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Sponsored by Taxsoftware.com   http://www.taxsoftware.com        February, 07 2010        Issue 25

Special Interest Articles

Form 1040, Schedule M: Error Reject Code 1132

Haiti Relief Donations Qualify for Immediate Tax Relief

Disaster Relief - Resources for Charities and Contributors

Copy of Your Tax Return – How to Get One
 

The American Recovery and Reinvestment Act of 2009: Information Center

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Form 1040, Schedule M: Error Reject Code 1132

A lot of filers ask us about this problem, do we decided to provide you with this information.

Error Reject Code 1132 occurs when the amount of the Economic Recovery Payment reported on Line 10 of the Schedule M does not match a data file that identifies if an agency (SSA, RRB or VA) issued an Economic Recovery Payment to the taxpayer(s) in 2009.

If the taxpayer cannot recall if they received the payment, advise the taxpayer to contact their respective agency to resolve the discrepancy before resubmitting the return claiming the Making Work Pay and Government Retiree Credits.

- Social Security Administration: Toll-free number is 800-772-1213. General ERP inquiries can be answered by the SSA Web site: http://www.ssa.gov/recovery/.

- Veterans Administration: Toll-free number is 800-827-1000. General ERP inquiries can be answered by going to the VA Web site: http://www4.va.gov/recovery/.

- Railroad Retirement Board: Go to the RRB Web site at http://www.rrb.gov/recovery/ for more details. 

If the taxpayer contacts the agency and a discrepancy did occur, then the agency must provide the taxpayer with a letter confirming the discrepancy.  These taxpayers should not claim the Making Work Pay and Government Retiree Credits when filing their original return, but instead will need to file an amended return to claim the Making Work Pay and Government Retiree Credits. They must attach a copy of the agency letter confirming the discrepancy.  

Haiti Relief Donations Qualify for Immediate Tax Relief

People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.

Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.

Taxpayers can benefit from their donations, almost immediately, by filing their 2009 returns early, filing electronically and choosing direct deposit. Refunds take as few as ten days and can be directly deposited into a savings, checking or brokerage account, or used to purchase Series I U.S. savings bonds.

The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.

To get a tax benefit, taxpayers must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.

Taxpayers should be sure their contributions go to qualified charities. Most organizations eligible to receive tax-deductible donations are listed in a searchable online database available on IRS.gov under Search for Charities. Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov. Donors can find out more about organizations helping Haitian earthquake victims from agencies such as USAID.

The IRS reminds donors that contributions to foreign organizations generally are not deductible. IRS Publication 526, Charitable Contributions, provides information on making contributions to charities.

Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution. Publication 526 has further details on the recordkeeping rules for cash contributions.

This year’s special Haiti relief provision is modeled on a 2005 law that, in the wake of the Dec. 26, 2004, Indian Ocean tsunami, allowed taxpayers to deduct donations they made during January 2005 as if they made the donations in 2004.

Disaster Relief - Resources for Charities and Contributors

In the aftermath of a disaster or in other emergency hardship situations, individuals, employers and corporations often are interested in providing assistance to victims through a charitable organization. The IRS provides a number of resources to help those involved in providing disaster relief through charities.

Publication 3833, Disaster Relief, Providing Assistance Through Charitable Organizations, describes how members of the public can use charitable organizations to provide assistance to victims of disasters or other emergency hardship situations.

View these on-line training courses at www.StayExempt.irs.gov:

bullet Disaster Relief - Part I, explains how charitable organizations may provide relief in disaster situations and the special tax rules that apply to such organizations
bullet Disaster Relief - Part II, explains the special rules that apply to employer-sponsored disaster relief organizations, the deductibility of contributions to disaster relief organizations and the tax treatment of distributions to disaster relief victims

The following materials were prepared as part of the Exempt Organizations Continuing Professional Education (CPE) Technical Instruction Program for Fiscal Year 2003. (These materials were designed specifically for training purposes only and. should not used or cited as authority for setting or sustaining a technical position.)

bullet Disaster Relief - Current Developments(2003) provides a synopsis of the significant developments relating to tax-exempt disaster relief organizations since September 11, 2001.

These frequently asked questions address the following areas:

  1. Providing relief through an existing charitable organization
  2. Creating a charitable organization to provide disaster relief
  3. Providing relief to employees of particular employers
  4. Charitable contributions for disaster relief

     

Additional Resources:

Tax Relief in Disaster Situations: Special tax law provisions may apply when an affected area has been declared a federally or Presidentially declared disaster area.  Such provisions provide relief from certain time-sensitive requirements, including certain notice, filing, and election requirements that apply to exempt organizations.  

In addition, certain types of charitable organizations, including employer-sponsored private foundations and donor advised funds, may only provide assistance in a "qualified disaster," such as a Presidentially declared disaster or an event the Secretary of the Treasury determines is catastrophic. Find the most recent disaster declarations that trigger these special provisions.

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bullet Published Guidance Relating to Disaster Relief Declarations  
bullet Providing Earthquake Relief to Haiti

Disaster Assistance and Emergency Relief for Individuals and Businesses

Federal Emergency Management Agency (FEMA) publishes disaster declarations and provides resources for disaster victims.

Publication 526, Charitable Donations, explains how donors may claim a deduction for charitable contributions.

 

The American Recovery and Reinvestment Act of 2009: Information Center

Information for Individuals

Some of the provisions of the law primarily affect individuals.

bulletMaking Work Pay Tax Credit. This tax credit means more take-home pay for many Americans. To make sure enough tax is withheld from their pay, taxpayers can use the IRS withholding calculator. See Making Work Pay for more.
 
bulletFirst-Time Homebuyer Credit Expands. Homebuyers who purchased in 2009 can get a credit of up to $8,000 with no payback requirement. New legislation extends and expands this credit to homes purchased by April 30, 2010.
 
bulletMoney Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.
 
bulletEducation benefits. The new American opportunity credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.

Enhanced Credits for Tax Years 2009, 2010. Find details on the earned income tax credit and the additional child tax credit.

Increased Transportation Subsidy. Employer-provided benefits for transit and parking are up in 2009.
 
bulletUp to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals should check their tax withholding.

$250 for Social Security Recipients, Veterans and Railroad Retirees. The Economic Recovery Payment will be paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board.
 
bulletEnergy Efficiency and Renewable Energy Incentives. See what individuals can do to reap tax rewards.
 
bulletCOBRA. Workers who lose their jobs may qualify for reduced COBRA health insurance premiums for a period of up to 15 months. Visit the U.S. Department of Labor's COBRA Web site, www.dol.gov/cobra, for details on this recently-extended and expanded subsidy.
 
bulletHealth Coverage Tax Credit. The credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.

Information for Businesses

Some of the provisions of the law primarily affect businesses.

bulletMaking Work Pay Tax Credit. The 2010 withholding rates, contained in Notice 1036, reflect reduced withholding as directed by the ARRA. An optional withholding procedure is available for pension plan administrators.
 
bulletWork Opportunity tax credit. This newly-expanded credit adds returning veterans and "disconnected youth" to the list of new hires covered by the credit that businesses may claim.
 
bulletCOBRA: Health Insurance Continuation Subsidy. The IRS has extensive guidance for employers, including an updated Form 941, as well as information for qualifying individuals.
 
bulletEnergy Efficiency and Renewable Energy Incentives. See what businesses can do to reap tax rewards.
 
bulletNet Operating Loss Carryback. Small businesses can offset losses by getting refunds on taxes paid up to five years ago. Information on the carryback, an expanded section 179 deduction and other business-related provisions, is now available.  The Worker, Homeownership And Business Assistance Act Of 2009 (WHBAA) further expands the five-year NOL carryback to most businesses.
 
bulletMunicipal Bond Programs. There are new ways to finance school construction, energy and other public projects. 

2008 and 2009 Tax Returns 

The law could affect some 2008 tax returns due in 2009. However, most of the changes in ARRA will affect 2009 individual tax returns due April 15, 2010.

How to Get One a Copy of Your Tax Return
 

If you need an exact copy of a previously filed and processed tax return and all attachments (including Form W-2), you should complete Form 4506 (PDF), Request for Copy of Tax Return, and mail it to the address listed in the instructions, along with a $57.00 fee for each tax year requested. The check or money order for the fee should be made payable to the "United States Treasury". Copies are generally available for returns filed in the current and past six years. Copies of jointly filed tax returns may be requested by either spouse and only one signature is required. Allow 60 calendar days to receive your copies.

Most needs for tax return information can be met with a computer print-out of your return information called a "transcript". A transcript may be an acceptable substitute for an exact copy of a return by the United States Citizenship and Immigration Services and lending agencies for student loans and mortgages. A "tax return transcript" will show most line items contained on the return as it was originally filed. If you need a statement of your tax account which shows changes that you or the IRS made after the original return was filed, however, you must request a "tax account transcript". Both transcripts are generally available for the current and past three years and are provided free of charge. The period in which you will receive the transcript varies from within ten to thirty business days from the time the IRS receives your request for the tax return or tax account transcript.

You can obtain a free transcript by calling 800-829-1040 and following the prompts in the recorded message or by completing and mailing a request for a transcript to the address listed in the instructions.

The IRS has created a new Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a transcript of a Form 1040 series return. The IRS created this streamlined form to help those taxpayers trying to obtain, modify or refinance a home mortgage. Transcripts may also be mailed to a third party, such as a mortgage institution, if specified on the form. You must sign and date the form giving your consent for the disclosure. Businesses, partnerships or individuals who need transcript information from other forms, such as Form W-2 or Form 1099, can use Form 4506-T (PDF), Request for Transcript of Tax Return, to obtain the information. These transcripts may also be mailed to a third party if there is consent for the disclosure.

Forms can be downloaded by using the following links or ordered by calling 800-829-3676. If you are a taxpayer impacted by a federally declared disaster, the IRS will waive the usual fees and expedite requests for copies of tax returns for people who need them to apply for benefits or to file amended returns claiming disaster-related losses. For additional information, refer to Topic 107, Tax Relief Disaster Situations, or call the IRS Disaster Assistance Hotline at 866-562-5227.

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