Archives for March 2013

Things to Consider With a Tax Extension

When it comes to filing yearly income tax returns, you find all types. There are those who are itching to file right after the New Year’s champagne toast, and those who trudge toward April 15 as if it were Armegeddon. And of course there are plenty of people who fall somewhere in between.

Because income can come from many different sources, and at all sorts of different levels, filing taxes is much more of a strain for some than others. Some may wind up with a quick and easy return, while others struggle to find the time, and sometimes the money to meet the deadline.

For those who see April 15 approaching a little too quickly, there is the option of filing the IRS form 4868 to get an extension. By filing an extension, taxpayers have an additional six months to file their taxes. But although there may be extra time, there may also be an extra expense. An extension allows a tax payer extra time to file, but not extra time to pay. If you are one of those who has to pay into the IRS or your state’s revenue department, holding off could mean that you’ll have to pay more. With an extension there is more time to file, but not more time to pay.

In order to limit fees, penalties, and interest taxpayers are best off paying their taxes at the time that they file for the extension. This can be tricky for some who don’t necessarily know what they owe. In order to make the process a bit easier, your tax accountant can estimate what you might owe. While not guaranteed to be accurate, these estimates will give you a place to start when it comes to knowing your tax bill.

If paying the whole amount is not feasible, pay what you can. Any penalties and interest will be calculated based on what you owe after April 15. If you’re due a refund, you won’t be charged penalties or interest. The following situations can make your tax obligation creep upwards: failing to file on time (your 4868 should take care of this), failing to pay, and Interest.

Failing to file can bring you a penalty of as much as 25% of your tax bill. For each month your return is late, 5% is added to your tax bill. This maxes out at 25%. The failure to pay penalty is less per month — only .5%, however this does not max out so delaying that payment too long could really add up. Interest charges can vary somewhat, but is currently around 4% of the amount that was underpaid.

If you’re feeling rushed or overwhelmed, knowing that there is an option to file an extension can bring some peace of mind, but still even with that extension it is always in the taxpayers best interest to get their taxes in order as soon as they can.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal..


Innocent Spouse Tax Filing

In the United States, married couples usually file a joint tax return. This means that both are responsible for payment of taxes to and the accuracy of the information filed on the tax return. While in most marriages this is a fair arrangement, there are times when the spouse keeps secret information that should have been filed with the tax return or lies to the spouse about payments.

Starting in 1971, the United States Internal Revenue Service began to realize that sometimes a spouse was kept in the dark for about taxable income and told by the spouse the taxes were paid when they weren’t. In 1971, the IRS wrote the first regulations for its “innocent spouse” program. Under certain limited conditions, a spouse was not held accountable for the other spouse’s actions.

In 1984, and again in 1998, the tax code was revised to give further protection to innocent spouses. This relief was badly needed, as spouses planning divorce would knowingly mislead their spouse so that both would share the tax liability when property was divided during property settlement. In 2013, the IRS announced that it was eliminating the two-year rule for request relief under innocent spouse. In fact, the rule can be applied retroactively and any taxpayer denied relief because of the two-year limitation may refile.

In addition, criminals often cheat on their taxes without their spouse’s knowledge. This is not only true of organized crime members but also people who engage in white-collar crime. The tax code provisions separate the liability so that the innocent spouse is not held responsible for the deceitful acts of their marriage partners.

In addition, a divorced spouse may elect to take an option known as the “separation of liability.” Once this option is taken, the spouse must prove that they had no knowledge of fraudulent activity. If successful, they are relieved of responsibility for falsified joint tax return.

To get relief you need to file IRS Form 8857. You only have to file a single copy of the form even if you are seeking relief for multiple years. If you want to give the IRS more information concerning your request just attach a letter with your name, address, social security number, and filing year. Send the form and any attachments to:

Internal Revenue Service
Innocent Spouse
Stop 840-F
P.O. Box 120053
Covington, KY 41012

The IRS makes it hard to get innocent-spouse relief. Over 50,000 innocent-spouse applications were filed in the past year with less than half of them getting approval. But, more than 1,500 denials were due to the two-year time limit that has been amended.

Your tax accountant is a good resource for help in filing for this relief.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.


5 Tips To Get Your Tax Return Quickly

You’ve been loaning your income to the government for the past year, and now is the moment you have been waiting for — tax season. This is the time of year where that lovely tax return is deposited in your account. Whether you are paying off a bill, taking a vacation or splurging on a fun purchase, you will want to be sure to get your tax return as quickly as possible. These tips will help you make sure the money gets back in your hands where it belongs in no time.

5 Tips To Get Your Tax Return Quickly

1. Ditch the pencil and paper forms, and e-file your taxes. Electronically filing your taxes is quick, easy and it is less expensive. You don’t have to worry about them getting lost in the mail, and the entire process is quicker — from preparing your taxes to receiving your return.

2. Opt for direct deposit. Direct deposit returns are processed much quicker than those who are waiting for a check in the mail. It can literally mean the difference between getting your return in a few days versus receiving it a few weeks after you file your taxes.

3. Be prepared for your tax appointment. Don’t try to jump the gun and file your taxes before you have all of your forms. Wait for everything to arrive in the mail, and recognize that some tax forms may not come until February. Have everything in a neat and tidy folder so your accountant can quickly and easily prepare your taxes.

4. Don’t wait until the last minute to submit your taxes. The longer you wait to file, the longer it will take you to get your return.

5. Double check your work. Mistakes will slow down the process for everyone, so make sure your taxes are correct before you submit them.

If you come prepared for your appointment and you are open-minded to technology, you will find that you will get your tax return much quicker than you have in past years. For some people who e-file, their return arrives in their account within a week. Years ago when everyone relied on pencil and paper to file their taxes, it could be several weeks before the tax return check arrived in the mail. Times have changed drastically, and it’s never been easier to get your tax return quickly. Take these steps today and start thinking of what you will do with that tax return when it arrives quicker than ever before.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.


Tax Season is Here Again– Are You Ready?

Are you one of those who wait till the last minute to do your taxes? Tax season has started; to be precise, on January 30, 2013, and that’s when our friends at the IRS begin to process personal tax or business tax returns. This is the right time to file your taxes, and this year, you have the added advantage of preparing and filing your taxes by the deadline on April 15th. Unless you get your documents in place, you will need to race to the meet deadline and then have to deal with stress that can be avoided in the first place.

So, here are some pointers to share with you about what the 2013 tax season brings in, right from the horse’s mouth, so you can get yourself organized.

A brand new, easy to navigate and redesigned is out there to welcome you. It has service options that are ready to wow you–additional video-conferencing guidance as well as tools on social media. You can easily get all the latest tax info out there, and if you are keen on learning more, you are directed to the IRS YouTube channel that you can see right here at IRS has further intensified its efforts to protect you, dear taxpayer, from any frauds or identity thefts.

Did you know that you could actually check the status of your tax refunds on your smartphone? With the IRS smartphone application, IRS2Go which is available for both Apple and Android users, you can also clarify any other tax related doubts when you are on the go.

While this year’s late legislation has affected several forms, details of which are listed on the IRS website, they hope to begin accepting these forms later this month and in March as well. Watch this space to find out more.

Another favorable change is in the tracking system that you would use after you have filed your returns on the “Where’s my refund” section of the IRS site. From this year onwards, you can look forward to an exact refund date, rather than the estimated date used up until last year, and this information is available after your tax returns have been processed and approved by the department.

So, let us all begin the laborious task of getting our records in place–receipts that depict your income, like your bank deposit slips, receipt books and your credit card charge slips; your purchases as well as your expenses and extend a warm welcome to the whole new tax season 2013.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.