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Tax Tip of the Week | No. 243 | Time Is Running Out…. March 26, 2014

Posted by bradstreetblogger in : tax changes, Tax Deadlines, Tax Preparation, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | March 26, 2014 | No. 243 | Time Is Running Out….

IRS Looks to Distribute $760 Million in Unclaimed Tax Refunds

The Internal Revenue Service is giving the Mega Millions jackpot some serious competition, with tax refunds totaling $760 million ready to be handed over to an estimated 918,600 taxpayers who did not file a federal income tax return for 2010.

The IRS estimates that half the potential refunds for 2010 are for amounts greater than $571. To collect the money, a tax return for 2010 must be filed by Tuesday, April 15, 2014.

“The window is quickly closing for people who are owed refunds from 2010 who haven’t filed a tax return,” said IRS Commissioner John Koskinen in a statement. “We encourage students, part-time workers and others who haven’t filed for 2010 to look into this before time runs out on April 15.”

Some taxpayers 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 tax 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 the property of the U.S. Treasury.

For 2010 tax returns, the law requires that the return be properly addressed, mailed and postmarked by April 15, 2014. There is no penalty for filing a late return qualifying for a refund.

The IRS is reminding taxpayers who are seeking a 2010 refund that their checks may be held if they have not filed tax returns for 2011 and 2012. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

Give us a call if you know of someone who didn’t file a tax return in 2010.

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.

Tax Tip of the Week | No. 242 | Estate Tax Update March 19, 2014

Posted by bradstreetblogger in : tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | March 19, 2014 | No. 242 | Estate Tax Update

The 2014 exclusion amount is $5,340,000

Laws were passed a couple of years ago that permanently set the federal tax exclusion amount on estates at $5,000,000. The law also stipulated the exclusion amount should be indexed for inflation each year.  The exclusion amount for 2014 is $5,340,000.  This means there is no federal estates taxes if the deceased has an estate less than $5,340,000 and no federal estate tax return needs to be filed.

The law also allows for “portability” of the unused exclusion amount to surviving spouses.  For example: “Joe dies in 2014 with a $3,000,000 estate that passes to his children.  Joe never made any taxable gifts in his lifetime so his estate pays no estate taxes (because his estate is less than $5,340,000). The executor of Joe’s estate, however, elects to permit Joe’s wife, Mary, to use Joe’s unused exclusion amount of $2,340,000 ($5,340,000 less the $3,000,000 excluded by Joe’s estate).  This means Mary will have a $7,340,000 exclusion for her estate upon her passing.”

Note, however, the only way to make this portability election is to file a timely federal estate tax form (Form 706) upon Joe’s death.  The IRS recently provided a simplified method for certain taxpayers to obtain an extension of time to make this portability election (see Revenue Procedure 2014-18).

So even though Joe’s estate, in this example, didn’t require any federal tax return to be filed, it is still a good idea to consult with an attorney upon someone’s death to explore all the options.  (Actually it would be better to have an estate plan in place prior to someone’s death.)

Remember, Ohio’s estate taxes ended for anyone who died after 12/31/2012.

If you have any additional questions on this Tax Tip let us know and we can refer you to some good estate attorneys.

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.

Tax Tip of the Week | No. 240 | Do You Qualify For Head of Household? March 12, 2014

Posted by bradstreetblogger in : Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes, Uncategorized , 5comments

Tax Tip of the Week | March 12, 2014 | No. 240 | Do You Qualify For Head of Household?

Many people overlook this filing status…

Many taxpayers overlook this possible filing status when deciding how to file their tax returns.  This is especially true among recently divorced couples when there is still a dependent child in the home. While filing as Head of Household will lower your taxes vs. filing as “Single”, you must follow the IRS guidelines to avoid inquiry or audits.

In order to file as Head of Household, you must meet several requirements. First, you must be unmarried, pay more than half the costs of supporting your household and live with other qualifying family members for whom you provide support for more than half of the year.  Some examples of qualifying family members include a dependent child, grandchild, brother, sister or grandparent.  You must also prove that you provide more than 50% of the support for the qualifying family member.   If you do not meet all of these requirements, you are not eligible to file as Head of Household.

Married taxpayers are not eligible to claim Head of Household status, as either you must be single or in some stage of separation.  According to the IRS, you are considered unmarried if you are single, legally separated by divorce or have lived apart from your spouse for six months or more in the calendar year.

If you qualify for Head of Household filing status, there are significant tax savings over filing as Single.  First, the tax rate for Head of Household is much more favorable.  Second, your standard deduction is almost $3,000 higher ($8,500 vs. $6,100 for 2013).

It can become very confusing to ensure your definition for Head of Household is the same as the IRS guidelines.  Be sure to call us if you have never filed as Head of Household before but think that you may qualify.

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.

Tax Tip of the Week | No. 239 | Mileage Rates for 2014 March 5, 2014

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

Tax Tip of the Week | March 5, 2014 | No. 239 | Mileage Rates for 2014

In Case You Haven’t Heard….

The Internal Revenue Service releases deductible mileage rates each year. In case you haven’t heard, the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes have been announced.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

•    56 cents per mile for business miles driven
•    23.5 cents per mile driven for medical or moving purposes
•    14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decreased one-half cent from the 2013 rates.  The charitable rate is based on statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

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.