Harless Tax Blog

Harless Tax Blog

How to Determine if You Can Claim the Premium Tax Credit

Monday, February 22, 2016

Wondering if you can claim a premium tax credit?  Good information from the IRS on this subject.

IRS Health Care Tax Tip 2016-15, February 4, 2016. Read Original Article >

The premium tax credit is a credit for certain people who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace. Claiming the premium tax credit may increase your refund or lower the amount of tax that you would otherwise owe.

If you did not get advance credit payments in 2015, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. You must file Form 8962 to claim the PTC on your tax return.

You can take the PTC for 2015 if you meet all of these conditions.

For at least one month of the year, all of the following were true:

  • An individual in your tax family was enrolled in a qualified health plan offered through the Marketplace.
  • The individual was not eligible for minimum essential coverage, other than coverage in the individual market.
  • The portion of the enrollment premiums for the month for which you are responsible was paid by the due date of your tax return.

To be an applicable taxpayer, you must meet all of the following requirements:

  • For 2015, your household income is at least 100 percent but no more than 400 percent of the Federal poverty line for your family size.
  • No one can claim you as a dependent on a tax return for 2015.
  • If you were married at the end of 2015, you must generally file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements.

Individuals can use the Premium Tax Credit Flow Chart to determine if they are eligible for the credit. Answer the yes-or-no questions in the chart – or via the accessible text – and follow the arrows to find out if you may be eligible for the premium tax credit. You can also use our interactive tool, Am I eligible to claim the Premium Tax Credit? to find out if you are eligible.

For more information about eligibility requirements see Eligibility for the Premium Tax Credit and also the instructions for Form 8962, Premium Tax Credit on IRS.gov/aca.

If you received the benefit of advance credit payments in 2015, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file an income tax return for this purpose even if you are otherwise not required to file a return. You’ll file Form 8962, Premium Tax Credit, with your tax return to reconcile the credit.

Remember, that filing electronically is the easiest way to file a complete and accurate tax return as the software does the math and guides you through the filing process. Electronic filing options include: free Volunteer Assistance, IRS Free File, commercial software, and professional assistance.

Great tips from the IRS on choosing a tax preparer...

Thursday, February 18, 2016

Choosing a tax professional wisely is very important.  Here are some tips from the IRS...

A tax return preparer is trusted with your most personal information. They know about your marriage, your income, your children and your social security numbers – the details of your financial life.

Most tax return preparers provide outstanding service. However, each year, some taxpayers are hurt financially because they choose the wrong tax return preparer. Be sure to check our tips for choosing a tax preparer.

IRAs: 8 things you might not know

Tuesday, February 16, 2016

From Fidelity 1/27/16.  Read Original Article >
Make sure you aren’t overlooking some IRA strategies and tax and savings benefits.

Chances are there may be a few things that you don’t know about an IRA, so, let’s take a look at eight commonly overlooked IRA rules and features that may be available to you, your spouse, or even your children.

  1. You can open a Roth IRA for a child who has taxable earned income. 
  2. Even if you exceed the income threshold, you might still be able to have a Roth IRA. 
  3. A nonworking spouse can open and contribute to an IRA.
Read entire article >

Falsely Padding Deductions on Returns is on the IRS Annual “Dirty Dozen” List of Tax Scams to Avoid

Friday, February 12, 2016

From the IRS.gov website - Feb 10th, 2106.  Read the Original Article >

WASHINGTON — The Internal Revenue Service today warned taxpayers to avoid the temptation of falsely inflating deductions or expenses on their returns to under pay what they owe and possibly receive larger refunds.

The vast majority of taxpayers file honest and accurate tax returns on time every year. However, each year some taxpayers fail to resist the temptation of fudging their information. That’s why falsely claiming deductions, expenses or credits on tax returns is on the “Dirty Dozen” tax scams list for the 2016 filing season.

"Taxpayers should file accurate returns to receive the refunds they are entitled to receive and shouldn't gamble with their taxes by padding their deductions," said IRS Commissioner John Koskinen.
Taxpayers should think twice before overstating deductions such as charitable contributions, padding their claimed business expenses or including credits that they are not entitled to receive – like the Earned Income Tax Credit or Child Tax Credit.

Increasingly efficient automated systems generate most IRS audits. The IRS can normally audit returns filed within the last three years. Additional years can be added if substantial errors are identified or fraud is suspected.

Significant civil penalties may apply for taxpayers who file incorrect tax returns including:

  • 20 percent of the disallowed amount for filing an erroneous claim for a refund or credit.
  • $5,000 if the IRS determines a taxpayer has filed a “frivolous tax return.” A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax reported is substantially incorrect.
  • In addition to the full amount of tax owed, a taxpayer could be assessed a penalty of 75 percent of the amount owed if the underpayment on the return resulted from tax fraud.

Taxpayers even may be subject to criminal prosecution (brought to trial) for actions such as:

  • Tax evasion
  • Willful failure to file a return, supply information, or pay any tax due
  • Fraud and false statements
  • Preparing and filing a fraudulent return, or
  • Identity theft.

Criminal prosecution could lead to additional penalties and even prison time.

Using tax software is one of the best ways for taxpayers to ensure they file an accurate return and claim only the tax benefits they’re eligible to receive. IRS Free File is an option for taxpayers to use online software programs to prepare and e-file their tax returns for free.

Community-based volunteers at locations around the country also provide free face-to-face tax assistance to qualifying taxpayers helping make sure they file their taxes correctly, claiming only the credits and deductions for which they’re entitled by law.

Taxpayers should remember that they are legally responsible for what is on their tax return even if it is prepared by someone else, so they should be wise when selecting a tax professional. The IRS offers important tips for choosing a tax preparer at IRS.gov.

More information about IRS audits, the balance due collection process and possible civil and criminal penalties for noncompliance is available at the IRS.gov website.

Taxpayers can also learn more about the Taxpayer Bill of Rights at IRS.gov. This is a set of fundamental rights each and every taxpayer should be aware of when dealing with the IRS, including when the IRS audits a tax return.

To find tips about choosing a return preparer, better understand the differences in credentials and qualifications, research the IRS preparer directory, and learn how to submit a complaint regarding a tax return preparer, visit www.irs.gov/chooseataxpro.


Florida and Georgia are Tops in Identity Theft

Friday, February 05, 2016

Did you know that Florida has the highest per capita rate of reported identity theft complaints followed by Georgia (Miami-Ft. Lauderdale-#1)? Click here to read more about how to protect yourself. Read more to see how to protect yourself

How to Prevent Identity Fraud
  • Don’t share personal information on the phone. The IRS will not call you!
  • Keep all important documents secure, especially your social security card.
  • Be mindful of credit card use, keep your card in sight when it is used.
  • Secure gadgets and passwords, change regularly and use a unique password on every site.
  • Limit the information you use online, especially Facebook, Twitter, and other social media.
  • Keep open communication with your bank, inform them when you are traveling.
  • Avoid opening unfamiliar links.
  • Don’t miss out on your mail, pick up often and hold at post office when traveling.
  • Secure your receipts, scan and shred.
  • Keep your PIN secure.
  • Check your credit report regularly (www.creditkarma.com).
  • Don’t share personal information on the phone. The IRS will not call you!

Required Minimum Distributions

Tuesday, February 02, 2016
Something to consider if you are 70 ½ years old or over.  Any taxpayer who is 70½ or over must take the Required Minimum Distributions from their retirement account.  The penalty is 50 percent of the amount required to be distributed. It is  not the responsibility of the custodian; it’s up to the taxpayer.

Tax Strategy: Modified extenders may require revised planning to maximize benefits.

Monday, February 01, 2016

Much of the headline news about the Protecting Americans from Tax Hikes Act of 2015 understandably has focused on the many "extenders" provisions that now have been made permanent or extended beyond the usual two-year period found in prior tax bills.

However, Congress also made substantive modifications within many of those extenders that may be no less important. Many of these changes have only been in effect since Jan. 1, 2016, rather than reaching back to Jan. 1, 2015, the general start date for most of the extenders. This column takes a look at some of these modifications and how taxpayers might benefit from them. READ ENTIRE ARTICLE >

Independent Contractors

Wednesday, January 27, 2016

It’s that time of year again. The IRS wants to hear from you. If own a business that employs independent contractors, 1099’s must be filed on a timely basis and the deadline is approaching.  A 1099 must be filed for every independent contractor that the business pays $600 or more for the calendar year to avoid penalties. The due date for mailing the recipient his copy is February 1, 2016. The due date for filing the IRS copy is February 28, 2016.  Tax Preparation South Florida

Health Insurance Facts

Friday, January 22, 2016
  • Did you know that the Affordable Care Act requires that you have minimum essential health coverage or make a shared responsibility payment, unless you’re exempt? Be sure to carefully review the variety of exemptions available to you to minimize any shared responsibility payment that you might have.
  • Individuals who do not have health coverage will pay the higher of 2 percent of their yearly household income.

Questions about Capital Gains?

Friday, December 18, 2015
Here are some things to consider. 
  • The tax rate on net capital gains is a sliding scale from zero to 20 percent depending on the taxpayers’ income level. For most taxpayers, the tax rate on capital gains (and qualified dividends) is no higher than 15 percent. 
  • Beware of the wash sale rules: buying and selling the same, or substantially same, stock within 30 days results in disallowed losses.
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