Showing posts from 2011

Back-to-School Tips for Students and Parents Paying College Expenses

Internal Revenue Service- Washington D.C.--Whether you’re a recent graduate going to college for the first time or a returning student, it will soon be time to get to campus – and payment deadlines for tuition and other fees are not far behind. The Internal Revenue Service reminds students or parents paying such expenses to keep receipts and to be aware of some tax benefits that can help offset college costs.
Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.

1. American Opportunity Credit  This credit, originally created under the American Recovery and Reinvestment Act, has been extended for an additional two years -2011 and 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. Qualified expenses include tuition and f…

The Montana State Fund Decreases Its Workers Compensation Insurance Rates

The Montana State Fund (MSF) Board of Directors has adopted an overall average decrease of twenty percent for premium rates effective July 1, 2011.  Rates may differ as individual class codes can vary up or down each year from the prior year rates, depending on the average losses for all the businesses in the class code.  The new rates apply to any policy with an effective date in Policy Year 2012 (July1 ,2011 to July 1, 2012).
House Bill 334 (HB334) enacted by the 2011 Montana Legislature is expected to significantly reduce workers' compensation costs.  Most of the provisions in that legislation become effective for injuries that occur July 1, 2011 and later.

For more information please contact our office or visit the Montana State Fund website at

IRS Increases Mileage Rate to 55.5 Cents per Mile

WASHINGTON --The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.
"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We…

Social Security Administration no longer mailing out earnings statements to workers

The Social Security Administration (SSA) has announced that it is no longer mailing out annual earnings statements to workers. The statements show how much workers have paid into the Social Security system and how much they are scheduled to receive in retirement benefits. The SSA said that the decision was made ""in light of the current budget situation."" It advises workers to estimate their retirement benefits using the ""Retirement Estimator"" on its website. Workers may use the ""Retirement Estimator"" if they have enough Social Security credits to qualify for retirement benefits and are not: (1) currently receiving Social Security benefits on their own Social Security record; (2) age 62 or older and receiving benefits on another Social Security record; or (3) eligible for a pension based on work not covered by Social Security. Published reports say that the SSA is working on providing the annual earnings statements elect…

Ten Important Facts About Capital Gains and Losses

Washington- Internal Revenue Service--Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When a capital asset is sold, the difference between the amount you paid for the asset and the amount you sold it for is a capital gain or capital loss.
Here are ten facts from the IRS about gains and losses and how they can affect your Federal income tax return.
1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.
2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.
3. You must report all capital gains.
4. You may deduct capital losses only on investment property, not on property held for personal use. (Investment property would include use in your business)
5. Capital …

Are Your Social Security Benefits Taxable?

Internal Revenue Service- Washinton

The Social Security benefits you received in 2010 may be taxable. You should receive a Form SSA1099 which will show the total amount of your benefits. The information provided on this statement along with the following seven facts from the IRS will help you determine whether or not your benefits are taxable.

1.  How much- if any - of your Social Security benefits are taxable depends on your total income and marital status.

2.  Generally, if Social Security benefits were your only income for 2010, your benefits are not taxable and you probably do not need to file a federal income tax return.

3. If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status.

4. Your taxable benefits and modified adjusted gross income are figured on a worksheet in the Form 1040A or Form 1040 Instruction booklet.

5. You can do the following quick computation to dete…

Points to Keep in Mind When Choosing A Tax Preparer

Internal Revenue Service- Washinton

If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

Here are a few points to keep in mind when choosing someone else to prepare your return:
Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.New regulations require all paid tax return preparers including attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.

Check on the preparer’s history. Check to see if the preparer has a questi…

Taxable or Non-Taxable Income?

Internal Revenue Service- Washington

Generally, most income you receive is considered taxable but there are situations when certain types of income are partially taxed or not taxed at all.

To help taxpayers understand the differences between taxable and non-taxable income, the Internal Revenue Service offers these common examples of items not included as taxable income:

* Adoption Expense Reimbursements for qualifying expenses
* Child support payments
* Gifts, bequests and inheritances
* Workers' compensation benefits
* Meals and Lodging for the convenience of your employer
* Compensatory Damages awarded for physical injury or physical sickness
* Welfare Benefits
* Cash Rebates from a dealer or manufacturer

Some income may be taxable under certain circumstances, but not taxable in other situations. Examples of items that may or may not be included in your taxable income are:

* Life Insurance If you surrender a life insurance policy for cash, you must include in income a…

IRS Kicks of 2011 Tax Season with Deadline Extended to April 18th

WASHINGTON- The IRS announced yesterday that taxpayers have until Monday, April 18 to file their 2010 tax returns and pay any tax due.  Emancipation Day, a  holiday observed in the District of Columbia, falls this year on Friday, April 15.  By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year.  Taxpayers requesting an extension will have until October 17 to file.  This extension however, still is not an extension to pay taxes.

The IRS also reminded taxpayers impacted by recent tax law changes that using e-fil is the best way to ensure accurate tax returns and will result in getting faster refunds.

New tax law will delay 2010 return processing

The IRS has announced that it will take until mid to late February before their system will be able to process certain income tax returns due to the late tax law changes.

Individual income tax returns affected include those with the following, a Schedule A for itemized deductions, a claim for higher education expenses, a claim for educator expenses, and a claim for state or local sales taxes.

This delay will apply to all filers, whether they file electronically or by paper.

New Tax Law passed in December

December 2010-- The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was signed into law on December 17, 2010.  This legislation will keep tax rates the same as they have been for another two years, keeping the Bush-era income tax cuts in place.  The law also allows a 13-month extension of unemployment benefits.

Capital gains and dividend rates also stay the same, at 15% and 0%  for the next two years.  The law also patches the alternative minimum tax by increasing the AMT exemption for 2010 and 2011.

Many tax breaks that expired at the end of 2009 were also extended, retroactively.  Some of these include; the teachers' deduction for buying classroom supplies, and the deduction for college expenses. 

This law also included a reduction in the social security taxes for employees, from 6.2% to 4.2% on wages up to $106,800.  Self-employed individuals will also see a decrease in their tax.

The estate tax was restored, retroactively for 2010, with a top r…