The Scoop. Agenda. When Age Matters 2/8/2016. Kristy Maitre Tax Specialist Center for Agricultural Law and Taxation February 10, 2015

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1 The Scoop Kristy Maitre Tax Specialist Center for Agricultural Law and Taxation February 10, 2015 Agenda Age matters Good reminders Ordering Publication 17 Estate Closing letters Refunds ACS support sites Scam Phone calls Will be easier to get a replacement Social Security card in the future Superseded Returns Rejects Using Form 8879 as a signature document FAFSA date change to apply for financial aid Deceased clients Form 8948 review Excise Tax information Farmer extension Abatement of certain penalties available for 2014 E File Tax Court Fin Cen issue When Age Matters 0 Birth Dependence exemption for newborn child Age 13 Child Care Credit no longer allowed Age 17 Child Tax Credit does not apply Age 18 Social Security taxes apply if employed by parent No more contribution to a Coverdell Education Savings Account No adoption credit 1

2 When Age Matters Age 19 No more dependent exemption unless a full time student Age 24 Still a full time student Cannot claim as a dependent any longer Kiddy tax rules no longer apply Age 25 Age necessary to claim the Earned Income Tax credit Age 27 Child drops off parent s health insurance plan When Age Matters Age 30 Coverdell Savings Accounts must be distributed or rollover to another qualifying family member Balance of myra must be rolled into a ROTH account Age 40 May deduct long term care insurance premiums as a medical expense Age 50 Additional catch up contributions can be made to retirement accounts Qualified public safety employees are not subject to an early withdraw penalty of their employer s retirement plan When Age Matters Age 55 No early withdrawal penalty for if the taxpayer separates from service Age 59 1/2 No penalty for early withdrawal from retirement plan Age 62 Eligible for reduced social security benefits Age 65 Higher standard deduction The 7.5% adjustment still applies thru % after 2016 No more Earned Income Tax Credit without a qualified child No Heath Savings Account contributions once eligible for Medicare 2

3 When Age Matters Age 70 No more deduction for long term care insurance Age 70 ½ Required minimum distributions must be made or penalty Qualified charitable distribution applies May roll retirement account into a Qualified Longevity Annuity Contract Age 85 Must begin distributions from a Qualified Longevity Annuity Contract Publication 17 Publication 17 is not available in paper format from the IRS However, you can buy a copy from the Government Printing Office for $10 this year Transcripts in Lieu of Estate Tax Closing Letters using E Services or Form 4506 T Businesses %26 Self Employed/Transcripts in Lieu of Estate Tax Closing Letters Account transcripts, which reflect transactions including the acceptance of Form 706 and the completion of an examination, may be an acceptable substitute for the estate tax closing letter Transcript Delivery Service (TDS) Form 4506 T For all estate tax returns filed on or after June 1, 2015, estate tax closing letters will be issued only upon request by the taxpayer In lieu of an estate tax closing letter, account transcripts are available online to tax professionals An account transcript from the Transcript Delivery System (TDS) reflects transactions including the acceptance of Form 706 and/or the completion of an examination 3

4 Refund Check Campus Location Identifier Requests on how to return a refund check, the customer service representative (CSR) or tax examiner at the Campus RI Unit will advise taxpayer to write "void" in the endorsement area on the back of the check Advise taxpayer to mail the check with a letter of explanation to the issuing campus Refund InquiryUnit The issuing campus location is on the front, at the bottom of the check, and displays all or the first six letters of the campus Advise the taxpayer not to write on the front of the check IRM Returned Refund Checks The Receipt and Control (R&C) function within a Campus receives the returned refund check and directs them to the Campus Refund Inquiry (RI) Unit Returned refund checks must be worked by campuses in the appropriate BOD Individual Master File (IMF) returned checks will be worked at IMF campuses BMF will be worked at BMF campuses IRS will send misrouted cases to the appropriate campus IRM Returned Refund Checks Letter 4427C, Acknowledgement of Returned Refund Check, should be sent to the taxpayer, unless a completed Form 3913, acknowledgement of Returned Refund Check, is received with the case from an IRS Taxpayer Assistance Center (TAC) In those cases, Form 3913 will serve as an acknowledgement letter No interim letter is required, unless the 60 day time frame indicated on Form 3913 cannot be met 4

5 ACS Support Sites Five Easy Ways to Spot a Scam Phone Call 1. Call you to demand immediate payment. IRS will not call about taxes you owe without first mailing you a bill 2. Demand that you pay taxes without giving you the chance to question or appeal the amount they say you owe 3. Require you to use a certain payment method for your taxes, such as a prepaid debit card 4. Ask for credit or debit card numbers over the phone 5. Threaten to bring in local police or other lawenforcement to have you arrested for not paying Lost Your Social Security Card? The new online version of the Application for a Replacement Social Security Card allows people in some states to request a replacement card online through our secure my Social Security portal without traveling to a field office Currently available in the District of Columbia, Michigan, Nebraska, Washington, and Wisconsin, it s an easy, convenient, and secure way to request a replacement card online 5

6 Lost Your Social Security Card? To take advantage of this new service option, you must: Have or create a my Social Security account Have a valid driver s license in a participating state or the District of Columbia (or a state issued identification card in some states) Be age 18 or older and a United States citizen with a domestic U.S. mailing address (this includes APO, FPO, and DPO addresses) and Not be requesting a name change or any other changes to your card my Social Security First, you ll need to create a my Social Security account The application process has built in features to detect fraud and confirm your identity In certain cases, security experts at Social Security will contact you to ensure it is a legitimate application SSA will only issue a replacement card if there s no suspicion of fraud and then they only mail it to a verified address my Social Security Log into your personal my Social Security account and select Request a Replacement Card Next, answer the screening questions to confirm eligibility, complete personal data, and you re done More states will be added in the future 6

7 Superseding Returns A superseding return is a return filed subsequent to the originally filed return and filed within the filing period (including extensions) The filer must indicate that the return supersedes the original return by checking the appropriate box on the return or designating Superseded Return on the top of the first return page An amended return is a return filed subsequent to the originally filed or superseding return and filed after the expiration of the filing period (including extensions) Superseding Returns If a taxpayer files two returns for the same period on or before the due date, the IRS generally will consider the second return filed as the original return IRM and Rev. Ruls and For example, if taxpayer files an income tax return on February 1 and then files a second return on March 15, the March 15 return will supersede the February 1 return The IRS treats the last return filed on or before March 15 as "the return" for all Code purposes Superseding Returns and the Statute of Limitations In recent Chief Counsel Advice (CCA) , the IRS concluded that a taxpayer s superseding tax return filed on the extended due date is the return that starts the assessment SOL 7

8 Rejects in General Rejected electronic individual income tax return data can be corrected and retransmitted without new signatures or authorizations if changes do not differ from the amount on the original electronic return by more than: $50 to "Total income" or "AGI", or more than $14 to "Total tax," "Federal income tax withheld," "Refund" or "Amount owed The EROS must give taxpayers copies of the new electronic return data Using Form 8879 as A Signature Document If you have a rejected return and are unable to get the taxpayer into your office to sign the original return, you can use the procedure below for the FEDERAL RETURN ONLY, I would attached the IRM section to the federal return NOTE: This procedure will not work for the State of Iowa or other states as this is just for federal returns Correspond for a required missing signature unless: a. "Substitute for Return Prepared by IRS" is noted, a signed form 1040X is attached for the same period,, "See 1040X" is noted, or "dummy" return b. "Section 6020(b)" or "prompt assessment" is noted or Form 4810 is attached c. Return is "amended", "corrected", "revised", "tentative", or "superseding" (See the amended return instructions in IRM ) d. Form 8879 is attached with a valid original signature, and there is any indication of rejected electronic filing or prior year Signature IRM ( ) This IRM covers other issues related to signatures 8

9 Federal Student Aid Application Date Change Make Sure Your Clients Are Aware Free Application for Federal Student Aid (FAFSA), is changing its application date to better accommodate the availability to obtain a copy of the federal tax returns filed by families and students If at the time the tax return was submitted to the IRS, the amount owed had not been paid in full, there is generally a delay in processing The tax return itself is accepted within a day or two of the return being electronically filed, but IRS is mandated to issue refunds as a first priority to avoid paying interest If the return is filed on paper and even longer acceptance and processing time can occur Refunds issued within 45 days of the filing deadline, this year April 18, 2016, will not accrue interest Therefore the more refunds issued within that time frame the more interest is saved Federal Student Aid Application Date Change Make Sure Your Clients Are Aware Balance due returns are generally delayed for processing until after the 45 day time frame has passed or even later in some situations, depending on the volume of refund returns filed late in the season Individuals with balance due returns that have not been processed cannot utilize the IRS Data Retrieval Tool (DRT) to obtain a copy of the return for the college That processing time can range from May September depending on the year This places and additional burden on students and families who depend on some guarantee of financial aid Beginning with the 2017/18 academic year, the application to begin the process of financial aid will be available as early as October 1, 2016 The applicant will be allowed to use income information from tax returns that have already been filed in an earlier year; thus, students (parents) may submit 2015 (rather than 2016) tax return information, as the new filing dates transition Website The Department of Education has provided a table to better demonstrate how the change will be implemented and what tax year s information will be needed for the academic periods The website at: ements/fafsa changes provides additional information. 9

10 Table Deceased Clients IRS is freezing the accounts of deceased individual Prevents potential long identity theft reviews Impact is on surviving spouse File and paper with Form 8948 and file documentation Form

11 Form 8948 Required Statement Excise Tax Returns Biodiesel and Alternative Fuels; Claims for 2015; Excise Tax Notice HOW TO MAKE A ONE TIME CLAIM FOR CREDITS AND PAYMENTS ALLOWABLE UNDER 6426(c), 6426(d), AND 6427(e) CLAIM PERIOD AND DUE DATE FOR BIODIESEL AND ALTERNATIVE FUEL INCENTIVES HOW TO MAKE AN ALTERNATIVE FUEL MIXTURE CLAIM UNDER 6426(e) CLAIM PERIOD AND DUE DATE FOR ALTERNATIVE FUEL MIXTURE CREDITS Excise Tax Returns NOTICE HAS NO EFFECT ON THE FOLLOWING FILINGS This notice has no effect on the 2015 nonrefundable income tax credit under 40(b)(6) for : Second generation biofuel producers The nonrefundable income tax credits under 40A(b)(1) for biodiesel mixtures 40A(b)(2) for biodiesel (including renewable diesel) 40A(b)(4) for the small agri biodiesel producer credit Those credits use Form 8864, Biodiesel and Renewable Diesel Fuels Credit Similarly, this notice does not affect 2015 claims for the refundable income tax credit under: 34 for biodiesel mixtures or alternative fuel Taxpayers should continue to submit these claims separately on, and in accordance with, Form 4136, Credit for Federal Tax Paid on Fuels 11

12 Farmer Extension Forms 1095 B and 1095 C have delays in being filed and provided to the client The returns can be filed without these forms Perform your due diligence to address whether they have heath insurance and for what months No farmer or fisherman extension applies Form 1095 A must be received before a tax return can be prepared Notice Request Abatement of Penalty A penalty under 6651(a)(2) of the Internal Revenue Code for late payment of a balance due A penalty under 6654(a) for underpayment of estimated tax Must request abatement not automatic Taxable year 2014 for taxpayers who (i) Are otherwise current with their filing and payment obligations (ii) Have a balance due for the 2014 taxable year due to excess advance payments of the premium tax credit (iii) Report the amount of excess advance credit payments on their 2014 tax return timely filed, including extensions IRS Statement on Experiencing Systems Outage The IRS experienced a hardware failure affecting a number of tax processing systems, which were unavailable Several of the systems were not operating, including: Modernized e file system Where s My Refund Direct Pay You can continue to prepare and file the tax returns as you normally would You can continue to send the tax returns to your e file provider; these companies will hold the tax returns until the IRS resumes accepting electronic tax returns 12

13 Tax Court Electronic filing of Tax Court petitions is coming soon Currently, the Court accepts petitions for a redress of taxes only via the mail or by hand delivery It s now proposing to allow petitions and other pleadings to be e filed with the Court Kiplinger Newsletter Jan 29, 2016 FIN CEN Current FIN CEN report does not allow for alternative reporting methods Parent company reporting for a subsidiary FIN CEN requesting comments on a revised report and layout pdf Fall Tax Schools Though they are names the Farm and Urban Tax Schools the schools cover more than farm issues Common return issues for all kinds of returns are covered All kinds of business entities Problematic issues Sometimes we even get into to issues that you many encounter only once or twice a year or tax season The Tax Schools are a blend of diverse topics of interest to all tax professionals New instructors with diverse backgrounds Your adventure awaits at Iowa State s Center for Agricultural Law and Taxation 13

14 Farm and Urban Tax Schools 2016 November 2, 2016 to December 13, Locations in Iowa and Online Webinar Save the Date for the 2016 Annual Farm and Urban Income Tax Schools The program is intended for tax professionals and is designed to provide up to date training on current tax law and regulations November 2 3: Maquoketa November 7 8: Red Oak November 9 10: Sheldon November 14 15: Mason City November 17 18: Ottumwa November 21 22: Waterloo December 5 6: Denison December 12 13: Ames and Live Webinar Summer Webinars S Corporation Reasonable Compensation ABLE Accounts Travel, Meals and Entertainment Preparing for a Gambling Audit Your Client Dies, What s Next? Innocent Spouse Above the Line Deductions Roth IRA s Net Operating Losses The Portability Election IRS Return Preparer Penalties Overview Miscellaneous Income New Developments Summer Webinars Employee vs. Independent Contractor Cancellation of Debt Tax Research with Limited Resources Injured Spouse IRS Representation Let s Talk Dependents Inventory Issues Preparing for an IRS Audit Getting your Client Right with IRS Appeals How to Write Your Appeals Request Start Up Costs Hobby Losses 14

15 Beginning Tax Preparers Class CALT is working on offering a basic class for NEW tax preparers this fall in October The week long webinar will cover the basics an individual needs to know such as: Requirement to file Dependents Filing Status Itemized deductions Earned Income Tax Education Credits Other issues a first or second year preparer needs to know as well as a refresher for others who need to brush up on issues The class will be a week long or more and will be offered at a special rate The Scoop Throughout the filing season two Scoops will be held on Scoop Dates 8:00 8:30 am Central time 12:00 12:30 Central time This assists with accommodating our west coast practitioners The same information will be shared at both sessions You have the option of registering for whatever session suits your schedule node fieldseminar date/month Future Scoop Dates Feb 24, 2016 Mar 09, 2016 Mar 23, 2016 Apr 06, nodefield seminar date/month 15

16 The CALT Staff John D. Lawrence Interim Director Associate Dean, College of Agriculture & Life Sciences Extension Programs and Outreach Director, Agriculture & Natural Resources Extension 132 Curtiss Hall Iowa State University Ames, Iowa Kristine A. Tidgren Staff Attorney E mail: ktidgren@iastate.edu Phone: (515) Fax: (515) The CALT Staff Kristy S. Maitre Tax Specialist E mail: ksmaitre@iastate.edu Phone: (515) Fax: (515) Tiffany L. Kayser Program Administrator E mail: tlkayser@iastate.edu Phone: (515) Fax: (515)