Monday, January 31, 2011

How many more miles can I put on these tires?

Isn’t that the approach some of us take with technology? We see the tread slowly disappearing, yet we are determined to get every last mile out of it. Every year we field questions from our customers about whether or not they should upgrade their computers, printers, networks, you name it. We have to ask ourselves these same questions here at Drake and the thought of keeping up with technology can be overwhelming because it evolves so quickly. Below is my first tip on this topic, with more to come in future installments.

Plan an annual review – At a minimum, do an annual review of your software and hardware.

  • Software - Review the system requirements for the software programs you use to run your business to ensure your hardware will support them. You can generally find system requirements in help files, marketing materials and license agreements. Sometimes this will involve inquiring about future versions to make sure there are no surprises.

Ex. Due to security issues, many software companies are discontinuing support for Internet Explorer(IE) 6. Microsoft recently released version 9(beta), but the security issues in IE 6 were addressed in version 7(released in October 2006). If you are still running IE 6, it is time to upgrade.

  • Hardware - Review manufacturer’s warranties for the hardware you use to make sure it will be supported for a reasonable timeframe for your business. With the release of something new generally comes the discontinuation of something old. Make sure your hardware is not in the “something old” category.

Ex. Your printer manufacturer releases a new line of printers and unbeknownst to you, discontinues support for your model. You don’t want to find that out during tax season which is likely when it will decide to stop working.

Since it is January, it is definitely not the time for tax preparers to be reviewing equipment for upgrades. However, I do recommend taking a few minutes to put an ‘annual tech review’ reminder on your calendar for right after tax season. Any issues you may have encountered during tax season should be fresh on your mind and you will give yourself plenty of time to implement any changes that are needed before next tax season.

As always, we are happy to assist our customers with these types of decisions. Don’t hesitate to call or email when the timing is right for you.

Saturday, January 29, 2011

When is a RAL a bad thing?

Many Tax Preparers feel like they need a RAL (Refund Anticipation Loan) to compete in the Tax Preparation business.  And honestly, it can draw folks in the door --- or more importantly, keep them from going down the street to someone who is offering a RAL.

RALs will always be better than going to the Loan Shark down the street for $500.  But they can be bad too.

When can a RAL be a bad thing?  Well, when it is a "bait and switch".  Some banks this year are doing a good job of loan approvals (I am not going to mention any bank names - good or bad), and some are doing a lousy job.  And we have heard of some firms that are trying to do some loans on their own with even worse approval rates ( I'll come and visit you in jail when CID catches on.).

We have seen RAL approval rates as low as the mid-20's.   When your approval rates are that low, I am not sure you have a RAL - just just THINK you have a RAL.  We have seen approval rates in the upper 70's as well - and considering that the IRS is not providing the debt indicator this year, that may be about as good as it gets.

A very few preparers have let us know that their approval rates for their offices are in the upper 80's, but let's face it, most of those are in areas where many customers are already banked, and the clients have a history with the same preparer (and with the same bank).

Personally,  I am in favor of restoring the debt indicator so that it will bring the price of the RAL back down (lower risk means lower rates and better approval rates).   Actions by the OCC and the FDIC along with several banks withdrawing from the RAL market have created a very uneven playing field for many preparers this year.  

There are some other great products that would work instead (including RACs and Debit Cards).  The IRS must think that Debit Cards are a good solution, because they are trying it themselves.

There is such a thing as a "Good RAL"; but it requires a Debt Indicator, and a Bank with deep pockets.  Only time will tell if we get both of those again.

Friday, January 28, 2011


Homeowners who made energy-saving improvements may be able to lower their 2010 tax bill.

Form 5695, Residential Energy Credits, is used to calculate and report residential energy credits, which include 1) the non-business energy property credit, and 2) the residential energy efficient property credit.

Non-Business Energy Credit
The non-business energy property credit has a maximum of $1,500 for 2009 and 2010 combined.  Costs could include high-efficiency heating and air conditioning systems, water heaters and stoves burning biomass, along with the cost of labor for their installation.  Energy-efficient windows, skylights, and doors, qualifying insulation, and certain roofs also qualify for the credit, though the cost of their installation does not.

These expenses must be made on or in connection with a dwelling located in the United States, owned and used by the taxpayer as his/her principal residence.

To qualify for the credit, improvements must meet certain energy efficiency requirements.

Residential Energy-Efficient Credit
Under the residential energy-efficient property credit, going green can also include qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Labor costs to install this property are generally included in the calculation of the credit.

Qualifying property must be installed in a dwelling located in the United States and used as the taxpayer’s residence.  It cannot, for example, be used to heat a swimming pool or hot tub.  For fuel cell expenses, the dwelling must be the taxpayer’s principal residence; special dollar limits apply for joint occupancy.

Taxpayers will need to obtain certification for their records that a component meets energy requirements; many Energy Star products qualify, though not all do.  Taxpayers can check Energy Star products at their website  At the bottom of the screen, click the “Tax Credits for Energy Efficiency” button.

If the taxpayer cannot use all of the credit because of the tax liability limit (line 26 is less than line 23), the unused portion may be carried over to 2011. 

Taking the Credit on the 1040 Return
Because these energy credits report in the non-refundable credits section of the 1040, tax liability has an effect on how much credit may be taken. 

Let’s say the taxpayers have a tax liability of $1,000.  They have a foreign tax credit of $200 and an expected energy credit of $1,500.  The foreign tax credit removes $200 from the tax liability, making it $800.  That means the taxpayers will only be allowed an $800 energy credit as they are limited to the amount of available tax liability.

For more information about energy credits, please see

  • IR-2010-110,
  • IRS Summertime Tax Tip 2010-16, and
  • Form 5695 Instructions.

Thursday, January 27, 2011

Still Looking for That Lesser of Evils: The Wonderfully Useless Form 8919

By Bob Nolan, EA, CPA

We have all had this client: He comes in with a 1099-MISC for non-employee compensation, but when we ask him about his business and the related expenses, he tells us, “I don’t have a business. I just work there.”

We know what’s going on, and we know the right thing to do. Our client is being short-changed by a boss who wants to get out of paying the employer’s share of the Social Security and Medicare taxes that are due on the client’s wages. The way for our client to get a fair shake is to file Form 8919 (and probably Form SS-8).

But then we look at the bottom of the Form 8919 instructions and see that ominous-looking exclamation mark with the word “CAUTION” printed under it. And right next to that, we see where it says that, if our client files this form, the IRS may contact the employer for more information. And it is not very hard to imagine the unscrupulous employer’s reaction to finding out our client blew the whistle on him.

So, how do we report the income on our client’s return? Line 21 may look tempting, but, aside from being technically the wrong place to report it, the income will not be treated as earned income for EIC and Child Tax Credit purposes. Another option is to report it as self-employment income, but that would cause the client to pay hundreds of dollars in tax that are not really his responsibility. Filing Form 8919 may be the correct thing to do, but, unless our client has already left that job, it just might get him fired. And even bad jobs are not easy to come by lately. What should we advise the client to do?

More often than not, once we have talked all of this over with the client, he’ll decide that, come to think of it, he really is an independent contractor after all. And I suppose we have to believe him, don’t we?

When Form 8919 first came out in 2007, it sounded like a great idea. And it is, in theory. But in practice, it seems to have relatively little use.

Except as an ethical dilemma.

Bob Nolan is an Enrolled Agent and an ASTQB–certified software tester, and is licensed as a Certified Public Accountant in the states of Illinois and North Carolina—but he is not quite as boring as that makes him sound. He has experience in public accounting and used to have his own small tax-preparation business. Previously a Drake Software customer, Bob has been a Tax Analyst in Drake’s federal tax development group since 2006. When he is not working, Bob enjoys travel, science fiction, old movies, and spending time with his very patient wife and his three children, who have the good fortune to take after their mom.

Tuesday, January 25, 2011

Let My PTIN Go

I’ve spoken with several preparers the last few months who have experienced some degree of difficulty in obtaining or registering their PTIN. Some called in a panic last week because their application was still “pending”, and tax season was about to start.

Up until yesterday, the IRS was mum on an official stance on what to do in those circumstances.

The IRS is issuing notice 2011-11, which will allow certain tax preparers who have applied to register or obtain a PTIN, to file tax returns using either their old PTIN or their SSN until they receive a response on their application. The notice indicates that these preparers will receive instructions from the on-line application process on how to proceed.

For preparers who have filed a paper application (W-12) with a payment, this will constitute a good faith effort to comply with the requirement.

Tax preparers who receive a new PTIN during tax season should immediately begin to use the new PTIN.

IRS Notice 2011-11 has been released, and is located here:
Internal Revenue Bulletin 2001-7 should be released soon and provide additional details of the clemency.

On a related note, as of this morning, the IRS PTIN sign-up system is experiencing technical difficulties.

Monday, January 24, 2011

Warning! Payroll Deadlines Quickly Approaching.

January 31st is an important date if you are a payroll filer. This date represents the due date for 2010 Forms 940, 941(Qtr 4), 944, 945, W-2, 1099 and more. There are also state unemployment insurance taxes and withholding returns due depending on which state(s) you file in.

In Drake Client Write-Up(CWU) we offer paper and e-filing options for most payroll forms. In addition, we offer On-The-Fly options for filing payroll forms if you are not an active CWU payroll user. Our On-The-Fly option allows you to enter payroll totals directly on the form for paper filing or e-filing. Best of all, it’s FREE! We actually find that many of our customers use our payroll filing modules to avoid the charges they would otherwise incur through their write-up program. That’s ok, we don’t mind.

If you do payroll filings, I’m happy to report you do get an extension to file this year… one whole day. Since January 31st falls on a Sunday, you have all the way to February 1st to file. Don’t wait till the last minute. I know, I know… easy for me to say.

Friday, January 21, 2011

Annotate PDF Reference Materials to Save Time

If you keep and use PDF reference materials in your office, you might save time with PDF sticky notes in documents you use frequently. I don’t see many people using them. Most people use Adobe Reader to view PDF files. If you’re familiar with Adobe Reader, maybe you already know that you can email a PDF and add comments to it from inside the Reader. I didn’t discover Adobe “sticky notes” until I recently installed Adobe Reader X and took some time to look around. .

I keep a lot of PDF reference documents on hand. They include IRS forms and instructions, user manuals, copies of screen help, PDFs I’ve captured from various Internet sources, and even screenshots printed to PDF. I can usually find the reference document I’m looking for (Drake Document Manager holds most of the reference material I keep locally).

But when I’m researching something, just finding the PDF isn’t enough. Sometimes I open a likely PDF looking for an answer and then realize it isn’t there. Worse, I remember that I’ve had this same document open before with this same question in mind, probably several times, found the answer elsewhere and can’t remember how I found it. IRS instructions sometimes do this to me, as do large PDFs that stash needed information in locations that aren’t obvious or don’t appear in the table of contents. Of course, I can search a PDF in Adobe Reader, but I may have to wade through dozens of finds before I see what I want. This “reinvent-the-wheel” scenario wastes time.

For common questions with hard-to-find answers, I post notes for my own use in these PDFs, on the first page, mentioning a page number or another reference document. The notes don’t print in the Reader default setup, although you can print them if you want. Sometimes I save PDFs I’ve pulled from IRS.GOV so I can annotate them for future use. Next time I open them, I won’t be wondering where I got that answer.

Thursday, January 20, 2011

Criticisms, Suggestions, Helpful Hints, Praises – We Want to Hear Them All!

By Judy Stepp, EA, Tax Analyst

At Drake Software, we’re always trying to make our product better, more accurate, and more useful for our customers. Each of us—the programmer for your state, the quality assurance team, the management, the sales staff, and the customer support personnel—takes pride in Drake’s products, and we all work hard to provide an excellent program for our users. Often that means changing the program mid-season to adapt to changes in the tax laws. In addition, many of the changes we make throughout the year are a direct result of feedback—criticisms, suggestions, helpful hints, and praises—from our customers.

Much of our customer feedback comes during tax season, when everyone is using the program—and when we’re least able to make major changes to it. When we get feedback—a customer service call, an e-mail, or even a post on the Drake Forum—we look at the issue, run some returns to reproduce it, and check it this way and that to see if we can do something to ensure that the program works as expected. We ask ourselves questions: What does the customer need to do, if anything? Do we need to change the way the program works? Can we make that change? If so, how? And when?

Testers, programmers, and others get together to determine the best course of action. If we decide a change is needed, we begin programming to make that change. Each change is followed up by exhaustive testing and final approval by all involved, and then the change is released to the public as an update to the program. We try to program, test, and release updates as swiftly as possible, and sometimes the process goes very quickly. Other times, one or more steps of the process may take awhile.

What if we decide not to make a change? In some instances, the customer’s feedback is based on a misunderstanding of how the program works; in that case, we respond to the customer as quickly as possible with a timely call-back or e-mail. In other instances, we decide a change would be good, but that it would be best to wait until the next tax season. In that case, we try to let the customer know that his or her request will be considered for a future version of the program.

So, do we value your feedback? You bet! When we hear from you, we find out what products you are using and how you use them. We learn what would make those products better and easier to use. So, keep those notes, calls, and e-mails coming. Listed below are several ways you can contact us:

• ?? where ?? = your state (for example, use to send feedback on the North Carolina program)
Drake Support site (Resources > Contact Us); this route allows you to directly e-mail our programmers

Phone: (828) 524-8020
Fax: (828) 349-5718

Judy Stepp has been an enrolled agent (EA) for 19 years. She worked with CPA firms and H&R Block in accounting and tax preparation before coming to the software program development side in 1997. Judy came to Drake Software in 2005 as a state tax analyst. She enjoys gardening, travel, writing, oil painting, and volunteering.

Wednesday, January 19, 2011

Block Puts Foot in the Door

Anyone who prepares taxes competes with H&R Block. So it always bears watching when Block releases its product offerings for tax season.

Block’s stated goal is to bring FEET in the door. How do you do that? Use the words “FREE” and “FAST” as much as possible.

FREE – Block will do a 1040EZ for free. This covers about 16% of Block’s customers. Their reasoning is when all is said and done, many taxpayers’ will end up needing a more complex return. Plus, many other services, including state returns etc… all cost extra. The offer expires on February 15th. But, their feet are in the door.

FAST – Block no longer has a Refund Loan program. What do you do when one of your most profitable products is no longer available? Act like it’s still there. One of their commercials has money flying around turning into a racecar, FAST! In reality, Block has what’s known as a Refund Anticipation Check (RAC). It’s a great product, allowing taxpayers’ to pay for their tax preparation out of their tax refund. Convenient, yes; but it’s no faster than IRS Direct Deposit. By the time this is explained to most customers, their feet are in the door.

How do you compete? All tax preparation marketing is local. Your message is about trust and service. Can you provide the products your customers demand and can they trust you? This trust begins with honest marketing. Most tax preparers already know that misleading a customer to get them in the door never works out in the long run.

On a related note, Block lost roughly 6% of their customers last year.

Monday, January 17, 2011

2D or not 2D, that is the question.

It is true that the Social Security Administration (SSA) released standards this year for printing 2D barcodes on Forms W-2 and W-3. It is also true that the IRS released alternative versions of Forms W-2 and W-3 to support the 2D barcode. So why might you receive a W-2 from a taxpayer with no 2D barcode? Here are 2 reasons why:

1. The only copy of Form W-2 that was specifically revised by the IRS to support a 2D barcode was Copy A, the copy designated for the SSA. There were no specific guidelines released to address 2D barcode placement on the other copies (1, 2, B, C and D) of Form W-2.

2. Printing 2D barcodes on Form W-2 is not mandatory for 2010. Therefore, it is possible that companies are waiting until it is mandatory to support them, which will likely be 2011.

In the Drake Write-Up program, we do support printing 2D barcodes on 2010 Forms W-2 and W-3. In addition, due to IRS guidelines being somewhat flexible in the dimensions of copies furnished to employees, we also developed alternative versions of Form W-2 Copy B(employee’s federal tax return) and Copy C(employee’s records) to support printing a 2D barcode.

When 2011 rolls around, I suspect industry will push for IRS to publish specific guidelines related to 2D barcode placement on the other copies of Form W-2, so have your scanners ready.

Friday, January 14, 2011

Next week, 600,000 low and moderate income individuals will receive a letter from the Treasury Department “inviting” them to receive their tax refund on a MyAccountCard Prepaid Debit Card.  

This program is being touted as part of the Obama’s administrations continuing efforts to increase electronic payments and to “empower Americans to make informed financial decisions”. 

Informed decisions;  hmmm….here’s some information NOT included in the Treasury’s press release:
- The pricing on the card will vary RANDOMLY customer by customer.  Some cards will have NO monthly fee, some as high as $4.95. 
- Reloading the card costs $4.95 (if done at a Green Dot location)
- ATM withdrawals, out of the Green Dot network,  will cost at least $2.50 (plus the out of network charge)
- Check the balance on the card, $ .50 (plus out of network charges). 
- Lost card?  Another $4.95. 

The Treasury department also announced it is working with payroll processor ADP to place marketing information for the card with consumers. 

The card is issued by Bonneville Bank and the program is managed by Green Dot.   Green Dot announced last February it plans to acquire Bonneville Bank, so at some point Green Dot will be both the program manager and the issuing bank for this card.   Pretty good deal for Green Dot and ADP.  Maybe not so much for the taxpayer.

Thursday, January 13, 2011

Revised Adoption Credit Rules

Revised Adoption Credit rules were put into place for tax years 2010 and 2011. Under the new rules a taxpayer may be able to take a refundable tax credit for qualifying expenses paid to adopt an eligible child.

The credit is based on reasonable and necessary expenses relating to a legal adoption, including adoption fees, court costs, attorney fees, and travel expenses.

Prior to 2010 the Adoption Credit was not refundable; it could only reduce the tax liability to zero. If the taxpayer’s tax liability was $8,994 and he/she was given a $12,150 credit for adopting an eligible child, the credit would take the tax liability to zero; the balance of the credit ($3,156) would carry to the next tax year.

Because the credit is considered refundable in 2010 and 2011, taxpayers could qualify for a refund even if federal income taxes are not withheld. As a refundable credit, the Adoption Credit flows to the Payments section on the second page of the 1040, line 71, Credits from Form 2439, 8839, 8801, and 8885.

Under the new rules, taxpayers must attach one or more adoption-related documents with the completed Form 8839, Qualified Adoption Expenses. Required documents differ if the adoption is foreign, or domestic, final or not final and if it is for a special-needs child.

Due to the requirement for further documentation, taxpayers claiming the Adoption Credit will have to paper-file the tax return. These documents are designed to ensure taxpayers properly claim the credit. Return time to receive a refund on a paper return is normally six to eight weeks.

Income limits and other rules are applied according to form instructions. The total amount excludable per child is limited to $13,170 in 2010. The credit begins to phase out when the adjusted gross income (AGI) reaches $182,520 and is completely phased out at an AGI of $222,520.

For more information about the expansion of the Adoption Credit, please refer to:

•Form 8839 instructions,
•IRS Notice 2010-66, and
•IRS Revenue Procedure 2010-31.

Backing Up Your Data

by Jared Byer

I hope most Drake users back up their computer data on a regular basis. I know not all Drake users have a robust back-up plan because I have talked to customers who have lost their data and there isn’t anything I can do to help them.

Having a back-up drive is good, but I suggest that you don't stop there. Consider the 3-2-1 backup plan: If the data is important, you should have 3 copies of it on at least 2 different types of media, with at least 1 copy off-site.

Reasons for Backups

Understanding the reasons we need backups also makes clear why a plan like 3-2-1 makes sense.

Reason #1: Hard-Drive Failure. The most common reason for backups is the potential for hard-drive failure. Conventional computer wisdom suggests that a hard drive is more likely to fail in the first year, and that the chances of failure start increasing again after three to five years. However, failures can happen at any time, so it’s important to have regular backups throughout the life of your hard drive.

Reason #2: Corrupted, Deleted, or Overwritten Data. Data stored on hard drives can become corrupted. Modern hard drives are constantly correcting errors, and one of the reasons errors are so likely is because of the incredible storage capacity of hard drives. Individual files can become damaged or unreadable on a hard drive that is still very healthy and reliable. This, along with the occasional accidental deletion or overwriting of a file, shows why incremental backups, which allow you to selectively restore individual files, are useful.

Three Copies of the Data

Hard drives fail, and backups can also fail. It is unlikely but possible that both will fail at the same time. For example, a power surge during the backup process can damage both the primary data source and the backup. Having a third backup that is either off-line or off-site can protect you from these more rare occurrences.

Two Media Types

Because most new computers don't come with floppy disk drives, and because tape drives are not as common as they once were, getting data off one of these items can be a challenge. A faulty tape drive or optical drive might make backups that are also faulty. By backing up to different, newer types of media, such as optical or flash storage in addition to hard drive storage, you can reduce the likelihood that your backed-up data becomes irretrievable due to an obsolete or unreadable media type.

One Off-Site Copy

Even if you use the latest technology to back up your files regularly, your backups might be worthless in the event of theft or natural disaster. That is why it is important to have regular off-site backups. Losing a few hours’, or even a day’s work, while still frustrating and costly, is a minor inconvenience compared to losing a week or more of work.

So remember: Back up your files regularly, have more than one copy of everything, don’t rely on just one backup media type, and keep at least one of the copies of your backup data off-site.

Jared Byer has a degree in economics from the University of Tennessee. He worked in taxes and accounting for 10 years before becoming a state tax analyst at Drake Software. When not at work, working on photography, or writing, Jared spends his time keeping up with new technology and consumer electronics.

Wednesday, January 12, 2011

E-file start-up

Many tax preparers may know the “first Sunday” routine, but there are many that are new to e-file this year, with the implementation of the e-file mandate. As advertised, the IRS will start receiving tax returns on Friday, January 14th. Did you know you can send them to Drake Software now? Drake started taking individual returns for federal and states, in addition to a number of business returns on January 3rd. We will transmit them to IRS as soon as IRS is ready to receive them.

But don’t expect acknowledgments quickly the first time around. IRS plans to release acknowledgments no earlier than 11 AM on Sunday, January 16th. Drake will have staff monitoring for acknowledgments and as soon as we receive them and verify that they are good, we will post them to the OLDB (on-line database) and make them available for preparers to retrieve from our processing center. Keep in mind that 11 AM is the earliest they will be available. It is sometimes much later in the day on that first day.

If you offer bank products, this is a good time to make sure your fees are accurate. Drake tries to trap as many as we can by comparing your transmissions to your enrollment setup. However, there are still many bank applications that get rejected (not declined, but rejected) by the bank because the fees on the return do not match what is set up at the bank. You can avoid rejects (and, thus delays in bank acks) by making sure your fees match NOW. If you get rejects, Drake staff has to correct the applications and re-submit and there can be significant delays as a result. So, spare your customers of those delays and check your fees today.

Tuesday, January 11, 2011

Pay Stub Filing and Snow

Tax season brings loads of potential stressful situations.  Some you can’t predict, some you can.  I’m going to go out on a limb here, and make two BOLD predictions for Tax Season 2011.  In fact, I am guaranteeing these two predictions. 
First – Sometime, somewhere, between today and April 15th it is going to snow, roads are going to ice up and people are going to have a hard time traveling because of the weather.
Second – A tax preparer is going to call us and complain that someone in their area is filing tax returns without W-2s, using just the clients’ last pay stub, and “no one is doing anything about it”.
Just to be clear, a “pay-stub return”, as I’m referring to it, is a return that is electronically filed, before February 14th, where the tax preparer / ERO does not have the taxpayers’ W-2 in hand. (The IRS precludes an ERO from filing a return without the W-2, or other withholding document,  IN HAND.  If a W-2 cannot be obtained prior to filing, form 4852 must be used to report estimated wages and withholding.  4852s cannot be filed prior to February 14, 2011.)   Some tax preparers get a little itchy at the starting line for tax season and can’t wait to get going, so excited in fact, they skirt IRS regulations and file returns before the client receives their W-2(s).
My good friend Doug from New Jersey, loves the snow.  In his neck of the woods, if enough businesses close down during tax season, people have nothing better to do than to go get their taxes done.  He orders pizza and buckles in for busy days.
However, Doug also is one of the most vocal critics of pay stub filers.  “Pay stub filers in the past have been terrible.  When a tax preparer does a tax return without a W-2, it inevitably causes big messes, and it’s usually ME that has to clean it up.”   Doug is a pretty good mess cleaner upper.  And there’s some money to be made from amending returns.  But it’s frustrating to the client, and most times the taxpayer ends up owing money on the amendment, which makes Doug the bearer of bad news.  Not a good way to start a new relationship.
KNOW THE RULES. on pay stub filing.  Pub 1345 Chapters 3 and 6 should be read by anyone tempted to jump the starting gun on tax season by using pay stub filing.  The penalties can be harsh. (see
REPORT THE ABUSE.  Abusive preparers can be reported a variety of ways.  Here’s a website that lists some of the ways to accomplish that.,,id=106773,00.html
BUCKLE IN.  One thing is for sure, whether its pay stub filing, late legislation or bank product changes, this is going to be a tax season storm like we’ve never experienced. 

Friday, January 7, 2011

IRS changes E-file Start up Plans

Two significant announcements have been made by IRS this week.

The first is that Business E-File, which was scheduled to start on Jan 8th, will be delayed until Jan 12th.  I am not sure who would be doing Business E-file in the next 5 days anyway, but be forewarned.  It does not start until next Wednesday.

The second announcement is that E-file Stockpiling Rules don't apply to the returns that are delayed because of late legislation.   If you have returns that are impacted, (see our previous blog), then you can hold those returns and file them sometime in mid-February when the IRS announces that they are ready to receive those returns. 

Normal stockpiling rules require that a return be transmitted within 3 calendar days once the ERO has all necessary information for origination of that return.  But even in normal circumstances, the IRS does not consider returns held prior to the date that it accepts them each year as stockpiling.   EROs should always advise taxpayers about when the return is going to be transmitted to IRS (or state).

Thursday, January 6, 2011

Tax Season Delayed for Some

Significant new tax laws were passed and signed into law on December 17th, 2010.  Because of these late changes, some tax returns cannot be filed either on paper or electronically until mid-February.

Here are the primary three categories of taxpayers that are impacted by the delay.

1. Schedule A filers -  Unfortunately this will impact a lot of folks.  There are not many changes on the form, but there is one on line 5 (sales tax deduction).  Because of this, all Schedule A filers are affected.

2. Higher Education Tuition and Fees Deduction.  (Taxpayers who file Form 8917)

3. Educator Expense Deduction on line 23 of Form 1040 (or line 16 of Form 1040A).

There are a few other examples of forms that could be delayed:
Form 4684, Casualties and Thefts
Form 8859, District of Columbia Home Buyers Credit
Form 3800, General Business Credit
Form 5405, First time Homebuyer Credit and Repayment of Credit
Form 6478, Alcohol Fuel Credit
Form 8834, Qualified Plug-In Electric Vehicle Credit
Form 8910, Alternative Motor Vehicle Credit
Form 8936, Qualified Plug-In Electric DriveMotor Vehicle Credit

You can always check updates on when these forms can be efiled.

Monday, January 3, 2011

2010 Drake Software ready for Download

January 3rd - Drake Software (2010 version) is ready for download to current active customers.   CDs are being duplicated and will be shipped on Tuesday January 4th, but customers can login and download the software TODAY.

Federal and all states are available for download.  In fact, California E-filing goes live this morning.  So once you download and install the software update, you can e-file California returns.

You can also e-file Federal and other state returns, but the IRS is not "live" yet, and we will have to hold those returns until the IRS is ready to receive them.

To download the software, just go to Drake Software - click on Support - Login and grab your software.

Here are the specific links:

If you want to go directly to the LOGIN page:

If you want to go to the Drake Support page:

If you want to go to the Drake Software main page:

Many Happy Returns!!!