Using a PIN to File Tax Return Electronically

If you file your tax returns electronically using software to file online, you must sign the tax return using the method of self-signed personal identification number ( PIN).This method allows taxpayers to electronically sign your tax on personal income by selecting a PIN five digits.

 

Using PIN to file Tax

The PIN consists of five digits (excluding all zeros) you choose to enter as your electronic signature. Each taxpayer who files a joint return need a PIN and each can select any combination of five digits. As part of the identity verification process, each taxpayer enters his birth date and the adjusted gross income ( AGI , for its acronym in English), as entered on the original return for the preceding year, or PIN last year .

If you can not access information from your tax return for tax year 2012 for purposes of verification of electronic signatures, the IRS will issue a PIN for electronic filing temporarily  to taxpayers who qualify . If you need an EFP, you can access the application on the IRS website.

 

E-File your Tax Return

Generally, you can electronically file your tax return even if you are required to submit certain paper forms or certain corroborating documents. Use  Form 8453, Report of Individual Income Tax in the United States by Means of E-filing IRS e-file, to transmit paper forms or corroborating documents required.

Taxpayers appearing as the main respondent who are under 16 years of age who have never presented and secondary taxpayers under age 16 who did not show for 2012 can not use the method of self-signing PIN to sign. Affected taxpayers can still file electronically using the method of PIN professional preparer.

Using a PIN to File Tax Return Electronically

The IRS advised taxpayers to retain a copy of your return for your records, so that this helps with the electronic signature of the declaration submitted electronically next year. If you need a copy of your tax transcript, you are also able to do this from the IRS website.

Information and Applying for Innocent Spouse Relief

Innocent Spouse Relief (Including separation of liability and equitable relief)

Many married taxpayers choose to file a joint income tax return because of certain benefits this filing status  provides the taxpayer. However, by filing a joint return, both taxpayers are jointly and severally liable for such taxes and any tax, interest or additional penalties resulting from the joint return, even if you later divorce. This could present problems when taxpayers are not totally up front with each other. Luckily, innocent spouse relief is available to taxpayers. Innocent spouse relief will be essential when one spouse does not know about all the activities of another taxpayer that they are filing a tax return with.

 

Information and Applying for Innocent Spouse Relief

The joint and several liability means that each taxpayer is legally responsible for all taxes owed. Therefore, both spouses usually are held responsible for all tax due even if one spouse earned all the income or improperly claimed deductions or credits. This is also true even if the divorce decree states that a former spouse will be responsible for the entire amount due on previously filed joint returns. In some cases, however, a spouse can get relief from this joint and several liability by going through the innocent spouse relief process.

 

Currently, there are three types of relief from joint and several liability for spouses who filed joint returns:

  1. Innocent Spouse Relief provides relief in situations that have assessed additional taxes if your spouse or former spouse stated income, stated incorrectly or improperly claimed deductions or credits.
  2. Relief by Separation of Liability If owed ​​additional taxes prorated between you and your former spouse or current spouse from whom you are separated, because any departure was not properly declared in the joint statement. The amount of taxes that is assigned to you is the amount which you are responsible.
  3. Equitable Relief may apply if you do not qualify for innocent spouse relief or separation of liability due to any item incorrectly stated in the joint tax return and is generally attributable to your spouse. You may also qualify for equitable relief if declared correct amount of tax on the joint return, but tax the return was not filed.

Note: You must request relief innocent spouse relief or separation of liability no later than 2 years after the date on which the IRS first attempted to collect the taxes owed . For equitable relief, you have to apply for relief during the time the IRS has to charge you the tax.

 

Tax Refunds and Innocent Spouse Relief

If you wish to request a refund of the tax you paid, then your request must be made ​​within the period of time that is given to you to claim a refund, which is generally three years after the date on which the statement is submitted to two years after payment of the tax, whichever is later. To see additional restrictions on redemptions available under the innocent spouse relief, equitable relief, and based on the laws of community property relief, see Publication 971, Innocent Spouse Relief (Innocent Spouse Relief). No refunds are available on relief by separation of liability that happens due to claiming innocent spouse relief.

 

You must meet all the following conditions to qualify innocent spouse relief:

  • Taxpayer filed a joint return where an understatement of tax (deficiency), which is attributed only to erroneous items indicated by your spouse. A “wrong item” includes income received by your spouse, but was omitted from the joint return. Deductions, credits and property bases are also considered as erroneous items if they are incorrectly presented in the joint statement.
  • You demonstrates that when signing the joint tax return you did not know and had no reason to know, that there was an understatement of tax; and
  • Taking into account all the facts and circumstances, it would be unfair to consider you responsible for the understatement of tax.

 

To qualify for the ” relief by separation of liability “ , must have filed a joint return and meet one of the following requirements when applying for relief:

  • Are divorced or legally separated from the spouse with whom filed a joint return,
  • Taxpayer is a widower or
  • It has not been in any member of the household of the spouse with whom you filed the joint return for the 12 month period ended on the date of the time Form 8857 Application for Innocent Spouse Relief was filed.

If at the time you signed the joint return and had actual knowledge of what caused the error on a joint return, you are not entitled to relief by separation of liability.

 

Publication 971 , Innocent Spouse Relief

If you do not qualify for “innocent spouse relief” or the “relief by separation of liability,” you may qualify for the “equitable relief” . To qualify for this relief, must show that, taking into account all the facts and circumstances, it would be unfair to hold him responsible for the understatement or underpayment of taxes. Also, must meet other requirements explained in Publication 971 , Innocent Spouse Relief.

 

Requesting Innocent Spouse Relief

To request innocent spouse relief, relief by separation of liability or equitable relief, must submit to the IRS on  Form 8857. If you want relief from joint and several liability, the IRS is required to notify the spouse who filed the joint statement on your application and allow you to provide information to consider about your claim.

If you lived in a state with laws of community property and did not submit a statement as “married filing jointly”, you may still qualify for relief. The states with the laws of community property are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. See Publication 971, in English, for additional information. Do not confuse the relief of joint and several liability to the claim of the injured spouse relief. A taxpayer is considered an “injured spouse” if filing a joint return and all or part of your share of the refund was, or will be, applied to federal or state taxes owed, outstanding pension for minor children, not tax federal debt (as a student loan) owed ​​by the spouse who filed the joint return.

 

IRS Tax Information for Innocent Spouses

What to Do If you Cannot Pay Taxes on Time

If you owe more taxes you can pay your taxes, do not panic. Be sure to file on time. Thus avoid the penalty for filing late taxes and will save you much trouble in the future.

 

Here’s what to do if you can not pay all your taxes before the deadline.

  • File your return on time and pay as much as possible. This can be possible through online tax software which will let you submit a payment to the IRS. Filing on time is essential  to avoid the late filing penalty .
  • Pay as much as you can to reduce the late payment penalty and interest charges. You can pay electronically, by telephone or by check or money order. Visit IRS.gov for electronic payment options.
  • Get a loan or use a credit card to pay your taxes. Interests and fees charged by a bank or credit card company may be less than the total interest and IRS penalties. For credit card options , see IRS.gov. Use the online tool to request an Installment Agreement. You do not have to wait for the IRS to send a tax bill to request an installment agreement. The most effective way is through Electronic Application for Installment Payment Agreement on IRS.gov. You can also apply by submitting the Form 9465 with your tax return. You can authorize an electronic funds withdrawal from your credit or debit card. That way you will not have to worry about writing a check every month and send it on time. Nor forget to make payments that may result in additional penalties.
  • Do not ignore a tax bill. If you receive a tax bill, do not ignore it. The IRS may initiate a collection process if you ignore the bill. Contact the IRS immediately to discuss your options. If you are facing a financial hardship , the IRS will work with you. Briefly, remember to present time. Pay as much as possible before the deadline of April 15 and pay the remaining debt as soon as possible. Learn more about the collection process on IRS.gov.

 

Starting an IRS Installment Agreement

If you owe $50,000 or less in combined taxes, penalties and interest, you can apply online; otherwise, you must fill out a more detailed form and mail it in.

 

What to Do If you Cannot Pay Taxes on Time

An installment agreement allows you to make a series of monthly payments over time. The IRS offers various options for making monthly payments, such as:

  • Direct debit from your bank account;
  • Payroll deduction from your employer;
  • Payment via check or money order;
  • Payment by Electronic Federal Tax Payment System (EFTPS);
  • Payment by credit card via phone or Internet; or
  • Payment by Online Payment Agreement (OPA).

 

Taxpayer Rights During IRS Collections

You have rights and protections throughout the collection process. If you would like information on arrangements to pay your bill, installment agreements, and what happens when you take no action to pay, refer to Publication 594 (PDF), The IRS Collection Process, and Publication 1 (PDF), Your Rights as a Taxpayer.

 

 

What to do if you did not receive W-2 from employer?

What should a taxpayer do if they do not receive a W2 from their employer?

 

 

The W-2 is necessary to file taxes if a taxpayer has earned wages. 

This form shows the amount of wages received during the year and the taxes withheld from their wages. It is important that you use this form to ensure that filing a complete and accurate tax. Most employers distribute these forms W-2 to your employees by January 31. If you have not received in mid-February, this is what you should do:

 

Contact your employer

First ask your employer for a copy of the W-2. You need to have a Form W-2 from all employers you worked with last year. If the employer sent the form, make sure they have the correct address.

 

Contact the IRS

If you have exhausted all resources and your employer did not send your W-2  by February 15th, contact the IRS for assistance at 1-800-829-1040. You will need to provide the following information when you call:

  • Your name, address, Social Security number, phone number;
  • The employer’s name, address and telephone number;
  • Dates of employment;
  • An estimate of the wages you received and the federal tax withheld in 2013. If possible, take the information from the last paycheck of the year.

 

Submit Your Tax Return to IRS on Time

If you did not receive your W-2 on time use Form 4852 , Substitute for W-2. Complete the form estimating income and withholding taxes as accurately as possible. The IRS may delay the process while the information is verified. If you need more time, you may request a six-month extension to file your federal tax return.

 

What to do if you did not receive W-2 from employer?

The easiest way is by visiting IRS.gov and use IRS Free File to send e-file the application. You can also mail the Form 4868, Application for Automatic Extension of Time to File a Federal Tax Statement. Be sure to apply before midnight on April 15. You may need to correct your tax return if you receive the W-2 form was missing after filing your return. If the information in the W-2 form is different than originally reported, you will need to file a tax return amended.

 

File a Form 1040X if you get W-2 After Filing

On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

Tax Topic 154 – Form W-2 and Form 1099-R (What to do if these forms W-2 or 1099-R are incorrect or not received)

Standard deduction for dependent parent

Claiming Dependent Parent Deduction

Most of the time people think of only children being considered dependents when they file their tax returns. However, there is a possibility that you can claim an elderly parent that you take care of as a dependent on your tax return if certain tests are met.

 

Standard deduction for dependent parent

The reduced standard deduction for taxpayers claimed as dependents on other returns applies only to the basic standard deduction. First, there must be a decision made to determine if someone is considered dependent:

  • The parent must first meet income requirements set by the IRS to be claimed as dependent. The parent must not have earned or received more than the exemption amount for the tax year. This amount changes each year
  • Second, the taxpayer must provide more than half of the parent’s support during the tax year in order to claim them as a dependent.

 

What family members can be claimed as dependents?

These are just a brief summary of the rules. The person who you want to claim as a dependent must be a relative. Relatives who may qualify – but do not have to live with you – include: mother, father, grandparent, stepmother, stepfather, mother-in-law, father-in-law.

Dependent taxpayers who are elderly or blind can claim the additional standard deductions, regardless of the level of earned income. Thus, for example, an elderly, single dependent taxpayer with no earned income can claim the $950 reduced basic standard deduction plus the $1,450 additional standard deduction for elderly single taxpayers.

 

Support Requirements for Claiming Dependents

Remember, that a taxpayer must be providing over half of their financial support for food, housing, medical, transportation, etc. If the person lives with you, include a reasonable percentage of your mortgage, utilities and other household costs in determining your level of support. Remember, your parent doesn’t have to live with you. If a taxpayer’s parents is living in an assisted car facility, any amount of support that a taxpayer pays towards this can count toward the dependency support requirement.

Summary of Dependency Tests

Dependency tests… you need to pass all 3 of them in order to be a dependent. These are from your parents point of view.

 

What are the Dependency Tests?

  • Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. Exceptions in Pub 501 Page 11, center column.
  • Citizen or Resident Test You generally cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico. However, there is an exception for certain adopted children, as ex­plained in pub 501 page 11 center column
  • The person you are claiming must be a *Qualifying Child” or a “Qualifying Relative”. Those are legal tax terms, and have their own definitions.

 

“Qualifying Child” There are 5 tests that must be passed, and they are:

  • Relationship Test Either your descendants, your siblings, or your siblings’ descendants (your step brother’s adopted grand child passes this test)
  • Age Test To meet this test, a child must be: Younger than you, and either Under age 19, or under age 24 while a full time student. Exception: Permanent or total disability passes this test regardless of age.
  • Residency Test To meet this test, your child must have lived with you for more than half the year. There are exceptions for temporary absences,(Illness, Education, Business, Vacation, Military Service) children who were born or died during the year, kidnapped children, and children of divorced or separated parents.
  • Support Test To meet this test, the child cannot have provided more than half of his or her own support for the year. (Different than support test for “Qualifying Relative”)
  • Joint Return Test same as above

 

“Qualifying Relative” There are 4 Tests that must be passed, and they are:

  • Not a “Qualifying Child” is exactly how it sounds. If you can be a qualifying child, you can’t also be a qualifying relative.
  • Member of Household or Relationship Test To meet this test, a person must either: Live with you all year as a member of your household, or Be related to you in one of the ways listed under Relatives who do not have to live with you. (Descendants, Siblings, Siblings’ descendants, ancestors, parents siblings. step/half/adopted count)
  • Gross Income Test To meet this test, a person’s gross income for the year must be less than the personal exemption for that tax year ($3,800 for 2012)
  • Support Test To meet this test, you generally must provide more than half of a person’s total support during the calendar year. (Different than support test for “Qualifying Child”)

 

Summary of All Dependency Tests for Dependency Exemption

For a taxpayer to claim a dependency exemption, the following conditions must be met:

  • You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer.
  • You cannot claim a married person who files a joint return as a dependent unless that joint return is only a claim for refund and there would be no tax liability for either spouse on separate returns.
  • You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year. (There is an exception for certain adopted children.)
  • You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative.
tax forms

6 Important Facts about Dependents and Exemptions

Even though each individual tax return is different, some tax rules affect every person who may have to file a federal income tax return. These rules include dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help you file your 2011 tax return.

 

Dependents and Exemptions

1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.

2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.

3. Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the Social Security number of any dependent for whom you claim an exemption.

4. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status and any special taxes you owe.

5. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.

6. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

 

6 Important Facts about Dependents and Exemptions

For more information on exemptions, dependents and whether you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available below or can be ordered by calling 800-TAX-FORM (800-829-3676). IRS Publication 501, Exemptions, Standard Deduction, and Filing Information

businessman

How To Determine Your Correct Tax Filing Status

Determining your filing status is one of the first steps to filing your federal income tax return. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax.

 

Some people may qualify for more than one filing status.

Here are eight facts about filing status that the IRS wants you to know so you can choose the best option for your situation.

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 2011, 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 2009 or 2010, you have a dependent child, have not remarried and you meet certain other conditions.

 

How To Determine Your Correct Tax Filing Status

There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Publication 501 is available below.

IRS Publication 501, Exemptions, Standard Deduction, and Filing Information
tax forms

Eight Filing Status Facts

The first step to filing your federal income tax return is to determine which filing status to use.

Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax.

There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child.

 

Here are eight facts about the five filing status options the IRS wants you to know so that you can choose the best option for your situation.

  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.

There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Publication 501 is available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676). 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.


IRS Links on Filing Status Information:

Publication 501, Exemptions, Standard Deduction, and Filing Information (PDF 196K)

tax forms

Difference Between 1040EZ and 1040A Tax Form

To file your individual tax return, you’ll have to decide which form to use…unless you e-file. If you file electronically, the software automatically selects the simplest and best form for you. Whether you use e-file or prepare on paper, using the simplest form will help avoid costly errors or processing delays. And remember, if you file electronically, it speeds up the processing of your tax return and the delivery of your refund. Two of the forms used for filing individual federal income tax returns are IRS Form 1040A and IRS Form 1040EZ (the third is IRS Form 1040, the most complex of the three). Anyone can file Form 1040; however, you have to meet certain requirements to use 1040EZ or 1040A.

 

Difference Between 1040A and 1040EZ

The IRS Form 1040A is one of three forms you can use to file your federal income tax return. Form 1040A is a shorter version of the more detailed Form 1040, but is more complex than the simple 1040EZ form. All taxpayers can use Form 1040; however, to use Form 1040A you must satisfy a number of requirements, such as having taxable income of $100,000 or less and claiming the standard deduction rather than itemizing.

Here are things to consider when deciding which IRS form to file. The differences between a 1040EZ and 1040A are discussed below.

 

Use the 1040EZ Tax Form if:

  • Your taxable income is below $100,000
  • Your filing status is Single or Married Filing Jointly
  • You and your spouse – if married — are under age 65 and not blind
  • You are not claiming any dependents
  • Your interest income is $1,500 or less
  • You are not claiming the additional standard deduction for real estate taxes, taxes on the purchase of a new motor vehicle, or disaster losses

Form 1040EZ is the briefest version of the 1040. You can’t itemize deductions or claim any adjustments to income or tax credits (except for the Earned Income Credit), and you can’t have any income from self-employment, alimony, dividends or capital gains.

 

Use the 1040A Tax Form if:

  • Your taxable income is below $100,000
  • You have capital gain distributions
  • You claim certain tax credits
  • You claim deductions for IRA contributions, student loan interest, educator expenses or higher education tuition and fees

Form 1040A is not as complex as Form 1040, but is longer than 1040EZ. Form 1040A allows you to claim a number of deductions that you are not able to on 1040EZ. If you can’t use Form 1040EZ, you may be able to use 1040A

 

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. You must use the 1040 if:

  • Your taxable income is $100,000 or more
  • You claim itemized deductions
  • You are reporting self-employment income
  • You are reporting income from sale of property

The filing status and exemptions section of Form 1040A is similar to the corresponding section on Form 1040. Due to the limited types of income you can receive and the limited adjustments to income you can make on Form 1040A, the income and adjusted gross income sections of Form 1040A are much shorter. One of the most significant differences between the two forms is that you can itemize deductions on Form 1040 but not on Form 1040A.

 

While everyone is able to file the 1040, the 1040 opens you up to the most potential tax credits.

This is why, if you are not sure, it is still desirable to take the extra time and fill this document out. Also, if you run your own small business or you have been experimenting with it this year, even if you haven’t incorporated yet, the 1040 is the document for you to use.

 

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