Do you rent property to others? If so, you’ll want to read the following tips about rental income and expenses.

You generally must include in your gross income all amounts you receive as rent. Rental income is any payment you receive for the use of or occupation of property. Expenses of renting property can be deducted from your gross rental income. You generally deduct your rental expenses in the year you pay them.　 


When to report income. You generally must report rental income on your tax return in the year that you actually receive it.

1. Advance rent. Advance rent is any amount you receive before the period that it covers.　 Include advance rent in your rental income in the year you receive it, regardless of the period covered.

2. Security deposits. Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year.

3. Property or services in lieu of rent.　 If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income.　 If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary.

4. Expenses paid by tenant. If your tenant pays any of your expenses, the payments are rental income. You must include them in your income. You can deduct the expenses if they are deductible rental expenses.

5. Rental expenses.　 Generally, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income.

6. Personal use of vacation home. If you have any personal use of a vacation home or other dwelling unit that you rent out, you must divide your expenses between rental use and personal use.　 If your expenses for rental use are more than your rental income, you may not be able to deduct all of the rental expenses.


　


 STANEK TAX SERVICES · 15701 STATE ROAD 50 STE 204 · CLERMONT, FL 34711
                                      Tel: (407) 434-1040 · Fax: (877) 386-1040


 

A federal district court in Ohio has issued a permanent injunction  ordering ITS Financial LLC, the parent company of Instant Tax Service  tax franchiser, to cease operations. The order, which was issued as a  result of a two-week trial in June, also bars Fesum Ogbazion, the sole  owner and CEO of ITS Financial, from operating or being involved with  any business relating to tax-return preparation.

ITS Financial, which claims to be the fourth largest tax-preparation  business in the country, had more than 150 franchisees that filed more  than 100,000 tax returns each year in 2011 and 2012. Ogbazion also
owned two other entities, Tax Tree LLC and TCA Financial LLC, that were also  shut down.

The Justice Department cited a long list of the company’s transgressions, including:
 

• Filing tax returns for customers without their permission and encouraging franchisees to do the same;
   
• Training and encouraging franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income, resulting in  submitting false federal tax returns; 
  
• Defrauding their largely low-income customers by marketing fraudulent loan  products to lure them into their tax-preparation offices and by requiring franchisees to charge phony and exorbitant fees;
   
• Forging customers’ signatures on loan checks that were then used to fund Ogbazion’s businesses;
   
• Failing to pay more than $1 million of the businesses’ employment taxes, lying  about assets, and hiding money in a secret bank account; 
  
• Lying on government forms and encouraging franchisees to do so as well;
   
• Obstructing government agents, including the IRS, and circumventing law-enforcement efforts involving the suspension of electronic filing identification  numbers;
   
• Telling franchisees to lie to the IRS during IRS compliance visits.

The court cited an IRS study that showed that the tax harm the company’s  franchisees caused in just five cities during a single filing season was between $10 million and $25 million. The company also had failed to 
comply with the terms of a preliminary injunction order that the company had agreed to in October 2012.

In a Justice Department press release, Assistant Attorney General Kathryn Keneally  said of the company, “As described by the court, this company grew large through abhorrent means—filing returns without customer authorization,  forging customer signatures, pushing fraudulent loan products, and much  more. As the court’s decision recognizes, a business model based on false and fraudulent conduct cannot be allowed to prevail.”

WASHINGTON — The Internal Revenue Service today warned consumers  about a
sophisticated phone scam targeting taxpayers, including recent  immigrants,
throughout the country.

Victims are told they owe money to the IRS and
it must be paid promptly  through a pre-loaded debit card or wire transfer. If
the victim refuses  to cooperate, they are then threatened with arrest,
deportation or  suspension of a business or driver’s license. In many cases, the
caller  becomes hostile and insulting.

“This scam has hit taxpayers in nearly every state in the country.  We  want to educate taxpayers so they
can help protect themselves.  Rest  assured, we do not and will not ask for credit card numbers over the  phone, nor request a pre-paid debit card or wire transfer,” says IRS  Acting Commissioner Danny Werfel. “If someone unexpectedly calls  claiming to be from the IRS and threatens police arrest, deportation or license revocation if you don’t pay immediately, that is a sign that it  really isn’t the IRS calling.” Werfel noted that the first IRS contact  with taxpayers on a tax issue is likely to occur via mail

Other characteristics of this scam include:
 

• Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
• Scammers may be able to recite the last four digits of a victim’s Social Security Number.
• Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
• Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
• Victims hear background noise of other calls being conducted to mimic a call site.
• After threatening victims with jail time or  driver’s license revocation, scammers hang up and others soon call back  pretending to be from the local police or DMV, and the caller ID  supports their claim.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do:
 

• If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that  line can help you with a payment issue – if there really is such an  issue.
• If you know you don’t owe taxes or have no reason to think that you  owe any taxes (for example, you’ve never received a bill or the caller  made some bogus threats as described above), then call and report the  incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
• If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov.  Please add "IRS Telephone Scam" to the comments of your complaint.

Taxpayers should be aware that there are other unrelated scams (such  as a lottery sweepstakes) and solicitations (such as debt relief) that  fraudulently claim to be from the IRS.

The IRS encourages taxpayers to be vigilant against phone and email  scams that use the IRS as a lure. 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 also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other  financial accounts. Recipients should not open any attachments or click  on any links contained in
the message. Instead, forward the e-mail to phishing@irs.gov.