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IRS and the fight against Identity Theft-Related Tax Fraud

Posted by Admin Posted on Feb 25 2015

IRS Working on Taxpayer Authentication to Combat Identity Theft-Related Tax Fraud


Will this be a valiant effort by the IRS to help protect us from the horrors of Identity Theft and Tax Fraud hassles? I mean it can't hurt.

So news is the IRS recently created a group whose goal is to centralize several prior ad hoc efforts to authenticate taxpayers across its systems in an effort to combat identity theft-related tax fraud, but the IRS lacks a good estimate of the costs, benefits and risks, according to a new government report.

Click here to read more about the IRS plan of attack versus identity theft - related tax fraud.

credit: http://www.accountingtoday.com/

Welcome to Our Blog!

Posted by Admin Posted on Dec 31 2014
This is the home of our new blog. Check back often for updates!

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Posted by Admin Posted on Dec 03 2014
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Student Tax Credit Update

Posted by Admin Posted on July 28 2014

The bill, known as the Student and Family Tax Simplification Act, would consolidate the Hope Credit, the American Opportunity Tax Credit, the Lifetime Learning Credit, and the tuition deduction into a single, expanded American Opportunity Tax Credit.

The legislation consolidates four existing education provisions — the Hope Credit, the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit, and the tuition deduction — into a single, modernized and strengthened AOTC.  The new AOTC, which would be permanent and partially refundable, would:

  • Provide a 100-percent tax credit for the first $2,000 of eligible higher education expenses and a 25-percent tax credit for the next $2,000 of such expenses (for a maximum credit of $2,500).
  • The first $1,500 of the credit would be refundable, meaning that families could receive the benefit regardless of whether they have Federal income tax liability. 
  • The credit could be used to offset expenses for tuition, fees and course materials. 
  • The credit would be available for up to four years of post-secondary education at qualifying four-year universities, community colleges, and trade and vocational schools.
  • The credit would begin to phase out for families with incomes between $86,000 and $126,000 (half those amounts for single individuals), ensuring that the credit provides the greatest benefit and value to low- and middle-income families.

These changes have its advantages it creates a simpler, single tax credit. We applaud the fact that the bill increases refundability and includes an important fix to better coordinate the AOTC and the Pell Grant.

Unfortunately, the bill would negatively impact many low and middle income students and families who benefit under the previous law. It will also harm graduate students and lifetime learners who utilize the tuition deduction or the LLC.

Click the link for more info on the new AOTC bill: 

http://black.house.gov/sites/black.house.gov/files/BLACK_041_xml.pdf

Important Info about Annual Reports.

Posted by Admin Posted on Jan 24 2013

With the start of a new year businesses in the state of Florida must remember to file their Annual Report.  Below you will find some information and frequently asked questions about Annual Reports.


Who Must File?
Florida Limited Partnerships, Limited Liability Limited Partnerships, Corporations (including not for profit), Limited Liability Companies.

Due Date for Filing
May 1, 2013

What are the filing fees?

For Profit Corporation                               $150.00
Not for Profit Corporation                         $ 61.25
Limited Liability Company                       $ 138.75 
Limited Partnership                                  $ 500.00
Limited Liability Limited Partnership     $500.00 

Penalty for Late Filing
$400.00 (There is no provision to abate or waive the $400 late fee.)

  • The state no longer mails postcard reminders and may have sent an email notification in January.
  • This is a reminder to all GSK clients to contact the state and handle this renewal by the May 1, 2013 deadline.
  • You can make payments and access the report by going to sunbiz.org. (Major credit cards accepted).


Note: The annual report is the easiest and least expensive way to make changes to the public corporate record. If you have a change in corporate officers, managers, address or other corrections to the public record, this is the best time to make those changes.

Please call us if you have any questions.







 



IRS Announces More Flexible Offer-in-Compromise Terms to Help a Greater Number of Struggling Taxpayers Make a Fresh Start

Posted by Admin Posted on May 22 2012

IR-2012-53, May 21, 2012

WASHINGTON ? The Internal Revenue Service today announced another expansion of its "Fresh Start" initiative by offering more flexible terms to its Offer in Compromise (OIC) program that will enable some of the most financially distressed taxpayers to clear up their tax problems and in many cases more quickly than in the past.

"This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years," said IRS Commissioner Doug Shulman. "It is part of our multiyear effort to help taxpayers who are struggling to make ends meet."

Today?s announcement focuses on the financial analysis used to determine which taxpayers qualify for an OIC. This announcement also enables some taxpayers to resolve their tax problems in as little as two years compared to four or five years in the past.

In certain circumstances, the changes announced today include:

  • Revising the calculation for the taxpayer?s future income.
  • Allowing taxpayers to repay their student loans.
  • Allowing taxpayers to pay state and local delinquent taxes.
  • Expanding the Allowable Living Expense allowance category and amount.

In general, an OIC is an agreement between a taxpayer and the IRS that settles the taxpayer?s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or a through payment agreement. The IRS looks at the taxpayer?s income and assets to make a determination of the taxpayer?s reasonable collection potential. OICs are subject to acceptance on legal requirements.

The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place common-sense changes to the OIC program to more closely reflect real-world situations.

When the IRS calculates a taxpayer?s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. All offers must be fully paid within 24 months of the date the offer is accepted. The Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, has been revised to reflect the changes.

Other changes to the program include narrowed parameters and clarification of when a dissipated asset will be included in the calculation of reasonable collection potential. In addition, equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.

Allowable Living Expenses

The Allowable Living Expense standards are used in cases requiring financial analysis to determine a taxpayer?s ability to pay. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer in compromise requests.

The National Standard miscellaneous allowance has been expanded to include additional items. Taxpayers can use the miscellaneous allowance for expenses such as credit card payments and bank fees and charges.

Guidance has also been clarified to allow payments for loans guaranteed by the federal government for the taxpayer's post-high school education. In addition, payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.

This is another in a series of steps to help struggling taxpayers under the Fresh Start initiative.

In 2008, IRS announced lien relief for taxpayers trying to refinance or sell a home. The IRS added new flexibility for taxpayers facing payment or collection problems in 2009. The IRS made changes to lien policies in 2011 and expanded the threshold for small businesses to resolve tax issues through installment agreements. And, earlier this year, the IRS increased the threshold for a streamlined installment agreement allowing individual taxpayers to set up an installment agreement without providing a significant amount of financial information.

http://www.irs.gov/newsroom/article/0,,id=257542,00.html?portlet=108

Eight Tips to Determine if Your Gift is Taxable

Posted by Admin Posted on Apr 02 2012
If you gave money or property to someone as a gift, you may owe federal gift tax. Many gifts are not subject to the gift tax, but the IRS offers the following eight tips about gifts and the gift tax.

1. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. For 2011 and 2012, the annual exclusion is $13,000.
2. Gift tax returns do not need to be filed unless you give someone, other than your spouse, money or property worth more than the annual exclusion for that year.
3. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.
4. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
5. The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. The following gifts are not taxable gifts:
? Gifts that are do not exceed the annual exclusion for the calendar year,
? Tuition or medical expenses you pay directly to a medical or educational institution for someone,
? Gifts to your spouse,
? Gifts to a political organization for its use, and
? Gifts to charities.
6. You and your spouse can make a gift up to $26,000 to a third party without making a taxable gift. The gift can be considered as made one-half by you and one-half by your spouse. If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if half of the split gift is less than the annual exclusion.
7. You must file a gift tax return on Form 709, if any of the following apply:
? You gave gifts to at least one person (other than your spouse) that are more  
      than the annual exclusion for the year.
? You and your spouse are splitting a gift.
? You gave someone (other than your spouse) a gift of a future interest that he
or she cannot actually possess, enjoy, or receive income from until some time in the future.
? You gave your spouse an interest in property that will terminate due to a future event.
8. You do not have to file a gift tax return to report gifts to political organizations and gifts made by paying someone?s tuition or medical expenses.

Tips for Reducing Tax-Time Stress

Posted by Admin Posted on Mar 26 2012

Tax preparation doesn't need to give you a headache. There are several ways to make it easier on yourself.


  • Don?t procrastinate.
    Resist the temptation to put off your taxes until the very last minute. Rushing to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.
  • Don?t panic if you can?t pay.  If you can?t pay the full amount of taxes you owe by the mid-April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. More than 75 percent of taxpayers eligible for an Installment
  • Request an extension of time to file ? but pay on time.  If the deadline clock is ticking, you can get an automatic six-month extension through Oct. 15. However, this extension of time to file, which must be filed or postmarked by the April 17 deadline, does not give you more time to pay any taxes due. If you have not paid at least 90 percent of the total tax due by the April deadline you may also be subject to an estimated tax penalty.
  • Non for Profit IRS annual Form 990 electronic filing.

    Posted by Admin Posted on Mar 07 2012

    Some non profit organization must file their annual IRS form 990 electronically.  This is now mandatory for some of those entities.

    If your organization is required to file electronically, now with the improve IRS electronic system your preparer can receive within minutes of the submission the acceptance report from the IRS.

    Ask your tax accountant to provide you with a copy of this report.  It is the proof that the organization filed the return and that it was done on time.

    IRS Needs Decrease Losses

    Posted by Admin Posted on Mar 02 2012

    IRS Needs Decrease Losses
    The IRS has reported new figures to shed some light on the problem of the ever increasing tax gap, which is now an astonishing $450 billion a year, a 30% increase from five years ago. For those who may be confused, the tax gap is the amount of taxes that are owed but not paid to the US Treasury.

    Four Tax Credits that Can Boost your Refund

    Posted by Admin Posted on Mar 01 2012

    A tax credit is a dollar-for-dollar reduction of taxes owed. Some tax credits are refundable meaning if you are eligible and claim one, you can get the rest of it in the form of a tax refund even after your tax liability has been reduced to zero.

    Here are four refundable tax credits you should consider to increase your refund on your 2011 federal income tax return:

    1. The Earned Income Tax Credit is for people earning less than $49,078 from wages, self-employment or farming. Millions of workers who saw their earnings drop in 2011 may qualify for the first time. Income, age and the number of qualifying children determine the amount of the credit, which can be up to $5,751. Workers without children also may qualify. For more information, see IRS Publication 596, Earned Income Credit.

    2. The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, while you work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.

    3. The Child Tax Credit is for people who have a qualifying child. The maximum credit is $1,000 for each qualifying child. You can claim this credit in addition to the Child and Dependent Care Credit. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.

    4. The Retirement Savings Contributions Credit, also known as the Saver?s Credit, is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver?s Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).

    There are many other tax credits that may be available to you depending on your facts and circumstances. Since many qualifications and limitations apply to various tax credits, you should carefully check your tax form instructions, the listed publications and additional information available at www.irs.gov. IRS forms and publications are available on the IRS website at www.irs.gov and by calling 800-TAX-FORM (800-829-3676).

    IRS Releases the Dirty Dozen Tax Scams for 2012

    Posted by Admin Posted on Feb 24 2012

    IRS Releases the Dirty Dozen Tax Scams for 2012

    WASHINGTON ?? The Internal Revenue Service today issued its annual ?Dirty Dozen? ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

    The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

    ?Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,? said IRS Commissioner Doug Shulman. ?Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don?t be fooled by these scams.?

    Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

    The following is the Dirty Dozen tax scams for 2012:

    Identity Theft

    Topping this year?s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

    Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

    The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer?s identity and personal information to file a tax return and claim a fraudulent refund.
     
    An IRS notice informing a taxpayer that more than one return was filed in the taxpayer?s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. 

    The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

    In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.  Working with the Justice Department?s Tax Division and local U.S. Attorneys? offices, the nationwide effort targeted 105 people in 23 states.

    Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit.  For more information, visit the special identity theft page at www.IRS.gov/identitytheft

    Phishing

    Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

    If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

    It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.  The IRS has information that can help you protect yourself from email scams.

    Return Preparer Fraud

    About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

    Questionable return preparers have been known to skim off their clients? refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

    In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

    Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

    • Do not sign the return or place a Preparer Tax identification Number on it.
    • Do not give you a copy of your tax return.
    • Promise larger than normal tax refunds.
    • Charge a percentage of the refund amount as preparation fee.
    • Require you to split the refund to pay the preparation fee.
    • Add forms to the return you have never filed before.
    • Encourage you to place false information on your return, such as false income, expenses and/or credits.

    For advice on how to find a competent tax professional, see  Tips for Choosing a Tax Preparer.

    Hiding Income Offshore

    Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

    The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.

    While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.
     
    Since 2009, 30,000 individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to bring their money back into the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore will become increasingly more difficult.

    At the beginning of this year, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.  This program will be open for an indefinite period until otherwise announced.

    The IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program.  That number will grow as the IRS processes the 2011 cases.

    ?Free Money? from the IRS & Tax Scams Involving Social Security

    Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

    Scammers prey on low income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

    There are a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return. 

    Beware. Intentional mistakes of this kind can result in a $5,000 penalty.

    False/Inflated Income and Expenses

    Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions.  This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution. 

    Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit when their occupations or income levels make the claims unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

    False Form 1099 Refund Claims

    In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.

    Don?t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

    Frivolous Arguments

    Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

    Falsely Claiming Zero Wages

    Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a ?corrected? Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

    Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

    Abuse of Charitable Organizations and Deductions

    IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property. The IRS is investigating schemes that involve the donation of non-cash assets ?? including situations in which several organizations claim the full value of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new standards for qualified appraisals.

    Disguised Corporate Ownership

    Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.

    These entities can be used to underreport income, claim fictitious deductions, avoid filing tax returns, participate in listed transactions and facilitate money laundering, and financial crimes. The IRS is working with state authorities to identify these entities and bring the owners into compliance with the law.

    Misuse of Trusts

    For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are legitimate uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.

    IRS personnel have seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement

    IRS Stops Tax Preparers Accused of Stealing Client Refunds

    Posted by Admin Posted on Feb 24 2012
    IRS Stops Tax Preparers Accused of Stealing Client Refunds     

    The Internal Revenue Service's Criminal Investigation division has cracked down on a pair of Southern California tax preparers accused of stealing their clients' tax refunds. Ernesto Jesus Suarez has pleaded guilty and faces up to six years in prison for collecting over $1.4 million of stolen refunds from the IRS. In a similar case, Javier Francisco Vega, was arrested and made his initial appearance in court.

    If you want to read more visit the link below.

    http://www.accountingtoday.com/news/IRS-Stops-California-Tax-Preparers-Stealing-Client-Refunds-61765-1.html?ET=webcpa:e2231:206946a:&st=email&utm_source=Newsletter+-+February+23rd%2C+2012&utm_campaign=newsletter+2%2F23&utm_medium=email

    Eight Things to Know about Medical and Dental Expenses and Your Taxes

    Posted by Admin Posted on Feb 14 2012

    If you, your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you file your tax return. Here are eight things the IRS wants you to know about medical and dental expenses and other benefits.

    1. You must itemize You deduct qualifying medical and dental expenses if you itemize on Form 1040, Schedule A.

    2. Deduction is limited You can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year. You figure this on Form 1040, Schedule A.

    3. Expenses must have been paid in 2011 You can include the medical and dental expenses you paid during the year, regardless of when the services were provided. You?ll need to have good receipts or records to substantiate your expenses.

    4. You can?t deduct reimbursed expenses Your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

    5. Whose expenses qualify You may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.

    6. Types of expenses that qualify You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.

    7. Transportation costs may qualify You may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. You can deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile for 2011.

    8. Tax-favored saving for medical expenses Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.

    Tax Tips for the Self-employed Individuals

    Posted by Admin Posted on Feb 09 2012
    There are many benefits that come from being your own boss. If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed.

    Here are six key points the IRS would like you to know about self-employment and self- employment taxes:

    1. Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job.

    2. If you are self-employed you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You figure self-employment tax using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income.

    3. You file an IRS Schedule C, Profit or Loss from Business, or C-EZ, Net Profit from Business, with your Form 1040.

    4. If you are self-employed you may have to make estimated tax payments. This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you fail to make quarterly payments you may be penalized for underpayment at the end of the tax year.

    5. You can deduct the costs of running your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.

    6. To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.

    Taxable or Non-Taxable Income?

    Posted by Admin Posted on Feb 07 2012

    Taxable or Non-Taxable Income? 

    Although most income you receive is taxable and must be reported on your federal income tax return, there are some instances when income may not be taxable.

    The IRS offers the following list of items that do not have to be included as taxable income:

    • Adoption expense reimbursements for qualifying expenses
    • Child support payments
    • Gifts, bequests and inheritances
    • Workers' compensation benefits (some exceptions may apply; see Publication 525, Taxable and Nontaxable Income)
    • Meals and lodging for the convenience of your employer
    • Compensatory damages awarded for physical injury or physical sickness
    • Welfare benefits
    • Cash rebates from a dealer or manufacturer

    Safeguard Your Refund ? Choose Direct Deposit

    Posted by Admin Posted on Feb 06 2012

    Safeguard Your Refund ? Choose Direct Deposit  

    Direct deposit is the fastest, safest way to receive your tax refund. When a taxpayer combines e-file and direct deposit, the IRS will likely issue your refund in as few as 10 days.

    Here are four reasons more than 79 million taxpayers chose direct deposit in 2011:

    1. Security Thousands of paper checks are returned to the IRS by the U.S. Post Office every year as undeliverable mail. Direct deposit eliminates the possibility of your refund check being lost, stolen or returned to the IRS as undeliverable.

    2. Convenience The money goes directly into your bank account. You won?t have to make a special trip to the bank to deposit the money yourself.

    3. Ease When you?re preparing your return; simply follow the instructions on your return or in the tax software. Make sure you enter the correct bank account and bank routing numbers.

    4. Options You can deposit your refund into multiple accounts. With the split refund option, taxpayers can divide their refunds among as many as three checking or savings accounts and up to three different U.S. financial institutions. Use IRS Form 8888, Allocation of Refund (Including Savings Bond Purchases), to divide your refund. A word of caution: Some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted. Additionally, Form 8888 should NOT be used to designate part of your refund to pay your tax preparer.

    Have you ever heard the IRS apologizing?

    Posted by Admin Posted on Jan 26 2012

    "The IRS has opened its filing season successfully this month, and refunds have started going out to many taxpayers. As with the start of any tax season, there are system validations that occur requiring some fine-tuning of our systems. As part of this, some taxpayers will receive refunds approximately one week later than initial projections they may have received, but these are still in line with historical refund delivery times.

    The IRS reminds taxpayers that refund time frames provided by "Where's My Refund" and tax providers are projected time frames and are subject to revision. Many different factors can affect the timing of the refund after the IRS receives the return for processing.  The IRS apologizes for any inconvenience caused by the revised refund dates.
    When the IRS announced the opening of the 2012 filing season, it advised taxpayers who electronically file and select direct deposit that they could see their refunds in as few as 10 days and 90 percent of refunds are provided within 21 days. Some taxpayers are getting refunds much faster, but at this time taxpayers should expect refunds to be issued as indicated in the original IRS guidelines.
    The one-week delay for some refunds relates to fine-tuning IRS systems to adjust for new safeguards put in place this tax season to provide stronger protection against refund fraud.  The IRS is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion."
     
    - IRS QuickAlerts for Tax Professionals

    Hire Someone You Hate. Why you should recruit people who disagree with you

    Posted by Admin Posted on Jan 19 2012

    When you're looking to hire someone new, often the most important consideration is the "fit." That is, you can train just about anyone with brains and some basic experience in the field to do the job, but you absolutely need someone who fits the company culture.

    This is extremely important -- having someone who doesn't get along or share the same ideals with the rest of the group can cause havoc and tension and make life at work just darn uncomfortable.

    That said, I think you should hire someone you don't want to be friends with.

    Let me explain.

    Hiring managers often see the job interview as kind of a "first date" -- with much higher stakes. If you have a good first date and decide to pursue a second, and it turns out that was a bad decision, then you're out a few bucks for dinner and a few hours of your life. But if you have a good interview, you may mistakenly hire the person and end up having to spend 40 hours a week with someone who makes you want to stick pins in your eyes.

    Because of this idea, managers often look for the same qualities in an employee that they would in a date, or rather, a potential new friend. But friends are different than employees and the distinction is critical to your business.

    We often choose our friends because they think like us, like the same things we do, and laugh at our jokes. (At this point, I know some of you are going to indignantly exclaim that I am wrong. As proof, you offer up the political arguments that you have with your friends. I will just point out that this means that you both very much like the same thing -- arguing about politics.)

    When Does Sex Count as a Work-Related Injury?

    Posted by Admin Posted on Jan 12 2012

    Apparently when it occurs on a business trip.

    An Australian public servant is suing her employer for compensation after being injured while having sex during a business trip.

    She works for ComCare, the Australian government?s?wait for it?workplace safety organization. During sex (not, for the record, part of her job) with a male friend (not connected to her job) a glass light fitting tore from the wall above the bed and struck her face. The woman, who cannot be named, suffered injuries to her nose, mouth, and a tooth, as well as  ?a consequent psychiatric injury,? described as an adjustment disorder, according to Australia?s Daily Telegraph.

    ComCare originally rejected her claim for the November 2007 incident, saying that sexual activity was not an ordinary part of an overnight stay, such as showering or sleeping. (She was staying in a motel because of a business meeting she had the next day.) So the woman sued.

    Her lawyer, Leo Grey, told a federal court there was no suggestion she?d engaged in misconduct. Her injury, he said, occurred during ?an ordinary incident of life commonly undertaken in a motel room at night.? He pointed out that ?there had not been any rule that employees should not have anyone else in their room without express permission of their department.?

    ComCare has argued that ?neither legal authority nor common sense? could find the injury was sustained during the course of her employment.

    Observes US workers comp management consulting firm Lynch Ryan on its blog: ?From the American litigation perspective, it might seem more logical to sue the hotel or the light manufacturer. But as Australia's comp law?unlike the American statutes?does allow compensation for pain and suffering, a liability claim might not add anything to the
    potential payout.?

    Could it be considered a work injury if the man had been a work acquaintance? It ?might have been compensable,? observes the blog. ?The devil, as always, is in the (salacious) details.?

    Small Business: Doctors going broke.

    Posted by Admin Posted on Jan 06 2012

    Doctors in America are harboring an embarrassing secret: Many of them are going broke.

    This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists.

    Industry watchers say the trend is worrisome. Half of all doctors in the nation operate a private practice. So if a cash crunch forces the death of an independent practice, it robs a community of a vital health care resource.

    "A lot of independent practices are starting to see serious financial issues," said Marc Lion, CEO of Lion & Company CPAs, LLC, which advises independent doctor practices about their finances.

    Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors' lack of business acumen is also to blame.

    Loans to make payroll: Dr. William Pentz, 47, a cardiologist with a Philadelphia private practice, and his partners had to tap into their personal assets to make payroll for employees last year. "And we still barely made payroll last paycheck," he said. "Many of us are also skimping on our own pay."

    Pentz said recent steep 35% to 40% cuts in Medicare reimbursements for key cardiovascular services, such as stress tests and echocardiograms, have taken a substantial toll on revenue. "Our total revenue was down about 9% last year compared to 2010," he said.

    "These cuts have destabilized private cardiology practices," he said. "A third of our patients are on Medicare. So these Medicare cuts are by far the biggest factor. Private insurers follow Medicare rates. So those reimbursements are going down as well."

    12 entrepreneurs reinventing health care

    Pentz is thinking about an out. "If this continues, I might seriously consider leaving medicine," he said. "I can't keep working this way."

    Also on his mind, the impending 27.4% Medicare pay cut for doctors. "If that goes through, it will put us under," he said.

    Federal law requires that Medicare reimbursement rates be adjusted annually based on a formula tied to the health of the economy. That law says rates should be cut every year to keep Medicare financially sound.

    Although Congress has blocked those cuts from happening 13 times over the past decade, most recently on Dec. 23 with a two-month temporary "patch," this dilemma continues to haunt doctors every year.

    Beau Donegan, senior executive with a hospital cancer center in Newport Beach, Calif., is well aware of physicians' financial woes.

    "Many are too proud to admit that they are on the verge of bankruptcy," she said. "These physicians see no way out of the downward spiral of reimbursement, escalating costs of treating patients and insurance companies deciding when and how much they will pay them."

    Donegan knows an oncologist "with a stellar reputation in the community" who hasn't taken a salary from his private practice in over a year. He owes drug companies $1.6 million, which he wasn't reimbursed for.

    Dr. Neil Barth is that oncologist. He has been in the top 10% of oncologists in his region, according to U.S. News Top Doctors' ranking. Still, he is contemplating personal bankruptcy.

    That move could shutter his 31-year-old clinical practice and force 6,000 cancer patients to look for a new doctor.

    Changes in drug reimbursements have hurt him badly. Until the mid-2000's, drugs sales were big profit generators for oncologists.

    In oncology, doctors were allowed to profit from drug sales. So doctors would buy expensive cancer drugs at bulk prices from drugmakers and then sell them at much higher prices to their patients.

    "I grew up in that system. I was spending $1.5 million a month on buying treatment drugs," he said. In 2005, Medicare revised the reimbursement guidelines for cancer drugs, which effectively made reimbursements for many expensive cancer drugs fall to less than the actual cost of the drugs.

    "Our reimbursements plummeted," Barth said.

    Still, Barth continued to push ahead with innovative research, treating patients with cutting-edge expensive therapies, accepting patients who were underinsured only to realize later that insurers would not pay him back for much of his care.

    "I was $3.2 million in debt by mid 2010," said Barth. "It was a sickening feeling. I could no longer care for patients with catastrophic illnesses without scrutinizing every penny first."

    He's since halved his debt and taken on a second job as a consultant to hospitals. But he's still struggling and considering closing his practice in the next six months.

    "The economics of providing health care in this country need to change. It's too expensive for doctors," he said. "I love medicine. I will find a way to refinance my debt and not lose my home or my practice."

    If he does declare bankruptcy, he loses all of it and has to find a way to start over at 60. Until then, he's turning away new patients whose care he can no longer subsidize.

    "I recently got a call from a divorced woman with two kids who is unemployed, house in foreclosure with advanced breast cancer," he said. "The moment has come to this that you now say, 'sorry, we don't have the capacity to care for you.' "

    Small business 101: A private practice is like a small business. "The only thing different is that a third party, and not the customer, is paying for the service," said Lion.

    "Many times I shake my head," he said. "Doctors are trained in medicine but not how to run a business." His biggest challenge is getting doctors to realize where and how their profits are leaking.

    "On average, there's a 10% to 15% profit leak in a private practice," he said. Much of that is tied to money owed to the practice by patients or insurers. "This is also why they are seeing a cash crunch."

    My biggest tax nightmare!

    Dr. Mike Gorman, a family physician in Loganvale, Nev., recently took out an SBA loan to keep his practice running and pay his five employees.

    "It is embarrassing," he said. "Doctors don't want to talk about being in debt." But he's planning a new strategy to deal with his rising business expenses and falling reimbursements.

    "I will see more patients, but I won't check all of their complaints at one time," he explained. "If I do, insurance will bundle my reimbursement into one payment." Patients will have to make repeat visits -- an arrangement that he acknowledges is "inconvenient."

    "This system pits doctor against patient," he said. "But it's the only way to beat the system and get paid."

    --- Are you a doctor who has made financial decisions you came to regret? E-mail Parija Kavilanzand you could be part of an upcoming article. Click here for CNNMoney.com comment policy.

    View this article on CNNMoney
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    Filing Deadline Extended to March 30 for Some Tax-Exempt Organizations

    Posted by Admin Posted on Dec 16 2011

    Filing Deadline Extended to March 30 for Some Tax-Exempt Organizations

     

    IR-2011-120, Dec. 16, 2011

    WASHINGTON ? Tax-exempt organizations with January and February filing due dates will have until March 30, 2012, to file their annual returns, the Internal Revenue Service announced today.

    The IRS is granting this extension of time to file because the part of the e-file system that processes electronically filed returns of tax-exempt organizations will be off-line during January and February. The agency stressed that the rest of the e-file system will continue to operate normally and urged all individuals and businesses to choose the accuracy, speed and convenience of electronic filing.

    In general, the extension applies to tax-exempt organizations whose normal filing deadline is either Jan. 17 or Feb. 15, 2012. Ordinarily, these deadlines would apply to organizations with a fiscal year that ended on Aug. 31 or Sept. 30, 2011, respectively. The extension also applies to organizations that already obtained an initial three-month filing extension and now have an extended filing deadline that falls on Jan. 17 or Feb. 15, 2012. The majority of tax-exempt organizations will be unaffected by this extension because they operate on a calendar-year basis and have a May 15 filing deadline.

    The extension applies to affected organizations filing Forms 990, 990-EZ, 990-PF, or 1120-POL. Form 990-N filers will not be affected. No form needs to be filed to get the March 30 extension.

    In order to avoid receiving a late filing penalty notice, a reasonable cause statement should be attached to the tax return. If organizations receive late-filing penalty notices, they should contact the IRS so that these penalties can be abated. The IRS encouraged these organizations to consider either e-filing early ? before the end of December ? or waiting until March to file electronically.

    Tax Preparer Gets 6-Month Sentence Newark, N.J. (November 30, 2011)

    Posted by Admin Posted on Dec 06 2011

    A New Jersey tax preparer was sentenced Wednesday to six months in prison for preparing false tax returns for numerous clients that resulted in an estimated tax loss to the federal government of between $30,000 and $80,000.

    Newark-based tax preparer Carlo St. Jean, 40, pleaded guilty midway through the trial to seven of the counts against him. Each count charged him with aiding and assisting in the preparation and presentation of false and fraudulent tax returns to the IRS from 2004 to 2006.

    St. Jean entered his guilty plea before U.S. District Judge Stanley R. Chesler, who presided over his trial. Chesler imposed the sentence Wednesday in Newark federal court.

    St. Jean owned and operated Grand Travel Inc. Discount Timeshare, a commercial tax preparation business in Newark, from January 2003 to April 2006. During that time, St. Jean met with at least six clients and an individual whom he later learned was an undercover IRS agent, counseling them in the preparation of false tax returns that included fabricated and inflated deductions allowing them to claim refunds from the IRS in amounts greater than they were entitled to receive.

    The phony deductions they claimed included medical and dental expenses, charitable contributions, and unreimbursed employee expenses. In addition to the prison term, the judge sentenced St. Jean to six months of house arrest and two years of supervised release, including a prohibition against being engaged in the tax preparation business.



    Certain Non Profit Organizations Not Required to File an Application for Exemption Have Annual Filin

    Posted by Admin Posted on Nov 21 2011

    Reminder: Certain organizations do not have to apply for tax exemption but still have a filing requirement. These include section 501(c)(3) organizations whose gross receipts in each taxable year are normally not more than $5,000 as well as organizations exempt under other Code Sections, such as 501(c)(4).

    Most small tax-exempt organizations, other than churches and certain church-related organizations, whose gross receipts are normally $50,000 or less for tax years ending on or after December 31, 2010 ($25,000 before December 31, 2010) have an annual reporting requirement.  For tax years beginning after December 31, 2007, organizations are required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ

    If you have never filed, please contact Customer Account Services at 1-877-829-5500 (a toll-free number) and ask that an account be established for the organization to allow filing of the e-Postcard.   

    Please note: If you are a 501(c)(3) organization, you must file an application for exemption to be recognized as tax-exempt by the IRS if your gross receipts increase and you no longer meet the exception from filing available to organizations whose gross receipts for each taxable year are not normally more than $5,000.

    Back to Top


    Reinstatement of Exemption After Automatic Revocation of a Non Profit 501c3 status

    Posted by Admin Posted on Nov 21 2011

    Is your organization -- or one that is important to you -- on the list of organizations revoked for failure to file a required information return or notice for three consecutive years?  If so, does the organization want its tax-exempt status reinstated?  Learn all about automatic revocation of exemption and how to apply for reinstatement on IRS.gov.  

    Organizations seeking reinstatement must file an application for exemption and pay a user fee regardless of whether it was required to file an application previously. 

    Please Note: Certain small organizations who were eligible to file the Form 990-N for 2007, 2008 and 2009 and who file for reinstatement before December 31, 2012 may qualify for a reduced user fee of $100 under a transitional relief program. Consult Notice 2011-43 to see if your organization may qualify for a reduced user fee.

    Also, see this IRS video to learn about reinstatement.

    Back to Top


    For those individuals who have been victims of identity theft

    Posted by Admin Posted on Nov 18 2011
    The IRS is dealing with identity theft.  This is becoming a very large problem and the IRS is taking measures to curtail the fraudsters.  The IRS will be sending out letters to about 250,000 taxpayers who have suffered identity theft advising them they will be receiving an Identity Protection Personal Identification Number (IP PIN).  This IP PIN must be used when the taxpayer is filing their tax returns this coming tax season. 

    IRS Lets Transgender Taxpayers Deduct Sex Change Operation

    Posted by Admin Posted on Nov 15 2011

    The Internal Revenue Service has decided to go along with a U.S. Tax Court decision last year allowing a transgender person to deduct the cost of their sex reassignment surgery.

    The Tax Court case involved a Massachusetts taxpayer named Rhiannon G. O?Donnabhain, a 65-year-old civil engineer who was born Robert Donovan. She sued the IRS after it disallowed the $5,679 medical expense deduction she took on her 2001 taxes for the $21,741 she had spent on hormone therapy, sex reassignment and breast augmentation surgery. The IRS disallowed the deduction, claiming the surgery was merely cosmetic and not surgically necessary. But last February, Judge Joseph Gale ruled that the expenses for sex reassignment surgery and hormone therapy could be deducted (see Tax Court Allows Deduction for Sex Change). However, he agreed with the IRS on disallowing the costs of breast augmentation surgery as the hormone therapy had already produced some of the desired characteristics.

    Earlier this month, according to the TaxProf blog, the IRS issued a ?notice of acquiescence,? in effect telling the Tax Court that it would not contest the decision.

    Gancedo Accounting Solutions Beginining its New Marketing Campaign

    Posted by Admin Posted on Sept 21 2011
    We have begun our new marketing campaign offering our services to non-profits in the Miami-Dade and Broward County areas. Here at Gancedo Accounting Solutions we have over two decades of experience with non-profits and all the unique accounting work that goes with a non-profit organization. Non-profits benefit by having a firm like Gancedo Accounting Solutions on their side because they can have our knowledge and experience on a per-need basis. Many non-profit organizations today might not have the funds in their budgets to hire full time accountants/CPA with the required experience and education to get the work done efficiently, timely and accurately.

    IRS Releases Specifications for Registered Tax Return Preparer Test

    Posted by Admin Posted on Sept 07 2011

    IR-2011-89, Sept. 6, 2011

    WASHINGTON ? The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.

    The test is part of an ongoing effort by the IRS to enhance oversight of the tax preparation industry. Preparers who pass this test, a background check and tax compliance check as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.

    The specifications identify the major topics that will be covered by the test, which will be available starting this fall. Although individuals who already have a provisional preparer tax identification number (PTIN) from the IRS do not have to pass the exam until Dec. 31, 2013, they may take the exam at any time once it is available.

    The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.

    Test vendor Prometric Inc. worked with the IRS and the tax preparer community to develop the test. The time limit for the test is expected to be between two and three hours. The test must be taken at one of the roughly 260 Prometric facilities nationwide.

    To assist in test preparation, the following is a list of recommended study materials. This list is not all-encompassing, but a highlight of what the test candidates will need to know.

    Serving the community via United Way

    Posted by Admin Posted on Sept 02 2011
    I proudly announce that United Way of Greater Miami has chosen me as a member of the Agency Finance Committee. I look forward to serve such an important community agency. The committee reviews and grades audited financial statements and tax returns for organizations funded by the UW.

    Gancedo Accounting Solutions Social Networks Update

    Posted by Admin Posted on Aug 15 2011

    Gancedo Accounting Solutions is finally on most of the social networks as of today. Visit us in Facebook, Twitter and Linkedin