How to Track Your IRS Refund

So you’re getting a tax refund and now you want to know when to expect it.   The good news is that the IRS wants you to know as well.  There are three fast and easy ways to track the status of your refund.

Go Online

The IRS created “Where’s My Refund?,” a digital tool designed to answer taxpayer questions about the status of their refund.  This year the IRS has refreshed, enhanced and polished the app just in time for the 2013 tax season, making it more automated and accurate than ever before.

With “Where’s My Refund", a new progressive feature called a “refund tracker” displays the return progress in three separate stages.  Here are the three stages and the messages you may receive:

1. Return Received

·          We have received your tax return and it is being processed.

·          You should get your refund within 21 days from the date we received your tax return.

·          Please check here or use our free mobile app, IRS2Go, to check on your refund.

2. Refund Approved

·          Your tax refund is scheduled to be sent to your bank on (MMDDYYYY). (Direct deposit date of refund) or (Other appropriate text if a paper check)

·          If your refund is not credited to your account by (the above date), check with your bank to see if it has been received.

·          Please Note: For refund information, please continue to check here, or use our free mobile app, IRS2Go. Updates to refund status are made no more than once a day.

3. Refund Sent

·          Your refund was sent to your bank on (MMDDYYY) for direct deposit (or other appropriate text if a paper check).

·          If your refund is not credited to your account by (MMDDYYY), check with your bank to find out if it was received (or other appropriate text if a paper check).

To get started you need your social security number, filing status and the exact dollar amount of the refund.  All of this information can be found on your 2012 tax return.

Wait 24 hours after e-filing a return and four weeks after mailing a return. 

The IRS tool updates overnight so there is no need to check more than once a day.

Call a Special Toll Free Number

If you don't have access to a computer or simply prefer using a telephone, you can call the IRS to track down your refund.

A special automated toll-free line is dedicated to refund status reports. When you call (800) 829-1954, you'll need the same information the online system requires – social security number, filing status and exact dollar amount of refund.

Use an App on Your Smartphone

The IRS has released a new version of IRS2Go, a smartphone application that lets you interact with the IRS using your mobile device.  Three new features are available, providing access to video, new updates and more tax information.

Get Your Refund Status You can check the status of your federal income tax refund using IRS2Go.  Simply enter your Social Security Number, which will be masked and encrypted for security purposes, then select your filing status and enter the amount of your anticipated refund from your 2012 tax return.  If you e-file your return, you can check your refund status within a 24 hours.  If you file a paper tax return, you will need to wait three to four weeks to check your refund status because it takes longer to process a paper return.

Get Tax Updates You can also use IRS2Go to subscribe to filing season tax updates by entering your e-mail address to automatically get daily tax tips. Tax Tips can help you with your tax planning and preparation needs. They are issued daily during the tax filing season and periodically during the rest of the year. The plain English updates cover topics such as free tax help, child tax credits, the Earned Income Tax Credit, education credits and other topics.

Follow the IRS
You can use IRS2Go to sign up to follow the IRS Twitter news feed, @IRSnews.  IRSnews provides the latest federal tax news, including information about tax law changes and important IRS programs.

New! Watch Us IRS2Go delivers video from the IRS YouTube channel to your mobile device.  As IRS launches new videos on YouTube, the videos are automatically featured on IRS2Go.

New! Get the Latest News
IRS news is available via IRS2Go as soon as it is released to the public. This feature allows you to learn about new programs, legislative updates and relevant tools to help you navigate taxes and the IRS.

New! Get Your Tax Record You can request your tax return or account transcript using your smartphone.  IRS2Go allows you to request this information, which will be mailed to you within several business days.

The app is free for both Android and Apple users.

I hope this information is helpful.  If you need further assistance, please contact me at Kinzey & Arndt, CPA.  

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Most Overlooked Deduction for Clients in the Construction Industry

I want make you aware of a substantial deduction that many people in the construction industry qualify for but is often overlooked by tax preparers.  Specifically, I am speaking about the “Domestic Production Activities Deduction”.

 

This deduction is available to all home builders and contractors regardless of what tax forms they file.   If you are a sole proprietor, S-corporation, LLC or Partnership, you can tell if you have taken the deduction by looking at line 35 of your Form 1040.  I find that nearly all of the builder’s and sub contractor’s tax returns I have reviewed have not claimed this deduction…and it can be substantial. 

Personally, I think there are a couple of reasons this deduction is not being taken advantage of:

·         Some tax preparers may not be up to speed on all changing tax laws as it relates to the construction industry 

·         The tax law covering this deduction can be somewhat complicated 

·         Some home builders don’t have their accounting system setup correctly to capture the data needed to do the calculations

 

The good news is if you haven’t been taking this deduction you can amend up to the prior three year’s tax returns and receive a refund.  If you need some tax assistance or have questions about if you qualify for this deduction, please give me a call at Kinzey & Arndt, CPA; my firm offers a free 1 hour consultation.  We have many clients in the construction industry and understand the unique challenges that home builders and their contractors face.  

I would love a chance to talk with you about how we can help your business run more efficiently and profitably.  We are located in the Claremont Commons building on East Battlefield (right next door to Metropolitan Grill).  Feel free to stop by or schedule an appointment, I would love to hear from you!

 

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Lost Your Home In Foreclosure? You May Qualify for A Refund.

A Jan. 18 deadline looms for about 2 million homeowners who lost their homes to foreclosure between the start of 2008 and the end of 2011. Five lenders could give each of those borrowers as much as $2,000.

The National Mortgage Settlement (NMS) administrator mailed Notice Letters and Claim Forms in late September though early October 2012 to those borrowers who lost their home due to foreclosure between January 1, 2008 and December 31, 2011.  The problem is that many qualifying homeowners never received those notices because they were mailed to the address of the foreclosed home.  Therefore, they do not realize they qualify for a refund.

The deadline to file a claim is January 18, 2013.  So if you lost your home between 2008 and 2011, keep reading to see if you qualify for relief, how much you might receive and how to file a claim.

What is the National Mortgage Settlement?

The NMS was reached last February between 49 states and the nation's five largest mortgage lenders and loan-servicers — Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo. (Oklahoma didn't agree to the settlement terms, so homeowners in that State can't take part.)

The settlement was reached after it was determined the five institutions may have illegally foreclosed on millions of homeowners between January 1, 2008, and December 31, 2011. Common problems involved improper review of foreclosure documents, failure to have key papers signed in front of a notary, and sometimes even downright abuse of the mortgage and foreclosure processes.

Who Qualifies?

Only borrowers who had loans that were issued or serviced by these five companies (Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo) are eligible to share in proceeds from the settlement. It required the banks to set aside about $20 billion to help current homeowners refinance their loans, reduce the outstanding balance of their mortgage, or get other types of relief that could help save their homes.

How much money will I get back?

In an interesting twist, though, it also earmarked $1.5 billion to reimburse an estimated 2 million people whose homes were foreclosed upon by any of the five banks between January 1, 2008, and December 31, 2011. The payments are expected to range anywhere from $800 to perhaps more than $2,000, based largely on how many of those former homeowners file the simple claim form by the upcoming January 18^th deadline.

How do I file a claim?

There is no fee to file the application, and federal regulators are discouraging consumers from paying for help from con men who offer to complete the easy paperwork for them.

The best place to get more information is from the following website:  www.nationalmortgagesettlement.com.    An alternative is to call the offices of the National Mortgage Settlement Administrator toll-free, (866) 430-8358.

If you have any questions or need assistance with the application, please call me at Kinzey & Arndt, CPA 417-882-9000 or visit our website www.cpainthesky.com.  I am happy to answer any questions free of charge for anyone that lost their home in this manner.  Let's see if we can get you what you were entitled to.

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Business Gift Giving – What’s Deductible?

During the holiday season many business owners give gifts to their clients, prospective clients or employees to thank them for their business or show appreciation for their hard work.   

But did you know your deduction for that business gift is limited to $25? 

The basic rule is that if you give someone a gift for business purposes, your business expense deduction is limited to $25 per person per year.  Any amount over the $25 limit is not deductible.  If this amount seems low, it is.  That’s because it was established in 1954.   

Most taxpayers are at least vaguely aware of this tax rule.  But what isn’t as widely known is that there are a few exceptions and work-arounds to this rather restrictive limit.   

Here’s a quick rundown of the major exceptions to the $25 limit. 

Companywide gifts 

The $25 limit applies only to gifts to individuals, either directly or indirectly.   It doesn’t apply if you gift to an entire company, unless the gift is intended for a particular person or group of people within the company such as the president or manager.  Such companywide gifts are deductible in any amount as long as they are reasonable. 

Example:  

Jackson, is a residential custom home builder whose best client is Acme Brick. Just before Christmas, he drops off a $100 cheese basket at the company's reception area for all of Acme's employees. He also delivers an identical basket to Acme's president. The first basket left in the reception area is a companywide gift, not subject to the $25 limit. The basket for Acme's president is a personal gift and therefore is subject to the limit.

Gifts to a husband and wife 

If you have a business connection with both spouses and the gift is for both of them, the $25 limit doubles to $50. 

Gifts to employees 

Although they have their own limitations and may be treated as compensation to the employees, an employer is allowed to deduct the costs of gifts made to employees. 

Entertainment 

There is a special twist if you gift a client with entertainment tickets, such as tickets to a football game. If you don't attend the event with the client, you have the option of treating the tickets as a gift or as an entertainment expense. Gifts of up to $25 are 100 percent deductible, while entertainment expenses are only 50 percent deductible. So, with tickets that cost less than $50, you get a bigger deduction if you treat them as a gift. If they cost more, treat them as an entertainment expense. 

Example: 

You pay $400 to a scalper for a pro football game ticket that has a face value of only $100. You give the ticket to a client but don't attend the game yourself. If you treat the ticket as a gift, you may deduct only $25 of the expense. If you treat it as an entertainment expense, your deduction would be 50 percent of $400, or $200. 

Only direct costs are limited 

Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit 

Inexpensive gifts 

Inexpensive items such as key chains and pens are not considered gifts for purposes of the $25 limit so long as:

• they cost $4 or less a piece
• your company name is clearly and permanently imprinted on them, and
• they are one of a number of identical items you widely distribute

As you can see, there are several exceptions to the $25 rule. With careful planning your business gifts could be 100% deductible.  To the extent your business qualifies for any of them, it’s important that the qualifying expenses be tracked separately (typically by charging them to a separate account in your accounting records) so that you can claim a full deduction. 

If you have any questions regarding the types of gifts or gift-giving situations that may qualify for a full deduction or how to properly isolate and account for them in your records, please contact me at Kinzey & Arndt CPA.  J

2013 Brings Two New Taxes to High Income Taxpayers

With the fiscal cliff stealing the spotlight over the holidays, very little attention was given to two new taxes that started January 1. 

 

Thanks to the Affordable Care Act (also known as Obamacare) the first wave of tax increases rolls out in 2013 to help fund the massive 2010 health care reform.  The new taxes on wages and investment income are expected to raise about $318 billion over 10 years. 

 

Granted the bulk of these taxes fall mainly on the wealthy and the health care industry, but sooner or later we will all be paying more.  To find out who pays and how much, keep reading:

 

Increased Medicare payroll tax

 

Currently, the Medicare payroll tax is 2.9% and it applies to earned income only.  An employee is responsible for 1.45% of the tax and it’s deducted automatically from the paycheck.  The employer kicks in the other 1.45%.   

 

Under the new tax provision, most taxpayers will continue to pay the 1.45% Medicare tax, but single people earning more than $200,000 and married couples earning more than $250,000 will owe an additional 0.9% on earned income above these thresholds.  

 

Employers will collect the extra 0.9% on wages exceeding $200,000 just as they would withhold Medicare taxes and remit them to the IRS. However, companies won’t be responsible for determining whether an employee’s income from other sources or combined income with his or her spouse makes them subject to the tax.  This means that some employees will have to pay additional Medicare taxes when they file income tax returns and others will get a refund for amounts overpaid.

Example 1

If you’re married and you and your spouse each earn $150,000, your employers will withhold 1.45% for Medicare tax, because neither of you exceeds the $200,000 individual threshold. But if you file a joint tax return, your combined earned income of $300,000 is $50,000 above the married filing jointly threshold. This means you will have underpaid your Medicare tax by $450 (.9% of $50,000) and will owe the additional amount when you file your taxes.

Example 2

If you are a self-employed single person with self-employment income of $300,000 you will pay a 2.9% Medicare tax on the first $200,000 and a 3.8% tax on the remaining $100,000.  This means you will owe an additional tax of $900 under the new tax provision.  (.9% * $100,000 = $900) 

New Medicare tax on Investment income

This one is kind of a big deal because it’s the first time a Medicare tax will be assessed on unearned income.  It applies to most joint filers with adjusted gross income (AGI) above $250,000 and single filers with AGI above $200,000.  AGI is the number at the bottom of the front page of Form 1040. 

The new tax is complex, but in effect it is a flat tax on investment income above the $250,000/$200,000 threshold. 

Investment income includes:

• interest, dividends, annuities, royalties, rents
• capital gains – including any profit you make on the sale of your residence if it exceeds the amount you are allowed
• income from a passive trade or business 

Investment income does not include:

• Income from a business in which you are an active participant
• Distributions from an IRA or qualified retirement plan
• Gain on the sale of an active interest in a partnership or S-corporation
• Gain inside a tax deferred annuity
• Distribution from a tax-free Roth account
• Interest from tax-exempt municipal bonds (Obama has proposed changing this) 

For those whose income levels are well below the $250,000/$200,000 threshold, keep in mind that all it takes is one transaction to push you into the 3.8% tax territory (i.e., sale of real estate with a large gain or conversion of an IRA into a Roth account).

Example

If a married couple earns $200,000 in wages and $100,000 in capital gains, $50,000 will be subject to the new tax, creating an additional $1,900 tax liability.  ($200,000 wages + $100,000 CG = $300,000 income - $250,000 threshold = $50,000 * 3.8% = $1,900).

As you can see, the wealthy are going to bear the brunt of this tax.  If you fall in these income levels and have investments, visit with me.  Tax advisers have already found ways to minimize the impact of this tax.   Contact my office to see how we can help.

1099 Season is Here - What You Need To Do

It’s almost January, and that means Form 1099 season. Companies big and small are about to start churning them out and you can’t afford to ignore them. If you’re in business, that is you file a Schedule C, E, F, Form 1065, Form 1120 or Form 1120S, you need to pay attention to issuing them or face penalties. 

New in 2011 to all federal business tax returns was a box asking whether any payments were made during the year that would require Form 1099 to be filed and a box asking whether or not you filed all required Forms 1099.  

By asking the two questions prominently on the return, the IRS isn't only reminding taxpayers of their obligations but also setting a snare for taxpayers that habitually violate the law. If a taxpayer answers "no" and an audit shows he should have sent the forms, the answers could be evidence in favor of higher penalties. 

So what are my Form 1099 obligations? 

You need to send a Form 1099 to all service providers that you paid rent, interest, dividends or royalties to in 2012.  You must also send Form 1099 to any independent contractors that you paid for services in 2012.  Vendors that are incorporated, unless they are an attorney, are exempt from this requirement.  This could include an accountant, a plumber, a website designer or a consultant. 

You are only required to send a Form 1099 to anyone meeting the above requirements if you paid them $600 or more in 2012.  Since the threshold is cumulative that means you have to keep track of all the small payments throughout the year.

All 1099s are to be distributed to the recipients no later than January 31, 2013, in order to avoid penalties.  In order to prepare the necessary forms, you have several options available to you: 

1. You may prepare all Forms 1099 for any person or business to whom you paid more than $600 in 2012 using forms from an office supply store. 

2. Kinzey and Arndt, CPA will prepare Forms 1099 for you.  We will need copies of all completed W-9s and the total paid to each person or business paid $600 or more in 2012 no later than January 15, 2013 in order to guarantee completion before January 31, 2013.   

3. If you are an accounting client of Kinzey and Arndt, CPA we will let you know who to request Form W-9 from and prepare all necessary Forms 1099 at year end.  We can provide assistance in collecting Forms W-9 from service providers. 

Why do you need to obtain a W-9? 

A W-9 form asks for the name, address, type of business and taxpayer identification number of a service provider to whom a business paid money.  This form protects you in two ways:

 

1. The form is used to identify vendors subject to the Form 1099 rules. There are penalties for failing to issue a 1099 when one is required.  

2. The form asks the service providers to certify that it is a U.S. citizen not subject to backup withholding.  Failure to withhold and remit backup withholding when required by law will subject the payer to liability for these taxes, plus interest and penalties.   

What if a service provider refuses to complete Form W-9? The IRS requires you to start backup withholding at a flat rate of 28%.  This means you are required to keep 28% of what you otherwise would have given the service provider and instead give it to the government. The threat of backup withholding is usually enough to ensure cooperation on the part of the entity completing the W-9.   

If you have questions about this information or whether or not a vendor qualifies, please feel free to contact me.   

If you are already a client, we need a signed engagement letter before we proceed with preparing 1099’s this year.  An engagement letter will be emailed to you no later than January 2, 2013.   If you don’t receive one by then, please contact our office.