Insurance World

I'd like to start with some numbers to get the ball rolling. In July, August and September of 2010, the ATO received 580,000 paper returns. Printed and layed end to end, the 132 page Tax Pack would be enough paper to go from Sydney to Perth five and a half times. Depending on the route you took. E-tax can can save all this paper as well as simplifying the whole process of end of year tax. So, what is e-tax and why - apart from the environment - should anyone use it?

The birth and growth of e-tax

Launched in 1999, e-tax allowed tax returns to be submitted over the internet for the first time and was a leap forward in the way that tax in Australia would be managed over the next ten years. In that first year 120,000 Australians downloaded and used the software, a figure which has grown to 2.3 million in 2009. Each year e-tax is improved from tax payers feedback to help improve the service and make filing easier for individuals. This ongoing improvement has helped grow e-tax usage in 2010 by 10% compared to 2009 pre-filling figures.

e-tax 2011: What will it do?

E-tax brings together much of the support given at the ATO website, a persons individual details and the documentation required to submit a tax return into one place.
Pre-filling of information. Once downloaded, e-tax links to millions of pieces of information about an individual tax situation including payment summaries, withheld tax, interest on savings, union and professional fees etc. This can help individuals find lost information and ensure it all goes in the right places on their tax returnA step-by-step submission process which guides you along meaning all the right sections of a tax return are completedReturn/refund estimates and calculators will let you know how much you can expect to pay or received based on ATO defined rulesExplanation of key terms and rules will increase individuals understanding of tax

Benefits of e-tax

On top of simplifying the whole process, people using e-tax in 2011 will benefit from faster returns compared to their paper counterparts; the ATO aims to have processed all electronic submissions within 14 days. There are also built-in checks and links to ATO resources to help prevent mistakes and ensure and accurate tax return. For your 2011 tax return, take the plunge and download the ATO e-tax software saving time, money and hassle with one of life's little chores.

Follow this link for more information on using 2011 e-tax.

http://www.taxrefundforfree.com.au/ has more information, links and resources to help you process your tax return

Patrick O'Sullivan reviews businesses, processes and ideas to find solutions and give advice in a variety of different situations.

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Starting To Think About Filing Your Expatriate Tax Return? Wait! Read This First: How to Save Money on Your US Expat Taxes

Living and working in a foreign country, whether it is temporary or permanent, can be a fulfilling and rewarding experience. Moving to another country, although exciting, does come with some challenges and requires that you learn a bit of new information as it relates to your US taxes. In order to reap the full benefits of living abroad you need to do some research regarding your expatriate tax return obligation before you need to file. No one likes filing their taxes, and certainly no one likes to spend money unnecessarily, so saving money is crucial. This article will provide you with four great ways to save on your US expat taxes.

Take advantage of the Foreign Tax Credit & Foreign Earned Income Exclusion

While you're living abroad and filing your US taxes, it is important to make sure that you take full advantage of Form 1116 and Forms 2555, otherwise known as the Foreign Tax Credit Form and the Foreign Earned Income Exclusion, respectively. The Foreign Tax Credit gives you a credit on your US expat taxes for the amount of money you have paid in tax to a foreign government. The Foreign Earned Income Exclusion helps you by excluding a big chunk of your foreign earned income from your US taxes. This is important because even as a US expat, all of the income that you make outside the United States is subject to identical tax rates as someone who is working and living inside of the US. That is where Form 2555 comes in. By completing this form, you can exclude up to $91,500 USD of income earned abroad from your US expat tax return. While including potential deductions of housing and living expenses, it is possible to counterbalance most if not all of your tax liability in a given calendar year.

The Foreign Tax Credit (or Form 1116) is different than Form 2555 but they work together to help you save money on your expat tax return. It is important to note that many people take a wrong turn when using these two forms by assuming their taxes will be offset by the numbers they have worked out, and they decide not to bother filing their expat taxes at all. Clearly this isn't going to do you any good! If you earn money abroad you will need to file in order to receive these tax breaks and avoid being hit with penalties.

Adjust your Foreign Housing Credit for the country you live in

A second tip for filing your US expatriate tax return is to make sure your Foreign Housing Credit is adjusted for the country you live in. The rates vary from country to country which can drastically affect the end result, so it is extremely important to make sure that this is adjusted. As a US citizen living and working abroad, you may be eligible to deduct some of your housing costs from your income in order to save some money on your taxes. In order to qualify for this deduction, you need to meet the "bona fide residence test" or the "physical presence test." This test ensures that you are indeed living and working abroad. The IRS allows this deduction because they recognize that you may need to spend more money on housing outside of the US. Generally, the deduction is for a maximum of $27,450 or 30% of your Foreign Earned Income Exclusion and you deduct this amount from your gross income for housing costs. As mentioned, this rate is adjustable depending on where you are living. For example, compared to living in the US, places such as London, Paris, Singapore, Hong Kong, Dubai and Perth all qualify for a much higher deduction rate than the standard rate due to the higher costs of living. By being aware of the changing rates associated with your country of residence, you could end up saving a lot of money!

Use the most advantageous foreign exchange rates

You can also save a lot of money by making sure that the accountant who is filing your expatriate tax return is using the most advantageous foreign exchange conversion dates. When filing your taxes, you can choose different foreign exchange periods such as annually or on a specific day. Making sure you make the right choice as to what period you choose can end up saving you a lot of money in the long run. For example, if you receive a $10,000 bonus on June 1st and the foreign exchange rate is lower than the monthly number has been, you may want to use the specific date to translate it into US Dollars (as everything needs to be filed in US dollars).

Don't get overcharged for your expatriate tax return preparation fees!

Finally, it is imperative to hire a qualified expert to prepare your US expat taxes and agree upon and pay one flat fee to the person who is filing your expatriate tax return so that you aren't surprised by the final bill. It happens all too often that expatriates believe they will be paying one amount only to be hit with extra charges and fees on their final bill. Many companies don't disclose their prices or they quote you one price only to have add-ons for each additional service. This obviously means that the tax bill can increase over the course of preparing the return, and you do not want to pay more than you can afford or more than you were expecting. You need to find someone you are comfortable dealing with and this likely means a company that has very transparent prices!

As you can see, there are numerous ways to save money on your US expatriate tax return. By understanding the credits and exclusions that are available to you as an expat, you can ensure that you are well informed and knowledgeable about the ways can save you money. For more information about how the various components of an expatriate tax return work please have a look at our new series Your Expat Taxes Explained.

About Greenback Expat Tax Services

Greenback Expat Tax Services specializes in preparation of US Expat Taxes for Americans living abroad. Incorporated in New York, Greenback's CPAs have 30+ years specialist experience in US expat taxes. We offer a flat fee ($329 for a federal return), simple process (we don't make you do all the work!) and, most importantly CPAs who are experts in the ins-and-outs of expat tax returns. For more information and to download a free guide to US expat taxes, visit http://www.greenbacktaxservices.com/

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The time is drawing near. April 15th (April 18th for 2010 returns) is right around the corner. What do you need to do before you file your income tax return?

Don't panic...the return is due on April 15th. If you can't get your return completed and filed by April 15th, request an extension. This is done on IRS Form 4868. A state extension return will also likely need to be filed depending on the state you live in. The federal extension will allow you until October 15th to file your return. Keep in mind that filing an extension only extends the time to file a return. It does not extend the time to pay. If you owe tax, this should be paid by April 15th.Married couples should review if married filing jointly or married filing separately is better for them. This is one where you need to "run the numbers" to see which is a better deal.Compare your return to last year's. This will allow you to see if you have all of the items of income and expenses from last year that are applicable to this year.Check the math. I know-everything is done on computers now. It still makes sense to review the returns for accuracy.Fund your IRA's. If you are deducting an IRA or funding a Roth IRA, make sure they are funded by April 15th. The Roth is not income tax deductible and, therefore, will not change the tax. An IRA or Roth IRA must be funded by April 15th as there is no extension. An IRA or a Roth can be funded up to $5,000 per year. Taxpayers age 50 and older can make an additional "catch-up" contribution of $1,000.If you have your returns prepared by a professional and they file electronically, you must sign and forward Form 8879, IRS E-File Signature Authorization, to your preparer. This authorizes the preparer to file the returns. The preparer cannot file the returns electronically without this authorization. If you are getting a refund, consider direct deposit. You will receive your refund quicker than by mail.If you do not file electronically and instead paper file, make sure to send them certified mail, return receipt requested. This will provide you with proof of filing your return and the date mailed.

ACTION ITEM: Don't rush to file your return. Take these seven practical steps before filing. If you can't get it completed by April 15th, file for an extension. Thomas F. Scanlon, CPA, CFP®

Thomas F. Scanlon, CPA, CFP® is the President of Borgida & Company P.C., CPA's in Manchester, CT and can be reached at http://borgidacpas.com/

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It's that time of year again... time to file your income tax return.

What if you can't get it done or don't have all of your material to prepare it?

File for an extension.

There are many reasons taxpayers may want to file an extension. Procrastination is right at the top of that list. For others however it may be that all of their tax documents have not arrived yet. The Form K-1 (From partnerships, subchapter S corporations and estates and trusts) may not be received so as to prepare a return by the due date.

To file an extension, complete Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This must be completed and filed by the due date, normally April 15. For 2010 returns it is April 18, 2011. The extension is granted automatically if it is filed completely and on time. The extension is for six months and allows for the returns to filed up until October 17, 2011.

Taxpayers must also file an extension in the state they are a resident of and any other states they may be required to file in. In Connecticut, taxpayers must file Form CT-1040- Ext, Application for Extension of Time to File Connecticut Income Tax Return for Individuals.

The extension merely extends the time to file the return; it does not extend the time to pay any taxes due. If taxes are due, they should be paid when the extension is filed.

Taxpayers that want to fund a Traditional IRA or a Roth IRA for 2010 need to have this made by April 18, 2011. Taxpayers with enough earned income that meet certain income requirements, can fund up to $5,000 into an IRA, Roth IRA or perhaps some combination of these. Taxpayers age 50 and older can make an additional $1,000 contribution in a so-called "catch up" contribution.

Taxpayers that are self-employed and want to fund a Simplified Employee Pension ("SEP") have until the due date of the returns, including the extension to fund this. In other words, if you want to fund your SEP, you can file the extension and this will allow up October 18, 2011 to fund this account.

As with other tax forms, we recommend the application for extension be mailed by Certified Mail-Return Receipt Requested.

This will provide you with proof of mailing.

ACTION ITEM: If you can't file your income tax return by April 18, 2011, file an extension.

Thomas F. Scanlon, CPA, CFP® is the President of Borgida & Company P.C., CPA's in Manchester, CT and can be reached at http://borgidacpas.com/

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In this article you will find the answer to the question "Who must pass the IRS competency examination in order to continue working as an income tax return preparation practitioner"?

Regulations distinguish among three categories of tax return preparers:

1. Attorneys, CPAs, and enrolled agents
2. Non-Form 1040 preparers and supervised preparers.
3. Candidate to become Registered Tax Return Preparer.

Attorneys, CPAs, and enrolled agents, non- Form 1040 preparers and supervised preparers are not required to meet the test requirement in order to perform their tax related activities. However, any individual not included in the above categories, who prepares a federal tax return for a fee, and pretends to become a Registered Tax Return Preparer under the new regulations, must pass the IRS competency examination.
The reason why Attorneys, Certified Public Accountants and Enrolled Agents (EAs) are exempt from testing and continuing education requirement is because they have a toughest professional testing and education requirements covering the tax laws and regulations.

The test exemption is extended to the supervised employees of attorneys, CPAs, attorneys or Enrolled Agents (EA) who prepare but do not sign and are not required to sign the Form 1040 series returns they prepare.
The testing is mandatory just for certain individuals who prepare tax returns on the Form 1040 series. So, individuals who prepare federal returns other than those in the Form 1040 series are also exempt from the test requirements.
To be more precise and clear about who is who, let's review the definition of each categories of tax return preparer as shown in the regulation:
A law firm is a law partnership, Professional Corporation, a sole proprietorship, or any other association authorized to practice law in any state, territory, or possession of the United States, including a Commonwealth, or the District of Columbia.
A certified public accounting firm is a partnership, professional corporation, sole proprietorship, or any other association that is registered, permitted, or licensed to practice as a certified public accounting firm in any state, territory, or possession of the United States, including a Commonwealth, or the District of Columbia
An enrolled agent is a tax professional, who has demonstrated special competence in tax matters, applied for enrollment, and has been issued an enrollment card
An individual who is supervised by an attorney, CPA or an enrolled agent, and the supervised preparer is employed by a law firm, CPA firm or other recognized firm (a firm that is at least 80 percent owned by attorneys, CPAs, or enrolled agents).The supervised preparers may not sign any tax returns they prepare or execute any other functions registered tax return preparers are allowed to execute.
Non-Form 1040 series preparers are individuals who do not prepare, or assist in the preparation of, any Form 1040 series tax return or claim for refund, except a Form 1040-PR or Form 1040-SS, for a fee.

A very important distinction is that a supervised preparer working for a Registered Tax Return Preparer who is not a lawyer, a CPA or an enrolled agent (under Circular 230) must have a PTIN and pass the competency examination. The exception for supervised preparers only applies if the individual is supervised by an attorney, CPA or an enrolled agent, and the supervised preparer is employed by a law firm, CPA firm or other recognized firm (a firm that is at least 80 percent owned by attorneys, CPAs, or enrolled agents).

The IRS has published more details about the competency examination, including the major topics that will be covered in the test. It is time to become informed and take action if you intend to become a registered tax return preparer. The IRS test will be available in mid-Fall-2011. Inasmuch as the test content outline published by the IRS covers an extensive amount of materials, candidates should take time to plan the use of available resources to be able to review the tax concepts in order to be successful in the testing room.

Read the next article of this series,"What is the IRS Exam Content ".

Don't delay to be proactive toward becoming informed about the IRS exam. Visit our website and know more about 1040 Exam Prep study materials.

Have access to free tools designed to assist you in your exam preparation at http://1040examprep.com/

Norma Wahnon
Tax Return Preparer, CPN
TaxBiz Solution

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The 30th of June marks the end of the Australian tax year and with that comes a rush of applications for tax returns and the expected refund that we all hold out for.

In July 2010, 1 in 6 people submitted their tax return and 55% of those were processed within 14 days. That's no mean feat for the ATO, processing around 12.7 million returns this year and paying out $29.5 billion in refunds. If you want to be at the front of the queue when it comes to tax return time it pays to get your house in order now. Don't wait until the last minute to track down those all important documents and start your research.

Payment Summary's/Group Certificates

Left a job in the past 9 months? It's a good idea to ask your employer for a Payment Summary. This can take the form of a signed letter or statement from your employer and is essential for getting your tax return processed quickly. This document should outline
The Company Name and ABN (Australian Business Number)Your details (Name, address etc)Your gross pay (the amount before any tax deductions)Tax withheld from youYour net pay (the amount after tax)

Work expenses

Some expenses you incur as part of your work can be claimed against your tax bill! You cannot claim for anything that your employer reimburses you for or (generally) associated with getting to and doing your job. However, you may be able to claim for some of the below, but make sure that you keep records!
Travel Expenses (excluding getting to and from you work except in special situations)Clothing Expenses - if you have a uniform or protective clothing, you may be able to claim for purchasing or cleaning costsMobile Phone Expenses - if you used your phone for work and was not re-imbursed, you may be able to these costs

Find a tax agent

Want to pass the responsibility for your return to an agent? Expect to pay between $70 and $150 for a tax agents to file your return on your behalf. Make sure your money is well spent
Start by asking your friends and family about their experience last year and get a few companies namesCheck the Tax Professional Bureau register to make sure they are on it (www.tpb.gov.au)

Costs for filing your tax

If you paid a tax agent in 2010 to file your tax return, you can claim this cost against your 2011 tax return. Make sure you have an invoice or receipt

Useful links

Guide to 2011 Tax Return

ATO - Individual Tax Return

http://www.taxrefundforfree.com.au/ is designed to help people process submit their tax refund themselves without the need of a tax agent.

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Getting a letter in the mail from the IRS can be very intimidating to the taxpayer. This is because the media & sometimes family & friends portray the IRS in such a negative light that we can overreact. But, there is really no need to worry until you open up the letter and see what it says as there could simply be a minor error on your tax return.

Follow the IRS Instructions in the Letter

First, read the letter to understand exactly what the IRS claims is an error on your income tax return. If the error is minor, such as a missing signature or an incorrect social security number, often times the IRS will just ask you to review your tax return & provide the correct information by a certain date. Make sure that you follow through & provide the correct information by the due date. If you used a tax preparer to file your return, make sure to consult with them as well before sending in the requested information to the IRS.

An Error Doesn't Mean You Are Necessarily Getting Audited

Receiving a letter from the IRS indicating that you have errors on your tax return doesn't necessarily mean that you will be getting audited. Mistakes happen & the IRS realizes that as they make them too. So, don't worry about a potential audit should your tax return have a minor error on it.

What if you Discover a Material Error

In some instances, as you are reviewing your return you may discover a material error such as incorrectly reporting marital status, deductions, or income. If this is the case, you should notify the IRS & file an amended tax return. You will need to complete FORM 1040x which cannot be filed electronically. It is best to have a licensed tax preparer (i.e. CPAs, EAs) complete the FORM 1040x for you even if you filed your original tax return on your own. The licensed tax preparers are more experienced and aware of potential mistakes when filing the amended return.

Your Refund Will Be Delayed

It is almost a certainty that your refund will be delayed if you are notified of an error as detailed above. Your refund is calculated based on the tax return information you provide and thus will not be processed quickly if the IRS needs to confirm certain details with you first.

Ryan S. Himmel is the founder of BIDaWIZ - the online marketplace for trusted answers from licensed business professionals (i.e. CPAs, CFAs, CFPs & More).

Visit us at BIDaWIZ to get help with your irs issues from top tax experts.

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