1685 Old Norcross Rd, Suite B900
Lawrenceville, GA 30046
Phone: 770-277-3830 Fax: 770-277-3840

Infinity Tax and Accounting's TAX TIPS:

This newsletter shares tax tips and tax updates to all of our value customers. We hope that you will find this information useful and enjoyable.

Facts about Taking Early Distributions from IRA To File or Not To File
Seven Things you Should Know When Selling Your Home Top Five Facts about Dependents and Exemptions
Tips for Taxpayers Making a Move Offset Education Costs
Owe the IRS a Prior Year Return? Five Important Tax Credits
Things the IRS Wants You to Know About Identity Theft Top Ten Facts about the Tuition and Fees Deduction
The Five Filing Status Possibilities Tax Benefits for Job Seekers
Determine Your Correct Filling Status

Facts About Taking Early Distributions from IRA:

If you took an early distribution from your retirement plan, here are some things you need to know:

  1. Payments you receive from your IRA (Individual Retirement Arrangement) before you reach age 59 ½ are generally considered early or premature distributions.
  2. Early distributions are usually subject to an additional 10 percent tax.
  3. Early distributions must also be reported to the IRS.
  4. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution.
  5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.
  6. If you made nondeductible contributions to an IRA and later take early distributions from that same IRA, the portion of the distribution attributable to those contributions is not taxed.
  7. If you received an early distribution from a Roth IRA the distribution attributable to contributions is not taxed.
  8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan.

There are several exceptions to the additional 10 percent early distribution, such as when the distributions are used for purchase of a first home, certain medical and educational expenses or if you become disabled.


Seven Things You Should Know When Selling Your Home Back to List of Tax Tips

You may be able to exclude the gain from their income. Here are seven things every homeowner should know if you sold, or plan to sell their house.

  • Amount of exclusion. When you have gain from the sale of your home, you may be able to exclude up to $250,000 of the gain from your income. For most taxpayers filing a joint return, the exclusion amount is $500,000.
  • Ownership test. To claim the exclusion you must have owned the home for at least two years during the five year period ending on the date of the sale.
  • Use test. You also must have lived in the house and used it as your main home for at least two years during the five year period ending on the date of the sale.
  • When not to report. If you are able to exclude all of the gain from the sale of your home, you do not need to report the sale on your federal income tax return.
  • Reporting taxable gain. If you have gain which cannot be excluded, it is taxable and must be reported on your tax return using Schedule D.
  • Deducting a loss. You cannot deduct a loss from the sale of your home.
  • Rules for multiple homes. If you have more than one home, you may only exclude gain from the sale of your main home and must pay tax on the gain resulting from the sale of any other home. Your main home is generally the one you live in most of the time.

Tips for Taxpayers Making a Move Back to List of Tax Tips

If you changed your home or business address, you’ll want to remember these six tips to ensure you receive any refunds or correspondence from the IRS.

  1. You can change your address on file with the IRS in several ways:
  • Correct the address legibly on the mailing label that comes with you tax package
  • Write the new address in the appropriate boxes on your tax return;
  • Use Form 8822, Change of Address, to submit an address or name change any time during the year
  • Give the IRS written notification of your new address by writing to the IRS center where you file your return. Include your full name, old and new addresses, Social Security Number or Employer Identification Number and signature.
  • If you filed a joint return, be sure to include the information for both taxpayers. If you filed a joint return and have since established separate residences, both taxpayers should notify the IRS of your new addresses
  • Should an IRS employee contact you about your account, you may be able to verbally provide a change of address
  1. Be sure to also notify your employer of your new address so you get your W-2 forms on time.
  2. If you change your address after you’ve filed your return, don’t forget to notify the post office at your old address so your mail can be forwarded.
  3. Taxpayers who make estimated payments throughout the year should mail a completed Form 8822, Change of Address, or write the IRS center where you file your return. You may continue to use your old pre-printed payment vouchers until the IRS sends you new ones with your new address. However, do not correct the address on the old voucher.
  4. The IRS does use the Postal Service’s change of address files to update taxpayer addresses, but it’s still a good idea to notify the IRS directly.


Owe the IRS a Prior Year Return? Back to List of Tax Tips

Don’t delay; file your prior year return now! The failure to file a federal tax return can be costly; whether you end up owing more or missing out on a refund.

If you owe taxes, a delay in filing may result in a failure-to-file penalty and interest charges. The longer you delay, the larger these charges grow.

If you are due a refund and don’t file you could lose your refund. There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether. The deadline for claiming refunds is generally three years after the return due date.

There are several reasons taxpayers don’t file their taxes. Perhaps you didn’t know you were required to file. Maybe, you just keep putting it off or simply forgot. Whatever the reason, it’s best to file your return as soon as possible. If you need help, even with a late return, the IRS is ready to assist you. Here are some steps for filing your prior year return:

  1. Gather prior year tax return information. You will need Social Security numbers, income information and records for expenses, deductions and credits.
  2. Get forms and publications. Make sure you get the forms and publications for the year of the tax return you are filing.

Things the IRS Wants You to Know About Identity Theft Back to List of Tax Tips

  1. If you receive a letter or notice from the IRS which leads you to believe someone may have fraudulently used your Social Security Number, respond immediately to the name and address or phone number printed on the IRS notice.
  2. If you receive a letter from the IRS that indicates more than one tax return was filed for you, this may be a sign that your SSN was used fraudulently.
  3. Another sign that you may be the target of identity theft is an IRS letter indicating you received wages from an employer unknown to you.
  4. The IRS has a department which deals specifically with identity theft issues. The IRS Identity Protection Specialized Unit is available if you have been in contact with the IRS about an identity theft issue and have not achieved a resolution.
  5. You can contact the IRS Identity Protection Specialized Unit by calling the Identity Theft Hotline at 800-908-4490 Monday through Friday from 8:00 am to 8:00 pm local time ( Alaska and Hawaii follow Pacific Standard Time).
  6. The IRS Identity Protection Specialized Unit is also available if you believe your identity may be at risk of being stolen due to a lost or stolen purse or wallet or due to questionable activity on your credit card or your credit report.
  7. The IRS never initiates communication with taxpayers about their tax account through emails. If you receive an e-mail or find a Web site you think is pretending to be the IRS, forward the e-mail or Web site URL to the IRS at phishing@irs.gov.
  8. The IRS has many more resources available to help inform taxpayers about identity theft on the IRS Web site. You can also visit the IRS Identity Theft Resource Page, which you can find by typing Identity Theft Resource Page in the search box on the IRS.gov home page.
  9. The Federal Trade Commission is also available to assist taxpayers with identity theft issues. You can reach them at 877-ID-THEFT (877-438-4338).

The Five Filing Status Possibilities Back to List of Tax Tips

Everyone who files a federal tax return must determine which filing status applies to them. It’s important you choose your correct filing status as it determines your standard deduction, the amount of tax you owe and ultimately, any refund owed to you.

There are two things to consider when determining your filing status:
First, your marital status on the last day of the year determines your filing status for the entire year. Secondly, if more than one filing status applies to you, choose the one that gives you the lowest tax obligation. Here are the five filing status options:

  1. Single, This will generally apply to anyone who is unmarried, divorced or legally separated according to your state law.
  2. Married Filing Jointly. A married couple may file a joint return together. If your spouse died during the year, you may still file a joint return with that spouse for the year of death.
  3. Married Filing Separately. A married couple may elect to file their returns separately.
  4. Head of Household. This generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
  5. Qualifying Widow(er) with Dependent Child. You may be able to choose this filing status if your spouse died during 2006 or 2007, you have a dependent child and you meet certain other conditions.

Facts to Help Determine Your Correct Filing Status Back to List of Tax Tips

Determining your filing status is one of the first steps to filing your federal income tax return. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Your filing status is used to determine your filing requirements, standard deduction, and eligibility for certain credits and deductions, and your correct tax.

Some people may qualify for more than one filing status. Here are eight facts about filing status that the IRS wants you to know so you can choose the best option for your situation.

  1. Your marital status on the last day of the year determines your marital status for the entire year.
  2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
  3. filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
  4. A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
  5. If your spouse died during the year and you did not remarry during the tax year, usually you may still file a joint return with that spouse for the year of death.
  6. A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
  7. Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
  8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during last 2 years, you have a dependent child, have not remarried and you meet certain other conditions
Proud being a member of

TAX
AND TIPS
Income Tax Preparation

Bookkeeping Services
Payroll Services
QuickBooks Services
Business Consulting

Tax Advice & Help

Things the IRS Wants You to Know About Identity Theft
Five Important Tax Credits
Top Five Facts about Dependents and Exemptions
Top Ten Facts about the Tuition and Fees Deduction

Business Hours:
Monday to Saturday
10:00 am to 6:00 pm

Tax Season:
Seven days / week
9:00 am to 8:00 pm