Sorry, but it’s true: you may have to pay federal income tax on part of your Social Security benefits.
If Social Security was your only income in 2014, your benefits will not be taxable, and, most likely, you will not even need to file a federal income tax return. However, if you get income from other sources you may have to pay taxes on some of your benefits.
The IRS uses a formula to determine how much, if any, of your Social Security benefits are taxable for income tax. Here’s a quick way to find out if you must pay taxes on your Social Security benefits: Add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.
The three base amounts are:
$25,000 – if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2014
$32,000 – if you are married filing jointly
$0 – if you are married filing separately and lived with your spouse at any time during the year
For more information on this topic visit IRS.gov. and download a copy of Publication 915, Social Security and Equivalent Railroad Retirement Benefits.
Tuesday, February 24, 2015
Monday, February 23, 2015
Taxable or Not – What You Need to Know about Income
ALL INCOME IS TAXABLE UNLESS THE LAW SPECIFICALLY EXCLUDES IT. That's the starting place for understanding what the IRS counts as income. Here are some basic rules to help you file an accurate tax return:
• Taxed income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services, and the fair market value of property or services received.
Some types of income are not taxable except under certain conditions, including:
• Life insurance. Proceeds paid to you because of the death of the insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that you get that is more than the cost of the policy is taxable.
• Qualified scholarship. In most cases, income from scholarships is not taxable. Specifically, this means that amounts you use for certain costs, such as tuition and required books, are not taxable. On the other hand, amounts you use for room and board are taxable.
• State income tax refund. If you got a state or local income tax refund, the amount may be taxable IF you itemized your deductions in the prior year. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some types of income that are usually not taxable:
• Gifts and inheritances are not taxed to the recipient.
• Child support payments are not taxed and are not deductible. Alimony, on the other hand, is taxable income and a tax deduction to the payer
• Welfare benefits
• Damage awards for physical injury or sickness. Punitive damages usually are taxable.
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses
For more on this topic see Publication 525, Taxable and Nontaxable Income. You can get it on IRS.gov/forms anytime.
• Taxed income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services, and the fair market value of property or services received.
Some types of income are not taxable except under certain conditions, including:
• Life insurance. Proceeds paid to you because of the death of the insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that you get that is more than the cost of the policy is taxable.
• Qualified scholarship. In most cases, income from scholarships is not taxable. Specifically, this means that amounts you use for certain costs, such as tuition and required books, are not taxable. On the other hand, amounts you use for room and board are taxable.
• State income tax refund. If you got a state or local income tax refund, the amount may be taxable IF you itemized your deductions in the prior year. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some types of income that are usually not taxable:
• Gifts and inheritances are not taxed to the recipient.
• Child support payments are not taxed and are not deductible. Alimony, on the other hand, is taxable income and a tax deduction to the payer
• Welfare benefits
• Damage awards for physical injury or sickness. Punitive damages usually are taxable.
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses
For more on this topic see Publication 525, Taxable and Nontaxable Income. You can get it on IRS.gov/forms anytime.
Friday, February 20, 2015
Stay Vigilant Against Bogus IRS Phone Calls and Emails
Tax scams take many different forms. Recently, the most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too. Here are several tips from the IRS to help you avoid being a victim of these tax scams:
The real IRS will not:
• Initiate contact with you by phone, email, text or social media to ask for your personal or financial information.
• Call you and demand immediate payment. The IRS will not call about taxes you owe without first mailing you a bill.
• Require that you pay your taxes a certain way. For example, telling you to pay with a prepaid debit card.
Be wary if you get a phone call from someone who claims to be from the IRS and demands that you pay immediately. Here are some steps you can take to avoid and stop these scams.
If you don’t owe taxes or have no reason to think that you do:
• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report. < br>
If you think you may owe taxes:
• Ask for a call back number and an employee badge number.
• Call the IRS at 800-829-1040. IRS employees can help you.
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity. < br>
If you get a ‘phishing’ email, the IRS offers this advice:
• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete it.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.
Stay alert to scams that use the IRS as a lure. More information on how toreport phishing or phone scams is available on IRS.gov.
The real IRS will not:
• Initiate contact with you by phone, email, text or social media to ask for your personal or financial information.
• Call you and demand immediate payment. The IRS will not call about taxes you owe without first mailing you a bill.
• Require that you pay your taxes a certain way. For example, telling you to pay with a prepaid debit card.
Be wary if you get a phone call from someone who claims to be from the IRS and demands that you pay immediately. Here are some steps you can take to avoid and stop these scams.
If you don’t owe taxes or have no reason to think that you do:
• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report. < br>
If you think you may owe taxes:
• Ask for a call back number and an employee badge number.
• Call the IRS at 800-829-1040. IRS employees can help you.
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity. < br>
If you get a ‘phishing’ email, the IRS offers this advice:
• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete it.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.
Stay alert to scams that use the IRS as a lure. More information on how toreport phishing or phone scams is available on IRS.gov.
Thursday, February 19, 2015
What You Should Know if You Change Your Name
Did you change your name last year? If you did, it can affect your tax return processing because all the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:
• Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
• Dependent Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.
If you adopted a child who does not have a SSN, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.
• Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.
• Report Changes any Changes in Family Circumstances in 2015. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, be sure to report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace throughout the year. Reporting changes will help make sure that you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance.
• Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
• Dependent Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.
If you adopted a child who does not have a SSN, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.
• Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.
• Report Changes any Changes in Family Circumstances in 2015. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, be sure to report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace throughout the year. Reporting changes will help make sure that you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance.
Wednesday, February 18, 2015
Facts You Should Know about Capital Gains and Losses
When you sell a capital asset the sale results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are 10 facts from the IRS to help you understand capital gains and losses:
1. Capital Assets. Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds. :
2. Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset. :
3. Net Investment Income Tax. You must include all capital gains in your income and you may be subject to the Net Investment Income Tax. This tax applies to certain net investment income of individuals, estates and trusts that have income above statutory threshold amounts. The rate of this tax is 3.8 percent. For details visit IRS.gov. :
4. Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use. :
5. Long and Short Term. Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term. :
6. Net Capital Gain. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain. :
7. Tax Rate. The capital gains tax rate usually depends on your income. The maximum net capital gain tax rate is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gains. :
8. Limit on Losses. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return. :
9. Carryover Losses. If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened in that next year. :
10. Forms to File. You often will need to file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses with your tax return.
1. Capital Assets. Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds. :
2. Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset. :
3. Net Investment Income Tax. You must include all capital gains in your income and you may be subject to the Net Investment Income Tax. This tax applies to certain net investment income of individuals, estates and trusts that have income above statutory threshold amounts. The rate of this tax is 3.8 percent. For details visit IRS.gov. :
4. Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use. :
5. Long and Short Term. Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term. :
6. Net Capital Gain. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain. :
7. Tax Rate. The capital gains tax rate usually depends on your income. The maximum net capital gain tax rate is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gains. :
8. Limit on Losses. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return. :
9. Carryover Losses. If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened in that next year. :
10. Forms to File. You often will need to file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses with your tax return.
Tuesday, February 17, 2015
Important Information about Advance Payments of the Premium Tax Credit
The Affordable Care Act includes financial assistance in the form of the premium tax credit for eligible taxpayers with moderate incomes who purchase coverage through the Health Insurance Marketplace. When you purchased coverage for 2014 through the Marketplace, you may have chosen to have the government send advance payments of the premium tax credit to your insurer to lower your monthly insurance premiums. At that time, the Marketplace estimated these credits based on information you provided about your expected household income and family size for the year.
If you chose to have advance credit payments sent to your insurer, you must file a federal income tax return, even if otherwise not required to file. You will need to reconcile these payments with the amount of premium tax credit you’re eligible for on your tax return. Receiving too much or too little in advance can affect your refund or balance due when you file.
For example, if you had certain life changes during the year and notified the Marketplace, the Marketplace should have adjusted the amount of the advance credit payments sent to your insurer accordingly. If you did not notify the Marketplace about these life changes, the advance credit payments may have been either too high or too low. Advance credit payments that are lower than the amount of premium tax credit on your tax return will reduce your tax bill or increase your refund.
On the other hand, if your advance credit payments are more than the premium tax credit you are eligible for based on your actual income, you will need to repay the excess amount, subject to certain caps. This will result in a smaller refund or a larger bill when you file your return. The repayment amount is based on your household income and family size. For more information on the repayment if your household income is less than 400 percent of the federal poverty line, the repayment amount is limited. Taxpayers with household incomes of 400 percent or more of the federal poverty line must repay all of the excess amount. See the instructions for Form 8962, Premium Tax Credit (PTC) for more information on the federal poverty line amounts.
Normally, taxpayers may owe certain penalties for late payments or underpayment of estimated tax. However, to help smooth the process for the first year of the Affordable Care Act, the IRS will waive these penalties for eligible taxpayers if they resulted from repayment of excess advance payments of the premium tax credit. This has no effect on the fee individuals will pay if they chose not to buy affordable health coverage. br>
You must complete Form 8962 to claim the premium tax credit and reconcile your advance credit payments with the premium tax credit you are eligible to claim on your return. You should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace by early February. This form provides information you will need when completing Form 8962. If you have questions about the information on Form 1095-A for 2014, or about receiving Form 1095-A for 2014, you should contact your Marketplace directly.
If you chose to have advance credit payments sent to your insurer, you must file a federal income tax return, even if otherwise not required to file. You will need to reconcile these payments with the amount of premium tax credit you’re eligible for on your tax return. Receiving too much or too little in advance can affect your refund or balance due when you file.
For example, if you had certain life changes during the year and notified the Marketplace, the Marketplace should have adjusted the amount of the advance credit payments sent to your insurer accordingly. If you did not notify the Marketplace about these life changes, the advance credit payments may have been either too high or too low. Advance credit payments that are lower than the amount of premium tax credit on your tax return will reduce your tax bill or increase your refund.
On the other hand, if your advance credit payments are more than the premium tax credit you are eligible for based on your actual income, you will need to repay the excess amount, subject to certain caps. This will result in a smaller refund or a larger bill when you file your return. The repayment amount is based on your household income and family size. For more information on the repayment if your household income is less than 400 percent of the federal poverty line, the repayment amount is limited. Taxpayers with household incomes of 400 percent or more of the federal poverty line must repay all of the excess amount. See the instructions for Form 8962, Premium Tax Credit (PTC) for more information on the federal poverty line amounts.
Normally, taxpayers may owe certain penalties for late payments or underpayment of estimated tax. However, to help smooth the process for the first year of the Affordable Care Act, the IRS will waive these penalties for eligible taxpayers if they resulted from repayment of excess advance payments of the premium tax credit. This has no effect on the fee individuals will pay if they chose not to buy affordable health coverage. br>
You must complete Form 8962 to claim the premium tax credit and reconcile your advance credit payments with the premium tax credit you are eligible to claim on your return. You should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace by early February. This form provides information you will need when completing Form 8962. If you have questions about the information on Form 1095-A for 2014, or about receiving Form 1095-A for 2014, you should contact your Marketplace directly.
Monday, February 16, 2015
IDENTITY THEFT PIN PILOT PROGRAM CONTINUES IN GEORGIA, FLORIDA, AND THE DISTRICT OF COLUMBIA
The Internal Revenue Service is offering the Identity Protection PIN (IP PIN) to all taxpayers who filed their federal tax returns last year from Florida, Georgia and the District of Columbia as part of a pilot program to help determine taxpayer demand for the IP PIN and the Service's ability to issue the PIN to a larger number of taxpayers. These locations have the highest per-capita percentage of tax-related identity theft. The program is voluntary and optional.
Taxpayers who wish to take advantage of this pilot opportunity for additional filing protection should visit www.irs.gov/getanippin to register and create an account. The IRS can’t issue an IP PIN to a taxpayer unless that person’s identity has been verified online. Once issued an IP PIN, taxpayers need to use it to confirm their identities on all federal income tax returns filed during the 2015 calendar year and future tax years. Taxpayers receive a new IP PIN by postal mail.
The IRS Identity Protection PIN is a 6-digit number assigned to victims of identity theft whose cases have been resolved. The IP PIN allows affected individuals to avoid delays in filing returns and receiving refunds. Many taxpayers across the country have been forced to use IP PiINs because their identity or someone else has fraudulently filed a return in their name. THIS program for Georgia, Florida, and the District of Columbia is voluntary: it is an optional way for taxpayers who live in areas where tax-related identity theft is more prevalent to add an additional layer of protection .
Resolving tax-related identity theft remains a top priority for the IRS. Identity theft is one of the fastest growing crimes nationwide, and preventing tax refund fraud caused by identity theft is one of the biggest challenges facing the IRS. The IRS is focused on preventing, detecting and resolving tax-related identity theft cases as soon as possible.
Taxpayers who wish to take advantage of this pilot opportunity for additional filing protection should visit www.irs.gov/getanippin to register and create an account. The IRS can’t issue an IP PIN to a taxpayer unless that person’s identity has been verified online. Once issued an IP PIN, taxpayers need to use it to confirm their identities on all federal income tax returns filed during the 2015 calendar year and future tax years. Taxpayers receive a new IP PIN by postal mail.
The IRS Identity Protection PIN is a 6-digit number assigned to victims of identity theft whose cases have been resolved. The IP PIN allows affected individuals to avoid delays in filing returns and receiving refunds. Many taxpayers across the country have been forced to use IP PiINs because their identity or someone else has fraudulently filed a return in their name. THIS program for Georgia, Florida, and the District of Columbia is voluntary: it is an optional way for taxpayers who live in areas where tax-related identity theft is more prevalent to add an additional layer of protection .
Resolving tax-related identity theft remains a top priority for the IRS. Identity theft is one of the fastest growing crimes nationwide, and preventing tax refund fraud caused by identity theft is one of the biggest challenges facing the IRS. The IRS is focused on preventing, detecting and resolving tax-related identity theft cases as soon as possible.
Fake Charities Among the IRS List of Tax Scams for 2015
The Internal Revenue Service warn taxpayers about groups masquerading as a charitable organization to attract donations from unsuspecting contributors. "When making a donation, taxpayers should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities,” said IRS Commissioner John Koskinen. “IRS.gov has the tools taxpayers need to check out the status of charitable organizations.”
The IRS offers these basic tips to taxpayers making charitable donations: • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. .”
• Don’t give out personal financial information, such as Social Security numbers or passwords to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money. People use credit card numbers to make legitimate donations but please be very careful when you are speaking with someone who called you. .”
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift. .”
Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.
Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.
They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims.
To help disaster victims, the IRS encourages taxpayers to donate to recognized charities. Call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you are a disaster victim with specific questions about tax relief or disaster related tax issues.
The IRS offers these basic tips to taxpayers making charitable donations: • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. .”
• Don’t give out personal financial information, such as Social Security numbers or passwords to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money. People use credit card numbers to make legitimate donations but please be very careful when you are speaking with someone who called you. .”
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift. .”
Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.
Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.
They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims.
To help disaster victims, the IRS encourages taxpayers to donate to recognized charities. Call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you are a disaster victim with specific questions about tax relief or disaster related tax issues.
Sunday, February 15, 2015
IRS Can Help if W-2s Are Missing
In most cases you get your W-2 forms by the end of January. Form W-2, Wage and Tax Statement, shows your income and the taxes withheld from your pay for the year. You need your W-2 form to file an accurate tax return.
If you haven’t received your form by mid-February, here’s what you should do:
• Contact your employer. Ask your employer (or former employer) for a copy. Be sure that they have your correct address.
• After Feb. 23. If you can’t get a copy from your employer, call the IRS at800-829-1040 after Feb. 23. The IRS will send a letter to your employer on your behalf. You’ll need the following when you call:
o Your name, address, Social Security number and phone number; o Your employer’s name, address and phone number; o The dates you worked for the employer; and o An estimate of your wages and federal income tax withheld in 2014. You can use your final pay stub for these amounts.
• File on time. Your tax return is normally due on or before April 15, 2015. Use Form 4852, Substitute for Form W-2, Wage and Tax Statement, if you don’t get your W-2 in time to file. Estimate your wages and taxes withheld as best as you can. The IRS may need more time to process your return while it verifies your information. If you can’t finish your tax return by the due date, you can ask for more time to file. Get an extra six months by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can also e-file a request for more time. You can do this for free with IRS Free File.
An Automatic Extension gives an extension of the date to FILE your tax return. However, if you owe taxes and do not pay by April 15, you may incur penalties and interest for LATE PAYMENT. Even if you file an extension, you should estimate and pay taxes due by April 15 to avoid penalties.
• Correct if necessary. You may need to correct your tax return if you get your missing W-2 after you file. If the tax information on the W-2 is different from what you originally reported, you may need to file an amended tax return. Use Form 1040X, Amended U.S. Individual Income Tax Return to make the change.
Note: Important New Health Insurance Form. If you bought health insurance through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement, by early February. You will need the new form to help you complete an accurate federal tax return. You will use the information from the Form 1095-A to calculate the amount of your premium tax credit. The form is also used to reconcile advance payments of the premium tax credit made on your behalf with the amount of premium tax credit that you are eligible to claim.
If you did not receive your Form 1095-A, you should contact the Marketplace from which you received coverage to get a copy. You are not required to send in proof of health care coverage, including Form 1095-A, to the IRS when filing your tax return. However, it’s a good idea to keep these records on hand to verify coverage.
If you haven’t received your form by mid-February, here’s what you should do:
• Contact your employer. Ask your employer (or former employer) for a copy. Be sure that they have your correct address.
• After Feb. 23. If you can’t get a copy from your employer, call the IRS at800-829-1040 after Feb. 23. The IRS will send a letter to your employer on your behalf. You’ll need the following when you call:
o Your name, address, Social Security number and phone number; o Your employer’s name, address and phone number; o The dates you worked for the employer; and o An estimate of your wages and federal income tax withheld in 2014. You can use your final pay stub for these amounts.
• File on time. Your tax return is normally due on or before April 15, 2015. Use Form 4852, Substitute for Form W-2, Wage and Tax Statement, if you don’t get your W-2 in time to file. Estimate your wages and taxes withheld as best as you can. The IRS may need more time to process your return while it verifies your information. If you can’t finish your tax return by the due date, you can ask for more time to file. Get an extra six months by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can also e-file a request for more time. You can do this for free with IRS Free File.
An Automatic Extension gives an extension of the date to FILE your tax return. However, if you owe taxes and do not pay by April 15, you may incur penalties and interest for LATE PAYMENT. Even if you file an extension, you should estimate and pay taxes due by April 15 to avoid penalties.
• Correct if necessary. You may need to correct your tax return if you get your missing W-2 after you file. If the tax information on the W-2 is different from what you originally reported, you may need to file an amended tax return. Use Form 1040X, Amended U.S. Individual Income Tax Return to make the change.
Note: Important New Health Insurance Form. If you bought health insurance through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement, by early February. You will need the new form to help you complete an accurate federal tax return. You will use the information from the Form 1095-A to calculate the amount of your premium tax credit. The form is also used to reconcile advance payments of the premium tax credit made on your behalf with the amount of premium tax credit that you are eligible to claim.
If you did not receive your Form 1095-A, you should contact the Marketplace from which you received coverage to get a copy. You are not required to send in proof of health care coverage, including Form 1095-A, to the IRS when filing your tax return. However, it’s a good idea to keep these records on hand to verify coverage.
Wednesday, February 11, 2015
“DO I NEED A CPA TO PREPARE MY INCOME TAX RETURN?”
Maybe not, for taxpayers whose sole source of income is from W-2 wages and who have had no extra-ordinary events in the past year. If the situation is “simple” and the person is comfortable using software and the internet, many taxpayers can do quite well filing their own tax returns using any of a number of FreeFile and software alternative (TaxAct, TurboTax, etc.)
However, if your tax situation is more complicated, you run the risk of paying more tax without the help of a CPA (Certified Public Accountant) or other tax professional. Especially, if you have a business or receive your income statement by 1099-misc instead of a W-2, or if you receive income from rental property, you will most likely profit from the help of a tax professional.
And, should you decide to self-prepare your tax return, I am happy to review your work without cost or obligation.
However, if your tax situation is more complicated, you run the risk of paying more tax without the help of a CPA (Certified Public Accountant) or other tax professional. Especially, if you have a business or receive your income statement by 1099-misc instead of a W-2, or if you receive income from rental property, you will most likely profit from the help of a tax professional.
And, should you decide to self-prepare your tax return, I am happy to review your work without cost or obligation.
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