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Top Ten Things You Need to Know About Making Federal Tax Payments

Will you be making a payment with your federal tax return this year?

If so, here are 10 important things the IRS wants you to know about making tax payments correctly.

  1. Never send cash!
  2. If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
  3. Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.
  4. Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search e-pay, or refer to Publication 3611, e-File Electronic Payments for more details.
  5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.
  6. Enclose your payment with your return but do not staple it to the form.
  7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”
  8. Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.
  9. Complete and include Form 1040-V, Payment Voucher, when sending your payment to the IRS. This will help the IRS process your payment accurately and efficiently.
  10. For more information, call 800-829-4477 for TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at IRS.gov.

 

Top Ten Things You Need to Know About Making Federal Tax Payments

no-refund

Three Ways to Pay Your Federal Income Tax

People who owe taxes but can’t pay the full amount owed by the April deadline should still file their return on time and pay as much as they can to avoid penalties and interest. If you can’t pay the full amount, you should contact the IRS to ask about alternative payment options.  Here are some of the alternative payment options you may want to consider:

 

Three Ways to Pay Your Federal Income Tax

  1. Additional Time to Pay Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.
  2. Installment Agreement You can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on IRS.gov. This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interestto self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. For more complete information see Tax Topic 202, Tax Payment Options on IRS.gov.
  3. Pay by Credit Card or Debit Card You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. However, the debit card must be a Visa Consumer Debit Card, or a NYCE, Pulse or Star Debit Card. To pay by credit card or debit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95.Do not add the convenience fee or flat fee to your tax payment.

 

Tax Credit Card Processing Companies

The processing companies are:

Official Payments Corporation:
To pay by debit or credit card: 888-UPAY-TAX (888-872-9829),
www.officialpayments.com/fed

Link2Gov Corporation:
To pay by debit or credit card: 888-PAY-1040 (888-729-1040),
www.pay1040.com

RBS WorldPay, Inc.
To pay by debit or credit card: 888-9PAY-TAX (888-972-9829),
www.payUSAtax.com

For more information about filing and paying your taxes, visit IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. You can download forms and publications at IRS.gov or request a free copy by calling 800-TAX-FORM (800-829-3676).

IRS Names Four New Frivolous Claims to Avoid

An individual or group may not avoid paying their fair share of taxes by making “frivolous” legal arguments such as those listed in this notice. The IRS publicizes these frivolous claims to help taxpayers understand the law and avoid penalties.

Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.

Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.

 

IRS Names Four New Frivolous Claims to Avoid

The four new frivolous claims pertain to the following:

  • Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
  • Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
  • A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
  • Certain instances of misuse or excessive use of the section 6421 fuels credit.

In 2006, Congress increased the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous. Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit although they were not eligible. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

Filing Season Opens on Time Except for Certain…

Filing Season Opens on Time Except for Certain Taxpayers Potentially Affected by AMT Patch

WASHINGTON — The Internal Revenue Service announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax “patch.”

Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.

The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.

Filing Season Opens on Time Except for Certain…

Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season.

“We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund,” said Linda Stiff, Acting IRS Commissioner. “We’ve taken extraordinary steps to figure out a way that we can start the filing season on time for most taxpayers, including some using AMT-related forms. Our goal has always been to make sure we can accurately process tax returns while getting refunds to taxpayers as quickly as possible.”

The February delay caused by the AMT patch will affect taxpayers using these five forms:

  • Form 8863, Education Credits
  • Form 5695, Residential Energy Credits
  • Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers
  • Form 8396, Mortgage Interest Credit
  • Form 8859, District of Columbia First-Time Homebuyer Credit

While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax – Individuals. Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14.

Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.

Efile is a great option for everyone, especially if they are affected by the AMT,” said Richard Spires, IRS Deputy Commissioner for Operations Support. “Filing electronically will get people their refunds faster, and e-file greatly reduces the chances for making an error on the AMT or other tax issues.”

In addition to filing electronically, the IRS urges taxpayers to take simple steps to avoid problems:

Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates.

Taxpayers with $54,000 or less in Adjusted Gross Income can use Free File to electronically file their returns for free. Free File will only be available by visiting the official IRS web site at IRS.gov. In all, 90 million taxpayers qualify for this free service.

Taxpayers who use tax software to print out paper copies of tax forms should make sure they update their software before printing out forms. Taxpayers using paper forms can also visit IRS.gov to get updated copies of AMT forms.

The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT. In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.

The IRS also reminds taxpayers that printed tax packages, which will begin arriving in the mail around New Year’s, went to the printer in November before the AMT changes were enacted. The packages reflect the law in effect at the time of printing. The tax packages include cautionary language to taxpayers that late legislation was pending.

The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes.

“The IRS is going to continue to do everything it can to make this a fully successful filing season for the nation’s taxpayers,” Stiff said. “We will continue to work to keep taxpayers up to date and make this situation as easy as possible for everyone.”

Some Tax Refunds To Be Delayed

Over 3 million refunds will be delayed until february due to congress’ late fix to the AMT bill, according to the IRS late thursday.

We regret the inconvenience the delay will mean for million of early tax filers, especially those expecting a refund,” acting IRS Commissioner Linda Stiff said.

Will my refund be delayed?

The majority of tax returns will not be affected by this delay. If you didn’t have to pay the AMT last year then you probably won’t have to this year, unless your financial situation has changed.

If you are affected by this, we can help you. Just file your taxes as usual with FileYourTaxesnow.com and we will walk you through the process. Going to a brick and mortar tax preparer won’t speed this process up, all those effected by the AMT have to wait, no matter how the forms are filed. Efile is still the fastest way to file your taxes.

Some Tax Refunds To Be Delayed

If you efile taxes online then you are using the best way to file your taxes.

The five forms affected by the delay are:

  • Form 8863, Education Credits.
  • Form 5695, Residential Energy Credits.
  • Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.
  • Form 8396, Mortgage Interest Credit and
  • Form 8859, District of Columbia First-Time Homebuyer Credit.

Any taxpayer using those tax forms will have to wait until February to file their taxes, the IRS said. The IRS will begin processing those forms on Feb. 11, and the first tax refunds for those people who efile taxes online will start going out 10 to 14 days later and those who file with paper tax forms can expect a wait of as long as six weeks.

Tax refunds face a delay

WASHINGTON – President Bush on Monday pushed Congress to pass a one-year fix to the alternative minimum tax, which threatens to hit 23 million federal tax filers, warning that failure to do so could delay tax refunds next year.

The alternative minimum tax, or AMT, is calculated alongside the income tax, with the taxpayer paying the higher of the two calculations.

The AMT was passed in 1969 in a bid to close tax shelters for filers with incomes above $200,000, the equivalent of $1.2 million today. But it wasn’t indexed to rise with inflation, so what was a fortune then is upper-middle income today in expensive parts of the nation.

Congress typically freezes the number of AMT payers at 4 million by passing annual legislation to “patch” the AMT. Absent the fix, about 70 percent of tax filers with incomes between $75,000 and $100,000 could face the AMT.

But “patching” the AMT deprives the treasury of about $50 billion that the AMT would otherwise raise, and that complicates Congress’ effort to reduce budget deficits.

 

Tax refunds face a delay

The Democrats running Congress are feuding over the AMT patch. The House wants to offset the lost AMT revenue with taxes on private equity firms and other businesses. But Senate Democrats favor passing a fix that wouldn’t offset the lost revenue and thus would add $50 billion to the federal deficit.

Bush warned Monday that “the longer they delay, the more likely it is that there’s $75 billion of refund checks that will be late” in arriving. That’s because tax forms can’t be printed and prepared until Congress finishes changing the tax law. The Internal Revenue Service won’t be able to process the refunds of Americans who file mortgage interest credits or any one of the 11 forms and deductions used in calculating the AMT.

Q: Why are $75 billion in refund checks at stake?

A: The IRS says it needs up to seven weeks from the passage of any AMT fix to finish changing electronic and paper tax forms. Bush’s numbers imply that the tax filing season, which normally begins on Jan. 13, wouldn’t start before Feb. 18.

Q: Will Congress pass a fix this year?

A: There’s no guarantee, but House and Senate leaders pledge to do so before they recess this weekend for the holidays.

Q: If they succeed, when will the tax season begin?

A: Seven weeks from the end of this week would be the second week in February. That would be a four-week delay from the scheduled Jan. 13 start of tax filing. But Democrats insist that by law, companies have until Jan. 31 to send employees their W-2 forms. So technically, they say, the delay is really only about two weeks.

Q: Will the IRS extend the April 15 deadline to file taxes because of the AMT delay?

A: Right now, there’s no discussion of that. The IRS is ramping up computer systems and manpower to make up for the delay in its ability to process tax filings. The agency historically gets refunds to electronic filers more quickly than to paper filers.

Q: Who gets hurt by the delay?

A: The IRA Oversight Board estimated in late November that if tax filing season began on Feb. 4, it would result in delays for 15.5 million tax refunds out of about 130 million tax filings. Almost 12 percent of all tax filers could see their refunds delayed, totaling about $39 billion.

Q: Will electronic filers be spared delays?

A: No. The IRS said that by last Feb. 16, it had received 38 million tax returns, and almost 32 million were owed refunds. About 80 percent of these were filed electronically. That suggests that electronic filers will be delayed in greater numbers than paper filers.

Q: Which 12 forms are affected by the AMT delay?

A: According to the IRS Oversight Board of the House Ways and Means Committee, they are Form 6251 – AMT form; Form 1040, Schedule R – credit for the elderly or disabled; Form 1040-A, Schedule 2 – child and dependent care credit; Form 1116 – Foreign Tax Credit; Form 2441 – Child and Dependent Care Credit; Form 5695 – Residential Energy Credits; Form 8396 – Mortgage Interest Credit; Form 8839 – Qualified Adoption Expenses; Form 8859 – District of Columbia’s First-Time Homebuyer Credit; Form 8863 – Education Credits; Form 8880 – Credit for Qualified Retirement Savings Contributions; Form 8801 – Credit for Prior Year AMT.

Source: The Sacromento Bee
About the writer:
Call Kevin G. Hall, McClatchy Washington Bureau, (202) 383-6038.

How to efile taxes online

How to efile taxes online?

Step 1 – Get all your tax information together! – You’ll save time and won’t have to stop in the middle of preparing your current year tax return to find a missing document.

Here is what you will need to eFile a Tax Return Online with the IRS using online software to prepare taxes:

  • Social Security numbers for yourself, your spouse, and any dependents.
  • Forms W-2 from all employers are required for yourself and your spouse.
  • Forms 1099 for Dividends, Retirement, or other income, or any Forms 1099 with Income Tax Withholding.
  • Receipts for expenses for Itemized Deductions (Schedule A).
  • Receipts and records for other income or expenses.
  • Bank Account numbers (for a fast refund, or to pay electronically).
  • Prior year Adjusted Gross Income amount or prior year PIN if using a Self-Select PIN as your signature.
  • Complete information on what records you need, and how long to keep your records.

Step 2 – Choose the method of e-filing that works for you:

  • Tax Professional
  • Personal Computer

Step 3 – e-file it!

Paid Preparer – If using a Tax Preparer, be sure to take all your information with you, and don’t forget to ask for IRS e-file!
Personal Computer – Those filing taxes online, just answer the simple questions in our tax preparation software here at File Your Taxes Now, and the software will do the rest for you. For faster refunds, or to pay when YOU want to, have your bank account number handy.

 

Common Features of Software and Online Products that Allow for eFile:

  • Easy-to-understand online interview
  • No income restrictions
  • Supports every filing status
  • Selects the right federal income tax form for you: 1040EZ, 1040A, 1040
  • Calculates capital gain distributions
  • Claim tax credits
  • Claim deductions for IRA contributions, student loan interest, school tuition and fees, etc.
  • Claim itemized deductions
  • Detects and calculates Child Tax Credit
  • Detects and calculates Earned Income Credit (EIC)
  • Report self-employment income
  • Report small business income
  • Report income from sale of a property
  • Error and omission checking (100% accuracy guaranteed)
  • Fast direct bank refund deposit (requires bank account)
  • Pay later – deduct fee from refund (small fee applies)
  • efile for an extension by April 15, 2015
  • Print your completed and IRS accepted return

There is no need for you to select a tax form; it’s all done by the efile.com online tax preparation software. If you need a tax form that is not currently accepted online by the IRS, you can still complete and efile your federal tax return.  Relax. You’re done. Now SHARE – tell a family member or friend IRS e-file is the smart way to electronically file their federal and state income tax returns!

Tax News for November 2007

Honda Hybrid Begins Phase-Out on January 1
IR-2007-191, Nov. 19, 2007 — The IRS announced today that American Honda Motor Company, Inc, has submitted quarterly reports indicating that its cumulative sales of qualified vehicles to retail dealers reached the 60,000-vehicle limit during the calendar quarter ending Sept. 30, 2007.

IRS Reminds Charities and Churches of Political Activity Ban
IR-2007-190, Nov. 19, 2007 — The Internal Revenue Service today reminded section 501(c)(3) organizations, including charities and churches that federal law prohibits them from becoming directly or indirectly involved in campaigns of political candidates.

IRS Has $110 Million in Refund Checks Looking for a Home
IR-2007-189, Nov. 14, 2007 — Each check is worth $953, on average.

2008 Nissan Altima Certified as Qualified Hybrid Vehicle
IR-2007-188, Nov. 13, 2007 — The IRS has acknowledged the certification by Nissan North America, Inc., that its 2008 Nissan Altima Hybrid vehicle meets the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle.

Plan Now to Get Full Benefit of Saver’s Credit; Tax Break Helps Low- and Moderate-Income Workers Save for Retirement
IR-2007-187, Nov. 9, 2007 — The saver’s credit is an added bonus for many eligible workers who contribute to retirement plans. Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the amount of taxes owed.

2008 Hybrids Certified As Tax Credit For Toyota and Lexus Comes to an End
IR-2007-186, Nov. 8, 2007 — The IRS acknowledged the certification by Toyota Motor Sales U.S.A., Inc., that several of its Model Year 2008 vehicles qualify for the hybrid vehicle tax credit. Only vehicles purchased prior to Oct. 1, 2007, qualify for a credit.

Another Record-Breaking Number of Taxpayers Choose to Electronically File in 2007
IR-2007-185, Nov. 7, 2007 — The IRS this year received nearly 80 million tax returns through e-file, breaking the record set last year.

IRS and States to Share Employment Tax Examination Results
IR-2007-184, Nov. 6, 2007 — Officials from the IRS and more than two dozen state workforce agencies have entered into agreements to share the results of employment tax examinations.

IRS Warns of E-mail Scam Soliciting Donations to California Wildfire Victims
IR-2007-183, Nov. 2, 2007 — Don’t be fooled by a scam e-mail that appears to be a solication from the IRS for donations to victims of the recent California wildfires.

IRS Announces New Chinese, Korean, Russian and Vietnamese Tax Glossaries to Assist Taxpayers
IR-2007-182, Nov. 2, 2007 — Five new publications will meet growing demand for non-English language tax information.

News Release and Fact Sheet Archive
News releases and fact sheets from November 2002 forward and an archive of news releases and fact sheets in PDF format back to 1997.