What’s so important about choosing the right tax preparer? As a taxpayer, you are legally responsible for what’s on your tax return even if someone else prepares it. Therefore, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent service to their clients.

How do you know if you’re choosing the right tax preparer? Here are some tax tips for choosing a tax preparer:

• Check the person’s qualifications
  Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics. New regulations require all paid tax return preparers including tax attorneys, CPAs and enrolled agents to apply for a Preparer Tax Identification Number — even if they already have one — before preparing any federal tax returns in 2011.
• Check on the preparer’s history
  Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Professional Responsibility for enrolled agents.
• Find out about their service fees
  Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers.
• Make sure the tax preparer is accessible
  Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise. A good tax preparer will also provide you help in answering your tax questions.
• Provide all records and receipts needed to prepare your return
  Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
• Never sign a blank return
  What are you crazy? Avoid tax preparers that ask you to sign a blank tax form.
• Review the entire return before signing it
  Another one of the top ten tax tips is that before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it. If not ask for answers to your tax related questions.
• Make sure the preparer signs the form and includes their PTIN
  A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.

You can report abusive tax preparers and suspected tax fraud to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888. For additional tax help or tax tips visits the IRS website.

Source: irs.gov

Almost ten percent of Americans were unemployed in 2010. But being out of work does not excuse taxpayers from filing income tax. The IRS recognizes that the loss of a job create tax issues.

Here are some tax tips and answers to tax questions for unemployed taxpayers.

Is Severance Pay Taxable?
Yes, severance pay is taxable in the year that you receive it. Your employer will include this amount on your Form W-2 and will withhold appropriate federal and state taxes. See Publication 525 for additional tax help.

Is Accumulated Sick Pay and Vacation Pay taxable?
Yes, annual or vacation pay, and sick pay are calculated as wages by your employer and will be included in your Form W-2.

Is Unemployment Compensation taxable?
Yes, your state unemployment insurance benefits (up to 26 weeks) and your extended benefits (up to an additional 13 weeks) are taxable. You may choose to have 10% withheld for federal taxes by completing Form W-4V.
The State will provide you with a Form 1099-G prior to January 31st of each year, showing the amount of taxable benefits paid in the prior year. See Publication 525 for additional information.

Is there a COBRA Health Insurance Continuation Premium Subsidy?
Workers who have lost their jobs may qualify for a 65 percent subsidy for Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation premiums for themselves and their families for up to nine months. Eligible workers will have to pay 35 percent of the premium to their former employers.
To qualify, a worker must have been involuntarily separated between September 1, 2008, and December 31, 2009.
More information on the COBRA subsidy is available from the U.S. Department of Labor.

What about gifts of Cash and Property from family or friends?
Generally, the person who receives the gift is not liable for any taxes on the gift. If the gift produces income like interest, dividends or rent payments, the receiver would be responsible for taxes on that produced income. Each year there is a specific maximum amount that may be given that will not create a taxable event to either the giver or the receiver. Gifts in excess of this maximum may be subject to gift taxes by the gift giver. See Publications 17 or 950 for additional information.

Is Public Assistance or Food Stamps taxable?
No.

When will I get my final W-2 from my employer?
Your employer must provide your Form W-2 by January 31st after the close of the calendar year.

What if my employer filed bankruptcy or went out of business, how do I get my W-2 form?
In either case the employer must file and report your wages and withholding on a Form W-2 at year’s end. If you do not receive your Form W-2, try to contact your employer or their representative. If you are unsuccessful, the IRS can assist you in filing a substitute Form W-2 using your records. A good precaution is to keep year-to-date records or pay stubs until you receive your Form W-2.

If I sell assets like stocks, bonds, and property, are they immediately taxable?
Not necessarily, however the sale of such assets should be reported. If you have a gain on the sale, it may generate an income tax liability. You should review your overall tax situation and make sure you have paid your taxes as required to avoid any estimated tax penalty. More tax help and additional tax information on estimated tax is in Publication 505.

What can I do if I owe taxes and cannot pay them?
Contact the Internal Revenue Service as soon as possible to request a payment plan. Communication is the key to minimizing problems.

Is special assistance available on unresolved tax matters that create hardships?
Yes, if you are experiencing economic harm, a systemic problem or are seeking help in resolving tax problems that have not been resolved through normal channels, you may be eligible for Taxpayer Advocate Services (TAS) assistance. You can reach TAS by calling toll-free 1-877-777-4778

The questions above come verbatim from IRS publications. For IRS tax help and other tax tips visit the IRS website.

source: irs.gov

On January 24, the IRS unveiled its first smartphone application, called IRS2Go. The phone application provides tax help by letting taxpayers check the status of their tax refund and obtain helpful tax information.

“This new smart phone app reflects our commitment to modernizing the agency and engaging taxpayers where they want when they want it,” said IRS Commissioner Doug Shulman. “As technology evolves and younger taxpayers get their information in new ways, we will keep innovating to make it easy for all taxpayers to access helpful information.”

The IRS2Go phone app gives people a convenient way of checking on their federal refund. It also gives people a quick way of obtaining easy-to-understand tax tips.

Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

“This phone app is a first step for us,” Shulman said. “We will look for additional ways to expand and refine our use of smartphones and other new technologies to help meet the needs of taxpayers.”

The mobile app, among a handful in the federal government, offers a number of safe and secure ways to help taxpayers. Features of the first release of the IRS2Go app include:

Get Your Refund Status
Taxpayers can check the status of their federal refund through the new phone app with a few basic pieces of information. First, taxpayers enter a Social Security number, which is masked and encrypted for security purposes. Next, taxpayers pick the filing status they used on their tax return. Finally, taxpayers enter the amount of the refund they expect from their 2010 tax return.

For people who e-file, the refund function of the phone app will work within about 72 hours after taxpayers receive an e-mail acknowledgement saying the IRS received their tax return.
For people filing paper tax returns, longer processing times mean they will need to wait three to four weeks before they can check their refund status.

About 70 percent of the 142 million individual tax returns were filed electronically last year.

Get Tax Updates
Phone app users enter their e-mail address to automatically get daily tax tips. Tax Tips are simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the tax filing season and periodically during the rest of the year. The plain English updates cover topics such as free tax help, child tax credits, the Earned Income Tax Credit, education credits and other topics.

The new tax smartphone application illustrates the IRS’s commitment to provide information to taxpayers beyond traditional channels.

For more tax help and additional tax tips visit the IRS website.

Source: irs.gov