Archive for the ‘Taxes’ Category

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The Good Side of Taxes:

In Accounting & Finances,Business,Taxes on September 11, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900407228Become a Tax Volunteer for VITA and TCE

Got some free time on your hands? Turn it into time well spent by becoming a tax volunteer for Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE). These community-based programs provide free tax return preparation for people who need tax help but can’t afford it, such as seniors and people with disabilities.

No experience in preparing taxes – no problem. As a volunteer, you’ll get special training and can choose to work in a variety of roles. For example, if you’re bilingual (or beyond!) you could be a big help to people who don’t speak English.

MH900295311If you’re a veteran – and even if you’re not a veteran – being a VITA or TCE volunteer is one way you can help out military personnel and their families. They’re already occupied with risking their lives for the country, so let’s give them a hand with their tax preparation, okay?

In other words, it’s basically a win-win situation all around. Not only will you assist others, you’ll also learn a thing or two about taxes in the process. Yup, this is your chance to learn all the insider tips about deductions and credits like the Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly. How could you say no?

MH900200391Here’s another reason why you shouldn’t decline. Volunteer hours are flexible and minimal – about three to five hours per week. That’s like only thirty minutes a day! If only work could be so short and sweet…

Volunteering doesn’t sound too bad, does it? And getting there should be a breeze. Volunteer sites are located in neighborhood centers, libraries, schools, shopping malls, and other convenient locations all over the U.S. Think about it: you could take a nice walk to the site, help out some folks with their taxes for an hour, and then head home for dinner glowing from knowing you did your good deed for the day.

And you’ll be making history. As a VITA or TCE volunteer, you’ll become part of a program that’s helped people file tax returns at no charge for more than forty years. “It’s people helping people.”

MH900056116Ready to sign-up? Volunteer programs are open from mid-January through the tax filing deadline (April 15, 2014). Right now you should head over to IRS.gov and type “tax volunteer” in the search box for more info. The final step is to submit Form 14310, VITA/TCE Volunteer Sign Up, by email through the IRS website. Then you’ll be on your way to making the world a better place.

Sufen Wang, M.S. Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Internal Revenue Service Crisis Update:

In Accounting & Finances,Business,Taxes on June 26, 2013 by Sufen Wang Tagged: , , , , , , ,

Daniel Werfel is IRS’ New Acting Commissioner

There’s a new sheriff in town, and he’s here to stay…only until the end of September. On May 22 Daniel Werfel, the White House Office of Management and Budget Controller, replaced Steven Miller as Acting Commissioner of the IRS.

His job: immediate crisis management regarding the agency’s improper scrutiny of conservative-leaning groups applying for tax-exempt status. Already he has replaced Lois Lerner, the director of Exempt Organizations, with Ken Corbin. And Werfel’s being kept under close watch by the big men on campus: President Obama and Treasury Secretary Lew want a progress report within 30 days.

The new Commissioner is supposed to 1) ensure that staff who acted inappropriately are held accountable, 2) examine and correct any failures in the system that allowed this behavior to happen, and 3) take a forward-looking, systemic view of the agency’s organization.

It’s too soon to tell how well Werfel is handling his role, but let’s hope he does a better job than Miller, so the IRS can start focusing on its day-to-day operations again. 

 

Sufen Wang, M.S. Accountancy,

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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IRS Hasn’t Been Pennywise:

In Accounting & Finances,Business,Culture,Entertainment,Taxes on June 11, 2013 by Sufen Wang Tagged: , ,

MH900185740Treasury Inspector General for Tax Administration (TIGTA) Audit Identifies Excessive Spending at IRS Conference

The IRS might need to brush up on its coupon clipping skills after TIGTA’s recent audit of the agency’s spending at conferences from 2010 to 2012. Let’s just say that although every penny counts, the Internal Revenue Service hasn’t been counting every penny when it comes to planning out-of-office events.

TIGTA’s audit focused on a certain very expensive Small Business/Self-Employed (SB/SE) Division’s All Managers Conference in Anaheim, California in August 2010. Held at the Marriott, Hilton, and Sheraton hotels, this event was attended by 2,609 SB/SE Division executives and managers and reportedly cost $4.1 million – yikes! Because IRS management didn’t have to track and report actual conference costs at the time, there’s no way to double-check that number. It doesn’t matter though – TIGTA found plenty of splurging anyways.

MH900310838First of all, the IRS didn’t use available internal personnel to find the best deal in town. Instead, SB/SE management hired two non‑governmental event planners to choose a location for the conference. This non-IRS pair obviously wasn’t looking out for the IRS’ (and the taxpayer’s) pocket book, they were looking to get paid. And – what do you know – the event planners received an estimated $133,000 commission from the three hotels based on the cost of rooms paid for by the IRS.

MH900023026It’s safe to assume those planners didn’t do much hotel room bargain hunting online. Still, some bargaining did occur. They made sure to negotiate a bunch of concessions for the managers and executives at the conference. Attendees got daily continental breakfast. And a welcome reception with two drink coupons. And there were lots and lots of suite upgrades.

And that’s not all folks – TIGTA also found other very fishy expenses like“planning trips” held before the conference, the production of a Star Trek parody and “SB/SE Shuffle” video, a keynote speaker who painted portraits of Michael Jordan and Abraham Lincoln, an information corridor that raffled off baseball tickets, and various promotional gifts given to IRS employees.

Sure, brief bags and hard-covered spiral journals replete with imprinted logos are nice souvenirs to bring home, but they’re definitely not necessary costs. The IRS could have got a much lower lodging rate for the conference by using governmental event planners and eliminating those extra hotel amenities.

MH900363294Accordingly, TIGTA had more than a few budgeting tips for the IRS, which the IRS agreed to follow: verify that conference-costs and attendance are being tracked, use IRS personnel to plan future conferences, evaluate whether there should be hotel upgrades, ensure that taxable travel is identified and that Forms W-2 are issued to applicable employees, etc. Excessive Federal spending is a hot topic right now, so the IRS is going to have to start saving money if it wants to save face.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Operation Double Dip….

In Accounting & Finances,Business,Taxes on May 21, 2013 by Sufen Wang Tagged: , , , ,

MH900239563IRS Agents Caught Dipping Into The Cookie Jar:  24 Employees Indicted for Tax Fraud

Some people just can’t keep their hands out of the cookie jar. And when that cookie jar is filled with taxpayer dollars, you know the culprits are going to get more than a mere slap on the wrist.

Twenty-four current and former IRS employees in Tennessee and Mississippi are about to find that out the hard way. They recently got caught red-handed defrauding the government of more than $250,000 in benefits and have been indicted for their crimes.

MH900150005Thirteen were milking their employee “benefits” for all they’re worth. They’re facing federal charges of making false statements to obtain unemployment insurance payments, food stamps, welfare, and housing vouchers. Basically, they said they didn’t have a job while applying for or re-certifying those government benefits – and then they clocked back in from their lunch break. Seriously though, these individuals are facing some serious time: if convicted, they could be eating prison food for the next five years.

Eleven other former and current IRS employees were charged with theft of property over $1,000. They probably thought it was like taking candy from a baby. Now their goose is cooked and they might be served with a class D felony.

U.S. Attorney Edward L. Stanton III dug into these workers who decided to bite the hand that feeds: “According to the allegations in the indictment, while these IRS employees were supposed to be serving the public, they were instead brazenly stealing from law-abiding American taxpayers. These charges demonstrate our unwavering resolve to work with our law enforcement partners and hold accountable anyone who fraudulently obtains government benefits and violates the public’s trust.”

MH910217103These charges should be food for thought for anybody thinking they can get away with an extra-large slice of the pie. Remember, there’s no such thing as a free lunch.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Self-Employment 101:

In Accounting & Finances,Business,Taxes on April 30, 2013 by Sufen Wang Tagged: , , , , , ,

Help Yourself with these Independent Entrepreneur Tax Tips


black-29972_640If you live and – more importantly work – by the motto “You’re not the boss of me!” then read on. When you’re self-employed, you either work for yourself, as an independent contractor, or own your own business. Despite this independence, you’re still accountable to at least one person, Uncle  Sam, and you have to play by his rules even if you set your own hours. Yes, pick any 18 hours a day, 7 days a week; welcome to self-employment!

So, let’s say that you have a regular nine-to-five job, but you also do a little bit of this and a little bit of that on the side. Self-employment income can include pay that you receive from that part-time work done from home. That is income earned in addition to your normal job.

MH900160788Therefore, it is important to determine if you’re self-employed or not.  Any income you earned and for which you DO NOT recieve a W2 at year end for that income, is self-employed income.  Any and all self-employed income must be reported and filed via a Schedule C aka “Profit or Loss from Business,” or a Schedule C-EZ, with your personal income tax return Form 1040.  Oh, keep in mind that the minimum tax imposed on these self-employed income is at least 15%, which includes Social Security and Medicare taxes, in addition to your income tax.

Furthermore. you may have to make estimated tax payments throughout the year, on the income that is not subject to withholding. If you don’t make those payments, you may get hit with a penalty when you file your return. Being your own boss isn’t sounding too good right about now, is it?

MH900442412Well, at least you don’t have to worry about getting fired. And you’ll be able to deduct some business expenses for the costs you paid to run your trade. Most can be deducted in full, but some costs must be ‘capitalized’ – meaning you can deduct a portion each year over a period of years. Here’s the catch though: you can only deduct costs that are both “ordinary” and “necessary.”

MH900127671Finally, just because you’re self-employed doesn’t mean you have to figure everything out by yourself. For more answers, check out the IRS Small Business and Self-Employed Tax Center, Publication 334, Tax Guide for Small Business, Publication 535, Business Expenses, and Publication 505, Tax Withholding and Estimated Tax. Now go finish hanging up that Employee of the Month plaque above your desk.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Determining Your Correct Filing Status

In Accounting & Finances,Business,Culture,Taxes on April 27, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900151049Single, Married, or Head of Household?

Okay, seriously, now that the tax deadline, April 15, had passed, and tax extension had filed; you really need to start working on your returns!

What’s your status? No, not your Facebook status, your income tax return filing status. Filing status can impact the tax benefits you receive, the amount of your standard deduction, and the amount of taxes you pay. It can even – drum roll please – affect whether you have to file a federal income tax return.

MH900019119Classifying your relationship as “It’s Complicated” will only annoy the overworked IRS Agent. You must choose from five filing statuses on a federal tax return, with the three most common being “Single,” “Married Filing Jointly,” and “Head of Household.”

MH900237191Your marital status on the last day of the year is your marital status for the entire year. So even if you had a New Year’s Eve wedding, in tax return terms, you were married for all of 2012. A married couple can either file together using the Married Filing Jointly status, or separately, in which case each person’s filing status would be Married Filing Separately. Pretty self-explanatory.

If your spouse died during 2012, you usually can still file a joint return for that year. Qualifying Widow(er) with Dependent Child status applies only ifyour spouse died during 2010 or 2011, you have a dependent child, and you meet certain other conditions.

MH900237195If you aren’t married, divorced, or legally separated, in general your filing status will be Single. However, you might be able to file as Head of Household, which has a higher standard deduction and lower tax rates than the Single filing status. To claim Head of Household, you can’t be married and you must have paid more than half the cost of maintaining a home for yourself and a qualifying person. Head of Household is the status most often claimed in error, so make sure you meet all of the requirements.

You can and should shop around for the best income tax deal. If more than one filing status fits you, choose the one that allows you to pay the lowest taxes. IRS e-file will help you determine the correct filing status, and you can also use the Interactive Tax Assistant at IRS.gov.

Sufen Wang, M.S. Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Get Credit Where Credit is Due:

In Accounting & Finances,Business,Taxes on April 25, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900039005Five Tax Credits to Reduce Your Taxes

Now that the tax deadline, April 15, had passed, and tax extension had filed; let us start working on your returns, shall we?!

Give yourself credit for all your hard work in 2012 – tax credit that is…. A tax credit reduces the amount of tax you mu pay, which is always a good thing!  A refundable tax credit is doubly god because it reduces the amount you must pay and it could also result in a refund. So, before handing in your tax return just yet – do your homework and see if you are missing out on some extra credit.

If you worked, but didn’t earn a lot of money last year – less than $50,270 – the Earned Income Tax Credit may be your perfect match. Eligibility is based on earnings, filing status, and eligible children. The EITC Assistant Tool does the math for you to see if you make the grade and approximately how much credit you’ll receive. The more kids you have, the better: the maximum you can get is $5,891 if you’re a worker with three or more children.

MH900446562Speaking of children, everyone knows it’s a full-time job raising kids. One of the perks, other than the joy of seeing them grow up, is a little thing called the Child Tax Credit. This credit can reduce your income tax by up to $1,000 for each qualifying child under age 17 that you claim on your return.

MH900198327And even when the kids leave the nest for college, you can still get credit for your parenting skills with the American Opportunity Tax Credit. This applies to the first four years of post-secondary education with the maximum credit at $2,500 per eligible student and 40% of the credit (up to $1,000) being refundable. This should offset some of the pain of paying full tuition for that out-of-state private university that your son or daughter just has to go to because it has the best sports teams.

Or maybe you’re stuck between a rock and a hard place: you have somebody who depends on you, like a disabled spouse, dependent, or qualifying child under age 13, but you need to work to support them. If you paid for their care so that you could work or look for employment in the meantime, the Child and Dependent Care Credit could cover up to 35% of those care-taking expenses.

MH900200427Finally, this one is dedicated to those individuals out there who think ahead. The Retirement Savings Contributions Credit, a.k.a. the Saver’s Credit, helps low-to-moderate income workers save for retirement. To qualify, you must contribute to an IRA or a retirement plan at work and your income must be below a certain limit. And the credit is in addition to any other tax savings that apply to retirement plans. Now let the credits roll! 

Sufen Wang, M.S. Accountancy,

Wang Solutions, Long Beach, CA (562) 856-0793

Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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Taxes are Due Monday April 15:

In Accounting & Finances,Business,Taxes on April 11, 2013 by Sufen Wang Tagged: , , , , , , ,

169849_taxYour Guide to Hassle-Free Filing

There’s less than a week to go before your taxes are due to Uncle Sam. If you haven’t submitted your return, you can start panicking right about now OR you can follow these easy steps to ensure submitting your return is as painless as possible. And if you’ve already submitted, it doesn’t hurt to keep these strategies in mind for next tax season.

MH900334322First, get together any documents you might need to file your taxes BEFORE you sit down to fill out your return. You don’t want to be running around like a headless chicken looking for this or that piece of paper. Instead, find receipts, cancelled checks, W-2 Forms, Wage and Tax Statements, and 1099 income statements, and place them all in one convenient location for easy reference.

Now that that’s done, figure out how you want to file. If your income was $57,000 or less, take advantage of the Free File service: Free File Tax Software will do all the tax preparation work for you online, and it doesn’t cost a cent. If you’re more of the DIY type, you can also e-file by using Free File Fillable Forms, which are an electronic version of IRS paper forms. In fact, regardless of income, anybody can use these Fillable Forms to file Form 1040 series tax returns for free.

internet-32340_640If you don’t use the Free File service, you can still e-file by buying commercial tax software, or through a paid tax preparer. Many tax preparers are now required by law to use e-file because it gets you your refund in half the time and it offers more payment options when you owe money. Even the IRS claims that “IRS e-file is the best way to file an accurate tax return.” And most people seem to agree, with more than 80% of taxpayers using IRS e-file last year. Of course, if you want to make things difficult, you can still file on paper…

However you decide to file, direct deposit is the fastest and safest way to get your refund. And combining it with e-file will get your money even faster. That being said, faster is not necessarily better when you’re actually filling out your return. Don’t rush and be sure to double-check everything before you submit: a mistake on something as simple as your social security number could get complicated when processing your return.

black-29972_640If you have any questions, the IRS has all the answers. Visit IRS.gov to browse its resources, such as the Interactive Tax Assistant tool, or check out Publication 17, Your Federal Income Tax.

By the way, just in case you are NOT going to make the April tax deadline… Make sure you file a tax extension by April 15!!!!

Sufen Wang, M.S. Accountantcy
Wang Solutions, Long Beach, CA  (562) 856-0793

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Casual Merchants: Expect Underreporting Notices in the Mail

In Accounting & Finances,Business,Taxes on April 2, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900104746The IRS Didn’t Forget about Casual Merchants: Expect Underreporting Notices in the Mail

Casual merchants might have some official ‘splainin’ to do. The IRS is taking a good, hard look at the gross receipts of food cart operators, mom-and-pop shops, swap meet participants, and sellers on online auction sites such as Ebay. If there appear to be any discrepancies, the agency will likely send out “soft letters” requesting additional information from those small business taxpayers.

$10 billsSpecifically, the IRS will be checking whether gross receipts – as reported by credit card companies and third-party networks – match up with income stated on tax returns. Since 2011, certain taxpayers have had credit, debit, and certain electronic transactions reported on Form(s) 1099-K, Merchant Card and Third Party Network Payments. A high amount of receipts that appears on this form, but not in income levels on the tax return, is obviously going to raise eyebrows.

MH900401126Thus, a soft letter means the taxpayer isn’t in trouble (yet), but the IRS wants answers. After all, the IRS knows there are legitimate reasons why a merchant’s numbers might not add up with the third parties’. For example, there could be a difference between parties’ calendar year versus fiscal year accounting systems. Or it could arise from the fact that Form 1099-K does not take into account on sales returns and refunds processed by the merchant, or a merchant’s cost of goods, or other legitimate deductions from gross income.

These valid excuses are exactly why the IRS plans to begin with soft letters of inquiry. If the taxpayer agrees with the assessment of underreporting, the IRS will request that they amend their returns. The goal is not punish taxpayers, but to increase voluntary compliance.

Sufen Wang, M.S.Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793

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Taxable or Nontaxable?

In Accounting & Finances,Business,Education,Family,Taxes on March 11, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900442285Question Needs to be Answered: Income Tax Basics

You know (hopefully) that federal income tax returns are due April 15. But do you really know what income is – let alone if it’s taxable or non-taxable? Here’s income by the numbers to help you do the math correctly on your returns.

Income can include money, property, or services that you receive. All income is taxable unless the law specifically excludes it – and those “tips” you pocketed are not excluded. You should notice that income doesn’t just mean money: non-cash income received through bartering is as taxable as wages, and both parties must report the fair market value of goods/services received as income on their tax returns. 

MH900361224Although most income is taxable, there are exceptions to this rule. Gifts, bequests, and inheritances are usually nontaxable, so don’t worry about that luxury car given to you for your birthday. If you buy something and get a cash rebate from the dealer/manufacturer, that rebate is also not taxable. Welfare benefits, child support payments, and reimbursements for qualified adoption expenses are all not taxable. Finally, if you collected damage awards for a physical injury or sickness, those are yours to keep, tax-free – nobody wants to kick you while you’re down.

TMH900234599hings get a little tricky with income that’s not taxable except under certain conditions. For example, life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount more than the cost of the policy is taxable. Similarly, any scholarship income used for certain costs like tuition and required course books is not taxable, but amounts used for room and board are taxable. And classifying your frat house as  “textbook” college living won’t work.

Don’t forget to report any taxable refund, credit, or offset of state or local income taxes you received, even if you weren’t mailed Form 1099-G. You’ll have to contact the government agency that issued the payment to obtain that form. And don’t miss out on IRS Publication 525, Taxable and Nontaxable Income – it explains everything you ever wanted to know about income.

Wang Solutions, Sufen Wang, M.S. Accountancy, (562) 856-0793

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