Tuesday, April 18, 2017

New Deadline for Reporting Foreign Accounts

Starting this year, the deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is now the same as for a federal income tax return. This means that the 2016 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 18, 2017. FinCEN will now grant filers missing the April 18 deadline an automatic extension until Oct. 16, 2017 to file the FBAR. Specific extension requests are not required. In the past, the FBAR deadline was June 30 and no extensions were available.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2016. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.

Most People Abroad Need to File

An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

A special extended filing deadline applies to U.S. citizens and resident aliens who live and work abroad. For U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico, the income tax filing deadline is June15, 2017. The same applies for those serving in the military outside the U.S. and Puerto Rico. Tax payments are still due on April 18, and interest will apply to any payment received after that date.  See U.S. Citizens and Resident Aliens Abroad for details.

Nonresident aliens who received income from U.S. sources in 2016 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is April 18. See Taxation of Nonresident Aliens on IRS.gov.

Special Income Tax Return Reporting for Foreign Accounts and Assets

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Wednesday, March 22, 2017

File 4868 if you cannot file your 1040 by April 18th .

Make an electronic  payment and get  an automatic extension of time to file.

An extension of time to file will automatically process when you pay all or part of your taxes electronically  by April 18. There’s no need to file a paper or electronic Form 4868 ,Application for Automatic Extension of Time to File U.S. Individual Income Tax Return However, an extension of time to file is not an extension to pay. You can file up to six months later when you have an extension , but your taxes are still due by your original due date.

 You can get an automatic extension when you make a payment with Direct Pay , the Electronic Federal Tax Payment System or by debit or credit card . When paying electronically, you must select  Form 4868 as the payment type and the payment date in order to get the automatic extension. Keep the confirmation you receive as proof of your payment

Another way to make a payment is through the IRS2Go phone app. 
It provides an easy way for you to make a payment, check the status of your refund and other helpful 

Download IRS2Go from Google Play, the Apple App Store or Amazon to make payments anytime, anywhere. IRS electronic  payment options are quick, easy and secure.

Payment link: https://www.irs.gov/Payments 

Tax Credit Facts one should know before filing 1040

Tax Credit Facts:

Taxpayers who have adopted or tried to adopt a child in 2016 may qualify for a tax credit.

The Credit. The credit is nonrefundable, which may reduce taxes owed to zero. If the credit exceeds the tax owed, there is no refund of the additional amount. In addition, if an employer helped pay for the adoption through a written qualified adoption assistance program, that amount may reduce any taxes owed. 

Maximum Benefit. The maximum adoption tax credit and exclusion for 2016 is $13,460 per child. 

Credit Carryover. If the credit exceeds the tax owed, taxpayers can carry any unused credit forward. For example, the unused credit in 2016 can reduce taxes for 2017. Use this method for up to five years or until the credit is fully used, whichever comes first. 

Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themselves. 

Qualified Expenses. Adoption expenses must be reasonable, necessary and directly related to the adoption of the child. Types of expenses may include adoption fees, court costs, attorney fees and travel. 

Domestic or Foreign Adoptions. Taxpayers can usually claim the credit whether the adoption is domestic or foreign. However, there are different rules regarding the timing of expenses for each type of adoption. 

Special Needs Child. A special rule may apply if the adoption is of an eligible U.S. child with special needs. Under this special rule, taxpayers can claim the tax credit, even if qualified adoption expenses were not paid. 

No Double Benefit. In some instances both the tax credit and the exclusion may be claimed but not for the same expenses. 

Income Limits. The credit and exclusion are subject to income limitations. These may reduce or eliminate the claimable amount.. 

IRS Free File. Use IRS Free File to prepare and e-file federal tax returns for free. File Form 8839, Qualified Adoption Expenses, with Form 1040. Free File is only available on IRS.gov/freefile.

Wednesday, March 1, 2017

Not filed 1040 for 2013 ? last chance to file and claim your refund back...

Not filed 1040 for 2013 ? last chance to file and claim your refund back...:

There is one Wohh news for US tax filers.. those who have forgot to file their 2013, 1040  tax return with refund due from IRS have a good news now. April Tuesday, April 18 2017 is last date for filing your tax return and claim back your refund from IRS. 

The Internal Revenue Service announced today that unclaimed federal income tax refunds totaling more than $1 billion may be waiting for an estimated 1 million taxpayers who did not file a 2013 federal income tax return.

 As the deadline is over for 2013 , tax return most of the tax payer will have scare will I be charged for late filing penalty ???  answer is No. 

Remember, there’s no penalty for filing a late return if you’re due a refund.”

In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If they do not file a return within three years, the money becomes the property of the U.S. Treasury. For 2013 tax returns, the window closes April 18, 2017. The law requires taxpayers to properly address mail and postmark the tax return by that date.

By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2013. Many low-and-moderate income workers may have been eligible for the Earned Income Tax Credit (EITC). For 2013, the credit was worth as much as $6,044. The EITC helps individuals and families whose incomes are below certain thresholds. 

Now the question comes where to find tax form for 2013 , 1040.. you can download from the below link...

1040 form for 2013 for free download 

Tuesday, February 14, 2017

Simplified Method for Computing Home Office Deduction or Standard method of Home office ?

Simplified Method for Computing Home Office Deduction :

A simplified method for computing the qualified home office deduction is available. Under this method, the deduction equals $5 (for 2016) multiplied by the home’s square footage used for qualified business use (up to 300 square feet). Qualified business use is use that meets the tests under Qualified Home Office.

Here there is no need to maintain any records for expense incurred and This simplified option doesn’t change the criteria for claiming a home office deduction. It merely simplifies the calculation and record keeping requirements.
 The simplified method deduction is limited to net income from the business (before any home office deduction). It is reported on Schedule C, line 30. Form 8829 is not used.

When the simplified method is used, no depreciation can be claimed on the business-use portion of the home. But, mortgage interest, real estate taxes and casualty losses are claimed in full on Schedule A. There is no pro-ration of any of those expenses to Schedule C or F. Use of the simplified method has no effect on business expenses unrelated to the home, such as advertising, supplies and wages paid to employees.

Taxpayers can choose the simplified method on a year-to-year basis. But, any disallowed home office deduction carried over from a year in which actual expenses were deducted cannot be used in a year when the simplified method is used.

Friday, February 10, 2017

Child and Dependent Care Tax Credit and 1040 return

The Child and Dependent Care Credit can help offset some of the costs you pay for the care of your child, a dependent or a spouse. Here are 10 facts the IRS wants you to know about the tax credit for child and dependent care expenses.
1. If you paid someone to care for your child, dependent or spouse last year, you may qualify for the child and dependent care credit. You claim the credit when you file your federal income tax return.
2. You can claim the Child and Dependent Care Credit for “qualifying individuals.” A qualifying individual includes your child under age 13. It also includes your spouse or dependent who lived with you for more than half the year who was physically or mentally incapable of self-care.
3. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
4. You, and your spouse if you file jointly, must have earned income, such as income from a job. A special rule applies for a spouse who is a student or not able to care for himself or herself.
5. Payments for care cannot go to your spouse, the parent of your qualifying person or to someone you can claim as a dependent on your return. Payments can also not go to your child who is under age 19, even if the child is not your dependent.
6. This credit can be worth up to 35 percent of your qualifying costs for care, depending upon your income. When figuring the amount of your credit, you can claim up to $3,000 of your total costs if you have one qualifying individual. If you have two or more qualifying individuals you can claim up to $6,000 of your costs.
7. If your employer provides dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses for how the rules apply to you.
8. You must include the Social Security number on your tax return for each qualifying individual.
9. You must also include on your tax return the name, address and Social Security number (individuals) or Employer Identification Number (businesses) of your care provider.
10. To claim the credit, attach Form 2441 to your tax return. If you use IRS e-file to prepare and file your return, the software will do this for you.

Free 1040 Tax Preparation - Who is eligible ?

Free 1040 Tax Preparation - Who is eligible ?:

The word Free Tax filing getting excited ???? Most of us have question Am I eligible for free tax filing of my 1040 ? Here is some clarification from IRS.

The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs help people every year. Through these IRS-sponsored programs, millions of lower-to-moderate income individuals and families get their taxes done free.
The IRS works with local community groups to train and certify VITA and TCE volunteers to offer this service. Eligible taxpayers, including those with disabilities or limited English, should take advantage of these free programs.

Here are several important details about VITA and TCE:
  • VITA. VITA offers free tax return preparation to eligible taxpayers who generally earn $54,000 or less.
  • TCE. TCE is mainly for people age 60 or older but offers service to all taxpayers. The program focuses on tax issues unique to seniors. AARP participates in the TCE program through AARP Tax-Aide.
  • Local Sites. The IRS works with community organizations to offer free tax services at thousands of sites nationwide. These sites usually open in late January and early February.
  • Free Electronic Filing. VITA and TCE provide free electronic filing. E-filing is the safest, most accurate way to file a tax return. Combine e-file with direct deposit for quicker refunds.
  • Tax Benefits. VITA and TCE volunteers help people to get all the tax benefits for which they are eligible. These include the Earned Income Tax Credit, American Opportunity Tax Credit, the Child Tax Credit or the Credit for the Elderly.
  • Bilingual Help. Some VITA and TCE sites provide bilingual help.
  • Help for Military. Many military bases have VITA sites that offer free tax assistance to members of the military and their families. Volunteers can help with military tax topics. Some of these include special rules and tax benefits that apply to those serving in combat zones.
  • Self-Preparation Option. At many VITA sites, people who earn $64,000 or less may be able to prepare their own tax returns using free web-based software. This option is for those who do not have a home computer or do not need much help.
  • Site Information. Taxpayers can find the nearest VITA site by using the VITA Locator Tool at IRS.gov or by downloading the IRS2Go app. Site information is also available by calling the IRS at 800-906-9887. Find more on AARP Tax-Aide locations at by using the AARP Tax-Aide Locatoror by calling 888-227-7669.
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at ValidatingYour Electronically Filed Tax Return.

Tuesday, February 7, 2017

Getting Call demanding immediate payment in the name of IRS?

Getting Call demanding immediate payment in the name of IRS?:

Tax season has kicked in and many scams are running in the name of IRS. Tax filers don't yield to such scams and pay or provided details.

Scams continue to use the IRS as a lure. These tax scams take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. Scammers use the IRS name, logo or a fake website to try and steal money from taxpayers. Identity theft can also happen with these scams.

Taxpayers need to be wary of phone calls or automated messages from someone who claims to be from the IRS. Often these criminals will say the taxpayer owes money. They also demand payment right away. Other times scammers will lie to a taxpayer and say they are due a refund. The thieves ask for bank account information over the phone. The IRS warns taxpayers not to fall for these scams.

IRS employees will NOT:

  • Call demanding immediate payment. The IRS will not call a taxpayer if they owe tax without first sending a bill in the mail.
  • Demand payment without allowing the taxpayer to question or appeal the amount owed.
  • Require the taxpayer pay their taxes a certain way. For example, demand taxpayers use a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to contact local police or similar agencies to arrest the taxpayer for non-payment of taxes.
  • Threaten legal action such as a lawsuit.
If a taxpayer doesn’t owe or think they owe any tax, they should:
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • Report the incident to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. Criminals often use fake refunds, phony tax bills or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.

For those taxpayers who get a ‘phishing’ email, the IRS offers this advice:

  • Don’t reply to the message.
  • Don’t give out your personal or financial information.
  • Forward the email to phishing@irs.gov. Then delete it.
  • Do not open any attachments or click on any links. They may have malicious code that will infect your computer.

Monday, February 6, 2017

Beware of W-2 Phishing Scam Evolving

Dangerous W-2 Phishing Scam Evolving; Targeting Schools, Restaurants, Hospitals, Tribal Groups and Others

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.

In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice. “This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.

When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this. As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.

Here’s how the scam works: Cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2.  This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).

The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight. Those businesses that received the scam email last year also are reportedly receiving it again this year.

Security Summit partners warned of this scam’s reappearance last week but have seen an upswing in reports in recent days.

New Twist to W-2 Scam: Companies Also Being Asked to Wire Money
In the latest twist, the cybercriminal follows up with an “executive” email to the payroll or comptroller and asks that a wire transfer also be made to a certain account. Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars due to wire transfers.

The IRS, states and tax industry urge all employers to share information with their payroll, finance and human resources employees about this W-2 and wire transfer scam. Employers should consider creating an internal policy, if one is lacking, on the distribution of employee W-2 information and conducting wire transfers.

Steps Employers Can Take If They See the W-2 Scam
Organizations receiving a W-2 scam email should forward it to phishing@irs.gov and place “W2 Scam” in the subject line. Organizations that receive the scams or fall victim to them should file a complaint with the Internet Crime Complaint Center (IC3,) operated by the Federal Bureau of Investigation.

Employees whose Forms W-2 have been stolen should review the recommended actions by the Federal Trade Commission at www.identitytheft.gov or the IRS at www.irs.gov/identitytheft. Employees should file a Form 14039, Identity Theft Affidavit, if the employee’s own tax return gets rejected because of a duplicate Social Security number or if instructed to do so by the IRS.

The W-2 scam is just one of several new variations that have appeared in the past year that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies. Individual taxpayers also can be targets of phishing scams, but cybercriminals seem to have evolved their tactics to focus on mass data thefts.

Be Safe Online

In addition to avoiding email scams during the tax season, taxpayers and tax preparers should be leery of using search engines to find technical help with taxes or tax software. Selecting the wrong “tech support” link could lead to a loss of data or an infected computer. Also, software “tech support” will not call users randomly. This is a scam.

Wednesday, November 30, 2016

What is new for 1040 for the year 2016 ?

What is new for 1040 for the year 2016 ?:

10 Important Changes for Tax Year 2016

1. Tax Day is April 18.

The Washington, D.C., holiday of Emancipation Day is on Friday, April 15, 2016. Under federal law, the tax deadline gets extended when it falls on a holiday or weekend, and so the tax deadline for most taxpayers will be the following Monday, April 18. For those states in New England that celebrate Patriot's Day, an even later April 19 deadline will apply.

2. Tax penalties related to Obamacare are going up again.

The Affordable Care Act imposed penalties for those not having qualifying health care coverage. Those penalties started at $95 per adult, or 1% of income above the filing threshold in 2014, but they rose to $285 per adult, or 2% of income above the filing limit in 2015. For 2016, penalties will rise again, hitting $695 per adult, or 2.5% of income. A family maximum will apply to the per-person amount, but the $2,085 amount will be substantially higher than the $975 in 2015 and the $285 in 2014.

3. Tax brackets are rising slightly.

Most of the tax brackets that govern different classes of taxpayers are adjusted for inflation. For 2016, these bracket amounts are rising by roughly 0.4%.

4. Standard deductions are going up for head-of-household filers.

The low inflation rate kept standard deductions for most taxpayers steady in 2016 from 2015 levels, including the single, married filing jointly, and married filing separately statuses. For those who qualify as heads of household, the standard deduction will rise $50 to $9,300 in 2016.

5. Personal exemptions are rising.

The personal exemption that taxpayers are entitled to take on their tax returns will go up by $50 in 2016. That will give everyone an exemption amount of $4,050.

6. Contribution limits on health savings accounts are going up.

Health savings accounts let people with high-deductible health plans set money aside on a pretax basis to cover the costs of their health care. For 2016, the contribution limit for individual policies will remain at $3,350, but the maximum contribution for family policies will rise by $100 to $6,750. A catch-up contribution of $1,000 for those 55 or older will continue to apply. 

7. The Earned Income Credit is rising.

The maximum allowable Earned Income Credit will go up modestly in 2016. For those with three or more qualifying children, the maximum credit will rise to $6,269, up $27. Those with two children will get a maximum $5,572, which is up $24 from 2015, while one-child families can get up to $3,373, $14 more than last year. Those without children get just a $3 bump and can claim up to $506 for 2016

8. The exemption from AMT is higher.

The alternative minimum tax has struck a growing number of taxpayers, making the exemption amount more important than ever. Single taxpayers will see their AMT exemptions go up $300 in 2016 to $53,900, while joint filers will see a $500 boost to $83,800.

9. The estate tax exemption is heading upward.

The lifetime exemption amount for the gift and estate tax is tied to inflation, and it is slated to rise next year as well. The exemption amount will rise to $5.45 million, up $20,000 from 2015. The limit applies to estates of those who pass away in 2016.

10. Other tax provisions could change if not renewed.

Nearly every year, lawmakers wait until the last minute to renew popular tax breaks, such as charitable distribution from IRAs, state sales tax deductions, teachers' write-offs for classroom supplies, and deductions for private mortgage insurance. As of early December, these provisions hadn't yet been renewed for 2015, but typically, lawmakers renew them retroactive to the beginning of the year. The same is likely in 2016 unless an extension provides for two years of relief rather than just one.

Tax slabs for 2016


Taxable Income
Tax Rate
$927.50 plus 15% of the amount over $9,275
$5,183.75 plus 25% of the amount over $37,650
$18,558.75 plus 28% of the amount over $91,150
$190,151—$ 413,350
$46,278.75 plus 33% of the amount over $190,150
$119,934.75 plus 35% of the amount over $413,350
$415,051 or more
$120,529.75 plus 39.6% of the amount over $415,050

Married Filing Jointly or Qualifying Widow(er)

Taxable Income
Tax Rate
$1,855 plus 15% of the amount over $18,550
$10,367.50 plus 25% of the amount over $75,300
$29,517.50 plus 28% of the amount over $151,900
$51,791.50 plus 33% of the amount over $231,450
$111,818.50 plus 35% of the amount over $413,350
$466,951 or more
$130,578.50 plus 39.6% of the amount over $466,950

Married Filing Separately

Taxable Income
Tax Rate
$927.50 plus 15% of the amount over $9,275
$5,183.75 plus 25% of the amount over $37,650
$14,758.75 plus 28% of the amount over $75,950
$25,895.75 plus 33% of the amount over $115,725
$55,909.25 plus 35% of the amount over $206,675
$233,476 or more
$65,289.25 plus 39.6% of the amount over $233,475

Head of Household

Taxable Income
Tax Rate
$1,325 plus 15% of the amount over $13,250
$6,897.50 plus 25% of the amount over $50,400
$26,835 plus 28% of the amount over $130,150
$49,417 plus 33% of the amount over $210,800
$116,258.50 plus 35% of the amount over $413,350
$441,001 or more
$125,936 plus 39.6% of the amount over $441,000

2016 Personal Exemption Amounts

For tax year 2016, the personal exemption amount is $4,050 (compared to $4,000 in 2015).
The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phaseout (PEP) thresholds are as follows:
Filing Status
PEP Threshold Starts
PEP Threshold Ends
Married Filing Jointly
Married Filing Separately
Head of Household




2016 Standard Deduction Amounts


For tax year 2016, the standard deduction amounts are as follows:
Filing Status
Standard Deduction
Married Filing Jointly
Married Filing Separately
Head of Household
Qualifying Widow(er)