These summer activities can affect next year’s tax returns

These summer activities can affect next year’s tax returns

Summertime activities often affect the tax returns people file the following year. Here are some things taxpayers do during the summer along with tips they should consider now:

  • Getting married.
    Newlyweds should report any name change to the Social Security Administration. They should also report an address change to the United States Postal Service, their employers, and the IRS. This will help make sure they receive documents and other items they will need to file their taxes.
  • Working part-time.
    While summertime and part-time workers may not earn enough to owe federal income tax, they should remember to file a return. They’ll need to file early next year to get a refund for taxes withheld from their checks this year.

    Normally, employees receive a Form W-2, Wage and Tax Statement, from their employer to account for the summer’s work. They’ll use this to prepare their tax return. They should receive the W-2 by January 31 next year. Employees will get a W-2 even if they no longer work for the summertime employer.

    Summertime workers can avoid higher tax bills and lost benefits if they know their correct status. Employers will determine whether the people who work for them are employees or independent contractors. Independent contractors aren’t subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes.

For questions about your tax return, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Last Chance to Claim Your tax refunds

Last Chance to Claim Your tax refunds

The law gives taxpayers who fail to file their income taxes three years to submit a return and claim a refund. Generally, the three-year countdown starts on the due date of the return, including extensions.

Over a million Americans fail to file a tax return every year. By not filing, many of these people risk losing any refund they’re owed, which averages more than $600, according to Internal Revenue Service estimates.

The law gives procrastinators three years to submit a return and claim a refund. The three-year countdown starts on the original due date of the return or the extension due date if an extension was filed. Late filers who owe no taxes don’t pay any penalty, and might even be eligible to get credits beyond the money withheld from their wages.

Time matters with tax refunds

April 15, 2020, is the last day to file your original 2016 tax return to claim a refund. If you received an extension for the 2016 return then your deadline is October 15, 2020.

If you miss the deadline, any excess in the amount of tax you paid every paycheck or sent as quarterly estimated payments in 2016 goes to the U.S. Treasury instead of to you. You also lose the opportunity to apply any refund dollars to another tax year in which you owe income tax.

Under certain conditions the IRS will withhold your refund check. It can be used to pay any past-due student loans, child support and federal tax debt you owe. The IRS can also hold refund checks when the two subsequent annual returns are missing. That means you should file returns for 2017 and 2018 as soon as possible. For the 2017 tax year, with a filing deadline in April of 2018, the three-year grace period ends April 15, 2021.

Obstacles to your tax refund

One of the hills you have to climb to claim your refund is gathering the necessary documents. If you kept your financial records, you have an easy ascent. If not, then you must build time into your filing schedule to obtain a copy of your W-2 from your employer and any 1099 forms you’re missing from your bank and other payers.The IRS can help if your document search fails. You can ask the agency for a transcript of these information returns by filing Form 4506T, “Request for Transcript of Tax Return,” and checking off Box 8. Allow 10 business days for a response.The IRS also accepts online requests (at irs.gov) and phone transcript requests (at 800-908-9946). The 1040 series of tax forms can be downloaded from the “Prior Year Returns” link on agency’s “Forms and Publications” web page or ordered by calling (800) 829-3676. You have the option of e-filing or mailing a paper return. Regardless of the filing method you choose, be sure you sign, as the IRS does not issue refunds to late filers without their signature.

If you haven’t filed your tax return yet, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

How To Find Unclaimed Money

How To Find Unclaimed Money

If a business, government office, or other source owes you money that you don’t collect, it’s considered unclaimed.

The federal government doesn’t have a central website for finding unclaimed money. But you don’t need to hire a company to find unclaimed money for you. You can find it on your own for free, using official databases.

1. Search in Your State

Businesses send money to state-run unclaimed property offices when they can’t locate the owner. The money in state unclaimed funds is often from bank accounts, insurance policies, or your state government.

  • Start your search for unclaimed money with your state’s unclaimed property office.

  • Use the multi-state database to search for your name, especially if you’ve moved to another state.

  • Verify how to claim your money. Each state has its own rules about how you prove that you’re the owner and claim the money.

2. Search for Money from Employers

  • Unpaid Wages – The Department of Labor (DOL) may recover back wages for you if your employer broke labor laws. If you think you may be owed back wages from your employer:

    • Search DOL’s database of workers who have money waiting to be claimed. DOL holds unpaid wages for up to three years.  

  • Pensions from Former Employers – Search for unclaimed pensions from companies that went out of business or ended a defined plan.

3. Search for Money from Insurance

  • VA Life Insurance Funds – Search the U.S. Department of Veterans Affairs (VA) database for unclaimed insurance funds.

    • The VA may owe money to current or former policyholders or their beneficiaries.

    • This database doesn’t include funds from Servicemembers’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI) policies from 1965 to the present. 

  • FHA-Insurance Refunds – If you had an FHA-insured mortgage, you may be eligible for a refund from the U.S. Department of Housing and Urban Development (HUD).

    • Search the HUD database with your FHA case number (three digits, a dash, and the next six digits—for example, 051-456789).

4. Search for Money from Tax Refunds

  • Tax Refunds – The Internal Revenue Service (IRS) may owe you money if your refund was unclaimed or undelivered.

5. Search for Money from Banking and Investments

  • Bank Failures – Search the Federal Deposit Insurance Corporation (FDIC) for unclaimed funds from failed financial institutions.

  • Credit Union Failures – Find unclaimed deposits from credit unions.

  • SEC Claims Funds – The Securities and Exchange Commission (SEC) lists enforcement cases in which a company or person owes investors money.

  • Replace a Savings Bond – Replace a lost, stolen, or destroyed paper savings bond.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600



People can act now to help others in their community next year

People can act now to help others in their community next year

Every year, hundreds of people volunteer their time to help other taxpayers. IRS volunteers provide free tax preparation in communities across the nation. While it might seem like the distant future, people who want to volunteer in 2020 can start taking action now.

The Volunteer Income Tax Assistance and the Tax Counseling for the Elderly programs offer free tax help across the country. These programs help people with low-to-moderate incomes, senior citizens, persons with disabilities, and those who speak limited English. Last year, VITA and TCE volunteers prepared millions of federal tax returns for qualified taxpayers at no cost. Anyone interested in volunteering can visit the sign-up page on IRS.gov.

Here are reasons people become an IRS-certified VITA or TCE tax volunteer:

Flexible hours. Volunteers serve an average of three to five hours per week. The programs are usually open from mid-to-late-January through the tax filing deadline in April. Some sites are even open all year.
 
VITA and TCE sites are often nearby. Each year there are thousands of sites set up in neighborhoods all over the country. These free tax help sites are in places like community centers, libraries, schools and shopping malls.
 
No prior experience needed. Volunteers receive special training and often serve in a variety of roles. VITA and TCE programs want volunteers of all backgrounds and ages. They also want people who are fluent in other languages.
 
Free tax law training and materials. Volunteers receive training materials at no charge. The tax law training covers how to prepare basic federal tax returns electronically. The training also covers tax topics like deductions and credits.
 
Continuing education credits for tax pros. Enrolled agents and non-credentialed tax return preparers can earn continuing education credits when volunteering as a VITA/TCE instructor, quality reviewer, or tax return preparer.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Tips to help taxpayers recognize tax scams

Tips to help taxpayers recognize tax scams

New versions of well-known tax-related scams appear every year…and 2019 is no different. No matter what time of year, taxpayers should be on the lookout for scams. Here are some things taxpayers should remember to help them spot scams and avoid becoming a victim.

Phone scams

  • The IRS does not leave pre-recorded, urgent or threatening messages.
  • In many versions of phone scams, potential victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation and revocation of licenses.
  • Criminals can fake or “spoof” caller ID numbers to appear to be anywhere in the country. Scammers can even spoof an IRS office phone number, or the numbers of various local, state, federal or tribal government agencies.

Email phishing scams

  • 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.
  • There are special circumstances when the IRS will call or come to a home or business. These visits include times when a taxpayer has an overdue tax bill, a delinquent tax return, or a delinquent employment tax payment.
  • If a taxpayer receives an unsolicited email that appears to be a scam, they should report it to the IRS. They can forward the email message to phishing@irs.gov. They should not open any attachments, click on any links, reply to the sender, or take any other actions that could put them at risk

 

Telltale signs of a scam

Taxpayers should remember that the IRS generally first mails a bill to a taxpayer who owes taxes. The IRS and its authorized private collection agencies will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments.
  • Ask for checks to third parties. The IRS has specific instructions on how to pay taxes. All tax payments should only be made payable to the U.S. Treasury.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

If a taxpayer receives a phone call, but doesn’t owe taxes and has no reason to think they do, they should:

If a taxpayer owes tax or thinks they do, they should:

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600



Tips for taxpayers who make money from a hobby

Tips for taxpayers who make money from a hobby

Many people enjoy hobbies that are also a source of income. From painting and pottery to scrap booking and soap making, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

If someone has a business, they operate the business to make a profit. In contrast, people engage in a hobby for sport or recreation, not to make a profit. Taxpayers should consider nine factors when determining whether their activity is a business or a hobby. They should base their determination on all the facts and circumstances of their activity.

If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21.

Many people enjoy hobbies that are also a source of income. From painting and pottery to scrap booking and soap making, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

If someone has a business, they operate the business to make a profit. In contrast, people engage in a hobby for sport or recreation, not to make a profit. Taxpayers should consider nine factors when determining whether their activity is a business or a hobby. They should base their determination on all the facts and circumstances of their activity. If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040.

For any kind of tax help, contact one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Its time to do a Paycheck Checkup

Its time to do a Paycheck Checkup

The IRS urges all employees, including those with other sources of income, to perform a Paycheck Checkup now. Doing a checkup will help employees make sure their employers are withholding the right amount of tax from their paychecks. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty.

The easiest way to a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. Taxpayers can use the results from the Calculator to help fill out the Form W-4 and adjust their income tax withholding with their employer.  Taxpayers who receive pension income can use the results from the calculator to complete a Form W-4P and give it to their payer.

If you need help with a payroll checkup call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Taxpayers who still haven’t filed their 2018 tax return should do so ASAP

Taxpayers who still haven’t filed their 2018 tax return should do so ASAP

While the federal income tax-filing deadline has passed for most people, some taxpayers did not file an extension and still have not filed their tax returns. These taxpayers should file ASAP. They should do so even if they can’t pay to avoid potential penalties and interest, which can continue to add up quickly.

Here are some things taxpayers in this situation should know:

  • Penalties and interest are only added on unfiled returns if the taxpayer did not pay taxes by the April deadline. Taxpayers who did not file and owe tax should file a tax return and pay as much as they are able to now. If they cannot pay the full amount, they should learn about payment options. These can reduce possible penalties and interest added to the amount the taxpayer owes.
  • IRS Free File is available on IRS.gov through October 15.
  • Some taxpayers may have extra time to file their tax returns and pay any taxes due. These include:
      o Some disaster victims
      o Military service members and eligible support
         personnel in combat zones
      o U.S. citizens and resident aliens who live and work
         outside the U.S. and Puerto Rico
  • If a return is filed more than 60 days after the April due date, the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. Therefore, if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.
  • The IRS provided penalty relief for certain taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
  • Other taxpayers filing after the deadline may also qualify for penalty relief. Those who are charged a penalty may contact the IRS and explain why they were unable to file and pay by the due date.
  • Taxpayers who have a history of filing and paying on time often qualify for first-time penalty abatement.
  • There is no penalty for filing late if a refund is due.

If you haven’t filed your 2018 tax return, contact one of our offices for assistance.

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Here’s what taxpayers should know if they get a notice from the IRS

Here’s what taxpayers should know if they get a notice from the IRS

Certain taxpayers might get a letter from the IRS this year. It’s called an IRS Notice CP 2000. It gives detailed information about issues the IRS identified. The IRS sends this notice when information from a third party doesn’t match the information the taxpayer reported on their tax return. The notice also provides steps taxpayers should take to resolve those issues.

Here is some information about these notices to help taxpayers understand why they got one and what to do when it arrives:

  • The IRS sends a notice to the taxpayer when a tax return’s information doesn’t match data reported to the IRS by banks and other third parties.
  • This notice isn’t a formal audit notification. It is simply a notice to see if the taxpayer agrees or disagrees with the proposed tax changes.
  • Taxpayers should respond to the Notice CP2000. The taxpayer usually has 30 days from the date printed on the notice to respond.
  • The IRS provides a phone number on each notice. IRS telephone assistors can explain the notice and what taxpayers need to do to resolve any issues.
  • The IRS will send another notice to the taxpayer if the taxpayer doesn’t respond to the initial Notice CP2000, or if the agency can’t accept the additional information provided. It is called an IRS Notice CP3219A, Statutory Notice of Deficiency.
  • The Notice CP3219A gives detailed information about why the IRS proposes a tax change and how the agency determined the change. The notice tells taxpayers about their right to challenge the decision in Tax Court if they choose to do so. Even if they decide not to go to Tax Court, the IRS will continue to work with the taxpayer to help resolve the issue.

If you get a notice from the IRS, contact one of our offices for assistance.

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600

Got tip income? Here are some tips about tips from the IRS

Got tip income? Here are some tips about tips from the IRS

Aside from regular wages, many taxpayers have jobs where they get tips from their clients or customers.  Generally, income received as a tip is taxable. Here’s some information to help taxpayers correctly report the income they receive as a tip:

Use the Interactive Tax Assistant.
This tool on IRS.gov asks taxpayers a series of questions. After the taxpayer answers the questions, the tool gives responses based on the answers. Taxpayers can use the Interactive Tax Assistant to find out if their tip income is taxable.

Show all tips on a tax return.
Taxpayers use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of any unreported tip income. This form allows the taxpayer to include it as additional wages. This includes the value of non-cash things someone receives as a tip, such as tickets or passes to an event.

Report all types of tips.
Taxpayers must pay tax on all tips received during the year, including those:

  • Directly from customers.
  • Added to credit cards.
  • From a tip-splitting agreement with other employees.

Report tips to an employer.
Employees who receive $20 or more in tips in any month must report their tips for that month to their employer. They must do so by the 10th day of the next month. When reporting tips, the employee should include cash, check and credit card tips they received. The employer must withhold federal income, Social Security and Medicare taxes on these reported tips.

Keep a daily log of tips.
Taxpayers use Publication 1244, Employee’s Daily Record of Tips and Report to Employer, to record tips. This will help report the correct amount of tips on their tax return.

For help planning for your 2019 taxes call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600