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IRS tips for the 2013 tax-filing season

Following the January tax law changes made by Congress under the American Taxpayer Relief Act, the Internal Revenue Service plans to open the 2013 filing season and begin processing tax returns on Jan. 30. The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The vast majority of tax-filers — more than 120 million households — should be able to begin filing tax returns starting Jan. 30. The IRS estimates that remaining households will be able to start filing in late February or into March. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most taxpayers in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.

If you use a tax-preparer, be aware that all paid tax-preparers should now have IRS-issued preparer ID numbers for use on any individual tax returns they prepare. By the end of 2013, paid preparers who are not enrolled agents, certified personal accountants or attorneys must take a basic competency test on Form 1040 tax preparation. They will become Registered Tax Return Preparers (RTRPs) once they pass it. Hiring a person with one of these four important credentials to do your taxes is your best choice. And remember that your refund should only be deposited directly into accounts that are in your own name, your spouse’s name or both if it’s a joint account.

Employers will be withholding more Social Security tax in 2013 from most employees’ paychecks since the temporary payroll tax reduction has expired. Employers and payroll companies will handle the withholding changes, so employees typically won’t need to take any action. As always, however, the IRS urges workers to review their withholdings every year and, if necessary, fill out new W-4 forms to submit to their employers.

Don’t miss these tax benefits

  • E-file — Using IRS E-file to prepare and file can help ensure that you don’t miss any new tax breaks or changes and will eliminate most errors. Plus it speeds up your refund and gives you confirmation that the IRS got your tax return. For many, e-filing can be free using brand-name software at IRS.gov through the Free File program.
  • Free tax help — Many lower-income and elderly taxpayers are eligible for free tax preparation and e-filing at help sites staffed by IRS-trained volunteers. Dial the United Way at 211 or the IRS at 1-800-906-9887 to find the help site closest to you.
  • Tax credit for lower-income workers — The Earned Income Tax Credit (EITC) generally is for people who worked part or all of the year but didn’t make a lot of money. For 2012, a married couple filing jointly with three eligible children may qualify if they made less than $50,270. EITC, worth up to $5,891, is highest for married couples with children, but couples without children and single filers can also qualify.2012 updates

2012 Updates

The 2012 standard deduction rises to $5,950, up $150 from 2011. For married couples filing jointly, it rises to $11,900, up $300. The personal exemption is $3,800 per person, up $100.

The 2012 rate for business use of your vehicle is 55.5 cents per mile; the rate for use of your vehicle to get medical care or to move is 23 cents per mile. For miles driven helping a qualified charity, the 2012 rate is 14 cents per mile.

Highlights of the American Taxpayer Relief Act

  • Child Tax Credit — A temporary increase of the Child Tax Credit from $500 to $1,000 was made permanent. The credit generally can be claimed for each qualified child under age 17.
  • Sales Tax Deduction — The State and Local Sales Tax Deduction was extended through 2013. Since most Tennesseans can’t take a deduction for state income taxes paid, the sales tax deduction can be a valuable benefit.
  • Child and Dependent Care Credit — This credit is usually claimed by those who pay for child or dependent care while they work or look for work. The maximum expenses that can be claimed had been temporarily increased from $2,400 to $3,000 for one child and from $4,800 to $6,000 for two or more children. Those increases were made permanent.
  • Capital Gains Tax — Temporary reductions in the capital gains tax rates were made permanent for all tax filers except those with incomes above $400,000 ($450,000 for joint filers) beginning with the 2013 tax year.
  • College Expenses — The American Opportunity Tax Credit was extended through 2017. It generally allows a credit for up to $2,500 for higher education tuition and required fees paid. A separate deduction of up to $4,000 for tuition and fees paid was extended through 2013. A deduction of up to $2,500 in student loan interest paid was made permanent.
  • Forgiven Mortgage Debt — The law extends through 2013 relief from having to pay taxes on forgiven or canceled mortgage debt of up to $2 million. Most other types of forgiven debts are taxable as income.

Visit www.irs.gov for more information about the American Taxpayer Relief Act of 2012.

Scam warning

Don’t be a scam victim! Even though the IRS is active online (including Twitter, YouTube and Facebook), remember that the agency does not initiate contact by email. Unsolicited emails that appear to be from the IRS are usually dangerous identity-theft scams. Visit IRS.gov to learn how to report tax scams or fraud.

How to contact the IRS

Navigate your way through the tax season online and skip waiting in line. All you need is a computer and Internet access because the IRS website, www.irs.gov, has a wealth of free information and online tax support.

Remember that the IRS no longer automatically sends out paper tax forms, but you can get forms at IRS.gov or by calling 1-800-TAX-FORM. Forms are also available at IRS taxpayer-assistance centers and at some libraries and post offices.

For your mobile device, download the free IRS2Go app to check your refund status, order tax transcripts, get tax information and more.

You can call the IRS toll-free at 1-800-829-1040 (1-800-829-4059 for TTY/TDD). For business questions, call the IRS at 1-800-829-4933.

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