Posts Tagged ‘Tax returns’

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Anti-Fraud Efforts by The IRS…

In Accounting & Finances,Business,Taxes on December 15, 2015 by Sufen Wang Tagged: , , , , ,

IRS Keeps on Truckin’ in Anti-Fraud Efforts with a W-2 Verification Code Test Drive

ID theft

Tis the Seasons!  Year end 2015 W-2s will be mailing out by January 31, 2016 and the IRS continues to wage war against identity thieves and other tax fraudsters via a Form W-2-Wage and Tax Statement-verification code pilot program. The program will test whether adding an authentication code on W-2 copies provided to employees will be “useful in evaluating the integrity of the W-2 data that taxpayers submit when they e-file their 1040s,” explained Scott Mezistrano of the IRS, during a payroll industry conference. Note the mention only of e-file: the code won’t be tried out on W-2s filed with paper Forms 1040, keeping in line with the IRS’s slow-but-sure transition to cyberspace.

Algorithm2The W-2 code dry run for tax year 2015 will be limited to a few, hand-picked payroll service providers (PSP), who will in turn hand pick some employer clients, whose employees will in turn receive W-2s with the brand spankin’ new codes on Copies B and C of the Form. Each code will be 16 characters long, like this – xxxx-xxxx-xxxx-xxxx – and will be generated by each PSP using a special IRS-provided algorithm. The kicker is that the algorithm will use certain data points from the W-2 to generate the code. So after the employee enters their unique code on their e-filed tax form, the IRS can check to make sure it matches the data on the Form W-2.

Form W2Since this is just a W-2 verification pilot program, no employee will get penalized if they forget to include their code or they submit the wrong one when they e-file. Their returns will be processed per the usual, along with their refunds. And while the trial will be limited in scope, don’t be surprised if you get a substitute Form W-2 with a verification code on it. While you aren’t obligated to partake in entering the code, your participation could end up helping other honest taxpayers down the road. If the process is successful, by as early as 2017 all Form W-2s could be updated to include a verification code box.

StolenIdentityConsidering the less-than-stellar quality of the IRS’s identity theft victim customer service, let’s hope the W-2 anti-fraud program does work out. All an identity thief really needs is your name, date of birth, Social Security Number, and no conscience whatsoever. Using your personal info, the criminal will file a tax return using fake W-2 information to try to get themselves – not you – as big of a refund as possible. If the trial is a home run, the W-2 verification program would make the lives of these low-lives a lot harder because they would need to enter the magic code that matches the W-2 data.

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 Impersonation Scams

In Accounting & Finances,Business,Taxes on December 15, 2015 by Sufen Wang Tagged: , , , ,

IRS Impersonation Scams Running Rampant: Watch out for New Tricks from Con Artists

TaxScamScamming just isn’t what it used to be – it’s a whole lot worse. As technology has evolved, so has the way people use it to exploit other people, and a lot of the time, the victims are taxpayers. Since October 2013, at least 4,000 people have lost more than $20 million collectively from tax scams. As such, the IRS has issued another warning for taxpayers to keep their eyes and ears wide open for any suspicious phone calls, e-mails, or letters.

CardTrickTax scammers have some new tricks up their sleeves and everyone is their target. One ruse is to alter the number that appears on the taxpayer’s telephone caller ID so it looks they’re getting a bona fide call from the IRS or other agency. The scammers keep the act up by spewing fake names, titles, and badge numbers, all to make themselves sound legit.

ScamsSometimes, the scammers will be so kind as to give their victims step-by-step instructions on how they can make the “required” payment, e.g. by going to a nearby bank and getting a debit card. And recently, some scammers have been giving out actual IRS addresses where the victims can mail their payment receipt. Little do the taxpayers know that their money is going straight into the pockets of thieves!

Threatening2On the one hand, these scams work because the fake correspondence often looks and seems official to unsuspecting taxpayers – con artists will even send e-mails and letters using official IRS letterhead. The scams also succeed because taxpayers get scared – scammers rely heavily on fear tactics, such as threatening to call the police, to make people react immediately and shell out money without thinking twice.

The real IRS will NEVER call you about taxes owed without first mailing a Notice, then another Notice, then a bill, etc. etc.  The IRS will NEVER ask for credit or debit card numbers over the phone; and will NEVER demand taxes without giving the taxpayer the chance to question the amount owed. If you get a weird call from someone claiming to be from the IRS, HANG UP and call the IRS back from your end at 1-800-829-1040. Also remember that the official IRS website is IRS.gov – if it doesn’t have .gov at the end, get out of there quick!

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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Tax Returns Errors = Delay in Refunds

In Accounting & Finances,Business,Taxes on June 1, 2014 by Sufen Wang Tagged: , , , , , , , ,

homerMake No Mistake About It: Tax Return Errors Delay Refunds

Tax day has come and gone, and now you just have to wait. And wait and wait and wait and wait a second, what’s taking your refund so long? The delay might be due to a blooper on your tax return – the IRS will need to contact you to correct it. You’re more likely to make a mistake if you file on paper instead of IRS e-file – twenty times more likely in fact.

identity_theft3For example, you might have written in the wrong SSN or even forgot to put it at all. That’s usually the case – we forget the most important thing because we’re so focused on the little details. It’s okay to peek at your SSN card to make sure you got your own number right.

Everybody has crazy spellings of their names nowadays with silent consonants, extra vowels, and missing letters all over the place. Be sure to spell the names of everyone on your tax return exactly as they’re printed on their SSN cards.

help+calculatorFiling status might seem like a guessing game. A lot of folks accidentally file as Head of Household instead of as Single (the former does sound more impressive). Luckily, the Interactive Tax Assistant can give you a helping hand with filing status.

OLYMPUS DIGITAL CAMERASimple arithmetic gets complicated fast when a lot of numbers are involved. If you’re tempted to show that calculator who’s boss and do everything with the old noggin’, don’t. Math mistakes are a common error on tax returns, especially when you don’t have tax preparation software doing the calculations for you.

stop-read-instructionsRead all the instructions. This goes for everything in life, but is especially important when it comes to baking, setting up expensive electronics, and figuring tax credits or deductions. A lot of filers botch up when figuring their EITC, Child and Dependent Care Credit, and the standard deduction.

Choosing direct deposit will get you your refund fastest. However, choosing direct deposit and using the wrong bank and account numbers on your return is a sure way to get your refund slower.

pen_signatureWhew, you made it through the tax return, double-checking your math and ensuring everyone’s names have all the extra letters they’re supposed to have. But all that work will be for nothing if you don’t put your John Hancock on there, along with the date. And go find your spouse if you’re filing jointly – the return isn’t valid unless both of you sign.

You can’t exactly sign with a pen when you’re filing electronically. Well I mean you can try to, but your computer screen won’t look too great afterwards. Instead, use a PIN to sign the return. If you know last year’s e-file PIN, use that. If not, enter the Adjusted Gross Income from your originally-filed 2012 federal tax return, but don’t use the AGI amount from an amended or IRS-corrected 2012 return. 

internet-32340_640To err is human – which is why it’s best to rely on IRS e-file in the future.

Sufen Wang, M.S.Accountancy
www.sufenwang.com
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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Tested or Not?! Calling all Registered Tax Return Preparers!

In Accounting & Finances,Business,Education,Family,Taxes on February 21, 2013 by Sufen Wang Tagged: , , , , , , ,

ExamRTRP Program Up in the Air: Testing and Continuing Education are Voluntary


Calling all Registered Tax Return Preparers! You know how the IRS now requires every paid tax return preparer to pass a competency test and meet continuing education requirements in order to be called an RTRP? Not anymore. On January 18, a federal judge ruled that the mandatory RTRP regulatory system is invalid because the IRS had to stretch a law to make it apply to preparers in the first place. Prepare to be very, very confused.


In short, the ruling means the IRS does not have the authority to license tax preparers. Which means that as of right now, according to the IRS, “tax return preparers covered by this program are not currently required to register with the IRS, to complete competency testing or secure continuing education.” The regulatory practice requirements for CPA’s, attorneys, enrolled agents, enrolled retirement plan agents, or enrolled actuaries are unaffected by the ruling.


MH900054685Required is the key word in all of this. The IRS filed a motion to suspend the injunction, which was denied on Feb.1 by the same judge. However, he did clarify that the IRS can allow preparers to “voluntarily obtain credentials that might distinguish them from other preparers.” Thus, the IRS’ testing and continuing-education centers will remain open. Indeed, it might be a good idea to complete the RTRP requirements anyways: the IRS can appeal the judge’s full ruling and his decision could eventually be reversed.

The judge also clarified that the injunction does not affect PTINs, which means that those requirements and fees are still active. The IRS has reopened the online PTIN system, but it’s being updated to reflect current requirements. All of this confusion comes at a bad time with tax filing season just ahead. Tax return preparers need answers from the IRS and they need them fast.

Man pointing chartAnd what does all this mean for us, the tax payers?  Always check your tax preparer‘s background, credentials and ask for references!  “Google” the tax preparer’s name and check out his/her background as much as you are able before you make the hiring.  Just because it is NOT required to be licensed, does not mean that anyone off the street can and should prepare your tax returns!  Hire a reputable tax preparer will paid off in the long run!


On the Money, Sufen Wang, Wang Solutions

M.S.Accountancy, Long Beach, CA 562-856-0793

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Gamble Responsibly:

In Accounting & Finances,Business,Culture,Entertainment,Taxes on September 8, 2012 by Sufen Wang Tagged: , , , , , , ,

Your Winnings are Taxable Income

Welcome home from your Summer vacation.  A special welcome home to all of you who spent your vacation in Las Vegas or at any of its alike gambling town.  By now you should know that everything that happens in Vegas, doesn’t stay in Vegas. Hotel bills with hidden fees, a marriage at the Little White Wedding Chapel, and taxable gambling winnings which you must report on your income tax return, will all follow you back home. But hey, you win some, you lose some – and vice versa – you can also deduct your gambling losses.

A “gambling income” is exactly what it sounds like: any money you win from lotteries, raffles, horse races, casinos, etc. Even those lucky $20 grocery store scratch-offs count. And there’s no way to avoid the system. If you pass on the cash and choose a new SUV or 7-day trip to Cancun, you’ll still owe taxes on the fair market value of your prize.

In general, you should record all your gambling winnings on the “Other income” line of Form 1040. So that’s where you’ll put down your $20 pay out from the grocery store scratch-off. But although all gambling winnings are taxable, some require extra paperwork. If you receive a certain amount of winnings or have any that are subject to federal tax withholding, you must get Form W-2G, Certain Gambling Winnings, from the payer. For example, you’ll need Form W-2G if you won $1,200 or more from bingo or slot machines.

Now for something that will make your bank account feel a little better. You can claim your gambling losses (up to the amount of your winnings) on Schedule A, under “Other Miscellaneous Deductions.” So that’s where you would report the $20 bucks you spent on scratch-off lottery tickets before you finally won. If you do decide to deduct, don’t guesstimate; make sure you have documentation of your losses and winnings.  So, folks, save all of your “losing” lottery tickets and scratchers!

To find out more about gambling and taxes, check out IRS Publication 529 on Miscellaneous Deductions. Remember that if Lady Luck is on your side, Uncle Sam will be waiting on your other side.

On the Money, Sufen Wang, Wang Solutions

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Undeliverable Refund from the IRS… Really?!

In Accounting & Finances,Business,Taxes on February 1, 2012 by Sufen Wang Tagged: , , , , , , ,

IRS Seeks to Return Undelivered Refund Checks…

Are you missing your refund?  Don’t miss out on your missing money….

The IRS is doing a little year-end cleaning and they want to get rid of your money. Almost 100,000 taxpayers didn’t receive their tax refunds last year due to simple mailing address errors. That means over $153.3 million, or about $1,547 per check, in refund checks had to be sent back to the IRS offices because of scribbled, incorrect, or just plain missing addresses – and are just waiting to be returned.

So if you’re one of those people still asking “Where’s my refund?”, you might find the “Where’s My Refund?” tool on IRS.gov very useful (or call 1-800-829-1954). You can check the status of that mysteriously absent check and find instructions on how to resolve any delivery problems. These are the only ways to find out about your pending refund, so don’t be fooled by e-mails that look like they are sent by the IRS. Those messages are phishing scams and your computer will be grateful if you don’t open the attachments or click on any suspicious links. 
 
A word of advice on future filings, you really should just choose direct deposit when you file your return and completely avoid the hassle of lost, stolen, and undelivered checks. You can receive the tax refund directly into your bank account, divvy it up between two or three financial accounts, or even buy a savings bond! You might as well go digital all the way and file your tax return electronically, so that you don’t have to go all the way to the post office. The IRS also recommends e-file because it eliminates the risk of lost paper returns, reduces errors on tax returns, and speeds up refunds. This is particularly useful for taxpayers who can’t even read their own handwriting; well, maybe they can, while the IRS Revenue Agent has to guess what those numbers really are on their returns.
 
The IRS knows best when it comes to tax returns, so listen to its recommendation and use e-file and direct deposit to avoid future delivery problems. You can also literally listen to the IRS’ Undeliverable Refund Podcast for more information or check out the agency’s Undeliverable Refund Video.

 
On the Money
Sufen Wang
Wang Solutions
 

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Using the Title “Registered Tax Return Preparer”?!

In Accounting & Finances,Business,Taxes on October 23, 2011 by Sufen Wang Tagged: , , , , , , ,

 The IRS says Nobody Can Claim the Name – Just Yet

 

 

Think you have what it takes to be called a Registered Tax Return Preparer (RTRP)? At the moment, nobody does! In case you missed it, the IRS issued a reminder that NO ONE can currently claim to be a “Registered Tax Return Preparer,” even if they have a provisional preparer tax identification number (PTIN).
 
Cutting corners (and words) by calling yourself a “Registered Return Preparer” or “Registered Tax Preparer” isn’t going to cut it either. In order to become an official RTRP, an individual must have a valid PTIN, complete 15 units of continuing education, pass the IRS competency examination, and also pass the tax compliance and suitability checks. Sounds simple enough – except for the fact that the examination is not yet available and the IRS is still developing the suitability check!


Although the IRS released the specifications for the exam, the agency hasn’t stated when the test and the check will be up and running. Since NOBODY can satisfy all four of the RTRP requirements, at this point, NOBODY may designate her/himself as a registered tax return preparer. That means EAs, CPAs, and other individuals exempt from taking the IRS competency examination and the 15 education units shouldn’t print “Registered Tax Return Preparer” on their business cards either.

Don’t turn a blind eye to these IRS requirements– especially since all 730,000 PTIN holders are subject to the advertising and solicitation rules under section 10.30 of Circular 230. Advertising yourself as an RTRP when you really aren’t registered could result in a trip to the Office of Professional Responsibility, a monetary penalty, and even a disqualification from the practice. Now stop reading and go study and get ready for the IRS upcoming competency exam!

 
So, folks, don’t get fool by titles or advertised names, check out your tax preparer’s credential before you acquire the services.
 
On the Money,
Sufen Wang
Wang Solutions

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