Ed Bove-Tax Express Blog

Don't Believe Everything You Hear

It never ceases to amaze me how often people come to my tax office telll me all kinds of crazy rumors and half-truths they've heard about the income tax process.  And the problem is: They believe all of it.

Well, where did they hear it all?  From the IRS?  No.  From a tax professional?  No.  It's usually from a friend or neighbor or co-worker or family member or even a stranger in a coffee shop.  Yet they take it like it's the Gospel truth.  And most of it is anything but.

Case in point: Tax season is only in it's second day and I've already had a bunch of people call the office saying that they heard they can file their tax return using their final pay stub.  They heard wrong!

You must use a W-2 Form issued from your employer to list your wages on your income tax forms.  The IRS will not process your return without it.  The only time they would ever consider using a pay stub would be if an employer failed to provide a W-2.  But that is rare and would never come until late in the tax season.

But people are in a rush to get their money and they hear what they want to hear - and they believe it.

I'm hear to tell you: Don't believe everything you hear.

It's rarely true.

 

Time Running Out on Rebates

New Jersey residents have only until the end of October to apply for two popular property tax rebates.  State officials are urging qualifying residents to apply for the Homestead Credit and Senior Freeze programs.  For more information, see the news story in the link below:

N.J. Lawmakers Urging Residents to Apply for Rebates

IRS Offers Relief For Victims of Hurricane Irene

The IRS has announced relief measures for individual and business taxpayers affected by Hurricane Irene. Taxpayers in North Carolina, New Jersey, New York and Puerto Rico will receive tax relief. Other locations are expected to be added in coming days after FEMA completes additional damage assessments.

The tax relief postpones tax filing and payment deadlines to October 31, 2011. It includes corporations and businesses that previously obtained an extension until September 15, 2011, to file their 2010 returns and individuals and businesses that received a similar extension until October 17th. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due September 15th.

Tax Relief Available So Far

So far, IRS filing and payment relief applies to the following counties and municipalities:

• In North Carolina: Beaufort, Carteret, Craven, Dare, Hyde, Pamlico and Tyrell;
• In New Jersey: Bergen, Essex, Morris, Passaic and Somerset;
• In New York: Albany, Delaware, Dutchess, Essex, Greene, Schenectady, Schoharie and Ulster; and
• In Puerto Rico: Caguas, Canovanas, Carolina, Cayey, Loiza, Luquillo and San Juan.

For more details, go to the IRS website at www.irs.gov and enter “disaster relief” in the search box on the upper right-hand corner of the IRS home page. Hint: For more specific information on a particular state, add the state name to your search.

IRS Will Accept Returns During Government Shutdown, Will Not Extend Filing Deadline

The IRS has announced that it will continue to accept tax returns despite the possible federal government shutdown. Taxpayers are still required to file their 1040 forms by the April 18th deadline. If the government shuts down after midnight tonight, the IRS will suspend the processing of paper returns, but will continue to accept electronically filed returns.

E-File will remain open for both individual and business returns. The IRS has urged individuals to file electronically, because most of these returns are processed automatically and should not be delayed.  Because of limited IRS staffing in the event of a shutdown, paper returns will be accepted, but will not be processed. Taxpayers who file paper returns will experience a delay in receiving their refunds. Limited telephone customer service functions will remain available during any shutdown.

 Tax Payments

Tax deposits and payments will continue to be processed, both for electronic and paper tax returns. Taxpayers should continue to make these payments as normal if the government shuts down.

 Audits

The IRS will suspend audits during the shutdown, so examination appointments will have to be rescheduled.

 Reason for the Shutdown

The shutdown may occur because Congress has not reached an agreement on a continuing appropriations bill to fund the government. Government funding officially runs out at midnight on April 8th. It is difficult to predict how long any shutdown may last. In the past, shutdowns commonly extended from a few days to a week. However, the 1995 shutdown lasted 21 days, the longest government shutdown on record—so far.

Late Tax Law Changes Will Delay Some Returns

The IRS has announced a delay in the start of tax season for some individual taxpayers affected by the Tax Relief Act of 2010. This delay affects individual taxpayers who itemize deductions, claim tuition and fees deduction, or claim the educator expense deduction. The delay affects both paper-filed and e-file returns. (For a complete list of forms, see Forms Affected By the Extender Provisions below.)

The IRS is asking preparers to wait for the IRS prescribed start date – mid-to late February 2011 – before e-filing these returns; returns submitted on paper prior to the IRS prescribed start date will be ‘shelved’ and processed later than returns filed on or after the start date. IRS e-file is the fastest, best way for taxpayers affected by the delay to get their refunds.

For more details from the IRS, visit the following link: http://www.irs.gov/newsroom/article/0,,id=233449,00.html

Forms Affected By the Extender Provisions:

Taxpayers must wait to file if they are affected by any of the tax credits or deductions that expired at the end of 2009 and were renewed by the 2010 Tax Relief Act, enacted Dec. 17.

The delays affect taxpayers claiming: 

• Itemized deductions (claimed on Schedule A of Form 1040)
• Tuition and Fees Deduction (claimed on Form 8917)
• Educator Expense Deduction (claimed on Form 1040, line 23, or Form 1040A, line 16)
• Casualties and thefts (claimed on Form 4684)
• District of Columbia First-Time Homebuyer Credit (claimed on Form 8859)

The Calm AFTER The Storm

Well the record-setting Blizzard of 2010 is behind us, but it certainly has left its mark.  Here it is, a full 2 days after the fact and things are still a mess.

I only live 10 minutes from my office, but it took me forever to get here today and even longer to find a parking spot.  The township, which usually does a superb job of plowing and cleaning up, must have really been overwhelmed with this fierce storm, because the streets of Union Center are a total mess.

The public parking lot behind the building has yet to be plowed.  Cars on the side street adjacent to my office are plowed in.  Even Stuyvesant Avenue, the main drag, is in a bad way.

So, even though it is theoretically back to business as usual, things are far from normal.  In fact it is eerily quiet around here.

Why am I telling you all this?  Simple.  If you don't already have an appointment this week, you may be better off waiting until after New Year's Day when things are more thoroughly cleaned up.  And if you do have an appointment this week, you'd better give yourself some extra time to get here and find a much sought-after parking spots.

Be careful out there.

PS -- Here's a picture I took from my office window this afternoon.  See for yourself.

The Changes Never End

Came all the way down to North Carolina to the home base of my tax software company to attend their annual tax update school.  I've been to several tax update sessions in the past few months.  And I've noticed one consistent message with all of them:

Everything we tell you today is subject to change.

That's because Washington has a penchant for making a zillion last- minute changes each year that throws the tax industry into complete turmoil right as their new season begins.  And this year will be no different.

When I get home I'll fill you in on things...at least as they stand at the moment.

Stay tuned!

Tax Season Never Really Ends

It's true that April 15th has come and gone.  And so it seems that another tax season has ended.  But has it really?

Consider this:

• As I stated in a previous blog entry, residents of 12 New Jersey counties have until May 11th to file their tax returns;
• Taxpayers who filed for extensions have until Oct. 15th to complete their returns;
• People often realize after they've already filed their returns, that they left out something important.  And so they need to file an amended tax return to include the missing information.

If you fall into any of these categories, please remember that Tax Express is open and available to help year-round.  Unlike most of our competitors, we don't close up shop and disappear after April 15th.

Now we don't keep the same crazy hours in the off-season that we do during tax season, but we are available if you require help.

So if you need any additional tax services, please call our office at (908) 686-8600 and we'll be glad to schedule an appointment for you. 

Soaked New Jersey Residents Get Extra Time To File Tax Returns

People who live or have a business in storm ravaged areas of New Jersey are getting extra time to file their federal and state tax returns.

The IRS has announced that it will postpone the filing deadline until May 11 for taxpayers in parts of New Jersey that were declared federal disaster areas following last months severe storms and floods.

The NJ Division of Taxation has stated it will follow the IRS' lead and give affected residents the same deadline for filing their state tax returns.  The New York State Department of Taxation indicated that it would provide tax relief for flood victims as well.

The disaster area covers 12 New Jersey counties, including Atlantic, Bergen, Cape May, Essex, Gloucester, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset and Union.

The IRS indicated that its computer systems will automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief.  Affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request tax relief.

The NJ Division of Taxation stated that "If you are affected by the storms and the due date for filing your return and for paying your tax is postponed by the Division of Taxation, you are eligible for interest and penalty abatement on underpaid tax that would otherwise accrue for the period of the postponement."

For more information on tax relief for storm and flood victims click on the following links:

IRS News Release on Tax Relief For Flood Victims

NJ Division of Taxation News Release

8 Things You Should Know About The New Vehicle Sales Tax Deduction

If you bought a new car in 2009, you may be eligible to a special tax deduction for the sales and excise taxes on the purchase.  And that may be the case regardless of whether you itemize or take the standard deduction on your tax return.

Here are 8 things the IRS says you should know about this new deduction:

1.       State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.

2.       Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.

3.       To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8500 pounds or less. New motor homes are not subject to the weight limit.

4.       Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.

5.       Purchases made in states without a sales tax – such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon – may also qualify for the deduction. Taxpayers in these states may be entitled to deduct other qualifying fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.

6.       This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction.  Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.

7.       The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

8.       Taxpayers who do not itemize on Schedule A must complete Schedule L, Standard Deduction for Certain Filers to claim the deduction.