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Taxability of Social Security Benefits

February 15th, 2017

Taxability of Social Security Benefits

What You Need to Know about Child Tax Credit

February 14th, 2017

The Child Tax Credit for 2016

Beware of Scam Calls and Emails

February 14th, 2017

Beware of Scam Calls and Emails

Validating Your Identity for Tax Return

February 13th, 2017

Changes are being made to combat identity theft from tax returns.  Click here for more information. Validating Your Tax Identity

Tax Change on Health Care

February 13th, 2017

Small business employers will once again be able to pay back employees for Health-care costs.  Click here to learn more. Tax Change on Health Care

2017 Income Tax Refund Schedule

December 1st, 2016

If you’re wondering where your tax refund is, here is a schedule based on the date that your tax return was submitted to the IRS.

Click here to see the schedule……2017-income-tax-refund-schedule

Medical and Dental Tax Deduction

August 8th, 2016

As you collect receipts and information for medical and dental bills for tax deduction, remember to follow a few key rules.

Click here for tips concerning tax deductions for medical and dental expenses…Medical and Dental Tax Deduction

Tax Tips for Weddings

August 8th, 2016

If you are getting or have been married this calendar year, tax issues may arise.

Check out the following tips before completing your taxes… Tax Tips for Weddings

Ways to Pay Your Tax Bill

August 8th, 2016

If you owe Federal tax, the IRS offers many easy ways to pay.

Click here to read the article…Ways to Pay Your Tax Bill

2016’s Dirty Dozen Scams

April 6th, 2016

(from the February 17, 2016 Journal of Accountancy article by Sally P. Schreiber, J.D.)

Every year the IRS releases a list of what it calls the worst tax scams of the year. Beginning February 1 and ending on February 17, the IRS issued a news release each day highlighting scams.  These “dirty dozen” scams can be encountered any time of year, but the IRS reports that they peak during tax season.

  1. Identity Theft.

According to the IRS, the No. 1 scam this year is tax-related identity theft. This is defined as someone using a taxpayer’s stolen Social Security number to file a tax return claiming a fraudulent refund. Although the IRS has introduced more effective screening and detection systems designed to detect identity theft before it issues a refund, the Service admits it is still a major problem.  To fight this more effectively, over the past year, the IRS has participated in a Security Summit initiative in partnership with states and the tax-preparation industry to try to improve security for taxpayers. The participants share information of fraudulent schemes that have been detected this filing season to provide increased protection. More than 20 data elements are used, unknown to taxpayers, to verify tax return information.

 

In addition, the IRS urged taxpayers to protect their own information so it’s harder for thieves to breach the IRS’s security systems.

 

  1. Phone Scams.

Phone scams are when a criminal calls impersonating the IRS.  Many times they disguise the number they are calling from so it appears to be the IRS or another agency, and they may threaten arrest, deportation, or license revocation. The scammers sometimes use IRS titles and fake badge numbers to appear legitimate and use the victim’s name, address, and other personal information, which makes the call sound official.

 

The IRS says taxpayers should be aware that the IRS will never call to demand immediate payment, call about taxes owed without first having mailed a bill, call to demand payment without the opportunity to question or appeal, require use of specific payment method, ask for credit card or debit card information over the phone, or threaten to bring in local police or other law enforcement.

 

  1. Phishing. Another scam that continues to appear high on the list is “phishing,” in which taxpayers get unsolicited emails seeking financial or personal information.  A taxpayer who receives a suspicious email should send it to phishing@irs.gov.  Scam emails can also infect a computer with malware without a taxpayer knowing it, often enabling the criminals to access sensitive files or track keyboard strokes, exposing login information.

 

  1. Return preparer fraud. Return preparer fraud involves dishonest preparers who set up shot using filing season to perpetrate refund fraud, identity theft, and other scams, according to the IRS. The IRS warns taxpayers to be wary of “unscrupulous preparers who prey on unsuspecting taxpayers with outlandish promises of overly large refunds.”

 

Choosing a taxpayer carefully is very important.  You entrust them with your very private financial information and it needs to be protected.  The IRS provides a number of tips for taxpayers to choose competent preparers, including checking what the preparer’s credentials are, making sure the preparer will be available after filing season, and ensuring that the taxpayer’s refund is deposited into the taxpayer’s account, not the preparer’s.  The IRS recommends avoiding preparers who base their fees on a percentage of the refund or promise larger refunds than other preparers.

  1. Hiding money or income. Hiding money or income offshore is a major focus of IRS enforcement efforts.  There are legitimate reasons a taxpayer may have foreign accounts, but these trigger report requirements. The IRS offers a number of programs, including the Offshore Voluntary Disclosure Program, for taxpayers to come into compliance with these requirements.  The IRS noted that the heightened reporting required under the Foreign Account Tax Compliance Act, which went into effect in 2015, makes it even harder for taxpayers to conceal overseas assets.

 

  1. Inflated refund claims. Another scam that is closely related to return preparer fraud is inflated refund claims, which unscrupulous preparers set up shop to lure unsuspecting taxpayers. Be wary of outlandish refunds based on federal benefits or tax credits you’ve never heard of or weren’t eligible for in the past.

 

  1. Fake charities. Taxpayers are cautioned to check the Except Organizations on the IRS’s website to determine whether a charity is bona fide and qualifies for deductible contributions. Legitimate charities should be willing to give donors their EINs, which can be used to check if they are qualified on the IRS website. Fake charities often use the name similar to a well-known charity and may set up a fake website. They also can be used for identity theft purposes.  When a large-scale natural disaster happens, these fraudulent organizations tend to increase, and the IRS warns that taxpayers should not make any contributions without checking first.

 

  1. Falsely padding deductions. This consists of deceitfully inflating deductions or expenses on the return to pay less tax or receive a bigger refund. This item is new on the list this year. The IRS earns taxpayers that they should think twice before overstating their charitable contributions expenses or padding their business expenses, as well as avoid claiming credits they are not entitled to, such as the EITC and child tax credit. Taxpayers who do this may be subject to substantial penalties and may, in some cases, face criminal prosecution.

 

  1. Excessive claims for business credits. The next item on the list expands on last year’s excessive claims for fuel credits. This scam involves two specific false claims:  fraudulent claims for refunds of fuel excise tax and bogus claims for the research tax credit. The IRS says that its refund fraud filters are stopping a number of fraudulent fuel excise tax refunds this year.

 

  1. Falsifying income to claim tax credits. This usually involves falsely claiming higher earned income to qualify for the EITC, which is a refundable credit. Unscrupulous preparers often do this to get taxpayers larger refunds than they are entitled to. Even when taxpayers are unaware of these false claims, they are, as the IRS reminds, responsible for what is on their tax return. They can be subject to significant penalties, interest, and possible prosecution.

 

  1. Abusive tax shelters. These are defined as schemes using multiple flowthrough entities to evade taxes. They often use limited liability companies, limited liability partnerships, international business companies, foreign financial accounts, offshore credit or debit cards, and multilayer transactions to conceal who owns the income or assets.

 

The IRS also mentions misuse of trusts and captive insurance companies among the types of transactions taxpayers should avoid.

 

  1. Frivolous tax arguments. The IRS warns not to be talked into frivolous tax arguments. They involve claims such as that the only employees subject to income tax re employees of federal government or that only foreign income is taxable. Taxpayers should avoid unscrupulous promoters of false tax-avoidance arguments because taxpayers end up paying what they owe plus potential penalties and interest. The IRS reminds taxpayers that they would be automatically subject to the $5,000 penalty for frivolous tax positions.