Protect Yourself from Tax Fraud
Tax fraud is becoming more and more prevalent. In 2013 the IRS reported that 5.2 billion dollars were dispersed to identity thieves, according to the Government Accountability Office. The thieves filed fraudulent tax returns for unsuspecting individuals, and the IRS did not catch it until well after the refund check had been cashed.
The full extent of the fraud issue is hard to comprehend, but it is an issue that you need to be aware of.
Identity thieves steal your personal information, such as your Social Security Number, before you even receive your W-2 or 1099. Thieves will then quickly file a fake income tax return on your behalf. Then they collect the refund. The IRS typically tries to issue refund checks within three weeks, which doesn’t really give much time to catch identity thieves.
Here’s how to protect yourself for tax fraud:
File early, and file electronically! The IRS will reject any tax returns with your Social Security Number that are filed after yours is received. By filing early and electronically you are taking the necessary steps to make sure your tax return is processed before any fraudulent ones can be received.
Have questions about how to prevent identity theft tax refund fraud for you? Give me a call at 573-686-3053 and I’ll be happy to sit down with you.
Have You Received an IRS Notice?
A notice from the IRS are sent out for a variety of reasons, but please do not panic. If you receive a notice from the IRS, please give us a call. We are happy to take a look at the notice or letter and answer any questions that you may have about it. We’ll help you take care of it so you don’t receive notices in the future.
Please give us a call and we’ll be happy to help. Call us at 573-686-3053.
Are Tips Taxable Income?
If you receive compensation through tips then there are some key issues to take note of:
Tips are treated as taxable income. They are subject to federal income, Social Security and Medicare taxes. Also, the value of non-cash tips are considered income.
Tips need to be included on your tax return. You must include in your gross income all cash tips you receive from customers, tips added to credit cards or debit card purchases and your share of any tips you receive from a splitting agreement.
Keep a daily log of your tip income. It’s best to keep a running log of any tips you receive. The IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer should be used.
Report tips to your employer. Typically the minimum that needs to be reported is $20 or more in one month. So if you receive $20 or more in one calendar month then you need to be reporting that income to your employer. Your employer is required to withhold the correct federal tax, Social Security tax and Medicare tax.
State income tax. Tip income might be taxable by your state. It’s best to talk to your tax preparer to make sure you’re on track.
If you have any questions about your tips, then give us a call at 573-686-3053.
7 Common Triggers for an Audit by the IRS
Going through an audit from the IRS is not fun and it can be costly. There are ways to avoid running the risk of getting audited. Here’s are 7 triggers that are common:
Claim Earned Income Tax Credit when you’re not eligible
Inflating Home Office Deductions
Claim Head of Household when you’re actually married
Failing to include income, like a W2, 1099 or other form
Using Too Many Round Numbers
Too Many Losses on your Schedule C
Claiming High Charitable Deductions Disproportionately
At Denton & Associates we recommend having a tax professional like a CPA assist you with filing your tax return. We can help you make sure everything is on track. Give us a call at 573-686-3053 to schedule a meeting with one of our CPAs.
Trying to By a New Home?
Home buying can be stressful whether it’s your first home or your second home. There are many different criteria to take into consideration before even looking at homes. Here are few steps you should do first:
Decide on a budget. If you’re not sure how much house you can afford then I would recommend talking to your accountant. He can help you look over your budget and get you started.
Start saving for the down payment. It’s recommended to put down at least 20% of the purchase price to avoid paying private mortgage insurance (PMI). Start with creating a monthly budget to see how much you can put back each month towards your goal.
Determine when you would like to move. By setting a target date, this will help you stick to your savings goal.
Talk to the bank. You will need to complete an application for a mortgage once you have an idea of a home, but by talking to the bank early you may be able to find how much you qualify for.
If you have any questions on the home-buying process, please give us a call at 573-686-3053.
It’s Never Too Early To Be Thinking About Taxes
Around here, we don’t believe in it ever being too early to start thinking about this year’s taxes. Especially for business owners and farmers. We would recommend giving your tax professional a call if you have a question. It’s easier to plan ahead then it is to fix a mistake.
Give one of our tax experts a call at 573-686-3053 to see if that equipment purchase or business move is tax-smart.