IRS UPDATES SALES TAX TABLE PUBLICATION: The Internal Revenue Service has updated for three states the tables that taxpayers can use to determine whether they'll benefit from deducting sales tax rather than state and local income taxes. The agency updated the optional sales tax tables in Publication 600 for Arkansas, California and Virginia. The tables, which give taxpayers a sales tax deduction amount as an alternative to saving receipts throughout the year and tabulating the amount actually paid, were updated to reflect sales tax changes made by the three states during 2004; the original tables were based on the states' sales tax rates as of Jan. 1, 2004.
The IRS said that it made the update before any of the tables were mailed to taxpayers in Arkansas, California or Virginia. The updated tables are available at www.irs.gov/pub/irs-pdf/ p600.pdf. The agency will mail the updated Publication 600 to taxpayers in the affected states this week.
The IRS said that the impact of the table change is relatively small, since the sales tax figures were adjusted by a small amount, and the affected states have income taxes, which means that most taxpayers in those states won't use the sales tax tables, but will claim a state income tax deduction instead.
The American Jobs Creation Act of 2004 authorized the sales tax deduction as an option for those who itemize deductions, letting them choose between deductions for state and local income or sales taxes for tax years 2004 and 2005 only. Taxpayers will indicate by a checkbox on Line 5 of Schedule A which type of tax they're claiming.
REVISED SCHEDULES K-1 TO REDUCE FILING COMPLEXITY: The Internal Revenue Service has revised Schedules K-1 for this year's filing season by simplifying them to reduce common errors and the burden associated with preparation and filing requirements.
Income, deductions and credits from partnerships, S corps and trusts are reported to investors on Schedules K-1. The new partnership and S corp Schedules K-1 will be available for the 2004 tax year and the trust Schedule K-1 will be available for tax year 2005. Approximately 25 million Schedules K-1 are filed each year, with the highest number filed by partnerships.
The redesigned schedules feature an improved layout similar to that of Form W-2, as well as streamlined instructions. The schedules are also scannable, eliminating the risk of transcription errors. "The revisions to Schedules K-1 will reduce taxpayer or practitioner preparation time, increase quality and improve reporting accuracy," said Larry Gray, governmental affairs liaison for the National Association of Tax Professionals. "The Schedules K-1 are now laid out similar to a Form W-2. For example, a code for each amount to be reported in Box 13, Other Deductions, is listed on page two of Schedule K-1 (Form 1065) and is similar to the coding system used for Box 12 on Form W-2. By using the code information, the taxpayer or practitioner will know specifically where to correctly report the amount on the taxpayer's Form 1040."
BLOCK FINANCIAL ADVISORS CEO TO LEAVE FIRM: H&R Block Inc. announced that Brian L. Nygaard, president and chief executive officer of H&R Block Financial Advisors Inc., has decided to leave the company.
Nygaard, who has served as head of Block's financial and investment advisory services subsidiary since November 2001, was due to leave at the end of January, according to company spokesperson Linda McDougal.
The business unit will report to Jeffery W. Yabuki, H&R Block's executive vice president and chief operating officer, while the company searches for Nygaard's successor.
"Under Brian's direction, our Financial Advisors unit has made significant strides over the past three years, especially given the very challenging market environment," said Mark A. Ernst, H&R Block chairman and CEO. "Brian has moved us closer to integrating our financial services with our tax offerings. He successfully transitioned H&R Block Financial Advisors from its former transaction-based focus to one that is a full-service, relationship-based organization. And in creating the financial advisor-tax professional team concept, we are well positioned to meet the broader financial planning and investment needs of our millions of tax clients."
"I was given a unique opportunity at H&R Block Financial Advisors to reshape an organization to become the leading supplier of financial services to Middle America, and I'm proud of our accomplishments," Nygaard said in a statement.
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