Monthly Archives: October 2015

Inflation adjustments to 2016 tax brackets

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

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Inflation in 2015 has been negligible. That means the tax provisions that are adjusted each year to account for inflation aren’t changing that much.

But in the tax world, every little bit helps. And the 2016 inflation adjustments just announced by the IRS mean that most taxpayers will see some changes.

Tax bracket tweaks

The 7 existing tax brackets are the same in 2016, but the amount of money that falls into each will change a bit in 2016. And those inflation increases mean that you can earn a little more in each bracket and stay at the same tax rate.

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Increased exemptions

The good exemption news is that every taxpayer gets to claim a specific dollar amount, along with the same amount for all dependents, to help reduce their adjusted gross income. In 2016, the exemption amount goes up $50 to $4,050.

Note, however, wealthier taxpayers could lose the value of exemptions. It starts phasing out at $259,400 for single taxpayers and $311,300 for married couples filing jointly. It disappears totally when a single filer’s income hits $381,900 or $433,800 for married couples filing jointly.

More to deduct

If you claim the standard deduction, and most taxpayers do, you’ll be able to reduce your adjusted gross income a bit more on your 2016 taxes.

The standard deduction is based on your tax-filing status. For single taxpayers and couples who file separate returns, it’s $6,300. Married jointly filing couples get double that: $12,600. Head of household taxpayers can claim a $9,300 standard deduction amount in 2016.

Don’t confuse 2015, 2016 figures

Remember, these amounts affect 2016 taxes that you’ll file in 2017. Inflation adjustments for 2015 were issued by the IRS back in November 2014.

But the 2016 numbers are good to have handy as you plan your strategies to keep next year’s tax bill as low as possible.

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.

 

IRS will share tax-filing info to fight identity theft

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

taxes-blog-irs-will-share-tax-filing-info-to-fight-identity-theft

When taxpayers hear that their tax information will be shared, they generally freak out, and with good reason. Almost daily we learn of some hacking incident in which personal data is obtained and then used to steal the victims’ financial identities.

The IRS has not been immune from such security breaches. Its own online transcript tool was compromised last spring. Tax-related identity theft topped the Federal Trade Commission’s consumer complaint list in 2014 and continues to grow.

Now, however, the IRS, along with state tax administrators and tax industry partners that make up the so-called Security Summit, say that sharing of taxpayer filing data will help stem tax identity theft and tax-return fraud.

The group, which was formed in March, has announced new security practices that will take effect with the 2016 filing season.

Share and share alike

One security move is ensuring that federal and state tax agencies, along with the tax industry that helps millions of individuals file their returns each year, have all the information they need to fight identity thieves.

In its work over the past 7 months, the Security Summit identified 20 new pieces of information that can be shared at tax-filing time with the IRS and states to help authenticate a taxpayer and detect identity theft refund fraud.

This information includes such things as repetitive use of Internet Protocol, or IP, numbers to transmit returns; identification data from computers from which returns originate; and the time it takes to complete a tax return, a potential indicator of computer-mechanized fraud.

States, tax industry responsibilities

Among those sharing this data will be e-file providers who submit 2,000 or more returns a year. These e-filing agents now will be required to research and analyze returns and then provide any potential identity-theft data to the IRS and the states.

State operating agreements also will include like-kind requirements for data-sharing and identity theft lead reporting to the IRS.

The goal here is to catch patterns of fraud and stop them before they become full-blown identity theft catastrophes.

The IRS, at the request of tax industry representatives and state tax offices, will act as the conduit for sharing the information with states via a secure data transfer process for the 2016 filing season. So far, 34 state departments of revenue and 20 tax industry members have signed on to part of the new information-sharing system, with more expected to sign later.

Regardless of what tax info is shared among preparers and tax agencies, you need to keep track of who’s looking at your personal data. You can do so through myBankrate.

Do you agree with the IRS and its tax-filing partners that the sharing of filer data will help stop tax identity theft? Or do you think it provides another avenue for private information to be hacked?

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.

Top 10 countries toughest on tax evaders

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

taxes-blog-top-10-countries-toughest-on-tax-evaders

The IRS is making progress in tracking down foreign accounts that U.S. taxpayers use to hide money. On Sept. 30, it began exchanging tax information with some foreign governments, making it easier to find untaxed offshore accounts.

While that’s a big step for the American tax collector, the United States is still behind when it comes to aggressively going after tax evaders.

Who are we chasing when it comes to chasing down tax cheats? A recent study by CXC Global, a worldwide workforce management consultant, identified the 10 countries with the most aggressive approach to dealing with tax scofflaws.

They are Spain, Argentina, Germany, Brazil, Russia, the United Kingdom, Australia, Canada, Indonesia and New Zealand.

Spain’s tax-collection diligence

Spain is no surprise. That country is working to get its economy on firmer footing and every tax dollar helps.

Just ask international futbol (or soccer, as we call it) star Lionel Messi and several of his fellow players who are facing investigations by Spanish officials into their tax affairs.

And royalty is not immune. Spain’s Princess Cristina had her title as Duchess of Palma de Mallorca stripped as a result of tax-related allegations that have embarrassed the monarchy. She and her husband are awaiting trial on embezzlement and tax fraud charges.

Meanwhile, Brazil is seeking to clean up its image and add to its treasury as it prepares to host the 2016 Summer Olympics. And Russia’s appearance on the tough-on-tax-cheats list also is indicative of that country’s financial woes, as well as President Vladimir Putin’s tough style of leadership.

Global efforts to end tax evasion

Although the United States did not make the top 10 list of countries tough on tax evaders, expect Uncle Sam to continue to upgrade his efforts, especially when it comes to foreign accounts. The United States is part of a global initiative to stem tax evasion.

The effort is being led by the Organization for Economic Cooperation and Development, which recently issued a package of new standards as part of an overhaul of the international rules for taxing company profits. The leaders of the group of 20 largest world economies are expected to agree to the changes, which supporters say will help global governments get back between $100 billion and $240 billion in revenue they lose to tax evasion each year.

The bottom line is that when it comes to taxes, cheaters worldwide are running out of places to hide.

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.