Saturday, January 29, 2011

Forms Affected By the Extender Provisions

Taxpayers will need to wait to file if they are impacted by any of the tax credits or deductions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 enacted Dec. 17. The delays impact taxpayers claiming:
Schedule A (Form 1040), Itemized Deductions
Form 8917, Tuition and Fees Deduction
Educator Expense Deduction claimed on Form 1040
Form 4684, Casualties and Thefts
Form 8859, District of Columbia First-Time Homebuyer Credit

A few other taxpayers will also need to wait to file, due to the impact of other recent changes, primarily some of those included in the Small Business Jobs Act of 2010. Affected forms include:
Form 3800, General Business Credit
Form 5405, First-Time Homebuyer Credit and Repayment of the Credit
Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit
Form 8834, Qualified Plug-In Electric and Electric Vehicle Credit
Form 8910, Alternative Motor Vehicle Credit
Form 8936, Qualified Plug-In Electric DriveMotor Vehicle Credit

The delay affects both paper and electronic filers. All tax returns claiming these credits or deductions should not be filed until the IRS is ready to start processing these returns in mid-to late February. IRS e-file is the fastest, best way for those impacted by the delay to get their refunds.

Friday, January 21, 2011

Tax Tips on Tip Income

If you work in an occupation where tips are part of your total compensation, you need
to be aware of several facts relating to your federal income taxes. Here are four things
the IRS wants you to know about tip income:

1. Tips are taxable. Tips are subject to federal income, Social Security and
Medicare taxes. The value of non–cash tips, such as tickets, passes or other
items of value, is also income and subject to tax.

2. Include tips on your tax return. You must include in gross income all cash
tips you receive directly from customers, tips added to credit cards, and your
share of any tips you receive under a tip–splitting arrangement with fellow

3. Report tips to your employer. If you receive $20 or more in tips in any one
month, you should report all of your tips to your employer. Your employer is
required to withhold federal income, Social Security and Medicare taxes.

4. Keep a running daily log of your tip income. You can use IRS Publication
1244, Employee's Daily Record of Tips and Report to Employer, to record
your tip income.