IRS Warns About ‘Federal Student Tax’ Scams

A new IRS warning about scammers targeting students and parents.

Telephone scammers may target students and parents during the back-to-school season and demand payments for such non-existent taxes as the “Federal Student Tax,” the IRS has warned.

IRS impersonators may call students and demand that money be wired immediately to pay a fake federal student tax, according to the Service. As in other similar scams, if the taxpayer doesn’t comply, the scammer becomes aggressive and threatens to report the student to the police to be arrested.

JLDEServices.com

IRS Rolling Out Mandatory ITIN Renewals

The Internal Revenue Service is making some important changes in the Individual Taxpayer Identification Number program that will require many ITIN holders to renew their numbers under a law passed by Congress last December.

The IRS plans to begin the renewals in October. The Protecting Americans from Tax Hikes Act, also known as the PATH Act, requires ITINs that have not been used on a federal tax return at least once in the last three years to be renewed. Otherwise they will no longer be valid for use on a tax return unless the taxpayer renews it. ITINs are frequently used by foreign nationals, resident aliens and undocumented workers.

ITINs issued by the IRS before 2013 that have been used on a federal tax return in the past three years will need to be renewed starting this fall. The IRS is putting in place a rolling schedule for the renewals to help taxpayers.

New Overtime Rules changing December 1, 2016

Are you an employer? If so, you’ve got a major challenge to accomplish in the next few months.

Most businesses aren’t ready for the new overtime and worker classification changes to the Fair Labor Standards Act (FLSA) that the Department of Labor recently published, which will impact to millions of U.S. workers and their employers. The rules go into effect December 1, unless Congress intervenes to prevent or modify them.

Why do these changes matter? Because it will almost certainly affect how you pay at least some of your employees. In brief, if you have a salaried worker making under $46,467 per year, you will either need to give them a pay increase, cut them to hourly, or start paying them overtime when they work more than 40 hours per week.

“Businesses aren’t really aware of the significance of these rule changes,” said Tara Wolckenhauer, Division VP at ADP. “We really need to communicate to them the impact of these rules, if they do go into effect. How will it impact the way we work, how it will change internal workflows, and what businesses need to be doing to prepare.”

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April 18 Deadlines

Individual tax returns are due April 18th, as Saturday, April 16, 2016 is Emancipation Day in the District of Columbia, and the holiday is observed on Friday, April 15th.  However, because Patriot's Day will be observed on April 18 in Maine and Massachusetts, residents of those states will have until April 19th to file and pay their taxes.

This also means that by statute you have until April 18th to amend a 2012 return to claim a refund.

A nonresident alien completing a Form 1040NR generally needs to file by June 15th.  However, nonresident aliens who have wages paid in the United States or receive non-employee compensation in the United States need to file by April 18th.

Consumer Alert: Scammers change tactics, once again impersonating IRS agents

Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but now the IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone. 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. The IRS wants to remind taxpayers to guard against all sorts of con games that continually change. 

Tax Refunds are about to expire

More than a million Americans stand to lose $950 million in unclaimed tax refunds for 2012 if they don’t file a federal income tax return by this year’s April tax deadline. Any funds that are not claimed will go to the U.S. Treasury.

The median potential refund is $718, according to the IRS.

"A surprising number of people across the country overlook claiming tax refunds each year. But the clock is ticking for taxpayers who didn’t file a 2012 federal income tax return, leaving nearly $1 billion in refunds unclaimed," said IRS Commissioner John Koskinen in a statement. "We especially encourage students and others who didn't earn much money to look into this situation because they may still be entitled to a refund. Don't forget, there’s no penalty for filing a late return if you’re due a refund.”

March 15 Due Dates/Deadlines

March 15	Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in February.
	Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in February.
	Corporations - File a 2015 calendar year income tax return (Form 1120) and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe.
	S Corporations - File a 2015 calendar year income tax return (Form 1120S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1 (Form 1120S), Shareholder's Share of Income, Credits, Deductions, etc., or a substitute Schedule K-1. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe.
	Partnerships - File a 2015 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1 (Form 1065), Partner's Share of Income, Credits, Deductions, etc., or a substitute Schedule K-1. If you want an automatic 5-month extension of time to file the return and provide Schedule K-1 or a substitute Schedule K-1, file Form 7004. Then file Form 1065 by August 15.
	Electing large partnerships - Provide each partner with a copy of Schedule K-1 (Form 1065-B), Partner's Share of Income (Loss) From an Electing Large Partnership. The due date applies even if the partnership requests an extension of time to file the Form 1065-B by filing Form 7004.
	S corporation election - File Form 2553, Election by a Small Business Corporation, to choose to be treated as an S corporation beginning with calendar year 2016. If Form 2553 is filed late, S treatment will begin with calendar year 2016.

The IRS is warning taxpayers about a disturbing new scam

Very disturbing memo from the IRS with an update on scams - this affects everyone.

Even though tax fraud shows no sign of slowing down, Americans are failing to take simple precautions to best protect their personal information.

A new report from the data security firm IDT911 found that tax-related fraud cases soared 154% from 2014 to 2015 and didn't seem to be tapering off. Losses from tax-refund fraud will hit an estimated $21 billion by the end of 2016.

The Internal Revenue Service has already released an alert for email tax scams after phishing and malware incidents skyrocketed this year by about 400%.

These bogus emails, designed to look as if they're from the IRS or another legitimate entity, ask for information related to filing status, PINs, refunds, and personal information, among other topics. The alert reminds taxpayers that the IRS doesn't send emails.

But despite the disturbing statistics, most Americans are ignoring the risks and choosing not to take necessary precautions.

Nearly one in five survey respondents filing from home hasn't put a password on his or her home Wi-Fi, making it easy for hackers. A little under half of Americans don't lock their mailboxes when they're expecting a tax refund in the mail.

In addition, more than a third say they're unfamiliar with how to determine whether a tax preparer is qualified. And despite experts advising people to file as early as possible to limit the window for potential identity thieves, a mere 12% of people planned on filing their taxes in January.

Adam Levin, chairman and founder of IDT911, listed three key tactics consumers need to take to tackle fraud: 

1. Minimize the risk of exposure, 

2. monitor their accounts on a daily basis, and 

3. manage the damage if they do become victims of identity theft by using resolution resources provided by banks, credit unions, insurance providers, and the HR departments of their employers."

April Tax Due Dates

April 11	Employees - who work for tips. If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.
April 18	Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in March.
	Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in March.
	Individuals - File an income tax return for 2015 (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, or you can get an extension by phone if you pay part or all of your estimate of income tax due with a credit card. Then file Form 1040, 1040A, or 1040EZ by October 17.
	Household Employers - If you paid cash wages of $1,900 or more in 2015 to a household employee, file Schedule H (Form 1040) with your income tax return and report any employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2014 or 2015 to household employees.
	Individuals - If you are not paying your 2016 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2016 estimated tax. Use Form 1040-ES.
	Electing Large Partnerships - File a 2015 calendar year return (Form 1065-B). If you want an automatic 6-month extension of time to file the return, file Form 7004. Then file Form 1065-B by October 17. See March 15 for the due date for furnishing the Schedules K-1 to the partners.
	Corporations - Deposit the first installment of estimated income tax for 2016. A worksheet, Form 1120-W, is available to help you estimate your tax for the year.

March Tax Due Dates

March 10	Employees who work for tips. - If you received $20 or more in tips during February, report them to your employer. You can use Form 4070.
March 15	Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in February.
	Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in February.
	Corporations - File a 2015 calendar year income tax return (Form 1120) and pay any tax due. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe.
	S Corporations - File a 2015 calendar year income tax return (Form 1120S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1 (Form 1120S), Shareholder's Share of Income, Credits, Deductions, etc., or a substitute Schedule K-1. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe.
	Partnerships - File a 2015 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1 (Form 1065), Partner's Share of Income, Credits, Deductions, etc., or a substitute Schedule K-1. If you want an automatic 5-month extension of time to file the return and provide Schedule K-1 or a substitute Schedule K-1, file Form 7004. Then file Form 1065 by August 15.
	Electing large partnerships - Provide each partner with a copy of Schedule K-1 (Form 1065-B), Partner's Share of Income (Loss) From an Electing Large Partnership. The due date applies even if the partnership requests an extension of time to file the Form 1065-B by filing Form 7004.
	S corporation election - File Form 2553, Election by a Small Business Corporation, to choose to be treated as an S corporation beginning with calendar year 2016. If Form 2553 is filed late, S treatment will begin with calendar year 2016.
March 31	Electronic Filing of Forms - File Forms 1097, 1098, 1099, 3921, 3922, and W-2G with the IRS. This due date applies only if you file electronically. Otherwise, see February 29. The due date for giving the recipient these forms generally remains February 1.
	Electronic Filing of Forms W-2 and W-2G - File copies of all the Forms W-2 (Wage and Tax Statement) and W-2G (Certain Gambling Winnings) you issued for 2015. This due date applies only if you electronically file. Otherwise, see February 29. The due date for giving the recipient these forms remains February 1.
	Electronic Filing of Forms 8027 - File copies of all the Forms 8027 you issued for 2015. This due date applies only if you electronically file. Otherwise, see February 29.

February Tax Due Dates

February 01	Individuals - who must make estimated tax payments. If you did not pay your last installment of estimated tax by January 15, you may choose (but are not required) to file your income tax return (Form 1040) for 2015. Filing your return and paying any tax due by February 1, 2016 prevents any penalty for late payment of last installment. If you cannot file and pay your tax by February 1, file and pay your tax by April 18.
	Businesses - Give annual information statements to recipients of 1099 payments made during 2015.
February 10	Employees - who work for tips. If you received $20 or more in tips during January, report them to your employer. You can use Form 4070.
	Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2015. This due date applies only if you deposited the tax for the quarter in full and on time.
	Employers - Federal unemployment tax. File Form 940 for 2015. This due date applies only if you deposited the tax for the year in full and on time.
	Employers - Nonpayroll taxes. File Form 945 to report income tax withheld for 2015 on all nonpayroll items. This due date applies only if you deposited the tax for the year in full and on time.
	Certain Small Employers - File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2015. This tax due date applies only if you deposited the tax for the year in full and on time.
	Farm Employers - File Form 943 to report Social Security and Medicare taxes and withheld income tax for 2015. This due date applies only if you deposited the tax for the year in full and on time.
February 16	Individuals - If you claimed exemption from income tax withholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.
	Businesses - Give annual information statements to recipients of certain payments made during 2015. You can use the appropriate version of Form 1099 or other information return.
	Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in January.
	Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in January.
February 17	Employers - Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2015, but did not give you a new Form W-4 to continue the exemption this year.
February 29	Payers of Gambling Winnings - File Form 1096, Annual Summary and Transmittal of U.S. Information Returns, along with Copy A of all the Forms W-2G you issued for 2015. If you file Forms W-2G electronically (not by magnetic tape), your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms remains February 1.
	Employers - File Form W-3, Transmittal of Wage and Tax Statements, along with Copy A of all the Forms W-2 you issued for 2015. If you file Forms W-2 electronically your due date for filing them with the SSA will be extended to March 31. The due date for giving the recipient these forms is still February 1.
	Large Food and Beverage Establishment Employers - with employees who work for tips. File Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Use Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically your due date for filing them with the IRS will be extended to March 31.
	Farmers and Fishermen - File your 2015 income tax return (Form 1040) and pay any tax due. However, you have until April 18 to file if you paid your 2015 estimated tax by January 15, 2016.
	Businesses - File information returns (Form 1099) for certain payments you made during 2015. These payments are described under February 1. There are different forms for different types of payments. Use a separate Form 1096 to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, what form to use, and extensions of time to file. If you file Forms 1097, 1098, 1099, 3921, 3922 or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms will still be February 1.

Dealing With The IRS Could Get Worse

Advocate raises questions about "self-service" plan.

Having to contact the IRS is something no one wants to have to do, and taxpayer advocates are warning it could get even more difficult.

The agency’s five-year plan includes the development of an online platform to make it easier for taxpayers to find information. Though it could simplify certain processes, CNN Money reports that it presents a potentially significant disadvantage.

In her annual report to Congress, U.S. Taxpayer Advocate Nina Olson writes that the IRS intends “to substantially reduce telephone and face-to-face interactions with taxpayers.” She thinks that the agency needs to be “much more specific about how much personal taxpayer assistance it expects to provide.”

Giving taxpayers online accounts will likely reduce the need for personal assistance, but Olson doesn’t think it will be reduced as much as expected. The IRS will still need to provide personal assistance to the millions of taxpayers without Internet access and the many others who are wary of airing out their finances online. Even for those who choose to set up an account, the online platform won’t be able to address issues that aren’t “cookie cutter.”

by:  Michael Addady

IRS Resumes e-File Processing

The IRS has reported that their systems are back in production. We expect it will take them some time to catch up. We will process and post your acknowledgements as soon as the IRS makes them available. At this time the IRS has announced that the processing and acknowledgements are up to date. Check with the IRS if you have not received your acknowledgment within 3 days of filing.

IRS Statement on Experiencing Systems Outage

Feb. 3, 2016 

The IRS experienced a hardware failure this afternoon affecting a number of tax processing systems, which are currently unavailable. Several of our systems are not currently operating, including our modernized e-file system and a number of other related systems. The IRS is currently in the process of making repairs and working to restore normal operations as soon as possible. We anticipate some of the systems will remain unavailable until tomorrow.

The IRS remains in close contact with e-file software transmitters and the tax community during this period.

A number of taxpayer and tax practitioner tools are unavailable. IRS.gov remains available, although a number of the services on the site are not, including Where’s My Refund.

Taxpayers can continue to prepare and file their tax returns as they normally would. Taxpayers can continue to send their tax returns to their e-file provider; these companies will hold the tax returns until the IRS resumes accepting electronic tax returns. Taxpayers who have already filed their tax returns do not need to take any additional action.

The IRS is still assessing the scope of the outage. At this time, the IRS does not anticipate major refund disruptions; we continue to expect that 9 out of 10 taxpayers will receive their refunds within 21 days.

IRS issues 10 tips for choosing a tax preparer

Filing season began a little more than a week ago, and while some taxpayers have already filed their 2015 returns, many others are still gathering receipts and shopping around for a tax professional. To help the latter group, the IRS suggested ten things to do when choosing a tax preparer.

Here’s the checklist:

1. Check the Preparer’s Qualifications.
2. Check the Preparer’s History.
3. Ask about Service Fees.
4. Ask to E-file Your Return.
5. Make Sure the Preparer is Available.
6. Provide Records and Receipts.
7. Never Sign a Blank Return.
8. Review Your Return Before Signing.
9. Ensure the Preparer Signs and Includes Their PTIN.
10. Report Abusive Tax Preparers to the IRS.

Source: Internal Revenue Service

Business/Personal Philosophy

My philosophy for all phases of life.

Be Kind  -  Be Fair  -  Be Happy!!

Joe

Tax Software Wars

TAX RELATED SCAMS YOU CAN AVOID:

Everyone knows someone in one way or another that has been scammed, or someone tried to get them in a scam.  But when it comes to taxes, people tend to panic and not look at what is happening with a specific situation.

Make sure your elderly relatives and other people who may be susceptible know of these scams and to talk about what they may feel is a scam.

Phony calls from the IRS:
This scam has a person acting as an IRS agent and informing you they have a warrant for your arrest. Please get a prepaid card or wire money directly immediately or you are off to jail.  REALLY!!

If you are concerned that you owe the IRS money, call them directly at 1-800-829-1040.

Fraudulent email from the IRS:
Please understand the IRS does not send emails!!  It's a direct scam to get information from you so they can steal from you.

False tax returns in your name:
People use the above scam to get your information to then file a false return for a big refund.  The problem can be fixed, but it's not an easy process.  Safeguard your social security number and file your return as soon as you have your paperwork.

Shady tax preparers:
Research your tax preparer, search for reviews and ask for referrals.

Promises of a large tax refund:
Beware of faked returns to get you a refund - after the preparer skims off the top.  If you get audited, it's your problem as the IRS holds the taxpayers legally responsible for the information on their return.

Fraudulent charities:
Fraudulent charities are always a problem.  But if you use one as a tax deduction and are audited, you could be hit with more taxes and a penalty.

Beware of phone calls asking for donations and requests through the mail.  Never give them your social security number - this is another way they are stealing your identity.

Please be aware of these scams - and there are many more out there with new ones everyday.  When in doubt, please call the IRS directly at 1-800-829-1040 for more information on your account - or - research your concerns online.

Joe

2015 Filing Deadline for Personal Taxes

2016 Tax season opens January 19th for the nation's taxpayers, which the IRS will begin accepting individual electronic returns.

The filing deadline to submit your 2015 tax returns is Monday, April 18, 2016.  Due to Emancipation Day on Friday the 15th, the filing deadline is pushed out to the following Monday.

Due to Patriots Day, the deadline will be Tuesday, April 19th, in Maine and Massachusetts.

Joe

Most Outrageous Tax Deductions of 2016

What are some of the most outrageous tax deductions of 2016?

Expensive Clothing
Baby Grand Piano
Misinterpretations of Charitable Donations
Foot Powder for Smelly Feet
Business Boat
Valleyfair Season Tickets
Cat Food and Litter
A Wedding to Remember
Keeping Yourself Rejuvenated (Botox, tanning, etc)
Commuting to Work

Lets not give the IRS a reason to look at your tax return.

Joe, JLDE Services