The Information Reporting Program Committee or the IRPAC is formed with members of Internal Revenue Service (IRS) and private sector. It forms a good platform for them both to exchange ideas and viewpoints which influence formation of various tax laws and provisions. Each year IRPAC tables it report with details of various tax related administrative issues which were tackled by the committee during the year. Activities of IRPAC are managed by National Public Liaison Office of IRS and primarily comprises of members which are top tax experts in the country. The members often raise various issues related to tax governance and practical ways to tackle them.
The current report of the IRPAC has more than 30 recommendations which were based on finding and discussions throughout the year. Some of the important recommendations are as under:
- Layout of the form W-2 has been made more user friendly and to include practical details.
- Form 1099 which is used for information reporting related to Patients Protection & Affordable Care Act has been made suitable.
- Recommendations on security transactions specially on reporting losses.
- Reporting requirements for settlement of third party transactions were also part of recommendation of IRPAC.
- Very important recommendations concerning Foreign Account Tax Compliance Act which governs reporting structure for foreign sourcing of funds by financial and non-financial organizations.
Above are few of the important areas in which IRPAC has given their recommendation for year 2010. More details on this report can be found on the official website of IRS.
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Each year Internal Revenue Service department take references of many different inflation indexes before deciding on various tax provisions. As many tax provisions bear direct effect on the personal disposable income of the taxpayer they have become an important tool in hands of the economists to control the flow of funds in an economy. We all want to maintain a certain standard of living irrespective of inflation of depressions in our economy. Often inflations eats away sizable portion of our income and we don’t even realize it. In the recent past some inflationary trends have been observed as a result of which IRS has decided to increase certain rebates in income tax provisions in the year 2011.
Few examples of such relief in the current can be witness by changes in the following provisions:
- Personal & dependent tax exemption levels increased to $ 3750 from earlier level of $ 3700 in year 2010.
- Increase in standard deduction levels from $ 11400 to $ 11600 for married filing jointly. And for individuals it has been increased to $ 5800 from earlier $ 5700.
- Threshold of tax bracket increased to $ 69,000.
- Revised ECIT limits stand increased at $ 5751.
- Modified income threshold now stands at $ 102,000.
All the above provisions will refine the personal disposal income in hands of a taxpayer and leave an average taxpayer with little more to spend in this year.
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There have been two important things related to start and end of this year’s tax season. By now you all must be aware that the deadline to submitting our tax returns has been extended by three extra days this year. Instead of 15th April you have time till 18th April 2011 to file your 2010 tax returns or apply for extension. This extension has been carried out due to a local holiday in State of Columbia which is followed by weekend holiday. The start of tax season has also been delayed for some of the tax payers who are palling to claim itemized deductions in Form 1040 or 1040A.
Usually tax filing process begins in the month of January itself; this year has been no exception. However there have some late changes in the provisions of income tax laws which require some time to get incorporated in the electronic system of filing returns. This delay would not have happened if most of the people were filing their returns through the traditional paper filing method. But now over 70% of Americans are using the electronic medium to e-file their income tax returns it is very important to update the system before the filing process could begin. Computer professionals have been working day and night to make the necessary changes in their system as early as possible. They would also require some time to test these changes before finally giving it a go ahead so that taxpayers at large do not face any problems.
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There have been some recent changes in the tax laws which were accepted by congress and signed by the President in |December 2010. As these changes will have to be incorporated in the electronic version of processing tax as well IRS authorities will need some time in making sure this incorporation was carried out in time. As these changes will be applicable for tax year 2010 all those who will be effected by them have no choice but to wait little more before filing their returns. IRS has already issued information on this delay for some of the tax payers and is also expected to inform soon by when the online system will be updated.
Most of these changes are on account of provisions for claiming itemized deductions in form 1040A. In case you do not have any claims under itemized deductions in Form 1040A this delay is not going to affect you, and you can go ahead and e-file your returns. More specifically these deductions are in the items related to:
- Schedule A: Claims in Schedule a on account of medical and dental expenses, charitable deductions, deductions on account mortgage interest will need to wait little more.
- Higher Education Fee: Parents claiming to Higher Education Tuition Fee credits need to wait further. Under the new provisions a qualifying taxpayer could claim up to $ 4000 on account of post secondary tuition fee paid for their child.
- Educator Claims: Taxpayers who which to claim tax credits under Educator Scheme using Form 1040 or 1040A will also need to wait before the online system is updated.
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