Tag Archive for Tax Returns

Alert Your Clients To Possible Refund Delays In 2017

Ron Marini

Tax professionals should alert their clients that a new law requires the IRS to hold refunds until mid-February 2017 for people claiming the Earned Income Tax Credit or the Additional Child Tax Credit.

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Trump, Clinton, Buffett And Taxes

John Stancil

Much has been made in the press of late regarding the tax returns of the major Presidential candidates. This article is not focused on promoting either candidate, but an attempt to shed some light on these recent tax revelations.

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Tax Return Tips For Your 2015 Tax Returns

John Stancil

As The United States Tax Code gets more complex, one would think that the number of individuals utilizing a paid preparer would be on the increase. However, that is not the case. More and more individuals are filing their own returns. I see at least two reasons for this. The individual tax return market can be viewed as consisting of two segments – very simple returns with no itemized deductions or other complications in the return and more complex returns utilizing multiple tax schedules and tax forms. As the standard deduction increases, more taxpayers are taking the standard deduction, so their tax return is fairly simple to prepare. Adding to the simplicity of the return is the second factor – availability of inexpensive or free preparation software. Since these typically guide the taxpayer in preparation, the task becomes even simpler.

However, taxpayers of all stripes should be aware of certain factors involved in filing their returns. I have provided my “Ten Best Tips for Filing your Return.” These tips can be useful for those preparing their own returns, but they can also guide the taxpayer using a CPA or other professional preparer in assembling their information for the preparer.

• File tax returns on time, even if you cannot pay now. You will be assessed a penalty and interest for failure to pay, but you will avoid the failure to file penalty. This penalty is 5% per month of the amount of taxes owed, up to 25%. If you don’t owe, there shouldn’t be a penalty. Read more

Good To Know… Part 3 – From Larry Stolberg, CPA, CA

Larry Stolberg - 11-27-15

Short Blog Posts In One Location…

◊ Green card holders who are holding cards close to 8 of the last 15 years need to examine their options to avoid becoming covered expatriates if they return to Canada and/or wish to give up the green card. Becoming a covered expatriate can have significant U.S. tax implications to you.

◊ CRA Form 1135 may become easier for 2015 if the aggregate cost of foreign property is not over $250K.

◊ Snowbirds need to watch their days presence in the U.S. to avoid deemed residency rules and related filing obligations! Read more

Repair Regs – Another Solution To “Elect-Out” of Rev. Proc. 2015-20 To Preserve Missed Deductions

Gian Pazzia

The IRS has recently written on their website that eligible taxpayers may elect out of Rev. Proc. 2015-20 by filing a statement with their 2014 tax returns indicating their qualifying trade or business is not applying the simplified procedure of Rev. Proc. 2015-20. Qualified small business taxpayers who accept the relief of Rev. Proc. 2015-20 automatically forfeit any opportunity to retroactively correct capitalized expenditures that should have been deducted in years prior to 2014.

A qualified “small business taxpayer” for this purpose is any business with total assets of less than $10 million or less than $10 million in average annual gross receipts (from prior three taxable years). Read more

Should You Itemize Your Deductions For Taxes?

Barry Fowler15

Looking ahead to the filing season for this year’s tax returns, a frequent question is whether you should keep track of tax-deductible expenditures or simply settle for the standard deduction amount.

Whether you can itemize deductions on your tax return depends on how much you spent on certain expenses during the year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions (usually job or investment related) can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.

The standard deduction amounts are based on your filing status, your age and whether or Read more

Everything You Wanted To Know About Installment Payment Plans, But Wished You Did Not Need To Ask

TaxConnections Picture - Man - Thinking - 5-21-15- square

If you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as you pay your tax debt in full, you can reduce or eliminate your payment of penalties or interest, and avoid the fee associated with setting up the agreement.

Before applying for any payment agreement, you must file all required tax returns.

You may be eligible to apply for a streamline payment agreement if:

• Individuals must owe $50,000 or less in combined individual income tax, penalties and interest, and have filed all required returns. Read more

The Concept of Being Married, But Considered Unmarried For Tax Purposes

TaxConnections Picture - Married on Teeter Totter - square

The general rule for married taxpayers filing their tax returns is that they can only file Married Filing Jointly (MFJ) or Married Filing Separately (MFS). There is, however, a very important exception to this rule. If you are married and separated from your spouse, under tax law you may be considered unmarried if certain conditions are met. This means that you could qualify to use the Head Of Household filing status instead of MFS, and will not be subject to the disadvantages associated with the MFS filing status.

Under tax law, you can be considered unmarried if you meet all the following tests:

• Obviously, you must intend to file a separate return from your spouse.
• You must have paid more than half the costs of keeping up a home for the tax year. Read more

When Fear of Filing Leads To Years of Failing To File Tax Returns

Tax Problems

Have you ever heard the expression, “What you focus on expands”? I invite you to consider this idea for a moment as I discuss what gets so many people in trouble with the IRS.

Most of the time it starts out innocently enough. You prepare your tax returns and much to your surprise you owe the IRS a sum of money you simply do not have. It could be $1000, $2000, $10,000. It could be more or it could be less. Let’s just agree that whatever the amount it seems impossible for you to be able to pay all at once. So, what do you do? You decide not to file your taxes.

The next year, the same thing happens, and again you are afraid to file because now you owe more. You fear the IRS will demand payment in full.  Each successive year, the fear Read more

Tax Refunds Delayed By Educational Credit Programming Glitch

The Internal Revenue Service has found that changes in Form 8863, Education Credits, are delaying more than 600,000 tax returns, many of which appear to come from H&R Block. The IRS acknowledged in an email Friday that it revised the form for tax year 2012 “to help taxpayers and tax preparers understand the qualifications for the American Opportunity Tax Credit. Checkboxes for lines 23-26 were added to confirm basic qualifications for taxpayers claiming this credit. If these lines are left blank, there will be a delay in the processing of the taxpayer’s return. To avoid delays, ensure your clients complete Form 8863 correctly.”

The IRS originally warned about the delays last month, telling preparers that they needed to fill out Yes or No in response to certain questions asking whether students had completed four years of post-secondary education before 2012 and whether they had ever been convicted before the end of 2012 of a federal or state felony for possession or distribution of a controlled substance (see IRS Warns of Problems with Education Credit Filings). However, it turns out the IRS had actually made further changes in the programming of the forms so that an N needed to be filled out instead of a No. The form itself, though, has checkboxes next to the words Yes and No. All this confusion has led to many frustrating refund delays for taxpayers, particularly at the nation’s largest tax prep chain, H&R Block. On Sunday, Block posted a message on its Facebook page saying it was working to resolve the issues with the IRS after being inundated with complaints from customers.

“H&R Block has confirmed with the IRS that there was an issue with certain tax returns filed before February 22, 2013 that included certain education tax credits claimed on Form 8863,” the company wrote. “We have worked with the IRS to expedite a solution to this issue for all of our affected clients.  If you received this letter of notice requesting additional information for Form 8863 and already responded to the IRS, or have not received a notification to date, there is no additional action needed at this time. For those clients who have received notification from the IRS and have yet to respond, please call your local H&R Block office or 800-HRBLOCK. The office or customer service agent will be able to better serve you and provide next steps. For those clients who received the IRS notice regarding form 8863 that said it would take 6-8 weeks to receive a refund after this issue was resolved, we are assured it will not take that long. We continue to work with the IRS and as we have more specifics on timing and any other updated information, we will share it with our clients.”

An IRS spokesperson told MarketWatch on Tuesday that the problem was delaying the processing of about 10 percent of the approximately 6.6 million tax returns filed with the Form 8863. Block has apparently been the major recipient of thousands of complaints on Facebook and Twitter about the problem. The IRS is able to process the tax returns now that it knows the source of the errors, but because that means there are extra steps involved, taxpayers will still be subject to delays. One recent comment on Block’s Facebook page from a customer indicated they have been waiting a month and a half for their tax refund.

Block updated the Facebook page Tuesday to say that it was going to reach out individually to the taxpayers who were affected, referring obliquely to articles like the one on MarketWatch as well as other outlets like USA Today and Forbes about the problem. “Sorry for the late update but we’ve always assured you we would share information as soon as it becomes available,” said Block. “There continues to be a lot of information floating around regarding the Form 8863 issue that is impacting a number of our clients. We wanted to give you a place to go to get those facts and the next steps for those in this situation. In addition to this page on our website, we are reaching out to each and every one of you individually to give you direction and give you the facts. Please look for those emails, calls or letters starting tomorrow. Again, we apologize for the inconvenience this has caused and we’re glad to hear some clients are already seeing their refund status change due to the work with the IRS. Please keep checking here and on the website for the latest information.”

On the new page about the situation on its site, Block stated, “The IRS has informed us and other impacted providers that they are currently processing these returns. This review process means the IRS may need 4-6 weeks from this date to issue a refund. H&R Block clients are already reporting a change in their refund status since the IRS began processing these returns.”

Block added that the IRS is reminding taxpayers to check the “Where’s My Refund?” tool on to learn the status of their tax refund, but since the site is updated overnight by the IRS, taxpayers do not need to check it more than once a day. Early in tax season, the IRS asked taxpayers not to check “Where’s My Refund?” too often because it was getting bogged down with requests from anxious taxpayers (see IRS Asks Preparers and Taxpayers to Limit Use of ‘Where’s My Refund’ Tool).

Block said no additional action is needed for H&R Block clients who have already received an IRS letter requesting additional information for Form 8863 and already responded to the IRS; or have not received an IRS letter about Form 8863 to date. For those H&R Block clients who have received a letter from the IRS and have yet to respond, they are asked to call their local H&R Block office or 800-HRBLOCK. “The IRS has stopped sending letters based on this Form 8863 issue to this group of affected H&R Block clients,” Block noted.

The glitch is also causing problems for taxpayers who are applying for financial aid through the Free Application for Federal Student Aid program. Block advised that there are manual steps they can take that will allow their FAFSA application to proceed while their return is still processing. The Department of Education suggests that if the tax return has not yet been processed by the IRS, they can manually enter the tax return data on the application. They can then return to the online FAFSA to update the information when the return has been processed. The information about this is posted on the FAFSA section of the Department of Education’s website.

Block offered a statement of regret to its clients, saying, “H&R Block appreciates that this issue may cause problems for our clients and we are doing everything in our power to address the processing of these returns. We will continue to update clients as more information becomes available. We thank our clients for their patience while we continue to work with the IRS to expedite the filing process on their behalf.”

The delays in tax refunds this year after the last-minute fiscal cliff deal are also starting to have an impact on the economy at large. Walmart CFO Charles Holley told an investor conference Tuesday that the big box retailer has cashed $2.7 billion worth of tax refund checks this year so far in the U.S., compared to approximately $4 billion at this time last year, according to Reuters.

What with all the confusion this tax season, including the late start to the season and delays in forms including the one for education tax credits, the last thing that taxpayers and preparers needed was a major software bug caused by a difference of one letter in the alphabet. To paraphrase an old saying, sometimes…

“No really does mean No!”


 What do you think?  Feel Free To Comment.


By Michael Cohn, Editor-in-Chief, Accounting,  March 13, 2013

Edited and posted by Harold Goedde CPA, CMA, Ph.D. (taxation and accounting)

The IRS Released Its Winter 2013 Statistics of Income Bulletin

Winter 2013 Statistics of Income Bulletin IR-2013-26, March 6, 2013

WASHINGTON — The Internal Revenue Service today announced that the winter 2013 issue of the Statistics of Income Bulletin is available at The winter 2013 issue features preliminary data from more than 145 million individual income tax returns for tax year 2011. The Statistics of Income (SOI) Division produces the SOI Bulletin on a quarterly basis. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue of the SOI Bulletin also includes articles on the following topics:

–  Individual Income Tax Rates and Shares, 2010. Of the 142.9 million individual tax returns filed in tax year 2010, 84.5 million (59.1 percent) were classified as taxable returns or returns with a total income tax greater than $0. Adjusted gross income (AGI) for taxable returns was nearly $7.25 trillion, and total income tax was $952 billion.

–  Individual Noncash Charitable Contributions, 2010. More than 7. million individual taxpayers reported a total of $34.9 billion in deductions for noncash charitable contributions for tax year 2010.

–  Split-Interest Trusts, Filing Year 2011. Charitable remainder trusts, charitable lead trusts, and pooled income funds reported $9.7 billion in gross income and $118.1 billion in end-of-year assets.

–  Domestic Private Foundations and Related Excise Taxes, Tax Year 2009. For tax year 2009, domestic private foundations reported $588.5 billion in total assets and $52.2 billion in total revenue. These foundations distributed $40.9 billion in contributions, gifts, and grants to the charitable sector.

–  Controlled Foreign Corporations, 2008. For tax year 2008, foreign corporations controlled by U.S. multinational corporations held $14.5 trillion in assets and reported receipts of $6.0 trillion.

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