Tag Archives: IRS

Op-ed: Tips for paying taxes for summer jobs


| oped@queenscourier.com

PEGGY E. RILEY

Many students take a job in the summer after school lets out. If it’s your first job it gives you a chance to learn about the working world. That includes taxes we pay to support the place where we live, our state and our nation. Here are eight things that students who take a summer job should know about taxes:

1.      Don’t be surprised when your employer withholds taxes from your paychecks. That’s how you pay your taxes when you’re an employee. If you’re self-employed, you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how our pay-as-you-go tax system works.

2.      As a new employee, you’ll need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Your employer will use it to figure how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.

3.      Keep in mind that all tip income is taxable. If you get tips, you must keep a daily log so you can report them. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return.

4.      Money you earn doing work for others is taxable. Some work you do may count as self-employment. This can include jobs like baby-sitting and lawn mowing. Keep good records of expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction may help lower your taxes.

5.      If you’re in ROTC, your active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training isn’t taxable.

6.      You may not earn enough from your summer job to owe income tax. But your employer usually must withhold Social Security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count toward your coverage under the Social Security system.

7.      If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions, you’re considered self-employed. If you don’t meet those conditions and are under age 18, you are usually exempt from Social Security and Medicare taxes.

8.      You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true, you may still want to file. For example, if your employer withheld income tax from your pay, you’ll have to file a return to get your taxes refunded. You can prepare and e-file your tax return for free using IRS Free File. It’s available exclusively on IRS.gov.

Peggy Riley is the IRS Media Relations Specialist for New England, New York, Maryland and Delaware.

 

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Queens’ Morning Roundup


| ctumola@queenscourier.com

The Queens Morning Roundup logo.

TODAY’S FORECAST 

Wednesday: Overcast with rain. High of 57. Winds from the NNE at 5 to 10 mph. Chance of rain 80%. Wednesday night: Overcast in the evening, then partly cloudy. Low of 43. Winds from the NW at 10 to 15 mph.

EVENT OF THE DAY: Eric March: Cityscapes of Long Island City and Astoria

In Cityscapes of Long Island City and Astoria, an exhibit of paintings and drawings at the Greater Astoria Historical Society through November 17, Long Island City-based artist Eric March examines his local neighborhood to find the epic and the intimate in a new series of cityscapes of western Queens, from soaring bridges over the East River to private moments in a storefront. Click here for more info or to submit an event of your own

Lhota, de Blasio have heated second debate

Mayoral candidates Joe Lhota and Bill de Blasio once again battled in their second debate of the general election Tuesday night. Read more: The Queens Courier

Worker hurt during TV show filming in Queens: FDNY

An electrician working on the set of a television show being filmed in Queens had minor injuries when a lift he was on caught fire, the FDNY says. Read more: NBC New York

Manhattan food cart vendor charged in plot to torture Egyptian businessman

A Manhattan food cart vendor plotted to torture a prominent member of the city’s Egyptian-American business community but was pinched after the man he hired to do the gruesome work ratted him out, police sources said Tuesday. Read more: New York Daily News

Government shutdown causes IRS tax season delay

Here’s more fallout from the government’s partial shutdown: Early tax filers will have to wait an extra week or two to get tax refunds next year. Read more: AP

FDA: Over 3,600 pets sickened, 580 dead after eating jerky treats

More than 3,600 pets have gotten sick, and 580 have died, from jerky treats that were largely imported from China, the Food and Drug Administration said Tuesday. Read more: CBS New York

Survey: NY, NJ among sexiest accents in North America

Are the New Jersey and New York accents sexy? Yes, if you believe a survey released by a dating website called Cupid.com. Read more: Fox New York

What happens after I file my taxes?


| mrbarrytax@aol.com

Now that the federal income tax deadline is in your rear-view mirror, what happens after you file? A lot of taxpayers have post tax-filing questions such as what records should I keep and for how long? The IRS has answers for you.

What Records Should I Keep? Normally, tax records should be kept for three years. You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending already filed returns or preparing future returns. But some documents such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property should be kept much longer.

If the IRS suspects you’ve underreported your income by 25 percent or more, it has up to six years to audit your return. Additionally, if you have written off a worthless investment, you should keep those records up to seven years.

Address Change. If you move after you filed your return, send Form 8822, Change of Address, to the Internal Revenue Service. If you are expecting a paper refund check, you should also file a change of address with the U.S. Postal Service.

What If I Made a Mistake? Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Tax Return.

IRS Publication 552, Recordkeeping for Individuals, has more details on tax record keeping.

Barry Lisak, EA, is an IRS Enrolled Agent who has operated a tax preparation office for over 30 years. Any questions or comments, please contact mrbarrytax@aol.com or 516-829-7283.

Are you feeling anxious about your tax refund?


| mrbarrytax@aol.com

E-file, with bank direct deposit, is the fastest and safest way to receive your tax refund. If you already filed your Federal tax return and are due a refund, you have several options to check on your refund. Here are procedures the IRS wants you to know about checking on the status of your refund.

Online Access to Refund Information. Where’s My Refund? is an interactive tool on www.irs.gov and is the fastest, easiest way to get information about your Federal income-tax refund. Whether you opted for direct deposit or asked the IRS to mail you a check, Where’s My Refund? gives you online access to your refund information, 24 hours a day, 7 days a week.

When to Check Refund Status. If you e-fi le, you can get refund information 72 hours after the IRS acknowledges receipt of your return. If you fi le a paper return, refund information will generally be available three or four weeks after mailing your return.

What You Need to Check Refund Status. When checking the status of your refund, have a copy of your federal tax return handy. To get your personalized refund information you must enter:

• Your Social Security Number or ITIN • Your filing status which will be Single, Married Filing Jointly, Married Filing Separate Return, Head of Household, or Qualifying Widow(er).

• Exact whole-dollar refund amount shown on your tax return.

What the Online Tool Will Tell You. You could get several responses, including:

• Acknowledgement that your return was received and is in processing.

• The mailing date or direct deposit date of your refund.

• Notice that the IRS could not deliver your refund due to an incorrect address.

Toll-free Number. If you do not have Internet access, you can check the status of your refund by calling the IRS Refund Hotline at 800-829-1954. When calling, you must provide your or your spouse’s Social Security number, fi ling status and the exact whole- dollar amount shown on your return

Barry Lisak, EA, is an IRS Enrolled Agent who has operated a tax preparation office for over 30 years. Any questions or comments, please contact mrbarrytax@aol.com or 516-829-7283.

Last-minute tips for filing your tax returns


| mrbarrytax@aol.com

The tax filing season is just around the corner. The IRS offers tips for taxpayers still working on their returns.

File electronically. IRS e-file is safe, easy and the most common way to file. E-file is now the norm; not the exception. In 2011, nearly 110 million people used e-file to transmit their returns. If you expect a tax refund, you’ll get the money faster when you e-file, because the IRS processes electronic returns faster than paper ones.

Check all numbers. Carefully check Social Security numbers for each person listed. This includes you, your spouse, dependents and persons listed in relation to claims for Child and Dependent Care or Earned Income Tax Credit. Missing, incorrect or illegible Social Security numbers can delay or reduce a tax refund.

Double-Check Your Figures. If you are filing a paper return, you should double-check that you have correctly figured the refund or balance due.

Check the Tax Tables. If you are filing a paper return, double-check that you have used the right figure from the tax table.

Contribute to Retirement Accounts: If you haven’t made an IRA (deductible or non-deductible) or Roth IRA contribution for 2012, you have until April 15.

Sign Your Form. You must sign and date your return. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.

Electronic Payments. Electronic payment options are convenient, safe and secure methods for paying taxes. You can authorize an electronic funds withdrawal, or use a credit or a debit card.

Can’t Pay the Taxes Due. If you owe taxes but can’t pay the full amount by the deadline, file your tax return on time and pay as much as you can to avoid tax penalties and interest.

Extension to File. By the April due date, you should either file a return or request an extension of time to file, Form 4868. Remember, the extension of time is not an extension of time to pay.

Barry Lisak, EA, is an IRS Enrolled Agent who has operated a tax preparation office for over 30 years. Any questions or comments, please contact mrbarrytax@aol.com or 516-829-7283.

Post-Sandy tax relief


| mhayes@queenscourier.com

Some good news is here for the victims of Superstorm Sandy. With many other problems at the forefront, the New York State Department of Taxation and Finance, and also the Internal Revenue Service (IRS) are giving taxpayers a bit of a break on their payments.

The Department of Taxation and Finance announced on Thursday, November 15 the additional extension of certain tax filing and payment deadlines for those directly affected by the storm.

President Barack Obama has declared Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster and Westchester Counties to be federal disaster areas.

The IRS declaration permits the organization to postpone certain deadlines for taxpayers who reside or have a business in the disaster area to February 1, 2013. Excise tax deposits have also been moved to November 26, 2012.

Additionally, the NYS Department of Taxation and Finance has extended its deadline for tax payments and filings, beginning October 26, to November 26. For more information on the department’s newly instated tax relief, storm victims can visit www.tax.ny.gov, and see document N-12-16.

The IRS has automatically identified taxpayers in the covered disaster area and applies automatic filing and payment relief, but those outside of the federally-declared area can call the IRS disaster hotline at 1-866-562-5227 to request tax relief. In addition, taxpayers may download forms and publications from the IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (829-3676).

IRS to crack down on IRA tax rules


| rfatoullah@queenscourier.com

An individual retirement account (IRA) is a form of retirement plan that provides tax advantages for those individuals who set aside savings for their future retirement. Taxpayers can contribute a certain amount each year and reduce their annual taxable incomes by the amount contributed. Further, until the individual IRA owner reaches the age of 70 and a half, the actual contributions to the IRA plus any earned interest grow tax free.

Unless an exception applies, money can typically be withdrawn penalty free as taxable income from an IRA once the owner reaches age 59 and a half. Further, owners must begin taking distributions of at least the calculated minimum amounts by April 1 of the year after reaching the age 70 and a half. The amount that must be withdrawn (the minimum required distribution) is calculated based on a factor taken from the appropriate IRS table and is based on the life expectancy of the owner and possibly his or her spouse as beneficiary, if applicable. At the death of the owner, distributions must continue and if there is a designated beneficiary, distributions can be based on the life expectancy of the beneficiary.

Now is an opportune time for all IRA owners to make sure that they have been complying with tax rules. The Internal Revenue Service (IRS) is going to start cracking down on individual retirement accounts in an effort to collect penalties from taxpayers who do not follow rules regarding maximum contributions and minimum distributions. According to an article in the Wall Street Journal, the crackdown is part of an attempt to collect millions of dollars in previously uncollected penalties.

Individuals are only allowed to contribute a certain amount to regular and Roth IRAs each year. For 2012, one can contribute $5,000 plus an addition $1,000 if over age 50. If an individual contributes more than the allowable amount, he/she may be subject to a penalty of six percent of the excess amount. In addition, if an IRA owner, after having reached age 70 and a half, does not take the required minimum distribution, he/she can be subject to a 50 percent penalty on the amount that should have been withdrawn. The same penalty applies to IRAs that are inherited from another individual. There is no statute of limitations on the penalties, so if errors are made over subsequent years, the penalties can add up quickly.

It is unclear how the IRS will step up enforcement of the penalties. The IRS will report to the Treasury Department in the very near future on its strategies, which could include more paperwork and audits. According to the Wall Street Journal, in 2006 and 2007, the IRS failed to collect $286 million in penalties for missed withdrawals and contributions.

Individuals and financial planners need to look over their IRAs to make sure contributions and withdrawals have been made properly. If any errors are found, they should be corrected immediately because delaying further only increases penalty and interest charges. This should be done in the context of a review of your entire estate plan by an estate planning attorney and a financial advisor.

Ronald Fatoullah & Associates, a law firm concentrating in elder law, estate planning, Medicaid eligibility, special needs, trusts, guardianships, & probate. Ronald Fatoullah is a leading expert in the fields of elder law & estate planning and is the founder and managing attorney of the firm. He is certified as an elder law attorney by the National Elder Law Foundation, and he is the current Legal Committee Chair of the Long Island Alzheimer’s Association. The firm’s offices are conveniently located in: Queens, Long Island, Manhattan & Brooklyn and can be reached at: 1-877-Elder Law or 1-877-Estates. This article was written with the assistance of Debby Rosenfeld, Esq., a senior staff attorney with the firm.

Former 111th Precinct officer busted by DEA


| tcimino@queenscourier.com

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This time, he was on the wrong side of the cuffs.

Devon Daniels, formerly assigned to the 111th Precinct in Bayside, was arrested on Tuesday, May 15 for his role in allegedly aiding drug dealers.

According to the Drug Enforcement Administration (DEA) Daniels, 30, “abused his authority and position of trust by accessing a computer database of the FBI in a manner that exceeded authorized access.”

The criminal complaint details how the DEA office in Wichita, Kansas had been investigating a heroin trafficking organization since 2008; wiretaps revealed that Daniels allegedly communicated with the leader of a Jamaica-based heroin distribution organization on numerous occasions to, among other things, ask for money and to borrow vehicles.

The alleged dealer also asked Daniels how to “get gun shot residue off your hands,” and was provided with an official NYPD parking plaque.

DEA officials also say that Daniels ascertained information from his colleagues regarding drug arrests, which he then passed along to members; he also performed criminal background checks and obtained license plate information for the dealers, reportedly using the mobile computers inside police crusiers.

Daniels’ bank account was also used “to facilitate financial transactions that involved drug proceeds.”

It was unclear at the time of his arrest, executed by the DEA, IRS and NYPD Internal Affairs, what charges Daniels faced.

Your Income Tax Filing Status


By Queens Courier Staff | editorial@queenscourier.com

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BY BARRY LISAK

The first step to filing your federal income tax return is to determine which filing status to use. In other words, two people making exactly the same amount of income could have different tax calculations due solely to a difference in their filing status. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child.

Here are some facts about the five filing status options the IRS wants you to know so that you can choose the best option for your situation.

1. Your marital status on the last day of the year determines your marital status for the entire year.

2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.

3. Single filing status generally applies to anyone unmarried, divorced or legally separated according to state law.

4. A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.

5. If your spouse died during the year and you did not remarry during 2011, you may still file a joint return with that spouse for the year of death.

6. A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.

7. Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.

8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2009 or 2010, you have a dependent child and you meet certain other conditions.

 

Barry Lisak, EA, is an IRS Enrolled Agent who has operated a tax preparation office for over 30 years. Any questions or comments, please contact mrbarrytax@aol.com or 516-829-7283.

 

Responsibilities of A Special Needs Trustee


By Queens Courier Staff | editorial@queenscourier.com

A supplemental needs trust (SNT) is a vehicle through which an individual can provide for the needs of a chronically and severely disabled beneficiary by supplementing the beneficiary’s government benefits, rather than diminishing such benefits. Many government benefit programs, including Medicaid, count the assets and income of an individual for purposes of determining eligibility for assistance. With a supplemental needs trust, however, a person such as a parent or relative may establish and fund a trust for a disabled individual without jeopardizing the beneficiary’s eligibility for Medicaid and Supplemental Security Income (SSI).

The trustee of an SNT has all the same duties of any trustee, plus the specific added responsibilities due to the special needs of the beneficiary. All trustees are responsible for the prudent investing of trust property, bookkeeping and accounting of trust activities, communicating with trust beneficiaries, tax reporting for the trust and appropriately distributing trust property to the beneficiary or beneficiaries – taking into account both current and future needs. In addition to these responsibilities, the trustee of an SNT must also inquire into the needs of the trust beneficiary, ensure that the beneficiary maintains their eligibility for public benefit programs, report to the agency or agencies administering these programs and work with the family members, social workers or other individuals providing support for the trust beneficiary.

Due to these demands, many families find that a professional trustee is better equipped to serve as trustee or as co-trustee with a family member. Professional trustees, such as banks, trust companies and some attorneys, are prepared to handle details like establishing accounts for the management of trust assets, handling trust recordkeeping, hiring and overseeing the activities of any service providers, making distribution decisions and investing trust assets.

With respect to the taxation of the trust, the trustee is responsible for notifying the IRS that the SNT has been created and requesting that the IRS issue an employer identification number. This number is necessary for opening any account in the name of the trust and is also used on the trust’s tax returns.  The trustee is also required to prepare and file annual federal and state fiduciary income tax returns and reporting any income that the trust earns.  It is critical for the trustee to know when potential tax reductions may warrant making distributions to or on behalf of the trust beneficiary.

The trustee also has sole responsibility for distribution decisions. To avoid compromising a beneficiary’s eligibility for public benefits, distributions generally should be made directly to providers of goods or services, rather than to the beneficiary. When a beneficiary receives a distribution that exceeds their allowable monthly limit, it is considered unearned income and SSI benefits are reduced on a dollar for dollar basis. If the trust beneficiary is a recipient of SSI benefits, the trustee must be aware of the income distribution guidelines so as not to jeopardize the beneficiary’s eligibility. Further, the trustee must also adhere to the guidelines posted in the trust by the grantor.

The trustee is required to look at the big picture when it comes to a request by the beneficiary for a trust distribution. A trust often initially appears to hold an excessive sum of money. However, when taking into consideration the life expectancy of the beneficiary and the anticipated use of the funds, the funds in the trust may have to be used sparingly.Accordingly, the trustee may have to deny the beneficiary a distribution if the trustee is concerned about depleting the trust assets.  It can often be easier for an independent, professional trustee to deny a beneficiary’s request rather than a family member.

Finally, the trustee has a fiduciary responsibility for the management of trust assets, even if the trustee chooses to hire professional investment managers to make day-to-day investment decisions.

SNTS are a unique and helpful tool in elder law and special needs planning. Consulting with an attorney who specializes in these fields is helpful in determining when the creation of such a trust should be utilized.

Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills and VA benefits. The firm has offices in Forest Hills, Great Neck, Manhattan, Brooklyn and Cedarhurst, NY. Mr. Fatoullah has been named a “fellow” of the NationalAcademy of Elder Law Attorneys and is a former member of its Board of Directors. Mr. Fatoullah has been certified as an Elder Law Attorney by the National Elder Law Foundation, and he is a co-founder of Senior Umbrella Network of Queens. We wish to thank Special Needs Answers for their contribution to this article.This article was written with the assistance of Debby Rosenfeld, Esq., a senior staff attorney at the firm. Ronald Fatoullah & Associates can be reached by calling (718) 261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.