Archive for the ‘Tax Filing’ Category

Budget Deal Affects 2017 Tax Returns

February 9, 2018

The budget deal passed on February 9, 2018 contains a number of provisions that affect tax returns for 2017 — even though the tax filing season is already under way and millions of tax returns have been filed. These changes fall into two categories.


Dozens of provisions that expired at the end of 2016 have been extended for 2017. Three are of particular importance to individual taxpayers:

  • PMI. For a several years now the law has permitted itemizers to deduct qualified mortgage interest premium payments, commonly known as PMI. This provision expired at the end of 2016, but has now been retroactively extended through 2017. Some 4 million taxpayers are affected.
  • Discharge of mortgage indebtedness. Subject to exceptions, the general rule is that you have to report income when discharge of indebtedness relieves you of the obligation to repay money you borrowed. An exception for qualified principal residence indebtedness that expired at the end of 2016 has been retroactively extended through 2017.
  • Tuition and fees. Similarly, an above-the-line deduction for qualified tuition and fees has been extended through 2017.

Dozens of other provisions have been similarly extended. Some are narrow provisions of little interest to most taxpayers, such as a credit for training mine rescue teams. Yet there are others that could affect individual taxpayers. For example, if you insulated your home, you may qualify for the nonbusiness energy property credit. Due to the large number of these provisions, it’s probably a good idea to hold off on filing your return if it includes any item that would have qualified for a deduction or credit that expired at the end of 2016, until you can determine whether that item was extended — and whether the IRS is ready to accept a return claiming that tax benefit.

Disaster relief

The law contains provisions providing tax relief to people affected by the California wildfires and various hurricanes. For example, you may be able to take money from an IRA without paying an early distribution penalty, and subsequently be permitted to restore those dollars to your retirement account. These provisions are too extensive for a full description here, so look for future guidance from the IRS.

Effect on filing season

The IRS is probably about as well prepared for this as they could be, but that doesn’t mean they can respond instantaneously. Anticipating a possible problem, they didn’t remove the affected lines from tax forms, but showed them as “reserved for future use.” Extensive revisions to their software won’t be necessary, but any changes must go through a testing protocol before going live, so we shouldn’t expect to be able to file returns claiming these items right away. Meanwhile, those who still pick up paper forms from IRS offices or libraries can’t expect to see corrected printed forms anytime soon. They’ll have to download forms online or, preferably, join the vast majority of taxpayers who benefit from electronic filing.

If you need guidance on claiming these benefits, you’ll have to look to prior year versions of IRS publications, because the 2017 versions will simply say these benefits have expired. You can read about the PMI deduction and the rule for qualified principal residence indebtedness in the 2016 version of Publication 530, and the tuition and fees deduction in the 2016 edition of Publication 970.

Already filed? If you’ve already filed, but now are eligible for additional tax benefits, you’ll be able to seek a refund by filing an amended return.,

Tax Season Advisory

January 5, 2018

Based on announcements by the IRS, here are some important dates and other information to keep in mind regarding this year’s tax season. (more…)

Visit Our 2016 Filing Season Guide

January 31, 2016

Form 1040We’ve released our 2016 Filing Season Guide with updated guidance on free tax return filing opportunities and other useful features.

An Easier Way to Report Capital Gains

February 27, 2015

Taxation of InvestorsIf you have more than a few sales of stocks, mutual funds or other investments to report on your tax return, you may want to be aware of a recent change in IRS requirements for reporting these transactions.

details: Easier Capital Gains Reporting

TurboTax Apology

January 24, 2015
By Kaye A. Thomas

Form 1040Beginning last year, Intuit began disabling key features in some of its TurboTax offerings so users would have to upgrade to more expensive versions. The change rolled out a year ago to people who prepared returns online, and this year it also affects those who buy the software for installation on their computers (CD or download). For some reason, last year’s change in the online version didn’t cause much of a stir, but the angry response to this year’s follow-on change in the installed version has been widely reported, including in the New York Times and Wall Street Journal.

Intuit has responded with an apology for not doing enough to communicate this change. The company offers no apology, however, for the underlying strategy of forcing users to migrate to more expensive products. The TurboTax apology comes with a rebate offer, but one that won’t fully compensate for the difference in cost, and won’t be available to all affected customers.


Guide to Free Tax Filing

January 22, 2015


You can pay less than this

Psst! You don’t have to pay for tax software or filing services! Even if you don’t meet the requirements of the IRS Free File program (which we review with all its warts), you may be able to prepare and file your tax return free of charge through other offerings.

details: Free Tax Filing

Nonqualified Options? Don’t Ask the IRS

January 12, 2015

Compensation in stock and optionsWe recently added some material on how to report sales of stock you acquire by exercising a nonqualified option. In the course of doing that we took a look at what the IRS has to say on the subject. Not much, it turns out — and some of what they say isn’t accurate.

details: The Sorry State of IRS Guidance on Nonqualified Options

Eager to File?

December 29, 2014

Filing your taxesCountdown to tax season: The IRS has announced that it will begin accepting electronic returns, and begin processing paper returns, January 20.

IRS Announces Tax Season Start Date

December 22, 2013

Filing your taxesThe IRS has announced that it will begin accepting 2013 income tax returns on January 31, 2014. Here’s what’s strange about that particular date.


Free Efile for Extension

April 9, 2013

If you can’t file by April 15, you should be aware that it’s easier than ever to file for a six-month extension. You can have a tax pro do it for you, or use tax software, but if push comes to shove you can file your federal extension online, free of charge, without regard to your income level. The IRS explains how to do this here.

  • Do this even if you owe money and can’t pay at this time. Filing for an extension doesn’t get you out of the late payment penalty, but it gets you out of the much worse late filing penalty — if you follow up by filing the return by October 15.

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