8/29/2013
Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples WASHINGTON -- The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage. The ruling implements federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act. “Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide. It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve,” said Secretary Jacob J. Lew. “This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.” Under the ruling, same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit. Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law. Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status. Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations. Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier. Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income. How to File a Claim for Refund Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return. Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement. For information on filing an amended return, go to Tax Topic 308, Amended Returns at http://www.irs.gov/taxtopics/tc308.html or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form. Future Guidance Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.
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New York Governor Andrew M. Cuomo announced a new initiative Monday to encourage individuals who owe significant back taxes to the state to pay their bills by suspending their New York State driver licenses when their past-due tax liability exceeds $10,000.
The crackdown is the result of legislation introduced as part of the executive budget and signed into law earlier this year.“Our message is simple: tax scofflaws who don’t abide by the same rules as everyone else are not entitled to the same privileges as everyone else,” Cuomo said in a statement. “These worst offenders are putting an unfair burden on the overwhelming majority of New Yorkers who are hardworking, law-abiding taxpayers. By enacting these additional consequences, we’re providing additional incentives for the state to receive the money it is owed and we’re keeping scofflaws off the very roads they refuse to pay their fair share to maintain.” The new initiative is estimated to increase collections in the Empire State by $26 million this fiscal year and as much as $6 million annually hereafter. “It’s in every taxpayer’s best interest to pay all tax bills in full,” said Commissioner of Taxation and Finance Thomas H. Mattox. ”If you can’t pay in full, our staff is available to help you arrange a payment plan that will satisfy your debt.” The New York State Department of Taxation and Finance will send the first round of 16,000 suspension notices to delinquent taxpayers, who have 60 days from the mailing date to arrange payment with the Department. If the taxpayer fails to do so, the Department of Motor Vehicles will send a second letter providing an additional 15 days to respond. If the taxpayer again fails to arrange payment, their license will be suspended until the debt is paid or a payment plan is established. A taxpayer who drives while the suspension is in effect is subject to arrest and penalties, Cuomo’s office noted. Those with a suspended license can, however, apply for a restricted license, which allows them to drive to work, and return directly home. In New York State, 96 percent of taxes are paid by businesses and individuals who voluntarily meet their tax responsibilities, Cuomo’s office noted. The remaining 4 percent is collected through the tax department's audit, collections and criminal investigations programs. Whether you roll the dice, bet on the ponies, play cards or enjoy slot machines, you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling losses…but only up to the extent of your winnings.
The IRS alerted taxpayers and tax professionals about an interest calculation error on certain notices mailed the weeks of July 1 and July 8.
The IRS discovered errors in the CP2000 notices during a two-week period this July. The notices contained an incorrect calculation on the interest owed on proposed taxes from under reported income. The interest figures were lower than they should be. The IRS has corrected the issue for future mailings. Later this month, the IRS will be sending a special mailing to the recipients of the notices. Taxpayers should follow the directions on the letter, and they will be encouraged to either call a special toll-free number or write to the IRS to receive the corrected interest amount. A CP2000 notice shows proposed changes to income tax returns based on a comparison of the income, payments, credits and deductions reported on a tax return with information reported by employers, banks, businesses and other payers. The CP2000 also reflects any corrections made to an original tax return during processing.
Your 401(k) plan may allow you to borrow from the plan. However, you should consider a few things before taking a loan from your 401(k). If you don’t repay the full amount of the loan, including interest, according to the loan’s terms, the unpaid loan amount is a distribution to you from the plan. Your plan may even require you to repay the remaining amount of the loan in full if you stop working for the employer sponsoring the plan. Otherwise, the unpaid amount is considered a plan distribution to you. Generally, you have to include any previously untaxed amount of the distribution in your gross income for the year in which the distribution occurs. You may also have to pay an additional 10 percent tax on the amount of the taxable distribution, unless you: Are age 59 1/2 or older, or qualify for another exception to the 10 percent additional tax penalty. Any unpaid loan amount also means you will have less money saved for your retirement. Remember, your 401(k) plan is designed so you can save money while working for your retirement. So, before borrowing from your future, carefully consider all other alternatives. __________________________________________________________________________________________ The Internal Revenue Service is looking to return tax refunds that were not
delivered earlier this year because of mailing address errors. Taxpayers who did not get their refund in the mail as expected and believe their refund check may have been returned to the IRS should use the “Where’s My Refund?” tool on IRS.gov. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954. Nearly three-quarters of all individual income tax filers claim a refund on their annual tax return. Although the vast majority of those refunds are issued as direct deposits, nearly 30 million taxpayers request paper refund checks. The IRS recommends filing tax returns electronically and using direct deposit. Electronic filing eliminates the risk of lost returns and reduces errors on tax returns that can cause refund delays. Direct deposit prevents the possibility a check being returned to the IRS as undeliverable and ends the danger of paper checks being lost or stolen. Taxpayers should be aware that the IRS does not initiate contact with taxpayers by e-mail. E-mail informing taxpayers of pending tax refunds and asking for personal information are phishing scams. The agency urges taxpayers receiving such messages not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that can infect their computers. The best way for an individual to verify if she or he has a pending refund is going directly to IRS.gov and using the “Where’s My Refund?” tool. 5 Things You Should know about Required Minimum Distributions (RMD) from Retirement Accounts5/16/2013 Required minimum distributions (RMDs) are amounts you are required to take from qualified retirement plans and IRAs in order to avoid a 50% penalty on insufficient annual distributions.
Here are 5 things to know: 1. If you turned 70 1/2 in 2012, for example, you must take your first RMDs before the end of this year unless you postpone it until April 1, 2013. However, postponement means taking two RMDs in 2013 and that can adversely impact taxation of Social Security benefits in 2013 and result in increased Medicare premiums for Parts B and D in 2015. 2. If you are still working, you can postpone your RMDs from company retirement plans until you retire; this rule does not apply to IRAs. 3. RMDs for IRAs can be taken from one or more accounts. Total up all IRAs and then decide from which one or more accounts to take the required distribution amount. This rule does not apply to qualified retirement plans; separate RMDs are required from each type of retirement plan. 4. No lifetime distributions are required from Roth IRAs for the owner, but beneficiaries usually must draw down the accounts over their lifetime (a special rule applies to spouses). 5. The penalty for insufficient withdrawals can be waived if you ask the IRS to do so. You must explain why you failed to take RMDs and show that you remedied the situation as soon as you discovered the insufficiency. |
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