Anthony Sykes & Company

         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...