Continue reading »]]> Direct deposit is the fastest, safest way to receive your tax refund. When a taxpayer combines e-file and direct deposit, the IRS will likely issue your refund in as few as 10 days.

Here are four reasons more than 79 million taxpayers chose direct deposit in 2011:

1. Security: Thousands of paper checks are returned to the IRS by the U.S. Post Office every year as undeliverable mail. Direct deposit eliminates the possibility of your refund check being lost, stolen or returned to the IRS as undeliverable.

2. Convenience: The money goes directly into your bank account. You won’t have to make a special trip to the bank to deposit the money yourself.

3. Ease: When you’re preparing your return; simply follow the instructions on your return or in the tax software. Make sure you enter the correct bank account and bank routing numbers.

4. Options: You can deposit your refund into multiple accounts. With the split refund option, taxpayers can divide their refunds among as many as three checking or savings accounts and up to three different U.S. financial institutions. Use IRS Form 8888, Allocation of Refund (Including Savings Bond Purchases), to divide your refund. A word of caution: Some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted. Additionally, Form 8888 should NOT be used to designate part of your refund to pay your tax preparer.

Continue reading »]]> IRAs 

  The deductible amount for IRAs remains unchanged at $5,000, but the income limits increase as follows: For taxpayers who are active participants in an employer plan filing a joint return or as a qualifying widow(er), the income limit is $92,000. For all other taxpayers, the income limit is increased to $58,000. The limit for a taxpayer who is not an active participant but whose spouse is an active participant is increased to $173,000. Roth IRAs The adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for a taxpayer filing as a qualifying widow(er) is increased to $173,000. The limitation for all other taxpayers is increased to $110,000

 Roth IRAs

 The adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for a taxpayer filing as a qualifying widow(er) is increased to $173,000. The limitation for all other taxpayers is increased to $110,000

Continue reading »]]> Below is a list of the major tax provisions set to expire at the end of 2011 unless Congress acts to extend them.

Individual Provisions

• Temporary 2% Payroll Tax Cut
• Increased Individual Alternative Minimum Tax (AMT) exemption and Nonrefundable Personal Tax Credits Allowed Against the AMT
• Deduction for State and Local  Sales Taxes. Note: The expiration of this provision will make a huge difference for taxpayers who live in states with no state income tax – and taxpayers who are planning to buy expensive items, such as appliances, motor homes, and boats.
• Tuition  and  Fees Deduction for  Higher Education.
• Itemized Deduction for Mortgage Insurance Premiums.
• $250  Deduction  for   Teacher  Classroom Expenses
•  Direct Charitable Contributions from an IRA

Business Provisions

• 100 Percent Bonus Depreciation
• Enhanced $500,000 Expensing of DepreciableProperty (not including real estate)
• Expensing   of     leasehold   improvement property, qualified restaurant property, and qualified retail improvement property.
• Small Business Stock Exclusion
• Research and Development Tax Credit
• Work Opportunity Tax Credit for Employers
• New Markets Tax Credit

Energy Incentives

• Nonbusiness Energy Credit  for   Energy- Efficient Building Improvements and Residential Energy Property, such furnaces,  central air conditioners, water heaters, heat pumps and similar components.
• Electric-drive    Vehicles    and     Plug-in Conversions
• Energy-Efficient Home Construction  Credit
• Energy Efficient Appliance Credit

Continue reading »]]> 100% of the cost can be written off if no personal use is made of the vehicle, thanks to 100% bonus depreciation. SUVs must have loaded gross vehicle weights over 6,000 pounds to qualify for this break. The $25,000 ceiling on expensive SUVs doesnt apply if bonus depreciation is taken. Used SUVs dont get bonus depreciation. New pickup trucks with loaded weights over 6,000 pounds can be fully written off. Ditto for used heavy pickup trucks if cargo bed is atleast six feet in length.

Continue reading »]]> The IRS will be sending letters to all known IRS identity theft victims in early December. These letters will notify taxpayers that the IRS has placed an identity theft indicator on their account. That letter will advise the taxpayer that an additional letter will be forwarded toward the end of the month of December with a unique PIN that must be entered onto the taxpayers returns for 2011 for the taxpayer to file electronically.  Absent this PIN, the taxpayer will be required to file a paper return, which could delay a refund. The IRS will then match the special PIN with the PIN to be entered on the e-filed returns to positively identify the taxpayer. If the PIN does match or is not present on the e-filed return, the return will be rejected. The unique PIN will be “year” specific.  These unique PINs will likely be issued for up to three years after the IRS has identified and validated an identity theft victim.

Important to Keep PIN Letters

Again, taxpayers victimized by ID theft can e-file their return but only if they include the special PIN on their Form 1040. Therefore, it is essential that taxpayers keep the letters received in December. If a taxpayer loses the letter and does not know his or her special PIN, the taxpayer cannot retrieve it in any other way. Duplicate letters will not be issued.  If a taxpayer loses the PIN number, the taxpayer cannot e-file. The IRS also has recommended that tax return preparers require some form of photo identification from their clients to help reduce identity theft and tax filing fraud.