Monthly Archives: May 2015

Thieves Access IRS Get Transcript App, 100,000 Accounts Compromised

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By AICPA

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The IRS announced on Tuesday that criminals have used taxpayer-specific information to gain access to approximately 100,000 taxpayers’ accounts through the IRS’s Get Transcript online application and steal those taxpayers’ data. The Get Transcript app has been shut down temporarily.

The IRS says the criminals obtained enough taxpayer-specific information from outside sources that they were able to get through the Get Transcript authentication process. The IRS became aware of the problem late last week when it noticed unusual activity taking place in the application. The hacking apparently started in February and involved approximately 200,000 attempts to access the Get Transcript app. The Get Transcript app is not hosted on the IRS computer system that handles tax return filing submissions, and the IRS says that the filing submission system remains secure.

Both the Treasury Inspector General for Tax Administration (TIGTA) and the IRS’s Criminal Investigation unit are investigating the matter. As for a motive, the IRS said in its announcement of the breach, “It’s possible that some of these transcript accesses were made with an eye toward using them for identity theft for next year’s tax season.”

The IRS says it will provide a free credit monitoring service for those taxpayers whose accounts were hacked. It is also notifying all 200,000 taxpayers whose accounts were the targets of the unauthorized access attempts. Those letters will start going out this week.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

New Pennsylvania lottery tax proposed

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate.com

I have my Mega Millions ticket for tonight’s May 19 lottery drawing. If I don’t win that — OK, when I don’t win — I’ll pick up a Powerball lottery slip for the drawing on May 20.
taxes-blog-new-pennsylvania-lottery-tax-proposedYes, I know the odds are not in my favor. But, like millions of Americans, I only throw away a few dollars when the jackpots are really big, like they are now.

The Mega Millions payout is an estimated annuity value of $173 million. If you take the lump sum payout, which most winners do, that comes to $106 million. The Powerball jackpot is an estimated annuity value of $121 million, or $75.7 million cash.

Tax due on lottery winnings

Longtime readers know that now’s the time I remind everyone about the tax consequences of winning the lottery. I say bring them on! I will happily hand over a portion of a huge jackpot to Uncle Sam.

Of course, I live in Texas, which doesn’t have a state income tax, so I don’t have to worry about those added taxes.

Many other gamblers, however, must share part of their good luck with state tax collectors.

New Pennsylvania lottery tax proposed

And if the governor of Pennsylvania gets his way, lottery players in the Keystone State will have to start paying state taxes on lottery winnings that exceed $600.

Currently, Pennsylvania lottery winnings aren’t taxed. It’s been that way since the gambling games came to the state in 1971. Pennsylvanians, however, must pay tax on money they win from other states’ lotteries.

Any tax proposal is risky, but Democratic Gov. Tom Wolf is taking a chance with the lottery tax. Pennsylvania is facing a projected deficit of $1.5 billion to $2 billion. Wolf’s office says the new lottery tax could bring in $15 million next year and $25 million by the 2019-2020 fiscal year.

Long odds on tax passages

The odds of Wolf getting his lottery tax are about as good as those for winning a jackpot. The state legislature, not to mention lottery-playing Pennsylvanians, oppose the tax.

Even some of Wolf’s fellow Democrats are against the change. Lottery winnings are tax-free, they note, to encourage people to play.

Why the state-push of gambling? Pennsylvania lottery proceeds go toward senior centers and meals, low-cost prescription assistance and free or reduced-fare transportation programs, rent rebates and care services.

Would an added tax on lottery winnings discourage you from buying tickets? Or would you just chalk it up to the cost of playing? Personally, it wouldn’t stop me from dropping a few bucks on a ticket. If I win, I’d have plenty to share, even with tax collectors.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

State tax cost of Tom Brady suspension

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate.com

The National Football League has spoken. Tom Brady will sit out the first four games of the 2015 season for his role in the improperly inflated footballs scandal during last season’s playoffs.
taxes-blog-state-tax-cost-of-tom-brady-suspension

The punishment for Deflategate, as the football air pressure incident has become known, is based on findings in the 243-page Wells Report that it is “more probable than not” that the New England Patriots’ star quarterback violated league rules.

Jock tax cost

Patriots’ fans, as well as the millions who play fantasy football, are freaking out about the loss of such a valuable player for a quarter of the NFL’s 2015 regular season.

So are Massachusetts and New York tax collectors.

If Brady doesn’t win his expected appeal of the suspension, he won’t play in two home games in Foxborough, Massachusetts. He’ll miss road games in Buffalo, New York, and Arlington, Texas.

Three of those four games are in states that collect income taxes. And jock taxes, the share of well-paid athletes’ earnings that states and some cities get when players come to play games, provide a nice chunk of change for state treasuries.

Brady’s 2015 NFL base salary of $8 million means he will lose around $500,000 per game.

That’s $1 million that won’t face taxes from home games in Massachusetts against the Pittsburgh Steelers and Jacksonville Jaguars.

New York’s tax collector will lose its part of half a million dollars that Brady won’t get for the Buffalo Bills home game.

Only the match-up between the Patriots and Dallas Cowboys is immaterial for state tax purposes since Texas has no income tax.

And we can’t forget Uncle Sam. The U.S. Treasury also will take a hit from the $2 million that Brady won’t be paid.

Tougher on states than Brady?

While $2 million is a lot of money, the punishment isn’t really that big of a deal to Brady, a two-time NFL most valuable player who earned his fourth Super Bowl ring in February.

His NFL salary is only a small part of his overall net worth, which Celebritynetworth.com estimates at $120 million. Plus, Brady married up financially. His wife, Brazilian super model Gisele Bundchen, is estimated to be worth $320 million.

Struggling states, however, will miss every tax dollar they can’t collect from Brady this fall.

Maybe those state tax officials will file a friend of the NFL appellate hearing brief in support of leniency for Brady.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

 

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.