Where’s My Refund?

Where is my refund

If you’re expecting a refund from the IRS, you really want to know when that money is coming in.

http://www.irs.gov/Refunds

When you go to IRS.gov, click on the refunds tab on the top.  This is where you can check the status of your refund online.

 

Once you file your US Income taxes, the most important thing to you is, “Where’s My Refund?”  If you’re trying to find out about a current year tax return that was e-filed, the easiest way to find out about your refund is through the IRS “Where’s My Refund?” website.  Before you go to the website you’ll need to have your Social Security Number, your filing status (Married filing jointly, Single, Head of Household, etc.), and the exact amount of your refund in order to gain access.

 

You need to wait at least 24 hours after the IRS receives your e-filed tax return.  That means 24 hours after you get IRS confirmation that they’ve received it—not 24 hours after you filed.  If you go to someplace like H&R Block and file your taxes on January 5th,—but the IRS hasn’t opened up their e-file acceptance, then your taxes are not really filed yet as far as the IRS is concerned.  The tax company is just holding your return in a batch folder waiting for the IRS to open.

 

If you mail your tax return, don’t expect to see any results on “Where’s My Refund” until 4 weeks after you mail your paper return.  Once again, the IRS isn’t “receiving” paper returns until they open the e-file, so even if you mail your return on January 1st, don’t expect to see your results online before an e-filed return.

 

The IRS has announced that they will not personally respond to calls about tax refunds until 21 days after your return has been received.  To put that in plain English—

 

The IRS ain’t gonna talk to you about your refund until they’re good and ready to, no matter how early you filed your return.


I put that in big, bold, red letters because last year I received several calls from people who filed their taxes early with a store front tax company down the street from my office, then couldn’t find their refunds on the IRS website and that store front office didn’t return their calls.  People were frantically trying to get information and couldn’t get answers.

 

So, if you go someplace to file your personal US income taxes and they tell you the IRS is receiving them before the acceptance date, they’re either lying or stupid.  I know, that’s harsh but it’s true.  They’re not actually filing the returns— they’re sending them to a “holding bin” until the IRS can actually receive the transmissions.  It’s called stockpiling.  It used to be illegal, but since the IRS keeps putting off the filing date they’ve made it okay to do now.   The point is—your return isn’t really filed yet, and it won’t be received by the IRS until they officially open the filing season.

 

Now, if it’s after the official start date, and you’ve waited 24 hours after receiving notice that your return has been accepted by the IRS, you can go to the “Where’s My Refund?” page to check on the status of your return.  Here’s the link:  Where’s My Refund?

 

If the site doesn’t have an answer for you, wait another day and try again.  The website is only updated once every 24 hours so checking on it more than once a day is a waste of time.

 

One final thing—all of the accounting firms have to deal with the IRS late e-file acceptance issue.  Whether it’s a big box company like H&R Block, a small tax company like Roberg Tax Solutions, or a Big Four accounting firm like Deloitte; we all have to live with the same rules.  The IRS will not accept anyone’s return any earlier than the official start date.

 

Generally, the e-file acceptance date begins on the day after the Martin Luther King, Jr. holiday, but has been as late as January 31.  The start date for 2018 was not yet set at the time of this update.

Does a Non-US Citizen Have to Report Foreign Bank Accounts on a US Tax Return?

Photo by David McKelvey at Flickr.com

 

There’s been a lot of discussion lately about foreign bank accounts.  A recent court case settled criminal charges on a man for not reporting his foreign bank accounts to the US government.   This is big—it used to be that the fines and penalties were very stiff, but criminal charges are even worse.

 

A question that I’ve been getting lately is this:

 

“I’m a US resident alien, I am not a citizen.  According to the IRS Publication number 17, US Citizens have to report foreign bank account, but it doesn’t say anything about resident aliens. So do I still have to report?”


While I think that the wording in the Publication 17 is an excellent argument for not reporting, I know that the IRS expects resident aliens to report their foreign bank accounts and pay income tax on the earning of those accounts.  Even though IRS publication 17 expressly refers to US citizens, other IRS publications refer to “US persons.”

 

According to the IRS, as US person is:

 

“United States person means U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.”


I copied that right off the IRS website so that’s not an interpretation of the meaning, that’s the IRS definition.

 

My experience has been that the IRS does expect foreign nationals living in the US and filing a regular 1040 income tax return to report foreign income and foreign bank account holdings.

 

My advice is that you are considered to be a US resident for income tax purposes; you need to report your foreign bank account earnings and holdings.  The fines and penalties are very high, and the new court case involving criminal penalties makes the risk of not reporting that much higher.

 

If you have not been reporting your foreign bank accounts, but should have, you can apply for the Offshore Voluntary Disclosure Program.  It allows you to go back and report those accounts from past years and pay the tax and reduced penalties.  While the penalties for the Offshore Voluntary Disclosure Program are steep, they’re still much lower than if the IRS “catches” you not reporting.  The fewer years that are involved, the lower the penalties will be.

Depreciating a Bitch

Dog breeders - You are entitled to certain deductions that many others are not qualified for. Get the deductions you deserve and maximize your tax benefits. Photo by Mike Bitzenhofer at Flickr.com

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First and foremost, we’re talking about dogs here.

I’m often asked by dog breeders about how to write off the cost of purchasing a dog for breeding purposes.   If you are planning on going into the business of breeding dogs, then your dogs are livestock and would fall into the same rules as farm animals.

 

Depreciation for a dog begins when the dog reaches maturity.  If you buy a puppy for breeding, depreciation begins when the dog can be bred.  If you purchase a dog for working, (such as herding or security) depreciation begins when the dog can actually be worked.

 

You cannot buy a puppy and write off the entire cost because you say that you intend to breed it.  You must actually be breeding the dog to claim an expense.

 

How long do you depreciate a dog for?

Because dogs are not specifically listed in the IRS depreciation tables, the timeline on depreciating a dog is seven years.

 

Can I just write off the whole cost the year I start breeding?

Yes, that would be called a Section 179 Expense deduction.  But there’s a catch with claiming a Section 179 expense deduction that most people don’t know or forget about.  Remember, dogs are depreciated over seven years.  If you write off the entire cost of the dog the first year of breeding, but then you quit breeding your dog—you’re required to “recapture” any remaining depreciation.

 

What does recapture mean?

Well, let’s say your dog cost $2,000 and you claimed the full expense the year you start breeding her.  After two years, you decide it’s not worth it and you have her spayed.  You only got two years of breeding from the dog, so you have 5 years of depreciation that you have to reclaim.

 

If you used the MACRS depreciation schedule, you would have claimed $286 the first year and $486 the second year for depreciation.  That makes a total of $772.  To reclaim the Section 179 expense, that means that you would subtract the depreciation you could have claimed from the $2000 that you wrote off before and you’d have to claim the $1,228 left as income.

 

Yes, it does stink, but that’s the rule.  And remember—a dog breeding business is a more likely candidate for an audit than most other businesses so you’re going to want to maintain your books nice and tight.

 

A few other points about dogs as business property:

  1. If you buy dogs to resell, that’s considered inventory and you don’t expense them until you actually sell them.
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  3. If you buy a dog for breeding, and then sell the dog later, you have to reclaim the depreciation as ordinary income.  Example:  buy dog for $2000, claim section 179 expense of $2000, sell dog for $3000, you would claim $3000 as ordinary income.
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  5. You may purchase a breeding dog and choose not to depreciate the dog, just keep the dog as an investment.  When you sell the dog, the profit is taxed at capital gains rate instead of ordinary income (which is a lower tax rate.)  Example:  dog costs $2000, sold for $3,000, only $1,000 of income is realized and would be taxed at lower capital gain rate.
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There’s a lot here to think about.  Don’t go trying to claim the cost of your dog on your tax return unless you truly are in a dog business.  Expensing a dog is going to be a red flag for an audit—so dot your “I”s and cross your “T”s and make sure you’ve done all your homework.

 

If you do plan on depreciating your dog, click here to get my handy dog depreciation schedule to help you figure your expenses.

Medical Expense Deduction is Changed for 2013

Starting with your 2013 tax return, the floor for claiming medical expenses has gone up to 10% from 7.5%. -Photo by epSos.de at Flickr.com

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Do you claim medical expenses on your tax return?  If you do, then you need to know that the rules changed for 2013.

 

It used to be that you medical expenses had to be higher than 7.5% of your adjusted gross income in order for you to be able to claim them.  So if you made $50,000 a year, your medical expenses would have to be higher than $3,750 before you could claim anything for that.  Starting with your 2013 tax return, the floor for claiming medical expenses has gone up to 10%, so now your medical expenses would have to be higher than $5,000 in order to claim anything.

 

So let’s say you had major surgery this past year.  After all the insurance reimbursements, you were still out of pocket $7,000.  Using the above example, you’d only be able to claim $2,000 of medical expenses on your tax return.

 

Even if your medical expenses were over 10% of your income, you still need enough other deductible expenses to make your medical expense deduction worthwhile.  Let’s say you’re single and your standard deduction for 2013 is $6,100.    Suppose you had $3,000 withheld for your state income tax, you gave $1,000 to charity, and you had the $2,000 of medical expenses that you could claim.  That only totals $6,000—you’re still better off claiming the standard deduction of $6,100.  Keep that in mind as you gather up your medical receipts; it’s not just having enough medical expenses to deduct, it’s having enough expenses overall to make it worth your while.  This is commonly referred to as itemizing deductions.

 

If you, or your spouse, are age 65 or over, there’s a temporary exception to the 10% rule.  You can continue to use the medical expenses that exceed 7.5% of your adjusted gross income.  You can keep doing that all the way through 2016, after that, you’ll also have to use the 10% threshold.

 

Please check out my post about maximizing your medical expense deduction:  http://robergtaxsolutions.com/2013/02/maximizing-your-medical-expense-deduction/

 

Even if you can’t claim your medical expenses with your itemized deductions on schedule A, some people are entitled to claim their medical expenses elsewhere.  You don’t want to miss out on any deduction that available to you.

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YEXT

 

 

 

We’re signed up with Yext. They’ve got a fancy little gizmo that let’s us post things. Anyway, this is going to be our Yext page for now. So consider this to be an experimental page. If it works, we’ll make a regular page out of it. Thanks for visiting.

5 Reasons to Bring Your Old Tax Return to Your St. Louis Tax Preparation Appointment

St. Louis Arch

Beautiful effect on the St. Louis Arch downtown. -Photo by Photo by Eyton Z at Flickr.com

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I hear this question a lot, “Why does my tax preparer want to look at my old tax return?”  The answer is:  Lots of reasons.  Let me give you a few examples.

 

1. Carry forwards:  A carry forward is something that was on your last year’s tax return that can affect your taxes this year.  A really important one is capital losses.  Let’s say you sold some stocks last year at a big loss and couldn’t use all your losses on last year’s return.  You get to carry those forward until they’re used up.  I once had to amend a bunch of tax returns for a woman with $100,000 of loss carry-forwards.  She had never brought her returns to her preparer before.  Because the returns went back for more than three years, some of her deductions were lost forever.

 

But it’s not just capital losses.  All sorts of things from last year can affect this year’s taxes like depreciation, estimated tax payments, what you paid to the state, did you itemize or not, and did you pay any alternative minimum tax (AMT), just to name a few.

 

2. Continuity:  the IRS looks at things funny when you’ve got changes.  Changing something simple like putting the wife’s name on top one year, and then putting the husband’s name on top the next can be seen as an attempt to hide something.  I always list taxpayers in the same order as the prior year return to avoid trouble.      I once helped taxpayers who had a simple notice about their taxes.  It was normally an easy thing to fix—make a quick phone call and mail a document and you’re done.  What I would call a no-brainer as far as audit letters go.  But for this couple, it took weeks to settle the issue; I couldn’t understand the problem.  Finally, the agent on the case explained that they were “digging into the taxpayers” because they had flip flopped the names on the return for different tax years, which is a common habit with fraudsters.

 

Fortunately for the couple had nothing to hide—but a teensy little question on their tax return (not even a mistake, just a question) led the IRS to look back through several years of tax returns because of the  flipped names.

 

3. Finding missed deductions:  If you have a professional do your taxes, we want to find a missed deduction.  It’s what we do.  For us it’s the chocolate sauce on the ice cream.  It’s well…., click on this video to see how finding extra money for you feels http://www.flickr.com/photos/83052216@N00/4354753195/in/photolist-7CPfpD-9LYL7p

 

4. Making sure your new preparer doesn’t miss something:  I have some clients with some pretty complicated paperwork.  They have tax forms that aren’t included in home tax preparation software and aren’t even found in some professional packages.  I have to get some of these forms from the IRS and prepare them by hand.  (I actually print out extra copies of those forms and tell my clients, “If you ever change preparers, your new preparer needs to see these.”)   But even if your tax return is fairly easy, letting your preparer see your last year’s return is  a good idea—you don’t want her to miss something.

 

5. Comparison:  Putting your tax returns together for comparison purposes is a valuable tool for you.  How did you do this year?  Did you make more than last year?  Did you make less?  What did you do differently?  What should you do differently?  You’ve probably heard the old saying, “Those who don’t study history are condemned to repeat the same mistakes.”  The same goes with your tax return.

 

So please, bring your old tax return with you when you make a tax appointment.  It will make your preparer happy and it could save you some money!

Reporting Worthless Stock on Your Tax Return

Losing money in the stock market is frustrating.  Remember to take advantage of those losses on your tax return.

Losing money in the stock market is frustrating. Remember to take advantage of those losses on your tax return.

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Did you own stock in a company that’s now worthless?  For Example:  In 2013, Kodak’s old stock was cancelled when the company emerged from bankruptcy.  If you owned the old Kodak stock; it’s worthless now.  So how do you claim that loss on your tax return?

 

You’re going to report it as a sale of stock on form 8949.  Here’s a link to that form:  http://www.irs.gov/pub/irs-pdf/f8949.pdf The 8949 form flows through to something call the Schedule D which will then flow through to your regular 1040 tax return.  Tax software should handle it for you, but if you’re still doing returns by hand, remember you’ll need to send both the 8949 and the Schedule D in with your tax return.

 

For the sale date, you’re going to put 12/31/2013.  Under Proceeds, you’re going to put $0.  You’ll fill in the other boxes with the name of the stock, how many shares you owned and what your basis in the stock was.  Basis is what you paid for it, plus any commission fees that you may have paid to the broker.  (For what it’s worth, Kodak emerged from bankruptcy on September 3, 2013.  Tax preparers usually don’t have access to that information when preparing a return with worthless stock on it, that’s why 12/31 is generally used as the sale date.  If you know the actual date your stock became worthless, you may use it, but don’t let it keep you from preparing your return.)

 

Because stock became worthless, you’re going to have a capital loss.  You’ll use that loss to offset other capital gains.  If you have no other gains, you can use up to $3,000 of loss to offset your other income.   If you have more than $3,000 of loss, you can carry forward the excess losses and keep using them until they run out.

 

It’s important to know the difference between worthless stock and nearly worthless stock.   In Kodak’s case, once they filed for bankruptcy back in 2012 the shares had very little value.  You can’t write off “nearly worthless” stock unless you actually sell it.  (Which isn’t easy to do.)

 

Once the company emerges from bankruptcy, the stock in question is cancelled and you can write off the loss.

Why You Deserve An Enrolled Agent

Have you seen the new TurboTax commercial about how awesome you are?  It’s a great commercial.  And yes, you are totally awesome.

 

Turbo tax says that you are so awesome that you can do your own taxes.  To be quite honest, lots of people can. Some people shouldn’t. Here’s a video of someone who shouldn’t have.

Tim Geitner explaining his tax problems to Congress.

 

Here’s the thing.  Can you do your own taxes as well as I can do them for you?  No—probably not.  (Sorry, that sounds snobby but I’m really good at what I do.)

 

But can you do them well enough?  Maybe you can.  Pretty much, if you only have W-2 income and don’t itemize your deductions then you’re probably fine doing your own taxes.   There are some tax situations where no matter how good I am at taxes; I’m just not going to get you any more money back than you’d get for yourself.   (My mother would say, “You can’t bleed a turnip.”  Yes, my Mom said some weird stuff.)

 

Now,  you’re a “do it yourself” kind of person, and you don’t have complicated taxes, you can go straight to my 1040.com web-site and do it yourself from here:  https://fileonline.1040.com/1040/Home/?did=95443 It’s an alternative to Turbo Tax and it’s a little less expensive.  You can try it for free and see how you like it.  You don’t have to pay unless you actually file your return there.

 

But—if you are self-employed, have investment income, retirement income, rental income, education expenses, are divorced with children, are a high income earner, have cancelled debt, going through bankruptcy or a number of other issues—you can really benefit from the services of a qualified tax professional.

 

Here’s a couple of things that I don’t like about Turbo Tax:

  1. There are 4 ways to claim an education expense on your tax return.  TT doesn’t always give you the best one for you.  It usually does, but not always.
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  3. TT categorizes you:  home owner, business owner, someone who owns stock or rental property, or someone in the military.  Many people fit into more than one category and I’ve got a couple that could claim “all of the above”.  A tax professional won’t pigeon-hole you.
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  5. TT is not made for splitting a child’s exemption between divorced parents.  That’s a matter for an Enrolled Agent.
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  7. If you’re a high income earner subject to Alternative Minimum Tax (AMT), TT will just compute the tax, it’s not equipped to help you find ways to reduce the AMT like an EA can.
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  9. Here’s the biggest one:  most of the audit cases that I handle during the year come from people who prepared their own tax returns using Turbo Tax.  I appreciate the business, I really do, but taxes are complicated.  They shouldn’t be, but they are.  And sometimes you need help.
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When I was a kid, my dad had a whole list of things I had to be able to do before I was allowed to go away to college.  One of those things was to be able to change a tire.  I can change a tire all by myself, thank you very much.  But, awhile back, I got a flat on Higway 44 during a snowstorm.  It was cold and blowing and the trucks were whipping past me at 70 miles an hour.  I was very grateful that I had signed up for AAA.

 

An Enrolled Agent navigating complicated tax rules is kind of like the AAA guy changing your tire for you during a snowstorm.  I kind of like changing a tire.  I know that sounds silly but I do.  But I’m also smart enough to know when I need help.

 

You’re awesome, you truly are.  You are so awesome, I think you deserve an Enrolled Agent.

Why Is My Tax Preparer Asking Me Such Nosy Questions?

With all the questions the IRS requires tax preparers to ask, getting your taxes done can seem more like an interrogation than tax prep.

With all the questions the IRS requires tax preparers to ask, getting your taxes done can seem more like an interrogation than tax prep.

 

I took a phone call from a fellow awhile back who was absolutely furious about some of the questions his tax preparer had asked him.  The preparer had asked a whole bunch of questions about his kids and even asked to see their report card from school.  He said, “My daughters are 4 and 2 years old.  They don’t even go to school yet!”

 

So what’s going on here?

 

It’s all related to an IRS form—# 8867.  Form 8867 has to be filled out and sent in with every tax return that has the Earned Income Tax Credit.  Now, this form has been around for awhile, but it used to be that a tax preparer was just supposed to ask some questions and you’d keep that information to yourself.  Now, the IRS expects you to send the form in with the tax return.  If a tax preparer doesn’t complete the form and send it in with an EIC return—the IRS charges a $500 penalty to the tax preparer.

 

 

That’s $500 per return.  You miss too many of those and you could be out of business.    For most preparers, that’s more than what we charge to prepare an EIC return.

 

Now if you prepare your own tax return, you don’t have to worry about form 8867, it’s only for paid tax preparers.  But if you have your taxes done at H&R Block, or Jackson Hewitt, or even me—that form must be completed, and signed, and sent with your tax return.  (If your tax return is e-filed, we are required to keep the signed copy in our files.)

 

And the form seems to ask for more and more information every year.  Now there’s a whole section about documents:  documents to prove your kids live with you, documents to prove a disability, and documents to prove self-employment income.   Tax preparers are now expected to look at a taxpayer’s documents to verify the information on an EIC tax return.  School records, like report cards, are usually the easiest thing to use for documentation.  Of course, report cards aren’t very helpful when your children aren’t in school yet.  No documents, no form 8867.  No form 8867, no tax return.  No tax return, no refund.

 

It’s like the IRS is trying to turn regular tax preparers into the EIC police.  It’s not a job we asked for, but it’s a regulation that we’re required to enforce.  The penalties are so stiff that we’ll all be out of work if we don’t go along.

 

So remember, if you tax preparer asks to see your child’s report card, he doesn’t care if your son got a D in math or is a straight A student;  he’s just trying to help you get your refund.

The Single Most Important Tax Question You May Not Know to Ask

Do you have a bank account in a foreign country?  If so, you may be required to report that to the IRS.

Do you have a bank account in a foreign country? If so, you may be required to report that to the IRS.

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Do you have a bank account in a foreign county? Yes or No.

 

If the answer is no, you don’t have a foreign bank account, you can’t sign for anyone with a foreign bank account (like when your parent keeps you as a signer to the account in case something happens to them) —then you’re done here.  If your answer is “yes” or “maybe” — keep reading.

 

Did you know that you are supposed to report that you own a foreign bank account to the IRS on your tax return?  The question about foreign bank accounts is on something called Schedule B—that’s where you report your interest and dividends.  The problem is many people with foreign bank accounts don’t know that they’re supposed to report their foreign interest.  They don’t even look at the Schedule B so they don’t see the question!

Why is this such a big deal?  Because, if you own a foreign bank account and you don’t submit the proper forms to the IRS about them, you could be subject to thousands of dollars in fines and penalties.  Let me repeat that:  THOUSANDS OF DOLLARS IN FINES AND PENALTIES!


 

 

The IRS doesn’t take “I didn’t know” as a proper excuse for not reporting foreign income.  And if you’ve never seen the question for Schedule B—you don’t even know the question is there.  Even if you’re having your taxes professionally done—if you’re not reporting interest income, the question may never get asked because it shows up in the interest income section of the interview.

 

So, do you have a foreign bank account?  Yes or No?

 

If yes, then do you now, or did you at any time during the year have over $10,000 (US equivalent) in the account?  If yes, then you’ll have to file a form called the FinCEN 114.  (It used to be called the TD F 90-22.1 but it’s also known as the FBAR.)  This is a form that gets filed separately from your tax return.  (The new form isn’t up in the IRS website yet.)

 

If you had over $50,000 in the account, you’ll be required to file form 8938, a Statement of Foreign Financial Assets which gets filed along with your tax return.  http://www.irs.gov/pub/irs-pdf/f8938.pdf

 

The bottom line is—if you’ve got foreign assets, you need to be reporting them on your US tax return.  Even if you’re earning no interest on these accounts, you still have to report that you own them.  If you are earning interest or dividends on these accounts, you need to report that on your US tax return and pay the tax on them.  If you’re paying taxes on that money to a foreign country, you may get a credit on your US return for those taxes you already paid.

 

Reporting foreign income and accounts can be confusing, but you don’t have to do it alone.  Roberg Tax Solutions can help you.