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Archive for November, 2019

New Gift Card Scam

Wednesday, November 27th, 2019

There is yet another scam that is on the rise that the IRS is warning taxpayers about. This new scam involves gift cards. The scammer essentially wants you to pay a fake tax bill with gift card access numbers. Our firm has worked with the IRS on many issues and one thing we can tell you for a fact is that an IRS agent has NEVER asked for a gift card. So once you hear that term “gift card”, you will know it is a scam. Per the IRS, this is how this scam unfolds:

• Someone posing as an IRS agent calls the taxpayer and informs them their identity has been stolen.
• The fake agent says the taxpayer’s identify was used to open fake bank accounts.
• The caller tells the taxpayer to buy gift cards from various stores and await further instructions.
• The scammer then contacts the taxpayer again telling them to provide the gift cards’ access numbers.

Always remember to never give out your personal information to an unsolicited call, email, or text. If you believe you have been a victim of an IRS scam, you can contact the Treasury Inspector General for Tax Administration by calling 800-366-4484 or visiting their website at:

https://www.treasury.gov/tigta/contact_report_scam.shtml

Please consult your tax advisor on all the above information.

How Long Should You Keep Your Tax Records?

Tuesday, November 26th, 2019

This is a question we often get asked by clients, how long should they keep their tax records and backup documentation? Below is a quick reference guide from the IRS outlining how long you should keep your documents:

1) Keep records for 3 years (if situations 4, 5, and 6 below do not apply to you).
2) Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your tax return.
3) Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4) Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5) Keep records indefinitely if you do not file a return.
6) Keep records indefinitely if you file a fraudulent return.
7) Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Please consult your tax advisor on all the above issues.

2019 Standard Mileage Rates

Friday, November 22nd, 2019

The standard mileage rates for the use of a car (vans, pickups or panel trucks) for 2019 are the following:

* 58 cents per mile for business miles driven, up from 54.5 cents for 2018
* 20 cents per mile driven for medical or moving purposes, up from 18 cents for 2018
*14 cents per mile driven in service of charitable organizations, unchanged from 2018

Please consult your tax advisor on all the above information.

Education Tax Credits

Wednesday, November 20th, 2019

There are two tax credits available to help taxpayers with the costs of higher education, The American opportunity tax credit and the lifetime learning credit. If you qualify for either of these credits it could help reduce your tax liability. You must have received a Form 1098-T from an eligible education institution in order to have a chance to qualify for one of these credits.

The American opportunity tax credit is:
• Worth a maximum of $2,500 per eligible student.
• Only for the first four years at an eligible college or vocational school.
• For students pursuing a degree or other recognized education credential.
• Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.

The lifetime learning credit is:
• Worth a maximum benefit of $2,000 per year no matter how many students are in your family.
• Available for all years of postsecondary education and for courses to acquire or improve job skills.
• Available for an unlimited number of years.

Your income level could reduce or eliminate any education credits so you want to check with your tax advisor if you will be eligible for a credit or not.

New IRS Scam Letter

Wednesday, November 13th, 2019

The scammers are getting better! By now many people are aware of the fact that the IRS doesn’t usually call you with threats and their first method of contact is a letter so that is exactly what the scammers are now doing. This is an example of a scam IRS letter and it is pretty close to what the real ones look like so be careful. You can always call the IRS directly at 800-829-1040 to verify if a letter is real or not.

IRS Stresses Natural Disaster Preparation

Monday, November 4th, 2019

The presence of Hurricane Dorian has the IRS encouraging individuals to make the necessary preparations for not only themselves but also making sure to secure their essential documents so they are not permanently lost. The IRS offers a few different hints to help taxpayers prepare:

• Secure key documents and make copies – this includes any important document such as birth certificates, deeds, titles, tax returns, insurance policies, etc. Duplicates can be made and stored away from the disaster area and electronic copies can also be made.
• Document valuables and equipment – taking photographs and videos will help support insurance claims after the disaster strikes.
• Employers should check fiduciary bonds.
• Rebuilding documents – the IRS has a reconstructing records webpage to assist taxpayers with this:

https://www.irs.gov/newsroom/reconstructing-records-after-a-natural-disaster-or-casualty-loss-irs-provides-tips-to-help-taxpayers

• Taxpayers can call the IRS help line at 866-562-5227 if they need to speak with a specialist trained to handle disaster related issues.

Please consult your tax advisor on all the above information.

Tax Information When Selling Your Home

Friday, November 1st, 2019

If you sell your primary residence you may qualify to exclude all or part of any gains from your income. In the year you sell your home, you may need to report the gain or loss on the Schedule D of your tax return. If you received a Form 1099-S then the sale needs to be reported on your tax return even if there is no gain. To be on the safe side you can report the sale even if you didn’t receive a 1099-S and you had no gain.

The main question is will you pay taxes on your gains or not?

In order to qualify for the exclusion, you need to meet the ownership and use test. The rule is that during a five-year period on the date of the sale, the homeowner must have owned the home and lived in it as their main home for at least two years. If you meet this requirement, you may be able exclude up to $250,000 of the gain from your income. If you file a joint return with your spouse you may qualify for an exclusion of $500,000. Also please keep in mind that if you have a loss as a result of selling your primary residence, you cannot deduct the losses.

Please consult your tax advisor on all the above issues and to see if you qualify for this exclusion.