The IRS issued more than 9 out of 10 refunds to taxpayers in less than 21 days last year. The same results are expected in 2013.

Even though the IRS issues most refunds in less than 21 days, it’s possible your tax return may require additional review and take longer.

Use Where’s My Refund? to Check the Status of Your Refund.

Where’s My Refund? has a new look for 2013! The tool will include a tracker that displays progress through 3 stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent.

You will get personalized refund information based on the processing of your tax return. The tool will provide an actual refund date as soon as the IRS processes your tax return and approves your refund. Remember, most refunds will be issued in less than 21 days.

In 2013 you will be able to start checking on the status of your return sooner – within 24 hours after we have received your e-filed return or 4 weeks after you mail a paper return.

IRS Tax Tip 2011-29, February 10, 2011

The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income. Here are 10 important facts from the IRS about this credit and how it may benefit your family.

1. Amount - With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.

2. Qualification - A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence.

3. Age Test - To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2010.

4. Relationship Test - To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

5. Support Test - In order to claim a child for this credit, the child must not have provided more than half of their own support.

6. Dependent Test - You must claim the child as a dependent on your federal tax return.

7. Citizenship Test - To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.

8. Residence Test - The child must have lived with you for more than half of 2010. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.

9. Limitations - The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

10. Additional Child Tax Credit - If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

Charitable contributions are deductible only if you itemize deductions on Form 1040, Schedule A (PDF).

To be deductible, charitable contributions must be made to qualified organizations. Payments to individuals are never deductible. SeePublication 526, Charitable Contributions. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deductions, review Exempt Organizations Select Check on the IRS.gov website.

If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.

For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the date of the contribution, and the amount of the contribution. In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. See Publication 561, Determining the Value of Donated Property. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.

You must fill out Form 8283 (PDF), and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return.

For more information, refer to Form 8283 (PDF) and the Form 8283 Instructions, as well as Publication 526, Charitable Contributions. For information on determining the value of your noncash contributions, refer to Publication 561, Determining the Value of Donated Property.

Explain how can this happen for such a long period of time!!!!
No one wants to take blame for the deficit. The blame is slammed onto poor citizens. At the height of this country’s deficit, CEOs are more overly responsible for their share. They have abuse many programs which now they want to close.

“The companies represented by officials working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills”.
The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, and they plans to spend at least $30 million pushing for a deficit reduction deal. Can this work when they are the beneficiaries?
During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most clearly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have over powered the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs. Particular Medicare, Medicaid, and Social Security; these programs should be cut. Cutting these programs would extremely impact the poor and the elderly. As part of their push, they are advocating a “territorial tax system” that would exempt their companies’ foreign profits from taxation, netting them about $134 billion in tax savings, according to a new report from the Institute for Policy Studies titled “The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks” — money that could help pay off the federal budget deficit.

But the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.” This is a shame!!
Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.

Just three of the companies — GE, Boeing and Honeywell — were handed nearly $28 billion last year in federal contracts alone. A spokesman for Campaign To Fix The Debt did not respond to an email from The Huffington Post over the weekend.
The CEO council recommends two major avenues that it claims will produce “at least $4 trillion of deficit reduction.” The first is to “replace mindless, abrupt deficit reduction with thoughtful changes that reform the tax code and cut low-priority spending.” The second is to “keep debt under control over the long-term by focusing on the long-term growth of entitlement programs.”

CEOs are encouraged to present a Fix-The-Debt PowerPoint presentation to their “employee town hall [meetings and] company meetings.” To further help get the word out, the campaign borrowed a page from the CEOs this fall who wrote letters encouraging their employees to vote for Mitt Romney, or face job cuts. This time, the CFD has created two templates for bosses to use at their companies.

But in the past week, in order to make their case to the millions of Americans who don’t work for them, CEOs fanned out into television, to convince the rest of the country that slashing the social safety net is the only way to reduce the deficit.
In an interview aired Monday, Goldman Sachs chairman and CEO Lloyd Blankfein said Social Security “wasn’t devised to be a system that supported you for a 30 year retirement after a 25-year career.” The key to cutting Social Security, he said, was simply a matter of teaching people to expect less.

“You’re going to have to do something, undoubtedly, to lower people’s expectations of what they’re going to get,” Blankfein told CBS, “the entitlements, and what people think they’re going to get, because you’re not going to get it.”
Blankfein and Goldman Sachs don’t have to worry about lowering expectations. After receiving a $10 billion federal bailout in 2008, and paying it back a few years later, Goldman Sachs recently exceeded Wall Street analysts’ expectations by announcing$8.4 billion in third quarter revenues for 2012. On the heels of a great year, Blankfein is expected to take home an even larger salary than he did in 2011, when he made$16.1 million.

To understand the importance of banking profits to the members of the deficit council, one need look no further than the two top-ranking members of the Campaign To Fix The Debt’s steering committee, former New Hampshire Sen. Judd Gregg (R) and former Pennsylvania Gov. Ed Rendell, a Democrat. Gregg is currently employed as an international adviser to Goldman Sachs, while Rendell collects his paycheck from the boutique investment bank Greenhill & Co.

Following Blankfein’s evening news appearance on Monday, Cote, the Honeywell CEO, sat down with the same network on Tuesday, and said essentially the same thing that Blankfein did.

Cote ranked 11th on a list compiled in a recent study conducted by the Institute for Policy Studies of executives who have saved the most from the Bush tax cuts. According to the IPS, Cote’s taxable compensation for 2011 was a bit more than $55 million, and he did not pay about $2.5 million thanks to the Bush tax cuts.

After mentioning a few scary-sounding deficit statistics, he suggested the government raise revenue by ending individual tax credits and deductions, which he said amounted to a $1 trillion “giveaway” in 2011. It was clear, however, that Cote hadn’t come on the show to talk about taxes.

“The big nut is going to have to be [cuts to] Medicare/Medicaid … especially with the baby boomer generation retiring. It’s going to literally crush the system.”
But while Cote strongly recommends cutting those benefits, when it comes to the tax obligations of corporations, he’s clear about what he wants: a corporate tax rate of zero.
“From a fairness perspective, nobody would be able to stand [a zero tax rate on corporate profits],” but if the U.S. really wanted to create jobs, he said this spring, “we would have the lowest rate possible.”
At Honeywell, Cote practices what he preaches. Between 2008-2010, the company avoided paying any taxes at all. Instead, the company got taxpayer-funded rebates of$34 million off of profits totaling nearly $5 billion.
Part of what makes the lobbying blitz around the fiscal cliff so complex for CEOs on the Fiscal Leadership Council is that many of them need more than just low tax rates. They also need Congress and the White House to maintain current defense spending levels so they can continue winning enormous contracts.
In 2011, $40 billion of taxpayer money was divided among just nine CFD member companies, led by defense giant Boeing, which raked in $22 billion in federal contracts alone, more than the other eight companies combined. For his efforts as CEO, Boeing’s Jim McNerney took home nearly $23 million in compensation last year.
But even as McNerney lends his name to the deficit commission, his company has quietly begun laying off U.S. workers ahead of defense cuts that are expected to be part of a deficit reduction deal. The company denies that federal spending has anything to do with the job cuts, but defense industry analysts aren’t convinced.
At least one faction of Boeing’s workforce is thriving: Boeing lobbyists in Washington have made $12 million since January fighting proposed cuts to defense and aerospace projects.

Argument regarding the tax policies may be delayed until 2013. Congress is still divided and there is not a clear unite. The payroll requirements may be delayed as far as January of 2013. This action is detrimental to payroll companies and citizens.

Afraid of losing jobs, afraid of failure, no one is certain. We all should prepare for the worst.

Has America reached its breakin point? Are we forced to get accustomed to the “New Reality”.

Raising or Cutting Payroll taxes will have an effect on America. Spend less and Save More.

Withholding Income Taxes

Some states have released their income tax withholding tables for 2013. The IRS (Internal Revenue Service) is waiting for congress before it releases tables. But here is a scenario; If Congress does not deliver before 2013, the Treasury secretary mad choose to keep some tax rates the same. This may apply to all or those making less than $200k per year. When increasing tax, it involves more than one method. For individuals making 200k, not only could the tax rates increase, but the amount of withholding allowances may decrease, causing more taxes to be paid.

If no Federal income tax extension is passed for individuals by the end of 2012, the four highest-percentage federal income tax brackets will increase. The rates may jump from 35 percent to 39.6 percent followed by rates 36 percent from 33 percent and 25 percent to 28 percent.

Backup Withholding Rate

The backup withholding rate applicable for payments to individuals identified by IRS as having provided an incorrect taxpayer identification number, which is pegged at the third-highest rate, would increase to 31 percent from 28 percent without an extension, Langer said.

Release of the 2013 Publication 15 (Circular E), Employer’s Tax Guide, which is to include percentage method withholding tables and wage-bracket method withholding tables, would occur after Congress decides which income tax rates to extend, Langer said.

Form W-4, Employee’s Withholding Allowance Certificate, likely will be released after the release of the 2013 Publication 15, Langer said.  Because Form W-4 is required for successfully withholding employee wages in conjunction with the tables, a delayed release of the 2013 form could be detrimental to employees who want to file the form, especially employees who want to claim exemption from federal income tax withholding and who need to file a Form W-4 by February 15 each year to acquire the exemption through February 15 of the following year, Langer said.

FICA Withholding, Form 941

Form 941, Employer’s Quarterly Federal Tax Return, which includes lines for reporting taxable Social Security and Medicare wages may be finalized in the first quarter of 2013 because IRS cannot sign off on the form until it knows the employee Social Security tax rate for 2013.

Social Security tax rate of 4.2 percent is scheduled to revert to 6.2 percent January 1, 2013.  The White House has said that the administration is to evaluate by the end of 2012 whether to extend the reduced rate.

Line 5d of Form 941 likely will become the line for reporting wages greater than $200,000 that are subject to the additional Medicare tax rate of 0.9 percent starting January 1, 2013. The extra tax applies only to the employee portion of Medicare tax and not to the employer portion.

Employers should recognize employees whose earnings were near or surpassed the $200,000 threshold for 2012 so that employers can better anticipate who might be focus to the additional tax.

The employer and employee portions of Medicare wages assessed at the standard 1.45 percent tax rate still will be reported using Line 5c of Form 941.

Carrying out of the 0.9 percent additional Medicare tax will not affect the arrangement of the 2013 Form W-2, Wage and Tax Statement, Langer said.  The total of all Medicare wages and tips, including employee wages exceeding $200,000, still would be stated in Box 5. Total withheld Medicare taxes still would be reported in Box 6.

Systems and Communications

When the rates are released, payroll experts should adjust payroll processing systems. A test should be run to see whether the systems are properly calculating withholding on the adjusted values.

There are a few things that differentiate our blog:

•    First, you will find articles about payroll methods, income and tax topics beneficial to most businesses. However, instead of loading you down with technical jargon and tax code, we will always do our best to present it in a way that is relevant to you and your business needs.
•    Secondly, you will find our incredibly engaging and knowledgeable professional staff, but also an array of engaging business and industry leaders contributing their knowledge and expertise.
•    Furthermore, we will separate our blog into topics to make it easy for you to participate and find the information that is useful to you and your business.

We hope that you enjoy exploring the various industries and topics. We welcome your comments and suggestions and look forward to your feedback and participation. To discover more about Payroll Services, please visit our website www.payarctpayroll.com