Harless Tax Blog

Harless Tax Blog

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

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.

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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.