Montana Department of Revenue
P.O. Box 5835
Helena MT 59604-5835

You may also electronically file your W2 and 1099 documents using the State of Montana’s ePass service. ePass is an excellent method of conducting business with the State for many other purposes.

This information is accurate as of 2-6-2011, please visit http://revenue.mt.gov/forbusinesses/electronic_filing/annualtaxwhstatements.mcpx for more information. For more information about electronic filing with Montana using ePass, visit http://revenue.mt.gov/forbusinesses/electronic_filing/efilingw2and1099.mcpx.

House Republicans said Thursday that the health care overhaul will expand IRS authority by giving agents the power to verify acceptable health care coverage and fine or confiscate the tax refunds of Americans without coverage.

Republican members of the House Ways and Means Committee, a panel that oversees taxes and health issues, also charged that IRS audits will likely increase if health care legislation is passed. They added the IRS will require up to $10 billion to administer the new program. They also claimed the IRS may need to hire 16,500 additional employees.

“This dangerously expands IRS authority,” said Representative David Camp, (R., Mich.), the ranking Republican on the Committee on Ways and Means. “Most Americans will find it shocking and troubling.”

Here are the exceptions to the Federal 3 year guideline:

• The assessment period is extended to 6 years instead of 3 years if a taxpayer omits from gross income an amount that is more than 25 percent of the income reported on a tax return.
• The IRS can assess additional tax with no time limit if a taxpayer: (a) doesn’t file a return; (b) files a false or fraudulent return in order to evade tax, or (c) deliberately tries to evade tax in any other manner.
• The IRS gets an unlimited time to assess additional tax when a taxpayer files on an unsigned return.

If no exception applies to you, for Federal purposes, you can probably discard most of your tax records that are more than 3 years old; add a year or so to that if you live in a state with a longer statute.

Examples: Tony filed his 2008 tax return before the due date of April 15, 2009. He will be able to safely dispose of most of his records after April 15, 2012. On the other hand, if Tony filed his 2008 return on June 1, 2009. He needs to keep his records at least until June 1, 2012. In either case, Tony may opt to keep his records a year or two longer if his state has a statute of limitations longer than 3 years.

Please note that even if you discard backup records, never throw away your file copy of any tax return (including W-2s). The return itself provides data that can be used in future tax return calculations or to prove amounts related to property transactions, social security benefits, etc. You should keep certain records for longer than 3 years. These records include:

• Stock acquisition data. If you own stock in a corporation, keep the purchase records for at least 4 years after the year you sell the stock. This data will be needed in order to prove the amount of profit (or loss) you had on the sale.
• Stock and mutual fund statements where you reinvest dividends. Many taxpayers use the dividends they receive from a stock or mutual fund to buy more shares of the same stock or fund. The reinvested amounts add to basis in the property and reduce gain when it is finally sold. Keep statements at least 4 years after final sale.
• Tangible property purchase and improvement records. Keep records of home, investment, rental property, or business property acquisitions AND related capital improvements for at least 4 years after the underlying property is sold.

The Energy Conservation Installation Credit is a nonrefundable credit. A nonrefundable tax credit is one that can’t reduce the amount of tax owed to less than zero. If the credit were able to reduce the amount of tax owed to less than zero, the taxpayer would be entitled to a payment from the government, and would be called a refundable tax credit

According the the Montana Department of Revenue, the following items qualify for the credit:

• Insulation of floors, walls, ceilings and roofs in existing buildings
• Insulation in the floors, walls, ceilings and roofs of a new building, to the extent that it exceeds the current International Energy Conservation Code with Montana amendments as adopted by the Montana Department of Labor and Industry
• Insulation of heating and air conditioning pipes, insulation and sealing of heating, ventilation and air conditioning (HVAC) ducts, and insulation of hot water heaters and tanks
• Windows that result in a reduction of energy consumption
• Storm doors and insulated exterior doors
• Caulking and weather stripping of an existing structure
• Devices which limit the flow of hot water from shower heads and lavatories
• Heat recovery ventilators (HRV)
• Glass fireplace doors on existing fireplaces
• Exhaust fans to reduce air conditioning requirements
• Replacement of incandescent light fixtures with fixtures of a more efficient type such as those with electronic ballast and compact or linear fluorescent lamps and LED lights
• Lighting controls with cutoff switches to permit the selective use of lights
• Programmable thermostats
• Installation of new domestic water heaters, heating or cooling systems, so long as the new system uses energy more efficiently than the prior system

According the Department of Revenue, the following is a partial list of investments that do no qualify for the credit:

• Installing carpet
• Reshingling or repairing a roof
• Paint
• Replacing or repairing a failing foundation
• Siding with little or no insulation
• Portable air conditioners
• Space heaters
• Household appliances such as ENERGY STAR stoves, washers, dryers and refrigerators

1. The cost was incurred to operate an existing business in the same field as the one you entered into, and
2. The cost was incurred before the day your active business begins.

The following are start-up costs:

• Analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
• Advertising costs for the opening of the business.
• Salaries and wages for employees who are in training as well as their instructors.
• Travel and other costs necessary to secure prospective distributors, supplies or customers.
• Salaries and fees for executives and for professional services.

Start-up costs do not include research and experimental costs, deductible interest or taxes.

Purchasing an existing business

Costs incurred in the course of a general search for a business or a preliminary investigation of a specific business are amortizable as start-up costs. These are the costs associated with the decision to acquire the business. Costs incurred in an attempt to purchase the business are capital expenses that cannot be amortized.

Here’s an example:

On April 16th, you hired me to assist you in the potential purchase of a coffee shop. I researched the industry, the local economy and the financial projections of a specific coffee shop. On July 1st, you prepared and submitted a letter of intent to the coffee shop owner. The letter stated that a binding commitment would result only after a purchase agreement was signed. I continued to perform professional services related to the research the business by analyzing the financial records of that coffee shop. On August 1st, you signed the purchase agreement with the owner of the coffee shop.

The costs of services provided by me before August 1st are amortizable as start-up costs while the costs of services provided by me on and after August 1st relate to the attempt to purchase the business and therefore must be capitalized.

1. AARP Tax Aide is actually available to taxpayers of any age. Income restrictions and return complexity issues may apply. Volunteers get busy so it’s best to call ahead 1-888-227-7669.
2. Volunteer Income Tax Assistance (VITA) is available to low to moderate income level taxpayers. Volunteers are trained and certified to prepare basic returns. To find a location, call 1-800-829-1040.
3. Free software is typically available from H&R Block and Intuit Turbo Tax and is also available online. Extra fees may apply for complex returns, state filings, and may have income limitations. So be sure to read about before investing too much time in preparing your return. Even for a fee, these programs can be a good deal. The obvious disadvantage here is that no tax consultation is available and the software’s calculations are only as good as your answers. Be sure to download some materials from the IRS and your state department of revenue if you have questions about tax issues.
4. Free online income tax return filing is available for Federal returns and the IRS lists many of these providers on its website. Be sure to check whether the provider you choose can handle both your Federal and your State income tax return. Some providers only offer Federal and some only offer certain states. For Montana free income tax filing, visit Montana Free File.

As a practicing CPA and a volunteer tax preparer, I am often asked questions and provide consultations that taxpayers consider valuable. The best free tax filing methods will involve a preparer who can answer your questions. However, if you feel comfortable preparing your own returns and doing your own research, it’s nice to be able to work from the comfort of your own home or office.

Four Steps to Follow If You Are Missing a W-2

Getting ready to file your tax return?  Make sure you have all your documents before you start. You should receive a Form W-2, Wage and Tax Statement from each of your employers.  Employers have until February 1, 2010 to send you a 2009 Form W-2 earnings statement. If you haven’t received your W-2, follow these four steps:

1. Contact your employer If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed.  If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address.  After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.

2. Contact the IRS If you do not receive your W-2 by February 16th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:

• Employer’s name, address, city and state, including zip code and phone   number
• Dates of employment
• An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2009. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.

3. File your return You still must file your tax return or request an extension to file by April 15, even if you do not receive your Form W-2. If you have not received your Form W-2 by April 15th, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible.  There may be a delay in any refund due while the information is verified.

4. File a Form 1040X On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

Form 4852, Form 1040X, and instructions are available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

• Form 4852, Substitute for Form W-2, Wage and Tax Statement (PDF 29K)
• Form 1040X, Amended U.S. Individual Income Tax Return (PDF 123K)
• Instructions for Form 1040X (PDF 43K)