A Radical Proposal for Fighting Tax-Related ID Theft

A Radical Proposal for Fighting Tax-Related ID Theft

Are you concerned about your tax information being stolen? A recent article from TaxProToday.com, written by Roger Russell, brought to our attention how a new idea could help cut down on tax-related ID theft and protect taxpayers in the long run. Tax experts Roger Harris and Jeff Trinca have an idea to drastically cut down tax refund fraud — by making stolen taxpayer information worthless to thieves. The two talked to staffers on the Senate Finance Committee and the House Ways and Means Committee about the idea last week, and intend to speak with committee members when they return from the August recess next month. The IRS is making progress in fighting identity theft tax refund fraud, according to Harris, president of Padgett Business Services, and Trinca, vice president of Van Scoyoc Associates. They cite the decline in taxpayers reporting ID theft from 698,700 in 2015 to 376,500 in 2016, a 46 percent drop. And indications are that the number will decline further in 2017. Yet the lower number still reflects approximately a billion dollars a year in lost revenue. Fraudsters are relentless, and will likely adjust in future filing seasons. “Rapid refunds and refundable credits are part of the problem,” said Harris. They increase the incentive for ID theft by putting all taxpayers at risk with a system that only benefits a portion of the taxpayer population. Thieves don’t care if a taxpayer is due a refund or owes money; they just want the taxpayer’s information.” The solution, according to Harris, is a “Refund Lock.” “There is a large pool of returns that, due to the taxpayer’s expected...
Home Office Deduction: Which Method to Use?

Home Office Deduction: Which Method to Use?

Are you an entrepreneur using a home office? Are you aware there are two different ways to take the deduction for the use of your home for business purposes? Determining which is right for you is the topic of today’s blog. The IRS has very specific guidelines as what constitutes the use of your home for business. Regular and exclusive use – this means you can’t use your laptop on the kitchen table, but must have a specific place used only for business purposes. Generally, your home must be the principal place of business, although there are exceptions if you have a separate location. Since 2013, the IRS has had two different ways to calculate the home office deduction (originally there was just the actual expense method which is considered to be complicated). Since the simplified method has been introduced, it is much easier to determine the amount of the deduction. But which method should you use? The actual expense method allows you to write off a proportional amount of expenses based on the percentage of the home used for the business. These indirect expenses generally include rent/mortgage, real estate taxes, utilities, and repairs and insurance. You can also deduct direct expenses such as painting or buying equipment for your space. The simplified method allows a write off of $5 for every square foot of your home office up to 300 square feet for a total deduction up to $1500.00. With the actual expense method, you must keep copies of all paperwork proving actual costs to support the tax deduction taken, which is not required for the simplified method....
Tax Benefits for Education

Tax Benefits for Education

It’s August and many parents have children heading to college soon, and there are tax benefits for education. Are you aware you may qualify for some credits or deductions on your income tax return? Following is information you may find helpful regarding this topic: A tax credit reduces the amount of income tax you may have to pay. A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay. An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American opportunity tax credit and the lifetime learning credit. You must meet all three of the following for either credit: You, your dependent or a third party pays qualified education expenses for higher education. An eligible student must be enrolled at an eligible educational institution. The eligible student is yourself, your spouse or a dependent you list on your tax return. If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. In the past, there were also deductions you may have been able to take on your tax return. These included: Tuition and Fees –  The tuition and fees deduction could reduce the amount of your income subject to tax by up to $4,000. You could not claim the tuition and fees deduction as...
GO-Biz Accepting Applications for California Competes Tax Credit

GO-Biz Accepting Applications for California Competes Tax Credit

Would you be interested in having tax credits for your business? The third quarter application period is open for businesses interested in applying for the California Competes Tax Credit program. The program is provided by the Governor’s Office of Business and Economic Development (GO-Biz), which offers a variety of different services to help business owners including international trade development, regulation guidance, small business assistance, and assistance with state government. With information shared by the CalChamber’s website, you can learn how this program could potentially help your business and how you can apply. The California Competes Tax Credit is an income tax credit available to businesses that want to come, stay, or grow in California. Tax credit agreements are negotiated by GO-Biz and approved by a statutorily created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, and one appointee each by the Assembly Speaker and Senate Rules Committee. This program is open to any business planning to create new full-time jobs in the state, regardless of size or location. Businesses can access the online application here. Applications must be submitted by August 21. Since 2014, GO-Biz has allocated $492.5 million to 688 companies projected to create 70,747 new jobs and $14.4 billion in new investments. Members of the CCTC team are available to provide technical application assistance. An application guide, Frequently Asked Questions (FAQs) and program regulations are available on the California Competes Tax Credit page. If you would like to learn more information on CCTA program, you can participate in an upcoming online webinar hosted by...
10 Things to Know About the Child/Dependent Care Credit

10 Things to Know About the Child/Dependent Care Credit

Are you a parent incurring child/dependent care costs so you can work? Are you aware you may qualify for a deduction on your tax return? If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must...
IRS Website Offers Small Business Employment Tools

IRS Website Offers Small Business Employment Tools

Do you have trouble understanding and complying with the complex IRS payroll regulations for your small business? The IRS website offers tax resources for small businesses with products ranging from printable calendars, online calculators, a series of educational webinars and step-by-step guides. An article published on the CPA Practice Advisor website, helps inform entrepreneurs about the tools available to assist them with employment taxes. Federal law requires most employers to withhold federal taxes from their employees’ wages. IRS tools can help small businesses understand some of the requirements for withholding, reporting, and paying employment taxes. The IRS website, IRS.gov, provides easily accessible information and guides on what forms employers should use as well as how and when to deposit and report employment taxes. Federal Income Tax– Small businesses first need to figure out how much tax to withhold. Small business employers can better understand the process by starting with an employee’s Form W-4 and the withholding tables described in Publication 15, Employer’s Tax Guide. Social Security and Medicare Taxes– Most employers also withhold social security and Medicare taxes from employees’ wages and deposit them along with the employers’ matching share. In 2013, employers became responsible for withholding the Additional Medicare Tax on wages that exceed a threshold amount.There is no employer match for the Additional Medicare Tax and certain types of wages and compensation are not subject to withholding. Federal Unemployment (FUTA) Tax– Employers report and pay FUTA tax separately from other taxes. Employees do not pay this tax or have it withheld from their pay. Businesses pay FUTA taxes from their own funds. Depositing Employment Taxes– Generally, employers...

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