2009 Filing Requirements
You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico and you meet the filing requirements as given below. However, if you are self employed or independent contractor, you must file tax return if your self employed income is $400 or more.
1. Filing Status Single
If under 65, must file tax return if gross income is at least $9,350.
If 65 or older, must file tax return if gross income is at least $10,750.
2. Filing Status Married Filing Jointly
If under 65 (both spouses), must file tax return if gross income is at least $18,700.
If 65 or older (one spouse), must file tax return if gross income is at least $29,800.
If 65 or older (both spouses), must file tax return if gross income is at least $20,900.
(Read Filing Status: Married Filing Jointly)
3. Filing Status Married Filing Separately
Any age, must file tax return if gross income is at least $3,650.
(Read Filing Status: Married Filing Separately)
4. Filing Status Head of Household
If under 65, must file tax return if gross income is at least $12,000.
If 65 or older, must file tax return if gross income is at least $13,400.
(Read More: Head of Household)
5. Filing Status Qualifying Widow(er) with Dependent Child
If under 65, must file tax return if gross income is at least $15,050.
If 65 or older, must file tax return if gross income is at least $16,150.
2009 Standard Deduction
For the 2009 tax return, the standard deduction amounts are,
*Single (other than head of household and Surviving Spouses) $5,700
*Married Filing Joint Returns and Surviving Spouses $11,400
*Married Filing Separate Returns $5,700
*Head of Households $8,350
The 2009 Exemption Deduction for each exemption is $3,650
If you are a dependent, read: Filing Requirements of a Dependent
For more information read IRS Publication 501 (2008), Exemptions, Standard Deduction, and Filing Information
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax
1. Working in Two or More States
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Sunday, November 1, 2009
Friday, September 25, 2009
S Corporations
An S corporation or S-corp is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. S corporations elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.
Qualification Requirements
To qualify for S corporation status, the corporation must meet the following requirements:
* Be a domestic corporation,
* Have only allowable shareholders including individuals, certain trust, and estates and may not include partnerships, corporations or non-resident alien shareholders,
* Have no more than 100 shareholders,
* Have one class of stock, and
* Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.
Filing Requirements
1. For income tax return, S Corporation files Form 1120S and schedule K-1 (Form 1120S),
2. For estimate taxes, it files Form 1120-W (corporation only) and 8109 (for depositing taxes), and
3. For employment taxes it files (a) Form 941 for Social security and Medicare taxes and income tax withholding, (b) Form 940 for federal unemployment (FUTA) tax, and Form 8109 for depositing taxes.
Form 1120S generally must be filed by March 15th of the year immediately following the calendar year covered by the return or, if a fiscal year (a year ending on the last day of a month other than December) is used, by the 15th day of the third month immediately following the last day of the fiscal year, and the automatic extension period is six months. The corporation must complete a Schedule K-1 for each person who was a shareholder at any time during the tax year and file it with the IRS along with Form 1120S. The second copy of the Schedule K-1 must be mailed to the shareholder. For 2008, the amount for late fling is $86/month/shareholder with a maximum of 12 months.
Some but not all states recognize a state tax law equivalent to an S corporation, so that the S corporation in certain states may be treated the same way for state income tax purposes as it is treated for Federal purposes. A state taxing authority may require that a copy of the Form 1120S return be submitted to the state with the state income tax return.
California additional taxes
S-corporations pay a franchise tax of 1.5% of net income in the state of California (minimum $800). This is one factor to be taken into consideration when choosing between a limited liability company and an S-corporation in California. On highly profitable enterprises, the LLC franchise tax fees, which are based on gross revenues (minimum $800), may be lower than the 1.5% net income tax. Conversely, on high gross revenue, low profit-margin businesses, the LLC franchise tax fees may exceed the S corp net income tax.
New York City additional taxes
In New York City, S-corporations are subject to the full corporate income tax at a 8.85% rate. However if the S-corporation can demonstrate that a portion of its business was done outside the city, that portion will not be subject to the additional tax.
Qualification Requirements
To qualify for S corporation status, the corporation must meet the following requirements:
* Be a domestic corporation,
* Have only allowable shareholders including individuals, certain trust, and estates and may not include partnerships, corporations or non-resident alien shareholders,
* Have no more than 100 shareholders,
* Have one class of stock, and
* Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.
Filing Requirements
1. For income tax return, S Corporation files Form 1120S and schedule K-1 (Form 1120S),
2. For estimate taxes, it files Form 1120-W (corporation only) and 8109 (for depositing taxes), and
3. For employment taxes it files (a) Form 941 for Social security and Medicare taxes and income tax withholding, (b) Form 940 for federal unemployment (FUTA) tax, and Form 8109 for depositing taxes.
Form 1120S generally must be filed by March 15th of the year immediately following the calendar year covered by the return or, if a fiscal year (a year ending on the last day of a month other than December) is used, by the 15th day of the third month immediately following the last day of the fiscal year, and the automatic extension period is six months. The corporation must complete a Schedule K-1 for each person who was a shareholder at any time during the tax year and file it with the IRS along with Form 1120S. The second copy of the Schedule K-1 must be mailed to the shareholder. For 2008, the amount for late fling is $86/month/shareholder with a maximum of 12 months.
Some but not all states recognize a state tax law equivalent to an S corporation, so that the S corporation in certain states may be treated the same way for state income tax purposes as it is treated for Federal purposes. A state taxing authority may require that a copy of the Form 1120S return be submitted to the state with the state income tax return.
California additional taxes
S-corporations pay a franchise tax of 1.5% of net income in the state of California (minimum $800). This is one factor to be taken into consideration when choosing between a limited liability company and an S-corporation in California. On highly profitable enterprises, the LLC franchise tax fees, which are based on gross revenues (minimum $800), may be lower than the 1.5% net income tax. Conversely, on high gross revenue, low profit-margin businesses, the LLC franchise tax fees may exceed the S corp net income tax.
New York City additional taxes
In New York City, S-corporations are subject to the full corporate income tax at a 8.85% rate. However if the S-corporation can demonstrate that a portion of its business was done outside the city, that portion will not be subject to the additional tax.
Friday, April 17, 2009
What's New for 2009
This article contains information that effects your 2009 tax return.
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
Taxpayers can estimate their deduction with the help of IRS Publication 919, How Do I Adjust My Withholding? For purchases above $49,500 limit and in case of phase-outs, the lines 10a to 10k on Worksheet 10 take this into account.
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference for Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. Free Download http://www.octro.com/
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
Taxpayers can estimate their deduction with the help of IRS Publication 919, How Do I Adjust My Withholding? For purchases above $49,500 limit and in case of phase-outs, the lines 10a to 10k on Worksheet 10 take this into account.
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference for Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. Free Download http://www.octro.com/
Wednesday, April 8, 2009
Form 4868 Automatic Extension for 6 months
The regular due date for filing your 2008 tax return is April 15, 2009. Instead of trying to complete your tax return in a rush, it is better to get an extension. Make sure that your return is error free. The due date to file Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) to get automatic extension is April 15, 2009. If you file Form 4848, your due date is October 15, 2009. You must pay the tax due by the regular due date. If you do not pay the tax due by the regular due date, you will owe interest. You may also be charged penalties.
Individuals Outside the United States If you are a U.S. citizen or resident, and you are outside the U.S. on the regular due date (April 15, 2009), you are allowed an automatic 2-month extension (until June 16, 2009). For this two month's extension, the taxpayer is not required to file Form 4868. The taxpayer may file Form 4868 to get further extension of 4 months.
If you do not pay the tax due by the regular due date of April 15, 2009, interest and penalty is charged until the date the tax is paid. The Form 4868 extends the date to file your tax return to October 15, 2009 but you must still pay all your due taxes on or before the regular due date.
It is possible that the IRS finds some error in the tax return that may result in an additional tax. If this happens after April 15, you will have to pay the due tax amount with interest and penalty. Taxpayers can limit these charges by filing on time and paying sooner.
The current interest rate charged by IRS is 5 percent per year and late payment penalties, normally 0.5 percent (1/2 of 1 percent) per month, apply to any tax paid after the April 15 deadline, taxpayers can limit these charges by paying sooner. For example, a taxpayer who files on May 1, owing $1,000 in tax, would be charged interest plus a $50 penalty. If you can not pay the tax due in full on or before the filing date of April 15, 2009, here is what you should do:
1. Make Partial Payment by April 15, 2009
Make sure to pay what ever maximum you can pay before April 15, 2009. If you are also filing your tax return, make sure to include the payment with your tax return. You will also attach Form 1040-V. If you are applying for extension to file, then send the payment with Form 4868. Various e-pay options offer taxpayers the easiest and fastest way to make a full or partial payment with their return. These options enable taxpayers to make payments either online or by phone using electronic funds withdrawal or a credit card. Alternatively, taxpayers can send the IRS a check made out to “United States Treasury.” If you are not paying the full amount of tax due, make sure to make a short-time payment agreement with IRS or apply for Installment Agreement.
2. Apply for 6-month’s Automatic Extension to File Your Tax Return (Form 4868)
If your tax return is not complete, make sure to file Form 4868 for 6-months extension to file your tax return. Make sure to pay all your tax due or the amount you are in a position to pay with Form 4868. If you apply for extension, then you can file your tax return up to October 15, 2009. You will not pay penalty for not filing your tax return. However, you will still pay interest on the tax due amount.
3. Make a Short-time Payment Arrangement with IRS
Taxpayers who need more time to pay can find out in just a few minutes whether they qualify for a payment agreement with the IRS. Just click on the Online Payment Agreement link and follow the prompts. By entering some basic information about their tax situation, eligible taxpayers can set up in a matter of minutes either a short-term payment extension or a monthly payment plan. A short-term extension gives a taxpayer up to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply.
4. Apply for Installment Agreement
A monthly payment plan or installment agreement gives a taxpayer more time to pay. Though interest still applies, the late-payment penalty is cut in half for any month an installment agreement is in effect. This reduced rate of 0.25 percent (1/4 of 1 percent) per month is only available if the tax return was filed on time. A user fee will also be charged if the installment agreement is approved. The fee, normally $105, is reduced to $52, if taxpayers agree to make their monthly payments electronically through electronic funds withdrawal. The fee is $43 for eligible low-and-moderate-income taxpayers. Alternatively, taxpayers can apply for a payment agreement by filling out Form 9465, Installment Agreement Request. This form can be filed along with either an electronically filed return or a paper return. If filing on paper, be sure to attach it to the front of the return.
Extra Time to File
Some taxpayers can wait until after April 15 to file a return, pay any taxes due and make IRA contributions for 2009. As a general rule, those eligible get the extra time without having to ask for it. Eligible taxpayers include:
*Members of the military serving in Iraq, Afghanistan or other combat zone localities. Normally, the postponement is until at least 180 days after the service member leaves the combat zone.
*Victims of severe flooding in Minnesota and North Dakota have an extra 30 days, until May 15, to file their 2008 individual tax returns and pay any taxes due. Similarly, victims of severe storms and tornadoes in three Oklahoma counties have until May 11 to file and pay.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2008 Filing Requirements
2. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First Time Homebuyers Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Individuals Outside the United States If you are a U.S. citizen or resident, and you are outside the U.S. on the regular due date (April 15, 2009), you are allowed an automatic 2-month extension (until June 16, 2009). For this two month's extension, the taxpayer is not required to file Form 4868. The taxpayer may file Form 4868 to get further extension of 4 months.
If you do not pay the tax due by the regular due date of April 15, 2009, interest and penalty is charged until the date the tax is paid. The Form 4868 extends the date to file your tax return to October 15, 2009 but you must still pay all your due taxes on or before the regular due date.
It is possible that the IRS finds some error in the tax return that may result in an additional tax. If this happens after April 15, you will have to pay the due tax amount with interest and penalty. Taxpayers can limit these charges by filing on time and paying sooner.
The current interest rate charged by IRS is 5 percent per year and late payment penalties, normally 0.5 percent (1/2 of 1 percent) per month, apply to any tax paid after the April 15 deadline, taxpayers can limit these charges by paying sooner. For example, a taxpayer who files on May 1, owing $1,000 in tax, would be charged interest plus a $50 penalty. If you can not pay the tax due in full on or before the filing date of April 15, 2009, here is what you should do:
1. Make Partial Payment by April 15, 2009
Make sure to pay what ever maximum you can pay before April 15, 2009. If you are also filing your tax return, make sure to include the payment with your tax return. You will also attach Form 1040-V. If you are applying for extension to file, then send the payment with Form 4868. Various e-pay options offer taxpayers the easiest and fastest way to make a full or partial payment with their return. These options enable taxpayers to make payments either online or by phone using electronic funds withdrawal or a credit card. Alternatively, taxpayers can send the IRS a check made out to “United States Treasury.” If you are not paying the full amount of tax due, make sure to make a short-time payment agreement with IRS or apply for Installment Agreement.
2. Apply for 6-month’s Automatic Extension to File Your Tax Return (Form 4868)
If your tax return is not complete, make sure to file Form 4868 for 6-months extension to file your tax return. Make sure to pay all your tax due or the amount you are in a position to pay with Form 4868. If you apply for extension, then you can file your tax return up to October 15, 2009. You will not pay penalty for not filing your tax return. However, you will still pay interest on the tax due amount.
3. Make a Short-time Payment Arrangement with IRS
Taxpayers who need more time to pay can find out in just a few minutes whether they qualify for a payment agreement with the IRS. Just click on the Online Payment Agreement link and follow the prompts. By entering some basic information about their tax situation, eligible taxpayers can set up in a matter of minutes either a short-term payment extension or a monthly payment plan. A short-term extension gives a taxpayer up to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply.
4. Apply for Installment Agreement
A monthly payment plan or installment agreement gives a taxpayer more time to pay. Though interest still applies, the late-payment penalty is cut in half for any month an installment agreement is in effect. This reduced rate of 0.25 percent (1/4 of 1 percent) per month is only available if the tax return was filed on time. A user fee will also be charged if the installment agreement is approved. The fee, normally $105, is reduced to $52, if taxpayers agree to make their monthly payments electronically through electronic funds withdrawal. The fee is $43 for eligible low-and-moderate-income taxpayers. Alternatively, taxpayers can apply for a payment agreement by filling out Form 9465, Installment Agreement Request. This form can be filed along with either an electronically filed return or a paper return. If filing on paper, be sure to attach it to the front of the return.
Extra Time to File
Some taxpayers can wait until after April 15 to file a return, pay any taxes due and make IRA contributions for 2009. As a general rule, those eligible get the extra time without having to ask for it. Eligible taxpayers include:
*Members of the military serving in Iraq, Afghanistan or other combat zone localities. Normally, the postponement is until at least 180 days after the service member leaves the combat zone.
*Victims of severe flooding in Minnesota and North Dakota have an extra 30 days, until May 15, to file their 2008 individual tax returns and pay any taxes due. Similarly, victims of severe storms and tornadoes in three Oklahoma counties have until May 11 to file and pay.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2008 Filing Requirements
2. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First Time Homebuyers Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Saturday, January 17, 2009
First-Time Homebuyer Credit
You can claim the credit if you are a first-time homebuyer and have purchased a home located in the United States after April 8, 2008 and before June 30, 2009. For the purpose of this credit, you are first time homebuyer if you (your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase. Vacation homes and rental property are not eligible. The date of purchase is the date the title closes. If you constructed your main home, the purchase date is the first date you occupy the home. Different credit applies to home located in the United States purchased during
(a) After April 8, 2008, and before January 1, 2009, and
(b) After December 31, 2008 and before December 1, 2009. Under the new law, was signed into law on Nov. 6, 2009, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
Taxpayers will claim the credit on IRS Form 5405, First-Time Homebuyer Credit. You claim the first-time homebuyer credit on your 2008 tax return or amended 2008 return or on your 2009 return. If you are claiming the credit on the amended tax return Form 1040X, then enter the credit on line 15 of Form 1040-X and enter "Form 5405" in the white space at the end of line 15, and attach the Form 5405.
How much is the credit?
(a) For home purchases after April 8, 2008, and before January 1, 2009
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the maximum credit will be available for homes costing $75,000 or more.
The credit is in fact an interest-free loan because it must be repaid in equal installments over a 15-year period starting the second year after the year the credit is claimed. For example, if you properly claim the maximum available credit of $7,500 on your 2008 federal tax return, you must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on your 2010 federal tax return. Normally, $500 will be due each year from 2010 to 2024.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers and the credit phases out at $95,000, or $170,000 for joint files. Also no credit is allowed if the taxpayer disposes of the residence, or the residence ceases to be principal residence, before the close of the tax year for which credit is otherwise allowed.
What if you sell your home?
When you sell the home or do not use the home as principal residence, you must pay back the balance of the loan in the year the home is sold or ceases to be the principal residence. However, the repayment of amount may not exceed the amount of gain from the sale of residence to an unrelated person. If there is no gain then repayment is waived.
If on divorce, the home is transferred to a spouse or former spouse, the spouse who receives the home is responsible for any future recapture.
(b) For home purchases closed after December 31, 2008 and before June 30, 2009 (Binding contract for the principal residence must be entered on or before April 30, 2010)
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing jointly. The limit is $4,000 for a married person filing a separate return. In most cases, the maximum credit will be available for homes costing $80,000 or more.
They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income (MAGI) is more than
(i) $75,000, or $150,000 for joint filers (for purchased before November 6, 2009), and
(ii) $125,000, or $225,000 for joint filers (for purchases on or after November 6, 2010).
Who Cannot Claim the Credit
1. If you are a non-resident, the home is located outside the United States, or you acquired home by gift, inheritance or from a related person. (Resident aliens even with ITIN are eligible).
2. If you own more than 50% outstanding stocks of a corporation or capital interest or profits interest of a partnership.
3. If you are or were eligible for District of Columbia first-time homebuyer credit.
4. You buy your home from a close relative. A related person includes your spouse, ancestors (parents, grandparents, etc), or linear descendants (children, grandchildren, etc.).
5. You stop using your home as your main home. You sell your home before the end of the year.
6. Your home financing comes from tax-exempt mortgage revenue bonds.
(c) Credit for long-time homeowners buying a replacement principal residence.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. Replacement home must be purchased in the period from November 6, 2009 to April 10, 2010.
Proof of Purchase
Real estate transfer records are public records. Many states make it available on line and the IRS can verify it easily. Some days do not have all the records online or public and in those cases IRS is asking for the proof of purchase. For example, most records in MO are not available on line and the IRS is asking for a copy of the recorded deed or a copy of the HUD-1 or RESPA settlement sheet as proof.
IRS Warns Taxpayers to Beware of First-Time Homebuyer Credit Fraud
IRS vigorously pursues anyone who falsely tries to claim this or any other tax credit or deduction. The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund. So before claiming the credit, make sure that you meet the requirements, and claim the credit only after you actually purchase the home.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2008 Filing Requirements
2. Filing Requirement for a Dependent
3. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
(a) After April 8, 2008, and before January 1, 2009, and
(b) After December 31, 2008 and before December 1, 2009. Under the new law, was signed into law on Nov. 6, 2009, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
Taxpayers will claim the credit on IRS Form 5405, First-Time Homebuyer Credit. You claim the first-time homebuyer credit on your 2008 tax return or amended 2008 return or on your 2009 return. If you are claiming the credit on the amended tax return Form 1040X, then enter the credit on line 15 of Form 1040-X and enter "Form 5405" in the white space at the end of line 15, and attach the Form 5405.
How much is the credit?
(a) For home purchases after April 8, 2008, and before January 1, 2009
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the maximum credit will be available for homes costing $75,000 or more.
The credit is in fact an interest-free loan because it must be repaid in equal installments over a 15-year period starting the second year after the year the credit is claimed. For example, if you properly claim the maximum available credit of $7,500 on your 2008 federal tax return, you must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on your 2010 federal tax return. Normally, $500 will be due each year from 2010 to 2024.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers and the credit phases out at $95,000, or $170,000 for joint files. Also no credit is allowed if the taxpayer disposes of the residence, or the residence ceases to be principal residence, before the close of the tax year for which credit is otherwise allowed.
What if you sell your home?
When you sell the home or do not use the home as principal residence, you must pay back the balance of the loan in the year the home is sold or ceases to be the principal residence. However, the repayment of amount may not exceed the amount of gain from the sale of residence to an unrelated person. If there is no gain then repayment is waived.
If on divorce, the home is transferred to a spouse or former spouse, the spouse who receives the home is responsible for any future recapture.
(b) For home purchases closed after December 31, 2008 and before June 30, 2009 (Binding contract for the principal residence must be entered on or before April 30, 2010)
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing jointly. The limit is $4,000 for a married person filing a separate return. In most cases, the maximum credit will be available for homes costing $80,000 or more.
They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income (MAGI) is more than
(i) $75,000, or $150,000 for joint filers (for purchased before November 6, 2009), and
(ii) $125,000, or $225,000 for joint filers (for purchases on or after November 6, 2010).
Who Cannot Claim the Credit
1. If you are a non-resident, the home is located outside the United States, or you acquired home by gift, inheritance or from a related person. (Resident aliens even with ITIN are eligible).
2. If you own more than 50% outstanding stocks of a corporation or capital interest or profits interest of a partnership.
3. If you are or were eligible for District of Columbia first-time homebuyer credit.
4. You buy your home from a close relative. A related person includes your spouse, ancestors (parents, grandparents, etc), or linear descendants (children, grandchildren, etc.).
5. You stop using your home as your main home. You sell your home before the end of the year.
6. Your home financing comes from tax-exempt mortgage revenue bonds.
(c) Credit for long-time homeowners buying a replacement principal residence.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. Replacement home must be purchased in the period from November 6, 2009 to April 10, 2010.
Proof of Purchase
Real estate transfer records are public records. Many states make it available on line and the IRS can verify it easily. Some days do not have all the records online or public and in those cases IRS is asking for the proof of purchase. For example, most records in MO are not available on line and the IRS is asking for a copy of the recorded deed or a copy of the HUD-1 or RESPA settlement sheet as proof.
IRS Warns Taxpayers to Beware of First-Time Homebuyer Credit Fraud
IRS vigorously pursues anyone who falsely tries to claim this or any other tax credit or deduction. The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund. So before claiming the credit, make sure that you meet the requirements, and claim the credit only after you actually purchase the home.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2008 Filing Requirements
2. Filing Requirement for a Dependent
3. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Wednesday, January 7, 2009
When will I get my tax refund?
You can have a refund check mailed to you or you can have your refund direct deposited directly to your account. If you e-filed your tax return, you should get your refund within 15 days if you opted for direct deposit and 21 days if IRS send you a paper check. If you have mailed you return to the IRS, then you should receive your refund check within 6 weeks.
Refund Information from IRS
Refund information does not become available until it has been 6 weeks since you filed your tax return (3 weeks if you filed electronically). After waiting the appropriate number of weeks, the fastest, easiest way to find out about your current year refund is to log onto http://www.irs.gov/. Click on Where's My Refund then go to Get My Refund Status. You can call Refund Hotline at (800) 829-1954. Be sure to have a copy of your current tax return available because you will need to know your social security number shown on your return, the filing status and the exact whole dollar amount of our refund. The IRS updates refund information every seven days.
Refund Information For an Amended Tax Return
You cannot check the status of a refund for an amended return on the automated tax line or by accessing "Where's my Refund." Amended/corrected returns are processed as quickly as possible. However, it may take 8 to 12 weeks or longer to process the return. If 8 weeks have elapsed and you have not received your refund, you may call (800) 829-1040.
Many taxpayers have filed amended tax returns for 2009 to be able to get First Time Homebuyers Credit. For such returns IRS is taking longer time to process the return.
In Case of Overpayment or Underpayment of Refund
If you receive a check for more than the refund you claimed, do not cash the check until you receive a notice explaining the difference. If you receive a check for a refund you are not entitled to, or for an overpayment that should have been credited to estimated tax, do not cash the check. Call the IRS.
If your refund check is for less than you claimed, you will get a notice explaining the difference. Cash the check; this does not stop you from claiming an additional amount of refund. If you did not receive a notice and you have any questions about the amount of your refund, you should wait for 2 weeks before calling the IRS. All or part of any interest you were charged on an erroneous refund generally will be forgiven. Any interest charged for the period before demand for repayment was made will be forgiven unless
1. You, or a person related to you, caused the erroneous refund in any way, or
2. The refund is more than $50,000.
Offset Against Debts
If you owe certain past amounts including federal income tax, other federal debts (such as student loans), state income tax, and child and spousal support payments, all or part of the refund may be used to pay all or part of the past-due amount. You will be notified by IRS if your refund is offset against debts.
(Also you can check in advance if you are flagged for offset or not by calling FMS Autoresponder line at 1-800-304-3107.)
Joint Return and injured spouse. When you file a joint return and only one spouse owes a past-due amount, the other spouse should file Form 8379, Injured Spouse Allocation, so that the other spouse gets his/her share of tax refund.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2008 Filing Requirements
2. Filing Requirement for a Dependent
3. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Refund Information from IRS
Refund information does not become available until it has been 6 weeks since you filed your tax return (3 weeks if you filed electronically). After waiting the appropriate number of weeks, the fastest, easiest way to find out about your current year refund is to log onto http://www.irs.gov/. Click on Where's My Refund then go to Get My Refund Status. You can call Refund Hotline at (800) 829-1954. Be sure to have a copy of your current tax return available because you will need to know your social security number shown on your return, the filing status and the exact whole dollar amount of our refund. The IRS updates refund information every seven days.
Refund Information For an Amended Tax Return
You cannot check the status of a refund for an amended return on the automated tax line or by accessing "Where's my Refund." Amended/corrected returns are processed as quickly as possible. However, it may take 8 to 12 weeks or longer to process the return. If 8 weeks have elapsed and you have not received your refund, you may call (800) 829-1040.
Many taxpayers have filed amended tax returns for 2009 to be able to get First Time Homebuyers Credit. For such returns IRS is taking longer time to process the return.
In Case of Overpayment or Underpayment of Refund
If you receive a check for more than the refund you claimed, do not cash the check until you receive a notice explaining the difference. If you receive a check for a refund you are not entitled to, or for an overpayment that should have been credited to estimated tax, do not cash the check. Call the IRS.
If your refund check is for less than you claimed, you will get a notice explaining the difference. Cash the check; this does not stop you from claiming an additional amount of refund. If you did not receive a notice and you have any questions about the amount of your refund, you should wait for 2 weeks before calling the IRS. All or part of any interest you were charged on an erroneous refund generally will be forgiven. Any interest charged for the period before demand for repayment was made will be forgiven unless
1. You, or a person related to you, caused the erroneous refund in any way, or
2. The refund is more than $50,000.
Offset Against Debts
If you owe certain past amounts including federal income tax, other federal debts (such as student loans), state income tax, and child and spousal support payments, all or part of the refund may be used to pay all or part of the past-due amount. You will be notified by IRS if your refund is offset against debts.
(Also you can check in advance if you are flagged for offset or not by calling FMS Autoresponder line at 1-800-304-3107.)
Joint Return and injured spouse. When you file a joint return and only one spouse owes a past-due amount, the other spouse should file Form 8379, Injured Spouse Allocation, so that the other spouse gets his/her share of tax refund.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2008 Filing Requirements
2. Filing Requirement for a Dependent
3. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Tuesday, October 28, 2008
2008 Filing Requirements for Most Taxpayers
2008 Filing Requirement
You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico and you meet the filing requirements as given below. However, if you are self employed or independent contractor, you must file tax return if your self employed income is $400 or more.
1. Filing Status Single
If under 65, must file tax return if gross income is at least $8,950.
If 65 or older, must file tax return if gross income is at least $10,300.
2. Filing Status Married Filing Jointly
If under 65 (both spouses), must file tax return if gross income is at least $17,900.
If 65 or older (one spouse), must file tax return if gross income is at least $18,950.
If 65 or older (both spouses), must file tax return if gross income is at least $20,000.
(Read Filing Status: Married Filing Jointly)
3. Filing Status Married Filing Separately
Any age, must file tax return if gross income is at least $3,500.
(Read Filing Status: Married Filing Separately)
4. Filing Status Head of Household
If under 65, must file tax return if gross income is at least $11,500.
If 65 or older, must file tax return if gross income is at least $12,850.
(Read More: Head of Household)
5. Filing Status Qualifying Widow(er) with Dependent Child
If under 65, must file tax return if gross income is at least $14,400.
If 65 or older, must file tax return if gross income is at least $15,450.
2008 Standard Deduction
For the 2008 tax return, the standard deduction amounts are,
*Single (other than head of household and Surviving Spouses) $5,450
*Married Filing Joint Returns and Surviving Spouses $10,900
*Married Filing Separate Returns $5,450
*Head of Households $8,000
The 2008 Exemption Deduction for each deduction is $3,500
If you are a dependent, read: Filing Requirements of a Dependent
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2008 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax
1. Working in Two or More States
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Thursday, September 11, 2008
Partnerships
Generally a partnership is a business organization with two or more members for carrying on a trade, business, financial operation, or venture and divides its profits. An incorporated organization is not partnership. An LLC having two or more owners is a partnership for federal tax purpose unless the LLC elects to be treated as a corporation and files Form 8832. The conversion of a partnership into an LLC classified as a partnership for federal tax purposes or conversion of an LLC classified as a partnership into a partnership does not terminate the partnership.
A partner can be an individual person, corporation, trust, estate, or another partnership. All general partners are personally liable for partnership liabilities. There can be no limited partners in a general partnership.
Partnership Tax Return (Form 1065)
A partnership must file an information return Form 1065 showing its income, deductions, and other required information. It must show the names and addresses of each partner and each partner's distributive share of taxable income. The return must be signed by a general partner. If a limited liability company is treated as a partnership, it must file Form 1065 and one of its members must sign the return.
A partnership is not considered to engage in a trade or business, and is not required to file a Form 1065, for any tax year in which it neither receives income nor pays or incurs any expenses treated as deductions or credits for federal income tax purposes.
A partnership files Income Tax Return Form 1065 and does not pay any taxes. The profit of a partnership is distributed among the partners. For this the partnership issues Form K-1 to the partners. Partners must include this profit in their own income and on this income pay 15.3% employment taxes.
Late Filing of Partnership Return
You the year 2007, the penalty is $85/month/partner, with a maximum of twelve months. The base penalty for 2008 is $86/month/partner with a maximum of twelve months.
Filing Extension Period
For the partnership returns (Form 1065 series) that have unextended due dates on or after January 1, 2009, the filing extension period is only five months (previously six months).
Partnership Termination
A partnership terminates when one of the following events take place
1. All its operations are discontinued and no part of any business, financial operation, or venture is continued by any of its partners in a partnership
2. At least 50% of the total interest in partnership capital and profits is sold or exchanged within a 12-month period, including sale or exchange to another partner (except in case an electing large partnership).
3. For special rules that apply to merger, consolidation, or division of partnership.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Complete List of Articles
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A partner can be an individual person, corporation, trust, estate, or another partnership. All general partners are personally liable for partnership liabilities. There can be no limited partners in a general partnership.
Partnership Tax Return (Form 1065)
A partnership must file an information return Form 1065 showing its income, deductions, and other required information. It must show the names and addresses of each partner and each partner's distributive share of taxable income. The return must be signed by a general partner. If a limited liability company is treated as a partnership, it must file Form 1065 and one of its members must sign the return.
A partnership is not considered to engage in a trade or business, and is not required to file a Form 1065, for any tax year in which it neither receives income nor pays or incurs any expenses treated as deductions or credits for federal income tax purposes.
A partnership files Income Tax Return Form 1065 and does not pay any taxes. The profit of a partnership is distributed among the partners. For this the partnership issues Form K-1 to the partners. Partners must include this profit in their own income and on this income pay 15.3% employment taxes.
Late Filing of Partnership Return
You the year 2007, the penalty is $85/month/partner, with a maximum of twelve months. The base penalty for 2008 is $86/month/partner with a maximum of twelve months.
Filing Extension Period
For the partnership returns (Form 1065 series) that have unextended due dates on or after January 1, 2009, the filing extension period is only five months (previously six months).
Partnership Termination
A partnership terminates when one of the following events take place
1. All its operations are discontinued and no part of any business, financial operation, or venture is continued by any of its partners in a partnership
2. At least 50% of the total interest in partnership capital and profits is sold or exchanged within a 12-month period, including sale or exchange to another partner (except in case an electing large partnership).
3. For special rules that apply to merger, consolidation, or division of partnership.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Complete List of Articles
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Tuesday, September 9, 2008
The U.S. Income Tax Topics 2
Reporting Tips
All tips you receive directly, through your employer and under a tip-splitting or tip-pooling are income. If you have tips income, you must keep a proper record of tips, report tips to your employer and report tips income on your tax return.
1. Keep a daily tip record. You can either maintain your personal tip diary, or keep copies of documents that show your tips, such as restaurant bills and credit card charge slips.
2. Report tips to your employer. You must report tips (amounting to $20 or more in a month) to your employer each month by the 10th of the next month so that your employer can withhold FICA taxes. If your employer does not give you any other way to report tips, you can use Form 4070. Fill in the information and give it to your employer. To get a 1-year supply of the form, ask your employer for Publication 1244 or contact IRS.
3. Report all your tips on your income tax return. Report your tips with your wages on line 1 of Form 1040EZ or line 7 of Form 1040A or Form 1040. You must report all tips you received in 2008 on your tax return, including both cash tips and non cash tips. Any tips you reported to your employer for 2008 are included in the wages shown in box 1 of your Form W-2. Add to the amount in box 1 only the tips you did not report to your employer.
Record Keeping
You must keep all the records as per the federal law.
1. For assessment of tax you owe, this generally is 3 years from the date you filed the return or the due date of the return, which ever is later.
2. For filing a claim for credit or refund, this generally is 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. Returns filed before the due date are treated as filed on the due date.
3. If you did not report income that you should have reported on your return, and it is more than 25% of the income shown on the return, the period of limitations does not run out until 6 years after you filed the return.
4. If a return is false or fraudulent with intent to evade tax, or if no return is filed, an action can generally be brought at any time
5. You may need to keep records relating to the basis of property longer than the period of limitations. Keep those records as long as they are important in figuring the basis of the original or replacement property. Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you.
The clause "if the return is false or fraudulent...," may mean that you should keep record for all your life.
Read http://www.irs.gov/businesses/small/article/0,,id=98513,00.html
What If I Have Incomplete Records?
If you do not have complete records to prove an element of an expense, then you must prove the element with:
*Your own written or oral statement, containing specific information about the element, and
*Other supporting evidence that is sufficient to establish the element.
Destroyed records. If you cannot produce a receipt because of reasons beyond your control, you can prove a deduction by reconstructing your records or expenses. Reasons beyond your control include fire, flood, and other casualty. Go through your bank statements, canceled checks, credit card statements and other records to collect as much information as you can. Get a copy of police report with you.
Excess Social Security Taxes Withheld
The Federal Insurance Contributions Act (FICA) provides for a federal system of old-age, survivors, disability, and hospital insurance. The FICA requires that the employer withhold social security tax at 6.2% and Medicare tax at 1.45% from the wages of the employees. For the year 2008 the social security tax is deducted from the first $102,000 of the wages while Medicare tax is deducted from the entire wages.If you, or your spouse if filing joint return, had more than one employer for 2008 and total wages of more than $102,000 (or $97,500 for 2007), too much social security tax may have been withheld. You can take a credit on this line for refund on line 67 of Form 1040 for the amount withheld in excess of $6324 for 2008 (or $6045 for 2007). But if any one employer withheld more than $6324, you cannot claim the excess on your return. The employer should adjust the tax for you. If the employer does not adjust the over collection amount, you can file a claim for refund using Form 843. The Form 843 is filed separate from the tax return.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Complete List of Articles
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Friday, August 22, 2008
The U.S. Income Tax Topics 1
1. Copy of Tax Return and Transcripts
If you did not keep a copy of your tax return, you can get it from IRS. You can also get transcripts of the tax return. Transcripts serve most of your requirements. There is no fee for the transcripts. Transcripts have most of the information from your tax return including information from W2, 1099. Transcripts are normally available for 3-years. You can order a transcript by calling 1-800-829-1040, or using Form 4506-T, Request for Transcript of Tax Return. If you have a fax number, you can get it faxed.
To request for Copy of Tax Return you must use Form 4506. You will get copy of tax return filed by you along with all the attachments (like W2, 1099..). For each return the charges are $39 and IRS takes about 60 days to complete your request. In the Form 4506 you can also authorize a third party to receive the return.
Debt Cancellation
Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. If canceled is intended as a gift to you, then it is not income. A debt includes any indebtedness for which you are personally liable. However, in case of bankruptcy, insolvency or no-recourse loans, the debt cancellation is not treated as income. A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. The lender cannot pursue you personally in case of default.
If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21 (Other Income). If it is a business debt, report the amount on Schedule C or Schedule C-EZ (Form 1040) (or on Schedule F, Profit or Loss From Farming (Form 1040), if the debt is farm debt and you are a farmer).
Also read about debt cancellation in case of foreclosure or repossession.
Settlement - Taxability
Part of settlement may be taxable depending upon:
1. Physical injuries or physical sickness settlements are generally non-taxable if you did not take an itemized deduction for medical expenses related to this injury in prior years. If you did deduct medical expenses related to the injury, the amount is taxable and is reported as "Other Income" on line 21 of Form 1040.
2 Interest, punitive damages, emotional distress or mental anguish, and employment discrimination or injury to reputation settlements are generally taxable. Interest is taxable as "Interest Income" and is reported on line 8a of Form 1040). Punitive damages, emotional distress or mental anguish, and employment discrimination or injury to reputation settlements are reported as "Other Income" on line 21 of Form 1040.
Punitive Damages are taxable even if is related to a physical injury or physical sickness). Emotional distress or mental anguish amounts are taxable to the extent that they exceed medical costs, not previously deducted, for treatment of emotional distress or mental anguish.
3. Loss-of-use or loss-in-value of property settlements may be taxable if the settlement exceeds your basis in the property; the excess is gain. Gains on personal capital assets are reported on Form 1040’s Schedule D, Capital Gains and Losses. Gains on business capital assets are reported on Form 4797, Sale of Business Property.
Scholarship and Fellowship Grants
If you are a degree candidate and if the financial aid (includes scholarship and fellowship grants) is for tuition fee, other fees, books, supplies and equipment, and are not a payment for your services, then it is not taxable. For a degree candidate aid for boarding and travel are taxable. If you are not a degree candidate, then all the financial aid is taxable. You must use Worksheet 1-1 in Chapter 1 of Publication 970 to figure out the taxable amount.
If you receive a scholarship award under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program, the amount received is tax free without regard to any services you are obligated to perform.
Scholarship and fellowship grants not reported on Form W-2 are included in your wages income. Also, enter “SCH” and the amount on the dotted line next to line 7 of Form 1040 (or line 1 of 1040EZ or line 7 of 1040A). However, if you were a degree candidate, include on line 7 only the amounts you used for expenses other than tuition and course-related expenses. For example, amounts used for room, board, and travel must be reported on line 7.
Any "SCH" amount that you put on line 7 of Form 1040 is subject to employment taxes at 15.3%. Include amounts you receive under a scholarship as pay for your services as an independent contractor in determining your net earnings from self-employment. If your net earnings are $400 or more, you will have to pay self-employment tax. Use Schedule SE, Self-Employment Tax, to figure this tax.
Read IRS Publication 970 - Tax Benefits for Education - Tax Benefits for Education; Chapter 1--Scholarships, Fellowships, Grants, and Tuition Reductions.
Social Security Income & Disability Benefits
Your social security benefits including social security disability benefits (excluding SSI payments) may be taxable, if the total of one-half of your benefits, plus all your other income including tax-exempt interest is more than the base amount for your filing status. The SSI benefits are not taxable.
Your base amount (without any exclusions) is:
$25,000 if you are single, head of household, or qualifying widow(er),
$25,000 if you are married filing separately and lived apart from your spouse for all of 2007,
$32,000 if you are married filing jointly, or
$-0- if you are married filing separately and lived with your spouse at any time during 2007.
Generally, up to 50% of your benefits will be taxable. However, up to 85 percent of your benefits could be taxed if
* you are a single and the total of all your other income plus half of your Social Security checks exceed $34,000,
* you are married filing jointly and the total of all your other income plus half of your Social Security checks exceed $44,000, or
* you are married filing separately and lived with your spouse at any time during 2008.
To find out your taxable benefits, you must complete the work sheet found in your Form 1040 or 1040A instruction book.
Your social security benefits or rail road benefits are reported in box 5 of Form SSA-1099 or RRB-1099. Enter is amount on Form 1040 line 20a or on Form 1040A line 14a. The taxable part of the benefits will appear on Form 1040 line 20b or on Form 1040A line 14b.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Filing W4 Employee’s Withholding Allowance Certificate
4. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Complete List of Articles
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Foreclosure or Repossession of Main Home
The current economic crisis is causing record number of foreclosures, short sales and debt cancellations. If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. In the foreclosure, the homeowner relinquishes title of property generally to the bank that holds the first mortgage or deed of trust on the property. Homeowners associations, taxing agencies, and other interested parties will sometimes also foreclose on a property. In case of foreclosures and short sales, when mortgages are not paid in full upon the transfer of real estate, it may be complicated to calculated the tax implications.
If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. If your home was foreclosed on or repossessed, you may have two tax situations:
1. You have a sale. The sale may generate capital gain or loss. You figure the gain or loss from the sale in generally the same way as gain or loss from any sale. But the selling price of your home used to figure the amount of your gain or loss depends, in part, on whether you were personally liable for repaying the debt secured by the home.
2. You have forgiveness of debt. Debt forgiveness may generate taxable ordinary income.
Form 1099-A and Form 1099-C.
Generally, you will receive Form 1099-A, Acquisition or Abandonment of Secured Property, from your lender. This form will have the information you need to determine the amount of your gain or loss and any ordinary income from cancellation of debt. If your debt is canceled, you may receive Form 1099-C, Cancellation of Debt. You may need to report the cancellation of debt as income. When you borrowed the money you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. However, in case of bankruptcy, insolvency or no-recourse loans, the debt cancellation is not treated as income.
Non-Recourse Loan. A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. The lender cannot pursue you personally in case of default.
Mortgage Forgiveness Debt Relief Act of 2007.
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt of recourse loan on their principal residence. The provision is to exclude cancelled mortgage debt from income applies only to the portion of the debt that was used to buy, build or improve the residence. Debt forgiven in connection with a foreclosure or debt reduced through mortgage restructuring, qualify for this relief.
The act applies to qualified debt forgiven in the years 2007, 2008 or 2009, and the taxpayer may be able to claim special tax relief up to $ 2 million (The limit is $1 million for a married person filing a separate return) by filling out newly-revised Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)) and attaching it to their federal income tax return.
If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. If your home was foreclosed on or repossessed, you may have two tax situations:
1. You have a sale. The sale may generate capital gain or loss. You figure the gain or loss from the sale in generally the same way as gain or loss from any sale. But the selling price of your home used to figure the amount of your gain or loss depends, in part, on whether you were personally liable for repaying the debt secured by the home.
2. You have forgiveness of debt. Debt forgiveness may generate taxable ordinary income.
Form 1099-A and Form 1099-C.
Generally, you will receive Form 1099-A, Acquisition or Abandonment of Secured Property, from your lender. This form will have the information you need to determine the amount of your gain or loss and any ordinary income from cancellation of debt. If your debt is canceled, you may receive Form 1099-C, Cancellation of Debt. You may need to report the cancellation of debt as income. When you borrowed the money you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. However, in case of bankruptcy, insolvency or no-recourse loans, the debt cancellation is not treated as income.
Non-Recourse Loan. A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. The lender cannot pursue you personally in case of default.
Mortgage Forgiveness Debt Relief Act of 2007.
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt of recourse loan on their principal residence. The provision is to exclude cancelled mortgage debt from income applies only to the portion of the debt that was used to buy, build or improve the residence. Debt forgiven in connection with a foreclosure or debt reduced through mortgage restructuring, qualify for this relief.
The act applies to qualified debt forgiven in the years 2007, 2008 or 2009, and the taxpayer may be able to claim special tax relief up to $ 2 million (The limit is $1 million for a married person filing a separate return) by filling out newly-revised Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)) and attaching it to their federal income tax return.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Filing W4 Employee’s Withholding Allowance Certificate
4. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
State Tax Return
1. Working in Two or More States
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Saturday, August 9, 2008
Elective Deferrals 401(k) Plans
Retirement Plan
A section 401(k) plan allows an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre–tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 since they were not included in the taxable wages on your Form W-2. However, they are included as wages subject to social security, Medicare, and federal unemployment taxes.
A 401(k) plan can have an automatic enrollment feature. The employer can automatically reduce your pay by a fixed percentage and contribute that amount to the 401(k) plan unless you (the employee) affirmatively chooses not to invest 401(k) or reduce your investment percentage. These contributions qualify as elective deferrals.
Eligible Plans
In general, a qualified plan can include a cash or deferred arrangement only if the qualified plan is one of the following plans.
1. A profit-sharing plan, or
2. A money purchase pension plan in existence on June 27, 1974, that included a salary reduction arrangement on that date.
For tax years beginning after December 31, 2005, a 401(k) plan may allow employees to contribute to a qualified Roth contribution program.
Matching Contributions
In many 401(k) plans, the employer may also choose to make matching contributions to your 401(k) plan. For example, an employer contributes 50 cents for each dollar you choose to defer under your 401(k) plan.
Contribution Dollar Limit
The amount that an employee may elect to defer to a 401(k) plan is limited. This limit applies without regard to community property laws. For 2007 and 2008, the basic limit on elective deferrals is $15,500 per year. If the deferral limit is exceeded, the difference is included in the employee's gross income.
Catch-up contributions. A 401(k) plan can permit participants over the age of 50 to make catch-up contributions. The catch-up contribution limit for 2007 and 2008 is $5,000 per year. Elective deferrals are not treated as catch-up contributions for 2007 until they exceed the $15,500 limit. However, the catch-up contribution a participant can make for a year cannot exceed the excess of the participant's compensation over the elective deferrals that are not catch-up contributions.
Reporting on Form W-2
The employer must report the total amount deferred in boxes 3, 5, and 12 of an employee's Form W-2.
Early Withdrawal
In most cases, if you withdraw funds from your 401(k) plan before you are 59 1/2, you must pay the 10 percent additional tax on early distributions on any amounts that are not rolled into an IRA. However, this additional tax will not apply if the payments are made after your separation from service in or after the year you reached age 55, or if the payments are part of a series of substantially equal payments that are paid over your life.
Hardship Distribution
Many 401(k) plans allow employees to make a hardship withdrawal because of immediate and heavy financial needs. Generally, hardship distributions from a 401(k) plan are limited to the amount of the employee's elective deferrals only, and do not include any income earned on the deferred amounts. Hardship distributions are not treated as eligible rollover distributions.
Exceptions to Early Withdrawal
The tax does not apply to distributions that are
1. If you are totally and permanently disabled,
2. After the death of the plan participant or contract holder,
3. After your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees),
4. Made to an alternate payee under a qualified domestic relations order,
5. You have deductible medical expenses (medical expenses that exceed 7.5% of your adjusted gross income), whether or not you itemize your deductions for the year,
6. From an employee stock ownership plan for dividends on employer securities held by the plan,
7. Made due to an IRS levy of the plan, or
8. Made from elective deferral accounts under 401(k) or 403(b) plans, or similar arrangements that are qualified reservist distributions.
Early Withdrawal for Home Purchase
If you are under the age of 59 1/2, any withdraw from your 401(k) plan to purchase your first home, the withdrawal is subject to a 10 percent early distribution tax. However, depending on the rules for your 401(k) plan, you may be able to borrow money from your 401(k) plan to purchase your first home. Check with your 401(k) plan administrator.
Change of Job
When you leave your job, your old employer may send you a check for your 401(k) and withhold 20% tax. You have 60 days to roll over the entire distribution (including 20% withholding tax) to your current employer's 401(k) plan without at tax implications. However, if the amount rolled over was the net amount, that is, the amount of the distribution less the tax withheld, then the 20% withholding amount not rolled over is included in gross taxable income and may be subject to a 10 percent additional tax on early distribution.
Lump Sum Distribution After retirement
A lump-sum distribution is the distribution or payment, within a single tax year, of an employee's entire balance from all of the employer's qualified pension, profit-sharing, or stock bonus plans.
If the lump-sum distribution qualifies, you can elect to treat the portion of the payment attributable to your active participation in the plan before 1974 as long-term capital gain taxed at a 20% rate. If you are born before January 2, 1936, you can also elect to figure the tax on the rest of the distribution using the 10–year tax option (Form 4972). You should receive a Form 1099-R from the payer of the lump-sum distribution showing your taxable distribution and the amount eligible for capital gain treatment.
The Retirement Benefits – Pension and Annuities
If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, the amounts you receive may be fully taxable, or partially taxable. If you contributed after–tax dollars to your pension or annuity, your pension payments are partially taxable. You will not pay tax on the part of the payment that represents a return of the after–tax amount you paid. If the starting date of your pension or annuity payments is after November 18, 1996, you generally must use the Simplified Method to determine how much of your annuity payments is taxable and how much is tax free.
Required Beginning Date
A participant in the 401(k) plan must begin to receive required minimum distributions (RMDs) from his or her qualified retirement plan by April 1 of the first year after the later of the following years.
*Calendar year in which he or she reaches age 70½.
*Calendar year in which he or she retires from employment with the employer maintaining the plan.
However, the plan may require the participant to begin receiving distributions by April 1 of the year after the participant reaches age 701/ even if the participant has not retired. If no distribution is made in your starting year, the minimum required distributions for 2 years must be made the following year (one by April 1 and one by December 31). If you do not take the distribution, the excess accumulation is subject to 50% excise tax.
To calculate the RMD, divide the amount in the account at year end by the number of years left in the owner’s life expectancy and take out that amount. Normally from the distribution, the plan administrator must withhold federal income tax at 20%.
Form 5329
Use Form 5329, Additional Taxes on Other Qualified Plans (including IRA's), and Other Tax-Favored Accounts, to report any 401(k) tax penalty.
When you withdraw from 401(k), the plan administrator will send you Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. On your tax return, report the amount in box 1 of 1099-R as income, and the amount in box 4 of 1099-R as federal income tax withholding.
Reference: IRS Publication 4222 401(k) Plans for Small Business; http://www.irs.gov/
A section 401(k) plan allows an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre–tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 since they were not included in the taxable wages on your Form W-2. However, they are included as wages subject to social security, Medicare, and federal unemployment taxes.
A 401(k) plan can have an automatic enrollment feature. The employer can automatically reduce your pay by a fixed percentage and contribute that amount to the 401(k) plan unless you (the employee) affirmatively chooses not to invest 401(k) or reduce your investment percentage. These contributions qualify as elective deferrals.
Eligible Plans
In general, a qualified plan can include a cash or deferred arrangement only if the qualified plan is one of the following plans.
1. A profit-sharing plan, or
2. A money purchase pension plan in existence on June 27, 1974, that included a salary reduction arrangement on that date.
For tax years beginning after December 31, 2005, a 401(k) plan may allow employees to contribute to a qualified Roth contribution program.
Matching Contributions
In many 401(k) plans, the employer may also choose to make matching contributions to your 401(k) plan. For example, an employer contributes 50 cents for each dollar you choose to defer under your 401(k) plan.
Contribution Dollar Limit
The amount that an employee may elect to defer to a 401(k) plan is limited. This limit applies without regard to community property laws. For 2007 and 2008, the basic limit on elective deferrals is $15,500 per year. If the deferral limit is exceeded, the difference is included in the employee's gross income.
Catch-up contributions. A 401(k) plan can permit participants over the age of 50 to make catch-up contributions. The catch-up contribution limit for 2007 and 2008 is $5,000 per year. Elective deferrals are not treated as catch-up contributions for 2007 until they exceed the $15,500 limit. However, the catch-up contribution a participant can make for a year cannot exceed the excess of the participant's compensation over the elective deferrals that are not catch-up contributions.
Reporting on Form W-2
The employer must report the total amount deferred in boxes 3, 5, and 12 of an employee's Form W-2.
Early Withdrawal
In most cases, if you withdraw funds from your 401(k) plan before you are 59 1/2, you must pay the 10 percent additional tax on early distributions on any amounts that are not rolled into an IRA. However, this additional tax will not apply if the payments are made after your separation from service in or after the year you reached age 55, or if the payments are part of a series of substantially equal payments that are paid over your life.
Hardship Distribution
Many 401(k) plans allow employees to make a hardship withdrawal because of immediate and heavy financial needs. Generally, hardship distributions from a 401(k) plan are limited to the amount of the employee's elective deferrals only, and do not include any income earned on the deferred amounts. Hardship distributions are not treated as eligible rollover distributions.
Exceptions to Early Withdrawal
The tax does not apply to distributions that are
1. If you are totally and permanently disabled,
2. After the death of the plan participant or contract holder,
3. After your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees),
4. Made to an alternate payee under a qualified domestic relations order,
5. You have deductible medical expenses (medical expenses that exceed 7.5% of your adjusted gross income), whether or not you itemize your deductions for the year,
6. From an employee stock ownership plan for dividends on employer securities held by the plan,
7. Made due to an IRS levy of the plan, or
8. Made from elective deferral accounts under 401(k) or 403(b) plans, or similar arrangements that are qualified reservist distributions.
Early Withdrawal for Home Purchase
If you are under the age of 59 1/2, any withdraw from your 401(k) plan to purchase your first home, the withdrawal is subject to a 10 percent early distribution tax. However, depending on the rules for your 401(k) plan, you may be able to borrow money from your 401(k) plan to purchase your first home. Check with your 401(k) plan administrator.
Change of Job
When you leave your job, your old employer may send you a check for your 401(k) and withhold 20% tax. You have 60 days to roll over the entire distribution (including 20% withholding tax) to your current employer's 401(k) plan without at tax implications. However, if the amount rolled over was the net amount, that is, the amount of the distribution less the tax withheld, then the 20% withholding amount not rolled over is included in gross taxable income and may be subject to a 10 percent additional tax on early distribution.
Lump Sum Distribution After retirement
A lump-sum distribution is the distribution or payment, within a single tax year, of an employee's entire balance from all of the employer's qualified pension, profit-sharing, or stock bonus plans.
If the lump-sum distribution qualifies, you can elect to treat the portion of the payment attributable to your active participation in the plan before 1974 as long-term capital gain taxed at a 20% rate. If you are born before January 2, 1936, you can also elect to figure the tax on the rest of the distribution using the 10–year tax option (Form 4972). You should receive a Form 1099-R from the payer of the lump-sum distribution showing your taxable distribution and the amount eligible for capital gain treatment.
The Retirement Benefits – Pension and Annuities
If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, the amounts you receive may be fully taxable, or partially taxable. If you contributed after–tax dollars to your pension or annuity, your pension payments are partially taxable. You will not pay tax on the part of the payment that represents a return of the after–tax amount you paid. If the starting date of your pension or annuity payments is after November 18, 1996, you generally must use the Simplified Method to determine how much of your annuity payments is taxable and how much is tax free.
Required Beginning Date
A participant in the 401(k) plan must begin to receive required minimum distributions (RMDs) from his or her qualified retirement plan by April 1 of the first year after the later of the following years.
*Calendar year in which he or she reaches age 70½.
*Calendar year in which he or she retires from employment with the employer maintaining the plan.
However, the plan may require the participant to begin receiving distributions by April 1 of the year after the participant reaches age 701/ even if the participant has not retired. If no distribution is made in your starting year, the minimum required distributions for 2 years must be made the following year (one by April 1 and one by December 31). If you do not take the distribution, the excess accumulation is subject to 50% excise tax.
To calculate the RMD, divide the amount in the account at year end by the number of years left in the owner’s life expectancy and take out that amount. Normally from the distribution, the plan administrator must withhold federal income tax at 20%.
Form 5329
Use Form 5329, Additional Taxes on Other Qualified Plans (including IRA's), and Other Tax-Favored Accounts, to report any 401(k) tax penalty.
When you withdraw from 401(k), the plan administrator will send you Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. On your tax return, report the amount in box 1 of 1099-R as income, and the amount in box 4 of 1099-R as federal income tax withholding.
Reference: IRS Publication 4222 401(k) Plans for Small Business; http://www.irs.gov/
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Filing W4 Employee’s Withholding Allowance Certificate
4. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
State Tax Return
1. Working in Two or More States
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Tuesday, August 5, 2008
The U.S. Visas
Here is a list of some common visas for the U.S.
Visa A. The A-1 nonimmigrant visa is given to diplomats representing a foreign government inside the United States of America. Spouses and dependents are also eligible for this visa.
Your days in the U.S. are exempt from residency so you are non-resident. Employees of foreign governments, their families, and their servants are exempt on salaries paid to them in their official capacities as foreign government employees.
Visitor Visa B1/B2. The "B" Visitor Visa is a non-immigrant visa for persons desiring to enter the United States temporarily for business (B-1) or temporarily for pleasure (B-2).
Normally, B-1 visa holders cannot take up work in the U.S. Under a few circumstances, B-1 visitors may perform work like missionaries, volunteer workers for non-profit entities, certain domestic servants whose employers are not U.S. residents, certain airline employees.
For federal income tax purpose, your days on presence in the U.S. on B-1 visa count towards substantial presence test.
Visa G. The G-4 visa is nonimmigrant visa which allows foreign officers or employees of international organizations of any rank to enter into the U.S. to engage in business activities and not for personal business and pleasure. The staff and immediate family members of principal G-4 visa holders also qualify for G-4 visa.
Your dependents may work only after receiving permission from the USCIS. Working without prior permission is considered a violation of the visa status. They may apply for permission to work if there is a reciprocal work arrangement between the U.S. and your nation.
As a full time employee of an international organisation, you are exempt from income tax and will file Form 1040NR or 1040NR-EZ and Form. Employees of international organizations are exempt from Social Security/Medicare taxes on wages paid to them for services performed within the United States in their official capacity as employees of such organizations.
The exemption does not automatically apply to servants of employees of such international organizations. The exemption does not apply to spouses and children of nonimmigrants in G status who are employed in the United States by anyone other than an international organization.
Non-immigrant Work Visa E3. The E-3 are non-immigrant visas that allow Australians to work in the U.S. without restrictions. E-3 is issued for 2 years but is renewable indefinitely. Visas issued to spouses and children are not included in the E3 quota and spouses and children do not need to be Australian citizens.
The income in the U.S. is subject to FICA taxes and income taxes, and the days in the U.S. count towards the Substantial Presence Test (SPT). However, under the totalization agreement with Australia, your tax payments will be credited to the equivalent program in Australia.
During the first year on E3, if you do not meet SPT, you will file non-resident tax return Form 1040NR or 1040NR-EZ. If you meet SPT, then you are dual status resident, and file dual status tax return. A dual status resident who is married and meets SPT in the next year can choose to file joint tax return as residents under "First Year Choice."
Student Visa F1. There are two nonimmigrant visa categories for persons wishing to study in the United States. The "F" visa is for academic studies, and the "M" visa is for nonacademic or vocational studies.
An F1 student (including OPT or CPT period) is exempt from residency for 5-years and must file non-resident tax return Form 1040NR or 1040NR-EZ and 8843. During this period your income is not subject to FICA (Social Security and Medicare) taxes. Normally, on the nonresident tax return, you get your personal exemption and itemized deductions, and you do not get exemption deductions for your spouse and dependents except if you are from Canada, Mexico or South Korea or if allowed by the tax treaty. You may get some deduction based on the tax treaty with your country of citizenship, which you can claim on your tax return.
After you have completed 5-years on F1 or OPT, your days in the U.S. count towards the Substantial Presence Test (SPT). If you meet the SPT, you are resident for tax purpose, and must file resident tax return. Your income is subject to FICA taxes. On your tax return, you will get standard deduction unless you wish to itemize your deductions. If you are married, then you will file as Married Filing Jointly or Married Filing Separately. You can also claim exemption for dependents. On the resident tax return, just like the U.S. citizens and residents, you must report your worldwide income for the year.
In some cases, even after spending more than five years as student in the U.S., you can still claim exemption from residency (and not pay FICA taxes) and file non-resident tax return if you must provide sufficient facts on an attached statement to establish that you do not intend to reside permanently in the United States. You must prove that you maintained closer connection to your country of citizenship than to the U.S.
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Exchange Visitor Visa J1 and J2. A J-1 Visa is issued for an Exchange Visitor who is participating in an established J Exchange program pre-approved by the State Department. Exchange Visitors under J-1 visas include secondary school and college students, business trainees, trainees in flight aviation programs, primary and secondary school teachers, college professors, research scholars, medical residents or interns receiving medical training in the U.S., certain specialists, international visitors, and Government visitors. This rule requires some J visa holders to reside in their home country for at least two years before they may obtain an H, L or other immigrant visa to enter the U.S. or adjust their status within the U.S. A J-2 Visa is issued to a child (under age 21) or spouse of a J-1 principal. Once the minor child reaches his/her 21st birthday, he/she no longer qualifies for a J-2 visa or J-2 status. Also, if the J-2 spouse divorces the J-1 status holder, he/she no longer qualifies for J-2 status.
Everyone on J1 visa is exempt from residency for 2 years. J1 students, just like F1 visa holders, are exempt for 5 years. During the exempt period, your income is not subject to FICA taxes and you must file non-resident tax return Form 1040NR or 1040NR-EZ. Normally, on the nonresident tax return, you get your personal exemption and itemized deductions, and you do not get exemption deductions for your spouse and children (unless allowed by the tax treaty). You will also get deduction is based on the tax treaty.
Based on the tax for many countries the J1 Researchers, Professors and Teachers are exempt from federal income tax for two year, and for many countries the exemption is lost if the visa holder over stays.
After the exempt period, the days in the U.S. count towards the Substantial Presence Test (SPT). If you meet the SPT, you are resident for tax purpose, and must file resident tax return.
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Non-immigrant Work Visa H1-B and H4. The H-1B is a non-immigrant visa category that allows U.S. employers to seek temporary help from skilled foreigners who have the equivalent U.S. Bachelor's Degree education. H-1B employees are employed temporarily in a job category that is considered by the U.S. Citizenship & Immigration Services to be a "specialty occupation." An H1B visa is typically valid for up to six (6) years and entitles your spouse (husband/wife) and children to accompany you and 'live' in America. H1-B visa holders can apply for a Green Card (Legal Permanent Residency).
The income in the U.S. is subject to FICA (Social Security and Medicare) taxes and income taxes, and the days in the U.S. count towards the Substantial Presence Test SPT. If you are single, then during the first year of H1-B, if you do not meet SPT, you will file non-resident tax return. If you meet SPT, and you were non-resident in the beginning of the year, then you will file dual status tax return.
If you are married, then during the first year of H1-B, if you do not meet SPT, you can file non-resident tax return or you can file joint return as residents after you meet SPT in the next year. If you meet SPT, then you can file joint return as residents. On the resident tax return, you can also claim exemption for dependents. On the resident tax return, just like the U.S. citizens and residents, you must report your worldwide income for the year.
On the joint return, it is not required that your spouse must be in the U.S. or must be resident of the U.S. If your spouse can not get SSN, then you will attach W7 (ITIN application) with your tax return. Also for a dependent, who can not get SSN, you will attach W7 (ITIN application).
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Non-immigrant Inter-company Transferee Visa L1 and L2. The United States L1 is non-immigrant visa classification that applies to an intra-company transferee. It allows companies operating both in the US and abroad to transfer certain classes of employee from its foreign operations to the USA operations for up to seven years. The employee must be in in a managerial, executive, or specialized knowledge capacity and must have worked for a subsidiary, parent, affiliate or branch office of your US company outside of the US for at least one year out of the last three years.
Spouses of L-1 visa holders get L2 visa and are allowed to work after obtaining work authorization, without restriction, in the US, and the L-1 visa may legally be used as a steppingstone to the Green Card under the doctrine of dual intent. An L2 visa holder may engage in full or part time study. Children of L1 visa holder also get L2 visa.
The income in the U.S. is subject to FICA (Social Security and Medicare) taxes and income taxes, and the days in the U.S. count towards the Substantial Presence Test SPT.
If you are single, then during the first year of L1, if you do not meet SPT, you will file non-resident tax return. If you meet SPT, and you were non-resident in the beginning of the year, then you will file dual status tax return.
If you are married, then during the first year of L1, if you do not meet SPT, you can file non-resident tax return or you can file joint return as residents after you meet SPT in the next year. If you meet SPT, then you can file joint return as residents. On the resident tax return, you can also claim exemption for dependents. On the resident tax return, just like the U.S. citizens and residents, you must report your worldwide income for the year.
On the joint return, it is not required that your spouse must be in the U.S. or must be resident of the U.S. If your spouse can not get SSN, then you will attach W7 (ITIN application) with your tax return. Also for a dependent, who can not get SSN, you will attach W7 (ITIN application).
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Visa A. The A-1 nonimmigrant visa is given to diplomats representing a foreign government inside the United States of America. Spouses and dependents are also eligible for this visa.
Your days in the U.S. are exempt from residency so you are non-resident. Employees of foreign governments, their families, and their servants are exempt on salaries paid to them in their official capacities as foreign government employees.
Visitor Visa B1/B2. The "B" Visitor Visa is a non-immigrant visa for persons desiring to enter the United States temporarily for business (B-1) or temporarily for pleasure (B-2).
Normally, B-1 visa holders cannot take up work in the U.S. Under a few circumstances, B-1 visitors may perform work like missionaries, volunteer workers for non-profit entities, certain domestic servants whose employers are not U.S. residents, certain airline employees.
For federal income tax purpose, your days on presence in the U.S. on B-1 visa count towards substantial presence test.
Visa G. The G-4 visa is nonimmigrant visa which allows foreign officers or employees of international organizations of any rank to enter into the U.S. to engage in business activities and not for personal business and pleasure. The staff and immediate family members of principal G-4 visa holders also qualify for G-4 visa.
Your dependents may work only after receiving permission from the USCIS. Working without prior permission is considered a violation of the visa status. They may apply for permission to work if there is a reciprocal work arrangement between the U.S. and your nation.
As a full time employee of an international organisation, you are exempt from income tax and will file Form 1040NR or 1040NR-EZ and Form. Employees of international organizations are exempt from Social Security/Medicare taxes on wages paid to them for services performed within the United States in their official capacity as employees of such organizations.
The exemption does not automatically apply to servants of employees of such international organizations. The exemption does not apply to spouses and children of nonimmigrants in G status who are employed in the United States by anyone other than an international organization.
Non-immigrant Work Visa E3. The E-3 are non-immigrant visas that allow Australians to work in the U.S. without restrictions. E-3 is issued for 2 years but is renewable indefinitely. Visas issued to spouses and children are not included in the E3 quota and spouses and children do not need to be Australian citizens.
The income in the U.S. is subject to FICA taxes and income taxes, and the days in the U.S. count towards the Substantial Presence Test (SPT). However, under the totalization agreement with Australia, your tax payments will be credited to the equivalent program in Australia.
During the first year on E3, if you do not meet SPT, you will file non-resident tax return Form 1040NR or 1040NR-EZ. If you meet SPT, then you are dual status resident, and file dual status tax return. A dual status resident who is married and meets SPT in the next year can choose to file joint tax return as residents under "First Year Choice."
Student Visa F1. There are two nonimmigrant visa categories for persons wishing to study in the United States. The "F" visa is for academic studies, and the "M" visa is for nonacademic or vocational studies.
An F1 student (including OPT or CPT period) is exempt from residency for 5-years and must file non-resident tax return Form 1040NR or 1040NR-EZ and 8843. During this period your income is not subject to FICA (Social Security and Medicare) taxes. Normally, on the nonresident tax return, you get your personal exemption and itemized deductions, and you do not get exemption deductions for your spouse and dependents except if you are from Canada, Mexico or South Korea or if allowed by the tax treaty. You may get some deduction based on the tax treaty with your country of citizenship, which you can claim on your tax return.
After you have completed 5-years on F1 or OPT, your days in the U.S. count towards the Substantial Presence Test (SPT). If you meet the SPT, you are resident for tax purpose, and must file resident tax return. Your income is subject to FICA taxes. On your tax return, you will get standard deduction unless you wish to itemize your deductions. If you are married, then you will file as Married Filing Jointly or Married Filing Separately. You can also claim exemption for dependents. On the resident tax return, just like the U.S. citizens and residents, you must report your worldwide income for the year.
In some cases, even after spending more than five years as student in the U.S., you can still claim exemption from residency (and not pay FICA taxes) and file non-resident tax return if you must provide sufficient facts on an attached statement to establish that you do not intend to reside permanently in the United States. You must prove that you maintained closer connection to your country of citizenship than to the U.S.
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Exchange Visitor Visa J1 and J2. A J-1 Visa is issued for an Exchange Visitor who is participating in an established J Exchange program pre-approved by the State Department. Exchange Visitors under J-1 visas include secondary school and college students, business trainees, trainees in flight aviation programs, primary and secondary school teachers, college professors, research scholars, medical residents or interns receiving medical training in the U.S., certain specialists, international visitors, and Government visitors. This rule requires some J visa holders to reside in their home country for at least two years before they may obtain an H, L or other immigrant visa to enter the U.S. or adjust their status within the U.S. A J-2 Visa is issued to a child (under age 21) or spouse of a J-1 principal. Once the minor child reaches his/her 21st birthday, he/she no longer qualifies for a J-2 visa or J-2 status. Also, if the J-2 spouse divorces the J-1 status holder, he/she no longer qualifies for J-2 status.
Everyone on J1 visa is exempt from residency for 2 years. J1 students, just like F1 visa holders, are exempt for 5 years. During the exempt period, your income is not subject to FICA taxes and you must file non-resident tax return Form 1040NR or 1040NR-EZ. Normally, on the nonresident tax return, you get your personal exemption and itemized deductions, and you do not get exemption deductions for your spouse and children (unless allowed by the tax treaty). You will also get deduction is based on the tax treaty.
Based on the tax for many countries the J1 Researchers, Professors and Teachers are exempt from federal income tax for two year, and for many countries the exemption is lost if the visa holder over stays.
After the exempt period, the days in the U.S. count towards the Substantial Presence Test (SPT). If you meet the SPT, you are resident for tax purpose, and must file resident tax return.
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Non-immigrant Work Visa H1-B and H4. The H-1B is a non-immigrant visa category that allows U.S. employers to seek temporary help from skilled foreigners who have the equivalent U.S. Bachelor's Degree education. H-1B employees are employed temporarily in a job category that is considered by the U.S. Citizenship & Immigration Services to be a "specialty occupation." An H1B visa is typically valid for up to six (6) years and entitles your spouse (husband/wife) and children to accompany you and 'live' in America. H1-B visa holders can apply for a Green Card (Legal Permanent Residency).
The income in the U.S. is subject to FICA (Social Security and Medicare) taxes and income taxes, and the days in the U.S. count towards the Substantial Presence Test SPT. If you are single, then during the first year of H1-B, if you do not meet SPT, you will file non-resident tax return. If you meet SPT, and you were non-resident in the beginning of the year, then you will file dual status tax return.
If you are married, then during the first year of H1-B, if you do not meet SPT, you can file non-resident tax return or you can file joint return as residents after you meet SPT in the next year. If you meet SPT, then you can file joint return as residents. On the resident tax return, you can also claim exemption for dependents. On the resident tax return, just like the U.S. citizens and residents, you must report your worldwide income for the year.
On the joint return, it is not required that your spouse must be in the U.S. or must be resident of the U.S. If your spouse can not get SSN, then you will attach W7 (ITIN application) with your tax return. Also for a dependent, who can not get SSN, you will attach W7 (ITIN application).
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Non-immigrant Inter-company Transferee Visa L1 and L2. The United States L1 is non-immigrant visa classification that applies to an intra-company transferee. It allows companies operating both in the US and abroad to transfer certain classes of employee from its foreign operations to the USA operations for up to seven years. The employee must be in in a managerial, executive, or specialized knowledge capacity and must have worked for a subsidiary, parent, affiliate or branch office of your US company outside of the US for at least one year out of the last three years.
Spouses of L-1 visa holders get L2 visa and are allowed to work after obtaining work authorization, without restriction, in the US, and the L-1 visa may legally be used as a steppingstone to the Green Card under the doctrine of dual intent. An L2 visa holder may engage in full or part time study. Children of L1 visa holder also get L2 visa.
The income in the U.S. is subject to FICA (Social Security and Medicare) taxes and income taxes, and the days in the U.S. count towards the Substantial Presence Test SPT.
If you are single, then during the first year of L1, if you do not meet SPT, you will file non-resident tax return. If you meet SPT, and you were non-resident in the beginning of the year, then you will file dual status tax return.
If you are married, then during the first year of L1, if you do not meet SPT, you can file non-resident tax return or you can file joint return as residents after you meet SPT in the next year. If you meet SPT, then you can file joint return as residents. On the resident tax return, you can also claim exemption for dependents. On the resident tax return, just like the U.S. citizens and residents, you must report your worldwide income for the year.
On the joint return, it is not required that your spouse must be in the U.S. or must be resident of the U.S. If your spouse can not get SSN, then you will attach W7 (ITIN application) with your tax return. Also for a dependent, who can not get SSN, you will attach W7 (ITIN application).
Any Question? Or for consultation, contaxt ustaxfiling@gmail.com
Useful Articles for Aliens
1. U.S. Tax Filing Requirements for Non-Residents
2. Substantial Presence Test
3. Social Security and Medicare (FICA) Taxes for Non-resident Exempt Individual
4. U.S. Tax Treaties for Professors, Teachers and Researchers
5. U.S. Tax Treaties for Students and Apprentices
6. Mandatory Reporting of Foreign Bank and Financial Accounts
7. The U.S. Visas
Complete List of Articles
OctroTalk - World's First without 3G Live Video Chat/Conference & Video Streaming for Mobile Phones -- For Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. OctroTalk has instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference. Free Trial/Download http://www.octro.com/
Thursday, June 19, 2008
Working or Living in Two or More states
If you work in two different states, you will file tax return in both the states. One state is your tax home white the other state is where you are part year resident. In some cases, you may be part year resident of two or more states.
In the state that is not your tax home, where you are part year resident, report income you earned while in that state. If you have received only one W2 from your employer, then use simple arithmetic based on number of days spent in the state to figure our the income that you should report to this state.
In the state that is your tax home, report your worldwide income for full year. Also in this state claim credit for the taxes paid to the other state.
State with no income tax. The states that do not have individual income taxes are Florida, Alaska, Nevada, South Dakota, Washington, Texas and Wyoming. In New Hampshire you only pay income tax on Dividend and Interest income at flat rate of 5%. Tennessee does have tax on income (at a 6% rate) received from stocks and bonds not taxed ad valorem.
Florida, Alaska and South Dakota have corporate income tax. Washington has a corporate tax called the "Business and Occupation Tax (B&O)", which is a gross receipts tax. Texas in May 2006, passed a franchise tax on businesses (sole proprietorships and some partnerships are exempt).
States with a flat rate personal income tax. Most states (34) have a progressive income tax, where the rate rises as an income gets larger. Following states have flat rate income tax: Colorado 4.63%, Illinois 3%, Indiana 3.4%, Massachusetts 5.3%, Michigan 4.35%, Pennsylvania 3.07% and Utah 5%.
Moving After Retirement. If you are getting retirement benefits and you moved from a state with no income tax to a state with income tax, then you must pay state income tax even on your retirment benefits.
Nonresident Aliens and Exempt Individuals. States define tax residence differently than the IRS does at the federal level. At the state level, there are generally three types of people: residents, part-year residents and nonresidents. The determination of residence tends to be based on the time of year an individual moved into or out of a state, or if they lived there all year. It is entirely possible that an nonresident alien is considered a resident for tax purposes at the state level several years before they are considered a resident for federal tax purposes.
Some states honor the federal tax treaty benefits. States the do not honor federal treaty benefits are Alabama, Arkansas, California, Connecticut, Hawaii, Kansas, Kentucky, Mississippi, New Jersey, North Dakota and Pennsylvania.
Situation 1: Living in one state while commuting daily to work in another state.
It may happen that you live in one state while you go to work in a different state. A common example is you live in New Jersey and work in New York. You commute daily from NJ to NY. For NY you are nonresident and NJ is your tax home. You must file NY tax return as nonresident and report income earned while in NY. You must file NJ return as full year resident and report your world wide income for the year including NY income. On the NJ return, claim credit for taxes paid to NY.
Situation 2: Working and living in a state while the employer is in a different state For example, you live and work in California while the employer is in New Jersey. You must file CA tax return and report all your income including the income received from the NJ employer. Your income is not subject to NJ state taxes. If the employer is withholding NJ state taxes, tell them not to withhold NJ taxes. In case, on your W2, NJ taxes are withheld, then you will file NJ return to get the refund of taxes withheld. File nonresident tax return (Form NJ-1040NR), and list the NJ income as zero , which results in zero NJ tax and the return will show the refund. With your NJ tax return you will attach a statement that you were never present in NJ for this employment. If possible get a statement from the employer that you worked from California.
Situation 3: Moving out of a state to another state
For example, you were living and working in CA, and then in the same year you moved to NJ and started working from NJ.
Now during the period you are in NJ, you will report income on the NJ tax return. You may need to report this income on the CA tax return also if your moving out of CA is considered temporary or transitory. This is especially true if you are domiciled in CA or were resident of CA. If you must report the NJ income on the CA tax return, then on the CA tax return you will also claim credit for taxes paid to NJ.
If you moved out of CA permanently (and did not leave any links with CA), you will not report your NJ income on CA tax return. If you moved out of CA permanently but you returned back to CA after one or two years, then CA will certainly like to tax you for the period you were out of CA. Now it is for you to prove that stay outside was not temporary or transitory.
Situation 4. Moving out the U.S. to a foreign country
If you are a U.S. citizen or permanent resident, you must file the U.S. tax return and report your worldwide income. If you paid any taxes in the foreign country, then you get foreign tax credit by filing Form 1116 or you can use earned income exclusion Form 2555 if you meet the requirements.
Your foreign income may be taxable in the state you are domiciled or were resident when you left the country. And on the state tax return, you do not get foreign tax credit or foreign earned income exclusion. If your foreign income is taxable in a state depends upon your situation. For this you must read the state’s residency requirements. If your stay out of state is considered temporary or transitory, then many states in the U.S. will certainly tax you.
Situation 5. Married Working and Living in Different States
If you are married, then normally it is better tax wise to file joint return. And if you file joint for the federal return, then most states require that you file state in the same way. If both the spouses work and live in the same state, then the state return is simple. In many cases, both the spouses live and work in different states.
For example, one spouse lives and works in MN and other spouse lives and works in NJ and they are filing a joint return. For the MN tax return, one spouse is resident of MN and must declare his/her worldwide income to MN while the other spouse is nonresident of MN and does not have any MN income. Similarly, for the NJ tax return, one spouse is resident of NJ and must declare his/her worldwide income to NJ while the other spouse is nonresident of NJ and does not have any NJ income.
State Tax Forms
Tax Administrator has a map that has links to all the state's tax information web sites.
Where is My Refund?
California. Please wait 7 days after you e-file. If you filed on paper, please allow 8 weeks for processing of your return. Before you begin, make sure you have: Your social security number, your complete mailing address, and the refund amount shown on your tax return. Check here http://www.ftb.ca.gov/online/refund/index.asp
North Carolina. To determine the status of your refund for the current tax year 2007, you will need: The first social security number shown on the return and the exact amount of refund shown on your return (D-400 Line 28). Click the link: https://eservices.dor.nc.gov/wheresmyrefund/selection.jsp
In the state that is not your tax home, where you are part year resident, report income you earned while in that state. If you have received only one W2 from your employer, then use simple arithmetic based on number of days spent in the state to figure our the income that you should report to this state.
In the state that is your tax home, report your worldwide income for full year. Also in this state claim credit for the taxes paid to the other state.
State with no income tax. The states that do not have individual income taxes are Florida, Alaska, Nevada, South Dakota, Washington, Texas and Wyoming. In New Hampshire you only pay income tax on Dividend and Interest income at flat rate of 5%. Tennessee does have tax on income (at a 6% rate) received from stocks and bonds not taxed ad valorem.
Florida, Alaska and South Dakota have corporate income tax. Washington has a corporate tax called the "Business and Occupation Tax (B&O)", which is a gross receipts tax. Texas in May 2006, passed a franchise tax on businesses (sole proprietorships and some partnerships are exempt).
States with a flat rate personal income tax. Most states (34) have a progressive income tax, where the rate rises as an income gets larger. Following states have flat rate income tax: Colorado 4.63%, Illinois 3%, Indiana 3.4%, Massachusetts 5.3%, Michigan 4.35%, Pennsylvania 3.07% and Utah 5%.
Moving After Retirement. If you are getting retirement benefits and you moved from a state with no income tax to a state with income tax, then you must pay state income tax even on your retirment benefits.
Nonresident Aliens and Exempt Individuals. States define tax residence differently than the IRS does at the federal level. At the state level, there are generally three types of people: residents, part-year residents and nonresidents. The determination of residence tends to be based on the time of year an individual moved into or out of a state, or if they lived there all year. It is entirely possible that an nonresident alien is considered a resident for tax purposes at the state level several years before they are considered a resident for federal tax purposes.
Some states honor the federal tax treaty benefits. States the do not honor federal treaty benefits are Alabama, Arkansas, California, Connecticut, Hawaii, Kansas, Kentucky, Mississippi, New Jersey, North Dakota and Pennsylvania.
Situation 1: Living in one state while commuting daily to work in another state.
It may happen that you live in one state while you go to work in a different state. A common example is you live in New Jersey and work in New York. You commute daily from NJ to NY. For NY you are nonresident and NJ is your tax home. You must file NY tax return as nonresident and report income earned while in NY. You must file NJ return as full year resident and report your world wide income for the year including NY income. On the NJ return, claim credit for taxes paid to NY.
Situation 2: Working and living in a state while the employer is in a different state For example, you live and work in California while the employer is in New Jersey. You must file CA tax return and report all your income including the income received from the NJ employer. Your income is not subject to NJ state taxes. If the employer is withholding NJ state taxes, tell them not to withhold NJ taxes. In case, on your W2, NJ taxes are withheld, then you will file NJ return to get the refund of taxes withheld. File nonresident tax return (Form NJ-1040NR), and list the NJ income as zero , which results in zero NJ tax and the return will show the refund. With your NJ tax return you will attach a statement that you were never present in NJ for this employment. If possible get a statement from the employer that you worked from California.
Situation 3: Moving out of a state to another state
For example, you were living and working in CA, and then in the same year you moved to NJ and started working from NJ.
Now during the period you are in NJ, you will report income on the NJ tax return. You may need to report this income on the CA tax return also if your moving out of CA is considered temporary or transitory. This is especially true if you are domiciled in CA or were resident of CA. If you must report the NJ income on the CA tax return, then on the CA tax return you will also claim credit for taxes paid to NJ.
If you moved out of CA permanently (and did not leave any links with CA), you will not report your NJ income on CA tax return. If you moved out of CA permanently but you returned back to CA after one or two years, then CA will certainly like to tax you for the period you were out of CA. Now it is for you to prove that stay outside was not temporary or transitory.
Situation 4. Moving out the U.S. to a foreign country
If you are a U.S. citizen or permanent resident, you must file the U.S. tax return and report your worldwide income. If you paid any taxes in the foreign country, then you get foreign tax credit by filing Form 1116 or you can use earned income exclusion Form 2555 if you meet the requirements.
Your foreign income may be taxable in the state you are domiciled or were resident when you left the country. And on the state tax return, you do not get foreign tax credit or foreign earned income exclusion. If your foreign income is taxable in a state depends upon your situation. For this you must read the state’s residency requirements. If your stay out of state is considered temporary or transitory, then many states in the U.S. will certainly tax you.
Situation 5. Married Working and Living in Different States
If you are married, then normally it is better tax wise to file joint return. And if you file joint for the federal return, then most states require that you file state in the same way. If both the spouses work and live in the same state, then the state return is simple. In many cases, both the spouses live and work in different states.
For example, one spouse lives and works in MN and other spouse lives and works in NJ and they are filing a joint return. For the MN tax return, one spouse is resident of MN and must declare his/her worldwide income to MN while the other spouse is nonresident of MN and does not have any MN income. Similarly, for the NJ tax return, one spouse is resident of NJ and must declare his/her worldwide income to NJ while the other spouse is nonresident of NJ and does not have any NJ income.
State Tax Forms
Tax Administrator has a map that has links to all the state's tax information web sites.
Where is My Refund?
California. Please wait 7 days after you e-file. If you filed on paper, please allow 8 weeks for processing of your return. Before you begin, make sure you have: Your social security number, your complete mailing address, and the refund amount shown on your tax return. Check here http://www.ftb.ca.gov/online/refund/index.asp
North Carolina. To determine the status of your refund for the current tax year 2007, you will need: The first social security number shown on the return and the exact amount of refund shown on your return (D-400 Line 28). Click the link: https://eservices.dor.nc.gov/wheresmyrefund/selection.jsp
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Filing W4 Employee’s Withholding Allowance Certificate
4. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
State Tax Return
1. Working in Two or More States
Complete List of Articles
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Saturday, May 24, 2008
How to Get Missing Forms W-2 and 1099
Documents like Forms W2, 1099-Int, 1099-Misc, 1099-R are needed to complete your tax return. They contain information about your income that you may be required to report on your tax return.
Some of these forms may even be available online. It depends upon the policy of your employer or the who issues the form. So find out from them if you can view it or download it online. If your employer does not have your W2 information online, then you can not get it online from any other source.
If you are an employee you will get Form W-2, Wage and Tax Statement, from each of your employers each year. For example, your employer has until January 31, 2008 to give you 2007 form. You should allow two more weeks to receive your W-2 from employers who send them by mail. If you do not receive your Form W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect or incomplete address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.
If you misplaced your W-2, contact your employer. Your employer can replace the lost form with a “reissued statement.” Be aware that your employer is allowed to charge you a fee for providing you with a new W-2. When you do receive your W2, first thing you should do is to check all the information on it to make sure that it is correct. Check your social security number and income and taxes reported on it.
Contact IRS
You should try to get W2 from your employer, as this will save your from some future problems that may arise. If you still do not receive your missing or corrected form by February 15th, contact the IRS for assistance at 800-829-1040. When you call, have the following information:
*Employer's name, address, city, and state, including zip code and phone number,
*Your name, address, city and state, including zip code, and Social Security number, and
*Dates of your employer and an estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
With your information, the IRS will contact the employer/payer for you and request the missing form. IRS will also send you a Form 4852 (Substitute for Form W-2 or Form 1099-R).
Use Form 4852 for Tax Filing
It is always better to get W2 from your employer. If you do not receive the missing information in time to file, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.
Amending Your Tax Return
On occasion you may get back conflicting documents. You may receive a Form W-2 or W-2C (corrected form) after you filed your return using Form 4852, and the information differs from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.
W2 and Other Forms for Past Years
The IRS does not retain actual copies of Form W-2. However, the IRS maintains (and will provide free of charge) Form W-2 information for any purpose for the past ten processing years. Call 1–800–829–3676, or visit the IRS web site at www.irs.gov to Form 4506-T, Request for Transcript of Tax Return, to order the information from the IRS.
The only way to get a copy of your Form W-2 from IRS is to order a copy of the entire return on Form 4506, Request for Copy of Tax Return, and pay a fee of $39.00 per tax year.
The Social Security Administration will provide copies of Forms W-2 for retirement purposes at no charge and for other than retirement purposes for a fee. Call 1–800–772–1213, or visit the SSA web site at www.ssa.gov for instructions on how to obtain wage information from the SSA.
Some of these forms may even be available online. It depends upon the policy of your employer or the who issues the form. So find out from them if you can view it or download it online. If your employer does not have your W2 information online, then you can not get it online from any other source.
If you are an employee you will get Form W-2, Wage and Tax Statement, from each of your employers each year. For example, your employer has until January 31, 2008 to give you 2007 form. You should allow two more weeks to receive your W-2 from employers who send them by mail. If you do not receive your Form W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect or incomplete address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.
If you misplaced your W-2, contact your employer. Your employer can replace the lost form with a “reissued statement.” Be aware that your employer is allowed to charge you a fee for providing you with a new W-2. When you do receive your W2, first thing you should do is to check all the information on it to make sure that it is correct. Check your social security number and income and taxes reported on it.
Contact IRS
You should try to get W2 from your employer, as this will save your from some future problems that may arise. If you still do not receive your missing or corrected form by February 15th, contact the IRS for assistance at 800-829-1040. When you call, have the following information:
*Employer's name, address, city, and state, including zip code and phone number,
*Your name, address, city and state, including zip code, and Social Security number, and
*Dates of your employer and an estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
With your information, the IRS will contact the employer/payer for you and request the missing form. IRS will also send you a Form 4852 (Substitute for Form W-2 or Form 1099-R).
Use Form 4852 for Tax Filing
It is always better to get W2 from your employer. If you do not receive the missing information in time to file, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.
Amending Your Tax Return
On occasion you may get back conflicting documents. You may receive a Form W-2 or W-2C (corrected form) after you filed your return using Form 4852, and the information differs from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.
W2 and Other Forms for Past Years
The IRS does not retain actual copies of Form W-2. However, the IRS maintains (and will provide free of charge) Form W-2 information for any purpose for the past ten processing years. Call 1–800–829–3676, or visit the IRS web site at www.irs.gov to Form 4506-T, Request for Transcript of Tax Return, to order the information from the IRS.
The only way to get a copy of your Form W-2 from IRS is to order a copy of the entire return on Form 4506, Request for Copy of Tax Return, and pay a fee of $39.00 per tax year.
The Social Security Administration will provide copies of Forms W-2 for retirement purposes at no charge and for other than retirement purposes for a fee. Call 1–800–772–1213, or visit the SSA web site at www.ssa.gov for instructions on how to obtain wage information from the SSA.
More Articles:
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Filing W4 Employee’s Withholding Allowance Certificate
4. Missing W2, 1099-Misc, 1099-R, 1099-Int
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
State Tax Return
1. Working in Two or More States
Complete List of Articles
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