Category Archives: Uncategorized

Taxpayers should stay alert because scammers don’t take a summer vacation

While many people take summer vacations, data thieves do not. Phishing emails and telephone scams continue to pop up around the country. The IRS reminds everyone to be vigilant to avoid becoming a victim.

Here are some things for taxpayers to remember so they can keep their personal data safe:

  • The IRS does not leave pre-recorded, urgent messages asking for a call back. In one scam, the victim is told if they do not call back, a warrant will be issued for their arrest. Other variations may include the threat of other law-enforcement agency intervention, deportation or revocation of licenses. The IRS will never threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Criminals can fake or “spoof” caller ID to appear to be anywhere in the country, including from an IRS office. This prevents taxpayers from being able to verify the true call number. If a taxpayer gets a call from the IRS, they should hang up and call the agency back at a publicly-available phone number.
  • If a taxpayer receives an unsolicited email that appears to be from the IRS, they should report it by sending it to phishing@irs.gov. Some people might also receive an email from a program closely linked to the IRS, such as the Electronic Federal Tax Payment System. Recipients should also send these emails to phishing@irs.gov.
  • The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Tips for teenage taxpayers starting a summer job


Now that school’s out, many students will be starting summer jobs…from working at a summer camp to being an office intern. The IRS reminds students that not all the money they earn may make it to their pocket. That’s because employers must withhold taxes from the employee’s paycheck. Here are a few things these workers need to know when starting a summer job:

  • New employees. Students and teenage employees normally have taxes withheld from their paychecks by the employer. When a taxpayer gets a new job, they need to fill out a Form W-4. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay. The Withholding Calculator on IRS.gov can help a taxpayer fill out this form.
  • Self-employment. Students who do odd jobs over the summer to make extra cash – like baby-sitting or lawn care – are considered self-employed. They should remember that money earned from self-employment is taxable. Workers who are self-employed may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year. Taxpayers who do this should keep good records of all money they receive.
  • Tip income. Someone working as a waiter or a camp counselor who receives tips as part of their summer income should know that tip income is taxable income and subject to federal income tax. They should keep a daily log to accurately report them, as they will report tips of $20 or more received in cash in any single month.
  • Payroll taxes. This tax pays for benefits under the Social Security system. While taxpayers may earn too little from their summer job to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer.
  • Reserve Officers’ Training Corps pay. If a taxpayer is in an ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive – like food and lodging allowances paid to ROTC students participating in advanced training – may not be taxable. The Armed Forces’ Tax Guide on IRS.gov has more details.

For help with any income tax question  call one of our offices:

Plymouth 734.454.4100,  Allen Park 313.388.7180, Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Tips for Taxpayers Who Need to Amend a Return

Taxpayers who discover they made a mistake on their tax returns after filing can file an amended tax return to correct it. This includes changing the filing status and dependents, or correcting income, credits or deductions. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return. Taxpayers should not file an amended return to fix math errors, because the IRS will correct those.

Here are some tips on how a taxpayer amends a tax return. Taxpayers should:

  • Complete and mail the paper Form 1040X, Amended U.S. Individual Income Tax Return, to correct errors to an original tax return the taxpayer has already filed. Taxpayers can’t file amended returns electronically and should mail the Form 1040X to the address listed in the form’s instructions. However, taxpayers filing Form 1040X in response to a notice received from the IRS, should mail it to the address shown on the notice.
  • Prepare Form 1040X. Many taxpayers find the easiest way to figure the entries for Form 1040X is to make the changes in the margin of the original tax return and then transfer the numbers to their Form 1040X indicating the year they are amending.  Use the second page of Form 1040X in Part III to explain the changes.
  • Know when not to amend. Aside from math errors, taxpayers also do not need to amend their return if they forgot to include a required form or schedule. The IRS will mail a request to the taxpayer, if needed.
  • Use separate forms for each tax year. Taxpayers amending tax returns for more than one year will need a separate 1040X for each tax year. Mail each tax year’s Form 1040X in separate envelopes.
  • Wait to file for corrected refund for tax year 2017. Taxpayers should wait for the refund from their original tax return before filing an amended return. It is okay to cash the refund check from the original return before receiving any additional refund.
  • Pay additional tax. Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
  • File within three-year time limit. Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax – usually April 15 – whichever is later.
  • Track an amended return. Taxpayers can track the status of an amended return three weeks after mailing using “Where’s My Amended Return?” Processing can take up to 16 weeks. 

    For help with any income tax question or an amendment call one of our offices:

    Plymouth 734.454.4100,  Allen Park 313.388.7180, Livonia 734-462-6161,

    Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

     

Disasters Don’t Plan Ahead, but You Can

Hurricane Preparedness Week is May 6-12. The IRS reminds taxpayers to prepare for hurricanes and other natural disasters now. By taking a few steps before disaster strikes, taxpayers can reduce their stress when it comes time to file claims or rebuild after the catastrophic event.

Here are some things for folks to consider:

  • Update Emergency Plans. Because a disaster can strike any time, taxpayers should review emergency plans annually. Personal and business situations change over time, as do preparedness needs.
  • Create Electronic Copies of Documents. Taxpayers should keep documents – including bank statements, tax returns and insurance policies – in a safe place. Doing so is easier now that many financial institutions provide statements and documents electronically. Even if original documents are available only on paper, people should scan them into an electronic format and store them on DVD, CD or cloud storage.
  • Document Valuables. It’s a good idea for people to photograph or videotape the contents of any home, especially items of higher value. Documenting these items ahead of time will make it easier to claim insurance and tax benefits after a disaster strikes. The IRS has a disaster loss workbook which can help taxpayers compile a room-by-room list of belongings. Photographs can help prove the fair market value of items for insurance and casualty loss claims.

For questions about your taxes and planning ahead contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

 

Withholding Calculator Frequently Asked Questions

Q: For 2018, when should I check the Withholding Calculator?

A: As soon as possible. Withholding takes place throughout the year. The earlier you check, the more time there is for withholding to take place evenly during the rest of the year. However, it is a good idea to check the Withholding Calculator when you have a copy of your 2017 tax return or your 2016 return available; having this will make using the Withholding Calculator easier.

Q: Why should I check on my withholding? 

A: The IRS always recommends employees check their withholding each year to make sure they’re having the right amount of tax withheld from their paychecks. This year, it’s more important than ever to check following major changes from the new Tax Cuts and Jobs Act. Among other things, the new law increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions and changed the tax rates and brackets. These changes mean it’s an especially good idea to do a “paycheck checkup” to review your tax withholding. Also, if you experience a change in your status that affects the number of your withholding allowances – such as a divorce – then you should check withholding so that you can give your employer a new Form W-4.

Q: Are some employees more likely to need to change their withholding in 2018?

A: Yes. For people with simpler tax situations, the 2018 withholding tables were designed to produce the correct amount of tax withholding—avoiding under- and over-withholding of tax. This means that people with simple situations do not need to make any changes, assuming their current Form W-4 on file with their employer was filled out following the form instructions. Simple situations include singles and married couples with only one job, who have no dependents, and who do not claim itemized deductions, adjustments to income or tax credits.

But many people have more complicated financial situations, and tax withholding from their wages might need to be revised.  With the new tax law changes, it’s especially important for these people to use the Withholding Calculator on IRS.gov to check if they have the right amount of withholding.

Among the groups with more complicated financial situations who should check their withholding are:

Families with more than one earner.
People with two or more jobs at the same time or who only work for part of the year.
People with children who claim credits such as the Child Tax Credit.
People with older dependents, including children age 17 or older.
People who itemized deductions in 2017.
People with high incomes and more complex tax returns.

Taxpayers with more complex situations might need to use Publication 505, Tax Withholding and Estimated Tax, expected to be available on IRS.gov in early spring, instead of the Withholding Calculator.  For example, this includes those who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents, and people with capital gains or dividends.

For questions about your taxes and the new tax act contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

IRS Urges Travelers Requiring Passports to Pay Their Back Taxes or Enter into Payment Agreements; People Owing $51,000 or More Covered

WASHINGTON ─ The Internal Revenue Service today strongly encouraged taxpayers who are seriously behind on their taxes to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy.

This month, the IRS will begin implementation of new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Taxpayers affected by this law are those with a seriously delinquent tax debt.  A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full
  • Paying the tax debt timely under an approved installment agreement,
  • Paying the tax debt timely under an accepted offer in compromise,
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
  • Having requested or have a pending collection due process appeal with a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

A passport won’t be at risk under this program for any taxpayer:

  • Who is in bankruptcy
  • Who is identified by the IRS as a victim of tax-related identity theft
  • Whose account the IRS has determined is currently not collectible due to hardship
  • Who is located within a federally declared disaster area
  • Who has a request pending with the IRS for an installment agreement
  • Who has a pending offer in compromise with the IRS
  • Who has an IRS accepted adjustment that will satisfy the debt in full

For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

In general, taxpayers behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS. Frequently, taxpayers qualify for one of several relief programs, including the following:

  • Taxpayers can request a payment agreement with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreement to set up a monthly payment agreement for up to 72 months.
  • Some financially distressed taxpayers may qualify for an offer in compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

IRS.gov has other tips for taxpayers to catch up on their filing and tax obligations and more information about the revocation or denial of passports because of unpaid taxes

For help with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Tax update!!!

Individual focused – Tax Cuts and Jobs Act H.R. 1 expires after 2025.
1. All of these changes do not affect tax year 2017 unless stated.
2. Inflation adjustments (tax brackets, standard deduction, AMT etc.) but it is “chained CPI” which is a slower measure of inflation.
3. Individual Mandate – ELIMINATED (penalty will still be assessd in 2017 and 2018)
4. Personal exemptions – ELIMINATED
5. Standard Deduction – raised to $12,000(single)/$24,000(Married filing Jointly)
6. Schedule A –
a. Deduction for
i. State income tax or sales tax paid – Now grouped with Property taxes and total combined is    capped at $10,000
ii. Property taxes – capped at $10,000
iii. Tax Prep Fees – ELIMINATED
iv. Personal casualty losses – ELIMINATED if the loss is not an official national disaster.
v. Mortgage Interest – Home Equity interest ELIMINATED if the HELOC isn’t used for    home        acquisition debt on up to $100,000.
vi. Mortgage Interest – Threshold lowered to $750,000 of debt. Will apply to debt incurred after December 15, 2017. Older mortgages grandfathered in.
vii. Medical Expenses – deductibility kept and temporarily lowered to 7.5% for 2 years then up to 10% of AGI.
viii. All 2% AGI deductions (employee business expnses etc.) – ELIMINATED
7. Moving Expenses – ELIMINATED except for certain members of the military.
8. Adoption Credit preserved.
9. Child tax credit – $2000 For children 16 and under. Phase-out begins at $200,000/$400,000.
10. Family tax credit – new concept; $500 for non-child dependent
11. Educator Expense deduction – Kept at $250
12. Principal Residence gain exclusion – Must own home for 2 out of 5 years. Amount that can then be excluded is $250,000/$500,000.
13. College accounts that are Section 529’s – New concept – $10,000 annually can be withdrawn to pay to send the child to a public, private, or religious or secondary school.
14. Alimony – No longer deductible to the paying spouse and no longer taxable to the receiving spouse. This applies to the final divorce decrees that happen after December 31, 2018.
15. Pass-through income – New Concept – Shareholders, Partners, Schedule E’s and Schedule C’s get a 20% deduction on their business income. So if the K-1 shows $100,000 then 20% of that is excluded and the $80,000 is taxed. There is a cap on this. The full 20% deduction is available for $157,500(single)/$315,000(married filing jointly). Income above the limit has to go through a formula which will include employee wages paid and/or value of qualified property purchased. Real estate investors are most likely to benefit from this. Special Service trades get lower phase-out amounts. Types of special service trades are CPA’s, Lawyers, Doctors.
16. Discharge of student debt – excludes from income in event of death or disability.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Strong Passwords Help Keep Tax Data Safe

Passwords are often the key to guarding access to personal information and data stored on computers or sent over email. Because most taxpayers file their returns electronically and access account information online, it is critical for taxpayers to not only create strong passwords for all tax-related accounts, but to do everything in their power to protect those passwords.

Here are seven things taxpayers should consider when creating and protecting passwords:

  • Longer passwords are safer and more difficult to guess. A strong password should be a minimum of eight characters. It should include a combination of letters, numbers, symbols and special characters.
  • A password should include at least one uppercase letter, one lowercase letter, one number, and one symbol or character.
  • Taxpayers should not include personal information in passwords.  A criminal can find names of siblings, friends, children and pets on social media sites. This makes it easier for cybercriminals to figure out a person’s password that includes these names.
  • Avoid using the same password for all information systems, accounts and devices. If someone does guess one password, they will not have access to all the other accounts.
  • Taxpayers can substitute numbers and symbols for letters in words or phrases to make it more difficult for a thief to guess a password.
  • People should never share passwords.
  • Taxpayers should be careful of attempts to trick you into revealing your password.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Taxpayers Should Be Wary of Unsolicited Calls from the IRS

Taxpayers who get an unexpected or unsolicited phone call from the IRS should be wary – it’s probably a scam. Phone calls continue to be one of the most common ways that thieves try to get taxpayers to provide personal information. These scammers then use that information to gain access to the victim’s bank or other account.

When a taxpayer answers the phone, it might be a recording or an actual person claiming to be from the IRS. Sometimes the scammer tells the taxpayer they owe money and must pay right away. They might also say the person has a refund waiting, and then they ask for bank account information over the phone.

Taxpayers should not take the bait and fall for this trick. Here are several tips that will help taxpayers avoid becoming a scam victim.

The real IRS will not:

  • Call to demand immediate payment
  • Call someone if they owe taxes without first sending a bill in the mail
  • Demand tax payment and not allow the taxpayer to question or appeal the amount owed
  • Require that someone pay their taxes a certain way, such as with a prepaid debit card
  • Ask for credit or debit card numbers over the phone
  • Threaten to bring in local police or other agencies to arrest a taxpayer who doesn’t pay
  • Threaten a lawsuit

Taxpayers who don’t owe taxes or who have no reason to think they do should follow these steps:

  • Use the Treasury Inspector General for Tax Administration’s IRS Impersonation Scam Reporting web page to report the incident.
  • Report it to the Federal Trade Commission with the FTC Complaint Assistant on FTC.gov.
  • Taxpayers who think they might actually owe taxes should follow these steps:
  • Ask for a call back number and an employee badge number.
  • Call the IRS at 1-800-829-1040.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

 

Tips for Individuals Who Need to Reconstruct Records After a Disaster

Taxpayers who are victims of a disaster might need to reconstruct records to prove their loss. Doing this may be essential for tax purposes, getting federal assistance, or insurance reimbursement.

Here are 12 things taxpayers can do to help reconstruct their records after a disaster:

  • Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov, or use their smartphone with the IRS2Go mobile phone app. They can also call 800-908-9946 to order them by phone.
  • To establish the extent of the damage, taxpayers should take photographs or videos as soon after the disaster as possible.
  • Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of appropriate documents.
  • Home owners should review their insurance policy as the policy usually lists the value of a building to establish a base figure for replacement.
  • Taxpayers who made improvements to their home should contact the contractors who did the work to see if records are available. If possible, the home owner should get statements from the contractors to verify the work and cost. They can also get written accounts from friends and relatives who saw the house before and after any improvements.
  • For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, the taxpayer can contact the attorney who handled the trust.
  • When no other records are available, taxpayers can check the county assessor’s office for old records that might address the value of the property.
  • There are several resources that can help someone determine the current fair-market value of most cars on the road. These resources are all available online and at most libraries:
    • Kelley’s Blue Book
    • National Automobile Dealers Association
    • Edmunds
  • Taxpayers can look on their mobile phone for pictures that show the damaged property before the disaster.
  • Taxpayers can support the valuation of property with photographs, videos, canceled checks, receipts, or other evidence.
  • If they bought items using a credit card or debit card, they should contact their credit card company or bank for past statements.

If a taxpayer doesn’t have photographs or videos of their property, a simple method to help them remember what items they lost is to sketch pictures of each room that was impacted.

For help with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600