Anthony Sykes & Company

         A sweeping change of the Federal Tax code has been passed. There are many questions and concerns about how it will affect individuals and businesses. Some changes are planned to be permanent, others will go away after a period of time, but now is the time to get familiar with the details of what this act will really do.           First of all, please keep in mind that this law will not affect the Tax Return you will file by April 2018 . The provisions and changes in this Act will start in 2018 and will be seen in the Tax filings in 2019. For individuals , there will be some very big adjustments in how their finances are taxed. For example, a Taxpayer will only be able to file as: Single or Married Filing Jointly . In future posts we will go into greater detail on this and other changes.           In the area of business , we can find other ways the Tax C...

          In recent years, there has been a rapid growth in the travel industry with regard to vacation accommodations. It seems that there are many options that allow people to choose where they can stay when visiting other areas, but most interestingly, more people than ever can now offer up their home or a vacation home for travelers to stay in. While this might be a new field to some, this is a source of income that is quite familiar to the IRS. As a result, there are well established rules in effect when it comes to renting a vacation home.           Simply stated, the rules about taxing vacation home rentals change depending on whether the home is rented for 15 days or more in the given year. If it is less than 15 days, then congratulations are in order. There will be no taxes applied to that income! Qualified expenses can still be used as deductions as well.            If t...

          Now is the time of year when many employers may give gifts to their employees or show appreciation to the staff for a year of good work. These are common expressions, but like with most situations, there is a potential Tax impact depending on the details of what is provided and how.           If the gifts provided are infrequent and have a low cash value to make it impractical and unreasonable to account for them, they meet a certain criteria. They will be tax-free to the employee and tax-deductible for the employer. For example, books or flowers given for outstanding performance, “low cash value” holiday or birthday gift, or an occasional meal for employees and their guests would fall into this category. This is a familiar situation for many.           However, if the gift is cash, or can easily become cash, the circumstances change. In the view of the IRS, this becomes ...

          Identity theft has been a growing source of criminal activity for many years. Unfortunately, the same can be said for businesses, especially small businesses. This information has often been used to gain fraudulent Tax Refunds or credit cards. Stealing this sort of data has essentially turned into an industry of theft.           To combat these clever thieves, the IRS has new protection methods in place that will go into full effect next year. They are designed to spot suspicious Tax Returns, while at the same time, making sure the true Returns are processed faster. This is really an expansion of some pilot programs that were put in place 2 years ago. Last year that program was expanded, now it is going full scale, and their effects will be made known in the coming months.           There will be a variety of new questions that will accompany a submission ...

           Now is the time of year when online shopping kicks into full swing. Add to that the upcoming tax filing season and it is a prime target for criminals to take advantage of what they see as opportunities. Here are some good practices that individuals and business can put into effect to help protect themselves.            Scams against employers.  Businesses can and have had their identities stolen. They need to protect their Employer Identification Number ( EIN ), just like a person must protect their Social Security Number ( SSN ). For this coming year, the IRS will be asking for extra information to verify that a Tax Return for a business is true. A trusted Qualified Tax Professional can guide a business through this more detailed process.            Avoiding phishing emails.  These types of messages take on a v...

       This is the time when we take time to reflect, on what has happened in the year. However, it is also the right time to prepare for the next Tax Season. The more that is done now, the less stressful it will be when the time arrives. This is especially true for people who have gone through certain events this year.            A new job.  Congratulations on finding new employment! One thing that you should do very quickly is make sure that the right amount of tax is being withheld from your paycheck. Otherwise a very unpleasant surprise will be presented when filing an Income Tax Return. This can take time, but it is worth the effort.              Taxpayers who make estimated tax payments.  Those who make payments throughout the year are involved in a payment plan or are self-employed, in a business partnership, or an S-Corporation. No...

        One word that can be used to describe the current efforts in Tax Reform is: speed. There are major changes to the current Federal Tax plan that are being proposed, and if passed, they will go into effect in less than 5 years. But what will happen when they do? Since the different plans are still being debated, nobody can say for sure. However, there are many possibilities that are of concern because they can lead to very big loopholes.           For example, there is a provision to change the Corporate Tax System in the US. Currently, all Corporate profits for US companies are taxed, no matter where in the world they are earned. This has led some companies to keep their overseas profits from coming back to the US, by any number of complicated schemes. The change would be a switch that only taxes profits earned in this country. On the surface, this might give more incentive for a business to transfer...

          It has now been made official. The IRS will NOT accept Federal Tax Returns that do not answer the questions about health coverage under the Affordable Care Act. This change in policy will go into effect next year, for the upcoming Tax Season. This is a significant move on the part of the IRS.           In the past, this requirement had been something of a gray area. Due to a variety of factors, the IRS has been processing Tax Returns where individuals have not shown that they have health coverage. However, they would still apply a penalty to these Taxpayers. Even so, in these situations a Tax Refund would still be issued, a little later than most. That will no longer be the case. As it stands, the ACA is still in place, and the IRS will apply its obligations under the law to all Taxpayers. Even if it means suspending or rejecting the processing of a Tax Return until it gets an answe...

          Every year, there are many Taxpayers who ask for a 6-month extension to file their Federal Tax Return. This year, that deadline is fast approaching on October 16 . For those who are filing a Tax Return this month, here are a few points to keep in mind.           It may seem to be very obvious, but make sure your Tax Return is filed on time . If one files late, after being given an extension, there are penalties and fines that will result. These can be avoided by simply filing on time. For those who know that they will owe, they should pay as much as possible to avoid more penalties and interest. A Qualified Tax Professional can help you to see how much you will owe and go over your payment options. Those who have an extension, and have been effected by disasters like earthquakes and hurricanes, will normally have more time to file.         ...

          It seems today, that the only constant that we can rely on is change. Whether that is true or not, there are many things that we do need to be aware of, and adjust to. There are waves of change that hit us whether we like it or not. It’s at those times, that we may be best served, by taking a step back and reflecting on time tested advice that can give appropriate perspective.           “Never stop learning”. Considering how fast technology changes, and its effects on the world continue to be felt in different ways, all of us are learning many things at the same time. It allows us to better meet demands and provide much needed services, especially in the area of tax and finance. While this can be intimidating, it must be embraced. The future will not wait, and there are unknown benefits that await those who adapt to changing times.         ...

          Most people would prefer simple tasks and activities over anything complex. Is the same true of taxes and finance? Most would give a resounding “Yes!” to that question. However, it has been said that over the past 30 years, that Federal Tax law has grown from 26,000 pages to 70,000 pages. Why has this taken place?           One theory is that the Tax code is stuck in what can be called the “Rinse. Wash. Repeat.” cycle. In this situation, a law is passed, but Taxpayers and professionals do their best to comply with the law while paying as little in tax as possible. When this is observed, Congress will pass another law to prevent these tactics, and the process starts again. It highlights how complicated things can get when many different groups are trying to represent their own interests, including the US government. Perhaps a balance can be reached, but it will be difficult to say the...

          This is the time when the IRS will increase its notices to many Taxpayers about different matters. Unfortunately, this means that there are many others who try to take advantage and defraud others by pretending to representatives of the US Treasury. So it’s up to each of us to know what will distinguish a genuine officer or agent from a con artist.           The In-Person visit. These can happen for various reasons, and from different branches of the IRS. No matter what the case may be, IRS representatives will always have a pocket commission and Personal Identity Verification Credential . They will describe the authority and responsibilities of the person to whom they belong. A Revenue Officer often makes visits to discuss Tax debt. These visits are usually not scheduled. They can request payment, but it will always be to the US Treasury. A Revenue Agent of the IRS handles audits...

          Now is especially the time of year when the IRS will contact Taxpayers about different financial issues. There are standard practices that will be followed, so one will know that they are actually dealing with the IRS. This 2 part series is meant to serve as a cautionary reminder of the times we live in, and show how we can keep our most sensitive financial information safe.           Phone Calls. The first contact from the IRS will usually be in the form of a letter in the mail. They will never send text messages or use social media. An IRS Agent or Revenue Officer may call a Taxpayer or the Tax Professional to confirm an appointment or items for an audit. In some cases, a private debt collection firm can be used for outstanding tax amounts. However, this will only be done after written notice has been given. Any and all payments will always be to the US Treasury.   ...

        Now that ideas have taken shape, preparations are being made. These will set the stage for how the business will function in a practical way moving forward. A critical decision that must be made at this point is what accounting method will be used. Once the choice about how to report income and expenses is made, it must be used consistently. This is a serious decision and must be well researched.        Cash . Using this method, income would be reported and expenses deducted, in the year they are received or paid . This is not to be confused with the Accrual method. Here, a business would report income or expenses in the year they earn them , even if they are paid in a different year. A Qualified Tax Professional is essential at this point to help set up the framework of what can become a solid and successful business.

          When ideas start to become practical plans, reality begins to set in. There are crucial choices that need to be made. They will set the stage for the beginning of a new business venture. To make sure this is done in the best way possible, we will continue our series looking at helpful new business tips.           Business Taxes. The structure chosen for the business, will directly affect how the business is taxed. The options available are: employment tax, excise tax, income tax, and self-employment tax. A Qualified Tax Professional is essential at this step. Their guidance in choosing the correct Tax to pay will save a lot of stress. Most businesses will need to make Estimated Tax Payments. Here, a Qualified Tax Professional will make sure there are no underpayments to the IRS. This is will only lead to stiff penalties and a lack of stability.      ...

         This may be the time of year when business ideas, become plans. This can be the time, when those plans are put in motion and a new business is started. When this decision is made, it is always an exciting time. However, it is also a time when many questions need to be answered. It would be appropriate to seek the guidance of a Qualified Tax Professional to firmly establish your business. Our series will look at 5 ways this can be done.           Structure. The way a business is structured will affect every other tax, finance, and legal aspect of the business. There are 5 options. They each have details that must be considered carefully before making a choice. The options are Sole Proprietorship, Partnership, S Corporations, and Corporations. The fifth option of Limited Liability Corporation is allowed by state statutes. A Qualified Tax Professional would be an essential advisor at this sta...

          There are many factors that all businesses have in common, however when looking at the details, there are usually more differences. This series has looked at the area of determining the value of a small business. It is a core service that Anthony Sykes & Co provides for its small business clients.           Evaluate the risk and determine the market . Every business has some risk, but that usually depends on the market. Some have a stable outlook with little to no competition. Others may have regular challenges and great opportunities for growth. It is sometimes true that, the greater the risk, the greater the reward will be. Each business is unique and must be looked at such.

         There are many factors that all businesses have in common, however when looking at the details, there are usually many more differences. One area is determining the value of a business. In our continuing series, we will look at another feature of business valuation. This is an essential service that Anthony Sykes & Co provides for its small businesses clients.           Estimate how the business will grow. In most cases, a business will grow over time. The faster the growth, the more the business will be worth. No one is able to tell the future, but reasonable growth can be estimated using a few factors. Most important for a business owner is to know the lifespan of their business. Does it have a fixed date, or is it indefinite? This plays a big role in determining the value of a business. Our next post will discuss more of the process of business valuation.

         There are many factors that all businesses have in common, however when looking at the details, there are usually more differences. One area is determining the value of a business. Large corporations can use their publicly traded stock to make that determination. That is not an option for a small business. There are a number of unique inputs that must be considered in order to accurately state what a business is worth. This is an area that Anthony Sykes & Co is more than qualified to provide excellent results. That is true because of following some simple principles.           Know what the business earns. That might seem a little obvious, but this really is the first step. Different industries may emphasize other points and certain accounting practices can make giving an answer a little difficult. The proof of a business valuation starts here. Our next post will go into more detai...

          IRS audits are the largest source of Criminal Tax cases. This is a part of the IRS that most people are unfamiliar with, and never want to see. The IRS Criminal Investigation Division handles these cases. If ever visited by one of these Special Agents (yes, that is their title), keep in mind that lying to them can result in a Felony. Always ask to see identification, ask for a business card, and consider what to say, if anything.           Often they may approach a person and say they are not the target of an investigation, just a witness. That might be true at the time. There is nothing to keep the answers given at the time, to be used against a person if/when the investigation changes. This is a situation when a Taxpayer needs to go find legal representation. It is their right to communicate with the Criminal Investigation Division through an attorney. Usually a qualified Tax Profes...

          It’s widely known that Federal Tax Law is complex. This is part of the reason for audits, the civil review of tax filings. How can those reviews turn into a criminal case? There is no simple answer.           One common area is income . Always report all of your income. Numbers that don’t make sense can start audits, and upon further review, it’s up to the discretion of the IRS Auditor where to go. Another contributing factor is statements made during the auditing process. A false statement given is a great way to prolong an audit. This is another area where a qualified Tax Professional will help a Taxpayer. They are a great representative for the Taxpayer to the IRS, and will be able to provide the documents being reviewed.           If the conduct displayed, or the information provided move past a certain threshold for the Auditor, the...

           The IRS just updated the information on how auditors will handle employment Tax exams. The key points will stay the same. Audits usually start off because of a risk area, or because of previous history with the employer. When the examination starts, they will look at the internal controls. That means they are looking to determine if the business keeps good written records and are in compliance with all applicable laws or obligations. If this can be proven, the audit tends to be quick, if not, the search will expand. Here are the consistent problems that are found in many cases.           Wrongly categorizing employees as independent contractors. When this is done, the proper taxes are not being paid. That will lead to the taxes, along with penalties being assessed. Our previous post described some of the points that the IRS uses to make this determination. Businesses need to us...

          The IRS wants all businesses and business owners to know the difference between an Employee and an Independent Contractor. One will have income tax, Social Security, and Medicare withheld from their pay, the other will not. This may seem like a small issue, but our next post will discuss why it matters.           Here are a couple of points to keep in mind to help make the distinction. How the business exerts behavioral control , such as determining what work should be accomplished and directing how it is done, that matters to the IRS. Financial control such as how the worker is paid and the extent they can make their services available to the market are also taken into consideration.           Apart from the aspect of control, how the relationship is defined plays a key role. This will include written contracts, the provision of a pensi...

One of the biggest problems in the area of Taxes and Accounting is business identity theft. This dishonesty is when a person or group creates, uses, or tries to use a business’s information to try and get tax benefits. The IRS is trying to deal with this growing problem, but they have a long way to go. In 2013, there were 133 tax returns that were suspected of having a share in business identity theft. From that group, 97 claimed refunds of over $2 million. The IRS is establishing procedures to look for patterns that come up in business tax filings that are based on fraudulent claims. They are also going to be proactive in reaching out to businesses that may have had their identities stolen. These patterns keep changing, so will their detection process. These stolen refunds end up effecting every taxpayer. This program would seem to be a step in the right direction to stop this problem. What do you think?

          When Tax Law is applied, there is a difference between Willful and Non-Willful conduct. To be considered Willful, a Taxpayer must choose to break the law or avoid a legal duty. This intent can lead to Criminal prosecutions and large Civil judgements. Some may try to claim that they had no prior knowledge that what they were involved in was illegal, and it was all just a simple mistake. However, the IRS often looks at a Taxpayer’s actions to determine intent.           There was a Taxpayer who opened 2 Swiss bank accounts in the early 1970’s and never reported them on his Tax Return. He first mentioned them to his accountant in this 1990’s. The accountant said that they should have been reported since they were opened, but not to do anything now. It would all be settled when the Taxpayer died. About 20 years later that accountant died. The new accountant prepared documents to report ...

         Why would a Taxpayer want to file an Amended Tax Return? It should not be for a simple math error. The IRS will fix those when processing the Tax Return and if they need specific documents, they will ask for them. If it’s something more than that, then filing an Amended Tax Return may be the best option.           Keep in mind that when fixing mistakes, this should not be done in a way that only adds to Tax Refunds and not Taxes owed. Making these sorts of changes will get the attention of IRS and make them take a closer look at the adjustments. It can be the easy way to get to an audit. Normally the statute of limitations for the IRS to take action on a Tax Return is 3 years. Amending the Tax Returns filed during this period of time can help a Taxpayer discover a refund that has been waiting for them, or a debt that needs to be paid. Either way, it can lead to big changes.

          It seems today, that the only constant that we can rely on is change. Whether that is true or not, there are many things that we do need to be aware of, and adjust to. There are waves of change that hit us whether we like it or not. In the area of Taxes, one almost yearly change is the IRS collection policy. Over the last few years, they have been given more Congressional tools to use to collect Federal Taxes owed. They were law when signed, but have now started to be administered.           The best way to avoid these programs is to get help as early as possible. A qualified Tax Professional can be a necessary representative for the Taxpayer to the IRS and keep a bad situation from getting much worse. They keep updated on yearly changes.           For example, those with an Offer In Compromise with the IRS have in the past had extra time...

        There are many situations in which a Taxpayer can wind up with a Federal Tax debt. In some cases, they are not able to pay it. For those in this position, there is an option called Offer In Compromise. Very few will actually qualify for it, but for those who do, it can be a great source of relief.           This is NOT a payment plan. The Offer In Compromise is very unique in that it will allow for the settlement of a tax debt for less than the actual amount. There are a variety of options that the IRS offers Taxpayers to help them in paying any taxes owed and a qualified Tax Professional can guide you through these decisions and what would be required. Here’s a video that gives more detail on an Offer In Compromise: https://youtu.be/imMIMk5mIa8

         Did you know that taxpayers and businesses can approach the IRS in advance of making a tax decision, to see what the outcome would be? While that sounds simple, it really isn’t, and is probably not something that the majority of people would want to get involved in. Here are some things to consider about approaching the IRS their blessing on a tax plan.           One can submit a written request for an IRS Ruling . These will be binding when given, can take up to 6 months to handed down, and can have a fee of over $20,000 attached to it. This option should only be used if there is a strong likelihood of receiving a “Yes”. Even if the request is withdrawn later because of a negative outcome (or no decision is given), the next Tax Return will be flagged for an audit, since they know what is being planned.           Another option is an ...

         There are some, from the perspective of the IRS, who qualify for a Tax Filing Extension without needing to apply. This is a relatively small group of people with very outstanding and unique circumstances.           Those who live and work outside the US have until June 15 to file their Tax Return and pay any taxes due. This is also true of members of the military on duty outside of the US and Puerto Rico. However, military personnel in combat zones have an extension of at least 180 days after leaving the combat zone before needing to file. Taxpayers living in presidentially declared disaster areas can get more time to file their Tax Return. For those affected by Hurricanes Irma and Maria, the Tax Return deadline is June 29, 2018. Victims of wildfires and floods in areas of California will also be granted certain forms of Tax relief from the IRS.

          In 2015, Congress passed the FAST Act, part of this allows the IRS collect large Tax debts. This complex program involves cooperation between the IRS and the State Department regarding those who are classified as “seriously delinquent in tax debt”. This program called IRC Section 7345 , started being administered in March 2017.           Taxpayers who are certified by the IRS to be in this position, will have their names turned over to the State Department. They can have their Passports denied , limited , or revoked until they return to good standing with the IRS. This is particularly true if applying for or trying to renew a Passport. This is used as leverage for debt collection. Those who will be affected by this program are those who owe $50,000 or more and (1) have a lien filed with all ways of relief denied or (2) a levy issued.         ...

          In a word, the best advice is: Hurry. Even though the deadline may have been missed, it’s better to be late than very late. Penalties and interest related to taxes owed grow each day. Go to your qualified Tax Professional and figure out how much you may owe. When filing a late Tax Return, send in that amount, or at least as much as possible.           However, if you do not owe taxes, there will be no penalty. In fact, if there is a Tax Refund due, the Taxpayer will receive the entire amount. Many of these individuals may not be required to file a Tax Return, but if they do not, they will lose their right to a refund in 3 years.

             It seems today, that the only constant that we can rely on is change. Whether that is true or not, there are many things that we do need to be aware of, and adjust to. A new example is a very dangerous email scam that targets businesses and its employees. A criminal sends an email, pretending to be an executive in an organization, to a member of the Payroll or Human Resources Department. They ask for a list of all employees and their Forms W-2. Falling for a Business Email Compromise of this sort will be devastating.           If this happens, the IRS must be notified to keep these thieves from filing false Tax Returns in order to receive refunds. This data loss must also be reported to any State Tax Agencies, as well as, the FBI’s Internet Crime Complaint Center ( IC3 ). The IRS can also help with guidance to share with employees who have had their personal infor...

          When it comes to Taxes and filing a return, people either want to keep everything, or throw it all away. While the IRS certainly wants Taxpayers to keep their important documents, there is a balance that can be struck. Here are a few general guidelines that can be followed when dealing with your Tax records.           If a Tax Return is filed correctly and on time, the supporting documents can be thrown away ( after shredding ) after about  3 years. If information in the Tax Return is not accurate, the documents should be saved for at least 6 years. That is how long the IRS will legally be able to start an audit. If no Tax Return was filed or it was fraudulent, there is no statute of limitations. Criminal action could be brought at any time .           Some items that can be shredded and thrown away are documents that have nothin...

        Some of the most recent Tax news is that the IRS will restart a program that used private debt collection agencies to collect overdue Federal Taxes. These cases will deal with taxes owed over a number of years, starting with less than $50,000. Letters will be mailed to Taxpayers affected by this in the coming weeks, by the IRS and by the debt firm. The program will start slow, but thousands of letters will be mailed by this summer. The majority of Taxpayers will not notice the change, but there are details that we all should know, in order to avoid those who will try to take advantage of this adjustment           There are only four companies involved in this program. Only they are authorized to represent the IRS in this matter. All payments will still go to the IRS, not to the debt collection agencies. This process always starts with letters, so any surprise phone calls demanding money is a thi...

          For any business, the matter of Payroll Tax is very serious. The IRS looks at it as the government’s money and any failure to pay will trigger an aggressive response. In some cases that could mean fines and jail time. Using money to pay vendors, the landlord, or employees in order to function, is never considered a good reason to avoid paying the Payroll Tax.           In general, the IRS will pursue Responsible People in a business when this obligation is not being met. This can happen even if they are not personally aware of this Tax not being paid. A Responsible Person is an officer, director, or anyone who makes decisions about paying or who has check signing authority. If Payroll Taxes are not being paid, the IRS will penalize any or all Responsible Persons for the full amount of Taxes owed. This allows them to pursue them each individually in order to collect the Tax.  ...

          Many people every year, give to charities of their choice. Whether it is in the form of cash or property, people give freely and in some cases they wish to claim that gift as a deduction on their Tax Return for that year. If that is the case, here are some points to keep in mind, in order to make that possible.           The donation must be given to a qualified charity . Check their status before parting with your funds. Political organization, individuals, and political candidates do not qualify. For donations of $250 or more , there must be a receipt from the charity and a description of what was given. If a Taxpayer was given something as result of the donation, this is a Benefit in Return . This might be tickets to events, merchandise, meals, or other similar things. In this case, the deduction would be reduced by the amount of benefits given. There are other factors to consider, ...

For the past few years, the IRS has released a list of the 12 most common Tax scams to be on the watch for. Many of them peak at this time of year. Here are a few to avoid. Phishing. The IRS will never begin contact by means of an email. Never open these emails, click those links, or use fake websites asking for your information. They are trying to steal your identity. Phone Scams are a constant issue as con artists threaten Taxpayer’s with arrest, deportation, and other things. The IRS never starts contact by means of a phone call. Fake Charities . Be careful of groups with names that are similar to national charities, but just a little bit different. They could just be trying to collect people’s money for their own benefit. Take a little time to make sure your funds are going to the right cause. Excessive Business Tax Credit claims . These tend to be hard to qualify for and there are good reasons for that. Unless a Taxpayer has a farm or runs a research group, they should...

         States all over the US are raising taxes in a variety of ways. Here are some that might have the biggest effect. For example, in Louisiana , the state sales tax has gone up to 5%. This makes the average local sales tax in the entire state about 9.99%, the highest in the US. It has also been extended to items that were exempt from taxes, like Mardi Gras beads. However, as of now this rate hike is set to expire in mid-2018.           Pennsylvania is continuing to apply its 6% sales tax to digital downloads and streaming services. In a decisive change, the state will now tax all Lottery winnings. Pennsylvania had been 1 of the 2 states that did not apply State Income Tax to Lottery winnings. California is now the only state that has that view.           New Jersey has added 23 cents to its Gas Tax to pay for Public Works projects. Part of that ...

         Millions of taxpayers receive notices and letters from the IRS, especially at this time of year. Here are a few simple steps to keep in mind if you find yourself in this situation. Never ignore it. The issue always works out better if the notice is responded to quickly. Focus on the problem. IRS notices will highlight the issue. Understand that before responding. If you agree with what the notice says, you may not need to respond. If you don’t agree , you will need to respond with a letter. Your tax Professional can help you with the details of what will be required. Remember, taxpayers have the right to a representative. Most problems can be handled without going to the IRS in person. Always keep the notice along with your tax records. Please take care to avoid scams. The IRS never makes first contact by phone, email, or text. It is always by mail . These simple reminders might remove some stress from an anxious situati...

          Can it be possible to pay Federal Income Tax on Social Security benefits? The short answer is: yes. There are situations where this can happen. Beyond this fact, there are a number of States that also might tax Social Security income. Here are a few points to keep in mind.           States that do not have their own Income Tax will obviously not tax Social Security income. So if you live, or are planning to move to, a State like Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, or Wyoming, this will not be an issue. Other States give an exemption to Social Security income. This is true for States like Alabama, California, Delaware, Hawaii, Idaho, Maine, Massachusetts, Oklahoma, and Oregon. However, Minnesota, North Dakota, Vermont and West Virginia will apply Federal guidelines to Social Security income. States like Colorado, Connecticut, Kansas, North Dakota, and U...

         It seems today, that the only constant that we can rely on is change. Whether that is true or not, there are many things that we do need to be aware of, and adjust to. One example is a new proposed budget for the IRS. It could be reduced to $9.65 Billion. This could be difficult for one of few Federal agencies that pays for itself.           It would seem that the IRS and the Treasury Department as a whole are under stress. The first effect has been the closing of many walk-in IRS assistance centers and longer waits for phone customer service. Budgetary reasons were given for the lower than expected level of individual Tax Return audits and Criminal Investigations. This could be just the next step in a series of budget cuts over the past few years. With challenges that continue to grow from fraud, crime, and people who try to creatively avoid paying taxes, the IRS does its best to keep up.

        The IRS is doing their best to make Taxpayers aware that there is about $1 Billion in unclaimed refunds from 3 years ago. So there are a number of people who did not file a Tax Return in 2013 and have until April 18, 2017 to claim what is theirs. After this date, the funds become property of the US Treasury. There is no penalty for filing a late Tax Return if you are due a Refund. Would you like to find out how?           A Federal Tax Return must be filed, and it must be the correct form used at that time. They must also use all the correct financial information from the year 2012, which may take a little effort. Often, those who find themselves in these situations are those who did know they qualified for tax credits, or thought they made too little to file a Tax Return. It might be worthwhile to see if your refund is part this $1 Billion.         ...

The IRS has stated that filling out line 61 on Federal Tax Returns is no longer required. What is the significance of this 1 line? This was the line that was added due to the Affordable Care Act ( Obamacare ) and its requirement that all carry health coverage. In the past, if the answer was “No”, there would be a penalty given. If an answer was not given, it would be considered a “silent return” and rejected.           All returns filed this year will be treated differently. Taxpayers may continue answer the question, but if they do not, their returns will continue to be processed. This is most likely due to an Executive Order signed on the first day of the Trump administration. Keep in mind that the Affordable Care Act is still in effect and any Returns that withhold information from Line 61 could still be penalized at a later date.

         Should I make a standard deduction or should I itemize? This is a question that many have asked every year during Tax Season. Every situation is different, so here are some key points to keep in mind making this choice. When making the choice of a Standard Deduction , the amount is based on the Taxpayer’s filing status for 2016. For example, if the status chosen is “Single” or “Married Filing Separately” then the deduction amount is $6,300. If they qualify as “Head of Household” then the amount is $9,300. However there are exceptions to these amounts. If the Taxpayer can be claimed as a dependent, then the amounts will be lower. They will be much higher if the Taxpayer is over 65. Itemized Deductions require a lot of paper work and attention to detail but might be worth the effort. Some of the expenses that can be listed are: real estate and personal property taxes, home mortgage interest, and gifts to charities. It is also ...

          Children are gifts to their parents in a variety of ways. That is also true when it comes to filing Tax Returns. Here are a few tax benefits that parents can claim that relate to their children.           If a parent paid for the care of their child under the age of 13 so they could work or look for work, this may qualify for the Child and Dependent Care Credit . Adoptive parents can also claim the Adoption Credit for certain costs related to the adoption process.          The Child Tax Credit has specific points that need to be addressed. To claim this credit, the child must be under 17, as of December 31, 2016. The child can be the Taxpayer's child, stepchild, sibling, stepbrother or sister, grandchild, and even niece or nephew. They can also be an adopted child or a child lawfully placed for adoption. They must be a dependent that is cla...

         While the vast majority of Taxpayer’s are honest and give all the necessary factual information when it comes to their Tax Returns, there are a few who do not. They see opportunities to use Credits falsely and increase fraudulent expenses and deductions. While they may gain in the short-term, the IRS looks at a bigger picture.           There is a list of typical tax scams that the government is always looking out for. Their systems are checking the past 3 years’ worth of Tax Returns for these trends and will start an audit if something looks suspicious. They will add more years of tax filings if more errors are found. The penalties that can be applied are fairly severe.           If it is determined that the Tax Return is “frivolous” or “contains information clearly showing that the tax reported is incorrect”, the fine from this determi...

          The area of finance is of serious concern. For many, the largest amount of income they will receive at one time is their Tax Refund. While it can seem tempting to try and increase that refund through deceptive means. The painful truth is that lies will only cause more money to be paid and some jail time served, no matter what any professional might say. Here are some examples.           A Tax Preparer in Wisconsin has pleaded guilty to defrauding the IRS of around $500,000 by making false claims about dependents in the Taxpayer’s household. It started with investigating 1 Return that showed a $3,700 refund when there should have been $1,100 owed. From there it was determined that over a 4 year period over 9,500 Tax Returns were filed by this Preparer, creating a total of $34 Million in refunds. These Returns averaged 3 dependents each and the majority used Individual Taxpayer Identi...

         There are many problems that can occur when filing taxes. Here are a few that are within our control and will help to save a little bit of stress during Tax Season.           Math. The most common mistakes on forms deal with simple numbers. Take the time to check once or twice to make sure things add up at every step. While you’re at it, make sure your name is spelled right and the correct SSN or ITIN is being used. If the name is correct, then glance at the filing status to make sure it is accurate. There are 5 options that can be used.           The Tax Return cannot be filed unless it is signed and dated . The most important point to remember is to never file late . All Tax Returns are due this year by midnight on April 18. Even if one were to file an extension, any taxes owed are still due by April 18. Here are just a few points to ...

For many, a Tax Refund is their largest single source of income during the year. After filing a Tax Return, the next question is "When is my Refund going to be available?" Since there are millions who ask this same question, the IRS has provided this video to help Taxpayer's track the status of their refund. Please click the following link to view the video:     The "Where's My Refund?" Tool

        A recent survey said that, in the last year, 1 out of 4 people in America had their personal information stolen from what was thought to be a secure location. This can happen through business dealings or personal activities, so we need to be careful at all times. Never give your sensitive personal information when just calling to inquire about fees or the possibility of having a "tax preparer" file your Tax Return. This can lead to a false Tax Return being filed in your name and a Refund taken without your knowledge. If you believe that this is your situation, please take decisive action and tell your bank or financial institution quickly. They have teams of hard working employees who will save your funds from thieves and keep your Credit Report intact. A review of your Credit Report every few months can bring to light any theft before it develops too far. Report fraudulent "tax preparers" to the IRS as soon as possible. The...

         These stories in the news have sadly become very common. Headlines about personal information that was thought to be secure, and how it has been stolen on a massive scale. These computer attacks have affected the lives of millions of people and every industry that conducts business on the Internet. This includes the government and the IRS.           In May 2015, the IRS announced that sensitive information on an Internet application it provided had been compromised. The identities of up to 500,000 taxpayers may have been stolen. This is one part of a serious issue that continues to grow on an almost daily basis. The goal of this post and the one to follow, is to share what to do if we find ourselves in this situation. There are steps we can take if we feel that our identity has been stolen.           The Criminal Investigation division of the...