CARL WATTS & ASSOCIATES

October 01, 2012

www.carlwatts.com
office@carlwatts.com
Washington DC
 tel/fax 202 350-9002
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We think an appropriate subject after the summer break would be a summery of the most important news from the IRS.

First of all, the 2013 tax season deadline is April 15, there are no more delays caused by holidays or Sundays. Taxpayers requesting an extension will have until Oct. 15 2013 to file their 2012 tax returns.

If you pay estimated tax payments throughout the year, the due date for your next quarterly installment for prepayment of 2012 income taxes is Tuesday, Jan. 17. Estimated tax payments for 2013 will be due on April 15, June 17, Sept. 16 and Jan. 15, 2014.

The temporary payroll tax cut has been extended to December 31 2012; employees will enjoy a continued savings of 2% of wages withheld for Social Security – from 6.2% to 4.2%. The Social Security wage base for 2012 is $110,100 up from $106,800 in 2011. Once your wages exceed this amount, Social Security will not be withheld but Medicare will continue to be withheld.

Business mileage rates for 2011 remain unchanged for 2012 and are as follows: 55 1⁄2 cents per mile for business, 23 cents per mile for moving and medical, and 14 cents per mile for charitable purposes.

The IRS is providing tax relief to taxpayers impacted by Hurricane Isaac and other natural disasters.

The IRS also recommends that you safeguard your financial and tax records before any disaster strikes. Keep your records in electronic format, document your valuables by photographs or videotapes, and update emergency plans annually. If your records are destroyed, you can ask the IRS for copies of previously filed tax returns.

The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year. Here are some details:

  • The cost of day camp may count as an expense towards the child and dependent care credit;
  • Expenses for overnight camps do not qualify;
  • Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit;
  • The credit can be up to 35 percent of your qualifying expenses, depending on your income;
  • You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
2012 IRS Updates
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It’s good to be back, and we hope you feel the same way!

If you are adopting a child in 2012, you should know that the Affordable Care Act increased the amount of the Adoption Tax Credit and made it refundable, which means it can increase the amount of your refund.
The adoption tax credit, which is as much as $13,170, offsets qualified adoption expenses making adoption possible for some families who could not otherwise afford it. Taxpayers who adopt a child in 2011 or 2012 may qualify, if you adopted or attempted to adopt a child and paid qualified expenses relating to the adoption.

Just like it happens every year, the IRS has millions of dollars in checks that are returned as undeliverable.

If you were expecting a refund check and didn’t get it, you may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months.

You can also make sure the IRS has your correct address by filing Form 8822, Change of Address, which is available on the IRS website or can be ordered by phone.

The IRS launched a smartphone application this year, IRS2Go, that lets you interact with the IRS using your mobile device. The mobile application can help you get your refund status and tax updates. IRS2Go is available for the iPhone or iTouch and the Android.

The IRS issued a consumer alert about a new, email-based phishing scam now circulating that targets Department of Defense military members, retirees and civilian employees. The email appears to come from Defense Finance and Accounting Services and displays a .mil email address. The email states that those receiving disability compensation from the Department of Veterans Affairs (VA) may be able to obtain additional funds from the IRS. Email recipients are then asked to send various VA and IRS documents containing their personal and financial information, such as copies of VA award letters or their income tax returns, to an address in Florida. The information on these documents is then used by the scammers to commit identity theft. Typically, identity thieves use someone’s personal data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards or apply for new loans, credit cards, services or benefits in the victim’s name.

As a final note, remember that it’s never too early to get your papers in order for the following tax season and contact a professional to help you maximize your deductions and reduce your taxes for 2012.