Tuesday, March 24, 2015

It's Not A Scam: IRS Is Really Sending Out Identity Verification Letters - (Forbes)



The Internal Revenue Service (IRS) is ramping up efforts to thwart identity theft. As part of those efforts, IRS is reminding taxpayers who receive requests from the IRS to verify their identities using the Identity Verification Service website at idverify.irs.gov.
Article originally published on Forbes.com by Kelly Phillips Erb - 03/18/2015

I know: this sounds like a scam. You’re right to be suspicious. I just reported on a bogus IRS verification email scam making the rounds.
But this is legit. Pay attention, though. You’re not going to be asked to verify your identification via email. Ditto for phone calls. The IRS will not initiate contact with you to verify your identification via email or phone.
If IRS has a concern about a suspicious tax return with a real taxpayer’s name and/or Social Security number, they will send you a letter. It’s a specific letter: Letter 5071C (check the upper corner of the letter for the number). If you receive Letter 5071C, you should follow the directions and access idverify.irs.gov. If you do not receive a Letter 5071C, you do not need to access the site.
On the IRS Identity Verification Service website, you’ll be asked questions that only you can answer. This is similar to the system that some states are using to confirm refunds.
Welcome_to_the_IRS_Identity_Verification_Service
Once you verify your identity, you can confirm whether you filed the tax return IRS finds to be suspicious. If you did not file the return, IRS will help you with the next steps. If you did file the return, your return will be processed (it will take approximately six weeks) and you’ll be issued a refund, if one is due.

If you’re nervous about using the website, you can also follow the instructions in the letter to call a toll-free number. Expect to wait a bit if you’re calling the toll-free number.
When responding to the letter, you should have copies of your prior year tax return and your current year tax return, and any supporting documents, like your forms W-2 and 1099.
Opportunities for fraud are plentiful these days so be careful. Use caution when replying to correspondences. Don’t respond to email purporting to be from IRS and don’t offer up personal details on the phone. If you’re visiting an IRS web site, always look for a URL ending with .gov – not .com, .org, .net, or anything else.

Article originally published on Forbes.com by Kelly Phillips Erb - 03/18/2015

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Monday, March 9, 2015

Six Overlooked Tax Breaks for Individuals -

Confused about which credits and deductions you can claim on your 2014 tax return? You're not alone. Here are six tax breaks that you won't want to overlook.


1. State Sales and Income Taxes

Thanks to last-minute tax extender legislation passed last December taxpayers filing their 2014 returns can still deduct either state income tax paid or state sales tax paid, whichever is greater.

Here's how it works. If you bought a big ticket item like a car or boat in 2014, it might be more advantageous to deduct the sales tax, but don't forget to figure any state income taxes withheld from your paycheck just in case. If you're self-employed, you can include the state income paid from your estimated payments. In addition, if you owed taxes when filing your 2013 tax return in 2014, you can include the amount when you itemize your state taxes this year on your 2014 return.


2. Child and Dependent Care Tax Credit

Most parents realize that there is a tax credit for daycare when their child is young, but they might not realize that once a child starts school, the same credit can be used for before and after school care, as well as day camps during school vacations. This child and dependent care tax credit can also be taken by anyone who pays a home health aide to care for a spouse or other dependent--such as an elderly parent--who is physically or mentally unable to care for him or herself. The credit is worth a maximum of $1,050 or 35 percent of $3,000 of eligible expenses per dependent.


3. Job Search Expenses

Job search expenses are 100 percent deductible, whether you are gainfully employed or not currently working--as long as you are looking for a position in your current profession. Expenses include fees paid to join professional organizations, as well as employment placement agencies that you used during your job search. Travel to interviews is also deductible (as long as it was not paid by your prospective employer) as is paper, envelopes, and costs associated with resumes or portfolios. The catch is that you can only deduct expenses greater than 2 percent of your adjusted gross income (AGI). Also, you cannot deduct job search expenses if you are looking for a job for the first time.


4. Student Loan Interest Paid by Parents

Typically, a taxpayer is only able to deduct interest on mortgage and student loans if he or she is liable for the debt; however, if a parent pays back their child's student loans that money is treated by the IRS as if the child paid it. As long as the child is not claimed as a dependent, he or she can deduct up to $2,500 in student loan interest paid by the parent. The deduction can be claimed even if the child does not itemize.


5. Medical Expenses

Most people know that medical expenses are deductible as long as they are more than 10 percent of Adjusted Gross Income (AGI) for tax year 2014. What they often don't realize is what medical expenses can be deducted, such as medical miles (23.5 cents per mile) driven to and from appointments and travel (airline fares or hotel rooms) for out of town medical treatment.

Other deductible medical expenses that taxpayers might not be aware of include health insurance premiums, prescription drugs, co-pays, and dental premiums and treatment. Long-term care insurance (deductible dollar amounts vary depending on age) is also deductible, as are prescription glasses and contacts, counseling, therapy, hearing aids and batteries, dentures, oxygen, walkers, and wheelchairs.

If you're self-employed, you may be able to deduct medical, dental, or long term care insurance. Even better, you can deduct 100 percent of the premium. In addition, if you pay health insurance premiums for an adult child under age 27, you may be able to deduct those premiums as well.


6. Bad Debt

If you've ever loaned money to a friend, but were never repaid, you may qualify for a non-business bad debt tax deduction of up to $3,000 per year. To qualify however, the debt must be totally worthless, in that there is no reasonable expectation of payment.

Non-business bad debt is deducted as a short-term capital loss, subject to the capital loss limitations. You may take the deduction only in the year the debt becomes worthless. You do not have to wait until a debt is due to determine whether it is worthless. Any amount you are not able to deduct can be carried forward to reduce future tax liability.

Are you getting all of the tax credits and deductions that you are entitled to? Maybe you are...but maybe you're not. Why take a chance? Call the office today and make sure you get all of the tax breaks you deserve.