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IRS Has $1.1 Billion for People Who Have Not Filed a 2007 Income Tax Return | Tax Tip of the Week | No. 86 March 30, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a comment

How to Collect Money That May be Waiting for You

Refunds totaling more than $1.1 billion may be waiting for nearly 1.1 million people who did not file a federal income tax return for 2007, the Internal Revenue Service announced recently.  However, to collect the money, a return for 2007 must be filed with the IRS no later than Monday, April 18, 2011.  For Ohio, the IRS estimates there are 33,200 unfiled returns with an average refund of $620.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2007 returns, the window closes on April 18, 2011. The law requires that the return be properly addressed, mailed and postmarked by that date. You cannot e-file a prior year tax return. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2007 refund that their checks will be held if they have not filed tax returns for 2008 and 2009. In addition, the refund will be applied to any amounts still owed to the IRS, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than a refund of taxes withheld or paid during 2007. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2007 were $39,783 for those with two or more children, $35,241 for people with one child, and $14,590 for those with no children.

If you know of anyone who did not file a tax return for 2007, have them contact us immediately.  As we mentioned in a Tax Tip last year, be sure to check on elderly taxpayers to make sure they have filed tax returns.

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

IRS Changes Its Mind | Tax Tip of the Week | No. 85 March 23, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes , 1 comment so far

Changes on Medicare Premiums as Self-Employed Health Insurance

With no notice, the IRS changed the wording in its 2010 Form 1040 Instructions. The instructions now say that Medicare B premiums can be used to figure the self-employed health insurance deduction. The 2009 instructions and Publication 535 said  they did not qualify.

Example: Mary is a 67-year-old, self-employed real estate broker. Because she’s a high income individual and is means tested for Medicare B, Mary pays $4,243 for her 2010 Medicare coverage. Mary also pays $1,200 for Medigap health insurance and $2,900 for long-term care insurance. If she’s otherwise qualified, Mary can claim a self-employed health insurance deduction of $8,343. For 2010 only, this amount also reduces her self-employment income for SE tax purposes.

Sometimes the rules do change in your benefit.

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

2010 Tax Filing Due Dates | Tax Tip of the Week | No. 84 March 16, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Uncategorized , 1 comment so far

The following is summary of due dates to timely file your 2010 tax returns.  Please keep in mind that amounts owed on tax returns do not get extended and are due on the original filing date.  Note:  All of these due dates assume you are using a calendar year-end accounting period.  If you are using a fiscal year-end accounting system then call us for your due dates.

Corporations

Form 1120 & 1120S Due:  3/15/11   Extensions:  use Form 7004 Due:  9/15/11

Partnerships

Form 1065  Due:  4/18/11  Extensions:  use Form 7004 Due:  9/15/11

Fiduciary Returns

Form 1041  Due:  4/18/11  Extensions:  use Form 7004 Due:  9/15/11

Individual Returns

Form 1040  Due:  4/18/11  Extensions:  use Form 4868 Due:  10/17/11

If your business is formed as a Limited Liability Company (LLC) your due dates and filing forms are based upon elections you have or have not made to the IRS.  Individual LLCs are taxed as a sole proprietorship on Form 1040, Schedule C.  Multi member LLCs are taxed as a partnership on Form 1065.  If you have filed an election to the IRS to be taxed as a corporation, then the LLC will file either a Form 1120 or Form 1120S depending on the type of election you made.

Don’t file late!!! The penalties add up in a hurry!

Give us a call if you need help meeting your due dates.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Changes Made to Lien Process | Tax Tip of the Week | No. 83 March 9, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes , add a comment

In an effort to help struggling taxpayers, the IRS has recently made changes to their lien system and other collection tools. The changes include:

• Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
• Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
• Withdrawing liens in most cases where a taxpayer enters into a direct debit installment agreement.
• Creating easier access to installment agreements for more struggling small businesses.
• Expanding a streamlined offer in compromise program to cover more taxpayers.

More information can be found in IR-2011-20.

If you know of someone in trouble with the IRS for taxes owed, have them contact us.  You do NOT want to deal with the IRS directly on these issues.  This is a situation when you really need a CPA or Enrolled Agent to guide you through the process.

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Home Office Deduction | Tax Tip of the Week | No. 82 March 2, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Uncategorized , add a comment

We often hear people say they do not want to take the home office deduction because it is an audit “red flag.”  However, this feeling may lead to missing out on a potentially significant and legitimate deduction.

Let’s look at the rules.  First, the area of the home used for an office must be used regularly and exclusively:
1. As the principal place of business (including administrative use);
2. As a place to meet with clients in the normal course of business, or
3. In connection with the business, if it is a separate structure not attached to the principal residence.
4. If you are an employee, the business use of the home must be for the convenience of the employer.  (Meaning no other office facility exists and is a condition of employment).  Also, note that the home office deduction will not be as significant as those who are self-employed because the deduction is taken on Schedule A subject to 2% AGI limitations.

If you meet these tests, you can then deduct the business percentage use of:
– Mortgage Interest
– Real Estate Taxes
– Casualty Losses
– Home Repairs/Maintenance
– Rent
– Utilities
– Homeowners Insurance
– Security Systems
– Other expenses including garbage removal, snow plowing, etc.
– Depreciation

Note: Choosing not to take the depreciation deduction is not an option.  It falls under the “allowed or allowable” rules.  It also means that when you sell your home you must recapture the depreciation.  This means you will have a taxable consequence on what would otherwise probably be a tax-free sale of the home.

I represented a client with a home office that was undergoing an IRS audit a couple of months ago.  Not once was the legitimacy of the home office deduction questioned.

Let’s talk about your situation and make sure you are not missing out.

As always, give us a call if you have any questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.