ARE YOU READY TO FILE THOSE TAXES

Most taxpayers are chomping at the bit, ready for all those W-2's to arrive so they can get there taxes done. Fielded several calls tonight with anxious taxpayers checking to see if they could file with just there last pay stub. Everybody is in the same boat, times are tough and everyone is short on cash.

Before you make that trip to the tax office, make sure you have all your W-2's, 1099's if you worked as and independent contractor. If you have money in a savings account, bring that interest statement along. Please don't forget the children's social security cards and date of birth, you would be amazed at the number of rejections we get just because the names, birth dates and social security numbers don't match what the Social Security Administration has on file.

Just as a reminder for those new parents out there, if you've just had a child, your child can not be claimed as a dependent without a social security number. If you haven't received their card, contact the Social Security Administration and ask for a print out with the number on it.

If you own your home, there's mortgage interest and real estate tax that can be claimed. How about the drug store, did you get a list of the medication that you brought in 2007? And charitable contributions, do you have receipts, bring them along. Now you better call and make an appointment, the next two weeks are going to be busy with folks like you, ready for that refund.

P Harker Tax Advisor4/Tax Prep
http://www.effectur.com
http://www.blogcatalog.com/directory/business

SOME GOOD READING

Have you ever visited the North Carolina. Gov site? If you want some good reading material it's better than "Cops" or "Law and Order" and I'm a huge fan of both shows.

There are stories after stories of people that have been sentenced to jail for various tax charges and the North Carolina Department of Revenue is not playing around. One story stuck in my mind about a lady that was a professional preparer and was charged with 34 counts of aiding or assisting in the preparation of fraudulent income tax returns and two counts of attempting to evade or defeat the state’s individual income tax.

As part of her sentence, she was also ordered not to prepare or file tax returns for others. The state’s evidence showed that she was a paid tax preparer and completed both original and amended North Carolina individual income tax returns for clients that she knew were false.

She also told several of her clients that she had worked for the Internal Revenue Service and the North Carolina Department of Revenue, although she had never worked for either agency.

Check out the nc.gov site and look under press releases for The Revenue Department

P. Harker, Tax Advisor4/Tax Preparation
www.effectur.com

FRIVOLOUS CLAIMS

The Internal Revenue Service issued a notice that lists four additional erroneous legal positions that taxpayers should refrain from using as an excuse to avoid paying their taxes.

An individual or group may not avoid paying their fair share of taxes by making “frivolous” legal arguments such as those listed in this notice. The IRS publicizes these frivolous claims to help taxpayers understand the law and avoid penalties.

Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.

Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.

The four new frivolous claims pertain to the following:

Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
Certain instances of misuse or excessive use of the section 6421 fuels credit.
In 2006, Congress increased the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

Notice 2008-14 along with additional information providing the truth about frivolous arguments can be found on IRS.gov

And you thought not being compliant was a tough situation to be in.

P Harker, Tax Advisor 4/Tax Preparation
www.effectur.com

CANCELLATION OF DEBT

Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. You have no income from the canceled debt if it is intended as a gift to you. A debt includes any indebtedness for which you are liable or which attaches to property you hold.

If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. If it is a business debt, report the amount on Schedule C or Schedule C-EZ (Form 1040) (or on Schedule F, Profit or Loss From Farming (Form 1040), if the debt is farm debt and you are a farmer).

Form 1099-C. If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. The amount of the canceled debt is shown in box 2.

Interest included in canceled debt. If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible if you paid it. later.

If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3).

Discounted mortgage loan. If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. You must include the canceled amount in your income.

Mortgage relief upon sale or other disposition. If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt, later. Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21.

If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure or repossession), that relief is included in the amount you realize. You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Report any gain on nonbusiness property as a capital gain.

This information is courtesy of the IRS.gov

P. Harker, Tax Advisor 4/Tax Preparation
www.effectur.com

JUST THREE LITTLE LETTERS!

It's amazing that just three little letters can bring a grown man to his knees and a woman to tears. What are those three little letters you ask? IRS

Have you ever been the recipient of there confidential correspondence? I have, and it's not fun and games.

Almost eleven years ago, after a divorce I received one of those letters. That was a reality check, and what brought me to tax preparation. I've always loved accounting, and still can't believe to this day that back then I wasn't more involved in the tax preparation for my family. A long story short, my situation turned out just fine, only because I took action and didn't ignore the Internal Revenue Service.

I am amazed on a daily basis the number of individuals that do ignore the IRS, and then all of a sudden there is a lien or levy.

Recently I took a survey and was surprised by a response of a close friend he said "nothing" when I asked him what he knew about taxes. Further into the conversation he told me that he gathers all his paperwork and drops it off for preparation by a long time preparer who knows him well.

I was glad to hear that he had the good sense to use a professional, considering the number of mistakes made on self-prepared returns. But then that's a whole series in it self.

P. Harker, Tax Advisor4/Tax Prep
www.effectur.com

GAMBLING - WINNINGS & LOSSES

Did you know that gambling winnings are fully taxable and must be reported on your tax return each year?

Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.

Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld income federal taxes from the payment.

Here are some general guidelines on gambling income and losses:

Reporting winnings: The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. You may not use Form 1040A or 1040EZ.

Deducting losses: If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.

It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

This information was provided by the IRS


P. Harker, Tax Advisor4/Tax Prep
www.effectur.com

IRS ADVICE FOR CHOOSING A TAX PREPARER

Eva Rosenberg had this article on her blog site "Tax Mama" courtsey of the Internal Revenue Service. It is well worth repeating.


Taxpayers who pay someone to do their taxes should choose a preparer wisely. If you choose to use a paid tax preparer, it is important that you find a qualified tax professional. Taxpayers are ultimately responsible for everything on their return even when it’s prepared by someone else
The most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions, and other items. By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from later IRS contacts.
While most tax return preparers are professional and honest, taxpayers can use the following tips to choose a preparer who will offer the best service for their tax preparation needs.
• Ask about service fees. Avoid preparers who claim they can obtain larger refunds than other preparers, or those who guarantee a refund or base fees on a percentage of the amount of the refund.
• Plan Ahead. Choose a preparer you will be able to contact after the return is filed and one who will be responsive to your needs.
• Get References. Ask questions and get references from clients who have used the tax professional before. Were they satisfied with the service received?
• Research. Check to see if the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.
• Determine if the preparer’s credentials meet your needs. Does your state have licensing or registration requirements for paid preparers? Is he or she an Enrolled Agent, Certified Public Accountant, or Attorney? If so, the preparer can represent taxpayers before the IRS on all matters – including audits, collections, and appeals. Other return preparers can represent taxpayers only in audits regarding a return signed as a preparer.
You can report suspected tax fraud and abusive tax preparers to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888. Download Form 3949-A from IRS.gov or order by mail at 800-829-3676.



P. Harker, Tax Advisor4

http://www.effectur.com/