Anthony Sykes & Company

In previous posts we have discussed steps to take when making a wise decision when it comes to choosing a tax professional. Our last post discussed why it’s important to look now and a couple of things to consider if that is what you need to do. We will now consider two major red flags that might come up in that search. Look out for “ghost” preparers. A ghost preparer is a paid tax preparer who will not sign the tax return after it is completed. They will insist that the taxpayer sign it and file it themselves. This is against the law. While the taxpayer is responsible for everything in the tax return, if someone is paid to prepare it, they must sign their name. When a person hides their actions in this way it is often a sign that fraud is being committed. If they based their fees on a percentage of the refund or promised to get a bigger refund than anyone else, this is another sign of potential fraud. A valid ID for tax preparers. Every paid preparer needs to have a valid Prepar...

             Now is the time to make an appointment with your tax professional. It’s early in the tax season, so filing will usually be less stressful. That is especially true if you are returning to your regular tax professional. What if you are looking for someone new? Then starting early is absolutely essential. There should be a bond of trust between a taxpayer and their tax professional. This is needed because that person is entrusted with sensitive and personal information of their clients. In reality trust and respect are earned over time. How can someone choose the right tax professional for themselves right now?           There are many tips that can help in the search for a new tax professional. Making price the most important factor is not always best. If you pick a tax professional because they are the least expensive, remember that you often get what you pay for. Make sure to pick a preparer who is available th...

        The Internal Revenue Service ( IRS ) has announced that the beginning of tax season will be January 27, 2025. It would be best to organize financial and tax related documents now. It will simplify the filing process and reduce overall stress. However, it must be stated that for many of us, these times are anything but simple.         The fires across the Los Angeles area have forever changed so many lives. For this reason, LA County has been declared a federal disaster area. That has allowed the IRS to postpone the filing deadline to October 15 . This allows for those impacted directly by the fires to focus on what is most important right now and work on rebuilding their lives one step at a time.

             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 ch...

              Until recently the Internal Revenue Service ( IRS ) had been encouraging many taxpayers to hold off on filing their tax returns. This is not because of a technical flaw, but there was a question that needed to be answered. Would state tax payments over the past year be taxable at the federal level? California is one of 21 states to provide such payments.           After discussion, it was determined that these payments would not need to be reported as income, and therefore not taxable. They will be viewed as payments for general welfare and disaster relief. This was a complex situation that had many questions for the IRS . One determining factor is that since the federal pandemic disaster declaration is ending in May 2023, there is no need to make an issue of these payments made in 2022. With that issue settled, please be sure to gather your important documents and prepare to file your t...

                 With the Internal Revenue Service ( IRS ) ready to accept tax returns, you may be wondering how to take advantage of an early start date. The best thing to do is use your time wisely. How can you do that?  The first thing you should do is to gather all of your necessary information. This is the time of year that tax information is arriving, so keep it organized and make copies to give to your Qualified Tax Professional . The earlier you start this process, the easier it will be. As a bonus, you will be less likely to be in a rush and have missing details that will prevent you from filing your tax return. If you are choosing a new Qualified Tax Professional , make appointments early to meet them and discuss your needs. The longer you wait, the less availability they will have. The best way to prepare for tax season is to gather your information and get your questions answered early.

             The tax season for this year has been established. As announced by the Internal Revenue Service ( IRS ), the first day tax returns will be accepted is January 23 . The deadline to file is April 18 . However, in light of the recent devastating storms, many counties in California were declared federal disaster areas. How does this designation change things for the affected taxpayers?           As is often stated, this allows for federal funding to care for the practical needs of disaster victims. This also makes the way for federal agencies like the ( IRS ) to have the ability to adjust deadlines as circumstances dictate. In this case, the taxpayers that live in California counties that have been declared federal disaster areas, will have until May 15 to file federal individual and business tax returns. This also postpones any estimated tax payments. This allows for time to focus on what is needed now.

                 The tax season for this year has been established. As announced by the Internal Revenue Service ( IRS ), the first day tax returns will be accepted is January 23 . The deadline to file is April 18 . After reflecting on the past 3 years, the IRS has taken steps to make improvements in the service it provides to taxpayers.           As part of the Inflation Reduction Act passed in August 2022, the IRS has hired 5,000 new employees. They will answer phone inquiries and provide in-person assistance. The date of January 23 was chosen to allow for training and needed updates to the software so IRS systems will work smoothly. Tuesday, April 18, 2023 will be the tax filing deadline in observance of Emancipation Day in the District of Columbia. Since there is more help available this year than in previous years, our next post will discuss how to best use our time in preparation f...

               For those who requested an extension to file their 2021 tax return, the deadline is Monday, October 17 . The Franchise Tax Board ( FTB ) follows the lead of the Internal Revenue Service ( IRS ) in this area. The time to file is now. However, there is no need to wait until the last minute of the last day. If you are ready before October 17, get your return filed then. When you have your information, there is no need to wait. If something unexpectedly comes up, and you file after the deadline, there will be a late filing penalty.           In some cases, there are some who are given extra time. Members of the military serving in a combat zone have extra time. They usually have up to 6 months after they leave the combat zone to file. Taxpayers who live in a declared disaster area will have extra time. In these situations, the filing date can continue to change, so those affected need ...

                 The tax filing deadline has passed. However, there are some common issues that come up that have relatively simple solutions. If a taxpayer expects a refund, they are usually processed in 21 days. Keep in mind that the Internal Revenue Service ( IRS ) will take longer to release a refund if the tax return is claiming a credit, has errors, or is affected by identity theft.           If you are not receiving a refund and are surprised by that development, then checking your withholding should be done. This will make sure that the correct amount of tax is being withheld from your paycheck.           Sometimes after filing their return, a taxpayer will realize that they made an error or forgot to attach a form. A common reaction is to amend their return. This should only be done to fix errors like filing status, income, deductions, ...

               Monday April 18 is approaching with certainty. The time left to file is reduced. If you are waiting until the very last minute, here are some things you should keep in mind.           File online. Those who file online tend to have fewer errors. Common errors will be picked up and needed information will be asked for. Additionally, any paper mail will take months to be processed. That will lead to penalties and interest. Filing online is the most practical option.           Consider an extension. This allows extra time to file a tax return, not to pay any taxes due. Any estimated tax liability must be paid by April 18 to be considered on time.           Extra information. When dealing with something like the Advance Child Tax Credit payment or trying to claim the Recovery Rebate Credit ...

               Criminals are especially active during this time of year. Their goal is to steal personal information, such as Social Security numbers, and file fraudulent tax returns. The Internal Revenue Service ( IRS ) scans tax returns for fraud, and when they find something, it is set aside for further review. The next steps are critical.           If the IRS determines there is fraud, they will send a letter to the taxpayer. Nothing will be processed until there is a response. The letter will notify them of potential identity theft and give specific instructions that must be followed. They might be online, over the phone, or even need to take place in person. Do not ignore these letters. Your Qualified Tax Professional can help guide you through the process.

            Every year there are millions of taxpayers who do not file a tax return. This leaves billions in unclaimed tax refunds. In 2018, there was an estimate of $1.5 billion in unclaimed money. A taxpayer usually has three years to claim their refund. This is assuming that they do not owe or have another issue with the Internal Revenue Service ( IRS ). If that is the situation, the IRS may apply some of the refund to any outstanding federal or state debts.           The deadline to claim any part of the waiting refunds from 2018 is April 18, 2022. That tax return must be mailed in. Given the current state at IRS mail sorting centers, it should be mailed as soon as possible. Other late tax returns can be e-filed. The refund amount might be delayed if there are other tax returns outstanding. Any money that goes unclaimed will become property of the US Treasury. A Qualified Tax Professional can help y...

     The tax filing deadline of April 18, 2022 is coming up soon. For those who need more time to gather their documentation and file a tax return, they can file an extension. That is much better than facing a failure to file penalty. However, from the point of view of the Internal Revenue Service ( IRS ), this does not mean that there is extra time to pay any taxes owed.      When payments are made late, penalties and interest are applied. So if a taxpayer were to wait until the extension date of October 17 to pay taxes that are due, there would be extra fines that could have been avoided. The filing date can be adjusted, but you must pay on time. If you need help, your Qualified Tax Professional can assist you in avoiding unnecessary penalties.

                 The Internal Revenue Service ( IRS ) is strongly encouraging all to remain vigilant in the face of ongoing and renewed scams and schemes. This would include having security software on phones, tablets, and computers. This along with understanding the basic trends of scams will protect taxpayers and tax professionals from identity theft.           Protect your personal information . This is more valuable than cash, or cryptocurrency if you’re into that. Never give it away to just anyone. Only share it when it is needed. A Social Security number, credit card number, bank or even utility account numbers can be used to steal money and create new accounts. Avoid phishing scams . The easiest way for criminals to get what they want is to ask for it. Internet ads don’t always come from companies that you can trust. Never download security software from a pop-up ad. It will say tha...

           At this point there is less than 1 month before the tax filing deadline. All needed documents should have been mailed or provided in electronic format. But what if something is missing? What if a form has a mistake? What should you do?           As soon as possible, contact your employer or the agency that issued the form and request a new one or inform them of the error. You might be able to receive a revised one soon. If not, the tax return must still be filed on time, or an extension must be filed before April 18, 2022 . Depending on what information is missing making an estimate is acceptable. When the form comes in later, an amended tax return can be filed.

          The Earned Income Tax Credit ( EITC ) is one of the largest tax credits. It has expanded for this year in a number of ways. For example, there is now no upper age limit for taxpayers to qualify for this credit. In addition, the EITC has expanded to include many who do not have children.           They must be at least 19 years old with income below certain limits. There are also provisions for those who are 18 and experiencing homelessness or who were in foster care. Overall, the amount of the credit has been raised and Economic Impact Payments or child tax credit payments do not count toward income when claiming this credit. Keep in mind that when claiming this credit, it will delay your tax refund by a few weeks by law as the Internal Revenue Service ( IRS ) checks to see if you truly qualify.

     The Internal Revenue Service ( IRS ) has decided to suspend the mailing of many notices to taxpayers and tax professionals. Many of these letters are automatically generated. The reason for stopping these letters is that IRS employees have a great backlog of mail to sort through. At this point, many of the letters being sent out do not accurately reflect the current situation.      Some may still be received over the next few weeks. The IRS cannot legally stop sending out all notices. However, there is often no need to respond because they are still working on last year’s tax returns. But if there is a problem for this year, interest and penalties will continue to accrue. So, it is in your best interest to take care of current tax responsibilities as soon as possible.

          The tactics of criminals and scam artists continue to adjust over time. To stay safe, we need to continue to learn about them. We may be familiar with the concept of phishing. This is when a message or email that seems to be from a legitimate source is sent out to hook as many as possible and get them to share confidential information. The activity of spearphishing targets a particular group. With tax season well under way, criminals are turning some of their attention to Tax Professionals and others who use tax software. Many are receiving emails that demand action be taken. They claim that online accounts have been frozen. However, clicking on any of the official icons or links will send you to a page that requires account information to be provided. At that point, the account is compromised.           Instead of clicking on links, go to the actual website. You can also call the support hotline for the governmen...

       The Internal Revenue Service ( IRS ) has finished issuing the third round of Economic Impact Payments ( EIP ). This means that if you qualified, but did not receive the full amount, you must claim the 2021 Recovery Rebate Credit on your tax return. This also applies to those who do not normally file a tax return. Families that added a new dependent in 2021 may be eligible for a greater amount.      The IRS will send a letter confirming what was sent in 2021, so taxpayers must carefully look at the information and determine what amount, if anything, they can claim as a credit. Doing this will help avoid processing delays. Careful review is needed in this matter. Having a Qualified Tax Professional would be helpful.