Author Archives: Carol Coburn

Taxpayer Bill of Rights

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS.

  • The Right To Be Informed – they have the right to be informed of IRS decisions and receive clear explanations of the outcomes
  • The Right to Quality Service- to receive prompt, courteous, professional assistance, and to speak to a supervisor about inadequate service
  • The Right to Pay No More than the Correct Amount of Tax- have the right to pay only the amount of tax legally due and have the IRS apply all payments properly
  • The Right to Challenge the IRS’s Position and Be Heard- has the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, and to receive a response if the IRS does not agree with their position
  • The Right to Appeal an IRS Decision in an Independent Forum- taxpayers are entitled to a fair and impartial administrative appeal, and generally have the right to take their cases to court
  • The Right to Finality- have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit or collect a tax debt
  • The Right to Privacy- has the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect process rights including search and seizure protections
  • The Right to Confidentiality- have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law
  • The Right to Retain Representation- Taxpayers have the right to retain an authorized representative, of their choice to represent them when dealing with the IRS
  • The Right to a Fair and Just Tax System- have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayer’s have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their issues properly and timely

Blog # 4

Blog # 4

On Tuesday, Jan. 14, the get an IP PIN tool became available at the IRS.gov/IPPIN for taxpayers. Access began for taxpayers who need to retrieve a lost/missing

IP PIN or certain taxpayers who want to voluntarily enter the IP PIN opt-in program.

The IP PIN is a six-digit number assigned to help prevent the misuse of taxpayers Social Security number on fraudulent federal income tax returns

An IP PIN helps the IRS verify a taxpayer’s identity and accept their electronic or paper tax returns. It prevents an identity thief from filing a tax return with a stolen SSN.

Taxpayers who are confirmed victims of identity theft will receive in the mail a

CP01A Notice with their IP PIN. If they do not receive the notice in time or lose the notice, they can use the Get an IP PIN tool to retrieve their IP PIN.

Taxpayers opting into the program must use the online tool to get an IP PIN.

Taxpayers who want an IP PIN can go to www.irs.gov/ippin to access the Get an IP PIN tool. Taxpayers must register an account through the IRS.

Identity verification items are required as follows:

  • Email address
  • Social Security number (SSN) or Individual Tax Identification Number (ITIN)
  • Tax filing status and mailing address
  • One financial account number linked to your name

Example:

Credit card- last eight digits (no AMEX, debit or corporate cards)

Student loan

Mortgage or home equity loan; home equity line of credit

Auto loan

  • Mobile phone linked to your name (for faster registration) or ability to receive an activation code by mail

IMPORTANT: The IRS will never email, text or call you to request your IP PIN.

Do not reveal your IP PIN to anyone but trusted tax software provider or tax preparer. Neither your provider nor preparer will ask for your IP PIN except to complete your tax return

 

 

 

Here are reasons for people to file a 2019 tax return

Here are reasons for people to file a 2019 tax return

While many people are required to file a tax return. It’s a good idea for everyone to determine if they should file. Some people with low income are not required to file, but will need to do so if they can get a tax refund.

Five tips for taxpayers who are deciding whether to file a tax return:

Find out the general reasons to file.

In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules apply if the taxpayer is self-employed or can be claimed as a dependent of someone else.

Look at tax withheld or paid.

Here are a few questions for taxpayers.

*Did the taxpayer’s employer withhold federal income tax from their pay?

*Did taxpayer make estimated tax payments?

*Did taxpayer overpay last year and have it applied to this year’s tax?

If the answer is “yes” and the taxpayer could be due a refund they must file a tax return to get their money.

Look into whether they can claim the earned income tax credit.

A working taxpayer who earned less than $55,592 last year could receive the EITC as a tax refund. They must qualify and may do so with or without a qualifying child.

Child tax credit for other dependents

Taxpayers can claim the child tax credit if they have a qualifying child under the age of 17 and meet other qualifications.

Education Credits

There are two higher education credits that reduce the amount of tax someone owes on their tax return. One is the American opportunity tax credit and the other is the lifetime learning credit. The taxpayer, their spouse, or their dependent must have  been a student enrolled at least half time

 

 

 

 

 

 

 

 

3 simple steps to take stock or your finances

Blog #2

3 simple steps to take stock or your finances

The new year is a good time to review and update your financial picture. Here are three key steps you could take this month.

Update your beneficiary designations

It’s critical to name beneficiaries on all your financial accounts, regardless of size. That’s because your retirement assets will pass on to your beneficiaries, not to the heirs named in your will or other estate planning documents.

Replenish your emergency savings

In general, strive to keep three to six months of living expenses in a safe, liquid cash reserve. This enables you to cover an unexpected, urgent expense or a setback such as job loss, without dipping into retirement savings and derailing your progress.

Review your investment portfolio

Your portfolio should always align with your financial goals, time horizon and risk tolerance. Given markets also change over time. Ensure you remain aligned to your long-term investment strategy.

IRS open 2019 tax filing season on January 27, 2020

Blog #1

IRS open 2019 tax filing season on January 27, 2020

Tax season will start for individual tax return filers on Monday, January 27, 2020, when the tax agency will being accepting and processing 2019 tax year returns.

Deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020.

The IRS set the January 27 opening date to ensure the security and readiness of key tax processing systems and to address the potential impact of recent tax legislation on 2019 tax returns.

While taxpayers may prepare returns through tax software companies and tax professionals before the start date, processing of those returns will being after IRS systems open later this month.

IRS encourages to file electronically and choose direct deposit. It’s fast, accurate and the best way to get your refund as quickly as possible!

Get ready for Taxes: What to know about the amount of a tax refund

Blog # 73

Get ready for Taxes: What to know about the amount of a tax refund

 After filing a tax return, a taxpayer will know whether or not they are to receive a tax refund. Sometimes, however, a taxpayer’s refund will be a different amount than they expect.

Here are some reasons a taxpayer’s refund might be less than they thought:

  • Financial transactions happening late in the year can have an unexpected tax impact if a 2019 federal income tax withholding unexpectedly falls short of the tax liability of the year. Certain transactions can influence taxpayer’s anticipated refund. This includes things like:
  • Year-end and holiday bonuses
  • Stock dividends
  • Capital gain distributions from mutual funds and stocks
  • Real estate or other property sold at a profit

If this happens taxpayer’s can still make a quarterly estimated tax payment directly to the IRS for the tax year 2019. The deadline for making a payment for the fourth quarter of 2019 is Wednesday, Jan. 15, 2020.

  • A taxpayer’s refund can be used to pay other debts a taxpayer owes. All or part of a refund can go to a taxpayer’s
  • Past-due federal tax
  • State income tax
  • State unemployment compensation debts
  • Child and spousal support
  • Other federal nontax debts such as student loans

A taxpayer receives a notice if their debt meets the criteria for an offset.

Any remainder of refund will be sent in a check or direct deposit as the taxpayer had originally requested on the return.

 

 

 

 

How taxpayers can avoid phishing scams

Blog # 72

How taxpayers can avoid phishing scams

Knowledge and awareness are two things that can protect taxpayers from getting caught up in a phishing scam.

A phishing scam is often an unsolicited email or a website that looks like a legitimate site designed to trick users. The scams convince people into providing personal and financial information. Scam emails can arrive to personal and work accounts on computers, smartphones and tablets.

Scammers often use one or more of these tactics:

  • Pose as a trusted bank, retail store, government agency or even a tax professional
  • Tell the taxpayer there is something wrong with their account
  • Tell the recipient they’re in violation of a law
  • Tell the taxpayer to open a link in email or download an attachment
  • Send the taxpayer a familiar looking -but fake- website and ask them to log in to it.

Thieves trick taxpayers in to revealing account numbers and passwords.

Thieves secretly download malicious software on to someone’s device to collect personal information.

A criminal might also try to fool the receipt into sending money to the scammers.

It is important to remember that the IRS will never:

Call to demand immediate payment using specific payment method such as a prepaid card, iTunes gift card or wire transfer.

  • Ask a taxpayer to make a payment to a person or organization other than the U.S. Treasury.
  • Threaten to immediately bring in local police or other law enforcement, saying they can have the taxpayer arrested for not paying.
  • Demand taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

Taxpayers who receive an IRS-related or tax-themed phishing email should forward it to phishing@irs.gov as well as the Treasury Inspector General for Tax Administration

Jan. 31 filing deadline remains for employer wage statements, independent contractor forms

Blog # 71

Jan. 31 filing deadline remains for employer wage statements, independent contractor forms

Wage statements and independent contractor forms still have a Jan. 31 filing deadline.

Before the Protecting Americans from Tax Hikes (PATH) Act, employers generally had a long period of time to file these forms. But the 2015 law made a permanent requirement for employers to file their copies of Form W-2, Wage and Tax Statement and Form W-3, Transmittal of Wage and Tax Statements with the Social Security Administration by Jan. 31.

Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors are also due at this time. Such payments are reported in box 7 of this form.

The early filing date means that the IRS can more easily detect refund fraud by verifying income that individuals report on their tax returns.

Employers should verify employees’ information. This includes names, addresses, and Social Security or individual taxpayer identification numbers.

Employers should ensure their company’s account information is current.

Automatic extensions of time to file Forms W-2 are not available.

 

 

Four Common Errors can be Costly to Small Businesses

Blog # 70

Four Common Errors can be Costly to Small Businesses

A small business owner wears many different hats.

They wear their boss hat one day, the employee hat the next day and when tax season comes around, it might be their tax hat.

They may think of doing their taxes as just another item to cross off their to-do-list.

However, this approach could leave taxpayers open to mistakes.

Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties.

 Using an Enrolled Agent (EA) as a resource is an easy way to avoid these kind of errors.  

Being aware of common mistakes can help alleviate the stress of tax time.

A few mistakes small business owners should avoid:

 Underpayment of estimated taxes- business owners should make estimated tax payments if they expect to owe $1000 or more. If they do not pay enough tax through withholdings and estimated tax payments, they may be charged a penalty.

  • Depositing employment taxes- business owners with employees are expected to deposit taxes they withhold, in addition to the employer’s share of those taxes. If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.
  • Filing late- business tax returns must be filed in a timely manner, to avoid late filing penalties.
  • Not separating business and personal expenses– it can be tempting to use one credit card for all expenses especially if your business is a sole proprietorship. Doing so will make it hard to tell legitimate business expense from personal ones. This could cause errors when claiming deductions and become a problem if the business is ever audited.

Summer Activities Can Affect Next Year’s Tax Return

Summer Activities Can Affect Next Year’s Tax Return

Getting Married:

  • Report any name change to the Social Security Administration. Report and address change to the United States Postal Service, employers and IRS.

Sending Kids to Summer Day Camp:

  • Unlike overnight camps, cost of summer day camp may count towards the child and dependent care credit.

Working Part-Time:

  • While summertime and part time workers may not earn enough to owe federal income tax, they should remember to file a return. They’ll need to file to get a refund for taxes withheld from their checks.
  • Employees receive a Form W2 from their employer. They’ll use this to prepare their tax return. W-2’s should be received by January 31 next year. Employees will get a W2 even if they no longer work for the summertime employer.
  • Summertime workers who work as independent contractors aren’t subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes.