Tax Alerts

Don’t forget to tell the IRS if you are moving
If you have recently moved or are planning a move soon, don’t forget to let the IRS know. The IRS does use the Postal Service’s change of address files to update taxpayer addresses. However, notifying the IRS directly is still your best bet.

There are four ways you can let the IRS know of your recent or upcoming move:

• On your tax return – You can correct your address on the mailing label that comes with your tax package. Or you can write the new address in the appropriate box on your return when you file it with the IRS.
• Form 8822 – You can use Form 8822, Change of Address, to send the IRS an address or name change at any time. This form can be downloaded from the IRS website at http://www.irs.gov, or you can call 1-800-TAX-FORM (1-800-829-3676) to request a copy of the form.
• Written notification – You can write to the IRS service center where you file your return and provide your new address. You will need to provide the IRS with your full name, old and new addresses, Social Security number or Employer Identification number, and signature.
• Verbal notification – You can provide the change of address to the IRS verbally, but only if an IRS employee contacts you directly about your account.

  Also, don’t forget to notify your employer and the U.S. Postal Service of your address change.

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Receive your tax refund quicker with E-file, direct deposit
If you need your tax refund in a hurry, the fastest way to get it is to file your tax return electronically with the IRS’ free E-file and have your refund deposited directly into your bank account. Those who file their returns electronically get their refund in about half the time as those who file paper returns.

To use E-file, all you have to do is go to the IRS website at www.irs.gov. The service is available 24 hours a day, seven days a week through Oct. 15, 2008.

According to the IRS, more than 61 million taxpayers had their tax refunds deposited right into their bank accounts in 2007.

With direct deposit you have both convenience and security. The convenience is there because you don’t have to make a trip to the bank with a check. You have security knowing there is no check to get lost or possibly even stolen.

All you have to do is fill in your bank’s routing number and your account number on your tax return. You can even have your refund deposited into as many as three checking or savings accounts.
For more information about direct deposit, you can call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit the IRS website at www.irs.gov.

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Recently married or divorced? Tell the IRS of your name change
If you have recently gotten married or divorced and changed your last name in the process, there is one big thing you might want to consider when filing your tax return.

You need to make sure that the name on your tax return matches the name registered with the Social Security Administration (SSA). If the names do not match, you could see a delay in any expected refund.
If you just recently got married but have not changed your last name with the SSA and you file a joint return with your new husband and new last name, the IRS computers will not be able to match the new name with the Social Security number.
It’s the same if you have recently been divorced, had taken your husband’s name, but have now taken back your maiden name.

Informing the SSA about any name change is actually an easy process. You can simply fill out Form SS-5 at your local SSA office. You can actually download the form from the SSA’s website at www.socialsecurity.gov, or you can call 1-800-772-1213 and have the form sent to you.

This same rule applies if you have recently adopted a child. The child’s Social Security number must match the name.

If, however, you have adopted a child who does not have a Social Security number, you can apply for an Adoption Taxpayer Identification Number (ATIN), which is a temporary number used in place of a Social Security number on tax returns. To obtain an ATIN, you need to fill out Form W-7A with the IRS. You can download this form at http://www.irs.gov, or you can call 1-800-TAX-FORM (1-800-829-3676).

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Don’t think you have to report your tips? Think again
Many employees working for tips are reluctant to report the full amount of the tips they receive. A few dollars here and there that are not reported can add up in the long run. It is actually more beneficial than you know to honestly report all of your income.

There are several reasons to report your tip income to the IRS:

• Accurate reporting avoids penalties and interest that may be applied if you are audited.
• Tip reporting increases Social Security credits, which helps the employee maximize Social Security and Medicare benefits at retirement.
• Accurately reporting income may increase your chance of receiving financing for a car, home, or other necessities.

The IRS recommends employees keep a daily tip record to accurately report tips to their employer, to the IRS and to prove their tip income if their return is ever questioned.

Employees can keep a tip record in one of two ways; either by writing information about tips in a tip diary or by keeping copies that shows tips, such as restaurant bills or charge card slips. Employees can also use Form 4070A, Employees Daily Record of Tips. More information can be found regarding all IRS forms at www.irs.gov.

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Choose a Tax Year: Calendar vs. Fiscal
According to the IRS, every taxpayer must figure out their taxable income on the basis of an annual accounting period for record-keeping and reporting income and expenses.

There are two choices available:

• Calendar year – this period runs from January 1 through December 31. There are some instances where a calendar year is actually required.
• Fiscal year – this period runs for 12 consecutive months and ends on the last day of any month except for the month of December.

When choosing a tax year, remember the selected tax year must be used on your first tax return and for all subsequent returns unless you get approval from the IRS to change. This change can be requested by filing Form 1128, Application to Adopt, Change, or Retain a Tax Year. For more information on this, visit http://www.irs.gov and see Publication 538.