Ways to Obtain IRS Forms and Publications

The Internal Revenue Service has free tax forms and publications on a wide variety of topics.  Due to the continued growth in electronic filing, the availability of free options to taxpayers and efforts to reduce costs; the IRS will no longer be automatically mailing paper tax packages.

If you need IRS forms, here are four easy methods for getting the information you need.

1. On the Internet You can access forms and publications on the IRS website 24 hours a day, seven days a week, at http://www.irs.gov.
2. Taxpayer Assistance Centers There are 401 TACs across the country where IRS offers face-to-face assistance to taxpayers, and where taxpayers can pick up many IRS forms and publications. Visit http://www.irs.gov and go to Contact My Local Office on the Individuals page to find a list of TAC locations by state. On the Contact My Local Office page, you can also select TAC Site Search and enter your zip code to find the IRS walk-in office nearest you as well as a list of the services available at specific offices.
3. At Convenient Locations in Your Community During the tax filing season, many libraries and post offices offer free tax forms to taxpayers. Some libraries also have copies of commonly requested publications. Many large grocery stores, copy centers and office supply stores have forms you can photocopy or print from a CD.
4. By Mail You can call 1-800-TAX-FORM (800-829-3676) Monday through Friday 7:00 am to 10:00 pm local time – except Alaska and Hawaii which follow Pacific time – to order current year forms, instructions and publications as well as prior year forms and instructions by mail. You will receive your order by mail, usually within 10 days.

Please wait until after January 10, 2011, to order tax products for 2010.

Links:

• Publication 910, Guide to Free Tax Services (PDF 636K)
• Publication 2053A, Quick and Easy Access to IRS Tax Help and Forms (PDF 40K)
• State tax forms

Capital Gains and Dividends Get Special Treatment

The tax rate on capital gains and dividends remains at zero percent for 2010.  You will be allowed to receive dividends and take profit on the sale of long-term assets you’ve owned, and pay no tax until they push you into the 25% tax bracket.  To qualify for the zero rate you must have owned the assets over a year and be in the 10% or 15% tax brackets.

For 2010 the 25% tax bracket starts at taxable incomes greater than $67,900 for married filing jointly and $33,950 for single filers.  When your taxable income exceeds these amounts your dividends and long-term capital gains will be taxed at 15%.  Short-term gains and long-term gains on collectibles do not qualify for these special rates. 

For example, suppose you were married filing jointly and all your income was from long-term capital gains.  For 2010, you would be pushed into the 25% tax bracket when your income exceeded $67,900.  If the only taxable income you had for the year was $65,000 of dividends and long-term capital gains, none of your income would be taxed.

No Penalty for Missed Section 179 Elections

The IRS had always claimed that taxpayers must make an election (on Form 4562) to claim the Section 179 deduction for specific assets on the originally filed return for the year the assets were placed in service.  If the election was missed, the IRS wouldn’t allow the taxpayer to fix the problem by making the election on an amended return.  No more.  For taxable years 2003-2009, you can make the Section 179 election on your original return or an amended one.

Sec. 179 Expensing Gets Expansion

Hoping to spur the economy, President Obama has increased the benefits of the Code Section 179 election.  Most new equipment purchases may be depreciated over the life of the equipment or using the Sec. 179 election, expensed in the year of the purchase.

In 2009, the maximum Sec. 179 expense deduction was limited to $250,000.  Under the new law the maximum deduction has been increased to $500,000.  There are limitations to the amount of equipment that may be purchased during the year and still qualify to take a Sec. 179 election.

In 2009, the deduction began to phase out dollar for dollar after reaching $80,000 in total equipment purchases.  Under the new law this limit is increased to $2 million.

There is an additional benefit under the law. The definition of “qualifying property” has been expanded to include qualified real property, which includes qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.  The qualified real property category is limited to a maximum of $250,000 rather than the $800,000 for other property.  The new law is effective for equipment purchases beginning January 1, 2010 and ending December 31, 2011

New Law Increases Form 1099 Reporting

While no one was paying attention, Congress quietly expanded the business information reporting requirements and slipped it into the Health Care Reform Act passed in March 2010.  The new law will impact millions of businesses.

Under the old law, businesses were required to issue 1099s in limited circumstances, primarily to non corporate taxpayers for services received. Under the new law, effective for payments beginning in 2012, businesses that pay amounts greater than $600 during the year to both corporate and non corporate taxpayers, for either services or product purchases, will be required to file a Form 1099, Information Report to each taxpayer and with the IRS.

Businesses will need to collect all the necessary reporting information including taxpayer identification number, name and address from each vendor paid over $600 in aggregate during the calendar year.  This will be a huge burden on small business.

IRS Releases Form to Help Small Businesses Claim New Health Care Tax Credit

IRS Also Announces How Tax-Exempt Organizations Will Claim Credit

WASHINGTON –– The Internal Revenue Service today released a draft version of the form that small businesses and tax-exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year. The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.

The IRS has posted a draft of Form 8941 on IRS.gov. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.

Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.

The final version of Form 8941 and its instructions will be available later this year.

The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.  The maximum credit goes to smaller employers ¬¬–– those with 10 or fewer full-time equivalent (FTE) employees ––¬¬ paying annual average wages of $25,000 or less.

The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.

More information about the credit, including a step-by-step guide and answers to frequently asked questions, is available on the Affordable Care Act page on the IRS website.

Calculate Health Care Tax Credit

IRS Releases Form to Help Small Employers Calculate New Health Care Tax Credit, Announces How Tax-Exempts Will Claim Refundable Credit

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The IRS today announced the release of a draft version of the Form 8941 that both small businesses and tax-exempt organizations will use to calculate the small business health care tax credit during the 2011 tax season.  The credit is designed to encourage small employers to offer health insurance coverage or maintain the coverage they currently offer their employees.

While small businesses will include the amount of the credit as part of the general business credit on their tax returns, tax-exempt organizations eligible for the refundable credit will claim the credit on a revised Form 990-T. The revised Form 990-T will enable eligible tax-exempt organizations to claim the tax credit even though they owe no tax on unrelated business income.