Iowa Tax Filing Deadline is October 31: Claim Your $54 Credit Before Then

iowa-43743_1280The extended deadline for filing Iowa income tax returns is October 31. This year’s deadline has some added meaning, because it’s also the deadline for claiming the $54 Iowa Taxpayers Trust Fund Credit.

The credit is $54 per primary taxpayer. So a single person gets $54, and a married couple is allocated $108 total. I outlined details of the credit in a blog post in February, which you can find here.

Unlike most tax credits, which can typically be claimed whenever you file your tax return (even if it’s filed late), the Iowa Taxpayers Trust Fund Credit for 2013 tax returns can only be claimed on a 2013 tax return filed by the extended due date.

So if you haven’t filed your Iowa tax return yet, make sure to do so before October 31, or you’ll miss out on your $54 credit.

Image courtesy of user Nemo on Pixabay.com

Updated Wisconsin Tax Guidance for Same-Sex Married Couples

flag-36423_1280Earlier this month, the U.S. Supreme Court declined to hear appeals to cases overturning same-sex marriage bans in several states, including Wisconsin.

As a result, same-sex marriage is now legal in those states.

From a tax perspective, Wisconsin released guidance earlier this week saying that couples in same-sex marriage can now file joint Wisconsin tax returns. Previously, Wisconsin had said same-sex couples needed to file separate Wisconsin tax returns as single people, and recalculations may need to be done in arriving at Wisconsin taxes. That all goes away now:

Previously, same-sex couples who filed a joint federal tax return were required to file as single or head of household for Wisconsin. Schedule S was used to separate the income reported on the federal joint tax return to the separate Wisconsin returns. Schedule S should no longer be filed with a Wisconsin tax return.

Determining filing status

A couple is considered married for the whole year if they were lawfully married as of December 31. If a spouse dies during the year, the couple may file a joint return for the year unless the surviving spouse remarries during the year. Lawfully married means a valid marriage in a state that recognizes same-sex marriage.

Filing returns

2014 individual income tax returns
A lawfully married same-sex couple must file their Wisconsin individual income tax returns as married filing jointly, married filing separately or, if qualified, as head of household.

2013 and prior returns filed on or after October 16, 2014
A lawfully married same-sex couple must file their Wisconsin individual income tax returns as married filing jointly, married filing separately or, if qualified, as head of household.

2013 and prior returns filed before October 16, 2014
A lawfully married same-sex couple who already filed their tax returns, may choose (but are not required) to amend their Wisconsin tax returns using Form 1X, claiming a filing status of married filing jointly, married filing separately or, if qualified, as head of household. Prior returns may be amended as long as the period of limitations has not expired.

From a news release on the Wisconsin Department of Revenue website.

Image courtesy of user Nemo on Pixabay.com

My Response to the IRS Saying I Can’t Speak On My Own Behalf

lion-159448Some readers have been curious as to how I responded to the IRS saying I’m not authorized to speak on my own behalf.

Since my dispute with the IRS is over a silly clerical matter, I’m fine with sharing details relating to this case.

To recap: I think my company is supposed to use Form 941 to report payroll; the IRS says I’m supposed to use Form 944.

All payroll taxes have been paid. This is purely a clerical matter over which form to use for my very simple payroll reporting.

If the IRS had simply said, in their September 22nd letter, that they think I’m supposed to file Form 944, I would have dropped the matter and filed Form 944 because it’s not a big deal.

But since the IRS said I’m not authorized to speak on my own behalf, I had to reply.

I kept the snark to myself (snark is for this blog, not official correspondence with the IRS) and I think I was blunt but professional throughout:

Dear IRS,

I am the president of Dinesen Tax & Accounting, P.C. and am writing in response to LTR 3007C, dated September 22, 2014. A copy of the letter is enclosed.

The letter indicates that you cannot make changes to my company’s account as requested on August 12, 2014, because I hadn’t given permission to my “accountant” to act on my behalf.

That letter from August 12th was from me. My company is an accounting firm and I am an accountant, but the letter I sent on August 12th was me writing as the president and sole shareholder of Dinesen Tax & Accounting, P.C., on behalf of my company.

Dinesen Tax & Accounting, P.C. is not my “client,” they are the company that I own.

I continue to maintain that my company should be a Form 941 filer for 2014. However, if the IRS wishes for us to use Form 944 for 2014, and Form 941 for 2015, I am fine with that.

As your records no doubt indicate, all payroll taxes have been paid in a timely fashion, so this is really just a clerical matter as to which form to file.

If you have any questions or need further information, please call me.

(Image courtesy of OpenClips on pixabay.com)

Glossary: Filing Status

Income Tax space on Game BoardFederal tax returns allow for 5 filing statuses on a tax return:

  1. Single
  2. Head of household
  3. Married filing jointly
  4. Married filing separately
  5. Qualifying widow(er)

Single

Straightforward. An unmarried person who (generally) doesn’t have kids. It’s also possible that an unmarried who has kids might not qualify for head of household filing status and so they would also file as single.

Head of Household

Generally refers to an unmarried person who has kids. In order to qualify for this status, the taxpayer must pay more than 50% of the costs of maintaining the home.

Married Filing Jointly

Straightforward. A married couple that combines their income and deductions.

Married Filing Separately

A married couple that elects to file two separate tax returns, splitting items of income and deductions.

Qualifying Widow(er)

Refers to a married person whose spouse dies and children remain in the household. The surviving spouse files as married in the year of death, and then as a qualifying widow(er) in the next two tax years. This filing status uses the same tax brackets as married filing jointly.

What Does It All Mean?

Each filing status comes with its own tax bracket. Various rules, such as phaseouts of deductions and credits, vary with filing status.

Is One Status Better than Others?

As with everything with taxes, the answer is “it depends.” One common myth is that married filing jointly is “always” better. IT IS NOT ALWAYS BETTER.

It is true that, in general, married filing separately is the worst filing status of all, but again, that’s not always the case.

Move Up the W-2 Filing Deadline to Combat ID Theft?

www.irs.gov pub irs-pdf fw2-page-001The U.S. Government Accountability Office recently issued a report recommending that the deadline for employers to file Form W-2 with the IRS be moved up, in an effort to combat identity theft.

Since I have a little experience dealing with identity theft, this recommendation caught my eye.

Background

Employers must issue Form W-2 to employees by January 31 each year. But the deadline for the employer to send those W-2s to the IRS is later:

  • February 28/29 if filing paper forms with the IRS
  • March 31 if electronically filing with the IRS

E-filing of W-2s is not required unless the employer is filing 250 or more forms.

Proposal

The GAO proposal recommends:

  • Moving the deadline for employers to send W-2s to the IRS to January 31
  • Lowering the threshold for requiring the e-filing of W-2s to either 5 or 10

Would this Help Stop ID Theft?

The logic behind this idea is that it would help the IRS perform better computer matching on tax returns that are filed, thus perhaps reducing cases of identity theft.

Currently, if someone gets their W-2 on January 31 they can file their tax return and receive their refund weeks — maybe even months — before the person’s employer sends a copy of the W-2 to the IRS and that information makes it into the IRS’s systems.

My Thoughts

I think this is a good recommendation. I’ve always wondered why there are two different deadlines with W-2s anyway. If the forms are ready to give to employees, they’re ready to give to the IRS.

Maybe the deadlines are different so that employers can make corrections. But if the IRS provided a simple and penalty-free way to make corrections anytime, I don’t think having a January 31 filing deadline would be a problem.

My concern about moving up the deadline is that I’m skeptical of the information actually making its way into the IRS’s systems quickly.

How much re-coding would the IRS need to do to speed up the processing of W-2 information to make sure the information goes where it needs to go? How much re-coding would the IRS need to do to identify cases of identity theft?

It blows my mind that the IRS’s systems are not already set up to spot cases of blatant identity theft. For example, one address in Lithuania somehow received 655 fraudulent refunds before the IRS and their computers figured out that something was amiss.

Moving up the W-2 deadline should be done and it might be a partial fix to the problem of identity theft … but it’s one piece of a solution, not a cure-all.