Marriage Tax-Wise

In Accounting & Finances, Taxes on February 26, 2017 by Sufen Wang

What is Marriage Tax-Wise? The IRS Issues Final Ruling

rings-26760_640What’s the definition of marriage? Ask this question of many Americans and you’ll end up opening a whole wormhole of (not very well-researched) arguments, followed by a quick spiral into derogatory terms, and if you’re especially unlucky, a soliloquy on the merits of shopping at Wal-Mart. Luckily, when it comes to federal taxes, we don’t need to look to anybody other than The IRS to find out how marriage is defined. The IRS has published final regulations on the definition of marriage tax-wise, based on the Supreme Court’s decisions in Obergefell v. Hodges, and Windsor v. United States, along with Revenue Ruling 2013-17.

heart-1348870_640In these final regulations published in the Federal Register earlier in September, the IRS confirmed that for federal tax purposes, the terms “husband,” “wife,” and “spouse” apply to same-sex marriages recognized in the state where the couple tied the knot. These terms can be neutrally applied to include partners of either sex. However, The IRS clarified that those terms, as well as “husband and wife,” do not include people who entered into a civil union, domestic partnership, etc. In other words, if the relationship is not considered marriage under the laws of the U.S. state, territory, or possession where it happened, it’s not considered a marriage when it comes to taxes.

So what happens if the happy couple decides to take the plunge while abroad? The final IRS rules clarify that if the coupled got married in a foreign jurisdiction whose laws recognize the marriage, and if the relationship is recognized as marriage in at least one U.S. state, possession, or territory, then those folks are married for federal tax purposes. And if the wedding bells toll in a domestic setting, the marriage of the two people is recognized tax-wise if the marriage is acknowledged by the U.S. state, possession or territory where the couple married. This is regardless of where they end up settling down.

gay-love-equal-loveAnd although the IRS didn’t mention the following in their regulations, it goes without saying that these are true across any marriage:


  • “Marriage is the bond between a person who never remembers anniversaries and another who never forgets them.”
  • “Marriage lets you annoy one special person for the rest of your life.”
  • “Behind every successful wife, stands a surprised mother in law.”
  • “Marriage is a relationship in which one person is always right and the other is the husband.”
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


W2 Scam is BACK!!!!

In Accounting & Finances, Business, Taxes on February 13, 2017 by Sufen Wang

Watch Out Payroll & HR Departments: The W-2 Scam is Back

road-sign-464653_640It’s troublesome that it’s 2017 and we still have to worry about e-mail scams. Even worse, this time around, there’s a repeat offender slinking its way into inboxes across the country. The IRS has renewed a warning regarding a fake e-mail that looks like it’s coming directly from company CEOs. Criminals are sending the e-mails out to the companies’ HR and payroll departments, and tricking them into sending back employee W-2 Forms.

SSN-identity-theftWe’ve seen this gimmick before. The scam first appeared last year, with the goal of fooling the nice folks who handle confidential employee records into giving up all the juicy details about those files – employee SSNs, names, and income info. So what do the thieves do with this secret info turned over to them? They try to file fraudulent tax returns so that they can get the tax refund money.

executive-2051412_640The scam has been dubbed as a “spoofing” e-mail, since the correspondence sure looks like it came from the head honcho, replete with the actual name of the company’s CEO. According to the e-mail, the person upstairs needs the payroll/HR office to send up a list of employees and all their private info, including SSNs, pronto.

Like a tired old script, here are some of the phrases that may appear in the deceptive e-mails:

  • Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
  • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary).
  • I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap.

stop-634941_640If you get any such urgent, cordial e-mail from the person in charge, immediately question its legitimacy. There’s always something a little fishy about scam e-mails – from the font used, to the spelling and grammar, to the sender’s e-mail – so stay on the lookout for anything at all that doesn’t look right. And remember, the best way to stop a scam is to raise awareness about it, so get the word out that hustlers are trying to use this old racket 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


Schedule “C” Updates…

In Accounting & Finances, Business, Taxes on September 11, 2016 by Sufen Wang Tagged: , , , ,

Some Light Reading for the Weekend: Updated Schedule C Instructions

think-about-1184858_640Folks, the 2015 Tax Extension deadline is upon us!!!!  October 15 is right around the corner!!! Yikes!!!  Let’s get that Schedule C finalize and send off to your CPA or the IRS and be done with year 2015!  Let’s review some of the changes for year 2015 before you hit that “SEND” button or lick that envelope and stamps to The IRS.surprised-1184889_640

easy-estimated-taxes-2013For many Americans, filing taxes is a quick and painless process. For sole proprietors and the self-employed, it’s never so easy. If you’re one of these folks, you have the privilege of struggling through Schedule C, Profit or Loss from Business, and its many accompanying forms. And just when you think you’ve mastered the twists and turns of those documents, the IRS changes the instructions so you have to figure them out all over again.

The latest round of Schedule C instructions are available here. Small businesses that changed accounting methods to adopt repair regulations will want to check out the simplified reporting requirements. The instructions also cover deduction and capitalization of tangible property expenditures related to those repair regulations.

For your reading pleasure, the IRS also released updated instructions for Form 4562, Depreciation and Amortization. For tax years beginning in 2015, the maximum Section 179 expense deduction is $500,000 ($535,000 for enterprise zone property), with this limit reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2 million.

house-valueAlso note that you can choose to claim a 50% special depreciation allowance for certain qualified property that you got after Dec. 31, 2007 and placed in service before Jan. 1, 2016. According to the instructions, the definition of qualified property differs for some qualified property placed in service after Dec. 31, 2015. And corporations should review the updated Form 4562 instructions, since there’s news on claiming certain unused minimum tax credits.

MH900334322So if you were looking for some easy reading material to keep you occupied this weekend, today’s your lucky day!

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




Cash Flow Management $$$

In Accounting & Finances, Business, Taxes on July 19, 2016 by Sufen Wang

Keep Your Business Cash Flow In Check With These Management Tips

You’re turning a tidy profit, so your business must be thriving.

This thinking has sunk more than a few aspiring entrepreneurs. Profit is great and all, but to truly have a finger on the pulse of your business, you need to look at the bigger picture via your cash flow. Cash flow is all about the money moving in and out of your enterprise. It comes down to how much dough you have in the bank or in the safe, how much money you owe, and how much money people owe you. If you can get a handle on these three things, such as with the tips below, you’ll have a healthy cash flow that will turn your lemonade stand into a boomin’ destination for the ages.

1.       Keep a cash stockpile in the cleaning supply closet. Or maybe somewhere safer, such as the bank, but the point is to have back-up cash at your disposal in case worse comes to worst. Preferably enough savings to tide your business over for three to six months if customers are as scarce as feathers on a fish or if a hurricane comes through and takes your roof with it. On that note, keep a separate cash stash at home for personal finance emergencies. (P.S. Cash stash does not mean actual cash!  A separate savings account or a credit union account that is physically hard to get to!)

2.       Don’t sag your shelves with inventory. While volume discounts are enticing, excess inventory sucks the life blood out of budgets. Order only what you need to serve customers, and if you’re interested in a purchasing incentive, weigh it against the cost of idle products yawning in the stockroom.  Just In Time Inventory System is hard, but very efficient to handle your inventory!

MH9001052163.       Remember that there ain’t no such thing as a free lunch. So don’t give your customers one, or a free brake pad repair, or furniture refinishing, or whatever service you’re offering, just because you don’t want to “pressure” them into paying. Always bill customers in a timely manner, and always make sure they pay you, and always keep records of both invoices and payments. If you’re trying to make money, you have to actually get the money to keep your cash flow strong!

4.       Be a proud penny-pincher. Every cent you spend should be a necessary expense for the good cause of your business. If you don’t control the costs of supplies, salaries, inventory, and more with a Spartan mindset, you’re going to end up hurting your cash flow and your business’s chances of success. Be especially parsimonious if the sales are flowing in; this influx tends to trigger sloppy expenditures.

MH9001051765.       Tread the credit waters carefully. Keeping in line with #3, there’s a difference between treating customers well, and allowing customers to walk all over you. If you give clients the option to pay for your products/services in installments, you need some way to ensure they’re going to end up paying – before they leave with their nice new teeth. Consider implementing a credit approval process or even accepting credit cards. For a small percentage to a vendor, the latter means you’ll get the money up front and save time on collections down the road.

If you let your cash flow run its own course, you probably won’t like what you find at the end of the road. But if you keep the above tips in mind and stay in tune with all of the money coming in and out of your business, you can expect it to flourish for years to come.


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


Taxpayers Beware!

In Accounting & Finances, Business, Taxes on June 30, 2016 by Sufen Wang

Robots and Agent Impersonators Are On the Loose

If it looks like a taxpayer, talks like a taxpayer, and has a social security number like a taxpayer, then it’s probably a robot trying to hack the IRS’s E-file PIN system. Yup, the newest threat out there has binary for a brain…though of course, there’s a real human criminal huddled over their computer somewhere just waiting to get their hands on the info of honest Americans.

binary-code-1-1241810-1279x1809Here’s what went down. In January, an automated bot broke into the IRS’s Electronic Filing PIN system. The robot already had about 464,000 SSNs stolen from somewhere else. Using those numbers, it started poking around for the corresponding E-Filing PINs that are used to authenticate a taxpayer when they file their return online. Oh and it got more than a few of them – 101,000 in fact.

1333293049-2400pxAt least that’s the initial estimate the IRS is giving out, so chances are even more taxpayers were affected. While the malware was able to pocket the E-Filing PINS, and the hackers still have the stolen SSNs, no other personal data was obtained. That raises the question, do robots even have pockets? Whatever the answer, the IRS has flagged the affected accounts so that no tax-related funny business happens.

no-phone-call-2400pxIf it sounds like an IRS agent, talks like an IRS agent, and puts you on hold like an IRS agent, then it’s probably an IRS agent impersonator trying to swindle you into handing over money. Yup, not only do taxpayers have to watch out for evil robots, they have to listen up because there’s also been a deluge of tax phone scams recently.

These criminals pretend to be Internal Revenue Service staff on the phone and aggressively ask for immediate payment or credit/debit card info. These scare tactics work more often than you’d think, which is why the word needs to be spread to every taxpayer: the real IRS won’t threaten you and it will always mail a bill before it calls.

Ensuring that hackers and impersonators don’t win is going to take a two-fold defense: the IRS needs to continue to bolster its cyber security efforts as E-Filing becomes more and more popular, and taxpayers have to stay on their toes at all times when it comes to protecting their personal info.

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


Get Help with The Old College Try:

In Accounting & Finances, Business, Education, Taxes on June 13, 2016 by Sufen Wang

Tax Credits for Higher Education


It’s back to college, that special time of the year when Twin XL bedding and mini-fridges are hot commodities, and kids get one last haircut from mom before they head off into the real world – though they always manage to return with copious amounts of dirty laundry. Higher education costs more than a fistful of dollars, but college-bound folks (or their parents or spouse) can alleviate some of the financial burden with education tax credits.

A biggie students can claim on their tax return is the American Opportunity Tax Credit (AOTC), which is worth up to $2,500 each year, and is available for the first four years of college. Forty percent of the AOTC is refundable, meaning that even if you don’t owe any taxes, you might be eligible to get up to $1,000 of the credit as a straight-up refund.

CollegeMoneyGraduate students and beyond will have more to rejoice about with the Lifetime Learning Credit (LLC). Worth up to $2,000 on your tax return, you can claim the LLC for every single year you’re an eligible student. Now go ahead and get your seven-year PhD on!

But as with most things, you can’t have your Instant Lunch and eat it too. Each student can only get one type of education credit per year. However, parents out there with two qualifying kids can claim a different credit for each student. Those lucky folks are welcome to flaunt their children’s tax achievements with a Proud Mom of an AOTC Student AND an LLC Student bumper sticker.

collegeboundThe fine print starts here. The higher ed credit is based on qualified education expenses: tuition costs, student activity fees, etc. For the AOTC, you can also count money spent on books and supplies you must have to study – and boy, are textbooks expensive! Unfortunately, things like room and board, transportation costs, and plastic cups for a kegger are not qualifying expenses. Also, you have to actually be studying at a higher ed school to get a higher ed tax credit. Local coffee shop book groups are not education institutions, however scintillating the literary conversation may be.

Notebook and pens? Check. Satchel instead of a backpack? Check. Coffee, coffee, coffee? Check, check, check! Form 1098-T? What the heck is that!? Your school uses this form to report your qualified education expenses to the IRS and to you, and it should show up in your mailbox and/or inbox by February 1, 2016. Tax credit for pursuing a college degree and a fulfilling life? Check!

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


3 Confusing Tax Deductions

In Accounting & Finances, Business, Taxes on January 25, 2016 by Sufen Wang

3 Confusing Tax Deductions Made Easy

taxesWhile tax professionals have more tax wisdom than your average Joe, not all understand the quirks of some deductions. Here are 3 deductions that frequently stump tax experts, explained properly, to ensure there are no hiccups in your tax return processing.


Deducting Student Loan Interest

diplomaTax time is the only time the phrase “student loan interest” means something good. That’s because you can get a deduction for the interest you paid on student loans. Plus, there’s no need to itemize to get this nice little break.

There are three rules though. For 1) you have to be legally obligated to pay the loan interest. For 2) a dependent can’t claim the student loan interest tax deduction on their own return. For 3) when the loan was taken out, the student must have been enrolled at least half-time in a program on-track to a recognized educational credential.

Number one and two are tricky because while the student is usually the one taking out the loan, the parents are often the ones footing the bill. Plus, college-age students are still usually dependents. Luckily, there are a couple of easy workarounds. One solution is for the parents to co-sign the loan payments or take out the loan themselves. Problem solved.

Deducting State and Local Taxes

The old saying “you can’t have your cake and eat it too” has never been more true than when it comes to state and local taxes. When itemizing deductions, you can claim state and local sales taxes OR you can claim state and local income taxes. But you can’t have both. Texans and people who live in other states where there’s no income tax are obviously going to want to take the sales tax road.

shopping-receiptsHowever, this route can get a little rocky a ways up. That’s because there are three paths to claiming the sales tax deduction. You can 1) take a look at your income, exemptions, and location, and then match-up with an amount on an IRS table. Or 2) claim the amount from that same table, but then also tack on actual amounts paid for items like a boat, major home improvement, and other big, specific stuff. Or finally, 3) claim the actual sales tax paid for everything.

The problem is that actual expenses are still at the mercy of the general sales tax. For example, if you buy a car and pay more sales tax on it than the general sales tax rate, you can only add the amount you would have paid at the general sales tax rate. Sorry. And, if you buy a boat or an aircraft, you can’t take the deduction at all if you paid more sales tax on those items than the general sales tax rate. Sorry again.

Deducting Mortgage Refinancing Points

house-valueWhile mortgage refinancing points might sound like they belong in a video game, these points actually have real world tax implications. In general, you can’t deduct points paid to refinance your existing mortgage in the year that you pay them, and you have to instead amortize them over the life of the loan. But let’s say you paid off your mortgage last year. You can deduct any leftover points that weren’t amortized in that year, as long as you didn’t refinance the mortgage with the same old lender.

Also, if you spruced up your house and covered the costs using some of the proceeds from refinancing the house, you can deduct the paid points that went to the home improvement project. To qualify for this, the points need to have been paid at the time of refinancing. Now aren’t you even happier you decided to add a guest bathroom?

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