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Tuesday, March 29, 2011

IRS Offers Guidance and Relief on Health Coverage Reporting Requirements

IRS Offers Guidance and Relief on Health Coverage Reporting Requirements


The Internal Revenue Service has issued interim guidance to employers on the informational reporting requirements on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.

Case of a 145-Day Tax Refund Delay

March 28, 2011, 3:00 PM

Case of a 145-Day Tax Refund Delay

Tim Ryan has been sucked into a vortex of bad tax luck. Last week, we reported that some taxpayers were facing delays in getting refund checks, due to computer snafus in processing their repayment of the 2008 first-time home buyer tax credit. (The credit was really a no-interest loan and has to be repaid over 15 years, beginning this year). Many of those filers, the Internal Revenue Service says, should begin getting their refunds in April.

Wednesday, March 23, 2011

Minimizing Capital Gains Taxes

Six tips show you how.
March 21, 2011
by Alan Haft

March is one of my favorite months of the year. Winter’s just about over, 
NCAA March Madness is around the corner, the NBA the playoffs are coming up, 
flowers are getting ready to bloom and topping the list is the fact that
most of us get to spend time preparing to pay taxes.
How great is that?
Although I’m certain the government is going to put our tax payments
to good use, I prefer to minimize the amount I pay and that’s why I pay 
attention to how I might lower them, especially on things such as 
capital gains.
Capital gains are certainly nothing new to CPAs but to many clients, 
capital-gains distributions remain one of the great mysteries of 
accounting. For this reason I thought a quick column on what they 
are and how to potentially reduce them could be of some help.

The article is targeted toward tax preparers but is clear enough for most individual taxpayers who might have capital gain issues.

Saturday, March 19, 2011

Tax deductions you might overlook

By Sandra Block, USA TODAY

Every few years, Congress holds hearings on the face-melting complexity of the tax code and the need for reform. Then the lawmakers go back to their offices and cook up new tax credits and deductions.
  • USA TODAY, Alejandro Gonzalez

USA TODAY, Alejandro Gonzalez
That means taxpayers must be constantly vigilant for tax breaks that could reduce the amount they owe. With the tax deadline approaching, here’s a look at some deductions you might overlook:

Tuesday, March 15, 2011

Tax Breaks – Cheaper by the Dozen CCH Points Out 12 Tax Season Benefits Homeowners Need to Know

Tax Breaks – Cheaper by the Dozen

CCH Points Out 12 Tax Season Benefits Homeowners Need to Know

Posted: March 10th, 2011 09:28 AM CDT
RIVERWOODS, ILL., March 9, 2011 – Owning your own home opens the door to many tax savings opportunities. CCH, a Wolters Kluwer business and the leading global provider of tax, accounting and audit information, software and services (, examines specific ways homeowners can take advantage of current income tax laws.
The rule of thumb for homeowner tax deductions is that you must file Form 1040 and any itemized deductions must be made on Schedule A (Form 1040). If you itemize you cannot take the standard tax deduction, but there are a number of tax credits and exclusions that can be taken whether or not you itemize.
“Many homeowners aren’t aware of all the tax deductions they’re entitled to take,” said Mark Luscombe, JD, LLM, CPA, and CCH Principal Federal Tax Analyst. “Taxpayers can take advantage of deductions for 2010 tax returns and may be able to file an amended return if they missed a homeowner deduction for a previous year.”
Homeowners’ 12 Steps to Potential Tax Savings

Thursday, March 10, 2011

IRS to Examine Rental Losses More Closely

IRS to Examine Rental Losses More Closely


The Internal Revenue Service has agreed with recommendations in a newly released government report urging the agency to increase its examinations of individual tax returns that report losses from rental real estate activity.

J. Russell George
The report, by the Treasury Inspector General for Tax Administration, was conducted because a Government Accountability Office report in August 2008 found that at least 53 percent of individual taxpayers with rental real estate activity for tax year 2001 misreported their rental real estate activity, resulting in an estimated $12.4 billion of net misreported income.
The objectives of TIGTA’s review were to evaluate the IRS’s scrutiny of individual tax returns with rental real estate activity and to recommend changes to help identify, select and examine tax returns with rental real estate activity.
TIGTA found that during fiscal years 2008 and 2009, the IRS’s rental real estate Compliance Initiative Program examined only a small percentage of the 318,339 examinations conducted by revenue agents and tax compliance officers. TIGTA projected that if the IRS were to increase the percentage of rental real estate CIP tax returns it examined, it could increase potential tax assessments by $27.3 million over a five-year period.
“Given the magnitude of underreporting in our voluntary system of tax compliance, even small improvements in the IRS’s examination of tax returns with rental real estate activity could increase taxpayer compliance and generate substantial additional revenue to the federal government, helping reduce the tax gap,” said TIGTA Inspector General J. Russell George in a statement.
IRS management agreed with all of TIGTA’s recommendations, disagreeing only with the report’s proposed monetary outcome measures.
In its report, TIGTA recommended that IRS officials conduct an analysis to determine the population of tax returns with rental real estate activity that meets the criteria for inclusion in the CIPs. The IRS should also revise the instructions for Form 8582 to require all taxpayers with prior-year unallowed passive activity losses to submit the form with their tax return. The report also recommended that the IRS ensure that the information taxpayers provide to report the net amount of income earned or losses incurred from being a real estate professional is transcribed.
IRS management agreed with all three recommendations. The IRS, in connection with the development of compliance strategies, plans to consider whether additional CIP examinations are appropriate. In addition, the IRS plans to revise the 2011 instructions for Form 8582 and transcribe the information taxpayers provide to report the net amount of income earned, or losses incurred, from being a real estate professional.
“We will ensure the information taxpayers provide to report the net amount of income earned, or losses incurred, from being a real estate professional is transcribed,” wrote Christopher Wagner, the commissioner of the IRS’s Small Business/Self-Employed Division. “These changes will assist in selection of the most high-risk returns for audit.”
However, the IRS disagreed with the proposed monetary outcome measures. “Since the dollars per hour figures were calculated based on actual examinations that were ranked and selected for examination based on their potential yield, the characteristics of these cases are not necessarily an accurate representation of the entire remaining population,” Wagner wrote. “Therefore, because the results of the cases examined do not necessarily represent results from cases not selected, projecting differences in revenues across unexamined cases does not produce accurate revenue estimations.”
TIGTA said it computed the outcomes conservatively using historical data from the examination program. TIGTA officials maintained that the potential $27.3 million of increased revenue over a five-year period is reasonable considering the assumptions used to calculate the estimate.

Wednesday, March 09, 2011

Windows 7 Observations

I have been running Windows 7 on my 64bit notebook for around 6 months.  I also have some experience with a 64bit desktop for last 3 months.  Late last year I attended the 2010 Winter TechFest of the North Carolina CPAs.  Included was a session entitled "All Aboard for Windows 7" by  Tommy Stephens of K2 Enterprises.  Following are notions from all three sources:

  • 64bit machine is really snappy when configured with maximum RAM
  • Get the maximum version if running in a business or otherwise heavy duty environment.  Enterprise differs from Ultimate only as to volume licensing.  Upgrading from Pro should be priced at around $79.
  • Bitlocker is included in Ultimate.
  • Windows 7 will run in XP mode if you have a critical, cranky XP app.
    • Adobe 7 and earlier run in XP only.  However you should upgrade to Adobe 10 whether on XP or Windows 7.
    • Quickbooks 2006 and earlier require XP.
  • Explore effective use of Libraries.  Files actually residing in multiple locations 'appear' to be in a single or multiple folders.  Observe the built-in Libraries for documents, music, pictures, and videos.
  • In general, do not try to upgrade older physical computers.  Buy any new machine with version you need of Windows 7 pre-installed.
  • Windows 7, Vista, and XP can co-exist on networks without conflicts.

Friday, March 04, 2011

The Top 1%

The following link, on current popularity of various smartphone operating systems has a chart that shows usage by age.  Being over 65 by a comfortable margin, I will be in a rather exclusive 1% of the population when my current phone finally dies: