Memorial Day – Honoring Those Who Gave the Ultimate Sacrifice

We salute the brave troops who gave their lives for our freedom. May we never forget or take for granted the ultimate sacrifice they made for our country.

Summer Job Tax Tips – Put Kids to Work!

Students with summer jobs can be exempt from federal income tax withholding if they did not owe any tax last year and do not expect to owe any for 2013. Students with unearned income of $350 or less and total income not greater than $6,100 can be exempt from federal income tax withholding. If their investment income is more than $350, the total income cannot exceed $1,000 to be exempt from federal income tax withholding.

Employers re-hiring summer students claiming exemption need to have employees complete new W-4 forms. The W-4 forms completed last year cannot be re-used.

Sole proprietors or husband-wife partnerships can hire their kids under the age of 18 and not owe any FICA tax. The same rules apply to a one-person LLC that elects to be disregarded for tax purposes. Federal unemployment tax is not due on kids’ salaries until they hit the age of 21.

For those kids branching outside the family business to earn their money, read about these tax rules in the article, ”Kids and Summer Jobs: What to Know About Taxes“,  from Fox Business by Bonnie Lee, a fellow Enrolled Agent.

Plan a great summer with these great tax tips!

Sales Tax for Internet Purchases – Status Update

Many of you heard the Senate passed the bill for sales tax on internet purchases. The bill now hits the House for an uphill battle with key members indicating they are not in a hurry. The House Judiciary Committee has jurisdiction over matter affecting state taxes and they will be taking their time with this matter. The word from House Members is they consider the exemption for small retailers on the Web to be too low and they want rules for sellers in states without sales taxes to be less stringent.

The proposed bill says the earliest collection could begin the first quarter that occurs six months after the bill is enacted. This tells us no purchases during 2013 will be affected. Stay tuned for updates as information becomes available.

Related articles

• Getting ready for an Internet sales tax (cnn.com)
• Senate passes bill allowing states to tax online sales (nbcnews.com)
• The Senate Looks Poised To Pass New Internet Sales Tax (businessinsider.com)

Taxing Accountant Tip – Savings for Startup Businesses

Your Taxing Accountant wants to keep you informed and help make you successful. Here are some great tips for startup businesses for cutting costs, straight from Millionaire Entrepreneurs – Read all about it at Entrepreneur’s article, “7 Frugal Startup Tips from Millionaire Entrepreneurs”.

Reminder – Estimated Tax Payments Due 1st Quarter 2013

Don’t forget to pay your individual estimated tax payments for first quarter 2013 by April 15, 2013, using Form 1040-ES, Estimated Tax for Individuals.

Related articles

• Oh No! I Owe, I Owe! – Tax Payment Options (holtpros.wordpress.com)
• Get Ready to Pay – Estimated Tax Payments (holtpros.wordpress.com)

Where’s My Refund?

You can generally expect the IRS to issue your refund in less than 21 calendar days after we receive your tax return.

Use this tool to check on the status of your refund. It provides the most up-to-date information the IRS has. There’s no need to call us unless Where’s My Refund? tells you to do so. Where’s My Refund? is updated every 24 hours – usually overnight — so you only need to check once a day.

Tax Day is Here – File or Extend

April 15th – Last day to file your personal income tax return or file an extension on form 4868.

Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember, this is an extension of time to file, not an extension of time to pay. However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief.

Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. Taxpayers should file, even if they can’t pay the full amount due. Here are further details on the options available.

More Time to File

People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly 10.7 million extension forms received by the IRS last year, almost 5.8 million were filed electronically.

Some taxpayers get more time to file without having to ask for it. These include:

• Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 17 to file. Tax payments are still due April 15.
• Members of the military and others serving in Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces Tax Guide.
• People affected by certain tornadoes, severe storms, floods and other recent natural disasters. Currently, parts of Mississippi are covered by a federal disaster declaration, and affected individuals and businesses in these areas have until April 30 to file and pay.

Oh No! I Owe, I Owe! – Tax Payment Options

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Easy Ways to E-Pay

Taxpayers with a balance due now have several quick and easy ways to electronically pay what they owe. They include:

• Electronic Federal Tax Payment System (EFTPS). This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll or for more information, call 800-316-6541 or visit www.eftps.gov.
• Electronic funds withdrawal. E-file and e-pay in a single step.
• Credit or debit card. Both paper and electronic filers can pay their taxes by phone or online through any of several authorized credit and debit card processors. Though the IRS does not charge a fee for this service, the card processors do. For taxpayers who itemize their deductions, these convenience fees can be claimed on Schedule A Line 23.

Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” Write “2012 Form 1040,” name, address, daytime phone number and Social Security number on the front of the check or money order. To help insure that the payment is credited promptly, also enclose a Form 1040-V payment voucher.

More Time to Pay

Taxpayers who have finished their returns should file by the regular April 15 deadline, even if they can’t pay the full amount due. In many cases, those struggling with unpaid taxes qualify for one of several relief programs, including the following:

• Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS and qualified taxpayers can avoid the filing of a Notice of Federal Tax Lien if one was not previously filed. Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
• Some struggling taxpayers may qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

It Can’t Be Almost April 15th Already!!!

For those of you who can’t keep up, here is your reminder that April 15th is Monday and time to file your income tax return for 2012. But don’t panic! Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember, this is an extension of time to file; not an extension of time to pay. However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief.

Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. Taxpayers should file, even if they can’t pay the full amount due. Here are further details on the options available.

More Time to File

People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly 10.7 million extension forms received by the IRS last year, almost 5.8 million were filed electronically.

Some taxpayers get more time to file without having to ask for it. These include:

• Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 17 to file. Tax payments are still due April 15.
• Members of the military and others serving in Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces Tax Guide.
• People affected by certain tornadoes, severe storms, floods and other recent natural disasters. Currently, parts of Mississippi are covered by a federal disaster declaration, and affected individuals and businesses in these areas have until April 30 to file and pay.

Related articles

• What to do about your W-2! (holtpros.wordpress.com)
• On April 15, File Your 1040 or an Extension? (forbes.com)

Get Ready to Pay – Estimated Tax Payments

Six Tips on Making Estimated Tax Payments

Some taxpayers may need to make estimated tax payments during the year. The type of income you receive determines whether you must pay estimated taxes. Here are six tips from the IRS about making estimated tax payments.

1. If you do not have taxes withheld from your income, you may need to make estimated tax payments. This may apply if you have income such as self-employment, interest, dividends or capital gains. It could also apply if you do not have enough taxes withheld from your wages. If you are required to pay estimated taxes during the year, you should make these payments to avoid a penalty.

2. Generally, you may need to pay estimated taxes in 2013 if you expect to owe $1,000 or more in taxes when you file your federal tax return. Other rules apply, and special rules apply to farmers and fishermen.

3. When figuring the amount of your estimated taxes, you should estimate the amount of income you expect to receive for the year. You should also include any tax deductions and credits that you will be eligible to claim. Be aware that life changes, such as a change in marital status or a child born during the year can affect your taxes. Try to make your estimates as accurate as possible.

4. You normally make estimated tax payments four times a year. The dates that apply to most people are April 15, June 17 and Sept. 16 in 2013, and Jan. 15, 2014.

5. You should use Form 1040-ES, Estimated Tax for Individuals, to figure your estimated tax.

6. You may pay online or by phone. You may also pay by check or money order, or by credit or debit card. You’ll find more information about your payment options in the Form 1040-ES instructions. Also, check out the Electronic Payment Options Home Page at IRS.gov. If you mail your payments to the IRS, you should use the payment vouchers that come with Form 1040-ES.

For more information about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. Forms and publications are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Publication 505, Tax Withholding and Estimated Tax
• Form 1040-ES, Estimated Tax for Individuals
• Electronic Payment Options Home Page

IRS YouTube Videos:

• Estimated Tax Payments – English | Spanish | ASL