Author: Eric Buechler

March 26, 2013

Department now offers free electronic filing for property tax returns

ST. PAUL, Minn. –– The Minnesota Department of Revenue is pleased to announce that most homeowners can now file for their property tax refund on our website for free.

 “We are thrilled to offer a free electronic filing option. It’s something we have worked toward for years,” said Terri Steenblock, Assistant Commissioner for Individual Taxes. “Homeowners who choose this option will be able to file their property tax return quickly and easily, allowing them to receive their refund even faster.”

 To file electronically for free, you must be:

·         A homeowner filing an original property tax refund

·         Filing a refund for property taxes paid in 2012 or later

·         Living in your home and not renting or using it for a business

·         Electing direct deposit for your refund

 What you need to electronically file:

·         Social Security number

·         Address

·         Valid email address

·         Household income

·         Qualifying dependent information

·         County property tax statement

·         Your bank account and routing number

 This new, free e-filing option saves the state more than $400,000 a biennium.

The department is committed to doing everything we can to expand our online services.

To electronically file your property tax return, click here. Or type keyword homeowner in the Search box on our website, www.revenue.state.mn.us.

To view our instructional video on filing property tax returns electronically, click here.

 Contact: Lisa Erickson

 Phone: 651-556-6397

 [email protected]   

Effective 9:00am Eastern time on Sunday, February 10, 2013, the IRS will start processing 2012 returns that contain Form 4562, Depreciation and Amortization. This will include the Form 1040-family tax returns, Form 1065/1065-B, Form 1120-family tax returns and Form 990-family tax returns.

On Thursday, February 14, 2013, the IRS plans to start processing 2012 returns that contain Form 8863, Education Credits.

IRS lost another case recently.  This time the 6th Circuit Court of Appeals refused to reconsider a 2012 decision that payments made to laid off workers aren’t subject to FICA taxes (Social Security and Medicare payroll taxes).  For tax years 2011 and 2012, that’s a tax savings of $56.50 per $1000.00 of compensation per employee, plus the matching payroll savings for their employer.  As the IRS estimates refund claims could hit $1 billion, a Supreme Court appeal is likely.  Stayed tuned to this issue as you may want to apply for a refund should your employer have withheld FICA on your severance pay when you were laid off.

IRS is announcing on Monday, January 28th that they will NOT be processing Form 8863 beginning on January 30th.  Instead, it becomes one of the forms that is being delayed until late February or early March.  This is a fairly common form that will impact many taxpayers.  This form is used to report credits and deducitons related to tuition and education expenses.

In 2003 46% of US Tax Returns were e-filed.  Now, let’s fast forward to the year 2010 where 78% of all US Tax Returns were e-filed.  That’s an incredible leap!  That means more IRS agents available to answer your questions, right.  Don’t hold your breath. 

After reading these stats, three questions came to mind regarding this robust increase to our nation’s electronic tax filing.

1. Does IRS deserve applause for promoting e-file services? 
2. Rather should we high-five private tax software companies, accounting firms, and the general public for their efforts in embracing the modern electronic tax system?             (I would say, give all factions three cheers!)
3. Now for the disturbing question…  How many self-filed electronic returns were done correctly? 

Why is this disturbing to me?  Here’s why.  I just picked up a client that is pretty intelligent.  The tax return was 99% correct, using consumer tax software.  He followed the software’s tax questionnaire, as I imagine most do-it-yourself filers do.  Good so far.  Let’s fast forward 2 years, this is where I come in. 

In reviewing the audit notice and self-prepared tax return sent to me via PDF, I soon discovered that my client had incorrectly filled out the wrong column of one of the business forms.  Although my client used the correct tax form, the figures were in the wrong column.  This was an innocent error and was most likely due to my client not really understanding the tax forms nor the end result of the business deduction that he took.   Tis one little error cost my client a few thousand dollars, interest, penalties, and a bunch of his precious time. 

I always say to new clients, “within any 5 year period – my consulting fees will be paid for by my tax saving advice, or at least by keeping you out an IRS office.”  I’m not advocating everyone use a tax advisor, but hopefully I’ve provided a pause for thought when it’s time to seek professional guidance.

Below are the rest of the 2010 tax return statistics recently published by IRS.

2010 Complete Report estimates:

• 142,892,050 Total, all individual returns filed
• 84,071,480 1040 returns
• 40,810,489 1040A returns
• 18,010,081 1040EZ returns

Estimates of returns filed electronically:

• 111,559,553 Total, all individual returns filed
• 62,427,066 1040 returns
• 35,419,288 1040A returns
• 13,713,200 1040EZ returns

Form 1040 tax debts can be discharged in bankruptcy, that is, only if the tax returns were filed prior to the bankruptcy filing and prior to an IRS assessment.  Even if the Form 1040 is filed late, the “tax return” requirement is deemed to be satisfied for the bankruptcy discharge.  Please note, any tax assessment prior to filing the late tax return cannot be discharged in bankruptcy.  Bankruptcy attorneys, who should be experts in this area of taxation (or at least well versed), do make this mistake. 

Lesson: File all returns prior to your bankruptcy filing and prior to assessment, even if late.  Some or all of your Form 1040 tax debt will then has a chance to be washed away with your bankruptcy filing.

Bankruptcy is a complex issue.  Therefore, this is not intended to be specific legal or tax advice.  Seek an expert for guidance.

Source Document: CC-2010-016

The non-custodial parent must attach a signed (by custodial parent) Form 8832 to claim the child exemption on their tax return.  Tax Court says it will disallow the child exemption deduction if Form 8832 is not signed and attached to the return.  That said, there is an exception to this rule.  Both conditions below must apply:

1. Divorce/Separation Agreement awards the child exemption to the non-custodial parent, if child support is current and paid timely, and
2. This exception only applies to divorces that occurred prior to 2009.

Although this Tax Court Summary Opinion is not an official IRS stance, it does provide guidance to what you would face if your tax return was audited and this form is not attached and signed by the custodial parent.  So please, get Form 8832 signed by the custodial parent.

 The IRS has announced that the 2013 gift tax exclusion increases from 2012’s $13,000 per person per year to $14,000 per person per year for 2013.