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As you may be aware, for the last few years the Internal Revenue Service has been strongly urging taxpayers to file their income tax returns electronically. Tax return preparers have been required to IRS e-file individual income tax returns since 2012, with certain allowable exceptions. 
One of those exceptions is that the taxpayer can opt-out of e-filing and choose to file on paper. Although you may have a reason for not wanting to e-file, for the 122 million taxpayers who did e-file last year there are actually several good reasons for doing so.
E-file is actually the best way to file an accurate and complete return since tax software is designed to do the math and help you avoid mistakes. E-filing means the IRS does not have to re-type your tax return at their service center, which means less chance that the IRS will make a mistake when processing your return. When e-filing you will receive a confirmation that the IRS has received your tax return. This is proof that the IRS received your tax return and has started processing it. E-file also meets strict security guidelines and uses the best encryption technology. Since the start of the e-file program, the IRS has safety and securely processed more than 1.2 billion e-file individual tax returns.
If you would like to receive your refund earlier, e-filing is definitely the way to go. Because there is nothing to mail and your return is less likely to contain errors, e-filed returns have a shorter turnaround time. 
Most IRS refunds were issued in less than 21 days. An even faster way to get your refund is to combine e-filing with direct deposit into your bank account.
With the e-file program you have several different payment options available. If you owe taxes, you can e-file and set an automatic payment date on or before the April 15th due date. You can pay by check, money order, debit card or credit card. You can also transfer funds electronically from your bank account.
E-file is easy. You can e-file your federal return through IRS Free File at IRS.gov. You can also use commercially available software or simply ask your tax preparer to e-file your return.
Try it. You’ll like it.
Large party automatic gratuities may be a thing of the past. These were originally implemented to ensure servers were being adequately compensated. However, as of January 1st, the IRS now considers these automatically calculated tips as service fees, and will treat them as regular wages, subject to payroll withholding tax.
Think back to your last experience at a restaurant when you were with a large group of people and your tip was calculated into the bill when you went to pay it. 
You probably knew beforehand that this would be the case since it was most likely printed somewhere that a certain percent gratuity would be added to the bill for tables with more than a certain number of people. Did you consider this a tip or a service charge?
The IRS uses the following factors to determine whether a payment is a tip or a service charge:
If even one of these conditions is not met, the payment is considered a service fee and not a tip.
This is a big change for employers and employees. The employer now has to treat this money as income and has to include it in that employee’s regular wages. This means it is subject to normal reporting and withholding requirements. Also, employees will not be able to take their money as they receive it, they will have to wait until the next pay day.
This ruling will probably deter a lot of restaurants from including an automatic tip into their customer’s bills. By removing this, it will likely reduce the amount of tips servers will receive. 
A good way for employers to help their servers get adequate tips is to include suggested tip amounts on the bills. Putting a suggested tip amount on the bill does not qualify the money as a service charge because the customer still has a choice in the decision.
Yes, it is that time of year. Now that the holidays are over, it’s time to start thinking about income tax. 
Were there any life event changes such as getting married, having a baby, adopting a child, death of a spouse, purchasing a home or any other events that would affect your income tax return?
Start accumulating your documents to prepare your 2013 income tax return. Set aside a box, a file or a cubby to hold tax documents as you receive them in the mail. Be on the lookout for envelopes with “tax document enclosed” on them. You should receive Form W-2 if you were an employee in 2013, Form 1098 Mortgage Interest Statement if you own property, as well as various types of Form 1099, if any. 
You’ll also need Forms K-1 from pass through entities that you have an interest in. You should have been accumulating documents and receipts for tax deductions and contributions received throughout the year.
How will you prepare your income tax return? The IRS offers a free filing on their website for taxpayers with adjusted gross income (AGI) of $57,000 or less. The free filing is a good option for taxpayers with uncomplicated tax situations. There are also numerous tax preparation software packages on the market for individuals ineligible to take advantage of the IRS Free File.
Hiring a professional to prepare your income tax return makes sense when your tax situation includes unusual tax circumstances, numerous investments in rentals or partnerships, or you just need to be confident that your return was prepared correctly and that all possible tax savings were considered.
Now get prepared and get your 2013 income tax return filed by April 15, 2014! (An extension to file is available, but not to pay if you can’t meet this deadline).
It’s almost time to begin gathering your tax information. You should receive most of your 2013 tax documents by early to mid-February 2014.
Whether you expect to prepare your own return or use the services of a professional, it pays to be organized.
Probably the most important document you need to locate is a copy of last year’s tax return. The tax situation of most individuals does not change dramatically from year to year. So the information shown on last year’s return is a good guide to what you need to look for this year.
On the other hand, if you experienced a life event during 2013, your tax situation could be in for a big adjustment. Life events include marriage, divorce, birth of a child, retirement, a business startup or a change in employment.
Everyone’s situation is different, but most people receive some common tax documents in the mail:
You may receive other income tax-related forms as well:
All of these forms will be needed to see whether you qualify to itemize your deductions. If you are self-employed, you will also need to gather receipts for all deductible business expenses. Check out IRS Publication 535 for more information about business expenses.
Looking ahead to next year at this time, while you’re digging up all these records, sort everything and create files to hold:
Then keep items sorted as they come in during 2014. That way, next year’s income tax return should be easier to prepare.
If this week’s negotiations to raise the federal debt ceiling do not end well, there could be major consequences to the economy. 
Administration officials say that by Thursday they will have exhausted all borrowing authority and only have cash on hand. There would be enough money to make payments for a few days, but not more than two weeks.
According to an article in the Washington Post, economists on both sides agree that no matter which course the President chooses, a drop in federal spending that large would have an impact on economic growth. The administration would have to consider delaying or suspending tens of billions of dollars, as soon as Friday, to Medicare and Medicaid providers, food stamp recipients, unemployment benefits and Social security checks. This could be detrimental to seniors and low-income people. Veterans’ benefits and pay for active-duty troops could also be delayed. Nearly $60 billion is due in November to cover the aforementioned expenses.
Further, economists have estimated that if the government shutdown lasts through October, real GDP could be reduced as much as 1.5 percentage points in the fourth quarter. Hundreds of thousands of furloughed workers are expected to postpone purchases, which would be a major hit to growth through reduced consumer spending. 
Consumer sentiment hit a nine-month low in early October. Estimates for fourth-quarter GDP are being held steady or have been cut slightly in light of the shutdown. Citigroup’s chief U.S. economist Robert DiClemente stated that the longer the delay in authorized spending, the greater the incidence of negative spillovers to private activity. Though these impacts would be reversed once the furloughed workers return to work, there would still be drags on the economy that may continue into 2014.
The government shutdown has affected many federal agencies, including the Internal Revenue Service. It is estimated that only about 10% of the IRS employees are currently working. This has caused some questions among taxpayers about whether or not their tax returns need to be filed by October 15th. The government shutdown and the decrease of IRS employees will not affect the upcoming tax deadline. 
All taxpayers who requested a six month extension by April 15 will still have to file their tax returns by October 15th.
Having a decrease in employees due to the shutdown will affect other areas of tax filing. It is recommended that you file your tax return electronically because most of these will be processed automatically. If you paper file, nothing will be done with your return until the shutdown ends, but it still needs to be postmarked by the October 15th or it will be considered late. If you do paper file, it is good idea to send your return using Certified Mail to have proof that you sent your return in by October 15th.
The government shutdown has caused much frustration for taxpayers. This is mostly true for taxpayers expecting a refund. Even if your tax return is filed on time, no refunds will be issued until the government shutdown ends and operations return to normal. However, if you owe money it still needs to be paid when you file. The “IRS Where’s My Refund?” function will not be available to anyone who filed their tax return after the start of the government shutdown until the shutdown ends.
Also there is not much happening in regards to tax assistance from the IRS. 
There is no one working the telephone customer service lines and the IRS’s walk-in taxpayer assistance centers are closed. However, the automated assistance line is still open.
So get your tax return filed by October 15th, and hopefully for everyone waiting on a refund or trying to resolve an issue with the IRS, the government shutdown ends soon.
The October 15th tax extension deadline is quickly approaching, which means it’s time to finish up that tax return you have been avoiding all summer. There are many benefits to filing an extension if your tax return is not quite ready in April, but there are no additional extensions available for the upcoming October 15th deadline. When you filed your extension in April, it did not extend the amount of time to pay, it just gave you an extra 6 months to finalize and file your tax return. 
You still had to pay the amount of tax you owed or the best estimate of it by April 15th. This might have people questioning why they need to get their returns in by October 15th if they already paid in April. The reason is to avoid possible penalties.
Depending on whether you owe money or are due a refund from the IRS will determine the consequences of not filing on time.
For individuals that will receive a refund, you will not be assessed any penalties. This is because the penalties are based on a percentage of the amount owed to the government. If you owe $0, any percentage of zero is still zero. However, the sooner you file, the sooner you’ll get your tax refund so it’s not a bad idea to get your tax return filed as soon as possible.
If you are one of the unlucky individuals that do owe, you could be subject to penalties. The IRS imposes two types of penalties; the failure-to-file penalty and the failure-to-pay penalty. The failure-to-file penalty is 5% per month on any unpaid taxes and the failure-to-pay penalty is .05% per month on any unpaid taxes. If you filed an extension in April the failure-to-file penalty is deferred until October 15th. However, if you do not file by October 15th the failure-to-file penalty begins that day and will be assessed until you file your return. 
If you did not file an extension in April, the failure-to-file penalty started April 15th and will continue until your return is filed and the amount you owe is paid. In general, the maximum penalty is 25% of the amount you owe. You will also have to pay interest on the amount of tax unpaid by April 15th.
In order to avoid these penalties be sure to file your tax return by April 15th or if you filed an extension, by October 15th, and pay the total amount you owe when you file your extension in April.
Recently, in Windsor v. U.S., the Supreme Court made history by striking down a key provision in the Defense of Marriage Act (DOMA). Although DOMA wasn’t typically viewed as a tax law, it carried significant tax consequences for married same-sex couples who have traditionally been unable to do things like file a joint return or take advantage of a number of favorable estate-planning provisions. 
The Supreme Court’s decision means that the federal government, including the IRS, must now treat same-sex couples who are legally married in states that permit same-sex marriage the same as their heterosexual counterparts. However, the Court’s decision also raises a number of unanswered questions, including whether and to what extent it will apply retroactively, and how conflicts between state laws will be resolved.
in 1996, Congress enacted, and President Clinton signed into law the Defense of Marriage Act. Section 3 of DOMA defines marriage for purposes of administering federal law as the “legal union between one man and one woman as husband and wife.” It further defines “spouse” as “a person of the opposite sex who is a husband or wife.”
The Windsor Case based on the taxation of an estate of a same-sex couple from New York challenged Section 3 and prevailed in the district court and again in the Second Court of Appeals. In a majority opinion delivered by Supreme Court Justice Kennedy, the Supreme Court held that DOMA Section 3 was unconstitutional deprivation of equal protection. It should be noted that Section 2 of DOMA, allowing states to refuse to recognize same-sex marriages performed under the laws of other states, wasn’t at issue in this case.
Although there was difficulty and confusion in applying tax law for same-sex couples prior to this decision, it has not eased the complexity encountered in reporting and complying with federal and state tax laws with regard to same-sex couples. While the decision makes clear that the federal government must recognize a lawful same-sex marriage, a number of issues remain unanswered including the following:
The following are among the tax breaks newly available to legally married same-sex couples:
As with almost all new complex tax law, these new provisions bring about a great deal of confusion and uncertainty as to application. I am sure that as these new provisions come into practice, many cloudy issues will be resolved. I am also sure that just as many new issues will arise. Stay tuned…I will keep you posted.
Last week approximately 400 CPA’s (including yours truly) descended on Capitol Hill to discuss issues of interest to the profession and our clients. 
The Capitol Hill visits were in conjunction with the Spring Meeting of the AICPA Council which is held every other year in Washington DC in order for Council members to make these important visits to each state’s legislators. Our delegation from Nevada met with each of our elected members of Congress or their staff liaisons in order to discuss the following important issues:
• “What’s at Stake?” – The CPA Profession on Federal Fiscal Responsibility: This updated video resource available for CPA’s, Policymakers and the Public reviews the federal government’s latest financial report and discusses the profession’s role in promoting the importance of the nation’s fiscal responsibility.
• H.R. 1129: The Mobile Workforce State Income Tax Simplification Act of 2013: This bill creates a uniform national standard that will limit state or local taxation of the compensation of an employee who performs duties in more than one state or locality to: (1) the state or locality of the employee’s residence and (2) the state or locality in which the employee is physically present performing duties for more than 30 days.
• S. 420 and H.R. 901: Tax Return Due Date Simplification and Modernization Act of 2013: These bills propose a shuffling of the original and extended due dates of corporate, partnership and other returns to improve the flow of information needed by taxpayers to timely file their personal returns. The bills propose new original due dates as follows:
There are proposed revisions to various extended due dates as well which for the most part remain in the familiar September/October time frame. For more information on these dates see the full text of the bills at www.govtrack.us.
• H.R 797: Municipal Advisor Oversight Improvement Act of 2013: This bill would clarify the definition of a municipal advisor and make it clear that providing customary and usual accounting services by CPA’s is not the same as providing municipal advisory services which now requires SEC registration under the Dodd-Frank Act.
• Our Nevada CPA delegation also discussed various other issues related to the general topic of tax reform which is of great interest to Congress in light of recent and not so recent events. For more information read the AICPA’s Principals of Good Tax Policy.
Our visits always prove to be enlightening for all of those involved be they the elected member of Congress, the staff liaison or the CPA’s participating in the meetings. We must never lose sight of the fact that we all have a voice in our democracy whether it be a visit to Capitol Hill, a phone call or email or the simple casting of a vote.
Are you planning on saving a portion of your tax refund this year? You should know about an option the IRS offers to make it easier for you to save. This can be done by including IRS Form 8888, Allocation of Refund, when you file your tax return. 
Using this form, you can split your refund between three options; direct deposit into a bank account, Series l Savings Bonds, or payment by check.
Many people take advantage of the ability to directly deposit their tax refund right into their checking account. But what they don’t know is they have the option to direct deposit funds in up to three different accounts. These bank accounts can be a checking account, savings account, Individual Retirement account (IRA), Health Savings Account (HSA), Archer MSA, Coverdell Education Savings Account (ESA), or TreasuryDirect online account. All of these provide many options to help you save.
The only time you can get a Series l Savings Bond in paper form is by getting it with your tax refund. On January 1, 2012, financial institutions stopped issuing U.S Series l Savings Bonds in paper form, meaning you cannot walk into a bank to purchase one. You have to purchase them electronically through a TreasuryDirect account.
By using the tax refund option, you can get up to $5,000 worth of Series l savings bonds in paper form. These must be issued in multiples of $50 and can be allocated between three different savings bond registrations, meaning you can give these savings bonds as gifts or get them for yourself.
The Allocation of Refund form can help greatly with saving because you can choose how you want to receive your refund. For example, you can deposit part your refund in a savings account, get $150 of savings bonds, and have the additional amount sent to you by check. Everyone knows it’s hard to save your refund when you get that check, but by using this tool you can put aside a portion of your refund before you even have the chance to spend it.
