Tax Related Identity Theft – A Growing Problem

In the past several years there have been a proliferation of high profile incidents involving theft of personal information at major businesses (and government!) in the US. A recent NPR story pegs the estimated number of people who have had their Social Security Number (SSN) stolen at up to 60-80 percent of all Americans! In other words, unless you are a hermit or recluse or wear a tin foil hat then chances are good your personal information is out there and exposed. This is big business for criminal enterprises and an ever increasing problem. The Government Accountability Office (GAO) recently released a report for tax year 2013 indicating approximately $30 Billion in ID theft related fraud was attempted with $24.2 Billion being “prevented or recovered”, leaving $5.8 Billion actually paid out to fraudsters. Read more

Eight Facts on Late Filing and Payment Penalties

April 15 is the annual deadline for most people to file their federal income tax return and pay any taxes they owe. If, for whatever reason, you missed the deadline you may be assessed penalties for both failing to file a tax return and for failing to pay taxes they owe by the deadline. Here are eight important facts every taxpayer should know about penalties for filing or paying late:

1. Two penalties may apply. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. Read more

Eight Facts to Know if You Receive an IRS Letter

The IRS sends millions of letters and notices to taxpayers for a variety of reasons. Many of these letters and notices can be easily dealt with without having to call or visit an IRS office. Here are eight things you should know about if you receive a notice or letter from the IRS. Read more

Seven Tips to Determine if Your Gift is Taxable

If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax. Here are seven tax tips about gifts and the gift tax.

1. Nontaxable Gifts. The general rule is that any gift is a taxable gift. However, there are exceptions to this rule. The following are not taxable gifts:

• Gifts that do not exceed the annual exclusion for the calendar year,
• Tuition or medical expenses you paid directly to a medical or educational institution for someone,
• Gifts to your spouse (for federal tax purposes, the term “spouse” includes individuals of the same sex who are lawfully married),
• Gifts to a political organization for its use, and
• Gifts to charities. Read more

What You Should Know about the AMT

Even if you’ve never paid Alternative Minimum Tax (AMT), before, you should not ignore this tax. Why? Because your tax situation might have changed and this might be the year that you need to pay AMT. AMT attempts to ensure that taxpayers who claim certain tax benefits pay a minimum amount of tax. You may have to pay this tax if your income is above a certain amount.

Here’s what you should know about the AMT:

1. When AMT applies. Your filing status and income determine the amount of your exemption. You may have to pay the AMT if your taxable income, plus certain adjustments, is more than your exemption amount. In most cases, if your income is below this amount, you will not owe AMT.

2. Exemption amounts. The 2014 AMT exemption amounts are:

• $52,800 if you are Single or Head of Household.
• $82,100 if you are Married Filing Joint or Qualifying Widow(er).
• $41,050 if you are Married Filing Separate.

Your AMT exemption is reduced if your income is more than certain limits.

3. Use the right forms. If you owe AMT, you usually must file Form 6251, Alternative Minimum Tax–Individuals. Some taxpayers who owe AMT can file Form 1040A and use the AMT Worksheet in the instructions.

4. AMT rules are complex. The easiest way to prepare and file your tax return is to use a qualified tax preparer who will figure out AMT for you if you owe the tax. Call today for more information or to set up a consultation.