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Commonly Overlooked Deductions

Itemized Tax Deductions

If total itemized tax deductions are more than the standard deduction, it’s usually more beneficial to itemize. For most homeowners it is worthwhile to itemize deductions because they can deduct interest, real estate tax, and certain mortgage insurance premiums.
Here are some popular (and commonly overlooked) itemized deductions not related to home ownership:

  • Medical expenses — This includes expenses spent on doctors, hospitals and medicine, some other tax deductible items include health insurance premiums, prescription eyeglasses and contact lenses, hearing aids, medical transportation, equipment for disabled people, and nursing home expenses. Medical miles can also be deducted.
  • State and local income taxes — This category includes income tax and personal property tax.
  • Charitable contributions — These include cash and property such as new and used household goods and items, securities, and vehicles donated to qualified charitable organizations. Volunteer expenses and miles can also be deducted.
  • Casualty losses — If you suffered a loss because of theft, fire, storm damage or other casualty, you can deduct an unreimbursed loss if it is more than the sum of $100 and 10% of your adjusted gross income.
  • Unreimbursed out-of-pocket job expenses — Tax-deductible expenses include vehicle expenses (other than commuting), travel expenses, uniforms, union dues and continuing education expenses.
  • Miscellaneous expenses — Safe-deposit box fees, investment expenses, tax preparation fees and certain legal fees are examples of miscellaneous tax deductions. The tax deduction for this category of expenses is allowed only for the total of these expenses and unreimbursed job expenses that is more than 2% of your adjusted gross income. Note: There are a few miscellaneous tax deductions that are not subject to the 2% floor. These include repayments of amounts exceeding $3,000 that you previously included in your income, gambling losses, estate tax on income in respect of a decedent, and a decedent’s investment in a pension. Continue reading

2011 Tax Changes That May Affect You

The IRS has recently released the new changes for the upcoming 2011 Tax Year. As always World Wide Tax Services is working diligently to keep up with issues in Tax that may affect you. With the current buzz about the condition of the economy, increases in unemployment, governmental cuts, and the unknown political changes to occur next year, most of us are watching our wallets and considering making some changes/reductions to improve if not stabilize our financial conditions. Many of us start the new year with hopes of a nice refund to either help offset costs, put away for savings, or purchasing that special item we have been putting off for sometime. We have compiled information to assist you in preparation of your tax return, whether you are brave enough to file independent of a tax provider or gathering the necessary documentation needed by your tax preparer to prepare an accurate return that maximizes your potential refund.

Standard Deductions

The Standard Deduction for filers that do not itemize has increased for 2011. The amount depends on your filing status: Continue reading

The CEO Discusses The New Tax Preparer Requirements

The IRS is working hard to protect the Taxpayer from issues that exist with non qualified tax preparers, tax fraud and erroneous tax returns that have increased over the last decade. We hear often in the news reports of tax preparers knowingly reporting fraudulent tax information to boost refunds, sometimes taking a kickback for the service. Our company and staff pride ourselves on providing tax and accounting services with the client in mind. Our goal is to also protect and provide top notch service to each client and assist with any tax issues that may exist. We take full responsibility for what is reported on the tax return, and we sign each return.

We are also complying with the new requirements that include passing examinations testing our knowledge of the tax laws, attending trainings each year provided by the IRS and working diligently to stay abreast of tax issues, and changes that affect our clients. We have listed below the tips provided by The Internal Revenue Service to assist in your search for a tax preparer. Continue reading

What to look for in a good tax preparer

If you pay someone to prepare your taxes, choose that preparer wisely because in the long run the Taxpayer (you) are held responsible for what is reported on the tax return, regardless if it was prepared by someone else.

Most preparers are professional, work with integrity, and provide excellent service to their clients.

The following are a few tips on what to expect when someone else prepares your return

Paid preparers are required by law to sign the return and fill in the preparer areas of the form.

The preparer should also provide their indentifying number (PTIN or SSN) on the return.

The preparer must provide a copy of the return to you for your records.

Review! Review! The completed return to ensure all tax information, your name, address, and social security number(s) are correct. Make sure none of these fields are left blank.

Also review and ensure you understand the entries and are comfortable with the accuracy of the return BEFORE you sign it.

Never sign a blank return, and never sign in pencil.

Continue reading

What To Bring To Your Tax Appointment

Documents You Should Bring To Your Tax Appointment

To assist your tax preparer in preparing the most accurate return, we have listed below information/forms that are required to be reported if applicable.

  • Social Security Card(s)
  • Driver’s License(s)
  • Dependents’ Social Security Numbers & Dates of Birth
  • Last Year’s Federal and State Tax Returns
  • Wage Statements (W-2)
  • Pension or Retirement Income  (1099-R)
  • Interest and Dividend Income  (1099- INT/DIV)
  • State Income Tax Refund Amount  (1099-G)
  • Social Security Income (SSA)
  • Unemployment Income (1099-G)
  • Commissions Received/Paid (1099-Misc)
  • Sales of Stocks or Bonds (1099-B)
  • Self-Employed Business Income & Expenses
  • Income and Expenses from Rentals
  • Lottery or Gambling Winnings and Losses
  • Income from Partnerships, S Corporations, Trusts, and Estates
  • IRA Contributions
  • Alimony Paid or Received Continue reading

Making Electronic Tax Payments

This information was provided by Levyloophole.com

There are a variety of ways to pay your taxes.

You can pay by:

  • Check, money order, and credit card, or
  • Direct debit from your checking account, which you can do by phone on online, using the IRS’s Electronic Federal Tax Payment System (EFTPS).

Electronic payments may be made from your home or wherever you happen to be, 24 hours a day 7 days a week. You can even schedule payments in advance.

What’s great is, it’s a paperless process and saves you time and money.

For example:

  • No checks to write
  • No money orders to purchase
  • No trips to purchase money orders
  • No payment vouchers to fill out and mail.

NOTE: Employment taxes on Forms 940, 941, and 944 cannot be scheduled in advance.

There are three electronic payment options:

  1. Electronic Funds Withdrawal
  2. Credit Cards
  3. The Electronic Federal Tax Payment System (EFTPS)

Scheduling Estimated Tax Payments

Form 1040ES, Estimated Taxes

You can schedule up to four quarterly estimated tax payments from your bank account while e-filing a return.

Authorize an Electronic Funds withdrawal

You can authorize an electronic funds withdrawal to pay any penalties associated with Form 1065 and 1065B.

Make Past Due Payments

You can make past due Form 941 and Form 940 return payments by phone or online.

Trust Fund Recovery Penalty

You can make a Trust Fund Recovery Penalty payment assessed against an individual by phone or online.

Trust fund taxes include:

  • Federal income taxes, and
  • the employee’s share of social security and Medicare taxes.

Form 944, Employer’s Annual Federal Tax Return: While e-filing Form 944, you can make a Form 944 balance due payment by phone or online.

 

Excerpted from levyloophole.com

City Of Detroit Income Tax Amnesty Program

http://www.detroitmi.gov/DepartmentsandAgencies/Finance/IncomeTaxDivision/IncomeTaxAmnesty.aspx

Mayor Bing has announced Individuals or companies that owe income taxes to the City of Detroit can pay their back taxes without penalty from January 22 through February 16.

Who Must Pay Income Tax to the City of Detroit?

All Detroit residents who earn more than $600 in a calendar year are required to pay income taxes regardless of where they work. Residents would file Form D-1040(R).
In addition, all non-residents who spend any time working in Detroit and earn more than $600 in a calendar year are required to pay income taxes to the City regardless of where their employer is located.  This would include sales personnel, delivery drivers, physicians, attorneys, accountants, visiting nurses, professional athletes, visiting entertainers, reporters/media personnel, skilled trades, contractors, etc.  Non-residents file Form D-1040(NR).

Who is Eligible for the Amnesty Program?

Anyone who has not filed an income tax return or has an outstanding balance for tax years 2011 and prior can take part in the program.
That includes:

  • Individuals/Joint Income
  • Employee Withholding
  • Corporate
  • Partnerships

How and Where Do I File My Delinquent Taxes?

To take advantage of the program, individuals and companies must:

Complete income tax returns for the eligible years. For faster processing, the returns should be accompanied by company-issued W-2 forms and all federal schedules to support deductions.

File delinquent income tax returns and pay outstanding balances by mail or in person from Jan. 22 – Feb. 16 at the following location.


Finance Department – Income Tax Division
Coleman Young Municipal Center, 2 Woodward Ave. – Suite 130, Detroit MI 48226

Monday – Friday
from 8 a.m. – 4 p.m.

Saturday from 9 a.m. – noon (Use Randolph entrance on weekends)
(313) 224-3315 (office)
All customers arriving before closing will be serviced.

Pay by mail:  The delinquent amount must be paid in full using a cashier’s check or money order.  No cash or personal checks will be accepted through the mail.  Incorrect payment amounts will result in an adjusted balance due.

Pay in person:
  The delinquent amount must be paid in full using a cashier’s check, money order, cash or credit/debit card. Credit/debit cards will only be accepted in person, and an additional 2.5% service fee applies. No personal checks will be accepted.

For more information and to obtain tax formsclick here.  Additional tax information is also available on the City’s Web site by clicking on Departments and then go to Municode.

Note: If the taxpayer is in bankruptcy or has other legal matters with the City of Detroit, the taxpayer must contact their attorney to find out whether the taxpayer can participate in the 2013 City of Detroit Amnesty Program.

The American Taxpayer Relief Act of 2012, has been approved

Congress has passed the American Taxpayer Relief Act of 2012, ending the fear of the fiscal cliff increasing taxes for taxpayers. Due to the lateness of these changes  the IRS will need additional time to update forms and instructions and systems in order to adopt the extender provisions. These changes are expected to delay tax filings similar to those of the 2011 filing season, when filing for some filers with “itemized deductions” were not able to file until mid-february.

We will keep you posted as new information is released regarding the start of the 2013 Filing Season. Listed below is the information made available in the Senate Bill H.R. 8 passed January 1, 2013.

TITLE II—INDIVIDUAL TAX EXTENDERS

Sec. 201.       Extension of deduction for certain expenses of elementary and  secondary school teachers.

Sec. 202.       Extension of exclusion from gross income of discharge of qualified principal residence indebtedness.

Sec. 203.       Extension of parity for exclusion from income for employer-provided mass transit and parking benefits.

Sec. 204.       Extension of mortgage insurance premiums treated as qualified residence interest.

Sec. 205.       Extension of deduction of State and local general sales taxes.

Sec. 206.       Extension of special rule for contributions of capital gain real property made for conservation purposes.

Sec. 207.       Extension of above-the-line deduction for qualified tuition and related expenses.

Sec. 208.       Extension of tax-free distributions from individual retirement plans for charitable purposes.

Sec. 209.       Improve and make permanent the provision authorizing the Internal Revenue Service to disclose certain return and return information to certain prison officials.

TITLE III—BUSINESS TAX EXTENDERS

Sec. 301.       Extension and modification of research credit.

Sec. 302.       Extension of temporary minimum low-income tax credit rate for  nonfederally subsidized new buildings.

Sec. 303.       Extension of housing allowance exclusion for determining area median gross income for qualified residential rental project exempt  facility bonds.

Sec. 304.       Extension of Indian employment tax credit.

Sec. 305.       Extension of new markets tax credit.

Sec. 306.       Extension of railroad track maintenance credit.

Sec. 307.       Extension of mine rescue team training credit.

Sec. 308.       Extension of employer wage credit for employees who are active  duty members of the uniformed services.

Sec. 309.       Extension of work opportunity tax credit.

Sec. 310.       Extension of qualified zone academy bonds.

Sec. 311.       Extension of 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and  improvements, and qualified retail improvements.

Sec. 312.       Extension of 7-year recovery period for motorsports entertainment complexes.

Sec. 313.       Extension of accelerated depreciation for business property on an Indian reservation.

Sec. 314.       Extension of enhanced charitable deduction for contributions of food inventory.

Sec. 315.       Extension of increased expensing limitations and treatment of certain real property as section 179 property.

Sec. 316.       Extension of election to expense mine safety equipment.

Sec. 317.       Extension of special expensing rules for certain film and television productions.

Sec. 318.       Extension of deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.

Sec. 319.       Extension of modification of tax treatment of certain payments to controlling exempt organizations.

Sec. 320.       Extension of treatment of certain dividends of regulated investment companies.

Sec. 321.       Extension of RIC qualified investment entity treatment under FIRPTA.

Sec. 322.       Extension of subpart F exception for active financing income.

Sec. 323.       Extension of look-thru treatment of payments between related controlled foreign corporations under foreign personal holding companies

Sec. 324.       Extension of temporary exclusion of 100 percent of gain on certain small business stock.

Sec. 325.       Extension of basis adjustment to stock of S corporations making charitable contributions of property.

Sec. 326.       Extension of reduction in S-corporation recognition period for built-in gains tax.

Sec. 327.       Extension of empowerment zone tax incentives.

Sec. 328.       Extension of tax-exempt financing for New York Liberty Zone.

Sec. 329.       Extension of temporary increase in limit on cover over of rum excise taxes to Puerto Rico and the Virgin Islands.

Sec. 330.       Modification and extension of American Samoa economic development credit.

Sec. 331.       Extension and modification of bonus depreciation.

TITLE IV—ENERGY TAX EXTENDERS

Sec. 401.       Extension of credit for energy-efficient existing homes.

Sec. 402.       Extension of credit for alternative fuel vehicle refueling property.

Sec. 403.       Extension of credit for 2- or 3-wheeled plug-in electric vehicles.

Sec. 404.       Extension and modification of cellulosic biofuel producer credit.

Sec. 405.       Extension of incentives for biodiesel and renewable diesel.

Sec. 406.       Extension of production credit for Indian coal facilities placed in service before 2009.

Sec. 407.       Extension and modification of credits with respect to facilities producing energy from certain renewable resources.

Sec. 408.       Extension of credit for energy-efficient new homes.

Sec. 409.       Extension of credit for energy-efficient appliances.

Sec. 410.       Extension and modification of special allowance for cellulosic biofuel plant property.

Sec. 411.       Extension of special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified         electric utilities.

Sec. 412.       Extension of alternative fuels excise tax credits.

TITLE V—UNEMPLOYMENT

Sec. 501.       Extension of emergency unemployment compensation program.

Sec. 502.       Temporary extension of extended benefit provisions.

Sec. 503.       Extension of funding for reemployment services and reemployment and eligibility assessment activities.

Sec. 504.       Additional extended unemployment benefits under the Railroad Unemployment Insurance Act.

TITLE VI—MEDICARE AND OTHER HEALTH EXTENSIONS

Subtitle A—Medicare Extensions

Sec. 601.       Medicare physician payment update.

Sec. 602.       Work geographic adjustment.

Sec. 603.       Payment for outpatient therapy services.

Sec. 604.       Ambulance add-on payments.

Sec. 605.       Extension of Medicare inpatient hospital payment adjustment for low volume hospitals.

Sec. 606.       Extension of the Medicare-dependent hospital (MDH) program.

Sec. 607.       Extension for specialized Medicare Advantage plans for special need individuals.

Sec. 608.       Extension of Medicare reasonable cost contracts.

Sec. 609.       Performance improvement.

Sec. 610.       Extension of funding outreach and assistance for low-income  programs.

Subtitle B—Other Health Extensions

Sec. 621.       Extension of the qualifying individual (QI) program.

Sec. 622.       Extension of Transitional Medical Assistance (TMA).

Sec. 623.       Extension of Medicaid and CHIP Express Lane option.

Sec. 624.       Extension of family-to-family health information centers.

Sec. 625.       Extension of Special Diabetes Program for Type I diabetes and for Indians.

Subtitle C—Other Health Provisions

Sec. 631.       IPPS documentation and coding adjustment for implementation of MS-DRGs.

Sec. 632.       Revisions to the Medicare ESRD bundled payment system to reflect findings in the GAO report.

Sec. 633.       Treatment of multiple service payment policies for therapy services.

Sec. 634.       Payment for certain radiology services furnished under the Medicare hospital outpatient department prospective payment system.

Sec. 635.       Adjustment of equipment utilization rate for advanced imaging services.

Sec. 636.       Medicare payment of competitive prices for diabetic supplies and elimination of overpayment for diabetic supplies.

Sec. 637.       Medicare payment adjustment for non-emergency ambulance transports for ESRD beneficiaries.

Sec. 638.       Removing obstacles to collection of overpayments.

Sec. 639.       Medicare advantage coding intensity adjustment.

Sec. 640.       Elimination of all funding for the Medicare Improvement Fund.

Sec. 641.       Rebasing of State DSH allotments.

Sec. 642.       Repeal of CLASS program.

Sec. 643.       Commission on Long-Term Care.

Sec. 644.       Consumer Operated and Oriented Plan program contingency fund.

TITLE VII—EXTENSION OF AGRICULTURAL PROGRAMS

Sec. 701.       1-year extension of agricultural programs.

Sec. 702.       Supplemental agricultural disaster assistance.

TITLE IX—MISCELLANEOUS PROVISIONS

Sec. 901.       Strategic delivery systems.

Sec. 902.       No cost of living adjustment in pay of members of congress.

TITLE X—BUDGET PROVISIONS

Subtitle A—Modifications of Sequestration

Sec. 1001.    Treatment of sequester.

Sec. 1002.    Amounts in applicable retirement plans may be transferred to designated Roth accounts without distribution

IRS Delays Beginning of Tax Season to January 30, 2013

Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.