Help Desk Resource Page
More Tax Tips from H&R
Block and the IRS
H&R Block's tax
facts for 2013
There are some key facts to
remember when filing your tax return for 2013. With the information below,
taxpayers will be more prepared financially for this year.
·
Sticker shock: 2%
payroll tax holiday ended therefore all workers will get less annual take-home
pay compared to last year because the Social Security payroll tax returned to
6.2%. FYI, that's more than $80/month less for someone earning $50,000/year.
·
Millions are eligible to claim casualty losses: Many natural disasters occurred in
2012 including Hurricane Sandy. Claiming a casualty loss as an itemized tax
deduction could mean significant tax savings for millions of taxpayers in a
federal disaster area. Losses in a federally declared disaster area in 2012 can
be claimed on either an amended 2011 return or a 2012 return.
·
Education tax breaks extended: The American Opportunity Credit, extended through
2017, allows eligible taxpayers to claim up to $2,500 for each of the first
four years of college for each student. Through 2013, the Tuition and Fees
Deduction provides a reduction in taxable income of up to $4,000 and the Lifetime
Learning Credit is worth up to $2,000 per return for post-secondary degree
programs. Also, the tuition and fees deduction, worth up to $4,000 per tax
return was extended.
·
Energy tax breaks extended: Taxpayers may claim energy-efficiency tax credits for
the cost of eligible home improvements up to the maximum lifetime credit of
$500. Eligible improvements include windows, doors, and insulation.
·
Health exchanges will use returns for income verification. The 2012 tax return may be used
for income verification for open enrollment for health insurance through
government-sponsored exchanges. This process starts in October.
·
Family friendly tax breaks extended: More than 70 tax provisions that expired Dec. 31,
2011 retroactively were extended which impacts all income levels and includes
many tax breaks for families.
Some
of the more popular extended tax breaks:
·
The Child Tax Credit, set to be cut in half, was extended and is worth $1,000 per dependent
child
·
State and local sales tax itemized deduction–having the greatest impact on the
millions of taxpayers who reside in states with no income tax
·
Educator expense deduction–worth up to $250 per teacher to help cover unreimbursed
classroom expenses
·
Mortgage insurance premium–deductible as residence interest
·
Charitable distributions from IRAs–non-taxable up to $100,000
Tax Filing Status
One of the most common
mistakes taxpayers make is selecting the wrong filing status. Using the right
filing status helps ensure you pay only what you owe in taxes and get back the
full refund you deserve.
IRS filing statuses
Single: Those who are not married may file as single. Marital
status on Dec. 31 of the year for which you are filing your tax return
determines filing status. Taxpayers who are not divorced on Dec. 31 must
continue to use married filing jointly or married filing separately, but some
may file as head of household.
Married filing jointly: Generally, married taxpayers file a joint return
because of the added tax benefits, including eligibility for certain credits.
If your spouse died in the tax year for which you are filing, you can likely
file as married filing jointly.
Married filing separately:
Filing separately can sometimes lower
a tax bill. For example if one of the spouses has a low income and high medical
bills, he/she would benefit from filing separately to claim these expenses as
itemized deductions.
Head of household w/ a
qualifying person: Married and single
taxpayers can sometimes qualify to file as head of household when these
conditions are met:
·
You
are either single or considered unmarried for tax purposes; married taxpayers
are considered single for tax purposes if they have not lived in the same home
as their spouse for at least 6 months of the year
·
Paid
more than half of the cost of keeping your home
·
Had
a qualifying dependent living in your home more than half of the year; if the
qualifying dependent is your parent, the requirement to have lived with you is
waived
Qualifying widow(er) w/ a
dependent child: For up to two years
after a spouse's death, the widow(er) may continue to use the married filing
jointly tax rate by filing as a qualified widow(er) w/ a dependent child, as
long as the taxpayer hasn't remarried
H&R Block's things
to bring to your tax preparer:
There is some information you
can bring with you to your tax preparer that will make the tax return process
less painful. Your tax preparer will need some general information and
knowledge of your income and deductions for the year. To make it easier on your
tax preparer, organize this information by type, general, income, deductions,
and business.
General Information
·
Bring
social security number (s) for yourself, your spouse, and your
dependents
·
Bring
last year's tax returns, both federal and state
·
Tell
your tax preparer about any life changes you've had throughout the past year
like marriage, divorce, a new child, a new home, a new job, etc.
Income documents
·
Bring
all W'2s
·
Bring
all 1099s, such as state tax refunds, nonemployee compensation, etc.
·
Remember
that unemployment income is taxable too, so make sure you bring that
information
Deductions/Credit Records
·
Bring
receipts/statements showing any medical expenses, charitable
contributions, job search expenses, or casualty losses (due to flood, fire, etc.)
that you had during the year
·
If
you are a homeowner, bring your Form 1098 from your mortgage
company–this will show mortgage interest and real estate taxes paid
·
Bring
personal property tax receipts
·
If
you paid tuition for a post-secondary institution, bring this
information
If you own a small
business
·
Records
of your business income
·
Records
of your business expenses: receipts, invoices, bills
·
If
you use your personal car for business, bring the log of business use
·
If
you have a home office, have information to claim this deduction–bring
utility bills, records of repairs done for the home office area
·
Information
about any self-employed health insurance premiums paid for self-employed
retirement plan contributions made during the year
Tax Benefits Tips for Parents
Your children may help you qualify for valuable tax benefits, such as certain
credits and deductions.
- Dependents. In
most cases, you can claim a child as a dependent even if your child was
born anytime in 2012.
- Child Tax Credit. You
may be able to claim the Child Tax Credit for each of your children that
were under age 17 at the end of 2012.
- Child and Dependent Care
Credit. You may be able to claim this credit if you paid
someone to care for your child or children under age 13, so that you could
work or look for work.
- Earned Income Tax Credit. If
you worked but earned less than $50,270 last year, you may qualify for
EITC. If you have qualifying children, you may get up to $5,891 dollars
extra back when you file a return and claim it.
- Adoption Credit. You
may be able to take a tax credit for certain expenses you incurred to
adopt a child.
- Higher education
credits. If you paid higher education costs for yourself or
another student who is an immediate family member, you may qualify for
either the American Opportunity Credit or the Lifetime Learning Credit.
Both credits may reduce the amount of tax you owe. If the American
Opportunity Credit is more than the tax you owe, you could be eligible for
a refund of up to $1,000.
- Student loan interest. You
may be able to deduct interest you paid on a qualified student loan, even
if you do not itemize your deductions.
- Self-employed health
insurance deduction - If you were self-employed and paid for health
insurance, you may be able to deduct premiums you paid to cover your
child. It applies to children under age 27 at the end of the year, even if
not your dependent.
http://www.irs.gov/uac/Newsroom/Eight-Tax-Benefits-for-Parents
Who may claim the child
tax credit?
·
Generally,
a taxpayer who has a qualifying child under age 17 at the end of the calendar
year may claim the child tax credit
·
The
credit may reduce the tax liability by as much as $1,000 from 2002-2012 for
each qualifying child
o
The
additional child tax credit is a credit that taxpayers may claim if they cannot
claim the full amount of the child tax credit because of a tax liability that
is lower than the amount of the credit.
·
The
maximum credit that may be claimed is $1,000 for each qualifying child. The
child tax credit must be reduced if either (1) or (2) applies:
1.
The
amount of tax is less than the credit. If the amount is 0, the credit cannot be
claimed because there is no tax to reduce. However, the taxpayer may be able to
claim the additional child tax credit.
2.
The
taxpayer's modified adjusted gross income (MAGI) is above the amount shown
below for the taxpayer's filing status. The credit id reduced by $50 for each
$1,000 of MAGI above the limits shown below, which are not adjusted for
inflation.
a.
Married
filing jointly-- $110,000
b.
Single,
head of household, or qualifying widow(er)--$75,000
c.
Married
filing separately--$55,000
·
To
claim the child tax credit, file Form 1040 or Form 1040A. The name and
identification number, usually the social security number, must be provided on
the tax return for each qualifying child.
Dependents–U.S.,
Mexico, and Canada
In some cases, taxpayers may
be able to claim the people they support as dependents for the dependent
exemption on their U.S. income tax return.
·
Generally,
a dependent must be a U.S. citizen, U.S. resident alien, U.S. national, or a
resident of Canada or Mexico. (Exceptions are made for certain adopted
children).
To claim dependents living in
Mexico, these specific qualifications must be met:
·
Taxpayers
must provide more than 50 percent of the dependent's eligible living expenses
o
When
calculating support, eligible expenses that may be included are food, lodging,
clothing, education, medical and dental care, recreation and transportation
o
All
qualified expenses must be verified with the appropriate receipts and
documentation
·
The
dependent must be:
o
Child,
stepchild, foster child or their descendent
o
Sibling,
stepsibling, or half sibling
o
Stepparent
o
Niece,
nephew, aunt, uncle
o
Son-in-law,
daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law
·
The
dependent's gross income from U.S. sources may not exceed $3,800 for 2012,
unless disabled
·
The
dependent must not file a joint return for the year unless only to claim a
refund of taxes withheld.
·
In
addition to meeting basic exemption qualifications, the taxpayer must submit a
form W-7 to get an individual tax identification number for the IRS for the
dependent
Tax Exemption and Dependents Guide
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.
- 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.
http://www.irs.gov/uac/Newsroom/Important-Facts-about-Dependents-and-Exemptions
Divorce
·
Marital
status
o
Your
marital status on Dec. 31 of the year you are filing tax returns for is a
determinant in your filing status
o
If
your divorce isn't final, you may want or not want to file a joint return, be
sure to ask your divorce lawyer
o
Being
divorced could qualify you to file as head of household if you meet these two
conditions:
1.
Paid
more than half the cost of keeping up your home
2.
Had
a qualifying dependent living in your home more than half of the year
o
Divorced
taxpayers who do not qualify to use the head of household status will generally
file as single
·
Name
and Address
o
After
a name change, remember to request a new Social Security card with the new name
o
Your
name on your tax return must match what the Social Security Administration has
on file, if it doesn't it could take much longer to process your tax return and
delay the issuance of a tax refund
·
Alimony
o
The
payer must claim the payments as an above-the-line tax deduction
o
The
recipient must claim alimony as a taxable income
o
Making
quarterly estimated tax payments is another option
·
Custodial
parents
o
In
most cases, the custodial parent (parent the child spends more nights w/) will
claim the children as their dependents
o
However,
noncustodial parents can claim children as their dependents with the proper
written consent of the custodial parent
·
Child
Support
o
Child
support is not tax-deductible for the payer, and child support is not
considered income for the recipient and therefore should not be reported on
income tax returns
·
Protection
if you suspect your spouse incorrectly reported their income
Divorce,
separation, and remarriage can prompt people to review their tax history and
sometimes seek relief. These are the types of protection the IRS provides for
eligible spouses:
o
If
one spouse owes back taxes or has other past-due obligations, for which the IRS
can hold back some or all of a joint tax refund, the other spouse can request
injured spouse relief. When injured spouse relief is granted, the injured
spouse may be able to get their portion of a tax refund, while their spouse's
portion would be offset the past-due debts
o
Married
taxpayers who suspect a past joint tax return may be have understated income
and tax without their knowledge may seek relief from joint tax liability by
requesting innocent spouse relief, separation of liability, or equitable relief
(a recent change has removed the two-year time limit for requesting this
specific type of relief, which the IRS says is often sought by people who faced
difficult or intimidating situations, such as domestic abuse
Military pay, potential
tax breaks and filing rules:
Military careers can result
in a complicated tax outlook. Special tax circumstances apply to service
members which means it is very important that they understand the different
types of pay they receive, eligibility for certain tax breaks, and what the filing
rules and deadlines are.
Types of pay taxes
differently
·
Combat
pay is not taxed, but that money can be included as earned income to qualify
for the Earned Income Tax Credit and the Child Tax Credit
·
Excludable
income includes allowances for living, family, death, and moving, and this
income is not included in gross income when calculating taxes.
Tax breaks exist for
everyday expenses and relocations
·
The
Earned Income Tax Credit rules allow military taxpayers to include nontaxable
combat income for purposes of calculating the amount of credit they are
entitled
·
Military
personnel who move due to a permanent change of duty may be eligible to deduct
unreimbursed expenses necessary for the relocation of their household; taxpayers
do not have to itemize their deductions to take this tax break
·
When
the next move is back to civilian life, the job search expenses incurred may be
tax deductible as itemized deductions
·
The
cost and upkeep of military uniforms may be qualified as itemized tax
deductions
·
Members
of the armed forces can deduct reimbursed travel expenses if they travel more
than 100 miles away from home to report for reserve duties
Military Spouse Residency
Relief Act, state tax obligations
·
Service
members retain residency in their home states; spouses also retain residency in
their home state if they move with their military spouse
·
A
civilian will not automatically be granted the same residency of their service
member spouse
·
Instead,
residency must be declared and the spouse must meet 3 requirements to qualify
for relief:
1. Spouse moves with the service member
to the duty state in compliance with military orders
2. Spouse is living in the state solely
to be with the service member
3. Spouse and service member share the
home state
·
Military
spouses should contact their state taxation board or department of revenue
before attempting to change state of residency
·
Military
spouses who meet the requirements should ask their employer to withhold state
income tax for their home state of residency
Tips from the IRS
Some Types of Income Are Not Taxable
Most types of income are taxable, but some are not.
Income can include money, property or services that you receive. Here are some
examples of income that are usually not taxable: child support payments; gifts,
bequests and inheritances; welfare benefits; damage awards for physical injury
or sickness; cash rebates from a dealer or manufacturer for an item you buy;
and reimbursements for qualified adoption expenses.
http://www.irs.gov/uac/Newsroom/Taxable-and-Nontaxable-Income
Still File Tax on Time–Even if you don't have your W-2
It's a good idea to have all your tax documents
together before preparing your 2012 tax return. However, if you have not
received your W-2, first contact your employer and make sure they have your
correct address. After February 14, you may call the IRS. There's a long list
of information you need to provide them. You can see it on the link below. You
should also still file your tax return on time. You can use File Form 4852,
Substitute for Form W-2, Wage and Tax Statement, in place of the W-2. If you
need more time to file, you can get a six-month extension of time. If you
receive the missing W-2 after filing your tax return and the information on the
W-2 is different from what you reported using Form 4852, then you must correct
your tax return. File Form 1040X, Amended U.S. Individual Income Tax Return to
amend your tax return.
http://www.irs.gov/uac/Newsroom/Missing-Your-W2-Here-is-What-to-Do