NEWSWIRE

Dow closes up 490 points

U.S. stocks closed the day up 4% after Fed, other central banks move to support the global economy.

What to do with your 401(k) once you retire

When I retire next year, should I keep my 401(k) funds with the same firm that currently manages them or roll them into an IRA with a different firm?

S&P downgrades 15 banks

Standard and Poor's downgraded 15 banks, including Bank of America and Citigroup, as a result of applying new ratings criteria for the world's 37 largest banks.

Why Holiday Shoppers May Be Overspending

It's gratifying to see beleaguered consumers showing some fighting spirit, but there's one big problem.

Central Banks to the Rescue: Naughty or Nice?

The attempt by major central banks to ease strains on Europe's credit markets certainly cheered financial markets on Wednesday, but what does the coordinated action actually do? 

3 Reasons Apple Shares Are So Cheap

Though a long-time market darling, the reality is Apple's stock remains one of the cheapest of the major tech names on a relative basis.

Samsung scores rare patent win versus Apple

Samsung Electronics is set to resume selling its Galaxy tablet computer in Australia as early as Friday, after the South Korean technology firm won a rare legal victory in a long-running global patent war with Apple.

A protocol for the newly unemployed

Although the economy is showing some signs of recovery, people are still getting laid off daily. Here's advice for the newly unemployed on maximizing your resources from somebody who has been there many times.

Small Biz Employees Unprepared for Retirement

Three-quarters of small business owners believe that so many Americans are financially unprepared for retirement that the problem has reached the level of a crisis, but only about a fifth of them actually offer their employees a 401(k) or similar plan, according to a new survey.

IRS Will Maintain Current Interest Rates in Q1

The Internal Revenue Service said Tuesday that interest rates for tax overpayments and underpayments would remain the same in the first quarter of the year.

Tax Court Rules in Favor of TurboTax Defense

The U.S. Tax Court has ruled in favor of a taxpayer who made a data entry error when using Intuit’s TurboTax tax prep software.

IRS Files Tax Lien against Rapper Bow Wow

The Internal Revenue Service has reportedly filed a tax lien against rap singer Bow Wow for $91,105.61 for unpaid taxes dating back to 2006.

Democrats to Introduce Bill to Extend Payroll Tax Cut

Senate Majority Leader Harry Reid, D-Nev., said Monday that he plans to introduce legislation this week that would extend the payroll tax cut that is due to expire at the end of the year.

IRS’s New E-file System Remains Error-prone

The Internal Revenue Service’s Modernized E-file System, which is supposed to replace the current electronic filing system by the 2013 filing season, is still unable to assure the accurate processing of individual tax returns.

IRS Hot Topics

Affordable Care Act Tax Provisions

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that became effective in 2010 or 2011, and more that will be implemented during the next several years. The following is a list of provisions now in effect; additional information will be added to this page as it becomes available.

Health Insurance Premium Tax Credit

Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On Aug.12, 2011, the IRS issued proposed regulations that describe who will be eligible to receive the premium tax credit and how to compute the credit. The proposed regulations also describe how to reconcile any advance credit payments for health benefits purchased through an Exchange with the final credit amount. The proposed regulations provide numerous examples, solicit written comments and provide a notice of public hearing. Comments must be submitted by Oct. 31, 2011.  The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.  Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer. Additional information about the Exchange can be found at www.healthcare.gov.

Small Business Health Care Tax Credit

This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers and our news release.

Changes to Flexible Spending Arrangements

Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.  For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers.

FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5.

IRS partners can spread the word to their clients with the help of a Health Plan Changes flyer and a drop-in article, Does your Healthcare Program need a checkup?

Health Coverage for Older Children

Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.

Excise Tax on Indoor Tanning Services — First Quarterly Payment Was Due Nov. 1, 2010

A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. The first payment of the tax was due Monday, Nov. 1. Payments are made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn't apply to phototherapy services performed by a licensed medical professional on his or her premises. There's also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. For more information on the tax and how it will be administered, see the Indoor Tanning Services Tax Center.

Adoption Credit

The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply. In addition to filling out Form 8839, Qualified Adoption Expenses (see instructions), eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents to avoid slowing down a refund.
For other information, see our news release, tax tip, questions and answers, flyer, Notice 2010-66, Revenue Procedure 2010-31 and Revenue Procedure 2010-35.

Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers

The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption under section 501(c)(29) for recipients of CO-OP grants and loans that meet additional requirements. IRS Notice 2011-23 outlines the requirements for tax exemption under under section 501(c)(29) and solicits written comments regarding these requirements as well as the application process. Comments must be submitted by May 27, 2011.

Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers

The Affordable Care Act amended section 162(m) of the Code to limit the compensation deduction available to certain health insurance providers. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009. Initial guidance on the application of this provision can be found in Notice 2011-2, which also solicits comments on the application of the amended provision.

Employer Shared Responsibility Payment

Starting in 2014, certain employers must offer health coverage to their full-time employees or a shared responsibility payment may apply. More information may be found in news releases IR-2011-92 and IR-2011-50 and Notices 2011-73 and 2011-36.

IRS Begins Scheduling Tax Preparer Competency Tests

The Internal Revenue Service is moving into the second phase of its tax preparer regulation initiative by beginning next week to schedule the first competency tests for tax preparers.

Obama Pushes for Extension of Payroll Tax Cut

President Barack Obama told an audience in New Hampshire on Tuesday that their taxes would go up an average of $1,000 to $1,500 unless the payroll tax cut were extended and expanded as part of his jobs bill.

Report Questions Basis for Some IRS Fees

The Internal Revenue Service earns about $198 million a year in fees from installment agreements and $40 million in fees from tax return transcripts, but the reason for some of the user fees is vague, according to a new report.

Former Madoff Employee Pleads Guilty to Fraud

A long-time employee at Bernard Madoff’s investment firm has pleaded guilty to fraud charges after he was accused of helping fabricate trading records that enabled Madoff to pull off his massive Ponzi scheme.

Consumers Worried about Finances During Holiday Season

More consumers are reporting this holiday season that their finances have deteriorated over the past year.

Avoid Scams

Are you getting the right immigration help?

Many people offer help with immigration services. Unfortunately, not all are authorized to do so. While many of these unauthorized practitioners mean well, all too many of them are out to rip you off. This is against the law and may be considered an immigration service scam.

If you need help filing an application or petition with USCIS, be sure to seek assistance from the right place, and from people that are authorized to help. Going to the wrong place can:

• Delay your application or petition
• Cost you unncessary fees
• Possibly lead to removal proceedings

This site can help you avoid immigration service scams. Remember: Know the facts when it comes to immigration assistance, because the Wrong Help Can Hurt.

Tools to Help You Avoid Scammers

USCIS wants to combat immigration service scams by equipping applicants, legal service providers and community-based organizations with the knowledge and tools they need to detect and protect themselves from dishonest practices.

To accomplish this goal, USCIS launched the Unauthorized Practice of Immigration Law (UPIL) Initiative. As part of the effort, we've partnered with several government agencies to identify resources that can help you avoid immigration services scams.

Empower yourself by using our online educational resources, which include:

• The top things to know before and after filing an application or petition
• A list of common immigration services scams
• State-by-state information on where you can report an immigration services scam
• Advice on finding authorized legal help
• Information on becoming an authorized legal immigration service provider
• Educational tools you can print and share 

NEWSWIRE

Congress Reinstates FHA loan limits Congress has reinstated the loan limit formula and maximum cap for Federal Housing Administration-insured loans for two years.

The provision reinstates the FHA loan limits through 2013 at 125 percent of local area median home prices, up to a maximum of $729,750 in the highest cost markets. The floor will remain at $271,050. The loan limits for Fannie Mae and Freddie Mac-backed mortgages will remain at 115 percent of local area median home prices, up to $625,500.

The bill also provides for a short-term extension of the National Flood Insurance Program through December 16, 2011.

Obama Signs Veterans Hiring Tax Credit Law

President Obama signed into law Monday a bill that provides tax credits for hiring veterans and repeals a 3 percent tax withholding requirement on government contractors.

Congressman Proposes Raising the Estate Tax

A senior member of the tax-writing House Ways and Means Committee has introduced legislation to roll back the estate tax rates to pre-Bush tax cut levels.

IRS Faulted for Adoption Tax Credit Refund Delays

The Internal Revenue Service sent the majority of claims for the adoption tax credit to auditors this year because they lacked the necessary documentation, even though it had options that could have enabled it to reduce the number of costly correspondence audits and issue refunds to parents faster while still maintaining a robust enforcement strategy, according to a new report.

Income Fell in U.S. for Second Straight Year in 2009

The Internal Revenue Service found that adjusted gross income decreased in 2009 for the second year in a row, as unemployment compensation continued to increase as a source of income.