IRS Predicting Extra Difficult Tax Filing Season (Again)

John Koskinen, Commissioner of Internal Revenue, addressed the American Institute of CPAs' (AICPA) National Tax Conference earlier this month. He talked about the upcoming 2015 tax filing season. “We believe it may be one of the most complicated filing seasons we’ve ever had, for a number of reasons".

“Continuing uncertainty about the extender legislation imposes stress, not only on the IRS, but on the entire tax community,” he said, and “if the uncertainty over extenders continues into December, the IRS could be forced to postpone the opening of the 2015 filing season.” With Congress now on Thanksgiving break, this seems to be a certainty.

I have written about the "extender legislation" in previous posts on this blog.

Reductions to the IRS's budget “will pose serious challenges to our customer service, enforcement efforts and information technology projects,” he said. Telephone service could drop from the 2014 service level of 71 percent to 53 percent in 2015, because the IRS has not been given the funds to hire sufficient staff to handle incoming calls.

Poor customer service at the IRS has been getting worse and worse every year because a hostile Congress has not given the IRS the funds they need to do the job. Because of long waits, I never even attempt to call the IRS on the phone. Rather, I write them a letter and send it in the mail.  It takes months to get a response. Thanks, Congress.

- Mark S Gleason CPA
  www.lakes-cpa.com

Inflation Adjustments Increase Tax Exemptions and Lower Rates (Slightly)

The IRS has announced the annual inflation adjustments for 43 different tax provisions including the rate thresholds for the tax rate schedules. These go into effect on Jan 1, 2015.

Here are some of the adjustments:

• The top federal tax rate of 39.6 percent affects single taxpayers whose income exceeds $413,200 ($464,850 for marrieds), up from $406,750 and $457,600, respectively. 
• The standard deduction rises to $6,300 for singles and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively. The standard deduction for heads of household rises to $9,250, up from $9,100.
• The income threshhold where itemized deductions begin to be phased out begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
• The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. The exemption phase-out begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly) and phases out completely at $380,750 ($432,400 for marrieds).
• The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014.
• The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
• This amount of the basic exclusion (exemption) from federal estate taxes for decedents who die during 2015 is $5,430,000, up from a total of $5,340,000.
• The annual exclusion for gifts remains at $14,000 for 2015.
• For 2015, the foreign earned income exclusion is $100,800, up from $99,200 for 2014.

Here's one I hadn't previously imagined. The tax on arrow shafts for 2015 (to be paid by the manufacturer or importer of certain arrows) is going up to $0.49 per shaft. To avoid this tax, it looks like you want your arrows to be less than 18 inches long and less than 5/16 of an inch in diameter, unless of course your arrows are suitable for use with a bow having a peak draw weight of 30 pounds or more, in which case all your arrow shafts are taxable.

Complete details can be found in Rev. Proc. 2014-61.

- Mark S Gleason CPA
  www.lakes-cpa.com

Contribution Limits to 401(k) Plans for 2015 are Increased

The IRS has announced upward revisions to the annual contribution limits for pension and other retirement plans for 2015. Taxpayers will be allowed to make contributions of $18,000 to 401(k) plans for 2015. The increase, from $17,500 to $18,000 also applies to 403(b) plans and 457 plans. In addition, the limit on "catch-up" contributions for taxpayers over the age of 50 has been increased from $5,500 to $6,000.

Many of my clients will benefit from these increases in the limits as these will result in bigger deductions for their retirement savings. Those that are saving for retirement with Roth accounts will benefit from the increased contribution limits as well.

- Mark S Gleason CPA
  www.lakes-cpa.com

Scam Alert for Minnesota Taxpayers

The Minnesota Department of Revenue has issued a warning about a new scam. Fraudsters are calling taxpayers and demanding immediate payments over the phone.

The callers claim to be from the Department of Revenue and tell people they owe the state money and must pay it immediately by credit card or money order or the police will be sent to their home.

The MN Department of Revenue says on their website that they never call taxpayers to demand immediate payment or threaten to send the police to a taxpayer's home.

- Mark S Gleason CPA
  www.lakes-cpa.com

Put Your Dog to Work and Get a Tax Deduction

Service dogs, the canines that lead the blind and provide emotional support, have been gaining in popularity. They are helpful in many contexts and enjoy special status under the Americans with Disabilities Act. They also have special status under IRS rules because their medical expenses and the cost of their food and training can be deductible as a medical expense. No deductions are allowed for ordinary dogs.

Here is what IRS Publication 502, Medical and Dental Expenses has to say about it: "You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties".

The medical expense deduction in my experience is mostly an illusion because only the amount of medical expenses in excess of 10% of a taxpayer's income is deductible. Furthermore, taxpayers who do not itemize deductions are unable to benefit from medical deductions. Nevertheless, I predict that service dogs are going to continue to grow in popularity and that lots of dog owners are going to want to pass Fido off as a service animal in order to get a tax deduction.

- Mark S Gleason CPA
  www.lakes-cpa.com

US Treasury Cracks Down on Inversions

The Treasury Department announced this week a batch of new rules designed to curtail inversions, the corporate income tax loophole du jour.

The inversion loophole is expected to cost the US $20 billion in revenue losses over the next 10 years, unless Congress takes action. Since Congressional action isn't going to happen, the executive branch is stepping up with the limited authority it has to try to limit the fiscal hemmoraging these inversions are causing.

The inversion loophole is used by large US corporations to avoid US income taxes by having the income taxed in a foreign jurisdiction having a lower tax rate. In a typical inversion transaction, a US corporation merges with a foreign corporation.  The newly merged entity retains it's status as a foreign corporation, even if most of the operations are located in the US.

Under current law, the merged entity is not treated as a US corporation if the (old) US company's shareholder's end up owning less than 80% of the combined company. The obvious solution would be to lower the 80 percent to 50 percent, but congressional Republicans will not permit that to happen.
The new rules issued by the Treasury Department are intended to make the 80% rule harder for companies to get around.

The press release issued by the Treasury Department states: "Today’s action eliminates certain techniques inverted companies currently use to gain tax-free access to the deferred earnings of a foreign subsidiary, significantly diminishing the ability of inverted companies to escape U.S. taxation.  It also makes it more difficult for U.S. entities to invert by strengthening the requirement that the former owners of the U.S. company own less than 80 percent of the new combined entity".

These actions are being taken under sections 304(b)(5)(B), 367, 956(e), 7701(l), and 7874 of the Internal Revenue Code.

Here are a few of the actions being taken to close these loopholes:

• Preventing inverted companies from restructuring a foreign subsidiary in order to access the subsidiary’s earnings tax-free (Section 7701(l) of the Internal Revenue Code).
• Closing a loophole to prevent an inverted company from transferring cash or property from a controlled foreign corporation to the new parent to completely avoid U.S. tax (Section 304(b)(5)(B) of the Internal Revenue Code).
• Restricting the "skinnying down" technique where corporations reduce their size before a merger so the new combined entity meets the requirements of current law (Section 7874 of the Internal Revenue Code).
• Preventing "spinversions" of business units into foreign corporations by treating the new spun-off company as a US domestic corporation (Section 7874 of the Internal Revenue Code).
• Eliminating "hopscotch loans", a technique whereby a foreign subsidiary of a US company loans money to a foreign corporation to help it finance an (inversion) merger with the US parent corporation are now forbidden (Section 956 of the Interal Revenue Code).

This is only a taste of today's loophole closing du jour.  For further details visit the Treasury Department's website at http://www.treasury.gov/press-center/press-releases/Pages/jl2645.aspx

- Mark Gleason
  www.lakes-cpa.com

New IRS Forms for Implementing the Affordable Care Act

The IRS has released draft versions of a bunch of forms for individuals and employers to make reports required under the Affordable Care Act (ACA). These forms will be used to gather the information necessary to administer the tax credits and penalties provided by the ACA.

• Form 1094-B is the Transmittal of Health Coverage Information Returns which accompanies the filings of Forms 1095-B (below).
• Form 1095-B is the Health Coverage form requesting information about each "responsible" individual policy holder.
• Form 1094-C is the Transmittal of Employer-Provided Health Insurance Offer and Coverage forms contains information about the "applicable large employer" and is to be sent in with the forms 1095-C (below) .
• Form 1095-C is the the Employer-Provided Health Insurance Offer and Coverage form having fields for the social security numbers for all the covered individuals along with information regarding the offer of coverage and the employer share of premiums. It looks like employers will provide one of these forms for each employee.
• Form 1095-A is the Health Insurance Marketplace Statement containing information about health care recipients and their families and other details such as dates of birth, coverage periods, and their premium payments. It looks like employers will provide one of these forms for each employee.
• Form 8965 is the form for Health Coverage Exemptions and is to be attached to individual taxpayers' forms 1040, 1040-A, and 1040-EZ.

This law has lots of moving parts and it is going to be interesting to see how tax preparers deal with all these new forms. I think that I will be one of the few to be prepared for this transition.

- Mark G Gleason CPA
  www.lakes-cpa.com

Sloppy Recordkeeping Can Be Expensive

I ran across a recent tax court case that reminded me of some of my clients. Garza v Commissioner is a story about a taxpayer who couldn't convince the IRS that his records substantiated his deduction for auto mileage.

It's not that he don't keep any records, he just wasn't disciplined enough to do it every day. At the end of each month, he made a note of the odometer readings at the end of each month, with occasional additional mid-month readings. But there was no other information relating to vehicle expenses. There was nothing recorded about any personal travel. His entire deduction for auto mileage of $20,085.50 was disallowed by the IRS and Garza took the IRS to the Tax Court.

He lost because he did not record the amount, time, or business purpose for each business use of his truck.
To paraphrase the court, "a taxpayer generally  must maintain adequate records or produce sufficient evidence corroborating his own statement, establishing the amount, date, and business purpose of each expenditure or business use of [an automobile]".

So, my readers, don't let this happen to you.

- Mark S Gleason CPA
  www.lakes-cpa.com

Money Laundering 101

How's that for a catchy title for a blog post?

My friend Richard says that I remind him of Barry the Money Launderer, one of the characters in his favorite TV series, Burn Notice.
I am not an expert in money laundering.  I know next to nothing about it.
This afternoon I ran into an overview of money laundering on the Cornell University Law School Legal Information Institute website.
I thought I would share this information with my readers, some of whom are apparently admirers of Barry the Money Launderer.

"Money laundering refers to a financial transaction scheme that aims to conceal the identity, source, and destination of illicitly-obtained money. 
The money laundering process can be broken down into three stages. First, the illegal activity that garners the money places it in the launderer’s hands. 
Second, the launderer passes the money through a complex scheme of transactions to obscure who initially received the money from the criminal enterprise.
Third, the scheme returns the money to the launderer in an obscure and indirect way."

This article then goes on to discuss the relationship of money laundering to tax evasion. The two go hand-in-hand. 

"Tax evasion and false accounting practices constitute common types of money laundering. 
Often, criminals achieve these objectives through the use of shell companies, holding companies, and offshore accounts.
A shell company is an incorporated company that possesses no significant assets and does not perform any significant operations. 
To launder money, the shell company purports to perform some service that would reasonably require its customers to often pay with cash.
Cash transactions increase the anonymity of customers and therefore decrease the government’s ability to trace the initial recipient of the dirty money. 
Money launderers commonly select beauty salons and plumbing services as shell companies. The launderer then deposits the money with the shell company, which deposits it into its accounts. 
The company then creates fake invoices and receipts to account for the cash. Such transactions create the appearance of propriety and clean money. 
The shell company can then make withdrawals and either return the money to the initial criminal or pass the money on to further shell companies before returning it to further cloud who first deposited the money."

None of my former or current clients are hairdressers or plumbers and I have never had a client whom I suspected of engaging in this type of activity.

In 1970 Congress enacted the Bank Secrecy Act which requires banks to report cash and currency transactions of over $10,000.00.
Money laundering is a federal crime under the Money Laundering Control Act of 1986. 

If you are a money launderer, I do not want you for a client.

- Mark S Gleason CPA
  www.lakes-cpa.com

IRS Issues New Taxpayers' Bill of Rights

Here are your rights, according to the IRS:

1. The Right to Be Informed
2. The Right to Quality Service
3. The Right to Pay No More than the Correct Amount of Tax
4. The Right to Challenge the IRS’s Position and Be Heard
5. The Right to Appeal an IRS Decision in an Independent Forum
6. The Right to Finality
7. The Right to Privacy
8. The Right to Confidentiality
9. The Right to Retain Representation
10. The Right to a Fair and Just Tax System

- Mark S Gleason CPA
  www.lakes-cpa.com

Youth and Summertime: Dreaming about Tax Avoidance

Summer is almost here.  Although the official beginning of Summer is a couple weeks away, many college and high school students are already have found summer employment and are hard at work. Others will be starting their summer jobs in the weeks to come.

Now is a good time to help these hard working young people get their retirement savings off to an early start. Parents and grandparents (uncles and aunts too) can contribute up to $5,500 to a young worker's Roth IRA.  If properly invested, the funds can grow into hundreds of thousands of dollars by the time these youngsters retire at age 65 or 70. The funds can be withdrawn from the Roth account tax free after age 59 and a half.

This is an uncommon little loophole in our tax system that rewards people for working.
Contributions to Roth IRAs are subject to a dollar limit ($5,500 for 2014 for singles under the age of 50) and an earned income limit: Roth contributions cannot exceed the student's earnings from employment (including self-employment). 

Most students probably need the money they earn in the summer for their education expenses. Without a little help from their families few students are able to take advantage of this tax planning opportunity.  Once they are established in their careers, many of these young people are going to find that their incomes exceed the earnings thresholds under which contributions to Roth accounts are allowed, so now is the time to start thinking about this.

- Mark S Gleason CPA
  www.lakes-cpa.com

 

IRS Audit Lottery: Odds are Better than Winning the Lottery

Because of cuts to the IRS's budget fewer and fewer audits are being conducted by the IRS.

The audit rate for last year was a little under 1% for individual income tax payers but this 1% includes correspondence exams as well as in-person audits by revenue agents.

Individuals with over $1 million had a 5% chance of an encounter with a revenue agent but the rate for those with incomes between $200,000 and $1 million was only 1.11%.

Those of us with incomes below $200,000 had slightly less than a one quarter of 1% (.25%) chance of getting audited.

These are better odds than winning the lottery, but not nearly as much fun.

Chances of being audited in 2014 are even lower than last year. Audit rates for corporations are expected to decline this year also.

- Mark S Gleason CPA
  www.lakes-cpa.com

IRS and MN Dept of Revenue Announcements on Heartbleed

Both the IRS and the Minnesota Department of Revenue issued announcements proclaiming themselves unaffected by Heartbleed , the recently discovered coding flaw that lets hackers steal passwords from websites.

The IRS announcement:

The IRS continues to accept tax returns as normal. Our systems continue operating and are not affected by this bug, and we are not aware of any security vulnerabilities related to this situation. We continue to monitor the situation and remain in contact with our software partners. The IRS advises taxpayers to continue filing their tax returns as they normally would in advance of the deadline.

The Minnesota Department of Revenue announcement: 

The Minnesota Department of Revenue systems have not been affected by the “heartbleed” virus.  We are accepting tax returns as normal and we encourage taxpayers to file their returns in advance of the April 15 deadline.  We continue to monitor the situation and will remain in contact with the IRS and software vendors.  If the situation changes we will provide an update. 

For those of us who depend on the internet to get our daily work done, this has been an unwelcome distraction, especially coming right before the April 15 tax filing deadline.

- Mark S Gleason CPA
  www.lakes-cpa.com

Who are the One Percent?

We hear about the top 1% all the time.  Who are the 1%?
The most frequently represented occupations of taxpayers in the top 1% of US taxpayers, according to IRS data, includes corporate executives,  financial professionals, doctors, lawyers and a broad category of occupations that including technical, scientific, computer, math and engineering jobs.

In 2011 a taxpayer mades the cut and is included in the top 1% at $379,000 annual income.
Most of these people should be given medals for their productivity and their contribution to society in the form of all the taxes they pay.
The top 1% earned 19% of all the income reported to the IRS (2011) and paid 35% of all federal income taxes.
Thank you!

- Mark S Gleason CPA
  www.lakes-cpa.com

Retroactive Minnesota Tax Law Changes

The CPAs that participate in an email tax forum I belong to are whining about changes to the tax law enacted last week. The tax cuts included in this new law affect 2013 tax returns that have already been filed.
Many tax preparers are not happy about this. I think the CPA's should be happy that taxes have been cut for their clients.

The MN Department of Revenue is having a little hand-holding session to comfort the upset tax preparers and "provide you with more information". So the upshot of all this (according to the MN Department of Revenue) is:

If your client has already filed, and the return is affected by the changes, they will receive notification from us.  Please tell them not to do anything until they receive direction from us.
One of three things will happen with the return.  The department:
1. Will fix the return and send the taxpayer a letter explaining how it was fixed.
2. Will send a letter to the taxpayer requesting more information and use that information to fix the return.  They will receive a letter explaining how it was fixed.
3. Will not be able to fix the return.  If this happens, the taxpayer will receive a letter explaining the return can’t be fixed.  If this happens, they will need to file an amended return to get the benefits of the law changes that apply to them.
If your client has not filed…
Please wait to file their return.  We are working to get new forms and instructions to you by April 3.  
Note:  If you use a desktop version of a software product, please be sure to watch for software updates from your software company.
We appreciate the job you do helping taxpayers file their returns and appreciate your patience as we review and implement the law changes.

Meaningful tax savings will be had by very few taxpayers including those suffering the tax consequences of a real estate foreclosure or who incurred adoption expenses. I don't think any of my clients will incur retroactive tax relief of over $50. Some of my clients will be effected by the mortgage insurance deduction, student loan interest and classroom expenses.

The Minnesota Society of Certified Public Accountants has released the following summary of things we tax preparers need to learn all about immediately:

Provisions enacted federally for 2012 and 2013 only and adopted for Minnesota retroactively to tax year 2013:
Deduction in adjusted gross income of up to $250 for classroom expenses paid by a K-12 grade educator
Exclusion for discharge indebtedness income on a principal residence
Itemized deduction for mortgage insurance premiums on a principal residence
F,or taxpayers 70-1/2 or older exclusion from gross income up to $100,000 of IRA distributions made directly to charitable organizations (the amount excluded is not allowed as a charitable deduction)
Increased maximum exclusion for employer provided commuter vehicle or transit pass fringe benefits from $125 per month to $245 per month to obtain parity with the exclusion of fringe parking benefits
Allowed expensing for the first $15 million of production costs of films and television shows
Allowed depreciation of leasehold improvements and qualified restaurant property, including new restaurant property and improvements to retail property over 15 years (rather than 39 years) for property placed in service through 2013
Allowed accelerated depreciation of qualified Indian reservation property for property placed in service through 2013
For contributions made in taxable years beginning through 2013, extension of basis adjustment to S corporation stock when the S corporation donates appreciated property, which is equal to the tax basis of the property rather than the fair market value
Allowed depreciation of certain motorsports entertainment complex property over 7 years rather than 15 or 39 years for property placed in service through 2013
Allowed expensing of 50% of the cost of advanced mine safety equipment for equipment placed in service through 2013
Special rule for charitable contributions of real property for conservation purposes for contributions made in tax years beginning in 2013
Allowance for companies other than C corporations to take a deduction for contributions to a charity equal to the cost basis plus one-half the normal price mark-up of food inventory for contributions made through 2013

Provisions enacted at the federal level for tax year 2013 and future years to which Minnesota would conform retroactively to tax year 2013 and for future years:
Increased contribution limits from $500 to $2,000 per year and allowed use of education savings accounts for elementary and secondary school expenses
Increased income limits and allowance of unlimited time period for the deduction of student loan interest
Exclusion from gross income for amounts paid or expenses incurred (up to $5,250 annually) by an employer in providing educational assistance to employees under an educational assistance program
Exclusion from income for awards under the National Health Service Corps scholarship program and related awards for health-care professionals
Exclusion for employer provided adoption assistance

Forgive the sloppy formatting of this post.  I am short of time today and this is what happens when cutting and pasting long quotations. My comments in this post are bold, the rest of this has been cut and pasted from the sources I identified.

- Mark S Gleason CPA
  www.lakes-cpa.com

April 15 is Your Last Chance to Claim Your 2010 Federal Income Tax Refund

The IRS announced today that there are $760 million in refunds for people who didn't file their 2010 income tax returns. "Refunds totaling almost $760 million may be waiting for an estimated 918,600 taxpayers who did not file a federal income tax return for 2010. However, to collect the money, a return for 2010 must be filed with the IRS no later than Tuesday, April 15, 2014."

As a matter of fact, I am meeting with someone next week to talk about preparing her 2010 income taxes. We believe there is a refund to be claimed.

This reminds me of Gleason's four rules of tax procrastination along with some of and their corollaries:

1. If you procrastinate long enough, the need to perform the task may go away. Corollary: You may die suddenly, and whatever it was that you didn't get around to doing, now just isn't going to get done.
2. The need to file a tax return doesn't go away, even if you die. Corollary: Someone else will have to take care of it for you.
3. Tax returns are never easier to prepare or file after they are long past due. Corollary: It's more difficult and time-consuming to gather the information to prepare a complete and accurate return years after the fact than it is right after the end of the year.
4. Filing your taxes late is illogical and more inconvenient than filing them on time.

- Mark S Gleason CPA
   www.lakes-cpa.com

Wealthy Taxpayers are Now Paying More in Taxes

Taxpayers having incomes that exceed 97% of all the other taxpayers' incomes are being hit with some new taxes for 2013.

Many of them (not my cients - they were all informed) are just finding out about these new tax hits as they prepare to file their 2013 tax returns.

First, the special reduced rate of tax for capital gains has been bumped up to 20% (from 15%) for married couples with incomes over $450,000 ($400,000 for singles).

Second, Medicare taxes are being increased from 1.45% to 2.35% on wages in excess of $250,000 for married taxpayers ($200,000 for singles).

In addition, there is a new 3.8% Medicare tax on investment income. This new tax applies to the lesser of: (a) taxable investment income or (b) the amount by  which their adjusted gross income exceeds $250,000 for married couples ($200,000 for singles). Investment income includes dividends, interest, rental income, capital gains and annuities.

Third, personal exemptions and itemized deductions for married taxpayers with adjusted gross incomes in excess of $300,000 ($250.000 for singles) are reduced. The "phase-out" of personal exemptions eliminates 2% of the personal exemption deduction for each $2,500 that adjusted gross income exceeds the $300,000/$250,000 thresholds. Itemized deductions are "phased-out" by reducing total itemized deductions by 3% of the amount adjusted gross income exceeds the $300,000/$250,000 thresholds. This reduction is limited to 80% of total itemized deductions.

- Mark S Gleason CPA
  www.lakes-cpa.com

¿Recién llegado a los Estados Unidos?

La informacion es del Internal Revenue Service:

Si usted está recién llegado a los Estados Unidos, deberá informarse sobre cuáles son sus responsabilidades tributarias. En esta página usted encontrará respuestas sobre quién tiene la obligación de presentar una declaración de impuesto federal en los Estados Unidos. Obtenga respuestas a las siguientes preguntas:
¿Cómo sé si tengo la obligación de presentar una declaración de impuesto federal en los Estados Unidos?
¿Determina mi estatus migratorio si debo o no pagar impuestos?
¿Qué beneficios obtendré al presentar una declaración de impuestos?
¿Existen multas por no presentar declaración?
Toda persona que resida en los Estados Unidos, reciba ingresos y cumpla con ciertos requisitos tiene la obligación de presentar una declaración de impuesto federal. La obligación de presentar la declaración no depende de su condición migratoria, sino más bien del nivel de sus ingresos. Presentar la declaración es la ley, y el no cumplir con ella le expone a sanciones, tanto civiles como penales.
La ley requiere un número de identificación a cada persona que aparezca en la declaración de impuesto federal. Por lo general, el Número de Seguro Social, expedido por la Administración del Seguro Social, es el número que aparece en la declaración de impuestos.
Si el contribuyente tiene la obligación de presentar una declaración de impuestos pero no cumple con los requisitos necesarios para obtener un Número de Seguro Social, el contribuyente, si reúne los requisistos, puede solicitar y obtener un Número de Identificación Personal del Contribuyente (ITIN) de parte del Servicio de Impuestos Internos para presentar la declaración.
Usted puede preparar y presentar su declaración por sí mismo o puede solicitar los servicios de algún profesional de impuestos. La declaración se puede presentar en formularios de papel y enviarse por correo. Algunos profesionales de impuesto ofrecen preparación y presentación.

- Mark S Gleason CPA
  www.lakes-cpa.com

Minnesota K-12 Education Credit

The Minnesota Department of Revenue issued a reminder on it's Weekly Digest Bulletin about problems they are having with taxpayers claiming the K-12 education credit for items that do not qualify.

Here is what their bulletin said:
Minnesota offers a refundable education credit that reduces a taxpayer's income tax liability.  Taxpayers who meet the criteria can qualify to claim it.  We frequently see expenses claimed that do not qualify for the credit. Avoiding these common errors will help the taxpayer get their refund sooner.
Examples of expenses we see taxpayers claiming that DO NOT qualify include:
School uniforms including choir, band, dance, and graduation robes,
Fees for athletic programs including swimming and gymnastics,
PSAT, ACT, and SAT testing fees,
Computer hardware and/or software claimed for the full value (expenses are limited to $200 on line 14 of the M1ED),
Recreational programs such as Boy Scouts and Girl Scouts.

What they didn't say is that because a majority of the claims for this credit claim the credit for ineligible expenses, each one of these claims is manually examined (audited).  This was true some years ago and I don't know if it's still true, but this has been an ongoing problem for the MN Dept of Revenue. When I was a member of the MN House of Representatives during the Ventura years, the Department of Revenue wanted to repeal this credit because of the administrative headaches caused by all the ineligible claims.

Mark S Gleason CPA
www.lakes-cpa.com