September 23, 2013
September 18, 2013
2011, Individual Income Tax Returns (Publication 1304) Now Available
WASHINGTON — The Internal Revenue Service announced the availability of Statistics of Income—2011, Individual Income Tax Returns (Publication 1304), on irs.gov/taxstats. U.S. taxpayers filed 145.4 million individual income tax returns for tax year 2011. This was up 1.7 percent from 2010.
Also in tax year 2011, the adjusted gross income less deficit reported on those returns totaled $8.4 trillion, a 3.5-percent increase from the prior year.
The report is based on a sample drawn from the 145.4 million individual income tax returns filed for tax year 2011 and provides estimates of sources of income, adjusted gross income, exemptions, deductions, taxable income, income tax, modified income tax, tax credits, self-employment tax and tax payments.
Classifications include tax status, size of adjusted gross income, marital status, age and type of tax computation. A brief text reviews the requirements for filing tax returns, explains the changes in tax law and describes the sample used to produce the report. Publication 1304 is currently available for download at irs.gov/taxstats.
For more information about these data, please write to the Director, Statistics of Income Division, RAS:S, Internal Revenue Service, 1111 Constitution Avenue, K-Room 4122, Washington, DC 20224.
September 16, 2013
Kiplinger's Personal Finance
"Get Ready for Obamacare"
"President Obama signed the affordable Care Act into law, its major provisions are nearly ready for prime time. Beginning January 1, insurers will no longer be able to reject people or charge higher rates because of preexisting conditions; the premiums they charge older people will be capped; most plans won't be able to impose annual or lifetime caps on coverage; and to control the cost of insuring the older and sicker, everyone-including the young and healthy- must have health insurance or face a penalty. In 2014 the penalty is 1% of annual income or $95 per person(whichever is higher); the penalty increase to 2.5% of income or $695 per person in 2016.
"If you don't have health insurance through an employer-because you're self-employed or unemployed, you work for an employer that doesn't offer health benefits, or you simply decided to go bare-you may be eligible to receive a subsidy to help reduce your premiums. But to qualify, you have to buy a policy from you state's new health insurance exchange. If you work for an employer that does offer coverage, you can still choose to shop on the exchanges, but you can't get a subsidy if your employer proves "affordable" coverage. Affordable means the employee's share of premiums for employee-only coverage is no more than 9.5% of household income. The employer's plan must also be considered "adequate," which means it covers 60% of the average health care costs in the area(based on a complicated actuarial calculation).
"Because of the health care law's new protections, young, healthy people won't get as big of a break on premiums and are likely to pay higher rates than in the past. Older people may pay less, especially if they have health conditions that jacked up their premiums. But the changes will depend on your state's current rules, competition in the marketplace and the level of coverage you have now...."
"President Obama signed the affordable Care Act into law, its major provisions are nearly ready for prime time. Beginning January 1, insurers will no longer be able to reject people or charge higher rates because of preexisting conditions; the premiums they charge older people will be capped; most plans won't be able to impose annual or lifetime caps on coverage; and to control the cost of insuring the older and sicker, everyone-including the young and healthy- must have health insurance or face a penalty. In 2014 the penalty is 1% of annual income or $95 per person(whichever is higher); the penalty increase to 2.5% of income or $695 per person in 2016.
"If you don't have health insurance through an employer-because you're self-employed or unemployed, you work for an employer that doesn't offer health benefits, or you simply decided to go bare-you may be eligible to receive a subsidy to help reduce your premiums. But to qualify, you have to buy a policy from you state's new health insurance exchange. If you work for an employer that does offer coverage, you can still choose to shop on the exchanges, but you can't get a subsidy if your employer proves "affordable" coverage. Affordable means the employee's share of premiums for employee-only coverage is no more than 9.5% of household income. The employer's plan must also be considered "adequate," which means it covers 60% of the average health care costs in the area(based on a complicated actuarial calculation).
"Because of the health care law's new protections, young, healthy people won't get as big of a break on premiums and are likely to pay higher rates than in the past. Older people may pay less, especially if they have health conditions that jacked up their premiums. But the changes will depend on your state's current rules, competition in the marketplace and the level of coverage you have now...."
September 12, 2013
Give Tax Records a Mid-Year Tune-up this Summer
IRS Summertime Tax Tip 2013-23
During the summer, you may not think about doing your taxes, but maybe you should. Some of the expenses you’ve paid over the past few months might qualify for money-saving tax credits or deductions come tax time. If you organize your tax records now, you’ll make tax filing easier and faster when you do them next year. It also helps reduce the chance that you’ll lose a receipt or statement that you need.
Here are some tips from the IRS on tax recordkeeping.
• You should keep copies of your filed tax returns as part of your tax records. They can help you prepare future tax returns. You’ll also need them if you need to file an amended return.
• You must keep records to support items reported on your tax return. You should keep basic records that relate to your federal tax return for at least three years. Basic records are documents that prove your income and expenses. This includes income information such as Forms W-2 and 1099. It also includes information that supports tax credits or deductions you claimed. This might include sales slips, credit card receipts and other proofs of payment, invoices, cancelled checks, bank statements and mileage logs.
• If you own a home or investment property, you should keep records of your purchases and other records related to those items. You should typically keep these records, including home improvements, at least three years after you have sold or disposed of the property.
• If you own a business, you should keep records that show total receipts, proof of purchases of business expenses and assets. These may include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices. Also include credit card receipts, sales slips, canceled checks, account statements and petty cash slips. Electronic records can include databases, saved files, emails, instant messages, faxes and voice messages.
• If you own a business with employees, you should generally keep all employment-related tax records for at least four years after the tax is due, or after the tax is paid, whichever is later.
• The IRS doesn’t require any special method to keep records, but it’s a good idea to keep them organized and in one place. This will make it easier for you to prepare and file a complete and accurate return. You’ll also be better able to respond if there are questions about your tax return after you file.
• You must keep records to support items reported on your tax return. You should keep basic records that relate to your federal tax return for at least three years. Basic records are documents that prove your income and expenses. This includes income information such as Forms W-2 and 1099. It also includes information that supports tax credits or deductions you claimed. This might include sales slips, credit card receipts and other proofs of payment, invoices, cancelled checks, bank statements and mileage logs.
• If you own a home or investment property, you should keep records of your purchases and other records related to those items. You should typically keep these records, including home improvements, at least three years after you have sold or disposed of the property.
• If you own a business, you should keep records that show total receipts, proof of purchases of business expenses and assets. These may include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices. Also include credit card receipts, sales slips, canceled checks, account statements and petty cash slips. Electronic records can include databases, saved files, emails, instant messages, faxes and voice messages.
• If you own a business with employees, you should generally keep all employment-related tax records for at least four years after the tax is due, or after the tax is paid, whichever is later.
• The IRS doesn’t require any special method to keep records, but it’s a good idea to keep them organized and in one place. This will make it easier for you to prepare and file a complete and accurate return. You’ll also be better able to respond if there are questions about your tax return after you file.
You’ll find more information about recordkeeping for individuals in Publication 17, Your Federal Income Tax. Business owners should check Publication 583, Starting a Business and Keeping Records. Both are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Video and audio files explaining recordkeeping requirements are also available on our IRS video portal at www.irsvideos.gov.
Additional IRS Resources:
• Publication 17, Your Federal Income Tax
• Tax Topic 305 – Recordkeeping
• Publication 583, Starting a Business and Keeping Records IRS YouTube Videos:
• Record Keeping – English | Spanish | ASL
• Publication 17, Your Federal Income Tax
• Tax Topic 305 – Recordkeeping
• Publication 583, Starting a Business and Keeping Records IRS YouTube Videos:
• Record Keeping – English | Spanish | ASL
September 11, 2013
Ten Tax Tips for Individuals Selling Their Home
If you’re selling your main home this summer or sometime this year, the IRS has some helpful tips for you. Even if you make a profit from the sale of your home, you may not have to report it as income.
Here are 10 tips from the IRS to keep in mind when selling your home.
1. If you sell your home at a gain, you may be able to exclude part or all of the profit from your income. This rule generally applies if you’ve owned and used the property as your main home for at least two out of the five years before the date of sale.
2. You normally can exclude up to $250,000 of the gain from your income ($500,000 on a joint return). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013.
3. If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return.
4. If you can’t exclude all of the gain, or you choose not to exclude it, you’ll need to report the sale of your home on your tax return. You’ll also have to report the sale if you received a Form 1099-S, Proceeds From Real Estate Transactions.
5. Use IRS e-file to prepare and file your 2013 tax return next year. E-file software will do most of the work for you. If you prepare a paper return, use the worksheets in Publication 523, Selling Your Home, to figure the gain (or loss) on the sale. The booklet also will help you determine how much of the gain you can exclude.
6. Generally, you can exclude a gain from the sale of only one main home per two-year period.
7. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is usually the one you live in most of the time.
8. Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523 for details.
9. You cannot deduct a loss from the sale of your main home.
10. When you sell your home and move, be sure to update your address with the IRS and the U.S. Postal Service. File Form 8822, Change of Address, to notify the IRS.
For more information on this topic, see Publication 523. It’s available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:
• Publication 523, Selling Your Home• Questions and Answers on the Net Investment Income Tax
• Form 8822, Change of Address
• U.S. Postal Service
September 9, 2013
Give Withholding and Payments a Check-up to Avoid a Tax Surprise
Some people are surprised to learn they’re due a large federal income tax refund when they file their taxes. Others are surprised that they owe more taxes than they expected. When this happens, it’s a good idea to check your federal tax withholding or payments. Doing so now can help avoid a tax surprise when you file your 2013 tax return next year.
Here are some tips to help you bring the tax you pay during the year closer to what you’ll actually owe.
Wages and Income Tax Withholding
- New Job. Your employer will ask you to complete a Form W-4, Employee's Withholding Allowance Certificate. Complete it accurately to figure the amount of federal income tax to withhold from your paychecks.
- Life Event. Change your Form W-4 when certain life events take place. A change in marital status, birth of a child, getting or losing a job, or purchasing a home, for example, can all change the amount of taxes you owe. You can typically submit a new Form W–4 anytime.
- IRS Withholding Calculator. This handy online tool will help you figure the correct amount of tax to withhold based on your situation. If a change is necessary, the tool will help you complete a new Form W-4.
Self-Employment and Other Income
- Estimated tax. This is how you pay tax on income that’s not subject to withholding. Examples include income from self-employment, interest, dividends, alimony, rent and gains from the sale of assets. You also may need to pay estimated tax if the amount of income tax withheld from your wages, pension or other income is not enough. If you expect to owe a thousand dollars or more in taxes and meet other conditions, you may need to make estimated tax payments.
- Form 1040-ES. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you need to pay estimated taxes on a quarterly basis.
- Change in Estimated Tax. After you make an estimated tax payment, some life events or financial changes may affect your future payments. Changes in your income, adjustments, deductions, credits or exemptions may make it necessary for you to refigure your estimated tax.
- Additional Medicare Tax. A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold amount based on the individual’s filing status. For additional information on the Additional Medicare Tax, see our questions and answers.
- • Net Investment Income Tax. A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts. For additional information on the Net Investment Income Tax, see our questions and answers.
See Publication 505, Tax Withholding and Estimated Tax, for more on this topic. You can get it at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
Additional IRS Resources:
- IRS Withholding Calculator tool
- Tax Withholding
- Form W-4, Employee's Withholding Allowance Certificate
- Form 1040-ES, Estimated Tax for Individuals
- Publication 505, Tax Withholding and Estimated Tax
IRS YouTube Videos:
IRS Podcasts:
September 3, 2013
Three Tax Scams to Beware of This Summer
Are you thinking about taxes while you’re enjoying the warm summer months? Not likely! But the IRS wants you to know that scammers ARE thinking about taxes and ways to dupe you out of your money.
Tax scams can happen anytime of the year, not just during tax season. Three common year-round scams are identity theft, phishing and return preparer fraud. These schemes are on the top of the IRS’s “Dirty Dozen” list of scams this year. They’re illegal and can lead to significant penalties and interest, even criminal prosecution.
Here’s more information about these scams that every taxpayer should know.
Here’s more information about these scams that every taxpayer should know.
1. Identity Theft. Tax fraud by identity theft tops this year’s Dirty Dozen list. Identity thieves use personal information, such as your name, Social Security number or other identifying information without your permission to commit fraud or other crimes. An identity thief may also use another person’s identity to fraudulently file a tax return and claim a refund.
The IRS has a special identity protection page on IRS.gov dedicated to identity theft issues. It has helpful links to information, such as how victims can contact the IRS Identity Theft Protection Specialized Unit, and how you can protect yourself against identity theft.
2. Phishing. Scam artists use phishing to trick unsuspecting victims into revealing personal or financial information. Phishing scammers may pose as the IRS and send bogus emails, set up phony websites or make phone calls. These contacts usually offer a fictitious refund or threaten an audit or investigation to lure victims into revealing personal information. Phishers then use the information they obtain to steal the victim’s identity, access their bank accounts and credit cards or apply for loans. The IRS does not initiate contact with taxpayers by email to request personal or financial information. Please forward suspicious scams to the IRS at phishing@irs.gov. You can also visit IRS.gov and select the link “Reporting Phishing” at the bottom of the page.
3. Return Preparer Fraud. Most tax professionals file honest and accurate returns for their clients. However, some dishonest tax return preparers skim a portion of the client’s refund or charge inflated fees for tax preparation. Some try to attract new clients by promising refunds that are too good to be true.
Choose carefully when hiring an individual or firm to prepare your return. All paid tax preparers must sign the return they prepare and enter their IRS Preparer Tax Identification Number (PTIN). The IRS created a webpage to assist taxpayers when choosing a tax preparer. It includes red flags to look for and information on how and when to make a complaint. Visitwww.irs.gov/chooseataxpro.
For the full list of 2013 Dirty Dozen tax scams, or to find out how to report suspected tax fraud, visit IRS.gov.
Additional IRS Resources:
IRS YouTube Videos:
- Protect Yourself From Identity Theft – English | Spanish | ASL
- Are You a Victim of Identity Theft? – English | Spanish | ASL
- Phishing - Malware – English | Spanish | ASL
- Choosing a Tax Preparer – English | Spanish | ASL
IRS Podcasts:
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