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Scammers Who Pose as the IRS

Posted by Admin Posted on Aug 14 2017

 Be Alert to Scammers Who Pose as the IRS

 

Scammers pretending to be from the IRS continue to target taxpayers. These scams take many different forms. Among the most common are phone calls and fake emails. Thieves use the IRS name, logo or a fake website to try and steal money from taxpayers. Identity theft can also happen with such scams.

Taxpayers need to be cautious of phone calls or automated messages from scammers who claim to be from the IRS. These criminals often say the taxpayer owes money. They also demand immediate payment. Scammers also lie to taxpayers and say they are due a refund. They do this to lure their victims into giving their bank account information over the phone. The IRS warns taxpayers not to fall for these scams.

Below are tips that will help avoid becoming a victim during the summer months and throughout the year:

The IRS will NOT:

  • Call to demand immediate payment using specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS first mails a bill to taxpayers who owe taxes. If the IRS assigns a case to a Private Debt Collector (PCA), both the IRS and the authorized collection agency send a letter to the taxpayer. Payment is always to the United States Treasury.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand payment of taxes without giving the taxpayer the opportunity to question or appeal the amount owed.
  • If a taxpayer does not owe any tax, they should:
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.

If a taxpayer is not sure whether they owe any tax, they can view their tax account information on IRS.gov to find out.

Taxpayers should also watch out for emails and websites looking to steal personal information. An IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. Criminals often use fake refunds, phony tax bills or threats of an audit. Some emails link to fake websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they’re successful, they use it to steal a victim’s money and their identity.

For taxpayers who get a ‘phishing’ email, the IRS offers this advice:

Avoid scams. The IRS does not initiate contact using social media or text message. The first contact normally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

Additional IRS Resources:

Gambling Winnings & Losses

Posted by Admin Posted on Aug 08 2017

 

Gambling Winnings and Losses

 

Taxpayers must report all gambling winnings as income. They must be able to itemize deductions to claim any gambling losses on their tax return.

Taxpayers who gamble may find these tax tips helpful:

1.    Gambling income. Income from gambling includes winnings from the lottery, horseracing and casinos. It also includes cash and non-cash prizes. Taxpayers must report the fair market value of non-cash prizes like cars and trips to the IRS.

2.   Payer tax form. The payer may issue a Form W-2G, Certain Gambling Winnings, to winning taxpayers based on the type of gambling, the amount they win and other factors. The payer also sends a copy of the form to the IRS. Taxpayers should also get a Form W-2G if the payer withholds income tax from their winnings.

3.   How to report winnings. Taxpayers must report all gambling winnings as income. They normally should report all gambling winnings for the year on their tax return as “Other Income.” This is true even if the taxpayer doesn’t get a Form W-2G.

4.   How to deduct losses. Taxpayers are able to deduct gambling losses on Schedule A, Itemized Deductions, but keep in mind, they can’t deduct gambling losses that are more than their winnings.

5.   Keep gambling receipts. Keep records of gambling wins and losses. This means gambling receipts, statements and tickets or by using a gambling log or diary.

Don't Take the Bait

Posted by Admin Posted on Aug 03 2017

Don’t Take the Bait  

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry today warned tax professionals that ransomware attacks are on the rise worldwide as bad actors here and abroad infiltrate computer systems and hold sensitive data hostage.

The IRS is aware of a handful of tax practitioners who have been victimized by ransomware attacks. The Federal Bureau of Investigation recently cautioned that ransomware attacks are a growing and evolving crime threatening the private and public sectors as well as individuals.

The “Don’t Take the Bait” campaign, a 10-week security awareness campaign aimed at tax professionals, hopes to increase awareness about these attacks. The IRS, state tax agencies and the tax industry, working together as the Security Summit, urge practitioners to learn to protect themselves. This is part of the ongoing Protect Your Clients; Protect Yourself effort.

“Tax professionals face an array of security issues that could threaten their clients and their business,” IRS Commissioner John Koskinen said. “We urge people to take the time to understand these threats and take the steps to protect themselves. Don’t just assume your computers and systems are safe.” Ransomware is a type of malware that infects computers, networks and servers and encrypts (locks) data. Cybercriminals then demand a ransom to release the data. Users generally are unaware that malware has infected their systems until they receive the ransom request.

The 2017 Phishing Trends and Intelligence Report issued annually by Phish labs named ransomware one of two transformative events of 2016 and called its rapid rise a public epidemic.

In May 2017, a ransomware attack dubbed “WannaCry” targeted users who failed to install a critical update to their Microsoft Windows operating system or who were using pirated versions of the operating system. Within a day, criminals held data on 230,000 computers in 150 countries for ransom.

The most common delivery method of this malware is through phishing emails. The emails lure unsuspecting users to either open a link or an attachment. However, the FBI also has warned that ransomware is evolving and cybercriminals can infect computers by other methods, such as a link that redirects users to a website that infects their computer.

Victims should not pay a ransom. Paying it further encourages the criminals. Often the scammers won’t provide the decryption key even after a ransom is paid.

Tips to Prevent Ransomware Attacks

Tax practitioners – as well as businesses, payroll departments, human resource organizations and taxpayers – should talk to an IT security expert and consider these steps to help prepare for and protect against ransomware attacks:

  • Make sure employees are aware of ransomware and of their critical roles in protecting the organization’s data.
  • For digital devices, ensure that security patches are installed on operating systems, software and firmware. This step may be made easier through a centralized patch management system.
  • Ensure that antivirus and anti-malware solutions are set to automatically update and conduct regular scans.
  • Manage the use of privileged accounts — no users should be assigned administrative access unless necessary and only use administrator accounts when needed.
  • Configure computer access controls, including file, directory and network share permissions, appropriately. If users require read-only information, do not provide them with write-access to those files or directories.
  • Disable macro scripts from office files transmitted over e-mail.
  • Implement software restriction policies or other controls to prevent programs from executing from common ransomware locations, such as temporary folders supporting popular Internet browsers, compression/decompression programs.
  • Back up data regularly and verify the integrity of those backups.
  • Secure backup data. Make sure the backup device isn’t constantly connected to the computers and networks they are backing up. This will ensure the backup data remains unaffected by ransomware attempts.

Victims should immediately report any ransomware attempt or attack to the FBI at the Internet Crime Complaint Center, www.IC3.gov. Tax practitioners who fall victim to a ransomware attack also should contact their local IRS stakeholder liaison

 

Tips to Keep in Mind for Taxpayers Traveling for Charity

Posted by Admin Posted on Aug 01 2017

 

Tips to Keep in Mind for Taxpayers Traveling for Charity

 

 Some taxpayers may travel because of their involvement with a qualified charity. These traveling taxpayers may be able to lower their taxes.

 

 Tips for taxpayers to use when deducting charity-related travel expenses:

 

Qualified Charities For a taxpayer to deduct costs, they must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. A taxpayer should ask the group about its status before they donate. Taxpayers can also use the Select Check tool on IRS.gov to check a group’s status.

 

Out-of-Pocket Expenses A taxpayer may be able to deduct some of their costs including travel. These out-of-pocket expenses must be necessary while the taxpayer is away from home. All costs must be:

 

Unreimbursed, directly connected with the services, expenses the taxpayer had only because of the services the taxpayer gave, and not personal, living or family expenses.

 

Genuine and Substantial Duty The charity work the taxpayer is involved with has to be real and substantial throughout the trip. The taxpayer can’t deduct expenses if they only have nominal duties or do not have any duties for significant parts of the trip.

 

Value of Time or Service A taxpayer can’t deduct the value of their time or services that they give to charity. This includes income lost while the taxpayer serves as an unpaid volunteer for a qualified charity.

 

Travel Expenses a Taxpayer Can Deduct The types of expenses a taxpayer may be able to deduct include:

 

Air, rail and bus transportation, car expenses, lodging costs, cost of meals, and taxi or other transportation costs between the airport or station and their hotel.

 

Travel Expenses Taxpayer Can’t Deduct Some types of travel do not qualify for a tax deduction. For example, a taxpayer can’t deduct their costs if a significant part of the trip involves recreation or vacation.

 

Tips to Know for Deducting Losses from a Disaster

Posted by Admin Posted on July 26 2017

 

Tips to Know for Deducting Losses from a Disaster

 

The IRS wants taxpayers to know it stands ready to help in the event of a disaster. If a taxpayer suffers damage to their home or personal property, they may be able to deduct the loss they incur on their federal income tax return. If their area receives a federal disaster designation, they may be able to claim the loss sooner.

Ordinarily, a deduction is available only if the loss is major and not covered by insurance or other reimbursement.

Here are 10 tips taxpayers should know about deducting casualty losses:

1. Casualty loss.  A taxpayer may be able to deduct a loss based on the damage done to their property during a disaster. A casualty is a sudden, unexpected or unusual event. This may include natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.

2. Normal wear and tear.  A casualty loss does not include losses from normal wear and tear. It does not include progressive deterioration from age or termite damage.

3. Covered by insurance.  If a taxpayer insured their property, they must file a timely claim for reimbursement of their loss. If they don’t, they cannot deduct the loss as a casualty or theft. Reduce the loss by the amount of the reimbursement received or expected to receive.

4. When to deduct.  As a general rule, deduct a casualty loss in the year it occurred. However, if a taxpayer has a loss from a federally declared disaster, they may have a choice of when to deduct the loss. They can choose to deduct it on their return for the year the loss occurred or on an original or amended return for the immediately preceding tax year.

This means that if a disaster loss occurs in 2017, the taxpayer doesn’t need to wait until the end of the year to claim the loss. They can instead choose to claim it on their 2016 return. Claiming a disaster loss on the prior year's return may result in a lower tax for that year, often producing a refund.

5. Amount of loss.  Figure the amount of loss using the following steps:

  • Determine the adjusted basis in the property before the casualty. For property a taxpayer buys, the basis is usually its cost to them. For property they acquire in some other way, such as inheriting it or getting it as a gift, the basis is determined differently. For more information, see Publication 551, Basis of Assets.
  • 6. $100 rule.  After figuring the casualty loss on personal-use property, reduce that loss by $100. This reduction applies to each casualty-loss event during the year. It does not matter how many pieces of property are involved in an event.

7. 10 percent rule.  Reduce the total of all casualty or theft losses on personal-use property for the year by 10 percent of the taxpayer’s adjusted gross income.

8. Future income.  Do not consider the loss of future profits or income due to the casualty.

9. Form 4684.  Complete Form 4684, Casualties and Thefts, to report the casualty loss on a federal tax return. Claim the deductible amount on Schedule A, Itemized Deductions.

10. Business or income property.  Some of the casualty loss rules for business or income property are different from the rules for property held for personal use.

Call the IRS disaster hotline at 866-562-5227 for special help with disaster-related tax issues. For more on this topic and the special rules for federally declared disaster-area losses see Publication 547, Casualties, Disasters and Thefts. Get it and other IRS tax forms on IRS.gov/forms at any time.

Avoid scams. The IRS will never initiate contact using social media or text message. First contact generally comes in the mail. Those wondering if they owe money to the IRS can account information on IRS.gov to find out.

Warning of New Phone Scam

Posted by Admin Posted on June 16 2017

 

IRS Warns of New Phone Scam Involving Bogus Certified Letters; Reminds People to Remain Vigilant Against Scams, Schemes this Summer

 

WASHINGTON – The Internal Revenue Service today warned people to beware of a new scam linked to the Electronic Federal Tax Payment System (EFTPS), where fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country, so taxpayers should be alert to the details.

 

In the latest twist, the scammer claims to be from the IRS and tells the victim about two certified letters purportedly sent to the taxpayer in the mail but returned as undeliverable. The scam artist then threatens arrest if a payment is not made through a prepaid debit card. The scammer also tells the victim that the card is linked to the EFTPS system when, in fact, it is entirely controlled by the scammer. The victim is also warned not to contact their tax preparer, an attorney or their local IRS office until after the tax payment is made.

 

“This is a new twist to an old scam,” said IRS Commissioner John Koskinen. “Just because tax season is over, scams and schemes do not take the summer off. People should stay vigilant against IRS impersonation scams. People should remember that the first contact they receive from IRS will not be through a random, threatening phone call.”

 

EFTPS is an automated system for paying federal taxes electronically using the Internet or by phone using the EFTPS Voice Response System. EFTPS is offered free by the U.S. Department of Treasury and does not require the purchase of a prepaid debit card. Since EFTPS is an automated system, taxpayers won’t receive a call from the IRS. In addition, taxpayers have several options for paying a real tax bill and are not required to use a specific one.

 

Tell Tale Signs of a Scam:

 

The IRS (and its authorized private collection agencies) will never:

 

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.

 

For anyone who doesn’t owe taxes and has no reason to think they do:

 

  • Do not give out any information. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. Please add "IRS Telephone Scam" in the notes.

 

For anyone who owes tax or thinks they do:

 

 

The IRS does not use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov. Additional information about tax scams is available on IRS social media sites, including YouTube videos.

 

 

 

Small Business Work Reminder

Posted by Admin Posted on May 05 2017

 

Small Business Week Reminder: Work Opportunity Tax Credit can Help Employers Hiring New Workers; Key Certification Requirement Applies

 

WASHINGTON –The Internal Revenue Service today reminded employers planning to hire new workers that there’s a valuable tax credit available to those who hire long-term unemployment recipients and others certified by their state workforce agency. During National Small Business Week—April 30 to May 6—the IRS is highlighting tax benefits and resources designed to help new and existing small businesses.

 

The Work Opportunity Tax Credit (WOTC) is a long-standing income tax benefit that encourages employers to hire designated categories of workers who face significant barriers to employment. The credit, usually claimed on Form 5884, is generally based on wages paid to eligible workers during the first two years of employment.

 

To qualify for the credit, an employer must first request certification by filing IRS Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. Other requirements and further details can be found in the instructions to Form 8850.

 

There are now 10 categories of WOTC-eligible workers. The newest category, added effective Jan. 1, 2016, is for long-term unemployment recipients who had been unemployed for a period of at least 27 weeks and received state or federal unemployment benefits during part or all of that time. The other categories include certain veterans and recipients of various kinds of public assistance, among others.

 

The 10 categories are:

 

  • Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients
  • Unemployed veterans, including disabled veterans
  • Ex-felons
  • Designated community residents living in Empowerment Zones or Rural Renewal Counties
  • Vocational rehabilitation referrals
  • Summer youth employees living in Empowerment Zones
  • Food stamp (SNAP) recipients
  • Supplemental Security Income (SSI) recipients
  • Long-term family assistance recipients
  • Qualified long-term unemployment recipients.

 

Eligible businesses claim the WOTC on their income tax return. The credit is first figured on Form 5884 and then becomes a part of the general business credit claimed on Form 3800.

 

Top 9 Facts about the Adoption Tax Credit

Posted by Admin Posted on Mar 22 2017

 

Top Nine Facts about the Adoption Tax Credit

 

 If you adopted or tried to adopt a child in 2015, you may qualify for a tax credit. Here are nine things you should know about the adoption credit.

 

 

    1.  Credit or Exclusion. The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can’t get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax.

    2.  Maximum Benefit. The maximum adoption tax credit and exclusion for 2015 is $13,400 per child.

    3. Credit Carryover. If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2015, you can use it to reduce your taxes for 2016. You can do this for up to five years, or until you fully use the credit, whichever comes first.

    4.  Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themselves.

    5.  Qualified Expenses. Adoption expenses must be directly related to the adoption of the child and be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.

    6.  Domestic or Foreign Adoptions. In most cases, you can claim the credit whether the adoption is domestic or foreign. However, the timing rules for which expenses to include differ between the two types of adoption.

    7.  Special Needs Child. If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you didn't pay any qualified adoption expenses.

    8.  No Double Benefit. Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion. However, you can’t claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense.

    9.  Income Limits. The credit and exclusion are subject to income limitations. The limits may 

       

 

 

Medical and Dental Expenses May Impact Your Taxes

Posted by Admin Posted on Mar 09 2017

 

Medical and Dental Expenses May Impact Your Taxes 

 

Medical expenses can trim taxes. Keeping good records and knowing what to deduct make all the difference. Here are some tips to help taxpayers know what qualifies as medical and dental expenses:

 

  • Itemize. Taxpayers can only claim medical expenses that they paid for in 2016 if they itemize deductions on a federal tax return.
  • Qualifying Expenses. Taxpayers can include most medical and dental costs that they paid for themselves, their spouses and their dependents including:

 

    • The costs of diagnosing, treating, easing or preventing disease.

    • The costs paid for prescription drugs and insulin.

    • The costs paid for insurance premiums for policies that cover medical care.

    • Some long-term care insurance costs.

      Exceptions and special rules apply. Costs reimbursed by insurance or other sources normally do not qualify for a deduction. More examples of what costs taxpayers can and can’t deduct are in IRS Publication 502, Medical and Dental Expenses.

 

  • Travel Costs Count. It is possible to deduct travel costs paid for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. For use of a car, deduct either the actual costs or the standard mileage rate for medical travel. The rate is 19 cents per mile for 2016.
  • No Double Benefit. Don’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from these plans are usually tax-free.

 

 

 

Tax Prepares May Increase Fees by More Than 6%

Posted by Admin Posted on Feb 19 2017

 

Tax Prepares May Increase Fees by More Than 6%

 

In addition to the recent responsibilities related to implementing the new health insurance requirements for all individuals, new regulations taking effect for the 2016 tax year are greatly increasing the time prepares must put into the completion of many tax returns.

 

These new regulations issued by the IRS implement new due-diligence requirements that tax return preparers must follow when they prepare returns that claim a child tax credit, additional child tax credit, or American opportunity tax credit (T.D. 9799REG-102952-16). Before these changes, the due-diligence requirements and the penalties for noncompliance applied only to claims for the earned income tax credit (EITC). These new rules apply for returns or claims for refund prepared on or after Dec. 5, 2016, for tax years beginning after Dec. 31, 2015.

 

To comply with the due-diligence requirements, besides submitting Form 8867, the preparer must complete the worksheet in Form 1040, 1040A, 1040EZ, or any other form the IRS may prescribe for each credit, including how each credit was computed and the information used to make the computation. The preparer must not know or have reason to know that any information the preparer used to determine eligibility for, and the amount of, each credit is incorrect. The preparer also must make reasonable inquiries when required, documenting those inquiries and responses contemporaneously.

 

Finally, the preparer must retain for three years the Form 8867, the worksheet (or alternative records), and the record of how and when the information that was used to determine eligibility for, and the amount of, each credit was obtained by the preparer, including the identity of any person furnishing information and a copy of any document the preparer relied on in preparing the return.

 

The regulations were also amended to reflect other legislative changes that subject the penalty amount to an inflation adjustment. The $500 penalty for each breach of the rules, which applies separately to each credit, is adjusted for inflation. For 2016 and 2017, the inflation-adjusted penalty is $510.

 

All of this greatly increases the time preparers will have to devote to all returns and especially those that may be eligible for these credits.

 

Tax and accounting firms plan to raise their fees for accounting services by 6.1% in 2017 and tax prep fees by an average of 6.4% according to a study by the National Society of Accountants.

 

 

 

W-2 Phishing Scam

Posted by Admin Posted on Feb 03 2017

 

Dangerous W-2 Phishing Scam Evolving; Targeting Schools, Restaurants, Hospitals, Tribal Groups and Others

 

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.

 

In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice.

 

“This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.

 

When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this. As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.

 

Here’s how the scam works: Cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2.  This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).

 

The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight. Those businesses that received the scam email last year also are reportedly receiving it again this year.

 

Security Summit partners warned of this scam’s reappearance last week but have seen an upswing in reports in recent days.

 

New Twist to W-2 Scam: Companies Also Being Asked to Wire Money

 

In the latest twist, the cybercriminal follows up with an “executive” email to the payroll or comptroller and asks that a wire transfer also be made to a certain account. Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars due to wire transfers.

 

The IRS, states and tax industry urge all employers to share information with their payroll, finance and human resources employees about this W-2 and wire transfer scam. Employers should consider creating an internal policy, if one is lacking, on the distribution of employee W-2 information and conducting wire transfers.

 

Steps Employers Can Take If They See the W-2 Scam

 

Organizations receiving a W-2 scam email should forward it to phishing@irs.gov and place “W2 Scam” in the subject line. Organizations that receive the scams or fall victim to them should file a complaint with the Internet Crime Complaint Center (IC3,) operated by the Federal Bureau of Investigation.

 

Employees whose Forms W-2 have been stolen should review the recommended actions by the Federal Trade Commission at www.identitytheft.gov or the IRS at www.irs.gov/identitytheft. Employees should file a Form 14039, Identity Theft Affidavit, if the employee’s own tax return gets rejected because of a duplicate Social Security number or if instructed to do so by the IRS.

 

The W-2 scam is just one of several new variations that have appeared in the past year that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies. Individual taxpayers also can be targets of phishing scams, but cybercriminals seem to have evolved their tactics to focus on mass data thefts.

 

 

 

IRS Alerts

Posted by Admin Posted on Dec 29 2016

 

Tax professionals should alert their clients that a new law requires the IRS to hold refunds until mid-February 2017 for people claiming the Earned Income Tax Credit or the Additional Child Tax Credit. In addition, new identity theft and refund fraud safeguards put in place by the IRS and the states may mean some tax returns and refunds face additional review.
 


 

Online tools to Assist Taxpayers

Posted by Admin Posted on Dec 01 2016

 

IRS Launches New Online Tool to Assist Taxpayers with Basic Account Information

 

WASHINGTON – The Internal Revenue Service announced today the launch of an online application that will assist taxpayers with straightforward balance inquiries in a safe, easy and convenient way.

 

This new and secure tool, available on IRS.gov allows taxpayers to view their IRS account balance, which will include the amount they owe for tax, penalties and interest. Taxpayers may also continue to take advantage of the various online payment options available by accessing any of the payment features including: direct pay, pay by card and Online Payment Agreement. As part of the IRS vision for the future taxpayer experience, the IRS anticipates that other capabilities will continue to be added to this platform as they are developed and tested.

 

“This new tool is part of the IRS’s commitment to improve and expand taxpayer services by providing additional online taxpayer options,” said IRS Commissioner John Koskinen. “The new ‘balance due’ feature, paired with the existing online payment options, will increase the availability of self-service interactions with the IRS. This will give taxpayers another way to take care of their tax obligations in a fast and secure manner.”

 

Before accessing the tool, taxpayers must authenticate their identities through the rigorous Secure Access process. This is a two-step authentication process, which means returning users must have their credentials (username and password) plus a security code sent as a text to their mobile phones.

 

Taxpayers who have registered using Secure Access for Get Transcript Online or Get an IP PIN may use their same username and password. To register for the first time, taxpayers must have an email address, a text-enabled mobile phone in the user's name and specific financial information, such as a credit card number or specific loan numbers. Taxpayers may review the Secure Access process prior to starting registration.

 

As part of the security process to authenticate taxpayers, the IRS will send verification, activation or security codes via email and text. The IRS warns taxpayers that it will not initiate contact via text or email asking for log-in information or personal data. The IRS texts and emails will only contain one-time codes.

 

In addition to this new functionality, the IRS continues to provide several self-service tools and helpful resources available on IRS.gov for individuals, businesses and tax professionals.

 

 

 

Workers Compensation Rates Set to Increase

Posted by Admin Posted on Nov 28 2016

 

FL Office Takes Action on Workers' Compensation Insurance Rates

Tallahassee, FL (WorkersCompensation.com) - After a thorough review of the workers’ compensation insurance rate filing submitted by the National Council on Compensation Insurance (NCCI) and careful consideration of hundreds of public comments and testimony received from interested stakeholders, the Florida Office of Insurance Regulation (Office) has issued an Order that gives contingent approval to an overall combined average statewide rate increase of 14.5% versus the requested 19.6%.  Approval of the revised rate increase is contingent on NCCI amending the filing to include the recommended changes stipulated within the Order.  As ordered by the Office, the revised rate increase would become effective on December 1, 2016 for new and renewal business, with no change in rates for current in-force policies. The amended rate filing must be filed with the Office for review and approval no later than October 4, 2016.

The NCCI rate filing was originally submitted in May of this year and amended in June to address the impact of three recent legal changes, including two Florida Supreme court case decisions (Castellanos v. Next Door Company and West phal v. City of St. Petersburg) and legislatively-mandated updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual (HCPR Manual). 
 

If NCCI submits the required amended rate filing and it is subsequently approved by the Office at an overall combined average statewide rate increase of 14.5%, the individual rate impacts will include:

    A 10.1% statewide average rate increase for the April 28th Florida Supreme Court decision in the case of Castellanos v. Next Door Company, which  found the mandatory attorney fee schedule in Section 440.34, Florida Statutes, unconstitutional as a violation of due process under both the Florida and United States Constitutions.

·    A 2.2%  statewide average rate increase for the June 9th Florida Supreme Court decision in the case of West phal v. City of St. Petersburg, in which the Florida Supreme Court found the 104-week statutory limitation on temporary total disability benefits in Section 440.15(2)(a), Florida Statutes, unconstitutional because it causes a statutory gap in benefits in violation of an injured worker’s constitutional right of access to courts. The Supreme Court reinstated the 260-week limitation in effect prior to the 1994 law change.

·    A 1.8% statewide average rate increase related to updates within the Florida Workers’ Compensation HCPR Manual per Senate Bill 1402. The manual became effective on July 1, 2016.

For more information about the NCCI public hearing and rate filing, visit the Office’s “NCCI Public Rate Hearing” webpage.

 

 

 

Newly Married Couples

Posted by Admin Posted on Oct 28 2016

 

Newly Married Couples Should Report Marriage to Marketplace

 

If you’re recently married, you probably have a list of things to do.  There’s one other thing you should add to that list: a health insurance review. This is particularly important if you enrolled in coverage through a Health Insurance Marketplace and you receive premium assistance in the form of advance payments of the premium tax credit.

 

When you apply for assistance to help pay the premiums for health coverage through the Marketplace, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim for the tax year using information you provide. This information includes details about your family composition and your projected household income.

 

It is important for you to report life changes – known as changes in circumstances – to your Marketplace to get the proper type and amount of financial assistance and to avoid getting too much or too little in advance. Reporting changes in circumstances will allow the Marketplace to adjust your advance credit payments. This adjustment will help you avoid getting a smaller refund or owing money that you did not expect to owe on your federal tax return.

 

To report changes and to adjust the amount of your advance payments of the premium tax credit you must contact your Health Insurance Marketplace. Be sure to report all changes directly to that Marketplace because they can affect both your coverage and your final credit when you file your federal tax return.

 

Other changes you should report to the Marketplace include:

 

  • Birth or adoption
  • Marriage or divorce
  • Moving to a different address
  • Increases or decreases in your household income

 

These changes may also open the door for the Marketplace special enrollment period that permits health care plan changes. In most cases, the special enrollment period for Marketplace coverage is open for 60 days from the date of the life event.

 

The Premium Tax Credit Change Estimator can help you estimate how your premium tax credit will change if your income or family size changes during the year. This estimator tool does not report changes in circumstances to your Marketplace. Because these tools provide only an estimate, you should not rely upon them as an accurate calculation of the information you will report on your tax return. You should use these estimators only as a guide to assist you in making decisions regarding your tax situation.

 

 

 

Moving in 2016?

Posted by Admin Posted on Sept 20 2016

 

Moving in 2016? Notify Your Marketplace about Your New Address

 

If you moved this year or are planning to move, you probably have a list of organizations to notify about your new address – like the U.S. Postal Service, utility companies and even the IRS. If you get health insurance coverage through a Health Insurance Marketplace, you should add one more important notification to your list: your Marketplace.

 

If you are receiving advance payments of the premium tax credit, it is particularly important that you report changes in circumstances, such as moving to a new address, to the Marketplace. There’s a simple reason. Reporting your move lets the Marketplace update the information used to determine your eligibility for a Marketplace plan, which may in turn affect the appropriate amount of advance payments of the premium tax credit that the government sends to your health insurer.

 

Reporting the changes  promptly will help you get the proper type and amount of financial assistance.  Getting too much premium assistance means you may owe additional money or get a smaller refund when you file your taxes. On the other hand, getting too little could mean missing out on monthly premium assistance that you deserve.

 

Other changes in circumstances that you should report to the Marketplace include:

 

  • an increase or decrease in your income, including lump sum payments like a lump sum payment of Social Security benefits
  • marriage or divorce
  • the birth or adoption of a child or other changes affecting the composition of your tax family
  • starting a job with health insurance
  • gaining or losing your eligibility for other health care coverage

 

Many of these changes in circumstances – including moving out of the area served by your current Marketplace plan – qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find information about special enrollment periods at HealthCare.gov.

 

The Premium Tax Credit Change Estimator can help you estimate how your premium tax credit will change if you experience a change in circumstance during the year.

 

 

 

New Federal Tax Law

Posted by Admin Posted on Sept 15 2016

 

New Federal Tax Law May Affect Some Refunds Filed in Early 2017; IRS to Share Details Widely with Taxpayers Starting This Summer

 

The Internal Revenue Service has announced initial plans for processing tax returns involving the Earned Income Tax Credit and Additional Child Tax Credit during the opening weeks of the 2017 filing season. The IRS is sharing the information now to help the tax community prepare for the 2017 season, and plans are being made for a wider communication effort this summer and fall to alert taxpayers about the changes that will affect some early filers.

 

This action is driven by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that was enacted Dec. 18, 2015, and made several changes to the tax law to benefit taxpayers and their families. Section 201 of this new law mandates that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before Feb. 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return.

 

This change begins Jan. 1, 2017, and may affect some returns filed early in 2017. Additional information is listed below.

 

  • To comply with the law, the IRS will hold the refunds on EITC and ACTC-related returns until Feb. 15.

  • This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.

  • The IRS will hold the entire refund. Under the new law, the IRS cannot release the part of the refund that is not associated with the EITC and ACTC.

  • Taxpayers should file as they normally do, and tax return preparers should also submit returns as they normally do.

  • The IRS will begin accepting and processing tax returns once the filing season begins, as we do every year. That will not change.

  • The IRS still expects to issue most refunds in less than 21 days, though IRS will hold refunds for EITC and ACTC-related tax returns filed early in 2017 until Feb. 15 and then begin issuing them.

    This is one more step the IRS is taking to ensure taxpayers receive the refund they are owed. The IRS plans to work closely with stakeholders and IRS partners to help the public understand this process before they file their tax returns and ensure a smooth transition for this important law change.

    More information about this law will be posted to IRS.gov and shared with partners and taxpayers throughout the second half of 2016.

     

 

It's Not Too Early to Determine Whether You Have Qualifying Health Care Coverage

Posted by Admin Posted on Aug 30 2016

 

It’s Not Too Early to Determine Whether You Have Qualifying Health Care Coverage 

 

The individual shared responsibility provision requires you and each member of your family to have basic health coverage – also known asminimum essential coverage – qualify for a health coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.

Many people already have minimum essential coverage. If you do, you'll simply report your coverage when you file your 2016 tax return in 2017. If you and your family members all had minimum essential coverage for each month of the tax year, you will indicate this on your tax return by checking a box on Form 1040, 1040A or 1040EZ. No further action is required.

 

If you do have health coverage, you’ll receive one or more forms early next year about the health care coverage that you had or were offered during 2016. You should not attach any of these forms to your tax return but should keep them with your tax records.

 

Here are some examples of coverage that qualify as minimum essential coverage:

 

Employer-sponsored coverage

 

  • Group health insurance coverage for employees under
    • a governmental plan such as the Federal Employees Health Benefit program
    • a plan or coverage offered in the small or large group market within a state
    • a grandfathered health plan offered in a group market
  • Self-insured group health plan for employees
  • COBRA coverage
  • Retiree coverage

 

Individual health coverage:

 

  • Health insurance you purchase directly from an insurance company
  • Health insurance you purchase through the Health Insurance Marketplace
  • Health insurance provided through a student health plan

 

Coverage under government-sponsored programs:

 

  • Medicare Part A coverage
  • Medicare Advantage plans
  • Most Medicaid coverage
  • Children’s Health Insurance Program, also known as CHIP
  • Most types of TRICARE coverage
  • Comprehensive health care programs offered by the Department of Veterans Affairs
  • Department of Defense Nonappropriated Fund Health Benefits Program
  • Refugee Medical Assistance

 

U.S. citizens, who are residents of a foreign country for an entire year, and residents of U.S. territories, are considered to have minimum essential coverage for the year.

 

For a list of the types of coverage that qualify as minimum essential coverage and information on those that do not qualify – as well as information on certain coverage that may provide limited benefits – visit the MEC page on IRS.gov/aca.

 

If you need health coverage, visit HealthCare.gov to learn about health insurance options that are available for you and your family, how to purchase health insurance, and how you might qualify to get financial assistance with the cost of insurance. 

 

 

 

Home Energy Tax Credits

Posted by Admin Posted on Aug 29 2016

 

 IRS Summertime Tax Tip 2016-25

 

Home Energy Tax Credits Save You Money at Tax Time

 

Certain energy-efficient home improvements can cut your energy bills and save you money at tax time. Here are some key facts that you should know about home energy tax credits:

 

Non-Business Energy Property Credit 

 

  • Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
  • The other part of the credit is not a percentage of the cost. This part of the credit is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
  • This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
  • Your main home must be located in the U.S. to qualify for the credit.
  • Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
  • You must place qualifying improvements in service in your principal residence by Dec. 31, 2016.

 

Residential Energy Efficient Property Credit

 

  • This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
  • Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
  • Qualified wind turbine and fuel cell property must be placed into service by Dec. 31, 2016. Hot water heaters and solar electric equipment must be placed in to service by Dec. 31, 2021.
  • The tax credit for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity. The amount for other qualified expenditures does not have a limit. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return. • The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.

 

 

 

IRS Website Hack

Posted by Admin Posted on Aug 22 2016

The IRS website hack was worse than we thought

The agency underestimated the number of taxpayers affected.

 

The IRS announced Monday that a hack to its website that occurred in May is much worse than it initially thought.

 

 Hackers accessed taxpayer information through the “get transcript” application, which allowed users to recall information that they input in previous tax returns. The system was shut down following the cyber-attacks.

The IRS originally believed there had been 114,000 successful breaches and 111,000 unsuccessful attempts. A more recent review has identified an additional 220,000 successful and 170,000 unsuccessful incidents. This brings the total count to a total of 615,000 attempts, about three times more than the IRS formerly thought.

 

The agency believes that the breached information will be used in 2016 to file fraudulent tax returns, Reuters reports. 15,000 fraudulent returns were filed this year as a result of the hack, likely amounting to under $50 million worth of refunds. The agency is attempting to review whether the number of fraudulent returns increased due to the hack, but it requires officials to review each individual tax return manually, Reuters says.

 

The IRS will soon mail out letters to the taxpayers whose information had been breached and offer them free credit monitoring and a new personal ID number to ensure next season’s tax returns are unaffected.

 

 

IRS Issues Urgent Fraud Alert

Posted by Admin Posted on Aug 19 2016

 

IRS Issues Urgent Fraud Alert: Back-to-School Scams; Encourages Students, Parents, Schools to Stay Alert

 

WASHINGTON — The Internal Revenue Service today warned taxpayers against telephone scammers targeting students and parents during the back-to-school season and demanding payments for non-existent taxes, such as the “Federal Student Tax.”

 

People should be on the lookout for IRS impersonators calling students and demanding that they wire money immediately to pay a fake “federal student tax.” If the person does not comply, the scammer becomes aggressive and threatens to report the student to the police to be arrested. As schools around the nation prepare to re-open, it is important for taxpayers to be particularly aware of this scheme going after students and parents.    

 

“Although variations of the IRS impersonation scam continue year-round, they tend to peak when scammers find prime opportunities to strike”, said IRS Commissioner John Koskinen. “As students and parents enter the new school year, they should remain alert to bogus calls, including those demanding fake tax payments from students.”

 

The IRS encourages college and school communities to share this information so that students, parents and their families are aware of these scams.

 

Scammers are constantly identifying new tactics to carry out their crimes in new and unsuspecting ways. This year, the IRS has seen scammers use a variety of schemes to fool taxpayers into paying money or giving up personal information. Some of these include:

 

  • Altering the caller ID on incoming phone calls in a “spoofing” attempt to make it seem like the IRS, the local police or another agency is calling
  • Imitating software providers to trick tax professionals--IR-2016-103
  • Demanding fake tax payments using iTunes gift cards--IR-2016-99
  • Soliciting W-2 information from payroll and human resources professionals--IR-2016-34
  • “Verifying” tax return information over the phone--IR-2016-40
  • Pretending to be from the tax preparation industry--IR-2016-28

 

If you receive an unexpected call from someone claiming to be from the IRS, here are some of the telltale signs to help protect yourself.

 

The IRS Will Never:

 

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Ask for credit or debit card numbers over the phone.

 

If you get a suspicious phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

 

  • Do not give out any information. Hang up immediately.
  • Search the web for telephone numbers scammers leave in your voicemail asking you to call back. Some of the phone numbers may be published online and linked to criminal activity.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
  • If you think you might owe taxes, call the IRS directly at 800-829-1040.

 

 

 

IRS Warns Consumers of Possible Scams Relating to Orlando Mass-Shooting

Posted by Admin Posted on June 20 2016

 

IRS Warns Consumers of Possible Scams Relating to Orlando Mass-Shooting

 

WASHINGTON ― The Internal Revenue Service today issued a consumer alert about possible fake charity scams emerging due to last weekend’s mass-shooting in Orlando, Fla., and encouraged taxpayers to seek out recognized charitable groups.

 

When making donations to assist victims of last weekend’s terrible tragedy, there are simple steps taxpayers can take to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to quickly and easily check out the status of charitable organizations.

 

While there has been an enormous wave of support across the country for the victims and families of Orlando, it is common for scam artists to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.

 

The IRS cautions donors to follow these tips:

 

  • Be sure to donate to recognized charities.
  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.
  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution. Scam artists may use this information to steal a donor’s identity and money.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
  • Consult IRS Publication 526, Charitable Contributions, available on IRS.gov.   This free booklet describes the tax rules that apply to making tax-deductible donations. Among other things, it also provides complete details on what records to keep.

 

Bogus websites may solicit funds for victims of this tragedy. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.

 

Additionally, scammers often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes.

 

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.”

 

More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.” 

 

IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”

Posted by Admin Posted on June 17 2016

 

IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”

 WASHINGTON — The Internal Revenue Service today issued a warning to taxpayers about bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.”
Even though the tax deadline has come and gone, scammers continue to use varied strategies to trick people, in this case students. In this newest twist, they try to convince people to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.
“These scams and schemes continue to evolve nationwide, and now they’re trying to trick students,” said IRS Commissioner John Koskinen. “Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”
Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.
Some examples of the varied tactics seen this year are:

    • Demanding immediate tax payment for taxes owed on an iTunes gift card.
    • Soliciting W-2 information from payroll and human resources professionals--IR-2016-34
    • “Verifying” tax return information over the phone--IR-2016-40
    • Pretending to be from the tax preparation industry--IR-2016-28

The IRS urges taxpayers to stay vigilant against these calls and to know the telltale signs of a scam demanding payment.
The IRS Will Never:

    • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
    • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
    • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
    • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
    • Ask for credit or debit card numbers over the phone.

If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do:

    • Do not give out any information. Hang up immediately.
    • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
    • Report it to the Federal Trade Commission by visiting FTC.gov and clicking on “File a Consumer Complaint.” Please add “IRS Telephone Scam” in the notes.
    • If you think you might owe taxes, call the IRS directly at 1-800-829-1040.


More information on how to report phishing or phone scams is available on IRS.gov.

 

IRS to Delay Tax Refunds Involving EITC and ACTC Next Year

Posted by Admin Posted on June 14 2016

 

IRS to Delay Tax Refunds Involving EITC and ACTC Next Year

 

 

 

The Internal Revenue Service is warning tax professionals that next year, a new law will require the IRS to hold all Earned Income Tax Credit and Additional Child Tax Credit refunds until Feb. 15 as a safeguard against identity theft and tax fraud.

The IRS pointed out the new law is likely to affect some returns submitted early in the tax filing season. The IRS is encouraging tax professionals to begin preparing for the change now. Planning is also underway for a wider communication effort this summer and fall to alert taxpayers.

 The action is driven by the Protecting Americans from Tax Hikes Act of 2015, or PATH Act, which was enacted Dec. 18, 2015. Section 201 of the new law mandates that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before Feb. 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return.

The change begins Jan. 1, 2017 and may affect some returns filed early in 2017. To comply with the law, the IRS said it will hold the refunds on EITC and ACTC-related returns until Feb. 15. This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.

The IRS plans to hold the entire refund until that time. Under the new law, the IRS cannot release the part of the refund that is not associated with the EITC and ACTC.

The IRS advised taxpayers to file as they normally do, and tax return preparers should also submit returns as they normally do. The IRS will begin accepting and processing tax returns once the filing season begins, as we do every year. That will not change.

The IRS still expects to issue most refunds in less than 21 days, though IRS will hold refunds for EITC and ACTC-related tax returns filed early in 2017 until Feb. 15 and then begin issuing them.

The IRS plans to work closely with stakeholders and IRS partners to help the public understand this process before they file their tax returns and ensure a smooth transition for this important law change. More information about this law will be posted to IRS.gov and shared with partners and taxpayers throughout the second half of 2016.

 

 

 

IRS Warns of Continued Scams, Varied Tactics as the Tax Deadline Nears

Posted by Admin Posted on Apr 18 2016

 

IRS Warns of Continued Scams, Varied Tactics as the Tax Deadline Nears

IR-2016-62, April 13, 2016

WASHINGTON — The Internal Revenue Service today issued a warning that scammers may try using the April 18 tax deadline to prey on hard-working taxpayers by impersonating the IRS and others with fake phone calls and emails. Even after the tax deadline passes, taxpayers should know the telltale signs of a scam and tips to protect themselves from a variety of phone scams and phishing emails.

"We’ve seen continuing activity in these scams throughout the filing season," said IRS Commissioner John Koskinen. "As the tax deadline nears, these criminals may try and trick honest taxpayers over the phone or via email, and people should remain vigilant. After the tax deadline, watch out for these scammers promising a refund or threatening you with an unexpected tax bill."

These scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. By email, they try enticing people to click on links in official-looking messages containing questions related to their "tax refund." Report these emails to phishing@irs.gov. By phone, many scammers use threats to intimidate and bully people into paying a "tax bill." They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Variations of these scams can be seen nationwide, and it’s more important than ever to be cautious with providing personal or financial information. As part of the effort to protect taxpayers, the IRS has teamed up with state revenue departments and the tax industry to make sure taxpayers understand the dangers to their personal and financial data as part of the “Taxes. Security. Together” campaign.   

Some examples of the varied tactics seen this year are:

  • Soliciting W-2 information from payroll and human resources professionals (see news release IR-2016-34)

  • “Verifying” tax return information over the phone (IR-2016-40)

  • Pretending to be from the tax preparation industry (IR-2016-28

    There are some important reminders for taxpayers nationwide about these schemes.

    Watch Out for Threatening Phone Calls

    Beware of scammers making unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email.

    Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

    The IRS Will Never:

  • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.

  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.

  • Ask for credit or debit card numbers over the phone.

    If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do:

  • Do not give out any information. Hang up immediately.

  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.

  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

  • If you think you might owe taxes, call the IRS directly at 1-800-829-1040.

    Avoid Email Phishing Attempts

    There has been a surge in email scams this year that appear to be from a tax agency or a tax software company. 

    Never reply to emails, texts or pop-up messages asking for your personal, tax or financial information. One common trick by criminals is to impersonate a business such as your financial institution, tax software provider or the IRS, asking you to update your account and providing a link. For small business, these schemes may try impersonating a company leader and request payroll and human resource information for employees in your company. Never click on links even if they seem to be from organizations you trust. Go directly to the organization’s website.

    And if it sounds too good to be true, it probably is. If you see an email that says "You won a free cruise" or "The IRS has a refund waiting for you," odds are high that it is a phishing attempt looking to get your personal information.

    If you get a phishing email, remember this important advice:

  • Don’t reply to the message.

  • Don’t give out your personal or financial information.

  • Forward the email to phishing@irs.gov. Then delete it.

  • Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

    More information on how to report phishing or phone scams is available on IRS.gov.

    Related Items:

  • www.irs.gov/identitytheft

  • Fact sheet FS-2016-1, IRS, States and Tax Industry Combat Identity Theft and Refund Fraud on Many Fronts

  • FS-2016-2, IRS, States and Tax Industry Urge Taxpayers to Join the Effort to Combat Identity Theft

  • FS-2016-3, IRS Identity Theft Victim Assistance: How It Works

  • FS-2016-4, How New Identity Security Changes May Affect Taxpayers for 2016 

Consumer Alert: Scammers Change Tactics, Once Again

Posted by Admin Posted on Mar 15 2016

 

Consumer Alert: Scammers Change Tactics, Once Again

 

WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but now the IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone.

 

The latest variation being seen in the last few weeks tries to play off the current tax season. Scam artists call saying they have your tax return, and they just need to verify a few details to process your return. The scam tries to get you to give up personal information such as a Social Security number or personal financial information, such as bank numbers or credit cards.

 

“These schemes continue to adapt and evolve in an attempt to catch people off guard just as they are preparing their tax returns,” said IRS Commissioner John Koskinen. “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.”

 

The IRS reminds taxpayers to guard against all sorts of con games that continually change. The IRS, the states and the tax industry came together in 2015 and launched a public awareness campaign called Taxes. Security. Together. to help educate taxpayers about the need to maintain security online and to recognize and avoid “phishing” and other schemes.

 

The IRS continues to hear reports of phone scams as well as e-mail phishing schemes across the country.

 

“These schemes touch people in every part of the country and in every walk of life. It’s a growing list of people who’ve encountered these. I’ve even gotten these calls myself,” Koskinen said.

 

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 phone scam contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam. Just this year, the IRS has seen a 400 percent increase in phishing schemes.

 

Protect Yourself

 

Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email. They’ve even begun politely asking taxpayers to verify their identity over the phone.

 

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.

 

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

 

Here are some things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

 

The IRS will never:

 

  • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you several bills.
  • Call or email you to verify your identity by asking for personal and financial information.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone or email.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

 

If you get a phone call from someone claiming to be from the IRS and asking for money or to verify your identity, here’s what you should do:

 

If you don’t owe taxes, or have no reason to think that you do:

 

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

 

If you know you owe, or think you may owe tax:

 

  • Call the IRS at 800-829-1040. IRS workers can help you.

 

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

 

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

 

 

 

Email: Phishing or Legit?

Posted by Admin Posted on Mar 07 2016

 

Email: Phishing or Legit?

 

 

 

If you receive mail that purports to be from your email service provider telling you any of the following, it is more than likely a Phishing scam (the following are only a few of the things these emails will tell you).

 

 

 

If you look further down, below this list, there is more information and tips to help you discern if an email is legitimate or not. (I especially found the very last 2 lines, regarding hovering, to be most helpful).

 

 

 

1) Your account has been blocked

 

2) There has been unusual activity on your account

 

3) To update your account

 

4) To consent to the Electronic Communications Delivery Policy or your account will be deactivated

 

5) To upgrade your account

 

6) Your payment is overdue, sign in to Customer Central to confirm your payment

 

7) Your email address will be deleted

 

8) Your bill is ready to be viewed.  Bogus emails may say this or something

 

similar:

 

 

 

."Please Read! Important message from <your email service provider>"

 

 

 

Dear <your email service provider> Customer,

 

Your June, 2012 <your email service provider> billing statement is ready for viewing. To view your bill, please download and extract the attachment. Enter your User Name and Password, and from the next screen select GO from the VIEW YOUR BILL option.

 

 

 

10) You get an email and the From address is <your email service provider>.User 11) A mail that purports to be from your email service provider which includes an attachment. Example: Download the attachments, complete the payment form to pay your July bill online and get your 50% Discount.

 

12) To update your credit card information and your service could be suspended if you fail to do so.

 

13) There was an issue with your last payment. You are required to validate your payment information in order to avoid service suspension. Update your payment methods. Update your credit card information as soon as possible.

 

14) <Your email service provider> has updated the online security contract. In order to get the last update click "Accept Terms Now" bellow and accept the "Terms & Conditions".

 

15) Our Security Department has been receiving complains about your email account and we are sending you this notification before we terminate your account.

 

16) Dear <your email service provider> User, Your E-mail account has exceeded its limit and needs to be verified, if not verified within 24 hours; we shall suspend your account. CLICK HERE to verify your email account now.

 

17) Your immediate attention is required. Our billing department has identified that there is an unpaid supplementary fee of $25.00 on your Internet Services. [Login to Customer Central] You must Log In as the Administrator/Parent account holder. If payment is not completed by [July 03, 2013] - we will be forced to suspend your account indefinitely. We are currently investigating this issue, if it is a system error, you may disregard this message.

 

18) A DGTFX Virus has been detected in your email folders and threatens to deactivate your email account if you don't send your email address, full name, password and phone number.

 

THERE IS NO SUCH THING AS A DGTFX virus. It’s just a string of letters somebody dreamed up to try and make their phishing campaign more believable. If you do a search for it, the only thing that will turn up in the results are numerous "this is a phishing scam".

 

19) Failure to do anything else that will result in your service being suspended

 

20) You have been overcharged by a specific amount which will be listed; I should submit a refund through the email.

 

21) Create your Refund Voucher because you were overcharged on your last bill. Will include links for you to use to sign in.

 

22) On a specific date an email upgrade will go into effect and that you need to upgrade my account before then. Even if there is an upgrade planned you won't have to update anything. These mails usually have a link for the supposed "upgrade" which if filled out will give scammers access to your account.

 

23) This is to alert you that you have to store your email information with us so it won’t disable your account we have upgraded our system and therefore we are asking our customers fill their email details online so as not to render their email account to be disabled thank you for your help resolving this matter.

 

You can verify/modify your email information here by clicking link below:

 

24) <Your email service provider> will undergo unscheduled system Maintenance today in order to improve your account. Please "told to click link here" to

 

Update Your Mailbox. Your account will be inactive if this survey is not completed.

 

 

 

 

 

DO NOT CLICK THE LINKS AND PROVIDE THE INFORMATION.

 

THESE ARE PHISHING ATTEMPTS. YOU WILL BE GIVING COMPLETE STRANGERS ACCESS TO YOUR ACCOUNT.

 

 

 

There is one way to know 100% if the mail is a phishing attempt. If the mail contains links that lead to a page wanting your user name, password or any other personal information /asks in the mail for you provide the info.

 

 

 

Be suspicious of any email or phone call that asks for your personal account information, such as user names, passwords, and account numbers. Email, phone calls, text messages, instant messages, or Web logs that appear to come from a reliable source may not always be authentic.

 

 

 

Be aware that legitimate email service providers will NEVER ask you for password information over the phone or email.

 

 

 

They will NEVER ask for billing or payment information through email whether by a link or in an attachment.

 

 

 

They will NOT send out disconnect/suspension notices for failure to pay via Email or for anything else you fail to do.

 

 

 

Official <Your email service provider> mail will never be sent with <Your email service provider>.User as the sender.

 

 

 

THESE EMAILS ARE PHISHING ATTEMPTS/SCAMS.

 

 

 

They won't include attachments for you to open in order to access your account.

 

 

 

Another sign of a phishing attempt is the sender address. If it contains @ with .2 letters it

 

was sent from a domain outside the United States. An example of this is @uc.cl (which is in

 

a post by a customer who received a phishing attempt from someone using that domain) cl

 

is for Chile. Each country has a domain code. A good search engine will help you identify the country. Most email service providers will not send mail from another country domain.

 

 

 

Another thing you can do is look at the headers in the email, which often contain clues that

 

your email service provider did not send it. If you don't know how to find the headers, ask your provider or inquire in their forum.

 

 

 

You can also hover over the From line in the Inbox to see where the email message was sent

 

from. If not Comcast or Xfinity, you know it is not legit.

 

 

 

Also hovering over the link in an email client will also show the URL. These URL's are a strong indicator the mail is not legitimate.

 

 

 

 

 

Home Energy Credits Save Money and Cut Taxes

Posted by Admin Posted on Feb 29 2016

 

Home Energy Credits Save Money and Cut Taxes

 

You can trim your taxes and save on your energy bills with certain home improvements. Here are some key facts to know about home energy tax credits:

 

Non-Business Energy Property Credit 

 

  • Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
  • The other part of the credit is not a percentage of the cost. It is for the actual cost of certain property. This may include items like water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
  • This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
  • Your main home must be located in the U.S. to qualify for the credit.
  • Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
  • You may claim the credit on your 2015 tax return if you didn’t reach the lifetime limit in past years. Under current law, this credit is available through Dec. 31, 2016.

 

Residential Energy Efficient Property Credit

 

  • This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
  • Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
  • There is no dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
  • The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
  • This credit is available through 2016.

 

Phone & Tax Scams for Filing 2016

Posted by Admin Posted on Feb 08 2016

 

WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, headlining the annual "Dirty Dozen" list of tax scams for the 2016 filing season, the Internal Revenue Service announced today.

The IRS has seen a surge of these phone scams as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season.

"Taxpayers across the nation face a deluge of these aggressive phone scams. Don't be fooled by callers pretending to be from the IRS in an attempt to steal your money," said IRS Commissioner John Koskinen. “We continue to say if you are surprised to be hearing from us, then you're not hearing from us.”

"There are many variations. The caller may threaten you with arrest or court action to trick you into making a payment,” Koskinen added. “Some schemes may say you're entitled to a huge refund. These all add up to trouble. Some simple tips can help protect you."

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year. Many of these con games peak during filing season as people prepare their tax returns or hire someone to do so.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam.

"The IRS continues working to warn taxpayers about phone scams and other schemes," Koskinen said. "We especially want to thank the law-enforcement community, tax professionals, consumer advocates, the states, other government agencies and particularly the Treasury Inspector General for Tax Administration for helping us in this battle against these persistent phone scams."

Protect Yourself

Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

The IRS will never:

  • Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
     
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
     
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
     
  • Ask for credit or debit card numbers over the phone.
     
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

If you don’t owe taxes, or have no reason to think that you do:

  • Do not give out any information. Hang up immediately.
     
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
     
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.

If you know you owe, or think you may owe tax:

  • Call the IRS at 800-829-1040. IRS workers can help you.

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Health Care Law: Provisions for Businesses

Posted by Admin Posted on Feb 05 2016

 

Health Care Law: Tax Considerations for Employers with Fewer than 50 Employees

 

Some of the tax provisions of the Affordable Care Act apply only to employers with fewer than 50 full-time or full-time equivalent employees.

 

Employers with fewer than 50 employees should take note of these tax considerations:

 

  • More than 95 percent of employers have fewer than 50 full-time employees or equivalents and are not subject to the employer shared responsibility provision.
  • Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates throughout the year.
  • If an employer has 50 or fewer employees, it can purchase health insurance coverage for its employees through the Small Business Health Options Program.
  • Employers that have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 may be eligible for the small business health care tax credit. These employers are eligible for this credit if they cover at least 50 percent of their full-time employees’ premium costs, and the coverage is purchased through the SHOP.

 

All employers, regardless of size, that provide self-insured health coverage must annually file information returns for individuals they cover. The first returns are due to be filed in 2016 for the year 2015.

 

The cost of these health care benefits will be reported in box 12 of the Form W-2, with Code DD to identify the amount. In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.

 

For more information, see the Affordable Care Act Tax Provisions for Small Employers page on IRS.gov/aca.

 

Also, to obtain coverage or for more information, please contact an insurance broker in your area.

 

Year-End Tax Tips for Individuals

Posted by Admin Posted on Jan 26 2016

 

The National Society of Accountants has released some suggested year-end tax tips for individuals.

 

Individual income tax rates of 10, 15, 25, 28, 33, 35 and 39.6 percent remain in place for filing next April. (The more you made, the greater your percentage.) The standard deduction for 2016 income will stay the same: $6,300 if you file your taxes using the status single or married filing separately. Married joint filers still receive a $12,600 deduction; head of household filers’ deduction jumps $50, to $9,300.

 

Year-end tax-saving tactics include spreading recognition of your income between years by postponing year-end bonuses and maximizing both deductible retirement contributions and allowable retirement distributions for this calendar year, coordinating capital losses against the sale of appreciated assets, postponing redemption of U.S. Savings Bonds, and delaying your year-end billings and collections.

 

You may also want to defer corporate liquidation distributions (full cash-value payment for all a company’s stock you hold) until 2016, pay your last state estimated tax installment in 2015 and pre-pay real estate taxes or mortgage interest.

 

Life changes: Did you get married or divorced? Have a child? Buy a home? Change jobs or retire? A change in employment, for example, may bring severance pay, sign-on bonuses, stock options, moving expenses and COBRA health benefits, among other changes that affect your taxes.

 

Additionally, try to predict any life events in 2016 that might trigger significant income or losses, as well as a change in your filing status.

 

Retirement savings: You can contribute up to $5,500 to an individual retirement account or Roth IRA for 2015 and, if you’re 50 or older, $1,000 more in catch-up contributions. You also have until April 15, 2015, to make an IRA contribution for 2015. One tax move in this area: Delay until 2016 converting your traditional IRA to a Roth IRA, which incurs taxes.

 

Giving: You can still make tax-free gifts of $14,000 per recipient (a total of $28,000 in the case of married couples).

 

Tax-free distributions, up to a maximum of $100,000 per taxpayer each year from IRAs to public charities, have been allowed as an alternative to reporting the income and taking an itemized deduction. You must be 70½ or older to do this.

 

High Earners
If your income is six figures or more, you should anticipate possible liability for the 3.8 percent net investment income (NII) tax calculated on net investment income in excess of your modified adjusted gross income (MAGI). Threshold MAGIs for the NII tax are $250,000 in the case of joint returns or a surviving spouse, $125,000 for a married taxpayer filing a separate return, and $200,000 in any other case.

 

Keeping income below the thresholds is worth exploring, as is spreading income out over a number of years or offsetting the income with both above-the-line and itemized deductions. Of course, planning for the NII tax requires a very personalized strategy.

 

The tax rate on net capital gain is no higher than 15 percent for most taxpayers. Net capital gain may not be taxed if you’re in the 10 or 15 percent income tax brackets. A 20 percent rate on net capital gain can apply if your taxable income exceeds the thresholds set for the 39.6 percent rate ($413,200 if you file single, $464,850 for married filing jointly or as a qualifying widow[er], $439,000 for head of household and $232,425 for married filing separately).

 

Wash sale rules: These cover sales of stock or securities in which your losses are realized but not recognized for tax purposes because you acquire substantially identical stock or securities within 30 days before or after the sale.

 

Alternative minimum tax: The AMT is now “patched,” which permanently increases the exemption amounts and indexes those amounts for inflation. For 2015, the exemption amounts are $53,600 for single individuals and heads of household, $83,400 for married couples filing a joint return and surviving spouses and $41,700 for married couples filing separate returns.

 

You can take several steps to reduce the AMT’s effect on your tax liability. Avoid certain deductions, including the accelerated depreciation deduction on real property or expensed research, among others. You might also avoid exercising incentive stock options in a year in which you’re subject to AMT.

 

Pease limitation: This reduces a higher-income taxpayer's allowable itemized deductions by 3 percent of the amount (up to 80 percent), with the reduction kicking in after certain income thresholds. For 2015, Pease thresholds are $309,900 for married couples and surviving spouses, $284,050 for heads of households, $258,250 for unmarried taxpayers and $154,950 for married taxpayers filing separately.

 

Related to the Pease limitation is the personal exemption phase-out (PEP). The threshold income amounts for the PEP are the same as those for the Pease limitation.

 

Health Insurance
The Affordable Care Act requires that you have minimum essential health coverage or make a shared responsibility payment, unless you’re exempt. On 2014 returns filed in 2015, taxpayers reported if they had minimum essential coverage; that reporting requirement will again be on 2015 returns filed in 2016.

 

If you may be liable for a shared responsibility payment, carefully review the significant number and variety of exemptions available. You may also be able to project the amount of any payment. Closely related are changes to the medical expense deduction, health flexible spending arrangements (and similar arrangements), insurance coverage for children, and more.

 

Potential Legislation
As of mid-November, tax bills pending in Congress included a package of tax extenders, revisions to the Affordable Care Act and more. Lawmakers might renew them either before year-end or early in 2016. Incentives include:

 

Exclusion of cancellation of indebtedness on principal residence: Allows you to exclude from income the cancellation of mortgage debt of up $2 million on a qualified principal residence.

 

Higher education tuition and fees deduction: Provides a maximum $4,000 deduction for qualified tuition and fees at post-secondary institutions of learning, subject to income phase-outs.

 

Classroom expense deduction. Primary and secondary education professionals may take an above-the-line deduction for qualified unreimbursed expenses up to $250 paid during the year.

 

Stay tuned to see which of these and other extenders continue or end. In the meanwhile, planning for their potential renewal is key.

 

 

 

Care Tax Credit and the SHOP Marketplace

Posted by Admin Posted on Dec 11 2015

 

Care Tax Credit and the SHOP Marketplace

 

 

 

If you are a small employer, there is a tax credit that can put money in your pocket.

 

The small business health care tax credit benefits employers that:

·         have fewer than 25 full-time equivalent employees

·         pay an average wage of less than $50,000 a year

·         pay at least half of employee health insurance premiums

 

To be eligible for this credit, you must have purchased coverage through the small business health options program, also known as the SHOP marketplace.

 

For information about insurance plans offered through the SHOP Marketplace, visit Healthcare.gov.

How will the credit make a difference for you?                 

For tax years 2010 through 2013, the maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities.

 

For tax years beginning in 2014 or later, there are changes to the credit:

·         The maximum credit increases to 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers. 

·         To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exception to this requirement.

·         The credit is available to eligible employers for two consecutive taxable years.

 

If you pay $50,000 a year toward employees’ health care premiums — and if you qualify for a 15 percent credit, you save... $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $10,000 a year.

 

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

 

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability. Refund payments issued to small tax-exempt employers claiming the refundable portion of credit are subject to sequestration. Find out more information on sequestration.

 

If you can benefit from the credit this year but forgot to claim it on your tax return, there’s still time to file an amended return. Refund limitations may apply. Generally, a claim for refund must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.

 

See examples of how the credit applies in different circumstances.

Can you claim the credit?

To be eligible, you must cover at least 50 percent of the cost of employee-only (not family or dependent) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year. Remember, you will have to purchase insurance through the SHOP Marketplace (or qualify for an exception to this requirement) to be eligible for the credit for tax years 2014 and beyond. For information about State-based SHOPs participating in the direct enrollment process, such as the one adopted by federally-facilitated SHOP Marketplaces, see the Centers for Medicare & Medicaid Services (CMS) FAQs about flexibilities for State-based SHOP direct enrollment.

What IS an FTE? Basically, two half-time employees count as one FTE. That means 20 half-time employees are equivalent to 10 FTEs, which makes the number of FTEs 10, not 20.

If you pay total average annual wages of $200,000 and have 10 FTEs. To figure average annual wages you divide $200,000 by 10 — the number of FTEs — and the result is your average annual wage. The average annual wage would be $20,000.

The amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000 (as adjusted for inflation beginning in 2014), the amount of the credit you receive will be less.

How do you claim the credit?

You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941.

If you are a small business, include the amount as part of the general business credit on your income tax return.

 

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don't ordinarily do so.
 

Don’t forget... if you are a small business employer, you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.

 

Year-End Tax Tips for Businesses

Posted by Admin Posted on Dec 07 2015

Year-End Tax Tips for Businesses

The National Society of Accountants is offering some year-end tax tips for businesses.

Consider several general strategies, such as use of traditional timing techniques for income and deductions and the role of the tax extenders, as well as strategies targeted to your particular business. As in past years, planning is uncertain because of the Affordable Care Act and the expiration of many popular but temporary tax breaks.

Filing Changes
Recent legislation changed filing deadlines for some entity tax returns for 2016: Partnership tax returns will be due on March 15, not April 15 (for calendar year partnerships), and c-corporation returns will be due on April 15, not March 15 (for calendar year C Corporations). Returns for s-corporation will continue to be due on March 15.

Expensing and Bonus Depreciation
Many businesses use enhanced Code Sec. 179 expensing as a key component of year-end tax planning. Sec. 179 property is generally defined as new or used depreciable tangible property purchased for use in a trade or business. Software was also recently included, as was qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.

(Congress has not renewed the enhancements to Sec. 179 expensing for 2015, but they likely will be renewed. Year-end planning should reflect both the likely extension and the possibility of no extension.)

Similarly, bonus depreciation has been a valuable incentive for many businesses. Fifty percent bonus depreciation generally expired after 2014 (with limited exceptions for certain types of property).

Qualified property for bonus depreciation must be depreciable under the Modified Accelerated Cost Recovery System (MACRS) and have a recovery period of 20 years or less for a wide variety of assets.

Year-end placed-in-service strategies can provide an almost immediate cash discount for qualifying purchases.

Although you should factor a bonus-depreciation election into year-end strategy, you don’t have to make a final decision on the matter until you file a tax return. Also, bonus depreciation isn’t mandatory: you might want to elect out of bonus depreciation to spread depreciation deductions more evenly across future years.

Another potentially useful strategy involves maximizing benefits under Sec. 179 by expensing property that doesn’t qualify for bonus depreciation, such as used property, and property with a long MACRS depreciation period.

Section 199 Deduction
Year-end planning benefits from the release of guidance on the Code Sec. 199 domestic production activities deduction is an often under-utilized potential break. The guidance provides many examples of what business activities qualify; recent Internal Revenue Service guidance highlights manufacturing, construction, oil-related work, film production, agriculture, and many other pursuits.

Work Opportunity Tax Credit
If your business is considering expanding payrolls before 2015 ends, take a look at the Work Opportunity Tax Credit (WOTC). (Although the WOTC, under current law, expired after 2014, Congress is expected to renew the WOTC for 2015 and possibly for 2016).

Generally, the WOTC rewards employers that hire individuals from certain groups, including veterans, families receiving certain government benefits, and individuals who receive supplemental Social Security Income or long-term family assistance. The credit is generally equal to 40 percent of the qualified worker's first-year wages up to $6,000 ($3,000 for summer youths and $12,000, $14,000, or $24,000 for certain qualified veterans). For long-term family-aid recipients, the credit is equal to 40 percent of the first $10,000 in qualified first-year wages and half of the first $10,000 of qualified second-year wages.

Repair-Capitalization Rules
Currently, a de Minimis safe harbor under the so-called “repair reg.” allows you to deduct certain items costing $5,000 or less that are deductible in accordance with your company’s accounting policy reflected on your applicable financial statement (AFS). IRS regulations also provide a $2,500 de Minimis safe harbor threshold if you don’t have an AFS.

Routine Service Contracts
If you’re an accrual-basis taxpayer (meaning you have a right to receive income as soon as you earn it), you have a new tool for planning. The IRS has provided a safe harbor under which accrual-basis taxpayers may treat economic performance as occurring on a ratable basis for ratable service contracts—perhaps particularly useful in connection with your regular services that extend into 2016. If your business meets the safe harbor for ratable service contracts, you may be able take a full deduction in the current tax year for certain 2015 payments even though you may not perform the services until next year.

Affordable Care Act
For large businesses, the ACA imposes many new requirements, including the employer shared responsibility provision (also known as the employer mandate). Small businesses, although generally exempt from this mandate, need to review how they deliver employee health insurance.

Many small businesses have provided a health benefit to employees through a health reimbursement arrangement (HRA). Following passage of the ACA, the IRS described certain types of HRAs as employer payment plans – therefore subject to the ACA’s market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Failure to comply with these reforms triggers excise taxes under Code Sec. 4980D.

Pending legislation in Congress would allow small employers (that is, those with fewer than 50 full-time and full-time equivalent employees) to have stand-alone HRAs and reimburse expenses without violating the ACA’s market reforms.

Small employers also should review the Code Sec. 45R credit. If your business has no more than 25 full-time equivalent employees, you may qualify for a special tax credit to help offset your costs of employee health insurance. You must pay average annual wages of no more than $50,000 per employee (indexed for inflation) and maintain a qualifying health care insurance arrangement. (Generally, health insurance for employees must be obtained through the Small Business Health Options Program, part of the Health Insurance Marketplace.)

What do I need to know about the Health Care Law for my 2013 Tax Return?

Posted by Admin Posted on Mar 18 2014

What do I need to know about the Health Care Law for my 2013 Tax Return?

For most people, the Affordable Care Act has no effect on their 2013 federal income tax return. For example, you will not report health care coverage under the individual shared responsibility provision or claim the premium tax credit until you file your 2014 return in 2015. 

However, for some people, a few provisions may affect your 2013 tax return, such as the additional Medicare tax and the net investment income tax.

Here are some additional tips:

Filing Requirement: If you do not have a tax filing requirement, you do not need to file a 2013 federal tax return to establish eligibility or qualify for financial assistance, including advance payments of the premium tax credit to purchase health insurance coverage through a Health Insurance Marketplace. Learn more at HealthCare.gov.

W-2 Reporting of Employer Coverage: The value of health care coverage reported by your employer in box 12 and identified by Code DD on your Form W-2 is not taxable. Learn more.

Information available about other tax provisions in the health care law: More information is available on IRS.gov regarding the following tax provisions: Premium Rebate for Medical Loss Ratio, Health Flexible Spending Arrangements, and Health Saving Accounts.


Changes to Itemized Deduction for 2013 Medical Expenses

If you itemize your deductions on Form 1040, Schedule A, new rules may affect your medical expense deduction. The new rules raise the threshold that unreimbursed medical and dental expenses you paid for yourself, your spouse, and your dependents must reach before a deduction is permitted.

Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those which are not covered by health insurance, that exceed 10 percent of their adjusted gross income. Previously, the law permitted deductions for unreimbursed expenses in excess of 7.5% of their adjusted gross income.

Temporary exemption for taxpayers age 65 and older

There is a temporary exemption for individuals age 65 and older until Dec. 31, 2016. If you are 65 years or older, you may continue to deduct total medical expenses that exceed 7.5% of your adjusted gross income through 2016. If you are married and only one of you is age 65 or older, you may still deduct total medical expenses that exceed 7.5% of your adjusted gross income.

This exemption is temporary. Beginning Jan. 1, 2017, the 10% threshold will apply to all taxpayers, including those over 65.

Special Exclusion for Cancelled Home Mortgage Debt

Posted by Admin Posted on Mar 15 2014

Special Exclusion for Cancelled Home Mortgage Debt

If a lender cancels or forgives money you owe, you usually have to pay tax on that amount. But when it comes to your home, an important exception to this rule may apply in 2013. Here are several key facts from the IRS about the special exclusion for cancelled home mortgage debt:

• If the cancelled debt was a mortgage loan on your main home, you may be able to exclude the cancelled amount from your income. To qualify you must have used the loan to buy, build or substantially improve your main home. The loan must also be secured by your main home.

• If your lender cancelled part of your mortgage through a loan modification, or ‘workout,’ you may be able to exclude that amount from your income. You may also be able to exclude debt discharged as part of the Home Affordable Modification Program. Visit IRS.gov for more details about HAMP. The exclusion may also apply to the amount of debt cancelled in a foreclosure.

• The exclusion may apply to amounts cancelled on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or greatly improve your main home. Proceeds used for other purposes don’t qualify. For example, a loan that you used to pay your credit card debt doesn’t qualify.

• Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit card debt or car loans.

• If your lender reduced or cancelled at least $600 of your mortgage debt, you should receive Form 1099-C, Cancellation of Debt, in January of the following year. This form shows the amount of cancelled debt and other information. Notify your lender if any information on the form is wrong.

• Report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. File the completed form with your federal tax return.

• Use IRS e-file to file your tax return. E-file is the easiest way to file because the software will do the hard work for you. You can use IRS Free File to prepare and e-file your tax return with either free, brand-name software or online fillable forms – all for free. Otherwise, you may file electronically with commercial software, or through a paid preparer.

• Whether you use IRS e-File or mail a paper return, you can use the Interactive Tax Assistant on IRS.gov to find out if you must pay tax on cancelled mortgage debt.  

For more on this topic, see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. You can get IRS forms and publications online at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Affordable Health Care Act

Posted by Admin Posted on Feb 07 2014

The Affordable Health Care Act will continue to roll out in 2014, meaning that uninsured individuals have some choices to make that could have tax implications. The health reform act will continue through March 31, 2014 If you don't buy an insurance plan, you could face a penalty. The charge for 2014 is either 1% of your yearly household income or $95 per uninsured adult and $47.50 per child, up to $285 for a family. You pay whichever amount is higher. If you get insurance for part of the year, your penalty will be prorated. You'll pay the penalty when you file your 2014 tax return in 2015. If you're getting a refund, the IRS will subtract your penalty from the amount you were to get back. If your refund isn't large enough to cover the penalty, the IRS will send you a bill. If you ignore the bill the IRS will take the amount out of future tax refunds.

Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law

Posted by Admin Posted on Sept 26 2013

Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law

The following questions and answers provide information to individuals of the same sex who are lawfully married (same-sex spouses). These questions and answers reflect the holdings in Revenue Ruling 2013-17 in 2013-38 IRB 201.

Q1. When are individuals of the same sex lawfully married for federal tax purposes?

A1. For federal tax purposes, the IRS looks to state or foreign law to determine whether individuals are married. The IRS has a general rule recognizing a marriage of same-sex spouses that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages.

Q2. Can same-sex spouses file federal tax returns using a married filing jointly or married filing separately status?

A2. Yes. For tax year 2013 and going forward, same-sex spouses generally must file using a married filing separately or jointly filing status. For tax year 2012 and all prior years, same-sex spouses who file an original tax return on or after Sept. 16, 2013 (the effective date of Rev. Rul. 2013-17), generally must file using a married filing separately or jointly filing status. For tax year 2012, same-sex spouses who filed their tax return before Sept. 16, 2013, may choose (but are not required) to amend their federal tax returns to file using married filing separately or jointly filing status. For tax years 2011 and earlier, same-sex spouses who filed their tax returns timely may choose (but are not required) to amend their federal tax returns to file using married filing separately or jointly filing status provided the period of limitations for amending the return has not expired. A taxpayer generally may file a claim for refund for three years from the date the return was filed or two years from the date the tax was paid, whichever is later. For information on filing an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html

Q3. Can a taxpayer and his or her same-sex spouse file a joint return if they were married in a state that recognizes same-sex marriages but they live in a state that does not recognize their marriage?

A3. Yes. For federal tax purposes, the Service has a general rule recognizing a marriage of same-sex individuals that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages. The rules for using a married filing jointly or married filing separately status described in Q&A #2 apply to these married individuals. 

Q4. Can a taxpayerâ??s same-sex spouse be a dependent of the taxpayer?

A4. No. A taxpayerâ??s spouse cannot be a dependent of the taxpayer.

Q5. Can a same-sex spouse file using head of household filing status?

A5. A taxpayer who is married cannot file using head of household filing status. However, a married taxpayer may be considered unmarried and may use the head-of-household filing status if the taxpayer lives apart from his or her spouse for the last 6 months of the taxable year and provides more than half the cost of maintaining a household that is the principal place of abode of the taxpayerâ??s dependent child for more than half of the year. See Publication 501 for more details.

Q6. If same-sex spouses (who file using the married filing separately status) have a child, which parent may claim the child as a dependent?

A6. If a child is a qualifying child under section 152(c) of both parents who are spouses (who file using the married filing separate status), either parent, but not both, may claim a dependency deduction for the qualifying child. If both parents claim a dependency deduction for the child on their income tax returns, the IRS will treat the child as the qualifying child of the parent with whom the child resides for the longer period of time during the taxable year. If the child resides with each parent for the same amount of time during the taxable year, the IRS will treat the child as the qualifying child of the parent with the higher adjusted gross income.   

Q7. Can a taxpayer who is married to a person of the same sex claim the standard deduction if the taxpayerâ??s spouse itemized deductions?

A7. No. If a taxpayerâ??s spouse itemized his or her deductions, the taxpayer cannot claim the standard deduction (section 63(c)(6)(A)).

Q8. If a taxpayer adopts the child of his or her same-sex spouse as a second parent or co-parent, may the taxpayer (â??adopting parentâ??) claim the adoption credit for the qualifying adoption expenses he or she pays or incurs to adopt the child?

A8. No. The adopting parent may not claim an adoption credit. A taxpayer may not claim an adoption credit for expenses incurred in adopting the child of the taxpayerâ??s spouse (section 23). 

Q9. Do provisions of the federal tax law such as section 66 (treatment of community income) and section 469(i)(5) ($25,000 offset for passive activity losses for rental real estate activities) apply to same-sex spouses?

A9. Yes. Like other provisions of the federal tax law that apply to married taxpayers, section 66 and section 469(i)(5) apply to same-sex spouses because same-sex spouses are married for all federal tax purposes.

Q10. If an employer provided health coverage for an employeeâ??s same-sex spouse and included the value of that coverage in the employeeâ??s gross income, can the employee file an amended Form 1040 reflecting the employeeâ??s status as a married individual to recover federal income tax paid on the value of the health coverage of the employeeâ??s spouse?

A10. Yes, for all years for which the period of limitations for filing a claim for refund is open. Generally, a taxpayer may file a claim for refund for three years from the date the return was filed or two years from the date the tax was paid, whichever is later. If an employer provided health coverage for an employeeâ??s same-sex spouse, the employee may claim a refund of income taxes paid on the value of coverage that would have been excluded from income had the employeeâ??s spouse been recognized as the employeeâ??s legal spouse for tax purposes. This claim for a refund generally would be made through the filing of an amended Form 1040. For information on filing an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html.

For a discussion regarding refunds of social security and Medicare taxes, see Q&A #12.

Example. Employer sponsors a group health plan covering eligible employees and their dependents and spouses (including same-sex spouses). Fifty percent of the cost of health coverage elected by employees is paid by Employer. Employee A was married to same-sex Spouse B at all times during 2012. Employee A elected coverage for Spouse B through Employerâ??s group health plan beginning Jan. 1, 2012. The value of the employer-funded portion of Spouse Bâ??s health coverage was $250 per month.

The amount in Box 1, â??Wages, tips, other compensation,â?? of the 2012 Form W-2 provided by Employer to Employee A included $3,000 ($250 per month x 12 months) of income reflecting the value of employer-funded health coverage provided to Spouse B. Employee A filed Form 1040 for the 2012 taxable year reflecting the Box 1 amount reported on Form W-2.

Employee A may file an amended Form 1040 for the 2012 taxable year excluding the value of Spouse Bâ??s employer-funded health coverage ($3,000) from gross income.

Q11. If an employer sponsored a cafeteria plan that allowed employees to pay premiums for health coverage on a pre-tax basis, can a participating employee file an amended return to recover income taxes paid on premiums that the employee paid on an after-tax basis for the health coverage of the employeeâ??s same-sex spouse?

A11. Yes, for all years for which the period of limitations for filing a claim for refund is open. Generally, a taxpayer may file a claim for refund for three years from the date the return was filed or two years from the date the tax was paid, whichever is later. If an employer sponsored a cafeteria plan under which an employee elected to pay for health coverage for the employee on a pre-tax basis, and if the employee purchased coverage on an after-tax basis for the employeeâ??s same-sex spouse under the employerâ??s health plan, the employee may claim a refund of income taxes paid on the premiums for the coverage of the employeeâ??s spouse. This claim for a refund generally would be made through the filing of an amended Form 1040. For information on filing an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html. For a discussion regarding refunds of social security and Medicare taxes, see Q&A #12.

Example. Employer sponsors a group health plan as part of a cafeteria plan with a calendar year plan year.  The full cost of spousal and dependent coverage is paid by the employees.  In the open enrollment period for the 2012 plan year, Employee C elected to purchase self-only health coverage through salary reduction under Employerâ??s cafeteria plan. On March 1, 2012, Employee C was married to same-sex spouse D. Employee C purchased health coverage for Spouse D through Employerâ??s group health plan beginning March 1, 2012. The premium paid by Employee C for Spouse Dâ??s health coverage was $500 per month.

The amount in Box 1, â??Wages, tips, other compensation,â?? of the 2012 Form W-2 provided by Employer to Employee C included the $5,000 ($500 per month x 10 months) of premiums paid by Employee C for Spouse Dâ??s health coverage. Employee C filed Form 1040 for the 2012 taxable year reflecting the Box 1 amount reported on Form W-2.

Employee Câ??s salary reduction election is treated as including the value of the same-sex spousal coverage purchased for Spouse D. Employee C may file an amended Form 1040 for the 2012 taxable year excluding the premiums paid for Spouse Dâ??s health coverage ($5,000) from gross income.

Q12. In the situations described in FAQ #10 and FAQ #11, may the employer claim a refund for the social security taxes and Medicare taxes paid on the benefits? 

A12. Yes. If the period of limitations for filing a claim for refund is open, the employer may claim a refund of, or make an adjustment for, any excess social security taxes and Medicare taxes paid. The requirements for filing a claim for refund or for making an adjustment for an overpayment of the employer and employee portions of social security and Medicare taxes can be found in the Instructions for Form 941-X, Adjusted Employerâ??s Quarterly Federal Tax Return or Claim for Refund. A special administrative procedure for employers to file claims for refunds or make adjustments for excess social security taxes and Medicare taxes paid on same-sex spouse benefits will be provided in forthcoming guidance to be issued by the IRS in the near future.  

Q13. In the situations described in Q&A #10 and Q&A #11, may the employer claim a refund or make an adjustment of income tax withholding that was withheld from the employee with respect to the benefits in prior years? 

A13. No. Claims for refunds of overwithheld income tax for prior years cannot be made by employers. The employee may file for any refund of income tax due for prior years on Form 1040X, provided the period of limitations for claiming a refund has not expired. See Q&A #10 and Q&A #11. Employers may make adjustments for income tax withholding that was overwithheld from an employee in the current year provided the employer has repaid or reimbursed the employee for the overwithheld income tax before the end of the calendar year.

Q14. If an employer cannot locate a former employee with a same-sex spouse who received the benefits described in Q&A #10 and Q&A #11, may the employer still claim a refund of the employer portion of the social security and Medicare taxes on the benefits?

A14. Yes, if the employer makes reasonable attempts to locate an employee who received the benefits described in Q&A #10 and Q&A #11 that were treated as wages but the employer is unable to locate the employee, the employer can claim a refund of the employer portion of Social Security and Medicare taxes, but not the employee portion. Also, if an employee is notified and given the opportunity to participate in the claim for refund of Social Security and Medicare taxes but declines in writing, the employer can claim a refund of the employer portion of the taxes, but not the employee portion. Employers can use the special administrative procedure that will be set forth in forthcoming guidance to file these claims. 

Q15. If a sole proprietor employs his or her same-sex spouse in his or her business, can the sole proprietor get a refund of Social Security, Medicare and FUTA taxes on the wages that the sole proprietor paid to the same-sex spouse as an employee in the business? 

A15. Services performed by an employee in the employ of his or her spouse are excluded from the definition of employment for purposes of the Federal Unemployment Tax Act (FUTA). Therefore, for all years for which the period of limitations is open, the sole proprietor can claim a refund of the FUTA tax paid on the compensation that the sole proprietor paid his or her same-sex spouse as an employee in the business. Services of a spouse are excluded from Social Security and Medicare taxes only if the services are not in the course of the employer's trade or business, or if it is domestic service in a private home of the employer.

Q16. What rules apply to qualified retirement plans pursuant to Rev. Rul. 2013-17?

A16. Qualified retirement plans are required to comply with the following rules pursuant to Rev. Rul. 2013-17:

  1. A qualified retirement plan must treat a same-sex spouse as a spouse for purposes of satisfying the federal tax laws relating to qualified retirement plans.
  2. For purposes of satisfying the federal tax laws relating to qualified retirement plans, a qualified retirement plan must recognize a same-sex marriage that was validly entered into in a jurisdiction whose laws authorize the marriage, even if the married couple lives in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages.
  3. A person who is in a registered domestic partnership or civil union is not  considered to be a spouse for purposes of applying the federal tax law requirements relating to qualified retirement plans, regardless of whether that personâ??s partner is of the opposite or same sex.

Q17. What are some examples of the consequences of these rules for qualified retirement plans?

A17. The following are some examples of the consequences of these rules:

  1. Plan A, a qualified defined benefit plan, is maintained by Employer X, which operates only in a state that does not recognize same-sex marriages. Nonetheless, Plan A must treat a participant who is married to a spouse of the same sex under the laws of a different jurisdiction as married for purposes of applying the qualification requirements that relate to spouses.
  2. Plan B is a qualified defined contribution plan and provides that the participantâ??s account must be paid to the participantâ??s spouse upon the participantâ??s death unless the spouse consents to a different beneficiary.  Plan B does not provide for any annuity forms of distribution. Plan B must pay this death benefit to the same-sex surviving spouse of any deceased participant. Plan B is not required to provide this death benefit to a surviving registered domestic partner of a deceased participant. However, Plan B is allowed to make a participantâ??s registered domestic partner the default beneficiary who will receive the death benefit unless the participant chooses a different beneficiary.

Q18. As of when do the rules of Rev. Rul. 2013-17 apply to qualified retirement plans?

A18. Qualified retirement plans must comply with these rules as of Sept. 16, 2013. Although Rev. Rul. 2013-17 allows taxpayers to file amended returns that relate to prior periods in reliance on the rules in Rev. Rul. 2013-17 with respect to many matters, this rule does not extend to matters relating to qualified retirement plans. The IRS has not yet provided guidance regarding the application of Windsor and these rules to qualified retirement plans with respect to periods before Sept. 16, 2013.

Q19. Will the IRS issue further guidance on how qualified retirement plans and other tax-favored retirement arrangements must comply with Windsor and Rev. Rul. 2013-17?

A19. The IRS intends to issue further guidance on how qualified retirement plans and other tax-favored retirement arrangements must comply with Windsor and Rev. Rul. 2013-17.  It is expected that future guidance will address the following, among other issues:

  1. Plan amendment requirements (including the timing of any required amendments).
  2. Any necessary corrections relating to plan operations for periods before future guidance is issued.

Q20. Can a same-sex married couple elect to treat a jointly owned and operated unincorporated business as a Qualified Joint Venture?

A20. Yes. Spouses that wholly own and operate an unincorporated business and that meet certain other requirements may avoid Federal partnership tax treatment by electing to be a Qualified Joint Venture. For more information on Qualified Joint Ventures, see the tax topic â??Husband and Wife Businessâ?? at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business.

Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized

Posted by Admin Posted on Sept 26 2013

Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples

IR-2013-72, Aug. 29, 2013

WASHINGTON â?? The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

The ruling implements federal tax aspects of the June 26 Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.

Under the ruling, same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.

Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

Legally-married same-sex couples generally must file their 2013 federal income tax return using either the married filing jointly or married filing separately filing status.

Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.

Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances, such as signing an agreement with the IRS to keep the statute of limitations open, that permit them to file refund claims for tax years 2009 and earlier.

Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.

How to File a Claim for Refund

Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.

Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement. For information on filing an amended return, see Tax Topic 308, Amended Returns, available on IRS.gov, or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.

Future Guidance

Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.

Other agencies may provide guidance on other federal programs that they administer that are affected by the Code. 

Revenue Ruling 2013-17, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.

Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on Sept. 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so, as long as the statute of limitations for the earlier period has not expired

Get Credit for Making Your Home Energy-Efficient

Posted by Admin Posted on June 20 2013

IRS Tax Tip 2013

 If you made your home more energy efficient last year, you may qualify for a tax credit on your 2012 federal income tax return. Here is some basic information about home energy credits that you should know.

Non-Business Energy Property Credit  

·         You may claim a credit of 10 percent of the cost of certain energy saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs.  

·         In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. Each type of property has a different dollar limit. Examples include the cost of qualified water heaters and qualified heating and air conditioning systems.

·         This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.

·         Your main home must be located in the U.S. to qualify for the credit.

·         Not all energy-efficient improvements qualify, so be sure you have the manufacturer?s credit certification statement. It is usually available on the manufacturer?s website or with the product?s packaging.

·         The credit was to expire at the end of 2011. A recent law extended it for two years through the end of 2013.

Residential Energy Efficient Property Credit

·         This tax credit is 30 percent of the cost of alternative energy equipment that you installed on or in your home.

·         Qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines.

·         There is no limit on the amount of credit available for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year?s tax return.

·         You must install qualifying equipment in connection with your home located in the United States. It does not have to be your main home.

·         The credit is available through 2016.

Tax Rules for Children Who Have Investment Income

Posted by Admin Posted on Apr 19 2013

Tax Rules for Children Who Have Investment Income

 

Some children receive investment income and are required to file a federal tax return. If a child cannot file his or her own tax return for any reason, such as age, the child's parent or guardian is responsible for filing a return on the child?s behalf.

There are special tax rules that affect how parents report a child?s investment income. Some parents can include their child?s investment income on their tax return. Other children may have to file their own tax return.

Here are four facts from the IRS about the taxability of your child?s investment income.

  1. Investment income normally includes interest, dividends, capital gains and other unearned income, such as from a trust.

  2. Special rules apply if your child's total investment income is more than $1,900. The parent?s tax rate may apply to part of that income instead of the child's tax rate.

  3. If your child's total interest and dividend income is less than $9,500, you may be able to include the income on your tax return. See Form 8814, Parents' Election to Report Child's Interest and Dividends. If you make this choice, the child does not file a return.

  4. Your child must file their own tax return if they received investment income of $9,500 or more. File Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, with the child?s federal tax return.

For more information on this topic, see Publication 929, Tax Rules for Children and Dependents. This booklet and Forms 8615 and 8814 are available at IRS.gov. You may also have them mailed to you by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

  • Publication 929, Tax Rules for Children and Dependents
  • Form 8814, Parents' Election to Report Child's Interest and Dividends
  • Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900

 

I Conduct my Business with Honesty and Integrity

Posted by Admin Posted on Apr 04 2013

 The way I conduct my business motivates clients to recommend me to their friends. Clients keep coming back because they enjoy doing business with Business Accounting & Tax Professionals, Inc..

The quality and services I provide is no less than what I would provide for my own family and friends. My clients know they can trust me to provide quality service.

Two Education Credits Help Pay Higher Education Costs

Posted by Admin Posted on Apr 01 2013

The American Opportunity Credit and the Lifetime Learning Credit may help you pay for the costs of higher education. If you pay tuition and fees for yourself, your spouse or your dependent you may qualify for these credits.

Here are some facts the IRS wants you to know about these important credits:

 The American Opportunity Credit

The AOTC is worth up to $2,500 per eligible student.

The credit is available for the first four years of higher education at an eligible college, university or vocational school.

The credit lowers your taxes and is partially refundable. This means you could get a refund of up to $1,000 even if you owe zero tax.

An eligible student must be working toward a degree, certificate or other recognized credential.

The student must be enrolled at least half time for at least one academic period that began during the year.

You generally can claim the costs of tuition and required fees, books and other required course materials. Other expenses, such as room and board, do not qualify.

 

The Lifetime Learning Credit

The credit is worth up to $2,000 per tax return per year. The yearly limit applies no matter how many students are eligible for the credit.

The credit is nonrefundable. This means the amount you can claim is limited to the amount of tax you owe.

The credit is available for all years of higher education. This includes courses taken to acquire or improve job skills.

You can claim the costs of tuition and fees required for enrollment or attendance. This includes amounts you were required to pay to the institution for course-related books, supplies and equipment.

 

You cannot claim either of these credits if someone else claims you as a dependent on his or her tax return. Both credits are subject to income limitations and may be reduced or eliminated depending on your income.

Keep in mind that you can?t claim both credits for the same student in the same year. You may not claim both credits for the same expense. Parents or students claiming either credit should receive a Form 1098-T, Tuition Statement, from their educational institution. You should make sure it is complete and correct.

Find out more details about these credits and other college tax benefits in Publication 970, Tax Benefits for Education.

 You can get the booklet at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Parents and Students: Check Out College Tax Benefits for 2012 and Years Ahead

Posted by Admin Posted on Feb 28 2013

Parents and Students: Check Out College Tax Benefits for 2012 and Years Ahead

WASHINGTON ? The Internal Revenue Service today reminded parents and students that now is a good time to see if they qualify for either of two college education tax credits or any of several other education-related tax benefits.

In general, the American opportunity tax credit, lifetime learning credit and tuition and fees deduction are available to taxpayers who pay qualifying expenses for an eligible student. Eligible students include the primary taxpayer, the taxpayer?s spouse or a dependent of the taxpayer.

Though a taxpayer often qualifies for more than one of these benefits, he or she can only claim one of them for a particular student in a particular year. The benefits are available to all taxpayers ? both those who itemize their deductions on Schedule A and those who claim a standard deduction. The credits are claimed on Form 8863 and the tuition and fees deduction is claimed on Form 8917.

The American Taxpayer Relief Act, enacted Jan. 2, 2013, extended the American opportunity tax credit for another five years until the end of 2017. The new law also retroactively extended the tuition and fees deduction, which had expired at the end of 2011, through 2013. The lifetime learning credit did not need to be extended because it was already a permanent part of the tax code.

For those eligible, including most undergraduate students, the American opportunity tax credit will yield the greatest tax savings. Alternatively, the lifetime learning credit should be considered by part-time students and those attending graduate school. For others, especially those who don?t qualify for either credit, the tuition and fees deduction may be the right choice.

All three benefits are available for students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions. None of them can be claimed by a nonresident alien or married person filing a separate return. In most cases, dependents cannot claim these education benefits.

Normally, a student will receive a Form 1098-T from their institution by the end of January of the following year. This form will show information about tuition paid or billed along with other information. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax benefits. Taxpayers should see the instructions to Forms 8863 and 8917 and Publication 970 for details on properly figuring allowable tax benefits.

Many of those eligible for the American opportunity tax credit qualify for the maximum annual credit of $2,500 per student. Here are some key features of the credit:

  • The credit targets the first four years of post-secondary education, and a student must be enrolled at least half time. This means that expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college do not qualify. Any student with a felony drug conviction also does not qualify.
  • Tuition, required enrollment fees, books and other required course materials generally qualify. Other expenses, such as room and board, do not.
  • The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
  • The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $180,000 or more and singles, heads of household and some widows and widowers whose MAGI is $90,000 or more.
  • Forty percent of the American opportunity tax credit is refundable. This means that even people who owe no tax can get an annual payment of up to $1,000 for each eligible student. Other education-related credits and deductions do not provide a benefit to people who owe no tax.

The lifetime learning credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the American opportunity tax credit, the limit on the lifetime learning credit applies to each tax return, rather than to each student. Though the half-time student requirement does not apply, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

  • Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not.
  • The credit equals 20 percent of the amount spent on eligible expenses across all students on the return. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability.
  • Income limits are lower than under the American opportunity tax credit. For 2012, the full credit can be claimed by taxpayers whose MAGI is $52,000 or less. For married couples filing a joint return, the limit is $104,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $124,000 or more and singles, heads of household and some widows and widowers whose MAGI is $62,000 or more.

Like the lifetime learning credit, the tuition and fees deduction is available for all levels of post-secondary education, and the cost of one or more courses can qualify. The annual deduction limit is $4,000 for joint filers whose MAGI is $130,000 or less and other taxpayers whose MAGI is $65,000 or less. The deduction limit drops to $2,000 for couples whose MAGI exceeds $130,000 but is no more than $160,000, and other taxpayers whose MAGI exceeds $65,000 but is no more than $80,000.

Eligible parents and students can get the benefit of these provisions during the year by having less tax taken out of their paychecks. They can do this by filling out a new Form W-4, claiming additional withholding allowances, and giving it to their employer.

There are a variety of other education-related tax benefits that can help many taxpayers. They include:

  • Scholarship and fellowship grants?generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
  • Student loan interest deduction of up to $2,500 per year.
  • Savings bonds used to pay for college?though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
  • Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child?s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the earned income tax credit.

The general comparison table in Publication 970 can be a useful guide to taxpayers in determining eligibility for these benefits. Details can also be found in the Tax Benefits for Education Information Center on IRS.gov.

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Posted by Admin Posted on Dec 05 2012
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