IRS Tax News

  • 18 Oct 2012 2:25 PM | Anonymous

    WASHINGTON undefined For tax year 2013, the Internal Revenue Service announced today annual inflation adjustments for more than two dozen tax provisions.

    • The annual exclusion for gifts rises to $14,000 for 2013, up from $13,000 for 2012.
    • The amount used to reduce the net unearned income reported on a child’s tax return subject to the “kiddie tax,” is $1,000, up from $950 for 2012.
    • The foreign earned income exclusion rises to $97,600, up from $95,100 in 2012.

    Details on these inflation adjustments and others such as the low-income housing credit, the dollar limits for high-deductible health plans and other amounts can be found in Revenue Procedure 2012-41, which will be published in Internal Revenue Bulletin 2012-45 on Nov. 5, 2012.

  • 15 Oct 2012 10:34 AM | Anonymous

    Attention: Software Developers, Return Transmitters and Authorized IRS e-file Providers/EROs

    The draft 94x XML 2013 Schema (version 3.0) is now posted to the irs.gov website. Testing can be done with the new Schemas starting on October 17, 2012. We strongly encourage that you test for all new changes. We have also provided the 94x XML Sample Schemas as a guide for you on irs.gov website.      

    The Matrix Chart has been updated and is now available on the irs.gov website.

     For more information see Publication 3823. 

  • 15 Oct 2012 10:33 AM | Anonymous

    Attention: All Modernized e-File (MeF) Business and Individual (BMF & IMF) Transmitters, Software Developers and States

    The Modernized e-File system will be unavailable from approximately 1:00 am until 9:00 am, Eastern on Sunday, Oct 21, 2012 while the IRS performs scheduled maintenance.

    We apologize for any inconvenience caused by this extended timeframe. Thank you in advance for refraining from accessing the MeF Production or Assurance Testing Systems during this period.

    Please check the MeF Status Page  for updates.
  • 12 Oct 2012 3:59 PM | Anonymous

    Doug Shulman, the 47th commissioner of the Internal Revenue Service, has decided to step down on Nov. 9, the last day of his term.

  • 09 Oct 2012 10:11 AM | Anonymous

    Any tax preparer who still needs to take the RTRP test to become a registered tax return preparer may be interested in this upcoming webinar. Participants will receive the latest information from the Return Preparer Office about the new Registered Tax Return Preparer test including why you should schedule your appointment today. This is a live webinar with a question and answer component and participants may earn CE credit. Please view this announcement for full details.

  • 04 Oct 2012 9:54 AM | Anonymous
    If you adopted a child last year and requested an extension of time to file your 2011 taxes, you may be able to
    claim the expanded adoption credit on your federal tax return for qualifying expenses paid to adopt an eligible
    child.

    Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of
    the child and may include adoption fees, court costs, attorney fees and travel expenses.

    The adoption credit for tax year 2011 can be as much as $13,360 per eligible child. If you adopt a U.S. child
    whom a state, county or the District of Columbia has determined has special needs, you may be entitled to the
    full credit regardless of whether you paid any actual qualified adoption expenses.

    Here are some things to remember if you still need to file your 2011 tax return or amend your 2011 tax return:

    • You can use IRS Free File or other software to prepare your return, but you must print and mail the tax
    return to the IRS, along with all required documentation.
    • Required documents may include a final adoption decree, placement agreement from an authorized
    agency, court documents and/or the state’s determination for special needs children.
    • The credit for qualified adoption expenses is subject to income limitations, and may be reduced or
    eliminated depending on your income.
    • You can get the credit as a tax refund even after your tax liability has been reduced to zero.
    • To claim the credit, you must file a paper tax return and Form 8839, Qualified Adoption Expenses, and
    attach all supporting documents to your return.
    • If you filed your tax return for 2011 and did not claim an allowable adoption credit, you can file an
    amended return to get a refund. Use Form 1040X, Amended U.S. Individual Income Tax Return, along
    with Form 8839 and the required documents to claim the credit.

    It is necessary for the IRS to review all documents submitted. Normally, it takes six to eight weeks to process a
    return claiming the adoption credit.
  • 04 Oct 2012 9:42 AM | Anonymous
    It’s a common misconception that unless you receive a Form W-2G, Certain Gambling Winnings, at a casino,
    your gambling winnings don’t have to be reported on your federal tax return. However gambling winnings, like
    any other income not specifically exempted from law, are taxable and must be reported on your federal tax
    return, regardless of whether or not documentation was provided at the time the money was earned (or won).
    Fortunately, if you itemize your deductions, there are ways to offset your gambling winnings with any losses
    that you may have incurred up to the amount of your winnings. Below are five tips that every taxpayer who
    gambles should know:

    1. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and
    casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.

    2. If you receive a certain amount of gambling winnings or if you have any winnings that are subject to
    federal tax withholding, the payer is required to issue you a Form W-2G. The payer must give you this
    form if you receive:

    • $1,200 or more in gambling winnings from bingo or slot machines;
    • $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
    • More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
    • $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker
    tournaments) and the payout is at least 300 times the amount of the wager; or
    • Any other gambling winnings subject to federal income tax withholding.

    3. Generally, you report all gambling winnings on the Other income line (line 21) of Form 1040, U.S.
    Federal Income Tax Return.

    4. You can claim your gambling losses up to the amount of your winnings on Form 1040, Schedule A,
    Itemized Deductions, under Other Miscellaneous Deductions. You must report the full amount of your
    winnings as income and claim your allowable losses separately. You cannot deduct gambling losses
    that are more than your winnings. You cannot reduce your gambling winnings by your gambling losses
    and report the difference.

    5. Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets,
    statements, and documentation such as a diary or similar record of your losses and winnings. Your
    records should show your winnings separately from your losses. Refer to IRS Publication 529,
    Miscellaneous Deductions, for more details about the type of information you should write in your diary
    and what kinds of proof you should retain in your records.

    For more information on gambling income and losses, see IRS Publication 529, Miscellaneous Deductions or
    Publication 525, Taxable and Nontaxable Income, both available at IRS.gov or by calling 800-TAX-FORM
    (800-829-3676).
  • 04 Oct 2012 9:29 AM | Anonymous

    Sometimes, when the right opportunity presents itself, you may be able to pay for goods and services
    that you need or want by trading goods that you own, or providing a service that you can perform in
    return. An example of this is if you own a lawn maintenance company and receive legal services from an
    attorney and pay for those services by providing an agreed upon amount of mowing and maintenance
    services at the attorney’s home or place of business. In this scenario, the fair market value of the legal
    services provided is taxable to you as the lawn maintenance company owner. At the same time, the fair
    market value of the lawn and maintenance services you provide is taxable to the attorney or his firm.
    This type of transaction - bartering or trading - can prove to be useful when cash-flow problems would
    otherwise prevent you from securing needed goods or services. And while there is no exchange of cash
    or credit, the fair market value of the goods or services that were exchanged is taxable to both parties
    and must be claimed as other income on an individual or business income tax return.

    Remember, just like with payments by money, if a business makes payments of bartered services to
    another business (except a corporation) of $600 or more in the course of the year, these payments are to
    be reported on Form 1099-MISC.

    When considering record keeping requirements, barter and trade transactions should be treated just like
    any other financial transaction or exchange. Original cost of goods being bartered or traded, transaction
    dates, fair market value at the time of the transaction, and other pertinent details should be recorded to
    assist in the preparation of your income tax return and held, in general, for a period of 3 years in
    accordance with other documents and receipts used to substantiate income and expenses.

    For more details on barter and trade transactions, please visit the IRS’ Bartering Tax Center or view the
    Do You Barter? video.

  • 26 Sep 2012 4:15 PM | Anonymous

    Effective October 1, 2012, applications to become an IRS e-file provider must be submitted online. We will no longer accept paper e-file applications.

    Become an e-file provider in 3 easy steps:

    1. Create an IRS e-Services account.
    2. Submit your e-file provider application online.
    3. Pass a suitabilty check

    The online application process takes 4-6 weeks to complete – don’t delay, become an e-file provider today.

    NOTE: Existing e-file providers must now use e-Services to make account updates.

    Help is available at IRS.gov or through the e-Help Desk at 1-866-255-0654 (512-416-7750 for international calls), Monday through Friday, 6:30 a.m. - 6:00 p.m. (CST). Frequently Asked Questions and online Tutorials are available to answer questions or to guide users through the application process.
  • 21 Sep 2012 5:21 PM | Anonymous

    Victims of the severe storms and straight-line winds that began on June 29, 2012 in parts of West Virginia may qualify for tax relief from the Internal Revenue Service.

    The President has declared Fayette, Kanawha, Nicholas, and Raleigh counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

    The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after June 29, and on or before August 28, have been postponed to August 28, 2012.  
    In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after June 29, and on or before July 16, as long as the deposits are made by July 16, 2012.

    If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.
    The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

    Covered Disaster Area

    The counties above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

    Affected Taxpayers

    Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

    Grant of Relief

    Under section 7508A, the IRS gives affected taxpayers until August 28 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after June 29 and on or before August 28.

    The IRS also gives affected taxpayers until August 28 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after June 29 and on or before August 28.

    This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

    The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after June 29 and on or before July 16 provided the taxpayer makes these deposits by July 16.

    Casualty Losses

    Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

    Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

    Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “West Virginia/Severe Storms and Straight-Line Winds” at the top of the form so that the IRS can expedite the processing of the refund.

    Other Relief

    The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

    Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

    Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

    Related Information

    Recent IRS Disaster Relief Announcements

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