit Form 8867 with EITC returns.  Penalties will be assessed for 2012 returns. The online EITC Due Diligence training module can help avoid penalties.

  • 22 Jun 2012 2:40 PM | Anonymous
    Viewing this webinar will allow participants to learn:

    • What is foreclosure or repossession of real property?
    • Learn about taxable cancellation of debt (COD) income
    • Find out exceptions and exclusions under IRC 108
    • Hear about reduction of tax attributes and Form 982
  • 22 Jun 2012 2:39 PM | Anonymous

    June 2012

    Taxpayers should be on the lookout for a new, email-based phishing scam now circulating that targets Department of Defense military members, retirees and civilian employees. The email appears to come from Defense Finance and Accounting Services and displays a .mil email address. The email states that those receiving disability compensation from the Department of Veterans Affairs (VA) may be able to obtain additional funds from the IRS. Email recipients are then asked to send various VA and IRS documents containing their personal and financial information, such as copies of VA award letters or their income tax returns, to an address in Florida.

    The information on these documents is then used by the scammers to commit identity theft. Typically, identity thieves use someone’s personal data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards or apply for new loans, credit cards, services or benefits in the victim’s name.

    For more information on phishing scams, please see Suspicious e-Mails and Identity Theft.

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