1099Fire

Form 1098-E is an information return that is used by student loan lenders to report interest paid toward the loan. Any interest paid on a student loan is tax deductible. A copy of Form 1098-E can be requested from a student loan lender for this information to help a person fill out their taxes. For lenders, Form 1098-E must be ordered from the IRS since it can not be downloaded from their website.

Most tax preparation software has a line to enter student loan interest paid to help on calculate their deductions. Student loan interested may be deducted up to $2,500. There are also other requirements for the deduction:

1.) The tax preparer must not have a modified adjusted gross income (MAGI) of over $75,000 if single and $150,000 or more if married.

2.) The tax filer must have any filing status except: married filing separately.

3.) There must have been interested paid on a qualified student loan.

4.) There must be a legal obligation to pay interest on that loan.

Not every loan qualifies. For example, if a student loan was refinanced for more than the amount of the original loan, and the money was used for other purposes besides education purposes, the interest paid on that loan would not qualify for a deduction.

Loan origination fees that are used to pay for services by the lender can not be deducted as interest.

Also, certain student loan repayment programs such as the NHSC Loan Repayment Program may affect how loan interest payments are calculated.

Loan origination fees qualify if the fee is required for the use of the money rather than for services provided by the lender.

Another loan payment that may qualify is credit card debt. Interest on revolving debt that is used to pay for educational expenses can be deducted and is considered student loan interest. However, the credit card must be exclusively used for educational purposes.

Both consolidated and collapsed loans qualify as well. Refinanced student loans qualify as well, again, as long as the money is used for educational purposes.

Voluntary payments also qualify for the deduction. Interest payments can be deducted for the life of the loan.

For more details, check out Publication 970 Part 5: http://www.irs.gov/publications/p970/ch05.html#en_US_publink1000178283

The IRS announced last week that they would be accepting applications from small firms who would like to qualify for grants or tax credits under the Qualifying Therapeutic Discovery Project Program. The program is a part of the Affordable Health Care Act and the purpose of the incentives are to improve American health care, product more affordable therapies, and increase the number of jobs in America.

Up to $5 million is available for each firm with less than 250 employees. There is a total of $1 billion available. The IRS is accepting applications for the program up until July 21st.

More details:

WASHINGTON – The Internal Revenue Service today announced that small firms may now begin applying for certification for tax credits or grants available under the Qualifying Therapeutic Discovery Project Program, created by the Affordable Care Act.

These credits or grants are available for projects that show significant potential to produce new cost-saving therapies, create U.S. jobs, and increase U.S. competitiveness.

Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program, and its instructions are now available. Companies may submit applications for certification beginning today. Applications must be postmarked no later than July 21, 2010.

“This new tax credit was designed to promote medical research that could improve health and save lives,” IRS Commissioner Doug Shulman said. “I encourage companies that are involved in this groundbreaking type of work to apply.”‬‪

Each project will be evaluated based on different criteria:

The qualifying therapeutic discovery project program is targeted to projects that show potential to produce new therapies, reduce long-term health care costs, or significantly advance the goal of curing cancer within the next 30 years.

The credit or grant covers up to 50 percent of the cost of qualifying biomedical research, up to a maximum credit of $5 million per firm and $1 billion overall, and is only available to firms with no more than 250 employees. Credits and grants are available for investments made in 2009 and 2010.

As part of the review process for research projects, the Department of Health and Human Services (HHS) will evaluate each project for its potential to produce new therapies, reduce long-term health care costs or cure cancer within 30 years. Only projects that show a reasonable potential to meet these goals will be certified as eligible for the credit or grant.

The IRS will issue certifications by the end of October, based on the determinations made by HHS. More information, including questions and answers on this program, can be found on the Affordable Care Act page of IRS.gov.

Victims of the recent Gulf oil spill are eligible for help from the IRS. The IRS announced that they would be providing individuals and businesses affected by the Gulf oil spill assistance with tax help. There will also be a Gulf Coast Assistance Day on July 17th.

Some of the guidance refers to dealing with how taxpayers should treat compensation payments from BP. BP payments for lost income are taxable according to current law in the same way that wages would be. Compensation for physical injuries or property loss are non-taxable.

The IRS bulletin has more information regarding the different types of tax assistance that are available:

WASHINGTON –– The Internal Revenue Service today provided guidance to individuals and businesses affected by the oil spill in the Gulf of Mexico and announced a number of new efforts to help affected taxpayers, including a special Gulf Coast Assistance Day on July 17.

“This is a very difficult time for many people affected by the oil spill in the Gulf of Mexico. As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it,” IRS Commissioner Doug Shulman said. “We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution. We’ll do everything we can under current law to help taxpayers.”

Here is more information about which types of payments are considered taxable:

The guidance released today is based on current law, and it explains how recipients of payments from BP should treat the payments for tax purposes. According to the current law, BP payments for lost income are taxable in the same way that the wages or business income these payments are replacing would have been. The law treats compensation for lost wages or income differently for tax purposes than compensation for physical injuries or property loss, which generally are nontaxable.

Every person can have unique financial circumstances, so the IRS encourages taxpayers to review their tax situation or talk with their tax preparers about the implications of payments or compensation from the oil spill.

The new information is available in a question-and-answer format on a special section of the IRS website, IRS.gov. The IRS is closely monitoring the situation in the Gulf, and additional information will be added to IRS.gov as it becomes available.

The IRS will be holding a special assistance day on July 17th. They are also offering a toll-free hotline soon and other types of assistance for victims of the oil spill:

To help people in the Gulf Coast area dealing with tax issues, the IRS also announced a special assistance day on July 17 in seven cities. Taxpayers and tax preparers will be able to work directly with IRS employees to resolve tax issues, including specific topics related to the oil spill. The IRS will hold the Gulf Coast Assistance Day in four states:

* Alabama: Mobile.
* Florida: Panama City and Pensacola.
* Louisiana: New Orleans, Houma and Baton Rouge.
* Mississippi: Gulfport.

Times and specific locations will soon be announced and will be available on IRS.gov.

In addition, taxpayers with problems related to the Gulf spill will soon be able to reach IRS personnel through an IRS toll-free telephone line. Specially trained IRS personnel will be available to help people with tax questions related to the oil spill. More information will be available soon about this telephone line.

The IRS encourages taxpayers in the Gulf struggling with payment or collection issues to contact the agency. The IRS continues to have a number of ways to help taxpayers dealing with oil spill issues or other economic hardship issues, including:

* Assistance of the Taxpayer Advocate Service for those taxpayers experiencing particular hardship navigating the IRS.
* Postponement of collection actions in certain hardship cases.
* Added flexibility for missed payments on installment agreements and offers in compromise for previously compliant individuals having difficulty paying.
* IRS employees will be permitted to consider a taxpayer’s current income and potential for future income when negotiating an offer in compromise.
* Accelerated levy releases for taxpayers facing economic hardship.

The IRS is offering a free webinar on July 8, 2010 at 2:00 P.M. ET for information on the Hiring Incentives to Restore Employment Act. The webinar will include information on the new tax exemptions for employee hiring and retention. The exemptions were introduced by the U.S. government last march as an incentive for businesses in American to hire and retain unemployed workers.

Employers may be eligible for a payroll tax exemption for their share of Social Security for certain workers hired after March 18, 2010. There is also a tax credit available for employee retention; employers may be eligible for up to a $1,000 tax credit for each employee hired and retained for a least 52 weeks.

Two of the requirements for the credit and exemption are that the employees are hired between February 3, 2010 and January 1, 2011, and that the employees must have been unemployed at least 60 days prior to beginning work, or were employed at less than 40 hours per week at least 60 day prior to starting work.

The IRS webinar will have more information on these requirements, which businesses can claim each benefit, how businesses can claim the benefits, and also general information on the HIRE act.

Registration for the free webinar is at: http://www.visualwebcaster.com/IRS/69705/reg.asp?id=69705

More information is detailed in this IRS article:

NATIONAL PHONE FORUMS AND WEBINARS

Meeting: Hiring Incentives to Restore Employment (HIRE) Act Webinar
Date(s): July 8, 2010
Time: 2:00 p.m. (EST); 1:00 p.m. (CST); 12:00 p.m. (MST); 11:00 p.m. (PST)
Location: Your home or office
Contact: Internal Revenue Service Webinar; E-mail: nationalphoneforum@irs.gov
Event Information: This FREE webinar is for:

* Tax professionals
* Attorneys
* Payroll professionals
* Industry partners
* Small businesses

Learn about:

* The HIRE Act payroll tax exemption and retention income tax credit for employers who hire previously unemployed workers
* Who qualifies as an eligible individual for each benefit
* What businesses may claim each benefit
* How business can claim those HIRE benefits

Earn Continuing Professional Education credit:

* Enrolled agents receive one CPE credit for participating for a minimum of 50 minutes from the start of the webinar
* Other tax professionals may receive credit if the webinar meets your organizations or states CPE requirements
* To receive credit, you must attend the event offered on July 8, 2010.
* You must also register for the webinar using your e-mail address, and use the same e-mail address to log in to attend. This will confirm your attendance and generate your Certificate of Completion.
* Groups will not receive individual certificates as attendance cannot be verified.
* *Only July 8, 2010 participants will receive certificates. If you do not need a certificate to obtain CPE credit, you may choose to view the archived version of the webinar after July 8, 2010.
* Look for your Certificate of Completion by e-mail approximately one week after the webinar. If you have met all requirements, you will receive your certificate automatically.

As more individuals and businesses are starting rely upon electronic return filing and computer software to assist with preparing electronic tax and information returns, there are issues that must be properly managed and administered by the IRS to facilitate this transition.

The Electronic Tax Administration Advisory Committee (ETAAC) is a division of the IRS that advises the IRS on how to best oversee this transition. The ETAAC also provides feedback on the IRS’s electronic tax administration policies.

The ETAAC recently presented their annual report to congress. The report suggested that the IRS should continue to encourage electronic filing of tax returns.

The committee also suggested that the IRS continue to update their systems. More information is detailed in the full briefing:

WASHINGTON — The Electronic Tax Administration Advisory Committee (ETAAC) this month presented its 2010 Annual Report to Congress. The ETAAC provides feedback on the development and implementation of the Internal Revenue Service’s electronic tax administration strategy.

The report includes recommendations to further expand the use of electronic filing. The report recommends the IRS use a three-year phase-in approach to successfully implement the tax preparer requirement to electronically file individual tax returns. The report also calls for continued funding and completion of the modernization of IRS systems as well as collaboration between the IRS and industry regarding tax software standards and the implementation of the return preparer regulations.

“ETAAC plays a significant role in IRS efforts to improve the taxpayer’s experience via e-file and the Internet,” said David Williams, director of Electronic Tax Administration. “The IRS appreciates ETAAC’s recommendations, which we will consider as we plan our strategy for electronic tax administration.”

The 13-member panel provides an organized public forum for discussion of electronic tax administration issues and the overriding goal that paperless filing should be the preferred and most-convenient method of filing tax and information returns.

“ETAAC believes a fully e-enabled IRS is critical to meeting the overarching e-file goal and enhancing tax administration,” said Phil Poirier, ETAAC Chairman.

ETAAC submits an annual progress report to Congress each June. The IRS Electronic Tax Administration created the ETAAC in 1998 as required by the IRS Restructuring and Reform Act of 1998. The report is the result of research and analysis as well as meetings with senior IRS executives.

Public comments on the report may be sent to etaac@irs.gov .

The IRS announced today that they would be extending the deadline for defined contribution retirement plan sponsors that were affected by flooding, storms, or other natural disasters in several states. The IRS is extending the deadline to July 30, 2010 and the normal deadline was April 30, 2010 for those who qualify. The IRS briefing explains how qualification for the extended deadline works in more detail:

WASHINGTON — The Internal Revenue Service is providing administrative relief for sponsors of defined contribution plans, such as section 401(k) plans, that were affected by the storms and other severe weather in those counties in Alabama, Connecticut, Massachusetts, Mississippi, New Jersey, Rhode Island, Tennessee and West Virginia declared Presidential Disaster Areas during the period from March 1 through May 31, 2010.

Notice 2010-48 administratively extends to July 30, 2010, the April 30 deadline for restating affected pre-approved defined contribution plans and, if applicable, for submitting determination letters to the IRS, to July 30, 2010. The section 401(b) remedial amendment period for these retirement plans is also extended to July 30.
The relief provided by this notice is in addition to the statutory relief already provided by the IRS, under section 7508A of the Internal Revenue Code, to taxpayers affected by the federally declared disasters in these eight states during the period from March through May 2010.

The notice details the scope of the relief provided by this administrative action and further defines the conditions under which a plan qualifies as an affected plan. A plan is an “affected plan” only if any of the following locations relating to the plan were in the federally declared disaster areas at the time of the disasters:

1. The principal place of business of the employer that maintains the plan;
2. The principal place of business of the employer that employs more than 50 percent of the active participants covered by the plan;
3. The office of the plan or the plan administrator;
4. The office of the primary record keeper serving the plan; or
5. The office of any advisor that had been retained by the plan or the employer at the time of the storms or other severe weather that is directly involved with the adoption of the plan or the submission of a determination letter application to the IRS.

In addition, the IRS gave information on what types of disasters qualify for the administrative relief:

This relief applies to the following disaster situations:

Connecticut victims of March 2010 severe storms and flooding. See, News Release CT-2010-35, June 1, 2010.

Tennessee victims of April-May 2010 severe storms and flooding. See, News Release AL/TN-2010-56T, May 5, 2010.

Alabama victims of April 2010 severe storms and flooding. See, News Release AL/TN-2010-55A, May 4, 2010.

Mississippi victims of April 2010 severe storms, tornadoes and flooding. See, News Release LA/MS-2010-21, April 30, 2010.

New Jersey victims of March 2010 storms and flooding. See, News Release NJ-2010-32, April 5, 2010.

Massachusetts victims of March storms and flooding. See, News Release MA-2010-15, March 31, 2010.

Rhode Island victims of March storms and flooding. See, News Release RI-2010-11, March 31, 2010.

West Virginia victims of March storms and flooding. See, News Release WVA-2010-12, March 31, 2010.

IRS recently announced in their newsletter that health professionals who received student loan repayments for working in underserved areas would qualify for a tax discount from the IRS. The Affordable Care Act may qualify health professionals for a tax cut on their 2009 tax returns and on future returns.

The act allows health professionals to not include eligible loan forgiveness amounts on their taxes for 2009. This exclusion saves health professionals more money on their yearly income taxes.

Prior to the act, only particular types of loans were eligible for exclusion on taxes. However, the law expands the number and type of loans that qualify. The purpose of the law is to encourage more health professionals to work in underserved areas that are in need of higher quality health care.

Form 1040X allows those who have already filed their taxes for 2009 to still have those amounts excluded. Health professionals may ask their state loan offices whether or not they qualify for the tax reduction. For more information, here is the full IRS briefing:

Affordable Care Act Provides Expanded Tax Benefit to Health Professionals Working in Underserved Areas

WASHINGTON — As part of a larger Administration announcement on efforts to strengthen the health care workforce, the Internal Revenue Service today announced that under the Affordable Care Act health care professionals who received student loan relief under state programs that reward those who work in underserved communities may qualify for refunds on their 2009 federal income tax returns as well as an annual tax cut going forward.

“Doctors and nurses who choose to practice in underserved areas make a great contribution to their local communities,” Commissioner Doug Shulman said. “By expanding the tax exclusion for student loan forgiveness, the Affordable Care Act provides an even greater incentive to practice medicine in areas that need it most.”

The Affordable Care Act included a change in the law, effective in 2009, that expands a tax exclusion for amounts received by health professionals under loan repayment and forgiveness programs. Prior to the new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs eligible for funding under the Public Health Service Act qualified for a tax exclusion.

The Affordable Care Act expands this tax exclusion to include any state loan repayment or loan forgiveness programs intended to increase the availability of health care services in underserved areas or health professional shortage areas and makes this exclusion retroactive to the 2009 tax year.

Health care professionals participating in these programs who have reported income from repaid or forgiven loan amounts on their 2009 returns, possibly after receiving a Form W-2, Wage and Tax Statement, or Form 1099, may be due refunds. Those who believe they qualify for this relief may want to consult their state loan program offices to determine whether the program is covered by the new law.

Health care professionals who have not yet filed for 2009 need not report eligible loan repayment or forgiveness amounts when they file. Those who have already filed may exclude eligible amounts by filing Form 1040X, Amended U.S. Individual Income Tax Return. This form can be downloaded from this website or obtained by calling the IRS toll-free at 1-800-TAX-FORM (1-800-829-3676). Individuals filing Form 1040X to claim this exclusion should write “Excluded student loan amount under 2010 Health Care Act” in the Explanation of Changes box.

Health care professionals may request an employer or other issuer to provide a Form W-2c, Corrected Wage and Tax Statement, or 1099 and may attach the corrected form to the Form 1040X. However, the Form 1040X may also be filed without attaching a corrected form.

An individual whose employer withheld and paid taxes under the Federal Insurance Contributions Act (FICA) on payments covered under the new exclusion may request that the employer seek a refund of withheld FICA on the employee’s behalf. And because employers also pay a portion of the FICA tax, the employer also may also be entitled to a refund.

To obtain a refund, an employer should file a separate Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, for each Form 941, Employer’s Quarterly Federal Tax Return, which needs to be corrected. An employer filing a Form 941-X is also required to file a Form W-2c for each employee who benefits from the exclusion.