Friday, January 24, 2014

Watch Out for Tax Scams as Filing Season Opening Nears

IR-2014-5, Jan. 23, 2014
WASHINGTON — With the start of the 2014 tax season approaching on Jan. 31, the Internal Revenue Service urged taxpayers to be aware that tax-related scams using the IRS name proliferate during this time of year.
Tax scams can take many forms, with perpetrators posing as the IRS in everything from e-mail refund schemes to phone impersonators. The IRS warned taxpayers to be vigilant of any unexpected communication that is purportedly from the IRS at the start of tax season.
The IRS encourages taxpayers to be on the lookout for phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for personal identification numbers (PINs), passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to phishing@irs.gov.

Additional information on how to report phishing scams involving the IRS is available on the genuine IRS website, IRS.gov.
In addition, the IRS continues to aggressively expand its efforts to protect and prevent refund fraud involving identity theft as well as work with federal, state and local officials to pursue the perpetrators of this fraud.
The IRS offers several suggestions for taxpayers to help protect themselves against scams and identity theft:
  • Don’t carry your Social Security card or any documents that include your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
  • Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient.
For more information, see the special identity theft section on IRS.gov and IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.
Taxpayers also should be very careful when choosing a tax preparer. While most preparers provide excellent service to their clients, a few unscrupulous return preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.

Wednesday, January 22, 2014

Tax Deductions and Credits Often Overlooked

Whether you love them or loathe them, taxes are one of life's only two sure things, at least according to Benjamin Franklin.
But for many, having taxes taken out of their paycheck on a weekly, bi-weekly, or monthly basis is their only form of savings during the year. Although the personal savings rate in the U.S. of 4.2% is off its historic lows, relative to other nations around the world it's pretty low. This means that despite the unpopularity of taxes, they can deliver quite a pop to a number of Americans come February and March, when tax refunds begin to trickle in.
Source: Taxlady23, Tumblr.

Yet for all the different types of tax deductions and credits available, each year millions of Americans, even those with the help of tax-prepping software or the assistance of a tax professional, will miss a deduction or credit that they are entitled to. You can blame a lot of this on the tax code, which changes every year, as well as the fact that the U.S. tax code would require 73,954 regular 8.5-by-11-inch printed pages to explain, based on statistics from the CCH Standard Federal Tax Reporter. 
With that in mind, let's take a look at some commonly overlooked tax deductions and credits that you should be on the lookout for when you file your taxes.


Source: http://www.westcoastexteriors.com
Energy-efficient home improvements
Have you completed any home-improvement projects that made your home more energy efficient? Perhaps new insulated windows, new doors, or a new roof? The good news is the Non-Business Energy Property Credit allows you to claim up to 10% the cost of these repairs (with windows not to exceed a $200 credit) up to a maximum lifetime credit of $500. In other words, if you claimed $300 on this credit in 2011, you may still claim up to an additional $200, but as the IRS's website warns, be careful to ensure that you have the manufacturer's credit certification statement. Otherwise, the improvement may not qualify.

In addition, the Residential Energy Efficient Property Credit, which runs through 2016, allows you to write off 30% of your costs to put alternative energy equipment in your home, such as solar water heaters or wind turbines. There is no limit on the tax credit you can receive here, and better yet, you can carry the credit forward until it's used up.   

Caring for a parent
Most people are aware of their ability to claim tax credits for child care, but many often forget that they can also claim a total annual expenses benefit of $3,000 when it comes to taking care of a parent.

According to the IRS, this credit is based on a percentage of the amount of work-related expenses you pay to a caregiver to take care of your parent. The IRS qualifies this Dependent Care Credit as any spouse or dependents who are physically or mentally incapable of taking care of themselves and who spend at least eight hours per day in your household, and the deduction is based on your annual income.

Self-employed health insurance premiums
Taxes for self-employed people can be confusing even with the help of tax preparation software, but one often missed deduction for a self-employed person are health insurance premiums. For non-self-employed people, health, dental, and other medical expenses need to equate to at least 7.5% of adjusted gross income before they receive any sort of benefit. For practically all self-employed people, this rule doesn't apply. In fact, most won't even need to itemize their deductions, like non-self-employed people. Instead, they can simply deduct all medical and dental expenses paid out of their own pocket in 2013 and reap the rewards of their self-employment.


Source: Taxlady23, Tumblr

Casualty, disaster, and theft losses
Have you ever been the victim of a natural disaster such as an earthquake or tornado, or had items stolen from you? If the answer is yes, you may be eligible to claim these different types of losses on your tax return. Also, if you're in a city or county that's been declared a federal disaster area, then you're automatically eligible to claim this loss.

Now keep in mind that not all losses are considered eligible to be claimed on your tax return. If it's a loss that's created by normal wear and tear, you can forget about it! Similarly, if your insurance company provides you with a reimbursement on your loss, the most you can do is claim the difference on the reimbursement value versus what the item was currently valued at (if there's even a discrepancy in the first place).

State sales tax deductions
Most people in the U.S. pay a state income tax and get some form of deduction when they file their taxes based on that state income tax. However, in states that have high state sales taxes, or no income tax at all, some people are overlooking the ability to itemize their sales tax deduction for significantly larger savings.

Tax-prepping software that uses predetermined IRS calculations will often choose a sales tax deduction value based on your income. However, sales tax paid on just a couple of big-ticket items could be enough to tip the scales heavily in favor of itemizing your taxes to claim a much bigger deduction.

Earned Income Tax Credit
The Earned Income Tax Credit, or EITC, is a benefit given to American workers who have low-to-moderate income, which helps reduce their taxable income and may even result in a refund.

It might seem like common sense for taxpayers to look toward this deduction, since it's been around for years, but the IRS notes that a whopping 20% to 25% of qualified individuals aren't receiving this benefit. One reason, of course, is that you have to file a tax return with the IRS for the EITC even if you owe no tax or aren't normally required to file a return, and we know this probably isn't being done. There are strict limits on who qualifies for the EITC based on their adjusted-gross income, which can be viewed here for 2013.

Refinancing points
Did you purchase a home or refinance your loan sometime in the past year, or two ... or 10? If you paid points on your mortgage or loan, then you may be entitled to amortize these points over the life of your loan.

For example, let's assume you paid $3,600 in "points" when you purchased your home. Unfortunately, you can't deduct the $3,600 upfront, since those fees were incorporated into the life of your loan. However, you'll be allowed to deduct a maximum of $120 per year on your taxes over the life of the 30-year loan as well as the full balance remaining on your points if you decide to pay off your loan early.


With any tax advice you should always consult your tax professional. You may also visit www.irs.gov for current information.
Please email us at info@laebusiness.com if you’re in the market for a new tax professional.

Sunday, January 12, 2014

Starting Your Work Week Off Right...

We could all use a little boost in productivity from time to time. When Sunday evening rolls around, we have high hopes for a productive work week. When we get up and start working on Monday, often we spend most of the morning prepping ourselves for the week; which eats up a significant chunk of our time. Before we know it, we have spent most of our Monday working just to set ourselves up for the rest of the week. Talk about a direct hit to productivity; we end up stopping dead in our tracks before progress even gets going. Between a constant flood of emails, phone calls, voicemails and text messages to attend to, and your growing to do list, Monday mornings are that really dreaded part of the week...And it doesn’t have to be that way. 

We can start our work week off right by taking a few of those Monday morning tasks and starting them Sunday. I know, I know; before you start telling me “I don’t work on the weekends,” hear me out. You can take roughly an hour of your day on Sunday and prepare yourself for a very productive week. You would be surprised at how much time you can save come Monday when you spend just one hour getting things ready on Sunday.

Update your to do list

By Sunday there are tons of things swirling through your head that you know you will have to do come Monday. Take a few minutes and add those things to your to do list? You can spend five minutes updating your list with all of the things you know you have to do, so you can get back to enjoying your weekend. The same can be said about updating your to do list as well. I'm not sure about you, but when I get to working on things, I often tend to forget to review my list and mark off things that I have already done. This is a good time to go through your list and make sure it is up to date, which will allow you to focus your time on Monday toward things on your to do list instead of on updating it. Write out any due dates for your tasks, and highlight your most pressing items. Not only should you be able to see at a glance when things are due, you should also have it glaring which items need your desperate attention when you sit down for work on Monday. You can use the quiet of Sunday to determine your most critical items and not let incoming tasks on Monday distract you from what you determined is most important the night before.

Go through your inbox

While this could be a dangerous thing, going ahead and poking through your inbox, for the most part, will help save time in the morning. Take about 15-30 minutes and that will surely save you some time come Monday.
For instance, we all get email such as advertisements, newsletters, and weekly email reminders. We know these messages are coming and will be there no matter what. Why not go ahead and go through all of them you have and get rid of them? Read them, file them away, or delete them. Whatever you would be doing Monday morning with these messages, go ahead and take care of them now. That way, you don’t feel like you are working, but you are making way to a smaller unread inbox and can focus on actual emails that need your attention.
If you are brave enough (and willing to give up the time on your weekend to do it), you could even go through your email to see what to expect come Monday. Are there clients emailing you wanting simple tasks done? Go ahead and add it to your to do list. That makes it one less message to deal with in the morning. But, this is only for the brave and or those who are bored on Sunday.

Get caught up on your social media networks

Social media networks can often be a distraction and a time-sucker for most of us, especially if our jobs require frequent use of these networks. Since we often step away from these social networks during the weekend to spend time with friends and family and do other things, we could quickly fall behind and it can take tons of time on Monday morning to see what we missed.
If you follow social media networks such as LinkedIn, Twitter and Facebook, you can spend a few moments on Sunday night getting caught up on the updates. Doing this the night before a really busy morning will help you limit how much time you spend catching up on these social media networks on Monday morning. While you won’t get completely caught up (because there will be updates coming in while you sleep), you can help significantly cut down the time spent on these networks on Monday when you should be focusing on powering through your tasks and the growing inbox count.

Have a fabulous week!

Are there any tasks you do on Sunday to help boost your productivity for the week? Leave us your comments below!

Tuesday, January 7, 2014

2014 Tax Season to Open Jan. 31, 2014

2014 Tax Season to Open Jan. 31, 2014

IRS EfileThe new opening date for individuals to file their 2013 tax returns will allow the IRS adequate time to program and test its tax processing systems. The annual process for updating IRS systems saw significant delays in October following the 16-day federal government closure.
“Our teams have been working hard throughout the fall to prepare for the upcoming tax season,” IRS Acting Commissioner Danny Werfel said. “The late January opening gives us enough time to get things right with our programming, testing and systems validation. It’s a complex process, and our bottom-line goal is to provide a smooth filing and refund process for the nation’s taxpayers.”


The government closure meant the IRS had to change the original opening date from Jan. 21 to Jan. 31, 2014. The 2014 date is one day later than the 2013 filing season opening, which started on Jan. 30, 2013, following January tax law changes made by Congress on Jan. 1 under the American Taxpayer Relief Act (ATRA). The extensive set of ATRA tax changes affected many 2012 tax returns, which led to the late January opening.
The IRS cautioned that it will not process any tax returns before Jan. 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file with the direct deposit option.
The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.
Please refer to our  2013 Personal Tax Check List to start getting your paperwork in order. LAE Business Services is an IRS authorized E-file provider. Contact us today to set up an appointment for your personal income tax return preparation.info@laebusiness.com or 631-793-1292

Saturday, January 4, 2014

IRS Sets 2014 Mileage Rates

The IRS just announced its standard mileage rates for 2014.  The new rates are a slight decrease, a half cent,  from the 2013 rates for business, medical and moving expenses.

Effective January 1, 2014, the standard mileage rates will be:
  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations
Small business owners, employees, self-employed individuals and other taxpayers can use the standard mileage rate to calculate their tax-deductible costs for using a vehicle for business, charitable, medical or moving purposes.

The IRS points out that these standard mileage rates are “optional”; meaning that you have the option of using the IRS-designated standard mileage rate for 2014. Or, in the alternative, you may keep track of your actual expenses of operating the vehicle and claim actual expenses instead.
There are some rules limiting when you can use the standard business mileage rates:
(1) You can claim the standard mileage rate for a maximum of four vehicles used simultaneously.
(2) You cannot use the standard mileage rate if you’ve already claimed a Section 179 deduction for that vehicle.
(3) And you cannot use the standard business mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS).

What if Your Employees Use Their Personal Vehicles for Business?

A frequently asked question is “If my employees use their personal vehicles to do work for the business or to run business errands, do I have to reimburse the employee at the standard mileage rate?”
In most states you do not have to reimburse expenses to employees, but most employers do so, using the standard mileage rate.  The business can then deduct as a business expense the amount reimbursed to the employee, up to the standard mileage rate. Of course, any reimbursement to the employee should not be treated as taxable income to the employee.If you do not reimburse your employee for business use of a personal vehicle, then the employee may be able to deduct the unreimbursed expense on his or her 1040, Schedule A.  In that case, you as the employer do not get to claim the deduction.

For more detail on 2014 mileage rates, see the IRS site.  Contact your accountant for specific advice in your situation.

Thursday, January 2, 2014

Throw Me To The Wolves...



Pack

Be honest Be kind and Be true, but Never be pushed to the breaking point!