Identity Theft: Tips for Taxpayers

Identity theft is a very real and serious issue. The 2015 tax season saw continued instances of identity theft.
 
According to the IRS: “Usually, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. Generally, the identity thief will use a stolen SSN to file a forged tax return and attempt to get a fraudulent refund early in the filing season. You may be unaware that this has happened until you file your return later in the filing season and discover that two returns have been filed using the same SSN.”
 
It is important that you protect your personal information. The IRS advises the following actions to reduce the likelihood of identity theft: 

• Don’t carry your Social Security card or any document(s) with your SSN on it.
• Don’t give a business your SSN just because they ask. Give it only when required.
• Protect your financial information.
• Check your credit report every 12 months.
• Secure personal information in your home.
• Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
• Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

In addition, high income earners may want to consider contracting with a personal management firm to provide monitoring services or inquire if your insurance company provides similar services. Identity fraud insurance coverage may also be included in homeowner insurance policies for protection in the event identity theft occurs.
 
For additional information click on the following links:
Taxpayer Guide to Identity Theft
Tips for Taxpayer, Victims about Identity Theft and Tax Returns

Bogus IRS Phone Calls and Emails

From IRS Tax Tip 2015-20:
 
Tax scams take many different forms. Recently, the most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too. Here are several tips from the IRS to help you avoid being a victim of these tax scams:

The real IRS will not:

• Initiate contact with you by phone, email, text or social media to ask for your personal or financial information.

• Call you and demand immediate payment. The IRS will not call about taxes you owe without first mailing you a bill.

• Require that you pay your taxes a certain way. For example, telling you to pay with a prepaid debit card.

Be wary if you get a phone call from someone who claims to be from the IRS and demands that you pay immediately. Here are some steps you can take to avoid and stop these scams.

If you don’t owe taxes or have no reason to think that you do:

• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.

• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.

If you think you may owe taxes:

• Ask for a call back number and an employee badge number.

• Call the IRS at 800-829-1040. IRS employees can help you.

In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real.  The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.
If you get a ‘phishing’ email, the IRS offers this advice:

• Don’t reply to the message.

• Don’t give out your personal or financial information.

• Forward the email to phishing@irs.gov. Then delete it.

• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

Stay alert to scams that use the IRS as a lure. More information on how to report phishing or phone scams is available on IRS.gov.
If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

Additional IRS Resources:

• Identity Protection Tips

• Identity Protection Home Page 

IRS YouTube Videos:

• Tax Scams – English | Spanish | ASL 

• Phishing-Malware – English | Spanish | ASL

• IRS Efforts On Identity Theft – English | Spanish | ASL

• IRS ID Theft FAQ – First Steps for Victims – English | Spanish | ASL

• IRS ID Theft FAQ – Going After the Bad Guys – English | Spanish | ASL

IRS Podcasts:

• Tax Scams – English | Spanish

• ID Theft: Protect Yourself from Identity Theft – English | Spanish

• IRS ID Theft FAQ – First Steps for Victims – English | Spanish

IRS ID Theft FAQ – Going After the Bad Guys – English | Spanish

Happy New Year! (Another New Tax Season!)

With a new year comes another new tax filing season! As we prepare for the upcoming tax season, we hope this past year has been filled with many blessings and finds you in good health. 

Below are items that may apply to your income tax situation for 2014. Take note of information on the 2014 health care reforms and a new mandatory reporting of health insurance coverage. Also take note of some of the last-minute changes from Congress in December that extended tax provisions which were previously set to expire at the end of 2013.

If you missed our annual tax letter in your inbox or mailbox, see the links at the bottom of the page.

HEALTH CARE REFORM

Taxpayers who don’t have health care coverage in 2014 may be subject to a penalty. As previously mentioned, the completed ACA checklist is required in order for us to complete the appropriate tax reporting compliance forms and disclosures.  You may also be receiving some new forms this year from your employer and insurance company.  These forms are labeled 1095-A, B and C.  If you receive any of these forms, it is imperative they be provided to us with your tax documentation.  If your tax and health insurance situation requires the additional forms and compliance reporting, we will need to increase our preparation fee.  The ACA rules and forms are extremely complex, and we have spent hundreds of hours over the past year becoming educated with this new law and how it affects taxpayers. 

FOREIGN ACCOUNTS

If you have a bank account, retirement account, or business interest with a value over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund), please let us know as some special rules will apply to you. There are substantial penalties for failure to disclose these items.

CHILDREN/STUDENT RETURNS

We strongly encourage you to have us prepare the tax returns of your dependent children.  If you qualify for a subsidy, the Affordable Care Act forms require reporting of all household income.   Additionally, analysis of the education credits requires information from both parent and child tax reporting to maximize these credits.

CAPITAL GAIN TAX RATES/NET INVESTMENT TAX

For taxpayers in the 15% tax bracket or below, the capital gain rates will remain at 0%. For taxpayers above the 15% bracket but below $450k taxable income, the long term capital gain tax rate is set at 15%. For taxpayers with taxable income above $450k, the capital gain tax rate will be 20%. In addition, the 3.8% net investment income tax applies to single taxpayers with adjusted gross income of $200,000 and joint filers earning $250,000. This tax may impact the effective after-tax return on the sale of your investments, but proper planning may serve to minimize tax liability.

HOME OWNER ENERGY CREDITS

This provision has been extended, so if you have purchased insulation, storm windows or doors, a high-efficiency furnace, a water heater or made similar energy improvements in 2014, you may qualify for a 10-30% federal income tax credit.  However, the lifetime credit is limited to $500 and other limits are imposed based on the type of improvement. Supporting documents must be provided.

OTHER NOTEWORTHY ITEMS

• The American Opportunity College Tuition tax credit is extended through 2017.
• The child tax credit of $1,000 for children under age 17 has been extended through 2017.
• The “above the line” deduction of qualified college tuition and related college expenses is extended through 2014.
• The $250 deduction for certain expenses of school teachers is extended through 2014.
• Tax free IRA distributions to qualified charitable organizations is extended through 2014.
• The mileage rates for 2014 are 56 cents per mile for business mileage, 24 cents for medical mileage and 14 cents charitable miles.  Please document and complete the applicable section of our questionnaire if you had deductible business miles, medical miles or charitable miles.

MICHIGAN TAX UPDATE AND REMINDERS

• For 2014, the Michigan tax law changes implemented in 2012 relating to taxation of retirement benefits, social security benefits and interest/dividends continue to be in effect.  Individuals born prior to 1946 will not be affected by the changes. Individuals born between 1946 and 1952 will be somewhat affected.  Individuals born after 1952 may see significant increases to income that is subject to state income tax.
• Contributions to public universities/colleges, food banks and homeless shelters, libraries, radio stations etc. are no longer eligible for any Michigan related tax credits. However, they remain deductible as an itemized deduction on the federal return.

As always, we strive to provide you with timely, complete and accurate service while keeping your tax liability to the lowest legal amount. We encourage you to forward your income tax information as soon as you have everything organized. Remember: if we receive your tax information after March 31, it is very likely that we will need to file an extension for you.

---

1040 CLIENT FORM LINKS:

You can find the following forms on the 1040 Client Forms page on our website:

• 2014 Year-End 1040 Tax Letter
• 2014 Year-End 1040 Questionnaire
• ACA Checklist (MANDATORY)
• Business Income Worksheet (Schedule C)
• Rental Income Worksheet (Schedule E)