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Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following seven facts from the IRS can help you choose the method that gives you the lowest tax.
1. Qualifying expenses - Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. If the total amount you spent on qualifying medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions
is more than your standard deduction, you can usually benefit by itemizing.
2. Standard deduction amounts -Your standard deduction is based on your filing status and is subject to inflation adjustments each year.
For 2011, the amounts are:
Single $5,800
Married Filing Jointly $11,600
Head of Household $8,500
Married Filing Separately $5,800
Qualifying Widow(er) $11,600
3. Some taxpayers have different standard deductions - The standard deduction amount depends on your filing status, whether you are 65 or older or blind and whether another taxpayer can claim an exemption for you. If any of these apply, use the Standard Deduction Worksheet on the back of Form 1040EZ, or in the 1040A or 1040 instructions.
4. Limited itemized deductions - Your itemized deductions are no longer limited because of your adjusted gross income.
5. Married filing separately - When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.
6. Some taxpayers are not eligible for the standard deduction - They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.
7. Forms to use - The standard deduction can be taken on Forms 1040, 1040A or 1040EZ. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.
These forms and instructions may be downloaded from the IRS website at www.irs.gov
or ordered by calling 800-TAX-FORM (800-829-3676).
30 Mayıs 2012 Çarşamba
Tax Credits Available for Certain Energy-Efficient Home Improvements
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The IRS would like you to get some credit for qualified home energy improvements this year. Perhaps you installed solar equipment or recently insulated your home? Here are two tax credits that may be available to you:
1. The Non-business Energy Property Credit Homeowners who install energy-efficient improvements may qualify for this credit. The 2011 credit is 10 percent of the cost of qualified energy-efficient improvements, up to $500. Qualifying improvements includeadding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. You can also claim a credit including installation costs, for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. The credit has a lifetime limit of $500, of which only $200 may be used for windows. If you've claimed more than $500 of non-business energy property credits since 2005, you can not claim the credit
for 2011. Qualifying improvements must have been placed into service in the taxpayer’s principal residence located in the United States before Jan. 1, 2012.
2. Residential Energy Efficient Property Credit This tax credit helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines. The credit, which runs through 2016, is 30 percent of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; geothermal heat pumps qualify only when installed on or in connection with your main home located in the United States. Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.
If you're eligible, you can claim both of these credits on Form 5695, Residential Energy Credits when you file your 2011 federal income tax return. Also, note these are tax credits and not deductions, so they will generally reduce the amount of tax owed dollar for dollar. Finally, you may claim these credits regardless of whether you itemize deductions on IRS Schedule A.
You can find Form 5695 at IRS.gov or order it by calling 1-800-TAX-FORM (800-829-3676).
1. The Non-business Energy Property Credit Homeowners who install energy-efficient improvements may qualify for this credit. The 2011 credit is 10 percent of the cost of qualified energy-efficient improvements, up to $500. Qualifying improvements includeadding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. You can also claim a credit including installation costs, for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. The credit has a lifetime limit of $500, of which only $200 may be used for windows. If you've claimed more than $500 of non-business energy property credits since 2005, you can not claim the credit
for 2011. Qualifying improvements must have been placed into service in the taxpayer’s principal residence located in the United States before Jan. 1, 2012.
2. Residential Energy Efficient Property Credit This tax credit helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines. The credit, which runs through 2016, is 30 percent of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; geothermal heat pumps qualify only when installed on or in connection with your main home located in the United States. Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.
If you're eligible, you can claim both of these credits on Form 5695, Residential Energy Credits when you file your 2011 federal income tax return. Also, note these are tax credits and not deductions, so they will generally reduce the amount of tax owed dollar for dollar. Finally, you may claim these credits regardless of whether you itemize deductions on IRS Schedule A.
You can find Form 5695 at IRS.gov or order it by calling 1-800-TAX-FORM (800-829-3676).
Six Facts About the Alternative Minimum Tax
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The Alternative Minimum Tax attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.
Here are six facts the Internal Revenue Service wants you to know about the AMT and changes for 2011.
1. Tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain expenses. These benefits can drastically reduce some taxpayers’ tax obligations. Congress created the AMT in 1969, targeting higher-income taxpayers who could claim so many deductions they owed little or no income tax.
2. Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
3. You may have to pay the AMT if your taxable income for regular tax purposes, plus any adjustments and preference items that apply to you, are more than the AMT exemption amount.
4. The AMT exemption amounts are set by law for each filing status.
5. For tax year 2011, Congress raised the AMT exemption amounts to the following levels
$74,450 for a married couple filing a joint return and qualifying widows and widowers;
$48,450 for singles and heads of household;
$37,225 for a married person filing separately.
6. The minimum AMT exemption amount for a child whose unearned income is taxed at the parents' tax rate has increased to $6,800 for 2011.
Use the AMT Assistant at www.irs.gov to determine whether you may be subject to the AMT. You can find more information about the Alternative Minimum Tax and how it affects you by
accessing IRS Form 6251, Alternative Minimum Tax —Individuals, and its instructions
at www.irs.gov. You can also order the form by calling 800-TAX-FORM (800-829-3676).
Here are six facts the Internal Revenue Service wants you to know about the AMT and changes for 2011.
1. Tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain expenses. These benefits can drastically reduce some taxpayers’ tax obligations. Congress created the AMT in 1969, targeting higher-income taxpayers who could claim so many deductions they owed little or no income tax.
2. Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
3. You may have to pay the AMT if your taxable income for regular tax purposes, plus any adjustments and preference items that apply to you, are more than the AMT exemption amount.
4. The AMT exemption amounts are set by law for each filing status.
5. For tax year 2011, Congress raised the AMT exemption amounts to the following levels
$74,450 for a married couple filing a joint return and qualifying widows and widowers;
$48,450 for singles and heads of household;
$37,225 for a married person filing separately.
6. The minimum AMT exemption amount for a child whose unearned income is taxed at the parents' tax rate has increased to $6,800 for 2011.
Use the AMT Assistant at www.irs.gov to determine whether you may be subject to the AMT. You can find more information about the Alternative Minimum Tax and how it affects you by
accessing IRS Form 6251, Alternative Minimum Tax —Individuals, and its instructions
at www.irs.gov. You can also order the form by calling 800-TAX-FORM (800-829-3676).
Work at Home? You May Qualify for the Home Office Deduction
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If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The IRS has the following six requirements to help you determine if you qualify for the home office deduction.
1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:
• as your principal place of business, or
• as a place to meet or deal with patients, clients or customers in the normal course of your business, or
• in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
2. For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively.
3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.
4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on Form 1040 Schedule C, Profit or Loss From Business.
6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.
For more information see IRS Publication 587, Business Use of Your Home, available at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).
1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:
• as your principal place of business, or
• as a place to meet or deal with patients, clients or customers in the normal course of your business, or
• in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
2. For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively.
3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.
4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on Form 1040 Schedule C, Profit or Loss From Business.
6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.
For more information see IRS Publication 587, Business Use of Your Home, available at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Tips for Taxpayers Who Can't Pay Their Taxes on Time
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If you owe tax with your federal tax return, but can't afford to pay it all when you file, the IRS wants you to know your options and help you keep interest and penalties to a minimum.
Here are five tips:
1. File your return on time and pay as much as you can with the return. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. For electronic and credit card options for paying see www.IRS.gov. You may also mail a check payable to the United States Treasury.
2. Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
3. Request an installment payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include:
• Using the Online Payment Agreement application and
• Completing and submitting IRS Form 9465-FS, Installment Agreement Request, with your return IRS charges a user fee to set up your payment agreement. See www.irs.gov or the installment agreement request form for fee amounts.
4. Request an extension of time to pay. For tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative. To see if you qualify visit www.irs.gov and get form 1127-A, Application for Extension of Time for Payment. But hurry, your application must be filed by April 17, 2012.
5. If you receive a bill from the IRS, please contact us immediately to discuss these and other payment options. Ignoring the bill will only compound your problem and could lead to IRS collection action.
If you can’t pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can. For more information on the IRS collection process go to or see IRSVideos.gov/OweTaxes.
Here are five tips:
1. File your return on time and pay as much as you can with the return. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. For electronic and credit card options for paying see www.IRS.gov. You may also mail a check payable to the United States Treasury.
2. Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
3. Request an installment payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include:
• Using the Online Payment Agreement application and
• Completing and submitting IRS Form 9465-FS, Installment Agreement Request, with your return IRS charges a user fee to set up your payment agreement. See www.irs.gov or the installment agreement request form for fee amounts.
4. Request an extension of time to pay. For tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative. To see if you qualify visit www.irs.gov and get form 1127-A, Application for Extension of Time for Payment. But hurry, your application must be filed by April 17, 2012.
5. If you receive a bill from the IRS, please contact us immediately to discuss these and other payment options. Ignoring the bill will only compound your problem and could lead to IRS collection action.
If you can’t pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can. For more information on the IRS collection process go to or see IRSVideos.gov/OweTaxes.
26 Mayıs 2012 Cumartesi
Tax Tip - Itemize vs Standard Deduction
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The standard deduction is exactly what it sounds like—a flat amount that you can deduct from your taxable income. The amount you can deduct is based on your filing status, number of dependents, and what year you’re filing the taxes for. For additional information on the standard deduction, see IRS Publication 501.
When you itemize deductions, you have the ability to deduct the actual dollar amount of individual deductions. Some of these deductions come in the form of mortgage interest, property taxes, medical expenses, and more. If you think that if you totaled up all of your allowed deductions and it would be greater than the standard deduction, it would probably be wise to itemize.
What Expenses Can be Itemized?
-Mortgage interest
-Charitable contributions-Property taxes. -State and local income taxes.
-Medical expenses that exceed 7.5% of your adjusted gross income.
-Various miscellaneous expenses that exceed 2% of your income such as: union dues, tools and supplies needed for work, tax preparation fees, some legal fees, and many more.Should You Itemize?There is no right or wrong answer, and it depends on your situation. To determine if itemizing would be valuable, you should take a look at Schedule A of Form 1040. On this sheet, you can list your itemized expenses, and then total them up to compare the amount to the standard deduction. If the itemized amount is greater, then you would want to itemize. If the total itemized amount is less than the standard deduction, you would not want to itemize.The largest deductions for most people are mortgage interest and property taxes, and in these situations, even a modest mortgage can put you over the standard deduction limit. Since this can mean hundreds of dollars over the standard deduction, the tax savings can be significant.Call us - Executive resources FSI - 530-888-6691
The standard deduction is exactly what it sounds like—a flat amount that you can deduct from your taxable income. The amount you can deduct is based on your filing status, number of dependents, and what year you’re filing the taxes for. For additional information on the standard deduction, see IRS Publication 501.When you itemize deductions, you have the ability to deduct the actual dollar amount of individual deductions. Some of these deductions come in the form of mortgage interest, property taxes, medical expenses, and more. If you think that if you totaled up all of your allowed deductions and it would be greater than the standard deduction, it would probably be wise to itemize.
What Expenses Can be Itemized?
-Mortgage interest
-Charitable contributions-Property taxes. -State and local income taxes.
-Medical expenses that exceed 7.5% of your adjusted gross income.
-Various miscellaneous expenses that exceed 2% of your income such as: union dues, tools and supplies needed for work, tax preparation fees, some legal fees, and many more.Should You Itemize?There is no right or wrong answer, and it depends on your situation. To determine if itemizing would be valuable, you should take a look at Schedule A of Form 1040. On this sheet, you can list your itemized expenses, and then total them up to compare the amount to the standard deduction. If the itemized amount is greater, then you would want to itemize. If the total itemized amount is less than the standard deduction, you would not want to itemize.The largest deductions for most people are mortgage interest and property taxes, and in these situations, even a modest mortgage can put you over the standard deduction limit. Since this can mean hundreds of dollars over the standard deduction, the tax savings can be significant.Call us - Executive resources FSI - 530-888-6691
Calumet Specialty Products Offered Tax Credits and Training Grants for Expansion in Indianapolis
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From the Indianapolis Business Journal:
Oil refiner Calumet Specialty Products Partners said it plans to expand its Indianapolis headquarters, adding 48 jobs by 2015.
The company, which produces oils, solvents, waxes, said it will make a multi-million-dollar investment to purchase a new enterprise resource planning system and computer equipment at its headquarters at 2780 Waterfront Parkway.
Calumet, which currently has 75 full-time Indiana employees, has begun hiring management, accounting, sales, human resources and information technology workers.
Calumet began operations in 1990 with the acquisition of a specialty lubricants refinery in northwest Louisiana and a distribution terminal in Burnham, Ill. The company now operates five additional plants in Louisiana, Pennsylvania, Texas, Wisconsin and Missouri.
The Indiana Economic Development Corp. offered Calumet up to $400,000 in tax credits and up to $137,500 in training grants. The city of Indianapolis will consider additional property tax abatement.
...
http://www.ibj.com/calumet-plans-to-add-48-jobs-at-indianapolis-hq/PARAMS/article/34633
Oil refiner Calumet Specialty Products Partners said it plans to expand its Indianapolis headquarters, adding 48 jobs by 2015.
The company, which produces oils, solvents, waxes, said it will make a multi-million-dollar investment to purchase a new enterprise resource planning system and computer equipment at its headquarters at 2780 Waterfront Parkway.
Calumet, which currently has 75 full-time Indiana employees, has begun hiring management, accounting, sales, human resources and information technology workers.
Calumet began operations in 1990 with the acquisition of a specialty lubricants refinery in northwest Louisiana and a distribution terminal in Burnham, Ill. The company now operates five additional plants in Louisiana, Pennsylvania, Texas, Wisconsin and Missouri.
The Indiana Economic Development Corp. offered Calumet up to $400,000 in tax credits and up to $137,500 in training grants. The city of Indianapolis will consider additional property tax abatement.
...
http://www.ibj.com/calumet-plans-to-add-48-jobs-at-indianapolis-hq/PARAMS/article/34633
Indiana Law Blog Post: Long Reuters article examines increasing use of Tax Courts by the various states
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The ILB entry links to a Reuters article on the increasing use of Tax Courts by states. From the article:
...
Their structures vary from state to state, but generally these tribunals offer a place where taxpayers can challenge the decisions of tax authorities, from individual and corporate income taxes to sales and property taxes.
States without an independent court generally rely on administrative hearing systems within their revenue departments to adjudicate tax disputes, like the one Georgia had. Unhappy taxpayers in these systems often may appeal to state courts, but these lack specialized tax judges.
Proponents of the new tax courts include lawyers' groups and corporations. They say the courts handle appeals more quickly and in ways that are fairer to taxpayers than when the appeals are under the control of state revenue departments.
See the full ILB post here:
http://indianalawblog.com/archives/2012/05/courts_long_reu.html
...
Their structures vary from state to state, but generally these tribunals offer a place where taxpayers can challenge the decisions of tax authorities, from individual and corporate income taxes to sales and property taxes.
States without an independent court generally rely on administrative hearing systems within their revenue departments to adjudicate tax disputes, like the one Georgia had. Unhappy taxpayers in these systems often may appeal to state courts, but these lack specialized tax judges.
Proponents of the new tax courts include lawyers' groups and corporations. They say the courts handle appeals more quickly and in ways that are fairer to taxpayers than when the appeals are under the control of state revenue departments.
See the full ILB post here:
http://indianalawblog.com/archives/2012/05/courts_long_reu.html
Vigo County Companies Seek Tax Abatements for Expansion Projects
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From the Terre Haute Tribune Star:
Two Vigo County companies are seeking tax abatements for expansion projects, one of which is included as part of a county incentive package.
Applied Extrusion Technologies Inc. plans to invest an estimated $8 million for new equipment for metalizing and slitting oriented polypropolene packaging materials, including a winder, packout and upgrades for large diameter rolls.
The company plans to add 13 new employees with an annual payroll of $545,00, said Lou Britton, attorney for the company told the special projects committee of the Vigo County Council Wednesday.
AET currently employs 450 workers with an payroll payroll of $28 million. This figure does not include an additional 30 part-time workers, Britton said.
...
The company is seeking a 10-year personal property tax abatement.
The tax abatement phases in taxes over a 10-year period, with no taxes paid in the first year, then 10 percent of taxes paid, with 90 percent abated, in the second year. The amount paid increases annually until the end of the abatement. The company will pay $57,000 in new property taxes over the span of the abatement, Britton said.
The special projects committee approved the abatement to be presented to the full Vigo County Council to vote on a preliminary approval vote at its June 12 meeting. The council will vote on a final approval in July.
The committee also heard a request for a 10-year real property and 10-year personal property tax abatement for ThyssenKrupp Presta Terre Haute LLC. The tax abatements are part of a previously announced county incentive package for the company to construct a 73,600 square foot addition to its facility in the Vigo County Industrial Park, south of Terre Haute. The company will also add three new assembly lines.
ThyssenKrupp Presta currently has 188 employees with an annual payroll of more than $2.44 million.
By the end of 2013, ThyssenKrupp Presta will add 120 new workers with an annual payroll of $4,487,435, in excess of $17 per hour, said Steve Witt, president of the Terre Haute Economic Development Corp.
...
“Vigo County competed for this expansion with several other ThyssenKrupp facilities in the U.S. and Mexico,” Witt said. “To win this project for our community, we provided a local incentive offer that included 10-year real and personal property tax abatement as well as a $200,000 reimbursement to the company for project-related expenses associated with the expansion,” Witt told the council committee.
The company’s real property investment will be $5.1 million, while new equipment will be an investment of $16.7 million, Witt said. The company will pay $547,010 for real property taxes with the abatement, a savings to the company of $536,180 over the length of the abatement, Witt said.
ThyssenKrupp Presta will pay $498,696 in personal property taxes over the 10-year period, a savings of $742,724. The company’s total new taxes, both personal and real property, over the 10-year abatement period is $1,045,706, Witt said.
In addition, the Indiana Economic Development Corp. has offered an incentive package of $1.075 million from the state’s Skills Enhancement Fund for job training and $875,000 in Economic Development for a Growing Economy (EDGE) tax credits for a 10-year period.
...
The committee voted to send the tax abatement, plus a $200,000 appropriation from the county’s Economic Development Income Tax (EDIT) fund for the incentive package, to the full council. The council will vote on a preliminary approval vote at its June 12 meeting. The council will vote on a final approval in July.
In other business, the committee sent eight tax abatements onto to the full council for review in June. The council reviews abatements annually. Committee chairman Brad Anderson, R-4th, said some companies are not up to their full employment, but “in this business climate” it could be difficult for a company to meet full employment.
Councilman Mark Bird, D-at large, said the abatements are “substantially in compliance,” adding companies cannot control a downturn in the economy. The abatements were for Ginovus; Marion Tool & Die Inc.; CSN, LLC; Staples; Certainteed Corp.; NIPSCO; ADVICS: and Danisco USA Inc.
http://tribstar.com/local/x1968170425/Companies-seek-Vigo-tax-abatements
Two Vigo County companies are seeking tax abatements for expansion projects, one of which is included as part of a county incentive package.
Applied Extrusion Technologies Inc. plans to invest an estimated $8 million for new equipment for metalizing and slitting oriented polypropolene packaging materials, including a winder, packout and upgrades for large diameter rolls.
The company plans to add 13 new employees with an annual payroll of $545,00, said Lou Britton, attorney for the company told the special projects committee of the Vigo County Council Wednesday.
AET currently employs 450 workers with an payroll payroll of $28 million. This figure does not include an additional 30 part-time workers, Britton said.
...
The company is seeking a 10-year personal property tax abatement.
The tax abatement phases in taxes over a 10-year period, with no taxes paid in the first year, then 10 percent of taxes paid, with 90 percent abated, in the second year. The amount paid increases annually until the end of the abatement. The company will pay $57,000 in new property taxes over the span of the abatement, Britton said.
The special projects committee approved the abatement to be presented to the full Vigo County Council to vote on a preliminary approval vote at its June 12 meeting. The council will vote on a final approval in July.
The committee also heard a request for a 10-year real property and 10-year personal property tax abatement for ThyssenKrupp Presta Terre Haute LLC. The tax abatements are part of a previously announced county incentive package for the company to construct a 73,600 square foot addition to its facility in the Vigo County Industrial Park, south of Terre Haute. The company will also add three new assembly lines.
ThyssenKrupp Presta currently has 188 employees with an annual payroll of more than $2.44 million.
By the end of 2013, ThyssenKrupp Presta will add 120 new workers with an annual payroll of $4,487,435, in excess of $17 per hour, said Steve Witt, president of the Terre Haute Economic Development Corp.
...
“Vigo County competed for this expansion with several other ThyssenKrupp facilities in the U.S. and Mexico,” Witt said. “To win this project for our community, we provided a local incentive offer that included 10-year real and personal property tax abatement as well as a $200,000 reimbursement to the company for project-related expenses associated with the expansion,” Witt told the council committee.
The company’s real property investment will be $5.1 million, while new equipment will be an investment of $16.7 million, Witt said. The company will pay $547,010 for real property taxes with the abatement, a savings to the company of $536,180 over the length of the abatement, Witt said.
ThyssenKrupp Presta will pay $498,696 in personal property taxes over the 10-year period, a savings of $742,724. The company’s total new taxes, both personal and real property, over the 10-year abatement period is $1,045,706, Witt said.
In addition, the Indiana Economic Development Corp. has offered an incentive package of $1.075 million from the state’s Skills Enhancement Fund for job training and $875,000 in Economic Development for a Growing Economy (EDGE) tax credits for a 10-year period.
...
The committee voted to send the tax abatement, plus a $200,000 appropriation from the county’s Economic Development Income Tax (EDIT) fund for the incentive package, to the full council. The council will vote on a preliminary approval vote at its June 12 meeting. The council will vote on a final approval in July.
In other business, the committee sent eight tax abatements onto to the full council for review in June. The council reviews abatements annually. Committee chairman Brad Anderson, R-4th, said some companies are not up to their full employment, but “in this business climate” it could be difficult for a company to meet full employment.
Councilman Mark Bird, D-at large, said the abatements are “substantially in compliance,” adding companies cannot control a downturn in the economy. The abatements were for Ginovus; Marion Tool & Die Inc.; CSN, LLC; Staples; Certainteed Corp.; NIPSCO; ADVICS: and Danisco USA Inc.
http://tribstar.com/local/x1968170425/Companies-seek-Vigo-tax-abatements
Park 41 in Evansville Designated an "Industrial Recovery Site"
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From the Evansville Courier and Press:
On Thursday, GAGE announced that Evansville's former Whirlpool plant, now called Park 41, has been designated as an Industrial Recovery Site. The informal term for such sites is dinosaur buildings.
The program, administered by the Indiana Economic Development Corp., provides tax credits of up to 25 percent of the cost of remodeling, repair or improvements to a Dinosaur Building.
"It's a way to revitalize the entire facility," said Katelyn Hancock, spokeswoman for the Indiana Economic Development Corp.
Companies located in a Dinosaur Building must apply to the state development corporation to receive the tax credit, Hancock said.
To qualify, a building must have been in service for at least 15 years, with at least 50,000 square feet and must have been at least 75 percent vacant for a year or longer.
Whirlpool shut down its refrigerator plant in 2010. The Kunkel Group, an Evansville developer, purchased the building in April 2011.
The 1.5 million-square-foot building currently has nine tenants.
...
http://www.courierpress.com/news/2012/may/25/park-41-dubbed-dinosaur-building/
On Thursday, GAGE announced that Evansville's former Whirlpool plant, now called Park 41, has been designated as an Industrial Recovery Site. The informal term for such sites is dinosaur buildings.
The program, administered by the Indiana Economic Development Corp., provides tax credits of up to 25 percent of the cost of remodeling, repair or improvements to a Dinosaur Building.
"It's a way to revitalize the entire facility," said Katelyn Hancock, spokeswoman for the Indiana Economic Development Corp.
Companies located in a Dinosaur Building must apply to the state development corporation to receive the tax credit, Hancock said.
To qualify, a building must have been in service for at least 15 years, with at least 50,000 square feet and must have been at least 75 percent vacant for a year or longer.
Whirlpool shut down its refrigerator plant in 2010. The Kunkel Group, an Evansville developer, purchased the building in April 2011.
The 1.5 million-square-foot building currently has nine tenants.
...
http://www.courierpress.com/news/2012/may/25/park-41-dubbed-dinosaur-building/
23 Mayıs 2012 Çarşamba
IRS Tax Tip 2012-54 -- Employee Business Expenses
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Some employees may be able to deduct certain work-related expenses. The following facts from the IRS can help you determine which expenses are deductible as an employee business expense. You must be itemizing deductions on IRS Schedule A to qualify.
Expenses that qualify for an itemized deduction generally include:
• Business travel away from home
• Business use of your car
• Business meals and entertainment
• Travel
• Use of your home
• Education
• Supplies
• Tools
• Miscellaneous expenses
You must keep records to prove the business expenses you deduct. For general information on recordkeeping, see IRS Publication 552, Recordkeeping for Individuals available on the IRS website at www.irs.gov, or by calling 1-800-TAX-FORM (800-829-3676).
If your employer reimburses you under an accountable plan, you should not include the payments in your gross income, and you may not deduct any of the reimbursed amounts.
An accountable plan must meet three requirements:
1. You must have paid or incurred expenses that are deductible while performing services as an employee.
2. You must adequately account to your employer for these expenses within a reasonable time period.
3. You must return any excess reimbursement or allowance within a reasonable time period.
If the plan under which you are reimbursed by your employer is non-accountable, the payments you receive should be included in the wages shown on your Form W-2. You must report the income and itemize your deductions to deduct these expenses.
Generally, you report unreimbursed expenses on IRS Form 2106 or IRS Form 2106-EZ and attach it to Form 1040. Deductible expenses are then reported on IRS Schedule A, as a miscellaneous itemized deduction subject to a rule that limits your employee business expenses deduction to the amount that exceeds 2 percent of your adjusted gross income.
For more information see IRS Publication 529, Miscellaneous Deductions, which is available on the IRS website at www.irs.gov, or by calling 1-800-TAX-FORM (800-829-3676).
Expenses that qualify for an itemized deduction generally include:
• Business travel away from home
• Business use of your car
• Business meals and entertainment
• Travel
• Use of your home
• Education
• Supplies
• Tools
• Miscellaneous expenses
You must keep records to prove the business expenses you deduct. For general information on recordkeeping, see IRS Publication 552, Recordkeeping for Individuals available on the IRS website at www.irs.gov, or by calling 1-800-TAX-FORM (800-829-3676).
If your employer reimburses you under an accountable plan, you should not include the payments in your gross income, and you may not deduct any of the reimbursed amounts.
An accountable plan must meet three requirements:
1. You must have paid or incurred expenses that are deductible while performing services as an employee.
2. You must adequately account to your employer for these expenses within a reasonable time period.
3. You must return any excess reimbursement or allowance within a reasonable time period.
If the plan under which you are reimbursed by your employer is non-accountable, the payments you receive should be included in the wages shown on your Form W-2. You must report the income and itemize your deductions to deduct these expenses.
Generally, you report unreimbursed expenses on IRS Form 2106 or IRS Form 2106-EZ and attach it to Form 1040. Deductible expenses are then reported on IRS Schedule A, as a miscellaneous itemized deduction subject to a rule that limits your employee business expenses deduction to the amount that exceeds 2 percent of your adjusted gross income.
For more information see IRS Publication 529, Miscellaneous Deductions, which is available on the IRS website at www.irs.gov, or by calling 1-800-TAX-FORM (800-829-3676).
Deducting Charitable Contributions: Eight Essentials
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Donations made to qualified organizations may help reduce the amount of tax you pay.
The IRS has eight essential tips to help ensure your contributions pay off on your tax return.
1. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations or candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.
5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization and the date and amount of the contribution. For text message donations, a telephone bill meets the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the
amount given.
7. To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
8. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining the value of donations, refer to Publication 561, Determining the Value of Donated Property. All are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
The IRS has eight essential tips to help ensure your contributions pay off on your tax return.
1. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations or candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.
5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization and the date and amount of the contribution. For text message donations, a telephone bill meets the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the
amount given.
7. To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
8. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining the value of donations, refer to Publication 561, Determining the Value of Donated Property. All are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Eight Tips to Determine if Your Gift is Taxable
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If you gave money or property to someone as a gift, you may owe federal gift tax. Many gifts are not subject to the gift tax, but the IRS offers the following eight tips about gifts and the gift tax.
1. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. For 2011 and 2012, the annual exclusion is $13,000.
2. Gift tax returns do not need to be filed unless you give someone, other than your spouse, money or property worth more than the annual exclusion for that year.
3. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.
4. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
5. The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. The following gifts are not taxable gifts:
• Gifts that are do not exceed the annual exclusion for the calendar year,
• Tuition or medical expenses you pay directly to a medical or educational
institution for someone,
• Gifts to your spouse,
• Gifts to a political organization for its use, and
• Gifts to charities.
6. You and your spouse can make a gift up to $26,000 to a third party without making a taxable gift. The gift can be considered as made one-half by you and one-half by your spouse. If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if half of the split gift is less than the annual exclusion.
7. You must file a gift tax return on Form 709, if any of the following apply:
• You gave gifts to at least one person (other than your spouse) that are more than the annual exclusion for the year.
• You and your spouse are splitting a gift.
• You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy, or receive income from until some time in the future.
• You gave your spouse an interest in property that will terminate due to a future event.
8. You do not have to file a gift tax return to report gifts to political organizations and gifts made by paying someone’s tuition or medical expenses.
For more information see Publication 950, Introduction to Estate and Gift Taxes. Both Form 709 and Publication 950 are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
1. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. For 2011 and 2012, the annual exclusion is $13,000.
2. Gift tax returns do not need to be filed unless you give someone, other than your spouse, money or property worth more than the annual exclusion for that year.
3. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.
4. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
5. The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. The following gifts are not taxable gifts:
• Gifts that are do not exceed the annual exclusion for the calendar year,
• Tuition or medical expenses you pay directly to a medical or educational
institution for someone,
• Gifts to your spouse,
• Gifts to a political organization for its use, and
• Gifts to charities.
6. You and your spouse can make a gift up to $26,000 to a third party without making a taxable gift. The gift can be considered as made one-half by you and one-half by your spouse. If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if half of the split gift is less than the annual exclusion.
7. You must file a gift tax return on Form 709, if any of the following apply:
• You gave gifts to at least one person (other than your spouse) that are more than the annual exclusion for the year.
• You and your spouse are splitting a gift.
• You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy, or receive income from until some time in the future.
• You gave your spouse an interest in property that will terminate due to a future event.
8. You do not have to file a gift tax return to report gifts to political organizations and gifts made by paying someone’s tuition or medical expenses.
For more information see Publication 950, Introduction to Estate and Gift Taxes. Both Form 709 and Publication 950 are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Tips for Taxpayers Who Can't Pay Their Taxes on Time
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If you owe tax with your federal tax return, but can't afford to pay it all when you file, the IRS wants you to know your options and help you keep interest and penalties to a minimum.
Here are five tips:
1. File your return on time and pay as much as you can with the return. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. For electronic and credit card options for paying see www.IRS.gov. You may also mail a check payable to the United States Treasury.
2. Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
3. Request an installment payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include:
• Using the Online Payment Agreement application and
• Completing and submitting IRS Form 9465-FS, Installment Agreement Request, with your return IRS charges a user fee to set up your payment agreement. See www.irs.gov or the installment agreement request form for fee amounts.
4. Request an extension of time to pay. For tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative. To see if you qualify visit www.irs.gov and get form 1127-A, Application for Extension of Time for Payment. But hurry, your application must be filed by April 17, 2012.
5. If you receive a bill from the IRS, please contact us immediately to discuss these and other payment options. Ignoring the bill will only compound your problem and could lead to IRS collection action.
If you can’t pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can. For more information on the IRS collection process go to or see IRSVideos.gov/OweTaxes.
Here are five tips:
1. File your return on time and pay as much as you can with the return. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. For electronic and credit card options for paying see www.IRS.gov. You may also mail a check payable to the United States Treasury.
2. Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
3. Request an installment payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include:
• Using the Online Payment Agreement application and
• Completing and submitting IRS Form 9465-FS, Installment Agreement Request, with your return IRS charges a user fee to set up your payment agreement. See www.irs.gov or the installment agreement request form for fee amounts.
4. Request an extension of time to pay. For tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative. To see if you qualify visit www.irs.gov and get form 1127-A, Application for Extension of Time for Payment. But hurry, your application must be filed by April 17, 2012.
5. If you receive a bill from the IRS, please contact us immediately to discuss these and other payment options. Ignoring the bill will only compound your problem and could lead to IRS collection action.
If you can’t pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can. For more information on the IRS collection process go to or see IRSVideos.gov/OweTaxes.
Automated IRS System Helps College-Bound Students with Financial Aid Application Process
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College-bound students and their parents typically want to make every dollarand every minute of the college experience count including money spent ontuition and time spent on the college financial aid application process. TheInternal Revenue Service is helping minimize the time spent on the completionof the Free Application for Federal Student Aid (FAFSA) form by automatingaccess to federal tax returns with the IRS Data Retrieval Tool. This toolprovides the opportunity for applicants to automatically transfer the requiredtax data onto the FAFSA form.
Here are some tips on using the IRS Data Retrieval Tool:
College-bound students and their parents typically want to make every dollarand every minute of the college experience count including money spent ontuition and time spent on the college financial aid application process. TheInternal Revenue Service is helping minimize the time spent on the completionof the Free Application for Federal Student Aid (FAFSA) form by automatingaccess to federal tax returns with the IRS Data Retrieval Tool. This toolprovides the opportunity for applicants to automatically transfer the requiredtax data onto the FAFSA form.
Here are some tips on using the IRS Data Retrieval Tool:
- Benefits The IRS Data Retrieval tool is an easy and secure way to access and transfer tax return information directly onto the FAFSA form, saving time and improving accuracy. Also, the increased accuracy reduces the likelihood of being selected for verification by the school’s financial aid office.
- Eligibility Criteria Taxpayers who wish to use the tool to complete their 2012 FAFSA form must:
- have filed a 2011 tax return;
- possess a valid Social Security Number;
- have a Federal Student Aid PIN (individuals who don’t have a PIN, will be given the option to apply for one through the FAFSA application process);
- have not changed marital status since Dec. 31, 2011.
- Exceptions If any of the following conditions apply to the student or parents, the IRS Data Retrieval Tool can not be used for the 2012 FAFSA application:
- an amended tax return was filed for 2011;
- no federal tax return for 2011 has been filed ;
- the federal tax filing status on the 2011 return is married filing separately; a Puerto Rican or other foreign tax return has been filed.
- Alternatives If the IRS Data Retrieval Tool can not be used and if the college requests verification documentation, it may be necessary to obtain an official transcript from the IRS. To order tax return or tax account transcripts, visit www.irs.gov and select Order a Transcript or call the Transcript toll-free line at 1-800-908-9946.
17 Mayıs 2012 Perşembe
Everything You Need to Know About Making Federal Tax Payments
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If you need to make a payment with your tax return this year, the IRS wants you to know about its payment options. Here are 10 important facts to help you make your tax payment 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 checks or money orders. You can pay taxes or user fees 24 hours a day, seven days a week. Visit the IRS website at www.irs.gov and search e-pay, or refer to Publication 3611, 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. If you file on paper, you can 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 on the front of your check or money order your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number.
9. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently.
10. For more information, call 800-829-4477 and select 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 www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
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 checks or money orders. You can pay taxes or user fees 24 hours a day, seven days a week. Visit the IRS website at www.irs.gov and search e-pay, or refer to Publication 3611, 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. If you file on paper, you can 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 on the front of your check or money order your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number.
9. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS. Double-check the IRS mailing address. This will help the IRS process your payment accurately and efficiently.
10. For more information, call 800-829-4477 and select 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 www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Last-Minute Reminder to Parents and Students; Don’t Overlook College Tax Benefits
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WASHINGTON — The Internal Revenue Service today reminded parents and students rushing to meet this year’s April 17 deadline to be sure and check out several college-related tax benefits before filing their 2011 returns.
Two tax credits and a tax deduction are available to taxpayers who paid tuition and other expenses for an eligible student during 2011. Because an eligible student can be the taxpayer, spouse or dependent, these benefits can, for example, help workers taking continuing education courses and people returning to school, as well as parents paying for their children’s college
education.
Given the number of different higher education credits and deductions, the IRS reminds taxpayers to carefully review eligibility requirements so they don’t overlook these important college benefits. Tax benefits include the following:
*The American Opportunity Tax Credit helps pay for the first four years of post-secondary education. Tuition, required enrollment fees, books and other required course materials generally qualify, and eligible students must be enrolled at least half time. Qualifying expenses of $4,000 or more in 2011 can earn a taxpayer the maximum credit of $2,500 per student per year. Even taxpayers who owe no tax can get a payment of the credit of up to $1,000 for each eligible student. The credit is claimed on Form 8863. But the IRS warns taxpayers to avoid an often-costly tax scam, currently being promoted widely to senior citizens, low-income families and church members falsely claiming that refunds based on the credit are available, even if they’re not currently enrolled in college and even if they went to school decades ago. In addition, some international students, normally considered nonresident aliens for tax purposes, have been improperly advised that they qualify for the credit.
*The Lifetime Learning Credit, limited to $2,000 per taxpayer per year, can be claimed based on tuition and required enrollment fees paid for any level of post-secondary education. Because of differences between the two credits and the fact that the American Opportunity Tax Credit usually yields greater tax savings at the undergraduate level, the Lifetime Learning Credit may be particularly helpful to graduate students, students taking only one course and those who are not pursuing a degree. The Lifetime Learning Credit is also claimed on Form 8863.
*The tuition and fees deduction is available for both full-time and part-time students at all levels of post-secondary education. The deduction of up to $4,000 is claimed on Form 8917.
Each year, a student normally receives a Form 1098-T from their college showing tuition payments and other information.
Though a taxpayer often qualifies for more than one of these benefits, he or she can only claim one of them for a particular student in 2011. Income limits and other special rules apply to each of these benefits. The general comparison table in Publication 970 can be a useful guide to taxpayers in determining eligibility for each of these benefits.
Often, tax credits are more valuable, because they reduce the amount of tax owed, whereas deductions reduce the income on which tax is figured. Tax software can often help parents and students determine which benefit yields the greatest tax savings.
Besides these tax benefits, parents, students and former students who made student loan payments during 2011 can deduct up to $2,500 of student loan interest. Normally, borrowers receive from their financial institution Form 1098-E showing student loan interest paid for the year. This deduction is claimed on Form 1040 Line 33 or Form 1040A Line 18. Income limits and other special rules apply. For example, the student must have been enrolled at least half time in a degree or certificate program. A worksheet in the tax form instructions can help taxpayers figure the deduction correctly.
The student loan interest deduction, the tuition and fees deduction and both tax credits can be claimed by eligible taxpayers, regardless of whether they itemize deductions on Schedule A. These benefits are available to both Form 1040 and 1040A filers. Details on these and other
education-related deductions and credits can be found in the Tax Benefits for Education Information Center on IRS.gov.
Two tax credits and a tax deduction are available to taxpayers who paid tuition and other expenses for an eligible student during 2011. Because an eligible student can be the taxpayer, spouse or dependent, these benefits can, for example, help workers taking continuing education courses and people returning to school, as well as parents paying for their children’s college
education.
Given the number of different higher education credits and deductions, the IRS reminds taxpayers to carefully review eligibility requirements so they don’t overlook these important college benefits. Tax benefits include the following:
*The American Opportunity Tax Credit helps pay for the first four years of post-secondary education. Tuition, required enrollment fees, books and other required course materials generally qualify, and eligible students must be enrolled at least half time. Qualifying expenses of $4,000 or more in 2011 can earn a taxpayer the maximum credit of $2,500 per student per year. Even taxpayers who owe no tax can get a payment of the credit of up to $1,000 for each eligible student. The credit is claimed on Form 8863. But the IRS warns taxpayers to avoid an often-costly tax scam, currently being promoted widely to senior citizens, low-income families and church members falsely claiming that refunds based on the credit are available, even if they’re not currently enrolled in college and even if they went to school decades ago. In addition, some international students, normally considered nonresident aliens for tax purposes, have been improperly advised that they qualify for the credit.
*The Lifetime Learning Credit, limited to $2,000 per taxpayer per year, can be claimed based on tuition and required enrollment fees paid for any level of post-secondary education. Because of differences between the two credits and the fact that the American Opportunity Tax Credit usually yields greater tax savings at the undergraduate level, the Lifetime Learning Credit may be particularly helpful to graduate students, students taking only one course and those who are not pursuing a degree. The Lifetime Learning Credit is also claimed on Form 8863.
*The tuition and fees deduction is available for both full-time and part-time students at all levels of post-secondary education. The deduction of up to $4,000 is claimed on Form 8917.
Each year, a student normally receives a Form 1098-T from their college showing tuition payments and other information.
Though a taxpayer often qualifies for more than one of these benefits, he or she can only claim one of them for a particular student in 2011. Income limits and other special rules apply to each of these benefits. The general comparison table in Publication 970 can be a useful guide to taxpayers in determining eligibility for each of these benefits.
Often, tax credits are more valuable, because they reduce the amount of tax owed, whereas deductions reduce the income on which tax is figured. Tax software can often help parents and students determine which benefit yields the greatest tax savings.
Besides these tax benefits, parents, students and former students who made student loan payments during 2011 can deduct up to $2,500 of student loan interest. Normally, borrowers receive from their financial institution Form 1098-E showing student loan interest paid for the year. This deduction is claimed on Form 1040 Line 33 or Form 1040A Line 18. Income limits and other special rules apply. For example, the student must have been enrolled at least half time in a degree or certificate program. A worksheet in the tax form instructions can help taxpayers figure the deduction correctly.
The student loan interest deduction, the tuition and fees deduction and both tax credits can be claimed by eligible taxpayers, regardless of whether they itemize deductions on Schedule A. These benefits are available to both Form 1040 and 1040A filers. Details on these and other
education-related deductions and credits can be found in the Tax Benefits for Education Information Center on IRS.gov.
Managing Your Tax Records After You Have Filed
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Keeping good records after you file your taxes is a good idea, as they will help you with documentation and substantiation if the IRS selects your return for an audit. Here are five tips from the IRS about keeping good records.
1. Normally, tax records should be kept for three years.
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
1. Normally, tax records should be kept for three years.
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Amended Returns: Eight Facts
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If you discover an error on your federal income tax return after you e-filed or mailed it, you may want or need to amend your return. Perhaps you are eligible for a deduction or credit and you missed it the first time?
Here are eight key points the IRS wants you to know about when considering whether to file an amended federal income tax return.
1. Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended income tax return.
2. Use Form 1040X to correct previously filed Forms 1040, 1040A or 1040EZ. An amended return cannot be e-filed; you must file it by paper.
3. Generally, you do not need to file an amended return to correct math errors. The IRS will automatically make that correction. Also, do not file an amended return because you forgot to attach tax forms such as W-2s or schedules. The IRS normally will send a request asking for those.
4. Be sure to enter the year of the return you are amending at the top of Form 1040X. Generally, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.
5. If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS campus. The 1040X instructions list the addresses for the campuses.
6. If the changes involve another schedule or form, you must attach that schedule or form to the amended return.
7. If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.
8. If you owe additional 2011 tax, file Form 1040X and pay the tax before the due date to limit interest and penalty charges that could accrue on your account. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.
Here are eight key points the IRS wants you to know about when considering whether to file an amended federal income tax return.
1. Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended income tax return.
2. Use Form 1040X to correct previously filed Forms 1040, 1040A or 1040EZ. An amended return cannot be e-filed; you must file it by paper.
3. Generally, you do not need to file an amended return to correct math errors. The IRS will automatically make that correction. Also, do not file an amended return because you forgot to attach tax forms such as W-2s or schedules. The IRS normally will send a request asking for those.
4. Be sure to enter the year of the return you are amending at the top of Form 1040X. Generally, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.
5. If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS campus. The 1040X instructions list the addresses for the campuses.
6. If the changes involve another schedule or form, you must attach that schedule or form to the amended return.
7. If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.
8. If you owe additional 2011 tax, file Form 1040X and pay the tax before the due date to limit interest and penalty charges that could accrue on your account. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.
What To Do If You Receive a Notice from the IRS
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The IRS sends millions of letters and notices to taxpayers for a variety ofreasons. Many of these letters and notices can be dealt with simply, withouthaving to call or visit an IRS office.
Here are six things to know about IRS notices and letters.
1. There are a number of reasons why the IRS might send you a notice.Notices may request payment, notify you of account changes, or requestadditional information. A notice normally covers a very specific issue aboutyour account or tax return.
2. Each letter and notice offers specific instructions on what action needsto be taken.
3. If you receive a correction notice, please notify us immediately so wecan review the correspondence and compare it with the information on yourreturn.
4. Sometimes the notice is just a correction to your account, then usuallyno reply is necessary unless a payment is due or the notice directs otherwise.
5. If we do not agree with the correction the IRS has made, it is importantto respond as requested. We need to send a written explanation of why wedisagree and include any documents and information we want the IRS to consideralong with the bottom tear-off portion of the notice. It is not unusual for theIRS to take four to six weeks to respond after we have responded to them.
6. IRS notices and letters are sent by mail. The IRS does not correspond byemail about taxpayer accounts or tax returns. If you receive any emailcorrespondence from the IRS, do not open any attachments and immediately delete the email.
The most important thing to remember is that a response is needed eventhough you know you are right. And thesooner a response is made the better. Our job is to help you to respond in a manner that will solve theproblem quickly and easily. Please callus as soon as you receive any notice from the IRS or state tax commission.
The IRS sends millions of letters and notices to taxpayers for a variety ofreasons. Many of these letters and notices can be dealt with simply, withouthaving to call or visit an IRS office.
Here are six things to know about IRS notices and letters.
1. There are a number of reasons why the IRS might send you a notice.Notices may request payment, notify you of account changes, or requestadditional information. A notice normally covers a very specific issue aboutyour account or tax return.
2. Each letter and notice offers specific instructions on what action needsto be taken.
3. If you receive a correction notice, please notify us immediately so wecan review the correspondence and compare it with the information on yourreturn.
4. Sometimes the notice is just a correction to your account, then usuallyno reply is necessary unless a payment is due or the notice directs otherwise.
5. If we do not agree with the correction the IRS has made, it is importantto respond as requested. We need to send a written explanation of why wedisagree and include any documents and information we want the IRS to consideralong with the bottom tear-off portion of the notice. It is not unusual for theIRS to take four to six weeks to respond after we have responded to them.
6. IRS notices and letters are sent by mail. The IRS does not correspond byemail about taxpayer accounts or tax returns. If you receive any emailcorrespondence from the IRS, do not open any attachments and immediately delete the email.
The most important thing to remember is that a response is needed eventhough you know you are right. And thesooner a response is made the better. Our job is to help you to respond in a manner that will solve theproblem quickly and easily. Please callus as soon as you receive any notice from the IRS or state tax commission.
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