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IRS, States, Industry Urge Taxpayers to Learn Signs of Identity Theft

No matter how careful you are, identity thieves may be able to steal your personal information. If this happens, thieves try to turn that data quickly into cash by filing fraudulent tax returns.

The IRS, state tax agencies and the nation’s tax industry ask for your help in their effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference.

That’s why we launched a public awareness campaign called “Taxes. Security. Together.” We’ve also started a new series of security awareness tips that can help protect you from cybercriminals.

Here are a few signs that you may be a victim of tax-related identity theft:

  1. Your attempt to file your tax return electronically is rejected. You get a message saying a return with a duplicate Social Security number has been filed. First, check to make sure you did not transpose any numbers. Also, make sure one of your dependents, for example, your college-age child, did not file a tax return and claim themselves. If your information is accurate, and you still can’t successfully e-file because of a duplicate SSN, you may be a victim of identity theft. You should complete Form 14039, Identity Theft Affidavit. Attach it to the top of a paper tax return and mail to the IRS.
  2. You receive a letter from the IRS asking you to verify whether you sent a tax return bearing your name and SSN. The IRS holds suspicious tax returns and sends taxpayers letters to verify them. If you did not file the tax return, follow the instructions in the IRS letter immediately.
  3. You receive income information at tax time from an employer unknown to you. Employment-related identity theft involves the use of your SSN by someone, generally an undocumented worker, for employment purposes only.
  4. You receive a tax refund that you did not request. You may receive a paper refund check by mail that the thief intended to have sent elsewhere. If you receive a tax refund you did not request, return it to the IRS. Write “VOID” in the endorsement section, and include a note on why you are returning it. If it is a direct deposit refund that you did not request, contact your bank and ask them to return it to the IRS. Search IRS.gov for “Returning an Erroneous Refund” for more information.
  5. You receive a tax transcript by mail that you did not request. Identity thieves sometimes try to test the validity of the personal data they have chosen or they attempt to use your data to steal even more information. If you receive a tax transcript in the mail and you did not request it, be alert to the possibility of identity theft.
  6. You receive a reloadable, pre-paid debit card in the mail that you did not request. Identity thieves sometimes use your name and address to create an account for a reloadable prepaid debit card that they use for various schemes, including tax-related identity theft.

More information about tax-related identity theft can be found at Identity Protection: Prevention, Detection and Victim Assistance as well as the Taxpayer Guide to Identity Theft – all on IRS.gov.

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

IRS Offers Tips on Validating Your Identity on Your Tax Return

You should always keep a copy of your tax return. It is even more important for 2017, as the Internal Revenue Service moves to strengthen its e-signature validation process.

You must use your 2015 adjusted gross income or your 2015 self-select PIN to validate your identity on your federal electronic tax return this tax season. The electronic filing PIN is no longer available as an option.

The IRS, state tax agencies and the nation’s tax industry – partners in combating identity theft -ask for your help in their efforts. Working in partnership with you, we can make a difference.

That’s why we launched a public awareness campaign that we call “Taxes. Security. Together.” We’ve also launched a series of security awareness tips that can help protect you from cybercriminals.

As part of the IRS efforts to protect taxpayers, the e-signature validation change mostly affects those taxpayers who have used tax software in the past but are changing software brands in 2017. If that’s you, learn more about how to verify your identity and electronically sign your tax return at Validating Your Electronically Filed Tax Return.

Here are a few important steps:

  1. Find a copy of your 2015 tax return; the original return filed with the IRS.
  2. Create a five-digit Self-Select PIN to serve as your electronic signature. It can be any five numbers except all zeros.
  3. If married filing jointly, each taxpayer must create a self-select PIN.
  4. Provide your date of birth when prompted
  5. Provide either your 2015 adjusted gross income or your 2015 self-select PIN as the “shared secret” between you and the IRS. Either number, along with your date of birth, will serve to help validate your identity and verify your e-signature.
  6. On your 2015 tax return, your adjusted gross income (AGI) is on line 37 of the Form 1040; line 21 on the Form 1040-A or line 4 on the Form 1040-EZ.

This change will not affect most taxpayers. For example, if you are a returning customer, your software generally will automatically populate your date of birth and “shared secret” information. Those of you who switched software products generally must enter the “shared secret” information yourself.

If you don’t have a copy of your 2015 tax return, you may be able to get a copy from your prior-year software provider. If your software account is still active, you may be able to view your 2015 federal return to find your AGI. Or, you may ask your prior-year tax preparer for a copy if you had your return prepared professionally. If those are not options, you may use a Get Transcript self-help tool on IRS.gov to get a Tax Return Transcript showing your AGI.

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

 

2017 Standard Mileage Rates for Business, Medical and Moving Announced

WASHINGTON — The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

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 rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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

 

Avoid Identity Theft; Learn How to Recognize Phishing Scams

Simply ask for it. That’s the easiest way for an identity thief to steal your personal information.

Each day, people fall victim to phishing scams through emails, texts or phone calls and mistakenly turn over important data. In turn, cybercriminals try to use that data to file fraudulent tax returns or commit other crimes.

The Internal Revenue Service, state tax agencies and the tax industry — all partners in the fight against identity theft — urge you to learn to recognize and avoid phishing scams.

We need your help in the fight against identity theft. That’s why, as part of the Security Summit effort, we launched a public awareness campaign that we call Taxes. Security. Together. We’ve launched a series of security awareness tips that can help protect you from cybercriminals.

It’s called “phishing” because thieves attempt to lure you into the scam mainly through impersonations. The scam may claim to be from a friend, a company with whom you do business, a prize award – anything to get you to open the email or text.

A good general rule: Don’t give out personal information based on an unsolicited email request.

Here are a few basic tips to recognize and avoid a phishing email:

  • It contains a link. Scammers often pose as the IRS, financial institutions, credit card companies or even tax companies or software providers. They may claim they need you to update your account or ask you to change a password. The email offers a link to a spoofing site that may look similar to the legitimate official website. Do not click on the link. If in doubt, go directly to the legitimate website and access your account.
  • It contains an attachment. Another option for scammers is to include an attachment to the email. This attachment may be infected with malware that can download malicious software onto your computer without your knowledge. If it’s spyware, it can track your keystrokes to obtain information about your passwords, Social Security number, credit cards or other sensitive data. Do not open attachments from sources unknown to you.
  • It’s from a government agency. Scammers attempt to frighten people into opening email links by posing as government agencies. Thieves often try to imitate the IRS and other government agencies.
  • It’s an “off” email from a friend. Scammers also hack email accounts and try to leverage the stolen email addresses. You may receive an email from a “friend” that just doesn’t seem right. It may be missing a subject for the subject line or contain odd requests or language. If it seems off, avoid it and do not click on any links.
  • It has a lookalike URL. The questionable email may try to trick you with the URL. For example, instead of www.irs.gov, it may be a false lookalike such as www.irs.gov.maliciousname.com. You can place your cursor over the text to view a pop-up of the real URL.
  • Use security features. Your browser and email provider generally will have anti-spam and phishing features. Make sure you use all of your security software features.

Opening a phishing email and clicking on the link or attachment is one of the most common ways thieves are able not just steal your identity or personal information but also to enter into computer networks and create other mischief.

Learning to recognize and avoid phishing emails – and sharing that knowledge with your family members – is critical to combating identity theft and data loss. Businesses should educate employees about the dangers.

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

IRS, Partners Suggest Tips for Safe Holiday Online Shopping

The holiday online shopping season is a prime time for cybercriminals and identity thieves to trick shoppers into giving up financial, identity or password information.

The Internal Revenue Service and its partners urge you to follow a few safe practices that will increase your security online and help protect you from identity theft.

The IRS, state tax agencies and the tax professional industry are asking for your help in their effort to combat identity theft and fraudulent tax returns. Working in partnership with you, we can make a difference.

That’s why we launched a public awareness campaign that we call Taxes. Security. Together. We’ve also launched a series of security awareness tips that can help protect you from cybercriminals.
The Monday after Thanksgiving Day is known as Cyber Monday – the online equivalent to Black Friday — as shoppers head to retailers’ websites.

Here are a few basic steps to make your shopping season safer:

  1. Look for the “s” in “https.” The “s” in the opening URL stands for security. Always look for “https” – example, https://www.irs.gov – before sharing any information about your identity or your credit card/bank information. The “https” means the site uses secured, encrypted technology.
  2. Don’t use a public Wi-Fi to shop online. Unsecured hotspots can be used by thieves to peek at your transactions. Do not make online purchases or financial transactions while connected to a public Wi-Fi.
  3. Avoid phishing emails. Your inbox will likely fill with all kinds of “special” offers that you never requested, from online companies unknown to you. Avoid clicking on any links within emails from unknown sources or downloading any attachments. Beware of emails asking you to update your accounts, for example from your credit card company, bank, tax software provider or internet provider.
  4. Skip online employment offers. Along with retail “special” offers in your inbox, the holiday season also brings special, unsolicited job offers – promising “mystery shopping” jobs or work-from-home employment for extra cash. These often are ruses to steal your identity. Think before providing your Social Security number, financial information or identity information to any online source.
  5. Shop with reputable online retailers. If a retailer is unknown to you, check them out a bit before providing any information. The Better Business Bureau is a good place to start. You also can do a general internet search for customer reviews of the company.
  6. Review financial statements frequently. Keep a close eye on your credit card and/or bank statements. Quickly alert your financial institution to any unauthorized charges or withdrawals.
    The IRS, state tax agencies and the tax industry joined together as the Security Summit to enact a series of initiative to help protect you from tax-related identity theft in 2017. And you can help by taking these basic steps.

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

IRS, Partners Warn of Online Threats; Protect Personal Computers

The Internal Revenue Service, states and the tax industry remind you that online threats and annoyances abound. There are viruses, worms, Trojans, bots, spyware and adware – all fall under the malicious programs (malware) umbrella.

How do you protect your computer from hackers and identity thieves? You need security software and to keep it turned on. You also need security on all of your digital devices, including laptops, tablets and mobile phones.

The IRS, state tax agencies and the tax professional industry are asking for your help in their effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference.

That’s why we launched a public awareness campaign that we call Taxes. Security. Together. We’ve also launched a series of security awareness tips that can help protect you from cybercriminals.

Tens of thousands of new malware programs launch each day, making the use of security software essential to safe internet use. These malware programs can disable your computer, install viruses that give cybercriminals control, steal your data, track your keystrokes to give criminals your passwords and many other malicious acts.

Here are a few basic steps to help protect your computer:

  1. Use pre-installed security software. Many computers come pre-installed with firewall and anti-virus protections. A good broad-based anti-malware program should be able to protect you from viruses, Trojans, spyware and adware.
  2. Turn on automatic updates. Set your security software to update automatically so it can be upgraded as threats emerge. Also, make sure your security software is on at all times.
  3. Investigate your security software options. Search out trusted sources to learn more about security software options. This will help you decide if you should invest in security software that gives you even stronger protections and options.
  4. Consider encryption software. If you retain important financial documents, such as prior-year tax returns, on your computer, consider investing in encryption software to prevent unauthorized access by hackers or identity thieves.
  5. Protect your children. If your children also use the same device, make sure it has parental control options to protect your children from malicious websites. Educate your children about the threats of opening suspicious web pages, emails or documents.
  6. Set password protections for all devices. Whether it’s your computer, tablet or mobile phone, always set a password requirement for accessing the device. If it is lost or stolen, your device is still protected from access.
  7. Protect your wireless network. Set password and encryption protections for your wireless network. If your home or business Wi-Fi is unsecured it also allows any computer within range to access your wireless and steal information from your computer.
  8. Never download “security” software from a pop-up ad. A pervasive ploy is a pop-up ad that indicates it has detected a virus on your computer. It urges you to download a security software package. Don’t fall for it. It most likely will install some type of malware. Reputable security software companies do not advertise in this manner.
  9. Avoid downloads from suspicious sources. Never open a PDF document or picture attached in an email from an unknown source. It may contain malware.

The IRS, state tax agencies and the tax industry joined as the Security Summit to enact a series of initiative to help protect you from tax-related identity theft in 2017. You can help by taking these basic steps.

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

 

Employers that hire Holiday Help: Understand the Health Care Law’s Rules Around Seasonal Workers

As an employer, your size – for purposes of the Affordable Care Act – is determined by the number of your employees. If you hire seasonal or holiday workers, you should know how these employees are counted under the health care law.
Employer benefits, opportunities and requirements are dependent upon your organization’s size and the applicable rules. If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, you are an ALE for the current calendar year. However, there is an exception for seasonal workers.
If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, your organization is an ALE. Here’s the exception: If your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, your organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis.
The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions. For information on the difference between a seasonal worker and a seasonal employee under the employer shared responsibility provisions see our Questions and Answers page.

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

End of the Year Tips: Max Out Retirement Contributions

Saving for the future has several benefits. You pay less in taxes, ensure your retirement years are secure and qualify for tax breaks. The simplest way to realize the full advantages of your retirement account is to maximize your retirement contributions. You may make a contribution anytime from January 1 to the tax filing deadline (April 17 in 2017).

401(k)

If you have a 401(k) plan, you can contribute up to $18,000 in 2016. The limit was the same in 2015. If you maxed out your 401(k) in 2015, then you should keep your monthly contributions at the same rate.

Roth IRA

Eligibility for a Roth IRA phases out for taxpayers with income between $116,00 and $131,000 ($183,000-$193,000 for couples). Couples earning more than this limit can convert a traditional IRA to a Roth IRA.

You do not pay taxes on your contributions to a 401(k), but you’re taxed on withdrawals. However, on Roth IRA, you pay taxes at the time of making the contribution and make tax-free withdrawals later. Depending on which retirement account you have, you can plan your contributions based on how you are taxed. If you prefer paying taxes at a known tax rate, then the Roth IRA is preferable. However, if you want tax-free growth, a traditional IRA or a 401(k) is the retirement account to choose.

IRA

You can contribute up to a maximum of $5,500 to an IRA in 2016. If you are age 50 years or older, the maximum contribution limit is $6,500. One restriction to an IRA is that if you have a workplace retirement plan and a modified adjusted gross income (AGI) between $61,000 and $71,000 for individuals ($98,000-$118,000 for couples) in 2015, then you cannot make a full deduction on the contribution. In some cases, you cannot even take a partial deduction.

Also, even if you don’t have a workplace retirement plan but your spouse does, you cannot deduct the full amount of your contribution to an IRA if your income together is over $183,000. If your income together is over $193,000, then you cannot take any deduction.

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

End of the Year Tips: Prepare Your Records

Preparing your tax and financial records for 2016 will help you to keep track of your income, expenditures, savings and taxes. These four elements are vital in measuring monetary growth. Organized records also make preparing your tax return easier. Here are tips on what to do when preparing your records.

What Records to Keep

Records of receiving of income such as bank statements, expenditures such as credit card statements, and receipts of expenses that are tax deductible such as those of charitable giving are important and should be retained. Any document that supports the claims you make on your tax return should find a space in your tax records.

In case of an audit, the responsibility of proving deductions, entries and statements on your tax return falls on you. This is called the burden of proof. Even if you did not include incorrect information on the return, you must be able to prove that you included the correct information by using supporting documents.

Collect Information Returns

Depending upon whether you file as individual or business, you might be required to file various information returns. Some of the most commonly filed information returns are:

  • Form W-2 for Wage & Tax Statement
  • 1099-INT for Interest Income
  • 1099-D for Dividends
  • 1099-MISC for Miscellaneous Income
  • 1098-E for Student Loan Interest
  • 1099-R for Distribution from Pensions, Annuities, IRAs, Retirements, etc.
  • 5754 for Receiving Gambling Winnings
  • 1099-C for Cancellation of Debt

For businesses, there are forms, including:

  • Form 8027 – Employer’s Annual Information Return of Tip Income & Allocated Tips
  • Form 8300 – Report of Cash Payments Over $10,000 Received in a Trade or Business

The recipient must receive these forms by January 31 unless the deadline doesn’t apply, such as in the case of gambling winnings.

Gather the Receipts

If you itemize deductions, it is vital to keep the receipt or bank record of any deduction you claim on your return. You may gather receipt for medical expenses that are not covered, charitable contributions, restaurant bills for business meetings, property taxes, and so on. If you are unsure of what to keep, retain and organize the receipts of all the expenses before your return preparer informs you of which deductions to claim.

For help with tax planning 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

The Taxpayer Advocate

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that provides free assistance to taxpayers in resolving tax problems. The TAS can be beneficial to both individual taxpayers and businesses whose problems are causing financial difficulty.

Eligibility

Taxpayers who tried but failed to resolve their tax issues through normal IRS channels are eligible to receive help from the TAS. Also, taxpayers who are dissatisfied with the procedures and service of the IRS can seek assistance from the TAS. Some of the problems that the organization helps to resolve are identity theft, fraud by unscrupulous return preparers, tax debt and collection actions.

If you or your business is experiencing financial difficulties due to the IRS, are in danger of IRS collection actions, or are frustrated with the IRS’ service, you may seek help from the TAS.

Resolution Process

As part of the TAS resolution process, an individual or business is assigned to an advocate who listens to their tax problem and helps them to become familiar with standard IRS procedures. All services of the TAS are free.

The information taxpayers share with the TAS is not shared with the IRS except when it is necessary to provide relief to the taxpayer.

How to Contact

The TAS has at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico. Taxpayers can contact the advocate in their state by finding their phone number in Publication 1546. Additionally, taxpayers may call the TAS toll-free number 1-877-777-4778.

To send a request for assistance, file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order) with the TAS. Form 911 is available by phone at 1-800-829-3676, and on the IRS website – irs.gov.

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

 

 

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