We are certified Public Accountants and Financial Consultants offering a wide range of services in the areas of accounting, taxation, personal financial .
We are certified Public Accountants and Financial Consultants offering a wide range of services in the areas of accounting, taxation, personal financial planning and business consulting. A significant portion of our activities involve the taxation and financial advising of individuals, small businesses, and their related activities; trusts, estates, investment partnerships, etc. We have many years of experience, have assisted our clients with a variety of activities and problems, and have successfully represented our clients before the IRS and State taxing agencies in audits through the Appeals level. We seek to lower your tax and aren't scared off by IRS objections to valid deductions or positions.
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Scam Calls and Emails Using IRS as Bait Persist
Scams using the IRS as a lure continue. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.
Be wary if you get an out-of-the-blue phone call or automated message from someone who claims to be from the IRS.
Sometimes they say you owe money and must pay right away. Other times they say you are owed a refund and ask for your bank account information over the phone. Don’t fall for it. Here are several tips that will help you avoid becoming a scam victim.
The real IRS will NOT:
Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
Demand tax payment and not allow you to question or appeal the amount you owe.
Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
Ask for your credit or debit card numbers over the phone.
Threaten to bring in local police or other agencies to arrest you without paying.
Threaten you with a lawsuit.
If you don’t owe taxes or have no reason to think that you do:
Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.
If you think you may owe taxes:
Ask for a call back number and an employee badge number.
Call the IRS at 800-829-1040. IRS employees can help you.
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.
If you get a ‘phishing’ email, the IRS offers this advice:
Don’t reply to the message.
Don’t give out your personal or financial information.
Forward the email to [email protected]. 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.
What You Need to Know about Taxable and Nontaxable Income
All income is taxable unless a law specifically says it isn’t. Here are some basic rules you should know to help you file an accurate tax return:
Taxable income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is normally taxable.
Some types of income are not taxable except under certain conditions, including:
Life insurance. Proceeds paid to you upon the death of an insured person are usually not taxable. However, if you redeem a life insurance for cash, any amount you get that is more than the cost of the policy is taxable.
Qualified scholarship. In most cases, income from a scholarship is not taxable. This includes amounts used for certain costs, such as tuition and required books. On the other hand, amounts you use for room and board are taxable.
Other income tax refunds. State or local income tax refunds may be taxable. You should receive a Form 1099-G from the agency that paid you. They may have sent the form by mail or electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some items that are usually not taxable:
Gifts and inheritances
Child support payments
Damage awards for physical injury or sickness
Cash rebates from a dealer or manufacturer for an item you buy
Reimbursements for qualified adoption expenses
Missing Form W-2? IRS Can Help
Most people get their W-2 forms by the end of January. Form W-2, Wage and Tax Statement, shows your income and the taxes withheld from your pay for the year. You need it to file an accurate tax return.
If you haven’t received your form by mid-February, here’s what you should do:
Contact your Employer. Ask your employer (or former employer) for a copy. Be sure they have your correct address.
Call the IRS. If you are unable to get a copy from your employer, you may call the IRS at 800-829-1040 after Feb. 23. The IRS will send a letter to your employer on your behalf. You’ll need the following when you call:
Your name, address, Social Security number and phone number;
Your employer’s name, address and phone number;
The dates you worked for the employer; and
An estimate of your wages and federal income tax withheld in 2015. You can use your final pay stub for these amounts.
File on Time. Your tax return is normally due on or before April 18, 2016. Use Form 4852, Substitute for Form W-2, Wage and Tax Statement, if you don't get your W-2 in time to file. Estimate your wages and taxes withheld as best as you can. If you can’t get it done by the due date, ask for an extra six months to file.
Correct if Necessary. You may need to correct your tax return if you get your missing W-2 after you file. If the tax information on the W-2 is different from what you originally reported, you may need to file an amended tax return
Falsely Padding Deductions on Returns is on the IRS Annual “Dirty Dozen” List of Tax Scams to Avoid
The Internal Revenue Service today warned taxpayers to avoid the temptation of falsely inflating deductions or expenses on their returns to under pay what they owe and possibly receive larger refunds.
The vast majority of taxpayers file honest and accurate tax returns on time every year. However, each year some taxpayers fail to resist the temptation of fudging their information. That’s why falsely claiming deductions, expenses or credits on tax returns is on the “Dirty Dozen” tax scams list for the 2016 filing season.
"Taxpayers should file accurate returns to receive the refunds they are entitled to receive and shouldn't gamble with their taxes by padding their deductions," said IRS Commissioner John Koskinen.
Taxpayers should think twice before overstating deductions such as charitable contributions, padding their claimed business expenses or including credits that they are not entitled to receive – like the Earned Income Tax Credit or Child Tax Credit.
Increasingly efficient automated systems generate most IRS audits. The IRS can normally audit returns filed within the last three years. Additional years can be added if substantial errors are identified or fraud is suspected.
Significant civil penalties may apply for taxpayers who file incorrect tax returns including:
20 percent of the disallowed amount for filing an erroneous claim for a refund or credit.
$5,000 if the IRS determines a taxpayer has filed a “frivolous tax return.” A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax reported is substantially incorrect.
In addition to the full amount of tax owed, a taxpayer could be assessed a penalty of 75 percent of the amount owed if the underpayment on the return resulted from tax fraud.
Taxpayers even may be subject to criminal prosecution (brought to trial) for actions such as:
Willful failure to file a return, supply information, or pay any tax due
Fraud and false statements
Preparing and filing a fraudulent return, or
Criminal prosecution could lead to additional penalties and even prison time.
Parents: Don’t Miss Out on These Tax Savers
Children may help reduce the amount of taxes owed for the year. If you’re a parent, here are several tax benefits you should look for when you file your federal tax return:
Dependents. In most cases, you can claim your child as a dependent. You can deduct $4,000 for each dependent you are entitled to claim. You must reduce this amount if your income is above certain limits.
Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit.
Child and Dependent Care Credit. You may be able to claim this credit if you paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. You must have paid for care so that you could work or look for work.
Earned Income Tax Credit. You may qualify for EITC if you worked but earned less than $53,267 last year. You can get up to $6,242 in EITC. You may qualify with or without children.
Adoption Credit. You may be able to claim a tax credit for certain costs you paid to adopt a child.
Education Tax Credits. An education credit can help you with the cost of higher education. Two credits are available. The American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the credit reduces your tax to less than zero, you may get a refund. Even if you don’t owe any taxes, you still may qualify.
Student Loan Interest. You may be able to deduct interest you paid on a qualified student loan. You can claim this benefit even if you do not itemize your deductions.
Self-employed Health Insurance Deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid during the year. This may include the cost to cover your children under age 27, even if they are not your dependent.
The Earned Income Tax Credit: Often Missed
The Earned Income Tax Credit has helped workers with low and moderate incomes get a tax break for 40 years. Yet, one out of every five eligible workers fails to claim it. Here are some things you should know about this valuable credit:
Review Your Eligibility. If you worked and earned under $53,267, you may qualify for EITC. If your income or family situation has changed, you should review the EITC eligibility rules. You might qualify for EITC this year even if you didn’t in the past. If you qualify for EITC you must file a federal income tax return and claim the credit to get it. This is true even if you are not otherwise required to file a tax return. Don’t guess about your EITC eligibility. Use the EITC Assistant tool on IRS.gov. The tool can help you find out if you qualify for the credit. It can also estimate the amount of your EITC.
Know the Rules. You need to understand the rules before you claim the EITC, to be sure you qualify. It’s important that you get this right. Here are some factors you should consider:
If you are married and file a separate return you do not qualify for EITC.
You must have a Social Security number that is valid for employment for yourself, your spouse, if married, and any qualifying child listed on your tax return.
You must have earned income. Earned income includes earnings from working for someone else or working for yourself.
You may be married or single, with or without children to qualify. If you don’t have children, you must also meet age, residency and dependency rules. If you have a child who lived with you for more than six months of 2015, the child must meet age, residency, relationship and the joint return rules to qualify.
If you are a member of the U.S. Armed Forces serving in a combat zone, special rules apply.
Lower Your Tax or Get a Refund. If you qualify for EITC, you could pay less federal tax, no tax or even get a refund. EITC could be worth up to $6,242. The average credit was $2,447 last year.
Choosing the Correct Filing Status
It’s important to use the right filing status when you file your tax return. The status you choose can affect the amount of tax you owe for the year. It may even determine if you must file a tax return. Keep in mind that your marital status on Dec. 31 is your status for the whole year. Sometimes more than one filing status may apply to you. If that happens, choose the one that allows you to pay the least amount of tax.
Here’s a list of the five filing statuses:
Single. This status normally applies if you aren’t married. It applies if you are divorced or legally separated under state law.
Married Filing Jointly. If you’re married, you and your spouse can file a joint tax return. If your spouse died in 2015, you can often file a joint return for that year.
Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit you if it results in less tax owed than if you file a joint tax return. You may want to prepare your taxes both ways before you choose. You can also use it if you want to be responsible only for your own tax.
Head of Household. In most cases, this status applies if you are not married, but there are some special rules. For example, you must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Don’t choose this status by mistake. Be sure to check all the rules.
Qualifying Widow(er) with Dependent Child. This status may apply to you if your spouse died during 2013 or 2014 and you have a dependent child. Other conditions also apply.
Six Tips on Whether to File a 2015 Tax Return
Most people file a tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. Here are six tips to help you find out if you should file a tax return:
1.General Filing Rules. Whether you need to file a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and under age 65 you must file if your income was at least $10,300. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file.
2.Premium Tax Credit. If you enrolled in health insurance through the Health Insurance Marketplace in 2015, you may be eligible for the premium tax credit. You will need to file a return to claim the credit. If you chose to have advance payments of the premium tax credit sent directly to your insurer during 2015 you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The form will have information that will help you file your tax return.
3.Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
4.Earned Income Tax Credit. Did you work and earn less than $53,267 last year? You could receive EITC as a tax refund, if you qualify, with or without a qualifying child. You may be eligible for up to $6,242.
5.Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.
6.American Opportunity Tax Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You, your spouse or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file it with your return to claim the credit.
Which Tax Form is Best for You?
This tax filing season, get things off to a good start. Filing electronically is the easiest way to file a complete and accurate return. The tax software asks questions at each step and minimizes errors.
Here are some tips to help you choose the right forms:
You can generally use Form 1040EZ if:
Your taxable income is below $100,000;
Your filing status is single or married filing jointly;
You don’t claim dependents; and
Your interest income is $1,500 or less.
Note: You can’t use Form 1040EZ to claim the Premium Tax Credit. Nor can you use this form if you received advance payments of the premium tax credit in 2015.
Form 1040A may be best for you if:
Your taxable income is below $100,000;
You have capital gain distributions;
You claim certain tax credits; and
You claim adjustments to income for IRA contributions and student loan interest.
You must use the Form 1040 if:
Your taxable income is $100,000 or more;
You claim itemized deductions;
You report self-employment income; or
You report income from sale of a property.
Remember, if you e-file you don't need any paper forms to mail to the IRS.
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