January 06 2009 - IRS Notification w-edits

Due to the financial disasters affecting so many taxpayers, the IRS has a lot of steps available to help those who have lost jobs, homes, etc. There are many who are doing the best they can and have tried to pay the IRS what they owe, and are struggling with it.



I have included an IRS Notification from 01/06/09. For your benefit I highlighted the areas I think may help the everyday person who does not speak tax code. : ) I have added a couple of comments, they are italicized in green.

IR-2009-2, Jan. 6, 2009

WASHINGTON — The Internal Revenue Service today kicked off the 2009 tax filing season by announcing a number of new steps to help financially distressed taxpayers maximize their refunds and speed payments while providing additional help to people struggling to meet their tax obligations.

IRS Commissioner Doug Shulman encouraged taxpayers to take advantage of several new tax credits and deductions this filing season and announced a major enhancement to the Free File program that will allow nearly all taxpayers to e-file for free and accelerate their refunds.

“With so many people facing financial difficulties, we want taxpayers to get all the tax credits they’re entitled to as quickly as they can,” Shulman said. “In addition, we are creating new protections to help people trying to meet their tax obligations. The IRS will do everything it can to help during these tough times.”

Help for People Who Owe Taxes

With many people facing additional financial difficulties, the IRS is taking several additional steps to help people who owe back taxes.

“We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today,” Shulman said. “We want to go the extra mile to help taxpayers, especially those who’ve done the right thing in the past and are facing unusual hardships.”

On a wide range of situations, IRS employees have flexibility to work with struggling taxpayers to assist them with their situation. Depending on the circumstances, taxpayers in hardship situations may be able to adjust payments for back taxes, avoid defaulting on payment agreements or possibly defer (delay or put off for a time) collection action.

The IRS reminds taxpayers who are behind on tax payments and need assistance to contact the phone numbers listed on their IRS correspondence. There could be additional help available for these taxpayers facing unusual hardship situations.

Among the areas where the IRS can provide assistance:

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  Postponement of Collection Actions: IRS employees will have greater authority to suspend collection actions in certain hardship cases where taxpayers are unable to pay. This includes instances when the taxpayer has recently lost a job, is relying solely on Social Security or welfare income or is facing devastating illness or significant medical bills. If an individual has recently encountered this type of financial problem, IRS assistors may be able to suspend collection without documentation to minimize burden on the taxpayer.
  
  
  
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  Added Flexibility for Missed Payments: The IRS is allowing more flexibility for previously compliant individuals in existing Installment Agreements who have difficulty making payments because of a job loss or other financial hardship. The IRS may allow a skipped payment or a reduced monthly payment amount without automatically suspending the Installment Agreement. Taxpayers in a difficult financial situation should contact the IRS.
  
  
  
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  Additional Review for Offers in Compromise on Home Values: An Offer in Compromise (OIC), an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than the full amount owed, may be a viable option for taxpayers experiencing economic difficulties. However, the equity taxpayers have in real property can be a barrier to an OIC being accepted. With the uncertainty in the housing market, the IRS recognizes that the real-estate valuations used to assess ability to pay may not be accurate. So in instances where the accuracy of local real-estate valuations is in question or other unusual hardships exist, the IRS is creating a new second review of the information to determine if accepting an offer is appropriate.
  
  
  
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  Prevention of Offer in Compromise Defaults: Taxpayers who are unable to meet the periodic payment terms of an accepted OIC will be able to contact the IRS office handling the offer for available options to help them avoid default.
  
  
  
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  Expedited Levy Releases: The IRS will speed the delivery of levy releases by easing requirements on taxpayers who request expedited levy releases for hardship reasons. Taxpayers seeking expedited releases for levies to an employer or bank should contact the IRS number shown on the notice of levy to discuss available options. When calling, taxpayers requesting a levy release due to hardship should be prepared to provide the IRS with the fax number of the bank or employer processing the levy.

Taxpayers with financial problems who discover they can’t pay when they file their 2008 tax returns also have options available. IRS.gov has a list of What If? scenarios that deal with payment and other financial problems. These scenarios, in question-and-answer format, provide information on specific actions taxpayers can take. Taxpayers unable to pay in full can likewise contact the IRS to discuss additional options to pay.

Maximizing Refunds and Speeding Refund Delivery

This filing season, there are several steps taxpayers can take to maximize their refunds and speed the delivery of money from the IRS.

Taxpayers should look into the numerous tax breaks available and take every credit, deduction and exclusion for which they qualify. People who had less income in 2008 could find they qualify for credits for which they previously did not qualify. And there are several new benefits this year:

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  First-Time Homebuyer Credit: Those who bought a principal residence recently or are considering buying one should take note. This unique credit of up to $7,500 works much like a 15-year interest-free loan. A special page on IRS.gov has more details and answers to common questions.
  
  
  
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  The Recovery Rebate Credit: This credit is figured like last year's Economic Stimulus Payment except that Recovery Rebate Credit amounts are based on tax year 2008 instead of 2007. Most people already received their full benefit in the form of the Economic Stimulus Payment. However, a taxpayer may qualify for the Recovery Rebate Credit, if, for example, he or she did not get an Economic Stimulus Payment, had a child in 2008 or had a change in income level. If you receive this credit, it will be included in your refund and will not be issued as a separate payment. See the Form 1040 Instructions, Fact Sheet 2009-3 or the information center on IRS.gov for details.
  
  
  
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  Standard Deduction for Real Estate Taxes: Taxpayers can claim an additional standard deduction, based on the state or local real estate taxes paid in 2008. The maximum deduction is $500, or $1,000 for joint filers.
  
  
  
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  Mortgage Workouts and Foreclosures: For most homeowners, these are now tax-free. Eligible homeowners can exclude debt forgiven on their principal residence if the balance of the loan was less than $2 million. The limit is $1 million for a married person filing a separate return. See Form 982 and its instructions for details.

This Web site, IRS.gov, has more information on these and other popular credits, such as the child tax credit, the Earned Income Tax Credit and alternative fuel vehicle credit.

E-File, E-Pay and Direct Deposit

This year, electronic filing options will speed the payment of refunds to millions of taxpayers. Taxpayers who e-file and choose direct deposit for their refunds, for example, will get their refunds in as few as 10 days. That compares to approximately six weeks for people who file a paper return and get a traditional paper check.
This year, taxpayers can begin filing electronically on Jan. 16.

The IRS in 2009 is again offering free tax preparation and filing through the Free File program. Anyone with an adjusted gross income up to $56,000 can use the standard Free File options this year –– that is approximately 98 million Americans. The program also has usability improvements, including a standardized set of electronic forms that are most frequently used by Free File-eligible taxpayers.

This year the IRS and its partners are offering a new option, Free File Fillable Tax Forms, that opens up Free File to virtually everyone, even those whose incomes exceed $56,000.

Free File Fillable Tax Forms allows taxpayers to fill out and file their tax forms electronically, just as they would on paper. This option does not include an “interview” process like the other Free File offerings, but it does allow taxpayers to enter their tax data, perform basic math calculations, sign electronically, print their returns for recordkeeping and e-file their returns. It may be just right for those who are comfortable with the tax law or those who use electronic software to prepare their returns but file using paper forms.

Both the fillable-forms option and the previously available Free File offerings are available only through the IRS.gov Web site. More information will be available in mid-January.

1040 Central and Taxpayer-Friendly Features (irs website [www.irs.gov] has a lot of resources - search:student, trivia.)

When they visit the IRS.gov Web site this filing season, taxpayers may notice the new “rotating spotlight” feature on the homepage. The spotlights, which change every few seconds, give the taxpaying public direct access to more of the IRS Web site’s vast amount of content.

Also on the homepage, taxpayers can click on 1040 Central to find help preparing and filing their tax returns. Like last year, this popular section of IRS.gov has a wide range of offerings that address taxpayer needs.

Finally, the IRS is producing a number of podcasts this filing season that will be available on IRS.gov. In addition to Tax Tips, Fact Sheets and News Releases, these short audio interviews cover a wide range of topics and are a way for the IRS to reach out to a new generation of taxpayers.

Tax Filing Fact Sheets

For more tax season topics, see the following fact sheets:

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  Highlights of 2008 Tax Law Changes
  
  
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  Tax Credits Provide Funds for First-Time Homebuyers, Childcare, More
  
  
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  Recovery Rebate Credit

Recovery Rebate Credit - 2009

Good News! Mo Money! This is straight from
the IRS today! Way to go!

Subject: Recovery Rebate - IRS Notice 01/06/09

Recovery Rebate Credit Information Center

En Español
The Recovery Rebate Credit is a one-time benefit for people who didn't receive the full Economic Stimulus Payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion.

Generally, a credit adds to the amount of a tax refund or decreases the amount of taxes owed. Therefore, the amount you receive for the Recovery Rebate Credit will be included as part of your refund, as shown on your tax return. Unlike the 2008 Economic Stimulus Payment, it will not be issued as a separate check.
You May Be Eligible
People who fall into the categories described below may be eligible for the Recovery Rebate Credit this year:
· Individuals who did not receive an Economic Stimulus Payment.
· Those who received less than the maximum Economic Stimulus Payment in 2008 — $600 per taxpayer; $1,200 if married filing jointly — because their qualifying or gross income was either too high or too low.

· Families who gained an additional qualifying child in 2008.
· Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008.
· Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008.
How to Get the Recovery Rebate Credit
You need to claim the Recovery Rebate Credit on Form 1040, 1040A or 1040EZ. The instructions for these forms will show you which lines to use. Unlike the Economic Stimulus Payment, the Recovery Rebate Credit will be included in your tax refund for 2008 and will not be issued as a separate payment.
The IRS Will Figure the Credit for You in Most Cases
You can choose to let the IRS do the work when you file your 2008 Form 1040, 1040A or 1040EZ. If you're filing on paper, simply follow the line-by-line instructions to choose this option. If you're filing electronically, the software will figure the credit for you.
Or You Can Figure It Yourself
Likewise, you can figure and claim the Recovery Rebate Credit on your 2008 Form 1040,
1040A or 1040EZ. Two interactive online tools will be available to help you with the calculation: The Recovery Rebate Credit Calculator and How Much Was My 2008 Stimulus Payment?
The Recovery Rebate Credit Calculator will help you figure the amount you should claim on your 2008 tax return. Or, you can use the worksheet in the Form 1040 instruction booklet to help you figure your credit by hand. To use the Recovery Rebate Credit Calculator or complete the worksheet, you'll need the amount of the Economic Stimulus Payment you received in 2008, if any. This amount was provided on Notice 1378, Economic Stimulus Payment Notice, sent by the IRS to taxpayers who received a payment.
You can use How Much Was My 2008 Stimulus Payment? to determine the amount you already received, if you don’t have or didn't receive Notice 1378.

Getting Ready for Tax Time - Tips to Help You Optimize Your Legal Deductions

In less than a week, Congress and the Executive Branch will begin to put the 2008 Tax Year together.

One thing I cannot stress enough is, contact your Senators & Congresspeople regarding the Alternative Minimum Tax (AMT). Last year because so many tax pros got the word out to their clients, and those clients also contacted their Washington representatives, the AMT had a 'bandage' applied, but it wasn't fixed. This year so many other things have the attention of the American Public, this BIG PROBLEM is being ignored. It ain't over until the Fat Lady sings, and the Fat Lady in this case are the Citizens of the U.S. If the AMT is not done away with, it will crush the middle class ($36,000.00 - $195,000.00) We have lost on our Personal Deduction amount this year as well. When you consider all the losses by the middle class in the past 4 years, it is crushing.

Many taxpayers (workers) come to January - April, and want the process to be painless and quick. Sometimes by taking a little time and work, their tax burden can be reduced even by a few dollars.

If you use Jackson Hewitt, they can perform a tax optimization for you for free. They can prepare your taxes "short form" (a regular 1040A with no deductions), and then with your legal and documented deductions, can show you the difference. If you are better off taking itemization's you will pay a bit more for your Preparation Fees, but it may be worth it. It is always worth a look-see.

I. Medical Deductions: If you are insured through an employer, most Insurance is taken out pre-tax. This means instead of getting a tax deduction at the end of the year, your employer and you are given a benefit of a "deduction" off of your total taxed income. This causes many taxpayers to think they are all tapped out on Medical Deductions, and it isn't worth it to consider possible Medical Deductions. This is not always the case.

Remember: You get to count the total dollar amount paid on legitimate medical expenses, (you don't get another deduction on that pre-tax amount) toward your 7.5% required to receive a deduction for Medical Expenses paid.

States: Some States allow Itemization for tax payers who may not be eligible to Itemize on their Federal Return. If you do your own taxes, make sure to include all legal deductions in the body of your Federal Return, so possible legal State deductions will roll down. I use TaxSlayer through IRS Free File. As a tax pro, I highly recommend it.

Your W-2 Should show these amounts in the boxes on 12 or 13, sometimes they don't. If you are Self-Employed, unless you have set up a pre-tax account, you can deduct all unreimbursed, out-of-pocket paid, medical expenses. If you claimed the self-employed health insurance deduction on the 1040 line 29~be careful not to give yourself a double deduction - reduce the amount of premiums paid from the amount on line 29.

• Medical Mileage: for 2008 we lost 1 cent. It is now .19 per Medical Mile. Depending on where you live, those miles can add up. (Some Flex-Plans and Health Savings Accounts, also allow you to claim your mileage throughout the year as well, and if you have elected to do this, you probably won't have reason to file for a Medical Deduction). You can claim forms of Transportation to get Medical Care; Ambulance, Taxi, Plane, or a personal vehicle. Parking and Tolls are included. [Only deduct one time per tax return for the year].
• Prescription medicines or insulin. (if you have a Flex-Plan, or HSA, you have received the 'deduction' pre-tax, you will be counting it toward total medical expenses paid in.)
• X-rays, Labs, Doctor ordered treatments such as whirlpool baths
• Nursing Help - You can include the deduction for Employment taxes paid here. [Again, be careful not to double-dip].
• Hospital Care- Includes Meals, lodging [no pleasure expenses: limit of $50], clinic costs (If the care is critical, and a family member is paying for parking, etc) - Doctor Verified.
• A Portion of Qualified Long-Term Care Services [Pub 502]
• The Supplemental part of Medicare Part B & Premiums for Part D
• Smoking Cessation Program
• Weight Loss to treat Obesity diagnosed by a Dr.
• Medical Treatment for Drug & Alcohol addiction
• Aids - Glasses, Contacts, Hearing Aids, Braces, Crutches, Wheelchairs, Guide Dogs (Including the cost of taking care of the service Animal)
• Laser Eye Surgery or Radial Keratotomy
• Certain Med Expenses paid out of a deceased taxpayers Estate, can be claimed on the deceased taxpayer's final return.

Free Tax Tips: You must have receipts, your books, or other Documentation at the time you sit down with your Tax Pro. This year more than before, tax pros are under the gun to make sure their clients have legit deductions.
Q. What if I haven't kept a record of all Medical Mileage?

A. [Don't dump a load of receipts on your Tax Pro, unless you like paying big bucks. Don't think it is funny to dump a giant box of receipts during an IRS audit, you will not be smiling when it is all said and done].
1. Contact each Medical Provider you had throughout the Year. Ask them for a Print-out of all visits. Put in this request at the first of 2009, because the longer you wait, the more backed up Medical Provider's will get with these type of requests. Because of HIPPA, it is not as quick and easy as it used to be.

2. For each visit, go to Google Maps, Yahoo Maps, an atlas, or any other legit method of finding mileage to and from your home, to your provider. If it is the same one each month, it will be quite simple. If you have had a heartbreak year, it may take you a lot of time and work. From now on, you can keep a log as you go. You can use Excel, Access or several other software programs to keep track of all of your expenses through the year. Even a cheap notebook kept in your vehicle or home office will suffice. If you are Self-Employed, you are in violation if you are not keeping records and books on expenses and payments.

3. Use bank statements that are clearly marked as to the nature and payee of an expense. You can make these part of your records. Keep in mind, during an audit there can be questions about any and all expenditures and receivables included in those statements.

Using your personal vehicle -
A. You need to know the type of car, truck, suv - ie; 2008 Toyota Tundra.
B. You need to know the total price paid [sticker incl financing], or lease amount.
C. You need to know the first date you used this ride for medical purposes (this goes for other vehicle use expenses too)
D. You need to know ALL of the miles put on the vehicle for the Entire Tax Year. (If you are using actual expenses, you must have record of everything claimed.
E. You need to know Business Miles put on the car, truck, suv.
F. You need to know Charitable Miles put on the ride.
G. You need to know Commuting Miles (non-deductible)
H. You need to know the mileage for any other use - vacation, store, mother-in-law...
I. You need to have any amounts that were reimbursed.

Hoping this will help. Although it does put a glazed look in your eyes. :8 - >

My next post will be concerning Charitable Mileage,
Then, Business Mileage. Stay tuned little deer...

While Congress is in Session...

~ Part of Lesson One: If you don't know 'how' you get taxes, then you cannot understand that as a Citizen, you have more influence than you realize when it comes to Tax Code, and Tax Law & Rule Changes.

The reason Tax Payers and Tax Services have to wait until the middle of January to start the Tax Filing Season is because the Congress, the House of Representatives and the Executive Branch (President and Crew) have to finalize and agree with what your 1040 is going to say, what Exemptions will be given, any Credits, Changes of Tax Rates etc.

One thing I will ask those who are able: Contact your State & Federal Representatives and voice your loud Concern over the Alternative Minimum Tax (AMT). If it is not repealed, or another "fix" put on it, for the Tax Year of 2008, it will be the final straw for many Middle Class Taxpayers.

Incomes from $19,000.00 - $155,000.00 are paying an inordinate rate of their entire income in Taxes. [Remember the tax paid on everything; utilities, state & local, goods, bonuses, fuel, phones, license, registrations, etc].

If the AMT goes on without attention, many of those in the income brackets listed previously will have their usual deductions partly or completely phased out - in other words...Your Mortgage Interest, College Tuition etc will no longer be a deduction for you. For those who will have a huge loss on Schedule D this year, the final straw will be how much tax you will still have to pay.

At present, those making over $200,000.00 pay less as it goes up. Please talk to your Tax Professional, CPA or Accountant about the AMT, then your Congressional Representatives. We are the People and we have a voice, we just don't remember how to use it.

Lesson 1

January 15, 2009 is approaching quickly.

The first two weeks of the new year is when the IRS opens its doors [electronic] to tax payers; (workers who have a portion of their earnings removed from a paycheck). All payers have chance to pay in more taxes, or receive an Income Tax Refund for over payment of taxes.

People have little information about how the Tax Code is applied. Most citizens don't have a clue as to why their Bottom Line is what it is. Mostly, it is that "deer caught in the headlights" phenomenon that happens when a tax expert speaks to a regular person.

The goal is to break it down to where anyone can understand how to file their taxes; or get the legitimate Tax Help needed.

Dept of Treasury - $

IRS
l
Congress l Executive Branch Judicial Branch
I l I I
State Can Veto - (Say No)
Reps -- or,
I Pass
People
[Voters - Taxpayers]

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