This year the IRS has expanded due diligence questions concerning the Child Tax Credit to make sure that taxpayers and their children qualify for the credit. Here is a short guide to help tax professionals navigate this important credit.

Amount: The Child Tax Credit may help reduce federal income tax by $1,000 for each qualifying child claimed.

Additional Child Tax Credit: If the client qualifies for Child Tax Credit but gets less than the full amount, they could receive a refund, even if they owe no tax, through the Additional Child Tax Credit. This year, tax returns claiming Earned Income Credit and Additional Child Tax Credit that have refunds will be held by the IRS until February 15th.

Qualifications: There are many tests that the child must pass to qualify for the credit, including:

• The child must be under age 17 at the end of the year.
• The child must be the dependent and relative of the client.
• The child cannot file a joint return for the year, unless they are filing only to get a refund.

There are several other qualifications as well. For more information on special rules and limitations for the Child Tax Credit, please visit www.irs.gov.

To find the expanded due diligence questions in the Taxware Systems software, fill out the basic information on a client and click “Line Input” on the left hand side. Once there, you will see the Form 1040. On the far left above the automatic calculations is a large button with Due Diligence and a red X. Click on the button and the questions that need to be answered will be in red. Once those questions are answered, a green check mark will appear if the client qualifies for the credit.

Schedule 8812: If the client qualifies to claim the Child Tax Credit, make sure to check whether they need to fill out Form 8812. The same also goes for the Additional Child Tax Credit; the client will need to fill out Form 8812.

If you have questions, feel free to contact us!

support@taxwaresystems.com

1-800-877-1065

 

 

During the holiday season, people often donate money, personal belongings or property to charity. Here are some tips that you can share with your clients to help them file their tax return.

Qualified Charities: The client can deduct gifts for a qualified charity. This includes churches, synagogues, temples, mosques and government agencies, even if they do not appear on the Select Check tool provided by the IRS. Note: Warn them to be careful of phishers posing as qualifying charities. Do not open emails from a “charity” that is not familiar, and do not click on any links in the emails. The Select Check tool should be able to help you confirm actual charities.

Keep Records of All Cash Gifts: Gifts of money include those made in cash, checks, electronic funds transfer, credit card or payroll deductions. Make sure they ask for written statements or bank records from the charity. The statement must show the name of the charity, date and the contribution amount. If there are payroll deductions, have them retain a paystub or W-2 form from their employer.

Additional Records: The client needs to get an acknowledgement from the charity for each deductible donation, cash or property, of $250 or more.

Year-End Gifts: Deduct contributions in the year that they are made. If the client charges a gift to a credit card before the end of the year, it will count for 2016. The same is true of a check mailed in 2016.

Special Rules: If they give a car, boat or airplane to charity, special rules apply. Be sure they fill out Form 8283 Noncash Charitable Contributions, to report these gifts.

For more information about charitable donations, please visit

https://www.irs.gov/uac/about-publication-526 or call the IRS at 1-800-829-1040.

We have had a busy summer! We have added a lot of fantastic capabilities to the Income Tax programs. We appreciate your ideas and partnership continuing to help Wintax be the best in the industry. We have posted a video that shows you the great enhancements that have been made to our new next generation Wintax-1040 program:

https://youtu.be/xszthPHx81s

Taking advantage of some of the latest programming tools available, we have rewritten our Wintax-1040 Income Tax programs. We wanted to develop dynamic systems with a more user-friendly experience but keep our existing tax return flow so that there wouldn’t be a learning curve.

We believe we have hit the mark with this new Wintax program and are excited for its launch!

The new programs have the same overall features, functionality, and great flow as the old programs. Don’t worry, we didn’t take any features out, but made some great additions to them that we know you will appreciate. Some of the new key features that were added include:

Enhanced Windows 10 user interface, fully maximized screen and overall more user-friendly experience. Defaults and Settings have been moved to their own page. For most clients, Taxware’s standard defaults are adequate and typically do not require adjustments.

Native Print Printing is even faster.

User Interface Scaling This can be done on any page by CTRL mousewheel up or down. You can also go to the Defaults and Settings page and use the scaling slider. The scaler will remember whatever it was set to last when you exit the program.

Easier Networking Available networked drop down as well as networking filter. The network name is now part of the operating system’s client storage and gets ported into the client and e-file databases. This means you can easily switch to another network client’s settings, and that you can also filter clients based on your network ID. If you are not networking, simply uncheck the “Enable networking user filter” selection and the “User Filter” goes away. Tax returns’ network ID gets set during new client or prior year recall but can be reassigned in the print configuration menu.

“Bread Crumb” Navigation is awesome! Now you can know where you are in the tax return all the time. What makes this feature really fantastic is that clicking the blue titles can also be used to go straight to a specific page.

E-file Validation is now native to the new program. The internal and IRS schema validation for the federal takes place during the loading of the validator. We also have color coding of the XML, copy and paste functionality, and search XML utilities.

E-file tracker has a new Station ID filter. If networking computers or station ID EROs that intend to share the program, a station ID can be entered and the new e-file tracker will filter their tax returns.

There are too many fun things to talk about regarding the new program, but I’ll talk about a few of the highlights. Note: We are not discontinuing our fantastic current legacy 1040 program, so if you are more comfortable using the legacy program it is also being added to and enhanced.

Client Selection Grid

We are really excited about the new, enhanced recall client page. On this page, clients can filter the tax returns to show only tax returns for the selected filter by clicking the filter buttons. The search options located to the left will search the filtered data set. This should make finding and working with your clients a lot easier and faster.

Also from this page, the new client wizard can be accessed to start a return by selecting the new client button located in the tool bar.

For clients that have been recalled into the current year, expanded client information can be accessed by searching for the client and hitting the F2 key or clicking the F2 button.

This page provides a quick snapshot of the tax return. Client basic information, direct deposit information, amounts refunded or owed, amounts billed and owed, and a quick summary of the electronic filing status of the federal and state returns is available. For electronically filed returns, acknowledgement files can be printed right from this expanded information page.

1040 Line Input

This page is the main launch point of the federal tax return and the federal form 1040 is the main design flow for this page. Constant total calculations are shown in the left panel. Forms and schedules used are displayed in the middle panel and those forms or schedules can be accessed by double clicking those forms.

The main forms and schedules item selections are found in conjunction with the line numbers of the 1040. We also added specific page access if that line is clicked with your mouse. We also included our Form Search capabilities that had previously only been available in our direct Forms and Schedules page.

The IRS has announced new processing procedures involving the Earned Income Tax Credit and the Additional Child Tax Credit during the first few weeks of 2017, and during the latter half of 2016, the agency hopes to prepare taxpayers and tax professionals for this major change.

As part of the PATH Act passed in December of 2015, the new law mandates that no tax credit or refund for an overpayment for a taxable year shall be made to a taxpayer before February 15th if the taxpayer claimed Earned Income Tax Credit or Additional Child Tax Credit on their return.

This change will go into effect January 1, 2017, and may affect some returns filed early in 2017. This means that:

• The IRS will hold the refunds on EITC and ACTC-related returns until February 15th. The agency will also hold onto an entire refund that falls into this category, rather than issuing partial refunds.
• Taxpayers should file as normal, and tax professionals should submit returns as normal. The IRS will still be accepting and processing returns once the filing season begins; that process will not change with the new law.
• The IRS still expects to issue most refunds in less than 21 days, though the IRS will hold EITC and ACTC refunds until February 15th and then begin issuing them.

With these new steps in place, the hope is that the law can help prevent identity theft and fabricated withholdings revenue loss as well as ensure that taxpayers receive the refund they are owed.

The IRS will continue to share information with taxpayers at www.irs.gov as information becomes available through the fall of 2016.