Posts Tagged ‘Tax’

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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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Lighten Your Tax Load:

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

5 Credits to Reduce What You Owe

TaxTime_lgIf you’ve been around for a couple of decades, you probably owe lots of people lots of different things. Some debts can be measured in dollars, while others can’t even be put into words, and many will never be paid off. We all keep moving down this uncertain river as best we can, trying to keep our feet from getting too wet. But owed taxes are cut and dry: pay them, on time, so you don’t get swamped. Tax credits help take a load off the amount of taxes you owe. And with some credits you may still get a refund, even if you owe no tax.

Write The Earned Income Tax Credit in permanent marker on the back of your hand. Then start filing your 2013 tax return. You don’t want to miss this refundable credit for people who work without earning a lot of moolah. The EITC can boost your refund by as much as $6,044. Eligibility depends on your income, filing status, and the number of children in your family, but single workers with no dependents may also qualify for the EITC.

MH900435055Kids are lovely bundles of joy, but they’re also a lot of work. For each qualified child (under age 17 in 2013) you claim on your tax return, The Child Tax Credit can reduce the taxes you pay by up to $1,000. Then you can use that money saved to take everyone to Disneyland.

Speaking of work, a 9 to 5 job keeps rolling even when the little ones don’t have to go to school. (All this makes you wanna’ be a kid again, huh!?). The Child and Dependent Care Credit helps you offset the cost of daycare or day camp for children under age 13. But this credit isn’t just for kids – you might also be able to claim the costs of care for a disabled spouse or dependent.  

fat-piggy-bank-webThe Saver’s Credit is strictly for those individuals who have their sights set on the future. No, this is not a tax credit for fortune tellers: the Saver’s Credit actually helps workers save for retirement. If you made $59,000 or less in 2013 and contributed to an IRA or retirement plan at work, you could be eligible for this one.

MCj038257700001This credit’s been mentioned several times before, but important things bear repeating, and college students are especially important (just ask them). The American Opportunity Tax Credit helps you offset college costs and is available for four years of post-secondary education. It’s worth up to $2,500 per eligible student enrolled at least half time for at least one academic period. The only way you can get it is to file a tax return and complete Form 8863, Education Credits. What’s that noise? Oh it’s just the American Opportunity Tax Credit knocking – and it sounds like money.

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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Representative Please!

In Accounting & Finances,Business,Education,Taxes on October 7, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900056119TIGTA Audit Ensures Taxpayers’ Rights are Front and Center

Did you know IRS personnel are required to stop an interview if the taxpayer wants to consult with a representative and they also can’t bypass a representative without supervisory approval?

MH900251655If you didn’t know, the Treasury Inspector General for Tax Administration (TIGTA) has your back. Each year TIGTA hones in on an IRS office that regularly interacts with taxpayers and their representatives. This time around they scrutinized the folks who work in the Office of Appeals to make sure they’re contacting taxpayer representatives during key actions. The results of that audit, the Fiscal Year 2013 Statutory Review of Restrictions on Directly Contacting Taxpayers, are in and…

 MH900442430..the Office of Appeals did so-so. In 11 of 96 sampled cases (out of 72,239 total cases closed by Appeals), Appeals personnel skipped major steps. They either tried to call the taxpayer directly or didn’t send copies of very important papers to the authorized representative. It’s possible that those who broke the rules just made honest mistakes – maybe they were in a hurry to get home for dinner – but the policies are in place for the taxpayer’s protection.

And, what’s more, the bigwigs in the Appeals office didn’t do their part to ensure that the workers were following procedure. Accordingly, TIGTA offered some stern advice: the Chief of Appeals should “provide additional guidance to first-line managers and Appeals personnel that will reinforce the importance of ensuring that taxpayer representatives are involved in all case activities.” In other words, put in work at the top of the line so all the proper paperwork gets done down the line.

MH900289960Of course the IRS agreed with TIGTA’s recommendation. The agency’s first move will be to update the Internal Revenue Manual and front-line managers will have homework to do to brush up on their responsibilities. If you want more reading material yourself, check out the full Statutory Review here: http://www.treasury.gov/tigta/auditreports/2013reports/201330080fr.html

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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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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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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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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Whistleblowers Wanted:

In Accounting & Finances,Business,Education,Taxes on January 27, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900084382Report Suspected Tax Fraud

To catch a thief, the IRS needs your help. If you suspect someone might be bending certain tax laws, don’t just stand there – do something! There’s a variety of tax frauds, so the IRS has conveniently created a chart to explain which form you’ll need to fill out in order to make the tax world a better place.

Direct your pen to Form 3949-A, Information Referral, if you suspect an individual/business of false exemptions or deductions, kickbacks, false/altered documents, failure to pay taxes, unreported income, failure to withhold, or organized crime. Then congratulate yourself on doing the right thing.

MH900422392Identity theft is also a type of tax fraud. If you believe that someone is posing as you and has used your SSN for employment purposes or to file a tax return, pick up Form 14039, Identity Theft Affidavit. The sooner you submit the form, the sooner the impostor will be caught.

Maybe your friendly neighborhood tax preparer has been getting rich a little too quickly. If you suspect fraudulent activity or an abusive tax scheme by a tax return preparer/company, report it on Form 14157. You’ll need both this form and Form 14157-A if you also think a tax return preparer filed or altered your return without your consent.

If you have information about a suspicious tax promotion or promoter, whip out Form 14242 and show that fake promotion who’s boss. And finally, if you notice misconduct or wrongdoing by an exempt organizationor employee plan, complain about it on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.

MH900383616Reporting tax fraud is a good deed and should be reward enough by itself. However, for anyone who needs extra motivation, check out Form 211, Application for Award for Original Information. Sometimes it pays to be a whistleblower.  Do the right thing, it is hard, but it is very, very rewarding!!!

 

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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