Issue Number: 2016-4
Inside This Issue
- Alert Your Clients to Significant Tax Benefit in EITC
- IRS Issues Nine Out of 10 Refunds in Less than 21 Days
- Which Foreign Taxes Qualify for the Foreign Tax Credit?
- Higher Education Credits
- IRS Provides Tax Relief to Mississippi and Missouri Storm Victims
- Technical Guidance
1. Alert Your Clients to Significant Tax Benefit in EITC
The IRS joins partners across the country in promoting the Earned Income Tax Credit on EITC Awareness Day, Friday, Jan. 29. This is the tenth anniversary of the EITC Awareness Day campaign, a nationwide effort to alert millions of low and moderate-income workers who may be missing out on this significant tax credit.
Back to top
2. IRS Issues Nine Out of 10 Refunds in Less than 21 Days
The IRS issues nine out of 10 refunds in less than 21 days. The best way to check the status of a refund is online through the “Where’s My Refund?” tool at IRS.gov or via the IRS2Go phone app.
Back to top
3. Which Foreign Taxes Qualify for the Foreign Tax Credit?
The IRS recently updated the information on irs.gov to explain the rules for individuals in determining which foreign taxes qualify for the foreign tax credit, including additional examples of legal and actual foreign tax liability.
Back to top
4. Higher Education Credits
Your clients may qualify for either of two education tax credits if they paid for higher education for themselves or immediate family members. Both the American Opportunity Credit (AOTC) and the Lifetime Learning Credit (LLC) may reduce the amount of taxes they owe, but only the American Opportunity Credit is partially refundable.
The AOTC is worth up to $2,500 per year for an eligible student. This credit applies for the first four years of higher education. Forty percent of the AOTC is refundable. The LLC is worth up to $2,000. There is no limit on the number of years that a taxpayer can claim the LLC for an eligible student.
Taxpayers must complete Form 8863, Education Credits, and file Form 1040 or 1040A to claim these credits.
Note to Tax Pros: An institution of higher education school should provide your client Form 1098-T, Tuition Statement, showing expenses paid for the year. The amounts shown on the form may be different than the amount your client actually paid. When figuring the credit, be sure to verify whether the client paid any additional qualified education expenses not shown on the form. Form 1098-T contains information needed to complete Form 8863.
Learn more by visiting the IRS education benefits and EITC Refundable Credits Web pages or reading Publication 970, Tax Benefits for Education.
Back to top
5. IRS Provides Tax Relief to Mississippi and Missouri Storm Victims
Mississippi and Missouri storm victims will have until May 16 to file their returns and pay any taxes due. All workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization also qualify for relief.
Back to top
6. Technical Guidance
Notice 2016-16 provides that certain types of mid-year changes to certain retirement plans do not violate safe harbor rules and additional participant notice and election opportunities for some mid-year changes. Contributions to a section 401(k) or 401(m) retirement plan must not discriminate in favor of highly compensated employees. The nondiscrimination rules may be met through a safe harbor structure that includes limits on mid-year changes and a requirement to provide notice to plan participants.
Back to top
Thank you for subscribing to e-News for Tax Professionals an IRS e-mail service.
If you have a specific concern about your client's tax situation, call the IRS Practitioner Priority Service 1-866-860-4259.
This message was distributed automatically from the mailing list e-News for Tax Professionals. Please Do Not Reply To This Message
To subscribe to or unsubscribe from another list, please go to the e-News Subscriptions page on the IRS Web site.
|
