Tax Notes

EITC Assistant Available Online
The IRS has developed a new tool to help tax professionals determine the eligibility of their clients for the earned income tax credit (EITC) (,,id=129991,00.html ). The EITC Assistant helps determine eligibility for the credit, filing status and whether the taxpayers’ children meet the definition of “qualifying children” for EITC purposes.

Deduction for Educators Reinstated
Teachers and other educators can deduct up to $250 of their expenses for books and other classroom supplies for 2004 and 2005 when figuring adjusted gross income ( ). The Working Families Tax Relief Act of 2004 restored the educator expense deduction, which had expired at the end of 2003. Out-of-pocket expenses incurred any time during 2004 and 2005 (not just since the act was signed on October 4, 2004) may qualify. The deduction is available to educators in public or private elementary or secondary schools who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide, whether or not they itemize deductions.

Toyota Prius Owners Can Take Clean-Fuel Deduction
The IRS approved the 2005 Toyota Prius as eligible for the clean-burning fuel deduction. Taxpayers who purchase this vehicle new may claim a tax deduction of $2,000 on form 1040 under the Working Families Tax Relief Act of 2004 (,,id=130146,00.html ). The one-time deduction must be taken by the original owner in the year the vehicle first is used. Individuals can take this benefit as an adjustment to income and do not have to itemize deductions to claim it.

IRS Revises OIC Form
A newly revised application for an offer in compromise, the form 656 package—which makes it easier for taxpayers to follow the instructions and correctly apply for an agreement—is now available at,,id=130491,00.html . It includes Form 656-A, Income Certification for OIC Application Fee, and a worksheet to help taxpayers determine whether they meet the income exception to the $150 fee; a checklist to help them determine whether they are eligible; a third-party designee section, which allows a person other than the taxpayer to discuss any additional information the IRS needs to process the offer; and a summary checklist that reduces the chance the IRS will return the application for omissions.


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.