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Be Wary of Schemes as Filing Season Deadline Approaches

Posted by Admin Posted on Apr 03 2017

Be Wary of Schemes as Filing Season Deadline Approaches

 

The Internal Revenue Service, state tax agencies and the tax industry today warned tax professionals to beware of phishing email scams claiming to be from IRS e-Services and of schemes in general as the April 18 deadline nears.

Acting as the Security Summit, the IRS, state tax agencies and the tax industry warned that this time of year is the high season for identity thieves scams to steal sensitive data from tax professionals. All tax preparers and their employees must be on guard against phishing activities.

The IRS noted a particular surge in the past 24 hours related to a phishing email scam that seeks to steal practitioners’ usernames and passwords for IRS e-Services.

The subject lines on these scam emails vary but they generally are related to e-Service account closures. Some examples include:

Account Closure!

e-Service Account is Blocked

Few Hours to Close Your Account

Your Account is Closed

Your Account is Terminated

24Hrs to Block Your Account

Links in the scam email send practitioners to a fake e-Services login page where thieves can steal the user’s credentials. It is “signed” by “IRS gov e-Services.” 

The thieves are keying off on IRS efforts to increase protections for e-Services, including recent IRS efforts to encourage tax professionals to revalidate their identity to avoid delays accessing their e-Services account.

E-Services account holders should beware of schemes to obtain their password information. If an account has been closed because of failure to revalidate, users should contact the e-Services Help Desk to have it reopened. Users who are in doubt about the validity of emails should never open a link or attachment, but instead go directly to https://www.irs.gov/eservices. Users also should sign up for Quick Alerts, e-News for Tax Professionals or other subscription services to receive information directly from the IRS.  

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

For Small Business Startups, IRS Explains New Option for Claiming Research Credit; Option Still Available for Those That Already Filed

Posted by Admin Posted on Apr 03 2017

Research credit for small business

 

The Internal Revenue Service today issued interim guidance explaining how eligible small businesses can take advantage of a new option enabling them to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability. Before 2016, taxpayers could only take the research credit against their income tax liability.

Notice 2017-23, posted today on IRS.gov, provides guidance on a new provision included in the Protecting Americans From Tax Hikes (PATH) Act enacted in December 2015. This new option will be available for the first time to any eligible small business filing its 2016 federal income tax return this tax season. Those who already filed still have time to choose this option.

The option to elect the new payroll tax credit may especially benefit any eligible startup that has little or no income tax liability. To qualify for the new option for the current tax-year, a business must have gross receipts of less than $5 million and could not have had gross receipts prior to 2012.

An eligible small business with qualifying research expenses can choose to apply up to $250,000 of its research credit against its payroll tax liability. An eligible small business chooses this option by filling out Form 6765, Credit for Increasing Research Activities, and attaching it to a timely-filed business income tax return. But under a special rule for tax-year 2016, a small business that failed to choose this option and still wishes to do so, can still make the election by filing an amended return by Dec. 31, 2017. See the notice for further details.

After choosing this option, a small business claims the payroll tax credit by filling out Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. This form must be attached to its payroll tax return, for example Form 941, Employer’s Quarterly Federal Tax Return. Further details on how and when to claim the credit are in the notice.

The notice provides interim guidance on controlled groups, the definition of gross receipts, and other issues. The notice also requests public comment on various payroll tax credit issues to be addressed in future guidance. See the notice for details on how and when to submit comments. For more information on the research credit itself, see the instructions to Form 6765.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Refinancing Your Home?

Posted by Admin Posted on Mar 30 2017

Refinancing Your Home?

 

Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.

Generally, for taxpayers who itemize, the “points” paid to obtain a home mortgage may be deductible as mortgage interest. Points paid to obtain an original home mortgage can be, depending on circumstances, fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, the interest deduction for points is determined by dividing the points paid by the number of payments to be made over the life of the loan. This information is usually available from lenders. Taxpayers may deduct points only for those payments made in the tax year. For example, a homeowner who paid $2,000 in points and who would make 360 payments on a 30-year mortgage could deduct $5.56 per monthly payment, or a total of $66.72 if he or she made 12 payments in one year.

However, if part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off.

Other closing costs — such as appraisal fees and other non-interest fees — generally are not deductible. Additionally, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken.  Please contact us if you've recently refinanced, and we can be a big help!

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters

What you need to know about Car Donations

Posted by Admin Posted on Mar 30 2017

What you need to know about Car Donations

 

The IRS reminds taxpayers that specific rules apply for taking a tax deduction for donating cars to charities. If the claimed value of the donated motor vehicle, boat or plane exceeds $500, you can deduct the smaller of the vehicle's FMV on the date of the contribution or the gross proceeds received from the sale of the vehicle.

People who want to take a deduction for the donation of their vehicle on their tax return should take quite a few steps, but here is the most obvious:

Check that the Organization is Qualified.

Taxpayers must make certain that they contribute their car to an eligible organization; otherwise, their donation will not be tax deductible. Taxpayers can search Exempt Organizations Select Check online tool to check that an organization is qualified. In addition, taxpayers can call IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500. Be sure to have the organization's correct name and its headquarters location, if possible. Churches, synagogues, temples, mosques and governments are not required to apply for this exemption in order to be qualified.  Please contact us if you're considering a car donation for your tax return!

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters

Got Nexus? & Four Tips for Donating Artwork to Charity

Posted by Admin Posted on Mar 28 2017

Got Nexus? & Four Tips for Donating Artwork to Charity

 

For many years, business owners had to ask themselves one question when it came to facing taxation in another state: Do we have “nexus”? This term indicates a business presence in a given state that’s substantial enough to trigger the state’s tax rules and obligations.

Well, the question still stands. And if you’re considering operating your business in multiple states, or are already doing so, it’s worth reviewing the concept of nexus and its tax impact on your company.

Common criteria

Precisely what activates nexus in a given state depends on that state’s chosen criteria. Triggers can vary but common criteria include:

Employing workers in the state,

Owning (or, in some cases, even leasing) property there,

Marketing your products or services in the state,

Maintaining a substantial amount of inventory there, and

Using a local telephone number.

Then again, one generally can’t say that nexus has a “hair trigger”. A minimal amount of business activity in a given state probably won’t create tax liability there.

For example, an HVAC company that makes a few tech calls a year across state lines probably wouldn’t be taxed in that state. Or let’s say you ask a salesperson to travel to another state to establish relationships or gauge interest. As long as he or she doesn’t close any sales, and you have no other activity in the state, you likely won’t have nexus.

Strategic moves

As with many tax issues, the totality of facts and circumstances will determine whether you have nexus in a state. So it’s important to make assumptions either way. The tax impact could be significant, and its specifics will vary widely depending on just how the state in question approaches taxation.

For starters, strongly consider conducting a nexus study. This is a systematic approach to identifying the out-of-state taxes to which your business activities may expose you. The results of a nexus study may not necessarily be negative. You may find that your company’s overall tax liability is lower in a neighboring state. In such cases, it may be advantageous to create nexus in that state by, say, setting up a small office there. If all goes well, you may be able to allocate some income to that state and lower your tax bill.

Taxation and profitability

“The grass is always greener on the other side of the fence”, so the saying goes. If profitability beckons in another state, please contact our firm for help projecting how setting up shop there might affect your tax liability.

Sidebar: Service companies, beware of market-based sourcing

Nexus has been and remains the primary focus of companies considering whether and how they’d be taxed across state lines. (See main article.) But, recently, many states have established “market-based sourcing” for determining the tax liability of service companies that operate within their borders.

Under this approach, if the benefits of a service occur and will be used in another state, that state will tax the revenue gained from said service. “Service revenue” generally is defined as revenue from intangible assets — not the sales of tangible personal property.

Thus, in market-based sourcing states, the destination state of a service is the relevant taxation factor rather than the state in which the income-producing activity is performed (also known as the “cost of performance” method).

 

FOUR TIPS FOR DONATING ARTWORK TO CHARITY

Individuals may want to donate artwork so it can be enjoyed by a wider audience or available for scholarly study or simply to make room for new artwork in their home. Here are four tips for donating artwork with an eye toward tax savings:

1. Get an appraisal. Donations of artwork valued at over $5,000 require a “qualified appraisal” by a “qualified appraiser”. IRS rules detail the requirements. In addition, auditors are required to refer all gifts of art valued at $20,000 or more to the agency’s Art Advisory Panel. The panel’s findings are the IRS’s official position on the art’s value, so it’s critical to provide a solid appraisal to support your valuation.

2. Donate to a public charity. Donations to a qualified public charity (such as a museum or university) potentially entitle you to deduct the artwork’s full fair market value. If you donate to a private foundation, your deduction will be limited to your cost. The total amount of charitable donations you may deduct in a given year is limited to a percentage of your adjusted gross income (50% for public charities, 30% for private foundations) with the excess carried forward for up to five years.

3. Beware the related-use rule. To qualify for a full fair-market-value deduction, the charity’s use of the artwork must be related to its tax-exempt purpose. Even if the related-use rule is satisfied initially, you may lose some or all of your deductions if the artwork is worth more than $5,000 and the charity sells or otherwise disposes of it within three years of receipt. If that happens, you may be able to preserve your tax benefits via a certification process. (For further details, please contact us.)

4. Consider a fractional donation. Donating a fractional interest allows you to save tax dollars without completely giving up the artwork. Say you donate a 25% interest in your art collection to a museum for it to display for three months annually. You could then deduct 25% of the collection’s fair market value and continue displaying the art in your home or business for most of the year.

The rules for fractional donations, and charitable contributions of artwork in general, can be tricky. Plus, tax law changes affecting deductions may occur in the coming year. Contact our firm for help.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Business or Hobby?

Posted by Admin Posted on Mar 28 2017

Business or Hobby?

 

It is generally accepted that people prefer to make a living doing something they like. A hobby is an activity for which you do not expect to make a profit. If you do not carry on your business or investment activity to make a profit, there is a limit on the deductions you can take. You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. You cannot use a loss from the activity to offset other income. Activities you do as a hobby, or mainly for sport or recreation, come under this limit. So does an investment activity intended only to produce tax losses for the investors.

The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. For additional information on these entities, refer to business structures. It does not apply to corporations other than S corporations. In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:

You carry on the activity in a business-like manner,

The time and effort you put into the activity indicate you intend to make it profitable,

You depend on income from the activity for your livelihood,

Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),

You change your methods of operation in an attempt to improve profitability,

You, or your advisors, have the knowledge needed to carry on the activity as a successful business,

You were successful in making a profit in similar activities in the past,

The activity makes a profit in some years, and

You can expect to make a future profit from the appreciation of the assets used in the activity.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

BE ON THE LOOKOUT FOR UNSCRUPULOUS RETURN PREPARERS

Posted by Admin Posted on Mar 28 2017

BE ON THE LOOKOUT FOR UNSCRUPULOUS RETURN PREPARERS

 

WASHINGTON — The Internal Revenue Service warns taxpayers to be on the lookout for unscrupulous return preparers, one of the most common “Dirty Dozen” tax scams seen during tax season.

The vast majority of tax professionals provide honest, high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. That's why unscrupulous preparers who prey on unsuspecting taxpayers with outlandish promises of overly large refunds make the Dirty Dozen list every year.

"Choose your tax return preparer carefully because you entrust them with your private financial information that needs to be protected," said IRS Commissioner John Koskinen. "Most preparers provide high-quality service but we run across cases each year where unscrupulous preparers steal from their clients and misfile their taxes."

Return preparers are a vital part of the U.S. tax system. About 60 percent of taxpayers use tax professionals to prepare their returns.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.

Here are a few tips when choosing a tax preparer:

-Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on your filed tax return.

-Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant, or attorney), belongs to a professional organization or attends continuing education classes. A number of tax law changes, including the Affordable Care Act provisions, can be complex. A competent tax professional needs to be up-to-date in these matters. Tax return preparers aren’t required to have a 
professional credential, but make sure you understand the qualifications of the preparer you select. IRS.gov has more information regarding the national tax professional organizations.

-Check the preparer’s qualifications.  Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool can help you find a tax return preparer with the qualifications that you prefer. The Directory is a searchable and sortable listing of certain preparers registered with the IRS. It includes the name, city, state and zip code of:

-Attorneys 
-CPAs
-Enrolled Agents
-Enrolled Retirement Plan Agents
-Enrolled Actuaries
-Annual Filing Season Program participants

-Check the preparer’s history.  Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory. 
 
-Ask about service fees.  Preparers are not allowed to base fees on a percentage of their client’s refund. Also avoid those who boast bigger refunds than their competition. Make sure that your refund goes directly to you – not into your preparer’s bank account.

-Ask to e-file your return.  Make sure your preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must offer electronic filing. The IRS has processed more than 1.5 billion e-filed tax returns. It’s the safest and most accurate way to file a return.

-Provide records and receipts. Good preparers will ask to see your records and receipts. They’ll ask questions to determine your total income, deductions, tax credits and other items. Do not rely on a preparer who is willing to e-file your return 
using your last pay stub instead of your Form W-2. This is against IRS e-file rules.

-Make sure the preparer is available.  In the event questions come up about your tax return, you may need to contact your preparer after the return is filed. Avoid fly-by-night preparers.

-Understand who can represent you. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Non-credentialed tax return preparers can represent clients before the IRS in only limited situations, 
depending upon when the tax return was prepared and signed.  For all returns prepared and signed after Dec. 31, 2015, a non-credentialed tax return preparer can represent clients before the IRS in limited situations only if the preparer is a participant in the IRS Annual Filing Season Program.

-Never sign a blank return.  Don’t use a tax preparer that asks you to sign an incomplete or blank tax form.

-Review your return before signing.  Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.

-Report tax preparer misconduct to the IRS. You can report improper activities by tax return preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms on IRS.gov.

Remember: Taxpayers are legally responsible for what is on their tax return even if it is prepared by someone else. Make sure the preparer you hire is up to the task.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

IRS, los estados y la industria de impuestos alertan sobre recientes estafas por email

Posted by Admin Posted on Mar 27 2017

IRS, los estados y la industria de impuestos alertan sobre recientes estafas por email

 

El Servicio de Impuestos Internos (IRS), las agencias tributarias estatales y la industria de impuestos advirtieron tanto a los profesionales de impuestos como a los contribuyentes de estafas recientes por correo electrónico tipo phishing, especialmente aquellos que solicitan cambios de última hora de depósito para reembolsos o actualizaciones de cuentas.

A medida que se acerca el final de la temporada de presentación de impuestos de 2017, el 18 de abril, las estafas relacionadas con impuestos de diversos tipos están en su apogeo. El IRS instó tanto a los profesionales de impuestos como a los contribuyentes a estar en guardia contra actividad sospechosa.

El IRS, las agencias tributarias estatales y la industria de impuestos, actuando como la Cumbre de Seguridad, promulgaron muchas medidas contra el robo de identidad para 2017, pero los delincuentes cibernéticos están en constante evolución y hacen uso de estafas sofisticadas para engañar a la gente a que divulguen información confidencial.

Por ejemplo, una nueva estafa se presenta como un contribuyente pidiendo a su preparador de impuestos que haga un cambio de último minuto a su destino de reembolso, a menudo a una tarjeta de débito prepagada. El IRS insta a los preparadores de impuestos a reconfirmar verbalmente la información con el cliente si reciben una solicitud por correo electrónico de último momento para cambiar una dirección o una cuenta de depósito para reembolsos.

El IRS también sugiere que los profesionales de impuestos cambien y fortalezcan sus propias contraseñas de correo electrónico para proteger mejor sus cuentas de correo electrónico utilizadas para intercambiar datos confidenciales con los clientes.

Esta es también la época del año cuando los contribuyentes pueden ver los correos electrónicos fraudulentos de su proveedor de software de impuestos u otros que les piden que actualicen las cuentas en línea. Los contribuyentes deben aprender a reconocer correos electrónicos, llamadas o textos de tipo phishing, que aparentan provenir de organizaciones familiares tales como bancos, compañías de tarjetas de crédito, proveedores de software de impuestos o incluso el IRS. Estas estrategias generalmente instan a los contribuyentes a proveer datos confidenciales como contraseñas, números de seguro social y números de cuenta bancaria o de tarjetas de crédito.

Los contribuyentes que reciben correos electrónicos sospechosos que pretenden ser de un proveedor de software de impuestos o del IRS deben enviarlos a phishing@irs.gov. Recuerde: nunca abra un archivo adjunto o enlace desde una fuente desconocida o sospechosa. Puede infectar su computadora con malware o robar información. Además, el IRS no envía correos electrónicos no solicitados o solicita datos confidenciales a través de correos electrónicos.

La Cumbre de Seguridad mantiene una campaña de concienciación pública para los contribuyentes - Impuestos. Seguridad. Unidos. - y una campaña para los profesionales de impuestos - Proteja a sus clientes; Protéjase a sí mismo - como parte de su esfuerzo para combatir el robo de identidad.

Si tiene preguntas sobre contabilidad, impuestos nacionales o internacionales, representación con el IRS o implicaciones tributarias en bienes raíces, entre otros temas, no dude en llamar a Lord Breakspeare Callaghan LLC al 305-274-5811.

Fuente: IRS

Guía para la temporada de impuestos

Posted by Admin Posted on Mar 24 2017

Guía para la temporada de impuestos

 

El IRS ha desarrollado una serie de consejos para ayudarle a navegar problemas tributarios comunes al acercarse la fecha límite del 18 de abril de 2017 para los contribuyentes individuales.

Esta página se actualizará regularmente con información valiosa para completar su declaración de impuestos del 2016.

Guía de la temporada de impuestos: Obtenga una prórroga automática de seis meses para presentar; Free File ahora disponible para prórrogas — El Servicio de Impuestos Internos (IRS) les recordó hoy a los contribuyentes que si no podrán presentar sus impuestos para la fecha límite del 18 de abril, existe una opción fácil en línea para obtener más tiempo para completar su declaración.  Vea IR-2017-65SP.

Guía de la temporada de impuestos: “¿Dónde está mi reembolso?” es la mejor herramienta para verificar el estado de su reembolso — El Servicio de Impuestos Internos (IRS) recordó hoy a los contribuyentes que mientras que más del 90 por ciento de los reembolsos de impuestos federales se emiten en 21 días o menos, algunos pueden tomar más tiempo. Vea IR-2017-62SP.
 

Guía de la temporada de impuestos: Aún puede contribuir a una cuenta de retiro IRA para 2016 — El Servicio de Impuestos Internos (IRS) hoy recordó a los contribuyentes que aún tienen tiempo para contribuir a una cuenta de retiro tipo IRA para el año 2016 y en muchos casos, calificar para una deducción o crédito tributario.  Vea IR-2017-60SP.

Guía de la temporada de impuestos: Opciones de pago electrónico y acuerdo de pagos para aquellos que adeudan impuestos — El Servicio de Impuestos Internos (IRS) recordó hoy a los contribuyentes que es más fácil que nunca pagar sus impuestos electrónicamente. Existen varias opciones, rápidas y fáciles, disponibles para aquellos que no pueden pagar a tiempo. Vea IR-2017-59SP.

Guía de la temporada de impuestos: Proteja su computadora e información personal, financiera y tributaria — El Servicio de Impuestos Internos (IRS) recordó hoy a los contribuyentes que tomen precaución y protejan su información personal, financiera y tributaria, particularmente durante la temporada de impuestos. Vea IR-2017-55SP.

Guía de la temporada de impuestos: Ahorre tiempo, haga una cita antes de visitar un Centro de Asistencia al Contribuyente del IRS  — El Servicio de Impuestos Internos (IRS) recordó hoy a los contribuyentes que el servicio en todos sus Centros de Asistencia al Contribuyente (TAC, por sus siglas en inglés) es por cita previa. Vea IR-2017-54SP.

Guía de la temporada de impuestos: Publicación 17 del IRS ayuda con impuestos de 2016 — Los contribuyentes pueden sacar el máximo provecho de varios beneficios tributarios y obtener consejos útiles acerca de la preparación de sus declaraciones de impuestos federales de 2016 mediante la consulta de una guía de impuestos gratuita e integral, disponible en IRS.gov. Vea IR-2017-52SP.

Guía de la temporada de impuestos: Use IRS.gov para seleccionar un profesional de impuestos calificado — El Servicio de Impuestos Internos (IRS) hoy les recordó a los contribuyentes que IRS.gov 

Si tiene preguntas sobre contabilidad, impuestos nacionales o internacionales, representación con el IRS o implicaciones tributarias en bienes raíces, entre otros temas, no dude en llamar a Lord Breakspeare Callaghan LLC al 305-274-5811.

Fuente: IRS

Electronic Payment/Payment Agreement Options Available to Those Who Owe Taxes

Posted by Admin Posted on Mar 21 2017

electronic payments to those who owe taxes

 

The Internal Revenue Service today reminded taxpayers that it’s easier than ever to pay taxes electronically. For those unable to pay on time, several quick and easy solutions are available.

This is the seventh in a series of 10 IRS tips called the Tax Time Guide. Taxpayers can use these tips to find solutions to common tax issues as the April 18 tax deadline approaches. 

Taxpayers who owe taxes can now choose among several quick and easy electronic payment options, including the following:

- Electronic Funds Withdrawal allows taxpayers to e-file and pay from their bank account when using tax preparation software or a tax professional. EFW is only available when electronically filing a tax return.

- Direct Pay. Available at IRS.gov/directpay, this free online tool allows taxpayers to securely pay their taxes directly from checking or savings accounts without any fees or preregistration. Taxpayers can schedule payments up to 30 days in advance. Those using the tool will receive instant confirmation when they submit their payment.

- Credit or Debit Card. Taxpayers can pay online, by phone or with their mobile device through any of the authorized debit and credit card processors. The processor charges a fee. The IRS doesn’t receive or charge any fees for payments made with a debit or credit card. Go to https://www.irs.gov/payments for authorized card processors and phone numbers.

- IRS2Go. The IRS2Go mobile app is free and offers taxpayers the option to make a payment with Direct Pay for free or by debit or credit card through an approved payment processor for a fee. Download IRS2Go free from Google Play, the Apple App Store or the Amazon App Store.

- Electronic Federal Tax Payment System. This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll or for more information, call 800-555-4477, or visit eftps.gov.

- Cash. Taxpayers paying with cash can use the PayNearMe option. Payments are limited to $1,000 per day, and a $3.99 fee applies to each payment. The IRS urges taxpayers choosing this option to start early, because PayNearMe involves a four-step process. Initiating a payment well ahead of the tax deadline will help taxpayers avoid interest and penalty charges. The IRS offers this option in cooperation with OfficialPayments.com/fed and participating 7-Eleven stores in 34 states. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.    

Taxpayers can electronically request an extension of time to file. An extension of time to file is not an extension to pay. Taxes are still due by the original due date. Taxpayers can get an automatic extension when making a payment with Direct Pay, Electronic Federal Tax Payment System or by debit or credit card. Select “Form 4868” as the payment type to receive the automatic extension.

Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” To help ensure that the payment gets credited promptly, also enclose a Form 1040-V payment voucher. Also, print on the front of the check or money order: “2016 Form 1040”; name; address; daytime phone number; and Social Security number.

Taxpayers can view their federal tax account balances online. It’s safe, secure and available on the "Finding out How Much You Owe" page on IRS.gov. They can also access payment options or apply for an installment agreement on this page.

The IRS advises taxpayers to file either an income tax return or a request for a tax-filing extension by this year’s April 18 deadline to avoid late-filing penalties. This penalty can be ten times as costly as the penalty for paying late.

Taxpayers who owe, but can’t pay the balance in full, do have options. Often they qualify for one of several relief programs, including:

Payment Plans, Installment Agreements -- Most people can set up a payment plan with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement application to set up a short-term payment plan of 120-days or less, or a monthly payment agreement for up to 72 months. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS and qualified taxpayers can avoid the IRS filing a Notice of Federal Tax Lien unless it previously filed one. Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, IRS bill or notice.

Offer In Compromise -- Some struggling taxpayers may qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination on their ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Still Time to Contribute to an IRA for 2016

Posted by Admin Posted on Mar 21 2017

Still time to contribute to an IRA for 2016

 

The Internal Revenue Service today reminded taxpayers that they still have time to contribute to an IRA for 2016 and, in many cases, qualify for a deduction or even a tax credit.

This is the eighth in a series of 10 IRS tips called the Tax Time Guide. These tips are designed to help taxpayers navigate common tax issues as this year’s tax deadline approaches.

Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and the self-employed to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for a 2016 tax return, contributions must be made by April 18, 2017. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they complete their 2016 tax returns.

Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2016, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2016 is barred from making contributions to a traditional IRA for 2016 and subsequent years.

The deduction for contributions to a traditional IRA is generally phased out for taxpayers covered by a workplace retirement plan whose incomes are above certain levels. For someone covered by a workplace plan during any part of 2016, the deduction is phased out if the taxpayer’s modified adjusted gross income (MAGI) for that year is between $61,000 and $71,000 for singles and heads of household and between $0 and $10,000 for those who are married filing separately. For married couples filing a joint return where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range for the deduction is $98,000 to $118,000. Where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI phase-out range is $184,000 to $194,000.

The deduction for contributions to a traditional IRA is claimed on Form 1040 Line 32 or Form 1040A Line 17. Any nondeductible contributions to a traditional IRA must be reported on Form 8606.  

Even though contributions to Roth IRAs are not tax deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose incomes are above certain levels. The MAGI phase-out range is $184,000 to $194,000 for married couples filing a joint return, $117,000 to $132,000 for singles and heads of household and $0 to $10,000 for married persons filing separately. For detailed information on contributing to either Roth or Traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.

Taxpayers whose employer does not offer a retirement plan may want to consider enrolling in myRA®, a retirement savings plan offered by the U.S. Department of the Treasury. It's safe, affordable and a great option for people who don't have a retirement savings plan at work. Taxpayers can direct deposit their entire refund or a portion of it into an existing myRA – Retirement Account.  For further details and to open a myRA account online, visit www.myRA.gov.

Also known as the Retirement Savings Contributions Credit, the Saver’s Credit is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2016, the income limit is $30,750 for singles and married filing separate, $46,125 for heads of household and $61,500 for married couples filing jointly.

Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the Saver’s Credit can increase a taxpayer’s refund or reduce the taxes they owe. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or Traditional IRA and other qualifying retirement programs. Form 8880 is used to claim the Saver’s Credit, and its instructions have details on figuring the credit correctly.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

‘Where’s My Refund?’ Tool Best Way to Check Tax Refund Status

Posted by Admin Posted on Mar 21 2017

‘Where’s My Refund?’ Tool Best Way to Check Tax Refund Status

 

The Internal Revenue Service reminded taxpayers today that while more than 90 percent of federal tax refunds are issued in 21 days or less, some refunds may take longer. Many factors can affect the timing of a refund after the IRS receives the return. Also, taxpayers should take into consideration the time it takes a financial institution to post the refund to an account or for it to arrive in the mail.

The best way to check the status of a refund is online through the “Where’s My Refund?” tool at IRS.gov or via the IRS2Go mobile app.

"The majority of taxpayers receive a refund, and we understand those filers want to know when their refund will be issued. Our ‘Where’s My Refund?’ tool continues to be the best way for taxpayers to get the latest information," said IRS Commissioner John Koskinen.

This is the ninth in a series of 10 IRS tips called the Tax Time Guide. The guide is designed to help taxpayers as they near the April 18 tax filing deadline.

Taxpayers eager to know when their refund will be arriving should use the "Where's My Refund" tool rather than calling the IRS and waiting on hold or ordering a tax transcript. The IRS updates the status of refunds once a day, usually overnight, so checking more than once a day will not produce new information. “Where’s My Refund?” has the same information available to IRS telephone assistors so there is no need to call unless requested to do so by ”Where’s My Refund?”

Contrary to a myth rumored in social media, ordering a tax transcript will not help taxpayers find out when they will get their refund. The IRS notes that the information on a transcript does not necessarily reflect the amount or timing of a refund. While taxpayers can use a transcript to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation, they should use “Where’s My Refund?” to check the status of their refund.

“Where’s My Refund?” can be checked 24 hours after the IRS has received an e-filed return or four weeks after receipt of a mailed paper return. "Where’s My Refund?" has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent.

Users who access “Where’s My Refund?” on IRS.gov or the IRS2Go app must have information from their current, pending tax return to access their refund information.

The IRS continues to strongly encourage the use of e-file and direct deposit as the fastest and safest way to file an accurate return and receive a tax refund. The IRS expects that more than four out of five tax returns will be filed electronically, with a similar proportion of refunds issued through direct deposit.

The IRS Free File program offers free brand-name software to those with incomes of $64,000 or less. Seventy percent of the nation’s taxpayers are eligible for IRS Free File. All taxpayers, regardless of income, can use Free File fillable forms, which provide electronic versions of IRS paper forms to complete and file. Both options are available only through IRS.gov.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

IRS Reminds Taxpayers of April 1 Deadline to Take Required Retirement Plan Distributions

Posted by Admin Posted on Mar 21 2017

Deadline to Take Required Retirement Plan Distributions

 

The Internal Revenue Service today reminded taxpayers who turned age 70½ during 2016 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Saturday, April 1, 2017.

The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs but not Roth IRAs. It also typically applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. A taxpayer who turned 70½ in 2016 (born after June 30, 1945 and before July 1, 1946) and receives the first required distribution (for 2016) on April 1, 2017, for example, must still receive the second RMD by Dec. 31, 2017. 

Affected taxpayers who turned 70½ during 2016 must figure the RMD for the first year using the life expectancy as of their birthday in 2016 and their account balance on Dec. 31, 2015. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

Most taxpayers use Table III  (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2016 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.  

Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Employees who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulation  in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.

The IRS encourages taxpayers to begin planning now for any distributions required during 2017. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2017 RMD, this amount would be on the 2016 Form 5498 that is normally issued in January 2017.

IRA owners can use a qualified charitable distribution (QCD) paid directly from an IRA to an eligible charity to meet part or all of their RMD obligation. Available only to IRA owners age 70½ or older, the maximum annual exclusion for QCDs is $100,000. For details, see the QCD discussion in Publication 590-B.

A 50 percent tax normally applies to any required amounts not received by the April 1 deadline. Report this tax on Form 5329 Part IX. For details, see the instructions for Part IX of this form.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

IRS, States and Tax Industry Warn of Last-Minute Email Scams

Posted by Admin Posted on Mar 21 2017

IRS, States and Tax Industry Warn of Last-Minute Email Scams

 

The Internal Revenue Service, state tax agencies and the tax industry today warned both tax professionals and taxpayers of last-minute phishing email scams, especially those requesting last-minute deposit changes for refunds or account updates.

As the 2017 tax filing season winds down to the April 18 deadline, tax-related scams of various sorts are at their peak. The IRS urged both tax professionals and taxpayers to be on guard against suspicious activity.

The IRS, state tax agencies and the tax industry, acting as the Security Summit, enacted many safeguards against identity theft for 2017, but cybercriminals are ever evolving and make use of sophisticated scams to trick people into divulging sensitive data.

For example, one new scam poses as taxpayers asking their tax preparer to make a last-minute change to their refund destination, often to a prepaid debit card. The IRS urges tax preparers to verbally reconfirm information with the client should they receive last-minute email request to change an address or direct deposit account for refunds.

The IRS also suggests that tax professionals change and strengthen their own email passwords to better protect their email accounts used to exchange sensitive data with clients.

This is also the time of year when taxpayers may see scam emails from their tax software provider or others asking them to update online accounts. Taxpayers should learn to recognize phishing emails, calls or texts that pose as familiar organizations such as banks, credit card companies, tax software providers or even the IRS. These ruses generally urge taxpayers to give up sensitive data such as passwords, Social Security numbers and bank account or credit card numbers.

Taxpayers who receive suspicious emails purporting to be from a tax software provider or from the IRS should forward them to phishing@irs.gov. Remember: never open an attachment or link from an unknown or suspicious source. It may infect your computer with malware or steal information. Also, the IRS does not send unsolicited emails or request sensitive data via email.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Get an Automatic Six More Months to File; Free File Now Available for Extensions

Posted by Admin Posted on Mar 21 2017

Get an Automatic Six More Months to File

 

The Internal Revenue Service reminded taxpayers today that if they are unable to file their tax returns by this year’s April 18 deadline there is an easy, online option to get more time to complete their return.

The advice for those who cannot complete their tax return by April 18: Do not panic. Taxpayers who need more time to complete their return can request an automatic six-month extension. An extension allows for extra time to gather, prepare and file paperwork with the IRS, however, it does not extend the time to pay any tax due.

The fastest and easiest way to get an extension is through Free File on IRS.gov. Taxpayers can electronically request an extension on Form 4868. This service is free for everyone, regardless of income. Filing this form gives taxpayers until Oct. 16 to file their tax return. To get the extension, taxpayers must estimate their tax liability on this form and should pay any amount due.

Other fast, free and easy ways to get an extension include using IRS Direct Pay, the Electronic Federal Tax Payment System or by paying with a credit or debit card. There is no need to file a separate Form 4868 extension request when making an electronic payment and indicating it is for an extension. The IRS will automatically count it as an extension.

Direct Pay is available online and on the IRS2Go app. It’s free, does not require preregistration and gives instant confirmation when taxpayers submit a payment. It also provides the option of scheduling a payment up to 30 days in advance. Taxpayers using a credit or debit card can pay online, by phone or with the IRS2Go app. The card processor charges a fee, but the IRS does not charge any fees for this service.

Besides Free File and electronic payments, taxpayers can request an extension through a paid tax preparer, by using tax-preparation software or by mailing in a paper Form 4868. Tax forms can be downloaded from IRS.gov/forms.

The IRS reminds taxpayers that a request for an extension provides extra time to file a tax return, but not extra time to pay any taxes owed. Payments are still due by the original deadline. Taxpayers should file even if they can’t pay the full amount. By filing either a regular return or requesting an extension by the April 18 filing deadline, they will avoid the late-filing penalty, which can be 10 times as costly as the penalty for not paying.

Taxpayers who pay as much as they can by the due date reduce the overall amount subject to penalty and interest charges. The interest rate is currently four percent per year, compounded daily. The late-filing penalty is generally five percent per month and the late-payment penalty is normally 0.5 percent per month.

The IRS will work with taxpayers who cannot pay the full amount of tax they owe. Other options to pay, such as getting a loan or paying by credit card may help resolve a tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.       

When the President makes a disaster area declaration, the IRS can postpone certain taxpayer deadlines for residents and businesses in the affected area. Taxpayers who are victims of a natural disaster may apply for automatic filing and payment relief. Taxpayers outside the covered disaster area but whose tax records required for filing or payment are located in a covered disaster area may also be eligible for this tax relief. Taxpayers who have been affected by recent severe weather should check Around the Nation on IRS.gov for disaster tax relief for their state.

Other taxpayers who get more time to file without having to ask for extensions include:

U.S. citizens and resident aliens who live and work outside of the United States and Puerto Rico get an automatic two-month extension to file their tax returns. They have until June 15 to file. However, tax payments are still due April 18.

Members of the military on duty outside the United States and Puerto Rico also receive an automatic two-month extension to file. Those serving in combat zones have up to180 days after they leave the combat zone to file returns and pay any taxes due. Details are available in the Armed Forces’ Tax Guide Publication 3.

This is the 10th in a series of 10 IRS tips called the Tax Time Guide. The tips are intended to help taxpayers as they get closer to the April 18 income tax filing deadline.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Know these Facts Before Deducting a Charitable Donation

Posted by Admin Posted on Mar 21 2017

Know these Facts Before Deducting a Charitable Donation

 

If taxpayers gave money or goods to a charity in 2016, they may be able to claim a deduction on their federal tax return. Taxpayers can use the Interactive Tax Assistant tool, Can I Deduct my Charitable Contributions?, to help determine if their charitable contributions are deductible.

Here are some important facts about charitable donations:

Qualified Charities. Taxpayers must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible. To check the status of a charity, use the IRS Select Check tool.

Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with a federal tax return.

Benefit in Return. If taxpayers get something in return for their donation, they may have to reduce their deduction. Taxpayers can only deduct the amount that exceeds the fair market value of the benefit received. Examples of benefits include merchandise, meals, tickets to events or other goods and services.

Type of Donation. If taxpayers give property instead of cash, their deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price they would get if the property sold on the open market. If they donate used clothing and household items, those items generally must be in good condition or better. Special rules apply to cars, boats and other types of property donations.

Noncash Charitable Contributions. File Form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year. Complete section-A for noncash property contributions worth $5,000 or less. Complete section-B for noncash property contributions more than $5,000 and include a qualified appraisal to the return. Taxpayers may be able to prepare and e-file their tax return for free using IRS Free File. The type of records they must keep depends on the amount and type of their donation. To learn more about what records to keep, see Publication 526, Charitable Contributions.

Donations of $250 or More. If taxpayers donated cash or goods of $250 or more, they must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether they received any goods or services in exchange for the gift.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Five Tax Tips on Unemployment Benefits

Posted by Admin Posted on Mar 17 2017

Five Tax Tips on Unemployment Benefits

 

Taxpayers who received unemployment benefits need to remember that it may be taxable. Here are five key facts about unemployment:

Unemployment is Taxable. Include all unemployment compensation as income for the year. Taxpayers should receive a Form 1099-G, Certain Government Payments, by Jan. 31. This form shows the amount received and the amount of any federal income tax withheld.

There are Different Types. Unemployment compensation includes amounts paid under federal law or state law as well as railroad, trade readjustment and airline deregulation laws. Even some forms of disability payments can count. For more information, see IRS Publication 525.

Union Benefits May be Taxable. Benefits received from regular union dues as income might be taxable. Other rules may apply if a taxpayer contributed to a special union fund and those contributions to the fund are not deductible. In this case, report only income exceeding the amount of contributions made.

Tax May be Withheld. Those who receive unemployment can choose to have federal income tax withheld by using Form W-4V, Voluntary Withholding Request. Those choosing not to have tax withheld may need to make estimated tax payments during the year.

Visit IRS.gov for Help. Taxpayers facing financial difficulties should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of various life events such as job loss. For those who owe federal taxes and can’t pay, the Payments tab on IRS.gov provides some options. In many cases, the IRS can take steps to help ease financial burden.

Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.  

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

HAVE A HOUSEHOLD EMPLOYEE? BE SURE TO FOLLOW THE TAX RULES

Posted by Admin Posted on Mar 17 2017

HAVE A HOUSEHOLD EMPLOYEE? BE SURE TO FOLLOW THE TAX RULES

 

Many families hire people to work in their homes, such as nannies, housekeepers, cooks, gardeners and health care workers. If you employ a domestic worker, make sure you know the tax rules.

Important distinction

Not everyone who works at your home is considered a household employee for tax purposes. To understand your obligations, determine whether your workers are employees or independent contractors. Independent contractors are responsible for their own employment taxes, while household employers and employees share the responsibility.

Workers are generally considered employees if you control what they do and how they do it. It makes no difference whether you employ them full time or part time, or pay them a salary or an hourly wage.

Social Security and Medicare taxes

If a household worker’s cash wages exceed the domestic employee coverage threshold of $2,000 in 2016, you must pay Social Security and Medicare taxes — 15.3% of wages, which you can either pay entirely or split with the worker. (If you and the worker share the expense, you must withhold his or her share.) But don’t count wages you pay to:

Your spouse,

Your children under age 21,

Your parents (with some exceptions), and

Household workers under age 18 (unless working for you is their principal occupation).

The domestic employee coverage threshold is adjusted annually for inflation, and there’s a wage limit on Social Security tax ($118,500 for 2016, adjusted annually for inflation).

Social Security and Medicare taxes apply only to cash wages, which don’t include the value of food, clothing, lodging and other noncash benefits you provide to household employees. You can also exclude reimbursements to employees for certain parking or commuting costs. One way to provide a valuable benefit to household workers while minimizing employment taxes is to provide them with health insurance.

Unemployment and federal income taxes

If you pay total cash wages to household employees of $1,000 or more in any calendar quarter in the current or preceding calendar year, you must pay federal unemployment tax (FUTA). Wages you pay to your spouse, children under age 21 and parents are excluded.

The tax is 6% of each household employee’s cash wages up to $7,000 per year. You may also owe state unemployment contributions, but you’re entitled to a FUTA credit for those contributions, up to 5.4% of wages.

You don’t have to withhold federal income tax or, usually, state income tax unless the worker requests it and you agree. In these instances, you must withhold federal income taxes on both cash and noncash wages, except for meals you provide employees for your convenience, lodging you provide in your home for your convenience and as a condition of employment, and certain reimbursed commuting and parking costs (including transit passes, tokens, fare cards, qualifying vanpool transportation and qualified parking at or near the workplace).

Other obligations

As an employer, you have a variety of tax and other legal obligations. This includes obtaining a federal Employer Identification Number (EIN) and having each household employee complete Forms W-4 (for withholding) and I-9 (which documents that he or she is eligible to work in the United States).

After year end, you must file Form W-2 for each household employee to whom you paid more than $2,000 in Social Security and Medicare wages or for whom you withheld federal income tax. And you must comply with federal and state minimum wage and overtime requirements. In some states, you may also have to provide workers’ compensation or disability coverage and fulfill other tax, insurance and reporting requirements.

The details

Having a household employee can make family life easier. Unfortunately, it can also make your tax return a bit more complicated.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters

 

IRS Criminal Investigation Releases Fiscal Year 2016 Annual Report

Posted by Admin Posted on Mar 16 2017

IRS Criminal Investigation Releases Fiscal Year 2016 Annual Report

 

WASHINGTON — The Internal Revenue Service today announced the release of its IRS Criminal Investigation (CI) annual report, reflecting the significant accomplishments and criminal enforcement actions taken in fiscal year 2016.

IRS CI initiated 3,395 cases in FY 2016 that focused on tax-related identity theft, money laundering, public corruption, cybercrime and terrorist financing.

“The IRS continues to work to ensure that everyone is playing by the same rules and paying their fair share,” said IRS Commissioner John Koskinen. “The IRS is committed to fairly administering and enforcing the tax code, and our criminal investigators play a critical role in that effort.”

The CI report is released each year for the purpose of highlighting the agency’s successes while providing a historical snapshot of the make-up and priorities of the organization. The very first Chief of IRS CI, Elmer Lincoln Irey, served from 1919 to 1946 and envisioned releasing such a document each year to showcase the agency’s investigative work.

“I could not be more proud of all that our special agents and professional staff have accomplished in spite of our budget challenges,” said Richard Weber, Chief, IRS Criminal Investigation Division. “Though the total number of cases has dropped for the third consecutive year due to fewer agents and professional staff, we have continued to find ways to become even more efficient and the quality of our cases has never been greater.”

CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. This year, CI again boasted a conviction rate rivaling all of federal law enforcement at 92.1percent. That conviction rate speaks to the thoroughness of the investigations. CI is routinely called upon by prosecutors across the country to lead financial investigations on a wide variety of financial crimes including international tax evasion, identity theft, terrorist financing and transnational organized crime.

CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes in a manner to foster confidence in the tax system and compliance with the law. The 50-page report summarizes a wide variety of IRS CI activity throughout the fiscal year and includes case examples on a range of tax crimes, money laundering, public corruption, terrorist financing and narcotics trafficking financial crimes.

“I’m proud of IRS-CI and the reputation that this agency has as the best financial investigators in the world,” Weber said. “Regardless of our budget challenges over the past several years, I am proud that we have not lost sight of our impact or mission and that the quality of our cases remains high.”

[ Click Here to see the Annual Report]  

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

 

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a Federal Income Tax Return

Posted by Admin Posted on Mar 16 2017

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2013 Federal Income Tax Return

 

The Internal Revenue Service announced today that unclaimed federal income tax refunds totaling more than $1 billion may be waiting for an estimated 1 million taxpayers who did not file a 2013 federal income tax return.

To collect the money, taxpayers must file a 2013 tax return with the IRS no later than this year's tax deadline, Tuesday, April 18.

"We’re trying to connect a million people with their share of 1 billion dollars in unclaimed refunds for the 2013 tax year,” said IRS Commissioner John Koskinen. “People across the nation haven’t filed tax returns to claim these refunds, and their window of opportunity is closing soon. Students and many others may not realize they’re due a tax refund. Remember, there’s no penalty for filing a late return if you’re due a refund.”

The IRS estimates the midpoint for potential refunds for 2013 to be $763; half of the refunds are more than $763 and half are less.

In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If they do not file a return within three years, the money becomes the property of the U.S. Treasury. For 2013 tax returns, the window closes April 18, 2017. The law requires taxpayers to properly address mail and postmark the tax return by that date.

The IRS reminds taxpayers seeking a 2013 refund that their checks may be held if they have not filed tax returns for 2014 and 2015. In addition, the refund will be applied to any amounts still owed to the IRS, or a state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.

By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2013. Many low-and-moderate income workers may have been eligible for the Earned Income Tax Credit (EITC). For 2013, the credit was worth as much as $6,044. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2013 were:

$46,227 ($51,567 if married filing jointly) for those with three or more qualifying children;

$43,038 ($48,378 if married filing jointly) for people with two qualifying children;

$37,870 ($43,210 if married filing jointly) for those with one qualifying child, and;

$14,340 ($19,680 if married filing jointly) for people without qualifying children.

Current and prior year tax forms (such as the Tax Year 2013 Form 1040, 1040A and 1040EZ) and instructions are available on the IRS.gov Forms and Publications page or by calling toll-free: 800- TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2013, 2014 or 2015 should request copies from their employer, bank or other payer.

Taxpayers who are unable to get missing forms from their employer or other payer should go to IRS.gov and use the “Get Transcript Online” tool to obtain a Wage and Income transcript.  Taxpayers can also file Form 4506-T to request a transcript of their 2013 income. A Wage and Income transcript shows data from information returns we receive such as Forms W-2, 1099, 1098 and Form 5498, IRA Contribution Information. Taxpayers can use the information on the transcript to file their tax return.

State-by-state estimates of individuals who may be due 2013 tax refunds: 

State or District

Estimated

Number of

Individuals

Median

Potential

Refund

Total

Potential

Refunds*

Alabama

18,100

$729

$17,549,000

Alaska

4,700

$917

$5,665,000

Arizona

24,800

$650

$22,642,000

Arkansas

9,900

$722

$9,571,000

California

97,200

$696

$93,406,000

Colorado

20,200

$699

$19,454,000

Connecticut

11,500

$846

$12,691,000

Delaware

4,300

$776

$4,321,000

District of Columbia

3,200

$762

$3,341,000

Florida

66,900

$776

$67,758,000

Georgia

34,400

$671

$32,082,000

Hawaii

6,500

$793

$6,876,000

Idaho

4,500

$619

$3,919,000

Illinois

40,000

$834

$42,673,000

Indiana

21,700

$788

$22,060,000

Iowa

10,200

$808

$10,193,000

Kansas

11,100

$746

$10,700,000

Kentucky

12,900

$772

$12,627,000

Louisiana

20,300

$767

$21,209,000

Maine

4,000

$715

$3,645,000

Maryland

22,200

$770

$23,080,000

Massachusetts

23,000

$838

$24,950,000

Michigan

33,600

$763

$33,998,000

Minnesota

15,600

$691

$14,544,000

Mississippi

10,400

$702

$10,041,000

Missouri

22,400

$705

$20,787,000

Montana

3,600

$727

$3,480,000

Nebraska

5,300

$745

$5,084,000

Nevada

12,300

$753

$12,078,000

New Hampshire

4,400

$892

$4,930,000

New Jersey

29,900

$873

$33,207,000

New Mexico

8,100

$753

$8,162,000

New York

54,700

$847

$59,416,000

North Carolina

29,800

$656

$26,874,000

North Dakota

2,900

$888

$3,209,000

Ohio

36,000

$749

$34,547,000

Oklahoma

17,700

$773

$17,979,000

Oregon

15,500

$658

$14,188,000

Pennsylvania

39,400

$835

$41,078,000

Rhode Island

2,900

$796

$2,906,000

South Carolina

12,100

$674

$11,267,000

South Dakota

2,700

$823

$2,709,000

Tennessee

19,500

$743

$18,829,000

Texas

104,700

$829

$115,580,000

Utah

7,900

$667

$7,443,000

Vermont

2,000

$747

$1,859,000

Virginia

29,000

$752

$29,578,000

Washington

27,600

$829

$30,330,000

West Virginia

5,000

$855

$5,258,000

Wisconsin

12,700

$675

$11,619,000

Wyoming

2,800

$911

$3,189,000

Totals

1,042,100

$763

$1,054,581,000

 * Excluding the Earned Income Tax Credit and other credits. 

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

¿Tiene una casa de vacaciones que a veces alquila?

Posted by Admin Posted on Mar 16 2017

alquiler casa vacaciones

 

Si es así, debe saber que hay algunas reglas especiales que afectan la manera de reportar sus ingresos y gastos de alquiler.

Por ejemplo…si  alquila su casa de vacaciones solo por un corto tiempo, menos de 15 días al año, puede que no tenga que reportarlo.  

Esto significa que, en general, mientras usted esté dentro del plazo de dos semanas, sus ingresos serán exentos de impuestos y no necesitará reportarlo en su declaración.  

Y si usted detalla sus deducciones en el anexo A, aún puede reclamar deducciones de intereses hipotecarios calificados e impuestos de propiedad que usted paga, así como tambien las pérdidas fortuitas elegibles.

Por otro lado, si usted alquila su casa al menos 15 días durante el año, la ley es muy clara, los ingresos por alquiler que usted recibe siempre son tasables.  

Eso significa que usted debe reportarlo en su declaración usando el anexo E.

Sin embargo, las reglas para reclamar sus gastos son un poco más complicadas.

Los factores, como el número de días que  alquila su casa comparado con el número de días que la usa, también entran en juego.  

Esto afecta cuánto puede deducir, que gastos puede reclamar, y como los reporta en su declaración de impuestos.

La  publicación 527 del irs sobre la renta de alquiler y gastos tiene mucha información sobre las reglas que se aplican a las casas de vacaciones, incluyendo una hoja de trabajo y algunos ejemplos.  

Si tiene preguntas sobre contabilidad, impuestos nacionales o internacionales, representación con el IRS o implicaciones tributarias en bienes raíces, entre otros temas, no dude en llamar a Lord Breakspeare Callaghan LLC al 305-274-5811.

Fuente: IRS

Possible Jail and Fines for Falsely Padding Deductions on Returns

Posted by Admin Posted on Mar 15 2017

Possible Jail and Fines for Falsely Padding Deductions on Returns

 

The Internal Revenue Service warns against the temptation of falsely inflating deductions or expenses on tax returns to under pay what is owed and possibly receive larger refunds.

The vast majority of taxpayers file honest and accurate tax returns on time every year. However, each year some taxpayers fail to resist the temptation of fudging their information. That’s why falsely claiming deductions, expenses or credits on tax returns is on the “Dirty Dozen” tax scams list for the 2016 filing season.

"Taxpayers should file accurate returns to receive the refunds they are entitled to receive and shouldn't gamble with their taxes by padding their deductions," said IRS Commissioner John Koskinen.

Taxpayers should think twice before overstating deductions such as charitable contributions, padding their claimed business expenses or including credits that they are not entitled to receive – like the Earned Income Tax Credit or Child Tax Credit. Increasingly efficient automated systems generate most IRS audits. The IRS can normally audit returns filed within the last three years. Additional years can be added if substantial errors are identified or fraud is suspected.

Significant civil penalties may apply for taxpayers who file incorrect tax returns including:

-20 percent of the disallowed amount for filing an erroneous claim for a refund or credit.

-$5,000 if the IRS determines a taxpayer has filed a frivolous tax return.” A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax reported is substantially incorrect.

-In addition to the full amount of tax owed, a taxpayer could be assessed a penalty of 75 percent of the amount owed if the underpayment on the return resulted from tax fraud.

Taxpayers even may be subject to criminal prosecution (brought to trial) for actions such as:

-Tax evasion 

-Willful failure to file a return, supply information, or pay any tax due Fraud and false statements Preparing and filing a fraudulent return, or Identity theft.

Criminal prosecution could lead to additional penalties and even prison time.

Taxpayers should remember that they are legally responsible for what is on their tax return even if it is prepared by someone else, so be wise when selecting a tax professional. 

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source:  IRS

Phishing-Fake Emails and Websites try to steal your Information

Posted by Admin Posted on Mar 15 2017

Phishing-Fake Emails and Websites try to steal your Information

 

The Internal Revenue Service warns taxpayers to watch out for fake emails or websites looking to steal personal information. These “phishing” schemes continue to be on the annual IRS list of “Dirty Dozen” tax scams for the 2017 filing season.

Criminals pose as a person or organization you trust and/or recognize. They may hack an email account and send mass emails under another person’s name.  They may pose as a bank, credit card company, tax software provider or government gency. Criminals go to great lengths to create websites that appear legitimate but contain phony log-in pages. These criminals hope victims will take the bait to get the victim’s money, passwords, Social Security number and identity.

"Criminals are constantly looking for new ways to trick you out of your personal financial information so be extremely cautious about opening strange emails," said IRS Commissioner John Koskinen. "The IRS won't send you an email about a tax bill or refund out of the blue. We urge taxpayers not to click on any unexpected emails claiming to be from the IRS."

Scam emails and websites also can infect your computer with malware without you even knowing it. The malware can give the criminal access to your device, enabling them to access all your sensitive files or track your keyboard strokes, exposing login information.

If a taxpayer receives an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov. 

It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information online that can help protect taxpayers from email scams.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source:  IRS

HAVE A PENSION? BE SURE TO PLAN CAREFULLY

Posted by Admin Posted on Mar 08 2017

HAVE A PENSION? BE SURE TO PLAN CAREFULLY

 

The traditional pension may seem like a thing of the past. But many workers are still counting on payouts from one of these “defined benefit” plans in retirement. If you’re among this group, it’s important to start thinking now about how you’ll receive the money from your pension.

Making a choice

Some defined benefit plans give retirees a choice between receiving payouts in the form of a lump sum or an annuity. Taking a lump sum distribution allows you to invest the money as you please. Plus, if you manage and invest the funds wisely, you may be able to achieve better returns than those provided by an annuity.

On the other hand, if you’re concerned about the risks associated with investing your pension benefits (you could lose principal) — or don’t want the responsibility — an annuity offers guaranteed income for life. (Bear in mind that guarantees are subject to the claims-paying ability of the issuing company.)

Choosing yet again

If you choose to receive your pension benefits in the form of an annuity — or if your plan doesn’t offer a lump sum option — your plan likely will require you to choose between a single-life or joint-life annuity. A single-life annuity provides you with monthly benefits for life. The joint-life option (also referred to as “joint and survivor”) provides a smaller monthly benefit, but the payments continue over the joint lifetimes of both you and your spouse.

Deciding between the two annuity options requires some educated guesswork. To determine the option that will provide the greatest overall financial benefit, you’ll need to consider several factors — including your and your spouse’s actuarial life expectancies as well as factors that may affect your actual life expectancies, such as current health conditions and family medical histories.

You might choose the single-life option, for example, if you and your spouse have comparable life expectancies or if you expect to live longer. Under those circumstances, the higher monthly payment will maximize your overall benefits.

But there’s a risk, too: Because the payments will stop at your death, if you die prematurely and your spouse outlives you, the overall financial benefit may be smaller than if you’d chosen the joint-life option. The difference could be substantial if your spouse outlives you by many years.

Your overall financial situation — that is, your expenses and your other assets and income sources — also play a major role. Even if you expect a joint-life annuity to yield the greatest total benefit over time, you may want to consider a single-life annuity if you need additional liquidity in the short term.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters

Get Credit for Making a Home Energy Efficient

Posted by Admin Posted on Mar 08 2017

Get Credit for Making a Home Energy Efficient

 

Taxpayers who made certain energy efficient improvements to their home last year may qualify for a tax credit this year. Here are some key facts to know about home energy tax credits:

Non-Business Energy Property Credit

Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items added to a taxpayer’s main home last year. Qualified improvements include adding insulation, energy-efficient exterior windows and doors, and certain roofs. Do not include the cost to install these items.

The other part of the credit is not a percentage of the cost. It includes the installation costs of certain high-efficiency heating and air-conditioning systems, high-efficiency water heaters and stoves that burn biomass fuel. The credit amount for each type of property has a different dollar limit.

This credit has a maximum lifetime limit of $500. Taxpayers may only use $200 of this limit for windows.

A taxpayer’s main home must be located in the U.S. to qualify for the credit. The non-business energy property credit is only available for existing homes.

Be sure to have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. Taxpayers can use this to claim the credit. Do not attach it to a tax return. Keep it with tax records.

Taxpayers may claim the credit on their 2016 tax return if they didn’t reach the lifetime limit in past years. Under current law, Dec. 31, 2016, was the deadline for qualifying improvements to the taxpayer’s main U. S. home.

Residential Energy Efficient Property Credit

This tax credit is 30 percent of the cost of alternative energy equipment installed on or in a home. This includes the cost of installation.

Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.

There is no dollar limit on the credit for most types of property. If the credit is more than the tax owed, carry forward the unused portion of this credit to next year’s tax return.

The home must be in the U.S. It does not have to be a taxpayer’s main home, unless the alternative energy equipment is qualified fuel cell property. The residential energy efficient property credit is available for both existing homes and homes under construction.

This credit is available through 2016.

Use Form 5695, Residential Energy Credits, to claim these credits. For more information on this topic, refer to the form’s instructions. Get IRS forms anytime on IRS.gov/forms.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Capital Gains and Losses – 10 Helpful Facts to Know

Posted by Admin Posted on Mar 06 2017

Capital Gains and Losses – 10 Helpful Facts to Know

 

When a person sells a capital asset, the sale normally results in a capital gain or loss. A capital asset includes inherited property or property someone owns for personal use or as an investment.

Here are 10 facts that taxpayers should know about capital gains and losses:

Capital Assets. Capital assets include property such as a home or a car. It also includes investment property, like stocks and bonds.

Gains and Losses. A capital gain or loss is the difference between the basis and the amount the seller gets when they sell an asset. The basis is usually what the seller paid for the asset. For details about inherited property, see IRS Publication 544, IRS Publication 550 and IRS Publication 551.

Net Investment Income Tax. Taxpayers must include all capital gains in their income. Capital gains may be subject to the Net Investment Income Tax if the taxpayer’s income is above certain amounts. The rate of this tax is 3.8 percent. For details, visit IRS.gov.

Deductible Losses. Taxpayers can deduct capital losses on the sale of investment property but can’t deduct losses on the sale of property they hold for their personal use.

Limit on Losses. If a taxpayer’s capital losses are more than their capital gains, they can deduct the difference as a loss on their tax return. This loss is limited to $3,000 per year, or $1,500 if married and filing a separate return.

Carryover Losses. If a taxpayer’s total net capital loss is more than the limit they can deduct, they can carry it over to next year’s tax return.

Long and Short Term. Capital gains and losses are either long-term or short-term. It depends on how long the taxpayer holds the property. If the taxpayer holds it for one year or less, the gain or loss is short-term.

Net Capital Gain.  If a taxpayer’s long-term gains are more than their long-term losses, the difference between the two is a net long-term capital gain. If the net long-term capital gain is more than the net short-term capital loss, the taxpayer has a net capital gain.

Tax Rate. The tax rate on a net capital gain usually depends on the taxpayer’s income. The maximum tax rate on a net capital gain is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gain.

Forms to File. Taxpayers often will need to file Form 8949, Sales and Other Dispositions of Capital Assets. Taxpayers also need to file Schedule D, Capital Gains and Losses, with their tax return.

For more on this topic, see Schedule D instructions. Taxpayers can visit IRS.gov to get tax forms and documents anytime.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Debt Cancellation May be Taxable

Posted by Admin Posted on Mar 03 2017

Debt Cancellation May be Taxable

 

If a lender cancels part or all of a debt, a taxpayer must generally consider this as income. However, the law allows an exclusion that may apply to homeowners who had their mortgage debt canceled in 2016.

Here are 10 tips about debt cancellation:

1- Main Home. If the canceled debt was a loan on a taxpayer’s main home, they may be  able to exclude the canceled amount from their income. They must have used the loan to buy, build or substantially improve their main home to qualify. Their main home must also secure the mortgage. 

2- Loan Modification. If a taxpayer’s lender canceled or reduced part of their mortgage balance through a loan modification or ‘workout,’ the taxpayer may be able to exclude that amount from their income. They may also be able to exclude debt discharged as part of the Home Affordable Modification Program, or HAMP. The exclusion may also apply to the amount of debt canceled in a foreclosure.

3- Refinanced Mortgage. The exclusion may apply to amounts canceled on a refinanced mortgage. This applies only if the taxpayer used proceeds from the refinancing to buy, build or substantially improve their main home and only up to the amount of the old mortgage principal just before refinancing. Amounts used for other purposes do not qualify.

4- Other Canceled Debt. Other types of canceled debt such as second homes, rental and business property, credit card debt or car loans do not qualify for this special exclusion. On the other hand, there are other rules that may allow those types of canceled debts to be nontaxable.

5- Form 1099-C. If a lender reduced or canceled at least $600 of a taxpayer’s debt, the taxpayer should receive Form 1099-C, Cancellation of Debt, by Feb. 1. This form shows the amount of canceled debt and other information. 

6- Form 982. If a taxpayer qualifies, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. They should file the form with their income tax return.

7- IRS.gov Tool. Taxpayers should use the Interactive Tax Assistant tool - Do I Have Cancellation of Debt Income on My Personal Residence? - on IRS.gov to find out if their canceled mortgage debt is taxable.

8- Exclusion Extended. The law that authorized the exclusion of cancelled debt from income was extended through Dec. 31, 2016.

9- IRS Free File.  IRS e-file is fastest, safest and easiest way to file. Taxpayers can use IRS Free File to e-file their tax return for free. If they earned $64,000 or less, they can use brand name tax software. The software does the math and completes the right forms for them. If they earned more than $64,000, they can use Free File Fillable Forms. This option uses electronic versions of IRS paper forms. It is best for those who are used to doing their own taxes. Free File is available only on IRS.gov/freefile.

10- More Information. For more on this topic see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

IRS Reminds International Taxpayers of Tax Obligations; Clarifies Rules for Tax Withholding Agents

Posted by Admin Posted on Feb 28 2017

IRS Reminds International Taxpayers of Tax Obligations

 

The Internal Revenue Service today reminded non-U.S. citizens who may have taxable income, such as international students and scholars who may be working or receiving scholarship funds, that they may have special requirements to file a U.S. tax return.

The IRS also reminded withholding agents -- such as payroll professionals or universities -- that accurately filed Forms 1042-S help speed any refunds due to their non-U.S. citizen taxpayers. Errors on forms or returns could result in some refunds being delayed.

What Non-U.S. Citizen Taxpayers Must Do

The Internal Revenue Code generally requires non-U.S. citizens, whom the code defines as either resident or non-resident aliens, who are engaged in a trade or business within the U.S. to file tax returns. Non-resident aliens such as foreign students, teachers or trainees temporarily in the United States on F, J, M or Q visas are considered engaged in a trade or business.

Most individuals in F-1, J-1, M-1, Q-1 and Q-2 non-immigrant status are eligible to be employed in the U.S. and are eligible to apply for a Social Security number if they are actually employed in the United States. Those not eligible for an SSN but who have a tax filing requirement may request an Individual Taxpayer Identification Number from the IRS.

The non-U.S. citizen’s name must be reported exactly as it appears on the official documentation provided to the withholding agent (such as a Social Security Administration card or some other form of official governmental documentation).

Filing a Form 1040-NR or 1040NR-EZ is required by non-U.S. citizens who have a taxable event such as:

A taxable scholarship or fellowship, as described in Chapter 1 of Publication 970, Tax Benefits for Education;

Income partially or totally exempt from tax under the terms of a tax treaty; and/or

Any other income, which is taxable under the Internal Revenue Code.

Non-U.S. citizens also must attach one copy (generally Copy B) for each Form 1042-S received to their tax returns. Non-U.S. citizens should review the Form 1042-S to ensure it accurately reflects their name and income. If the form does not contain accurate information, they must contact the withholding agent for an amended Form 1042-S.

What Withholding Agents Must Do

Generally, non-U.S. citizens who have taxable income also may have withholding of taxes by the source of their income. Withholding agents are required to complete Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding.

Withholding agents must provide five copies of the Form 1042-S. Copy A should go to the IRS; Copies B, C and D to the recipient of the income; and copy E should be retained by the withholding agent. All information, including the name of the taxpayer, must match exactly on all copies of Form 1042-S.

If withholding agents create a substitute Form 1042-S, all five copies must be in the same physical format. The size, shape and format of any substitute form must adhere to the rules of Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. The official Form 1042-S is the standard for substitute forms.

A common error is to have a Form 1042-S listing two or more recipients in box 13a. The 2016 instructions to Form 1042-S have been updated to clarify that in the case of joint owners, Form 1042-S can only list one of the owners in box 13a.

Withholding agents should review Fact Sheet 2017-3, where they can find the latest changes to Form 1042-S instructions and common errors that delay processing of tax returns.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Cash Transactions Subject to Scrutiny for an Additional 6-Month Period!!!

Posted by Admin Posted on Feb 27 2017

Cash Transactions Subject to Scrutiny for an Additional 6-Month Period!!!

 

Foreign buyers purchased $102.6 billion of residential property between April 2015 – March 2016.  Fifty percent of the reported transactions were all-cash sales, according to the 2016 Profile of International Activity in U.S. Residential Real Estate report issued by the National Association of Realtors. The Financial Crimes Enforcement Network (FinCEN), aware of the number of all cash real estate purchases, has been concerned that some of those transactions may be conducted by individuals attempting to hide their assets and identity. For this reason, the FinCEN announced on February 23, 2017 the renewal of the existing Geographic Targeting Orders (“GTO”). The first GTO was implemented from March 1, 2016 thru August 27, 2016 and the second one from August 28, 2016 thru February 23, 2017.

FinCEN has found that about 30% of the transactions covered by the prior GTOs involve a beneficial owner or a purchaser representative that is also subject of a previous suspicious activity report. According to the FinCEN Acting Director Jamal El-Hind:  “These GTOs are producing valuable data that is assisting law enforcement and is serving to inform our future efforts to address money laundering in the real estate sector”. At this moment it is not clear whether or not the GTO will be extended to other counties in the nation or if they will become permanent in the future, but if the FinCEN keeps gathering meaningful data that is allowing them to fight money laundering more efficiently, chances are, in my opinion, that they will be implemented nationwide.

Effective on February 24, 2017 and for the next 180 days ending on August 22, 2017, title insurance companies in the following areas will be receiving GTOs.

 ·       All boroughs of New York City (Manhattan, Brooklyn, Queens, Bronx and Staten Island).
·        Miami-Dade County, Broward and Palm Beach Counties.
·        Los Angeles County, San Diego County and San Francisco, San Mateo and Santa Clara Counties (part of the San Francisco area).
·        Bexar County in Texas that includes the city of San Antonio.

The reporting threshold in the NY City boroughs will be $1.5 million except Manhattan that will remain at $3 million. The threshold for the three Florida counties will be $1 million and $2 million for the California counties. Bexar County will have a $500,000 reporting threshold.

The title insurance companies that receive a GTO must file a FinCEN Form 8300 within 30 days of closing to report the transactions over the required thresholds. Form 8300 requires the disclosure of information about the individual responsible for representing the legal entity that is purchasing the property, information about the beneficial owner of the purchaser and information about the transaction and method of payment.

The GTOs do not impose any new requirements on real estate professionals, but the National Association of Realtors has collaborated with FinCEN by developing Anti-Money Laundering Guidelines for Real Estate Professionals to help increase knowledge and understanding of potential money laundering activities. I suggest that you become familiar with the guidelines and also that you make  aware your foreign clients of the temporary reporting requirements.

Please do not hesitate to call me with any questions you may have regarding the above-mentioned issue or any other questions regarding your foreign clients. Our firm has a network of professionals that include International Tax Attorneys as well as Real Estate and Immigration Attorneys that will assist you and your clients to ensure that the whole process of buying, holding and selling real estate in the United States goes without any unpleasant surprises from the U.S. income and estate tax standpoint.

 

Kind regards,

 

Jose Huerta, EMST

International Tax Consultant

E-mail: jose@lbcpa.com

NEED A DO-OVER? AMEND YOUR TAX RETURN

Posted by Admin Posted on Feb 27 2017

NEED A DO-OVER? AMEND YOUR TAX RETURN

 

Like many taxpayers, you probably feel a sense of relief after filing your tax return. But that feeling can change if, soon after, you realize you’ve overlooked a key detail or received additional information that should have been considered. In such instances, you may want (or need) to amend your return.

Typically, an amended return — Form 1040X, to be exact — must be filed within three years from the date you filed the original tax return or within two years of the date the applicable tax was paid (whichever is later). Your choice of timing should depend on whether you expect a refund or a bill.

If claiming an additional refund, you should typically wait until you’ve received your original refund. Then cash or deposit the first refund check while waiting for the second. If you owe additional dollars, file the amended return and pay the tax immediately to minimize interest and penalties.

Bear in mind that, as of this writing, the IRS doesn’t offer amended returns via e-file. You can, however, track your amended return electronically. The IRS now offers an automated status-tracking tool called “Where’s My Amended Return?” at https://www.irs.gov/Filing/Individuals/Amended-Returns-(Form-1040-X)/Wheres-My-Amended-Return-1.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters

Avoid the Rush: Be Prepared to Validate Identity if Calling the IRS

Posted by Admin Posted on Feb 27 2017

Avoid the Rush: Be Prepared to Validate Identity if Calling the IRS

 

The Internal Revenue Service said mid-February marks the agency’s busiest time of the year for telephone calls. The IRS is reminding taxpayers who have questions about their tax accounts to be prepared to validate their identity when speaking with an IRS assistor. This will help avoid the need for a repeat call.

The IRS recognizes the importance of protecting taxpayers’ identities. That’s why IRS call center assistors take great care to make certain that they only discuss personal information with the taxpayer or someone authorized to speak on the taxpayer’s behalf.

Customer service representatives can answer refund questions beginning 21 days after the return was filed. Taxpayers should use “Where’s My Refund?” to track the status of their refund. Taxpayers who are e-filing their return and need their prior year adjusted gross income should use the Get Transcript tool on IRS.gov. IRS telephone assistors cannot provide prior-year adjusted gross income over the phone for filing purposes.

“Where’s My Refund?” will be updated Feb. 18 for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before Feb. 18, some taxpayers may see a projected date or a message that the IRS is processing their return.

By law, the IRS is required to hold EITC and ACTC refunds until Feb. 15. However, taxpayers may not see those refunds until the week of Feb. 27. Due to differing timeframes with financial institutions, weekends and the Presidents Day holiday, these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 -- if there are no processing issues with the tax return and the taxpayer chose direct deposit.

The IRS phone assistors do not have additional information on refund dates beyond what taxpayers have access to on "Where's My Refund?”. Given high call volumes, taxpayers should not call unless directed to do so by the refund tool. In addition, a common myth is that people can get their refund date earlier by ordering a tax transcript. There is no such "secret" option to find a refund date by calling the IRS or ordering a transcript; just check "Where's My Refund?" once a day.

If Calling About a Personal Tax Account

Before calling about a personal tax account, have the following information handy:

Social Security numbers and birth dates for those listed on the tax return

An Individual Taxpayer Identification Number (ITIN) for those without a Social Security number (SSN)

Filing status – Single, Head of Household, Married Filing Joint or Married Filing Separate

Prior-year tax return. The IRS may need to verify identity before answering certain questions

A copy of the tax return in question

Any letters or notices received from the IRS.

If Calling About a Letter 4883C

At this time of year, the IRS begins sending letters to taxpayers inquiring about suspicious tax returns it has identified. It’s important for the IRS and the taxpayer to confirm whether or not the taxpayer actually filed the return in question. Taxpayers have 30 days to call, which allows time to avoid the rush around Presidents’ Day.

To expedite the process when calling, taxpayers MUST have: 

The IRS letter  

Copy of prior year tax return (if filed)

Current year tax return (if filed)  

Any supporting documents for each year's return (such as W-2's, 1099's, Schedule C, Schedule F, etc.)

If Calling About Someone Else’s Account

IRS call center assistors will only speak with the taxpayer or their legally designated representative. Before calling, have the following information handy:

Verbal or written authorization to discuss the account

The ability to verify the taxpayer’s name, SSN/ITIN, tax period, form(s)

If the caller is a third party designee, a PTIN or PIN must be provided

A current, completed, and signed Form 8821, Tax Information Authorization or

A completed and signed Form 2848, Power of Attorney and Declaration of Representative

If Calling About a Deceased Taxpayer

Be prepared to fax:

The deceased taxpayer’s death certificate, and

Either copies of the Letter of Testamentary approved by the court or IRS Form 56, Notice Concerning Fiduciary Relationship (for estate executors)

To better serve taxpayers around the President’s Day holiday, the peak time of the year for telephone calls to the IRS, the IRS toll-free lines will be open Saturday, Feb. 18, from 9 a.m. to 5 p.m. (callers’ local time) and Monday, Feb. 20, from 7 a.m. to 7 p.m. (callers’ local time).

This tip is part of the IRS Avoid the Rush news release series designed to provide taxpayers with the information they need, when they need it. More details on this series, including information on additional online resources, are available on IRS.gov.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source:  IRS

Don’t Fall for Scam Calls and Emails Posing as IRS

Posted by Admin Posted on Feb 24 2017

Don’t Fall for Scam Calls and Emails Posing as IRS

 

Scams continue to use the IRS as a lure. These tax scams take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. Scammers use the IRS name, logo or a fake website to try and steal money from taxpayers. Identity theft can also happen with these scams.

Taxpayers need to be wary of phone calls or automated messages from someone who claims to be from the IRS. Often these criminals will say the taxpayer owes money. They also demand payment right away. Other times scammers will lie to a taxpayer and say they are due a refund. The thieves ask for bank account information over the phone. The IRS warns taxpayers not to fall for these scams.

Below are several tips that will help filers avoid becoming a scam victim.

IRS employees will NOT:

Call demanding immediate payment. The IRS will not call a taxpayer if they owe tax without first sending a bill in the mail.

Demand payment without allowing the taxpayer to question or appeal the amount owed.

Require the taxpayer pay their taxes a certain way. For example, demand taxpayers use a prepaid debit card.

Ask for credit or debit card numbers over the phone.

Threaten to contact local police or similar agencies to arrest the taxpayer for non-payment of taxes.

Threaten legal action such as a lawsuit.

If a taxpayer doesn’t owe or think they owe any tax, they should:

Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.

Report the incident to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.

In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. Criminals often use fake refunds, phony tax bills or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.

For those taxpayers who get a ‘phishing’ email, the IRS offers this advice:

Don’t reply to the message.

Don’t give out your personal or financial information.

Forward the email to phishing@irs.gov. Then delete it.

Do not open any attachments or click on any links. They may have malicious code that will infect your computer.

More information on how to report phishing or phone scams is available on IRS.gov.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.  

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

IRS Warns of Video Relay Scam Targeting Deaf and Hard of Hearing

Posted by Admin Posted on Feb 24 2017

IRS Warns of Video Relay Scam Targeting Deaf and Hard of Hearing

 

Every day scammers come up with new ways to steal taxpayers’ identities and personal information. Some scammers pretend to be from the IRS with one goal in mind: to steal money.

Be aware that con artists will use video relay services (VRS) to try to scam deaf and hard of hearing individuals. Don’t become a victim. Deaf and hard of hearing taxpayers should avoid giving out personal and financial information to anyone they do not know. Always confirm that the person requesting personal information is who they say they are.

Do not automatically trust calls just because they are made through VRS. VRS interpreters do not screen calls for validity.

The IRS has procedures in place for taxpayers who are experiencing tax issues. If you receive a call through VRS from someone claiming to be from the IRS, keep this in mind:

The IRS Will Never:

- Demand immediate payment and require the payment be made a specific way, such as by prepaid debit card, gift card or wire transfer. In most cases, the IRS will not call taxpayers about taxes owed without first having mailed a letter to the taxpayer.

- Threaten that local police or other law-enforcement groups will immediately arrest taxpayers for not paying a tax bill.

- Demand that taxpayers pay taxes without giving them the opportunity to question or appeal the amount owed.

- Ask for credit or debit card numbers over the phone.

Receive a Suspicious Call? Here’s What to Do:

Deaf and hard of hearing taxpayers who owe taxes or think they might owe taxes should call the IRS at 800-829-1040 through VRS. IRS employees can help with a payment issue or confirm if there really is a tax issue.

Taxpayers who know they don’t owe taxes or have no reason to think that they owe any taxes (for example, they’ve never received an IRS letter or the caller made bogus threats or demands as described above), should call and report the incident to the Treasury Inspector General for Tax Administration, or TIGTA, at 800-366-4484.

Taxpayers can file a complaint using the FTC Complaint Assistant. If the complaint involves someone impersonating the IRS, include the words “IRS Telephone Scam” in the notes.

To learn more about the latest tax phone scams, go to IRS.gov and type “scam” in the search field. IRS YouTube videos are available on a variety of topics in American Sign Language (ASL) with open-captions and voice over.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Identity Theft is the Number One Tax Scam

Posted by Admin Posted on Feb 23 2017

Identity Theft is the Number One Tax Scam

 

Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using Someone else’s Social Security number. Though the agency is making progress on this front, taxpayers still need to be Extremely careful and do everything they can to avoid being victimized. (IR-2016-12)

“We urge people to use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues because scams can take on many sophisticated forms," said IRS Commissioner John Koskinen. "Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary."

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. While the IRS has made significant strides over the past several years to address this issue, it remains a top concern for the IRS, which is why identity theft remains on the Dirty Dozen list again this year as the IRS works to protect taxpayers and help victims. In the most recent three fiscal years, Criminal Investigation (CI) helped convict approximately 2,000 identity thieves. In fiscal year 2015, the IRS initiated 776 identity theft related investigations, which resulted in 774 sentencings through CI enforcement efforts. The courts continue to impose significant jail time with the average months to serve in fiscal year 2015 at 38 months — the longest sentencing being over 27 years. The IRS understands that identity theft is a frustrating, complex process for victims. While identity thieves steal information from sources outside the tax system, the IRS is often the first to inform a victim that identity theft occurred. The IRS is working hard to resolve identity theft cases as quickly as possible.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Frivolous Tax Arguments Can Cost you Thousands

Posted by Admin Posted on Feb 22 2017

Frivolous Tax Arguments Can Cost you Thousands

 

Frivolous Tax Arguments: Don’t use frivolous tax arguments in an effort to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims Even though they are wrong and have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. (IR-2016-27)

WASHINGTON – The Internal Revenue Service is warning taxpayers against using frivolous tax arguments to avoid paying their taxes.

Also, the IRS released the 2016 version of “The Truth about Frivolous Tax Arguments.” The document describes and responds to some of the common frivolous tax arguments made by those who oppose compliance with federal tax laws. Examples include contentions that taxpayers can refuse to pay taxes on religious or moral grounds by invoking the First Amendment. Other examples mentioned also include contentions that the only “employees” subject to federal income tax are employees of the federal government; and that only foreign-source income is taxable. The cases cited in the document demonstrate how frivolous arguments are treated by the IRS and the courts.

"The IRS and the courts hear many outlandish arguments from people trying to avoid their legal filing and tax obligations," said IRS Commissioner John Koskinen. "Taxpayers should avoid unscrupulous promoters of false tax-avoidance arguments because taxpayers end up paying what they owe plus potential penalties and interest mandated by law."

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes.

Perpetrators of illegal scams may be subject to significant penalties and interest as well as possible criminal rosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them.

Debunking Frivolous Tax Arguments

“The Truth about Frivolous Tax Arguments” describes and responds to some of the common frivolous tax arguments made by those who oppose compliance with federal tax laws. The 2016 version includes numerous recently-decided cases hat demonstrate that the courts continue to regard such arguments as illegitimate.

Don’t Get Talked into Using a Frivolous Argument

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes..

The penalty for filing a frivolous tax return is $5,000. The penalty applies to anyone who submits a purported tax return or other specified submission, if any portion of the submission is based on a position the IRS identified as frivolous in Notice 2010-33, 2010-17 I.R.B. 609, or reflects a desire to delay or impede administration of the tax laws.

Those who promote or adopt frivolous positions also risk a variety of other penalties.  For example, taxpayers could be responsible for an accuracy-related penalty, a civil fraud penalty, an erroneous refund claim penalty, or a failure to file penalty.  The Tax Court may also impose a penalty against taxpayers who make frivolous arguments in court.   

Taxpayers who rely on frivolous arguments and schemes may also face criminal prosecution for attempting to evade or defeat tax. Similarly, taxpayers may be convicted of a felony for willfully making and signing under penalties of perjury any return, statement, or other document that the person does not believe to be true and correct as to every material matter.  Persons who promote frivolous arguments and those who assist taxpayers in claiming tax benefits based on frivolous arguments may be prosecuted for a felony.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Hiding money and income offshore? The IRS is looking for you!

Posted by Admin Posted on Feb 22 2017

Hiding money and income offshore?  The IRS is looking for you!

 

Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. The IRS offers the Offshore Voluntary Disclosure Program (OVDP) to enable people catch up on their filing and tax obligations. 

The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the 2015 filing season.

"Our continued enforcement actions should discourage anyone from trying to illegally hide money and income offshore," said IRS Commissioner John Koskinen. "We have voluntary options to help taxpayers get their taxes and filing obligations in order."

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 54,000 disclosures and we have collected more than $8 billion from this initiative alone. The IRS conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

The IRS remains committed to our priority efforts to stop offshore tax evasion wherever it occurs. Even though the IRS has faced several years of budget reductions, the IRS continues to pursue cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on U.S. soil.

Through the years, offshore accounts have been used to lure taxpayers into scams and schemes.

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Third-Party Reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements (IGAs) between the U.S. and  partner jurisdictions, automatic third-party account reporting began in 2015,  making it less likely that offshore financial accounts will go unnoticed by the IRS. In addition to FATCA and reporting through IGAs, the Department of Justice’s Swiss Bank Program continues to reach non-prosecution agreements with Swiss financial institutions that facilitated past non-compliance.  As part of these agreements, banks provide information on potential non-compliance by U.S. taxpayers. Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

 

Abusive Tax Shelters to Avoid Paying Taxes Can Give you a Big Headache

Posted by Admin Posted on Feb 21 2017

Abusive Tax Shelters to Avoid Paying Taxes Can Give you a Big Headache

 

ABUSIVE TAX SCHEMES HAVE EVOLVED!!!

The Internal Revenue Service said that using abusive tax shelters and structures to avoid paying taxes continues to be a problem and remains on its annual list of tax scams known as the “Dirty Dozen” for the 2017 filing season.

"Taxpayers should steer clear of unscrupulous promoters who sell phony tax shelters with no real purpose other than to avoid paying what is owed,” said IRS Commissioner John Koskinen. "These schemes can end up costing taxpayers more in back taxes, penalties and interest than they saved in the first place.”

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them.

Abusive Tax Structures

Abusive tax schemes have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions.

IRS Criminal Investigation (CI) has developed a nationally coordinated program to combat these abusive tax schemes. CI's primary focus is on the identification and investigation of the tax scheme promoters as well as those who play a substantial or integral role in facilitating, aiding, assisting, or furthering the abusive tax scheme, such as accountants or lawyers. Just as important is the investigation of investors who knowingly participate in abusive tax schemes.

Multiple flow-through entities are commonly used as part of a taxpayer's scheme to evade taxes. These schemes may use Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs), International Business Companies (IBCs), foreign financial accounts, offshore credit/debit cards and other similar instruments. They are designed to conceal the true nature and ownership of the taxable income and/or assets.

Whether something is “too good to be true” is important to consider before buying into any arrangements that promise to “eliminate” or “substantially reduce” your tax liability.  If an arrangement uses unnecessary steps or a form that does not match its substance, then that arrangement is an abusive scheme.  Another thing to remember  is that the promoters of abusive tax schemes often employ financial instruments in their schemes; however, the instruments are used for improper purposes including the facilitation of tax evasion.

The IRS encourages taxpayers to report unlawful tax evasion.

Where Do You Report Suspected Tax Fraud Activity?

Misuse of Trusts

Trusts also commonly show up in abusive tax structures. They are highlighted here because unscrupulous promoters continue to urge taxpayers to transfer large amounts of assets into trusts. These assets include not only cash and investments, but also successful on-going businesses. There are legitimate uses of trusts in tax and estate planning, but the IRS commonly sees highly questionable transactions. These transactions promise reduced taxable income, inflated deductions for personal expenses, reduced (even to zero) self-employment taxes, and reduced estate or gift transfer taxes.These transactions commonly arise when taxpayers are transferring wealth from one generation to another. Questionable trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS. IRS personnel continue to see an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses, as well as to avoid estate transfer taxes. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.

Captive Insurance

Another abuse involving a legitimate tax structure involves certain small or “micro” captive insurance companies.  Tax law allows businesses to create “captive” insurance companies to enable those businesses to protect against certain risks. The insured claims deductions under the tax code for premiums paid for the insurance policies while the premiums end up with a captive insurance company owned by the owners of the insured or family members.

The captive insurance company, in turn, can elect under a separate section of the tax code to exclude up to $1.2 million of its net premium income per year, so that the captive is taxed only on its investment income.

In the abusive structure, unscrupulous promoters, accountants, or wealth planners persuade the owners of closely held entities to participate in these schemes.  The promoters assist the owners to create captive insurance companies onshore or offshore and cause the creation and sale of the captive “insurance” policies to the closely held entities.  The policies may cover ordinary business risks or esoteric, implausible risks for exorbitant “premiums,” while the insureds continue to maintain their far less costly commercial coverages with traditional insurers.  Captive “insurance” policies may attempt to cover the same risks as are covered by the entities’ existing commercial coverage, but the captive policies’ “premiums” may be double or triple the premiums of the policy owners’ commercial policies.

Annual premium amounts are frequently targeted to the amounts of deductions business entities seek in order to reduce their taxable income. In these abusive schemes, total premiums can equal up to $1.2 million annually to take full advantage of the premium income exclusion provision.  Underwriting and actuarial substantiation for the insurance premiums paid are either absent or illusory.  The promoters manage the entities’ captive insurance companies for substantial fees, assisting taxpayers unsophisticated in insurance, to continue the charade from year to year.

The Protecting Americans from Tax Hikes Act of 2015 reins in certain of the micro captive abuses that the IRS is currently combatting.  Those provisions are effective for small insurance companies’ taxable years beginning after Dec. 31, 2016.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

What can I do to raise money for my small business?

Posted by Admin Posted on Feb 21 2017

What can I do to raise money for my small business?

 

Although the process is complex and frustrating, raising capital is the most basic of all business activities. When looking for financing, there are various sources to consider. For most new businesses, the main source of capital comes from savings and other forms of personal resources. There are better options available than credit cards that are often used for financing, even a small business loan.

When beginning, entrepreneurs usually look to private sources like friends and family. Generally, the money is loaned at a low interest rate or interest free, which is very beneficial at the beginning.

The most common source of funding, not including personal resources, are credit unions and banks who will provide a loan if it is possible to show that your offer is worthwhile. Other sources are venture capital firms that aid businesses in exchange for partial or equity ownership.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: Thomson Reuters

Inventing Income to Qualify for a Tax Credit can Lead to Big Bills in Back Taxes, Penalties and Jail

Posted by Admin Posted on Feb 21 2017

Inventing Income can Lead to Penalties and Jail

 

WASHINGTON — The Internal Revenue Service warns taxpayers to avoid schemes to erroneously claim tax credits on their returns.

“Taxpayers should not falsify their income or other nformation on their tax returns to improperly claim tax credits,” said IRS Commissioner John Koskinen. "Misrepresenting facts is cheating and taxpayers are legally responsible for all the information reported on their tax returns.”

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire professionals to do so.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.

Don’t Fake Income

Some people falsely increase the income they report to the IRS. This scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income, usually in order to maximize refundable credits.

Just like falsely claiming an expense or deduction you did not pay, claiming income you did not earn in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in taxpayers facing a large bill to repay the erroneous refunds, including interest and penalties. In some cases, they may even face criminal prosecution.

Taxpayers may encounter unscrupulous return preparers who make them aware of this scam. Make sure the preparer you hire is ethical and up to the task.

Choose Return Preparers Carefully

It is important to choose carefully when hiring an individual or firm to prepare your return. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to even jail time for defrauding their clients.

Here are a few tips when choosing a tax preparer:

-Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on your filed tax return.

-Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant, or attorney), belongs to a professional organization or attends continuing education classes. A number of tax law changes, including the Affordable Care Act provisions, can be complex. 
A competent tax professional needs to be up-to-date in these matters. Tax return preparers aren’t required to have a professional credential, but make sure you understand the qualifications of the preparer you select.

-Check the preparer’s qualifications.  Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool can help you find a tax return preparer with the qualifications that you prefer. The Directory is a searchable and sortable listing of certain preparers registered with the IRS. It includes the name, city, state and zip code of:

Attorneys
CPAs
Enrolled Agents
Enrolled Retirement Plan Agents
Enrolled Actuaries
Annual Filing Season Program participants

-Check the preparer’s history.  Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory. 

-Ask about service fees.  Preparers are not allowed to base fees on a percentage of their client’s refund. Also avoid those who boast bigger refunds than their competition. Make sure that your refund goes directly to you – not into your preparer’s bank account.

-Ask to e-file your return.  Make sure your preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must offer electronic filing. The IRS has processed more than 1.5 billion e-filed tax returns. It’s the safest and most accurate way to file a return.

-Provide records and receipts. Good preparers will ask to see your records and receipts. They’ll ask questions to determine your total income, deductions, tax credits and other items. Do not rely on a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.

-Make sure the preparer is available.  In the event questions come up about your tax return, you may need to contact your preparer after the return is filed. Avoid fly-by-night preparers.

-Understand who can represent you. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Non-credentialed tax return preparers can represent clients before the IRS in only limited situations, depending upon when the tax return was prepared and signed.  For all returns prepared and signed after December 31, 2015, a non-credentialed tax return preparer can represent clients before the IRS in limited situations only if the preparer is a participant in the IRS Annual Filing Season Program

-Never sign a blank return.  Don’t use a tax preparer that asks you to sign an incomplete or blank tax form.

-Review your return before signing.  Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it. -Report tax preparer misconduct to the IRS. You can report improper activities by tax return preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms on IRS.gov.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source:  IRS

Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples

Posted by Admin Posted on Feb 17 2017

Federal Tax Law for Same-Sex Married Couples

 

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) state that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. This applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

The August, 2013 ruling implements federal tax aspects of the June 26, 2013 Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act. Under the ruling, same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.

Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

Other agencies may provide guidance on other federal programs that they administer that are affected by the Code. Revenue Ruling 2013-17, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

WHICH BUSINESS TRAVEL EXPENSES CAN YOU DEDUCT?

Posted by Admin Posted on Feb 17 2017

TRAVEL EXPENSES YOU CAN DEDUCT

 

Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Generally, employees deduct these expenses by using Form 2106 (PDF), Employee Business Expenses, or Form 2106-EZ (PDF), Unreimbursed Employee Business Expenses, and Form 1040, Schedule A (PDF), Itemized Deductions. You cannot deduct expenses that are lavish or extravagant, or that are for personal purposes.

You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away.

Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that is your tax home. Your travel on weekends to your family home in Chicago is not for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.

In determining your main place of business, take into account the length of time you normally need to spend at each location for business purposes, the degree of business activity in each area, and the relative significance of the financial return from each area. However, the most important consideration is the length of time you spend at each location.

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you cannot deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you will work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes. For an exception to the 1-year rule for federal crime investigations or prosecutions, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses.

You may deduct travel expenses, including meals and lodging you incurred in looking for a new job in your present trade or business. You may not deduct these expenses if you had them while looking for work in a new trade or business or while looking for work for the first time. If you are unemployed and there is a substantial break between the time of your past work and your looking for new work, you may not deduct these expenses, even if the new work is in the same trade or business as your previous work. Refer to Publication 529, Miscellaneous Deductions.

Travel expenses for conventions are deductible if you can show that your attendance benefits your trade or business. Special rules apply to conventions held outside the North American area.

Deductible travel expenses while away from home include, but are not limited to the costs of:

-Travel by airplane, train, bus or car between your home and your business  destination. (If you are provided with a ticket or you are riding free as a result of a  frequent traveler or similar program, your cost is zero.)

-Fares for taxis or other types of transportation between the airport or train station and  your hotel, the hotel and the work location, and from one customer to another, or  from  one place of business to another.

-Shipping of baggage, and sample or display material between your regular and  temporary work locations.

-Using your car while at your business destination. You can deduct actual expenses or  the standard mileage rate, as well as business-related tolls and parking fees. If you  rent a car, you can deduct only the business-use portion for the expenses.

-Meals and lodging.

-Dry cleaning and laundry.

-Business calls while on your business trip. (This includes business communications by  fax  machine or other communication devices.)

-Tips you pay for services related to any of these expenses.

-Other similar ordinary and necessary expenses related to  your business travel.  (These  expenses might include transportation to and from a business  meal, public  stenographer's  fees, computer rental fees, and operating and maintaining a  house  trailer.)

Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel. The deduction for business meals is generally limited to 50% of the unreimbursed cost.

If you are an employee, your allowable travel expenses are figured on Form 2106 or Form 2106-EZ. Your allowable unreimbursed expenses are carried from Form 2106 or Form 2106-EZ to Form 1040, Schedule A (PDF), and are subject to a limit based on 2% of adjusted gross income. Refer to Topic 508 for information on the 2% limit. If you do not itemize your deductions, you cannot deduct these expenses. If you are self-employed, you can deduct travel expenses on Form 1040, Schedule C (PDF), Profit or Loss From Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit From Business (Sole Proprietorship), or if you are a farmer, on Form 1040, Schedule F (PDF), Profit or Loss From Farming.

If you are a member of the National Guard or military reserve, you may be able to claim a deduction for unreimbursed travel expenses paid in connection with the performance of services as a reservist that reduces your adjusted gross income rather than an itemized deduction on Form 1040, Schedule A This travel must be overnight and more than 100 miles from your home. Expenses must be ordinary and necessary. This deduction is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Claim these expenses on Form 2106 or Form 2106-EZ and carry them to the appropriate line on Form 1040. Expenses in excess of the limit can be claimed only as an itemized deduction on Form 1040, Schedule A.

Good records are essential. Refer to Topic 305 for information on recordkeeping. For more information on these and other travel expenses, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses.

 

If you have any questions regarding accounting, domestic taxation, international taxation, IRS representation, U.S. tax implications of Real Estate  transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

Very Exciting News

Posted by Admin Posted on Oct 17 2016

Lord Breakspeare Callaghan LLC

 

Dear all:

 

We have very exciting news!  Thanks to your awesome support our campaign to create awareness on tax, accounting and financial issues through our blog, social media and e-mail is growing very successfully.

And we continue to work for you harder than ever.  We are very proud to bring you  US Taxes TV , a video resource with hundreds of clips in English, Spanish, Portuguese and Sign Language loaded with information on tax, accounting and financial issues that affect you, your family and your business.

Please help us to spread the word by sharing the articles and videos, liking our Facebook page  and following us on Twitter.

Your questions and feedback are very important to us.  If you have questions regarding accounting, domestic taxation, international taxation, IRS representation and U.S. tax implications of Real Estate transactions please contact us at LBCPA.com , US Taxes TV (at the bottom of the page), sending an e-mail to BusinessRelations@lbcpa.com or by calling 305-274-5811.

Best Regards,

 

The LBC Team

LBC Team

The information provided on the LBCPA Blog is a community service for general information purposes only, and should not be used as a substitute for consultation with professional advisors who specialize in the topics covered. Please refer to your advisors for specific advice on these subjects. The information is not intended to be used, and it cannot be used, for the purposes of avoiding U.S. Federal and/or State tax laws or the tax laws of any foreign jurisdiction.

These blogs contain general information only and Lord Breakspeare Callaghan LLC or any of the other companies or firms presenting information are not providing accounting, business, financial, investment, legal, tax, or other professional advice or services. Lord Breakspeare Callaghan LLC or any of the other companies or firms contributing with articles shall not be responsible for any loss sustained by any person who relies on this information.