​More and more scammers are starting to use gift cards to get money from you.   iTunes gift cards are becoming de rigueur for these scoundrels to take your hard-earned money.  Gift cards act just like cash and are a quick way for these thieves to make off with their ill-gotten gains.    Most cards are untraceable and generally those that are scammed have no way to reverse the transaction.
 
Beware of the following types of scams most commonly used:

• IRS personnel insisting that you have a balance due and face legal issues if you do not pay (the IRS does not force you to pay in this method…ever!)
• An individual poses as a family member saying they are out of town and in trouble and need money for either bail or car repairs
• Sending you a check and posing as a customer wanting your service.  They ask you to deposit the check and then return a portion of the funds to them.    You then find out the check you deposited is fake.   Be aware that these scammers use fake checks with real bank information which may be initially verified but later shown that the account is closed or otherwise inactive
• Paying a fee to win a prize is a definite no-no and should be avoided.

 
The phrase “buyer beware” is appropriate here with the best advice being that if it sounds too good to be true, it likely is.   If you are still unsure, ask a professional such as an accountant, lawyer or banker.
 

Blog  In the midst of tax season I want to take this opportunity to clear up a myth surrounding the reporting of income and form 1099-Misc.     The common misconception is that if a taxpayer does not receive form 1099-Misc or if the income is under $600 per payer the income is not taxable.

However, there is no minimum amounts that a taxpayer may exclude from gross income.   Generally, Internal Revenue Code section 61 states that taxpayers must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code.    Additionally, there may be taxable income from certain transactions even if no money changes hands as the IRS considers all income received in money, property or service to be taxable unless the law specifically provides and exemption.

Therefore, taxpayers should exercise caution before deciding which income may not be reportable.

2013 Business Tax Filing by Richard Paul on 01/16/2014 1:06 PM
Starting Jan. 13, 2014, Business Tax Filers Can File 2013 Returns

Note: The Jan. 13 start date does not apply to Form 1041, the return filed by estates and trusts, and unincorporated small businesses that report their income on Form 1040. The start date for 1041 and all 1040 filers is Jan. 31, 2014. The Jan. 13 start date also does not apply to payroll tax returns filed using the Modernized e-File (MeF) platform. The IRS will begin processing payroll tax returns in the 94x series (such as Form 941) through the MeF platform on Jan. 26, 2014. Forms 94x are currently being processed on the legacy system.

The IRS will begin accepting 2013 business tax returns on Monday, Jan. 13, 2014. This start date applies to both electronically-filed and paper-filed returns.

Business returns include any return that posts on the IRS Business Master File (BMF). BMF returns include a variety of income tax and information returns such as Form 1120 filed by corporations, Form 1120S filed by S corporations, Form 1065 filed by partnerships and Form 1041, the return filed by estates and trusts. It also includes various excise and payroll tax returns, such as Form 720, Form 940, Form 941 and Form 2290. The IRS expects to be able to begin processing any of these business returns on Jan. 13.

The Jan. 13 start date does not apply to unincorporated small businesses that report their income on Form 1040. The start date for all 1040 filers is Jan. 31, 2014. Although the IRS encourages these small businesses to begin preparing their returns now, it will not be able to accept these or any other individual returns or begin processing them until Jan. 31. This includes sole proprietors who file a Schedule C, landlords who file a Schedule E and farmers who file a Schedule F.

This information is credited to IRS.gov.

October 15th Deadline Remains in Effect for Taxpayers Who Requested a Six-month Extension to File Tax Return

The Internal Revenue Service today reminded taxpayers that the Oct. 15 deadline remains in effect for people who requested a six-month extension to file their tax return.

The current lapse in federal appropriations does not affect the federal tax law, and all taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as required by law.

Many of the more than 12 million individuals who requested an automatic six-month extension earlier this year have yet to file their Form 1040 for 2012.

Though Oct. 15 is the last day for most people to file, some groups still have more time, including members of the military and others serving in Afghanistan or other combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due. People with extensions in parts of Colorado affected by severe storms, flooding, landslides and mudslides also have more time, until Dec. 2, 2013, to file and pay.

The IRS offered several reminders for taxpayers during the current appropriations lapse:

Taxpayers are encouraged to file their returns electronically using IRS e-file or the Free File system to reduce the chance of errors.

Taxpayers can file their tax returns electronically or on paper.  Payments accompanying paper and e-filed tax returns will be accepted and processed as the IRS receives them.  Tax refunds will not be issued until normal government operations resume.

IRS operations are limited during the appropriations lapse, with live assistors on the phones and at Taxpayer Assistance Centers unavailable. However, IRS.gov and most automated toll-free telephone applications remain operational.

Tax software companies, tax practitioners and Free File remain available to assist with taxes during this period.

Check Out Tax Benefits
Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other often-overlooked credits and deductions:

Benefits for low-and moderate-income workers and families, especially the Earned Income Tax Credit. The special EITC Assistant can help taxpayers see if they’re eligible.

Savers credit, claimed on Form 8880, for low-and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).

American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.

Same-sex couples, legally married in jurisdictions that recognize their marriages, are now treated as married, regardless of where they live. This applies to any return, including 2012 returns, filed on or after Sept. 16, 2013. This means that they generally must file their returns using either the married filing jointly or married filing separately filing status. Further details are on IRS.gov.

E-file Now: It’s Fast, Easy and Often Free
The IRS urged taxpayers to choose the speed and convenience of electronic filing. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 15 deadline. The tax agency verifies receipt of an e-filed return, and people who file electronically make fewer mistakes too.

Everyone can use Free File, either the brand-name software, offered by IRS’ commercial partners to individuals and families with incomes of $57,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels.

Taxpayers who purchase their own software can also choose e-file, and most paid tax preparers are now required to file their clients’ returns electronically.


Anyone expecting a refund can get it sooner by choosing direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.

Of the nearly 141.6 million returns received by the IRS so far this year, 83.5 percent or just over 118.2 million have been e-filed.

Payment Options

Taxpayers can e-pay what they owe, either online or by phone, through the Electronic Federal Tax Payment System (EFTPS), by electronic funds withdrawal or with a credit or debit card. There is no IRS fee for any of these services, but for debit and credit card payments only, the private-sector card processors do charge a convenience fee. For those who itemize their deductions, these fees can be claimed on next year’s Schedule A Line 23. Those who choose to pay by check or money order should make the payment out to the “United States Treasury”.

Taxpayers with extensions should file their returns by Oct. 15, even if they can’t pay the full amount due. Doing so will avoid the late-filing penalty, normally five percent per month, that would otherwise apply to any unpaid balance after Oct. 15. However, interest, currently at the rate of 3 percent per year compounded daily, and late-payment penalties, normally 0.5 percent per month, will continue to accrue.

Fresh Start for Struggling Taxpayers

In many cases, those struggling to pay taxes qualify for one of several relief programs. Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months or request a short-term extension to pay. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.

Taxpayers can also request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.

Alternatively, some struggling taxpayers qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

Details on all filing and payment options are on IRS.gov.

IRS tax tip 2013-19 issued on February 22, 2013 provides the following item.  Please contact me if you have questions regarding this issue or visit www.irs.gov for more information.

Beware of Bogus IRS Emails
The IRS receives thousands of reports every year from taxpayers who receive emails out-of-the-blue claiming to be from the IRS. Scammers use the IRS name or logo to make the message appear authentic so you will respond to it. In reality, it’s a scam known as “phishing,” attempting to trick you into revealing your personal and financial information. The criminals then use this information to commit identity theft or steal your money.

The IRS has this advice for anyone who receives an email claiming to be from the IRS or directing you to an IRS site:

• Do not reply to the message;
• Do not open any attachments. Attachments may contain malicious code that will infect your computer; and
• Do not click on any links in a suspicious email or phishing website and do not enter confidential information. Visit the IRS website and click on 'Identity Theft' at the bottom of the page for more information.

Here are five other key points the IRS wants you to know about phishing scams.

1. The IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information;
2. The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts;
3. The address of the official IRS website is www.irs.gov. Do not be misled by sites claiming to be the IRS but ending in .com, .net, .org or anything other than .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on their site and report it to the IRS;
4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence. Forward a suspicious email to phishing@irs.gov;
5. You can help the IRS and other law enforcement agencies shut down these schemes. Visit the IRS.gov website to get details on how to report scams and helpful resources if you are the victim of a scam.