Taxpayer's Social Security Numbers or Employer Identification Numbers may be truncated to just the last four digits on 1099 series forms issued for years 2009 and 2010. The Internal Revenue Service is launching a pilot program (Notice 2009-93) designed to help combat identity theft, and financial institutions and other businesses that send out tax documents in the Form 1098 series, Form 1099 series or Form 5498 series can participate. Truncated numbers will appear on statements issued to taxpayers; institutions are still required to report the full taxpayer identification number on forms sent to the IRS for processing.

Starting in the year 2011, payment transaction processors will be required to report to the Internal Revenue Service the gross sales transactions for their merchant accounts. The IRS recently published proposed regulations as part of their effort to implement this new requirement to report credit card sales. This is going to impact small businesses and entrepreneurs if they accept credit cards, debit cards, gift cards, Paypal or similar electronic payments.

Here's what we know so far. Anyone who has a merchant account, Paypal account or similar payment processing account will receive Form 1099-K from their service provider. (Here's a draft version of Form 1099-K so you can see what it will look like.) This new Form 1099-K is required unless the account-holder has total payment transactions for the year that do not exceed $20,000, and the total number of transactions does not exceed 200. The Form 1099-K will report gross sales transactions. The figures reported on the 1099-K will not be adjusted for transaction fees, refunds, or chargebacks.

Like the well-known Form 1099-MISC, entrepreneurs will need to make sure the numbers on the form are accurate and provide a copy of this form along with other tax documents given to their tax professional.

The Internal Revenue Service is trying to deliver some $123.5 million in refund checks that have been returned to the agency by the Postal Service.

Individuals can check the status of their refund check online using the IRS's Where's My Refund? application. You can also call a special refund hotline at 1-800-829-1954.

The most common reason for a refund check to be sent back to the IRS is that the taxpayer has moved and not left a forwarding address with the Postal Service. You can update your address information with the IRS by filing out Form 8822, Change of Address (pdf, 2 pages including instructions) and mailing this to the appropriate IRS Service Center (addresses are listed on page two of the form).

Congress has passed and President Obama has signed into law HR 3548, the Worker, Homeownership & Business Assistance Act of 2009. This law extends unemployment compensation benefits. "The extension provides for 14 weeks of extended benefit coverage for every state and an additional 6 weeks, for a total of 20 weeks, in high unemployment states where unemployment is over 8.5%," reports Alison Doyle, About.com's Guide to Job Searching.

The law provides a number of tax law changes as well. Some extend or enhance current tax breaks, while other changes are designed as revenue raisers. Here's highlights of the tax changes. Read more...

The maximum foreign earned income exclusion for 2010 is $91,500, an increase of $100 over the 2009 maximum.

For the year 2010, the personal exemption amount is $3,650 for yourself, your spouse and each dependent you are eligible to claim. This amount is unchanged from the 2009 amount. However there's one significant change for 2010. Unlike previous years, personal exemptions will not be reduced as a person's income increases.

For the year 2010, the maximum adoption tax credit will be $12,170. The IRS updated this figure as part of their annual update for several inflation-indexed figures as released in Revenue Procedure 2009-50.

The adoption credit is scheduled to sunset at the end of the year 2010, and revert back to its pre-2001 dollar limit of $5,000, or $6,000 if a special needs child is adopted.

The maximum dollar amounts that can be contributed to various types of retirement plans will remain the same for 2010, according to an announcement from the Internal Revenue Service.

The 2010 retirement plan limits will be as follows: Read more...

The IRS has released a new tax form, Schedule L, Standard Deduction for Certain Filers (2 pages including instructions, pdf) for use with 2009 tax returns. Taxpayers may need to use this form if they are claiming various additions to their standard deduction, such as the additional standard deduction for property taxes or the new car sales tax deduction. Schedule L can be attached either to the long Form 1040 or the shorter Form 1040A.

The IRS has released the income ranges for the marginal tax brackets for 2010. The income ranges are adjusted each year to take inflation into account. For 2010, the IRS notes that "recent inflation factors have been minimal" resulting in little or no change for the tax brackets. The LTCG/QD column below refers to the tax rate on long-term capital gains and qualifying dividends for each income range. The income figures below refer to taxable income, which is income after all adjustments to income, standard deduction or itemized deductions, and personal exemptions have been subtracted from total income. Read more...