Tuesday, July 05 2011
In a rare midyear move, the Internal Revenue Service is increasing the tax deduction you can take for using personal vehicles for business.
On July 1, if you use your personal vehicle for business, you’ll be able to deduct 55 cents a mile from your taxable income. That marks a 4-cent increase from the beginning of this year.
While the IRS normally updates mileage rates once a year during the fall for the next calendar year, the tax agency decided to raise the gas mileage tax deduction earlier due to high gas prices. (The average gas price currently is $3.61 a gallon, which is up from $2.74 last year, according to AAA.)
"This year's increased gas prices are having a major impact on individual Americans,” IRS Commissioner Doug Shulman told USA Today. “The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices. We are taking this step so the reimbursement rate will be fair to taxpayers."
Source: “IRS Increases Gas Mileage Deduction at Midyear,” USA Today (June 23, 2011)
Tuesday, February 23 2010
The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
Source: Washington Post (02/20/2010)
Monday, January 18 2010
The IRS started accepting e-filed tax returns on Jan. 15, marking the official start of tax season. The IRS’ popular Free File program also started accepting returns on Friday. However, as usual, W-2 and 1099 forms are generally not due to taxpayers before Feb. 1, so many taxpayers will not be prepared to file before then.
With the start of tax season, the IRS also announced the release of a new form that eligible taxpayers must use to claim the first-time homebuyer credit. Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, must be filed with the taxpayer’s individual tax return and is used to report the purchase of a home that makes the taxpayer eligible for the credit. In addition to Form 5405, eligible taxpayers must also include with their 2009 returns a copy of the settlement statement, executed retail sales contract (for mobile home purchases) or the certificate of occupancy (for newly constructed residences). The IRS reminded taxpayers in a news release that those who are claiming the first-time homebuyer credit cannot e-file because they must attach a proof of purchase to their returns.
E-Filing and Free File
The IRS reports that last tax season 66% of all returns were e-filed (some 95 million returns). The IRS says that for this season it is working on faster acknowledgment of whether a return has been accepted or rejected.
The Free File program allows taxpayers to prepare and file returns electronically for free, through a partnership between the IRS and a group of tax software vendors. Last season, the IRS introduced a new aspect to the Free File program—online fillable forms, which almost any individual taxpayer can use. (Traditional Free File is available only to taxpayers below a $57,000 income limit.) The IRS is urging eligible taxpayers to use the Free File program.
According to the IRS, benefits of e-filing or using Free File include a fast refund, reduced error rate and quick acknowledgment. By using e-file and direct deposit, taxpayers can get a refund in as few as 10 days. The error rate for an e-filed return is 1%, compared with 20% for a paper return. Unlike paper filers, e-filing taxpayers receive an acknowledgment that the IRS has received and accepted or rejected their returns.
Thursday, September 03 2009
According to published reports, the Internal Revenue Service is more closely examining how taxpayers are reporting mortgage interest deductions.