Category Archives: INDIVIDUALS

2015 IRS Refund Cycle Chart

2015 IRS Refund Cycle Chart for Tax Year 2014

2014 IRS E-File Cycle ChartThis is a schedule for 2015 IRS Refund Cycle Chart. Direct Deposit and Check date’s below. Please see disclaimer. 2015 tax refund schedule is listed below for information purposes. This is just for the first week. Find out when you’re state income tax refund will be in. Please consider donating $1 to $5 to us for help with cost of running the site. If you use our schedule on your webpage, please drop us a link. January 23rd, 2015 is the first day of tax season 2015. The I.R.S will begin accepting tax returns January 23rd, 2015.

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Why is my 2014 tax refund still processing

Why is my 2014 refund still processing?

2014 IRS Tax Refund Schedule wrong for you?

By the stats, the current tax season has been quite a success. The Internal Revenue Service is reporting that, despite an abbreviated season, they are processing tax returns and issuing tax refunds at a much faster pace than last year. Why is my 2014 refund still processing?

Of course, all of the numbers in the world don’t matter when the one number you’re counting on – your own refund – is affected.

This season, I’ve heard from a number of taxpayers experiencing tax refund delays (though certainly nothing near last year’s education credit snafu). Initially, the trouble seemed to focus on those 1121 codes. The IRS was made aware of the problem and did issue a statement, saying:

A very small percentage of taxpayers may see an 1121 reference number if they check “Where’s My Refund?” after they initially were provided a projected refund date by the tool. The IRS is aware of this situation, and emphasizes that the small group of taxpayers who see this reference number should continue checking Where’s My Refund for an update. If we need more information to process their return, we will contact them — usually by mail.

Most of the taxpayers who reached out to me regarding the 1121 issue have since reported that they’ve either received their refunds or updated information about the delay.

However, shortly after the 1121 issue was made public, the focus from taxpayers on social media – and in emails, direct messages and private messages to me – has zeroed in on another code that’s popping up over and over: TC 570. There is a notable difference between the 1121 code and the TC 570: the latter is not an explicit refund code. It appears not on the “Where’s My Refund?” tool but on a taxpayer’s transcript. That’s an important distinction.

I reached out to IRS to find out whether there was any sort of systemic issue causing taxpayers to see a TC 570 on their transcript. So far, the answer to that question is no. The IRS is, however, clearly aware of the concerns and had this to say:

A Transaction Code 570 can mean different things in different cases so a taxpayer should not try to draw a conclusion based on the presence of a TC 570. The Transaction Code 570 will stop a refund from being issued until the impact of the action being taken on the account and the refund is determined and processed. Transaction Codes are used internally by the IRS to identify a transaction, adjust and research tax accounts and to maintain a history of actions posted to a taxpayer’s account. While they are reflected on transcripts they are not reflected on most public facing documents or tools like Where’s My Refund because they are difficult to interpret and can have different meaning depending on the case and associated codes and files. Again, the best way for taxpayers to check the status of their refund is by going to Where’s My Refund.

It’s a statement worth repeating. The IRS uses a lot of internal codes on transcripts and they can mean different things. And what it means exactly isn’t always apparent to the person taking the call at IRS. Does that suck? Of course it does. Trust me. I’ve been on the end of those calls trying to decipher what’s going on for taxpayers. And I totally believe that taxpayers are calling IRS and getting two or three different answers about the status of their refund. And I believe that taxpayers deserve a better answer.

But I would caution taxpayers not to try and pick apart their tax transcripts in an effort to find answers. There is no “one size fits all” answer to the TC 570 – not even in the best of circumstances. It does not necessarily equate, as some have surmised, an audit. Nor does it means, as others have posited, that the refund is subject to an offset. It could mean those things – but again, you’re not going to be able to tell from a glimpse at your transcript this early in the season.

Those codes? They don’t always mean what you think they mean.

I know that isn’t the answer that taxpayers want to hear. And trust me, I am continuing to pester IRS about these issues (believe me when I say that they have my number). But it’s not a certainty that a TC 570 on your transcript is anything sinister at this stage of the season. The data doesn’t appear to support it. And if there’s a real problem with your specific return, you’ll hear from IRS.

And yes, there have been problems. I have confirmed reports that a glitch in at least one program has resulted in the issuance of paper checks instead of direct deposit. Errors – mostly transposition of numbers – have slowed processing of other returns. There have been bounces for bad addresses. Returns have been held because of prior years when no returns were filed. And yes, identity theft continues to be a big problem especially when SocialSecurity numbers for dependents have appeared on more than one return. Clearly, not everyone is having a smooth tax season.

By the numbers, however, most taxpayers are getting their refunds as quickly as anticipated. On average, the IRS expects to issue tax refund checks to 9 of 10 taxpayers in 21 days or less. Those are pretty good odds. But that still means that 1 in 10 taxpayers will receive refund checks after that 21 day window. That sounds like a pretty small number until you calculate the total against the number of refunds issued. The IRS expects to process about 140 million tax returns this season. In 2013, they issued more than 100 million tax refund checks. If 1 in 10 taxpayers get their refunds after 21 days, that still works out to about 10 million taxpayers. That’s more than the individual populations of 42 states. It’s more than the combination populations of Alabama and South Carolina, the 23rd and 24th most populous states. So, yes, it’s a lot. But the number of taxpayers who do receive their refunds within that 21 day window? That’s more than the combined populations of our most populous states (California, Texas and Florida) or more astoundingly, the combined population of 25 of our least populous states.

Does that help those taxpayers who are depending on refund checks that have not yet been deposited? Of course not. I know you want your money. And I know that in many cases, you’re depending on that money. But work through the right channels. Keep checking the “Where’s My Refund?” tool for information. If you are advised to call the IRS, do so. If you get mail from IRS, open it. But at this stage, it truly is a waiting game. If I hear anything further (and I am pursuing these issues), rest assured that I will post it as soon as it becomes available.

Discuss this and more on the Income Tax Forums.

Need help preparing your 2014 Tax Return? Visit Hot Springs Tax Services.

IRS already cut billions in tax refund checks

Millions of taxpayers have already received big refund checks, as the 2014 tax filing season seems to be humming along without a hitch. IRS issuing many refund checks already.

The Internal Revenue Service announced today that it issued $64.5 billion in refunds to 19.5 million taxpayers as of Feb. 7, a total dollar amount that was up 24% from the same time last year. The average refund check issued this year, $3,317, is also 4.6% larger than last year.
It’s not too surprising that this filing season is running more smoothly than last year, when the IRS lagged the previous year’s pace for issuing refunds throughout most of the filing season. The agency had to put off accepting certain tax forms until as late as March because it was updating its systems following the tax-code revamps caused by the fiscal-cliff legislation.

But taxpayers are also submitting their returns more quickly. The IRS received more than 27 million returns as of Feb. 7, up 2.5% from the same time in 2013. Nearly 96% of those were filed electronically. Samuel Hale, 21, a college student near Fort Worth, Texas, says his refund was deposited into his checking account Friday morning, a week after he filed his return electronically using online software. “I was very surprised,” says Hale, who couldn’t file his return until April last year because of a missing W-2 form.

In an interesting shift, the data shows more taxpayers are doing their own returns so far this tax season. Roughly half of the returns submitted, or 13.3 million, were self prepared, up 14.7% from last year. Typically, about 60% of returns are handled by a tax pro, according to IRS data.

Of course, not all taxpayers have been able to file their returns yet. Some people are still waiting on paperwork from their brokers, employers or colleges that they need to report all income and claim certain tax breaks. And some people aren’t eager to file their returns. Taxpayers who need to cut a check to the IRS generally wait until closer to April 15 to file.

Taxpayers can track their refunds using the “Where’s My Refund?” tool starting 24 hours after filing electronically, or four weeks after mailing in a return. About 90% of refunds are issued within 21 days, though some may be delayed if there is an issue with the return.

Discuss this and more on the Income Tax Forums.

FIRST IRS 2014 DIRECT DEPOSITS JUST WENT OUT

FIRST IRS 2014 DIRECT DEPOSITS JUST WENT OUT.

February 6th, 2014, 12:00A.M. the I.R.S. sent out thousands of tax payments to individuals who filed before January 31st, 2014. Some individuals who filed before January 31st, 2014 were not included in this due to the overflow of individuals who submitted their returns. Those individuals should watch the Where’s My Refund page and expect a payout on the next payout day being “on or before February 13th, 2014.”

Please reply to this post when you submitted, were accepted, approved, and if you received your refund last night.

When did you get your refund 2014

Today is the official start to the I.R.S. 2013 Tax Season. We want to compile a list of payments dates for our users to see to better help them determine the date that they will get their refund. So we pose the question, “When did you get your refund 2014?”

We would like everyone to reply to this post with the date that their refund was accepted and the date that I.R.S. has set for their direct deposit or check. To find out this date, you will need to visit the I.R.S. Where’s My Refund webpage here.

Optionally, we would also like you to post the date that your state refund, what state, and when your state finance department gives your refund date. To find out this, visit our Where’s My State Refund page.

Please comment here with Federal Acceptance Date, Federal Payout Date, (optional) State Acceptance Date, State, and State Acceptance Date.

Thank you for helping to make our 2014 Refund Schedule to be as accurate as possible.

Tax Rate Changes 2013

Much has been written about changes to the estate and gift tax law scheduled to occur on January 1, 2013, particularly the reduction of the lifetime estate and gift tax exemption amount from its 2012 level of $5,120,000 to $1 million. The exemption for the generation-skipping transfer tax will also decrease from its 2012 level of $5,120,000 to a base level of $1 million. It is indexed for inflation from 2001, however, and is currently estimated to be $1,430,000. Significant changes to the income tax law are also scheduled to take effect at the same time, but these changes are only now beginning to receive similar attention. While Congress could still act to avert some or all of the changes, the divided nature of this Congress makes the prospect of any action before January 1, 2013, uncertain. This alert summarizes the most significant of the changes to the income tax law that will take effect on January 1, 2013, and suggests some steps you might consider to mitigate their impact.

Tax Rates

The maximum federal income tax rate on ordinary income will increase from its present level of 35 percent to 39.6 percent. The tax rate on long-term capital gain income will increase from its present level of 15 percent to 20 percent. The most dramatic increase will be to the rate at which qualified dividends are taxed. Qualified dividends are currently taxed at the same 15 percent rate as long-term capital gain income. Beginning January 1, 2013, dividends will be treated the same as other ordinary income and taxed at a maximum income tax rate of 39.6 percent.

Additional Medicare Taxes

Now that the U.S. Supreme Court has upheld the Patient Protection and Affordable Care Act of 2010, the additional Medicare taxes will take effect January 1, 2013, as planned, unless Congress acts to change them.

Employees currently pay a Medicare hospital insurance tax of 1.45 percent on their wages. Self-employed individuals pay 2.9 percent of net earnings from self-employment. Unlike taxes on wages and self-employment income for Old Age, Survivors and Disability Insurance, which are capped, the Medicare component of the social security tax has no ceiling. Beginning January 1, 2013, an additional 0.9 percent tax will apply to wages in excess of $250,000 for a married person filing a joint return ($125,000 for married persons filing separately) or $200,000 for an unmarried individual. This will make the total Medicare tax for these individuals 2.35 percent on their wages above the threshold amount. For self-employed individuals, the additional 0.9 percent will apply to their earnings from self-employment in excess of $250,000 for a married person filing a joint return ($125,000 for married persons filing separately) or $200,000 for an unmarried individual. The total Medicare tax for these individuals will be 3.8 percent on their earnings above the threshold amounts, which are not currently indexed for inflation.

Medicare Tax on Investment Income

A new Medicare tax on net investment income will also take effect beginning January 1, 2013. The rate for this new tax will be 3.8 percent and will apply to the lesser of an individual’s i) net investment income; or ii) the excess of the individual’s “modified adjusted gross income” over $250,000 in the case of a married couple filing a joint return ($125,000 for married persons filing separately or an unmarried individual). Modified adjusted gross income is the adjusted gross income increased by the amount of the foreign earned income exclusion. For most taxpayers, their modified adjusted gross income will be the same as their adjusted gross income. The threshold amounts are not currently indexed for inflation.

In the case of an estate or trust that accumulates part of its income, the tax will apply to the lesser of i) its undistributed net investment income; or ii) the excess of its adjusted gross income over the dollar amount at which the highest tax bracket in Section 1(e) begins for the taxable year. This amount currently is scheduled to be $7,500. Since this is a much lower threshold amount than applies to individuals, in many cases, net investment income may be subject to the Medicare tax if it accumulated at the trust level, while it would not be subject to the tax if it is distributed to beneficiaries whose adjusted gross income is less than $250,000 if they file a joint return, or $200,000 if they are unmarried.

Net investment income is gross investment income reduced by those allowable deductions that are properly allocable to such income. Investment income includes interest, dividends, annuities, royalties, and rents, provided that this income is not derived from a trade or business that is not a passive activity for the taxpayer. It also includes gains from the disposition of property, so capital gains realized on the sale of appreciated investments will be subject to this new tax, as well as income derived from the business of trading financial instruments or commodities. If a business that is a passive activity for the taxpayer earns any of the above types of income, that income is also subject to the tax.

The tax does not apply to amounts distributed from qualified retirement plans. It also does not apply to any amount that is subject to the self-employment tax. This rule prevents the Medicare tax from applying twice to the same income. While income from a trade or business that is not a passive activity of the taxpayer will not be subject to the 3.8 percent Medicare tax on investment income, much of that income may be subject to the 3.8 percent Medicare tax on self-employment income. Some limited types of income may not be subject to either tax, but a lot of the detail on how the new tax will apply is still missing.

Phase-out of Itemized Deductions and Personal Exemptions

The phasing out of itemized deductions will also return to the tax law in 2013. Once again, an amount of a taxpayer’s itemized deductions equal to 3 percent of adjusted gross income in excess of $100,000 (adjusted for inflation) will be disallowed, but not in excess of 80 percent of the taxpayer’s total itemized deductions. The disallowance rule applies to all of a taxpayer’s itemized deductions except for medical expenses, investment interest, and casualty and theft losses. For 2009, the last year to which the phase-out previously applied, the $100,000 amount had been inflation adjusted to $166,800. The amount for 2013 should be announced soon.

The personal exemption deduction of $3,700 (2011 amount) per taxpayer and dependent will once again be phased out. The deduction is phased out at the rate of 2 percent of the deduction for each $2,500 by which the taxpayer’s adjusted gross income exceeds a threshold amount. The amount is inflation adjusted and for 2009, the last year to which the phase-out applied, was $250,200 for taxpayers filing a joint return. The deductions were completely lost if the taxpayer’s adjusted gross income exceeded $372,700. The deduction amount and the threshold amount where the phase-out begins for 2013 should be announced soon.

What Should You Do to Prepare for 2013?

You should be prepared to take certain steps after the November elections and before the end of the year if it becomes apparent that Congress will not act to extend the current tax regime into 2013. Some of the considerations are described below.

Should You Sell Appreciated Capital Assets in 2012?

The idea of selling appreciated capital assets in 2012 and paying a federal tax of 15 percent, as compared to a tax of 23.8 percent after 2012, certainly has appeal, since the applicable rate is increasing by 58.67 percent of its present level. Even if you do not wish to part with a particular position, in the case of publicly traded securities, you can easily re-base an appreciated securities position by selling it and then buying the same security. No “wash gain” rule comparable to the wash sale rule for losses applies, and you can sell an asset at a gain today and buy the same asset tomorrow.

Whether this strategy will prove to be a winner over time, however, depends on a number of factors that often are difficult to quantify. Selling earlier than you otherwise would have sold means paying the resulting tax sooner, and once you pay the tax, that money no longer generates further returns for you. By keeping the amount you would have paid in taxes invested on a pre-tax basis, you might eventually generate enough additional return to offset the higher tax rate, or more.

You can model various scenarios, but the result the model generates will only be as accurate as the assumptions you build into it. You will need to predict the time you would otherwise sell the asset, how much the asset might appreciate between now and that time, and the tax rate that might apply. You must also take into account the transaction costs of selling and re-establishing the position. Taxpayers who are elderly or in failing health may want to hold appreciated positions because a basis increase to fair market value at death will still apply.

At the extremes, you can pretty easily determine what to do. For example, if you have a substantially appreciated stock position that you believe you would normally sell in 2013, it almost certainly will be advantageous to sell that holding in 2012. On the other hand, if you have a position that you expect to hold for 15 more years, you are most likely better off just keeping the position and not reducing your invested assets by paying tax now. Over a period of 15 years, by keeping the amount of tax you would pay now invested and generating additional return, you will most likely earn enough to pay the increased amount of income tax that will be due at the time you do sell the asset. You also need to consider the most effective use of capital loss carryovers you might have.

Between these extreme cases, however, the analysis becomes more difficult. The future holding period of the asset and the future return on it are inversely correlated. As the asset’s future rate of return increases, the additional time that the asset must be held to overcome the higher tax rate decreases. As a rule of thumb, you might at least consider re-basing positions that you expect to sell within the next five years, and we are available to assist you in evaluating specific situations. Also, do not forget that the early payment of any applicable state income taxes will further diminish the amount of your invested capital going forward.

Many people have done quite well by operating on a philosophy that says the future is uncertain and you should never pay any tax until you absolutely must, a reasonable position to adopt in many cases.

Do Dividend-yield Stock Portfolios Still Make Sense?

If your investment portfolio is significantly weighted in favor of high-dividend-paying stocks, you should probably ask your investment advisor whether this strategy continues to make sense for you in an environment where the tax rate on dividends is nearly three times what it was when the portfolio was established. While a greater emphasis on growth stocks or other asset classes may be appropriate, you should make that decision only after a discussion with your investment advisor.

Should You Accelerate Ordinary Income?

The acceleration of ordinary income into 2012 could have certain advantages. The 2012 maximum federal income tax rate on ordinary income is 35 percent, as compared to the 2013 rate of 39.6 percent, or 43.4 percent if the income is investment income subject to the 3.8 percent Medicare tax on net investment income. Having a higher adjusted gross income in 2012 and a comparatively lower adjusted gross income in 2013 may also ameliorate to some degree the impact of the itemized deduction phase-out that will apply again in 2013. Acceleration of income is even more attractive if you will be paying AMT (Alternative Minimum Tax) in 2012 and can recognize additional ordinary income subject to a 28 percent tax rate.

If you have discretion to accelerate a bonus or other earned income into 2012 instead of 2013, you can also avoid the 0.9 percent increase in the Medicare tax on wages or net earnings from self-employment that will occur in 2013.

If you are able to control the payment of dividends by a “C” corporation or an “S” corporation that has accumulated earnings from prior “C” corporation years, it may be advantageous to pay dividends in 2012 while the federal income tax rate is 15 percent, as compared to 2013 and later years when the rate may be as high as 43.4 percent.

Consider Roth IRA Conversions

It may also be worthwhile to visit or re-visit the subject of Roth IRA conversions before the end of 2012. The maximum income tax rate that will apply to the taxable amount of a Roth conversion in 2012 is 35 percent, as compared to 39.6 percent if the conversion occurs in 2013 or later. While income from a qualified retirement account is not subject to the 3.8 percent Medicare tax on net investment income, the income from the conversion will increase your adjusted gross income. In 2013 or later, if a Roth conversion causes your adjusted gross income to increase from an amount below $250,000 (on a joint return) to an amount above $250,000, the conversion will result in at least a part of your net investment income becoming subject to the Medicare tax. A Roth conversion after 2012 will also result in an additional disallowance of itemized deductions, since that disallowance also increases as your adjusted gross income increases.

What about Itemized Deductions?

Whether you are better off accelerating or deferring itemized deductions is somewhat complicated. Superficially, deferring discretionary payments (e.g., many charitable contributions and some state income taxes) from 2012 to 2013 makes sense because the deduction may result in greater tax savings due to the higher tax rate that will apply in 2013. The phase-out of itemized deductions will also have an impact, however. If a significant portion of the deduction would be disallowed under the phase-out rules in 2013, then you may be better off taking the deduction in 2012, albeit against a lower tax rate. In the case of charitable contributions, another risk of deferring contributions to 2013 is that Congress could always eliminate the deduction at fair market value for contributions of appreciated property. Certain itemized deductions, such as state income taxes, are not deductible for purposes of computing the AMT, so you are better off paying those kinds of expenses in a year where you have less exposure to the AMT.

Conclusion

While other changes to the income tax law also will take effect in 2013, the ones summarized above are the most significant for higher-income taxpayers. If you would like our assistance in evaluating your particular situation and determining your best course of action, please feel free to contact us.

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