Category Archives: Tax Planning

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.

Advertisements

2014 tax breaks: Congress letting 55 tax breaks expire at year end

WASHINGTON – In an almost annual ritual, Congress is letting a package of 55 popular tax breaks expire at the end of the year, creating uncertainty — once again — for millions of individuals and businesses.

Lawmakers let these tax breaks lapse almost every year, even though they save businesses and individuals billions of dollars. And almost every year, Congress eventually renews them, retroactively, so taxpayers can claim them by the time they file their tax returns.

2014 tax breaks: Congress letting 55 tax breaks expire at year endNo harm, no foul, right? After all, taxpayers filing returns in the spring won’t be hurt because the tax breaks were in effect for 2013. Taxpayers won’t be hit until 2015, when they file tax returns for next year.

Not so far. Trade groups and tax experts complain that Congress is making it impossible for businesses and individuals to plan for the future. What if lawmakers don’t renew the tax break you depend on? Or what if they change it and you’re no longer eligible?

“It’s a totally ridiculous way to run our tax system,” said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation. “It’s impossible to plan when every year this happens, but yet business has gotten used to that.”

Some of the tax breaks are big, including billions in credits for companies that invest in research and development, generous exemptions for financial institutions doing business overseas, and several breaks that let businesses write off capital investments faster.

Others are more obscure, the benefits targeted to film producers, race track owners, makers of electric motorcycles and teachers who buy classroom supplies with their own money.

There are tax rebates to Puerto Rico and the Virgin Islands from a tax on rum imported into the United States, and a credit for expenses related to railroad track maintenance.

A deduction for state and local sales taxes benefits people who live in the nine states without state income taxes. Smaller tax breaks benefit college students and commuters who use public transportation.

A series of tax breaks promote renewable energy, including a credit for power companies that produce electricity with windmills.

The annual practice of letting these tax breaks expire is a symptom a divided, dysfunctional Congress that struggles to pass routine legislation, said Rep. John Lewis of Georgia, a senior Democrat on the tax-writing House Ways and Means Committee.

“It’s not fair, it’s very hard, it’s very difficult for a business person, a company, to plan, not just for the short term but to do long-term planning,” Lewis said. “It’s shameful.”

With Congress on vacation until January, there is no chance the tax breaks will be renewed before they expire. And there is plenty of precedent for Congress to let them expire for months without addressing them. Most recently, they expired at the end of 2011, and Congress didn’t renew them for the entire year, waiting until New Year’s Day 2013 — just in time for taxpayers to claim them on their 2012 returns.

But Congress only renewed the package though the end of 2013.

Why such a short extension? Washington accounting is partly to blame. The two-year extension Congress passed in January cost $76 billion in reduced revenue for the government, according to the nonpartisan Joint Committee on Taxation. Making those tax breaks permanent could add $400 billion or more to the deficit over the next decade.

With budget deficits already high, many in Congress are reluctant to vote for a bill that would add so much red ink. So, they do it slowly, one or two years at time.

“More cynically, some people say, if you just put it in for a year or two, then that keeps the lobbyists having to come back and wine-and-dine the congressmen to get it extended again, and maybe make some campaign contributions,” said Mark Luscombe, principal tax analyst for CCH, a consulting firm based in Riverwoods, Ill.

This year, the package of tax breaks has been caught up in a debate about overhauling the entire tax code. The two top tax writers in Congress — House Ways and Means Committee Chairman Dave Camp, R-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont. — have been pushing to simplify the tax code by reducing tax breaks and using the additional revenue to lower overall tax rates.

But their efforts have yet to bear fruit, leaving both tax reform and the package of temporary breaks in limbo. When asked how businesses should prepare, given the uncertainty, Camp said: “They need to get on board with tax reform, that’s what they need to do.”

Further complicating the issue, President Barack Obama has nominated Baucus to become U.S. ambassador to China, meaning he will soon leave the Senate, if he is confirmed by his colleagues.

As the Senate wound down its 2013 session, Democratic leaders made a late push to extend many of the tax breaks by asking Republican colleagues to pass a package on the floor of the Senate without debate or amendments. Republicans objected, saying it wasn’t a serious offer, and

the effort failed.

So should taxpayers count on these breaks as they plan their budgets for Income Tax 2014?

“The best thing I would say is, budget accordingly,” said Jackie Perlman, principle tax research analyst at The Tax Institute. “As the saying goes, hope for the best but plan for the worst. Then if you get it, great, that’s a nice perk. But don’t count on it.”

Discuss this and more at the Income Tax Forums.

IRS Delays Start of 2014 U.S. Tax Filing Citing Shutdown

IRS Delays Start of 2014 U.S. Tax Filing Citing ShutdownThe U.S. Internal Revenue Service delayed the start of the tax-filing season for one to two weeks, citing the recent 16-day federal government shutdown.

The IRS, which had been scheduled to open filing Jan. 21, 2014, will now begin accepting returns for tax year 2013 as early as Jan. 28. The agency will make a final decision on the date in December, according to a statement today.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,” Danny Werfel, the acting IRS commissioner, said in the statement.

This is the second year in a row that the IRS has postponed the filing season. Returns for 2012 were accepted starting on Jan. 30 after Congress delayed setting some tax policies.

“Considering the IRS has dealt with much larger changes on far shorter notice over the past years without delay, its reasons are suspect,” Sarah Swinehart, a spokeswoman for the Republican-led House Ways and Means Committee, said in an e-mail.

The IRS furloughed more than 90 percent of its employees during the shutdown, which began Oct. 1 when Congress was unable to pass a spending bill and ended after midnight Oct. 17.

‘Adds Insult’

“This is yet another unfortunate effect of a shutdown that Republicans should have never caused,” Representative Sander Levin of Michigan, the top Democrat on the Ways and Means Committee, said in a statement. “This tax-filing delay just adds insult to injury for Americans hoping to get a jump-start on their tax refunds in January.”

The delay won’t alter the April 15 deadline for taxpayers to file their returns or seek extensions.

At the start of the filing season, the IRS largely issues refunds to taxpayers who file as soon as they can. This year, the IRS issued $135 billion in refunds from Jan. 30 to March 1. That’s more than was paid from March 2 to May 10, when the agency received 50 percent more returns.

Delaying refunds could have an additional consequence in 2014. The U.S. debt limit is suspended through Feb. 7, and changes in the government’s projected spending after that date will affect the timing of how long the Treasury Department’s extraordinary measures to prevent a default will last.

Because the government may issue more refunds after Feb. 7 than previously anticipated, a potential lapse in borrowing authority could come a few days sooner than projected, said Loren Adler, research director at the Committee for a Responsible Federal Budget in Washington.

The delayed start of tax-filing season probably will create a backlog of potential returns for the start date, rather than delaying all returns equally.

“Those are folks who are trying to do this as soon as their books are in order,” Adler said.

The Bipartisan Policy Center projects that the U.S. will run out of borrowing authority between the end of February and mid-March 2014.

Discuss this and more in the Income Tax Forums.

Late Start for I.R.S. 2012 Income Tax Processing

Bad news coming out of the IRS today. The IRS will not start processing 2012 Income Tax Returns until January 30th, 2013.

Here is the article from the IRS:

IRS Plans Jan. 30 Tax Season Opening For 1040 Filers

IR-2013-2, Jan. 8, 2013

WASHINGTON — Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.

The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.

“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”

The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.

“The best option for taxpayers is to file electronically,” Miller said.

The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.

The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.

Who Can File Starting Jan. 30?

The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

Who Can’t File Until Later?

There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.

The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.

As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.

Updated information will be posted on IRS.gov.

More information here.

Individual 1040(ez) Tax Preparation

Also, a small note, If you have a copy of your prior year .tax return and your final pay stub from work. We can file starting January 3rd for you at no initial charge. Your payment will be paid out of your tax refund. Not have a bank account? No problem. We can have a check mailed or get the same card for you that you would get through a tax company. Contact us today for an appointment.

 

Taxes@HotSpringsTaxServices.com

(501) 216-0587

Get Your Income Tax Refund by January 28th 2013!

Get Your Income Tax Refund by January 28th 2013!

We finally have information about the Refund Calendar from the I.R.S. To see the dates that checks will be refunded, click here. We will actually be able to start filing on January 3rd 2013. This is the date that all of the tax forms needed will be available from the I.R.S. If you are interested in filing on this date, we will need your final 2012 pay check and a copy of your 2011 Tax Return that you filed in 2012.

If you are a returning client, we will just need your last pay stub from 2012 and any other information such as deductible expenses. We will still go over and make sure that we are not missing any 2012 information that could result in deductions or credits.

Contact us today to schedule an appointment via email or in office for January 2013! Appointments are limited, so please contact us as soon as possible!

2013 IRS e-file Refund Cycle Chart for Tax Year 2012

 Income Tax Refund Schedule 2012 Tax Payments

Income Tax Refund Calendar 2012

Income Tax Refund 2013

Income Tax Refund 2013

Taxes@HotSpringsTaxServices.com

%d bloggers like this: