IRS to Delay Tax Refunds Involving EITC and ACTC Next Year

More delay's, but if it safeguards identity theft, I wouldn't get angry.

See Here

http://www.accountingtoday.com/news/tax-practice/irs-to-delay-tax-refunds-involving-eitc-and-actc-next-year-78387-1.html

Washington, D.C. (June 13, 2016)

By Michael Cohn

 

The Internal Revenue Service is warning tax professionals that next year a new law will require the IRS to hold all Earned Income Tax Credit and Additional Child Tax Credit refunds until Feb. 15 as a safeguard against identity theft and tax fraud.
The IRS pointed out the new law is likely to affect some returns submitted early in the tax filing season. The IRS is encouraging tax professionals to begin preparing for the change now. Planning is also underway for a wider communication effort this summer and fall to alert taxpayers.
The action is driven by the Protecting Americans from Tax Hikes Act of 2015, or PATH Act, which was enacted Dec. 18, 2015. Section 201 of the new law mandates that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before Feb. 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return.
The change begins Jan. 1, 2017 and may affect some returns filed early in 2017. To comply with the law, the IRS said it will hold the refunds on EITC and ACTC-related returns until Feb. 15. This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.
The IRS plans to hold the entire refund until that time. Under the new law, the IRS cannot release the part of the refund that is not associated with the EITC and ACTC.
The IRS advised taxpayers to file as they normally do, and tax return preparers should also submit returns as they normally do. The IRS will begin accepting and processing tax returns once the filing season begins, as we do every year. That will not change.
The IRS still expects to issue most refunds in less than 21 days, though the IRS will hold refunds for EITC and ACTC-related tax returns filed early in 2017 until Feb. 15 and then begin issuing them.
The IRS plans to work closely with stakeholders and IRS partners to help the public understand this process before they file their tax returns and ensure a smooth transition for this important law change. More information about this law will be posted to IRS.gov and shared with partners and taxpayers throughout the second half of 2016.

What should I Pay to get my Taxes Done?

http://www.cpapracticeadvisor.com/news/12065684/average-income-tax-preparation-fees-increased-in-2015

File Separate or Married?

One question I get all the time, "Is it better for me to file Married Filing Separately vs. Married Filing Jointly?" It DEPENDS. The answer I give everyone who asks me a tax question, because it does depend on a lot of other items that go into your return. How much you make, how many kids, if you itemize and without knowing this, I can't tell you a right answer... I can tell you, with the experience I have, more times than not, MFS does not benefit. There are disadvantages to MFS and among them are: Lost Credits - specifically the Childcare expenses & Earned Income Credit. Unless both the spouses live apart for last six months of the year, no one can claim the childcare dependent credit. You will also loose education benefits such as the Tuition & fees deduction and the student loan interest deduction. Another disadvantage is, if one spouse itemizes, the other one must itemize as well. If one spouse takes the standard, the other one must take the standard deduction too. Unless you have a huge amount of itemized deductions, one spouse could itemize lower than the standard deduction. If there is social security involved, a greate percentage of Social Security benefits may be taxable, unless again if spouses lived apart for the entire year. Some reasons to file separately include, but are not limited to: 1.) No joint liability. Each spouse who signs a joint return is responsible for the accuracy of the return as well as the payment of the tax. A spouse who files separately is not responsible for reporting or paying tax on items attributable to the other spouse. 2.) Some couples do pay less tax filing separately. Spouses with similar and almost equal incomes will generally owe the same tax under either filing status unless one spouse has medical expenses, casualty losses or employee business expenses subject to a percentage of AGI. If one spouse has significantly higher income than the other, the couple will generally pay less tax filing jointly. The best advice I can give is run you and your spouse's returns a couple of ways. A) MFJ B) MFS - itemized C) MFS - non-itemized D) If there is a kid involved, claim on one spouses return for B & C and then the other spouse for B & C. Hope this helps!

Portals Are Here to Stay

With utilization of technology so prevalent in the business world, changes in the way CPA firms deliver a client's tax return has been a struggle. While the most prevalent delivery method is paper, many are starting to replace or supplement that method with delivery in some digital form. Federal and state laws continue to get stricter about maintaining the security of clients’ Social Security numbers. Client portals - secure online storage areas—offer an alternative to e-ma...il for communicating and collaborating with clients. In fact, these client portals are much more secure than email, and have an security encryption much like that of banks who use online banking. Here’s how portals typically work: The accountant uploads the tax return—or any other information the client may want—to a secure Web site, where each client has a personal password and can log on to retrieve information. When the accountant adds a new document, the client receives an e-mail with instructions on how to log on and view it. There are other benefits to using the client portal as well. 

1) Alleviates challenges for clients that live out of the immediate area and have difficulty physically coming into the office.

2) Provides an effective, efficient and more secure means of transmitting and storage of important documents
 
3) Provides clients with electronic copy of the tax return they can access at any time
 
4) Reduces impact on the environment.

I am curious how many of you already receive your tax return via portal? Would you consider this?

 

Top 10 Tips to Help you Choose A Tax Preparer

1. Check the preparer’s qualifications.
All paid tax return preparers are required to have a Preparer Tax Identification Number. In addition to making sure they have a PTIN, ask if the preparer belongs to a professional organization and attends continuing education classes. ...

2.Check on the preparer’s history.
Check with the Better Business Bureau to see if the preparer has a questionable history. Also check for any disciplinary actions and for the status of their licenses. For certified public accountants, check with the state boards of accountancy. For attorneys, check with the state bar associations. For enrolled agents, check with the IRS Office of Enrollment.

3.Ask about service fees.
Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers can. Also, always make sure any refund due is sent to you or deposited into an account in your name. Taxpayers should not deposit their refund into a preparer’s bank account.

4. Ask to e-file your return.
Make sure your preparer offers IRS e-file. Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return. IRS has safely and securely processed more than one billion individual tax returns since the debut of electronic filing in 1990.

5.Make sure the preparer is accessible.
Make sure you will be able to contact the tax preparer after you file your return, even after the April 15 due date. This may be helpful in the event questions arise about your tax return.

6.Provide records and receipts.
Reputable preparers will request to see your records and receipts. They will ask you questions to determine your total income and your qualifications for deductions, credits and other items. Do not use a preparer who is willing to e-file your return by using your last pay stub before you receive your Form W-2. This is against IRS e-file rules.

7.Never sign a blank return.
Avoid tax preparers that ask you to sign a blank tax form.

8.Review the entire return before signing.
Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.

9.Make sure the preparer signs and includes their PTIN.
A paid preparer must sign the return and include their PTIN as required by law. The preparer must also give you a copy of the return.

10.Report abusive tax preparers to the IRS.
You can report abusive tax preparers and suspected tax fraud to the IRS on Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or altered a return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. Download the forms on the IRS.gov website or order them by mail at 800-TAX-FORM (800-829-3676)

Identity Theft

There was 671,773 open IRS cases of identity theft as of May of 2015. The number is probably significantly higher now. Chances are there is probably someone you know that is a victim, or you will be a victim of ID theft soon! Being prepared will only help. What I have seen in the last couple of years from preparing taxes, the number has been growing drastically. Sometimes you won't know it until you go to file your return (electronically) and it was rejected becuase "the I...D number has already been filed". Resolving Tax ID theft matters can be time-consuming and costly without the right resources. The Two best things to do immediately following the time you find out your ID has been stolen to help resolve your issue sooner: 1) File a police Report 2) mail a paper tax return with an attached Form 14039 Identity Theft Affidavit and a copy of the police report to the IRS. There are steps to take when you "think" your ID theft has been stolen, but have not filed your return yet, too. I am here to help.

Allowances

I often have clients get confused about this theory. For those who like to adjust their withholding throughout the year like myself, it actually works opposite of what most people think. Just think, bigger number of allowances, more money in your pocket each paycheck! Also, each allowance does not necessarily correlate with how many dependents you are claiming which is a misconception as well.