The IRS recently reported that they have selected four new members and one chairman for the Electronic Tax Administration Advisory Committee (ETAAC).

Organizing and discussing electronic tax administration issues as well as assisting with communication between tax professionals and the IRS via electronic interaction is what the ETAAC does.

David R. Williams, the director of the IRS Return Preparer Office, had this to say, “ETAAC provides the IRS with valuable input regarding the development and implementation of effective electronic tax administration. The IRS is pleased with the continued support of the committee.”

These new members are taking over for the members whose terms have ended. All of the new members have promised to maintained the continuity of the ETAAC. These new members are:

Timothy Blevins, Mayetta, Kansas: Timothy is a consultant with CGI’s Tax, Revenue, and Collections Center of Excellence. Timothy has more than 30 years of experience in the performance, management and improvement efforts of government information technology solutions with the Kansas Department of Revenue: Division of Taxation and Division of Motor Vehicles.

Cyrus Daftary, Newton, Massachusetts: Cyrus is a partner with Burt, Staples & Maner, LLP. His responsibilities include: consulting with multi-national corporations and financial institutions on their compliance in the IRS tax withholding and information return reporting rules, developing and implementing tax software solutions for withholding and information return reporting, and authoring a three series treaty on E-Commerce.

Yasmine (Mimi) Nolan, Kansas City, Missouri: Mimi is the director of Tax Forms Management with H&R Block. She develops tax software, validates tax calculation software, and tests tax law changes for regulatory accuracy. She is responsible for a team that monitors and analyzes changes to the federal and state income tax forms, as well as electronic filing development, tax forms management, and quality assurance in systems development. Nolan is a member of National Association of Computerized Tax Processors.

Timur Taluy, Oxnard, California: Timur is the CEO of FileYourTaxes.com. He is responsible for the development of the user interface, the secure external interface and tax intelligence platform. He also supervises the activity that contributes to the accuracy of the final tax product. He is a member of Council for Electronic Revenue Communication Advancement.

Mark Steber, Sarasota, Florida: Mark will serve as Chairman of ETAAC for the 2011-2012 term. Mark is a CPA and the chief tax officer for Jackson-Hewitt Tax Service. He has more than 25 years of experience in the tax industry and is responsible for the overall tax service delivery compliance. He is a member of the American Institute of Certified Public Accountants.

The ETAAC sends reports to Congress regarding the progress of IRS electronic tax enterprises every June. The ETAAC began in 1998 by the IRS Electronic Tax Administration. The IRS was required to set up the ETAAC because of the IRS Restructuring and Reform Act of 1998.

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Claiming credits on your taxes will save you more money than taking tax deductions. A credit is a decrease in the amount you owe the IRS. A deduction is a only a decrease in gross revenue (income) before you figure how much tax you owe.

Here are some of the most common credits taxpayers may be able to take.

1. Education Tax Credits: There is the Hope Credit and the Lifetime Learning Credit. The Hope credit is for college tuition payments for you, your spouse or dependent. You can claim this credit for the first two years of college, for up to $1,650. On the Lifetime Learning Credit, you can claim up to $2,000 every year you, your spouse or dependent are in college.  For more info on these credits, read this post.

2. Adoption Tax Credit: Adopting a child can be very expensive, but you can claim a credit of up to $10,690 for the costs associated with adoption. There are certain rules you must follow in order to qualify for this credit, so you may want to contact a tax professional about your options. There is an income cap of $164,410 to be able to claim this credit.

3. Going Green: For several years now, the government has encouraged taxpayers to use more energy efficient products in in their homes, as well as hybrid vehicles. Energy efficient appliances, windows, water heaters, and solar panels can be a huge credit on your taxes.

4. Retirement Savings Tax Credit: The government gives tax credits to taxpayers who earn less than $25,000 as a single filer and $50,000 as joint filers while they put money in a retirement credit. The credit can be up to $1,000 depending on how you filed.

There are many other credits for which you may qualify. Talk to a tax professional to find out which credits you can claim.

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The tax filing extension deadline is quickly approaching, and the IRS, along with the Department of Health and Human Services, are reaching out to small businesses and professional service providers and asking them to take a look at the new Small Business Health Care Tax Credit to find out if they are eligible.

IRS Commissioner, Doug Shulman says, “As the filing deadlines approach, we want to make sure small business owners don’t leave any money on the table. Small businesses that offer health insurance should learn about this credit and claim it if they are eligible.”

The Small Business Health Care Tax Credit is part of the Affordable Care Act, which was put in place last year. Small businesses that pay half of the health insurance premiums for their employers may qualify for the tax credit. The credit is designed to assist small companies and tax-exempt businesses that have 25 or fewer employees with an average income of less than $50,000.

Small businesses have 2 tax filing deadlines that are coming up:

-September 15: Businesses that file each calendar year and have requested to file on September 15^th can claim the small employer health care credit on the 8941 Form and claim it as a general business credit on the 3800 Form when they file their taxes.

-October 17: Sole proprietors, partners and S-corporation shareholders who file the 1040 and ask for an extension will be able to file by October 17^th. They must use the 8941 Form and claim the credit on the 3800 Form, which is shown on line 53 on their 1040 Form.

Tax-exempt companies that file each calendar year, and asked for an extension will have until November 15^th. They will use the 8941 Form and claim the credit on the 990-T Form, Line 44f.

These deadlines are quickly approaching and businesses are planning for the tax year while the IRS works with their new partners, who are:

-The tax software industry: They are working to upgrade access to information to educate and notify small businesses about taxpayers who are eligible for this credit.

-Insurance agents, brokers and carriers: They work with small employers to guarantee that workers how receive health insurance are aware of the benefits of this credit. The Department of Health and Human Services has mailed over 2,000 agents and brokers regarding the credit.

-Small business and tax practitioner: They will give several webinars and other opportunities to learn about this credit.

More information can be found via social media like the IRS’s YouTube channel. The videos are in English, Spanish and American Sign Language. Emails and tweets will also be sent to small businesses and tax preparers.

The IRS wants to remind small businesses about the filing deadlines and will give details regarding the credit, such as:

-Businesses that have already filed their taxes may claim the credit.

-Businesses without tax liability this year can still benefit.

-Businesses that couldn’t use the credit in 2010 can claim it in the coming years.

The HHS has provided more information about this credit. Interested parties can find this information at http://www.healthcare.gov/news/blog/smallbusiness09072011.html.

Even more information about qualifying for this credit can be found at irs.gov and by searching for the Small Business Health Care Tax Credit for Small Employers.

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Many taxpayers who have disabilities can qualify for tax credits, benefits and deductions. Even the parents of children with disabilities can qualify for some tax breaks.

• If you are considered legally blind and file with Standard Deductions, you may be eligible to take larger deductions.
• If you have a disability, are employed and have Related Work Expenses, you may qualify to claim any business expenses related to your workplace. These expenses must be proven to be necessary in order for you to perform your job effectively.
• A credit for the elderly and disabled can be claimed for taxpayers 65 years of age or younger; however, they must be retired and on permanent and total disability.
• You can deduct medical expenses if you itemize your deductions by using the IRS 1040 Form, Schedule A.
• You may be able to claim the Earned Income Tax Credit if you have disabilities or are the parent of a disabled child. If you retired while you were on disability, your disability payments are considered earned income and are taxable until you are 65  years old. The EITC is a credit, so it will reduce your liability and potentially give you a refund. If you are between the ages of 25 and 65 and are disabled with no children, you may still be eligible for the EITC. Age restrictions are waived if you have a disabled child and claim the EITC. If you are eligible for Supplemental Social Security Income or Medicare, you will not be considered as having income if you choose to take the EITC.
• You can claim the Child or Dependent Care Tax Credit if you pay someone to come to your home to care for your disabled child or spouse.

If you think you or someone in your household may qualify for these credits, speak to a tax professional about all of your options for getting your maximum amount of deductions and credits.

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Many people wonder if now is the right time to purchase a new home. Some experts claim that renting is a better option right now, still, others say that purchasing a new home is a great investment in an uncertain economy because of the tax breaks. If you rent, you will miss a lot of deductions that you would get if you owned your own home.

Home Mortgage Interest- If you are renting your home, not rent-to-own, you are only paying down the home-owner’s mortgage interest. Deductions for mortgage interest are one of the biggest deductions on a Schedule A. It reduces your total tax liability.

Home Property Tax- Property taxes are another big part of your itemized expenses, but if you rent, you are only paying the home-owner’s property tax without any benefit to you.

Home Equity Interest- You can deduct interest on your home equity loan. Most taxpayers aren’t aware of this deduction, so they end up missing it.

Second Home Mortgage Interest- Most taxpayers don’t know that the interest from second homes or vacation homes can be deducted each year. If you own the title on a time share, the mortgage interest on that is deductible, as well.

Second Home Property Tax- Since you are allowed to deduct your second home mortgage interest, you can also deduct the property taxes on your second home. A lot of taxpayers miss this one, too.

Private Mortgage Insurance (PMI)- If you are required to pay private mortgage insurance, the premiums are deductible for mortgages that were made between 2007 and 2011. The IRS will, however, reduce this deduction based on your total income, so, for taxpayers in a lower tax bracket, it’s a nice benefit for this year.

There are capital gains exclusions when you sell your home, as well. The above mentioned examples are just a few of the major deductions you, as a home owner, can take. Talk to a tax professional if you have questions about any of these deductions.

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The Internal Revenue Service is giving tax relief to those who have been affected by Hurricane Irene.

The IRS declared that individuals and businesses in North Carolina, New Jersey, New York, and Puerto Rico will be given a tax break. Other areas affected by the hurricane will also receive tax relief in the coming weeks. Once FEMA has assessed the total damage, the IRS plans to make adjustments to their relief program.

This tax relief will delay many tax filing and payment deadlines. The deadline for Irene victims will be October 31, 2011. Included in this delay are corporations and businesses that had an extension on their 2010 taxes of September 15th, 2011. Individual taxpayers and businesses that received extension will receive another one, due October 17th, 2011. Included in these extensions are tax payments for the third quarter, which are usually due September 15th.

All details concerning these extensions, and information on filing a claim a disaster loss, for all of the areas affected by the hurricane can be found on www.irs.gov. Detailed information can also be found at www.disasterassistance.gov, the FEMA website. There, taxpayers can find information about damage assessment and recover.

Tax Relief Available So Far

For residents of North Carolina, New Jersey, New York, and Puerto Rico, who live in federally declared disaster areas, will receive filing and payment relief by filing a claim with the IRS. The IRS will announce more relief for other areas as they are declared. The IRS is asking that taxpayers and tax professionals keep up with pending areas by looking for “Tax Relief in Disaster Situations” on the IRS website.

Right now the IRS has applied the following counties to the relief program:
-In North Carolina: Beaufort, Carteret, Craven, Dare, Hyde, Pamlico and Tyrell;
-In New Jersey: Bergen, Essex, Morris, Passaic and Somerset;
-In New York: Albany, Delaware, Dutchess, Essex, Greene, Schenectady, Schoharie and Ulster; and
-In Puerto Rico: Caguas, Canovanas, Carolina, Cayey, Loiza, Luquillo and San Juan.

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Many taxpayers may not be thinking about their taxes this time of year, but the summer is the best time to start planning for next year. If you keep your financial statements and other important documents organized and safe, it will make your tax preparations that much easier, and, if you receive a letter from the IRS, you would stress over trying to find the right paperwork.

The IRS has a few helpful hints regarding record keeping.

1. The IRS won’t require you to keep your records in any certain order, but you should keep all documents that could affect your taxes. You should keep them in a safe place, and keep them together.

2. Taxpayers should keep the following records for the last three tax years:

• Bills
• Credit card and miscellaneous receipts
• Invoices
• Mileage logs
• Cancelled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return

Taxpayers should keep records that relate to their property for at least 3 years after they sell the property. Some examples are:

• A home purchase or home improvement
• Stocks and other investments
• Individual Retirement Arrangement transactions
• Rental property records

3. For small business owners, keep all of your employment tax records for no less than 4 years after they are due or paid. These documents would be:

• Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
• Proof of purchases: Cancelled checks, cash register tape receipts, credit card slips and invoices
• Expense documents: Cancelled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
• Documents to verify your assets: Purchase and sales invoices, real estate closing statements and cancelled checks

Look at IRS Publication 552, Record Keeping for Individuals, Publication 583, Starting a Business and Keeping Records, or Publication 463, Travel, Entertainment, Gift and Car Expenses. You can find these publications at irs.gov or by calling 800-829-3676.

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If you are age 65 or older, the following tax tips are for you.

Increased standard deduction
You qualify for a higher deduction if you are 65 years or older or were considered legally blind before the end of the year. You can’t, however, itemize your deductions if you take a standard deduction.

Social security taxes
Your income level determines whether or not you owe taxes on your Social Security. If your Social Security is your only source of income, you will probably not have to pay any taxes or file a tax return. Talk to a tax professional before you decide whether or not to pay taxes on your Social Security.

Required minimum distribution (RMD)
For retired persons who were older than 70 years old in 2009, a new tax law has eased the rules for mandatory minimum IRA withdrawals. Before the new tax law, you had to take a mandatory amount every year. This one-time law allows you to make a withdrawal only if you need it. It was put in place to keep retirees from having to withdrawal money from their IRAs when they don’t need to.

Roth IRA benefits
Roth IRAs are tax-free, which make things financially easier when you have no other income. You have the ability to change from a traditional IRA to a Roth IRA by doing a Roth conversion. You will have to pay taxes for the year you changed to a Roth IRA, but it will be much more helpful for the long-term. Speak to a tax professional to learn more about converting to a Roth IRA.

Winnings
Some retirees like to gamble at casinos, but they may forget to report their winnings to the IRS, which can get them into trouble. Gambling winnings are considered taxable income and must be reported on your taxes.

Medical expenses
The IRS allows for several deductions for your medical expenses if you itemize your deductions. Be aware that you may only claim medical expenses if they are more than 7.5% of your AGI. Record all of your expenses during the year in order to get your maximum deductions.

Stock losses
With the up and down stock market in the last few weeks, millions have lost money, including seniors. You can offset your capital gains if you report your stock losses now. You will also be able to deduct nearly $3,000 in losses and any other losses can be carried over to next year until it’s gone.

Seek professional advice
Tax codes are updated and changed constantly, so it can be difficult to keep up. In order to make sure you are taking every credit and deduction you are entitled to, it would be wise to seek the advice of a tax professional. They will help you fill out and submit your tax return, which will give you the maximum savings you can get.

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If you are thinking of taking one of those tax refund anticipation loans, you might want to think twice about it. It is probably better to just wait it out because you will get your money. These short terms loans end up costing American taxpayers over $900 million in fees every year. Over 12 million people shelled out high fees and percentage rates in order to get their refunds faster.

Here are 3 reasons to not even ask for this refund anticipation loan.

1. Large Fees: If you add up the loan fees, the tax preparation fees and the e-filing charges, the average refund of $2000.00 is reduced by nearly $300.00 just to begin the filing of your return. Every one of us wants to know when we will get our refunds and some of us need that extra money so badly we are willing to spend the extra money to get it faster.
2. Outrageous APR: In order to go take a loan on your refund, you could end up paying between 222.5% and 2000% in interest. This is no joke. We wouldn’t accept those terms for any other kind of loan, so why accept it for money that is already rightfully yours?
3. The IRS Could Hold Up Your Refund: If the IRS finds a problem with your tax return, they could take weeks, or sometimes even months to finish processing your refund. If this is the case, your short-term loan turns into a long-term loan and you will end up having to pay out those outrageous interest rates. If that happens, goodbye tax refund.

If you take the time to plan ahead, you won’t end up looking for a way to get your refund so quickly. You can wait it out and not stress over it. There are certain things you can do to not stress over the whereabouts of your refund:

3 Things You Can Do Next Year

1. You can reduce your tax withholding for next year.
2. You can file your taxes as soon as you get your W-2, file electronically and opt-in for direct deposit.
3. Try to change your financial circumstances (i.e. get yourself into a smaller tax bracket or look for deductions and credits).

If you have any questions about your refund or a refund loan, please contact a tax professional.

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Many taxpayers are busy updating their resumes and going to job fairs during the summer. The IRS wants everyone to be aware that most people can tax deductions on their tax returns for some of their job hunting expenses.

Here are 7 tips from the IRS regarding taking deductions for job search expenses.

1. All of the expenses must be related to your job search for your current career. You can’t take a deduction for job search expenses for a new career.

2. You are allowed to deduct expenses for employment agency fees while you are looking for work in your current career field. If those fees are paid back by an employer, you have to include that in your gross income.

3. You are allowed to take deductions for copies and mailing of your resume to employers if you are looking for a job in your current career field.

4. You may be allowed to deduct travel expenses to and from an interview that relates to your current occupation. Travel expenses include mileage and gas, but only if it’s related to your job search.

5. You may not take a deduction for job searches if there is a major gap in your employment. Check with the IRS website to find the specifics of this rule.

6. You may not take deductions if you are looking for your first job.

7. Your job search expenses are limited. You may only claim 2% of the adjusted gross income of your previous employer. You may figure your deductions on Schedule A when you file your tax return.

For more detailed information and instructions on deducting job search expenses, see Publication 529, Miscellaneous Deductions. You can find this publication on www.irs.gov or by calling 800-829-3676.

Daniel Stoica Accounting Professional