Where’s my refund?

Expecting an income tax refund?

You can find your IRS refund here. Have your social security number, filing status, and refund amount ready.

You can find your Nebraska refund here. Have your social security number and refund amount ready.

You can find your Iowa refund here. Have the tax year, social security number, and refund amount ready.

 

Internal Revenue Service (IRS)

Internal Revenue Service (IRS) (Photo credit: cliff1066™)

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MACRS HY Depreciation Schedule

Just to show how big of a dork I am, I wanted to share a spreadsheet that I made in Excel originally, then realized it was simple enough to even be used as a Google Document. It’s set up to put in the asset information you have, then figure the MACRS depreciation based on the half-year convention. The depreciation schedule is on the first tab and the MACRS table it refers to is on the second tab.

MACRS Half Year Convention Depreciation Schedule

 

 

Somebody has to pay taxes

The bar chart presented on the National Debt A...

Image via Wikipedia

A lot of people are getting fired up talking about significant income tax reform. Everyday there is someone posting on Twitter about income tax being unconstitutional or that the founders would be rolling in their graves about it. While that may be a fair point, no one seems to offer a viable solution.

It would be nice to have a more transparent tax system that is easier for individuals and businesses to comply with. That’s where the fair tax and flat tax supporters start their argument. However, neither of these taxes would get a broad base of support when most taxpayers realized they would be paying significantly more than they are now under our convoluted system of deductions, credits, and income exemptions.

The truth is, everyone would like the total tax burden to be lower than it is now. However, they don’t want to give up any government spending programs to achieve this reality. That fact has made it almost politically impossible for any politician to be elected with a platform based in reality. Everybody wants to go to heaven, but no one wants to die to get there.

It’s going to take a national awakening and a big shot of reality to restore fiscal balance to our current system. There really are only two options to choose from: less government support and lower taxes or continued mass welfare programs and acceptance of significantly higher taxes to fund those programs.

So are we hooked on government programs like a crazed addict or can we have an honest discussion about the necessary functions of government and be willing to cut anything that doesn’t fit that definition? I don’t think we can cut enough to make a significant difference without cutting something that hits too close to home for most taxpayers.

I think we need to prepare for significantly higher tax rates in the future just to support the program levels we currently have, and increasing tax rates as the government continues to bloat. Then we need to figure out the rules of the bloating system and figure out how we can get our piece of the taxes back through programs that are increasingly applying to much of the middle class. Big brother wants to hold your hand, and he’ll push you down just to prove you need that hand.

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To Omaha and Council Bluffs Non-profits

The IRS, under a one-time relief program, will allow small tax exempt organizations that have not filed returns for 2007, 2008, and 2009 to keep their tax-exempt status if they file a return by October 15, 2010. They have also published a list of organizations that they expected to hear from, but have not heard from.

The list is published by state and I have included lists for Iowa and Nebraska filtered for Council Bluffs and Omaha noting about 67 organizations in Council Bluffs and about 622 organizations in Omaha that the IRS is looking to hear from. Click here to see the complete listing for each state on the IRS website.

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You need your cable for business?

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Diana Coury (a self-employed insurance broker) found herself on the wrong side of the tax law when she deducted 100% of the expenses associated with the apartment she lived in as business expenses as well as 100% of her automobile expenses.  However, considering her lack of documentation and testimony, it seems the IRS was pretty generous reasonable with the expenses allowed.

The IRS allowed 70% of the taxpayer’s claimed deduction for business use of her home and she offered no testimony in court to substantiate the exclusive business use of any area of her apartment home. I’d say the IRS was generous in offering 70% on this one. The court also inquired as to the business use of the cable package that she claimed should be deductible, but strangely enough she couldn’t come up with one. I guess PBS doesn’t run constant specials on CPE for insurance brokers anymore?

On the automobile expenses, the taxpayer brought in her Quickbooks (or whatever software it was – isn’t Quickbooks kind of like Kleenex for book keeping by now) printout of “Auto expenses” with absolutely no substantiation of the business use of the vehicle. With no mileage log or appointment book, the IRS still allowed a 50% deduction for her automobile expenses, but a far cry from the 100% that she thought should have been deductible. Once again, it seems to me that she had the good fortune of finding someone rather friendly at the IRS to run through her case before she took up her ridiculous positions with the tax court.

Source: Tax Court Memo 2010-132

Closing the tax gap with more 1099s

Beginning in 2012 businesses will be required to report all payments in excess of $600 for services or merchandise to the IRS on form 1099, even payments to corporations.  This was slipped into health care reform and is expected to raise $17 billion over the next 10 years (helping health care reform appear more revenue neutral).

This additional reporting is expected to help close the tax gap by making it harder for businesses and individuals to under report income.  The IRS is awaiting instruction from HHS on how to enforce the reporting requirement, as HHS is charged with interpreting anything under the purview of health care reform.

My concern is the administrative burden and cost of compliance this will place on small businesses.  Businesses are already burdened by the cost of administration of many other taxes and tax compliance issues without dumping even more on them.  Unfortunately, too many people have taken the “no 1099, no income to report” stance, and now we are sadly reduced to this.

More from Accounting Web.

Giving up the personal exemption, not the EIC credit

I have seen this exact error twice in the past two weeks when reviewing the prior year tax returns for new clients.  Divorced parents swapping “claiming the kids” as part of the divorce settlement, trading 8332’s granting the exemption to the noncustodial parent. The prior year tax preparer totally left the second child off of the custodial parent’s tax return, costing the custodial parent significant refund dollars on the Earned Income Credit.

Form 8332 releases the right to claim the dependency exemption for a child. This does affect the calculation of the Child Tax Credit, but the Earned Income Credit follows it’s own checklist that does not require you claim the dependency exemption to include the child in the evaluation of the credit.

All tax professionals worth paying to do your tax return should be on the lookout for this, but if you totally leave your second child off of Turbo Tax, I doubt it has any basis for asking you about adding additional children that you’re not claiming the dependency exemption for.  Be careful on this part of your tax return, don’t cost yourself significant refund dollars.  If you’re unsure about how this should be done on your tax return, seek the help of a professional such as myself.  Also remember that you can amend up to 3 years of tax returns if you discover this error has been going on for a while.

Remember real estate taxes, even if you don’t itemize

Taxpayers who don’t itemize will benefit from an enhanced standard deduction if they have real estate taxes paid or sales tax paid on the purchase of a new vehicle.  However, this enhancement does require a new piece of paperwork, Schedule L, to figure your standard deduction.

It walks you through a series of questions to determine if you qualify to add your real estate taxes paid onto your standard deduction ($500 maximum for single filers and $1,000 maximum for married filers).  It then proceeds to ask you about sales tax paid on the purchase of a new car.  You can add sales taxes paid on the first $49,500 of a new car purchase to your standard deduction for 2009.

If you’re using a tax professional to prepare your taxes and have not itemized in the past, be sure to provide real estate tax information to them as they may not be aware that you own your home and may miss the deduction for real estate taxes paid.

It’s official – take Haiti donations on the 2009 return

A report from the Straights Times indicates that President Obama has signed the relief for Haiti tax bill into law.  While it was anticipated that he would sign it (making this not a great newsworthy event for my new blog), it’s nice to finally have this latest twist in the 2009 tax season settled and written in stone.

For more details check out the write-up from Kay Bell at Don’t Mess With Taxes. Joe Kristan also notes that Iowa is unlikely to conform with this latest update, so Iowa taxpayers taking this deduction on their 2009 Federal tax return will have to wait until 2010 to receive the state tax benefit.