Archive for the ‘Individual Taxpayers’ Category

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When Should A Taxpayer File An Amended Federal Income Tax Return?

Thursday, April 25th, 2024

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice. 

There are several situations in which a taxpayer, after filing their tax return, determines that there is information available now that was not available when the original tax return was prepared. While this often occurs when third parties notify taxpayers that they are providing the taxpayer with a “Corrected” form (Form W-2, Form 1099 B, 1099 INT, 1099 DIV, etc.).  There are also additional circumstances:

When a taxpayer realizes that their federal tax return has a math error, missing income or other mistake, they should file an amended tax return.

A taxpayer must file an amended return if they need to correct:

  • Filing status
  • Income
  • Deductions
  • Credits
  • Tax liability

Generally, a Federal income tax return can be “Amended” up until three years after the original tax return due date.

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Qualified Charitable Deduction (QCD)-A Tax Benefit For Senior Americans

Saturday, November 19th, 2022

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice. 

There is a provision in the income tax laws for American taxpayers who are 70 1/2 years old and older.  It’s the “Qualified Charitable Distribution” or QCD.  It works or provides tax benefits for taxpayers who have an annual “Required Minimum Distribution” or “RMD” and make donations to charitable organizations.  This tax benefit became really important with the “Tax Cuts and Jobs Act” that was enacted on December 17, 2017.  The TCJA became effective on January 1, 2018, and if not extended, will expire on December 31, 2025.

Prior to the enactment of the TCJA taxpayers made their charitable donations and entered the data on Schedule A (“Itemized Deductions”) of their individual tax returns, usually a Federal Form 1040, along with medical expenses, state and local taxes, mortgage interest, etc.  Then the taxpayer compared the itemized deductions total to the standard deduction total and used the higher amount.  However, the TCJA substantially increased the standard deduction for all taxpayers wherein, it may no longer be beneficial to use the actual itemized deductions. To illustrate, I’ll provide examples for two different taxpayers, both are “Married Filing Jointly”, have an RMD of $100,000, donate a total of $15,000 for all of their charities.  Their “Standard Deduction” is $25,100.  Their “Taxable Income” is $200,000 without the tax benefit of the QCD.

Taxpayer A– does not use the QCD.  Receives the required $100,000 RMD, records the $15,000 in donations on Schedule A.  However, the total “Itemized Deductions” are less than the “Standard Deduction”  His/Her “Taxable Income” is $200,000.

Taxpayer B-has his/her IRA Custodian send checks directly to each of the charitable organizations.  He/she receives the full benefit of the QCD.  However, his/her “Taxable Income” is now reduced by $15,000 (the QCD) to $185,000.  He/she also used the “Standard Deduction”.

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What Can You Do To Expedite Your Income Tax Refund?

Thursday, April 7th, 2022

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice. 

The information that I am seeing on the Internet states that the IRS goal for having your tax refund in to your bank account is twenty-one days.  While this could be “business days”, I am thinking that it’s “calendar days”.  There are decisions that you can make and actions that you can take that will facilitate this process:

  1.  File your tax return electronically!  It has been said that “paper” is to the IRS as Kryptonite was to Superman!
  2.  Check, double-check, and triple-check your tax return for errors BEFORE you e-file!  From your correct name (that is in the Social Security Administration records) and social security number to the birth dates of your dependents to the numbers that you have entered throughout your tax return.  All numbers can be transposed.
  3. If your tax software includes this function run “Error Checking” multiple times.
  4. Be sure that the “Routing Number”, “Your Full Bank Account Number” and “Bank Name” are all correct.
  5. If you are applying for the “Child Tax Credit”, or the “Earned Income Credit”, or if you received payments for the “Economic Recovery Rebate”  be sure that you provide all of the correct information.  If you received advance child tax credit payments last year, or the Economic Recovery Credit you should receive two separate letters from the IRS stating the amounts that you received.
  6. If you have questions, use https://irs.gov or the Internet to obtain information from the Frequently Asked Questions (FAQs) or search for the instructions for your forms.

After you have filed your tax return you can use the IRS “Where’s My Refund” hyperlink to obtain the status of your refund ( Refunds | Internal Revenue Service (irs.gov) )

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If There Is Ever A Problem With Your Tax Returns, How Will the IRS Contact You?

Thursday, March 31st, 2022

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice. 

There are several methods which the IRS may use to contact you to ask for additional information for your tax returns, to confirm an appointment, to discuss an upcoming audit, to collect your unpaid or delinquent taxes, to seize your property to satisfy your debts to the U S Treasury, to request copies of documents, or for other official reasons.  Under normal circumstances the communications will first be initiated by a letter from the Internal Revenue Service.

This is usually referred to as a “30-Day Letter”.  This means that the IRS expects to receive a response from you no later than thirty days from the date of the letter. Under no circumstances should you ignore the contents of this letter or this correspondence!

Notice in the reading below that the IRS now uses “third party” private debt collectors. While I do not have first-hand experience with these activities, anecdotal evidence from the Internet indicates that some of the tactics that are utilized may not always be either ethical, or achieve good business practice and standards.

Additionally, when reading the information from the IRS “Tax Tip” below, notice the situations and/or circumstances in which a particular method may be expected. At the end are five different methods that the IRS will NEVER use.  If you are contacted by any of the methods listed, ignore the contact!  It’s not from the IRS!!

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