Distinguish yourself from the rest. Stand out. Earn a credential or designation that attests to your competency as a professional tax preparer. Consider the National Tax Training School’s AFSP.
What is the Annual Filing Season Program – AFSP? Let’s see what the IRS has to say,
“Return preparers who complete the requirements for the Annual Filing Season Program will be issued a Record of Completion that they can display and use to differentiate themselves in the marketplace if desired.”
Not only do you differentiate yourself with a “Record of Completion,” there is another benefit too…
“Preparers who complete the AFSP will also be included in a new public database that will be added to IRS.gov by January 2015 for taxpayers to use in searching for qualified tax return preparers.”
You even get recognition on the IRS.gov website.
So get started with the National Tax AFSP distance learning/online program that will give you all you need to earn this coveted IRS Annual Filing Season Program – AFSP “Record of Completion.”
Attention CA Tax Preparers!
Don’t forget to fulfill your CTEC continuing education requirements.
National Tax is proud to announce that our California CTEC CPE courses have been fully revised for 2015 and are now available. These self-study courses are available at a very attractive price and are available in print or online versions. Study and complete the requirements on your own time.
Tax preparers in the state of California are required to be registered with the state.
April 15 Deadline – What to do if you need more time to file your taxes.
The April 15 tax deadline is coming up. If you need more time to file your taxes, you can get an automatic six month extension from the IRS. Here are a couple of things to know about filing an extension:
- Use Form 4868. You can request an extension by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must mail this form to the IRS by April 15. Form 4868 is available on IRS.gov/forms at any time.
- More time to file is not more time to pay. An extension to file will give you until Oct. 15 to file your taxes. It does not give you more time to pay your taxes. You still must estimate and pay what you owe by April 15 to avoid a late filing penalty. You will be charged interest on any tax that you do not pay on time. You may also owe a penalty if you pay your tax late.
- Use IRS Direct Pay. The safe, fast and easy way to pay your tax is with IRS Direct Pay. Visit IRS.gov/directpay to use this free and secure way to pay from your checking or savings account. You also have other electronic payment options. The IRS will automatically process your extension when you pay electronically. You can pay online or by phone.
- IRS helps if you can’t pay all you owe. If you can’t pay all the tax you owe, the IRS offers you payment options. In most cases, you can apply for an installment agreement with the Online Payment Agreement tool on IRS.gov. You may also file Form 9465, Installment Agreement Request. If you can’t make payments because of a financial hardship, the IRS will work with you.
April 1 Deadline to Take Required Retirement Plan Distributions
The Internal Revenue Service today reminded taxpayers who turned 70½ during 2014 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Wednesday, April 1, 2015.
The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457 plans.
The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2014 and receives the first required payment on April 1, 2015, for example, must still receive the second RMD by Dec. 31, 2015.
Affected taxpayers who turned 70½ during 2014 must figure the RMD for the first year using the life expectancy as of their birthday in 2014 and their account balance on Dec. 31, 2013. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the Appendices to Publication 590-B.
Most taxpayers use Table III (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2014 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary.
Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions.
The IRS encourages taxpayers to begin planning now for any distributions required during 2015. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2015 RMD, this amount would be on the 2014 Form 5498 that is normally issued in January 2015.
Employers: Don’t Overlook the Small Business Health Care Tax Credit
Do you own or run a small business or tax-exempt group with fewer than 25 full-time employees? If you do, you should know that the Small Business Health Care Tax Credit can help you provide insurance to your employees. You may be able to save on your taxes if you paid for at least half of their health insurance premiums. Here are several things that you should know about this important credit:
- Maximum Credit. For tax years beginning in 2014 and after, the maximum credit is 50 percent of premiums paid by small business employers. The limit is 35 percent of premiums paid by tax-exempt small employers, such as charities.
- Number of Employees. You may qualify if you had fewer than 25 employees who work full-time, or a combination of full-time and part-time. For example, two half-time employees equal one full-time employee for purposes of the credit.
- Qualified Health Plan. You must have paid premiums for your employees enrolled in a qualified health plan offered through a Small Business Health Options Program, or SHOP, Marketplace. There are limited exceptions to this requirement.
- Average Annual Wages. To qualify for the credit, the average annual wages of your full-time equivalent employees must have been less than $51,000 in 2014. The IRS will adjust this amount for inflation each year.
- Half the Premiums. You must have paid a uniform percentage of the cost of premiums for all employees. The amount you paid must be equal to at least 50 percent of the premium cost of the insurance coverage for each employee.
- Two Year Limit. An eligible employer may claim the credit for any two-consecutive taxable years, beginning in or after 2014. This credit can be claimed for two consecutive years, even if you claimed the credit at any point from 2010 through 2013.
- Tax Forms to Use. All employers use the Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For-profit businesses claim the credit on Form 3800, General Business Credit. Tax-exempt organizations claim it on Form 990-T, Exempt Organization Business Income Tax Return.
If you are a for-profit business and the credit is more than your tax liability for the year, you can carry the unused credit back or forward to other tax years. If you are a tax-exempt employer, you may be eligible to receive the credit as a refund. This applies so long as it does not exceed your income tax withholding and Medicare tax liability for the year.
You can learn more about General Business Tax Credits in the Federal Tax Course.
Education Tax Credits: Two Benefits to Help You Pay for College
Did you pay for college in 2014? If you did it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. The credits may reduce the amount of tax you owe on your tax return. Here are some important facts you should know about education tax credits.
American Opportunity Tax Credit:
- You may be able to claim up to $2,500 per eligible student.
- The credit applies to the first four years at an eligible college or vocational school.
- It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
- It is available for students earning a degree or other recognized credential.
- The credit applies to students going to school at least half-time for at least one academic period that started during the tax year
- Costs that apply to the credit include the cost of tuition, books and required fees and supplies.
- Lifetime Learning Credit:
- The credit is limited to $2,000 per tax return, per year.
- The credit applies to all years of higher education. This includes classes for learning or improving job skills.
- The credit is limited to the amount of your taxes.
- Costs that apply to the credit include the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.
For both credits:
- The credits apply to an eligible student. Eligible students include yourself, your spouse or a dependent that you list on your tax return.
- You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.
- Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different than what you actually paid. For example, the form may not include the cost of books that qualify for the credit.
- You can’t claim either credit if someone else claims you as a dependent.
- You can’t claim both credits for the same student or for the same expense, in the same year.
- The credits are subject to income limits that could reduce the amount you can claim on your return.
Education tax credits are covered in the Lesson 18 of the Federal Income Tax Course
Checking the status of your IRS Tax Refund
WASHINGTON — The Internal Revenue Service today reminded taxpayers that they can quickly check the status of their tax return and refund through “Where’s My Refund?”
Taxpayers who have not yet received their refunds can use “Where’s My Refund?” on IRS.gov or on the smartphone application IRS2Go 5.0 to find out about the status of their income tax refunds.
Initial information will normally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after the taxpayer mails a paper return to the IRS. The system updates only once every 24 hours, usually overnight, so there’s no need to check more often.
“Where’s My Refund? is the quickest and easiest way for taxpayers to get important information about their tax refund,” said IRS Commissioner John Koskinen. “Taxpayers need to remember that the Where’s My Refund system is updated every 24 hours, usually overnight, so there’s no need to check more than once a day.”
So far this year, “Where’s My Refund?” has received more than 179 million hits on IRS.gov.
Taxpayers should have their Social Security number, filing status and exact refund amount when accessing Where’s My Refund?
Other tips in the Tax Time Guide series are available on IRS.gov.
See this AP Press Article:
IRS cuts taxpayer services as filing returns gets harder
By STEPHEN OHLEMACHER, Associated Press
WASHINGTON (AP) — The IRS is cutting taxpayer services to historically low levels just as President Barack Obama’s health law will make filing a federal tax return more complicated for millions of families.
Got a question for IRS? Good luck reaching someone by phone. The tax agency says only half of the 100 million people expected to call this year will be able to reach a person.
Callers who get through may have to wait on hold for 30 minutes or more to talk to a person who will answer only the simplest questions.
“As we enter 2015, we are deeply concerned that taxpayers are receiving markedly less assistance from the IRS now than at any time in recent history,” said a report released Wednesday by agency watchdog Nina E. Olson.
IRS Commissioner John Koskinen says budget cuts are forcing the agency to reduce taxpayer services and other functions. The number of audits will decline, technology upgrades will be delayed and the agency might be forced to shut down and furlough workers for two days later this year, Koskinen said.
“People who file paper tax returns could wait an extra week — or possibly longer — to see their refund,” Koskinen said in an email to IRS employees this week. “We now anticipate an even lower level of telephone service than before, which raises the real possibility that fewer than half of taxpayers trying to call us will actually reach us.”
“Those who do reach us will face extended wait times that are unacceptable to all of us.” Koskinen added.
Congress cut the IRS budget by $346 million for the budget year that ends in September 2015. The $10.9 billion budget is $1.2 billion less than the agency received in 2010.
Republicans in Congress adamantly oppose Obama’s health law, so some have been working to starve the IRS of funds just as its role in implementing the law ramps up.
Olson is the National Taxpayer Advocate, an independent office within the Internal Revenue Service. She released her annual report to Congress Wednesday, less than a week before the start of tax filing season on Tuesday.
She said taxpayers will suffer from service reductions.
“Without adequate support, many taxpayers will be frustrated, some will make potentially costly mistakes, others will incur higher compliance costs when forced to seek information and assistance from tax professionals,” Olson wrote.
“Still others,” Olson said, “will simply give up and not file.”
For the first time, tax filers will have to report information about their health insurance during the previous year. For people who get health coverage through work or government programs like Medicaid, it will mean simply checking a box on their tax return.
Others who got insurance through state and federal marketplaces will have to file a new form, while people who received government subsidies to help pay premiums will have to provide more detailed information.
People who didn’t have health insurance last year face fines unless they qualify for a waiver, which requires more paperwork.
The subsidies were based on projected family incomes, so families will have to check to see if their actual incomes were higher or lower. If their incomes were higher than expected, they might have to pay back some of the subsidy, either through a smaller tax refund or a payment.
If their incomes were lower, they might qualify for a larger subsidy, which would come in the form of a larger tax refund.
The Internal Revenue Service issued a consumer alert providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.
These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.
“These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”
The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.
The IRS will never:
- Call you about taxes you owe without first mailing you an official notice.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone.
- Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
- If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
- If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
- If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.
Remember, too, the IRS does not use email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to www.irs.gov and type “scam” in the search box.
WASHINGTON ― The Internal Revenue Service announced the adoption of a “Taxpayer Bill of Rights” that will become a cornerstone document to provide the nation’s taxpayers with a better understanding of their rights.
The Taxpayer Bill of Rights takes the multiple existing rights embedded in the tax code and groups them into 10 broad categories, making them more visible and easier for taxpayers to find on IRS.gov.
Publication 1, “Your Rights as a Taxpayer,” has been updated with the 10 rights and will be sent to millions of taxpayers this year when they receive IRS notices on issues ranging from audits to collection. The rights will also be publicly visible in all IRS facilities for taxpayers and employees to see.
“The Taxpayer Bill of Rights contains fundamental information to help taxpayers,” said IRS Commissioner John A. Koskinen. “These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”
The IRS released the Taxpayer Bill of Rights following extensive discussions with the Taxpayer Advocate Service, an independent office inside the IRS that represents the interests of U.S. taxpayers. Since 2007, adopting a Taxpayer Bill of Rights has been a goal of National Taxpayer Advocate Nina E. Olson, and it was listed as the Advocate’s top priority in her most recent Annual Report to Congress.
“Congress has passed multiple pieces of legislation with the title of ‘Taxpayer Bill of Rights,'” Olson said. “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”
The tax code includes numerous taxpayer rights, but they are scattered throughout the code, making it difficult for people to track and understand. Similar to the U.S. Constitution’s Bill of Rights, the Taxpayer Bill of Rights contains 10 provisions. They are:
- The Right to Be Informed
- The Right to Quality Service
- The Right to Pay No More than the Correct Amount of Tax
- The Right to Challenge the IRS’s Position and Be Heard
- The Right to Appeal an IRS Decision in an Independent Forum
- The Right to Finality
- The Right to Privacy
- The Right to Confidentiality
- The Right to Retain Representation
- The Right to a Fair and Just Tax System
The rights have been incorporated into a redesigned version of Publication 1, a document that is routinely included in IRS correspondence with taxpayers. Millions of these mailings go out each year. The new version has been added to IRS.gov, and print copies will start being included in IRS correspondence in the near future.
The timing of the updated Publication 1 with the Taxpayer Bill of Rights is critical because the IRS is in the peak of its correspondence mailing season as taxpayers start to receive follow-up correspondence from the 2014 filing season. The publication initially will be available in English and Spanish, and updated versions will soon be available in Chinese, Korean, Russian and Vietnamese.
The IRS has also created a special section of IRS.gov to highlight the 10 rights. The web site will continue to be updated with information as it becomes available, and taxpayers will be able to easily find the Bill of Rights from the front page. The IRS internal web site for employees is adding a special section so people inside the IRS have easy access as well.
As part of this effort, the IRS will add posters and signs in coming months to its public offices so taxpayers visiting the IRS can easily see and read the information.
“This information is critically important for taxpayers to read and understand,” Koskinen said. “We encourage people to take a moment to read the Taxpayer Bill of Rights, especially when they are interacting with the IRS. While these rights have always been there for taxpayers, we think the time is right to highlight and showcase these rights for people to plainly see.”
“I also want to emphasize that the concept of taxpayer rights is not a new one for IRS employees; they embrace it in their work every day,” Koskinen added. “But our establishment of the Taxpayer Bill of Rights is also a clear reminder that all of the IRS takes seriously our responsibility to treat taxpayers fairly.
Koskinen added, “The Taxpayer Bill of Rights will serve as an important education tool, and we plan to highlight it in many different forums and venues.”