Archive for October, 2017

Halloween Update 10-30-17

by in Newsletter on Oct. 30, 2017

How to Know if the Knock on Your Door is Actually Someone from the IRS

October 30, 2017

Every Halloween, children knock on doors pretending they are everything from superheroes to movie stars. Scammers, on the other hand, don’t leave their impersonations to one day. They can happen any time of the year.

People can avoid taking the bait and falling victim to a scam by knowing how and when the IRS does contact a taxpayer in person. This can help someone determine whether an individual is truly an IRS employee.

Here are eight things to know about in-person contacts from the IRS.

 

  • The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
  • There are special circumstances when the IRS will come to a home or business. This includes:
    • When a taxpayer has an overdue tax bill
    • When the IRS needs to secure a delinquent tax return or a delinquent employment tax payment
    • To tour a business as part of an audit
    • As part of a criminal investigation
  • Revenue officers are IRS employees who work cases that involve an amount owed by a taxpayer or a delinquent tax return. Generally, home or business visits are unannounced.
  • IRS revenue officers carry two forms of official identification.  Both forms of ID have serial numbers. Taxpayers can ask to see both IDs.
  • The IRS can assign certain cases to private debt collectors. The IRS does this only after giving written notice to the taxpayer and any appointed representative. Private collection agencies will never visit a taxpayer at their home or business.
  • The IRS will not ask that a taxpayer makes a payment to anyone other than the U.S. Department of the Treasury.
  • IRS employees conducting audits may call taxpayers to set up appointments, but not without having first notified them by mail. Therefore, by the time the IRS visits a taxpayer at home, the taxpayer would be well aware of the audit.
  • IRS criminal investigators may visit a taxpayer’s home or business unannounced while conducting an investigation. However, these are federal law enforcement agents and they will not demand any sort of payment.

Taxpayers who believe they were visited by someone impersonating the IRS can visit IRS.gov for information about how to report it.

Monthly Newsletter for October 2016

by in Newsletter on Oct. 2, 2017

IRS Reminds Parents, Students to Explore Education Resources on IRS.gov

WASHINGTON – The Internal Revenue Service today reminded parents and students that there are many tax benefits available to them, and the easiest way to learn more about them is through the education resources available on IRS.gov.

Besides tax credits such as the American Opportunity Tax Credit and the Lifetime Learning Credit, there are other education-related tax benefits that can help reduce a taxpayer’s tax liability. Savings plans, such as 529 plans, also offer tax-free ways to save for a student’s qualified education expenses.

Deductions:

Student Loan Interest Deduction

If a taxpayer’s modified adjusted gross income (MAGI) in 2017 is less than $80,000 ($165,000 if filing a joint return), there is a special deduction allowed for paying interest on a qualified student loan used for higher education. This may include both required and voluntary interest payments. Eligible taxpayers can claim this deduction even if they don’t itemize their deductions on Form 1040 Schedule A.

  • Qualified Student Loan is a loan:
    • Taken out solely to pay qualified education expenses that were for the taxpayer, their spouse or a person who was their dependent when they took out the loan.
    • Paid or incurred within a reasonable period of time before or after the taxpayer took out the loan.
    • For education provided during an academic period for an eligible student.
    • From someone other than a relative.
    • That is not taken from a qualified employer plan.
  • Qualified Education Expenses include amounts paid for the following items:
    • Tuition and fees.
    • Room and board.
    • Books, supplies and equipment.
    • Other necessary expenses, such as transportation.

 

 

Business Deduction for Work-Related Education

A taxpayer who is an employee and can itemize their deductions may be able to claim a deduction for expenses they paid for work-related education.

For self-employed workers, deduct expenses for qualifying work-related education directly from self-employment income. This reduces the amount of income subject to both income tax and self-employment tax.

To claim a business deduction for work-related education, the taxpayer must:

  • Be working.
  • Itemize their deductions on Schedule A (Form 1040 or 1040NR), if they are an employee.
  • File Schedule C, Schedule C-EZ or Schedule F if the taxpayer is self-employed.
  • Have expenses for education that meet the requirements for qualifying work-related education.

Savings Plans:

Qualified Tuition Programs (529 Plans)

States may establish and maintain programs that allow taxpayers to either prepay or contribute to an account for paying a student’s qualified education expenses at a postsecondary institution. No tax is due on a distribution from a qualified tuition program unless the amount distributed is greater than the beneficiary’s adjusted qualified education expenses.

Qualified expenses include:

  • Required tuition and fees.
  • Books, supplies and equipment.
  • Computer or peripheral equipment, computer software and internet access and related services.
  • Room and board for those who qualify as at least half-time students.