IRS Opens January 19 for filing 2015 personal tax returns

The IRS has announced that the tax extenders legislation will not slow the start of tax season.  The IRS will be open for business on January 19, as planned.  On this day personal tax returns, 1040 forms, can be electronically filed.  All 1040s will begin to be processed at that time so sending in a paper return before that date will not speed up the process.  Paper returns will be held until January 19 and processed at that time.

Tax season will end on Monday, April 18, 2016, because Washington, D.C. will celebrate Emancipation Day and when D.C. closes and the IRS takes a break, it slows down the end of tax season.

The IRS urges tax payers to make certain all tax filing forms have been received before filing a tax return, this included W-2s, 1099s and the new form 1095-A from the Marketplace for tax payers who plan to take the premium tax credit.  I will be writing a separate post on these forms which are new.

E-file and direct deposit are still the quickest and safest ways to file returns and claim refunds.  You can do this yourself, sometimes for free if certain qualifications are met, or for a small fee.  You can also use the services of a tax professional if you prefer.  If you have any questions, please post a question and I'll do my best to supply an answer.

The IRS is open for business and so am I

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The IRS will be open for business on Tuesday, January 20, 2015, to begin processing 2014 tax returns.  Below is some information copied directly from the IRS web site about filing and using electronic filing.  If you don't file electronically, I urge you to do so.  It's quick.  It's easy.  It's free (sometimes).

Contact me if you need me. 

IR-2015-03, Jan. 15, 2015

WASHINGTON — The Internal Revenue Service announced the on-time opening of the nation’s 2015 filing season and highlighted a growing array of online services, including features that help taxpayers understand how the Affordable Care Act will affect them at tax time, along with the availability of the Free File program.

Taxpayers have until Wednesday, April 15, 2015 to file their 2014 tax returns and pay any tax due. The IRS expects to receive about 150 million individual income tax returns this year. Like each of the past three years, more than four out of five returns are expected to be filed electronically.

The IRS Free File program, available at IRS.gov, will open Friday for taxpayers, and the IRS will begin accepting and processing all tax returns on Tuesday, Jan. 20.

This year’s return will include new questions to incorporate provisions of the Affordable Care Act (or ACA). The majority of taxpayers - more than three out of four – will simply need to check a box to verify they have health insurance coverage. For the minority of taxpayers who will have to do more, IRS.gov/aca features useful information and tips regarding the premium tax credit, the individual shared responsibility requirement and other tax features of the ACA.

“Our employees will be working hard again this season to help the nation’s taxpayers,” IRS Commissioner John Koskinen said. “We encourage people to use the tools and information available on IRS.gov, particularly given the long wait times we anticipate on our phone lines. As always, taxpayers can benefit by filing electronically.”

Koskinen announced that taxpayers can begin preparing their returns using the Free File system on Friday, Jan. 16. Available only at IRS.gov, Free File offers two filing options:

• Brand-name software, offered by IRS’ commercial partners to about 100 million individuals and families with incomes of $60,000 or less; or
• Online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels and especially useful to people comfortable with filling out their own returns.

E-file, when combined with direct deposit, is the fastest way to get a refund. More than three out of four refund recipients now choose direct deposit. People who e-file make fewer mistakes, and it costs nothing for those who choose Free File.

In all, 14 software companies will be participating in this year’s Free File program. Additional details about the specific Free File offerings will be available tomorrow on the front page of IRS.gov when Free File becomes available.

Taxpayers who purchase their own software can also choose e-file, and most paid tax preparers are now required to file their clients’ returns electronically. In addition to Free File, commercial software companies also are currently available for taxpayer use.

The IRS will begin accepting and processing all returns — whether e-file, Free File or paper tax returns — on Jan. 20.

Like last year, the IRS expects to issue more than nine out of 10 refunds within 21 days. Again, the fastest way to get a refund is to e-file and choose direct deposit. It takes longer to process paper returns and in light of IRS budget cuts resulting in a smaller staff, it will likely take an additional week or more to process paper returns meaning that those refunds are expected to be issued in seven weeks or more.

Koskinen said, “If you haven’t already, you should consider filing electronically. It’s fast, accurate and the best way to get your refund quickly.”

Koskinen also strongly encouraged taxpayers to visit IRS.gov as a first stop for information ranging from the status of their refunds to basic tax information. He cautioned taxpayers that recent budget reductions will mean long wait times on the phone, routinely topping 30 minutes.

Information on IRS.gov and using tax software and e-file are among the options that can help people with questions about the individual shared responsibility requirement included in the Affordable Care Act, which is new to the Form 1040 this filing season.

The IRS will never call you. Never. Beware of scam.

I believe I have written about this before but it bears repeating.  The IRS will never call you.  Never.  Never.  Never.  The IRS agent wants to know that he is talking to the taxpayer in question and he can't know that if he makes a phone call.

If the IRS contacts you it will be with a Registered Letter that you will have to sign for.  That's the way they work.  They do not want the taxpayer to have the option or ability to say, "I didn't know I owed this tax." or "I was never contacted about this matter."

If they call, they could be talking to anyone claiming to be you or it could be you and you'll lie about it later.  Not that you would ever do that, but the IRS wants to make sure.

So, if anyone calls saying they are from the IRS and you need to pay some taxes you didn't know about over the phone, just hang up the phone.  Or start laughing and hang up the phone.  Or better yet tell the caller that you'll need to talk to your CPA and ask for the caller's contact information so you can get back to them.  Then hang up and call the police.

And that's another thing, after the IRS doesn't call you, they NEVER take tax payments over the phone by credit card.  YOU can contact the IRS payment system  --  the Electronic Federal Tax Payment System (EFTPS) either via phone or computer to make a payment if you wish, but the IRS never calls and they never ask for money over the phone.  They don't do that.

The IRS will never call you.

IRS to recognize same sex marriages on September 16, 2013.

This came in today from Karen Brosi at Western CPE.  She has done all the work but I will make some comments, especially as this change pertains to Tennessee tax payers. Karen Brosi All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes   In late August 2013, the U.S. Department of the Treasury and the IRS ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage. Tennessee doesn't recognize same sex marriages.  If a same sex couple marries in a state that recognizes same sex marriages, then Tennessee still will not recognize the marriage.  And Tennessee taxes, such as the Hall Tax on investment income, would still have to be filed separately as if the spouses were still single. Rev. Rul. 2013-17 implements federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act. Under the ruling same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit. Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law. Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status. Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations. I don't advise rushing off to amend past returns without a great deal of careful analysis.  When a tax return is amended the statute of limitations starts again from the date amended.  This may not mean a problem at all.  I would analyze if the amount of refund resulting from amending the return is worth extending the statute of limitations on the tax return.  Extending the statute of limitations means the return will have a longer time for possible IRS audits.  Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income. Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return. Future Guidance.  Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling. I don't know that this would cause any need for refunds to Tennessee employers since Tennessee doesn't recognize same sex marriages.  On the other hand, these deductions are for federal business income tax returns, so this might very will apply to Tennessee businesses.  If a business owner in Tennessee wants me to research it, I will.  I will also keep my eyes open for any information that comes from the Tennessee Department of Revenue regarding this issue. I have a feeling they will make a statement and when they do, I'll let you know. Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so (as long as the statute of limitations for the earlier period has not expired).

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