Harless Tax Blog

Harless Tax Blog

Wondering what the value of your donated items mean for your taxes? Here's a valuation chart from Goodwill

Thursday, March 24, 2016

What You Need to Know About the Child and Dependent Care Tax Credit

Tuesday, March 22, 2016
From the IRS.gov Website.

Don’t overlook the Child and Dependent Care Tax Credit. It can reduce the taxes you pay. Here are 10 facts from the IRS about this important tax credit:

  1. Child, Dependent or Spouse. You may be able to claim the credit if you paid someone to care for your child, dependent or spouse last year.
  2. Work-Related Expense.The care must have been necessary so you could work or look for work. If you are married, the care also must have been necessary so your spouse could work or look for work. This rule does not apply if your spouse was disabled or a full-time student.
  3. Qualifying Person. The care must have been for “qualifying persons.” A qualifying person can be your child under age 13. A qualifying person can also be your spouse or dependent who lived with you for more than half the year and is physically or mentally incapable of self-care.
  4. Earned Income. You must have earned income for the year, such as wages from a job. If you are married and file a joint tax return, your spouse must also have earned income. Special rules apply to a spouse who is a student or disabled.
  5. Credit Percentage/Expense Limits. The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on the amount of your income. Your allowable expenses are limited to $3,000 if you paid for the care of one qualifying person. The limit is $6,000 if you paid for the care of two or more.
  6. Dependent Care Benefits. If your employer gives you dependent care benefits, special rules apply. For more on these rules see Form 2441, Child and Dependent Care Expenses.
  7. Qualifying Person’s SSN. You must include the Social Security number of each qualifying person to claim the credit.
  8. Care Provider Information. You must include the name, address and taxpayer identification number of your care provider on your tax return.
  9. Form 2441. You file Form 2441 with your tax return to claim the credit.
  10. IRS Free File. You can use IRS Free File to prepare and e-file your federal tax return, including Form 2441, Child and Dependent Care Expenses, for free. Free File is the fastest and easiest way to file your tax return and it’s only available at IRS.gov/freefile.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Consumer Alert: Scammers Change Tactics, Once Again

Friday, March 18, 2016

WASHINGTON - Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but now the IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone.

From the IRS.gov Website.

The latest variation being seen in the last few weeks tries to play off the current tax season. Scam artists call saying they have your tax return, and they just need to verify a few details to process your return. The scam tries to get you to give up personal information such as a Social Security number or personal financial information, such as bank numbers or credit cards.

“These schemes continue to adapt and evolve in an attempt to catch people off guard just as they are preparing their tax returns,” said IRS Commissioner John Koskinen. “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.”

The IRS reminds taxpayers to guard against all sorts of con games that continually change. The IRS, the states and the tax industry came together in 2015 and launched a public awareness campaign called Taxes. Security. Together. to help educate taxpayers about the need to maintain security online and to recognize and avoid “phishing” and other schemes.

The IRS continues to hear reports of phone scams as well as e-mail phishing schemes across the country. “These schemes touch people in every part of the country and in every walk of life. It’s a growing list of people who’ve encountered these. I’ve even gotten these calls myself,” Koskinen said.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 phone scam contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam. Just this year, the IRS has seen a 400 percent increase in phishing schemes.

Protect Yourself
Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email. They’ve even begun politely asking taxpayers to verify their identity over the phone.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

Here are some things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

The IRS will never:

  • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you several bills.
  • Call or email you to verify your identity by asking for personal and financial information.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone or e-mail.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money or to verify your identity, here’s what you should do:

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

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

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

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Early Retirement Distributions and Your Taxes

Tuesday, March 15, 2016

Thinking about an early distribution from you retirement? Read these tips from IRS website. Read original article >

Many people find it necessary to take out money early from their IRA or retirement plan. Doing so, however, can trigger an additional tax on top of the income tax you may have to pay. Here are a few key points to know about taking an early distribution:

No retirement plan at work? Use this

Friday, March 11, 2016

Four out of 10 people, or more than 30M full-time private-sector workers, do not have access to a retirement plan at work.

by Kelley Holland, special to CNBC | Wednesday, 17 Feb 2016 | 8:18 AM ET | Read Original Article on CNBC website >

Got a retirement savings plan at work? If you don't, you're not alone.

In fact, 4 out of 10 people do not have access to a retirement plan at work, according to an analysis by the Pew Charitable Trusts. That translates to more than 30 million full-time, private-sector workers ages 18 to 64, the report found.

That's just one reason why more and more Americans are nearing retirement age with little or nothing in the way of savings for later in life. While confidence in a financially secure retirement has increased over the past several years, as of 2015, only 22 percent are highly confident they will have enough money to last.

The good news is that workplace plans are not the only way to save for your retirement. President Obama included proposals to increase access to retirement savings plans in his budget, using state based retirement plans and more.

But even apart from those proposals, you have several ways you can save outside of a workplace plan.

Read Original Article on CNBC website >

Help! My identity has been stolen. What should I do?

Tuesday, March 08, 2016

A very important topic today found everywhere in the media, the front page news, and every month there seems to be a new security breach.  But what do you do if it actually happens to you?  Here's some advice:

  • Immediately after the discovery of identity theft, create an Identity Theft Affidavit through the Federal Trade Commission (FTC).
  • With your completed Affidavit, file a police report.
  • Together, your Affidavit and police report form your Identity Theft Report. You will need copies of this report to send to credit agencies and the IRS. 
  • Pull your credit report! (Equifax, Experian and TransUnion). These should be free because you have been the victim of fraud.
  • Have the credit reporting agencies place a fraud alert on your file. You will only need to contact one bureau, which will notify the others.
  • Write letters disputing each charge and send certified mail with a copy of your credit report highlighting the error. Do this for each error reporting from each agency.
  • Request to have information that was the result of the identity theft blocked from your credit report.
  • As problems are resolved, obtain a new credit report. Identity theft can have long-running ramifications, so keep up with your credit report regularly.
Contact Lending Institutions that Issued Credit

  • Get in touch with the fraud departments at the companies that erroneously authorized credit to the thief in your name.
  • Send these companies the same letters and credit report copies.
  • Ask the companies to block fraudulent information, and the company will have to stop reporting the fraudulent information and will not be able to sell the debt for collection.
  • Request copies of the documents that were fraudulently used to get credit or make changes in your name. This will enable you to have a copy of the fraudulent signature. The company is required to send it to you within 30 days of your request.
Inform the IRS

  • As indicated above, tax identity theft is also a problem. In this case, the thief has used a taxpayer’s identity and real or falsified W-2s to file fraudulent returns claiming a refund. You may not know this has happened until you file and find out your refund has already been taken.
  • If you think someone has stolen your refund or used your social security number, notify the IRS immediately.
  • Fill out the IRS Identity Theft Affidavit, Form 14039.
  • When you receive correspondence from the IRS, respond right away.

Your Social Security Benefits May be Taxable

Saturday, March 05, 2016
I receive Social Security benefits.  How do I know if these benefits are taxable? 
If you receive Social Security benefits, you may have to pay federal income tax on part of your benefits. These IRS tips will help you determine if you need to pay taxes on your benefits.

  • Form SSA-1099. If you received Social Security benefits in 2015, you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of your benefits.
  • Only Social Security. If Social Security was your only income in 2015, your benefits may not be taxable. You also may not need to file a federal income tax return. If you get income from other sources you may have to pay taxes on some of your benefits.
  • Free File. Use IRS Free File to prepare and e-file your tax return for free. If you earned $62,000 or less, you can use brand-name software. The software does the math for you and helps avoid mistakes. If you earned more, you can use Free File Fillable Forms. This option uses electronic versions of IRS paper forms. It’s best for people who are used to doing their own taxes. Free File is available only by going to IRS.gov/freefile.
  • Interactive Tax Assistant. You can get answers to your tax questions with this helpful tool and see if any of your benefits are taxable. Visit IRS.gov and use the Interactive Tax Assistant tool.
  • Tax Formula. Here’s a quick way to find out if you must pay taxes on your Social Security benefits: Add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.
  • Base Amounts. The three base amounts are:
    • $25,000 – if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2015
    • $32,000 – if you are married filing jointly
    • $0 – if you are married filing separately and lived with your spouse at any time during the year
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Mark Your Calendars: Health Coverage Information Return Deadlines

Friday, March 04, 2016

Recently, the IRS extended the information reporting due dates for insurers, self-insuring employers, other health coverage providers and applicable large employers. This chart can help you understand the filing requirements and the extended 2016 deadlines.

From the IRS.gov Website.


IRS to Parents: Don’t Miss Out on These Tax Savers

Saturday, February 27, 2016

Are you a parent?  Here are some important areas of savings to consider. 

From the IRS.gov Website. Read Original Article >

Children may help reduce the amount of taxes owed for the year. If you’re a parent, here are several tax benefits you should look for when you file your federal tax return:

  • Dependents.  In most cases, you can claim your child as a dependent. You can deduct $4,000 for each dependent you are entitled to claim. You must reduce this amount if your income is above certain limits. For more on these rules, see Publication 501, Exemptions, Standard Deduction and Filing Information.
  • Child Tax Credit.  You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more information, see Schedule 8812 and Publication 972, Child Tax Credit.
  • Child and Dependent Care Credit.  You may be able to claim this credit if you paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. You must have paid for care so that you could work or look for work. See Publication 503, Child and Dependent Care Expenses, for more on this credit.
  • Earned Income Tax Credit.  You may qualify for EITC if you worked but earned less than $53,267 last year. You can get up to $6,242 in EITC. You may qualify with or without children. Use the 2015 EITC Assistant tool at IRS.gov to find out if you qualify. See Publication 596, Earned Income Tax Credit, to learn more.
  • Adoption Credit.  You may be able to claim a tax credit for certain costs you paid to adopt a child. For details see Form 8839, Qualified Adoption Expenses.
  • Education Tax Credits.  An education credit can help you with the cost of higher education.  Two credits are available. The American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the credit reduces your tax to less than zero, you may get a refund. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file a return to claim these credits. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim them. Visit the IRS’s Education Credits Web page to learn more on this topic. Also, see Publication 970, Tax Benefits for Education. 
  • Student Loan Interest.  You may be able to deduct interest you paid on a qualified student loan. You can claim this benefit even if you do not itemize your deductions. For more information, see Publication 970.
  • Self-employed Health Insurance Deduction.  If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid during the year. This may include the cost to cover your children under age 27, even if they are not your dependent. See Publication 535, Business Expenses, for details.  
You can get related forms and publications on IRS.gov.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Videos:

What Does Joint Employment Mean for the Construction Industry?

Friday, February 26, 2016

The US Department of Labor has been keenly interested in classifications of employee and contractor, a demarcation that can be specifically challenging in the construction industry where workers are often employed by two, or even more, employers.

Last month, the Department of Labor focused on joint employment with the issuing of the Administrator’s Interpretation of the FLSA and the Migrant and Seasonal Agricultural Worker Protection Act. When it comes to joint employment, in many cases, the worker’s hours are aggregated, which can affect overtime, and all of the worker’s joint employers must comply with FLSA and MSPA. 

Two types of worker-employer relationships can fall under the category of joint employment: horizontal (an employee who works for associated businesses, such as a retail employee working shifts at two locations) and vertical (an employee works directly under one employer who is dependent on another entity). Vertical joint employment can be particularly important for the construction industry where laborers work under sub-contractors, contractors and developers.

Review your employment structure to ensure compliance with these regulations; we’ll be happy to talk with you if you have any questions! Learn more from the NAHB


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