Category: IRS

IRS Warning on New Phone Scam

The Internal Revenue Service (IRS) has issued a warning about a new twist on the old IRS impersonation phone scam. In this version of the scam, criminals try to convince taxpayers that they are calling from the Taxpayer Advocate Service (TAS).

The TAS is an independent organization within the IRS. Its missions is to protect your rights as a taxpayer and to help you with tax problems you can’t resolve on your own. TAS does not initiate calls to taxpayers; generally, you reach out to TAS for help, and only then would TAS make a call or otherwise contact you. You can check out the TAS website here.

In the most recent scam variation, callers “spoof” the telephone number of the IRS TAS office in Houston or Brooklyn. When calls are spoofed, the scammers have changed the caller ID to make it look like they are calling from the agency, such as the IRS TAS.

Calls may be “robo-calls” or automated calls that request a call back. Once the taxpayer returns the call, the scammer requests personal information, like your Social Security number or other personally identifiable information.

In previous variations of the IRS impersonation phone scam, fraudsters demand immediate payment of taxes by a prepaid debit card, wire transfer or gift cards. Scammers may also tell potential victims that they are entitled to a large refund, but the refund can’t be released until the taxpayers provide personal information.

No matter the details, the scams typically have these things in common:
  • Scammers use fake names and IRS badge numbers to identify themselves.
  • Scammers may know the last four digits of the taxpayer’s Social Security number.
  • Scammers spoof caller ID to make the phone number appear as if the IRS or another local law enforcement agency is calling.
  • Scammers may send bogus IRS emails to victims to support their bogus calls.
  • Potential victims may hear background noise of other calls to mimic a call site (many of these calls come from fraudulent call centers like this one).
  • After threatening potential victims with jail time or other punishment, scammers may hang up and call back pretending to be from local law enforcement agencies or the Department of Motor Vehicles (again, spoofing calls so that the caller ID again supports the claim).
As a reminder, the IRS will never:
  • Call to demand immediate payment over the phone, nor will the IRS call about taxes owed without first having mailed you a bill.
  • 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.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card, gift card or wire transfer.
  • Ask for credit or debit card numbers over the phone.

Despite increased publicity about these kinds of scams, reports of phone scams increased in 2018, with the IRS reporting receipt of thousands of such complaints each week. These phone scams are “a major threat to taxpayers” and as such, continued to hold down a top spot on the IRS “Dirty Dozen” list of tax scams.

Don’t engage or respond with scammers. Here’s how to protect yourself:
  • If you receive a call from someone claiming to be from the IRS, and you do not owe tax, or if you are immediately aware that it’s a scam, don’t engage with the scammer and do not give out any information. Just hang up.
  • If you receive a telephone message from someone claiming to be from the IRS, and you do not owe tax, or if you are immediately aware that it’s a scam, don’t call them back.
  • If you receive a phone call from someone claiming to be with the IRS, and you owe tax or think you may owe tax, do not give out any information. Call the IRS back at 1.800.829.1040 to find out more information.
  • Never open a link or attachment from an unknown or suspicious source.
  • If you’re not sure about the authenticity of an email, don’t click on hyperlinks. A better bet is to go directly to the source’s main Web page.
  • Use security software to protect against malware and viruses found in phishing emails.
  • Use strong passwords to protect online accounts and use a unique password for each account. Longer is better, and don’t hesitate to lie about important details on websites since crooks may know some of your personal details.
  • Use two or multifactor authentication when possible. Two-factor authentication means that in addition to entering your username and password, you typically enter a security code sent to your mobile phone or other device.

Don’t fall for the tricks. Keep your personal information safe by remaining alert. And, when in doubt, assume it’s a scam.

Got a Letter from the IRS?

If you have received an IRS envelope from the Internal Revenue Service (IRS) in your mailbox that does not contain a refund check, it will probably cause an increase your heart rate likely increased. But Don’t panic, though; most of the issues in these letters can be dealt with simply and painlessly.

Every year, the IRS sends millions of letters and notices to taxpayers, notifying them of changes to their account, requesting additional information, and alerting them to payments that are due. Many of these letters are issued in error or are sent only because of a misinterpretation of facts.

If you get such a letter, it may be for one of several reasons; perhaps you overlooked an item of income or the amounts you reported on your return don’t match other information that the IRS received. It is also possible that someone else is using your SSN or is claiming your child as a dependent. The list goes on.

Such a notice normally covers a very specific issue about your account or your tax return. The notice should offer specific instructions on what you need to do to satisfy the inquiry. However, because the law requires that these letters be sent to advise you of your rights and other information, they can be very lengthy and difficult to understand. Thus, it is important to call this office or forward a copy of your letter immediately so that it can be reviewed and handled accordingly.

The worst option is to ignore the letter and hope that the issue will go away. Most of these letters are computer-generated, so if the issue is not resolved after a certain period of time, another letter will automatically be sent. As you might expect, each succeeding letter will become more aggressive and more difficult to deal with. Procrastination only makes the situation worse!

Most importantly, don’t automatically pay the amount the IRS is requesting unless you are positive that it is correct. Quite often, taxpayers do not actually owe the amount that is being billed, and it is quite difficult and time-consuming to get a refund for such a payment. It is thus good practice to have this office review your notice prior to making a payment.

Unfortunately, many taxpayers receive these letters without knowing it because they have moved and left no forwarding address. The IRS registers your address change when you file your annual tax return, but that may not be timely enough, especially if your return is on an extension or if you are behind in your filings. It is always better to notify the IRS (and your state, if applicable) when you get a new address, just as you would your family and your financial and business affiliations. You may not want to receive correspondence from the IRS, but as noted above, it is always easier to deal with the first notice than to wait. The complications can only increase when notices go unanswered. The IRS provides Form 8822 (Change of Address) for taxpayers who have relocated between tax filings.

Receiving such a notice may also be the first indication that your ID has been compromised by cyber thieves, many of whom have already filed phony tax returns using other people’s Social Security Numbers. If this is the case, you will want to take immediate actions to minimize the financial damage.

In fact, your notice might not even be from the IRS. It may actually be from a thief who is trying to sucker you into a scam to separate you from your hard-earned money.

You are strongly urged to contact this office immediately if you receive a notice from the IRS or from a state tax agency. It is important for all IRS correspondence be verified and then dealt with promptly and correctly. This office can handle these matters for you, so please call for assistance.

Phil Liberatore featured on Politics & Profits

Politics & Profits with Rick Amato 

Watch this short video clip as Phil Liberatore explains the reasons why Americans are receiving smaller refunds or no refunds this tax filing year.

According to IRS data for the second week of this year’s filing season, the average federal tax refund amount was down 8.7%, to $1,949, compared with the same window last year. The total number of refunds issued dropped by more than 15%.

Taxpayers who e-file and request direct deposit should see their refund hit their bank account within 21 days of submitting their return. Many have said they aren’t happy with the size of their refund this year, and some even owe money to the IRS.

PAP 021519_03 from EANTV on Vimeo.

March 2018 Online Advisor

We have just posted the MARCH 2018 issue of the ONLINE ADVISOR newsletter on our website. Here are a few headlines from that issue. To read any of these articles, click on the link at the end of this email.

ALERT: EXPIRED HOME AND EDUCATION TAX BREAKS REVIVED
Congress passed a federal budget bill in early February that temporarily revived several expired tax breaks for the 2017 tax year. Find out what’s included.

NEW TAX LEGISLATION REQUIRES PLANNING
With every simplification in the Tax Cuts and Jobs Act (TCJA), there are many more tax issues that still require planning to realize extra tax benefits. Here are seven of them.

TAX CHECKLIST FOR BUSINESS STARTUPS
Complying with regulations and tax requirements can be tricky when it comes to startups. You can make it a little easier with this checklist of things you’ll need to consider.

Just click here to read the full articles.

THE TAX REFORM BILL PASSED CONGRESS – What should I do?

Phil L. Liberatore CPA, A Professional Corporation is working hard to keep you informed and up to date on current tax and accounting news potentially affecting you, your families and your business.

THE TAX REFORM BILL PASSED CONGRESS

– What should I do?
Congress has put a bow on the biggest tax cut bill since 1986.It is estimated that 80% of tax payers will see some form of a reduction in their tax bill.

The legislation will go into effect Jan. 1, 2018. Tax filings for the 2017 year will largely resemble your 2016 tax return.

OUR RECOMMENDATIONS:

  1. Take a close look at your state income taxes that could be due for 2017. If you own your home and itemize your tax deductions, consider winter property tax bill by December 31, 2017. If you typically owe state income taxes, consider making an estimated tax payment by the end of December. The state and local income tax deductions will be limited to $10,000 in 2018.

To get an idea of what you paid for these taxes in 2016, refer to your 2016 taxes SCHEDULE A of form 1040, lines 5-8.

EXAMPLE: If your total state and local tax deduction for 2016 was 12,000, you will only be able to take up to $10,000 in deductions for 2018.

  1. Maximize your charitable organization donations. If you and your family have gotten in the habit of giving charitably, consider making your donation by December 31, 2017. This may also include ‘in-kind’ donations such as cars, etc.
  1. Consider paying down your home equity loans.They will no longer be deductible in 2018.
  1. Consider making a mortgage payment before December 31, 2017. This will increase your mortgage interest deduction for 2017.
  1. Prepare all of your 2017 miscellaneous tax deductions. They are being phased out in 2018. This includes unreimbursed work-related expenses, home office expenses, and tax preparation expenses. Have them ready for your tax return.
  1. Pay your medical bills. If you itemize, and have significant medical expenses, consider paying your medical bills. The threshold for medical expenses has actually been lowered for 2017 – 2018 to 7.5%.

FOR INDIVIDUALS:

1. Lowers (many) individual rates: The bill preserves seven tax brackets, but changes the rates that apply to: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Today’s rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

Here’s how income tax brackets will align according to the new rates:
– 10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
– 12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
– 22% (over $38,700 to $82,500; over $77,400 to $165,000 for couples)
– 24% (over $82,500 to $157,500; over $165,000 to $315,000 for couples)
– 32% (over $157,500 to $200,000; over $315,000 to $400,000 for couples)
– 35% (over $200,000 to $500,000; over $400,000 to $600,000 for couples)
– 37% (over $500,000; over $600,000 for couples)

The effect: It’s expected that the Treasury Department will come out with withholding tables in January, taxpayers might see the effect in their paychecks in February 2018.

2. Capital gains tax rates remain largely unchanged:The system for taxing capital gains and qualified dividends did not change under the act but the brackets will be adjusted.

3. Nearly doubles the standard deduction: For single filers, the bill increases it to $12,000 from $6,350 currently; for married couples filing jointly it increases to $24,000 from $12,700.

The effect: The percentage of filers who choose to itemize would drop sharply, since the only reason to do so is if your deductions exceed your standard deduction.

4. Eliminates personal exemptions: Today you’re allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. Doing so lowers your taxable income and thus your tax burden. The tax bill eliminates that option.

The effect: For families with three or more kids, that could mute if not negate any tax relief they might get as a result of other provisions in the bill.

5. Expands child tax credit: The credit is doubled to $2,000 for children under 17. It also would be made available to high earners because the bill would raise the income threshold under which filers may claim the full credit to $200,000 for single parents, up from $75,000 today; and to $400,000 for married couples, up from $110,000 today.

The effect: More Families will be able to get refundable child tax credits.

6. Eliminates mandate to buy health insurance:There would no longer be a penalty for not buying health insurance.

7. Changes to Itemized Deductions:

  1. Caps the state and local tax deduction: the final bill limits the state and local tax deduction for anyone who itemizes at $10,000. *For 2017 the deduction is unlimited for your state and local property taxes plus income or sales taxes.

The effect: If you own your home and itemize your tax deductions, you may be effected by this change, follow our recommendation on paying both real estate installments and any other state taxes you may be subject to in 2017. To get an idea of what you paid for these taxes in 2016, see your 2016 taxes SCHEDULE A of form 1040, lines 5-8.

EXAMPLE: if your total state and local tax deduction for 2017 will be 12,000, you will only be able to take $10,000 in deductions for 2018.

  1. Lowers cap on mortgage interest deduction: If you take out a new mortgage on a first or second home you would only be allowed to deduct the interest on debt up to $750,000, down from $1 million today. The bill would no longer allow a deduction for the interest on home equity loans, currently that’s allowed on loans up to $100,000.

The effect: Homeowners who already have a mortgage would be unaffected by the change. New mortgages taken after December 15 2018 will be fall under the limitation.

  1. No Major changes to the charitable donation deduction: The charitable donation deduction will remain in place with some adjustments upwards on limits for cash gifts. The charitable mileage rate will remain 14 cents per mile.

The effect: Currently, if you itemize your deductions, you can deduct certain donations to qualified charitable organizations.

  1. Miscellaneous itemized deductions: All miscellaneous itemized deductions subject to the 2% floor under current law are repealed.

The effect: Taxpayers who normally claim significant miscellaneous expenses (e.g. unreimbursed work-related expenses, home office expenses, and tax preparation expenses) will not be able to claim them anymore.

  1. Medical expenses: The act reduced the threshold for deduction of medical expenses to 7.5% of adjusted gross income for 2017 and 2018.

The medical expense deduction will remain in place with a lower floor of 7.5% for tax years 2017 and 2018. That means it is retroactive to 2017.

8. Curbs who’s hit by AMT: The AMT (Alternative Minimum Tax) is a secondary tax put in place in the 1960s to prevent the wealthy from artificially reducing their tax bill through the use of tax preference items. It is reduced by raising the income exemption levels to $70,300 for singles, up from $54,300 today; and to $109,400, up from $84,500, for married couples.

9. 529 College savings plans are expanded: Under the passed bill, up to $10,000 of 529 savings plans can be used per student for public, private and religious elementary and secondary schools, as well as home school students.

10. No changes to the college and tuition credits: The American Opportunity Credit (AOC) and Lifetime Learning Credit (LLC) remain unchanged under the passed bill.

11. No change to the exclusion of gain from sale of your home: There are no changes to the current law, you can still exclude up to $250,000 ($500,000 for married taxpayers) in capital gains from the sale of your home so long as you have owned and resided in the house for at least two of the last five years.

12. Exempts almost everybody from the estate tax: The tax bill essentially eliminates estate tax for all but the smallest number of people by doubling the amount of money exempt from the estate tax – currently set at $5.49 million for individuals, and $10.98 million for married couples. This measure will likely affect owners of businesses and farms who pass on those assets to their children.

FOR BUSINESSES:

  1. Corporate Tax Relief: Under the passed bill, the corporate tax rate would be lowered to 21% (presently 35%) beginning in January 1 2018. This will effect Corporations which do not pass through their income pay tax on profits at the corporate level.
  1. Pass-Through Entities: Businesses use structures like limited liability companies (LLCs) or S corporations to pass income through to the owners without paying tax at the company level. Under the passed bill, owners of pass-through companies (e.g. S corporations, partnerships, and LLCs) and sole proprietors will be taxed at their individual tax rates less a 20% deduction (to bring the rate lower) for business-related income (subject to certain wage limits and exceptions). Phase-ins begin at $157,500 for individual taxpayers and $315,000 for married taxpayers filing jointly.

Please contact me with any questions or concerns as I will strategize to ensure that you maximize your tax savings.

Sincerely,

Phil Liberatore

DECEMBER 2017 ONLINE ADVISOR

We have just posted the DECEMBER 2017 issue of the ONLINE ADVISOR newsletter on our website. Here are a few headlines from that issue. To read any of these articles, click on the link at the end of this email.

GET READY TO SAVE MORE IN 2018
Good news! You can save more for retirement using tax-advantaged accounts, thanks to the IRS contribution rate boost. Here’s what you need to know to start saving more.

BUSINESS YEAR-END TAX MOVES
It’s not too late to get your business in the best possible position for the 2017 filing season. Consider these possible deductions and other year-end tax moves.

DON’T DIG YOURSELF INTO HOLIDAY DEBT
It’s easier than you think to overspend during the holiday season. This year, try staying on budget with these helpful, money-saving tips.

Just click on the link below to read the full articles.

http://www.planningtips.com/Planning_Tips.asp?Co_ID=42935&Tip_ID=6850

Update on Equifax Cyber-Security Data Breach

This is bigger than we orginally thought.

Not only was banking information and account numbers stolen, this time the hackers got a lot more than that… watch this short video clip that Phil recorded to find out more:

Also, if you haven’t yet checked to see if you were impacted, click here to find out.

We want to make sure you are completely in-the-know and protected. Feel free to give us a call if you’ve got any other questions concerning this, or the new IRS scams that Phil mentions in the video.

We are here to serve and look out for you, your family and your business.

Thank you for being the best part of Philip L. Liberatore, CPA.

October 2017 Online Advisor Released

We have just released the October 2017 issue of the Online Advisor and this month it’s packed with trending and emerging topics including “Tax Loss Harvesting Tips,” “Business Taxes—Time to Consider Section 179?” and “How to Fix Your Overfunded Account.” Get a glimpse of the articles are below and for full articles, just click on the link at the end of this article.

5 TAX-LOSS HARVESTING TIPS
If you’d like to get the most out of your financial portfolio, consider this tax strategy. Take a look at the best ways you can use losses to reduce short-term gains.

BUSINESS TAX: TIME TO CONSIDER SECTION 179?
Are you thinking about depreciating business assets? Find out more on how Section 179 works and whether or not using it is a good move to make this tax season.

HOW TO ACE THE FAFSA
A recent change makes the FAFSA available Oct. 1. Learn the common mistakes students make when filling it out and the best ways to avoid them.

HOW TO FIX YOUR OVERFUNDED ACCOUNT
Overfunding happens. Find out how and what steps you can take to fix the problem with your IRA or 401(k).

Just click on the link below to read the full articles.

www.planningtips.com

Latest Financial and Tax Trends in IRS Problem Solvers’ September Online Advisor

Here’s a sneak peek at what this month’s topics include:

SAY GOODBYE TO THE COLLEGE TUITION DEDUCTION
Congress decided not to extend the $4,000 deduction for 2017.
Luckily, there are two popular education credits that may offer a more valuable tax break.

AVOID THESE COMMON TAX MISTAKES
The IRS faces thousands of tax returns with errors each year.
Learn the most common mistakes to avoid possible penalties and fines.

KNOW YOU’RE RIGHTS WHEN DEBT COLLECTORS CALL
In the U.S. strict rules in place that forbid any kind of harassment. Knowing your rights can help you can deal with debt collection with minimum hassle.

SAVE ON INSURANCE BY RAISING DEDUCTIBLES Having insurance for your home and vehicle is important, but it can also be expensive. That’s why it’s a good
idea to consider increasing your coverage deductibles.

Just click on this link to read the full articles.

10 Tips to Save on Income Taxes Before This Year Ends

When it comes to income tax deductions, most people don’t look past the obvious real estate taxes and mortgage interest. The tax laws are now so complicated that if you try to do it all on your own, you’ll most probably end up paying way more than you should!

Surprised?

Check out these Top 10 Tips to save on your income taxes before this year ends:

1) Go Green: Going green is not only great for the environment and the future of our planet, it also saves you income tax! If you live in a sunny area, install some solar panels on your house and other properties. You’ll save thousands of dollars on electricity bills and earn credits for the panels. Certain cooling and heating systems also qualify for tax credits.

2) Save for your children’s college: A very small percentage of people open 529 accounts for their kids’ college fees. Since you’ve already paid taxes on the money you’re investing, no taxes are applicable on the returns of that investment, as long as you use the money for funding college education. This is a fantastic way to not only save some money on taxes, but also ensure your kids go to college and live a secure life. It’s difficult to put a price on this, wouldn’t you agree?

3) Put more money into your retirement accounts: This might put a frown on your face initially, but that frown will turn into an “ear-to-ear” smile when you realize how much money you save in the long run! Plus, you’ll have more money when you’re ready to retire. You will be able to travel the world and do the things you’ve always wanted to do! You won’t be sad, broke and angry – you’ll be celebrating life! Money that is transferred to certain types of retirement accounts, such as IRAs and 401Ks is tax deductible, albeit only up to a certain limit.

4) Verify whether you are eligible for earned credit on income tax: Many people have absolutely no idea about this – even though it is possible to save as much as $6,000! If you are a low-to-medium income tax payer, there is a high probability you will qualify for earned tax credit. Anybody who earns less than $50,000 annually should check to be sure they qualify.

5) Don’t pay off your mortgage too early: This one is a bit tricky. On one hand, you want to get out of debt as soon as possible but then you also want to lower your taxes. As you may already know, mortgage interests are tax deductible. There is also the emotional element to consider, since people experience a deep satisfaction when paying off mortgage and this makes the equation even more complicated. Also, you can’t stretch your mortgage too long in a bid to save tax, since the extra interest may balance the money that you’re saving on taxes. So you’ll want to talk to an accountant and plan everything out properly. This will enable you to extract the maximum juice out of the tax laws.

6) Donate or gift money to your loved ones: It is well known charitable donations are tax-deductible. However, they are not the only type of gift that can help you to lower/save taxes. Did you know an individual can receive up to $13,000 dollars tax free? Not only that, but a child can receive up to $26,000 dollars ($13,000 from each parent). This technique is called “gift splitting.” Basically, what this means is that you can save taxes on the money you “gift” to your kids and even other loved ones.

7) Medical expenses are tax deductible: Hopefully, you will always remain healthy and will never have to claim tax benefits due to ill health. However, if you do happen to incur medical expenses, be sure to file all receipts meticulously considering you can save dollars on your taxes. Even basic supplies like bandages are covered and to learn the complete list of supplies and services, log on to www.irs.gov.

8) Become a businessperson: Launching your own business could be your path to financial freedom. Business owners are taxed differently. Entrepreneurs can save a lot more on taxes, especially if they own a home-based business. They save money on depreciation of assets. For example, a company car loses its value each year, so the depreciation can be counted as an expense and is subject to tax deductions. A business person can also choose to keep money in the company’s account instead of withdrawing it as income. If you have an idea brewing in your head for several months or years, it’s time to put it into action. A personal accountant can help you to understand tax laws better and potentially save your business thousands of dollars every year.

9) Your children can help save you money: Normally, your children drain your bank account in a major way. Yet, you are eligible for a plethora of tax benefits if you have children under the age of 17.

10) Alimony payments: They say that every dark cloud has a silver lining. Even failed relationships provide some consolation in the form of tax savings. If you pay alimony to your ex-spouse, the payments are tax deductible.

Let’s be honest, tax laws sound like Mandarin Chinese to most people and it can be difficult to interpret them, so many people just avoid them like the flu. However, this escapist attitude can cause them to lose a lot of money.

A reputable public accountant can help you to get a grip over your financial situation and even help you to turn around a liability into a potential saving. For example, if you have any worthless securities, then your losses are tax deductible. The only criterion is the security must truly be absolutely worthless. The losses are not just limited to the past financial year.

Any losses incurred in the past seven years can be deducted, as long as they haven’t been deducted previously. Even losses incurred in the stock market and mutual funds are eligible for deduction, up to a certain limit. A tax saving expert can rectify these issues, so why wait? Contact Phil Liberatore from IRS Problem Solvers today – it could be the smartest investment you make this year.