irs

Tax

Receive a Faster Refund with Direct Deposit

The New Year has arrived, which means . . . it’s tax time!

This year, do you want your refund faster? Have it deposited directly into your bank account. More taxpayers are choosing direct deposit as the way to receive their federal tax refunds. More than 78.4 million people had their tax refunds deposited directly into their bank accounts last year. It’s the secure and convenient way to get money in your wallet faster.

      • Security. The payment is secure – there is no check to get lost. Each year thousands of refund checks are returned by the US Post Office to the IRS as undeliverable mail. Direct deposit eliminates undeliverable mail and is also the best way to guard against having a tax refund stolen.
      • Convenience. There’s no special trip to the bank to deposit a check!

You can also electronically direct your refund to multiple accounts. With the new “split refund” option, taxpayers can divide their refunds among as many as three checking or savings accounts and three different U.S. financial institutions. The split refund option, using Form 8888, is also available for paper returns.

Caution: Some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted. Also, make sure you have the correct nine-digit routing number and your account number when selecting direct deposit.

To request direct deposit, just ask us. We are happy to assist you.

Tax

IRS Announces 2012 Standard Mileage Rates

Beginning January 1, 2012, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) became:

      • 55.5 cents per mile for business miles driven
      • 23 cents per mile driven for medical or moving purposes
      • 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate are based on an annual study of the fixed and variable costs of operating an automobile.

Let us know if you have questions about which driving activities you should monitor as tax year 2012 begins.

Tax

Should You File a Tax Return?

Do you ever wonder whether your income is high enough to warrant the filing of a tax return? Because the minimum income level varies depending on filing status, age, and the type of income you receive, it can be a bit complicated. The following guide is based on minimum income requirements from tax year 2011.

Single Taxpayers
If you expect to file a single return, the IRS requires you to file a tax return if your gross income for the year is at least $9,500 if you are under age 65 and $10,950 if you are 65 or older.

Married Filing Jointly
For married persons filing jointly, you are required to file a return if gross income for 2011 is at least $19,000 if both of you are under age 65. If one of you was at least age 65 in 2011, the limit is $20,150 – and if both of you were 65 or over, you must file if you made at least $21,300.

If you are not living with your spouse at the end of the year or you weren’t living with them on the day they passed away, the IRS requires you to file a return if your gross income is at least $3,700. This is based on the personal exemptiion, which in tax year 2011 was $3,700.

For married persons filing a separate return, no matter what age, you must file a return if gross income is at least $3,700.

Head of Household
For persons filing as head of household, you must file a return for 2011 if gross income is at least $12,200 if under age 65 and $13,650 if at least age 65.

Qualifying Widow or Widower
For persons filing as a qualifying widow or widower with a dependent child, you must file a return for 2011 if gross income is at least $15,300 if under age 65 and $16,450 if at least age 65.

Other Situations That Require Filing
Even if you don’t earn this much income, other situations necessitate filing a tax return. For example, a dependent has to file a return for 2011 if they received more than $950 in unearned income or more than $5,800 in earned income.

Other situations include:

You Owe Certain Taxes. If you owe FICA or Medicare taxes (also called payroll taxes) on unreported tips or other reported income that were not collected, you must file a return. You must also file a tax return if you are liable for any alternative minimum tax. Finally, you must file a return if you owe taxes on individual retirement accounts, Archer MSA accounts, or an employer-sponsored retirement plan.

Advance Earned Income Tax Credit Payments. The Earned Income Tax Credit is a federal income tax credit for eligible low-income workers. The credit reduces the amount of tax an individual owes, which may be returned in the form of a refund. If you receive advance payments for the earned income credit from your employer, you must file a return.

Self-Employment Earnings. If your net earnings from self-employment are $400 or more, you must file a return.

Church Income. If you earn employee income of at least $108.28 from either a church or a qualified church-controlled organization that is exempt from employer-paid FICA and Medicare taxes, you must file a return.

Questions?
Call us for more information about filing requirements and your eligibility to receive tax credits.

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