Jun 182018
 

Douglas Tax Blog. U.S.A. IRS.GOV/NEWSROOM

Most people are unaware of the IRS withholding calculator. We are often asked the question, am I withholding enough from my taxes to cover what I will owe ?  This question comes up usually around tax filing season, but often throughout the tax year. Its important to understand that if you have a set paycheck, and are worried about whether you are withholding enough, then yes, its a good idea to check your withholding, usually at the beginning of the year. And since the tax laws have changed its probably a good idea for just about everyone to do this, because you need to recalculate your taxes anyway.

Its even more important for people with variable income, or those who are self employed to do this. If you are self employed, you need to not only keep track of your expenses, but you need to plan ahead of time, and that starts with determining, through the use of the IRS withholding calculator, whether you are holding enough back in taxes to pay Uncle Sam. If you don’t do this ahead of time, you may find yourself needing tax resolution work, due to poor planning.

When should this be done is another common question. The IRS always states that you should check your withholding early in the year to make sure you have enough tax withheld from your paycheck, or if your self employed, set the right amount aside to pay in your quarterly estimated tax payments. And with the Tax Cuts and Jobs Act, the new law increased the standard deduction, removed personal exemptions, increased child tax credits, limited and or discontinued certain deductions and changed certain tax rates. So it makes sense to try and figure out where you end up.  The IRS withholding calculator is designed to do just that.

One last thought, many people believe that the new tax law lowered tax rates for everyone, therefore its not necessary to do this. Wrong. We have found that some people’s taxes have actually gone up, it depends upon the individual situation. Don’t take chances, prepare ahead of time, so you don’t have to call a tax resolution company.

National Society of Tax Professionals

Jun 122018
 

Douglas Tax Blog. U.S.A. IR-127

The Internal Revenue Service has provided guidance for taxpayers and employers about changes from the tax law changes that impact, move related expenses, un-reimbursed employee expenses, and vehicle expenses. The tax law changes suspends the deduction for moving expenses for tax years beginning after December 31st, 2017, and through January first of 2026. Meaning you cannot deduct the use of an automobile as part of a move until after 2016.

The tax law changes itemized deductions that are limited to 2 percent of adjusted gross income. This change will impact an un-reimbursed employee for items like uniforms, union dues and the deduction of business related meals, entertainment and travel. The business standard mileage rate which was issued before the Tax Law, cannot be used to claim an itemized deduction for un-reimbursed employee travel expenses in taxable years after December 31st, 2017, and before January 1st, 2016.

The standard mileage rate for the use of a car, van, or pickup or panel truck for 2018 remain, 54.5 cents for every mile of business travel driven a 1 cent increase from 2017. 18 cents per mile driven for medical purposes, a 1 cent increase form 2017. 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged. The standard mileage rate for businesses is based on an annual study of the fixed and variable costs of operating an automobile.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. A taxpayer may not use the business standard mileage for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than 4 vehicles being used at the same time.

One of the fastest way that self employed individuals get into tax trouble, is not keeping tabs on expenses, especially mileage deductions, that can add up to thousands of dollars in write offs. Don’t put yourself in a position where you need tax resolution services, because of sloppy record keeping.

  •  06/12
Jun 022018
 

Douglas Tax Blog. U.S.A. IR-2018-125

The IRS warned tax professionals thru its state and industry Security Summit partners to beware of phishing emails posing as state accounting and professional associations. The IRS received reports from tax professionals who received fake emails that were trying to trick them into disclosing their email usernames and passwords. Cyber criminals specifically targeted tax professionals in Iowa, Illinois, New Jersey, and North Carolina. The IRS also received reports about a Canadian accounting association.

Any suspicious or obviously fake organizations, should be reported right away to the IRS. Tax professionals need to be alert to these type of scams, as they change over time, and reporting and educating each other is a great way to combat the crime. Tax professionals who are members of professional associations should go directly to those associations websites rather than open any links or attachments.  Tax practitioners who receive suspicious emails related to taxes or the IRS, or phishing attempts to gain access to practitioner databases, should forward those emails to phishing@irs.gov

Scams like this are reminders to the tax community to be on guard against cybercriminals who are adapting tactics, and scams to try to catch unsuspecting individuals off guard. Being aware of new scams as they develop is crucial to stopping this type of crime. The Security Summit partners recommend these steps. Learn to know phishing emails, and never open a direct link or any attachment from a suspicious email.

Go to publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security, by the National Institute of Standards and Technology for additional information.  Install anti malware security software on your computer and set software to update automatically. Create passwords of at least 8 characters in length, then make sure to encrypt all sensitive files and emails and use strong passwords as well.

Make sure to clean or wipe old hard drives to destroy any data, including data on printers. Limit access to taxpayer data to individuals who need to know. Report any theft or data loss to the appropriate IRS Stakeholder Liason.

 

  •  06/02
May 212018
 

Douglas Tax Blog. U.S.A.  IR-117

The IRS Security  Tax Scams program has warned tax professionals to increase their computer security and to beware of their inbox, especially the email scams that act as a friend and want them to click on a link, so they can download a virus onto their computer, to gain confidential information. The phishing scams target Social Security numbers of Tax Professionals, and can lead to identify theft and false tax returns.

Since this tax scam surfaced several years ago, the IRS has been educating the tax industry to take countermeasures, first by educating them on what is happening, and secondly by providing tools to share information when an attack does happen, so law enforcement can react to prosecute those perpetrating the crimes. The IRS security tax scams campaign, has led to convictions of a large number of criminal gangs, and individuals who have targeted the tax industry for personal Social Security numbers.

The effort is being led led by the Treasury Department, Internal Revenue Service, Tax Inspector General For Tax Administration, Federal Bureau of Investigation, U.S. Justice Department, and Attorney General’s of all 50 States. It is a large scale crackdown of the tax refund fraud that swept the United States over the several years, along with the identity theft crackdown. The tools available to both Federal and State agencies are being expanded, and more and more companies, and organizations are taking part, casting a wider net, to catch criminals at a faster pace.

The tax community and others with taxpayer data, including human resource departments, small businesses and others, are among those targeted with increasingly sophisticated phishing schemes. The Anti-Phishing Work Group, a not for profit industry focused on eliminating identity theft and fraud from phishing, reported seeing a significant increase in phishing activities in 2017 ans so far in the year 2018. As programs like the IRS security tax scams show, stopping phishing scams will require a large scale coordinated effort.

  •  05/21
May 202018
 

Douglas Tax Blog. U.S.A.

We started discussing the IRS using private debt companies back when George Bush Jr. was President. The Republican’s wanted to outsource government functions to private industry to cut costs, but ultimately the idea didn’t work out for some simple reasons. Now, many years later, forgetting the lessons of history, and especially why the idea didn’t work before, some of the very Republicans who tried it before, are trying to do it again. If history is any guide, we know what will happen, again.

Having taxpayers pay for IRS private debt companies may seem like a good idea, but two problems prevent the utilization of it from coming to fruition. First off, the taxpayer Bill Of Rights. Whenever a Tax Debt Collector goes after someone with a tax debt, they have to adhere to to the taxpayer Bill of Rights, but because the Private Debt Agencies are so aggressive, they simply don’t.

When President Clinton was in office, after the first attempt at Private IRS debt collectors, horror stories hit the media, regarding taxpayers who were run over by Private IRS debt companies, who forgot that they had to adhere to the Taxpayer Bill of Rights, were then taken to court by those very same taxpayers, and in the end, Congress decided that the litigation costs were not worth the time and effort spent.

The second problem with this whole idea, is that the IRS is a perfectly good collection agency, by itself, but has never been funded adequately. For every dollar put into the IRS for Collection, they are bringing in nearly five dollars. Not a bad return, but when you politicians who are philosophically opposed to funding any form of government at all, it becomes a sticky issue.  IRS private debt companies is a good idea, but politics can sometimes get in the way, of even good ideas.  Sounds like business as usual in Washington D.C., when IRS private debt companies that have failed in the past are given traction again, with no reform’s.

  •  05/20
May 152018
 

Douglas Tax Blog. U.S.A.

IRS Amnesty and Tax Evasion questions are posed to us now and then, along with both business owners and individuals looking for options for dealing with a tax debt. The first thing we usually need to know is, do you have any unfilled tax returns ?  Being in compliance (filling all required tax returns), is imperative if alternatives for dealing with a large tax debt are to be pursued.

When we find out that a person has not filled a large number of tax returns, we often advise them to file right away to avoid the possibility of any type of criminal action by the IRS. The general rule of thumb is that if you seek help, and or file prior to the IRS catching up with you, criminal action usually does not happen, because you are showing are showing a willingness to solve the problem.

We had a client with a huge home health care business in the State of Arizona. They had grown too fast, knew little about taxes, and by the time they realized what had happened, they had over a million in payroll tax debt. They contacted us and the next thing that happened was a call form the owner stating Treasury Department officials with sidearms were at the business wanting to now what they were up to. The difference between any criminal action seemed to be an email from the owner to us, asking for Tax Resolution Services.

When it comes to IRS Amnesty and Tax Evasion, we also get questions about offshore accounts. The IRS has been active for years now, going after anyone who has parked money offshore, in an attempt to avoid taxes. Over $10 billion has been collected in these efforts to date. The IRS Offshore Voluntary Disclosure Program started in 2009, and has been designed to allow individuals to come forward to get back into the tax system.

Even though the Voluntary Disclosure Program has substantial penalties, which have been going up for several years, as long as someone steps up prior to the IRS finding out about them, the general rule is that they will not be criminally convicted. Of course that determination is a lengthy process to determine IRS Amnesty, and yet some situations warrant criminal prosecution.

  •  05/15
May 072018
 

Douglas Tax Blog. U.S.A.

We sometimes get a call regarding American Expatriates Taxes, whether the person is overseas, or visiting relatives back here in the United States. The common theme among all the expats is confusion about what they are required to do, and then frustration once they learn the rules of what is required by Uncle Sam of Expats, in filing taxes and the requirements about whether they will owe or not. Sometimes they end up with a debt, usually for failure to file any return at all, and sometimes they need tax relief  as a result.

Before making the decision, you need to know that if you leave, you may have to pay an exit tax. The tax is calculated by determining your assets and then figuring out what you could reasonably get for them if you sold them the day before you left the country. What you ow the IRS overall depends also upon the type of assets you have. If you have stocks or bonds,, the IRS can tax you up to 20% of those holdings. Other investments can be taxes up to the top tax bracket, which dropped after the Trump tax reform from 39.6% to the top rate of 37%.

Needing Tax Resolution because you failed to plan for such an exit can be avoided with some solid planning, but be advised and do it ahead of time. Most of the expats who call us failed to do just that, and that is why they are looking for Tax Resolution.

American Expatriates Taxes are complicated when it comes to estate and gift planning as well. Citizens of the United States are granted up to a five and a half million exclusion on taxes passed down in an estate. American Expatriate Taxes are rough in this area, as your relatives could face a forty percent tax on assets passed down in an estate. It is essential to plan ahead with a good financial planner so you can avoid needing Tax Resolution as a result of poor planning.

 

  •  05/07
Apr 302018
 

Douglas Tax Blog. U.S.A.  IRS.GOV

The IRS website has publications that can help provide tips and useful information for taxpayers, including detailed information for small businesses and IRS help. The IRS reminds small businesses of the many free products available at their website, located at IRS.GOV. Products ranging from online calculators, printable calendars, step by step guides and a series of educational webinars are all available for small businesses.

Federal law requires most employers to withhold federal taxes from their employees wages. IRS tools can help small businesses understand some of the requirements for withholding, reporting, and paying employment taxes. IRS help is also available to those who need it.  The IRS website IRS.GOV provides easily accessible information and guides on what forms employers should use as well as how and when to deposit and report employment taxes.

For the amount of Federal Income tax to withhold, small businesses first need to figure out how much tax to withhold. IRS help is available at IRS.GOV to do this. Most employers also withhold social security and medicare taxes, and the IRS website is a useful tool for gathering information that is needed to determine the correct amount to withhold and when to make payments to the IRS.

Employers pay employment taxes by making federal tax deposits through the Electronic Federal Tax Payment System. The amount of taxes withhled during the prior one year period determines when to make the deposits. Publication 3151-A, the ABCs of FTDs: Resource guide for Understanding Federal Tax Deposits is available at the IRS website as is IRS help.

Failure to make a timely deposit can mean being subject to a failure to deposit penalty of up to 15 percent. But the penalty can we waived if an employer has a history of filing required returns and making tax deposits on time. For more information, see the Penalty Relief Due to First Time Penalty Abatement page on IRS.GOV or ask for IRS help. See Understanding Employment Taxes and Employment Taxes on IRS.GOV for more information.

 

  •  04/30
Apr 102018
 

seen onDouglas Tax Blog. U.S.A.

The IRS website, IRS.GOV, has released its list of the new irs tax scams for 2018. Number one was Phishing scams. Tax Practitioners were hit hard in 2018 and the IRS came out with publication IR-2018-39, which gives detailed information on how to combat this type of fraud. The Tax Resolution Services industry and tax preparers are being proactive in defense of taxpayers information. Number two on the list were fake charities. Fraudsters were pretend to be a charity and solicit money are prowling phone lines and the IRS came out with publication IR-2018-47, in response to this scam.

Phone scams of all sorts seem to rampant, and come from not only the continental U.S. but also from international players, pretending to be IRS agents, demanding money to stop arrests. The scams seem to change with time, involve national disasters, fake organizations, and are quite creative, costing the American Taxpayer billions of dollars annually. The IRS put out IR-2018-40, in response to this scam.  Number four on the list of new irs tax scams was identity theft. This type of scam involves loss of data by large corporations and theft by individuals and small criminal organizations. IRS publication IR–2018-42 was issued by the IRS to help with this growing nationwide scam.

The new irs tax scams to make the list at number five is listing wrong deductions. This usually involves a crooked tax preparer, who is willing to skirt the tax law and code, to help individuals cheat Uncle Sam. Most get caught and end up losing their business license and some end up in jail. Many of the victims end up paying horrendous penalties to the IRS. The IRS came out with IR–2018-54 to help taxpayers spot these crooked tax preparers. The sixth on the list is improper business tax credits. IRS publication IR-2018-49 goes into detail about what a business can and cannot claim as a deduction, and if you have questions go get a tax professional for help.  Tax resolution services  is here to help.

 

 

  •  04/10
Mar 192018
 

Douglas Tax Blog. U.S.A. NSTP

Debt cancellation usually results in a 1099-C issued to the taxpayer for taxable income. The Mortgage Debt Forgiveness Act, which treated the debt forgiven on your primary residence as nontaxable income, expired on December 31, 2016 and has not yet been reinstated by Congress and may not be. If you had debt forgiveness from your mortgage company or had a loan modification then you may receive a notice for debt cancellation.

Taxpayers with debt cancellation can often exclude the cancellation of debt income to the extent they were insolvent immediately before the cancellation. If a cancelled debt is excluded from income, it is nontaxable. Generally, cancelled debt that is excludable from income is debt that is discharged in a bankruptcy. Cancelled debt is settlement of a debt for less that the amount owed. A debt may be cancelled by a lender voluntarily or through bankruptcy or other legal proceedings and may result in ordinary income from the sale of assets.

If your lender foreclosed on your mortgage or repossessed property as a result of a defaulted loan then each borrower will receive From 1099-A if, in full or partial satisfaction of the debt, they acquire an interest in your property. You need not be in the business of lending money to be subject to this reporting requirement. If your lender cancels or forgives a debt, it must provide the borrower with Form 1099-C, showing the amount of cancelled debt to re reported as income. Generally, individual taxpayers must include all cancelled amounts, even if less than $600.

IF, in the same calendar year, a debt is cancelled in connection with a foreclosure or abandonment of secured property, you may not receive both form 1099-A and form 1099-C, cancelled msnbcdebt, for the same debtor. You may receive form 1099-C only.

Nonbusiness credit card debt cancellation if non-business credit card debt is cancelled, the taxpayer may be able to exclude the cancelled debt from income up to the extent he or she is insolvent. Cancelled debt can also apply to a personal vehicle that is repossessed.

  •  03/19