Posts Tagged ‘Tax return (United States)’

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$1.6 Billion Down, Only $3.6 Billion to Go:

In Accounting & Finances,Business,Taxes on November 25, 2013 by Sufen Wang Tagged: , , , , ,

taxfraudTIGTA Reports on Fraudulent Tax Refunds
The Treasury Inspector General for Tax Administration (TIGTA) recently released some great news: the IRS issued $3.6 billion in fraudulent tax returns in 2011.

Um. I know, that’s a whopping amount of money that should not have been handed out. But it is a pleasant change of pace from the $5.2 billion reported for tax year 2010 to a $3.6 billion in 2011.

handmoneyDespite the “improvement,” the IRS needs to step up its game and fix lingering problems identified by TIGTA. For example, a handful of tax refunds depositing to the same bank account should be a bright red flag. Apparently the IRS is color blind. But $3.6 billion is a little bit harder to ignore.

identity_theftAnd the agency does seem to lose track of time when it comes to identify theft cases. TIGTA reported that it took the IRS about 312 days to resolve tax-related identity theft cases. That’s like an anniversary… So the million dollar – well, actually billion dollar – question is what will the IRS do about these numbers?

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (562) 806-5805

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2014 Tax Season Start Date Push Back…

In Accounting & Finances,Business,Taxes on November 18, 2013 by Sufen Wang Tagged: , , , , , , ,

Early Birds Must Be Patient: Government Closure Pushes Back 2014 Tax Season Start

New Year's Eve ClockThe government shutdown will have a ripple effect into next year. The IRS announced a delay of about one to two weeks to the start of the 2014 filing season. The agency needs the extra time to double-check its tax processing systems since the federal government was M.I.A. for 16 days.

Think government computers should be able to handle anything, no problem? Basically, fifty core IRS systems have to be able to process 150 million tax returns with no glitches. Updating these systems is a really confusing, year-round process with most of the work starting in the fall – in other words, right when the government stopped dead in its tracks.

Calendar 321About 90 percent of IRS operations were closed during the shutdown. Stir in the fact that this year there were already extra programming demands on IRS systems, to provide more refund fraud and identity theft detection and prevention, and you’ve got yourself a recipe for delay. The original start date of the 2014 filing season was Jan. 21. Now the IRS won’t start accepting 2013 individual tax returns until sometime between Jan. 28 and Feb. 4.

MH900339880Sending tax returns via snail mail won’t bypass the delay either: the IRS won’t process paper tax returns before the postponed start date. And there’s no point in doing that since taxpayers will receive their tax refunds much faster by using e-file with direct deposit. Looking further down the road, the April 15 tax deadline is set by statute, so that won’t get pushed back even with the late start.

The IRS is up and running after the 16-day downtime and is putting in work to catch up on the 400,000 pieces of paperwork that piled up during the closure. Stir in the 1 million items already being processed before the shutdown, along with the heavy demand on phone lines and walk-in sites, and you’ve got yourself another recipe, this time for a headache. The IRS encourages taxpayers to wait to call or visit if their issue is not urgent, and to use automated applications on IRS.gov. Don’t rush if you don’t have to: set your briefcase down and take a minute to smell the autumnal air before you continue on your busy day.

MH900237191Addendum: And that’s not all that was delayed folks. The PTIN renewal season was supposed to start on October 16, but nothing could happen because the IRS was closed. Luckily the agency got things back on track and the PTIN Renewal Season for 2014 officially began on October 30. That means about 690,000 federal tax return preparers have two months – from now until December 31 – to go online and renew their PTIN’s. Anyone who doesn’t and still wants to make money preparing federal returns, will be out of a job come New Year’s.  

Sufen Wang, M.S. Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Determining Your Correct Filing Status

In Accounting & Finances,Business,Culture,Taxes on April 27, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900151049Single, Married, or Head of Household?

Okay, seriously, now that the tax deadline, April 15, had passed, and tax extension had filed; you really need to start working on your returns!

What’s your status? No, not your Facebook status, your income tax return filing status. Filing status can impact the tax benefits you receive, the amount of your standard deduction, and the amount of taxes you pay. It can even – drum roll please – affect whether you have to file a federal income tax return.

MH900019119Classifying your relationship as “It’s Complicated” will only annoy the overworked IRS Agent. You must choose from five filing statuses on a federal tax return, with the three most common being “Single,” “Married Filing Jointly,” and “Head of Household.”

MH900237191Your marital status on the last day of the year is your marital status for the entire year. So even if you had a New Year’s Eve wedding, in tax return terms, you were married for all of 2012. A married couple can either file together using the Married Filing Jointly status, or separately, in which case each person’s filing status would be Married Filing Separately. Pretty self-explanatory.

If your spouse died during 2012, you usually can still file a joint return for that year. Qualifying Widow(er) with Dependent Child status applies only ifyour spouse died during 2010 or 2011, you have a dependent child, and you meet certain other conditions.

MH900237195If you aren’t married, divorced, or legally separated, in general your filing status will be Single. However, you might be able to file as Head of Household, which has a higher standard deduction and lower tax rates than the Single filing status. To claim Head of Household, you can’t be married and you must have paid more than half the cost of maintaining a home for yourself and a qualifying person. Head of Household is the status most often claimed in error, so make sure you meet all of the requirements.

You can and should shop around for the best income tax deal. If more than one filing status fits you, choose the one that allows you to pay the lowest taxes. IRS e-file will help you determine the correct filing status, and you can also use the Interactive Tax Assistant at IRS.gov.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Taxes are Due Monday April 15:

In Accounting & Finances,Business,Taxes on April 11, 2013 by Sufen Wang Tagged: , , , , , , ,

169849_taxYour Guide to Hassle-Free Filing

There’s less than a week to go before your taxes are due to Uncle Sam. If you haven’t submitted your return, you can start panicking right about now OR you can follow these easy steps to ensure submitting your return is as painless as possible. And if you’ve already submitted, it doesn’t hurt to keep these strategies in mind for next tax season.

MH900334322First, get together any documents you might need to file your taxes BEFORE you sit down to fill out your return. You don’t want to be running around like a headless chicken looking for this or that piece of paper. Instead, find receipts, cancelled checks, W-2 Forms, Wage and Tax Statements, and 1099 income statements, and place them all in one convenient location for easy reference.

Now that that’s done, figure out how you want to file. If your income was $57,000 or less, take advantage of the Free File service: Free File Tax Software will do all the tax preparation work for you online, and it doesn’t cost a cent. If you’re more of the DIY type, you can also e-file by using Free File Fillable Forms, which are an electronic version of IRS paper forms. In fact, regardless of income, anybody can use these Fillable Forms to file Form 1040 series tax returns for free.

internet-32340_640If you don’t use the Free File service, you can still e-file by buying commercial tax software, or through a paid tax preparer. Many tax preparers are now required by law to use e-file because it gets you your refund in half the time and it offers more payment options when you owe money. Even the IRS claims that “IRS e-file is the best way to file an accurate tax return.” And most people seem to agree, with more than 80% of taxpayers using IRS e-file last year. Of course, if you want to make things difficult, you can still file on paper…

However you decide to file, direct deposit is the fastest and safest way to get your refund. And combining it with e-file will get your money even faster. That being said, faster is not necessarily better when you’re actually filling out your return. Don’t rush and be sure to double-check everything before you submit: a mistake on something as simple as your social security number could get complicated when processing your return.

black-29972_640If you have any questions, the IRS has all the answers. Visit IRS.gov to browse its resources, such as the Interactive Tax Assistant tool, or check out Publication 17, Your Federal Income Tax.

By the way, just in case you are NOT going to make the April tax deadline… Make sure you file a tax extension by April 15!!!!

Sufen Wang, M.S. Accountantcy
Wang Solutions, Long Beach, CA  (562) 856-0793

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Whistleblowers Wanted:

In Accounting & Finances,Business,Education,Taxes on January 27, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900084382Report Suspected Tax Fraud

To catch a thief, the IRS needs your help. If you suspect someone might be bending certain tax laws, don’t just stand there – do something! There’s a variety of tax frauds, so the IRS has conveniently created a chart to explain which form you’ll need to fill out in order to make the tax world a better place.

Direct your pen to Form 3949-A, Information Referral, if you suspect an individual/business of false exemptions or deductions, kickbacks, false/altered documents, failure to pay taxes, unreported income, failure to withhold, or organized crime. Then congratulate yourself on doing the right thing.

MH900422392Identity theft is also a type of tax fraud. If you believe that someone is posing as you and has used your SSN for employment purposes or to file a tax return, pick up Form 14039, Identity Theft Affidavit. The sooner you submit the form, the sooner the impostor will be caught.

Maybe your friendly neighborhood tax preparer has been getting rich a little too quickly. If you suspect fraudulent activity or an abusive tax scheme by a tax return preparer/company, report it on Form 14157. You’ll need both this form and Form 14157-A if you also think a tax return preparer filed or altered your return without your consent.

If you have information about a suspicious tax promotion or promoter, whip out Form 14242 and show that fake promotion who’s boss. And finally, if you notice misconduct or wrongdoing by an exempt organizationor employee plan, complain about it on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.

MH900383616Reporting tax fraud is a good deed and should be reward enough by itself. However, for anyone who needs extra motivation, check out Form 211, Application for Award for Original Information. Sometimes it pays to be a whistleblower.  Do the right thing, it is hard, but it is very, very rewarding!!!

 

Sufen Wang, M.S.Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

 

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Revisiting IRS Budget Cut…

In Accounting & Finances,Business,Taxes on March 18, 2012 by Sufen Wang Tagged: , , , , , , ,

IRS Practitioner Phone Line Wait Time: First Sign of Services Decline?
 
Back in November, the IRS predicted that reducing its budget would mean trouble for taxpayers and practitioners down the road. Well, now we’re down the road and it looks like the IRS was right. (Ref: Blog: IRS Budget Cut)
 
From January 1 to March 1, IRS’s practitioner priority telephone line serviced only 69.9 percent of calls and the average wait time was 26 minutes. IRS Taxpayer Advocate Nina Olson advised callers to “bring your knitting to the phone.” She explained that “There is simply too much work and not enough employees to do the work.” Many practitioners have already noticed an overall increase in tax return processing time and the issuance of tax refunds
 
If problems like this are occurring with only a 0.2% reduction in funding from 2010 to 2011, then just imagine how long the wait time will be when the 2.5% cut in 2012 comes into full effect. On the bright side, at least a lot of sweaters will get knitted.
 
On the Money,
Sufen Wang
Wang Solutions

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Death and Taxes:

In Accounting & Finances,Business,Taxes on October 30, 2011 by Sufen Wang Tagged: , , , , , , ,

Think Taxes Will Be the Death of You?….  Well, Death Isn’t the End of Taxes…

Having trouble resting in peace? Do you feel that something is gravely wrong? Concerned about skeletons in your closet? You could be suffering from more than just Halloween fever – you might be haunted by the fact that you need to file that “LAST” tax return after your death!
 
Yes, you read that right: death does not excuse a final accounting with the IRS. Death and taxes may be equally inevitable, but
the taxman demands the last word, and the return is due by April 15 of the year following the taxpayer’s death. The estate tax return for a decedent who died after Dec. 16, 2010 is due nine months after the date of the decedent’s death.
 
However, if you died between Dec. 31, 2009 and Dec. 17, 2010, you’re in luck! The IRS decided to automatically grant filing extensions, as long as the executor timely files
Form 4768. That means no late filing and payment penalties on estates of decedents who submit Form 706 or 706-NA and pay the estate tax by March 19, 2012.
 
The IRS is offering another treat this Halloween season! The due date for
Basis Form 8939 – an information return used to report information about property acquired from a decedent and to allocate basis increase to certain property acquired from a decedent. – has been changed from Nov. 15, 2011 to Jan. 17, 2012. The IRS will not issue another extension and an executor may only file an amended Form 8939 by July 17, 2012 if the provisions of § 301.9100-2(b) are satisfied.

 The IRS has one more trick in its bag. Notice 2011-76 also provides penalty relief for certain beneficiaries of estates on their 2010 federal income tax returns. Usually the property recipient will be penalized if they don’t pay taxes on what they received – unless their neglect is due to a reasonable cause. Now, the IRS will presume that the recipient’s failure to pay was due to a reasonable cause; the recipient just needs to write “IRS Notice 2011-76” across the top of their amended return.
 

By the way, one last word, you really should “supervise” your executor to ensure that he/she files the extension on time and avoids any penalties. Not that it matters, since you personally do not have to worry about paying the extra dough! 

 
 
On the Money,
Sufen Wang
Wang Solutions