The Indian Panorama

Tag: Tax

  • Special Saturday help available April 13 at 70 IRS Taxpayer Assistance Centers nationwide; no appointment needed

    Special Saturday help available April 13 at 70 IRS Taxpayer Assistance Centers nationwide; no appointment needed

    WASHINGTON, D.C. (TIP):  As the April 15 federal tax filing deadline nears, the Internal Revenue Service, on April 8,  announced it will open more than 70 Taxpayer Assistance Centers (TACs) around the country on Saturday, April 13, for face-to-face help. This special help is available from 9 a.m. to 4 p.m. local time.

    At TACs, people meet face-to-face with IRS employees to get help with tax account issues, such as authenticating someone’s identity, asking about account adjustments and making payments by check or money order. The IRS plans one additional special Saturday opening on May 18.

    “IRS employees have been working hard throughout this tax season to help taxpayers, and the special Saturday hours are one more way we’ve expanded our services,” said IRS Commissioner Danny Werfel. “With the help of additional funding through the Inflation Reduction Act, we’ve been able to serve more taxpayers and provide additional assistance. For these special Saturday sessions, we encourage taxpayers to plan ahead so they have the right information. Frequently, taxpayers can get the help they need by visiting IRS.gov.”

    Before travelling to an office, the IRS encourages everyone to visit the event page IRS face-to-face Saturday help to get current information. The IRS notes representatives can’t accept cash payments during the special Saturday openings, and tax return preparation is not an available service.

    The IRS has online resources for many common tax situations, including several tools for making payments, getting an extension to file and setting up installment agreements. Taxpayers can make payments using their personal financial accounts, debit or credit cards and even digital wallets using tools on IRS.gov.

    Tips for taxpayers planning a visit

    Individuals should bring the following documents when they visit IRS Taxpayer Assistance Centers:

    Current government-issued photo identification, along with a second form of identification for identity verification services. Social Security or Individual Taxpayer Identification numbers for themselves and all members of their household, including their spouse and dependents (if applicable).

    Any IRS letters or notices received and related documents.

    A copy or digital image of the tax return in question if one was filed.

    The IRS noted that because appointments aren’t necessary for these special Saturday hours, some locations may see high demand and wait times can be longer than usual. To help with this and avoid delays, the IRS encourages people to plan ahead, review key tips and come prepared with needed information. IRS employees will be working hard to serve as many people as quickly as possible.

    Extended office hours on Tuesdays and Thursdays

    During the filing season, the IRS has also been providing extended office hours at many TACs nationwide. The added hours will end on Tuesday, April 16. To see if a nearby office is participating in the program, check its listing on the IRS/taclocator. Taxpayers can walk in or make appointments for service during extended hours. Cash payments are accepted during the additional office time, but taxpayers must have an appointment at a TAC currently accepting cash.

    Normally, TACs are open Monday through Friday, 8:30 a.m. to 4:30 p.m., and provide service by appointment only. To make an appointment, call 844-545-5640.

    Services provided

    The IRS’s Contact Your Local Office site lists all services provided at specific TACs. Tax return preparation is not a service offered at IRS TACs during these events or any operating hours. The IRS will provide information to anyone needing to find free local tax preparation resources. Additionally, File your return on IRS.gov gives step-by-step information on how to file individual tax returns.

    If someone has questions about a tax bill or IRS audit, or if they need help resolving a tax problem, they’ll receive assistance from IRS employees specializing in those services. If these employees aren’t available, the individual will receive a referral for these services. IRS Taxpayer Advocate Service employees may also be available to help with some issues.

    Professional foreign language interpretation will be available in many languages through an over-the-phone translation service. For deaf or hard of hearing individuals who need sign language interpreter services, IRS staff will schedule appointments for a later date. Alternatively, these individuals can call TTY/TDD 800-829-4059 to make an appointment.

    During the visit, IRS staff may also request the following information:

    A current mailing address,

    Proof of financial account information included on a tax return to receive payments or refunds by direct deposit.

    Tax return preparation options

    While tax return preparation is not a service offered at IRS TACs, information will be shared about available local free tax preparation options. Help is also available using the following services:

    Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax return preparation help, use the VITA Locator Tool or call 800-906-9887.

    To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.

    Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish.

    Free File Fillable Forms are electronic federal tax forms, equivalent to a paper 1040 form. Taxpayers should know how to prepare their own tax return using form instructions and IRS publications, if needed. Anyone, regardless of income, can use the forms. They are a free option for those whose AGI is greater than $79,000.

    MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members, and some veterans, with no income limit.

    IRS Direct File. Eligible taxpayers can file 2023 federal tax returns online, for free, directly with the IRS. Direct File is available to taxpayers who live in one of the 12 participating pilot states and report certain types of income, deductions and credits. Taxpayers can check their eligibility at directfile.irs.gov to see if Direct File is the right option for them. Once they’ve started their return, taxpayers can pause and sign back into IRS Direct File securely to complete it any time before the April filing deadline.

    Help available 24/7 at IRS.gov

    The fastest and easiest way for people to get the help they need is through IRS.gov. Go to IRS.gov for more information. Available resources include:

    Where’s My Refund?, check refund status and estimated delivery date.

    Get Transcript, view and print a tax transcript online.

    Payments, get information on a variety of payment methods, including cash.

    Direct Pay, make tax payments or estimated tax payments for free from a checking or savings account.

    Electronic Federal Tax Payment System, individuals or businesses can make all types of federal tax payments.

    Online Payment Agreement, set up installment payments to pay taxes owed.

    Where’s My Amended Return?, track the status of an amended return.

    Interactive Tax Assistant and FAQs, get answers to many tax law questions.

    All IRS Forms and Publications, find and download current tax forms, instructions and publications. Those without access to the internet can call 800-829-3676 to order tax forms by mail.

    For additional information on available services, see IRS Publication 5136, IRS Services Guide.

  • Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    WASHINGTON D.C. (TIP): In the sixth part of the “Dirty Dozen” tax scams for 2024, the Internal Revenue Service warned taxpayers about groups masquerading as charitable organizations to attract donations from unsuspecting contributors. In natural disasters and other tragic events, it’s common for compassionate individuals to donate money to help the victims. Unfortunately, scammers often use fake charities as a cover to not only obtain money but also gather sensitive personal and financial information that can be exploited for tax-related identity fraud.

    “We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers,” said IRS Commissioner Danny Werfel. “In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information. People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

    Fake charities mark day six of the Dirty Dozen. Started in 2002, the IRS’ annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including fake charities.

    As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including fake charities.

    Real tragedies; fake charities

    During times of disasters, fake charities become a concern. These deceitful organizations are created by scammers who take advantage of people’s generosity. They solicit money and personal information to victimize individuals through identity theft.

    When taxpayers decide to contribute funds or goods to an organization, they may qualify for a deduction on their tax return, but only if they itemize their deductions. It is important to remember that charitable donations are valid when directed toward IRS-recognized tax-exempt organizations. Individuals intending to donate can utilize the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to ensure legitimacy.

    Beware of scammers who might use email communications or manipulate caller IDs to deceive people into donating funds to charities. These fraudsters often target groups such as seniors and those with limited English proficiency.

    Here are some helpful tips to avoid getting scammed:

    Don’t give in to pressure. Scammers often create situations to get people to make payments. Genuine charities are always grateful for donations. Donors should take their time and research before making a charitable contribution.
    Exercise caution when making donation payments. Avoid any charity that requests gift card numbers or wire transfers. It’s better to pay by credit card or check after ensuring the charity’s authenticity.
    Verify the legitimacy of the charity. Scammers often use similar-sounding names for charities to confuse people. Before donating, potential donors need to ask the fundraiser for the charity’s name, website and mailing address so they can independently verify its authenticity. Use the special IRS TEOS tool to verify if an organization is a legitimate tax-exempt charity.
    Avoid sharing too much information. Scammers are always on the lookout for both money and personal data. Never disclose Social Security numbers, credit card numbers or Personal Identification Numbers. Only provide bank or credit card details after confirming the charity’s legitimacy.
    Report fraud

    As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS encourages individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

    To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:
    Internal Revenue Service Lead Development Center
    Stop MS5040
    24000 Avila Road
    Laguna Niguel, California 92677 3405
    Fax: 877 477 9135

    Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive Tax Schemes and Abusive Tax Return Preparers.

  • Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    WASHINGTON D.C. (TIP): In the sixth part of the “Dirty Dozen” tax scams for 2024, the Internal Revenue Service warned taxpayers about groups masquerading as charitable organizations to attract donations from unsuspecting contributors. In natural disasters and other tragic events, it’s common for compassionate individuals to donate money to help the victims. Unfortunately, scammers often use fake charities as a cover to not only obtain money but also gather sensitive personal and financial information that can be exploited for tax-related identity fraud.

    “We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers,” said IRS Commissioner Danny Werfel. “In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information. People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

    Fake charities mark day six of the Dirty Dozen. Started in 2002, the IRS’ annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including fake charities.

    As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including fake charities.

    Real tragedies; fake charities

    During times of disasters, fake charities become a concern. These deceitful organizations are created by scammers who take advantage of people’s generosity. They solicit money and personal information to victimize individuals through identity theft.

    When taxpayers decide to contribute funds or goods to an organization, they may qualify for a deduction on their tax return, but only if they itemize their deductions. It is important to remember that charitable donations are valid when directed toward IRS-recognized tax-exempt organizations. Individuals intending to donate can utilize the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to ensure legitimacy.

    Beware of scammers who might use email communications or manipulate caller IDs to deceive people into donating funds to charities. These fraudsters often target groups such as seniors and those with limited English proficiency.

    Here are some helpful tips to avoid getting scammed:

    Don’t give in to pressure. Scammers often create situations to get people to make payments. Genuine charities are always grateful for donations. Donors should take their time and research before making a charitable contribution.
    Exercise caution when making donation payments. Avoid any charity that requests gift card numbers or wire transfers. It’s better to pay by credit card or check after ensuring the charity’s authenticity.
    Verify the legitimacy of the charity. Scammers often use similar-sounding names for charities to confuse people. Before donating, potential donors need to ask the fundraiser for the charity’s name, website and mailing address so they can independently verify its authenticity. Use the special IRS TEOS tool to verify if an organization is a legitimate tax-exempt charity.
    Avoid sharing too much information. Scammers are always on the lookout for both money and personal data. Never disclose Social Security numbers, credit card numbers or Personal Identification Numbers. Only provide bank or credit card details after confirming the charity’s legitimacy.
    Report fraud

    As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS encourages individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

    To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:
    Internal Revenue Service Lead Development Center
    Stop MS5040
    24000 Avila Road
    Laguna Niguel, California 92677 3405
    Fax: 877 477 9135

    Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive Tax Schemes and Abusive Tax Return Preparers.

  • Dirty Dozen: Beware of Offer in Compromise ‘mills’ that falsely claim their services are necessary to resolve IRS debt

    Dirty Dozen: Beware of Offer in Compromise ‘mills’ that falsely claim their services are necessary to resolve IRS debt

    April 3, 2024

    WASHINGTON, D.C. (TIP):  As part of the annual Dirty Dozen list of tax scams, the Internal Revenue Service, on April 3,  renewed its warning to taxpayers concerning pricey Offer in Compromise (OIC) “mills” that aggressively mislead taxpayers into thinking their tax debts can disappear.

    As in past years, companies running OIC mills continue heavily advertising their promises to settle taxpayer debt at steep discounts for pennies on the dollar. While OIC is a legitimate IRS program, many taxpayers do not meet the technical requirements for the tax resolution program, often leaving them facing excessive fees from the promoters for information they could have easily obtained for free by using the IRS’s Offer in Compromise Pre-Qualifier tool.

    The OIC is a valuable IRS program to help taxpayers who cannot pay their federal tax debts, and some companies offer legitimate services. But the IRS encourages individuals to take a few minutes to assess the information available on IRS.gov to determine if they meet the eligibility criteria for the OIC program and to avoid hiring expensive promoters.

    “Taxpayers need to be cautious with aggressive marketing around the Offer in Compromise program that can mislead taxpayers,” said IRS Commissioner Danny Werfel. “These mills try to pull in steep fees while raising false expectations and exploiting vulnerable individuals with promises that tax debt can magically disappear.”

    “The program is legitimate, but it’s not for everyone,” Werfel added. “The IRS wants to help taxpayers who qualify for this program, but there are very specific requirements for people to qualify. A good first step is for taxpayers to take a few minutes and explore our free resources on IRS.gov. They can find out if they might qualify for this program – and at the same time avoid paying someone a hefty fee.”

    OIC mills are the focus of the fifth news release in the Dirty Dozen series. Started in 2002, the IRS’ annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

    Beware of Offer in Compromise mills

    An OIC is a legitimate IRS program that allows qualifying taxpayers to work with the IRS to settle a tax debt for less than the full amount owed. It is an option for those who may be unable to pay their full tax liability, or if doing so creates a financial hardship. In determining eligibility, the IRS considers the taxpayer’s unique situation. The OIC agreement occurs directly between the taxpayer and the IRS without a third party.

    Taxpayers, however, should be cautious of OIC mills, which make exaggerated claims through radio and TV ads about settling tax debts inexpensively. In reality, these mills often charge excessive fees, and taxpayers end up paying for a service they could have obtained for free directly from the IRS.

    The IRS urges individuals to spend a few minutes reviewing information on IRS.gov to determine if they may be eligible for the OIC program by using the IRS’s Offer in Compromise Pre-Qualifier tool for free.

    The IRS also reminds taxpayers about the First Time Penalty Abatement policy, where taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.

    Help others: Report fraud, scams and schemes

    The IRS encourages taxpayers to report any individuals promoting improper, abusive or fraudulent tax schemes, as well as tax return preparers who deliberately prepare improper or fraudulent returns.

    To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:

    Internal Revenue Service Lead Development Center

    Stop MS5040

    24000 Avila Road

    Laguna Niguel, California 92677-3405

    Fax: 877-477-9135

    Additionally, taxpayers and tax practitioners may submit their report of improper or fraudulent practices to the IRS Whistleblower Office, which may offer a possible monetary award.

    To learn more about avoiding becoming a victim of tax preparation schemes and fraud, please see Abusive Tax Schemes and Abusive Tax Return Preparers on IRS.gov.

  • Get ahead of the tax deadline; act now to file, pay or request an extension

    Get ahead of the tax deadline; act now to file, pay or request an extension

    April 2, 2024

    WASHINGTON, D.C. (TIP): With the April 15 tax deadline approaching, the IRS reminds taxpayers there is still time to file their federal income tax return electronically and request direct deposit.

    Filing electronically reduces tax return errors as tax software does the calculations, flags common errors and prompts taxpayers for missing information. Most people qualify for electronic filing at no cost and, when they choose direct deposit, receive their refund within 21 days.

    Free electronic filing options

    Taxpayers with income of $79,000 or less in 2023 can use IRS Free File guided tax software now through Oct 15. IRS Free Fillable forms, a part of this program, is available at no cost to taxpayers of any income level and provides electronic forms for people to fill out and e-file themselves.

    IRS Direct File is now open to all eligible taxpayers in 12 pilot states to decide if it is the right option for them to file their 2023 federal tax returns online, for free, directly with the IRS. Go to the Direct File website for more information about Direct File pilot eligibility and the 12 participating states.

    Through a network of community partnerships, the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free tax return preparation to eligible people in the community by IRS certified volunteers.

    MilTax, a Department of Defense program, generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

    Use ‘Where’s My Refund?’ to check refund status

    The Where’s My Refund? tool will normally show a refund status within 24 hours after e-filing a 2023 tax return, three to four days after e-filing a 2021 or 2022 return and four weeks after filing a tax return by mail. To use the tool, taxpayers need their Social Security number, filing status and exact refund amount. Taxpayers can also check ‘Where’s My Refund?’ by downloading our free mobile app, IRS2Go, from an iPhone or Android device. The tool updates once a day, so people don’t need to check more often.

    Taxpayers that owe on their tax return

    IRS reminds people they can avoid paying interest and some penalties by filing their tax return and, if they have a balance due, paying the total amount due by the tax deadline of Monday, April 15. For residents of Maine or Massachusetts, the tax deadline is Wednesday, April 17, due to Patriot’s Day and Emancipation Day holidays.

    Payment options for individuals to pay in full

    The IRS offers various options for taxpayers who are making tax payments:

    Direct Pay – Make a payment directly from a checking or savings account without any fees or registration.

    Pay with debit card, credit card or digital wallet – Make a payment directly from a debit card, credit card or digital wallet. Processing fees are paid to the payment processors. The IRS doesn’t receive any fees for these payments. Authorized card processors and phone numbers are available at IRS.gov/payments.

    Electronic Federal Tax Payment System (EFTPS) –This free service gives taxpayers a safe, convenient way to pay individual and business taxes by phone or online. To enroll and for more information, taxpayers can call 800-555-4477 or visit eftps.gov. Electronic funds withdrawal – Taxpayers can file and pay electronically from their bank account when using tax preparation software or a tax professional. This option is free and only available when electronically filing a tax return.

    Check or money order –Payments made by check or money order should be made payable to the “United States Treasury.”

    Cash – Make a cash payment through a retail partner and other methods. The IRS urges taxpayers choosing this option to start early because it involves a four-step process. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.

    Payment options for individuals unable to pay their taxes in full

    Taxpayers that are unable to pay in full by the tax deadline, should pay what they can now and apply for an online payment plan. They can receive an immediate response of payment plan acceptance or denial without calling or writing to the IRS. Online payment plan options include:

    Short-term payment plan –The total balance owed is less than $100,000 in combined tax, penalties and interest. Additional time of up to 180 days to pay the balance in full.

    Long-term payment plan – The total balance owed is less than $50,000 in combined tax, penalties and interest. Pay in monthly payments for up to 72 months. Payments may be set up using direct debit (automatic bank withdraw) which eliminates the need to send in a payment each month, saving postage costs and reducing the chance of default. For balances between $25,000 and $50,000, direct debit is required.

    Though interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the failure to pay penalty is cut in half while an installment agreement is in effect. Find more information about the costs of payment plans on the IRS’ Additional Information on Payment Plans webpage.

    Unable to file by the April 15 deadline?

    Individuals unable to file their tax return by the tax deadline can apply for a tax-filing extension in the following ways:

    Individual tax filers, regardless of income, can electronically request an automatic tax-filing extension through IRS Free File by filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

    Make an electronic payment using Direct Pay, debit card, credit card or digital wallet and indicate the payment is for an extension.

    Mail Form 4868 by the tax deadline.

    Things people should know when requesting a tax-filing extension:

    Tax-filing extension requests are due by the tax deadline date, and it does not give an extension of time to pay the taxes.

    Avoid some penalties by estimating and paying the tax due by the tax deadline.

    Special rules for tax deadlines and automatic tax-filing extensions may apply for taxpayers serving in a combat zone or qualified hazardous duty areas, living outside the United States, and people living in certain disaster areas. They may not need to submit a tax-filing extension; however, people should check to see if they qualify before the tax deadline.

    Use IRS.gov for the quickest and easiest information

    Taxpayers can visit IRS.gov 24 hours a day for answers to tax questions, more tips and resources by visiting the Let Us Help You page.

  • IRS warns against ‘ghost’ tax return preparers

     

    WASHINGTON  (TIP): With the start of the 2020 tax filing season near, the Internal Revenue Service is reminding taxpayers to avoid unethical “ghost” tax return preparers.

    According to the IRS, a ghost preparer does not sign a tax return they prepare. Unscrupulous ghost preparers will print the return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer.

    By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.

    Ghost tax return preparers may also:

    • Require payment in cash only and not provide a receipt.
    • Invent income to qualify their clients for tax credits.
    • Claim fake deductions to boost the size of the refund.
    • Direct refunds into their bank account, not the taxpayer’s account.

    The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

    Free basic income tax return preparation with e-file is available to qualified individuals from IRS-certified volunteers at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites across the country. For more information and to find the closest visit Free Tax Return Preparation for Qualifying Taxpayers on IRS.gov

    No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for ghost preparers inserting their bank account information onto the returns.

    Taxpayers can report preparer misconduct to the IRS using IRS Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

     

  • New tax law allows small businesses to expense more, expands bonus depreciation

    New tax law allows small businesses to expense more, expands bonus depreciation

    NEW YORK  (TIP): The Internal Revenue Service today reminded small business taxpayers that changes to the tax law mean they can immediately expense more of the cost of certain business property. Many are now able to write off most depreciable assets in the year they are placed into service.

    The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018 and the years ahead. Among those for business owners are tax rate changes for pass-through entities, changes to the cash accounting method for some, limits on certain deductions and more.

    Section 179 expensing changes

    A taxpayer may elect to expense all or part of the cost of any Section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017. For most businesses, this means the 2018 return they file next year.

    Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. The TCJA also modifies the definition of qualified real property to allow the taxpayer to elect to include certain improvements made to nonresidential real property. See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.

    New 100 percent, first-year ‘bonus’ depreciation

    The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify. The law also allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions.

    The deduction applies to business property acquired after Sept. 27, 2017, and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. In general, the bonus depreciation percentage is reduced for property placed in service after 2022. See the proposed regulations for more details.

    Taxpayers may elect out of the additional first-year depreciation for the taxable year the property is placed in service. If the election is made, it applies to all qualified property that is in the same class of property and placed in service by the taxpayer in the same taxable year. The instructions for Form 4562, Depreciation and Amortization, provide details.

    Business owners can refer to the Tax Reform Provisions that Affect Businesses page for updates.