e-News for Tax Professionals Issue 2017-24

Source: e-News for Tax Professionals Issue 2017-24

 

.  New Phone Scam Involves Bogus Certified Letters

Beware of a new scam linked to the Electronic Federal Tax Payment System (EFTPS), in which fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country.

 

2.  Orlando IRS Tax Forum Registration Deadline Is June 27

Tax professionals who want to attend the IRS Nationwide Tax Forum in Orlando, Fla., can save $115 by registering now. Enrolled agents, certified public accountants, certified financial planners, Annual Filing Season Program (AFSP) participants and other tax professionals can register at the standard rate of $255 through June 27. Attendees registering after that date will pay $370. The Orlando Nationwide Tax Forum takes place July 11 to 13

 

  1. IRS Adds New Features to Taxpayer Online Account

The Internal Revenue Service has added several new features to the online account tool first introduced last year. Taxpayers may now view up to 18 months of payment history, view payoff amounts and tax balance due amounts for individual tax years and more

 

  1. Extended Maintenance Window for Modernized e-File this Weekend

The maintenance build window for the Modernized e-File Production Environment is being extended on Sunday, June 18. The system will be unavailable from 1 a.m. until 12 pm ET. This build will deploy critical system updates.

 

5.  IRS Delays E-Services System Upgrade

The planned move of IRS e-Services to a new platform has been delayed until later this summer. Tax professionals should be advised the planned e-Services outage for June 15-19 has been cancelled. In addition, state users will be able to submit new or update existing state e-file coordinator applications and TDS applications until the upgrade begins later this summer.

A revised schedule for the planned upgrade will be provided.

IRS Tax Tip 2017-47: Tax Tips to Help You Determine What Makes a Gift Taxable

Source: IRS Tax Tip 2017-47: Tax Tips to Help You Determine What Makes a Gift Taxable

 

Issue Number:    IRS Tax Tip 2017-47


Tax Tips to Help You Determine What Makes a Gift Taxable

Taxpayers who give money or property to others may wonder about the federal gift tax and if it applies. Most gifts are not subject to the gift tax.

Here are seven tax tips about the gift tax and giving:

1. Nontaxable Gifts. The general rule is that any gift is potentially taxable. However, there are exceptions to this rule. The following are nontaxable gifts:

  • Gifts that do not exceed the annual exclusion amount for the calendar year,
  • Tuition or medical expenses a taxpayer pays directly to a medical or educational institution for another person,
  • A taxpayer’s gifts to their spouse,
  • Gifts to a political organization for its use, and
  • Gifts to charities.

2. Annual Exclusion. For 2016, the annual exclusion amount is $14,000. Most gifts are not subject to the gift tax. For example, there is usually no tax if the taxpayer makes a gift to their spouse or to a charity. If a taxpayer makes a gift to another person, the gift tax usually does not apply until the value of the gift exceeds the annual exclusion amount for the year.

3. No Tax on Recipient. Generally, the person who receives the gift will not have to pay tax on it.

4. Gifts Not Deductible. Making a gift does not ordinarily affect the taxpayer’s situation. A taxpayer cannot deduct the value of gifts they make (other than deductible charitable contributions as subject to the tax code).

5. Forgiven Debt and Certain Loans. Taxpayers who forgive debt or make a loan interest-free or below the applicable market interest rate may be subject to the gift tax.

6. Gift-Splitting. A taxpayer and their spouse can give up to $28,000 to a third party without making that gift taxable. Taxpayers need to consider one-half of the gift as from them and one-half given by their spouse.

7. Filing Requirement. Taxpayers need to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if any of the following apply:

  • The taxpayer gave gifts to at least one person (other than their spouse) that amounts to more than the annual exclusion for the year.
  • The taxpayer and their spouse are splitting a gift. This is true even if half of the split gift is less than the annual exclusion.
  • If the taxpayer gave a person (other than their spouse) a gift of a future interest that the recipient can’t actually possess, enjoy, or from which that person will receive income later.
  • A taxpayer gifting their spouse an interest in property that will terminate due to a future event.

For more information, see Publication 559, Survivors, Executors and Administrators. Taxpayers can view, download and print tax products on IRS.gov/forms anytime.

 

IR-2017-72, IRS Reminder to Taxpayers Who Haven’t Filed 2013 Returns: Time is Running Out; Agency has $1 Billion in Refunds

Source: IR-2017-72, IRS Reminder to Taxpayers Who Haven’t Filed 2013 Returns: Time is Running Out; Agency has $1 Billion in Refunds

 

Issue Number:    IR-2017-72

IRS Reminder to Taxpayers Who Haven’t Filed 2013 Returns: Time is Running Out; Agency has $1 Billion in Refunds

IRS YouTube Videos: Refund: Claim It or Lose It – English |Spanish | ASL

 WASHINGTON — The Internal Revenue Service reminded taxpayers 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. But time is running out. To claim this money, taxpayers must file a 2013 federal tax return by April 18, 2017.

 

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. The law requires them to properly address mail and postmark the tax return by April 18.

 

Some people, such as students and part-time workers, may not have filed because they had too little income to require them to file a tax return. They may have a refund waiting if they had taxes withheld from their wages or made quarterly estimated tax payments. Some taxpayers could also qualify for certain tax credits, such as the Earned Income Tax Credit (EITC), but they need to file a tax return to claim the credit.

 

Low- and moderate-income workers whose incomes fall below certain limits often qualify for the EITC, which for 2013 was worth as much as $6,044. The income limits 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.

 

There is no penalty for filing a late return for those receiving refunds. The IRS estimates that half the potential unclaimed refunds are worth more than $763.

 

The IRS may hold 2013 refunds if taxpayers have not filed tax returns for 2014 and 2015. The U.S. Treasury will apply the refund to any federal or state tax owed. Refunds may also be held to offset unpaid child support or past due federal debts such as student loans. 

 

Current and prior year tax forms and instructions are available on IRS.gov.

 

Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for tax 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.

 

See state-by-state estimates of individuals who may be due 2013 tax refunds and learn more about unclaimed refunds at IRS.gov.

IRS Tax Tip 2017- 40: Need More Time to Pay Taxes?

Source: IRS Tax Tip 2017- 40: Need More Time to Pay Taxes?

 

Issue Number:    IRS Tax Tip 2017- 40


Need More Time to Pay Taxes?

All taxpayers should file on time, even if they can’t pay what they owe. This saves them from potentially paying a failure to file penalty. Taxes are due by the original due date of the return.

Here are four tips for those who can’t pay their taxes in full by the April 18 due date:

  1. File on time and pay as much as possible. Pay online, by phone, with your mobile device using the IRS2Go app, or by check or money order. Visit IRS.gov for electronic payment options.
  2. Get a loan or use a credit card to pay the tax. The interest and fees charged by a bank or credit card company may be less than IRS interest and penalties. For credit card options, see IRS.gov.
  3. Use the Online Payment Agreement tool.  Don’t wait for the IRS to send a bill before seeking a payment plan. The best way is to use the Online Payment Agreement tool on IRS.gov. Taxpayers can also file Form 9465, Installment Agreement Request, with their tax return. Set up a direct debit agreement. With this type of payment plan, there is no need to send a check each month.
  4. Don’t ignore a tax bill.  If so, the IRS may take collection action. Contact the IRS right away by calling the phone number on your bill to talk about options. The IRS will work with taxpayers suffering financial hardship.

Remember to file on time. Pay as much as possible by April 18, 2017, and pay the rest as soon as possible to reduce the interest and penalties. Find out more about the IRS collection process 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.

IRS YouTube Videos:

IR-2017-73, Avoid Common Tax-Filing Errors

Source: IR-2017-73, Avoid Common Tax-Filing Errors

 

Issue Number:    IR-2017-73

Avoid Common Tax-Filing Errors; IRS Encourages e-filing, Careful Review

 

 

WASHINGTON — As the April 18 income tax filing deadline approaches, millions of taxpayers may be rushing to complete their taxes and many may realize they’re going to need more time. The IRS encourages taxpayers to take extra time to complete their tax return if needed.

 

Rushing to complete a tax return at the last minute can result in mistakes. Making a mistake on a tax return means it will likely take longer for the IRS to process it. That could delay a tax refund. Avoid many common errors by filing electronically. IRS e-file is the most accurate way to file your tax return. Seven out of ten taxpayers can use IRS Free File software at no cost.

 

Here are more helpful tips to avoid some common tax-filing

errors:

 

File electronically. Filing electronically, whether through e-file

or IRS Free File, vastly reduces tax return errors, as the tax software does the calculations, flags common errors and

prompts taxpayers for missing information.

Mail a paper return to the right address. Paper filers should check IRS.gov or their tax form instructions for the appropriate address where to file to avoid processing delays.

Take a close look at the tax tables. When figuring tax using

the tax tables, taxpayers should be sure to use the correct

column for the filing status claimed.

Fill in all requested information clearly. When entering information on the tax return, including Social Security numbers, take the time to be sure it is accurate and easy to read. Also, check only one filing status and the appropriate exemption

boxes.

Review all figures. While software catches and prevents many errors on e-file returns, math errors remain common on paper returns.

Get the right routing and account numbers. Requesting

direct deposit of a federal tax refund into one, two or even three accounts is convenient and allows the taxpayer access to their money faster. Make sure the financial institution routing and account numbers entered on the return are accurate. Incorrect numbers can cause a refund to be delayed or deposited into the wrong account.

Sign and date the return. If filing a joint return, both spouses must sign and date the return. When filing an individual tax

return electronically, taxpayers must electronically sign the tax return using a personal identification number (PIN): either the

Self-Select PIN or the Practitioner PIN method.

Attach all required forms. Paper filers need to attach W-2s

and other forms to the front of their returns that reflect tax withholding. If requesting a payment agreement with the IRS,

also attach Form 9465 to the front of the return. Attach all other necessary schedules and forms to the upper right-hand corner

of the tax form in the order shown in the instructions..

Keep a copy of the return. Once ready to be filed, taxpayers should make a copy of their signed return and all schedules for their records.

Request a filing extension. For taxpayers who cannot meet

the April 18 deadline, requesting a filing extension is easy and

will prevent late-filing penalties. Either use Free File or

Form 4868.

But keep in mind that while an extension grants additional time to file, tax payments are still due on April 18.

Owe tax? If so, a number of e-payment options are available.

Or send a check or money order payable to the “U.S. Treasury.”

IRS Tax Tip 2017-36: Are Tips Taxable? IRS Offers ‘Tips’ on Tips

Source: IRS Tax Tip 2017-36: Are Tips Taxable? IRS Offers ‘Tips’ on Tips

Are Tips Taxable? IRS Offers ‘Tips’ on Tips

Generally, income received in the form of tips is taxable. The IRS provides some information that helps taxpayers report tip income correctly:

  • Interactive Tax Assistant Tool. The ITA tool is a tax-law resource that asks taxpayers a series of questions and provides a response based on the answers. Taxpayers can use Is My Tip Income Taxable?.
  • Show all tips on a tax return. Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of any unreported tip income to include as additional wages. This includes the value of non-cash tips such as tickets, passes or other items.
  • All tips are taxable. Pay tax on all tips received during the year. This includes tips directly from customers and tips added to credit cards. This also includes  tips received from a tip-splitting agreement with other employees.
  • Report tips to an employer. If employees receive $20 or more in any month, they must report their tips for that month to their employer by the 10th day of the next month. Include cash, check and credit card tips received. The employer must withhold federal income, Social Security and Medicare taxes on the reported tips.
  • Keep a daily log of tips. Use Publication 1244, Employee’s Daily Record of Tips and Report to Employer, to record tips. This will help report the correct amount of tips on a tax return.

For more on this topic, see Tip Recordkeeping & Reporting and Publication 531, Reporting Tip Income, on IRS.gov.

IR-2017-16: IRS Answers Common Early Tax Season Refund Questions and Addresses Surrounding Myths

Source: IR-2017-16: IRS Answers Common Early Tax Season Refund Questions and Addresses Surrounding Myths

 

IRS Answers Common Early Tax Season Refund Questions and Addresses Surrounding Myths

IRS YouTube Videos

WASHINGTON — As millions of people begin filing their tax returns, the Internal Revenue Service reminded taxpayers about some basic tips to keep in mind about their refunds.

During the early parts of the tax season, early filers are anxious to get details about their tax refunds. And in some social media, this can lead to misunderstandings and speculation about refunds. The IRS offers some tips to keep in mind.

Myth 1: All Refunds Are Delayed

While more than 90 percent of federal tax refunds are issued in the normal timeframe – less than 21 days – it is true some refunds may be delayed – but not all of them. Recent legislation requires the IRS to hold refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Other returns may require additional review for a variety of reasons and take longer. For example, the IRS, along with its partners in the state’s and the nation’s tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud. The IRS encourages taxpayers to file as they normally would.

Myth 2: Calling the IRS or My Tax Professional Will Provide a Better Refund Date

Many people mistakenly think that talking to the IRS or calling their tax professional is the best way to find out when they will get their refund. In reality, 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.

Taxpayers eager to know when their refund will be arriving should use the “Where’s My Refund” tool rather than calling 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 the refund tool.

Myth 3: Ordering a Tax Transcript a “Secret Way” to Get a Refund Date

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.

Myth 4: “Where’s My Refund,” Must be Wrong Because There’s No Deposit Date Yet

Where’s My Refund? ‎on both IRS.gov and the IRS2Go mobile app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers claiming EITC or ACTC will not see a refund date on Where’s My Refund? ‎or through their software package until then. The IRS, tax preparers and tax software will not have additional information on refund dates.

The IRS cautions taxpayers that 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. This additional period is due to several factors, including banking and financial systems needing time to process deposits. Taxpayers who have filed early in the filing season, but are claiming EITC or ACTC, should not expect their refund until the week of Feb. 27. The IRS reminds taxpayers that President’s Day weekend may impact when they get their refund since many financial institutions do not process payments on weekends or holidays.

See the What to Expect for Refunds in 2017 page and the Refunds FAQs page for more information.

Myth 5: Delayed Refunds, those Claiming EITC and/or ACTC, will be Delivered on Feb. 15

By law, the IRS cannot issue refunds before Feb. 15 for any tax return claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC). The IRS must hold the entire refund, not just the part related to the EITC or ACTC. The IRS will begin to release these refunds starting Feb. 15.

These refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27. This is true as long as there is no additional review of the tax return required and the taxpayer chose direct deposit. Banking and financial systems need time to process deposits, which can take several days. .

More Information About “Where’s My Refund”

“Where’s My Refund?” can be checked within 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 reminds taxpayers claiming the EITC or the ACTC that recent legislation requires the IRS to hold those refunds until mid-February. Keep in mind that only a small percentage of total filers will fall into this situation. The change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent tax fraud.

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. More than four out of five tax returns are expected to be filed electronically, with a similar proportion of refunds issued through direct deposit.

Help for Taxpayers

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov. Taxpayers can also, if eligible, receive help from a community volunteer. Go to IRS.gov and click on the “Filing” tab for more information.

Seventy percent of the nation’s taxpayers are eligible for IRS Free File. Commercial IRS partners offer free brand-name software to about 100 million individuals and families with incomes of $64,000 or less.

Online fillable forms provides electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to irs.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider.

The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice about the ever-changing tax code. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.