The IRS reported audit rates declined last year for the sixth year in a row and reached their lowest level since 2002. That’s good news for people who don’t like to be audited (which is everybody)!
But don’t get complacent. A closer look at the IRS data release reveals some audit pitfalls you should know about. Here is what you need to know:
The end of tax season is approaching and if you’re getting a refund, here are four useful tips to know.
If you need to call the IRS this tax season, be aware that you'll be asked to verify your identity. This is part of the IRS's continuing effort to keep taxpayer data secure. You can help your phone call go smoothly by having the following information handy when you dial:
The IRS is warning taxpayers to keep on high alert for the next few months. Scammers may try to get their hands on your money or tax return by collecting your personal or financial data. According to the IRS, its employees will never:
Scammers were very successful last year with a scheme to pry W-2 pay stub data away from employers. The IRS warned that it may be one of several techniques they use again this year.
Brokers are required to report your cost basis to the IRS. Without good recordkeeping, you may not be able to prove you were overtaxed because of incorrect basis reporting by your broker.
The IRS released new income tax withholding tables that reflect the changes to the tax bracket structure in the Tax Cuts and Jobs Act (TCJA) passed in late December. Employers will have until Feb. 15 to update their payroll systems to reflect the new changes, and employees will start seeing the changes in their paychecks after that point.
The TCJA reduces income tax rates for almost all taxpayers. Widespread tax changes like this seldom happen, so it’s worth keeping an eye on your pay stubs over the next few weeks. The danger is that if the changes aren’t done right, you’ll either have too much tax taken out every paycheck, or end up with a big tax bill because too little was withheld. Here are some tips:
Believe it or not, pretending to be an IRS agent is one of the favorite tactics of scam artists, according to the Better Business Bureau. The con artists impersonate the IRS to either intimidate people into making payments over the phone, or to send misleading emails tricking people into sharing personal information digitally.
You can defend yourself against these scammers by knowing these simple rules:
Is a worker an independent contractor or an employee? This seemingly simple question is often the contentious subject of numerous IRS audits. As an employer, getting this wrong could cost you plenty in the way of Social Security, Medicare taxes, and other employment related taxes. Here is what you need to know.
IRS PIN Announcement: DO NOT THROW OUT
If you are one of the unfortunate victims of IRS identity theft you will need a one-time PIN to file your tax return. Without this numeric identifier your 2015 tax return will be rejected. The IRS issues taxpayer victims this PIN in a written notice.
IRS TAX AUDITS CUT BY BUDGET ISSUES
The IRS reports that its enforcement budget has been cut by $254 million, a 5% reduction from the previous year. As a result...
Each year the IRS announces a dozen tax scams they call the “dirty dozen”. One of them - telephone scams - is on a huge upswing RIGHT NOW. Here is what you need to know.
Warning: Watch out for aggressive phone scams again this tax season
The Treasury Inspector General for Taxpayer Administration (TIGTA) is warning taxpayers about one particular category of tax scams that has proven to be very widespread, very aggressive, and very relentless.
IRS commissioner reveals major concerns
IRS Commissioner John Koskinen recently discussed the major concerns the IRS has as it readies itself for the upcoming tax filing season. The proliferation of tax scams is a big concern with millions of taxpayers already having been taken in by scammers impersonating IRS agents. According to Koskinen, these scammers make threatening phone calls, trying to intimidate victims into providing personal financial information that can be used to steal identities.
A second area of concern is the IRS's involvement in handling the premium tax credits under the Affordable Care Act. Some taxpayers who were given advances on the credits based on income estimates may find that they may be receiving smaller refunds or owing the IRS money after filing their 2014 tax returns.
Please give us a call to discuss this or any of our other topics with you, so we can address your specific requirements.
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.
Pay attention to the IRS rules for charitable deductions
As the year draws to a close, you may decide to donate cash or property to one or more worthy causes. Besides the satisfaction of helping others, there's another reward for your benevolence: a tax deduction on your 2014 return. But the IRS recommends that you keep the following points in mind:
1. You may only deduct contributions made to a legitimate tax-exempt charitable organization.
Lifestyle Audits. A thing of the past?
The word “audit” is enough to raise anyone’s blood pressure. If the IRS agent then tells you they want to see bank accounts and personal records you may need a heart monitor. Should this happen to you, you could be in a process known as a lifestyle audit.
The lifestyle audit was a tool used by auditor’s to ascertain if the income you claim on your tax return can support how you live.
In this issue:
The Month of May:
School bells are ringing once again as summer draws to a close. This month's newsletter covers an array of topics from the recent warning of increased telephone scams by the IRS to helping identify when it is time to help parents with their financial management. Also included are circumstances when you need to make changes to your Healthcare Marketplace account and how to use the creation of lists to save money.
As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.
IRS Takes Steps to Reduce Fraud
In its ongoing effort to tackle the increase in fraud and identity theft at the IRS, there are a number of security enhancements announced to deal with the problem.
The problem: Would be thieves set up a deposit account at a local bank. They then file numerous tax returns claiming refunds early in the tax filing season. The tax returns request the refunds be sent to this single bank account. The account is then electronically drained of the stolen funds and the thieves are long gone.
Room for improvement. A new report says the IRS needs to improve efficiency for telephone and correspondence services. According to the Government Accountability Office (GAO), access to the IRS telephone help in 2013 remained at 68%, the same as it was in 2012. Also, unanswered paper correspondence that was more than 45 days old increased to 47% in 2013, up from 40% in 2012. (GAO-14-133, Dec. 2013)
IRS, phone home? The IRS is testing a program that allows staffers to access work email and other services on their personal smartphones. But the idea is not without risk. A new report from Treasury Inspector General for Tax Administration (TIGTA) points out that additional security is needed and recommends a thorough cost analysis to determine if the IRS should move forward with this concept. (TIGTA Ref. No. 2013- 20-108, 9124113)