Effective January 1, 2020, new Internal Revenue Service optional standard mileage rates will take effect, as follows:
As always, taxpayers have the option of calcuating the actual costs of using their vehicle instead of using the standard mileage rates.
Key to remember is, under the Tax Cuts and Job Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, excepting active duty members of the Armed Forces moving under orders to a permanent change of station.
by Thomas Keister
With the beginning of another tax season just a few weeks away, it is important to keep your guard up, as scam artists will come off the holiday season in high gear with a variety of tactics to try and score money or personal information from you, your friends, or your loved ones. Currently, three of the most popular scams going are phone and email-based tax scams, and charitable donation scams.
In email tax scams, you will receive an official-looking email, usually featuring the IRS logo and attempting to use tax-related language to convince them to update information by clicking a link. This is naturally a cover for the installation of malware, although in recent years, installed cryptocurrency mining software has also become prevalent. More advanced versions of the scam will even feature emails tailored to look like they are from friends or relatives to sell the scam. That warrants even more attention, as that makes it apparent that personal information has been compromised.
Hopefully, you were not one of the people who bought into the concept of a Do Not Call list when it was first floated. It wound up like most government programs- it became an utter hot mess, no matter how good the intentions were. With many scammers now using phone number "spoofing" programs to mask their calls as local numbers, it can be next to impossible to eliminate them from your life, save for the somewhat maddening ritual of blocking two dozen numbers a day on your phone.
If you find yourself brave, bold, or bored enough to answer one of those mystery numbers and hit one of these calls, you will most likely wind up listening to some idiot pretending to be an IRS employee. They will be attempting a collect an immediate payment for a tax debt, often employing an aggressive tone or threatening legal actions, such as a lawsuit or law enforcement involvement. Just laugh at them, hang up, and block the call. Or curse at them. Whichever works for you.
Charitable donation scams are the worst. Not only do they rip off good-hearted people, it leads to a sense of mistrust of charities, which leads to fewer donations to legitimate charities, which can be vital during times of crisis or disaster. I have worked in the past as a professional fundraiser, and it was always tough to have a good client that we struggled with because of that mistrust from the public.
Using names similar to larger national organizations and employing a rapid-fire script delivery, these callers will attempt to pluck your heartstrings, stoke your patriotism, or play into your outrage at a hundred words a minute. Don't fall for it. There are disclaimers and other language fundraisers are supposed to use over the phone, and they figure as long as they wing it by you like they are running a cattle auction, then their bases are covered. Fine print is still fine print, even if you heard it as gibberish on the way by.
So how do you handle these situations? Easy. Know upfront that the Internal Revenue Service will simply never demand immediate payment for anything. There is a clearly defined process for collecting a tax debt, including appeals and negotiations of final payment amounts and terms that must be followed before one red cent is expected. The Internal Revenue Service will never call you or email you, let alone have your friends or relatives do it for them. The IRS handles its business the good, old-fashioned government way- via United States Postal Service snail mail.
Never donate to a charity, even a large nationally known organization, over the phone. Yes, it is convenient, and you might get a warm and fuzzy from helping out (with the fifteen to eighteen cents on the dollar most legitimate charities have left after overhead and operating expenses), but just no. Ask the charity's phone rep to send you information through the mail. They already have your phone number, so the odds are good they have your address as well. A legitimate organization will be patient enough to handle your donation that way. You can either just throw it away, or you can use the information to check out the charity on the IRS website to vet their legitimacy with the Tax Exempt Organization Search. If you decide to make a donation, always do so in a manner that creates a record of the transaction, such as a check.
Keeping these practical and common sense moves in mind, you should have no problem navigating tax (and tax refund) season. Now, get back to blocking all those numbers on your phone...
by Thomas Keister
Most everyone has their own household rituals they do throughout the year, whether it is ‘spring cleaning’ or even ‘spring forward, fall back.’
One ritual you should add to that schedule is checking the tax withholding on your paycheck near the end of summer. With fall coming, most people get their attention divided. It can be the kids going back to school, football season starting up, the dreaded year-end holiday trilogy of Halloween, Thanksgiving, and Christmas, anything really.
While it may not seem like a big deal- you might have basically the same tax situation every year, and little to nothing ever changes, one should bear in mind that there are some significant changes to tax returns are coming next year.
With the passage of the Tax Cuts and Jobs Act last December, there are several tax law changes going into effect that could impact one’s tax return, including:
Checking and making any necessary changes to your withholding can prevent unpleasant surprises when tax season rolls up on you or can allow you to take home a bigger paycheck at the expense of having a larger tax refund. Taxpayers should check their withholding if they:
The Internal Revenue Service has Publication 505, Tax Withholding and Estimated Tax, and maintains a withholding calculator to assist taxpayers in making the right choices as it pertains to withholding.
The last, but no less important tip to remember is once you make any changes to your withholding, always follow up with your HR or Payroll department to ensure the changes have been made correctly.
by Thomas Keister
As much as we would like to think it doesn’t happen, there are times when various things hit various fans, and you find yourself facing the realization that something is wrong on the tax return you have filed. While there is no guarantee that things will break good or bad when you file an amended return, it is important to know a little bit about the process going in.
You will have to file using the paper form, Form 1040X (Amended U.S. Individual Income Tax Return) to make the corrections, as amended returns are not accepted electronically or by e-File. You will need to file a separate Form 1040X for each return, making sure to note the tax year at the top of each Form 1040X. Be sure to attach any other IRS forms or schedules involved in making the changes physically to the Form 1040X (common sense dictates stapling everything together).
The forms will contain all the information you will need on where to mail the completed forms. If filing more than one amended return, mail each tax year separately. Your tax preparer will have the forms available, or you can print them out from the Internal Revenue Service website.
If you just made a mistake in the math or forgot to include a form, don’t waste time and money filing an amended return- the IRS will let you know either way something’s off or missing. You should file an amended return to change filing status, or to make any corrections to income, allowable deductions or credits you might qualify for.
Time is always a factor with the IRS, so make sure you keep the following two things in mind:
Once you have filed the Form 1040X, you will have two options, depending on the final result. If you will owe, or owe more than originally thought, then obviously you will want to pay the tax as soon as possible, as penalties and interest will begin to accrue.
If you are due a refund, then you will be able, in most cases, to track the status of your amended return three weeks after filing with the Where’s My Amended Return tool, available on the IRS website. The tool can check current amended returns as well as returns up to three years back.
by Thomas Keister
You already know how it goes. You just sit down to dinner, or you've just fallen asleep, or whatever the situation is, and your cell phone rings. The number isn't familiar, or out of state completely, but when you answer, there is a recording, someone with a broken accent mumbling at you over a loud call center, or worse yet, two seconds of silence followed by the sound of being hung up on.
Don't even get me started on trying to call a hang-up back, only to be answered by a confused elderly woman insisting no one from that number had called.
Whatever hopes you might have had with the federal Do Not Call list, the fact of the matter is, technology has outpaced what the FTC hoped to accomplish with the list. Robocalls, nonsense collection calls, and number spoofing programs has made it next to impossible to truly stop a business from calling you if they want to. The end result is pretty much what you would expect with government stepping in to save us- you'll pretty much have to do it yourself.
The tips below are by no means a complete list, but it is at least a starting point for the two most commonly used phone systems in America today.
How to stop unwanted calls on a cell phone
-See what built-in features your phone has
-See what services your carrier offers
-Download a call-blocking app, which will stop, ring silent, or route calls automatically to voicemail. (Some free, others charge one-time or subscription fee)(Some apps will access contacts)
How to stop unwanted calls when using VOIP
-If your phone uses VOIP, your carrier may be able to assist with a call-blocking feature
-If you are unsure if your home phone uses VOIP, check with your carrier
Of course, if all else fails, you can report unwanted calls to the Federal Trade Commission at ftc.gov/complaint. For more information on blocking unwanted calls, please consult this article at the FTC website.
by Thomas Keister
For most taxpayers, filing their tax returns and getting their refunds is no big deal. However, problems can arise when the taxpayer is not quite prepared when they visit their tax preparer. These problems can be minor, but can delay filing, which in turn delays the processing and arrival of any tax refund.
First- Make sure your paperwork is together.
While the IRS urges all taxpayers to file a complete and accurate tax return by making sure they have all the needed documents before they file, your tax preparer will also most certainly urge the same thing. This makes the filing process must simpler, as everything can be accomplished in one setting, saving you multiple appointments to get through the filing process. This means making sure you have all:
W-2s 1099s 1095-As from the Marketplace if claiming the Premium Tax Credit
Interest statements Mortgage statements Student Loan statements
Receipts for charitable donations Receipts for work-related expenses
Receipts for childcare-related expenses Social Security statements
Social Security numbers for dependents
Typically, these forms start arriving in the mail in January, although some interest statements for investments and investments accounts may take into February to make it. Always check these statements carefully, and contact the payer immediately to have a corrected statement sent out.
Second- Know how the refund schedule works.
In recent years, changes have been made to how some refunds are processed, which has lead to confusion and anger in customers in income tax preparation offices all over the country. By law, and income tax return that is claiming the Earned Income Tax Credit or the Additional Child Tax Credit will not be issued a refund by the IRS before the middle of February. This was designed to ensure taxpayers receive the refund they are due by allowing the IRS more time to detect and prevent fraud.
The IRS is expecting the earliest refunds related to EITC and ACTC claims to be available in taxpayer bank accounts or debit cards starting on February 27, 2018. This is if the taxpayer uses direct deposit and there are no other issues with their tax return.
Third- Know the fastest ways to file your return and get your refund.
Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account.
Just having these three tips in mind- organizing your information, planning the best way to file and receive your refund, and expecting a bit of a wait will save you a lot of hassle and frustration when it comes to getting through tax season 2018.
by Thomas Keister
If you have military vets in your family or circle of friends, it could behoove you or them to check out the Veterans Aid & Attendance Pension Benefit, a little-known benefit which provides tax-free money that can be used for in-home care, board and care, an assisted living community or a private-pay nursing home.
The Veterans Aid & Attendance Pension Benefit, sometimes referred to as the A&A benefit, is basically a private nursing care insurance policy provided to veterans and their surviving spouses by the U.S. government. The benefit provides up to $1,794 a month for a veteran, $1,153 for a surviving spouse, or $2,127 to a couple. The tax-free money can be used for private-pay nursing homes, assisted living communities, in-home care, or board and care.
To qualify, a veteran or spouse must meet requirements including wartime service (at least 90 days of active duty with at least one day during one of the specified wars, and he or she must have had an honorary discharge), financial need (assets under $80,000 excluding a home and a car), and medical need (the veteran or spouse must need assistance with eating, bathing, or dressing).
It can take between six to eight months on average to get approved, however some applicants can wait more than a year. But once the application is approved, it is applied retroactively to the date of application.
Read about the Veterans Aid & Attendance Pensions Benefit, at the Veterans Administration website, and check out a brief questionnaire at VeteranAid.org, to help determine if you or a family member can benefit from this program
With much ballyhoo, and a ton of questionable analysis and sales pitching being done on the Trump Administration's tax proposal, here are some valuable resources to help you gauge the impact of this tax plan on you, your family, and the nation at large.
We're pretty sure we didn't have to tell you the tax plan being floated by the Trump administration was going to be bad for most all of America, even Trump University grads, but this article from Forbes points out how just two of the proposed changes will impact the elderly, younger disabled people, and their families. Read more here.
Even better, read the Institute on Taxation and Economic Policy report on the Tax Cuts and Jobs Act, recently released by the House of Representatives. Unless you are part of the richest 1%, you will want to read this.
Renu Zaretsky of the Tax Policy Center has a great piece pointing out even more flaws (if you thought any more could possibly exist) in the Tax Cuts and Jobs Act. This is your must read material of the week, right here.
Regardless of your political bend, the math is pure and simple: this tax plan is a giveaway to the corporations, and does no favors to the middle class and beyond. Knowing how this plan, especially if it manages to pass, will impact you is vital. Do your homework.
Tax, business, and consumer news and opinion. Curated and/or written by the HFG staff.
(c) 2017-18 Hoosier Financial Group, LLC
by way of mention...
Nothing contained in the articles on InfoPoint should be considered financial advice. All readers are expected to do their own research and team up with their own financial advisors before making any moves, financial or otherwise. Hoosier Financial Group, LLC takes no responsibility for any action taken by a reader before, during, or after reading any part of the InfoPoint blog or any affiliated internet texts.