“We will never ask for your personal information” or “we will never post without your permission” are commonly used phrases when companies warn consumers about scams and other ways to steer clear of predators looking to steal your identity, or worse, your money! These warnings are important and can help prevent you from falling prey to an unscrupulous individual, or fake company looking to make a fast buck. In the digital age, it is imperative that you safeguard your information and deal only with legitimate persons and entities.
This is true even in the world of taxes. The IRS reports it has received nearly 100,000 calls from concerned taxpayers, in response to calls received attempting to collect taxes. In response, the following IRS warning has been issued: ● Do not provide credit card or other financial information over the phone to a caller claiming to be an IRS agent. ● The IRS will never seek to collect a tax payment over the phone, so if you’ve been asked to do so, terminate the call. Asking the caller to verify certain information, such as your social security or tax ID number is a good way to identify a scam call. If you do this, be sure you don’t provide any of the information yourself, simply ask the caller to provide it to you. When a scam artist is unable to provide information within the knowledge of the IRS, it is a safe bet it isn’t the IRS on the other end of the line. For more information about how to avoid tax payment scams, call our office. If you have questions about taxes, call us for help. Contact Stanek Tax Services @ (407) 434-1040. And Remember, "Don't Panic, Call Stanek!"
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If you are a federal employee with outstanding tax debts, you may find that money from your TSP account (Thrift Savings Plan) is garnished to make good on those debts.
The Federal Retirement Thrift Investment Board (FRTIB) issued a final rule on September 10 in the Federal Register that makes TSP accounts (Thrift Savings Plan accounts)subject to federal tax levies. While this new rule might seem insignificant, the IRS has recently reported that collectively, federal workers owe $3.3 billion in back taxes. This new rule may help to collect some of that money. TSP accounts will be frozen after the TSP (Thrift Savings Plan) receives a qualifying tax levy or criminal restitution order. After the participant’s account is frozen, no withdrawal or loan disbursements will be allowed until the account is unfrozen. All other account activity will be permitted, including contributions, loan repayments, adjustments, contribution allocations and interfund transfers. Once a disbursement from the account is made in accordance with the restitution order or levy, the hold will be removed from the participant’s account. For federal tax purposes, this is an important distinction. Worker classification affects how you pay your federal income tax, social security and Medicare taxes, and how you file your tax return. Classification affects your eligibility for employer and social security and Medicare benefits and your tax responsibilities. If you aren’t sure of your work status, you should find out now. This brochure can help you.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee. These relevant facts fall into three main categories: behavioral control; financial control; and relationship of the parties. In each case, it is very important to consider all the facts – no single fact provides the answer. Carefully review the following definitions. BEHAVIORAL CONTROL These facts show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work. For example: Instructions – if you receive extensive instructions on how work is to be done, this suggests that you are an employee. Instructions can cover a wide range of topics, for example: - how, when, or where to do the work - what tools or equipment to use - what assistants to hire to help with the work - where to purchase supplies and services If you receive less extensive instructions about what should be done, but not how it should be done, you may be an independent contractor. For instance, instructions about time and place may be less important than directions on how the work is performed. Training – if the business provides you with training about required procedures and methods, this indicates that the business wants the work done in a certain way, and this suggests that you may be an employee. FINANCIAL CONTROL These facts show whether there is a right to direct or control the business part of the work. For example: Significant Investment – if you have a significant investment in your work, you may be an independent contractor. While there is no precise dollar test, the investment must have substance. However, a significant investment is not necessary to be an independent contractor. Expenses – if you are not reimbursed for some or all business expenses, then you may be an independent contractor, especially if your unreimbursed business expenses are high. Opportunity for Profit or Loss – if you can realize a profit or incur a loss, this suggests that you are in business for yourself and that you may be an independent contractor. RELATIONSHIP OF THE PARTIES These are facts that illustrate how the business and the worker perceive their relationship. For example: Employee Benefits – if you receive benefits, such as insurance, pension, or paid leave, this is an indication that you may be an employee. If you do not receive benefits, however, you could be either an employee or an independent contractor. Written Contracts – a written contract may show what both you and the business intend. This may be very significant if it is difficult, if not impossible, to determine status based on other facts. When You Are an Employee Your employer must withhold income tax and your portion of social security and Medicare taxes. Also, your employer is responsible for paying social security, Medicare, and unemployment (FUTA) taxes on your wages. Your employer must give you a Form W-2, Wage and Tax Statement, showing the amount of taxes withheld from your pay. You may deduct unreimbursed employee business expenses on Schedule A of your income tax return, but only if you itemize deductions and they total more than two percent of your adjusted gross income. When You Are an Independent Contractor The business may be required to give you Form 1099-MISC, Miscellaneous Income, to report what it has paid to you. You are responsible for paying your own income tax and self-employment tax (Self-Employment Contributions Act – SECA). The business does not withhold taxes from your pay. You may need to make estimated tax payments during the year to cover your tax liabilities. You may deduct business expenses on Schedule C of your income tax return. IRS TAX PUBLICATIONS If you are not sure whether you are an employee or an independent contractor, get Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Publication 15-A, Employer’s Supplemental Tax Guide, provides additional information on independent contractor status. Stanek Tax Services · 15701 State Road 50 Ste 204 · Clermont, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected]
Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] Don't Panic, Call Stanek!
If you receive a letter from the IRS about your tax return, don’t panic! The IRS notice you receive likely covers a very specific issue about your account or tax return. Generally, the IRS will send a notice if you owe additional tax, are due a larger refund, if there is a question about your tax return or if the IRS needs additional information from you to process your return or resolve your issue. If you receive a letter or notice from the IRS, it will outline the reason for the correspondence and will provide instructions and next steps. Many of these letters and notices can be dealt with simply. 3) There are a number of reasons why the IRS might send you a notice. Notices may request payment of taxes, notify you of changes to your account, or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. 4) Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry. 5) If you receive a correction notice, you should review the correspondence and compare it with the information on your return. 6) If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise. 7) If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response. 8) Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry. 9) It’s important that you keep copies of any correspondence with your records. ![]() If your lender cancelled or forgave any of your mortgage debt, you generally have to pay tax on that amount. But there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2013. 1. Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home. 2. To qualify, you must have used the debt to buy, build or substantially improve your principal residence. The residence must also secure the mortgage. 3. The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return. 4. You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring. You may also be able to exclude mortgage debt cancelled in a foreclosure. 5. You may also qualify for the exclusion on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing. 6. Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify. 7. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. 8. Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings. 9. If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property. 10. Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form. Stanek Tax Services · 15701 State Road 50 Ste 204 · Clermont, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] Capital loss carryover
If your capital losses exceed your capital gains, you have a capital loss carryover for the next tax year. You can use the carryover to offset capital gains plus up to $3,000 of ordinary income. Technically, capital losses carry forward as short-term and long-term losses. However, because of netting rules, whichever type of loss you have, it will be used to offset all of your current gains and then ordinary income up to $3,000. Limit on carryovers: Capital losses can be carried forward indefinitely; there is no fixed limit. However, capital losses end on death. They cannot be used by a surviving spouse beyond the joint return for the year of spouse’s death. Charitable contribution carryover If your charitable contributions are limited because of your adjusted gross income (AGI), excess amounts can be carried forward to future tax years (subject to AGI limits). Limit on carryovers: Charitable contributions can be carried forward for 5 years. There is a special 15-year carryover rule for contributions of conservation easements. Investment interest carryover If your investment interest deduction is limited due to a lack of investment income, the excess can be carried over to future tax years. The annual deduction for investment interest cannot exceed investment income for the year. Limit on carryovers: There is no fixed time limit. Home office deduction carryover If your home office deduction is limited because of your income from the home office activity, the excess deduction can be used on future tax returns to the extent there is sufficient income from the home office activity. You do not have to be in the same home office in the carryover year in order to use the carryover. Limit on carryovers: There is no fixed time limit. Net operating loss carryover If you have a net operating loss (NOL) carryover that was not used up, you can apply the NOL to future years. The NOL is reported as a negative figure on the "other income" line on Form 1040. Limit on carryovers: NOLs can be carried forward for up to 20 years. STANEK TAX SERVICES · 15701 STATE ROAD 50 STE 204 · CLERMONT, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] The American Opportunity Credit and the Lifetime Learning Credit may help you pay for the costs of higher education. If you pay tuition and fees for yourself, your spouse or your dependent you may qualify for these credits. Here are some facts you should know about these important credits: American Opportunity Credit The AOTC is worth up to $2,500 per eligible student. The credit is available for the first four years of higher education at an eligible college, university or vocational school. The credit lowers your taxes and is partially refundable. This means you could get a refund of up to $1,000 even if you owe zero tax. An eligible student must be working toward a degree, certificate or other recognized credential. The student must be enrolled at least half time for at least one academic period that began during the year. You generally can claim the costs of tuition and required fees, books and other required course materials. Other expenses, such as room and board, do not qualify. Lifetime Learning Credit The credit is worth up to $2,000 per tax return per year. The yearly limit applies no matter how many students are eligible for the credit. The credit is nonrefundable. This means the amount you can claim is limited to the amount of tax you owe. The credit is available for all years of higher education. This includes courses taken to acquire or improve job skills. You can claim the costs of tuition and fees required for enrollment or attendance. This includes amounts you were required to pay to the institution for course-related books, supplies and equipment. You cannot claim either of these credits if someone else claims you as a dependent on his or her tax return. Both credits are subject to income limitations and may be reduced or eliminated depending on your income.
Keep in mind that you can’t claim both credits for the same student in the same year. You may not claim both credits for the same expense. Parents or students claiming either credit should receive a Form 1098-T, Tuition Statement, from their educational institution. You should make sure it is complete and correct. STANEK TAX SERVICES · 15701 STATE ROAD 50 STE 204 · CLERMONT, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] Adoption can create new families or expand existing ones. The expenses of adopting a child may also lower your federal tax. If you recently adopted or attempted to adopt a child, you may be eligible for a non-refundable tax credit. You may also be eligible to exclude some of your income from tax. Here are ten things the IRS wants you to know about adoption tax benefits.
1. The maximum adoption tax credit and exclusion for 2013 is $12,970 ($13,190 in 2014) per eligible child. 2. To be eligible, a child must generally be under 18 years old. There is an exception to this rule for children who are physically or mentally unable to care for themselves. 3. The tax credit is nonrefundable. This means that, while the credit may reduce your tax to zero, you cannot receive any additional amount in the form of a refund. 4. If your credit exceeds your tax, you may be able to carry forward the unused credit. This means that if you have an unused credit amount for the tax year, you can use it to reduce your taxes for the following year. You can carryover an unused credit for up to five years or until you fully use the credit, whichever comes first. 5. Use Form 8839, Qualified Adoption Expenses, to claim the adoption credit and exclusion. You cannot efile a tax return when an adoption credit is claimed. You must mail your return to the IRS. 6. Adoption expenses must directly relate to the legal adoption of the child and they must be reasonable and necessary. Expenses that qualify include adoption fees, court costs, attorney fees and travel costs. 7. If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you did not pay any qualified adoption expenses. 8. If your employer has a written qualified adoption assistance program, you may be eligible to exclude some of your income from tax. 9. Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion. However, you cannot claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense. 10. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount you can claim depending on your income. STANEK TAX SERVICES · 15701 STATE ROAD 50 STE 204 · CLERMONT, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] ![]() Starting this 2014 tax season – the Internal Revenue Service will no longer offer free tax preparation services. The service suggests taxpayers to utilize online computer programs or non-profit organizations to assist them. This is the IRS Statement: "Due to resource constraints, fewer tax returns have been prepared at IRS walk-in offices in recent years. For several years, return preparation has only been available in a limited format – only offered at some IRS offices and not every day of the week at some locations. In addition, taxpayers had to have income below the Earned Income Tax Credit thresholds to receive this assistance. With the growth in electronic tax preparation and continued resource limitations, the IRS will be directing qualified taxpayers during the upcoming filing season to more than 13,000 volunteer partner sites across the country rather than limited services at the IRS’s 250 walk-in offices. The IRS will refer taxpayers who visit the walk-in offices for tax preparation to the nearest volunteer site for tax return preparation. In addition, the IRS Free File program on IRS.gov offers free e-file and tax software to help taxpayers prepare their returns." |
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May 2016
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