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Archive for June, 2019

Important Read if you Received an IRS Letter About Stock Sales

Wednesday, June 19th, 2019

Some taxpayers may receive an IRS during the summer stating that information that was reported to them does not match what your tax return says. An example would be if you received interest income and forgot to include it on your tax return, the IRS would send you a letter that it was missing and you owe additional taxes. One common letter they often send to taxpayers is a letter stating that stock sales were not included on your return.

This notice you need to pay special attention to because the amount the IRS says you owe them is not often correct, it is overstated by a considerable amount. For example if you sold $50,000 worth of stocks and forgot to include them on your return the IRS will send you a letter stating you owe taxes on the full amount of the sale, which in this case is $50,000. But this is often incorrect, the IRS does not take into account what you originally paid for the stocks when you first bought them. So if you paid $49,000 for them and sold them for $50,000, you only owe tax on the $1,000 gain, not the entire $50,000 sale like the IRS states in their letter.

So if you do receive one of these letters make sure to double check their figures for the sales and then check your brokerage statement to get the correct cost. You will most likely need to amend your tax return to report the sales and also the cost. If you had a gain on your sales you will owe additional taxes but it should be considerably less than what the IRS states in their letter since they don’t factor in the cost. Also please keep in mind that you will probably have to amend your state return as well as your federal.

Please consult your tax advisor on all the above information.

Now is a Good Time to Check your 2019 Payroll Withholdings

Tuesday, June 18th, 2019

With the almost half over, now is the perfect time to check in on your tax withholdings from your paychecks. The IRS has a tool on their website that will ask you a series of questions to basically put together a ballpark of what your tax return could look for 2019 and let you know if you are having too much withheld from your paychecks or too little. The withholding calculator can be found using the following link:

https://www.irs.gov/individuals/irs-withholding-calculator

You should have a copy of your 2018 tax return and your last paycheck stub available when you start to use the calculator.

Please consult your tax advisor on all the above information.

IRS to End Faxing and Third-Party Mailing of Tax Transcripts

Wednesday, June 12th, 2019

Starting on June 28th 2019 the IRS will stop faxing tax transcripts (which are a mirror image of your tax return) to both taxpayers and third parties (such as your accountant). The IRS is doing this to try to prevent tax fraud. Scammers will get a hold of your transcript from prior years then use it to create a fake tax return in order to steal the refund. There are still a few simple ways to obtain your tax transcript:

1) Get your transcript online or by mail: https://www.irs.gov/individuals/get-transcript
2) Call 800-908-9946
3) Submit Form 4506-T or 4506T-EZ to have a transcript mailed.

Please consult your tax advisor on all the above information.

Two New After Tax Season Scams to Look Out For

Wednesday, June 5th, 2019

The April tax filing deadline has passed which means its primetime for scammers to try out new variations of their tax fraud scams. Now is around the time that the IRS generates letters to taxpayers for various issues such as information missing from your return or errors they may have found, the scammers know this which is why they try to target taxpayers around this time. The first new scam the IRS is warning about involves social security numbers:

* The scammers are now calling people and telling them they have the power to suspend or cancel your social security number. They may also mention overdue taxes along with threatening to cancel your social security number.

* The second one is that scammers claim to be from a tax agency (which is fake). They are mailing people letters threatening an IRS lien or levy and claim to be from the “Bureau of Tax Enforcement”, which doesn’t actually exist. They want people to think the letter is from the IRS.

Always remember that the IRS will never call you to demand immediate payment using a specific method such as a debit card or a wire transfer and NEVER give out any personal information to unsolicited calls.

Please consult your tax advisor on all the above information.