In Accounting & Finances, Business, Taxes on February 17, 2012 by Sufen Wang Tagged: Alternative Minimum Tax, Earned Income Tax Credit, Filing Status (federal income tax), Internal Revenue Service, irs, Tax, Tax credit, Tax preparation
When and Why You Should File
Tax season is in full bloom with preparer commercials flooding the air waves and “Tax Filing This Way” signs being waved on every corner. The good news is that some of you out there won’t need to go through the hassle of filing this year. The bad news is that if you don’t file a return, you’ll have no chance of receiving certain tax credits.
As a U.S. Citizen or Resident Alien, you only have to file if you made a certain amount of money in 2011, and that amount varies based on your age, your filing status, and the type of income you received. Let’s say you were under 65 years old at the end of 2011, single, and made over $9,500 last year. You earned more than the minimum gross income, so you must file a return. However, if you are under 65, married, and want to file jointly with your spouse, you need to do so only if your gross income was at least $19,000. The IRS provides a handy-dandy chart with explanations for you to decide which categories apply to you.
Of course, there are all sorts of different situations that complicate these rules. Maybe you were self-employed and you made $800 last year. It might seem like a small amount, but if you earn over $400 working for yourself, you must submit a return. Or perhaps you owe certain special taxes, such as the Alternative Minimum Tax, or Recapture Taxes – once again, you’re going to be filling out a return in the next few months.
These are some reasons why you’re required to file, but even if none of them apply to you, you could still benefit from sending in a return. It’s the only way you can get a refund on that federal tax your employer withheld from your paycheck, or that overpayment you made on your 2010 taxes. There’s also the Earned Income Tax Credit, which is a refundable tax credit for people who worked, but barely made any money.
Sometimes kids are a good thing, especially when it comes to taxes. Maybe you decided to adopt last year and need help with all of the fees you paid during the process. You might be eligible for the Adoption Credit, a refundable tax credit for those adoption expenses. If your son or daughter (or both) attends college, you can offset the cost of their tuition with the American Opportunity Credit. Each student is eligible for a maximum $2,500 and 40% of the credit is refundable. It doesn’t take a math major to realize you should file a return even if you owe no taxes: you can still receive as much as $1,000 cash back for each student. So think twice before you set aside your financial records for next year – you might be missing out on the money you deserve.
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances, Business, Taxes on February 10, 2012 by Sufen Wang Tagged: Best Buy, Capital asset, Capital gains tax, Income tax, Internal Revenue Service, irs, Republicans, Tax
Capital Gains Tax this, Capital Gains Tax that…
We have been hearing this phrase a lot in the presidential debates. But what are those politicians actually arguing about? Don’t shake your head and say “Just another tax I have to pay.” Understanding how the Capital Gains Tax works and what’s at stake will benefit you and your finances in the long run.
That nice fridge you just bought from Best Buy is no ordinary refrigerator: it’s also something called a capital asset. The same term applies to your car, your house – even your secret Disney figurine collection. The IRS sums it up pretty well with the explanation that “almost everything you own and use for personal or investment purposes is a capital asset.”
Don’t panic yet hoarders. You can own as much stuff as you want without paying a cent of Capital Gains Tax on it. The problem starts when you sell any of that stuff and make more dough than you originally paid for it. For example, you might have purchased a rare book at a garage sale for $5 and you end up selling it for $6,000. Nice job on your $5,995 profit, but the IRS is going to want a piece of the pie too.
How much the IRS gets from you depends, in part, upon how long it takes you to sell the asset. A short-term gain is when you sell something for a profit less than a year after its original purchase. Therefore, a long-term gain is when you keep something for at least a year before you sell it. And then, for those people who are really patient, the super-long-term gain is when an asset is held for over five years after the original purchase.
You’re currently better off making long-term investments. For short-term investments, you get charged at the same rate as your income tax – so those in the highest income category get hit hard if they take the fast lane. However, everyone pays a flat rate of 15% for long-term capital gains (except individuals in the 15% income tax range and below, who are now paying 0%). The rates also vary depending on the nature of the asset. Sorry, but everyone is stuck at a 28% long-term rate for collectibles, so you might want to save those figurines for your kids. You can’t avoid paying taxes when you profit from your assets, but the rates aren’t set in stone, so pay attention to what politicians are proposing.
On the Money,Sufen Wang
Wang Solutions
In Accounting & Finances, Business, Taxes on February 1, 2012 by Sufen Wang Tagged: Address (geography), Cheque, InternalRevenueService, irs, IRS e-file, Tax, tax refund, Tax returns
IRS Seeks to Return Undelivered Refund Checks…
Are you missing your refund? Don’t miss out on your missing money….
The IRS is doing a little year-end cleaning and they want to get rid of your money. Almost 100,000 taxpayers didn’t receive their tax refunds last year due to simple mailing address errors. That means over $153.3 million, or about $1,547 per check, in refund checks had to be sent back to the IRS offices because of scribbled, incorrect, or just plain missing addresses – and are just waiting to be returned.
So if you’re one of those people still asking “Where’s my refund?”, you might find the “Where’s My Refund?” tool on IRS.gov very useful (or call 1-800-829-1954). You can check the status of that mysteriously absent check and find instructions on how to resolve any delivery problems. These are the only ways to find out about your pending refund, so don’t be fooled by e-mails that look like they are sent by the IRS. Those messages are phishing scams and your computer will be grateful if you don’t open the attachments or click on any suspicious links.
A word of advice on future filings, you really should just choose direct deposit when you file your return and completely avoid the hassle of lost, stolen, and undelivered checks. You can receive the tax refund directly into your bank account, divvy it up between two or three financial accounts, or even buy a savings bond! You might as well go digital all the way and file your tax return electronically, so that you don’t have to go all the way to the post office. The IRS also recommends e-file because it eliminates the risk of lost paper returns, reduces errors on tax returns, and speeds up refunds. This is particularly useful for taxpayers who can’t even read their own handwriting; well, maybe they can, while the IRS Revenue Agent has to guess what those numbers really are on their returns.
The IRS knows best when it comes to tax returns, so listen to its recommendation and use e-file and direct deposit to avoid future delivery problems. You can also literally listen to the IRS’ Undeliverable Refund Podcast for more information or check out the agency’s Undeliverable Refund Video.
On the Money
Sufen Wang
Wang Solutions
In Culture, Education, Entertainment on January 22, 2012 by Sufen Wang Tagged: Chinese New Year, Dragon, Red envelope, Year of Dragon
新年快樂! 恭賀新禧!
The Year of the Dragon is upon us! Let’s take a break from numbers and taxes – at least for a little while – and welcome the Dragon. Although New Year’s Eve is January 22nd, Chinese New Year is actually celebrated for fifteen days! The first three days are the most important and then a huge party on the fifteenth day ends the New Year celebration with a bang.
The house needs a thorough cleaning before the party starts – it’s bad luck to clean during the first three days of the New Year. Always sweeps inward in order to sweep good fortune inside. The house décor will feature a lot of the color red, and small red envelopes filled with $1 or $2 should be scattered around. It’s bad luck to enter a new year with empty rice containers, so don’t forget to head to the market for a refill. While you’re there, pick up some fresh offerings, such as oranges, apples, orchids, etc. for the various Gods, especially the Buddha. On the way back, make sure you wash your car and fill up the gas tank.
Similar to Thanksgiving, family members travel home to celebrate Chinese New Year’s Eve together. This holiday is especially important because it is the only time off for most factory workers in China. The traditional dinner includes all food groups, but the principal entrée is fish. Warning: never finish the fish dish, even if it’s delicious! You must have some leftover (savings) to carry food and fortune from the old year into the new year. Indeed, the pronunciation of the word “fish” in Chinese is actually the same as that of “leftover” or “save more.”
Gambling usually starts after New Year’s Eve dinner, with the most popular activities being Mahjong and dice games. Next, remember those red envelopes that were left lying around the house? Well, more of these are given out from married adults to younger children and are filled with crisp, new bills. If you are single, no matter how old you are, you get a pass on handing them out; most likely you will still receive the red envelopes from your parents. By the way, the money from these red envelopes generally exchanges from hand to hand via gambling winnings and losses throughout the night… Finally, the New Year’s Eve evening is topped off with fireworks at midnight.
With New Year’s Day comes freshly-prepared food. Although the dinner from the night before might look perfect for a rumbling tummy, it’s bad luck to eat the New Year’s Eve leftovers. Throughout the day, more red envelopes and food are shared with extended relatives and friends. You never know who will come visit with their children, so always have backup red envelopes. This goes on for three days…seriously, three days!
Chinese New Year celebrations end on February 6, 2012 and all of the family members gather together one more time before the new year officially gets underway. But what does the Year of the Dragon actually mean for you? The Dragon historically brings water, so keep your umbrella handy and your galoshes ready throughout 2012. Legend also has it that the Dragon is coated with a mysterious color that makes it unpredictable and untouchable, and thus, something unexpected could happen in 2012. Finally, the Year of the Dragon will be marked by “excitement, exhilaration, and intensity,” so put on some red clothes for good luck and get ready for a great year!
Happy New Year!新年快樂! 恭賀新禧!
Sufen Wang
Wang Solutions
In Accounting & Finances, Business, Taxes on January 16, 2012 by Sufen Wang Tagged: Certified Public Accountant, Preparer Tax Identification Number, State bar association, Tax, Tax preparation, tax refund, tax return
What to Look for in a Tax Return Preparer
It’s already that special time of the year, folks: people are getting ready for tax returns. You might be tempted to forget about filing because you plan on having a professional do it for you. But how do you know that you’ll find the right person for the job? After all, as the taxpayer, you are legally responsible for everything written on your tax return – even if you don’t prepare it. Here are some tips to keep in mind so that you can ensure your paperwork ends up in good hands.
First and foremost, the preparer MUST have a Preparer Tax Identification Number (PTIN) – otherwise he won’t be able to sign your return and enter this number, which is now required for all paid preparers. Once you have his official digits, you’ll want to dig a little deeper. Steer clear of any individual who has had a particularly unpleasant relationship with the Better Business Bureau or a bad record with the State Boards of Accountancy for certified public accountants, State Bar Associations for attorneys, etc. You get the drift?!
You’re obviously going to be charged for the preparer’s services, but how you pay is crucial. Avoid anyone who bases their fee on a percentage of your refund. Or take your business elsewhere if the preparer tells you that your refund will go into his bank account first, and he will then write you a check, after deducting his fees. Your tax refund is your money and should be deposited directly into an account in your name. You should pay your tax preparer separately for his services.
How you file is also important. The IRS is pushing for e-file because it’s faster and safer, and your preparer should at least make this option available to you. And if you choose not to e-file, then be sure to read my last week’s blog, Hello E-File!, as a reference to understand your responsibility in this process.
The tax preparer needs to be easily accessible to you, both by telephone and in-person. You don’t want to show up a few days before your returns are due and find a “Gone Fishing” sign on the door. You also don’t want your preparer to mysteriously leave town (with all of your personal information) after the return has been filed, so make sure you will be able to contact him for future questions.
Once you chose a preparer, you still need to keep your eyes open for any signs of bad business practices. A good preparer will ask you tons of questions to double-check your financial information, and should also request all of the necessary records and receipts. Think about it: how can someone accurately file your return if they don’t have the required documents, or a full understanding of your financial detail?
Returns are like checks – never sign a blank one. That means you need to review the completed return in its entirety before signing it. Ask your preparer any questions you may have, because if something is incorrect, you’re the one who will have to deal with it later. So, ask questions, and do no stop until you get satisfactory answers from your preparer. Finally, once the preparer has signed your return and included his PTIN, don’t walk out of the office until you have a hard copy in hand. Tax preparers are supposed to make things easier for taxpayers. Don’t let one get off easy if he tries to swindle you: report abusive tax preparers with Form 14157, available on www.irs.gov.
On the Money
Sufen Wang
Wang Solutions
In Accounting & Finances, Business, Taxes on January 9, 2012 by Sufen Wang Tagged: Internal Revenue Service, irs, IRS e-file, IRS tax forms, Tax, Tax preparation, tax return
Good-Bye Paper Returns, The IRS Makes Its Digital Move
The IRS is doing everything it can to ensure e-filing remains alive and well. In 2011, paid preparers who expected to file 100 or more individual income tax returns during the calendar year were required to file electronically. However, the new year means new requirements. As of January 1, 2012, paid preparers who expect to file just 11 or more individual, estate, or trust returns must file electronically.
Members of a firm will also have to play by these revamped rules. The e-file requirement applies if the firm’s members in the aggregate expect to file 11 or more covered returns in 2012. Basically, if your firm is doing any business at all, you’re probably going to be e-filing.
Indeed, almost every tax return counts when you’re checking for that magic number 11. The regulation covers income tax returns in the Form 1040 and Form 1041 series, and Form 990-T, the Exempt Organization Business Income Tax Return. However, forms such as 1040-NR and 1040X are considered automatic administrative exemptions because they still have to be mailed to the IRS the old-fashioned way, and so you shouldn’t include them in your estimate.
Remember that it’s ultimately up to the taxpayer to decide how he wants to submit his tax return. Psssst, heads-up, keep in mind that most of your client(s) usually do not know what they want; specifically how they want their tax returns to be filed… So, make sure you give sound advice to your clients in this regards. However, for those clients who really do not want to go digital, because of the new regulations, you’ll need to acquire a written statement from the taxpayers on or before the date the return is filed. It must be signed and dated (a joint return need only be signed by one spouse) and should state that the taxpayer chooses to file the return in paper format and will be submitting it to the IRS –rather than the preparer. This way, the individual income tax return will not be treated as filed by you, the tax return preparer, and thus will not be included in your return tally.
It’s important that you don’t send this statement to the IRS or attach it to your client’s tax return – that’s the taxpayer’s responsibility; well, good luck with that… hoping that your client will do what he is supposed to do… So, instead, make sure you do your part by attaching Form 8948, Preparer Explanation for Not Filing Electronically, to your client’s paper return and check box 1. You also need to include your PTIN on each tax return where requested. If your client does choose not to e-file, it’s important that he personally mails his return. The IRS is making it clear this year that once a taxpayer chooses not to e-file, it’s hands-off the paperwork for the tax preparer.
Hopefully you’re already an authorized e-file provider because that’s the only way you’re allowed to e-file with the IRS. If not, you might want to click on the following link and start applying for your Electronic Filing Identification Number – it takes at least 45 days for the authorization process. Otherwise you’re going to have a lot of clients filing complaints against their unprepared tax preparer.
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances, Business, Taxes on December 14, 2011 by Sufen Wang Tagged: Calendar year, Internal Revenue Service, IRS tax forms, Payment, Property tax, Salvation Army, Tax, Tax preparation
The end of the year is almost here and it’s the perfect time for business owners and individual tax payers to dust off their financial documents and confirm that everything is in order. You’ve got a lot to do, so let’s get started before those April tax showers come storming in!
Business Owners:
You’ll need to review all of your vendor payouts for the year: any vendor who has provided you labor services for more than $600 must be reported to the IRS via Form 1099. As a rule of thumb, always ask your vendors, regardless of the amount of their services, to complete a new W9 at the beginning of each calendar year; so that you do not have to chase them at year end for information. The W9 provides their legal name, address, and tax payer ID – whether it’s an EIN number or a regular social security number – and also requires the vendor to claim responsibility for any taxes due from payments issued to him.
Check your payroll to ensure payments to your employees have been recorded correctly throughout the year, any corrections may be still processed onto their year-end W2’s. Also, make sure that your payroll taxes have been submitted to the proper governmental agencies on a timely basis, and better take care any late payment before you close your books for the year. Any year-end bonuses and/or profit sharing to officers and employees must also be processed and to be included in their individual W2’s, and recorded as business expense accordingly.
Review your retirement plan, i.e, 401k Plan, if you have one. Make sure that all of the employees’ deferral have been deposited into their accounts; and any and all profit sharing or employer matching funds have been accurately distributed accordingly.The good news is that those profit sharing and/or employer matching distributions within a retirement plan are actually business write-offs and can help ease your year-end tax liability!
Take the time to reconcile your business checking and money market accounts with their corresponding bank statements – that means making sure the interest income has been recorded. Then move on to your credit card accounts and verify any and all business related charges and finance fees are in the record books. You should do the same with your cash expenses (i.e. count the petty cash drawer one last time) and dig out those receipts you knew would come in handy to support any expenditures.
Moreover, any capital expenditures? Section 179 will allow you to deduct a large amount of assets (expenditures) that you purchased throughout the year for business use. Again, make sure you have the proper receipts and purpose of the equipment clearly stated for your tax preparer.
Last but not least, the company cars are going to require a little inspection. Always reexamine the mileage log and odometer of what are supposed to be strictly business-used vehicles; your tax preparer will need this information to complete your business tax returns.
Individual Tax Payers:
Now where did you put those year-end W2’s? Your tax preparer will ask you for them, along with childcare-related expenses, and interest income received and mortgage payment 1098’s from your financial institutions. Keep an eye out because these documents must arrive on your doorstep by January 31. Next is the numbered forms category, check for 1099’s received from your investment accounts, such as mutual funds dividends and/or interest received for the year, and any stocks sold with their proper gain or loss data.
You can deduct any charitable donations you made during the year. Unfortunately, this does not include the time you spent doing laundry and taking the kids to school. Most charity organizations will issue a year-end summary of funds received from you by January 31. Any other small donations to Goodwill, Salvation Army, etc. must have a receipt with a description of the donated items and their estimated value.
To all the homeowners out there, do yourself a favor and confirm that you recorded your property tax payments. If you own rental properties, be sure that the collected rent has been properly documented as income, and related expenditures noted as rental expenses – this should include the property taxes you paid in the calendar year. While you’re searching through your “Property” file, if you refinanced, purchased, or sold any real estate this year, set aside your final closing document issued from the escrow company for your tax preparer. Please note that this must be the final closing statement and NOT the estimated statements.
Finally, gather up all of your medical expenses, doctors and medicine expenses alike. They are tax deductible if you are filing itemized personal income tax returns. Make sure you have the proper receipts to support your claims. Dont’ forget those glasses and dental appointments you had throughout the year!
Now you’re ready to welcome in the new year with a (temporarily) clean filing cabinet!
On the Year End,Sufen Wang
Wang Solutions
In Accounting & Finances, Business, Education, Taxes on November 21, 2011 by Sufen Wang Tagged: accounting, business, Education, Internal Revenue Service, irs, Small business, Tax, United States
Get Schooled by the IRS for Free
Wall Street isn’t the only place that’s been occupied lately. Proposed tuition increases have caused students on college campuses across the U.S. to stand up and say “NO” to raising the cost of higher education. If attending a university will break your bank, the IRS has a solution: the agency offers a variety of excellent educational training and learning tools for small businesses for FREE……
Those of you who consider yourselves tax pros should check out IRS Live. A real-time webinar, IRS Live is a panel discussion among IRS experts and industry professionals aimed at educating tax professionals on current and complex tax issues affecting them and their clients. You can actually earn Continuing Professional Education credits for participating in the webinar! IRS Live is broadcast bimonthly and the next program airs on Dec. 14.
For small business owners who are too busy to hit the books can boost their knowledge by visiting the Small Business/Self-Employed Virtual Small Business Tax Workshop. The curriculum caters to new owners and features lessons about how to set up and run your business so paying taxes isn’t a hassle, what you need to know about Federal Taxes and your new business, and much more. The best part is that you can go to recess whenever you get tired of listening to the teacher talk about retirement plans and tax obligations.
While you’re on the computer, you should print the handy-dandy 2012 tax calendar for small businesses and the self-employed, or set it as your desktop wallpaper. It reminds you about everything from the exact days you should deposit your payroll tax, to what forms you need to file and when. Or, if you’re an avid reader and don’t want to get too lost in that novel, just order a tax information bookmark – or even 100 if you want one for every book! You can go shopping for other business products here, and remember, everything is always free from the IRS.
Brochures are nice, but could you spot a tax scammer walking down the street? The IRS even provides tools to help identify, avoid, and report different types of scams. Still can’t get enough? Whether you’re a teacher looking to freshen up those old lesson plans or just somebody who wants to become more proficient in the business world, Understanding Taxes is a gold mine of educational resources. It provides detailed lesson plans, interactive activities, simulations, and answers for the hows and whys of taxes. The only thing the IRS doesn’t give you is an apple for the teacher.
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances, Business on November 14, 2011 by Sufen Wang Tagged: Accountancy, Accountant, Balance sheet, Certified Public Accountant, Income statement, Westwood College
Why Everyone Needs a Little Accounting in Their Life
My students for Basic Accounting Principles 101 crept sluggishly into the classroom as if they were entering a death chamber. It was the first day of the Fall Quarter at Westwood College. One young man immediately heaved an enormous sigh and declared, “I hate accounting and I am terrible at math. Oh, I’m getting a headache just by being in this class.” I couldn’t suppress a smile as I said, “Let me set a few things straight. First of all, accounting has very little to do with math, but it has a lot to do with logic and common sense.”
“What?!” cried all of students in the classroom, their sleepy ears perking up. Well, that definitely got their attention! “Yup, accounting is about how an individual “accounts” for a transaction, how one “reports” the data, and how one “translates” the information. The math portion simply plays a supporting role in the big picture. Whether it’s for business purposes or personal reasons, one wants to know where his money is coming from, how much of it he can generate, and how much he has left over at the end of the day.
“So accounting is really a medium that helps you keep track of your business transactions, report these transactions correctly according to accounting guidelines and principles, and most importantly, make your next business move. In other words, an accounting background is like having a secret weapon in the business world!” I exclaimed to my students. I continued to stand on my soap box and preach that everyone should have some accounting knowledge as he or she travels through life. Regardless of your chosen profession, you must be able to understand what your CPA, your tax preparer, your bookkeeper and/or your financial advisor is telling you about your financial status.
“When you’re a successful professional and have a family of your own ten years down the road, you’re going to be making big decisions about your money. It’s imperative that you know how to read a Balance Sheet and an Income Statement. How often have you heard on the news that a celebrity or business owner was cheated out of his/her life savings? It’s bad when an accountant steals from his clients, but it’s almost worse when a business owner doesn’t know how to read his own financial statements or check his bank accounts.
“I would go so far as to say that it’s fun to run a business once you know how to read and interpret its financial statements. Accounting functions as a safety net for your pocketbook – you can even think of it as the CSI of Numbers! Armed with accounting know-how, you can keep your financial advisors honest and your bank account secure. Remember to always check the integrity of your data – numbers don’t lie, people do – without principles and integrity, your financial statements would read like a fiction novel on the New York Times Best Seller list.”
On the Money,
Sufen Wang
Wang Solutions
In Accounting & Finances, Taxes on November 6, 2011 by Sufen Wang Tagged: Audit, Budget, Douglas Shulman, Internal Revenue Service, irs, Senate, Tax
Speaking up for the IRS….
Although taxpayers send their returns and payments to the IRS, the agency isn’t exactly rolling in the dough. Yes, the IRS has a budget and, what’s more, it’s in danger of being reduced. Don’t jump for joy yet; less money for the IRS could mean more problems for taxpayers in the near future.
IRS Commissioner Douglas Shulman broke down the implications of a broke IRS in a letter he recently sent to key lawmakers. The IRS budget last year was $12.1 billion: a current House approbation bill wants to cut $650 million from core IRS accounts and a Senate bill proposes a $525 million cut. Shulman stated outright that “These budget cuts will result in a direct increase to the nation’s deficit.”
But how could a decrease in government spending increase the deficit? For starters, “The IRS is unique in that it has a positive return on investment…collecting on average $2.5 trillion per year.” In other words, the IRS is a profit-center not a cost-center. Your tax dollars don’t just magically arrive at the U.S. treasury; there are real people right now who are working to ensure that everyone pays on time. In fact, 92% of the IRS’ enforcement budget is spent on labor and the proposed cuts would reduce staffing, leading to a 5-8 percent decrease in “collection actions taken to recover known unpaid taxes” and consequently, a loss of “$4 billion in revenue annually.”
Closer to home, customer service for taxpayers would also become greatly limited. This means more grey hairs for your practitioners (tax preparers, accountants and CPAs) who are trying to file accurate and timely tax returns. Right now, the normal waiting time for a phone inquiry is between 30 to 45 minutes. Sometimes it’s even difficult to receive an acknowledgement from the IRS that your response to an audit letter has been received. If you think that’s bad, be prepared to never get through to an IRS representative on perpetually-clogged phone lines and to wait five months for a response to your letters. (For tips on how to survive an audit, you can look forward to my e-book: How to Survive an Audit and Other Business Nightmares).
That’s not all folks. Shulman also said the cuts could impact a range of critical, but currently unfunded activities, such as fighting identity theft, cracking down on offshore tax evasion, and processing thousands of offshore asset disclosures. Indeed, the Commissioner said the reductions are serious enough that the IRS will start cutting its spending right away – waiting for enactment would not leave enough time to make the changes needed to adapt.
Here’s the bottom line: as long as the Internal Revenue Code continues to be treated as a social services delivery mechanism by Congress (first-time homebuyer credits, upcoming health care benefits, small business new worker credits, energy efficient equipment credits, etc.), any cuts in the IRS budget are likely to make the work of the tax practitioner more difficult at the same time that practitioner penalties are being increased. The heavy cuts proposed for the current IRS budget will end up costing every taxpayer time and money.
On the Money,
Sufen Wang
Wang Solutions
Sometimes kids are a good thing, especially when it comes to taxes. Maybe you decided to adopt last year and need help with all of the fees you paid during the process. You might be eligible for the Adoption Credit, a refundable tax credit for those adoption expenses. If your son or daughter (or both) attends college, you can offset the cost of their tuition with the American Opportunity Credit. Each student is eligible for a maximum $2,500 and 40% of the credit is refundable. It doesn’t take a math major to realize you should file a return even if you owe no taxes: you can still receive as much as $1,000 cash back for each student. So think twice before you set aside your financial records for next year – you might be missing out on the money you deserve.
Wang Solutions 