Tuesday, December 30, 2014

Tax Season Opens on January 20

WASHINGTON, D.C. (PR) - Following the passage of the extenders legislation, the Internal Revenue Service announced today it anticipates opening the 2015 filing season as scheduled in January. The IRS will begin accepting tax returns electronically on Jan. 20. Paper tax returns will begin processing at the same time.

The decision follows Congress renewing a number of "extender" provisions of the tax law that expired at the end of 2013. These provisions were renewed by Congress through the end of 2014. The final legislation was signed into law Dec 19, 2014.

"We have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems," said IRS Commissioner John Koskinen. "Our employees will continue an aggressive schedule of testing and preparation of our systems during the next month to complete the final stages needed for the 2015 tax season."

The IRS reminds taxpayers that filing electronically is the most accurate way to file a tax return and the fastest way to get a refund. There is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin.

More information about IRS Free File and other information about the 2015 filing season will be available in January.

Avoiding Unscrupulous Preparers

With the filing season approaching, the Internal Revenue Service joined with national tax organizations to provide people with new options to get information and tips on selecting tax professionals and avoiding unscrupulous preparers.

The effort includes new information available at IRS.gov/chooseataxpro, including a list of consumer tips for selecting a tax professional. There will also be a new gateway page with links to national non-profit tax professional groups, which can help provide additional information for taxpayers seeking the right type of qualified help.

“The tax return represents one of the biggest financial transactions of the year for many Americans, whether they are getting a refund or paying a tax bill,” IRS Commissioner John Koskinen said. “Filling out tax returns accurately is critically important. Between tax law changes and tax scams circulating, it’s more important than ever for people who need professional assistance to select wisely and carefully.”

Koskinen was joined at a Washington press conference Thursday with members of several national tax professional organizations that represent hundreds of thousands of tax professionals across the nation.
More than 140 million tax returns were filed last year, and more than half of with them were prepared with the help of a paid return preparer.

For the upcoming filing season, some taxpayers may want to get help with the new provisions of the Affordable Care Act, and tax professionals provide one of several options available. The vast majority of people will only have to check a box on their federal income tax return to indicate they had health coverage, but others have Marketplace coverage with tax credits, have exemptions or need them, or may have to make a payment because they could afford to buy health insurance but chose not to. Tax professionals will be able to help guide taxpayers through what they need to do in these circumstances. Commercial software programs will be able to help, too.

There are some basic tips taxpayers can keep in mind when selecting a tax professional. These include:
Select an ethical preparer. Taxpayers entrust some of their most vital personal data with the person preparing their tax return, including income, investments and Social Security numbers.
Make sure the preparer signs the return and includes their Preparer Tax Identification Number (PTIN). All paid prepares are required to have a valid PTIN.

Review your tax return and ask questions before signing. The taxpayer is ultimately legally responsible for what’s on their tax return, regardless of whether someone else prepared it.

Never sign a blank tax return. This is a clear red flag when a taxpayer is asked to sign a blank tax return. The preparer can put anything they want on the return – even their own bank account for the tax refund.

To help taxpayers navigate the different types of professional tax help available, the IRS updated IRS.gov/chooseataxpro, a page that explains the different categories of professionals. Taxpayers will also find a new partner page that provides links to the web sites of national organizations of tax professionals, with additional details about the groups, including state and local organizations or representatives.
Organizations in the listing or attending the press briefing include:

National Association of Enrolled Agents;
National Society of Tax Professionals;
National Association of Tax Professionals;
National Society of Accountants;
National Conference of CPA Practitioners;
The American Institute of Certified Public Accountants;
The American Association of Attorney-Certified Public Accountants; and
The Council for Electronic Revenue Communication Advancement

“Tax professionals are a vital link with American taxpayers, and without them we could not run the nation’s tax system,” Koskinen said. “Taxpayers have many options for their taxes, ranging from using software to selecting a tax professional. If someone needs professional assistance, I urge people to take a few minutes to review the tips at IRS.gov/chooseataxpro. We want taxpayers to understand the different types and categories of tax return preparers available to help them with their tax issues.”

In January, the IRS also plans to launch a new Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on the IRS website to help taxpayers verify credentials and qualifications of tax professionals. The Directory will be a searchable, sortable database with the name, city, state and zip code of credentialed return preparers as well as those who have completed the requirements for the new IRS Annual Filing Season Program (AFSP) which includes having a valid 2015 Preparer Tax Identification Number (PTIN).

In 2010, the IRS launched the Tax Return Preparer Initiative that requires anyone who prepares any federal tax return for compensation to obtain a PTIN from the IRS. In 2014 the IRS issued about 677,000 PTINs. Currently, anyone with a valid PTIN can prepare and sign federal tax returns they prepare.

2015 Optional Standard Mileage 

The Internal Revenue Service issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

57.5 cents per mile for business miles driven, up from 56 cents in 2014

23 cents per mile driven for medical or moving purposes, down half a cent from 2014 

14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously). Details on these and other special rules are in Revenue Procedure 2010-51, the instructions to Form 1040 and various online IRS publications including Publication 17, Your Federal Income Tax.

Besides the standard mileage rates, Notice 2014-79, posted today on IRS.gov, also includes the basis reduction amounts for those choosing the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing an allowance under a fixed and variable rate plan.

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