by NFS | Feb 8, 2011 | Archives
The Social Security benefits you received in 2010 may be taxable. You should receive a Form SSA-1099 which will show the total amount of your benefits. The information provided on this statement along with the following seven facts from the IRS will help you determine whether or not your benefits are taxable.
- How much – if any – of your Social Security benefits are taxable depends on your total income and marital status.
- Generally, if Social Security benefits were your only income for 2010, your benefits are not taxable and you probably do not need to file a federal income tax return.
- If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status.
- Your taxable benefits and modified adjusted gross income are figured on a worksheet in the Form 1040A or Form 1040 Instruction booklet.
- You can do the following quick computation to determine whether some of your benefits may be taxable:
- First, add one-half of the total Social Security benefits you received to all your other income, including any tax exempt interest and other exclusions from income.
- Then, compare this total to the base amount for your filing status. If the total is more than your base amount, some of your benefits may be taxable.
- The 2010 base amounts are:
- $32,000 for married couples filing jointly.
- $25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year.
- $0 for married persons filing separately who lived together during the year.
For additional information on the taxability of Social Security benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Call my office for more details or help.
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
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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
