The IRS Focuses on High Income Tax Cheats

             The Internal Revenue Service ( IRS ) continues to focus on applying the tax laws with accuracy and fairness. With that in mind, they have announced that they are restarting a program that focuses on individuals who did not file returns from 2017 to 2021 and had at least $400,000 in income. They have identified at least 125,000 cases of people who are not in compliance.           The non-filer letters will be going out every week to start the process of filing returns, collecting taxes, interest, and penalties. The basis of these letters comes from information through Forms W2, 1099 and others. Those who receive letters of this nature need to take quick action. The enforcement actions in this program are stronger than usual. That makes it critical that those who receive these letters go to a qualified tax professional . The IRS can be made aware of qualifying deductions and credits that can change the overall situation. Time is of the essence.

Beware of Phishing

              Phishing is a problem that never really goes away, but the intensity increases at certain times of the year. Tax Season is one of those times. Phishing is the practice of sending fraudulent communication pretending to be from a source that is trustworthy. This can take on different forms. Most common are emails and text messages.           The Internal Revenue Service ( IRS ) will never send a message to taxpayers asking for personal or financial information. These types of messages are received frequently and are created to induce panic or fear so that taxpayers will act without thinking. If you get a suspicious message, do not reply. Do not click on any attachments or links. This can install a virus. Delete the message. The IRS will never use social media to ask taxpayers for information.

Penalty Relief From the IRS

            The pandemic caused a great disruption to many institutions, and the Internal Revenue Service ( IRS ) was not exempt from this. In fact, their mail services were paused for a time and many who had tax balances did not receive a notice for the tax years 2020 and 2021. When tax balances are not paid promptly, penalties and interest will compound the amount. How will the IRS rectify this problem?           At the end of 2023, it was announced that the IRS had created a program to provide relief for those who were not given a written notice that they had a tax balance. They will automatically waive penalties on taxed amounts of $100,000 or less. Those who have already paid may be eligible for a credit on other tax years or a refund of the tax penalty. Those with more than $100,000 in taxes assessed are not automatically enrolled, but they can apply for relief.           One reason why these letters are so important is that they provide the options available for taxpayers

What is Fair in the Tax System?

                 Everyone wants to be treated fairly. That is an essential quality that all people have. But what is fairness? Trying to answer that question can prove to be difficult for some. While fairness is impartial and just treatment without favoritism or discrimination, applying this principle is a challenge. Each person has their own idea of what is fair. That is certainly true when it comes to the current tax system.           The Internal Revenue Service ( IRS ) is aware of that sentiment. After a year of review following the passing of the 2022 Inflation Reduction Act funding, they are determined to make a change. These changes will focus attention on the wealthy, partnerships, and other high-income earners who in recent years have had a sharp reduction in audits. The IRS is planning to use Artificial Intelligence to detect patterns in tax avoidance and new threats. They will also make sure that audit rates do not increase for modest earners. This is just one area that i

What is the Educator Expense Deduction for 2023?

            With the start of the new school year upon us, educators will want their students to have a complete classroom available to them. That might mean having some out-of-pocket expenses that are not reimbursed. If that’s the case, any principal, counselor, aide, or teacher who works at a K-12 school for at least 900 hours in a year can claim the Educator Expense Deduction . The current limit is $300, but that can be adjusted in the future based on inflation.           The qualifying costs can be related to books, supplies, and other materials used in the classroom. Equipment, including computer equipment and software can qualify. COVID-19 protective items used in the classroom would also apply. This can be claimed even if you use the standard deduction on your tax return. As a reminder, it is always best practice, especially when claiming a deduction, to keep good records which would include receipts. Your qualified tax professional can advise you further.

Is Your QuickBooks Online Account Safe?

             Is your QuickBooks Online account safe? Most likely it is. There is a reason why they are the most popular cloud-based accounting software today. However, when something is popular with consumers, it is also popular with criminals looking to take advantage of any opportunity they can. Consider this real-life example of how we helped one of our clients recover from an account hack.           The following details indicate a very sophisticated hack and underscore the need to be vigilant when it comes to criminals trying to steal your money. The Administrator’s account was hacked, and the associated phone number was changed. A Payroll Core subscription plan was added. This allowed the thief to add fake contractor names and associated email addresses. That step is key because this meant W-9’s were emailed to the “contractors”, filled out, and signed via DocuSign and then added to the Administrator User account. At this point the client’s bank account was connected to many di

Beware of Employee Retention Credit Scams

          The Employee Retention Credit ( ERC ) is a tax credit for employers who kept paying employees while closed by government order or had a great decrease in income due to COVID-19. This is a credit that can only be claimed by certain businesses and organizations that had employees during specific time periods. With this set of criteria, the ERC is continuing to be the subject of a growing advertising campaign. Wild claims are being made about who can qualify for it.           The eligibility requirements should be considered closely. One sign of a scam is stating that the application process is easy, or that someone can find out if they are eligible for it in minutes. The ERC is noted for being a very complex credit. Scammers are trying to use this situation to steal personal information or run away with large upfront fees for work that will never take place. Dishonest promoters try to lure in victims by offering to work for a fee based on a percentage of the credit or sayin