The Internal Revenue Service today released a new form that will help employers claim the special payroll tax exemption that applies to many newly-hired workers during 2010, created by the Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18.
New Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now posted on IRS.gov, along with answers to frequently-asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.
Most eligible employers then use Form 941, Employer’s Quarterly Federal Tax Return, to claim the payroll tax exemption for eligible new hires. This form, revised for use beginning with the second calendar quarter of 2010, is currently posted as a draft form on IRS.gov and will be released next month as a final along with the form’s instructions.
Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.
The HIRE Act created two new tax benefits designed to encourage employers to hire and retain new workers. As a result, employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of social security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. In addition, for each unemployed worker retained for at least a year, businesses may claim a new hire retention credit of up to $1,000 per worker when they file their 2011 income tax returns.
These two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify for either of these tax incentives.
Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees. Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible. IRS.gov has more details.
Related Item: IR-2010-33, Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers
Wednesday, April 7, 2010
Tuesday, April 6, 2010
Top Ten Things You Need to Know About Making Federal Tax Payments
Will you be making a payment with your federal tax return this year? If so, here are 10 important things the IRS wants you to know about making tax payments correctly.
1. Never send cash!
2. If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
3. Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.
4. Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search e-pay, or refer to Publication 3611, e-File Electronic Payments for more details.
5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.
6. Enclose your payment with your return but do not staple it to the form.
7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”
8. Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.
9. Complete and include Form 1040-V, Payment Voucher, when sending your payment to the IRS. This will help the IRS process your payment accurately and efficiently.
10. For more information, call 800-829-4477 for TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at IRS.gov.
1. Never send cash!
2. If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
3. Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.
4. Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search e-pay, or refer to Publication 3611, e-File Electronic Payments for more details.
5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.
6. Enclose your payment with your return but do not staple it to the form.
7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”
8. Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.
9. Complete and include Form 1040-V, Payment Voucher, when sending your payment to the IRS. This will help the IRS process your payment accurately and efficiently.
10. For more information, call 800-829-4477 for TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at IRS.gov.
Monday, April 5, 2010
Going Green May Reduce Your Taxes
When you invest in energy-efficient products, you may be saving money on both your energy bills and your tax return. The Internal Revenue Service wants you to know about these six energy-related tax credits created or expanded by the American Recovery and Reinvestment Act of 2009.
1. Residential Energy Property Credit This tax credit is for homeowners who make qualified energy efficient improvements to their existing homes. This credit is 30 percent of the cost of all qualifying improvements. The maximum credit is $1,500 for improvements placed in service in 2009 and 2010 combined. The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.
2. Residential Energy Efficient Property Credit This tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines installed on or in connection with their home located in the United States and geothermal heat pumps installed on or in connection with their main home located in the United States.The credit, which runs through 2016, is 30 percent of the cost of qualified property. ARRA removes some of the previously imposed annual maximum dollar limits.
3. Plug-in Electric Drive Vehicle Credit ARRA modifies this credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles, which runs through 2014, is $2,500 and the credit tops out at $7,500, depending on the battery capacity. ARRA phases out the credit for each manufacturer after they sell 200,000 vehicles.
4. Plug-in Electric Vehicle Credit This is a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.
5. Credit for Conversion Kits This credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle that is placed in service after Feb. 17, 2009. The maximum credit, which runs through 2011, is $4,000.
6. Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT Starting in 2009, ARRA allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.
1. Residential Energy Property Credit This tax credit is for homeowners who make qualified energy efficient improvements to their existing homes. This credit is 30 percent of the cost of all qualifying improvements. The maximum credit is $1,500 for improvements placed in service in 2009 and 2010 combined. The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.
2. Residential Energy Efficient Property Credit This tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines installed on or in connection with their home located in the United States and geothermal heat pumps installed on or in connection with their main home located in the United States.The credit, which runs through 2016, is 30 percent of the cost of qualified property. ARRA removes some of the previously imposed annual maximum dollar limits.
3. Plug-in Electric Drive Vehicle Credit ARRA modifies this credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles, which runs through 2014, is $2,500 and the credit tops out at $7,500, depending on the battery capacity. ARRA phases out the credit for each manufacturer after they sell 200,000 vehicles.
4. Plug-in Electric Vehicle Credit This is a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.
5. Credit for Conversion Kits This credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle that is placed in service after Feb. 17, 2009. The maximum credit, which runs through 2011, is $4,000.
6. Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT Starting in 2009, ARRA allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.
Six Important Facts about Tax-Exempt Organizations (REVISED)
Every year, millions of taxpayers donate money to charitable organizations. The IRS has put together the following list of six things you should know about the tax treatment of tax-exempt organizations.
1. Annual returns are made available to the public. Exempt organizations generally must make their annual returns available for public inspection. This also includes the organization’s application for exemption. In addition, an organization exempt under 501(c)(3) must make available any Form 990-T, Exempt Organization Business Income Tax Return. These documents must be made available to any individual who requests them, and must be made available immediately when the request is made in person. If the request is made in writing, an organization has 30 days to provide a copy of the information, unless it makes the information widely available.
2. Donor lists generally are not public information. The list of donors filed with Form 990, Return of Organization Exempt From Income Tax, is specifically excluded from the information required to be made available for public inspection by the exempt organization. There is an exception, private foundations and political organizations must make their donor list available to the public.
3. How to find tax-exempt organizations. The easiest way to find out whether an organization is qualified to receive deductible contributions is to ask them. You can ask to see an organization's exemption letter, which states the Code section that describes the organization and whether contributions made to the organization are deductible. You can also search for organizations qualified to accept deductible contributions in IRS Publication 78, Cumulative List of Organizations and its Addendum, available at IRS.gov. Taxpayers can also confirm an organization’s status by calling the IRS at 877-829-5500.
4. Which organizations may accept charitable contributions. Not all exempt organizations are eligible to receive tax-deductible charitable contributions. Organizations that are eligible to receive deductible contributions include most charities described in section 501(c)(3) of the Internal Revenue Code and, in some circumstances, fraternal organizations described in section 501(c)(8) or section 501(c)(10), cemetery companies described in section 501(c)(13), volunteer fire departments described in section 501(c)(4), and veterans organizations described in section 501(c)(4) or 501(c)(19).
5. Requirement for organizations not able to accept deductible contributions. If an exempt organization is ineligible to receive tax-deductible contributions, it must disclose that fact when soliciting contributions.
6. How to report inappropriate activities by an exempt organization. If you believe that the activities or operations of a tax-exempt organization are inconsistent with its tax-exempt status, you may file a complaint with the Exempt Organizations Examination Division by completing Form 13909, Tax-Exempt Organization Complaint (Referral) Form. The complaint should contain all relevant facts concerning the alleged violation of tax law. Form 13909 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
1. Annual returns are made available to the public. Exempt organizations generally must make their annual returns available for public inspection. This also includes the organization’s application for exemption. In addition, an organization exempt under 501(c)(3) must make available any Form 990-T, Exempt Organization Business Income Tax Return. These documents must be made available to any individual who requests them, and must be made available immediately when the request is made in person. If the request is made in writing, an organization has 30 days to provide a copy of the information, unless it makes the information widely available.
2. Donor lists generally are not public information. The list of donors filed with Form 990, Return of Organization Exempt From Income Tax, is specifically excluded from the information required to be made available for public inspection by the exempt organization. There is an exception, private foundations and political organizations must make their donor list available to the public.
3. How to find tax-exempt organizations. The easiest way to find out whether an organization is qualified to receive deductible contributions is to ask them. You can ask to see an organization's exemption letter, which states the Code section that describes the organization and whether contributions made to the organization are deductible. You can also search for organizations qualified to accept deductible contributions in IRS Publication 78, Cumulative List of Organizations and its Addendum, available at IRS.gov. Taxpayers can also confirm an organization’s status by calling the IRS at 877-829-5500.
4. Which organizations may accept charitable contributions. Not all exempt organizations are eligible to receive tax-deductible charitable contributions. Organizations that are eligible to receive deductible contributions include most charities described in section 501(c)(3) of the Internal Revenue Code and, in some circumstances, fraternal organizations described in section 501(c)(8) or section 501(c)(10), cemetery companies described in section 501(c)(13), volunteer fire departments described in section 501(c)(4), and veterans organizations described in section 501(c)(4) or 501(c)(19).
5. Requirement for organizations not able to accept deductible contributions. If an exempt organization is ineligible to receive tax-deductible contributions, it must disclose that fact when soliciting contributions.
6. How to report inappropriate activities by an exempt organization. If you believe that the activities or operations of a tax-exempt organization are inconsistent with its tax-exempt status, you may file a complaint with the Exempt Organizations Examination Division by completing Form 13909, Tax-Exempt Organization Complaint (Referral) Form. The complaint should contain all relevant facts concerning the alleged violation of tax law. Form 13909 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Saturday, April 3, 2010
Seven Important Facts about Your Appeal Rights
The IRS provides an appeals system for those who do not agree with the results of a tax return examination or with other adjustments to their tax liability. Here are the top seven things to know when it comes to your appeal rights.
1. When the IRS makes an adjustment to your tax return, you will receive a report or letter explaining the proposed adjustments. This letter will also explain how to request a conference with an Appeals office should you not agree with the IRS findings on your tax return.
2. In addition to tax return examinations, many other tax obligations can be appealed. You may also appeal penalties, interest, trust fund recovery penalties, offers in compromise, liens and levies.
3. You are urged to be prepared with appropriate records and documentation to support your position if you request a conference with an IRS Appeals employee.
4. Appeals conferences are informal meetings. You may represent yourself or have someone else represent you. Those allowed to represent taxpayers include attorneys, certified public accountants or individuals enrolled to practice before the IRS.
5. The IRS Appeals Office is separate from – and independent of – the IRS office taking the action you may disagree with. The Appeals Office is the only level of administrative appeal within the agency.
6. If you do not reach agreement with IRS Appeals or if you do not wish to appeal within the IRS, you may appeal certain actions through the courts.
7. For further information on the appeals process, refer to Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree. This publication, along with more on IRS Appeals is available at IRS.gov.
1. When the IRS makes an adjustment to your tax return, you will receive a report or letter explaining the proposed adjustments. This letter will also explain how to request a conference with an Appeals office should you not agree with the IRS findings on your tax return.
2. In addition to tax return examinations, many other tax obligations can be appealed. You may also appeal penalties, interest, trust fund recovery penalties, offers in compromise, liens and levies.
3. You are urged to be prepared with appropriate records and documentation to support your position if you request a conference with an IRS Appeals employee.
4. Appeals conferences are informal meetings. You may represent yourself or have someone else represent you. Those allowed to represent taxpayers include attorneys, certified public accountants or individuals enrolled to practice before the IRS.
5. The IRS Appeals Office is separate from – and independent of – the IRS office taking the action you may disagree with. The Appeals Office is the only level of administrative appeal within the agency.
6. If you do not reach agreement with IRS Appeals or if you do not wish to appeal within the IRS, you may appeal certain actions through the courts.
7. For further information on the appeals process, refer to Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree. This publication, along with more on IRS Appeals is available at IRS.gov.
Three New Issues to Be Addressed by IRS Industry Issue Resolution Program
WASHINGTON —The Internal Revenue Service and the Treasury Department today announced that guidance will be developed and published under the IRS’s Industry Issue Resolution (IIR) program for several significant issues affecting the telecommunications and retail industries.
Telecommunication issues include the proper treatment of unit of property for network assets, and the appropriate asset class for wireless telecommunications assets. The retail industry issue selected will address vendor mark-down allowances under the retail inventory method. These issues affect nearly all taxpayers in the respective industries.
Since its inception in 2000, the IIR program has resulted in resolution of many different tax issues cumulatively affecting thousands of taxpayers in many different lines of business. For each issue selected, a multi-functional team gathers and analyzes the relevant facts and recommends guidance.
At any time, business associations and taxpayers may submit tax issues that they believe could be resolved through the IIR program. IIR project selection criteria and submission procedures are outlined in Revenue Procedure 2003-36, which is available on the IRS Web site at IRS.gov. While issues may be submitted for consideration for inclusion in the IIR program at anytime, submissions must be received by August 31st for the summer screening of submissions.
Telecommunication issues include the proper treatment of unit of property for network assets, and the appropriate asset class for wireless telecommunications assets. The retail industry issue selected will address vendor mark-down allowances under the retail inventory method. These issues affect nearly all taxpayers in the respective industries.
Since its inception in 2000, the IIR program has resulted in resolution of many different tax issues cumulatively affecting thousands of taxpayers in many different lines of business. For each issue selected, a multi-functional team gathers and analyzes the relevant facts and recommends guidance.
At any time, business associations and taxpayers may submit tax issues that they believe could be resolved through the IIR program. IIR project selection criteria and submission procedures are outlined in Revenue Procedure 2003-36, which is available on the IRS Web site at IRS.gov. While issues may be submitted for consideration for inclusion in the IIR program at anytime, submissions must be received by August 31st for the summer screening of submissions.
Reminders for Last-Minute Tax Filers
With the April 15 tax filing deadline right around the corner, the Internal Revenue Service offers taxpayers who have not yet filed a few last-minute tips.
Don’t Miss the Deadline
If you have a balance due and don’t file a tax return by April 15, you face interest on the unpaid taxes as well as a failure-to-file penalty. Interest and penalties are added to your balance due. If you can’t file by the deadline, request an extension of time to file (see below).
If you file on time or request an extension but don’t pay all or some of the balance due by the deadline, you will incur interest on the unpaid amount and a failure-to-pay penalty. If you can’t pay the full amount, you should pay as much as possible by the deadline to minimize interest and penalties.
Get Recovery Tax Breaks
Last year’s American Recovery and Reinvestment Act created a full slate of tax breaks, which can be claimed on tax returns right now. These include:
• The Homebuyer Credit
• Making Work Pay Credit
• American Opportunity Credit
• Home Energy Credit
• New Car Tax and Fee Deduction
You can get information on these and other Recovery credits at IRS.gov/recovery.
File Electronically
Most tax returns are now filed electronically – either from home using purchased tax software, by a tax professional or through Free File.
There are several reasons the IRS encourages taxpayers to file electronically. Here are two big ones:
• E-file is accurate: Most available tax preparation programs check for errors and missing information, reducing the chances of delayed refunds or follow-up correspondence from the IRS.
• E-file is fast: With most tax software, you can file a state tax return at the same time you file your federal return. Once a return is accepted for processing, the IRS electronically acknowledges receipt of the return. And refunds take only about half the time of a paper return. If you choose direct deposit, you will get your refund in even less time.
Try Free File
Free electronic filing is available to everyone.
Traditional Free File is software with step-by-step help available to anyone whose 2009 adjusted gross income was $57,000 or less. The only way to access Free File is through the IRS Web site, IRS.gov. As the name implies, there is no charge for this service.
For those whose incomes exceed $57,000, there is Free File Fillable Forms. Free File Fillable Forms, also available through IRS.gov, allows a taxpayer to fill out and file tax forms online. You enter the necessary information, sign electronically, print the return for recordkeeping and then e-file the return right to the IRS. Since there is no step-by-step help, Free File Fillable Forms may be best if you are comfortable with the tax law and know which forms to choose.
Choose Direct Deposit for Refunds
Whether you file electronically or on paper, your refund can be automatically deposited into the bank or financial account of your choosing. Direct deposit is faster than a paper check. If you e-file and use direct deposit, you will receive your refund even faster. Direct deposit is also more secure than a paper check since a direct deposit goes directly into your account and cannot be lost in the mail or stolen.
Split Refund: Refunds can be direct-deposited into as many as three different accounts. Most e-file and tax preparation software allow you to “split” your refund this way. Paper return filers need to file Form 8888, Direct Deposit of Refund to More Than One Account, to split a refund among two or three accounts.
Buy Savings Bonds: This year, for the first time, you can buy Series I U.S. Savings Bonds with your refund. Issued by the Treasury Department, a Series I bond is a low-risk investment that grows in value for up to 30 years.
Check for Errors
Tax software finds common errors on electronically prepared returns. However, if you file on paper, you can avoid delays in processing and follow-up questions from the IRS by:
• Double-checking all figures
• Ensuring Social Security numbers are correct
• Signing forms where required
• Attaching required schedules and forms
• Mailing returns or request extensions by the April 15 filing deadline
Pay Electronically
Electronic payment options are safe and secure methods for paying taxes or user fees. You can pay online, by phone using a credit or debit card, or through the Electronic Federal Tax Payment System.
You may also pay by check made out to the “United States Treasury” using Form 1040-V, Payment Voucher, which must be included along with your tax return. If you have already filed but still need to pay all or some of your taxes, mail the check to the IRS with Form 1040-V.
Request an Extension of Time to File
If you can't meet the April 15 filing deadline, get an automatic six-month extension of time to file by filing Form 4868, Automatic Extension of Time to File. The form needs to be submitted by April 15.
There are several way you can request an extension, including Free File or Free File Fillable Forms, through your tax professional, with tax software you installed on your computer or on paper.
An extension pushes your filing deadline back to Oct. 15. However, an extension of time to file is not an extension of time to pay. If you owe taxes, you need to pay at the time you file the extension or face a non-payment penalty.
Apply for an Installment Agreement
If you can’t pay your entire balance due, an installment agreement will allow you to pay any remaining balance in monthly installments. If you owe $25,000 or less, you may apply for a payment plan using the Online Payment Agreement application or just attach Form 9465, Installment Agreement Request, to the front of your return. You’ll need to list the amount of your proposed monthly payment and the date you wish to make your payment each month. The IRS charges $105 for setting up the agreement, or $52 if the payments are deducted directly from your bank account.
You will be required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month after the due date that the tax is not paid.
Help Is Available
For more information about filing and paying your taxes, visit 1040 Central on IRS.gov. Important information is also available in Publication 17, Your Federal Income Tax. Forms and publications are available for download from IRS.gov or can be ordered by calling toll free 800-TAX-FORM (800-829-3676).
Don’t Miss the Deadline
If you have a balance due and don’t file a tax return by April 15, you face interest on the unpaid taxes as well as a failure-to-file penalty. Interest and penalties are added to your balance due. If you can’t file by the deadline, request an extension of time to file (see below).
If you file on time or request an extension but don’t pay all or some of the balance due by the deadline, you will incur interest on the unpaid amount and a failure-to-pay penalty. If you can’t pay the full amount, you should pay as much as possible by the deadline to minimize interest and penalties.
Get Recovery Tax Breaks
Last year’s American Recovery and Reinvestment Act created a full slate of tax breaks, which can be claimed on tax returns right now. These include:
• The Homebuyer Credit
• Making Work Pay Credit
• American Opportunity Credit
• Home Energy Credit
• New Car Tax and Fee Deduction
You can get information on these and other Recovery credits at IRS.gov/recovery.
File Electronically
Most tax returns are now filed electronically – either from home using purchased tax software, by a tax professional or through Free File.
There are several reasons the IRS encourages taxpayers to file electronically. Here are two big ones:
• E-file is accurate: Most available tax preparation programs check for errors and missing information, reducing the chances of delayed refunds or follow-up correspondence from the IRS.
• E-file is fast: With most tax software, you can file a state tax return at the same time you file your federal return. Once a return is accepted for processing, the IRS electronically acknowledges receipt of the return. And refunds take only about half the time of a paper return. If you choose direct deposit, you will get your refund in even less time.
Try Free File
Free electronic filing is available to everyone.
Traditional Free File is software with step-by-step help available to anyone whose 2009 adjusted gross income was $57,000 or less. The only way to access Free File is through the IRS Web site, IRS.gov. As the name implies, there is no charge for this service.
For those whose incomes exceed $57,000, there is Free File Fillable Forms. Free File Fillable Forms, also available through IRS.gov, allows a taxpayer to fill out and file tax forms online. You enter the necessary information, sign electronically, print the return for recordkeeping and then e-file the return right to the IRS. Since there is no step-by-step help, Free File Fillable Forms may be best if you are comfortable with the tax law and know which forms to choose.
Choose Direct Deposit for Refunds
Whether you file electronically or on paper, your refund can be automatically deposited into the bank or financial account of your choosing. Direct deposit is faster than a paper check. If you e-file and use direct deposit, you will receive your refund even faster. Direct deposit is also more secure than a paper check since a direct deposit goes directly into your account and cannot be lost in the mail or stolen.
Split Refund: Refunds can be direct-deposited into as many as three different accounts. Most e-file and tax preparation software allow you to “split” your refund this way. Paper return filers need to file Form 8888, Direct Deposit of Refund to More Than One Account, to split a refund among two or three accounts.
Buy Savings Bonds: This year, for the first time, you can buy Series I U.S. Savings Bonds with your refund. Issued by the Treasury Department, a Series I bond is a low-risk investment that grows in value for up to 30 years.
Check for Errors
Tax software finds common errors on electronically prepared returns. However, if you file on paper, you can avoid delays in processing and follow-up questions from the IRS by:
• Double-checking all figures
• Ensuring Social Security numbers are correct
• Signing forms where required
• Attaching required schedules and forms
• Mailing returns or request extensions by the April 15 filing deadline
Pay Electronically
Electronic payment options are safe and secure methods for paying taxes or user fees. You can pay online, by phone using a credit or debit card, or through the Electronic Federal Tax Payment System.
You may also pay by check made out to the “United States Treasury” using Form 1040-V, Payment Voucher, which must be included along with your tax return. If you have already filed but still need to pay all or some of your taxes, mail the check to the IRS with Form 1040-V.
Request an Extension of Time to File
If you can't meet the April 15 filing deadline, get an automatic six-month extension of time to file by filing Form 4868, Automatic Extension of Time to File. The form needs to be submitted by April 15.
There are several way you can request an extension, including Free File or Free File Fillable Forms, through your tax professional, with tax software you installed on your computer or on paper.
An extension pushes your filing deadline back to Oct. 15. However, an extension of time to file is not an extension of time to pay. If you owe taxes, you need to pay at the time you file the extension or face a non-payment penalty.
Apply for an Installment Agreement
If you can’t pay your entire balance due, an installment agreement will allow you to pay any remaining balance in monthly installments. If you owe $25,000 or less, you may apply for a payment plan using the Online Payment Agreement application or just attach Form 9465, Installment Agreement Request, to the front of your return. You’ll need to list the amount of your proposed monthly payment and the date you wish to make your payment each month. The IRS charges $105 for setting up the agreement, or $52 if the payments are deducted directly from your bank account.
You will be required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month after the due date that the tax is not paid.
Help Is Available
For more information about filing and paying your taxes, visit 1040 Central on IRS.gov. Important information is also available in Publication 17, Your Federal Income Tax. Forms and publications are available for download from IRS.gov or can be ordered by calling toll free 800-TAX-FORM (800-829-3676).
New Page on IRS.gov to Help Small Employers with Tax Credit for Providing Health Insurance Coverage
The IRS has updated IRS.gov to provide information to small employers regarding the new tax credit for providing health coverage.
The new features includes:
• A graphic to help employers quickly determine if they qualify for the credit,
• Scenarios that explain how much certain businesses and exempt organizations would benefit from the credit,
• Tax tips on taking the credit, and
• Questions and answers.
The IRS encouraged small employers to carefully consider the tax credit.
The new features includes:
• A graphic to help employers quickly determine if they qualify for the credit,
• Scenarios that explain how much certain businesses and exempt organizations would benefit from the credit,
• Tax tips on taking the credit, and
• Questions and answers.
The IRS encouraged small employers to carefully consider the tax credit.
Thursday, April 1, 2010
Tax Credit Helps Small Employers Provide Health Insurance Coverage
WASHINGTON ― Many small businesses and tax-exempt organizations that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.
Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
“This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees,” said IRS Commissioner Doug Shulman. “We urge small businesses and tax-exempt employers to look closely at this important tax break - which is already effective - to see if they qualify.”
The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax-exempt organizations.
The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers. It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.
The maximum credit goes to smaller employers – those with 10 or fewer FTEs – paying annual average wages of $25,000 or less.
Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.
The IRS will use postcards to reach out to millions of small businesses that may qualify for the credit. The postcards will encourage small business owners to take advantage of the credit if they qualify.
More information about the credit, including tax tips, guides and answers to frequently asked questions, is now available on the IRS Web site, IRS.gov.
Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
“This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees,” said IRS Commissioner Doug Shulman. “We urge small businesses and tax-exempt employers to look closely at this important tax break - which is already effective - to see if they qualify.”
The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax-exempt organizations.
The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers. It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.
The maximum credit goes to smaller employers – those with 10 or fewer FTEs – paying annual average wages of $25,000 or less.
Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.
The IRS will use postcards to reach out to millions of small businesses that may qualify for the credit. The postcards will encourage small business owners to take advantage of the credit if they qualify.
More information about the credit, including tax tips, guides and answers to frequently asked questions, is now available on the IRS Web site, IRS.gov.
Ten Things You Need to Know About Tax Refunds
Are you expecting a refund from the IRS this year? Here are the top 10 things you should know about your refund.
1. Refund Options You have three options for receiving your individual federal income tax refund: a paper check, direct deposit or U.S. Savings Bonds. You can now use your refund to buy up to $5,000 in U.S. Series I savings bonds in multiples of $50.
2. Separate Accounts You may use Form 8888, Direct Deposit of Refund to More Than One Account, to request that your refund be allocated by direct deposit among up to three separate accounts, such as checking or savings or retirement accounts. You may also use this form to buy U.S Savings Bonds.
3. Paper Return Processing Time If you file a complete and accurate paper tax return, your refund will usually be issued within six weeks from the date it is received.
4. Returns Filed Electronically If you filed electronically, your refund will normally be issued within three weeks after the acknowledgment date.
5. Check the Status Online The fastest and easiest way to find out about your current year refund is to go to IRS.gov and click the “Where’s My Refund?” link at the IRS.gov home page. To check the status online you will need your Social Security number, filing status and the exact whole dollar amount of your refund shown on your return.
6. Check the Status By Phone You can check the status of your refund by calling the IRS Refund Hotline at 800–829–1954. When you call, you will need to provide your Social Security number, your filing status and the exact whole dollar amount of the refund shown on your return.
7. Delayed Refund There are several reasons for delayed refunds. For things that may delay the processing of your return, refer to Tax Topic 303 at IRS.gov, which includes a Checklist of Common Errors When Preparing Your Tax Return.
8. Larger than Expected Refund If you receive a refund to which you are not entitled, or one for an amount that is more than you expected, do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.
9. Smaller than Expected Refund If you receive a refund for a smaller amount than you expected, you may cash the check. If it is determined that you should have received more, you will later receive a check for the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks after receiving the refund, then call 800–829–1040.
10. Missing Refund The IRS will assist you in obtaining a replacement check for a refund check that is verified as lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check.
For more information, visit IRS.gov or call 800-829-1040.
1. Refund Options You have three options for receiving your individual federal income tax refund: a paper check, direct deposit or U.S. Savings Bonds. You can now use your refund to buy up to $5,000 in U.S. Series I savings bonds in multiples of $50.
2. Separate Accounts You may use Form 8888, Direct Deposit of Refund to More Than One Account, to request that your refund be allocated by direct deposit among up to three separate accounts, such as checking or savings or retirement accounts. You may also use this form to buy U.S Savings Bonds.
3. Paper Return Processing Time If you file a complete and accurate paper tax return, your refund will usually be issued within six weeks from the date it is received.
4. Returns Filed Electronically If you filed electronically, your refund will normally be issued within three weeks after the acknowledgment date.
5. Check the Status Online The fastest and easiest way to find out about your current year refund is to go to IRS.gov and click the “Where’s My Refund?” link at the IRS.gov home page. To check the status online you will need your Social Security number, filing status and the exact whole dollar amount of your refund shown on your return.
6. Check the Status By Phone You can check the status of your refund by calling the IRS Refund Hotline at 800–829–1954. When you call, you will need to provide your Social Security number, your filing status and the exact whole dollar amount of the refund shown on your return.
7. Delayed Refund There are several reasons for delayed refunds. For things that may delay the processing of your return, refer to Tax Topic 303 at IRS.gov, which includes a Checklist of Common Errors When Preparing Your Tax Return.
8. Larger than Expected Refund If you receive a refund to which you are not entitled, or one for an amount that is more than you expected, do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.
9. Smaller than Expected Refund If you receive a refund for a smaller amount than you expected, you may cash the check. If it is determined that you should have received more, you will later receive a check for the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks after receiving the refund, then call 800–829–1040.
10. Missing Refund The IRS will assist you in obtaining a replacement check for a refund check that is verified as lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check.
For more information, visit IRS.gov or call 800-829-1040.
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