Brian Keith, CPA Accounting Services

07/03/2018

Don't get taken in.

Here’s how taxpayers can protect themselves from scammers

Knowledge is power, especially when it comes to avoiding tax scams. Here’s what taxpayers need to know to determine whether an encounter — in person, over the phone or by email — is an imposter or an actual IRS employee:

The IRS Does Not:

Call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer.
Demand taxpayers pay taxes without the opportunity to question or appeal the amount owed.
Threaten to bring in local police, immigration officers or other law enforcement to have someone arrested for not paying.
Threaten to revoke someone’s driver’s license, business licenses or immigration status.
The IRS Does:

In general, first mail a bill to any taxpayer who owes taxes.
Normally initiate contact with taxpayers through mail delivered by the United States Postal Service.
Present official identification when visiting a taxpayer. Taxpayers have the right to see these credentials, and – if they would like – the representative will provide them with a dedicated IRS phone number for verifying the information and confirming their identity.
Call or visit a home or business under certain circumstances. This includes when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or criminal investigation. Even then, taxpayers will generally receive several letters from the IRS in the mail first.
Assign certain cases to private debt collectors, but only after written notice is given to the taxpayer and their appointed representative.
Offer several payment options. Payment by check should be payable to the U.S. Treasury and sent directly to the IRS, not a private collection agency.

07/02/2018

If you get a love note from the IRS or any other taxing authority.

What taxpayers can do when a letter arrives this summer

Some taxpayers will receive a letter from the IRS this summer. Taxpayers should not panic and remember that they have fundamental rights when interacting with the agency.

These rights are in the Taxpayer Bill of Rights. Among other things, these rights dictate that letters from the IRS must include:

Details about what the taxpayer owes, such as tax, interest and penalties.
An explanation about why the taxpayer owes the taxes.
Specific reasons about why the IRS may have denied a refund claim.
Taxpayers who receive a letter from the IRS can do some simple things when it arrives. Taxpayers should remember to:

Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.

Compare it with the tax return. If a letter indicates a changed or corrected tax return, taxpayer should review the information and compare it with their original return.

Respond. Taxpayers should:
Respond to a letter with which they do not agree.
Mail a letter explaining why they disagree.
Mail their response to the address listed at the bottom of the letter.
Include information and documents for the IRS to consider.
Allow at least 30 days for a response.

Reply timely if necessary. If a taxpayer agrees with the information, there’s no need to contact the IRS. However, when a specific response date is in the letter, there are two main reasons a taxpayer should respond by that date:
To minimize additional interest and penalty charges.
To preserve appeal rights if the taxpayer doesn’t agree.

Pay. Taxpayers should pay as much as they can, even if they can’t pay the full amount they owe. They can pay online or apply for an Online Payment Agreement or Offer in Compromise.

Contact the IRS if necessary. For most letters, there’s no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can call the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.

Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.
Share this tip on social media -- : IRS Tax Tip 2018-101:What taxpayers can do when a letter arrives this summer. https://go.usa.gov/xUCSj

One thing I disagree with is for you to pay. Don't pay unless the letter is correct. The IRS has been known to make mistakes.

Tax Tip 2018-101, July 2, 2018

06/30/2018

For businesses thinking about switching.

Before your clients decide on their employement status, here are some key points to help your clients understand their classification decisions.

06/29/2018

Owe additional taxes, interest and penalties?

Here’s what taxpayers should know about penalty relief

Taxpayers who make an effort to comply with the law, but are unable to meet their tax obligations due to circumstances beyond their control may qualify for relief from penalties.

After receiving a notice stating the IRS assessed a penalty, taxpayers should check that the information in the notice is correct. Those who can resolve an issue in their notice may get relief from certain penalties, which include failing to:

File a tax return
Pay on time
Deposit certain taxes as required
The IRS offers the following types of penalty relief:

Reasonable cause
This relief is based on all the facts and circumstances in a taxpayer’s situation. The IRS will consider this relief when the taxpayer can show they tried to meet their obligations, but were unable to do so. Situations when this could happen include a house fire, natural disaster and a death in the immediate family.

Administrative Waiver and First Time Penalty Abatement
A taxpayer may qualify for relief from certain penalties if he or she:

Didn’t previously have to file a return or had no penalties for the three tax years prior to the tax year in which the IRS assessed a penalty.
Filed all currently required returns or filed an extension of time to file.
Paid, or arranged to pay, any tax due.
Before asking for First Time Abatement relief, taxpayers can request that the IRS first consider the reasonable cause relief provision. This preserves access to the First Time Abatement, which taxpayers may only use every three years.

Statutory Exception
In certain situations, legislation may provide an exception to a penalty. Taxpayers who received incorrect written advice from the IRS may qualify for a statutory exception.

Taxpayers who received a notice or letter saying the IRS didn’t grant the request for penalty relief may use the Penalty Appeal Online Self-help Tool.

06/20/2018

Gotten a love note from the IRS.

Dos and Don’ts for Taxpayers Who Get a Letter from the IRS

Every year the IRS mails millions of letters to taxpayers for many reasons. Here are some tips and suggestions for taxpayers who receive one:

Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do.

Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time all the taxpayer needs to do is read the letter carefully and take the appropriate action.

Do take timely action. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return. Taking action timely could minimize additional interest and penalty charges.

Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return, and keep it for their records.

Don’t reply unless instructed to do so. There is usually no need for a taxpayer to reply to a notice unless specifically instructed to do so. On the other hand, taxpayers who owe should reply with a payment. IRS.gov has information about payment options.

Do respond to a disputed notice. If a taxpayer does not agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub at the bottom of the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute. The taxpayer should allow at least 30 days for the IRS to respond.

Do remember that there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of the tax return and letter when calling.

Do avoid scams. The IRS will never initiate contact using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.

06/18/2018

Important info on Social Security.

Ted Sarenski, CPA/PFS, discusses 2018 changes to Social Security and much more, including claiming strategies, spousal benefits, and what might happen to the program in the future.

05/30/2018

Who has a teenager about to start their first job?

Tips for teenage taxpayers starting a summer job

Now that school’s out, many students will be starting summer jobs…from working at a summer camp to being an office intern. The IRS reminds students that not all the money they earn may make it to their pocket. That’s because employers must withhold taxes from the employee’s paycheck. Here are a few things these workers need to know when starting a summer job:

New employees. Students and teenage employees normally have taxes withheld from their paychecks by the employer. When a taxpayer gets a new job, they need to fill out a Form W-4. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay. The Withholding Calculator on IRS.gov can help a taxpayer fill out this form.

Self-employment. Students who do odd jobs over the summer to make extra cash – like baby-sitting or lawn care – are considered self-employed. They should remember that money earned from self-employment is taxable. Workers who are self-employed may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year. Taxpayers who do this should keep good records of all money they receive.

Tip income. Someone working as a waiter or a camp counselor who receives tips as part of their summer income should know that tip income is taxable income and subject to federal income tax. They should keep a daily log to accurately report them, as they will report tips of $20 or more received in cash in any single month.

Payroll taxes. This tax pays for benefits under the Social Security system. While taxpayers may earn too little from their summer job to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer.

Reserve Officers' Training Corps pay. If a taxpayer is in an ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive – like food and lodging allowances paid to ROTC students participating in advanced training - may not be taxable. The Armed Forces' Tax Guide on IRS.gov has more details.

05/20/2018

We all make mistakes.

Tips for Taxpayers Who Need to Amend a Return

Taxpayers who discover they made a mistake on their tax returns after filing can file an amended tax return to correct it. This includes changing the filing status and dependents, or correcting income, credits or deductions. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return. Taxpayers should not file an amended return to fix math errors, because the IRS will correct those.

Here are some tips on how a taxpayer amends a tax return. Taxpayers should:

Complete and mail the paper Form 1040X, Amended U.S. Individual Income Tax Return, to correct errors to an original tax return the taxpayer has already filed. Taxpayers can’t file amended returns electronically and should mail the Form 1040X to the address listed in the form’s instructions. However, taxpayers filing Form 1040X in response to a notice received from the IRS, should mail it to the address shown on the notice.
Prepare Form 1040X. Many taxpayers find the easiest way to figure the entries for Form 1040X is to make the changes in the margin of the original tax return and then transfer the numbers to their Form 1040X indicating the year they are amending. Use the second page of Form 1040X in Part III to explain the changes.
Know when not to amend. Aside from math errors, taxpayers also do not need to amend their return if they forgot to include a required form or schedule. The IRS will mail a request to the taxpayer, if needed.
Use separate forms for each tax year. Taxpayers amending tax returns for more than one year will need a separate 1040X for each tax year. Mail each tax year’s Form 1040X in separate envelopes.
Wait to file for corrected refund for tax year 2017. Taxpayers should wait for the refund from their original tax return before filing an amended return. It is okay to cash the refund check from the original return before receiving any additional refund.
Pay additional tax. Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
File within three-year time limit. Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax – usually April 15 – whichever is later.
Track an amended return. Taxpayers can track the status of an amended return three weeks after mailing using “Where’s My Amended Return?” Processing can take up to 16 weeks.

05/12/2018

For those who are part of the Airbnb economy.

Do you have clients who own a residence they pay a mortgage on and wish to rent out? Here's tax guru Julian Block to let you know the tax rules of doing so.

04/25/2018

Know anyone who hasn't filed a tax return or extension on time?

Missed the tax-filing deadline? IRS issues tips on what to do

WASHINGTON — While the federal income tax-filing deadline has passed for most people, there are some taxpayers still facing tax-related issues. This includes people who still haven’t filed, people who haven’t paid their taxes or those who are waiting for their tax refund.

The IRS offers these tips for handling some typical after-tax-day issues:

Didn’t file by April 18?

There is no penalty for filing a late return after the tax deadline if a refund is due. Penalties and interest only accrue on unfiled returns if taxes are not paid by April 18. The IRS provided taxpayers an additional day to file and pay their taxes following system issues that surfaced early on the April 17 tax deadline. Anyone who did not file and owes tax should file a return as soon as they can and pay as much as possible to reduce penalties and interest. For those who qualify, IRS Free File is still available on IRS.gov through Oct. 15 to prepare and file returns electronically.

Filing soon is especially important because the late-filing penalty on unpaid taxes adds up quickly. Ordinarily, this penalty, also known as the failure-to-file penalty, is usually 5 percent for each month or part of a month that a return is late.

But if a return is filed more than 60 days after the April due date, the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. This means that if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.

In some instances, a taxpayer filing after the deadline may qualify for penalty relief. If there is a good reason for filing late, be sure to attach an explanation to the return.

Alternatively, taxpayers who have a history of filing and paying on time often qualify for penalty relief. A taxpayer will usually qualify for this relief if they haven’t been assessed penalties for the past three years and meet other requirements. For more information, see the first-time penalty abatement page on IRS.gov.

“Where’s My Refund?”

The “Where’s My Refund?” tool is available on IRS.gov, IRS2Go and by phone at 800-829-1954. To use this tool, taxpayers need the primary Social Security number on the return, the filing status (Single, Married Filing Jointly, etc.) and the expected refund amount. The tool updates once daily, usually overnight, so checking more frequently will not yield different results.

Changing withholding?

Because of the far-reaching tax changes taking effect this year, the IRS urges all employees, including those with other sources of income, to perform a paycheck checkup now. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty. The easiest way to do that is to use the newly-revised Withholding Calculator, available on IRS.gov.

Owe taxes or need to make a payment?

Taxpayers who owe taxes can view their balance, pay with IRS Direct Pay, by debit or credit card or apply online for a payment plan, including an installment agreement. Before accessing their tax account online, users must authenticate their identity through the Secure Access process. Several other electronic payment options are available on IRS.gov/payments. They are secure and easy to use. Taxpayers paying electronically receive immediate confirmation when they submit their payment. Also, with Direct Pay and EFTPS, taxpayers can opt in to receive email notifications about their payments.

Need to fix an error on a return?

After filing their return, taxpayers may determine that they made an error or omitted something from their return. Usually an amended return is not necessary if a taxpayer makes a math error or neglects to attach a required form or schedule. Normally the IRS will correct the math error and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules. Taxpayers can use the Interactive Tax Assistant -- Should I File an Amended Return? -- to help determine if they should file an amended return to correct an error or make other changes to their return.

Form 1040X, Amended U.S. Individual Income Tax Return, must be filed by paper and is available on IRS.gov/forms at any time. Those expecting a refund from their original return, should not file an amended return before the original return has been processed. File an amended tax return to change the filing status or to correct income, deductions or credits shown on the originally-filed tax return. Use "Where's My Amended Return?" tool to track the status of an amended return. Normally, status updates are available starting three weeks after the amended return is filed. Allow up to 16 weeks for processing.

Need help responding to an IRS notice or letter?

An IRS notice or letter will explain the reason for the contact and give instructions on how to handle the issue. Most questions can be answered by visiting “Understanding Your Notice or IRS Letter” on IRS.gov. Taxpayers can call the phone number provided in the notice if they still have questions. If the issue can’t be resolved with the IRS through normal channels, contact the local Taxpayer Advocate Service office or call 877-777-4778.

Taxpayer Bill of Rights

Taxpayers have fundamental rights under the law. The Taxpayer Bill of Rights presents these rights in 10 categories. These rights protect taxpayers when they interact with the IRS. Publication 1, Your Rights as a Taxpayer, highlights these rights and the agency’s obligations to protect them.

Watch out for scams

The IRS will never make an initial, unsolicited contact via email, text or social media on filing, payment or refund issues. The IRS initiates most contacts through regular mail delivered by the United States Postal Service. Any email that appears to be from the IRS about a refund or tax problem is probably an attempt by scammers to steal personal or financial information. Forward the e-mail to [email protected].

Make a tax payment.

03/22/2018

It's tax season and the IRS isn't the only person trying to steal your money. Don't be taken in by any of these scams.

IRS Phone Scam Intensifies During Filing Season

As taxpayers are working to file their taxes, criminals are also hard at work — attempting to steal their money. While there are several versions of tax scams, the classic telephone con continues to thrive, especially during filing season. As a reminder, here’s how the scam works:

Scammers call taxpayers telling them they owe taxes and face arrest if they don’t pay. Sometimes, the first call is a recording, asking taxpayers to call back to clear up a tax matter or face arrest.
When taxpayers call back, the scammers often use threatening and hostile language. The thief claims the taxpayers may pay their debts using a gift card, other pre-paid cards or wire transfers.
Taxpayers who comply lose their money to the scammers.
Taxpayers should remember that the IRS does not:

Call taxpayers demanding immediate payment using a specific payment method, but will first mail a bill.
Threaten to have taxpayers arrested for not paying taxes.
Demand payment without giving taxpayers an opportunity to question or appeal the amount the IRS believes they owe.
Ask for credit or debit card numbers over the phone.
Taxpayers who receive these phone calls should:

Hang up the phone immediately, without providing any information.
Report these calls to the:
Treasury Inspector General for Tax Administration, using the IRS Impersonation Scam Reporting form, or by calling 800-366-4484.
Federal Trade Commission, using the FTC Complaint Assistant on FTC.gov, being sure to include “IRS Telephone Scam” in the notes.
More Information:
How to know it’s really the IRS calling or knocking on your door

IRS YouTube Videos:
Tax Scams – English | Spanish | ASL
Dirty Dozen – English | Spanish | ASL

Share this tip on social media -- : IRS Phone Scam Intensifies During Filing Season. https://go.usa.gov/xQqAY



Back to Top

IRS Tax Tip 2018-44, March 22, 2018