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Archive for March, 2014

Falsely Claiming Zero Wages or Using False Form 1099

March 28th, 2014

zero

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.

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.

Courtesy of the IRS Issue Number: 2014-16
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Return Preparer Fraud

March 27th, 2014

fraud 2

About 60 percent of taxpayers will use tax professionals this year to prepare their tax returns. Most return preparers provide honest service to their clients. But, some unscrupulous preparers prey on unsuspecting taxpayers, and the result can be refund fraud or identity theft.

Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. Make sure the preparer you hire is up to the task.

Courtesy of the IRS Issue Number: 2014-16
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Pervasive Telephone Scams

March 25th, 2014

phone

The IRS has seen a recent increase in local phone scams across the country, with callers pretending to be from the IRS in hopes of stealing money or identities from victims.

These phone scams include many variations, ranging from instances from where callers say the victims owe money or are entitled to a huge refund.

Courtesy of the IRS Issue Number: 2014-16
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Seven Facts about Dependants and Exemptions

March 21st, 2014

dependant

The IRS has seven facts on these rules to help you file your taxes.

1. Exemptions cut income. There are two types of exemptions: personal exemptions and exemptions for dependants. You can usually deduct $3,900 for each exemption you claim on your 2013 tax return.

2. Personal Exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return you can also claim one for your spouse. If you file a separate return, you can claim and exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependant of another taxpayer.

3. Exemptions for dependants. A dependant is either your child or a relative that meets certain tests. You can’t claim your spouse as a dependant.

4. Some people don’t qualify. You generally may not claim married persons as dependants if they file a joint return with their spouse.

5. Dependants may have to file. People that you can claim as your dependant may have to file their own federal tax return.

6. No exemption on dependant’s return. If you can claim a person as a dependant, that person can’t claim a personal exemption on his or her own tax return.

7. Exemption phase-out. The $3,900 per exemption is subject to income limits.

Courtesy of the Internal Revenue Service: Issue IRS Tax Tip 2014-22
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Identity Theft

March 20th, 2014

robber

Identity theft occurs when someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity their uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.

Courtesy of the IRS Issue Number: 2014-16
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Important Reminders about Tip Income

March 19th, 2014

tip jar

-Tips are taxable. You must pay federal income tax on any tips you receive. The value of non-cash tips, such as tickets, passes or other items of
value are also subject to income tax.

-Include all tips on your return. You must include the total of all tips you received during the year on your income tax return.

-Report tips to your employer. If you receive $20 or more in tips in any one month, from any one job, you must report your tips for that month to your employer.

-Keep a daily log of tips.

For more information, check out Internal Revenue Service Issue Number: IRS Tax Tip 2014-16.

2014 Filing Season Continues with Higher Refunds Issued

March 13th, 2014

refund

The IRS released 2014 tax filing season statistics showing that 15 percent more refunds were already issued this year, compared to 2013 figures. Additionally, the average federal refund totaled $3,3211, an increase of $190 compared with the same period a year ago.

The statistics issued, covering the period through February 14, show that while the overall number of tax returns filed this year is down slightly, less than a percentage point, nearly 95 percent of all returns received were filed electronically.

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Courtesy of the IRS Issue Number 2014-17

Four Good Reasons to Direct Deposit Your Refund

March 12th, 2014

money bank

Here are four good reasons to choose direct deposit:

1. Convenience. There is no need to make a trip to the bank to deposit a check.
2. Security. Sinces no risk of your refund check being stolen or lost in the mail.
3. Ease. When you do your taxes, just follow the instructions in the tax software or with your tax forms.
4. Options. You can split your refund among up to three financial accounts.

Visit our website at www.Hoorfarlaw.com.
Courtesy of IRS Issue Number: IRS Tax Tip 2013-15

Five Facts about Unemployment Benefits

March 11th, 2014

help wanted

Here are five important facts from the IRS about unemployment compensation:

1. You must include all unemployment compensation in your income for the year.

2. There are several types of unemployment compensation.

3. You must include benefits paid to you from regular union dues in your income.

4. You can choose to have federal income tax withheld from your unemployment.

5. If you are facing financial difficulties, you should visit IRS.gov. “What Ifs” for Struggling Taxpayers explains the tax effects of events such as
the loss of a job.

Courtesy of IRS Issue Number: IRS Tax Tip 2014-25
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Ten Facts about Capital Gains and Losses

March 10th, 2014
  1. Capital assets include property such as your home or car. They also include investment property such as stocks and bonds.
  2. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.
  3. You must include all capital gains in your income.
  4. You can deduct capital losses on the sale of investment property.capital gain and loss
  5. Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term.
  6. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain.
  7. The tax rates that apply to net capital gains will usually depend on your income.
  8. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or %1,500 if you are married and file a separate return.
  9. If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return.
  10. You must file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses.

Courtesy of the Internal Revenue Service Issue Number: IRS Tax Tip 2014-27.
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