Why Filing Taxes for Your Client, Even When They Aren’t Required, Might Be a Good Thing!
Most all tax preparers understand how income levels and filing requirements are contingent upon filing status, age and the type of income clients receive. What is often overlooked, however, even when clients aren’t required to file with Uncle Sam, is the fact that it may actually benefit them to do so.
Not surprisingly, the IRS provides definitive instructions on the requirements for filing Forms 1040, 1040A, or 1040EZ. With all of the new credit tax revisions and exceptions, some tax preparers are turning to Tax CPE Course materials or EA CPE curriculum to brush up on how these new revisions stand to benefit clients. Some continuing education tax courses are even focused exclusively on these new tax laws, showing tax preparers how to clients who fit into this scenario to get the greatest bang out of their tax returns.
Quick Tips on Non-Required Filing Benefits
Homebuyer Credit
First time homebuyers are eligible for a maximum $8000 or $4000 if filing married status separately. To qualify, a person must have entered into a contract on or before April 30th 2010 and have closed by September 30th 2010.
Tax Withheld
For taxpayers who have estimated their tax payments, had a previous years overpayment, or had income tax withheld, they may be eligible for a refund.
Child Tax Credit
If a taxpayer has at least one child that qualifies and they didn’t receive the full amount of the current Child Tax Credit originally, they could get a refundable credit.
American Opportunity Credit
Given the newly renamed and expanded Hope credit, taxpayers can claim this credit for tuition and certain fees for undergraduate and post-secondary education. The maximum credit per student is $2,500.
Earned Income Tax Credit
For those individuals who worked but earned little in 2010, this tax credit may prove useful in considering to file because it may qualify them for a refund.
Health Coverage Tax Credit
This credit is primarily for individuals who have received Adjustment Assistance (either Trade or Reemployment Trade). Further, those receiving PBGC pension payments may also qualify and receive a credit.
Quick Tips of Non-Required Filing for Losses
Two Scenarios
When taxpayers have suffered an overall loss because of an investment losses:
Only if filed in 2010 can they carry that loss forward and offset taxable capital gains in future years
They can carry these losses as far back as 2008 and possibly request a refund of carry forward, but, again, only if they filed in 2010.
When taxpayers have business losses that experienced a net operating loss (NOL) for 2010:
There are a plethora of resources available that cover these details and the types of taxpayers that fall into this unique category. The key for enrolled agents, certified public accounts and other tax professionals is to do the research, sign up for an enrolled agent class or look on the tax CPE sites that showcase this information.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
