IRS Summertime Tax Tip 2015-13

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Ten Key Tax Facts about Home Sales

In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year.

1. Exclusion of Gain.  You may be able to exclude part or all of the gain from the sale of your home. This rule may apply if you meet the eligibility test. Parts of the test involve your ownership and use of the home. You must have owned and used it as your main home for at least two out of the five years before the date of sale.
2. Exceptions May Apply.  There are exceptions to the ownership, use and other rules. One exception applies to persons with a disability. Another applies to certain members of the military. That rule includes certain government and Peace Corps workers. For more on this topic, see Publication 523, Selling Your Home.
3. Exclusion Limit.  The most gain you can exclude from tax is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.
4. May Not Need to Report Sale.  If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.
5. When You Must Report the Sale.  You must report the sale on your tax return if you can’t exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions. If you report the sale, you should review the Questions and Answers on the Net Investment Income Tax on IRS.gov.
6. Exclusion Frequency Limit.  Generally, you may exclude the gain from the sale of your main home only once every two years. Some exceptions may apply to this rule.
7. Only a Main Home Qualifies.  If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.
8. First-time Homebuyer Credit.  If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules, see Publication 523.
9. Home Sold at a Loss.  If you sell your main home at a loss, you can’t deduct the loss on your tax return.
10. Report Your Address Change.  After you sell your home and move, update your address with the IRS. To do this, file Form 8822, Change of Address. You can find the address to send it to in the form’s instructions on page two. If you purchase health insurance through theHealth Insurance Marketplace, you should also notify the Marketplace when you move out of the area covered by your current Marketplace plan.

Additional IRS Resources:

• Publication 5152: Report changes to the Marketplace as they happen English | Spanish

IRS YouTube Videos:

• Selling Your Home – English | Spanish | ASL
• Premium Tax Credit: Changes in Circumstances – English | Spanish |ASL
• Premium Tax Credit – English | Spanish | ASL

IRS Podcasts:

• Selling Your Home – English | Spanish
• Premium Tax Credit – English | Spanish

No Need to Wait Until Oct. 15 Extension Deadline to File

Oct. 15 is the last day to file 2014 tax returns for most people who requested an automatic six-month extension. However, you can file any time before Oct. 15 if you have all your required tax documents. If you are one of the nearly 13 million taxpayers who asked for more time to file your federal tax return this year, you don’t need to wait until Oct. 15 extension deadline to file your return. You can file now if you are ready. As you prepare to file, here are some things that you should know:

• Use IRS Free File.  Even though it is after April 15, nearly everyone can use e-file their tax return for free through IRS Free File. It does the math, checks to see if you qualify for tax breaks that you might miss, and it works best for those who are used to doing their own taxes. The program is available on IRS.gov now through Oct. 15. IRS e-file is easy, safe and the most accurate way to file your taxes. E-file also helps you get all the tax benefits that you’re entitled to claim.
• A Refund May be Waiting.  If you are due a refund, you should file as soon as possible to get it.
• Try Easy-to-Use Tools on IRS.gov.  Use the EITC Assistant to see if you’re eligible for the credit. Use the Interactive Tax Assistant tool to get answers to common tax questions, including new Health Care Law topics. Use these interactive tools to find out if you’re eligible to claim the premium tax credit, qualify for an exemption or if you must make a payment. 
• Use IRS Direct Pay.  If you owe taxes the best way to pay them is with IRS Direct Pay. It’s the simple, quick and free way to pay from your checking or savings account. Just click on the ‘Pay Your Tax Bill’ icon on the IRS home page.
• Understand the Health Care Law’s effect on your taxes. TheAffordable Care Act requires you, your spouse, and your dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a payment when you file. If you purchased coverage through the Marketplace, you may be eligible for the premium tax credit and need to use Form 8962, Premium Tax Credit, to reconcile any advance payments made on your behalf. If you do not file a 2014 tax return you will not be eligible for advance payments or cost-sharing reductions to help pay for your Marketplace health insurance coverage in 2016. Filing as soon as possible, using your most current Form 1095-A, Health Insurance Marketplace Statement, will substantially increase your chances of avoiding a gap in receiving this help.    
• Missed Deadline? File as Soon as You Can. If you did not request an extension by April 15, you should file and pay as soon as you can anyway. This will stop the interest and penalties that you will owe. IRS Direct Pay offers you a free, secure and easy way to pay your tax directly from your checking or savings account. There is no penalty for filing a late return if you are due a refund. The sooner you file, the sooner you’ll get it.
• Don’t Forget the Oct. 15 Deadline.  If you aren’t ready to file yet, remember to file by Oct. 15 to avoid a late filing penalty. If you owe and can’t pay all of your taxes, pay as much as you can to reduce interest and penalties for late payment. Use the Online Payment Agreement tool to ask for more time to pay. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return as soon as you can and pay as much as you can.
• More Time for the Military.  Some people have more time to file. This includes members of the military and others serving in a combat zone. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.

Additional IRS Resources:

• Where’s My Refund
• Make a payment – payment options
• IRS Tax Map
• Affordable Care Act Tax Provisions for Individuals and Families

IRS YouTube Videos:

• IRS Tax Payment Options – English | Spanish | ASL
• Online Payment Agreement – English | Spanish | ASL

IRS Podcasts:

• IRS Tax Payment Options – English | Spanish
• Online Payment Agreement – English | Spanish

Tax advice from the IRS summer 2015-08SP

In This Issue

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Five tax tips pastimes that generate income

Millions of people enjoy hobbies. These can also be a source of income. Some types of hobbies include stamp and coin collection, crafts and horse breeding. You must report on their income tax return you get from a hobby. How you report the income is different from how the report from a business. There are special rules and limits on deductions you can claim a hobby. Here are five tax tips you should know if you get income from a hobby:

1. Business or hobby. A key feature of a business is that you do it for profit. This differs from a hobby that you can do as a sport or recreation. You must consider nine factors (in English) and determine whether it is in this activity for profit. Be sure to make your determination based on facts and circumstances according to the situation. Watch and learn more with Publication 535 , Business Expenses (in English). You can also visit IRS.gov and write "non-for-profit" in the search box.
   
2. Allowable deductions hobby. You may deduct ordinary and necessary expenses pastime. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful and appropriate for the activity. See Publication 535 , Business Expenses (in English) for more information about these rules.
   
3. Spending limits. Generally, you can only deduct the cost of their hobby to the amount of their income pastime. If your expenses are more than your income, you have a loss of pastime. You can not deduct the loss from their other income.
   
4. How to deduct expenses. You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may be classified into three types of expenses. Special rules apply to each type. See Publication 535 to see how they are reported onSchedule A itemized deductions (in English). 
   
5. Use IRS Free File. The rules can be complex and hobbyIRS Free File you can make filing your taxes easier. IRS Free File is available until 15 October. If you earned $ 60,000 or less, you can use the tax software brands. If you earn more, you can use the forms to fill out Free File, the electronic version of IRS paper forms. Free File is available only through the website IRS.gov.

You can get Publication 535 (in English) in IRS.gov/formulariosat any time.

Additional Resources IRS:

• Business or Hobby? Answer implications deductions (in English)
• Publication 525 , Taxable Income and untaxed (in English)
• Publication 529 , Miscellaneous Deductions (in English)
• 17SP publication , The Federal Income Tax
• IRC Section 183 : Activities not engaged in profit (Technical Audit Guide) - Details of the factors for determining 'with' or 'not-for-profit' (in English)

IRS YouTube video:

• Welcome to Free File - Inglés

IRS Summertime Tax Tip 2015-09

Inside This Issue

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Keep Track of Miscellaneous Deductions

Miscellaneous deductions can cut taxes. These may include certain expenses you paid for in your work if you are an employee. You must itemize deductions when you file to claim these costs. So if you usually claim the standard deduction, think about itemizing instead. You might pay less tax if you itemize.  Here are some IRS tax tips you should know that may help you reduce your taxes:

Deductions Subject to the Limit.  You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income. These include expenses such as:

• Unreimbursed employee expenses.
• Job search costs for a new job in the same line of work.
• Some work clothes and uniforms.
• Tools for your job.
• Union dues. • Work-related travel and transportation.
• The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return.

Deductions Not Subject to the Limit.  Some deductions are not subject to the two percent limit. They include:

• Certain casualty and theft losses. In most cases, this rule applies to damaged or stolen property you held for investment.  This may include property such as stocks, bonds and works of art.
• Gambling losses up to the total of your gambling winnings.
• Losses from Ponzi-type investment schemes.

There are many expenses that you can’t deduct. For example, you can’t deduct personal living or family expenses. You claim allowable miscellaneous deductions on Schedule A, Itemized Deductions. For more about this topic seePublication 529, Miscellaneous Deductions. You can get it on IRS.gov/forms at any time.

Additional IRS Resources:

• Tax Topic 508 – Miscellaneous Expenses
• Interactive Tax Assistant tool – Can I Claim My Expenses as Miscellaneous Itemized Deductions on Schedule A (Form 1040)?

IRS YouTube Videos:

• Standard Versus Itemized Deductions - English | Spanish | ASL

IRS Podcasts:

• Standard Versus Itemized Deductions - English | Spanish

Wall Street Journal article- "No, That isn't the IRS Calling. Just Hang Up.

Phone calls by fraud artists posing as Internal Revenue Service employees and demanding money have surged in recent months.
The smart response if you get such a call: Just Hang Up. And if the scammer calls back, hang up again, say Eric Smith, a spokesman for the IRS, and Timothy Camus, an official with the Treasury Inspector General for Tax Administration, a government watch dog known as Tigta. "Often the scammer will move on," Mr. Camus says.
Next step: Report the incident to Tigta at 800-366-4484 or tigta.gov. Also contact the Federal Trade Commission through the FTC Complaint Assistant at FTC.gov, and add "IRS Telephone Scam" to the complaint comments.
The impostors often threaten to arrest the victim if he or she doesn't pay immediately using a prepaid debit card, Mr. Camus said in congressional testimony earlier this month. Other threats involve loss of a driver's license or business license.
The IRS never initiates contact with a taxpayer by phone, email or text message, messrs. Camus and Smith say. The IRS will never call about taxes owed without having first mailed a bill.  Nor will the agency require a taxpayer to use a specific payment method or ask for credit or debit card numbers over the phone. And unpaid taxes won't cause a driver's license to be revoked.
Between 9,000 and 12,000 complaints about such phone scams are filed each week with Tigta.  Since late 2013, some 3,000 victims have lost an average of $5,000, Mr. Camus said. -Laura Saunders

Surf the Net to IRS.gov this Summer

Summertime or anytime, get the tax help and information you need on IRS.gov. Our many online tools and services make it easy for you to do business with the IRS. Here are the top reasons to visit IRS.gov this summer:

• Use IRS Free File.  If you still need to file your 2014 tax return, you can use IRS Free File to e-file for free. Free File is available throughOct. 15. If you earned $60,000 or less you can prepare and e-file your taxes with free tax software. If you made more, use Free File Fillable Forms to e-file for free. This option is the electronic version of IRS paper forms. 
• Check on your refund.  The Where’s My Refund? tool is a fast and easy way to check on your tax refund. Use the IRS2Go mobile app to access it or click on the “Refunds” tab on IRS.gov.
• Try IRS Direct Pay.  If you owe taxes, pay them with IRS Direct Pay. It’s the safe, easy and free way to pay from your checking or savings account. Just click on the “Pay Your Tax Bill” link on the IRS home page.
• Apply to make payments.  If you are not able to pay your tax in full, you may apply for an Online Payment Agreement. Check out the direct debit payment plan. It has a lower set-up fee and you will not miss a payment. With a direct debit plan the IRS will not send you a monthly reminder to send your check.
• Correct your tax withholding.  Did you get a big refund or owed more tax than you expected when you filed your tax return? If so, you may want to change your tax withholding. To make a change, complete and give your employer a new Form W-4, Employee's Withholding Allowance Certificate. The IRS Withholding Calculator tool can help you fill out a new Form W-4.
• Get health care tax information.   The IRS website also has information about the Affordable Care Act tax provisions atIRS.gov/aca. You can visit this site for educational material that describes how the health care law tax provisions affect individuals and businesses. There you will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.
• Check out a charity.  If you donate to a charity, the value of your gift may be deductible. Use the Select Check tool to see if your charity qualifies. 
• Get answers to tax questions.  The Interactive Tax Assistant covers many common tax topics. Type in your question or search terms and it can lead you step-by-step to the answer. The IRS Tax Map gives you a single point of access to tax law information by subject. It integrates tax topics, forms, instructions and publications into one tool.
• Get forms and publications.  View, download and print federal tax forms and publications on IRS.gov/forms at any time.

Additional IRS Resources:

•  Payment Plans, Installment Agreements

IRS YouTube Videos:

• All About IRS.gov – English | Spanish | ASL  
• Welcome to Free File – English
• How to Use the Where's My Refund? Tool – English | Spanish | ASL
• IRS Tax Payment Options – English | Spanish | ASL
• Online Payment Agreement – English | Spanish | ASL
• IRS Withholding Calculator – English | Spanish | ASL

IRS Podcasts:

• How to Use the Where's My Refund? Tool – English | Spanish
• IRS Tax Payment Options – English | Spanish
• Online Payment Agreement – English | Spanish
• IRS Withholding Calculator – English | Spanish

Tax Planning- Why is Tax Planning so important?

The following 5 items are big reasons why everyone should plan for tax time!  When the time to perform is now, the time for preperation is over.
1, The tax payer will not get a big refund and the tax payer will not be blind sided by big tax bill they didn't know about.  Tax law changes every year, have an experience accountant on your side to help you through the changes.
2. The taxpayer will learn available credits to take & deductions to income for Federal & State.  Hire an accountant that; as Dave Ramsey states, "Has the heart of a teacher."  Don't do anything regarding money that you don't understand.  Atleast have a basic understanding of your tax return should look like so you can spot anything out of the ordinary.
3. An IRS transcript will help those who have not kept good records.  If you don't remember what you have filed in the past or maybe you want to know exactly what the IRS has on file on your Social Security Number.  This is a good way to stay on top of your tax history and documents.
4. If you do a budget with your family at home, part of the budget is taxes paid.  You need to know how much taxes you will pay in the comming days, months, years to have a full and complete personal budget.
5. The taxpayer and spouse will be working together as a team to knock this difficult part of their life out.  They will help each other succeed as they do tax planning.

When you do tax planning I promise you, you will improve your personal financial wellness which will help with your marriage and other personal items in your life.

Small businesses will have a good internal controls which is mandatory to succeed.  Here is an article from Dave Ramsey in regards to Small Business Tax Planning:
http://www.daveramsey.com/blog/focus-on-taxes-or-business-growth?ectid=10.20.6014

Please contact us if you want to do some tax planning at:
317-719-1674
cpawoodbury@gmail.com

Thank You.