Accounting & Tax News

 

Publication 17
Tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions and using IRAs to save for retirement


Seven Good Reasons Why You Should Become a Tax Volunteer

If you’re looking for a way to help others in your community, then think about becoming a tax volunteer. The IRS is looking for people who will provide free tax help next year.

The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free tax help across the country. Each year VITA and TCE volunteers prepare tax returns for free for people with low-to-moderate incomes.  

Here are seven good reasons why you should become a VITA or TCE volunteer.
1.    You don’t need prior experience. You’ll receive specialized training and can serve in a variety of roles. You can even help those who do not speak English if you are fluent in another language.

2.    The IRS provides free tax law training and materials. You’ll learn how to prepare basic tax returns and learn about tax deductions and credits that benefit eligible taxpayers. These include credits such as the Earned Income Tax Credit, Child Tax Credit and Credit for the Elderly.

3.    The volunteer hours are flexible. Volunteers generally serve an average of three to five hours per week. The programs are usually open from mid-January through the tax filing deadline in April. A few sites are open all year.

4.    VITA and TCE sites are located in communities throughout the nation. Sites are often set up in neighborhood centers, libraries, schools, shopping malls and other similar places. The programs offer free tax preparation and free electronic filing for both federal and state tax returns.

5.    You can also help those who serve our country, because the IRS also needs volunteers to provide tax help to military personnel and their families.

6.    As a volunteer, you’ll join a program that’s helped millions of people file tax returns at no charge for more than 40 years. Your help will make a difference. It’s people helping people. It's that simple.

7.    Tax Professionals (Enrolled Agents and Other Tax Return Preparers) can earn Continuing Education Credits when volunteering as a VITA/TCE instructor, quality reviewer or tax return preparer. See the IRS fact sheet for more information on Continuing Education Credits.
 
To find out more, visit IRS.gov and type "tax volunteer" in the search box. If you are interested you will need to submit Form 14310, VITA/TCE Volunteer Sign Up, by email through the IRS website.


Additional IRS Resources:
•    IRS Tax Volunteers
•    IRS Free Tax Return Preparation Programs
•    Link & Learn Taxes

August 26, 2014

Sell Loser Shares and Give Away the Resulting Cash; Give Away Winner Shares

Say you want to make some gifts to favorite relatives and/or favorite charities. You can make gifts in conjunction with an overall revamping of your holdings of stocks and equity mutual fund shares held in taxable brokerage firm accounts. Here’s how to get the best tax results from your generosity.
Gifts to Relatives

Do not give away loser shares (currently worth less than you paid for them) to relatives. Instead, sell the shares and take advantage of the resulting capital losses. Then, give the cash proceeds to the relative. Do give away winner shares to relatives. Most likely, they will pay lower tax rates than you would pay if you sold the shares. In fact, relatives who are in the 10% or 15% federal income tax brackets will generally pay a 0% federal tax rate on long-term gains from shares that were held for over a year before being sold. For purposes of meeting the more-than-one-year rule for gifted shares, count your ownership period plus the recipient relative’s ownership period.
Gifts to Charities

The strategies for gifts to relatives work equally well for gifts to IRS-approved charities. Sell loser shares and claim the resulting tax-saving capital loss on your return. Then give the cash sales proceeds to the charity and claim the resulting charitable write-off (assuming you itemize deductions). This strategy results in a double tax benefit (tax-saving capital loss plus tax-saving charitable contribution deduction). With winner shares, give them away to charity instead of giving cash. Here’s why. For publicly traded shares that you’ve owned over a year, your charitable deduction equals the full current market value at the time of the gift. Plus, when you give winner shares away, you walk away from the related capital gains tax. So, this idea is another double tax-saver (you avoid capital gains tax on the winner shares, and you get a tax-saving charitable contribution write-off).

Posted Aug 25, 2014/wittenbergcpa.com

IRS Tax Scams on the Rise

Therefore, it’s important to use caution when viewing emails and receiving telephone calls purportedly from the IRS. The IRS has issued a warning about a pervasive telephone scam. The Treasury Inspector General for Tax Administration (TIGTA) called it the largest scam of its kind. It has received reports of over 20,000 contacts related to this scam, and thousands of victims have paid over $1 million to fraudsters claiming to be from the IRS.

Potential victims are threatened with deportation, arrest, having their utilities shut off, or having their driver’s licenses revoked. Potential victims may be told they are entitled to big refunds, or that they owe money that must be paid immediately to the IRS.

Thieves who run this scam often:

  • Use common names and fake IRS badge numbers.
  • Know the last four digits of the victim’s Social Security Number.
  • Make caller ID appear as if the IRS is calling.
  • Send bogus IRS emails to support the bogus calls.
  • Make background noise of other calls being conducted to mimic a call site.
  • Call a second time claiming to be the police or department of motor vehicles. The caller ID again appears to support their claim.

You should know that that the IRS always sends taxpayers a written notification of any tax due via the U.S. mail. More importantly, the IRS will never ask for credit card, debit card, or prepaid card information over the telephone.

If you get a phone call from someone claiming to be from the IRS, and you think you owe taxes, hang up and call the IRS at (800) 829-1040 or, better yet, call us for help. If you don’t owe taxes or have no reason to think you owe any taxes, hang up and call to report the incident to the Treasury Inspector General for Tax Administration at (800) 366-4484.

Anyone targeted by this scam, should also file a complaint with the Federal Trade Commission using the “FTC Complaint Assistant” at FTC.gov and adding “IRS Telephone Scam” to the comments portion of the complaint.

Posted Aug 20, 2014/wittenbergcpa.com

Ten Things to Know About the Taxpayer Advocate Service

1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS and is your voice at the IRS.

2. We help taxpayers whose problems are causing financial difficulty. This includes businesses as well as individuals.

3. You may be eligible for our help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should.

4. The IRS has adopted a Taxpayer Bill of Rights that includes 10 fundamental rights that every taxpayer has when interacting with the IRS:

Taxpayer Bill of Rights

  • The Right to Be Informed.
  • The Right to Quality Service. 
  • The Right to Pay No More than the Correct Amount of Tax.
  • The Right to Challenge the IRS’s Position and Be Heard. 
  • The Right to Appeal an IRS Decision in an Independent Forum. 
  • The Right to Finality. 
  • The Right to Privacy. 
  • The Right to Confidentiality.
  • The Right to Retain Representation.
  • The Right to a Fair and Just Tax System.

Our TAS Tax Toolkit at TaxpayerAdvocate.irs.gov can help you understand these rights and what they mean for you. The toolkit also has examples that show how the Taxpayer Bill of Rights can apply in specific situations.

5. If you qualify for our help, you’ll be assigned to one advocate who will be with you at every turn. And our service is always free.

6. We have at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico.  You can call your advocate, whose number is in your local directory, in Pub. 1546, Taxpayer Advocate Service -- Your Voice at the IRS, and on our website at irs.gov/advocate. You can also call us toll-free at
877-777-4778. 

7. The TAS Tax Toolkit at TaxpayerAdvocate.irs.gov has basic tax information, details about tax credits (for individuals and businesses), and much more.

8. TAS also handles large-scale or systemic problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at www.irs.gov/sams.

9. You can get updates at

10. TAS is here to help you, because when you’re dealing with a tax problem, the worst thing you can do is to do nothing at all.

 IRS Public Notice - August 9, 2014