June 8, 2009
Josh Baker, EVP of Client Advocacy
Recently, I received an email from a taxpayer looking for help in retrieving a refund she felt the IRS owed her. She wanted to know if we could assist her in getting the rather large refund she was due on her federal tax return from 2004.
Unfortunately, I had to advise her there is a statute on tax refunds. You must claim any refund that is due within three years of the date of the return. In this taxpayer’s case, her 2004 return had to be filed by April 15, 2005. That means, she could have claimed the refund anytime between the time her return was processed, up until April 15, 2008. If the refund is not claimed, it is returned to the general fund of the U.S. Treasury.
Because the taxpayer did not give me any details about why she was unable to claim her refund before the statute ran out, I did tell her she could try calling the Taxpayer Advocate Service to see if they might be able to assist her in getting the refund. As with all tax issues, however, the ultimate decision lies with the IRS.
For more information on claiming tax refunds, visit http://www.irs.gov/publications/p556/ar02.html#d0e1618. For more information on the Taxpayer Advocate Service, visit http://www.irs.gov/advocate/index.html?portlet=5.
Josh Baker is the Executive Vice President of Client Advocacy for JK Harris and Company, LLC. Josh started with the company in August 2004 as the Director of Corporate Communications. He currently oversees Client Advocacy and the Communications Department at JK Harris.
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Posted by johnharris
May 18, 2009
Are you currently facing back tax problems? If so, chances are you may be looking for professional help to resolve them. When you are faced with the burden and stress of financial back tax debt, you’ll likely want someone you feel comfortable with, someone to help you through those troubling times.
There are a few things you’ll want to be aware of when choosing a tax resolution company:
• A tax representation company who is offering you a “once in a lifetime” opportunity to straighten out your issues with the IRS or promising to significantly reduce your taxes should be avoided. A tax representation company represents you with the IRS but cannot guarantee that you will receive any particular outcome in your case. The IRS has the final say on the results. It is the company’s job to analyze your situation and determine the best course of action for your particular case.
• Many companies hire former IRS employees, however, these employees do not have an inside connection to the IRS, nor can they negotiate on your behalf any differently than an Enrolled Agent, attorney or CPA can. Avoid any company advertising that they have an inside connection to the IRS.
• Avoid any tax representation company offering to settle your tax liability with the IRS for “pennies on the dollar.” Again, a tax resolution company cannot guarantee the results when it comes to dealing with the IRS.
• Many national tax resolution companies conduct their business over the phone, rather than meeting their clients in person. JK Harris’ Sales Consultants prefer to meet with their clients, by appointment only. JK Harris has over 325 convenient locations nationwide to help get you started on the road to fixing your tax problems with the IRS.
• A company who has longevity, and experience is the company to choose. The tax resolution industry is fast growing and many companies do not have the required experience that would ensure you feel comfortable in hiring them. Remember: the company that you choose to hire will be representing you before the IRS. You want a company that will be well-versed in IRS procedures and taxes. Choose a company you are comfortable with; make sure you hire someone you trust. The process of negotiating with the IRS can take months, even more than a year.
It is an important decision to hire a tax resolution team. Do not make the decision from an emotional place. Hire the right tax resolution company for you.
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Posted by johnharris
May 4, 2009
So you filed your tax return and then you realized you forgot to include something very important. Now what do you do?
It’s simple. All you have to do is file an amended tax return. Use Form 1040X, the Amended U.S. Individual Income Tax Return form. It can be used to correct Forms 1040, 1040A or 1040EZ. This form can also be used to correct a return you filed electronically.
The next question: Do you really need to file an amended return? Did you make a simple mathematical error or did you simply report something incorrectly?
Here are a few guidelines to go by.
There is no need to file an amended return if:
You made a math error. The IRS will generally make that correction for you.
You forgot to include forms such as W-2s or schedules. The IRS will normally request those from you.
File an amended return if:
You incorrectly reported your filing status, dependents, total income, deductions, or credits.
Quick tips filing and completing an amended tax return:
In general, within three years from the date you filed the original return you must file the amended return or within two years from the date you paid the tax, whichever is later.
At the top of Form 1040X, enter the year of the tax return you are amending.
For each tax return you are amending, prepare a separate Form 1040X and mail each return in a separate envelope. The IRS processing center address in your area can be found on the Form 1040X instructions page.
If the changes you are making to your return involve another schedule or form, attach those to the 1040X.
If you are filing for an additional refund, you should wait until you receive the original refund before filing the 1040X. You may cash the original refund check because the IRS will simply send you an additional check.
If you owe additional taxes for the tax year 2008, file Form 1040X and pay the additional tax that you owe as soon as you possibly can. By doing this, you will limit the amount of interest and penalties that may accrue because interest is charged on any tax not paid by the due date of the original return, even if you filed an extension.
The normal processing time for amended returns is approximately eight to 12 weeks from the date the IRS receives form 1040X.
For more information on amending your tax return, visit www.irs.gov
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Posted by johnharris
April 24, 2009
Phishing and email scams are not uncommon on the Internet. Most individuals are now aware of what phishing and email scams are, but there are still those who don’t have a clue. Either way, it is important to brush up and be aware of what scams are out there so you can avoid your personal information getting in the wrong hands. When it comes to the IRS, you have to be very careful you know how they will correspond with you so you don’t send your vital information to the wrong place and to the wrong people.
Phishing
Let’s say you get an email saying it is from the IRS and they need you to log into your account where you make your online installment payments and re-enter your payment information. So, you go to the website that looks just like the page you usually go to in order to make your payment and you follow the instructions given to you in the email. You hit the “submit” button and you feel good you were able to comply with the request made by the IRS in a timely manner.
But do you know what just really happened?
What just happened was you were phished. You were given a link in an email that looked like it was from the IRS, led to a page that looked like a legitimate IRS page, and you entered your financial information. A phishing email page looks legitimate, but it is not. These types of pages are “spoofed” pages more or less copied from the real page, but a close look at the address bar will show the address is not exactly what the address would be for the legitimate page. Unfortunately, that is something most people will not notice unless they are aware of the difference.
Email scams
Now let’s say you get an email from the IRS, asking you to reply to the email with your social security number or other important information. Because it is from the IRS, you definitely don’t want to ignore the request. You provide them with the information they have requested.
This is an email scam because the scammer created this legitimate looking email that was official looking, had logos, and everything else the IRS would include in an email.
The truth
The truth is the IRS is never going to request personal information over the Internet. They are not going to send you an email that takes you to a page for you to enter financial information. They are also not going to send you an email telling you they need your social security number. The Internet is a wide-open place and the IRS is not going to put your personal information at risk in such a way. If the IRS needs information from you, they will send you a letter to let you know what they need and how you can provide them with the information. The IRS always corresponds via postal mail. It is your responsibility to call them and provide them with information or mail them the information they need. All of this is done for the safety of your personal information.
If you are ever sent an email like this, you can visit phishing@irs.gov and report the email to the IRS. It is important the IRS knows when phishing or email scams pop up so they can work to get them shut down.
Leave a Comment » | Q&A, Tax Alerts, Tax Tips, tax preparation | Tagged: email scams, internet scams, phishing, tax alert | Permalink
Posted by johnharris
April 3, 2009
You may have heard – under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before December 1 can receive up to $8,000 (or $4,000 for married taxpayers filing separately). The credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers. Taxpayers are able to claim 10 percent of the purchase price of the home, up to $8,000 or $4,000 for married filing separately.
There have been many questions floating around about how to take the credit and whether it can be taken in 2008 or 2009. The simple answer is that it can be taken in either year, depending on how you claim it and what may benefit you the most.
According to the IRS, there are four possible filing options to consider:
File an extension – If you haven’t filed your 2008 taxes yet and know you are going to be buying a home before October 15, you can request a six month extension. This would be faster than waiting to file on the 2009 return. Even if you file an extension, you can file electronically and get your refund in as few as ten days.
File now, amend later – If you are due a nice sized refund for 2008 and you are considering buying a house in the next few months, you can go ahead and file April 15 and amend your return to claim the credit later this year.
Amend the 2008 tax return – If you are buying a house in the near future but have already filed your 2008 return, you can file an amended tax return to claim the credit and you will not have to wait until the 2009 return.
Claim the credit in 2009 rather than 2008 – For some of you, it may be more in your favor to wait and claim the credit in 2009. The credit could be higher for you in 2009 due to a job loss or drop in investment income. If either of these things could affect you in the future, it may benefit you to wait until the 2009 filing season.
For more information on tax credits for the first home buyer check this section on IRS’ website.
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Posted by johnharris
April 2, 2009
Recently, the U.S. Tax Court heard the case of a widow whose husband had passed away and left her with deep financial problems she was unaware of during their marriage. At the time of his death, she found out he had not been paying their joint Federal income taxes or Federal employment taxes for his employees and they owed the IRS over $131,000.
At the time of the trial, the widow was 70 years old and had been unable to work for decades due to a disability. Her husband had always taken care of their financial issues and had all financial statements sent to his law practice, leaving her unaware of their worsening financial condition. He had prepared all of their tax returns and presented them to her to sign just before they had to be mailed off to meet the filing deadline each year.
The widow liquidated what assets she had and attempted to pay off the tax debt. She applied to the IRS for innocent spouse relief and was denied. When she took her case before the Tax Court, they reversed the IRS’ determination, supporting the position she knew nothing about the tax debt and therefore was not in a position to have paid it. She was already experiencing financial hardship and she in no way benefited from the taxes not being paid.
Unfortunately, this is a situation we have seen many times over the years, whether the spouse dies or the couple divorces. One spouse is left culpable for the other person’s errors or evasion. Situations like this are what innocent spouse relief was designed for.
One of our case specialists recently helped a client who had been through a divorce and faced joint tax debt, which she was unable to pay. The IRS was trying to hold our client jointly responsible for her ex-husband’s tax debt, which came from his law practice. She signed a joint return with her ex-husband and believed he would file the taxes accordingly. Her taxes were withdrawn correctly through her own employer and she felt she was wrongly charged with owing tax debt attributable to his business. Although the IRS denied our client’s initial request seeking injured spouse relief, we persevered and the IRS granted her equitable relief status.
Check the IRS.gov website to see if you qualify for innocent spouse relief using the innocent spouse tax relief eligibility explorer.
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Posted by johnharris
April 2, 2009
Wouldn’t it be nice if you could purchase a brand spanking new car and be able to deduct it from your taxes? Well, now you can…sort of.
The IRS recently made the announcement that taxpayers who purchase a new vehicle (car, light truck, motor home or motorcycle) will be able to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns.
Of course there are certain stipulations which must be followed. The deduction is limited to taxes paid on purchases up to $49,500. That’s not to say you can’t purchase a vehicle that costs more than $49,500, but you will only get the deduction on the taxes up to that purchase price.
The vehicle must be purchased after Feb. 16, 2009 but before Jan. 1, 2010. Also, the deduction is phased out for taxpayers who have a modified adjusted gross income between $125,000 and $135,000 and file single and between $250,000 and $260,000 and file jointly.
Now here’s the really great thing. You don’t have to itemize on your tax return to receive this special deduction. It is available even if you use the standard deduction. And unlike the First-time Homebuyers Credit, the deduction cannot be used on your 2008 tax returns, only 2009.
Kind of makes you want to go out and look at some new cars, doesn’t it?
1 Comment | IRS Regulations, Tax Alerts, tax preparation | Tagged: IRS, new car tax credit, tax preparation | Permalink
Posted by johnharris
March 22, 2009
This time of year, it’s hard not to notice the assortment of home PC tax software packages available on the market. Many taxpayers swear by these products, due to the ease of use for the average person and the ability to e-file tax returns to the IRS.
Recent information from the IRS shows e-filing of federal tax returns from home computers is on the rise. In fact, as of March 6, 2009, the IRS has received more than 18 million returns filed from home computers. This number is up more than 20 percent over the same time last year.
So far, a total of 52 million tax returns have been e-filed, up 6 percent over the same period last year. About 91 percent of tax returns filed to date for tax year 2008 have resulted in a refund, although this seemingly large number is easily explained. At the beginning of tax season, the number of returns receiving a refund is higher because taxpayers anticipating a refund are more likely to file early. Those taxpayers expecting to owe the IRS usually put off filing until closer to or on the April 15th deadline.
Here are some other interesting statistics the IRS released with this report:
For the week ending March 7, 2008 compared to week ending March 6, 2009:
|
|
2008
|
2009
|
|
Visits to IRS.gov
E-filing Receipts
Total E-filed
Tax Professionals
Self-prepared
Total # Refunds
Total of Refunds
Avg. Refund
|
90,729,850
48,795,000
33,419,000
15,377,000
53,176,000
$136,976,000,000
$2,576
|
116,774,933
51,793,000
33,349,000
18,444,000
54,638,000
$153,579,000,000
$2,811
|
As a reminder, if you meet the income requirements of the IRS and you do not want to purchase your own tax software, the IRS partners with several companies to offer free online tax preparation and e-filing. Visit IRS.gov for more information.
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Posted by johnharris
March 22, 2009
Stimulus means extra money, just not all at once
It is truly amazing how one word can spark so much excitement in so many people. The word “stimulus” seems to have done that with the American public. Many Americans hear the word stimulus and immediately think check. The proof is in the number of times I have been asked if or when stimulus checks will be distributed this year.
The truth of the matter is, President Barack Obama’s “Stimulus package” does not include a stimulus check for taxpayers like former President George Bush’s package did. But don’t be discouraged. American taxpayers will still be getting money from the government, just not all at once.
Instead, the Making Work Pay provision of the American Recovery and Reinvestment Act is intended to provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing jointly. This will likely put extra money in your paychecks as the tax credit will be calculated at a rate of 6.2 percent of earned income for those taxpayers with an adjusted gross income of $75,000 or less, or $150,000 for married couples filing jointly.
And the beauty of this is the average American taxpayer need not do anything special to receive the credit. The credit will automatically start showing up in their paychecks this spring. It’s all up to employers and their payroll departments to start using the new withholding tables established by the IRS.
So there is no need to complete a new W-4, unless you have multiple jobs or the combined income of you and your spouse will put you in a higher tax bracket. If that is the case, you may want to submit a revised W-4 to ensure you have enough withholding held out to cover the tax for the combined income.
But please don’t forget the amount of the credit must be reported on your 2009 income tax return. Until then, however, enjoy the extra take-home pay you should start receiving very soon.
For more information about the Making Work Pay credit, see Publication 919 available on the IRS website at www.irs.gov.
4 Comments | Tax Alerts, Tax Tips, tax preparation | Tagged: American Recovery and Reinvestment Act, filing taxes, Stimulus package | Permalink
Posted by johnharris
March 4, 2009
Does anyone know what time it is?
It’s tax time of course. The time of year when everyone’s thoughts turn to taxes. Yes indeed, even those of us in the tax representation business think about taxes more now than ever.
One reason for this is because our clients have JK Harris prepare their tax returns. In order for taxpayers who owe the IRS to negotiate some sort of resolution, they must be up to date, or compliant as the IRS calls it, with the filing of their tax returns.
That is where our Tax Preparation Department comes in. When a non-compliant taxpayer comes to us, we can prepare their tax returns and then move directly to the resolution process. And many of these clients actually have JK Harris prepare their tax returns in future years as well.
While we don’t directly advertise our Tax Preparation services, it is a service we offer to our clients and to the general public. In fact, on average, we prepare between 32,000 and 33,000 tax returns each year. The IRS has received an average of 134,279,500 tax returns each year between 2002 and 2007.
This means that one out of approximately 4,000 tax returns submitted to the IRS nationally on a yearly basis is prepared by our JK Harris Tax Preparation Department.
These numbers, in and of themselves, are pretty impressive. But here’s something else I think is worth mentioning. The IRS, on average each year, receives 45,304,000 tax returns which are prepared by tax practitioners, meaning CPAs, Enrolled Agents, national tax preparation firms, etc.
This translates to one in every 1,400 tax returns prepared by tax practitioners are actually prepared by JK Harris.
To say I am quite pleased with these numbers would be an understatement. In fact, they are not just numbers to me. They represent a large population of people that JK Harris is proud to have assisted. And we look forward to continuing to assist our clients well into the future.
John Harris
www.JKHarris.com
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Posted by johnharris
