New IRS Retirement Plan Navigator Aims to Help Small Businesses
The Internal Revenue Service has created a new Web-based tool to help small business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance. The
IRS Retirement Plan Navigator is intended to provide employers with an easy-to-use guide that focuses on three areas: choosing a plan, maintaining a plan and correcting a plan. By using the navigator, employers may find that choosing and maintaining a pension plan is not as daunting as they thought. Some plan types are less costly and easier to establish than others. The navigator does not suggest which plan may be best for a specific employer but it does lay out the options to allow them to choose one that best fits their situations. The navigator includes a side-by-side comparison of pension plans and their requirements.
Expanded Recovery Act Tax Credits Help Homeowners Winterize their Homes, Save Energy; Check Tax Credit Certification Before You Buy
People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well. The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit. The nonbusiness energy property credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The residential energy efficient property credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements.
Inflation Having Little Effect on Tax Rates and Benefits in 2010
Tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to inflation, the Internal Revenue Service announced today.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010.
For more information on inflation adjusted items for 2010, see the full article or Revenue Procedure 2009-50, available now on IRS.gov.
Per Diem Allowances for Travelling EmployeesRules for employees who are reimbursed for lodging, meals, and incidental expenses, or meals and incidental expenses only, while traveling away from home, to substantiate the expenses by per diem allowance in lieu of actual expenses. The revenue procedure also provides an optional method for employees and self-employed individuals who are not reimbursed to use in computing the deductible costs they pay or incur for business meal and incidental expenses, or for incidental expenses only if they pay or incur no meal expenses, while traveling away from home. Use of a method described in this revenue procedure is not mandatory, and a taxpayer may use actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.
IRS Announces Pension Plan Limitations for 2010
The Internal Revenue Service today announced cost-of-living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2010.
New Form Aids Processing of Mortgage Applications, Makes Ordering Tax Transcripts SimplerThe Internal Revenue Service today issued a new form to aid the processing of mortgage applications under the Home Affordable Modification Program (HAMP) as part of the Making Home Affordable Program. The new form will make it simpler for people, especially homeowners trying to modify or refinance their mortgages, to order copies of their tax return transcripts. Taxpayers often need copies of their tax return information, especially when they are obtaining a new mortgage or when they are refinancing or modifying an existing mortgage. Taxpayers can use
Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a Form 1040 series tax return transcript free of charge. A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income. Transcripts ordered through the Form 4506T-EZ can be mailed to a third party, such as a financial institution. The IRS cautions taxpayers that they should complete all required fields, especially the requested years, before signing and dating the form.
IRS 2009 IRPAC Report Made Available
The Information Reporting Program Advisory Committee (IRPAC) today released the advisory group’s 2009
recommendations on a wide range of tax administration issues.
Based on its findings and discussions, IRPAC made more than 50 recommendations on a broad array of issues and concerns Internal Revenue Service-wide, key among them:
- Creating a new form and modified rules on information reporting of payments made in settlement of payment card and third party network transactions.
- Providing guidance on tax information reporting and withholding.
- Reporting of customer’s basis in securities transactions.
- Creating online Form W-4 instructions for non-resident aliens.
- Withholding on certain payments made by government entities
- Providing additional guidance to government entities that must comply with the withholding provisions. Permitting payers to issue payee statements showing only the last four digits of a payee’s TIN.
Through IRPAC, systemic problems related to information reporting are addressed in a public forum. IRPAC draws its members from the tax professional community and supported by a staff of IRS employees.
Two Out of Three Individuals Now Using IRS e-FileIndividuals e-filed a record 95 million federal income tax returns during 2009, up almost 6 percent from last year’s total of nearly 90 million. About two out of three taxpayers e-filed this year; out of the 141 million returns filed so far this year, over 67 percent were e-filed, compared to 59 percent last year. Each year, more taxpayers chose to e-file their tax returns. While the total number of tax returns has increased 10 percent during the past decade, the number filed electronically has increased by 168 percent. Taxpayers who e-file from a home computer continue to be an increasingly significant segment of those who e-file.
Recent Articles from e-News for Small Businesses
Faster write-offs for certain capital expendituresMany small businesses that invest in new property and equipment will be able to write off most or all of these purchases on their 2009 returns. A new
IRS.gov page has more information on the bonus depreciation and increased Section 179 deduction.
Taxes: What you need to know
The Taxpayer Advocate Service, an independent organization within the IRS that helps individuals and businesses resolve problems with the IRS, has revamped its toolkit, Taxes: What You Need to Know.
Form 944 election for 2010
Employers who have an estimated employment tax liability of $1,000 or less for the calendar year are eligible to file annual Form 944 rather than the quarterly Form 941. In the past, filing this form was mandatory for employers who met the qualifications. Recently released Revenue Procedure 2009-51 provides procedures for qualified employers to make an election whether to file annual Form 944 or quarterly Form 941 to report employment taxes.
IR-2009-101, IRS Seeks to Return $123.5 Million in Undeliverable Refunds to Taxpayers; IRS Reminds Taxpayers to Use E-file and Direct Deposit