Talk to Your Family about Security Online and at Home

For families with children and aging parents, it’s important to make sure everyone guards their personal information online and at home.

It may be time for “the conversation.”

The IRS, state revenue departments and the tax industry have teamed up to combat identity theft in the tax arena. Our theme: Taxes. Security. Together. Working in partnership with you, we can make a difference.

Especially in families that use the same computer, students should be warned against turning off any security software in use or opening any suspicious emails. They should be instructed to never click on embedded links or download attachments of emails from unknown sources.

Identity thieves are just one of many predators plying the Internet. And, actions by one computer user could infect the machine for all users. That’s a concern when dealing with personal financial details or tax information.

Kids should be warned against oversharing personal information on social media. But oversharing about home addresses, a new family car or a parent’s new job gives identity thieves a window into an extra bit of information they need to impersonate you.

Aging parents also are prime targets for identity thieves. If they are browsing the Internet, they made need to the same conversation about online security, avoiding spam email schemes and oversharing on social media.

They may also need assistance for someone to routinely review charges to their credit cards, withdrawals from their financial accounts. Unused credit cards should be canceled. An annual review should be made of their credit reports at annualcreditreport.com to ensure no new accounts are being opened by thieves, and reviewing the Social Security Administration account to ensure no excessive income is accruing to their account.

Seniors also are especially vulnerable to scam calls and pressure from fraudsters posing as legitimate organizations, including the Internal Revenue Service, and demanding payment for debts not owed. The IRS will never make threats of lawsuit or jail or demand that a certain payment method, such as a debit card, be made.

Fraudsters will try to trick seniors, telling them they have won a grand prize in a contest or that a relative needs money – anything to persuade a person to give up personal information such as their Social Security number or financial account information.

Some simple steps – and a conversation – can help the young and old avoid identity theft schemes and scammers.


To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.

IRS - Seven Steps for Making Identity Protection Part of Your Routine

The theft of your identity, especially personal information such as your name, Social Security number, address and children’s names, can be traumatic and frustrating. In this online era, it’s important to always be on guard.

The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.
Here are seven steps you can make part of your routine to protect your tax and financial information:

1. Read your credit card and banking statements carefully and often – watch for even the smallest charge that appears suspicious. (Neither your credit card nor bank – or the IRS – will send you emails asking for sensitive personal and financial information such as asking you to update your account.)

2. Review and respond to all notices and correspondence from the Internal Revenue Service. Warning signs of tax-related identity theft can include IRS notices about tax returns you did not file, income you did not receive or employers you’ve never heard of or where you’ve never worked.   3. Review each of your three credit reports at least once a year. Visit annualcreditreport.com to get your free reports.

4. Review your annual Social Security income statement for excessive income reported. You can sign up for an electronic account at www.SSA.gov.  
5. Read your health insurance statements; look for claims you never filed or care you never received.

6. Shred any documents with personal and financial information. Never toss documents with your personally identifiable information, especially your social security number, in the trash.

7. If you receive any routine federal deposit such as Social Security Administrator or Department of Veterans Affairs benefits, you probably receive those deposits electronically. You can use the same direct deposit process for your federal and state tax refund. IRS direct deposit is safe and secure and places your tax refund directly into the financial account of your choice.

IRS Poised to Veto Passports

Within days, the IRS will be able to revoke your passport for unpaid taxes. This bad idea has been kicking around for several years. This time, it is buried within 1300 pages of highway legislation. The government will surely see it as a nice complement to FATCA, the Foreign Account Tax Compliance Act. That massive law penalizes foreign banks that don’t hand over American account holders.

Not everyone is happy about giving the IRS power over passports. A group called American Citizens Abroad has urged Congress to reject tying tax collection to passports. Their press release is worth reading. But Congress is poised to pass H.R.22, which has already passed both the House and the Senate. It is in conference, but is not expected to change. So, get ready for new section 7345 of the tax code, called “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” 

The State Department could revoke, deny or limit passports for anyone the IRS certifies as having a seriously delinquent tax debt in an amount in excess of $50,000. In January of 2016, the State Department will start blocking Americans with ‘seriously delinquent’ tax debts. Administrative details about how all this will work are scant. But in all likelihood, it will mean no new passport and no renewal. It could even mean the State Department will rescind existing passports of people who fall into that category.

The list of affected taxpayers will be compiled by the IRS. The IRS will use a threshold of $50,000 of unpaid federal taxes. But this $50,000 figure includes penalties and interest. And as everyone knows, interest and penalties can add up fast. Notably, if you are contesting a proposed tax bill administratively with the IRS or in court, that should not count. That is not yet a tax debt.

There is also an administrative exception, allowing the State Department to issue a passport in an emergency or for humanitarian reasons. But how that will work isn’t clear, nor is the amount of time it will take to get special dispensation. You would still be able to travel if your tax debt is being paid in a timely manner, as under a signed installment agreement.

Yet the dynamics are still significant and could drastically alter how people interact with the IRS. Moreover, these harsh rules are not limited to criminal tax cases. They aren’t even limited to situations where the government thinks that you are fleeing a tax debt. In fact, you could have your passport revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien.

A $50,000 tax debt is easy to amass today, especially considering interest and penalties. Moreover, the IRS files tax liens routinely. It’s the IRS way of putting creditors on notice so the IRS eventually gets paid. In that sense, the you-can’t-travel idea seems extreme. IRS tax liens cover all your property, even acquired after the lien is filed. The courts use liens to establish priority in bankruptcy proceedings and real estate sales. The IRS can file a Notice of Federal Tax Lien after:

·         IRS assesses the liability;

·         IRS sends a Notice and Demand for Payment saying how much you owe; and

·         You fail to fully pay within 10 days.

A tax lien can also be filed by mistake. In most cases, there’s no mistake and the IRS lien is valid. But occasionally, the person might not actually owe the taxes and may just need to straighten out a pile of paperwork. With all this in mind, if this becomes law, is it subject to challenge? Is it constitutional? The right to travel is established, both between states and internationally. And although some restrictions have been upheld, it is not clear that this measure would pass the constitutional test. Consider especially the roughly eight million Americans living overseas, many of whom are already reeling from FATCA compliance problems.

Source: http://www.forbes.com/sites/robertwood/2015/12/02/irs-may-start-stamping-passports-when-you-pay-your-taxes/

Tax and Record Keeping Tips for Your Small Business

Small business owners face a great deal of challenges, but taxes always appears at the top of the list. Small business owners need to make sure they are paying what they should and taking the appropriate deductions to reduce their taxes.

Protect Your Business
No matter what stage of business you are in, it’s a good idea to consult a professional tax advisor. A knowledgeable tax advisor can save you both time and money as well as endless problems and hassles from the Internal Revenue Service.

Most small business owners turn to qualified Certified public accountants (CPAs). CPAs have been trained in business accounting procedures. To find a qualified CPA, check with other small business owners or contact your state’s CPA association. The American Institute of CPAs (AICPA) offers a listing of state CPA associations.

Pay Your Taxes Quarterly
If you’re a sole proprietor, which means you solely own an unincorporated business, the federal government requires you to pay income taxes each quarter. The federal government does not recognize an LLC as a classification for federal tax purposes. An LLC business entity must file as a corporation, partnership or sole proprietorship tax return. You must pay federal income tax, along with Social Security and Medicare taxes, known collectively as self-employment tax. Tax laws change frequently; contact your tax advisor to determine how much you should set aside. Read more: IRS Publication 505: Tax Witholding and Estimated Tax and Tax Calendar for Small Businesses and Self-Employed (Publication 1518)

Keep Good Records
Keeping well-organized records ensures you can answer questions if your return is selected for examination or prepare a response if you receive an IRS notice. As a small business owner, you should keep all your tax records for a minimum of four years.

Examples of important documents business owners should keep include:

·         Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC

·         Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices

·         Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments

·         Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks

Take every LEGAL deduction you can
There are two basic tax concepts small business owners need to know, business expenses and capital expenses.

·         Business expenses are the cost of conducting a trade or business. These expenses are common costs of doing business, and are usually tax deductible if your business is for profit. According to the IRS: To be deductible, a business expense must be both “ordinary” and “necessary.” An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business.

·         Capital expenses are the costs of purchasing specific assets, such as property or equipment, which usually have a life of a year or more and increase the quality and quantity of products and services. There are two ways to deduct capital expenses. You can “depreciate” them by deducting a portion of the total cost each year over an asset’s useful life; or you might be able to deduct the cost in one year as a Section 179 deduction.

Purchase Small Business Accounting Software
Small business accounting software saves you time compared to handling the books manually and is usually more efficient than using a simple spreadsheet because it reduces or eliminates redundant data entry. Narrow down your preferred accounting software choices by making a list of the features you need to run your business ranging from Inventory management, sales tracking, payroll, and tax reporting. Word of mouth referrals can be a valuable tool so talk to other small business owners and inquire what software they use and ask about the pros and cons.

Some well known accounting software: QuickBooks series by Intuit, Simply Accounting and Peachtree Complete Accounting Software by Sage Software, and Cougar Mountain Software.

Note: The Internal Revenue Service offers a Virtual Small Business Tax Workshop, composed of nine interactive lessons designed to help new small business owners learn their tax rights and responsibilities.

Source: https://www.score.org/blog/2015/rochelle-robinson/tax-and-record-keeping-tips-your-small-business

IRS Tax Tips for Deducting Gifts to Charity

The holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions. Here are six more tips that you should keep in mind:

1. Give to qualified charities. You can only deduct gifts you give to a qualified charity. Use the IRS Select Check tool to see if the group you give to is qualified. You can deduct gifts to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.

2. Keep a record of all cash gifts.  Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.

3. Household goods must be in good condition.  Household items include furniture, furnishings, electronics, appliances and linens. These items must be in at least good-used condition to claim on your taxes. A deduction claimed of over $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.

4. Additional records required.  You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.

5. Year-end gifts.  Deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.

6. Special rules.  Special rules apply if you give a car, boat or airplane to charity. If you claim a deduction of more than $500 for a noncash contribution, you will need to file another form with your tax return. Use Form 8283, Noncash Charitable Contributions to report these gifts. For more on these rules, visit IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.