When will I receive my refund becomes somewhat of a mystery.

No more refund cycles from IRS.  With the prediction of a refund deposited into a bank account no later than 21 days from the date it was accepted by the IRS.


Here is a link to the pdf publication from IRS discussing the subject of when you will receive your refund.

IRS announces relief Obamacare penalties. If you received an advanced tax credit you will not be penalized.

The IRS has provided limited relief for taxpayers who have a balance due on their 2014 income tax return as a result of reconciling advance payments of the premium tax credit against the premium tax credit allowed on the return. If a taxpayer meets certain requirements, the taxpayer is relieved of the penalty under Code Sec. 6651(a)(2) for failure to pay income tax. The relief applies only to the 2014 tax year, and does not apply to any underpayment of the individual shared responsibility payment resulting from application of Code Sec. 5000A.

Beginning in 2014, someone covered under an Affordable Insurance Exchange (Exchange) qualified health plan is allowed a premium tax credit under Code Sec. 36B. The taxpayer must reconcile or compare the amount of premium tax credit allowed on a tax return with advance credit payments. A difference between the advance payments and the credit allowed on the return may result in either a smaller refund or a larger balance due, if the advance payment exceeds the allowed credit, or a larger refund or smaller balance due, if the allowed credit exceeds the advance payment.

The IRS will abate the penalty under Code Sec. 6651(a)(2) for taxpayers who (1) are otherwise current with their filing and payment obligations; (2) have a balance due for 2014 due to excess advance payments of the premium tax credit; and (3) report the amount of excess advance payments on their timely filed 2014 return. The IRS will also abate the penalty for underpayment of estimated income tax under Code Sec. 6654(a) if the taxpayer (1) is otherwise current with filing and payment obligations; and (2) reports the amount of the excess advance credit payment on a timely filed 2014 return.

When responding to a notice demanding payment of a penalty, the taxpayer should submit a letter with the statement, "I am eligible for the relief granted under Notice 2015-9 because I received excess advance payment of the premium tax credit." Taxpayers who file their returns by April 15, 2015, will be entitled to relief even if they have not paid the underlying liability at the time they request relief. Taxpayers who file their returns after April 15, 2015, must fully pay the underlying liability by April 15, 2016, to be eligible for relief.

To request a waiver of the estimated tax underpayment penalty under Code Sec. 6654(a), a taxpayer should check box A in Part II of Form 2210, complete page 1 of the form, and include the form with their return, along with the statement: "Received excess advance payment of the premium tax credit."

Notice 2015-9, 2015FED ¶46,235

 

 

Source:  My ATX blog

Why go to an Enrolled Agent, your trusted tax professional, to do your taxes?

If you do your taxes alone, you just might miss out on some opportunities to keep you hard-earned cash in your bank account----which, when all is said and done, is the goal at the end of every working day for just about everyone.

Instead, consider this:

1. Work with a Human Being...and Lose the Fear of Making a Costly Mistake.       In theory, TurboTax should calculate the numbers the same way any accountant would.  But deep down, don't you wonder whether a human accountant could find more deductions than a computer program?  By working with a trusted tax professional, you can ask questions, and deal with problems as they arise, by interacting with fellow humans, rather than an indifferent computer screen.  Over time, you might actually learn to trust the people helping you out with your taxes! Then you and your accountant will be able to come up with new and clever ways of actually saving money on you taxes--ways you never would have come up with on your own.  
2. Access to the Correct (and Better) Tools and Education.                                     Enrolled Agent's (EA) as a general rule, work with much more sophisticated software than the average amateur has access at home. This means less chance of error, which can be major benefit in the long run.  Also, a qualified tax professional will almost certainly be better educated in the tax field than you are, and can ensure that you find the most savings possible while avoiding any dangerous tax pitfalls.  
3. Save Time and Money.                                                                                                 There's a lot of find print and complicated tax code to sort through come tax time.  By working with an EA possibly, save money.  In addition, an EA can assit you in charting out financial strategies and investments in advance.  By thinking ahead with a savvy tax professiona, yhou will save time and money now, and in the years to come.  

Source Tax Coach Software Winter 2015 Newsletter. 

The start of the tax season. Your tax guy is interviewed on Channel 20.

The local Springfield television station stopped by to interview your tax guy about the upcoming tax season.


Click this link to view the video from WICS Channel 20.

IRS Tells Taxpayers: Look Online for Answers, Expect Long Wait Times to Speak with IRS

From our tax software company comes even more information about how IRS is turning into the motor vehicle department.  We call the IRS regularly. Sometimes daily.  Our experience?  Hour to hour and half waits.  Just in time for the Obamacare taxes to kick in.

IRS Commissioner John Koskinen said on January 15 that taxpayers should seek help from the Service’s telephone assistors only as a last resort during filing season because budget cuts will result in lengthy wait times. Rather, taxpayers should first use online tools to get answers. Koskinen, speaking at a news conference in Washington, D.C., also repeated his recent warning that the Service may furlough employees to save money (TAXDAY, 2015/01/14, I.3).

Customer Service

The IRS will begin accepting and processing returns on January 20 (IR-2015-3; TAXDAY, 2015/01/16, I.2). "For taxpayers who have questions, or need forms, my advice is to take advantage of all the help we’re offering online," Koskinen said. Other customer service functions will be curtailed because of the budget cuts. "We expect our phones to be extremely busy with wait times of 30 minutes or more. I would caution taxpayers to use our phone lines only as a last resort." On January 14, IRS National Taxpayer Advocate Nina E. Olson predicted that the Service is unlikely to answer even half of the telephone calls it receives, and service levels may average as low as 43 percent this filing season (TAXDAY, 2015/01/15, I.1).

Shutdown

Under the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235), the IRS’s fiscal year (FY) 2015 budget was cut by approximately $346 million (TAXDAY, 2014/12/16, C.1). To absorb the funding cut, Koskinen has indicated that the Service may need to furlough employees.

"We are working very hard not to have a shutdown," Koskinen said. "We have tried to allocate resources to have the least impact on services and enforcement." The Service has also been in discussions with the National Treasury Employees Union (NTEU), which represents IRS employees.

Previously, Koskinen said that two furlough days could be necessary. "We may end up, if things go badly for one reason or another, with more than two days of shutdown possible," he noted. "If we take shut down days they will probably have to be taken in the Fall," he added.

PPACA

Koskinen acknowledged that many taxpayers will have questions about the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The PPACA generally requires individuals to carry minimum essential health coverage, unless exempt, or make a shared responsibility payment. "Our treatment of ACA returns will be the same as any other returns…over 80 percent of taxpayers will merely check a box on their return (indicating they have minimum essential coverage)," Koskinen said. "We have no indication that people will be less compliant with ACA than other areas. I do not expect an upswing of compliance problems," he predicted.

Refunds

The IRS expects to issue refunds within 21 days, Koskinen said. However, individuals who file paper returns may have to wait longer for their refunds. Typically, refunds for paper filers can take four-to-six weeks to process. "This year, refunds for paper filers may take an extra week because of budget cuts," according to Koskinen.

Introducing our new S Corporation newsletter

Welcome to our new monthly email newsletter.  We were somewhat frustrated.  Surprisingly, despite the popularity of the S Corporation, we have yet to find any practical newsletter that deals with the day to day issues that small business corporations owners encounter.

As an S Corporation owner you are not alone. S Corporations are the single most popular form of corporate entity in the United States.  This year more than 70% of the 4.1 million tax returns filed in the United States will be S Corporation returns.  68% of those 4.1 million tax returns had problems.  Our goal is solve those problems before IRS does. Thus our new to date unnamed  S Corporation newsletter.

As a quick refresher, an S Corporation is not subject to corporate tax rates. "Generally, an S Corporation is exempt from federal income tax other than tax on certain capital gains and passive income," according to the Internal Revenue Service.  Instead, an S Corporation passes-through profit (or net losses) to shareholders. The business profits are taxed at individual tax rates on each shareholder's Form 1040. The pass-through (sometimes called flow-through) nature of the income means that the corporation's profits are only taxed once– at the shareholder level. The IRS explains it this way: "On their tax returns, the S Corporation's shareholders include their share of the corporation's separately stated items of income.

S Corporations therefore avoid the so-called "double taxation" of dividends.  S Corporations, like regular C Corporations, can decide to retain their net profits as operating capital. However, all profits are considered as-if they were distributed to shareholders. Thus an S Corporation shareholder might be taxed on income they never received. (Whereas a shareholder of C-corporation is taxed on dividends only when those dividends are actually paid out.)

The big benefit--and the one that people usually talk about--is the payroll tax savings.

To understand how this works, let me compare two alternatives: A sole proprietor making $90,000 a year and an S Corporation making $90,000 a year.

Of course, the taxes that a sole proprietor pays depends on his or her filing status, itemized deductions and family size, but typically such a person might pay about $12,000 in federal income taxes. The person might also pay another chunk in state income taxes.

In addition to these income taxes, the proprietor also pays a 15.3% self-employment tax on the $90,000 of business profits. Roughly, this self-employment tax (which is equivalent to Social security and Medicare tax) equals $13,000.

Things usually work differently for the S corporation, however. To make calculations easy, assume the S corporation is owned by a single shareholder. In this case, the S corporation must break the $90,000 of profit into two buckets: wages and the leftover (which is called a distributive share). If the wages equal $40,000 and the leftover distributive share equals $50,000, the business pays Social Security and Medicare taxes (equivalent to self-employment tax) equal to roughly $6,000.

In this case, even though the two businesses make the exact same amount of money, the S corporation pays roughly $7,000 less in tax each year.

As of today Congress has not acted on the so called tax extenders.  There are more than 50 different tax provisions that have expired this year including the very popular section 179 accelerated depreciation of certain assets purchased during the year. The section 179 provision in previous tax years has allowed businesses to take the full depreciation deduction of an item that meets certain specifications – in many cases machinery and certain vehicles – in the current tax year, with a maximum deduction of $500,000 and a phase-out threshold of $2 million.  That deduction level, however, has fallen to $25,000 with a $200,000 phase-out for 2014, and will remain that way unless Congress acts on  the tax extenders package before the end of the year.

The IRS is warning Congress that decisions about renewing tax provisions that expired at the end of 2013 must be made by late November or next year's tax-filing season could be seriously disrupted.  Hopefully Congress will act soon but we are not optimistic.  Negotiations over extending a slew of expired tax breaks could take until the end of the current lame-duck session of Congress, according to the Hill.com.

It is our recommendation that if you are considering a major purchase of a section 179 asset do it. The overwhelming popularity of this deduction will most certainly insure its eventual passage.  The rules require you to put the asset into service in order to qualify for the deduct.  In many cases the section 179 deduction made the difference between owing tax and not owing tax for many clients.  Since the law requires you to put the asset into service in order to qualify for the deduction, you don’t want to take a chance that the asset will not be delivered in time before the end of the year.  

Each year we preach to our S Corporation clients about the importance of record keeping for their business.  Consider this recent tax court case in which an attorney an an ophthalmologist who not only were sent to jail for not filing their income tax returns, after filing their tax returns failed to substantiate mileage, travel and other deductions.  All the stars aligned. In our imaginary tax world these very smart people did some very stupid things.  And we can learn some lessons.

Professional Couple Overstated Business Expenses and S Corporation Losses

A professional couple was not entitled to deductions resulting from overstating business expenses on their joint income tax return, professional and legal expenses claimed on Form 1040, Schedule C, Profit or Loss From Business, rather than as miscellaneous itemized deductions on Schedule A, Itemized Deductions, and S corporation losses claimed on Schedule E, Supplemental Income and Loss. The wife was a practicing attorney who operated her own legal practice, and the husband was an ophthalmologist who was the sole shareholder of an ophthalmology practice that was an S corporation. Prior to filing their joint tax returns for the tax years at issue, the couple was convicted of willful failure to file federal income tax returns for previous years. They each were sentenced to 12 months imprisonment, 12 months

supervised release and a fine of $20,000. The wife claimed deductions on Schedule C for car and truck expenses and travel expenses. For the car and truck expenses, she did not maintain a contemporaneous mileage log, and their accountant based the number of miles driven on discussions with her. The documentation that the couple offered to substantiate the number

of miles driven consisted of seven parking receipts, an equipment lease, a help wanted advertisement, a phone message slip, and a few other documents. The evidence did not show that the wife’s mileage expenses were equal to the amount claimed. Similarly, the couple did not substantiate the wife’s travel expenses that were claimed deductions on Schedule C.

Business losses attributed to the husband’s business and claimed on Schedule E of the couple’s tax return for one of the years at issue were overstated. As the sole shareholder of the S corporation, the losses deductible by the husband were limited to his basis in the corporation. The wife stated that two deposits made into the bank account for the husband’s business were loans, but the couple did not provide sufficient evidence to show that the deposits were loans. Consequently, the two deposits were not figured into the husband’s adjusted basis in the S corporation. B.G. Hall, TCM, ¶15,485 Excerpted from Wolters Kluwer S Corporation guide.

So what can we learn from this case.  You have to keep adequate business records or face issues if the IRS comes calling.  Parking receipts, an equipment lease, and a phone message slip do not meet the requirements.  Now is a very good time to look at your recordkeeping.  Our recommendation is taking a look at wave apps. It is easy. Fairly comprehensive. Working with your tax guy is easy, too. Just invite us as a Guest Collaborator and we can both see your data, securely, in real time.  Perhaps the best part is the automatic download your bank account into your accounting records limiting the amount of data input you have to do. Advantages? It is free.  It is intuitive.  No need to change the way you are doing business today.  We like wave accounting so much we became a Wave accounting pro advisor.

We are going to tackle the murky crazy world of auto expenses next month.

As the clock winds down on 2014,  you should carefully examine their tax withholding/estimated tax payment situations.  If you’re having an especially good year, and/or if the new surtaxes may apply to you – check the level of your Federal income tax withholding, in comparison to the amount of payments required to keep you out of underpayment penalty trouble.  Recall that the use of estimated tax payments doesn’t provide the same flexibility as withholding.  An individual who has underpaid an estimated tax installment generally cannot avoid the penalty by increasing one or more estimates for later periods.  But income tax withheld is treated under the law as paid in equal amounts on each of the four installment dates – even in situations in which a large amount of “extra” tax is withheld late in the year.  Source Nolo.com/taxes.

From our September 02, 2012 client newsletter:

It seems that every successful business out there had to deal with failure. It is how you react to it that makes a difference. I like to say failure equals success.  Sitting at Firestone today, waiting for them to remove the nail that somehow managed to puncture our front right tire, I stumbled upon the August 2012 issue of INC.Magazine. The magazine’s cover story features 14 entrepreneurs who discuss their successes, their failures, and the lessons they learned along the way. Two were fired from the companies they formed. Another worked 20 years for his overnight success. Another silenced her critics with a $120 million payday. All of these company founders had one thing in common, the emotional roller coaster that is entrepreneurship.  All had failures along the way to success.

Drum Cafe is a corporate motivation and training organization that seeks to “building teams, uniting companies and motivating staff” through... I am not kidding you but it seems to work in Silicon Valley... interactive rhythmic drumming writes in their blog:

Every mistake is an opportunity to learn.  What separates the forever failures from a rising phoenix success story is quite simply our willingness to observe a mistake and learn from it.  Complete self honesty is absolutely imperative to this process.  We also have to be willing to have a positive mind story.  Here too the aspect of honesty is the truth that will set us free.  If we are tapping into some sob story from our past that we have painted negatively, we cannot move forward.  However, we can take that same story and ask ourselves “what did I learn from that experience?”  There is ALWAYS something to learn.  For example, if you walk down the street, paying no attention to the pavement below, you might trip over something.  You can either decide to never walk in that area again, potentially missing something spectacular, or you can recognize you tripped because you were not paying attention.  You learn to pay attention and walk down that same stretch of pavement and because of actually looking down you find a $100 bill!

Now that’s a simplified example, but I think you catch the point.  In case you need a little more food for thought on the matter of failure being a stepping stone towards success, here are few noted success after failure stories:

R. H. Macy: We are all familiar with this large department store chain, but Macy didn’t always have it easy. Macy started seven failed business before finally hitting big with his store in New York City.

Harland David Sanders: Also known as Colonel Sanders of Kentucky Fried Chicken.  The Colonel had his famous secret chicken recipe rejected 1,009 times before a restaurant accepted it.

Albert Einstein: Most of us think of Einstein as a genius, but did you know he did not speak until he was four and did not read until he was seven, causing his teachers and parents to think he was mentally handicapped, slow and anti-social?  Eventually, he was expelled from school and was refused admittance to the Zurich Polytechnic School. He proved everyone wrong and in the end, won a Nobel Prize and changed the face of modern physics.

Stephen King: The first book by this author, the iconic thriller Carrie, received 30 rejections, finally causing King to give up and throw it in the trash. His wife fished it out and encouraged him to resubmit it.  King is now one of the best-selling authors of all time.

Oprah Winfrey: Oprah faced a hard road to get to where she is today, enduring a rough and abusive childhood as well as numerous career setbacks including being fired from her job as a television reporter because she was “unfit for TV.”

Thomas Edison: In his early years, teachers told Edison he was “too stupid to learn anything.” He was fired from his first two jobs for not being productive enough. Even as an inventor, Edison made 10,000 unsuccessful attempts at inventing the lightbulb. Of course, all those unsuccessful attempts finally resulted in the design that worked.

I came home later today opening my email account  to find this discussion about the Home Depot founders from Dan Kennedy, selling his $97.00 “Turning Adversity to Opportunity” DVD:

For example in 1978, Bernie Marcus and Arthur Blank were fired from their executive jobs at Handy Dan Home Improvement Centers during a corporate takeover. Instead of putting their tails between their legs, hiding out and going into paralysis mode like many would, they made a plan to create their vision--a chain of home improvement centers larger than any of the competition.

They named it Home Depot.

Although their grand opening was less than spectacular, I don't have to tell you that it wasn't long before the company exploded with growth and in only two decades became the

world's largest home-improvement retailer.

What does this all mean?  First I believe, and most of conversations with fellow clients concur, the marketplace is not going to get any easier any time soon. Secondly I’ve actually seen conflicting numbers as it relates to exactly how many attempts Thomas Edison had at creating the light bulb.  But they were all in the thousands.  So, seriously, the next time you feel like quitting after failing, just think about the 9,999 failures he had.  He never gave up and learned from each and every mistake.  In fact, just before finally reaching success, Thomas Edison was interviewed by a young reporter who boldly asked Mr. Edison if he felt like a failure and if he thought he should just give up by now. Perplexed, Edison replied, “Young man, why would I feel like a failure? And why would I ever give up? I now know definitively over 9,000 ways that an electric light bulb will not work. Success is almost in my grasp.”

Do you know someone who having tax issues?  We can help.  According to IRS one in six taxpayers will have some sort of tax liability problem at some point.  Along with my colleague, former Illinois Department of Revenue attorney Jim Chipman, we have helped dozens of clients solve their tax problems, and this is very important, honestly and affordably.  If you know someone who is having problems, please ask them to call us.

Do you know someone who would like a copy of this email newsletter?  If so pass it on or ask them to send us their email at taxpartnerfreereports@gmail.com.

Donald C. Fuener E.A.

President

November 19, 2014

Tax Partner Holdings Inc.

“the small business accountants”

2060 W Monroe

Springfield IL 62704

217-241-4597

Have you seen our new website?

The small biz wiz website

How Not To Choose a Tax Preparer

From Forbes.com>>>



Competition for services remains fierce for the more than 50% of taxpayers who use a preparer at tax time. With about 150 million taxpayers seeking out tax preparation services, it’s a serious business. Preparers may lure taxpayers in the door with the promise of low rates and fancy promotions but quickly add on fees for their services bringing those “low, low rates” way, way up.


Other tax preparers are making promises that might not be legitimate. For example, preparers that claim you can get your refund faster by bringing in your last pay stub? Not if you’re e-filing. Per the IRS website:

Authorized IRS e-file Providers are prohibited from submitting electronic returns to the IRS prior to the receipt of all Forms W-2, W-2G, and 1099-R from the taxpayer.

And it’s not just the act of submitting the returns without proper documents that’s banned: preparers aren’t even allowed to advertise that they can prepare returns without those documents. Those preparers who violate those rules may be subject to sanctions. If your preparer is willing to break those simple rules – and flaunt it – what other rules might they be violating?

Click here for more help, here are ten tax preparer red flags to avoid: