by NFS | Feb 8, 2013 | Archives
Effective 9:00 am Eastern time on Sunday, February 10, 2013, the IRS will start processing 2012 returns that contain Form 4562, Depreciation and Amortization. This will include the Form 1040-family tax returns, Form 1065/1065-B, Form 1120-family tax returns and Form 990-family tax returns.
On Thursday, February 14, 2013, the IRS plans to start processing 2012 returns that contain Form 8863, Education Credits.
If we have already prepared a return for you with these forms, we can file them as of the above dates. Please let us know if you have any questions.
by NFS | Feb 7, 2013 | Archives
While each individual tax return is unique, there are some tax rules that affect every person who files a federal income tax return. These rules involve dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help you file your 2012 tax return.
- Exemptions reduce taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. You can deduct $3,800 for each exemption you claim on your 2012 tax return.
- Personal exemptions. You usually may claim one exemption for yourself on your tax return. You also can claim one for your spouse if you are married and file a joint return. If you and your spouse file separate returns, you may claim the exemption for your spouse only if he or she had no gross income, is not filing a joint return and was not the dependent of another taxpayer.
- Exemptions for dependents. Generally, you can claim an exemption for each of your dependents. A dependent is either your qualifying child or qualifying relative. If you are married, you may not claim your spouse as your dependent. You must list the Social Security Number of each dependent you claim on your return. See Publication 501, Exemptions, Standard Deduction, and Filing Information, for information about dependents who do not have Social Security numbers.
- Some people do not qualify as dependents. While there are some exceptions, you generally may not claim a married person as a dependent if they file a joint return with their spouse.
- Dependents may have to file. If you can claim someone else as your dependent on your tax return, that person may still be required to file his or her own tax return. Whether they must file a return depends on several factors, including the amount of their gross income (both earned and unearned income), their marital status and any special taxes they owe.
- Dependents can’t claim a personal exemption. If you can claim another person as a dependent on your tax return, that person may not claim a personal exemption on his or her own tax return. This is true even if you do not actually claim that person as your dependent on your tax return. The fact that you could claim that person disqualifies them from claiming a personal exemption.
Remember that a person must meet several tests in order for you to claim them as your dependent. If you need help, let us know, we are here for you.
by NFS | Feb 6, 2013 | Archives
Most living Americans think that an income tax has always been there… but no. In 1913, the U.S. Congress passed the first permanent income tax.
Most living Americans think that an income tax has always been there… but no. In 1913, the U.S. Congress passed the first permanent income tax. Before 1913, federal taxes were enacted, when necessary, for wars or other national needs.
The first known taxes date back to ancient Egypt when grain, livestock or oils were used instead of money to pay what was owed to the government. Even then, the surviving hieroglyphic tablets record how people complained about high taxes. Some things never change.
February 3, 2013 is the 100th birthday of the 16th Amendment, which is the recognized birth of U.S. Federal Income Tax. The history of the 16th Amendment actually dates back to 1861 during the civil war, when Congress passed the Revenue act of 1861. This act included a 3 percent tax on personal incomes over $800 to help pay war expenses.
Ten years later, in 1872, this act was repealed. The idea stuck around though, and in 1894 Congress enacted a 4 percent tax on income over $4,000. The U.S. Supreme Court immediately struck this down in a 5-4 decision.
In 1909, Congress tried again with the idea of an income tax. This time, however, it stuck, and on February 3, 1913 the 16th Amendment was ratified stating, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
In 1913 the first Form 1040 was documented. Congress placed a 1 percent tax on net personal income over $3,000, with an additional tax on those who had net income in excess of $20,000 of between 1 and 6 percent, depending upon income. The first year no taxes were collected; the IRS only checked the forms for accuracy.
During World War I the income tax rose to its highest point at 77 percent to help finance the war. Improvements to the system were made during World War II when Congress introduced payroll withholding and quarterly tax payments. The Alternative Minimum Tax (AMT) was later enacted in 1969.
When the 16th Amendment was first enacted, the deadline was March 1, but even that first tax day deadline was extended because it fell on a Sunday. In 1918 the official filing deadline was changed to March 15. In 1955, the date was change to the familiarly April 15.
Today, the IRS collects more than $1.2 billion in taxes and processes more than 133 million returns annually. And of course, people still complain about high taxes.
by NFS | Feb 1, 2013 | Archives
NEW YORK — The Dow Jones industrial average briefly topped 14,000 on Friday morning, a milestone not seen since before the financial crisis rocked the markets and the world economy.
After rising steadily in early trading thanks to the U.S. jobs report, the Dow briefly crossed 14,000 around 10:07 a.m. EST. The milestone was by a hair — the highest the Dow reached was 14,000.97 — and it lasted only a moment. The index was trading around 13,980 shortly afterward. The other major stock indexes were also up.
The Dow has crossed 14,000 only 15 times in its history. The last time was Oct. 17, 2007.
If the gains hold and it closes above 14,000 on Friday, that would put it in even more rarefied territory: On just nine of those days did it manage to close above 14,000 at the end of trading.
That time more than five years ago seems almost a different era — before signs of the devastating financial crisis were apparent to the average observer.
Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual. Housing prices were starting to ebb, but they hadn’t cratered. The unemployment rate was 4.7 percent, meaning jobs were abundant.
The benchmark is not far from its all-time high, 14,164.53, which it reached on Oct. 9, 2007. A year later, in the depths of the financial crisis, it had shed nearly 40 percent of its value.
The Dow is an index of 30 big companies, and its purpose is to represent how the broader stock market is faring. And while hitting 14,000 would be an important psychological milestone, it wouldn’t be much else.
The stock market is more a representation of how traders are feeling about the economy than the economy’s underlying fundamentals. And many investors don’t even think the Dow is the best way to track the market: They prefer the much bigger Standard & Poor’s benchmark index, which follows 500 companies, because they think it represents a more accurate view of the economy.
“You can hit these milestones, but then it can always end badly,” said Joe Gordon, managing partner at Gordon Asset Management in North Carolina. The fact that small investors are finally getting back in the stock market, he said, makes him think that stocks are due for a downturn.
“It’s meaningless to the average professional,” said Gordon, referring to the 14,000 benchmark. And for workers still unemployed by the financial crisis, he said, “it really means nothing to them.”
At midmorning, the Dow was up 119 points to 13,980. The Standard & Poor’s 500 rose 10 to 1,508. The Nasdaq composite index was up 19 to 3,161.
Overall, the government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with what traders had been expecting. Unemployment inched up to 7.9 percent from 7.8 percent in December. But, encouragingly, the government also reported that hiring over the past two years has been higher than it originally thought.
The jobs number is based on a survey of employers, and the unemployment rate is based on a separate survey of households, which is why they can diverge.
In Europe, tentative and incremental signs of a recovery were enough to push up stocks in France, Britain and Germany. December unemployment in the European Union was lower than analysts had feared, inflation unexpectedly fell, and a survey raised hopes of some growth in the manufacturing sector.
But there were also reminders that the debt problem is far from solved. The Netherlands was also forced to take over one of its major banks, to try to stave off a collapse. In Greece, dock workers extended a strike over the government’s spending cuts.
Among companies making big moves:
— Drugmaker Merck fell nearly 3 percent, down $1.22 to $42.02. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.
— Insurance company MetLife rose more than 1 percent, up 52 cents to $37.86, after saying it plans to buy the largest private pension fund administrator in Chile.
— Zoetis, an animal health business that Pfizer just spun off, made its debut on the stock market. It was up 18 percent, rising $4.63 to $30.62.
By Christina Rexrode
Associated Press
by NFS | Jan 31, 2013 | Archives
If you haven’t tried IRS e-file before, now is the time. Most taxpayers – more than 80 percent – file electronically. The IRS has processed more than 1 billion individual tax returns safely and securely since the nationwide debut of electronic filing in 1990. Fewer people file a paper tax return every year. Here are five good reasons to e-file your tax return:
- Accurate and complete. E-file is the best way to file an accurate and complete tax return. Tax returns that are incomplete or include errors take longer to process.
- Safe and secure. Tax preparers and software companies who e-file must meet strict guidelines and provide the best in encryption technology. You receive an acknowledgement within 48 hours that the IRS received your tax return. If the IRS does not accept your tax return, you will receive notification and can quickly correct your return and resubmit it.
- Faster refunds. An e-filed tax return usually means a faster refund compared to a paper return. The IRS issues most refunds in less than 21 days. If you choose direct deposit, your refund goes directly into your bank account. Combining e-file with direct deposit is the fastest way to get your refund. About three out of four taxpayers who file receive a tax refund. Last year the average refund was about $2,700.
- Payment options. If you owe tax, you can e-file early and set an automatic payment date anytime on or before the April 15 due date. You can pay by check or money order, by debit or credit card, or by transferring funds electronically from your bank account.
- It’s easy. You can e-file on you own through the NFS Do-It-Yourself filing or we can e-file the completed return form our office.
For more information about IRS e-file, please contact our office today.
