Is your worker an independent contractor or employee?

Payroll Service For Small Businesses - The question of whether a worker is an independent contractor or employee for federal income and employment tax purposes is a complex one. It is intensely factual, and the stakes can be very high. If a worker is an employee, the company must withhold federal income and payroll taxes, pay the employer's share of FICA taxes on the wages plus FUTA tax, and often provide the worker with fringe benefits it makes available to other employees. There may be state tax obligations as well. These obligations don't apply for a worker who is an independent contractor. The business sends the independent contractor a Form 1099-MISC for the year showing what he or she was paid (if it amounts to $600 or more), and that's it.

Who is an “employee?” There is no uniform definition of the term.

Under the common-law rules (so-called because they originate from court cases rather than from a statute), an individual generally is an employee if the enterprise he works for has the right to control and direct him regarding the job he is to do and how he is to do it. Otherwise, he is an independent contractor.

Some employers that have misclassified workers as independent contractors are relieved from employment tax liabilities under Section 530 of the 1978 Revenue Act (not the Internal Revenue Code). In brief, Section 530 protection applies only if the employer: filed all federal returns consistent with its treatment of a worker as an independent contractor; treated all similarly situated workers as independent contractors; and had a “reasonable basis” for not treating the worker as an employee. For example, a “reasonable basis” exists if a significant segment of the employer's industry has traditionally treated similar workers as independent contractors. Section 530 doesn't apply to certain types of technical services workers.

Individuals who are “statutory employees,” (that is, specifically identified by the Internal Revenue Code as being employees) are treated as employees for social security tax purposes even if they aren't subject to an employer's direction and control (that is, even if the individuals wouldn't be treated as employees under the common-law rules). These individuals are agent drivers and commission drivers, life insurance salespeople, home workers, and full-time traveling or city salespeople who meet a number of tests. Statutory employees may or may not be employees for non-FICA purposes. Corporate officers are statutory employees for all purposes.

Individuals who are statutory independent contractors (that is, specifically identified by the Internal Revenue Code as being non-employees) aren't employees for purposes of wage withholding, FICA, or FUTA and the income tax rules in general. These individuals are qualified real estate agents and certain direct sellers.

Some categories of individuals are subject to special rules because of their occupations or identities. For example, corporate directors aren't employees of a corporation in their capacity as directors, and partners of an enterprise organized as a partnership are treated as self-employed persons.

Under certain circumstances, you can ask IRS (on Form SS-8) to rule on whether a worker is an independent contractor or employee.

If you'd like to discuss with me how these complex rules apply to your business, to make sure that none of your workers are misclassified, please call my office to arrange for an appointment.

Please call if you would like to explore any of these issues more fully. I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/EYJdQtbPZAI

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Limits on a partner's loss deductions

Virtual CFO Services - As you are probably aware, one of the advantages of doing business as a partnership (or S corporation), as opposed to as a regular corporation, is that the business losses “pass through” to the partners and can be deducted by them on their individual tax returns. Many taxpayers are not aware, however, that limitations apply on how much of a partner's loss can be deducted.

The rule is you cannot take a loss on your individual tax return greater than the basis you have in your partnership interest. The loss is considered to occur on the last day of the partnership tax year, so the key figure is your basis in your interest as of that date. If you are aware of this limitation and of your basis, you may be able to do some planning to increase your allowable loss.

Your basis in your partnership interest starts out as the amount of cash you contribute, the basis you had in any property you contributed, and your share of partnership debt. (If you contribute property subject to debt, the rules get more complex.) After that, your basis is increased by your share of partnership income or gains and any later contributions you make to the partnership. Conversely, it is decreased by cash distributions you receive, by the basis of property distributed to you, and by your share of losses you are able to deduct.

Under these rules, if your share of partnership loss is $10,000 but your basis in your partnership interest is only $6,000, you will only be able to deduct $6,000 of the loss. (The rest is carried forward into future years where it can be deducted as your basis increases sufficiently to cover it.)

If you anticipate being allocated a partnership loss that you will not be able to deduct, consider the following moves to increase your basis before the end of the partnership tax year.

1. Accelerate planned contributions to the partnership. If you are planning to contribute cash or property to the partnership at some point, make the contribution before year end. As noted above, contributions increase your basis in your interest by the amount of cash and the basis of property contributed. In this fashion, you may be able to, in effect, “buy” deductible losses.

2. Defer distributions from the partnership. If you expect a distribution from the partnership, consider having it deferred until after the end of the partnership year. Since a distribution reduces your basis, deferring it will leave you more basis to allow larger loss deductions. (Keep in mind, however, that cash distributions in excess of basis result in taxable gain. Ideally, therefore, the distribution, if of cash, could be deferred until your basis has increased sufficiently to avoid gain on it.)

3. Accelerate partnership borrowings. If the partnership is planning on increasing its borrowings, consider having the new loans taken out by the partnership before its year end. Since the increased partnership loans increase each partner's basis by his share of the debt, partners would be able to deduct more losses.

4. Change allocation of partnership liabilities. You may increase your basis by increasing the portion of the liabilities allocated to you. The rules for allocating liabilities are complex and depend on whether the liabilities are recourse or nonrecourse. However, the rules have some flexibility and it may be possible for you to be allocated a greater portion of the partnership's liabilities without incurring a significant risk of loss if the partnership becomes insolvent.

If you would like my help in implementing any of the above planning moves or would like to discuss this topic further, please give me a call. Click this link to view our YouTube video http://youtu.be/KfO0_kmz7qc

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Opportunities for Nonfilers to re-enter the system

Nonfilers to re-enter the system - If anyone you know has failed to file tax returns when due, it's important that they be aware of the ways to resolve such a problem. Many nonfilers missed a year for one reason or another, and now are afraid to re-enter the tax system. But in fact, taxpayers who file overdue returns on their own are often treated reasonably well, much better than those who are caught.

For taxpayers who can't pay their entire tax bill at once, there's an installment payment option. IRS will also consider an offer-in-compromise on any of the following grounds: (1) where a taxpayer is unable to pay the tax, (2) where there is doubt as to the taxpayer's liability for the tax, (3) where collection of the full amount would cause economic hardship for the taxpayer, or (4) where compelling public policy or equity considerations exist that provide a sufficient basis for compromise.

An offer to compromise hasn't been rejected until IRS issues a written notice to the taxpayer or his representative, advising of the rejection, the reason(s) for the rejection, and the taxpayer's right to an appeal of the rejection. IRS can't notify a taxpayer or taxpayer's representative of the rejection of an offer to compromise until an independent administrative review of the proposed rejection is completed. The taxpayer may administratively appeal a rejection of an offer to compromise to the IRS Office of Appeals if, within the 30-day period commencing the day after the date on the letter of rejection, the taxpayer requests such an administrative review in the manner provided by IRS.

A streamlined offer-in-compromise program is available for taxpayers with annual incomes up to $100,000. In addition, participants must have tax liability of less than $50,000.

IRS has an independent procedure to review its own proposed rejection of requests for an installment agreement. This internal IRS review must occur before IRS notifies the taxpayer of actual rejection of the installment agreement request. IRS also has a procedure to allow taxpayers to appeal—to the IRS Office of Appeals—IRS's rejection of any request for an installment agreement.

A $5,000 penalty applies to any person who submits an application for a compromise or an installment agreement if any portion of the submission is either based on a position which IRS has identified as frivolous, or reflects a desire to delay or impede the administration of federal tax laws. However, this penalty is clearly aimed at those who abuse the process and should not deter taxpayers with legitimate applications from using the compromise or installment agreement processes.

Once a return is filed, IRS has three years in which to audit it. After that, the return is final. If no return is filed, there's no statute of limitations. IRS can come after the taxpayer at any time, even many years later.

Some nonfilers are actually entitled to refunds. A return claiming a refund can be filed at any time, but only the tax paid within the three years before the return was filed can be recovered. Tax withheld during a calendar year is considered paid on Apr. 15 of the next year. Estimated tax is considered paid on the return due date, which is generally also Apr. 15. Thus, a return filed more than three years late will likely be fruitless as a refund claim.

Our office can help nonfilers to file the necessary returns and take advantage of the available IRS programs. I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/KfO0_kmz7qc

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396 

Lost money from investing in a fraudulent investment arrangement such as Madoff's Ponzi scheme

Experienced Tax Accountant – IRS has announced special relief for victims of Bernard Madoff's Ponzi scheme (and for investors in other similar fraudulent schemes). Because Madoff's scheme continued for years, many investors are faced not only with the loss of their original investments, but also with having paid taxes on “phantom income,” based on fraudulent statements sent by Madoff's firm to investors over a number of years.

The first question IRS answers—generally positively for investors—is exactly how the loss from the investment will be treated for tax purposes. If the loss was considered a capital loss, which is often the case when a taxpayer loses money on an investment in stocks or securities, individual taxpayers would be limited to offsetting the loss against their capital gains, plus an additional $3,000 allowed as a deduction against ordinary income. Although the excess loss can be carried forward indefinitely, it would do little for losses of the magnitude incurred by the typical Madoff investor. So it was good news for investors when IRS announced that investors can take an ordinary loss deduction and the deduction isn't subject to the 2% of adjusted gross income (AGI) limit on miscellaneous itemized deductions, the income-based limitation on itemized deductions, or the 10% of AGI limitation on the deduction for casualty losses.

When the deduction is taken. Taxpayers can deduct the loss in the year the theft was discovered, which was 2008 for Madoff investors. This deduction can be taken if the loss isn't covered by a claim for reimbursement or other recovery that has a reasonable chance of occurring. If there is a reasonable chance of recovery, the taxpayer must either reduce the deduction by that amount or, alternatively, make a special election under a 2009 revenue procedure, which is discussed farther below. If, after reducing the deduction, the taxpayer actually recovers less than the reduction in a later year, he or she can take an additional deduction in the year the recovery amount is ascertained. And a taxpayer is required to include in income any amount recovered greater than the amount anticipated at the time of taking the deduction.

The amount of the deduction. According to IRS, the amount of the theft loss is determined by adding to the amount of the initial investment any additional investments and any amounts the taxpayer reported as income and reinvested, minus any amounts withdrawn over the years and any reimbursements or likely recovery.

Here's an example. Assume A invested $500,000 with Madoff's scheme in 2002, reported $40,000 of income on the investment each year in 2003, 2004, 2005, 2006, and 2007, all of which ($200,000) he reinvested. A made no withdrawals over the years, and has filed a claim for reimbursement with the Securities Investor Protection Corporation (SIPC). A is likely to recover $500,000, which is the most any investor can recover from SIPC (subject to a $100,000 cash maximum). His ordinary loss deduction for 2008 is $200,000.

There is an alternative way to calculate the loss under an elective provision, which is described below.

Net operating losses. Taxpayers with losses from Madoff's fraud may have loss deductions in excess of their income for 2008. Under the general rules for net operating losses (NOLs), the losses can be carried back two years and forward 20 years. For casualty or theft losses, the carryback is increased to three years. For 2008 and 2009 NOLs, most taxpayers could elect a three-, four- or five-year carryback period (instead of two years). In addition, a special increased carryback period election was available for small businesses, but only for 2008 NOLs. The interaction of the NOL rules with the rules for other deductions and credits is complex; if you had a potential NOL, you needed tax advice before choosing a carryback period.

Safe-harbor relief. Some investors will qualify for elective relief under Rev Proc 2009-20, 2009-14 IRB 735. The amount of the investment that qualifies for relief under the revenue procedure is the same as it is under the rules described above. But the amount to be deducted is 95% of the qualified investment if the investor doesn't pursue any potential third party recovery or 75% of the qualified investment if the investor is pursuing or intends to pursue a third party recovery. These amounts must be reduced by any actual recovery or potential SIPC recovery. The biggest advantage of this method is that the deduction isn't further reduced by a potential direct or third party recovery (although further deductions or income from losses or recoveries occurring in later years are covered by the rules above). The safe harbor can be elected only by investors who invested directly with Madoff (or in a similar fraudulent scheme).

To qualify for relief under Rev Proc 2009-20, investors must file Form 4684, Casualties and Thefts, marked “Revenue Procedure 2009-20,” with the tax return for the year in which the theft was discovered. Appendix A of Rev Proc 2009-20 contains a worksheet for calculating the amount of the theft loss and a statement that must be signed by the investor and submitted with Form 4684. We expect that this can be done on extension.

State tax treatment. Each state may treat these losses differently. New York, for example, has announced that it will recognize the safe harbor under Rev Proc 2009-20 for purposes of determining the amount of New York state itemized deductions for the theft loss. However, itemized deductions in New York are reduced for taxpayers with income in excess of certain thresholds (that is also the case for federal income tax purposes, but the IRS has explicitly excepted these losses from those reductions). And the NOL provisions permitted for federal purposes aren't permitted for New York because the state allows NOL deductions only for losses attributable to a business, trade, profession, or occupation carried on in New York. The losses from a Ponzi-like fraudulent investment arrangement generally won't qualify.

Please call me if you are interested in additional information on these issues. I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/EYJdQtbPZAI

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

How to open and fund myRAs, a US Treasury- administered Roth-IRA variant

Virtual CFO Services - On its website, the U.S. Department of the Treasury has provided more details on a retirement plan option it will administer directly for employees of private sector companies. It's called the myRA (my Retirement Account), it's a type of Roth IRA aimed at employees with no other retirement plan, and it's invested in a unique U.S. Treasury security.

AB Tax Accounting observation: Although Treasury materials consistently describe myRAs as a new type of Roth IRA, IRS hasn't issued guidance of any sort addressing this new variation. It appears as if Treasury will be the exclusive provider of information about this new retirement avenue.

Background on Roth IRAs. A Roth IRA is an individual retirement account (IRA) that is designated as a Roth IRA when it's established. (Code Sec. 408A(b)) It's treated as a traditional IRA except to the extent that special rules apply to it. (Code Sec. 408A(a))

An individual can make annual nondeductible contributions to a Roth IRA in amounts up to $5,500 (for 2015) (plus an additional $1,000 for those 50 and older), or 100% of compensation if less, reduced by the amount of contributions for the tax year made to all other IRAs. For 2015, the allowable contribution phases out ratably (in $10 increments) over the following levels of modified adjusted gross income (MAGI): for joint filers, $183,000 to $193,000; for married persons filing separately, $0 to $10,000; and for single taxpayers and heads of household, $116,000 to $131,000. (Code Sec. 408A(c))

Qualified distributions from Roth IRAs aren't included in income. These are distributions made after the five-tax-year period beginning with the first tax year for which the taxpayer or the taxpayer's spouse made a contribution to a Roth IRA established for the taxpayer, including a qualified rollover contribution from an IRA other than a Roth IRA, and that are made: (1) on or after attaining age 591/2; (2) at or after death (to a beneficiary or estate); (3) on account of disability; or (4) for a first-time home purchase expense up to $10,000.

Distributions that aren't qualified distributions are treated as made first from contributions to all of an individual's Roth IRAs and are nontaxable to that extent. Distributions in excess of contributions are taxable, and the amount includible in income is also subject to the 10% early withdrawal tax unless an exception applies. (Code Sec. 408A(d))

Background on myRAs. In his 2014 State of the Union address, President Obama promised that he would take executive action to create myRAs, a “starter” savings accounts that would be available through taxpayers' employers and backed by the U.S. government. MyRAs were described as being simple, safe, and affordable starter savings accounts to help low- and moderate-income taxpayers save for retirement. The President subsequently directed Treasury to effectuate this program (see Weekly Alert ¶  2  02/06/2014). Treasury issued some preliminary promotional materials on myRAs in May of 2014 (see Weekly Alert ¶  21  05/22/2014).

Now, Treasury has launched a multi-faceted website offering more detailed information, including how to actually sign up and get going on retirement savings through myRAs.

What is a myRA? In essence, a myRA is a government-administered Roth IRA authorized to hold only one type of investment, described as a “new United States Treasury security which safely earns interest at the same variable rate as investments in the government securities fund for federal employees.” The latter fund is described as having an average annual rate of 3.39% in the 2003—2013 period. The myRA holder pays no fees for maintenance of the account.

AB Tax Accounting observation: The reference to the government securities fund appears to be a reference to the G Fund, i.e., the Government Securities Investment Fund, which is one of the investment choices for federal employees' thrift savings plans. On the federal government's thrift savings plan (TSP) website (https://www.tsp.gov/investmentfunds/fundsheets/fundPerformance_G.shtml), the G Fund is described as investing exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP. The earnings consist entirely of interest income on the security. The payment of G Fund principal and interest is guaranteed by the U.S. government, and, as such, the G Fund investment is not subject to credit (default) risk. The G Fund interest rate calculation is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity. As a result, participants who invest in the G Fund are rewarded with a long-term rate on what is essentially a short-term security.

A myRA is subject to the same rules that apply to private Roth IRA, including the MAGI-based eligibility for contributions, maximum annual contributions, and tax treatment of distributions.

MyRAs belong to their owners and are not associated with any employer. This way savers can continue to use the same myRA account even if they move to a new job. They just need to set up direct deposit with the new employer. And if savers have more than one job, they can request contributions to be set up through each employer (although total contributions from multiple sources can't exceed the Roth IRA annual contribution limits).

Who can open a myRA? Currently, myRAs are available only individuals who work for an employer that offers direct deposit and is able to direct a portion of their paycheck to their myRA account. Treasury says that in the future it will open up the myRA to others (presumably to self-employeds and employees that don't work for a company that offers direct deposit).

How to open a myRA and contribute to it. The only way to open a myRA is on Treasury's website. The individual then starts funding the account by submitting a direct deposit authorization (provided by Treasury) to his or her employer. Contributions in the amount indicated by the employee are made each pay period and are direct-deposited into the employee's myRA. The funds are then invested in a new type of U.S. government security designed for myRAs.

Automatic myRA rollover to private Roth IRA. Participants can save up to $15,000, or for a maximum of 30 years, in their myRA account. When either of these limits is reached, the myRA will have to be rolled over to a private sector Roth IRA. A rollover to the private sector allows savers to continue to grow their savings past the maturity of their myRA starter savings account.

Treasury says savers also can choose to roll over their account balance into a private-sector Roth IRA at any time, and promises to release more information about rollover to the private sector in the future.

What's in it for an employer? Employers that don't offer any kind of retirement plan may want to look into promoting myRAs to employees. It's a retirement plan option that costs nothing for participating employers, since they don't administer employee myRA accounts, contribute to them, or match employee contributions. Each payday, a participating employer simply facilitates a payroll deduction from the employee's paycheck to the designated myRA account.

A separate section of Treasury's myRA website features an employer page that carries a variety of materials that companies can use to encourage employees' myRA participation. These include: a poster to hang in the workplace, a double-sided brochure that can be printed or shared electronically with employees, a web banner directing employes to myRA.treasury.gov, for use on a company intranet site or other internal communication channels, and FAQs that can be printed or emailed.

I hope you find this summary helpful. I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/EYJdQtbPZAI

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

Tax aspects of sole proprietorship

Experienced Tax Accountant –There are several important rules that you should be aware of sole proprietorship.

(1) For income tax purposes, you will report your income and expenses on Schedule C of your Form 1040. The net income will be taxable to you regardless of whether you withdraw cash from the business. Your business expenses will be deductible against gross income (i.e., “above the line”) and not as itemized deductions. If you have any losses, the losses will generally be deductible against your other income, subject to special rules relating to hobby losses, passive activity losses, and losses in activities in which you weren't “at risk.”

(2) You may be able to deduct office-at-home expenses. If you will be working from an office in your home, performing management or administrative tasks from an office-at-home, or storing product samples or inventory at home, you may be entitled to deduct an allocable portion of certain of the costs of maintaining your home. And if you have an office-at-home, you may be able to deduct commuting expenses of going from your home to another work location.

(3) You will be required to pay self-employment taxes. For 2015, you will pay self-employment tax (social security and Medicare) at a 15.3% rate on your net earnings from self-employment of up to $118,500 ($117,000 for 2014), and Medicare tax only at a 2.9% rate on the excess. An additional 0.9% Medicare tax (for a total of 3.8%) will be imposed on self-employment income in excess of $250,000 for joint returns; $125,000 for married taxpayers filing separate returns; and $200,000 in all other cases. Self-employment tax is imposed in addition to income tax, but you can deduct half of your self-employment tax as an adjustment to income.

(4) You will be allowed to deduct 100% of your health insurance costs as a trade or business expense. This means your deduction for medical care insurance won't be subject to the limitation on your medical expense deduction that is based on a percentage of your adjusted gross income.

(5) You will be required to make quarterly estimated tax payments. We can work with you to minimize the amount of your estimated tax payments while avoiding any underpayment penalty.

(6) You will have to keep complete records of your income and expenses. In particular, you should carefully record your expenses in order to claim the full amount of the deductions to which you are entitled. Certain types of expenses, such as automobile, travel, entertainment, meals, and office-at-home expenses, require special attention because they are subject to special recordkeeping requirements or limitations on deductibility.

(7) If you hire any employees, you will have to get a taxpayer identification number and will have to withhold and pay over various payroll taxes.

(8) You should consider establishing a qualified retirement plan. The advantage of a qualified retirement plan is that amounts contributed to the plan are deductible at the time of the contribution, and aren't taken into income until the amounts are withdrawn. Because of the complexities of ordinary qualified retirement plans, you might consider a simplified employee pension (SEP) plan, which requires less paperwork. Another type of plan available to sole proprietors that offers tax advantages with fewer restrictions and administrative requirements than a qualified plan is a “savings incentive match plan for employees,” i.e., a SIMPLE plan. If you don't establish a retirement plan, you may still be able to make a contribution to an IRA.

If you would like any additional information regarding the tax aspects of your going into business, or if you need assistance in satisfying any of the reporting or recordkeeping requirements, please give me a call. I hope you find this summary helpful. I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/EYJdQtbPZAI

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2011 Federal Income Tax Return

Experienced Tax Accountant – Federal income tax refunds totaling $1 billion may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2011, the Internal Revenue Service announced today. To collect the money, these taxpayers must file a 2011 tax return with the IRS no later than Wednesday, April 15, 2015.
"Time is running out for people who didn’t file a 2011 federal income tax return to claim their refund," said IRS Commissioner John Koskinen. "People could be missing out on a substantial refund, especially students or part-time workers. Some people may not have filed because they didn’t make much money, but they may still be entitled to a refund.”
The IRS estimates half of the potential refunds for 2011 are more than $698.
In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. For 2011 tax returns, the window closes on April 15, 2015. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.
The law requires the tax return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return that qualifies for a refund.
The IRS reminds taxpayers seeking a 2011 refund that their checks may be held if they have not filed tax returns for 2012 and 2013. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.
By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2011. Many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2011, the credit is worth as much as $5,751. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2011 were:

• $43,998 ($49,078 if married filing jointly) for those with three or more qualifying children,
• $40,964 ($46,044 if married filing jointly) for people with two qualifying children,
• $36,052 ($41,132 if married filing jointly) for those with one qualifying child, and
• $13,660 ($18,740 if married filing jointly) for people without qualifying children.

Current and prior year tax forms and instructions are available on the IRS.gov Forms and Publications
If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by going to IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.
Individuals who did not file a 2011 return with a potential refund:

State or District	Estimated Number of Individuals	Median Potential Refund	Total Potential Refunds*
Alabama	19,900	$693	$17,794,000
Alaska	5,300	$795	$5,703,000
Arizona	27,700	$618	$23,649,000
Arkansas	10,600	$678	$9,371,000
California	103,700	$627	$92,209,000
Colorado	21,100	$668	$19,258,000
Connecticut	13,400	$777	$13,415,000
Delaware	4,800	$726	$4,579,000
District of Columbia	3,900	$736	$3,812,000
Florida	67,500	$720	$64,106,000
Georgia	36,200	$628	$31,250,000
Hawaii	7,100	$742	$6,842,000
Idaho	4,700	$595	$3,838,000
Illinois	44,000	$763	$43,177,000
Indiana	23,900	$732	$22,135,000
Iowa	11,100	$719	$10,128,000
Kansas	11,600	$667	$10,421,000
Kentucky	14,300	$736	$12,935,000
Louisiana	22,000	$693	$21,432,000
Maine	4,500	$645	$3,748,000
Maryland	25,000	$694	$23,628,000
Massachusetts	25,800	$736	$25,005,000
Michigan	36,200	$721	$34,254,000
Minnesota	16,500	$632	$14,148,000
Mississippi	11,100	$629	$9,625,000
Missouri	23,600	$655	$20,378,000
Montana	3,700	$676	$3,381,000
Nebraska	5,700	$683	$5,108,000
Nevada	13,300	$702	$12,185,000
New Hampshire	4,600	$775	$4,518,000
New Jersey	34,200	$780	$34,520,000
New Mexico	8,500	$688	$7,799,000
New York	63,400	$765	$62,809,000
North Carolina	31,700	$595	$26,248,000
North Dakota	2,600	$761	$2,591,000
Ohio	39,600	$699	$35,218,000
Oklahoma	19,300	$707	$17,988,000
Oregon	17,500	$598	$14,262,000
Pennsylvania	44,000	$770	$42,228,000
Rhode Island	3,400	$748	$3,270,000
South Carolina	13,200	$609	$11,160,000
South Dakota	2,600	$732	$2,480,000
Tennessee	20,700	$690	$18,630,000
Texas	101,800	$743	$103,164,000
Utah	8,000	$610	$6,944,000
Vermont	2,100	$707	$1,921,000
Virginia	32,100	$685	$29,647,000
Washington	28,400	$750	$28,705,000
West Virginia	5,100	$784	$5,023,000
Wisconsin	14,100	$621	$11,953,000
Wyoming	2,800	$835	$2,984,000
Totals	1,117,900	$698	$1,041,576,000

* Excluding the Earned Income Tax Credit and other credits.
I hope you find this summary helpful. If you have any questions, please do not hesitate to call me. I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/EYJdQtbPZAI

Amare Berhie

AB Tax Accounting

info@abataxaccounting.com

(651) 621-5777, (952) 583-9108, (612) 224-2476, (763) 269-5396