Law Office of Camron Hoorfar, PC

The Internal Revenue Service and Treasury Department published in the
Federal Register temporary regulations that provide guidance to taxpayers on
the treatment of amounts paid to acquire, produce or improve tangible property
and regarding the accounting for, and dispositions of, property subject to
depreciation. These regulations provide objective standards and bright-line
rules intended to simplify compliance with the capitalization provisions
contained in section 263(a) of the Internal Revenue Code.

The temporary regulations generally are effective for expenditures made on
or after Jan. 1, 2012, and therefore these regulations do not affect taxpayers’
2011 tax returns.  The IRS and Treasury Department anticipate publishing
additional guidance that will advise taxpayers regarding how to obtain
automatic consent to change to a method of accounting provided in the temporary
regulations for taxable years beginning on or after Jan. 1, 2012.  These
automatic consent requests may be filed beginning with taxpayers’ 2012 tax
returns.  Taxpayers may not request a change to a method described in the
temporary regulations on their 2011 tax returns.

The temporary regulations also were released as a notice of proposed
rulemaking, offering taxpayers the opportunity to comment on the rules.
Written comments are requested by March 26, 2012, and a public hearing on the
regulations is scheduled for April 4, 2012.

In an annual reminder to taxpayers, the Internal Revenue Service announced
that it is looking to return $153.3 million in undelivered tax refund
checks. In all, 99,123 taxpayers are due refund checks this year that could not
be delivered because of mailing address errors.

Undelivered refund checks average $1,547 this year.

Taxpayers who believe their refund check may have been returned to the IRS
as undelivered should use the “Where’s
My Refund?” tool on IRS.gov. The tool will provide the status of their
refund and, in some cases, instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will receive instructions on
how to update their addresses. Taxpayers can access a telephone version of
“Where’s My Refund?” by calling 1-800-829-1954.

While only a small percentage of checks mailed out by the IRS are returned
as undelivered, taxpayers can put an end to lost, stolen or undelivered checks
by choosing direct deposit when they file either paper or electronic returns.
Last year, more than 78.4 million taxpayers chose to receive their refund
through direct deposit. Taxpayers can receive refunds directly into their bank
account, split a tax refund into two or three financial accounts or even buy a
savings bond.

The IRS also recommends that taxpayers file their tax returns
electronically, because e-file eliminates the risk of lost paper returns.
E-file also reduces errors on tax returns and speeds up refunds. Nearly 8 out
of 10 taxpayers chose e-file last year. E-file combined with direct deposit is
the best option for taxpayers to avoid refund problems; it’s easy, fast and
safe.

The public should be aware that the IRS does not contact taxpayers by e-mail
to alert them of pending refunds and does not ask for personal or financial
information through email.  Such messages are common phishing scams.
The agency urges taxpayers receiving such messages not to release any personal
information, reply, open any attachments or click on any links to avoid
malicious code that can infect their computers.  The best way for an
individual to verify if she or he has a pending refund is going directly to
IRS.gov and using the “Where’s My Refund?” tool.

You may not be thinking about your tax return right now, but summer is a
great time to start planning for next year. Organized records not only make
preparing your return easier, but may also remind you of relevant transactions,
help you prepare a response if you receive an IRS notice, or substantiate items
on your return if you are selected for an audit.

Here are a few things you should know about recordkeeping.

1. In most cases, the IRS does not require you to keep records in any
special manner. Generally, you should keep any and all documents that may have
an impact on your federal tax return. It’s a good idea to have a designated
place for tax documents and receipts.

2. Individual taxpayers should usually keep the following records supporting
items on their tax returns for at least three years:

• Bills
• Credit card and other receipts
• Invoices
• Mileage logs
• Canceled, imaged or substitute checks or any other
  proof of payment
• Any other records to support deductions or credits you
  claim on your return

You should normally keep records relating to property until at least three
years after you sell or otherwise dispose of the property. Examples include:

• A home purchase or improvement
• Stocks and other investments
• Individual Retirement Arrangement transactions
• Rental property records

3. If you are a small business owner, you must keep all your employment tax
records for at least four years after the tax becomes due or is paid, whichever
is later. Examples of important documents business owners should keep Include:

• Gross receipts: Cash register tapes, bank deposit
  slips, receipt books, invoices, credit card charge slips and Forms
  1099-MISC
• Proof of purchases: Canceled checks, cash register tape
  receipts, credit card sales slips and invoices
• Expense documents: Canceled checks, cash register
  tapes, account statements, credit card sales slips, invoices and petty
  cash slips for small cash payments
• Documents to verify your assets: Purchase and sales
  invoices, real estate closing statements and canceled checks

Whether you’re a recent graduate going to college for the first time or a
returning student, it will soon be time to get to campus – and payment
deadlines for tuition and other fees are not far behind. The Internal Revenue
Service reminds students or parents paying such expenses to keep receipts and
to be aware of some tax benefits that can help offset college costs.

Typically, these benefits apply to you, your spouse or a dependent for whom
you claim an exemption on your tax return.

1. American Opportunity
   Credit 
   This credit, originally created under the American Recovery and
   Reinvestment Act, has been extended for an additional two years – 2011 and
   2012. The credit can be up to $2,500 per eligible student and is available
   for the first four years of post secondary education. Forty percent of
   this credit is refundable, which means that you may be able to receive up
   to $1,000, even if you owe no taxes. Qualified expenses include tuition
   and fees, course related books, supplies and equipment. The full credit is
   generally available to eligible taxpayers whose modified adjusted gross
   income is below $80,000 ($160,000 for married couples filing a joint
   return).
2. Lifetime Learning
   Credit 
   In 2011, you may be able to claim a Lifetime Learning Credit of up to
   $2,000 for qualified education expenses paid for a student enrolled in
   eligible educational institutions. There is no limit on the number of
   years you can claim the Lifetime Learning Credit for an eligible student,
   but to claim the credit, your modified adjusted gross income must be below
   $60,000 ($120,000 if married filing jointly).
3. Tuition and Fees
   Deduction
   This deduction can reduce the amount of your income subject to tax by up
   to $4,000 for 2011 even if you do not itemize your deductions. Generally,
   you can claim the tuition and fees deduction for qualified higher
   education expenses for an eligible student if your modified adjusted gross
   income is below $80,000 ($160,000 if married filing jointly).
4. Student loan interest
   deduction
   Generally, personal interest you pay, other than certain mortgage
   interest, is not deductible. However, if your modified adjusted gross
   income is less than $75,000 ($150,000 if filing a joint return), you may
   be able to deduct interest paid on a student loan used for higher
   education during the year. It can reduce the amount of your income subject
   to tax by up to $2,500, even if you don’t itemize deductions.

For each student, you can choose to claim only one of the credits in a
single tax year. However, if you pay college expenses for two or more students
in the same year, you can choose to take credits on a per-student, per-year
basis. You can claim the American Opportunity Credit for your sophomore daughter
and the Lifetime Learning Credit for your senior son.

You cannot claim the tuition and fees deduction for the same student in the
same year that you claim the American Opportunity Credit or the Lifetime
Learning Credit. You must choose to either take the credit or the deduction and
should consider which is more beneficial for you.

Summertime is a popular time for people with children to move since school
is out. Moving can be expensive, but the IRS offers 10 tax tips on deducting
some of those expenses if your move is related to starting a new job or a new
job location.

1. Move must be closely
   related to start of work Generally, you can consider moving expenses incurred
   within one year from the date you first reported to a new location, as
   closely related in time to the start of work.
2. Distance Test Your move meets the
   distance test if your new main job location is at least 50 miles farther
   from your former home than your previous job location was.
3. Time Test You must work full time
   for at least 39 weeks during the first 12 months after you arrive in the
   general area of your new job location, or at least 78 weeks during the
   first 24 months if you are self-employed. If your income tax return is due
   before you’ve satisfied this requirement, you can still deduct your
   allowable moving expenses if you expect to meet the time test in the
   following years.
4. Travel You can deduct lodging
   expenses for yourself and household members while moving from your former
   home to your new home. You can also deduct transportation expenses,
   including airfare, vehicle mileage, parking fees and tolls you pay to
   move, but you can only deduct one trip per person.
5. Household goods You can deduct the cost
   of packing, crating and transporting your household goods and personal
   property. You may be able to include the cost of storing and insuring
   these items while in transit.
6. Utilities You can deduct the
   costs of connecting or disconnecting utilities.
7. Nondeductible expenses You cannot deduct as
   moving expenses: any part of the purchase price of your new home, car
   tags, drivers license, costs of buying or selling a home, expenses of
   entering into or breaking a lease, security deposits and storage charges
   except those incurred in transit.
8. Form You can deduct only
   those expenses that are reasonable for the circumstances of your move. To
   figure the amount of your moving expense deduction use Form 3903, Moving
   Expenses.
9. Reimbursed expenses If your employer
   reimburses you for the cost of the move, the reimbursement may have to be
   included on your income tax return.
10. Update your address When you move, be sure
    to update your address with the IRS and the U.S. Postal Service to ensure
    you receive refunds or correspondence from the IRS. Use Form 8822, Change
    of Address, to notify the IRS.

While the majority of Americans get a tax refund from the Internal Revenue
Service each year, there are many taxpayers who owe and some who can’t pay the
tax all at once.   The IRS has a number of ways for people to pay
their tax bill.

The IRS has announced an effort to help struggling taxpayers get a fresh
start with their tax liabilities. The goal of this effort is to help
individuals and small business meet their tax obligations, without adding
unnecessary burden.  Specifically, the IRS has announced new policies and
programs to help taxpayers pay back taxes and avoid tax liens.

Here are ten tips for taxpayers who owe money to the IRS.

1. Tax bill payments If you get a bill this
   summer for late taxes, you are expected to promptly pay the tax owed
   including any penalties and interest.  If you are unable to pay the
   amount due, it is often in your best interest to get a loan to pay the
   bill in full rather than to make installment payments to the IRS.
2. Additional time to pay Based on your
   circumstances, you may be granted a short additional time to pay your tax
   in full. A brief additional amount of time to pay can be requested through
   the Online Payment Agreement application at www.irs.gov
   or by calling 800-829-1040.
3. Credit card payments You can pay your bill
   with a credit card. The interest rate on a credit card may be lower than
   the combination of interest and penalties imposed by the Internal Revenue
   Code. To pay by credit card contact one of the following processing
   companies: Link2Gov at 888-PAY-1040 (or www.pay1040.com),
   RBS WorldPay, Inc. at 888-9PAY-TAX (or www.payUSAtax.com),
   or Official Payments Corporation at 888-UPAY-TAX (or www.officialpayments.com/fed).
4. Electronic Funds
   Transfer
   You can pay the balance by electronic funds transfer, check, money order,
   cashier’s check or cash.  To pay using electronic funds transfer, use
   the Electronic Federal Tax Payment System by either calling 800-555-4477
   or using the online access at www.eftps.gov.
5. Installment Agreement You may request an
   installment agreement if you cannot pay the liability in full. This is an
   agreement between you and the IRS to pay the amount due in monthly
   installment payments. You must first file all required returns and be
   current with estimated tax payments.
6. Online Payment Agreement
   If
   you owe $25,000 or less in combined tax, penalties and interest, you can
   request an installment agreement using the Online Payment Agreement
   application at www.irs.gov.
7. Form 9465 You can complete and
   mail an IRS Form 9465, Installment Agreement Request, along with your bill
   in the envelope you received from the IRS.  The IRS will inform you
   (usually within 30 days) whether your request is approved, denied, or if
   additional information is needed.
8. Collection Information
   Statement
   You may still qualify for an installment agreement if you owe more than
   $25,000, but you are required to complete a Form 433F, Collection
   Information Statement, before the IRS will consider an installment
   agreement.
9. User fees If an installment
   agreement is approved, a one-time user fee will be charged.  The user
   fee for a new agreement is $105 or $52 for agreements where payments are
   deducted directly from your bank account.  For eligible individuals
   with lower incomes, the fee can be reduced to $43.
10. Check withholding Taxpayers who have a
    balance due may want to consider changing their W-4, Employee’s
    Withholding Allowance Certificate, with their employer. A withholding
    calculator at www.irs.gov can help
    taxpayers determine the amount that should be withheld.

If you are adopting a child in 2011, the Internal Revenue Service encourages
you to familiarize yourself with the adoption tax credit. The Affordable Care
Act increased the amount of the credit and made it refundable, which means it
can increase the amount of your refund.

Here are six things to know about this valuable tax credit:

1. The adoption tax credit, which is as much as $13,170,
   offsets qualified adoption expenses making adoption possible for some
   families who could not otherwise afford it. Taxpayers who adopt a child in
   2010 or 2011 may qualify if you adopted or attempted to adopt a child and paid
   qualified expenses relating to the adoption.
2. Taxpayers with modified adjusted gross income of more
   than $182,520 in 2010 may not qualify for the full amount and it phases
   out completely at $222,520. The IRS may make inflation adjustments for
   2011 to this phase-out amount as well as to the maximum credit amount.
3. You may be able to claim the credit even if the
   adoption does not become final. If you adopt a special needs child, you
   may qualify for the full amount of the adoption credit even if you paid
   few or no adoption-related expenses.
4. Qualified adoption expenses are reasonable and
   necessary expenses directly related to the legal adoption of the child who
   is under 18 years old, or physically or mentally incapable of caring for
   himself or herself. These expenses may include adoption fees, court costs,
   attorney fees and travel expenses.
5. To claim the credit, you must file a paper tax return
   and Form 8839, Qualified Adoption Expenses, and you must attach documents
   supporting the adoption. Documents may include a final adoption decree,
   placement agreement from an authorized agency, court documents and the
   state’s determination for special needs children. You can still use IRS
   Free File to prepare your return, but it must be printed and mailed to the
   IRS, along with all required documentation. Failure to include required
   documents will delay your refund.
6. The IRS is committed to processing adoption credit
   claims quickly, but it also must safeguard against improper claims by
   ensuring the standards for this important credit are met. If your return
   is selected for review, please keep in mind that it is necessary for the
   IRS to ensure the legal criteria are met before the credit can be paid. If
   you are owed a refund beyond the adoption credit, you will still receive
   that part of your refund while the review is being conducted.