If you need more time, you can file for an automatic 6 month extension with Form 4868. This does not extend the time you have to pay taxes, so if you expect to owe you should include a payment with the extension in order to avoid penalties.
IRS admits improper refunds of $17 billion in 2011
March 28, 2012 By
Earned income credit, adoption credit, and college tuition tax credit refunds were improperly claimed on tax returns according to an internal IRS audit
Taxpayer can deduct interest paid on parent’s home mortgage
March 28, 2012 By
Taxpayer can deduct interest paid on parent’s home mortgage.
In a Tax Court case, a taxpayer won the mortgage interest deduction even though he wasn’t on the loan. In this case, he had made a substantial downpayment on the home, and later moved into the house. (Edosada, TC Summ Op. 2012-17)
Help for Financially Strapped Taxpayers
March 23, 2012 By
Congress keeps Social Security tax reduction for full year
Originally the cut was due to expire at the end of February. The rate for the employee’s share of Social Security tax dropped from 6.2% to 4.2%, for the second year.
IRS expands streamlined Installment Agreements
Good news for taxpayers who owe back taxes. The streamlined installment agreement, which does not require full financial disclosure, is now available for balances due up to $50,000. Previously the threshold was $25,000. And the maximum length of time to pay back has been increased from 60 months to 72 months.
Penalty relief expanded for financial hardship
A new six month grace period from the failure to pay penalty is available for taxpayers experiencing hardship. Wage earners who were unemployed for at least 30 days in 2011, up to the April 17, 2012 filing deadline, qualify. Self employed individuals who lost 25% or more in business income also qualify.
IRS does not require registration for volunteer tax prep programs
January 30, 2012 By
For the first time, the IRS is registering all those who prepare tax returns for a fee. This will allow the government to monitor preparers and issue sanctions for bad behavior. However, the registration requirement does not extend to volunteer preparers who prepare taxes for seniors and low income individuals for free.
Tax Court rules in favor of taxpayer with rental property
January 30, 2012 By
Gains on sales of homes bought for rent, but never actually rented, can be considered passive income. This allows the taxpayer to net the gains against passive losses, which often carry forward unused. (Vandegrift,TC Memo 2012-14)
New Reporting Requirement for Offshore Assets
January 30, 2012 By
Taxpayers with foreign bank accounts have long been required to disclose them to the IRS. Now the disclosure extends to other assets as well. Married couples with foreign assets of at least $100,000 on the last day of the year, or $150,000 at any time during the year must file Form 8938.
Businesses should buy assets by December 31
December 3, 2011 By
If you are planning to buy qualifying assets it makes sense to purchase and put them into service before the end of the year. New assets with useful lives of 20 years or less qualify for 100% bonus depreciation.
Shift income if you can to 2012
December 3, 2011 By
Businesses who are able to delay billings can defer taxes until next year.
LIkewise, if you have the cash on hand to pay bills you have in 2011, you can minimize your taxes for this year
Still more medical expenses allowed
December 3, 2011 By
The IRS has conceded that the cost of gender reassignment surgery is a medical expense. In a 2010 Tax Court case, a man diagnosed with gender identity disorder was allowed to deduct the cost of surgery and hormone therapy to become a woman. The IRS has decided to follow this ruling and not disallow such deductions taken by taxpayers.