TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

IRS to Furlough Employees on Five Days; Operations Will Shut Down Entirely The IRS will be closed for business on five days falling between May 24 and August 30. NTEU Press Release (4/19/13). Late last week, the National Treasury Employees Union (NTEU) announced that the IRS is sending out furlough notices this week to the entire IRS workforce, identifying the five following furlough days where the agency will shut down entirely: May 24, June 14, July 5, July 22, and Aug. 30. The 30-day notices to employees also leave open the possibility of another two unpaid furlough days. On those furlough days, all public operations of the IRS will be shut down, leaving taxpayers without access to information and assistance from frontline workers. According to the president of the NTEU, on those days, phone calls to the IRS will go unanswered and Taxpayer Assistance Centers across the country will have closed' signs in their windows. The furloughs are being driven by the ongoing sequest...

1. Tax Returns .  ALWAYS keep tax returns.They take very little space and if there is ever an argument the return was not filed, at least you have a copy. 2. Backup records. Any written evidence that supports figures on your tax return, such as receipts, expense logs, bank notices and sales records, should generally be kept for at least the three-year period.   If possible keep the records for 7 years. Note: There are some cases when taxpayers get more than the usual three years to file an amended return. You have up to seven years to take deductions for bad debts or worthless securities, so don't toss out recoSecurities. To accurately report taxable events involving stocks and bonds, you must maintain detailed records of purchases and sales. These records should include dates, quantities, prices, dividend reinvestment, and investment expenses, such as broker fees. Keep these records for as long as you own the investments, plus the statute of limitations on the relev...

Rev Rul 2013-11, 2013-20 IRB The Applicable Federal Rates for May 2013 are reproduced below. Table 1 Applicable Federal Rates (AFR) for May 2013 Period for Compounding Annual Semiannual Quarterly Month Short-Term AFR .20% .20% .20% .20% 110% AFR .22% .22% .22% .22% 120% AFR .24% .24% .24% .24% 130% AFR .26% .26% .26% .26% Mid-term AFR 1.00% 1.00% 1.00% 1.00% 110% AFR 1.10% 1.10% 1.10% 1.10% 120% AFR 1.20% 1.20% 1.20% 1.20% 130% AFR 1.30% 1.30% 1.30% 1.30% 150% AFR 1.51% ...

3% personal and 2% Corporate Overpayment Rates IRS has announced that the interest rates for tax overpayments and underpayments for the calendar quarter beginning Apr. 1, 2013, will remain the same as for the first quarter of 2013. For noncorporate taxpayers, the rate for both underpayments and overpayments for the second quarter of 2013 will remain unchanged at 3%. The 3% rate also applies to estimated tax underpayments for the second quarter in 2013. For corporations, the overpayment rate for the second quarter of 2013 will remain at 2%. Corporations will receive .5% for overpayments exceeding $10,000. The underpayment rate for the second quarter of 2013 for corporations will be 3%, but will be 5% for large corporate underpayments. Interest factors for daily compound interest for annual rates of 0.5% are published in Appendix A of Rev Rul 2012-32. 

IRS Issues Annual Advice on Missing Form W-2's Each year, the IRS issues annual advice on actions a taxpayer should take when the taxpayer has not received his or her Form W-2. IRS Website (2/8/13). According to the IRS, if a taxpayer has not received his or her Form W-2, the taxpayer should: (1) Contact the employer. Ask the employer or former employer to send the W-2 if it has not already been sent. Double check that the employer has the correct address. (2) Contact the IRS. After February 14, a taxpayer can call the IRS at 800-829-1040 if the taxpayer has not yet received his or her W-2. The IRS will require the following information: (i) the taxpayer's name, address, social security number and phone number; (ii) the employer's name, address and phone number; (iii) the dates the taxpayer worked for the employer; and (iv) an estimate of the taxpayer's wages and federal income tax withheld in 2012, based on the taxpayer's final pay stub or leave-a...

Employers - are you stuck with "Obamacare" Obamacare  is a disaster for employers that have low wage employees. Frankly, many companies will need to change how they conduct business in order to stay competitive . Number of Employees Does your business have emough employees to be subject to the pay-or-play  Obamacare tax? This is called the  shared responsibility requirement forcing employers to pay a huge penalty or provide health insurance. 50 Employee Requirement. The simple definition is employers with 50 or more full-time equivalent workers. Unfortunately, this is only a partial answer. The tricky term,   full-time equivalent (FTE) covers employees who average 30 hours per week .  Note: the normal 40 hour per week definition for full time is not applicable .  The time period is the prior year . Since the mandate begins in 2014, the year 2013 controls the determination of the number of employees. There are some exceptions for sea...

Relatives as Dependents You can  take exemptions for qualifying relatives.   Rule: A relative does not have to live with you and there is no age requirement. Support: First, you must be supporting the qualifying relative . Qualifying Relative:  In order to be a qualifying relative, the person must: Have earned less than $3,800 in gross income or unemployment benefits for the year 2012 Have received more than half of their support from you.  This does not have to be cash payments. It can be food, clothing, shelter, education, medical and dental care, recreation and transportation.  To calculate if the relative meets this test:   add all of your expenses for them; subtract   welfare, food stamps. government benefits and earnings. Be a U.S. resident or citizen, or a resident of Mexico or Canada Not be married filing jointly Qualifying relative s could be your: child parent sibling stepparent stepsibling half sibling grandpare...