If you are in need of help with your IRS tax liability – there is no better name in professional help than Rob Arena at Arena and Associates, Inc. Check our website at aataxhelp.com for more information. Call 303-847-4038 for a free consultation.
The IRS reports W2 identity theft as a growing problem. Employers that have had their records compromised by hacking activity can contact the IRS directly. Email firstname.lastname@example.org to notify the IRS of a W-2 data loss. The IRS will contact you directly to investigate the issue. In the subject line, type “W2 Data Loss” so that the email can be routed properly. Do not attach any employee personally identifiable information (PII) data.
Business employer identification number (EIN) associated with the data loss
Contact phone number
Summary of how the data loss occurred
Volume of employees impacted
The IRS also recommends that employers contact both state taxing authorities and local law enforcement to report the data hack and compromise records.
Internal Revenue Service enforcement action was down in 2016. The IRS has experienced continuing budget cuts and this is being reflected in a reduced number of audits, liens and levies. The lower oversight and enforcement action also lowered collection figures. The lower lien figures may forecast and uptick in activity for 2017 as the IRS guidelines for liens have not changed and therefore a backlog of work exists.
Identity Theft and the filing of fraudulent refund returns is a common and persistent problem for many taxpayers. As this is tax time, taxpayers must be wary of returns that our filed on their behalf by criminals that have stolen their social security numbers. The filing of a fraudulent return can result in the taxpayer’s refund being stolen and will delay posting of their actual return. Solving these types of issues can be time consuming and extremely frustrating.
A taxpayer may not be aware that they are a victim of identity theft until they attempt to file the tax return and it is rejected as a duplicate return. Other indicators of identity theft are IRS notices stating; more than one tax return filed using the taxpayer’s Social Security Number; or a balance due, refund offset or collection action taken for a year in which no return was filed; or the IRS or state records indicate the taxpayer received wages from an unknown employer; or an amended tax return. For business, fictitious employees or notice about a defunct, or closed business is a red flag.
Taxpayers that find that they have become victim of identity theft should act quickly. Unless the taxpayer contacts the IRS directly they may not be aware that the taxpayer was not the source of the fraudulent return. The IRS will research the matter and most likely contact the taxpayer to provide additional information. Being prompt and diligent in response can help to avoid an escalation of the issue.
Arena and Associates has many years of correcting these issues. If you or someone you know has suffered from this then call today for immediate help.
The IRS warns taxpayers and especially seniors to be wary of phone scams that are prevalent during tax season.
Avoid becoming a victim of scam artists. The IRS will never:
Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
Ask for credit or debit card numbers over the phone
IRS Reminds Taxpayers of April 1 Deadline to Take Required Retirement Plan Distributions
WASHINGTON — The Internal Revenue Service today reminded taxpayers who turned age 70½ during 2016 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Saturday, April 1, 2017.
The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs but not Roth IRAs. It also typically applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.
The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. A taxpayer who turned 70½ in 2016 (born after June 30, 1945 and before July 1, 1946) and receives the first required distribution (for 2016) on April 1, 2017, for example, must still receive the second RMD by Dec. 31, 2017.
Affected taxpayers who turned 70½ during 2016 must figure the RMD for the first year using the life expectancy as of their birthday in 2016 and their account balance on Dec. 31, 2015. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.
Most taxpayers use Table III (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2016 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.
Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Employees who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulation in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.
The IRS encourages taxpayers to begin planning now for any distributions required during 2017. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2017 RMD, this amount would be on the 2016 Form 5498 that is normally issued in January 2017.
IRA owners can use a qualified charitable distribution (QCD) paid directly from an IRA to an eligible charity to meet part or all of their RMD obligation. Available only to IRA owners age 70½ or older, the maximum annual exclusion for QCDs is $100,000. For details, see the QCD discussion in Publication 590-B.
A 50 percent tax normally applies to any required amounts not received by the April 1 deadline. Report this tax on Form 5329 Part IX. For details, see the instructions for Part IX of this form.
Tax Time Guide: Still Time to Contribute to an IRA for 2016
WASHINGTON — The Internal Revenue Service today reminded taxpayers that they still have time to contribute to an IRA for 2016 and, in many cases, qualify for a deduction or even a tax credit.
This is the eighth in a series of 10 IRS tips called the Tax Time Guide. These tips are designed to help taxpayers navigate common tax issues as this year’s tax deadline approaches.
Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and the self-employed to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.
Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for a 2016 tax return, contributions must be made by April 18, 2017. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they complete their 2016 tax returns.
Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2016, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2016 is barred from making contributions to a traditional IRA for 2016 and subsequent years.
The deduction for contributions to a traditional IRA is generally phased out for taxpayers covered by a workplace retirement plan whose incomes are above certain levels. For someone covered by a workplace plan during any part of 2016, the deduction is phased out if the taxpayer’s modified adjusted gross income (MAGI) for that year is between $61,000 and $71,000 for singles and heads of household and between $0 and $10,000 for those who are married filing separately. For married couples filing a joint return where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range for the deduction is $98,000 to $118,000. Where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI phase-out range is $184,000 to $194,000.
Even though contributions to Roth IRAs are not tax deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose incomes are above certain levels. The MAGI phase-out range is $184,000 to $194,000 for married couples filing a joint return, $117,000 to $132,000 for singles and heads of household and $0 to $10,000 for married persons filing separately. For detailed information on contributing to either Roth or Traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.
Taxpayers whose employer does not offer a retirement plan may want to consider enrolling in myRA®, a retirement savings plan offered by the U.S. Department of the Treasury. It’s safe, affordable and a great option for people who don’t have a retirement savings plan at work. Taxpayers can direct deposit their entire refund or a portion of it into an existing myRA – Retirement Account. For further details and to open a myRA account online, visit www.myRA.gov.
Also known as the Retirement Savings Contributions Credit, the Saver’s Credit is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2016, the income limit is $30,750 for singles and married filing separate, $46,125 for heads of household and $61,500 for married couples filing jointly.
Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the Saver’s Credit can increase a taxpayer’s refund or reduce the taxes they owe. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or Traditional IRA and other qualifying retirement programs. Form 8880 is used to claim the Saver’s Credit, and its instructions have details on figuring the credit correctly.
The Newsroom Topics
Issue Number: IR-2017-59
Inside This Issue
Tax Time Guide: Electronic Payment/Payment Agreement Options Available to Those Who Owe Taxes
WASHINGTON — The Internal Revenue Service today reminded taxpayers that it’s easier than ever to pay taxes electronically. For those unable to pay on time, several quick and easy solutions are available.
This is the seventh in a series of 10 IRS tips called the Tax Time Guide. Taxpayers can use these tips to find solutions to common tax issues as the April 18 tax deadline approaches.
Taxpayers who owe taxes can now choose among several quick and easy electronic payment options, including the following:
Taxpayers can electronically request an extension of time to file. An extension of time to file is not an extension to pay. Taxes are still due by the original due date. Taxpayers can get an automatic extension when making a payment with Direct Pay, Electronic Federal Tax Payment System or by debit or credit card. Select “Form 4868” as the payment type to receive the automatic extension.
Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” To help ensure that the payment gets credited promptly, also enclose a Form 1040-V payment voucher. Also, print on the front of the check or money order: “2016 Form 1040”; name; address; daytime phone number; and Social Security number.
Taxpayers can view their federal tax account balances online. It’s safe, secure and available on the “Finding out How Much You Owe” page on IRS.gov. They can also access payment options or apply for an installment agreement on this page.
The IRS advises taxpayers to file either an income tax return or a request for a tax-filing extension by this year’s April 18 deadline to avoid late-filing penalties. This penalty can be ten times as costly as the penalty for paying late.
Taxpayers who owe, but can’t pay the balance in full, do have options. Often they qualify for one of several relief programs, including:
Other tips in the Tax Time Guide series are available on IRS.gov.
Seminars, Workshops, Conferences, and Other Practitioner Activities By State:
1. IRS, Department of Education Statement about the IRS Data Retrieval Tool
The IRS Data Retrieval Tool on fafsa.gov and StudentLoans.gov is currently unavailable. We are working to resolve the issue as quickly as possible. However, at this time, the IRS anticipates the online data tool will be unavailable for several weeks.
While the Data Retrieval Tool is offline, the IRS offered other ways for students and families to find the tax information they need to complete student financial aid applications.
2. IRS Seeks Applications for the Electronic Tax Administration Advisory Committee
The IRS is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC).
The ETAAC provides an organized public forum for discussion of electronic tax administration issues such as prevention of identity theft and refund fraud in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC members will work closely with the Security Summit, a joint effort of the IRS, state tax administrators and tax software industry to fight electronic fraud.
3. Received Letter 5903? Additional Staff Available Starting Tuesday to Revalidate Your Identity for e-Services
If you received Letter 5903, e-Services Revalidation, you must revalidate your identity. For a limited time, the e-Services Help Desk will have additional staff available to only assist tax professionals who need to revalidate their identity to have their e-Services registration account reinstated. Additional assistors will be in place Tuesday, March 14 through Friday, March 17.
E-Services registration accounts were suspended for tax professionals who received Letter 5903 and failed to revalidate their identities within the required 30-day time period. The IRS urges tax professionals who need to revalidate their identity to do so now when extra staff is on hand and not wait until there is an emergency need to access their e-Services accounts.
Letter recipients must revalidate even if they are infrequent users of e-Services or its tools. As a reminder Authorized IRS e-file Providers must ensure the IRS has current information by reviewing and updating their IRS e-file application within 30 days of a change which requires access to your e-Services registration account. Letter 5903 was issued to those tax professionals who have access to sensitive taxpayer data through e-Services and who have accessed their accounts in the past year. This is part of the IRS’ ongoing effort to strengthen security around certain self-help tools on IRS.gov and better protect taxpayer and tax professional data.
More information is available at www.irs.gov/eservices.
4. New Date for “Working with the IRS Office of Appeals” Webinar
Register here to watch “Working with the IRS Office of Appeals — What to Expect,” a free 90-minute webinar, on May 3 at 2:00 p.m. EST. Topics include information on the role of Appeals, an overview of Appeals policies and procedures, and an outline of case procedures for examination and collection cases.
Certificates of completion are being offered. Earn one continuing education credit in Federal Tax.
5. Tax Scams via Video Relay Service (VRS)
The IRS warns the deaf and hard of hearing community about an increasing number of tax scammers that use Video Relay Services (VRS). Learn more in this IRS YouTube video.
Watch this and other videos on the IRS’s YouTube Channel.
6. Tax Pros: Do you use social media? Follow @IRStaxpros on Twitter
The IRS has a Twitter account that provides news and guidance for tax professionals.
Get the latest by following us at https://twitter.com/irstaxpros.
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Inside This Issue
Tax Time Guide: Protect Personal, Financial, Tax Information and Computers
WASHINGTON — The Internal Revenue Service today reminded taxpayers to be cautious and protect personal, financial and tax information, particularly at tax time.
This is the sixth in a series of 10 IRS tips called the Tax Time Guide, designed to help taxpayers navigate common tax issues. This year’s tax-filing deadline is April 18.
The IRS urges taxpayers to be safe online and reminds them to take steps to help protect personal information and guard against identity theft. This is true all year long, but particularly at tax time, when taxpayers may anticipate hearing about a tax refund or the status of their return.
“The IRS works year-round to protect taxpayers against scams and identity theft,” said John Koskinen, IRS Commissioner. “But we can’t do this alone. Taxpayers can do their part by taking certain precautions to stay ahead of these would-be con artists.”
Treat personal information like cash – don’t hand it out to just anyone. Social Security numbers, credit card numbers, bank and utility account numbers can be used to steal money or open new accounts. Every time a taxpayer receives a request for personal information, they should think about whether the request is truly necessary. Scammers will do everything they can to appear trustworthy and legitimate.
Avoid Phishing Scams
The easiest way for criminals to steal sensitive data is simply to ask for it. Taxpayers should learn to recognize phishing emails, calls or texts that pose as familiar organizations such as banks, credit card companies or even the IRS. These ruses generally urge taxpayers to give up sensitive data such as passwords, Social Security numbers and bank account or credit card numbers. They are called phishing scams because they attempt to lure the receiver into taking the bait. The subject line may suggest the recipient just won a free cruise or that they must immediately update an account. Never open a link or an attachment from a suspicious email. It may contain malware.
Also, don’t assume internet advertisements, pop-up ads or emails are from reputable companies. Check out companies to find out if they are legitimate. When online, a little research can save money and reduce security risks. If an ad or offer looks too good to be true, take a moment to check out the company behind it. Type the company or product name into a search engine with terms like “review,” “complaint” or “scam.”
Never download “security” software from a pop-up ad. A pervasive ploy is a pop-up ad that indicates it has detected a virus on the computer. It urges users to download a security software package. Don’t fall for it. It most likely will install some type of malware. Reputable security software companies do not advertise in this manner.
Protect Personal Data
Taxpayers should not carry Social Security cards with them or any documents that may include this number. Provide Social Security numbers only when necessary. Occasionally businesses will request it when it is not essential.
Give personal information over encrypted websites only. Shopping or banking online should be done only on sites that use encryption. To determine if a website is encrypted, look for “https” at the beginning of the web address (the “s” stands for secure). Some websites use encryption only on the sign-in page. If any part of the session isn’t encrypted, the entire account and the included financial information could be vulnerable. Look for “https” on every page of the site.
Use Strong Passwords
The longer the password, the tougher it is to crack. Use at least 10 characters; 12 is ideal for most home users. Mix letters, numbers and special characters. Try to be unpredictable – don’t use names, birthdates or common words. Don’t use the same password for many accounts. If the password is stolen –– it can be used to take over multiple accounts. Don’t share passwords on the phone, in texts or by email. Legitimate companies will not send messages asking for passwords. Receiving such a message probably means it’s a scam. Keep passwords in a secure place.
Set password and encryption protections for wireless networks. If a home or business Wi-Fi is unsecured it also allows any computer within range to access the wireless network and potentially steal information from connected devices.
Use Security Software
Make sure you have security software installed on all of your devices that connect to the internet. Many computers come pre-installed with firewall and anti-virus protections. A good broad-based anti-malware program should provide protection from viruses, Trojans, spyware and adware.
Set security software to update automatically so it can be upgraded as threats emerge. Also, make sure the security software is “on” at all times. If retaining important financial documents, such as prior-year tax returns, consider investing in encryption software to prevent unauthorized access by hackers or identity thieves.
Make sure security software has parental control options to protect children from malicious websites. Educate children about the threats of opening suspicious web pages, emails or documents.
Back Up Files
No system is completely secure. Copy important files, including federal and state tax returns, onto a removable disc or a back-up drive, and store it in a safe place. Save tax returns and records. Federal and state tax returns are important financial documents that a taxpayer may need for many reasons, ranging from home mortgages to college financial aid applications. Print out a copy and keep it in a safe place. Make an electronic copy in a safe spot as well. These steps also can help taxpayers more easily prepare next year’s tax return. If storing sensitive tax and financial records on a personal computer, use a file encryption program to add an additional layer of security.
The IRS, state tax agencies and the tax industry recently launched a public awareness campaign called Taxes. Security. Together. It provides additional safety tips for taxpayers. Also, see Publication 4524, Security Awareness for Taxpayers.
A Team of Tax Resolution Professionals Dedicated to Resolving Your Liability Nationwide.
- Rob Arena Arena and Associates, Inc. – 1040 Tax Filing Date is Here
- Rob Arena Arena and Associates, Inc. – W2 Data Theft
- Rob Arena Arena and Associates, Inc. – IRS Enforcement Changes
- Rob Arena Arena and Associates, Inc. – IRS Warns of Identity Theft
- Arena and Associates, Inc. – Rob Arena – Tax Time Phone Scams