IRS Tips for Holiday Security

The IRS wants to remind holiday shoppers to remain vigilant with their personal information this holiday season. That means you should be communicating with clients to ensure they stay vigilant this December. In the hustle and bustle of finding the best deals and shopping for everyone on your list, cybercriminals are waiting. While you’re shopping for presents, they’re shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data that could help them file fraudulent tax returns.

The IRS has declared this week “National Tax Security Awareness Week”.

“Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund.” – IRS Press Release

Here are seven steps to share with clients courtesy of the IRS that will help with online safety and protect tax returns and refunds in 2018.

1. Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy.
2. Avoid unprotected Wi-Fi. Beware purchases at unfamiliar sites or clicks on links from pop-up ads. Unprotected public Wi-Fi hotspots also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.
3. Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords. An attachment may download malware that tracks keystrokes.
4. Keep a clean machine. This applies to all devices — computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.
5. Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. Use a password manager, if necessary.
6. Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication, meaning users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords. For added protection, some financial institutions also will send email or text alerts when there is a withdrawal or change to the account. Generally, users can check account profiles at these locations to see what added protections may be available.
7. Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. And, when disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before trashing.

In addition to these tips, encourage your clients to check their credit reports from each of the three major credit bureaus to ensure there aren’t any unfamiliar credit changes. Consumers can also create a “My Social Security” account online with the Social Security Administration to see how much income is attributed to their SSN. This can help determine if someone else is using your SSN for employment purposes.

As tax preparers, it’s our duty to keep clients informed to help prevent tax fraud and identity theft. Be a source of comfort and information by keeping your clients informed all year long. Reminding them of cybersecurity best practices is just one way to prevent a disaster come tax time.

source https://www.theincometaxschool.com/blog/irs-holiday-security-tips/

Social Security Admin lowers 2018 taxable wage base

Tax Reform Links and Examples

Pong's success 45 years ago has led to today's digital taxes

9 ways to maximize your Giving Tuesday tax deduction

7 online security steps to take this holiday season

F1 champ Hamilton avoided millions in private jet taxes

UK tax agency to ease some penalties

Today's Tax Reform Cost - How Much is $1.5 Trillion?

Black Friday shopping for tax breaks … for the final time?

How to tell if Mom and Dad need help

Thankful for Our Family Business

 

Photo credit: Richmond Times Dispatch.

The Income Tax School is a nationwide online tax school that serves thousands of tax professionals and students each year. While that takes an entire team of employees to run, at its core both The Income Tax School and Peoples Tax are a family business.

It didn’t start out as a family business, but it evolved into being one. Way back when, my then fiancee (now wife) Marilyn lent me $60 to take my first tax class. That class got me a job as a seasonal tax preparer at H&R Block, which led to becoming their Mid-Atlantic regional director and then the New York City regional director. In 1987, I opened Peoples Income Tax, and in 1989 after seeing a need for quality tax education, I opened The Income Tax School to provide turn-key kits enabling independent tax business owners nationwide to operate their own tax schools.  Then, to be able to teach students directly nationwide, I launched elearning courses in 2003.

About 18 years ago, my daughter Terry joined the company and is now our Marketing Director.  A few years after that, my wife Marilyn joined us as our Vice President of Human Resources. Terry and Marilyn complement me and, together, we make a great top management team that is totally committed to the success of the company. Without Marilyn and Terry, I don’t think the business would have survived the many challenges we have encountered and overcome together.

In addition to my family, our company has hired relatives of several employees, which has increased the family nature of our business.

This year, as I think about the things I am thankful for, I am most thankful for my family and our family business and everyone’s commitment to our success. I hope you have a wonderful Thanksgiving holiday!

source https://www.theincometaxschool.com/blog/thankful-for-our-family-business/

Be sure to account for sales taxes in your Black Friday & Cyber Monday shopping budgets

IRS budget cut again, but not as much as Trump wanted

Trump has filed his 2016 taxes, or so it seems from remarks by former IRS commissioner

Guest Post - Simplification for Employers and Mobile Employees

PATH Act's route to tax-free wrongful conviction restitution

California College Access Tax Credit Reminders

Mnuchin money meme arises from currency photo shoot

Beware year-end ID theft and quick cash scams

Obamacare provision muddies Senate tax plan chances

Thankful for Our Family Business

The Income Tax School is a Nationwide online tax school that serves thousands of tax professionals and students each year. While that takes an entire team of employees to run, at its core both The Income Tax School and Peoples Tax are a family business.

It didn’t start out as a family business, but it evolved into being one. Way back when, my then fiancee (now wife) Marilyn lent me $60 to take my first tax class. That class got me a job as a seasonal tax preparer at H&R Block, which lead to becoming their Mid-Atlantic regional director and then the New York City regional director. In 1987, I opened Peoples Tax, and in 1989 after seeing a need for quality tax education, I opened The Income Tax School to provide turn-key kits enabling independent tax business owners nationwide to operate their own tax schools.  Then, to be able to teach students directly nationwide, I launched elearning courses in 2013.

About 18 years ago, my daughter Terry joined the company and is now our Marketing Director.  A few years after that, my wife Marilyn joined us as our Vice President of Human Resources. Terry and Marilyn complement me and, together, we make a great top management team that is totally committed to the success of the company. Without Marilyn and Terry, I don’t think the business would have survived the many challenges we have encountered and overcome together.

In addition to my family, our company has hired relatives of several employees, which has increased the family nature of our business.

This year, as I think about the things I am thankful for, I am most thankful for my family and our family business and everyone’s commitment to our success. I hope you have a wonderful Thanksgiving holiday!

 

source https://www.theincometaxschool.com/blog/thankful-for-our-family-business/

How One Blog Post Generated Thousands of Hits

Last year we wrote a blog post on the Peoples Tax blog (our sister tax preparation company) with line by line explanations on filling out a W4. Each month, no matter what we write about, this blog is the most visited page on our website. In fact, since we posted it in March of 2016, it has received 7,704 visits!

This blog is just a testament to how unsure people are about their tax situation. Sometimes questions that seem the most basic to us, are the very same questions our clients are asking. As a tax professional, it just goes to show that:

1. No matter what, there will always be taxpayers who need our guidance.
2. You should not only be blogging, you should answering these popular questions on your blog!

Generally speaking, when people need an answer to their question, the first place they go is the internet. Our traffic to this blog post is overwhelmingly coming from Google searches. So, how can you have the same success? Do your research to uncover the big questions your target audience is asking and write about it.

You can do that a few ways:

1. Ask clients, contacts, LinkedIn Group members, or your social media followers.
2. Research what taxpayers are asking in online forums like reddit.com/r/tax or Quora.
3. Check out tools like Google’s Keyword Planner or BuzzSumo.

Blogging is a great way to drive traffic to your website and establish your voice as a subject matter expert. For more on blogging, check out these posts:

Why Your Tax Firm Should Have A Blog

Social Media Guide for Tax Business Owners

If you want a fool proof blueprint to marketing your tax business, check out our Tax Business Marketing Manual.

source https://www.theincometaxschool.com/blog/tax-pro-blog-post/

Lawmaker goes to bat for Texas Rangers' ballpark tax break

Inflation bumps up some tax penalties

Pass-through taxation, part 2: The Senate tax reform bill

GOP tax plans would rub SALT in some Red State tax wounds

Tax Reform - What's Up?

What an exciting month so far for tax reform!  We have an amended bill passed by the House Ways and Means Committee (on 11/9 by vote of 24-16). That's the bill, H.R. 1, Tax Cuts and Jobs Act, introduced just one week earlier.  On 11/9, the Senate Finance Committee released a 253-page summary by the Joint Committee on Taxation (most of the pages describe current law).

A few observations:

• The House calls for individual rates of 12%, 25%, 35%, 39.6% and a surtax on the top rate because the benefit of the 12% bracket will phase-out for those in the top bracket (over $1 million of income).
• The Senate rates are 10%, 12%, 22.5%, 25%, 32.5%, 35% and 38.5%.
• Both change the corporate rate to a flat 20% (rather than today's top rate of 35%). The Senate delays this rate until 2019.
• Both bills reduce the maximum rate on business income of passthrough entities, other than professional service firms, but in different ways, and both with some complexity!
• The standard deduction in increased with most itemized deductions other than mortgage interest and charitable contributions remaining. The Senate retains the medical expense deduction.
• Personal and dependency exemptions are repealed. Both bills have a higher child credit amount and a credit for non-child dependents ($300 in House and $500 in Senate).
• Increased expensing amounts for limited time periods.
• Section 199 is repealed.
• Section 1031 would only apply to real property (other than dealer property).
• The estate tax exemption is doubled. The House repeals the estate and GST after 2023; the Senate does not.
• The corporate system is moved to a territorial system with provisions to prevent base erosion.

And there is more.  The House bill is scored to cost $1.5 trillion over ten years as allowed by the recent budget bill.

Next steps is for the House to vote and the Senate Finance Committee to amend its bill and vote and then have it go to the full Senate. Then a conference committee is needed to work out differences to get one bill to go to House and Senate for vote. 

Waiting for ...

• What all will be temporary due to reality that this will be enacted via budget reconciliation so only 51 votes needed in Senate rather than 60. But bill cannot increase deficit after ten years.
• Anything new to be added to help reduce cost, if necessary.
• Whether simplification is possible. While many individuals will move from itemizing to taking the standard deduction, there are still a variety of complex provisions for individuals and busiensses.

We'll see.  I'll have more later

There will be some discussion of tax reform at the CalCPA Federal, State, Local and International Tax Conference on November 15 - 17 at Universal City (and webcast). I'm providing a federal tax update at the start of the program. I'm focusing on cases and rulings and regs, but will note where tax reform might change something.  Other speakers will likely do the same.  AND, for a good discussion of tax reform and the process, Mel Schwarz of Grant Thornton will be talking about tax reform on Wednesday afternoon.  Don't miss that.  Mel knows what's going on in tax reform.

What do you think?

source http://21stcenturytaxation.blogspot.com/2017/11/tax-reform-whats-up.html

A salute, shout out and checklist for U.S. veterans

The great tax reform plan duel of 2017 has begun

Are You Investing In Your Employees?

Your employees are the heart and soul of your business. They keep your clients happy and they keep operations running. It’s important to make sure that you take care of them. Not only do happy employees make for happy clients, it’s expensive to hire and train. So, keeping your turnover low is extremely advantageous. Here are some great ways to invest in your employees so that they continue to grow and be successful at your firm.

Help them find their own niche 

Becoming a specialist in one area of tax is a great way to zero in on specific clients and earn their trust. Think about it. If you have curly hair, you want to go to a hairdresser that specializes in curly hair. If you’re in the mood for pizza, you don’t want to go to a random restaurant that happens to have pizza on their menu, you want a place that makes pizza.

Did you know? 25% of employees would be more satisfied at work if they were given the opportunity to do what they do best.

If there’s an area of tax law that an employees seems to be particularly interested in, why not let them specialize in it by offering to pay for CE Courses online?

We’ve written about becoming a specialist before. Check out the blog post below.

One Way To Gain An Edge On National Tax Firms

Become Enrolled Agents

It’s not that hard to gain the knowledge and expertise to prepare taxes for the general public, just look at the national tax firms turn and burn employees each tax season. Being an Enrolled Agent is the highest credential there is in the tax industry, which hold a lot of weight! Wouldn’t you rather have tax preparers who can better serve clients, charge more for their services, and promote as experts? Invest in your employees by putting on the path to Enrolled Agent.

Spend time on initial training

The on-boarding and training process of a new employee is crucial to retention. Investing in your staff means investing time to train them properly. That goes beyond making sure they prepare taxes properly. It includes knowing the policies and procedures, ongoing and upcoming promotions and you customer service standards.

Did you know? 40% of employees who receive poor job training leave their positions within the first year.

Essential Tax Office Training Check List

Professional Development

Being a successful tax preparer involves networking and relationship building. Your tax preparers need to get out of the office during the slow season to network, build relationships, and have opportunities for professional development. Whether it’s the occasional Lunch & Learn offered by a local or national association or a seminar, you should make sure that your employees are developing their professional skills and increasing their network.

Finding fun ways to acknowledge their hard work

Finally, beyond continuing education and professional development you’ve got to learn to have fun. Celebrate successes, acknowledge hard work, and create a workplace that your staff is excited to come to each day. It doesn’t take much. Here at The Income Tax School we host holiday parties, have ice cream socials, and even have a “fun committee” for planning fun activities.

Turn over is expensive. The best practice is to hire good employees and then invest in their development.

source https://www.theincometaxschool.com/blog/invest-in-your-employees/

IRS says goodbye to Koskinen, welcome Kautter

Inflation tweaks offer U.S. workers abroad some tax relief

E-file ends on Nov. 18

Filing season 2018 starts … IRS not sure yet

Tax reform could cost charities $13 billion a year

Pass-through problems in the GOP tax reform bill

Which bracket will you be in under the GOP tax reform plan?

Time to Set Year-End Tax Planning Appointments

The holidays are quickly approaching – which for the tax industry means year-end tax planning should be on your radar. Have you reached out to clients yet? It’s important that both individual and business clients consult with you to make tax moves that could positively affect their tax bill come tax season. 

Here are some important year-end reminders and strategies.

New Tax Laws in 2017

For higher income taxpayers ($418,400 taxable income for singles, $470,700 for married filing joint, $444,550 for heads of households and $235,351 for married filing separate), the 2017 tax year brought increased income thresholds.

Starting January 1st, The Protecting Americans from Tax Hikes (PATH) Act kicked in. This law requires the IRS to wait until February 15th to send out credits and refunds when the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) is claimed on a return. This could affect your cash flow.

On the healthcare front, limits for Medical Savings Accounts increased by $50 this year. The maximum deductibles for out-of-pocket expenses are $4,500 for self-only coverage and $6,750 for family coverage. The minimum deductible amount for annual family coverage is $4,500. The limit on out-of-pocket medical expenses under family coverage ($8,250) increases by $100.

For those who waited to get healthcare coverage hoping that Obamacare would be overturned, they will have to pay a penalty. One of the aspects of the ACA that IRS was tasked with enforcing is the individual mandate. The fee is calculated 2 different ways – as a percentage of your household income, and per person. You’ll pay whichever is higher.

1. Percentage of income

• 2.5% of household income
• Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace

2. Per person

• $695 per adult
• $347.50 per child under 18
• Maximum: $2,085

For Seniors looking to claim a deduction on their medical expenses when itemizing, this year is a bit different. Qualified medical expenses must be greater than 10% of your adjusted gross income (AGI).  This is up from 7.5% in 2016.

Year-End Tax Strategies 

Here are some traditional, end of year tax strategies to remind your clients about.

Income Deferral

Income deferral strategies shift income to the following tax year. If you expect to be in the same or a lower tax bracket in 2018, it may be advantageous to defer some of your income or accelerate deductions into the current year.

• Self-employed, cash basis taxpayers can delay billing clients until late in the year so that they will not receive the payments until 2018.
• Try to convince your employer to consider paying bonuses in January rather than December.
• Delay selling stocks with capital gains (unless they can be offset with losses)
• Sell stocks that are in a losing position to reduce income this year.
• Delay IRA or retirement account distributions. If you are 70 ½ don’t delay the required minimum distribution.
• Convert taxable compensation into tax free fringe benefits such as negotiating to receive an incentive stock option in place of some salary. Exercising the ISO does not produce taxable income for regular tax or the surtax, but is taxable for alternative minimum tax purposes.

Deduction Acceleration:

• Pay tax deductible expenses before the end of the year. Consider using a credit card which will conserve your cash but allow the deduction in this year.
• Maximize 401(k) and IRA contributions. Don’t forget catch-up contributions.
• If you are self-employed set up a self-employed retirement plan.
• Make qualified charitable donations (QCDs) from your IRA. If you are at least 70 ½ contributions to IRS approved charities made directly from your IRA to the charity can be used to satisfy the minimum required distribution rules but are tax free to you.
• Consider asking your employer to increase your state tax withholding now if you expect to owe state taxes when you file your return to accelerate the deduction into 2017.
• If you elect to deduct the sales taxes rather than state income taxes on your Schedule A, accelerate large purchases such as automobiles or boats into the current year in order to take advantage of the sales tax deduction

Individual Taxpayers

1. 1. State and local sales and use tax deduction: Taxpayers were allowed to deduct the larger of sales and use taxes or state or local income taxes paid.  This provision has been particularly beneficial to retired individuals who did not have state tax withholdings during the tax year.
   2. Qualified Charitable Distributions: IRA owners or beneficiaries who are 70 ½ or older were permitted to make cash contributions from their IRA accounts of $100,000 or less to IRS recognized charities.
   3. Charitable Contributions: Now is a good time to clean out closets, attics, basements, and storage containers to donate unused items to qualified charitable organizations. Be sure to make a list of the items you donated with brief descriptions and the the fair market value of each item. Taking pictures of your donations is also helpful in substantiating your donations. Donated items must be in good or better condition to be deductible. Remember to get a receipt or written acknowledgment of all donations.  
   4. Mortgage Insurance Premiums (PMI) deductions as qualified residence interest will expire.
   5. Standard Deduction vs. Itemized Deductions:  Before itemizing deductions, taxpayers should calculate the federal and state tax returns using both the itemized and standard deduction to determine which is more beneficial overall.  Itemizing deductions can have a negative impact on the state return, depending on the allowed state standard deduction.  For instance, if a large portion of the taxpayer’s itemized deductions are state incomes tax withheld, the state return would be greatly impacted since most states don’t allow the state income tax withheld as an itemized deduction.  
   6. Check Withholdings: Taxpayers should take time to check their withholdings to determine if they’ve withheld enough federal and state taxes during the year.  If the taxpayer is at risk for having a balance due, he can increase the amount withheld from his wages. He can also make an estimated payment to decrease or completely offset the expected balance due.   

Business Taxpayers

1. Business taxpayers will continue to be allowed to claim the 50% bonus first-year depreciation deductions (for tax years 2015-2017).  The maximum deduction limit for Section 179 property purchased and placed in service in is $510,000. The limit is reduced by the amount of the cost of Section 179 property placed in service during 2017 that exceeds $2,030,000.
2. If you own an S corporation or a partnership consider increasing your basis in order to deduct a loss this year or suspended losses from prior years.
3. The business standard mileage rate for 2017 is 53.5 cents per business mile.  Keep accurate business mileage logs to ensure you are receiving the largest legitimate mileage deduction allowable.
4. Keeping accurate and up-to-date business records ensures the business will benefit by deducting the maximum legitimate expenses allowed for businesses. Sloppy recordkeeping is very costly to businesses at tax time.

Please Note: If tax reform is enacted by Congress, the changes could be made retroactive to January 1, 2017, which could eliminate a number of deductions and make itemizing unnecessary for many taxpayers.  This would require changes in year-end tax planning strategies, your cash flow, and that of your EITC clients.

source https://www.theincometaxschool.com/blog/2017-year-end-tax-planning/

How the GOP tax reform plan could affect you (and me!)

November tax moves to make you, not the IRS, thankful