Ten IRS Income Tax Benefits for Parents to Get Tax Refunds

Your children may help you qualify for some tax benefits. Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.

1.     Dependents In most cases, a child can be claimed as a dependent in the year they were born.

2.     Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit.

3.     Child and Dependent Care Credit You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work.

4.     Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund.

5.     Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child.  Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included.

6.     Children with Earned Income If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.

7.     Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate.

8.     Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.

9.     Student loan Interest You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.

10.   Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent.

Efile your IRS Income Tax Return and get your Tax Refund directly deposited to your bank account.

What types of educational expenses are deductible on my IRS Income Tax Return?

Deductible educational expenses include: Amounts spent for tuition, books, supplies, laboratory fees and similar items. Transportation and travel expenses to attend qualified educational activities may also be deductible. Efile your tax return and receive your tax refund FAST

How to Get Your Prior Year Tax Information from the IRS

Taxpayers who need certain prior year tax return information can obtain it from the IRS. Here are nine things to know if you need federal tax return information from a previously filed tax return.

1.     There are three options for obtaining free copies of your federal tax return information – on the web, by phone or by mail.

2.     The IRS does not charge a fee for transcripts, which are presently available for the current tax year as well as the past three tax years.

3.     A tax return transcript shows most line items from your tax return as it was originally filed, including any accompanying forms and schedules.  It does not reflect any changes made after the return was filed.

4.     A tax account transcript shows any later adjustments either you or the IRS made after the tax return was filed. This transcript shows basic data – including marital status, type of return filed, adjusted gross income and taxable income.

5.     To request either transcript online, go to http://www.irs.gov and look for our new online tool called Order A Transcript. To order by phone, call 800-908-9946 and follow the prompts in the recorded message.

6.     To request a 1040, 1040A or 1040EZ tax return transcript through the mail, complete IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses, partnerships and individuals who need transcript information from other forms or need a tax account transcript must use the Form 4506T, Request for Transcript of Tax Return.

7.     If you order online or by phone, you should receive your tax return transcript within 5 to 10 days from the time the IRS receives your request. Allow 30 calendar days for delivery of a tax account transcript if you order by mail using Form 4506T or Form 4506T-EZ.

8.     If you still need an actual copy of a previously processed tax return, it will cost $57 for each tax year that you order.  Complete Form 4506, Request for Copy of Tax Return, and mail it to the IRS address listed on the form for your area.  Copies are generally available for the current year as well as the past six years. Please allow 60 days for actual copies of your return.

9. Get your tax return efiled safely and fast,

Preparing Your IRS Tax Return: Efile Your Taxes Online

If you pay someone to prepare your tax return, choose that preparer wisely. Taxpayers are legally responsible for what’s on their own tax returns even if prepared by someone else. So it is important to choose carefully when hiring an individual or firm to prepare personal returns. Most return preparers are professional, honest and provide excellent service to their clients. Here are a few points to keep in mind when someone else prepares your return:

• A Paid Preparer is required by law to sign the return and fill in the preparer areas of the form. The preparer should also include their appropriate identifying number on the return. Although the Preparer signs the return, you are responsible for the accuracy of every item on your return. In addition, the preparer must give you a copy of the return.
• Review the completed return to ensure all tax information, your name, address and Social Security number(s) are correct. Make sure that none of these spaces is left blank.
• Review and ensure you understand the entries and are comfortable with the accuracy of the return before you sign.
• Never sign a blank return, and never sign in pencil.
• Many online tax efile services may provide you just what you need at a nominal charge.  Before hiring an expensive tax preparer, visit 123 Easy Tax Filing LLC and see if you qualify.

Affordable Health Care Act IRS Tax Provisions

The Affordable Care Act was enacted on March 23, 2010, and contains some tax provisions that take effect this year. The following is a partial list of provisions now in effect. Small Business Health Care Tax Credit This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees for health insurance and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Changes to Flexible Spending Arrangements Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.

You Can Deduct Health Insurance for self-employment taxes in 2010

Generally, small business owners may not deduct the cost of health insurance when calculating self-employment tax. However, under President Obama’s Small Business Jobs Act and subject to specific statutory limitations (i.e. deduction is not available if self-employed individual is eligible to participate in an employer-subsidized health plan maintained by the employer of the taxpayer or the taxpayer’s spouse), business owners can deduct the cost of health insurance for themselves and their family in the calculation of their 2010 self-employment tax.

Self-employment tax is generally calculated using the Form 1040 Schedule SE, Self Employment Tax.

Efile your IRS income taxes safely and securely and get your tax refund FAST with direct deposit.

How You Can Pay Your Delinquent IRS Taxes: Offer in Compromist

You may be able to negotiate a settlement with the IRS and pay over time.

You may qualify for an Offer in Compromise if you are unable to pay your taxes in full or if you are facing economic hardship or other special circumstances. Offer in Compromise Application Fee – Your offer must include the $150 application fee.  If  you are requesting alow-income exception of the fee, your offer must include a completed Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment. Offers received without the $150 fee or a complete Form 656-A will not be accepted for processing.  Please see Step Four on Page 12 of Form 656-B, Offer in Compromise Booklet, for more information on the application fee and to determine if you qualify for the exception. • If you aren’t granted an Offer-in-Compromise and you are still unable to pay your delinquent taxes, you still may be eligible for an installment agreement. File Form 433-D and pay a $105 user fee, which we have authority to deduct from your first payment(s) ($52 for Direct Debit). • If you default on your installment agreement, you must pay a $45 reinstatement fee if the IRS agrees to reinstate the agreement. Efile your Income Taxes and get your refund faster!

IRS Tax Information Now Found on Twitter and YouTube

The Internal Revenue Service announced the availability of expanded Twitter feeds to share timely information with taxpayers and the tax professional community.

The IRS Twitter news feed, @IRSnews, provides the latest federal tax news and information for taxpayers. The focus of the IRS Twitter messages will be on easy-to-use information, including tax tips, tax law changes and important IRS programs such as e-file, the earned income tax credit and “Where’s My Refund.” Anyone with a Twitter account can follow @IRSnews by going to http://twitter.com/IRSnews.

Another important IRS Twitter feed, @IRStaxpros, is designed for the tax professional community. Follow @IRStaxpros by going to http://twitter.com/IRStaxpros. The IRS also tweets tax news and information in Spanish at @IRSenEspanol. Follow this Twitter feed by going to http://twitter.com/IRSenEspanol.

The IRS Twitter feeds will work in conjunction with IRS.gov and the IRS YouTube channels to bring IRS information direct to taxpayers. Since August of 2009, there have been more than 1 million views of videos on the IRSvideos (http://www.youtube.com/irsvideos), IRS multilingual (http://www.youtube.com/user/IRSvideosmultilingua) and IRS American Sign Language (ASL) (http://www.youtube.com/IRSvideosASL) channels.

In addition to Twitter and YouTube, the IRS provides additional social media tools to inform and assist taxpayers.

Efile your taxes online, safely and securely and accurately.  Get your tax refund even faster with direct deposit.

Can I receive an IRS tax refund if I am in a payment plan?

As a condition of your agreement, any tax refund due you in a future year will be applied against the amount you owe.  You should: Continue making your installment agreement payments to the IRS as scheduled because your refund is not considered as a substitute for your regular payment due. You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan or child support. The IRS will automatically apply any refund to the taxes owed. Efile your taxes online safely and securely.

The IRS Wants to Refund Tax Returns

The Internal Revenue Service is looking to return $164.6 million in undelivered refund checks. A total of 111,893 taxpayers are due one or more refund checks that could not be delivered because of mailing address errors.

“We want to make sure taxpayers get the money owed to them,” said IRS Commissioner Doug Shulman. “If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money.”

A taxpayer only needs to update his or her address once for the IRS to send out all checks due. Undelivered refund checks average $1,471 this year, compared to $1,148 last year. Some taxpayers are due more than one check.

The average dollar amount for returned refunds rose by just over 28 percent this year, possibly due to recent changes in tax law which introduced new credits or expanded existing credits, such as the Earned Income Tax Credit, under President Obama.

If a refund check is returned to the IRS as undelivered, taxpayers can generally update their addresses with the “Where’s My Refund?”  tool on IRS.gov. The tool also enables taxpayers to check the status of their refunds. A taxpayer must submit his or her Social Security number, filing status and amount of refund shown on their 2009 return. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.

While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Taxpayers can receive refunds directly into their bank, split a tax refund into two or three financial accounts or even buy a savings bond.

The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds. E-file combined with direct deposit is the best option for taxpayers; it’s easy, fast and safe.

The public should be aware that the IRS does not contact taxpayers by e-mail to alert them of pending refunds and that such messages are common identity theft scams. The agency urges taxpayers not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that will infect their computers.