by NFS | Feb 7, 2011 | Archives
You can buy Series I U.S. Savings Bonds with a portion or all of your federal tax refund for yourself or anyone. Series I bonds are low-risk bonds that grow in value for up to 30 years. While you own them they earn interest and protect you from inflation.
Here are six things the IRS wants you to know about using your federal refund to purchase savings bonds.
- You may use a portion of your refund to purchase up to $5,000 in U.S. Series I Savings Bonds for yourself or anyone.
- The total amount of saving bonds purchased must be in multiples of $50. Any portion of your refund not used to buy savings bonds will be deposited into another financial account – such as a checking or savings account or can be mailed to you as a paper check.
- Paper bonds will be issued in your name or the name you designate as primary owner, co-owner or beneficiary. If you are married and filed a joint return, the bonds will be issued in yours and your spouse’s name. You can also designate a beneficiary or co-owner under this name registration option.
- You will receive the U.S. savings bonds in the mail.
- Buying bonds with your refund is easy. Just select this option by filing Form 8888, Allocation of Refund (Including Savings Bond Purchases).
- Form 8888 has step-by-step instructions on how to select this option and how to specify the amount of your refund you want to use to purchase savings bonds.
For more information about the U.S. Savings Bonds refund option visit the IRS website at http://www.irs.gov/.
by NFS | Feb 4, 2011 | Archives
What are the Obstacles to Successful Retirement Planning? Check out NFS Financial Facts…
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by NFS | Feb 4, 2011 | Archives
Washington, D.C. – Approximately $33 million in credits for plug-in electric and alternative-fueled vehicles were erroneously claimed by at least 12,920 taxpayers through July 24, 2010, according to a new government report that also found nearly $50,000 worth of the credits going to prisoners.
The report, by the Treasury Inspector General for Tax Administration, found that about 20 percent of the $163.9 million in credits claimed by taxpayers from Jan. 1, 2010 to July 24, 2010 for plug-in electric and alternative motor vehicle credits were claimed in error.
In the course of its review, TIGTA also found that 1,719 of the 12,920 individuals erroneously reduced the amount of alternative minimum tax they owed by almost $5.3 million.
TIGTA conducted the audit as part of its continuing oversight of the Internal Revenue Service’s implementation of the American Recovery and Reinvestment Act of 2009. The Recovery Act included a number of provisions that encourage the purchase of motor vehicles that operate on clean renewable sources of energy. According to TIGTA’s review, approximately 29 prisoners also received $49,926 in vehicle credits even though they were in prison for all of calendar year 2009.
The erroneous claims TIGTA identified resulted from inadequate IRS processes to ensure information reported by individuals claiming the credits met qualifying requirements for the vehicle year, placed in-service date, and make and model. TIGTA’s review of electronically filed tax returns identified individuals who erroneously claimed the same vehicle for multiple plug-in electric and alternative motor vehicle credits or claimed an excessive number of vehicles for personal use credits.
TIGTA also determined that the IRS cannot track and account for plug-in electric and alternative motor vehicle credits claimed by individuals on paper-filed tax returns because it has not established processes to capture this information from those returns.
The IRS noted that the TIGTA report spotlighted only a fraction of the tax credits it processed. “The IRS is committed to running a balanced program on Recovery-related provisions, making sure we process taxpayer claims quickly and accurately while safeguarding against improper payments,” said a statement forwarded by IRS spokesman Grant Williams. “It is important to note that the erroneous claims identified in this TIGTA report represent only a small fraction of Recovery tax relief—less than 0.02 percent of the $260 billion in Recovery Act tax relief taxpayers received through December 2010. The IRS took immediate action to put additional protections in place to stop improper vehicle payments. We are also taking aggressive steps to recapture the credits people erroneously claimed.”
TIGTA recommended that the IRS develop procedures to disallow credits for vehicles with nonqualifying years, initiate actions to recover erroneous credits identified by TIGTA, and either develop a coding system to identify vehicle makes and models or require the Vehicle Identification Number on the forms used to claim plug-in electric and alternative motor vehicle credits.
The IRS agreed with the recommendations. In addition, IRS management took corrective actions to reduce erroneous claims when process weaknesses were brought to their attention, resulting in an estimated $3.1 million in revenue protected.
“The IRS, along with all federal agencies, is required to ensure that Recovery Act funds are used for authorized purposes and appropriate measures are taken to prevent waste, fraud and abuse,” said TIGTA Inspector General J. Russell George in a statement. “While IRS management did take corrective actions to reduce erroneous claims when TIGTA brought these process weaknesses to its attention, more clearly needs to be done.”
By Michael Cohn
by NFS | Feb 3, 2011 | Archives
Washington, D.C. – The Senate approved an amendment Wednesday to repeal the expanded 1099 information reporting requirements in the health care reform law.
Two similar, but competing amendments were introduced this week by Democratic and Republican lawmakers to be attached to a larger re-authorization bill for the Federal Aviation Administration. One came from Sen. Debbie Stabenow, D-Mich., and the other from Sen. Mike Johanns, R-Neb., who had both introduced earlier attempts to repeal the 1099 reporting requirements.
The two amendments mainly differed in a few words regarding the handling of administrative expenses at the Social Security Administration. To avoid adding to the budget deficit, Stabenow’s amendment authorizes the director of the Office of Management and Budget to cut unnecessary unobligated spending, but exempts the Social Security Administration’s administrative expenses from being cut. There are also differences in the cost estimates of the two amendments and in how they would be offset.
The repeal of the 1099 reporting requirements enjoyed broad bipartisan support. The requirements, which were included in the Patient Protection and Affordable Care Act, would have required businesses to report to the Internal Revenue Service any purchases of goods and services over $600 a year from another business or individual.
Senate Finance Committee Chairman Max Baucus, D-Mont., who has tried several times to get the 1099 reporting requirements repealed, hailed the approval of the amendment containing language exempting the Social Security Administration’s expenses. The Senate voted 81-17 to reject a point of order that had been raised against the Stabenow amendment.
“We heard small businesses loud and clear, and today both parties came together in a bipartisan manner to respond to their concerns,” Baucus said in a statement. “Eliminating these paperwork requirements lets small businesses focus on the critical work of growing their businesses and creating jobs. This amendment is paid for by cutting spending in other areas, but we took the extra steps to ensure that not a thin dime of Social Security money is used. The common-sense solution we passed today delivers the paperwork relief small businesses need while protecting and preserving the crucial Social Security and veterans benefits millions of people in Montana and across the country rely on.”
The larger, $34.5 billion FAA legislation enjoys wide bipartisan support and includes $8 billion for airport construction and infrastructure improvement. It also would establish a whistleblower office at the FAA, upgrade air control technologies, and create a national review board that would travel to FAA offices to perform safety audits.
There was no vote on the Johanns amendment on Wednesday. However, he hailed the passage of the repeal, pointing out that the Stabenow amendment was nearly identical to the language of the Small Business Paperwork Elimination Act that he had introduced, which had attracted 61 co-sponsors, including 16 Democrats.
“I’m thrilled that after multiple attempts to repeal this burdensome mandate, the Senate has finally done the right thing in voting to repeal it,” Johanns said in a statement. “The small business owners and organizations who stepped forward in opposition to this 1099 overreach were instrumental in sustaining the momentum that has resulted in wide bipartisan support. I look forward to continuing the effort to repeal the health care law and finding true solutions to our health care challenges. This is a big victory for our job creators.”
Stabenow also praised passage of the amendment. “Today we provided a common-sense solution for business owners so they can focus on creating jobs, not filling out paperwork for the IRS,” she said. “Since last year, I have worked with my colleagues on both sides of the aisle to address this problem. If left unchecked, 40 million small businesses would see their IRS 1099 paperwork increase 2000 percent.”
By Michael Cohn
by NFS | Feb 1, 2011 | Archives
Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.
- Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
- Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.
- Child and Dependent Care Credit You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses.
- Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
- Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included. For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.
- Children with Earned Income If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.
- Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate. For more information see IRS Publication 929, Tax Rules for Children and Dependents.
- Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income. For more information see IRS Publication 970, Tax Benefits for Education.
- Student loan Interest You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970.
- Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent. For more information see the IRS website.
