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Don’t be Fooled; IRS Scams Continue to Pose Serious Threat

The Internal Revenue Service has some advice for taxpayers this April Fool’s Day that  may prevent them from being the victim of a tax scam: Don’t be fooled by scammers. Stay safe and be informed. Here are some of the most recent IRS-related scams to be on the lookout for:

Telephone Scams. Aggressive and threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding payment.

Note that the IRS will never:

  • Call to demand immediate payment over the phone or call about taxes owed without first having mailed you a bill.
  • Threaten to immediately bring in local police or other law enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone or threaten to bring in local police or other law enforcement groups to have you arrested for not paying.

Scammers Change Tactics. The IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone. The latest variation on this scam uses the current tax filing season as a hook. Scam artists call saying they are from the IRS and have received your tax return, and they just need to verify a few details to process it. The scam tries to get you to give up personal information such as a Social Security number or personal financial information, such as bank numbers or credit cards.

Tax Refund Scam Artists Posing as TAP. In this new email scam targeting taxpayers, people are receiving emails that appear to come from the Taxpayer Advocacy Panel, a volunteer board that advises the IRS on issues affecting taxpayers. They try to trick you into providing personal and financial information. Do not respond or click the links in these emails. If you receive an email that appears to be from TAP regarding your personal tax information, forward it to phishing@irs.gov.

E-mail, Phishing and Malware Schemes. The IRS has seen an approximate 400 percent surge in phishing and malware incidents so far in the 2016 tax season.

The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

Variations of these scams can be seen via text messages, and the communications are being reported in every section of the country.

When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. The sites ask for Social Security numbers and other personal information, which could be used to help file false tax returns. The sites also may carry malware, which can infect your computer and allow criminals to access your files or track your keystrokes to gain information.

If you get a ‘phishing’ email, the IRS offers this advice:

  • Don’t reply to the message.
  • Don’t give out your personal or financial information.
  • Forward the email to phishing@irs.gov. Then delete it.
  • Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

More information on how to report phishing or phone scams is available 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,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

Six Facts You Should Know Before Deducting a Charitable Donation

If you gave money or goods to a charity in 2015, you may be able to claim a deduction on your federal tax return. Here are six important facts you should know about charitable donations.

  1. Qualified Charities. You must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible. An exception to this rule is contributions under the Slain Officer Family Support Act of 2015. To check the status of a charity, use the IRS Select Check tool.
  2. Itemize Deductions. To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with your federal tax return.
  3. Benefit in Return. If you get something in return for your donation, you may have to reduce your deduction. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.
  4. Type of Donation. If you give property instead of cash, your deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market. If you donate used clothing and household items, they generally must be in good condition, or better, to be deductible. Special rules apply to cars, boats and other types of property donations.
  5. Form to File and Records to Keep. You must file Form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year. The type of records you must keep depends on the amount and type of your donation. To learn more about what records to keep see Publication 526.
  6. Donations of $250 or More. If you donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether you received any goods or services in exchange for the gift.

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,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

Time Running Out to Claim $950 Million in Refunds for 2012 Tax Returns

If you did not file a tax return for 2012, you may be one of nearly one million taxpayers who may be due a refund from that year. If you are, you must claim your share of almost $950 million by April 18. To claim your refund, you must file a 2012 federal income tax return. Here are the facts you need to know about unclaimed refunds:

  • The unclaimed refunds apply to people who did not file a federal income tax return for 2012. The IRS estimates that half the potential refunds are more than $718.
  • Some people, such as students and part-time workers, may not have filed because they had too little income to require filing a tax return. They may have a refund waiting if they had taxes withheld from their wages or made quarterly estimated payments. A refund could also apply if they qualify for certain tax credits, such as the Earned Income Tax Credit.
  • If you didn’t file a 2012 return, the law generally provides a three-year window to claim a refund from that year. For 2012 returns, the window closes on April 18, 2016 (or April 19 for taxpayers in Maine and Massachusetts).
  • The law requires that you properly address, mail and postmark your tax return by that date to claim your refund.
  • If you don’t file a claim for a refund within three years, the money becomes the property of the U.S. Treasury. There is no penalty for filing a late return if you are due a refund.
  • The IRS may hold your 2012 refund if you have not filed tax returns for 2013 and 2014. The U.S. Treasury will apply the refund to any federal or state tax you owe. It also may use your refund to offset unpaid child support or past due federal debts, such as student loans.
  • If you’re missing Forms W-2, 1098, 1099 or 5498 for prior years, you should ask for copies from your employer, bank or other payer. If you can’t get copies, get a free transcript by mail that provides the information you need by going to IRS.gov. You can also file Form 4506-T to get a transcript. Order your transcript early. Transcripts arrive in five to 10 calendar days at the address we have on file for you.

For help filing your income tax call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

 

Avoid Errors; File an Accurate Return

The IRS encourages you to file an accurate tax return. Take extra time if you need it. If you make an error on your return then it will likely take longer for the IRS to process it. That could delay your refund. You can avoid many common errors by filing electronically. IRS e-file is the most accurate way to file your tax return. Seven out of ten taxpayers can use IRS Free File software at no cost.

Here are nine common tax-filing errors to avoid:

  1. Wrong or Missing Social Security Numbers. Be sure you enter all SSNs on your tax return exactly as they are on the Social Security cards.
  2. Wrong Names. Be sure you spell the names of everyone on your tax return exactly as they are on their Social Security cards.
  3. Filing Status Errors.  Some people use the wrong filing status, such as Head of Household instead of Single. The Interactive Tax Assistant on IRS.gov can help you choose the right status. If you e-file, tax software helps you choose.
  4. Math Mistakes.  Math errors are common. Tax preparation software does the math for e-filers.
  5. Errors in Figuring Tax Credits or Deductions.  Many filers make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit, and the standard deduction. If you’re not e-filing, follow the instructions carefully when figuring credits and deductions. For example, if you’re age 65 or older or blind, be sure you claim the correct, higher standard deduction.
  6. Incorrect Bank Account Numbers.  Choose direct deposit for your refund. It’s easy and convenient.  However, be sure to use the right routing and account numbers on your return. The fastest and safest way to get your tax refund is to combine e-file with direct deposit.
  7. Forms Not Signed. An unsigned tax return is like an unsigned check – it’s not valid. Both spouses must sign a joint return. You can avoid this error by e-filing your taxes since you must digitally sign your tax return before you send it to the IRS.
  8. Electronic Filing PIN Errors. When you e-file, you sign your return electronically with a Personal Identification Number. If you know last year’s e-file PIN, you can use that. If you don’t know it, enter the Adjusted Gross Income from the 2014 tax return that you originally filed with the IRS. Do not use the AGI amount from an amended return or a return that the IRS corrected.
  9. Health Care Reporting Errors. The most common health care reporting errors that taxpayers make involve failing to claim a coverage exemption and not reconciling advance payments of the premium tax credit. If you don’t have qualifying health care coverage but meet certain criteria, you might be eligible to claim an exemption from coverage and avoid an unnecessary payment when you file your tax return. If you enrolled in health coverage through the Health Insurance Marketplace and received advance credit payments, you must file a tax return to reconcile the advance payments made on your behalf with the amount of your actual premium tax credit.

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,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

Newest IRS Telephone Scam

The IRS said Monday it is receiving new reports of scammers calling under the guise of verifying tax return information over the phone.

The latest variation has been seen in the last few weeks and capitalizes on the current tax season. Scam artists call claiming they have the consumer’s tax return, and they only need to verify a few details to process the return. The scam tries to get taxpayers to give up personal information such as a Social Security number or personal financial information like bank numbers or credit cards.

“These schemes continue to adapt and evolve in an attempt to catch people off guard just as they are preparing their tax returns,” said IRS Commissioner John Koskinen in a statement. “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.”

The IRS is reminding taxpayers to safeguard against all sorts of con games that continually change. The IRS, the states and the tax industry came together in 2015 and launched a public awareness campaign called Taxes. Security. Together. to help educate taxpayers about the need to maintain security online and to recognize and avoid “phishing” and other schemes.

Nevertheless, the IRS continues to hear reports of phone scams as well as e-mail phishing schemes across the country.

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,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

 

Claiming a Tax Deduction for Medical and Dental Expenses

Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return:

  • Itemize. You can only claim your medical expenses that you paid for in 2015 if you itemize deductions on your federal tax return.
  • Income. Include all qualified medical costs that you paid for during the year, however, you only realize a tax benefit when your total amount is more than 10 percent of your adjusted gross income.
  • Temporary Threshold for Age 65.  If you or your spouse is age 65 or older, then it’s 7.5 percent of your adjusted gross income. This exception applies through Dec. 31, 2016.
  • Qualifying Expenses.  You can include most medical and dental costs that you paid for yourself, your spouse and your dependents including:
    • The costs of diagnosing, treating, easing or preventing disease.
    • The costs you pay for prescription drugs and insulin.
    • The costs you pay for insurance premiums for policies that cover medical care qualify.
    • Some long-term care insurance costs.

Exceptions and special rules apply. Costs reimbursed by insurance or other sources normally do not qualify for a deduction. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses. You can get it on IRS.gov/forms anytime.

  • Travel Costs Count.  You may be able to deduct travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 23 cents per mile for 2015.
  • No Double Benefit.  You can’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.
  • Use the Tool.  Use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. It can answer many of your questions on a wide range of tax topics including the health care law.

For help with this and any other 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,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

What to Do if You Don’t Receive Your Health Care Information Forms

This year, you may receive one or more forms that provide information about your 2015 health coverage; these forms are 1095-A, 1095-B and 1095-C. The IRS does not issue these forms and cannot provide you with a copy of any of these forms.

This tip provides guidance about what you should do if you are expecting to receive any of these forms, but do not have them by the time you are ready to file your tax return.

Form 1095-A, Health Insurance Marketplace Statement, provides you with information about your 2015 health care coverage if you or someone in your family enrolled in coverage through the Health Insurance Marketplace. The Marketplace should have furnished Form 1095-A to you by February 1, 2016.

  • If you were expecting a form and did not get one, you should contact your Marketplace. Visit your Marketplace’s website to find out the steps you need to follow to get a copy of your Form 1095-A online. The IRS does not issue and cannot provide you with your Form 1095-A.
  • You should wait to file your 2015 income tax return until you receive this form.
  • Filing before you receive this form may delay your refund.  You need the information from Form 1095-A to complete Form 8962, Premium Tax Credit and file it with your tax return.
  • You can find more information about your Form 1095-A from the Marketplace.

Form 1095-B, Health Coverage, provides you with information about your health care coverage if you, your spouse or your dependents enrolled in coverage through an insurance provider or self-insured employer last year. Coverage providers should furnish Form 1095-B to you by March 31, 2016.

  • For questions about your Form 1095-B, contact the coverage provider. See line 18 of the Form 1095-B for a contact number. The IRS does not issue and cannot provide you with your Form 1095-B.
  • You might not receive a Form 1095-B by the time you are ready to file your 2015 tax return, and it is not necessary to wait for it to file.
  • The information on these forms may assist in preparing a return, and you, however you can prepare and file your return using other information about your health insurance.

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance, provides you with information about the health coverage offered by your employer.  In some cases, it may also provide information about whether you enrolled in this coverage. Employers that are required to issue Form 1095-C should furnish it to you by March 31, 2016.

  • For questions about your Form 1095-C, contact your employer. See line 10 of Form 1095-C for a contact number. The IRS does not issue and cannot provide you with your Form 1095-C.
  • You might not receive a Form 1095-C by the time you are ready to file your 2015 tax return, and it is not necessary to wait for it to file.
  • The information on these forms may assist in preparing a return. However you can prepare and file your return using other information about your health insurance.

Do not attach any Forms 1095 to your tax return.  Keep the health care information forms with your tax records.

For help with this NEW filing requirement call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

 

Early Retirement Distributions and Your Taxes

Many people find it necessary to take out money early from their IRA or retirement plan. Doing so, however, can trigger an additional tax on top of the income tax you may have to pay. Here are a few key points to know about taking an early distribution:

  1. Early Withdrawals.  An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.
  2. Additional Tax. If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an additional 10 percent tax.
  3. Nontaxable Withdrawals.  The additional 10 percent tax does not apply to nontaxable withdrawals. They include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

A rollover is a type of nontaxable withdrawal. A rollover occurs when you take cash or other assets from one plan and contribute the amount to another plan. You normally have 60 days to complete a rollover to make it tax-free.

  1. Check Exceptions. There are many exceptions to the additional 10 percent tax. Some of the rules for retirement plans are different from the rules for IRAs.
  2. File Form 5329.  If you took an early withdrawal last year, you may need to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with your federal tax return. See Form 5329 and its instructions for details.

For help with your income tax call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

 

Top Tax Tips about Debt Cancellation

If your lender cancels part or all of your debt, it is usually considered income and you normally must pay tax on that amount. However, the law allows an exclusion that may apply to homeowners who had their mortgage debt cancelled in 2015. Here are 8 tips about debt cancellation:

  1. Main Home. If the cancelled debt was a loan on your main home, you may be able to exclude the cancelled amount from your income. You must have used the loan to buy, build or substantially improve your main home to qualify. Your main home must also secure the mortgage.
  2. Loan Modification. If your lender cancelled part of your mortgage through a loan modification or ‘workout,’ you may be able to exclude that amount from your income. You may also be able to exclude debt discharged as part of the Home Affordable Modification Program, or HAMP. The exclusion may also apply to the amount of debt cancelled in a foreclosure.
  3. Refinanced Mortgage. The exclusion may apply to amounts cancelled on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home and only up to the amount of the old mortgage principal just before refinancing. Amounts used for other purposes do not qualify.
  4. Other Cancelled Debt. Other types of cancelled debt such as second homes, rental and business property, credit card debt or car loans do not qualify for this special exclusion. On the other hand, there are other rules that may allow those types of cancelled debts to be nontaxable.
  5. Form 1099-C. If your lender reduced or cancelled at least $600 of your debt, you should receive Form 1099-C, Cancellation of Debt, by Feb. 1. This form shows the amount of cancelled debt and other information.
  6. Form 982. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. File the form with your federal income tax return.
  7. IRS.gov Tool. Use the Interactive Tax Assistant tool on IRS.gov to find out if your cancelled mortgage debt is taxable.
  8. Exclusion Extended. The law that authorized the exclusion of cancelled debt from income was extended through Dec. 31, 2016.

For More Information. For more on this topic see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments.

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,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

 

Here’s What You Need to Do with Your Form 1095-A

This year, you may receive one or more forms that provide information about your 2015 health coverage.  These forms are 1095-A, 1095-B and 1095-C. This tip is part of a series that answers your questions about these forms.

Form 1095-A, Health Insurance Marketplace Statement, provides you with information about your health care coverage if you or someone in your family enrolled in coverage through the Health Insurance Marketplace.

Here are the answers to questions you’re asking about Form 1095-A:

Will I get a Form 1095-A?

  • The Marketplace will send you a Form 1095-A if you, your spouse or a dependent enrolled in coverage for 2015. Most individuals did not enroll in Marketplace coverage and will not receive this form.
  • The Marketplace may send you more than one Form 1095-A if any of these apply:
    • Members of your household were not all enrolled in the same health plan
    • You updated your family information during the year
    • You switched plans during the year
    • You had family members enrolled in different states
  • The Form 1095-A is not new, but some people may receive it for the first time this year.

How do I use the information on my Form 1095-A?

  • This form provides information about your Marketplace coverage, including the names of covered individuals and which months they were covered last year.
  • Use the information from Form 1095-A to complete Form 8962, Premium Tax Credit, and reconcile advance payments of the premium tax credit or – if you are eligible – to claim the premium tax credit on your tax return.
  • If you received advance payments, which are shown on lines 21-33 of Form 1095-A, you must file a tax return, and include Form 8962, even if you are not otherwise required to file a return.  Filing your return without reconciling your advance payments will delay your refund and may affect future advance credit payments.
  • If Form 1095-A, Part II shows coverage for you and everyone in your family for the entire year, you can simply check the full-year coverage box on your tax return to satisfy the individual shared responsibility provision.
  • If there were months that you did not have coverage, you should determine if you qualify for an exemption from the requirement to have coverage. If not, you must make an individual shared responsibility payment.
  • Do not attach Form 1095-A to your tax return – keep it with your tax records.

What if I don’t get my Form 1095-A?

  • If you are expecting to receive a Form 1095-A, you should wait to file your 2015 income tax return until you receive this form.  Filing before you receive this form may delay your refund.
  • The IRS does not issue and cannot provide you with your Form 1095-A. If you are expecting a form and do not get one, you should contact your Marketplace. Visit your Marketplace’s website to find out the steps you need to follow to get a copy of your Form 1095-A online.
  • You can find more information about your Form 1095-A from the Health Insurance Marketplace.

Depending upon your circumstances, you might also receive Forms 1095-B and 1095-C. For information on these forms, see our Questions and Answers about Health Care Information Forms for Individuals.

If you need help with this NEW filing requirement, please call one of our offices!

Plymouth 734.454.4100, Allen Park 313.388.7180,

Grayling 989.348.4055,  Livonia 734-462-6161,

Madison Heights 248.544.6160, Royal Oak 248.399.7331,

Saginaw 989.782.1985, or St. Clair Shores 313.371.6600

 

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