The IRS has opened its filing season successfully this month, and refunds have started going out to many taxpayers.

As with the start of any tax season, there are system validations that occur requiring some fine-tuning of our systems. As part of this, some taxpayers will receive refunds approximately one week later than initial projections they may have received, but these are still in line with historical refund delivery times.

Time frames provided by “Where’s My Refund” section of the IRS website and by tax providers are projected time frames and are subject to revision. Many different factors can affect the timing of the refund after the IRS receives the return for processing.

When the IRS announced the opening of the 2012 filing season, it advised taxpayers who electronically file and select direct deposit that they could see their refunds in as few as 10 days and 90 percent of refunds are provided within 21 days. Some taxpayers are getting refunds much faster, but at this time taxpayers should expect refunds to be issued as indicated in the original IRS guidelines.

The one-week delay for some refunds relates to fine-tuning IRS systems to adjust for new safeguards put in place this tax season to provide stronger protection against refund fraud.  The IRS is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion.

The IRS apologizes for any inconvenience caused by the revised refund dates.

Did you know that there are no such things as Federally-mandated “legal holidays” for private-sector employees, whether paid or not?

It’s true! Because the Fair Labor Standards Act (FLSA), the “main” Federal law that regulates work hours and pay, does not require private-sector employers to grant any holiday time off to their employees. The FLSA also does not require public-sector employers to grant holiday time off to their employees.

However, legal holidays for Federal government employees are designated by a different law that is specifically for such employees. (More on that later.)

Most private-sector employers voluntarily grant time off to some or all of their employees on so-called “legal holidays.” They do so to attract and retain employees in competition with other employers, just as they voluntarily grant other benefits that are not required by law. (Yes, holiday time off could be considered a benefit of the job. It is not a requirement.)

Under the FLSA, employers also don’t have to pay their employees more than the standard rate for overtime work on legal holidays. More than the standard rate, such as double-time pay, is strictly a matter of agreement between employers and employees or employers and labor unions. Basically, FLSA treats any and all “legal holidays” exactly the same as “regular” workdays regarding hours and pay.

By the way, if an employer has a policy of granting time off for legal holidays, it’s a good idea to apply that policy equally to all employees of the same classification. Otherwise, the employer might face a discrimination lawsuit. (Contact the EEOC or a lawyer about that.)

States and municipalities may enact FLSA equivalents that provide more generous provisions than the Federal version ( check with the relevant state labor department or municipal equivalent, such as the city council, about that), but the probability is low that a particular state or municipality requires private-sector employers to grant employee time off for all legal holidays.

Legal Holidays for Government Employees

Legal holidays are established annually by Federal, state and local government offices for public-sector employees, according to laws or related regulations. For example, the U.S. Office of Personnel Management (OPM) establishes the following legal paid holidays for Federal government employees each calendar year, as designated in Title 5 of the United States Code (USC) (Federal laws).

• New Year’s Day
• Martin Luther King’s Birthday
• Washington’s Birthday (Presidents’ Day)
• Memorial Day
• Independence Day (“Fourth of July”)
• Labor Day
• Columbus Day
• Veterans Day
• Thanksgiving Day
• Christmas Day

The following taken directly from: http://www.window.state.tx.us/taxinfo/agriculture/

House Bill 268, passed during the 82nd Regular Legislative Session, requires, beginning Jan. 1, 2012, that a person claiming an exemption from sales tax on the purchase of certain items used in the production of agricultural and timber products must provide a registration number issued by the Comptroller of Public Accounts on the exemption certificate issued to the seller.

Also beginning Jan. 1, 2012, purchasers claiming an exemption on qualifying items used in the production of food or other agricultural products are required to issue the new Texas Agricultural Sales and Use Tax Exemption certificate, Form 01-924 (PDF).

Purchasers of qualifying items used in the production of timber products must issue the new Texas Timber Operations Sales and Use Tax Exemption Certificate, Form 01-925 (PDF).

The generic exemption certificate, form 01-339, should not be used to claim either the agricultural or timber exemptions on purchases made on or after Jan. 1, 2012. Blanket exemption certificates issued to suppliers on the old form must also be updated and replaced with new certificates for purchases made on or after Jan. 1, 2012.

Sales Tax

Motor Vehicle Tax

Farm machines, trailers and semitrailers used primarily for farming and ranching, including machines and trailers used primarily in poultry operations and on feedlots, qualify for exemption from Texas motor vehicle tax.

Motor Fuels Tax

Texas imposes a tax of twenty cents ($.20) per gallon on motor fuel. The tax is imposed when motor fuel is removed from the terminal rack and included in the price paid at the pump.

Gasoline

A producer of agricultural or timber products can get refunds of tax paid on gasoline used in power take-off equipment or auxiliary power units, off-highway equipment, stationary engines and for other non-highway purposes.

Diesel

All purchases of clear diesel fuel are taxable, including clear diesel used in power take-off equipment or auxiliary power units, off-highway equipment, stationary engines and for other non-highway applications.

Dyed diesel used exclusively to power non-highway agricultural equipment, such as a tractor or combine, on a farm or ranch can be purchased tax-free. A farm or ranch can be a feedlot, dairy farm, poultry farm, commercial orchard, commercial nursery or similar commercial agricultural operation. Unlike sales tax, agricultural use for purposes of the fuels tax exemption also includes dyed diesel used to power non-highway equipment used in a timber operation or for wildlife management as defined by the Property Tax Code, Section 23.51(7). A home garden however does not qualify.

A farmer or rancher who holds a valid Texas Dyed Diesel Fuel Agricultural End User Signed Statement Number is allowed to buy up to 25,000 gallons of tax-free dyed diesel per month. Producers of agricultural products can also apply for a Dyed Diesel Fuel Bonded User license which will allow them to purchase unlimited amounts of tax-free dyed diesel fuel for use in non-highway equipment.

Franchise Tax

Texas franchise tax applies to partnerships (general, limited and limited liability), corporations, LLCs, business trusts, professional associations, business associations, joint ventures and other legal entities.

Property Tax

Property taxes—also called ad valorem taxes—are locally assessed taxes levied by local taxing units. The state does not have local tax records on each property and its ownership and does not set property’s value for property taxes. State law allows the Comptroller’s office to advise local governments and taxpayers on property tax issues, but it cannot intervene in local tax matters.

The county appraisal district appraises property located in the county, while local taxing units set tax rates and collect property taxes based on those values. Land that qualifies for an agricultural appraisal has a lower taxable value for property tax purposes. Qualified agricultural lands are based on the land’s capacity to produce agricultural products, including timber, rather than its market value.

Due to recent increases in the price of fuel, the IRS has announced an increase in the optional standard mileage rates for the final six months of 2011.

The revised standard mileage rates apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes on or after July 1, 2011, and to mileage allowances that are paid both to an employee on or after July 1, 2011, and for transportation expenses paid or incurred by the employee on or after July 1, 2011.

The rate for all business miles driven from July 1, 2011, through December 31, 2011 will increase to 55.5 cents a mile, an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011

Deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile for the last six months of 2011, up from 19 cents for the first six months of 2011.

However, the rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Taxpayers who have changed or are about to change a home or business address should update that information with IRS to ensure they receive any refunds or correspondence. (IRS Tax Tip 2011-37)

A taxpayer can change an address on file with IRS in several ways:

• by writing the new address in the appropriate boxes on a tax return;
• by using Form 8822, Change of Address, to submit an address or name change any time during the year;
• by providing the agency written notification of the new address by writing to the IRS center where a tax return is filed.
  • If you write, the IRS will need your full name, old and new addresses, and your Social Security Number or Employer Identification Number and your signature. If you filed a joint return, both you and your spouse should provide the same information and it will require both of your signatures.
  • If you filed a joint return and you and/or your spouse have since established separate residences, you both should notify the IRS of your new addresses.

In the event an IRS employee contacts a taxpayer about the taxpayer’s account, it may be possible to verbally provide a change of address. The agency also encourages taxpayers to notify their employer and the post office.

Note: If you have your return prepared by a paid tax preparer, don’t forget to notify them of the change as well!

Press Release — March 2, 2011 — When trying to cut costs during these hard economic times, it is unlikely that your child care expenses can be reduced. Luckily there is the credit for child and dependent care expenses offered on your individual tax return. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.

In order to be eligible to receive the credit for child and dependent care expenses, the person receiving the care must be a qualifying person—either your dependent child under the age of 13 or certain other individuals who are physically or mentally incapable of self-care. Also, you must be the custodial guardian for the qualifying person, even if you do not claim them as an exemption. The care must have been provided while you (and your spouse) are either working or looking for work. If you are married, you must file a joint return in order to file for the credit. In order to claim the credit, you (and your spouse) must have earned income from wages, salaries, tips, or net earnings from self-employment. One spouse can be exempt from having earned income if he or she were a full-time student or were physically or mentally unable to care for him or herself.

Another qualification that must be met in order to receive the credit is that the dependent care must have been provided by a qualified caregiver. Spouses, dependents, and children under 19 are not qualified caregivers. At the end of the year, most caregivers will provide a statement with their federal employer ID number (EIN) or social security number (SSN), full name, address, and amount paid. All of this information is necessary for your tax return. If you do not receive a statement at the end of the year for this information, you should request this information prior to bringing your information to your tax preparer.

If your employer provides a dependent care benefit, the amount of dependent care expense claimed must be reduced by the benefit amount. If you pay someone to come to your home and provide care, you may be considered a household employer. Please contact a tax professional for guidance.

This article contains general tax information for taxpayers. Each tax situation may be different, so do not rely upon this information as your sole source of authority. Please seek professional advice for all tax situations. Tax professionals are experts who keep current on tax law changes. They can save you time and offer insight on how to use the tax breaks available to you. To find a professional tax preparer, look to NATP whose members subscribe to a strict code of ethics and standards of professional conduct (read them in the Press Room at www.natptax.com). To see NATP’s list of professionals in your area, visit www.natptax.com and click Find a Tax Pro.

Members of the National Association of Tax Professionals (NATP) work at offices that assist over 11 million taxpayers with tax preparation and planning. The average NATP member has been in the tax business for over 20 years and holds a tax/financial designation and/or a college degree. NATP has more than 20,000 members nationwide. Members include individual tax preparers, enrolled agents, certified public accountants, accountants, attorneys, and financial planners. As a nonprofit professional association, NATP serves professionals working in all areas of tax practice through professional tax education, tax research, and tax office supplies. The national headquarters, located in Appleton, WI, employs over 45 staff members. Learn more at www.natptax.com.

Its the very first step in filing you tax return: determine your filing status. Are you Single, Married Filing Jointly, Married Filing Separately, Head of Household or Qualifying Widow(er) with Dependent Child. Your filing status determines your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax.

Here are eight facts about the five filing status options:

1. Your marital status on the last day of the year determines your marital status for the entire year.
2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
3. Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
4. A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
5. If your spouse died during the year and you did not remarry during 2010, usually you may still file a joint return with that spouse for the year of death.
6. A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
7. Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2008 or 2009, you have a dependent child and you meet certain other conditions.

For more information about determining your filing status check IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. You can also use the Interactive Tax Assistant on the IRS website to determine your filing status. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.

Source.

Children make their parents laugh. Children can drive their parents a little crazy. But did you know that children can help their parents qualify for some tax benefits? They can!

Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.

1. Dependents - In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
2. Child Tax Credit – You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.
3. Child and Dependent Care Credit – You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses.
4. Earned Income Tax Credit – The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
5. Adoption Credit – You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child.  Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included.  For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.
6. Children with Earned Income – If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.
7. Children with Investment Income – Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate. For more information see IRS Publication 929, Tax Rules for Children and Dependents.
8. Higher Education Credits – Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.  For more information see IRS Publication 970, Tax Benefits for Education.
9. Student loan Interest – You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970.
10. Self-employed health insurance deduction – If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent.

Any questions you may have on any of these credits and deductions can be answered and explained by a qualified tax professional. Note that just because you have children does not mean you qualify for all of these deductions, but it does mean they are deductions you will want to investigate and see if they apply to your individual case.

Yesterday, the IRS rolled out the IRS2Go App for iPhone and Android users to be able to check on their tax refund and get tax information straight from their smartphone.

From the IRS Website:

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 2010 tax return. If you e-file your return, you can check your refund status within a few days. 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
Finally, 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.

Download the IRS2Go App
If you have an Apple iPhone or iTouch, you can download the free IRS2Go app by visiting the iTunes app store. If you have an Android device, you can visit the Android Marketplace to download the free IRS2Go app.

IRS2Go is a new way to provide you with information and tools. The IRS also uses YouTube and Twitter to share the latest information on tax law changes, initiatives, products and services through social media channels.

Denise’s Review
I downloaded the App as soon as I heard about it to check it out for myself. First impression was, “Very cool!” It has good reviews in the Android market from other users as well.

IRS2Go has a clean layout that is easy to navigate. Knowing the IRS’s determination to keep taxpayers information private and secure, I, personally, would trust the security measures that are in place within the App to protect your social security number.

My personal favorite thing is the “Contact us” section of the App. It gives you the hours of each IRS department and instead of having to punch in a phone number yourself (and risk dialing a wrong number!), there is simply a “call” button that will dial for you. Brilliant.

However, for me, the biggest disappointment is the “Get Tax Updates” section. I would personally have found this to be an excellent location to offer short tax tips right within the App. Instead, you sign up for a tax newsletter to be delivered to your email Inbox. (Which, by the way, does not have a confirmation link in the welcome email, meaning you could sign up any email address for the updates with or without the owner’s permission.)

In the end, though, I do think this is one of the more clever things I’ve seen the IRS do, and I applaud their developers for making it cross-platform friendly. While I don’t necessarily see this App as a “must have” for smartphone users, I do think its very handy, and I am curious to see what they do with it as they further develop it in the future.

Since recent real estate prices have dropped, many people have purchased new property to use as rental property. As you can guess, there are many tax rules that are applied to income made off of rental property. Below is a list of rules and tips to help make sure your rental income is allocated correctly on your income tax return.

• Any rent you receive in the current tax year is included in your income for that current year.
  • If you received the rent check for January 2011 in December 2010, that income will be included on your 2010 income tax return, despite the fact that its for 2011.
  • If you receive the first and last month’s rent upon a new tenant moving in, all of those funds are included in the current year income, even if the last month’s rent will actually be applied in another year.
• Bartering is income and, as such, must be shown as income.
  • Example, if the tenant agrees to maintain the lawn, show the value of that service as income. What would you pay a lawn service to do that service? (At the same time, you may also deduct that amount as a rental expense.)
• If your tenant pays any home upkeep expense (such as having the air conditioner fixed) and then deducts the expense from their rent, you must still show the full rent as having been paid and then write off that maintenance expense against it.
• Deposits that are non-refundable (for example, a pet deposit or a cleaning fee) are included in the income for the year that deposit is received.
• Deposits that may be refunded, such as a security deposit, does not need to be claimed as income as you will be returning that deposit to the tenant upon the end of the lease.
• When your tenant signs a lease with an option to purchase the property, all the payments are still rental income. However, once the tenant decided to buy the property, all payments received after the sale become part of the selling price.
• If your tenant breaks their lease and pays you to do so, that payment is rental income.
• Tip: if you rent out a room in your personal residence for less than 15 days, you do not need to include that rent you receive in your income. However, if you rent the room out for more than 15 days, it IS considered income.
• Keep all lease agreements and tenant applications! If you happen to be audited, those records will verify that the property is rental property. Keep receipts for all rental expenses that you deduct on your tax return to also prove your deductions are accurate.