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How to Get Tax Help, Publications, and Forms

May 31, 2011 By

If you are seeking tax help, the first thing you need is to be informed. If you feel uncertain about a specific aspect of taxes, or if you just generally feel uncertain about the entire process, there are a variety of ways to learn what you need to know. One of those is to visit the IRS website or acquire the latest official publications that contain instructions on all of the various tax laws and conditions that apply to each particular filing.

Aside from information itself, you also need to have all of the correct paperwork at your disposal. Much of what you require can be obtained on your own by visiting the IRS website. They are open 7 days a week, 24 hours per day. The URL is http://www.irs.gov. This is an ideal place to start.

You may also look up Taxpayer Assistance Centers directly to get your answers and information. In the US, there are 401 TAC’s that can assist taxpayers in person. They also provide much of the forms and other publications you may need, related to the IRS. To locate a TAC in your area, simply go to http://www.irs.gov, locate the Individuals page and then find Contact My Local Office. Once there, you are able to search for a TAC based on your zip code. This enables you to locate the closest IRS office that allows walk-ins in your area. A listing of what services are offered at each location is also provided for your convenience.

Your local community will also have resources that may be of assistance. For instance, post offices and libraries often provide tax forms free of charge to taxpayers during tax season. The local library may also carry tax related publications that are sought regularly. In addition to these, there are also stores that may have forms available to print from disc or via copy machine; i.e., office supply stores, copy centers, grocery stores, etc.

It is also possible to order the necessary forms by phone to be sent to you in the mail. Simply dial 1-800-TAX-FORM to obtain instructions, publications, forms for the current years, and forms and instructions for prior tax years. Your forms will arrive via mail generally in about 10 days. It is advisable to wait until after the first week or two of each new year before ordering forms for that year’s tax season to ensure the tax related products are available when you order them.

If you are unable to find what you need through a local office, or have any trouble with the mail and phone ordering, the best thing you can do is contact the IRS directly. Again, visit the website http://www.irs.gov, learn as much as you can there, and do not hesitate to contact your local office. You may call ahead to check on their business hours and to ask any tax help questions. You may also inquire on what you may need to bring in the event you do a walk-in visit to their office.

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Efforts to Review the 2 Year Limit on Innocent Spouse Relief

May 27, 2011 By


Filing returns jointly for any married couple comes with a range of advantages including entitlements to various tax breaks. Therefore, most married couples prefer filing tax returns jointly to maximize on such benefits. However, whenever a couple files returns jointly, they are individually liable to all the information and obligations associated to the returns. In this case, any omissions or erroneous entries are liable to both spouses irrespective of their knowledge or involvement with such information. However, the IRS provides an opportunity for innocent spouses to be protected from any tax liabilities if they were ignorant of the tax situation that led to the additional tax liabilities or signed returns out of pressure or extreme influence. Therefore, such an innocent spouse can petition to the IRS to be excused from any liabilities and thereby, pass the whole additional tax liability to the guilty spouse. This spouse-protection-arrangement is referred to as the Innocent Spouse Relief.

The Innocent Spouse Relief has protected many victims of tax fraud who find themselves in a problematic tax situation for information they were not aware of only because they filed their taxes jointly. However, to qualify for the Innocent Spouse Relief, one needs to meet a set of rules provided by the IRS. One of these rules is that you need to file for the Innocent Spouse Relief within a maximum of 2 years after submitting the returns. It means that if the IRS contacts a couple after the 2 year limit, an innocent spouse cannot utilize the Innocent Spouse Relief.

The two year limit on the Innocent Spouse Relief has been faced with a lot of criticism because this time limit provided by the IRS is seen as arbitrary and lacking any basis. There have been various efforts by different parties to seek a repeal of the limitation on the relief. The point of contention is that a spouse could remain innocent even 3 to 5 years after returns are made, and holding such an innocent spouse liable because of a time limitation is simply unfair. In one case, the IRS attempted to recover taxes from a spouse whose husband had been convicted of physically abusing her. The IRS claimed that it could not apply the Innocent Spouse Relief because of the time limitation. Luckily for her, the court ruled in her favor and the decision of the IRS to hold her responsible was reversed.

Various lawmakers, including 49 Representatives and 3 Senators, have endeavored to get an adjustment of the “2 year” rule. Representatives Pete Stark of California and Jim McDermott of Washington have written to the IRS Commissioner Doug Shulman, seeking an adjustment to the rule. Others including Senator Max Baucus, Senator Tom Harkin, and Senator Sherrod Brown have also made similar appeals to IRS administrators. However, this spirited effort has not been in vain. The IRS Commissioner, in response to these letters indicated, stated that the IRS was in the process of overhauling the whole relief to ensure that it addressed their concerns and ensured fairness to the innocent spouse.

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The First-Time Homebuyer IRS Tax Credit Complicates 2010 Returns

May 26, 2011 By


The 2010 tax returns have been quite frustrating for a section of taxpayers who were paying back their First Time Homebuyers Credit. According to the IRS, people in this group experienced delays in their refunds because of a computer hitch that slowed down the processing of their taxes.

Background of the Tax Credit

In 2008, the IRS introduced a new IRS tax credit to first time home buyers. In that year, it gave a tax credit of $7,500.00 to first-time home owners. However, unlike other tax credits, this particular credit was more of a loan from Uncle Sam and required repaying at no interest starting 2010. The repayment was to be in $500.00 installments for 15 years to make up for the credit amount. For individuals who had collected the tax credit but sold their house or put it up for rentals, they needed to pay off the tax credit “loan” in a single installment. However, when Congress extended the First-Time Home Buyer tax break in subsequent years, this tax credit was increased to a limit of $8,000.00 with a credit of $6,500.00 for subsequent home owners moving into a new residence. Better still, this credit no longer required any form of repayment. This left the 2008 first-time buyers who claimed this tax credit being the only group to repay their tax credit.

To add insult to injury, this 2008 home buyers who were repaying their tax credit for the first time this year have tax processing delays. The people mainly affected by these delays are those who made a sale of the home and had to pay the whole credit amount in one installment. Another group experiencing delays are the individuals who upgraded their homes and due to this change, are repaying more than the $500.00 annual installment threshold.

Complications with the Tax Credit

The complications of tax returns that followed the 2008 first-time home buyers provision coupled by the delays in processing of returns for this group of taxpayers has been such an administrative hassle for the IRS, that it has gotten may taxpayers and observers rating this year’s tax returns as a one of the worst. Taxpayers affected by the 2008 First-Time Home Buyer Credit had to file manual hard copies as opposed to e-filing, and extensive fraudulent claims in the tax credit made the IRS apply extra caution for reviewing the returns of people in this category.

Feedback on the Complications

According to Nina Olson, the National Taxpayer Advocate, the ignominious tax credit issues have made the 2010 tax returns to be her worst season ever. She felt that the tax credit for home buyers should not have been included in the taxes in the first place and only brought about confusion and frustration. Many taxpayers have gotten significant inconveniences from these unforeseen refund delays. Many are experiencing losses and higher interests and penalties for delayed debt and utility payments as they had depended on the IRS tax refunds to make payments for various financial obligations.

Most financial and tax advisers see the end of this home buyer tax break as a welcome relief.

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Will there be a Tax Compromise Over Huge Internet Sales Numbers?

May 25, 2011 By

Various states in America are running high deficits with the 2012 states’ budget deficit standing at $125 billion. This situation is causing state authorities to go beyond limits and seek any possible means of reducing the deficit. One of the ways that states are earnestly seeking is to raise incomes is through ecommerce sales taxes. Ecommerce and online merchandising is really becoming a huge income earner with fast growth. The 2010 sales revenues grew by 15% to $165 billion and the growth trend is projected to remain the same or increase to even higher rates. Therefore, there is much in terms of taxes that can be sustainably reaped from these online sales. In these $165 billion sales revenues for 2010, the sales tax on the transactions was over $10 billion. It is such figures and projections that are keeping state authorities eager to set up an effective system to harvest the taxes, based on these figures.

Besides the taxes in question, the state authorities are also seeking to protect local businesses operating in their jurisdictions that are facing stiff competition from these online merchants. Besides the extra costs of having an expensive physical location, the businesses are also incurring higher costs from sales taxes charged that are not directly collected by the online merchants. Ideally, those who purchase goods from an online merchant who is not situated in their state ought to pay a Use Tax that is equivalent to the local sales tax. If the Use tax was paid faithfully, the war between the online merchants and the state authorities would not exist as all taxes would be paid accordingly. Unfortunately, most Americans do not pay Use tax with online purchases, thereby giving an undue advantage to online merchants. This unfair competition is threatening local businesses and local jobs by extension, thereby forcing state administrations to act fast towards protecting their local businesses.

Currently, the Federal law prohibits a state from forcing interstate taxes or from seeking tax collections from a business not located in the state. Since these online merchants have limited locations but distribute their goods throughout America, many of these states lose sales taxes that are not being withheld by these online businesses. However, state authorities are looking for any available loophole in the law to nail these online merchants. On the other hand, internet merchants are fighting tooth and nail not to have the burden of tax collection laid on them.

States are currently pursuing top online merchants, especially Amazon, to collect sales taxes in the areas of their physical stores and affiliates. Texas, for example, presented a bill of $269 million for sales taxes not collected, claiming that Amazon owned a store in Texas through an affiliate. Other states are seeking to have Amazon and other major internet players collect sales taxes on their behalf claiming that any online affiliates from the states are more or less like a physical sales outlet. In response to this, Amazon has announced that it will be closing the store in Texas and other stores in other states and has also threatened to cut off various online affiliates to avoid being a sales tax withholding agent for these states.

The war between online businesses and state authorities is projected to culminate in Congress with direction and control being provided in a Federal law. However, the competing interests and high stakes is causing the war between the two sides to continue for a long while. The hope of a tax compromise looks bleak for now.

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Federal Income Tax Help on Bonus Pay

May 24, 2011 By

Many people believe that the extra income that comes from a bonus, which is not exactly “extra,” hypothetically places them in a higher tax bracket. They believe this is a bad thing due to the fact that it could mean that they have to pay a higher federal income tax rate on all of their earnings. However, this is a misconception. These erroneous beliefs and the eventual complaints are worsened when the bonus checks are received with a net payment that represents a fraction of the gross income shown on the pay slip.

The IRS handles bonus income in the same way as regular income. The taxable W-2 income is summed up in one box the moment you file your tax returns, and the same tax rates apply. The catch here is that the IRS has no discrimination against bonus pay, but employers usually do.

Employers are allowed to make a decision between three methods of withholding taxes from bonus income, once it is given to the employee separately from the regular income.

  1. The employer may withhold a flat rate of 25% for income taxes from the bonus payment.
  2. The other option is for the employer to add the bonus payment to the earliest regular payment, establish the average withholding of the sum of the two payments, deduct the amount withheld from the latest regular income payment, and withhold the rest from the bonus.
  3. This option is for employers who opt to link bonus pay with regular income in one payment without differentiating between the two types of earnings. Here, the employer is permitted to base withholding on the total sum of the bonus and regular income by utilizing the ordinary withholding tables.

It does not matter what technique the employer settles for; the bonus and regular income will be put together once you have filed your taxes.

One intriguing omission to the concept that bonuses are taxed in the same manner as other income relates to investment managers and hedge funds. This kind of income is referred to as “carried interest.” Investment managers usually acquire their bonuses from investment profits, and these are taxed at rates of 15%. This rate is considerably lower than their marginal tax rates.

Do not hesitate when it comes to earning a bonus. Your boss may withhold more of your money for taxes than usual, but in the end, it will level out once you have filed your taxes.

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Is the Surgery Done on Bristol Palin an IRS Tax Deductible?

May 23, 2011 By

The news on celebrity gossip channels are now alive with the new hit story of Bristol Palin’s surgery. The TV star from the Bio Channel reality show admitted to having undergone a procedure to her jaw in December 2010. In her interview that was carried on newsstands in Us Weekly, the TV star, who also happens to be the daughter of the former Alaska Governor Sarah Palin, claimed that the surgery was a corrective operation done to realign her jaw and her teeth. People previously had suspected she had undergone plastic surgery, noting the drastic changes to her facial features and though she remained silent about the issue for a while, her new look made a lot of headlines in the celebrity gossip arena. Many see the surgery done to the 20 year old TV celebrity as having made her look slightly older and probably more mature than her age. However, irrespective of how the surgery makes her look, the tax question at hand is whether such an operation is tax deductible or not.

Doctors and qualifying medical practitioners have the legal prerogative to determine whether a physical-attribute-altering procedure is cosmetic or corrective. A corrective procedure is one that ideally alters the physical looks of a part of the body to restore or correct a bodily function. Such a corrective surgery can be claimed as a legitimate medical expense and is an allowable deduction. In this case, since the surgery performed on Bristol Palin was approved by a medical doctor as a corrective operation and was done for the purpose of correcting and realigning Bristol’s jaw and the teeth, she can claim it as an IRS tax deduction. If she has health insurance, most insurance companies will cover the costs for such a surgery. However, this is under the assumption that the information provided by Bristol Palin in the newspaper article is true.

If the star paid for the surgery out of her pocket, she can include the surgery as an itemized deduction on Schedule A of her tax returns and indicate the cost as a part of the 7.5% of her Adjusted Gross Income in medical expenses. Owing to the fact that the surgery was done in December 2010, Bristol Palin needs to have included such a deduction in her 2010 tax returns that she should have filed this year. If, a few years down the line, Bristol feels that the corrective surgery makes her look older or takes away her “youthful” look, she can always get plastic surgery to restore her old look. However, since it will be a cosmetic surgery and not a corrective surgery, Palin should not seek any tax deductions with the procedures, if she decides to get some, that is.

Aside from the speculations, the main point here is that corrective plastic surgery is an allowable tax deduction while cosmetic surgery is not. The IRS provides the difference between the two types of surgeries in Publication 502, “Medical and Dental Expenses”. In the publication, the IRS defines a corrective surgery as a procedure that improves deformities caused by congenital abnormality, personal injury, or disfiguring disease. The IRS also gives an example of a corrective surgery as an operation performed to restore a breast for a breast cancer survivor who had his or her breast removed to fight the disease.

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IRS Help: Not Sure What to Do? Do You Need to File?

May 20, 2011 By

Need IRS help? Not sure what to do? Do not worry too much because there are many ways to achieving help. The IRS has its own main site online at www.irs.gov. This page lists all numbers, addresses, and contact details for questions and help. There are thousands of qualified IRS specialists there to help anyone with questions, forms, or even the best course of action for tax resolution. The IRS actually encourages a person to call, visit, or go online to get the help needed to file taxes. There are numerous forms that are available for every tax situation possible. The IRS will even help you with filling out the tax form as well!

It is the law for every taxpayer in the United States to file tax returns if the taxpayer made enough wages to claim. There are certain circumstances that allow a person to not have to file; if not enough wages were accrued, there is no obligation to have to file a claim. If a taxpayer falls under these categories, then he/she is exempt from filing a tax return:

  1. Self-employed, any age: $400
  2. Children and Teens classified as a dependent: $5,700
  3. Single, under 65: $9,350
  4. Single, over 65: $10,750
  5. Married, filing jointly, both spouses under 65: $18,700
  6. Married, filing jointly, one spouse over 65: $19,850
  7. Married, filing jointly, both spouses over 65: $20,900
  8. Married, filing separately, any age: $3,650

If a person does not fall into these categories, then that taxpayer must file a tax return. The IRS is there to help; they are not the enemy, but an organization to help those in need, even for taxpayers that are “behind” in taxes. The IRS will work with those who are willing to try to clear up any debt owed.

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Federal Income Tax Help: Which Form Do I Use?

May 19, 2011 By

Every year when you file your taxes, you have to pick which of the Form 1040 applies to your situation. Sometimes, this can seem really confusing and honestly, a bit nerve wracking. Here is some information to help you decide which form to use:

Most taxpayers will choose between Forms 1040 and 1040EZ. Form 1040EZ is, well, easy (pun intended). However, you cannot file Form 1040EZ, Income Tax Return for Single and Joint Filers with No Dependents, if you have dependents or if you file as head of household, married filing separately, a qualifying widow(er), are blind, income is over $100,000, or are over 65 years old. Additionally, if you wish to claim credits like the Earned Income Credit or the Making Work Pay Credit, you cannot use the 1040EZ. If you owe household employment taxes on wages you paid to a household employee or if you have been in a Chapter 11 bankruptcy case filed after Oct. 16, 2005, you cannot file the 1040EZ. Furthermore, if you were a nonresident alien at any time in 2010, you can only use the 1040EZ if you are married filing jointly.

You should use Form 1040, the U.S. Individual Income Tax Return if you itemize your deductions. The choice of whether you itemize is generally based on whether you take the standard deduction, which is $5,700 for individuals and $11,400 for joint filers. Use this form if you wish to claim “above the line” adjustments to your income (like alimony or IRA deductions).

The 1040-A, U.S. Individual Income Tax Return is essentially a cross between the 1040 and the 1040EZ because it is simpler than the 1040, but not as simple as the 1040EZ. You may want to seek income tax help if you are not sure which form to use.

Other less-used Forms 1040 are: 1040NR, U.S. Nonresident Alien Income Tax Return, 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents, 1040-C, U.S. Departing Alien Income Tax Return, 1040-PR (Spanish equivalent of the 1040-SS for residents of Puerto Rico), 1040-SS, U.S. Self-Employment Tax Return, 1040ES, Estimated Tax for Individuals, 1040-V, Payment Voucher, and 1040X, Amended U.S. Individual Income Tax Return.

Doing some simple research on the internet or checking in with www.IRS.gov will help you decide which form applies to your case.

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Help with IRS Tax Benefits for Disabled Taxpayers

May 18, 2011 By

If you or one of your dependents has a disability, you may be due an IRS tax credit or another benefit when you file this year.

Some medical expenses are deductible if you itemize using Form 1040, Schedule A. For specific details on deductible medical expenses, see IRS Publication 502, Medical and Dental Expenses. Also, taxpayers who are legally blind may be able to claim a higher standard deduction than the typical standard deduction.

If you receive benefits such as Veterans Administration disability benefits and Supplemental Security Income, it may be excluded from your gross income. Also, certain taxpayers with disabilities which impair their ability to work may be able to claim some work-related expenses if those expenses are necessary for the taxpayer to work. The popular Earned Income Tax Credit is available to disabled taxpayers and the parents of children with a disability. If the children of a taxpayer are disabled, the age limit is waived. The EITC is refundable, as well, and the refunded money will not be considered income for determining eligibility for Supplemental Security Income, Medicaid, and other benefit programs.

Furthermore, if you retired on disability, taxable benefits you receive under your employer’s disability retirement plan may make you eligible for the EITC because they are considered earned income. People who are elderly or disabled may also be due a credit if they are over 65 or retired on permanent and total disability.

You can also claim a credit if you pay someone to take care of a dependent spouse. There is no age limit if the spouse is disabled. Publication 3966, Living and Working with Disabilities or Publication 907, Tax Highlights for Persons with Disabilities provides further information on taxes for people with disabilities. The publication is available on the IRS website at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

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Income Tax Problems – Avoiding and Dealing With Identity Theft

May 17, 2011 By

If you are among those people who are filing their IRS tax returns, keep in mind that identity thieves are lying in the wait; and the tax season is one time of the year that makes them most dangerous. This is because tax returns have all the information the identity thieves require to damage your life. This includes the golden key to your chest of your most valuable financial information: your Social Security number. So be careful with your personal information.

It is important to pay your utter most attention to the location where you drop your tax return in the mail. You should never leave it up to the mail carrier to handle it. Ensure that you place it inside a secured mailbox, more so, one from which the mail will be collected as soon as possible. Actually, it is best to mail your tax return directly at the post office.

If you opt to use e-file, ensure that the computer you are using is secure with a firm firewall and antivirus and anti-malware programs that are regularly updated. Do not do it using Wi-Fi connections because they are not secure.

In the event that you are due a refund, ensure that your mailbox locks. If it doesn’t, then it would be best to have your mail sent to the post office, and collect it as soon as it arrives.

Also, keep in mind that the IRS does not, under any circumstances, contact people by e-mail. Therefore, if you receive an e-mail claiming to be from the IRS, pay no heed to it – it is just an identity thief who wants to obtain your personal information. The same also goes for telephone calls. If you receive a call from someone claiming to be from the IRS, hang up and call the IRS yourself to confirm if they need to talk to you.

It is advisable to keep your tax return and other related documents for seven years. This is because the IRS has three years from your tax-filing date to audit, and another six years to handle a claim. Once the documents have served their purpose, make sure that you shred them. Use a shredder that has a diamond or cross-cut, as opposed to a strip-cut. Strip-cut shredded documents can be pasted back together easily.

If you suspect that your identity may have been stolen, you should contact the IRS Identity Specialized Unit at 800-908-4490.

Watch out for identity thieves. They can cause you major problems.

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