As we approach the 2017 tax season, we want to remind everyone about “Tax Scams” that are ongoing throughout the country. If you have any questions please call our office. We will be happy to talk to you to determine if any contact from the IRS is legitimate. We are here to protect our clients.
If it sounds too good to be true, it probably is! In recent years, thousands of people have lost millions of dollars and their personal information to tax scams and fake IRS communication. This page looks at the scams affecting individuals, businesses, and tax professionals and what do if you if you spot a tax scam.
REMEMBER: The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. In addition, IRS does not threaten taxpayers with lawsuits, imprisonment or other enforcement action. Being able to recognize these tell-tale signs of a phishing or tax scam could save you from becoming a victim.
Information for Taxpayers
IRS-Impersonation Telephone Scams
An aggressive and sophisticated phone scam targeting taxpayers, including recent immigrants, has been making the rounds throughout the country. Callers claim to be employees of the IRS, but are not. These con artists can sound convincing when they call. They use fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make it look like the IRS is calling.
Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting. Or, victims may be told they have a refund due to try to trick them into sharing private information. If the phone isn’t answered, the scammers often leave an “urgent” callback request.
Note that the IRS will never:
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
- Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Ask for credit or debit card numbers over the phone.
Remember: Scammers Change Tactics — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but variations of the IRS impersonation scam continue year-round and they tend to peak when scammers find prime opportunities to strike.
Please remember that the deadline for Corporate Extensions is Thursday September 15, 2016. If you are a client of ours, you must have your completed tax information into our office no later than Friday September 9, 2016. Any tax information received after this date will not be ready before the September 15 deadline. The penalty for late filing for companies is $195.00 per shareholder per month.
The Individual Extension deadline is October 17, 2016 as October 15 is a Saturday. If you are our client, we must have your tax information no later than September 23, 2016 in order for us to complete the tax return prior to the deadline. The IRS charges Individuals penalties for late filing.
When considering refund issues, the IRS wants taxpayers to be aware several factors could affect the timing of their tax refunds next year.
A major change will affect some early tax filers claiming two key credits who won’t see their refunds until after Feb. 15.
Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund – even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the agency more time to help detect and prevent fraud.
As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do. Even though the IRS cannot issue refunds for some early filers until at least Feb. 15, the IRS reminds taxpayers that most refunds will still be issued within the normal time frame: 21 days or less, after being accepted for processing by the IRS.
”This is an important change to be aware of for some taxpayers used to getting an early refund,” Koskinen said. “We’ll be focusing on awareness of this change throughout the fall, but it’s important for taxpayers who might be affected by this to be aware of the change for their planning purposes. Although we still expect to issue most refunds within 21 days, we don’t want people caught by surprise if they get their refund a few weeks later than previous years.”
What you need to know about Education Credits for 2016
If you pay for college in 2016, you may receive some tax savings on your federal tax return, even if you’re studying outside of the U.S. Both the American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe, but only the AOTC is partially refundable.
Here are a few things you should know about education credits:
- American Opportunity Tax Credit – The AOTC is worth up to $2,500 per year for an eligible student. This credit is available for the first four years of higher education. Forty percent of the AOTC is refundable. That means, if you’re eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any tax.
- Lifetime Learning Credit – The LLC is worth up to $2,000 per tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
- Qualified expenses – You may use only qualified expenses paid to figure your credit. These expenses include the costs you pay for tuition, fees and other related expenses for an eligible student to enroll at, or attend, an eligible educational institution.
- Eligible educational institutions – Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify. If you aren’t sure if your school is eligible:
- Ask your school if it is an eligible educational institution, or
- See if your school is on the U.S. Department of Education’s Accreditation database.
- Form 1098-T – In most cases, you should receive Form 1098-T, Tuition Statement, from your school by February 1. This form reports your qualified expenses to the IRS and to you. The amounts shown on the form may be either: (1) the amount you paid for qualified tuition and related expenses, or (2) the amount that your school billed for qualified tuition and related expenses; therefore, the amounts shown on the form may be different than the amounts you actually paid. Don’t forget that you can only claim an education credit for the qualified tuition and related expenses that you paid in the tax year and not just the amount that your school billed.
- Income limits – The education credits are subject to income limitations and may be reduced, or eliminated, based on your income.
- Interactive Tax Assistant tool – To see if you’re eligible to claim education credits, use the Interactive Tax Assistant tool on IRS.gov.
How a Summer Wedding Can Affect Your Taxes
With all the planning and preparation that goes into a wedding, taxes may not be high on your summer wedding checklist. However, you should be aware of the tax issues that come along with marriage. Here are some basic tips to help with your planning:
• Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov, by calling 800-772-1213 or from your local SSA office.
• Change tax withholding. A change in your marital status means you must give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. If you and your spouse both work, your combined incomes may move you into a higher tax bracket or you may be affected by the Additional Medicare Tax. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4.
• Changes in circumstances . If you or your spouse purchased a Health Insurance Marketplace plan and receive advance payments of the premium tax credit in 2016, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace when they happen. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance credit payments are paid directly to your insurance company on your behalf to lower the out-of-pocket cost you pay for your health insurance premiums. Reporting changes now will help you get the proper type and amount of financial assistance so, you can avoid getting too much or too little in advance, which may affect your refund or balance due when you file your tax return.
• Address change. Let the IRS know if your address changes. To do that, send the IRS Form 8822, Change of Address. You should also notify the U.S. Postal Service. You can ask them online at USPS.com to forward your mail. You may also report the change at your local post office. You should also notify your Health Insurance Marketplace when you move out of the area covered by your current health care plan.
• Tax filing status. If you are married as of Dec. 31, that is your marital status for the whole year for tax purposes. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to figure the tax both ways to find out which status results in the lowest tax.
• Select the right tax form. Choosing the right income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. You must claim itemized deductions on a Form 1040, not a Form 1040A or Form 1040EZ.
How to Register for Get Transcript Online Using New Authentication Process
The IRS recently enhanced its e-authentication procedures required to register and use certain self-help tools on IRS.gov. This is a more rigorous e-authentication process than IRS has used in the past. It is in line with federal information security standards and the latest industry practices used by major financial institutions as well as many other large businesses.
We continue to support multiple options for those taxpayers who may be unable to access online features, and will continue to look for ways to expand options for all taxpayers.
The new e-authentication procedures currently are being applied to Get Transcript Online. The new procedures are scheduled to be applied to some other tools, such as Get an Identity Protection PIN, later this year.
Here’s what new users need to get started:
- A readily available email address;
- Your Social Security number;
- Your filing status and address from your last-filed tax return;
- Access to certain account numbers for either:
- credit card, or
- home mortgage loan, or
- home equity (second mortgage) loan, or
- home equity line of credit (HELOC), or
- car loan
- A readily available mobile phone. Only U.S-based mobile phones may be used. Your name must be associated with the mobile phone account. Landlines, Skype, Google Voice or similar virtual phones as well as phones associated with pay-as-you-go plans cannot be used;
- If you have a “credit freeze” on your credit records through Equifax, it must be temporarily lifted before you can successfully complete this process.
Because this process involves verification using financial records, there may be a “soft notice” placed on your credit report. This notice does not affect your credit score.
To securely access Get Transcript Online, first-time users must:
- Submit their name and email address to receive a confirmation code;
- Enter the emailed confirmation code;
- Provide their SSN, date of birth, filing status and address on the last filed tax return;
- Provide some financial account information for verification such as the last eight digits of their credit card number or car loan number or home mortgage account number or home equity (second mortgage) loan number;
- Enter a mobile phone number to receive a six-digit activation code via text message;
- Enter the activation code;
- Create username and password, create a site phrase and select a site image.
Returning taxpayers who have not completed the new secure access process:
- Log in with an existing username and password;
- Submit financial account information for verification, for example, the last eight digits of a credit card number or car loan number or home mortgage account number or home equity (second mortgage) loan account number;
- Submit a mobile phone number to receive an activation code via text;
- Enter the activation code.
Returning taxpayers who have completed the new secure access process:
- Log in with an existing username and password;
- Receive a security code text via mobile phone provided with account set up;
- Enter the security code into secure access.
If at any point, you cannot validate your identity – for example, you cannot provide financial verification information or you lack access to a mobile phone – you may use Get Transcript by Mail.
Get Transcript by Mail allows you to go online and select a return or account transcript type to be mailed to your address of record and delivered within five to 10 days. You may also call 1-800-908-9946 to order these transcripts by phone.
Why Employers Need to Count Employees
It’s important to know how many full-time employees you have because two provisions of the Affordable Care Act – employer shared responsibility and employer information reporting for offers of minimum essential coverage – apply only to applicable large employers. Employers average the number of their full-time employees, including full-time equivalents, for the months from the previous year to see whether they are considered an applicable large employer.
Whether your organization is an ALE for a particular calendar year depends on the size of your workforce in the preceding calendar year. To be an ALE, you must have had an average of at least 50 full-time employees – including full-time-equivalent employees – during the preceding calendar year. So, for example, you will use information about the size of your workforce during 2016 to determine if your organization is an ALE for 2017.
- A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
- A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
- An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.
There are many additional rules on determining who is a full-time employee, including what counts as hours of service.
Extensions for calendar year Corporations & S-Corporations are due now.
Do not let this slip by you. File an extension for your Corporations & S-Corporations before March 15, 2016. This is an extension of time to file your corporate return. This does not extend the payment deadline.
IRS Has Refunds Totaling $950 Million for People Who Have Not Filed a 2012 Federal Income Tax Return
IRS Has Refunds Totaling $950 Million for People Who Have Not Filed a 2012 Federal Income Tax Return
The Internal Revenue Service announced today that Federal income tax refunds totaling $950 million may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2012. To collect the money, these taxpayers must file a 2012 tax return with the IRS no later than this year’s April tax deadline.
“A surprising number of people across the country overlook claiming tax refunds each year. But the clock is ticking for taxpayers who didn’t file a 2012 federal income tax return, leaving nearly $1 billion in refunds unclaimed,” said IRS Commissioner John Koskinen. “We especially encourage students and others who didn’t earn much money to look into this situation because they may still be entitled to a refund. Don’t forget, there’s no penalty for filing a late return if you’re due a refund.”
The IRS estimates the midpoint for potential refunds for 2012 to be $718, with half being worth more than $718 and half being worth less.
In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. For 2012 tax returns, the window closes on April 18, 2016 (or April 19 for taxpayers in Maine and Massachusetts). The law requires the tax return to be properly addressed, mailed and postmarked by that date.
The IRS reminds taxpayers seeking a 2012 refund that their checks may be held if they have not filed tax returns for 2013 and 2014. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.
By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2012. Many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2012, the credit is worth as much as $5,891. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2012 were:
- $45,060 ($50,270 if married filing jointly) for those with three or more qualifying children,
- $41,952 ($47,162 if married filing jointly) for people with two qualifying children,
- $36,920 ($42,130 if married filing jointly) for those with one qualifying child, and
- $13,980 ($19,190 if married filing jointly) for people without qualifying children.
Current and prior year tax forms and instructions are available on the IRS.gov Forms and Publications page, or by calling toll-free: 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2012, 2013 or 2014 should request copies from their employer, bank or other payer.
Taxpayers who are unable to get missing forms from their employer or other payer should go to IRS.gov and use the “Get a Transcript by Mail” button to order a paper copy of their transcript and have it sent to their address of record. Taxpayers can also file Form 4506-T to request a transcript of their tax return. Taxpayers can use the information on the transcript to file their return.
WELCOME TO THE 2016 TAX SEASON!
The IRS declared the official start to the 2016 Tax Season on January 19, 2016. At T. Dennis Connally Consultant P.C., CPA we have sharpened our pencils, pumped up on caffeine and are ready to hit the ground running.
If you are already our client you will have received your annual tax organizer. We look forward to seeing you again this year. Remember to fill out the organizer COMPLETELY and provide ALL supporting documents in order for us to prepare your returns in a timely manner.
We are proud to welcome Kathy Barnes CPA to our firm. Kathy has been working as a CPA locally in Douglasville for over 20 years. We are happy to have her join our team.
We are also proud to announce that Andrew Jordan, Senior Accountant, has received his Masters Degree in Accounting and his license to practice as a Certified Public Accountant. Congratulations Andrew!
With Andrew’s status as a CPA, that gives our firm three Certified Public Accountants and an Enrolled Agent to handle any situation you may have.
If you are not a client, do not hesitate to call, we still a few appointments available.
We have a top notch team ready to assist you with all your accounting and tax needs.