Where’s my refund? You’re not alone in wondering; the IRS site for checking on refunds cautions that heavy use may limit its availability.
Tax season has had an unusual start. Very few returns were accepted prior to Jan. 30. Returns requiring a depreciation form were not accepted until Feb. 11. Returns claiming educational credits were delayed until Feb. 14. Residential Energy credits and Adoption Credit returns weren’t accepted until March.
Whether you’ve just gotten your first W-2 or have been filing for years, there are a few questions everyone asks.
Why did I get this “Important Tax Form”?
Every tax form you receive has also been sent to the IRS. Some forms, like W-2s and 1099s, list income you need to report. Forms starting with “1098” or “5498” often list potential deductions.
The Federal Tax Code and the impact of the fiscal cliff received most of the publicity recently. But Maine also has changes affecting your take home pay and 2012 tax preparation. Some of these changes affect everyone having taxes withheld. Others affect fewer filers, but can have a big impact on their Maine taxes.
Negotiations for the “fiscal tax cliff” concern mostly 2013 tax rates, deductions and credits. But there are several stumbling blocks ahead affecting 2012 taxes; the taxes to be filed starting in January.
Many tax benefits gradually fadeout over as income increases. But not all: Tax cliffs have a hard and fast line where $1 more in income can cost far more in tax benefits. Don’t believe me? Check out these three tax cliffs.
Earned Income Credit and Investment Income: Threshold not to pass: $3,200 in investment income. Benefit at risk: from $2 to $5,891. Earned income credit is a reward for working and is figured on four criteria: Adjusted Gross Income, Earned Income, Marital Status and Qualified Children. The credit is not a set amount; it varies from as little as $2 to as much as $5,891. But all along the range, if your investment income exceeds the cap ($3,200 in 2012) you’re no longer eligible. Investment income can come from interest, dividends, sales of stocks, redeeming savings bonds AND rental property.
Here’s a story that might make you feel better if you weren’t one of the 10,000 Mainers receiving a rebate under the Affordable Care Act. Turns out, in some cases the rebates will be taxable.
Why might these refunds be considered taxable? If you are refunded an expense you deducted in a prior year, then the refund can be taxable. This is most commonly seen in state tax refunds. If you deduct state income taxes on your federal return and receive a refund from the state, that refund may be taxable in the tax year it is received. The taxable amount is never in excess of the amount which provided you with a tax savings. As an example, an individual with only one deduction has $6,700 in state taxes withheld in 2011. On her federal tax return, she itemizes state taxes withheld as shown on her W-2. But in this example, she owes $0 to the state, so in 2012 she gets all $6,700 back. The $6,700 is not all taxable, only $1,000, which is the difference between what she’d itemized that year and the standard deduction for 2011: $5,700.
Student loans keep showing up in headlines, from the complaints from various “Occupy” groups to announcements that cumulative student loan debt has reached one trillion dollars. The Institute for College Access & Success estimates that two thirds of graduates have student loans. Maine’s class of 2010 carries an average student loan debt of $29,983. All of which makes the Maine Opportunity Credit more attractive than ever.
What is the Maine Opportunity Credit? Maine Opportunity Credit is a credit on your Maine return, reimbursing you for student loan payments made. That’s right, reimbursement of the entire student loan payment, not just the interest.
Missing a W-2? The first step is to contact your employer. If contacting your employer proves unsuccessful, AND it is after Feb. 15, then your next step is to contact the IRS at 1-800-829-1040.
When you contact the IRS, you should have the following information available:
Your employer’s name, phone number and complete address. If available, the Employer Identification Number is requested (this would be available on prior year W-2 forms, block b).
Your name, address, social security number and telephone number.
An estimate of the wages you earned, the federal income tax withheld and period you worked for the employer. Ideally this would be year to date information from your final pay stub. If that is not available you need a reasonable substitute: an earlier pay stub, records or bank deposits.
As Thanksgiving and the winter holidays approach, many set aside a little extra for their favorite charity. So it seemed appropriate to have this month’s true or false questions be about charitable giving.
- Rose is 72 and has a traditional IRA. She is required to make a withdrawal (required minimum distribution or RMD) from her IRA each year. In 2011, she can have her RMD sent directly to a charity, and if she does so, it will not be included in her taxable income.
True. In 2011, those over age 70 ½ may transfer up to $100,000 from an IRA directly to a charity. Eligible transfers count against the RMD and are not included in income. This provision has not yet been extended to 2012.
In common parlance, a head of a household is the one making important decisions and holding the family together. Not so when filing taxes. On a tax form, Head of Household (HOH) is just one of five filing statuses. Each filing status has its own requirements.
The HOH filing status dates back at least to 1917. In the instructions for that year, "head of family" is defined as "a person who in accordance with some moral or legal obligation actually supports and maintains one or more individuals closely related to him or her by blood, marriage, or adoption." The definition has been expanded considerably since then.
Currently there are three requirements which must be met for HOH eligibility:
Website CMS and Development by Links Online Marketing, LLC, Bangor Maine