The Internal Revenue Service has issued a new tax form for employees who have been misclassified as independent contractors.

Form 8919, Uncollected Social Security and Medicare Tax on Wages, will

The Internal Revenue Service has issued a new tax form for employees who have been misclassified as independent contractors.

Form 8919, Uncollected Social Security and Medicare Tax on Wages, will now be used to calculate and report the employee's share of uncollected Social Security and Medicare taxes due on their compensation. 

Form 8919 will apply for tax year 2007 to workers who performed services for an employer, but whose employer did not withhold the worker's share of Social Security and Medicare taxes. The worker must meet one of several criteria, including being designated a Section 530 employee by their employer or by the IRS prior to Jan. 1, 1997.

By using Form 8919, the worker's Social Security and Medicare taxes will be credited to their Social Security record. In the past, misclassified workers often used Form 4137 to report their share of Social Security and Medicare taxes. Misclassified workers should no longer use this form. Instead, Form 4137 should only be used now by tipped employees to report Social Security and Medicare taxes on allocated tips and tips not reported to their employers.

Sometimes employers misclassify their workers as independent contractors when in fact, their workers are employees. If you have had clients in this situation, you may have used Form 4137 in the past to report the client's share of social security and Medicare taxes. Form 4137 was designed to be used by tipped employees to report their share of taxes on allocated tips and tips not reported to their employers. However, the lack of any other options forced non-tipped workers to use Form 4137 to report their share of social security and Medicare taxes if they were misclassified as an independent contractor by their employers.

The IRS has addressed this issue by developing new Form 8919, Uncollected Social Security and Medicare Tax on Wages.  The form is now available and can be used for filing 2007 year taxes.

To use Form 8919, the worker must meet one of the following conditions to indicate that they were an employee while performing the services for the employer:

• The worker has filed Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, and received a determination letter from the IRS stating they are an employee of the firm.
• The worker has been designated as a section 530 employee by their employer or by the IRS prior to January 1, 1997.
• The worker has received other correspondence from the IRS that states that he or she is an employee.
• The worker was previously treated as an employee by the firm and he or she is performing services in a similar capacity and under similar direction and control.
• The worker's co-workers are performing similar services under similar direction and control and are treated as employees.
• The worker's co-workers are performing similar services under similar direction and control and filed Form SS-8 for the firm and received a determination that they were employees.
• The worker has filed Form SS-8 with the IRS and has not yet received a reply.

Since the IRS shares Form 8919 data with the Social Security Administration, the worker's social security and Medicare taxes are properly credited to the worker's social security record.

On December 20, 2007, President Bush signed the Mortgage Forgiveness Relief Act of 2007, providing relief to taxpayers who are facing hardship due to home foreclosures by allowing a limited exclusion for discharged home mortgage debt.

The

On December 20, 2007, President Bush signed the Mortgage Forgiveness Relief Act of 2007, providing relief to taxpayers who are facing hardship due to home foreclosures by allowing a limited exclusion for discharged home mortgage debt.

The Act also includes several other provisions such as a liberalized exclusion rule for home sales by surviving spouses; an extension of the deduction for mortgage insurance premiums; and a limited exclusion for qualifying state or local rebates or payments to firefighters and other emergency responders.

In addition, the new law increases the penalty for failure to timely file partnership returns, adds a new penalty for failure to file S corporation returns, and requires higher estimated tax installments for large corporations in 2012.

Cancelled Debt:

Taxpayers may exclude up to $2 million of mortgage debt forgiveness on their principal residence. For this purpose, qualified principal residence indebtedness is acquisition indebtedness with respect to the taxpayer's principal residence, but with a $2 million limit ($1 million for married individuals filing separately).

Under Sec. 163(h)(3)(B), acquisition indebtedness of a principal residence is indebtedness incurred in the acquisition, construction, or substantial improvement of an individual's principal residence that is secured by the residence. It includes refinancing of debt to the extent the amount of the refinancing doesn't exceed the amount of the refinanced indebtedness. The basis of the taxpayer's principal residence is reduced by the exclusion, but not below zero.

The exclusion only applies to a taxpayer's principal residence.

Effective for indebtedness discharged on or after January 1, 2007, and before January 1, 2010.

Mortgage Insurance Premiums:

The deduction for qualified mortgage insurance premiums as qualified residence interest is extended for three years. The deduction is allowed if the amounts:

• Are paid or accrued before January 1, 2011;

• Aren't properly allocable to any period after December 31, 2010; and

• Are paid or accrued with respect to a mortgage insurance contract issued after December 31, 2006.

Volunteer Firefighters and Emergency Medical Responders

Members of qualified volunteer emergency response organizations are entitled to exclude from gross income amounts for any qualified payment or any state or local tax benefit.

A qualified payment is a payment or reimbursement provided by a state or political subdivision to a taxpayer for the performance of services as a member of a qualified volunteer emergency response organization.

The amount of these payments is limited to $30 for each month during the year that the taxpayer performs such services. Expenses paid or incurred by the taxpayer in connection with the performance of services in excess of the payment received are allowed as a charitable contribution deduction.

A qualified volunteer emergency response organization is any volunteer organization which is organized and operated to provide firefighting or emergency medical services. Effective for tax years beginning after December 31, 2007, and before January 1, 2011

Surviving Spouse Home Sale Exclusion

Taxpayers who sell a principal residence within two years of the death of their spouse may exclude up to $500,000 of gain under Sec. 121 provided the ownership and use tests are met prior to death.

The two-year period begins on the date of death and ends two years after that date.

Effective for sales and exchanges after December 31, 2007

On December 26, the President signed into law the Tax Increase Prevention Act of 2007 (H.R. 3996). The Act provides for a one-year patch of the AMT for 2007 but does not offset the revenue cost with revenue raising provisions. Due

On December 26, the President signed into law the Tax Increase Prevention Act of 2007 (H.R. 3996). The Act provides for a one-year patch of the AMT for 2007 but does not offset the revenue cost with revenue raising provisions. Due to the late timing of the AMT patch legislation, many tax professionals are wondering how it will impact the 2008 filing season. NATP had previously been told that the IRS would need seven weeks to program their systems to accept returns once the AMT patch was signed into law. This pushes back the start of filing season, and the IRS's readiness to accept returns, to mid-February. The IRS has indicated that they will post revised copies of the eleven tax forms impacted by the AMT legislation to  ww.irs.gov within 72 hours after the AMT patch is signed into law. NATP is monitoring this situation and will post additional information here as it becomes available.

The IRS announced in IR-2007-209 that the late passage of the AMT patch will not impact their ability to file early in the season, beginning in mid-January. However, approximately 3 to 4 million taxpayers will be impacted and will not be able to file until February 11. The delay is the result of the system programming changes that need to be made at IRS to process returns that have any of the following forms to submit with their return:

1. Form 8863, Education Credits.

2. Form 5695, Residential Energy Credits.

3. Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A filers.

4. Form 8396, Mortgage Interest Credit.

5. Form 8859, District of Columbia First-Time Homebuyer Credit.

The Tax Increase Prevention Act of 2007 (H.R. 3996) provides for the following AMT changes:

The AMT exemption amounts before phase-out for 2007 for individuals are:

• $66,250 for married individuals filing jointly and surviving spouses

• $44,350 for unmarried individuals; and

• $33,125 for married individuals filing separately

This is a temporary fix only. Without future Congressional action, the AMT exemption amounts for individuals in 2008 will revert to 2000 levels. In addition, personal nonrefundable credits may offset AMT and regular tax. For tax years beginning in 2007, the combined total of the following credits is limited to the sum of: (1) regular tax liability reduced by the foreign tax credit, and (2) the AMT:

·         Dependent care credit;

•   Credit for the elderly and permanently and totally disabled;

• Mortgage credit;

• Child tax credit;

• Hope and Lifetime Learning credits;

• Adoption credit;

• Saver's credit;

• Non-business energy property credit for energy-efficient improvements to a principal residence;

• Residential energy efficient property credit for photovoltaic, solar hot water, and  fuel cell property added to a residence; and

• First-time D.C. homebuyer credit.

Again, absent future Congressional action, personal nonrefundable credits, with the exception of the child tax credit, adoption credit, and the saver's credit, can't exceed the excess of regular tax liability over tentative minimum tax in 2008.

If you have a gain from the sale or exchange of your main home, you may be able to exclude all or part of the gain from your income.

Individuals may be able to exclude up to $250,000 of capital gain, and

If you have a gain from the sale or exchange of your main home, you may be able to exclude all or part of the gain from your income.

Individuals may be able to exclude up to $250,000 of capital gain, and married taxpayers filing joint returns may be able to exclude up to $500,000 of gain each time you sell your main home, but generally no more frequently than once every two years.

To qualify for this exclusion of gain, you must meet ownership and use tests.

• Ownership Test: During the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years.
• Use Test: During the 5-year period ending on the date of the sale, you must have lived in the home as your main home at least 2 years.

If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount.

If you do not meet the ownership and use tests, you may be allowed to exclude a reduced maximum amount of the gain realized on the sale of your home if you sold your home because of health reasons, a change in place of employment, or certain unforeseen circumstances.  Unforeseen circumstances include, for example, divorce or legal separation, natural or man-made disasters resulting in a casualty to your home, or an involuntary conversion of your home. 

If you can exclude all the gain from the sale of your home, you do not report the gain on your federal tax return. If you cannot exclude all the gain from the sale of your home, or you choose not to, use Schedule D, Capital Gains and Losses, of the Form 1040 to report it.

Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.

The term "points" is used to describe certain charges paid to obtain a home mortgage.

Here are some things to remember when

Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.

The term "points" is used to describe certain charges paid to obtain a home mortgage.

Here are some things to remember when deducting points:

• Taxpayers who itemize deductions generally may be able to deduct the points paid to obtain a home mortgage as mortgage interest
• Points paid solely to refinance a home mortgage usually must be deducted over the life of the loan
• Points can be fully deducted in the year paid if certain tests are met

For a refinanced mortgage, the interest deduction for points is determined by dividing the points paid by the number of payments to be made over the life of the loan. This information is usually available from lenders. Taxpayers may deduct points only for those payments made in the tax year.

However, if part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible in the year it is paid off.

Other closing costs - such as appraisal fees and other non-interest fees - generally are not deductible. Additionally, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken.

If you bought a hybrid vehicle in 2007, you may be entitled to a tax credit on your 2007 return.  The credit is worth as much as $3,000  for the most fuel-efficient models. The precise amount depends on the make and model of the vehicle and

If you bought a hybrid vehicle in 2007, you may be entitled to a tax credit on your 2007 return.  The credit is worth as much as $3,000  for the most fuel-efficient models. The precise amount depends on the make and model of the vehicle and when the vehicle was purchased.

The tax credit for hybrid vehicles, called the Alternative Motor Vehicle Credit, applies to vehicles purchased or placed in service on or after January 1, 2006.

Hybrid vehicles have drive trains powered by both an internal combustion engine and a rechargeable battery.  Many currently available hybrid vehicles may qualify for the credit.  Taxpayers may claim the credit on their 2007 tax returns only if they placed a qualified hybrid vehicle in service in 2007.  As of March 2007, more than 40 different models of hybrids were/are eligible for the credit.

The credit is available only to the original purchaser of a new qualifying vehicle.  If the qualifying vehicle is leased the credit is available only to the leasing company.

If 60,000 hybrid or advance lean burn technology vehicles of a particular manufacturer are sold, the tax credit is reduced and eventually eliminated. The full credit can be claimed up to the end of the third month after the quarter in which the manufacturer sells its 60,000th hybrid vehicle.

The credit for qualified Toyota and Lexus vehicles was eliminated for purchases on or after Oct. 1, 2007. The full credit for qualified Honda vehicles was available for all purchases in 2007, but has been reduced for purchases on or after Jan. 1, 2008.

To find out whether your car qualifies for the hybrid tax credit and the maximum amount of that credit, you can go to the IRS.gov website and search for "qualified hybrid vehicles."

When preparing to file your federal tax return, don't forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize on IRS Form 1040, Schedule A.

Starting in 2007 to deduct any charitable donation

When preparing to file your federal tax return, don't forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize on IRS Form 1040, Schedule A.

Starting in 2007 to deduct any charitable donation of money, taxpayers must have a bank record or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. Though taxpayers are already required to keep records to support their contribution deductions, this new provision is designed to provide greater certainty, both to taxpayers and the government, in determining what may be deducted as a charitable contribution.

Here are a few tips to ensure your contributions pay off on your tax return:

• You cannot deduct contributions made to specific individuals, political organizations and candidates. Nor can you deduct the value of your time or services and the cost of raffles, bingo or other games of chance.
• Contributions must be made to qualified organizations to be deductible.
• Only contributions actually made during the tax year are deductible.
• If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
• Donations of stock or other property are usually valued at the fair market value of the property.
• Clothing and household items donated must be in good used condition or better to be deductible.
• Special rules apply to donation of vehicles.
• You can claim a deduction for individual contributions of $250 or more only if you obtain a written acknowledgment from the qualified organization.
• If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
• Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.

If you donated a car or other vehicle to a qualified charitable organization in 2007 and intend to claim a deduction you should review the special rules that apply to vehicle donations.  You can deduct contributions to a charity only if you itemize deductions on Schedule

If you donated a car or other vehicle to a qualified charitable organization in 2007 and intend to claim a deduction you should review the special rules that apply to vehicle donations.  You can deduct contributions to a charity only if you itemize deductions on Schedule A of Form 1040.

Generally, the amount you may deduct for a vehicle contribution depends upon what the charity does with the vehicle.  Charities typically sell donated vehicles.  If the vehicle is sold by the charitable organization, the deduction claimed by the donor usually may not exceed the gross proceeds from the sale.

If your deduction is $250 or more you must obtain written acknowledgement of the donation from the charity.  If your deduction is more than $500, this written acknowledgment or Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, must be attached to your return. Among other things, the acknowledgment generally must include the gross proceeds of the sale, the vehicle identification number, and a statement certifying the vehicle was sold in an arm's length transaction between unrelated parties.

If the organization intends to make significant intervening use of the vehicle or material improvements to the vehicle, the acknowledgment must include certain certifications. If the organization intends to sell the vehicle to a needy individual at a price significantly below fair market value, or gratuitously transfers the vehicle to a needy individual, the acknowledgment must also include certain certifications.

In addition, for deductions greater than $500, Form 8283, Noncash Charitable Contributions, must be attached to the return.

You can generally deduct the vehicle's fair market value instead of the amount of gross proceeds from the sale if any of the following situations apply:

• The organization makes significant intervening use of or materially improves the vehicle
• The organization gives or sells the vehicle to a needy individual at a price significantly below fair market value in direct furtherance of its charitable purpose of relieving the poor and distressed or underprivileged who are in need of a means of transportation
• The claimed deduction is $500 or less

The fair market value cannot exceed the private party sales price listed in a used vehicle pricing guide.

If you already filed your federal tax return and are due a refund, you have several options for checking on the status of your refund.

One way is to use "Where's My Refund?" an interactive tool on the IRS Web

If you already filed your federal tax return and are due a refund, you have several options for checking on the status of your refund.

One way is to use "Where's My Refund?" an interactive tool on the IRS Web site at IRS.gov. Simple online instructions guide taxpayers through a process that checks the status of their refund after they provide identifying information shown on their tax return. Once the information is processed, you could get several responses, including:

• Acknowledgement that your return was received and is in processing.
• The mailing date or direct deposit date of your refund.
• Notice that the IRS could not deliver your refund due to an incorrect address. In this instance, you can change or correct your address online.

Where's My Refund? is a very flexible tool. Whether you split your refund among several accounts, opt for direct deposit into one account, or ask IRS to mail you a check, Where's My Refund? gives you online access to your refund information.

Where's My Refund? also include links to customized information based on the taxpayer's specific situation. The links guide taxpayers through the steps they need to take to resolve any issues that may be affecting their refund. For example, if you do not get the refund within 28 days from the original IRS mailing date shown on Where's My Refund?, you can start a refund trace online.

The "Where's My Refund?" service meets stringent IRS security and privacy certifications. Taxpayers enter identifying information that includes their Social Security number, filing status and the exact amount of the refund shown on the return. This specific information verifies that the person is authorized to access that account.

"Where's My Refund?" is accessible to visually impaired taxpayers who use the Job Access with Speech screen reader used with a Braille display and is compatible with different JAWS modes.

Another option for checking the status of your refund is by calling the IRS TeleTax System at 800-829-4477 or the IRS Refund Hotline at 800-829-1954. When calling, you must provide the first Social Security number shown on the return, your filing status and the amount of the refund. If the IRS processed your return, the system will tell you the date your refund will be sent. The TeleTax refund information is updated each weekend. If you do not get a date for your refund, please wait until the next week before calling back.

The IRS recommends reviewing your entire tax return to be sure it is accurate and complete. Even a simple mistake can cause problems which might lead to delays in processing your return and receiving your refund.

Here are some ways to avoid

The IRS recommends reviewing your entire tax return to be sure it is accurate and complete. Even a simple mistake can cause problems which might lead to delays in processing your return and receiving your refund.

Here are some ways to avoid common tax return errors:

• File electronically. If you choose to e-file, many common errors are avoided or corrected by the computer software. If your income is under $54,000 you may be able to e-file for free using IRS Free File.
• Use the peel-off label if you choose to mail a paper return. You may line through and make necessary corrections right on the label. Be sure to fill in your Social Security number in the box provided on the return. If you do not have a peel-off label, fill in all requested information clearly, including the Social Security numbers.
• Check only one filing status on the tax return and check the appropriate exemption boxes. Enter the correct Social Security numbers for each of those exemptions.
• Use the correct Tax Table column for your filing status.
• Double check all figures on the return. Math errors are common mistakes.
• Make sure that the financial institution routing and account numbers you have entered on the return for a direct deposit of your refund are accurate. Incorrect numbers can cause the refund to be delayed or misdirected.
• Sign and date the return. If filing a joint return, both spouses must sign and date the return.
• Attach all Forms W-2, Wage and Tax Statement, and other forms that reflect tax withheld to the front of the return. Attach all other necessary forms and schedules.
• Do you owe tax? If so, enclose a check or money order made payable to the "United States Treasury" and Form 1040-V, Payment Voucher, if used. Or, you may choose to pay by credit card by contacting one of the credit card service providers.

If you are mailing a paper return to the IRS, take a few minutes to make certain that all information is complete and accurate before sealing the envelope. This simple precaution could help you avoid mistakes that can delay your refund or result in correspondence from

If you are mailing a paper return to the IRS, take a few minutes to make certain that all information is complete and accurate before sealing the envelope. This simple precaution could help you avoid mistakes that can delay your refund or result in correspondence from the IRS.

Here are just a few items to complete prior to mailing your tax return:

• Sign your return Your federal tax return is not considered a valid return unless it is signed. If you are filing a joint return, your spouse also must sign.
• Provide a daytime phone number. This may help speed the processing of your return if the IRS has questions about items on your return.
• Assemble any schedules and forms behind your Form 1040/1040A in the order of the "Attachment Sequence No." shown in the upper right hand corner of the schedule or form. Arrange any supporting statements in the same order as the schedules or forms they support and attach them last.
• Attach all copies of Forms W-2, W-2G and 2439 to the front of Form 1040. Also attach Form 1099-R if federal tax was withheld.
• Use the coded envelope included with your tax package to mail your return. If you did not receive an envelope, check the section called "Where Do You File?" in the tax instruction booklet.  Don't forget the stamp!
• If you are due a refund, consider direct deposit to receive your refund in the quickest and safest manner. Then make sure that the financial institution routing and account numbers you have entered are accurate. Incorrect numbers can cause the refund to be delayed or misdirected.
• Do you owe tax? If so, enclose a check or money order made payable to the "United States Treasury" and Form 1040-V, Payment Voucher, if used. Make sure you include your correct name, address, the Social Security number that is listed first on the tax form, daytime telephone number, tax year and form number (i.e. Form 1040).  Or, you may choose to pay by credit card by contacting one of the credit card service providers.

Once you complete your 2007 federal tax return, you can either file it electronically or mail it to the IRS.

More than one-half of all taxpayers file electronically because they know that IRS e-file provides a fast, easy, accurate, secure and convenient

Once you complete your 2007 federal tax return, you can either file it electronically or mail it to the IRS.

More than one-half of all taxpayers file electronically because they know that IRS e-file provides a fast, easy, accurate, secure and convenient way to file.  Taxpayers who file electronically receive an acknowledgement that their return has been received and accepted for processing.

Electronic options include:

• Computer filing using an authorized IRS e-file tax professional
• Using your personal computer to file
• Free File is available at IRS.gov for many taxpayers as an option for filing their returns with no charge

If you choose to mail your return, you will find directions on where to send it on the back cover of your instruction booklet.

When mailing your return, whether enclosing a payment or not, use the envelope and the appropriate mailing label that came with your tax instruction booklet. If you moved during the year, check the tax package to find the mailing address of the appropriate IRS Center. The appropriate address depends on where you live and whether or not you are enclosing a check or money order. Checks or money orders should be payable to the "United States Treasury."

If you have a balance due when filing your 2007 income tax return, remember to make sure your tax payment check or money order is payable to the "United States Treasury."  Complete and include Form 1040-V, Payment Voucher, when sending your payment and tax return to

If you have a balance due when filing your 2007 income tax return, remember to make sure your tax payment check or money order is payable to the "United States Treasury."  Complete and include Form 1040-V, Payment Voucher, when sending your payment and tax return to the IRS. This will help the IRS process your payment more accurately and efficiently.

Whether you are filing your current year's return (2007), a prior year's return or an amended return, always provide your correct name, address, the Social Security number that is listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order. Enclose your payment with your return, but do not staple it to the form. Do not mail cash with your tax return.

If you are e-filing you have the option of paying by electronic debit of your bank account using Electronic Funds Withdrawal. You will need to know your account number and your financial institution's routing number. You can check with your financial institution to make sure that an electronic withdrawal is allowed and to get the correct routing and account numbers. 

If you are paying by credit card, call or visit the Web site of either service provider listed below and follow the instructions:

• Link2Gov Corporation: 888-PAY-1040 (888-729-1040), pay1040.com.
• Official Payments Corporation: 800-2PAY-TAX (800-272-9829), officialpayments.com.

The service providers charge a convenience fee which may vary between the providers. You will be told what the fee is during the transaction and you will have the option to either continue or cancel the transaction. You can also find out what the fee will be by calling the provider's automated customer service number or visiting the provider's website. You will be given a confirmation number for your payment at the end of the call.

If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. There are also alternative payment options to consider:

• read more...

If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. There are also alternative payment options to consider:

• Pay by Credit Card You can charge your taxes on your American Express, MasterCard, Visa or Discover cards. To pay by credit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. The service providers charge a convenience fee based on the amount you are paying. Do not add the convenience fee to your tax payment.
  • Link2Gov Corporation: 888-PAY-1040 (888-729-1040), http://www.pay1040.com/ 
  • Official  Payments Corporation: 800-2PAY-TAX (800-272-9829), http://www.officialpayments.com/
• Extension of Time to Pay Based on the circumstances, a taxpayer could qualify for an extension of time to pay. The IRS is willing to allow extensions of time to pay in order to assist in tax debt repayment. A short term extension of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. Taxpayers qualifying for an extension of time to pay of 30 -120 days generally will pay less in penalties and interest than if the debt were repaid through an installment agreement.
• Installment Agreement The IRS may allow you to pay any remaining balance in monthly installments through an installment agreement. You can apply for an IRS installment agreement using our Web-based Online Payment Agreement application on IRS.gov. Another alternative is to attach a Form 9465, Installment Agreement Request, to the front of your tax return. The IRS charges a $105 fee for setting up an installment agreement. The fee is only $52 if you pay via direct debit. If your income is below a certain level (see Form 13844), you may qualify for a $43 fee. You will also be required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month, after the due date that the tax is not paid. If you do not file your return by the due date -- including extensions -- you may have to pay a failure-to-file penalty.

In most circumstances, the Online Payment Agreement application provides immediate notification regarding the approval of your request.  There may be times when you will need to mail paperwork or speak with us before we can determine your eligibility for an installment agreement or short term extension to pay.  If that is the case, the online application will provide an address and telephone number that can be used to reach the appropriate IRS office.

Oops! You've discovered an error after your tax return has been filed or maybe you need to adjust your 2007 return to include certain non-taxable benefits to reach the $3000 qualifying income level to qualify for an economic stimulus payment. What should you do? You may

Oops! You've discovered an error after your tax return has been filed or maybe you need to adjust your 2007 return to include certain non-taxable benefits to reach the $3000 qualifying income level to qualify for an economic stimulus payment. What should you do? You may need to amend your return.

(Note: Generally, the payment of economic stimulus payments is based on the information from your original 2007 federal tax return. However, the only item on an amended return that will affect the economic stimulus payment is when including certain non-taxable benefits not included on the original return. This must be the only reason you were not eligible for the economic stimulus payment on the original return.)

The IRS usually corrects math errors or requests missing forms - such as W-2s or schedules - when processing an original return. In these instances, do not amend your return. However, you should file an amended return if any of the following were reported incorrectly:

• Your filing status
• Your dependents
• Your total income
• Your deductions or credits

Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A, 1040EZ or electronically-filed return. Be sure to enter the year of the return you are amending at the top of Form 1040X. If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the IRS processing center for the area in which you live. The 1040X instructions list the addresses for the centers.

The Form 1040X has three columns. Column A is used to show original or adjusted figures from the original return. Column C is used to show the corrected figures. The difference between the figures in Columns A and C is shown in Column B. There is an area on the back of the form where you explain the specific changes being made on the return and the reason for each change.

If the changes involve another schedule or form, attach it to the 1040X. For example, if you are filing a 1040X because you have a qualifying child and now want to claim the Earned Income Credit, you must attach a Form 1040 Schedule EIC to show the qualifying person's name, year of birth and Social Security number.

If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund. If you owe additional tax for 2007, you should file Form 1040X and pay the tax by the April due date to avoid any penalty and interest.

Generally, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later, to claim a refund.

It's a moment many taxpayers dread. A letter arrives from the IRS - and it's not a refund check. Don't panic; many of these letters can be dealt with simply and painlessly.

Each year, the IRS sends millions of letters and notices

It's a moment many taxpayers dread. A letter arrives from the IRS - and it's not a refund check. Don't panic; many of these letters can be dealt with simply and painlessly.

Each year, the IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.

If you receive a correction notice, you should review the correspondence and compare it with the information on your return.

• Agree? If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
• Disagree?  If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry.

Be sure to keep copies of any correspondence with your records.

Are you in the middle of a disagreement with the IRS? If you disagree with the IRS about the amount of your tax liability or about proposed collection actions, you have the right to ask the IRS Appeals Office to review your case.

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Are you in the middle of a disagreement with the IRS? If you disagree with the IRS about the amount of your tax liability or about proposed collection actions, you have the right to ask the IRS Appeals Office to review your case.

IRS Publication 1, Your Rights as a Taxpayer, explains some of your most important taxpayer rights. During their contact with taxpayers, IRS employees are required to explain and protect these taxpayer rights, including the right to appeal.

The Appeals Office, which is independent of the IRS office that proposed the disputed action, can work with taxpayers by correspondence, telephone, or informal conferences.

Through Appeals procedures, taxpayers can settle most differences without expensive and time-consuming court trials. However, if you and the Appeals Officer or Settlement Officer cannot reach agreement, or if you prefer not to appeal within the IRS, in most cases, you may take your disagreement to federal court.

For more information about Appeals and its processes, go to the IRS Web site at IRS.gov and select the link to "Appeal a Tax Dispute", which is found at the bottom of the home page. The Appeals Web page provides links to assist you in determining if you are ready for Appeals, how to request an appeal, and what you can expect from Appeals.

This page also provides a link to easy-to-use online self-help tools to help you focus on your area of dispute and determine if you will benefit from filing an appeal. You can also link to "Online Videos of the Appeals Process" containing informative online video streams entitled "The Appeals Process (Examination)" and "The Appeals Process (Collection)."

Information is also available in IRS Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don't Agree; Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund; and Publication 1660, Collection Appeal Rights (for Liens, Levies, and Seizures).

Even though the April 15 tax deadline has passed, it is not too late to file for your economic stimulus payment this year.  Persons who qualify for the payment must file a 2007 tax return by October 15, 2008.

Millions of people

Even though the April 15 tax deadline has passed, it is not too late to file for your economic stimulus payment this year.  Persons who qualify for the payment must file a 2007 tax return by October 15, 2008.

Millions of people are eligible but may not know it, or think it is too late to get a payment. These are certain retirees, disabled veterans and low-wage workers who normally don't file a tax return because their income is too low or nontaxable. This year, they must file to receive their stimulus payment.

The IRS will issue economic stimulus payments of up to $600 for individuals ($1,200 for married couples) plus $300 for each eligible child under age 17 starting in early May, based on 2007 tax returns processed by April 15.

People who have no tax filing requirement but have at least $3,000 in qualifying income must file a simple Form 1040A tax return to obtain their stimulus payment. The law provides a minimum payment of $300 ($600 for married couples) plus the $300 payment per eligible child, if the person (or married couple) qualifies.

Qualifying income includes any combination of earned income, nontaxable combat pay as well as certain payments from Social Security, Veterans Affairs and Railroad Retirement.

The types of Social Security benefits that are considered qualifying income include retirement, disability and survivor payments. Supplemental Security Income (SSI) is not qualifying income. The types of Veterans Affairs benefits that are considered qualifying income include disability compensation, disability pension and survivor payments. Qualifying Railroad Retirement payments include the social security equivalent portion of Tier 1 benefits.

People not otherwise required to file an income tax return must file a simple Form 1040A with basic information to ensure that they receive the economic stimulus payment. This information includes their name; address; dependents, if any; amount of their qualifying income (which must be $3,000 or more); direct deposit information and their signatures.

If you plan to run your small business out of your home you may be temped to "write-off" many of your household expenses. But how do you know what is deductible and what is not? The IRS has some advice that may help answer the question:

If you plan to run your small business out of your home you may be temped to "write-off" many of your household expenses. But how do you know what is deductible and what is not? The IRS has some advice that may help answer the question: "Can I take a Home Office Deduction?"

Generally, expenses related to the rent, purchase, maintenance and repair of a personal residence are not deductible.

However, if you use part of your home for business purposes you may be able to take a home office deduction. Expenses that can be deducted include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, painting, repairs and depreciation.

In order to claim a business deduction, you must use part of your home:

• Exclusively and regularly as your principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of your business, or in connection with your trade or business where there is a separate structure not attached to the home; or
• On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.

In addition, if you work as an employee you can claim this deduction only if the regular and exclusive business use of the home is for the convenience of your employer and the portion of the home is not rented by the employer.

"Exclusive use" means a specific area of the home is used only for trade or business. "Regular use" means the area is used regularly for trade or business. Incidental or occasional business use is not regular use.

Non-business profit-seeking endeavors such as investment activities do not qualify for a home office deduction, nor do not-for-profit activities such as hobbies.

Example: An attorney uses the den in his home to write legal briefs or prepare clients' tax returns. The family also uses the den for recreation. The den is not used exclusively in the attorney's profession, so a business deduction cannot be claimed for its use.