Sunday February 12, 2012
People with capital gains transactions to report will need to use Form 8949 along with Schedule D. Form 8949 is a brand new tax form, and debuts for the 2011 tax year. Individuals will detail the sale of capital assets, such as stocks, mutual funds and bonds, on Form 8949 before summarizing those details on the Schedule D.
Schedule D has likewise undergone a major redesign. The newly revised Schedule D functions as a summary of the total amounts reported on Form 8949.
The first thing I noticed about the new Form 8949 is it has more columns and a different structure than the old Schedule D. The Form 8949 has extra columns to indicate whether a transaction has any special characteristics, such as the sale of a home or a wash sale, which necessitate making adjustments to the amount of gain or loss being reported.
The second thing I noticed, capital gains transactions must be grouped into three categories, depending on whether the broker supplied cost basis information on the Form 1099-B (which reports the sale of a capital asset), whether the broker did not supply any cost basis information on the 1099-B, or whether no 1099-B was received for that transaction. These three categories are found along the top of the Form 8949. Taxpayers will need to fill out one Form 8949 for each category of capital gains transaction they have.
The newly revised Schedule D mirrors the structure of the Form 8949, with totals from each category found on Form 8949 showing up on the Schedule D.
The instructions have been revised too, and contain extensive discussion of the various codes and adjustments that may need to be indicated.
Resources from the IRS Web site:
Tuesday February 7, 2012
Employers are required to issue a Form W-2 to report wage income and tax withholdings by January 31st of each year. If you haven't received your W-2, the quickest resolution is to talk to your employer and obtain a copy. As a general rule, it's best to wait for your W-2 before filing your tax return, as the W-2 may differ slightly from your final paystub of the year, and the W-2 has additional information you'll need that's not found on your paystub (such as your employer's tax identification number).
If you still haven't received your W-2 by the middle of February, and it appears you're employer won't print out a new copy for you, you can call the IRS at 1-800-829-1040 to lodge a compliant. The IRS should then follow up with your employer to make sure they've followed the rules about issuing W-2s to their employees.
It's possible for a person to file their tax return using information from their paystub, but this procedure requires some extra steps. You'll need to use Form 4852, which acts as a substitute for the W-2. You'll need to detail as much information as possible, and tax returns with this form need to be mailed in for manual processing by the IRS. I also recommend to make a copy of paystubs and attach that directly behind the Form 4852. This way the IRS can match up that information with whatever data they have in their records.
The IRS provides additional details on their Web page, Here is What to do If You Are Missing a W-2.
Tuesday February 7, 2012
Taxpayers who earn $50,000 or less can receive free tax preparation assistance through the VITA, the Volunteer Income Tax Assistance program. This program is funded in part by the IRS and are staffed by tax preparers who volunteer their time and who receive training from the IRS and state tax agencies. You can locate a VITA site near you by calling1-800-906-9887 (toll free) or by utilizing the VITA site locator found on the IRS Web site.
Elderly taxpayers can also receive free tax preparation services through the AARP's Tax Counseling for the Elderly program. You can search for locations on the AARP Web site. The AARP states that Tax Counseling for the Elderly makes tax preparation services "available free to taxpayers with low and moderate income, with special attention to those 60 and older."
The IRS appears to have launched a new service whereby taxpayers can prepare their own tax returns at a local community center, using computers and software at that community center and with the assistance of a volunteer. The IRS is calling this Facilitated Self-Assistance, and locations can be found in the this PDF document found on the IRS Web site.
Tuesday January 24, 2012
Quite frequently readers will ask how they can resolve disagreements among family members over who get's to claim a dependent. It's helpful to start with some ground rules, and my number one rule here is to prevent (if at all possible) the IRS from getting involved in family disputes. Now the IRS will get involved only if two or more people attempt to claim the same person as a dependent. So if at all possible, it's best to resolve your differences before anyone has filed their tax return.
In some situations, it's not easy or practical or even desirable to resolve a dispute. And here's where the tax rules can come to your aide. Read More...
