DiSabatino CPA Blog

DiSabatino CPA Blog

A blog by Michael DiSabatino CPA with topics on Tax Savings, Business, Management and more...

Mike's weekly post usually concentrated on tax saving strategies.

Chances of Audit Continue to Drop What you need to know

organization

You can be audited the later date of either three years after the filing deadline of your tax return or when you actually filed your tax return. However, there are two main exceptions to this rule that can extend the risk of being audited;

1

If the IRS audits a tax return and discovers an error of more than 25% of your claimed tax obligation they can go back six years.

2

 If the IRS deems there is fraud involved, they can go back indefinitely.

Every year the IRS publishes their examination statistics. Provided here are three years of published information to help you identify trends:

Continue reading
Rate this blog entry:
0
115 Hits

Income the IRS Can't Touch

money

Wouldn't it be nice to have a source of nontaxable income? You may be more fortunate than you realize. Listed here are a number of income items that the IRS does not tax.

  1. Tax-free interest. The federal government does not tax municipal bond interest. This includes bonds issued by a state or municipality. The tax-free benefit increases the higher your income, but caution must be taken to ensure the underlying municipality is not in dire financial condition.
  2. Health insurance premiums. For now, most health insurance premiums are tax free. This could change in the future to help pay for health care reform, but for most this benefit can be paid in pre-tax dollars.
  3. Income from Roth IRA and Roth 401(k) accounts. While the amounts contributed into these retirement savings accounts are taxed, any earnings made on the contributions are federal tax free as long as holding period and distribution rules are followed.
  4. Health savings accounts (HSA). Contributions and earnings in health related savings accounts are tax free as long as the proceeds in the account are used to pay for qualified health care expenses.
Continue reading
Rate this blog entry:
0
207 Hits

Understanding Tax Terms: Basis Covering the bases on basis

tax

Basis is a common IRS term, but probably does not enter into your everyday conversation. This IRS term is important because it impacts the taxes you pay when you sell, exchange or give away property.

What basis is

The IRS describes basis as:

The amount of your capital investment in a property for tax purposes. Use your basis to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale, exchange or other disposition of the property.

In plain language, basis is the cost of your property as defined by the tax code.

There are a few different types of basis that apply to different situations, including "cost basis," "adjusted basis," and "basis other than cost."

Continue reading
Rate this blog entry:
0
383 Hits

Tax Facts Without Political Spin New non-profit makes unbaised data readily available to all

Award

The Internet has put virtually unlimited information at our fingertips. And yet, much of the information about our government and tax system available online often reflects the bias of one group or another. If only there was a way to see important data uncolored by spin, gossip or a partisan bent.

Just the facts

Enter USAFacts.org, a website launched in April that makes a wide variety of data about life – and taxes – in the United States easily available. It centralizes and organizes publicly available statistics about population, finance, and the economy from dozens of government bodies, such as the Agriculture, Treasury and Justice departments. It’s a nonprofit site whose goal is to present the data without a political agenda or commercial motive.

Continue reading
Rate this blog entry:
0
396 Hits

Private Agencies Now Collecting for IRS Your scam alert should be on high

Private Agencies Now Collecting for IRS
Your scam alert should be on high

In a recent announcement, the IRS notified all taxpayers that outside collection of past-due tax bills is now beginning in mid-April 2017. This is a direct result of Congressional action in late 2015 requiring the IRS to turn over to outside companies billions in uncollected taxes it is no longer pursuing. This will impact all of us. Here is what you need to know.

Turn up your scam alert. Rest assured the tax-related identity theft epidemic is going to hit a new high as scam artists now will try to impersonate collection agencies. Never pay a collection agency directly for any tax owed. If you do not think you owe money to the IRS, ask for help.

Only four agencies have been authorized. Only four collection agencies have been authorized to collect unpaid taxes for the IRS. They are:

  • ConServe, of Fairport, New York
  • Pioneer, of Horseheads, New York
  • Performant, of Pleasanton, California
  • CBE Group, of Cedar Falls, Iowa
Continue reading
Rate this blog entry:
0
489 Hits

Tax Tips for Those Getting Married Know someone getting married? Send them this tip now.

Tax Tips for Those Getting Married
Know someone getting married? Send them this tip now.

Tax Tips for Those Getting Married

Know someone getting married? Send them this tip now.

If you recently got married, plan to get married, or know someone taking the matrimonial plunge, here are some important tax tips every new bride and groom should know.

Notify Social Security. Notify the Social Security Administration (SSA) of any name changes by filling out Form SS-5. The IRS matches names with the SSA and may reject your joint tax return if the names don’t match what the SSA has on file.

Address change notification. If either of you are moving, update your address with your employer as well as the Postal Service. This will ensure your W-2s are correctly stated and delivered to you at the end of the year. You will also need to update the IRS with your new address using Form 8822.

Continue reading
Tags:
Rate this blog entry:
0
554 Hits

Weekly Tax Tip Five Steps to Take if You're Audited

Weekly Tax Tip
Five Steps to Take if You're Audited

Getting audited is no one’s idea of a good time, yet you can minimize the stress if you take the right approach.

Step 1: Understand why and when. While it's possible you were selected randomly, it’s more likely you were selected for a specific reason. One example might be if your deductions for charitable donations or business expenses were greater than is typical for your income or profession. Before proceeding, make sure you understand what is being challenged and when you must reply.

Comment: Your chance of being audited “randomly” rises along with the size of your income. With $200,000 a year in income your chance of being audited nearly doubles (1.01% in FY2016) compared with a person who has half of that income. People with more than $10 million in income have a nearly 1-in-5 chance of an audit every year.

Continue reading
Rate this blog entry:
0
695 Hits

Reminder: 1st Quarter Estimated Taxes Due

Reminder: 1st Quarter Estimated Taxes Due

If you have not already done so, now is the time to review your tax situation and make a 2017 estimated quarterly tax payment using Form 1040-ES. The first quarter due date is now here.

First-quarter due date: Tuesday, April 18, 2017.

Remember, you are required to withhold (pre-pay) at least 90 percent of your current tax obligation, or 100 percent of last year’s federal tax obligation throughout the tax year.* A quick look at last year’s tax return and a projection of this year’s obligation can help determine if a quarterly payment might be necessary in addition to what is being withheld from any paychecks. Here are some things to consider:

Continue reading
Rate this blog entry:
0
761 Hits

Your next audit may be an "audit lite"

Your next audit may be an "audit lite"

Your next audit may be an "audit lite"

The IRS is handling more reviews with form letters

In-person audits with an IRS agent are becoming more uncommon. The IRS is instead handling many routine reviews through form letters called correspondence audits.

These IRS letters are a kind of “audit lite” the agency uses to ask for clarification and justification of specific deductions on your tax return. Common issues that trigger a correspondence audit are large charitable deductions, withdrawals from retirement accounts and education savings plans, excess miscellaneous deductions, and small business expenses.

Continue reading
Tags:
Rate this blog entry:
0
782 Hits

Taxpayers to forfeit more than $1 billion in refunds Are you one of them?

Taxpayers to forfeit more than $1 billion in refunds
Are you one of them?

The IRS disclosed there will be more than $1 billion in federal tax refunds forfeited this year if taxpayers don’t claim them by April 18.

Refunds have to be claimed within three years or they are forfeited to the government. The unclaimed $1 billion comes from about 1 million taxpayers who still haven't filed returns for the 2013 tax year. Often the people who leave these refunds behind are young adults, college students, senior citizens and low-income taxpayers.

Why refunds go unclaimed

Continue reading
Tags:
IRS
Rate this blog entry:
1
923 Hits

Tax Credits versus Tax Deductions

Tax Credits versus Tax Deductions

Tax Credits versus Tax Deductions... Which is worth more to you? 

Every industry and profession has common terms that are used so often those of us in the business often forget that most people do not have the depth of understanding that a person working within the tax code might have. One of these areas is understanding the differences between the tax terms "deductions" and "credits". Is one better than the other?

If it were simple

Continue reading
Rate this blog entry:
0
1035 Hits

DiSabatino CPA Receives 2017 Best of Camarillo Award

 

HoFCrystalBlack.png.md.cc.DJF 6T6S FUVVDiSabatino CPA Receives 2017 Best of Camarillo Award

Camarillo Award Program Honors the Achievement

CAMARILLO March 2, 2017 -- DiSabatino CPA has been selected for the 2017 Best of Camarillo Award in the Certified Public Accountants category by the Camarillo Award Program for the fifth consecutive year.

Continue reading
Rate this blog entry:
0
1068 Hits

The Tax Impact as Your Children Grow Up Prepare now for potential income tax hits

The Tax Impact as Your Children Grow Up
Prepare now for potential income tax hits

The Tax Impact as Your Children Grow Up
Prepare now for potential income tax hits

As your children grow older, you can easily be surprised by a larger tax bill. To help ease the possible burden, consider these tax implications as your dependent children age.

 

Continue reading
Tags:
Rate this blog entry:
0
1263 Hits

Ten Commonly Overlooked Deductions

Ten Commonly Overlooked Deductions

 Ten Commonly Overlooked Deductions
Don't forget these ideas to lower your taxes

The tax code is about 75,000 pages long, so it’s not surprising there are many overlooked money-saving deductions hidden within it. Check out this list of commonly overlooked deductions. You might wind up with a bigger refund than you expected.

Continue reading
Rate this blog entry:
0
1347 Hits

In the News: IRS Announces Release of Held Refunds

In the News: IRS Announces Release of Held Refunds

Finally...your refund is soon to be on its way

The IRS recently announced that tax returns using the Earned Income Tax Credit and the Additional Tax Credit will have their refunds issued. Congress approved legislation that delayed sending out these refunds until at least February 15th.

Here are the key dates: 


 

Saturday, February 18th: IRS "Where’s My Refund" web application will be updated with refund information.

Week of Feb. 27th: Probable timeframe the refunds will be arriving in bank accounts.

Here is a copy of the announcement:

Where’s My Refund? will be updated on Feb. 18 for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before Feb. 18, some taxpayers may see a projected deposit date or an intermittent message that the IRS is processing their return.

By law, the IRS is required to hold EITC and ACTC refunds until Feb. 15. However, taxpayers may not see those refunds until the week of Feb. 27. Due to differing timeframes with financial institutions, weekends and the Presidents Day holiday, these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 -- if there are no processing issues with the tax return and the taxpayer chose direct deposit.

Source: IRS e-news

Please recall this announcement only relates to held refunds that use the Earned Income Tax Credit and the Additional Tax Credit. Other refunds should be processed in normal timing.

Please consult our firm to asses your specific situation.

DiSabatino CPA
Michael DiSabatino
651 Via Alondra Suite 715
Camarillo, CA 93012
Phone: 805-389-7300
ww.sharpcpa.com

This publication provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten or redistributed without permission, except as noted here.  All rights reserved.

Continue reading
Rate this blog entry:
1
1458 Hits

No Health Insurance Still Means Big Penalties Avoid this tax penalty by taking action now

No Health Insurance Still Means Big Penalties
Avoid this tax penalty by taking action now

No Health Insurance Still Means Big Penalties

Avoid this tax penalty by taking action now

If you think President Trump's recent executive order means that the fees for not having health insurance are no longer in effect, you could be sorely mistaken. To avoid potentially thousands of dollars in "shared responsibility" tax penalties, you still need to be covered by a basic level of health insurance.

Continue reading
Rate this blog entry:
2
1559 Hits

Rejected! What to do if your e-filed tax return is rejected by the IRS

Rejected!
What to do if your e-filed tax return is rejected by the IRS

Rejected!

What to do if your e-filed tax return is rejected by the IRS

More than 90% of individual tax returns are now filed electronically, and usually the process goes smoothly. However, when an e-filed tax return is rejected, e-filing can become more complicated.

Continue reading
Rate this blog entry:
0
1638 Hits

File That Final Tax Return

File That Final Tax Return
File That Final Tax Return
Five reasons death and a tax return makes sense

If a parent or loved one died this past year, you may wish to consider filing a final tax return even if not technically required to do so.

Continue reading
Rate this blog entry:
0
161114 Hits

Do You Need to File a Tax Return?

Do You Need to File a Tax Return?
Do You Need to File a Tax Return?
Getting this wrong can cost you

One of the more common tax questions is whether you need to file a tax return this year. The answer is: It all depends. Here are some quick tips to help you determine your answer.

Continue reading
Rate this blog entry:
0
160566 Hits

Understanding Tax Terms: All those 1099's

Understanding Tax Terms: All those 1099's
Understanding Tax Terms: All those 1099's
Be prepared to file your tax return

Most taxpayers receive at least one 1099 each year. Virtually every small business, including sole-proprietors, must issue at least one 1099 each year. Here is a summary of the most common of these informational tax forms that you will need to file your tax return this year.

Continue reading
Rate this blog entry:
0
160613 Hits
 

Speed Up Your Success!

Contact Us Today: 1-805-389-7300

© 2006-2017 Michael DiSabatino, CPA. All Rights Reserved.