Tax Season Toolkit: everything you need to navigate through the busy season.As California's rainy season gives way to reveal an azure spring Azure Spring is a hot spring in the Lower Geyser Basin of Yellowstone National Park in the United States. The water temperature in the spring is 186°F (86°C).[1] References 1. ^ Ball, James W.; Nordstrom, D. Kirk; Jenne, Everett A.; Vivit, Davison V. sky, CPAs know that the greater storm is yet to come. As the holiday season turns into tax season, bringing the promise of constant, adrenaline-fueled deadlines, CPAs can be excused for turning a sentimental eye to winter. But never fear! CalCPA's annual Tax Season Toolkit is here to help. As you meet with clients, research what's new in the tax codes and update your software to provide the best service you can, spring ahead and confidently meet the only season that's never late or early--tax season. California Tax Tips Practitioner Hotline Hours The tax practitioner hotline is available Monday-Friday, 8 a.m.-5 p.m., at (916) 845-7057. The hotline is closed on weekends and state holidays. You also can fax questions to (916) 845-6377. California Package X A copy of the FTB's Package X will make tax season a little easier. Package X contains 2005 California tax forms and instructions and is offered in bound and loose-leaf print versions. The FTB FTB Franchise Tax Board (California; they collect income and sales tax) FTB Family Tax Benefit (Australian welfare assistance) FTB First Time Buyer (housing) is taking orders and will begin shipping Package X in January. For information, or to download an order form, go to www.ftb.ca.gov/professionals/packageX. Or call (916) 845-7070. E-file Resources The FTB has compiled a wealth of e-file resources, including FAQs, an e-file opt-out form (Form 8454), program information, a list of approved e-file software providers, an e-file tutorial, sample client letters, and forms and publications at www.ftb.ca.gov/professionals/efile/M_e_file.html. You can contact the FTB's e-file help desk at (916) 845-0353 or by fax at (916) 845-0287. To e-mail the FTB with your e-filing questions, visit www.ftb.ca.gov/emailapps/ero.asp or e-file@ftb.ca.gov. E-signature Option The FTB accepts electronic signatures for e-filed returns, mirroring IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. procedures by allowing taxpayers and tax professionals to sign using a personal identification number. The FTB accepts electronic signatures using Self-Select PIN, Practitioner PIN methods and the ERO ERO European Radiocommunications Office ERO Education Review Office (New Zealand) ERO Explicit Route Object (protocol) ERO Eastern Regional Office ERO Electronic Return Originator PIN. In addition, you still can use the California E-file Return Authorization (Form 8453). For more information, including an e-Signature Responsibilities Chart and related FAQs, visit www.ftb.ca.gov/professionals/efile/esig.html. California Real Estate Withholding Information for Sellers and Buyers For sales closing during 2005, California law California Law consists of 29 codes, covering various subject areas, the State Constitution and Statutes. See also
For more information on California's withholding requirements, visit www.ftb.ca.gov/individuals/wsc/California_Real_Estate.html. For questions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc real estate withholding requirements, call (916) 845-7315. The FTB also has changed the forms for real estate sales closing on or after Jan. 1, 2005. Forms 593-C and 593-L have been expanded to include non-individuals, and Form 593-W has been eliminated. For more, visit www.ftb.ca.gov/aboutftb/newsroom/withholding2005.html. [ILLUSTRATION OMITTED] Tax Rates, Tax Threshold and Standard Deductions The name given to a fixed amount of money that may be subtracted from the adjusted gross income of a taxpayer who does not itemize certain living expenses for Income Tax purposes. The tax rates have been indexed by 2.8 percent for the 2005 tax year. The tax threshold has risen to $10,764 of adjusted gross income for single and married filing separate taxpayers, and $21,527 for married filing joint, surviving spouse and head of household taxpayers. The standard deduction will increase for single or married filing separate taxpayers from $3,165 to $3,254. For married, qualifying widow(er), or head of household taxpayers, the standard deduction increases from $6,330 to $6,508. The personal exemption Personal exemption Amount of money a taxpayer can exclude from personal income for each member of the household in calculation of a tax obligation. personal exemption See exemption. credit increases for single, married filing separate, or head of household taxpayers from $85 to $87 and for married or surviving spouses from $170 to $174. The dependent exemption credit rises from $265 to $272 for each dependent. Other tax credits affected by indexing include the Joint Custody joint custody n. in divorce actions, a decision by the court (often upon agreement of the parents) that the parents will share custody of a child. There are two types of custody, physical and legal. Head of Household Credit, Dependent Parent Credit, Qualified Senior Head of Household Credit and the Renter's Tax Credit. For more, visit www.ftb.ca.gov/aboutFTB/press/2005/05_48.html. AB 115 In October, Gov. Schwarzenegger signed AB 115, which conforms California personal income and corporate tax law to federal law for taxable years Taxable year The 12-month period an individual uses to report income for income tax purposes. For most individuals, their tax year is the calendar year. beginning after 2004. Some significant areas of conformity include: * S corp changes in the American Jobs Creation Act; * Filing status and dependency exemptions related to the definition of a qualified child; and * Liberalized student loan deduction changes for taxable years beginning on or after Jan. 1, 2006. In general, AB 115 conforms California tax law with the Economic Growth and Tax Relief Reconciliation Act of 2001; the Job Creation and Worker Assistance Act of 2002; the Jobs and Growth Tax Relief Reconciliation Act of 2003; the Medicare Prescription Drug, Improvement, and Modernization Act The Medicare Prescription Drug, Improvement, and Modernization Act (Pub.L. 108-173, 117 Stat. 2066, also called Medicare Modernization Act or MMA) is a law of the United States which was enacted in 2003. of 2003; the Working Families Tax Relief Act of 2004; and the American Jobs Creation Act of 2004. However, there are many areas of nonconformity non·con·form·i·ty n. pl. non·con·form·i·ties 1. a. Refusal or failure to conform to accepted standards, conventions, rules, or laws. b. , including health savings accounts A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. ; deduction of income attributable to domestic production activities; and passive activity losses regarding real estate. For more information, see Page 27. New ID Number for Taxpayers Beginning Jan. 1, 2006, many of the notices and bills the FTB sends to your clients will have a unique identification number instead of their Social Security number. The change is the result of a new California law aimed at protecting taxpayers' Social Security numbers from unauthorized use. Business e-file The FTB will unveil the California Business e-file Program in January. If you are enrolled in the California e-file Program, you do not need to enroll again for Business e-file. However, if your office will have different contact information for Business e-file, you must update your information at www.ftb.ca.gov/online/8633. For more information, including applicable forms and schedules, visit www.ftb.ca.gov/professionals/taxnews/tn_05/09_10.html#9. For California Business e-file questions, contact the FTB's e-Programs Customer Service at (916) 845-0353 or e-file@ftb.ca.gov. FTB Web Tools Forms and Publications www.ftb.ca.gov/forms View, print and download California tax forms. A visit to this page ensures you have the latest version of any FTB form when you need it. You'll also find booklets containing returns, related forms and instructions; a listing of publications providing more detailed information on specific topics, such as real estate withholding; as well as links to federal tax forms, tax forms for other states, sales and use tax Sales and use tax refers to:
View Payments and Balance Due You can view estimated tax Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. payments, recent payments applied to a balance due, current balance due and a summary of each balance due tax year for personal income tax accounts at www.ftb.ca.gov/online/myacct. You'll need your client's Social Security number and 2005 customer service number to access individual account information. The customer service number can be obtained at www.ftb.ca.gov/online/csn. Web Pay This electronic personal income tax payment method electronically debits payments from the customer's bank account. With Web Pay, you can make estimated tax, bill, return or extension payments, as well as request an installment agreement for your client. Learn more at www.ftb.ca.gov/online/webpay. Check e-file Return Status You can check on the status of an e-file return at www.ftb.ca.gov/online/ifp/ack.html as long as your web browser The program that serves as your front end to the Web on the Internet. In order to view a site, you type its address (URL) into the browser's Location field; for example, www.computerlanguage.com, and the home page of that site is downloaded to you. supports 128-bit SSL (Secure Sockets Layer) The leading security protocol on the Internet. Developed by Netscape, SSL is widely used to do two things: to validate the identity of a Web site and to create an encrypted connection for sending credit card and other personal data. encryption The reversible transformation of data from the original (the plaintext) to a difficult-to-interpret format (the ciphertext) as a mechanism for protecting its confidentiality, integrity and sometimes its authenticity. Encryption uses an encryption algorithm and one or more encryption keys. . Federal Tax Tips Practitioner Priority Service The IRS Practitioner Priority Service (formerly the Practitioner Hotline)--(866) 860-4259--is a toll-free, accounts-related service for tax practitioners. It is your first point of contact for IRS assistance regarding your clients' account issues. Calls are routed to a designated site based on the practitioner's area code. Practitioner Priority Service hours are 7:30 a.m.-5:30 p.m. local time, weekdays. No More IRS Package X Due to budget cuts in printing and shipping, the IRS has eliminated Package X, Reference Copies of Federal Tax Forms and Instructions, effective Tax Year 2005. As a result, IRS Pub. 1045, Tax Professional's Guide to Federal Tax Products, also will become obsolete. IRS Web Tools In addition to the IRS e-file program, www.irs.gov/efile/article/0,,id=118663,00.html, other e-services for tax professionals are available. Disclosure Authorization allows tax professionals to electronically submit Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization. Electronic Account Resolution allows tax professionals to expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. closure on clients' account problems by electronically sending and receiving account-related inquiries. The Transcript Delivery System allows practitioners to request and receive account transcripts, wage and income documents, tax return transcripts, and verification of non-filing letters. Visit www.irs.gov/taxpros/article/0,,id=109646,00.html. The IRS also offers an array of electronic payment options for individuals and businesses, including electronic funds withdrawal and the Electronic Federal Tax Payment System. The EFTPS EFTPS Electronic Federal Tax Payment System EFTPS Electronic Funds Transfer Payment System is a free service provided by the Treasury, and allows businesses and individuals to pay their federal taxes electronically. For more information, visit www.EFTPS.gov. Additionally, the IRS has set up a directory of prior publications, which may prove valuable when doing a prior year return and can help refresh (1) To continuously charge a device that cannot hold its content. CRTs must be refreshed, because the phosphors hold their glow for only a few milliseconds. Dynamic RAM chips require refreshing to maintain their charged bit patterns. See vertical scan frequency and redraw. your memory to previous law. Visit www.irs.gov/pub/irs-prior. Mandatory e-Filing for Some Corps, Exempt Organizations The IRS will require certain large corporations and tax-exempt organizations to e-file their income tax or annual information returns beginning in 2006. For tax year 2005 returns due in 2006, the regulations require corporations with total assets of $50 million or more to e-file Forms 1120 and 1120S. In addition, tax-exempt organizations with total assets of $100 million or more will be required to e-file tax year 2005 Form 990. Beginning in 2007, the e-filing requirement will be expanded to include tax year 2006 tax returns of corporations and tax-exempt organizations with $10 million or more in total assets. In addition, private foundations and charitable trusts The arrangement by which real or Personal Property given by one person is held by another to be used for the benefit of a class of persons or the general public. will be required to electronically file their Form 990-PF regardless of their asset size. The electronic filing requirements only apply to entities that file at least 250 returns, including income tax, excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. , information and employment tax returns, during a calendar year. Facsimile Signatures Allowed Recent IRS rules outlined in Rev. Proc. 2005-39 allow corporate officers or duly authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: agents to sign employment tax forms using alternative signature methods, including mechanical devices and computer software. The new rules apply to any form in the 940 series; Form 1042, Annual Withholding Tax The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. Return for U.S. Source Income of Foreign Persons; Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips; Form CT-1, Employer's Annual Railroad Retirement Tax Return; and any variant of these forms. Increased Optional Standard Mileage Rates The IRS increased the optional standard mileage rates for the final four months of 2005 to 48.5 cents a mile for all business miles driven Sept. 1-Dec. 31, 2005-an 8-cent increase from the 40.5-cent rate in effect for the first eight months of 2005, as set by Rev. Proc. 2004-64. The new four-month rate for computing deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). medical or moving expenses will be 22 cents a mile, up from 15 cents for the first eight months of 2005. The rate for providing services for charitable organizations This article is about charitable organizations. For other uses of the word charity, see Charity. A charitable organization (also known as a charity) is an organization with charitable purposes only. is set by statute, not the IRS, and remains at 14 cents a mile. 2006 Pension Plan Limitations The IRS has unveiled cost-of-living adjustments cost-of-living adjustment n. Abbr. COLA An adjustment made in wages that corresponds with a change in the cost of living. applicable to dollar limitations for pension plans and other items for tax year 2006. For most of the limitations, the increase in the cost-of-living index cost-of-living index n. See consumer price index. Noun 1. cost-of-living index - an index of the cost of all goods and services to a typical consumer consumer price index, CPI met the statutory thresholds that trigger their adjustment. Additionally, several limitations set by the Economic Growth and Tax Relief Reconciliation Act of 2001 are scheduled to increase at the beginning of 2006. For more, visit www.irs.gov/newsroom/article/0,,id=149631,00.html. KATRINA: Tax Relief Extended Due Dates The IRS granted special relief for taxpayers in various parts of Louisiana CODE, OF LOUISIANA. In 1822, Peter Derbigny, Edward Livingston, and Moreau Lislet, were selected by the legislature to revise and amend the civil code, and to add to it such laws still in force as were not included therein. , Mississippi and Alabama struck by Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. by extending the due dates for filing tax returns and paying taxes until Feb. 28, 2006, for taxpayers in nine Texas counties and five Louisiana parishes. The FTB likewise has extended tax-filing dates and waived interest penalties. Retirement Plans Loans to Katrina Victims 401(k)s and similar employer-sponsored retirement plans, such as 403(b) tax-sheltered annuities Tax-sheltered annuity A type of retirement plan under Section 403(b) of the Internal Revenue Code that permits employees of public educational organizations or tax-exempt organizations to make before-tax contributions via a salary reduction agreement to a tax-sheltered retirement and certain 457 deferred-compensation plans, can make loans and hardship distributions to victims of Hurricane Katrina and members of their families. To qualify for this relief, hardship withdrawals must be made by March 31, 2006. Early Distributions: To qualify, the distribution must be made on or after Aug. 25, 2005, and before Jan. 1, 2007, from an eligible retirement plan such as a qualified plan or an IRA Ira, in the Bible Ira (ī`rə), in the Bible. 1 Chief officer of David. 2, 3 Two of David's guard. IRA, abbreviation IRA. , to an eligible individual--one whose principal residence was in the Hurricane Katrina disaster area on Aug. 28, 2005, and who sustained an economic loss from the hurricane. Loans A loan from a qualified employer plan to an eligible individual, defined above, is not treated as a taxable distribution of plan benefits if it is made on or after Aug. 25, 2005, and before Jan.1, 2007, and does not exceed a certain dollar limitation. Recontributions A qualified individual who, after Feb. 28, 2005, and before Aug 29, 2005, took a distribution such as a hardship distribution from a 401(k) plan or 403(b) annuity or a qualified first-time homebuyer First-Time Homebuyer An IRA owner who is exempt from the early-distribution penalty (which applies to IRA distributions that occur before the IRA owner reaches age 59.5) for distributing funds from his or her IRA to buy, build, or rebuild a home when having had no interest in a distribution from an IRA to purchase or construct a home in the Hurricane Katrina disaster area, but it was not purchased or constructed as a result of Hurricane Katrina, could recontribute the funds to the plan without any tax consequence. The individual must recontribute the funds during the period beginning Aug. 25, 2005, and ending Feb. 28, 2006. Temporary Suspension of Charitable Contribution charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. Limits A provision in the Katrina Emergency Tax Relief Act of 2005 allows donors to make cash gifts to charities by the end of this year to deduct an amount equal to virtually 100 percent of their adjusted gross incomes. Caution: As of Nov. 9, 2005, California had not conformed to the Katrina Emergency Tax Relief Act of 2005. For more, see the Federal Tax column, Page 36. RELATED ARTICLE: TAX TIP Circular 230: Written Advice The IRS has amended Circular 230, which outlines ethical behavior for tax professionals, to curb abusive tax avoidance The process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income. Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal transactions. A practitioner who provides a covered opinion must comply with the practice standards of Sec. 10.35 of Circular 230, which provides mandatory requirements for written tax advice. The mandatory requirements for written advice prohibit practitioners from providing advice that, for example, relies on incorrect factual assumptions or representations; does not consider all relevant facts; or fails to analyze important legal issues. A covered opinion must now: * Identify and consider all facts that the practitioner determines to be relevant; * Relate the applicable law, including potentially applicable judicial doctrines Noun 1. judicial doctrine - (law) a principle underlying the formulation of jurisprudence judicial principle, legal principle principle - a rule or standard especially of good behavior; "a man of principle"; "he will not violate his principles" , to the relevant facts; * Evaluate significant federal tax issues; and * Include the practitioner's conclusion as to the likelihood that the federal tax treatment of the transaction or matter that is the subject of the opinion is the proper treatment and the reasons for that conclusion. For more, visit www.irs.gov/irs/article/0,,id=132445,00.html. RELATED ARTICLE: TAX TIP Tax SOFTWARE SUPPORT Every major provider offers call-in, e-mail and online support. Here's a guide to tax software support: BNA BNA Bureau of National Affairs, Inc. BNA Birds of North America BNA block numbering area (US Census) BNA British North America BNA Banco Nacional de Angola (National Bank of Angola) Tax Management (800) 223-7270 www.bna.com/tm/support.htm Creative Solutions Ultra Tax (800) 968-0600 www.creativesolutions.thomson.com/netcsi/index.aspx Drake Software (828) 524-8020 http://support.drakesoftware.com/ Lacerte (800) 933-9999 www.lacertesoftware.com/support/ GoSystem Tax RS (800) 327-8829 https://support.riahome.com ProSystemFX (800) PFX-9998 http://prosystemfxsupport.tax.cchgroup.com/ TaxWise (866) 641-WISE http://customer.support@taxwise.com/ RELATED ARTICLE: TAX TIP Raise Your Hand: Find a CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. As tax season begins, don't forget to register or update your information with CalCPA.org's Find a CPA. Find a CPA is among the most popular pages on the website, receiving thousands of hits each month. The feature has matched scores of taxpayers with the local CPAs who best suit their needs. Your listing specifies not only where you practice, but how you practice. Listings include services provided, industries served and languages spoken. Add your name to the directory--or update your profile if you're already listed--at www.calcpa.org/find. RELATED ARTICLE: TAX TIP TaxTalk Listserve The TaxTalk listserve is an online community of more than 600 subscribers for posing and answering tax questions, discussing tax issues and passing on tax information. For details on how to sign up, go to www.calcpa.org/members/listservers. |
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