Friday, October 31, 2008
Tax Return Copy Rate to Increase
Washington, D.C. (Oct. 31, 2008)
By WebCPA staff
The Internal Revenue Service plans to increase the fee for obtaining an exact copy of a previously filed and processed tax return with all the attachments.
Beginning Nov. 1, the fee will increase to $57 from $39 to reflect better the cost of processing the request. Taxpayers or their designated representatives must still complete and mail the Form 4506, Request for Copy of Tax Return to complete the request. Copies are generally available for returns filed in the current and past six years.
However, the IRS noted that it would still provide a tax return transcript for many returns free of charge. A transcript provides most of the information contained in a tax return and usually includes the information that mortgage companies and other lending institutions require for loan and employment verification purposes.
Taxpayers can obtain transcripts by completing and mailing a Form 4506-T, Request for Transcript of Tax Return, by calling the IRS at (800) 829-1040, visiting a local Taxpayer Assistance Center or going through a tax professional if that person or company prepared their prior-year return. Transcripts represent more than 93 percent of all requests for tax account information, the IRS noted.
With a signed Power of Attorney, Form 2848, most tax preparers can obtain a transcript of a taxpayer instantly.
Friday, October 17, 2008
Inflation Adjustments Widen Tax Brackets
Washington, D.C. (Oct. 17, 2008)
By WebCPA staff
The Internal Revenue Service said personal exemptions and standard deductions would rise in 2009 to keep pace with inflation, providing more than three dozen tax benefits.
The inflation adjustments will affect 2009 tax returns, which most taxpayers will file in 2010. The value of each personal and dependency exemption is $3,650, up $150 from 2008. The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350).
Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes, the IRS noted.
Tax bracket thresholds will increase for each filing status. For a married couple filing a joint return, for example, the taxable income threshold separating the 15 percent bracket from the 25 percent bracket will be $67,900, up from $65,100 in 2008.
The maximum earned income tax credit for low- and moderate-income workers and working families with two or more children will be $5,028 in tax year 2009, up from $4,824 in 2008. The income limit for the credit for joint return filers with two or more children will be $43,415, up from $41,646. The annual gift exclusion is rising to $13,000, up from $12,000 in 2008.
The official IRS announcement,Rev. Proc. 2008-66, is at http://www.irs.gov/pub/irs-drop/rp-08-66.pdf.
Wednesday, October 15, 2008
McCain, Obama Propose Measures for Economic Crisis
Washington, D.C. (Oct. 15, 2008)
By WebCPA staff
Presidential candidate Sen. John McCain, R-Ariz., and his rival Sen. Barack Obama, D-Ill., have proposed differing tax and retirement plan measures to deal with the economic downturn.
McCain proposed that the first $50,000 withdrawn from individual retirement accounts and 401(k) plans by people over the age of 60 should be taxed at the lowest rate, 10 percent, in 2008 and 2009. He also called for suspending the tax rules that require seniors to begin selling off equities from their IRA and 401(k) accounts when they reach age 70.5.
In addition, McCain proposed increasing the amount of capital losses that can be used in 2008 and 2009 to offset ordinary income, from $3,000 to $15,000. He also suggested cutting in half the maximum tax rate on long-term capital gains, from 15 to 7.5 percent, in 2009 and 2010.
McCain wants to eliminate taxes on unemployment benefits. He has also proposed buying failing mortgages that are putting homeowners in danger of foreclosure and substituting them with fixed-rate mortgages guaranteed by the Federal Housing Administration at terms that are manageable for homeowners.
"The moment requires that government act," McCain said at a Pennsylvania rally. "And as president I intend to act quickly and decisively."
Obama has proposed that every family be allowed to withdraw up to 15 percent from their IRA or 401(k), up to a maximum of $10,000, without any fine or penalty, through 2009. He is also proposing a three-month moratorium on foreclosures. In addition, Obama is proposing a Jobs and Growth Fund that would provide money to states and local communities for infrastructure projects such as rebuilding and repairing bridges, roads and schools.
"We need to pass an economic rescue plan for the middle class and we need to do it now," he said in a statement.
Tuesday, October 7, 2008
Saturday, October 4, 2008
Some of the tax provisions included in the plan are:
► One year of Alternative Minimum Tax (AMT) patch, setting 2008 exclusion of $46,200 for individuals and $69,950 for joint filers
► Extensions of expiring provisions including:
o Teacher's above the line $250 expense deduction
o Deduction of qualified tuition through the end of 2009
o Choice of sales tax deduction or state income tax deduction, whichever is higher, as an itemized deduction
o Property tax deduction for non-itemizers
o Allow taxpayers over age 70½ to contribute an IRA distribution of up to $100,000 to charity and exclude the amount from income
o Relief for taxpayers whose mortgage debt has been reduced through foreclosure or reduced through a restructuring. This kind of reduction in debt traditionally counted as income under the tax code, but was made exempt in 2007. The new measure extends this protection from the end of 2009 through 2012.
o 15-year cost recovery for qualified leasehold improvements and restaurant property, and new 15-year treatment for qualified retail improvement property
► Changes to preparer penalty rules
► Increase in the AMT refundable credit
► Liberalization of the refundable child credit, lowering the “floor” for the refundability of the credit from approximately $12,050 to $8,500
Of course, California conforms to none of these changes. Click here for a PDF version of the Act.
For more details, click on this CCH link.