Industry Information
- WASHINGTON — People who are awaiting an economic stimulus payment or who have yet to file can avoid common errors that may delay their payment. They also can use the IRS Web site to answer most common questions.
- Revenue Procedure 2008-48 describes the circumstances under which the IRS will treat a child of parents who are divorced, separated, or living apart as the dependent of both.
- Commissioner Doug Shulman Discusses 10-Year Anniversary of the IRS Restructuring and Reform Act of 1998
- Scammers Use e-Mail, Fax to Pose as IRS
- Filing Extensions Changing for Some Business Taxpayers Later this Year
- IRS News - IRS Has Answers to Questions People Are Asking About Economic Stimulus Payments; IRS Urges People to Visit IRS.gov
- IRS News - Information on Stimulus Payments
- IRS News - 1040 Central at www.IRS.gov. Answers to many of your 1040 filing questions.
- IRS News - Guidance Related Protection of Taxpayer Data
- IRS News - Foreclosure Tax Relief Available to Many
- Modernized e-File (MeF) Available for Partnership Returns
- Form 8888 - Taxpayers Have More Direct Deposit Options for Their 2006 Refunds
A Few Tax Law Changes for 2008
Tax Law Changes for 2008
Additional Child Tax Credit
The threshold for the ACTC has been lowered to $8,500 for tax year 2008 only. The threshold would have been $12,050 before passage of EESA. (TAX in the news special edition 10/8/08)
0% Capital Gain
The 5% net long-term capital gain rate drops to 0% to the extent taxpayers are in the 10% or 15% tax brackets. (1/14/08)
Real Property Tax Deduction
Nonitemizers may claim an additional standard deduction for state and local real property taxes paid for tax years 2008 and 2009. The maximum deduction is $500 ($1,000 MFJ). (7/28/08)
Refundable First-Time Homebuyer Credit
Taxpayers who purchased a principal residence April 9, 2008 through June 30, 2009 who have not owned a principal residence in the previous three years may claim a refundable credit equal to 10% of the purchase price. The maximum credit is $7,500 ($3,750 MFS). Eligibility for the credit phases out for modified AGI between $75,000--$95,000 ($150,000--$170,000 MFJ). The credit is repaid in 15 equal installments starting in 2010; repayment is accelerated if the home is sold or no longer used as a principal residence. (7/28/08, 9/22/08)
Recovery Rebate Credit
The rebate that was paid in 2008 will be reconciled on the 2008 tax return. Taxpayers will receive any additional credit due, but need not repay any “excess” credit received. (6/30/08)
Kiddie Tax
Kiddie tax now applies to:
1. Children who are under age 18,
2. Children who are age 18, unless they provide over half of their own support based on earned income, and
3. Children ages 19-23 who are full-time students unless they provide over half of their own support based upon earned income. (5/28/07, 9/15/08)
Depreciation
The maximum §179 deduction for tax years starting in 2008 is $250,000. A phaseout of this amount starts when more than $800,000 of qualifying property is placed in service during the tax year. Additional first-year 50% “bonus” depreciation is the default provision for property placed in service in 2008. (4/21/08, 9/8/08) Note: Special provisions apply to federally declared disaster areas. We will have additional details in an upcoming disaster relief special edition of TAX in the news.
STATUS OF EXPIRED AND EXPIRING PROVISIONS
AMT patch
The provision for higher AMT exemptions and allowance of nonrefundable credits for AMT was modified and extended through 12/31/08.
Nonbusiness energy property credit
The credit for up to $500 of home improvement costs has been extended for 2009 only. The credit is not available for 2008. The 2009 credit includes biomass (corn, wood pellet, etc.) heating systems.
Teacher’s deduction
The $250 educator expense deduction was extended through 12/31/09.
Tuition and fees deduction
The deduction for up to $4,000 of higher education expenses was extended through 12/31/09.
Sales taxes
The deduction for state and local sales taxes in lieu of state and local income taxes was extended through 12/31/09.
Qualified charitable distributions (QCDs) from IRAs
The exclusion of taxable distributions of up to $100,000 from IRA funds contributed directly to a charity was extended through 12/31/09.
Combat pay election
The election to treat nontaxable combat pay as earned income for EITC purposes was made permanent.
ARTICLE SUMMARIES
Commissioner Doug Shulman Discusses 10-Year Anniversary of the IRS Restructuring and Reform Act of 1998
IR-2008-90, July 18, 2008
WASHINGTON –– Good morning. I would like to thank Chris Bergin for the opportunity to be here today to discuss the IRS Restructuring and Reform Act. I greatly enjoyed my work on the Restructuring Commission, and it is a real pleasure to see here today so many familiar faces from that time – even if we all look a little older.
Scammers Use e-Mail, Fax to Pose as IRS
IR-2008-88, July 10, 2008
WASHINGTON — The Internal Revenue Service cautions taxpayers to be on the lookout for a new wave of scams using the IRS name in identity theft e-mails, or phishing, that have circulated during the last two months.
Filing Extensions Changing for Some Business Taxpayers Later this Year
IR-2008-84, June 30, 2008
WASHINGTON — Internal Revenue Service officials today announced a change in the extended due date on certain business returns to help individuals better meet their filing obligations. The change, which reduces the extension period from six to five months, eases the burden on taxpayers who must report information from Schedules K-1 and similar documents on their individual tax returns.
IRS News – IRS will no longer mail 1040ES Quarterly Estimated Tax Payment Vouchers to taxpayers who use Tax Practitioner’s who utilize certain software.
If your client pays 1040ES Quarterly Estimated Tax Payments, please print and provide the client with their 1040ES Payment Vouchers using TaxWorks, as the IRS will no longer be mailing them. You can also help advance this initiative by pointing out the vouchers to your client; and encourage them to use the pre-printed vouchers, explaining that pre-printed vouchers help ensure correct payment posting to their account.
IRS News -Filing Season Opens on Time Except for Certain TaxPayers Potentially Affected by AMT Patch
Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.
IRS News - Foreclosure Tax Relief Available to Many
Special Web Section Unveiled for Homeowners Who Lose Homes; Foreclosure Tax Relief Available to Many
2007 IRS E-File
73 million Americans e-filed their 2006 tax returns. The IRS expects this number to increase substantially in 2007. Read this e-file article for more 2007 e-file information.
Modernized e-File (MeF) Available for Partnership Returns
As of January 8, 2007, partnerships can e-file their 2006 partnership tax returns using the modernized e-File method.
IRS.gov Offers Online Alternative Minimum Tax Assistance
The IRS announced that it has updated its online tool to help taxpayers determine whether or not they owe the Alternative Minimum Tax (AMT). View this article for more information about the Alternative Minimum Tax.
Deducting Travel, Entertainment, and Gift Expenses
Read this fact sheet for an explanation of the rules for deducting travel, entertainment, and gift expenses.
Electronic Payment Options for 2007
Taxpayers can opt to pay their taxes electronically by authorizing a credit card payment or electronic funds withdrawal. These options can be used for a number of items. Read this fact sheet for more information.
Tax Return Preparer Fraud
This fact sheet provides information about return preparer fraud, such as the filing of false income tax returns, false deductions, unallowable credits, excessive exemptions, and the 2007 refund of the long distance telephone tax.
Telephone Tax Refund Requests Too High in Some Cases, Not Claimed Enough in Others
Early filings of the new telephone tax refund show that some taxpayers have requested large and improper amounts. In addition, the IRS is also encountering an unexpectedly low proportion of e-filed returns claiming the telephone excise tax refund. Due to these findings, the IRS is highly encouraging all taxpayers to take advantage of this credit when filing their 2006 tax returns.
ADDITIONAL TAX ARTICLES
Federal Telephone Excise Tax Credit (Form 8913)
The telephone tax refund is a one-time payment available for anyone who paid the long distance telephone tax on landline, cell phone, or Voice over Internet Protocol (VoIP) service. The IRS will refund to you the taxes on long distance service billed to you for the period after February 28, 2003 and before August 1, 2006.
The IRS is making it easy for taxpayers to collect this refund by offering a standard amount between $30 and $60. The amount will be automatically determined based on family or household size, and TaxWorks will automatically add the credit amount to your refund. If you would rather have an exact amount, you can gather 41 months of old phone records, and then make the necessary entries directly on Form 8913. The refund will then be calculated from the amounts you enter.
Customer Account Data Engine (CADE)
CADE is a modernized system designed to replace the IRS Master Files. It is being implemented as a solution to the posting and storage of taxpayer accounts and tax return data.
This is great news because CADE will allow taxpayers to receive their refunds in as little as five days. CADE also makes it possible for Customer Service Representatives at the IRS to have access to accurate and up-to-date information. This will enable the IRS to be more efficient and helpful when taxpayers call with questions.
"For the first time in 40 years, the IRS is processing returns and issuing refunds on a new computer system," IRS Commissioner Mark W. Everson said. "We've waited a long time for this moment. While long overdue, this is an important first step in modernizing our return processing technologies."
Initially, CADE accepted the following types of returns:
- Returns filed by single taxpayers with no dependents
- Returns with a refund or even balance
- Form 1040EZ
- Forms 1040 and 1040A with no attached forms or schedules
By August 25, 2006, CADE had posted in excess of 7.35 million returns, 6.59 millions refund returns, and a total of $3.42 billion in refunds. Sometime in January the CADE population is expected to expand. For the first time CADE will accept:
- Married filers (both jointly and separately)
- Head of household
- Filers with "clean" dependents
- Additional schedules and their supporting forms
