tax return

Help Prevent Tax Identity Theft By Filing Early

 

identify theft

If you’re like many Americans, you might not start thinking about filing your tax return until close to this year’s April 17 deadline. You might even want to file for an extension so you don’t have to send your return to the IRS until October 15.

But there’s another date you should keep in mind: the day the IRS begins accepting 2017 returns (usually in late January). Filing as close to this date as possible could protect you from tax identity theft.

Why it helps

In an increasingly common scam, thieves use victims’ personal information to file fraudulent tax returns electronically and claim bogus refunds. This is usually done early in the tax filing season. When the real taxpayers file, they’re notified that they’re attempting to file duplicate returns.

A victim typically discovers the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because one with the same Social Security number has already been filed for the same tax year. The IRS then must determine who the legitimate taxpayer is.

Tax identity theft can cause major complications to straighten out and significantly delay legitimate refunds. But if you file first, it will be the tax return filed by a potential thief that will be rejected — not yours.

What to look for

Of course, in order to file your tax return, you’ll need to have your W-2s and 1099s. So another key date to be aware of is January 31 — the deadline for employers to issue 2017 W-2s to employees and, generally, for businesses to issue 1099s to recipients of any 2017 interest, dividend or reportable miscellaneous income payments. So be sure to keep an eye on your mailbox or your employer’s internal website.

Additional bonus

An additional bonus: If you’ll be getting a refund, filing early will generally enable you to receive and enjoy that money sooner. (Bear in mind, however, that a law requires the IRS to hold until mid-February refunds on returns claiming the earned income tax credit or additional child tax credit.) Let us know if you have questions about tax identity theft or would like help filing your 2017 return early.

 

Do you have to file taxes? The answer depends on your age, income and filing status

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

tax filing

 

Some people don’t need to file taxes every year, but this reprieve from tax duties generally applies to those whose earnings don’t meet certain thresholds.

You must consider three things when determining if you need to file a tax return: your age, your filing status and your income. Once you reach a certain income level, the law usually requires you to file taxes. The amounts are adjusted annually for inflation.

Tax-filing earnings thresholds for 2016 taxes

Tax-filing earnings thresholds for 2016 taxes

ACA premium credit claim

If you got health care coverage as required by the Affordable Care Act, also referred to as ACA or Obamacare, you might need to file a return.

This is the case if you qualified for federal help in buying your health care coverage through the health insurance marketplace. If advance payments of the ACA premium tax credit were made for you, your spouse, or a dependent who obtained such marketplace medical coverage, that amount must be reported by filing a Form 1040 tax return and Form 8962, Premium Tax Credit.

This will ensure that you got the appropriate tax credit in advance. If you received too much premium help, you’ll have to repay it with your return filing. If you did not get enough, you can collect the extra when you file.

Filing a return

As the table indicates, individuals younger than age 65 must file if they make certain amounts. The earnings threshold amounts go up a bit for older (65-plus) individuals.

Regardless of age, the earnings target is the same for married couples who file separate tax returns.

In most situations, your age for tax purposes depends on how old you were on the last day of the year. But when it comes to determining whether you have to file a return, the IRS says if you turned 65 on New Year’s Day, you are considered to be 65 at the end of the previous tax year. The one-day grace period allows you to use the higher income thresholds to determine whether you must file a tax return.

Dependents and filing

The IRS also has different rules for dependents who earn money. And even though it’s children we’re usually talking about, the IRS doesn’t make it easy, setting different earning standards for the two types of income — unearned or earned — that trigger filing requirements.

Generally, a child must file a return and pay tax due. But the amounts that trigger the filing depend on the type of income:

  • Earned, generally characterized as a salary, wages or tips. It also includes taxable scholarships and fellowship grants.
  • Or unearned, which includes investment interest or dividends, capital gains, unemployment benefits and some trust distributions.

The amount of each type of earnings that triggers a young person’s filing requirement is adjusted each year for inflation and is calculated using a formula that factors in the annual standard deduction amount.

Older individuals and persons of any age who are blind also must make some extra calculations to determine if they need to file a Form 1040.

Self-employment earnings

Don’t forget about self-employment earnings, whether you’re a teenager running a neighborhood lawn service or an adult with a 10-person manufacturing operation. This money counts toward determining if you have to file a return, regardless of whether it was your sole source of income or just an occasional side job to make a little extra cash.

If your annual gross self-employment income is at least as much as the income level for your filing status, you have to send in a Form 1040 and Schedule C or Schedule C-EZ reporting your earnings.

You also must file a Schedule SE to pay self-employment tax if your net earnings exceed $400.

When it pays to file

For those few who don’t legally have to file, it sometimes pays to send in a return anyway.

This is the case for individuals who don’t earn much but might be eligible for the earned income tax credit. This benefit is available to qualified individuals even if they owe no tax, meaning they would get money back from the federal government. Many people think the credit is available only to parents. It’s not. But the credit amount is greater for eligible low-wage taxpayers with children.

Plus, the IRS says that most individual taxpayers are due a tax refund. But those taxpayers must send in a Form 1040 or Form 1040A or Form 1040EZ to get that cash.

You can check out the filing requirements section of IRS Publication 17 for more details.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

$5M ‘reward’ for Trump tax return

 

 

 

By Bankrate

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!

taxes-blog-5M-reward-for-Trump-tax-return-getty-mst

What are Donald Trump’s tax returns worth? $5 million to one curious rich person.

An anonymous individual has offered to donate that amount to a veterans’ charity if the presumptive Republican presidential nominee will release his tax returns.

The inquisitive donor, who wants to keep his identity private, reportedly will even let The Donald choose the charity.

Nonpartisan tax curiosity

The high-dollar effort to get a glimpse of Trump’s 1040s was announced by David Brock, a political operative and Hillary Clinton backer. However, the person willing to pay for the tax revelation is a member of the Grand Old Party, according to Brock.

“He’s an old-fashioned Republican who thinks this is about character and wants to ensure that the Republican delegates next week know what they’re getting into when they nominate Donald Trump,” Brock said of the donor.

Running out of time

Brock’s mention of the GOP convention, which kicks off Monday, July 18, in Cleveland, is important. The donor wants Trump’s taxes in the open before then, so his $5 million offer expires on Friday, July 15.

Too bad. It’s not my money, but the offer should be valid through the Nov. 8 general election.

Republicans who will officially choose their presidential candidate next week aren’t the only ones who deserve to see Trump’s taxes. All American voters regardless of political affiliation should see that Trump follows tax laws.

What we could learn

The tax filings could give us an idea of just how Trump makes his self-proclaimed billions.

Screen shot 2016-07-15 at 1.49.26 PM

Or whether he’s not making as much as he says. Records from the New Jersey Division of Gambling Enforcement in connection with Trump’s Atlantic City operations show that Trump used tax breaks in 1978 and 1979 to arrive at earnings losses of $3.8 million, meaning he owed no taxes.

We also would get a look at what type of tax-saving strategies he employs and whether he is as hugely generous himself when it comes to charitable donations.

IRS audit excuse

Trump continues to say he won’t release his returns, which are under Internal Revenue Service audit, until the tax agency completes its examination. That’s his right.

But it’s also a diversion. Richard Nixon opened up his filings for public inspection when he was under IRS audit as president.

Maybe Trump will release his tax returns from the Cleveland convention podium. That certainly would make the event more exciting than is already predicted, but I’m not holding my breath.

In fact, I suspect that even, or especially, if he makes it to the Oval Office, Trump will keep doing things his way, which means keeping his tax returns secret.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

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.