Monthly Archives: March 2016

Massachusetts Tax Filing

Massachusetts tax filing applies if you work in Massachusetts

massachsuetts tax filingEvery individual resident of Massachusetts who earns or accumulates Massachusetts gross income over $8,000 must file a return of all the income. Income can be from a job you hold, interest earned on savings, social security, winnings from the lottery, or any other means that puts money in your pocket. It is all income regardless where it comes from. I know paying taxes on our hard-earned income stinks, but we all have to report it and file a tax return – state and federal.

Full year residents who earn or accumulate Massachusetts gross income over $8,000 during the taxable year must make a Massachusetts tax filing for their income tax return. Gross income is income earned prior to taxes being withheld. Residents must file Massachusetts Form 1 entitled Resident Individual Income Tax Return.

Nonresidents who work in Massachusetts or earn income though sources within Massachusetts must file income tax returns with Massachusetts if their income surpasses either $8,000 or the prorated personal exemption to which they are entitled. These are according to which is less. Nonresidents file Massachusetts Form 1 NR/PY entitled Nonresident/Part-Year Resident Individual Income Tax Return.

Part-year residents who obtain or accumulates Massachusetts gross income over $8,000 during the taxable year must file a Massachusetts income tax return. The form that part-time residents file is entitled Nonresident/Part-Year Resident Individual Income Tax Return or Massachusetts Form 1 NR/PY.

What if I Owe Money to Department of Revenue in Massachusetts?

April 19, 2016 is the Massachusetts tax filing deadline. File your taxes by that deadline regardless if cannot pay the amount due with my return. If you don’t have the total amount you owe on your return, you should try to pay 80% required so you can file an extension. If you cannot reach that amount, then pay what you can. When you file on before the deadline, the Massachusetts Department of Revenue you will not have to pay late filing penalties, but you will still have the interest and late payment penalties. However, even if you can’t pay the 80 percent, you are still must file on time. DOR will issue you a bill for the balance due, plus the interest and late payment penalty.

If the amount due is less than $5,000, you may arrange a payment option. To determine if you qualify, Worthtax can help you access and file the application accurately, without all the guess work. For other dollar amounts due, Worthax can give you tips on how to avoid collections. Keep in mind the Massachusetts can put a lien on your bank accounts and/or put a levy against your earnings. We can help you arrange a small payment agreement which may allow you to make monthly payments to meet your tax obligation.
Note: If you go with a payment agreement, interest and penalties will remain adding up on any portion of the balance outstanding.

No matter how you slice it when it comes to receiving or accruing income from a Massachusetts business or employer, you will have to file your taxes with the Massachusetts Department of Revenue. There are alternatives for you to select from when you file your income taxes for Massachusetts. The fastest option for receiving your refund is to go with electronic tax filing. To get started, call Alex Franch, BS EA at 781.849.7200 for additional information. Worthtax is an ultra-convenient service that uses a triple-check accuracy system that will help you get your taxes completed and filed on time. Worthtax has locations in Quincy, Weymouth and Dedham.


April Is A Very Busy Tax Month

April is a very busy tax month. There are only a few days left to get ready to meet your deadline for tax return filings. But other deadlines apply as well. Below are some important dates:

April Very Busy Month

April 1 – Last Day to Withdraw Required Minimum Distribution

Last day to withdraw 2015’s required minimum distribution from Traditional or SEP IRAs for taxpayers who turned 70½ in 2015. Failing to make a timely withdrawal may result in a penalty equal to 50% of the amount that should have been withdrawn. Taxpayers who became 70½ before 2015 were required to make their 2015 IRA withdrawal by December 31, 2015.

April 11 –  Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during March, you are required to report them to your employer on IRS Form 4070 no later than April 11. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

April 18 –  Individual Tax Returns Due

File a 2015 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic six-month extension of time to file the return, please call this office.

Caution: The extension gives you until October 17, 2016 to file your 2015 1040 return without being liable for the late filing penalty. However, it does not avoid the late payment penalty; thus, if you owe money, the late payment penalty can be severe, so you are encouraged to file as soon as possible to minimize that penalty. Also, you will owe interest, figured from the original due date until the tax is paid. If you have a refund, there is no penalty; however, you are giving the government a free loan, since they will only pay interest starting 45 days after the return is filed. Please call this office to discuss your individual situation if you are unable to file by the April 18 due date.

Note: The normal April 15 due date is a federal holiday in the District of Columbia, so for almost all individuals their 2015 Form 1040 returns are not due until the next business day, which is Monday, April 18 (except residents of Massachusetts and Maine, who have until April 19 to file).April 15 – Household Employer Return Due

April 18 – Estimated Tax Payment Due (Individuals)

It is time to make your first quarter estimated tax installment payment for the 2016 tax year. Our tax system is a “pay-as-you-go” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. These include:

  • Payroll withholding for employees;
  • Pension withholding for retirees; and
  • Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is equal to the federal short-term rate plus 3 percentage points, and the penalty is computed on a quarter-by-quarter basis.

Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than $1,000 (the “de minimis amount”), no penalty is assessed. In addition, the law provides “safe harbor” prepayments. There are two safe harbors:

  • The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.
  • The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You cannot avoid the penalty under this exception.

However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.

This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. Timely payment of each required estimated tax installment is also a requirement to meet the safe harbor exception to the penalty. If you have questions regarding your safe harbor estimates, please call this office as soon as possible.

CAUTION: Some state de minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call Alex Franch in this office for particular safe harbor rules for Massachusetts.

April 18 – Last Day to Make Contributions

Last day to make contributions to Traditional and Roth IRAs for tax year 2015.

Now do you understand why April is a very busy tax month?

It is because the due dates are different this year, and because the different rules apply for different tax events. As mentioned before, if you have any questions regarding your taxes or you need to get them filed before the Massachusetts April 15th deadline or IRS April 19th deadline, call Alex Franch, BS EA at 781.849.7200 for additional information. He understands the details involved with the Earned Income Credit and the IRS requirements. Worthtax has locations in Quincy, Weymouth and Dedham.

Worthtax offers discounts to help you get through this very busy tax month. Click here for details. Or, again, call Alex Franch, BS EA at 781.849.7200.


Are Social Security Benefits Taxable?

Untitled designWhether your Social Security benefits are taxable (and, if so, how much of them are) depends on a number of issues. The following facts will help you understand the tax of your Social Security benefits.

Social Security benefits, in this case, refers to the gross amount of benefits you receive, meaning the amount before reduction due to payments withheld for Medicare premiums. The tax treatment of Social Security benefits is the same whether the benefits are paid due to disability, retirement or reaching the eligibility age. Supplemental Security Income (SSI) benefits are not taxable under any circumstances. Therefore they are not included in the calculation.

How Much of Social Security Benefits Are Taxable

How much of your Social Security benefits are taxable depends on your total income and marital status. Of course, that is if any of the social security benefit is taxable.

  • If Social Security is your only source of income, it is generally not taxable.
  • If you have other significant income, as much as 85% of your Social Security benefits can be taxable.
  • If you are married and filing separately, and you lived with your spouse at any time during the year, 85% of your Social Security benefits are taxable regardless of your income. This is to prevent married taxpayers who live together from filing separately, thereby reducing the income on each return. Thus reducing the amount of Social Security income subject to tax.

How do I know if my Social Security Benefit is taxable?

The following quick calculation can be done to determine if some of your benefits are taxable:

Step 1. Add one-half of the total Social Security benefits you received to the total of your other income. Include any tax-exempt interest and other exclusions from income.

Step 2. Compare this total to the base amount used for your filing status. If the total is more than the base amount, some of your benefits may be taxable.

What Are the Base Amounts?

  • $32,000 for married couples filing jointly;
  • $25,000 for single persons, heads of household, qualifying widows/widowers with dependent children, and married individuals filing separately who did not live with their spouses at any time during the year; and
  • $0 for married persons filing separately who lived together during the year.

Taxpayers can defer their “other” income from one year to another. They may be able to plan their income so as to eliminate or minimize the tax on their Social Security benefits from one year to the next. An example of this is taking Individual Retirement Account (IRA) distributions. However, the required minimum distribution rules for IRAs and other retirement plans must be taken into account.

Those may be missing an opportunity for some tax-free withdrawals are:

  • Individuals who have substantial IRAs
  • AND who are not required to make withdrawals OR are making their post age 70.5 required minimum distributions
  • Without withdrawing enough to reach the Social Security taxable threshold.

Everyone’s circumstances are different. However, what works for one may not work for another.

Need More Information on how Social Security Benefits Affect Your Tax Return?

If you have questions about how social security benefits affect your tax returns, or if you wish to do some tax planning, call Alex Franch, BS EA at 781.849.7200 for additional information. He understands the details involved with the Earned Income Credit and the IRS requirements. Worthtax has locations in Quincy, Weymouth and Dedham.

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Earned Income Tax Credit: Do Not Miss Out

earned income tax credit, eitc, eic, earned income creditThe Earned Income Tax Credit (EITC) is a tax benefit for working people who have low to moderate income. It provides a tax credit that is treated like tax withholding. It goes to pay an individual’s tax liability, and any excess is paid to the individual in the form of a tax refund.

Earned Income Tax Credit Qualifications

Qualifications for the credit are based upon the amount of the filer’s earned income, the spouse’s earned income if the filer is married, and the number of qualified children on the tax return. Any child must either be under the age of 19 or be a full-time student under the age of 24 at the end of the year. Low-income earners between the ages of 25 and 64 who do not have a qualifying child may also qualify.

What Does Earned Income Mean?

Generally, earned income means income that is earned. Income from working, such as W-2 wages and self-employment income is considered earned income.

The credit increases as the taxpayer’s earned income or adjusted gross income (AGI) increases until it reaches a plateau, where it remains constant (at the maximum amount) until it reaches the AGI phase-out threshold. Once the threshold amount is exceeded, the credit is reduced by a set percentage; if income exceeds the top of the phase-out range, no credit is allowed.

How is the Earned Income Tax Credit Computed?

Computing the credit, like all things tax, is complicated. The credit is determined using IRS tables that reflect the dollar amounts at which phaseout begins and ends. However, the illustration below can help approximate the credit for 2015.

EIC, Earned Income Credit, EITC, Earned Income Tax Credit

EIC Example

A married couple with two children has earned income of $20,000 and a modified AGI of $21,000. If we multiply their earned income by their credit percentage ($20,000 x .40), we come up with $8,000. However, that exceeds the maximum credit of $5,548 for a married couple with two children. This means their credit before any phaseout is $5,548. Since their modified AGI is less than the phaseout threshold, then their EITC is $5,548. Had their earned income been $10,000, then their credit would have been $4,000 ($10,000 x .40). If either their earned income or their modified AGI had exceeded $49,974, their EITC would have been totally phased out. They would not have gotten any credit.

What Else Should We Know?

There is also a limit on investment income a taxpayer can have and qualify for the EITC. For 2015, that limit is $3,400. If a taxpayer qualifies for EITC but has investment income in over $3,400, the taxpayer will not receive any EITC.

Individuals that claim either the foreign earned income or foreign housing exclusion also will not qualify for the earned income credit.

Members of the military can elect to treat all or none of their nontaxable combat pay as earned income for the purposes of computing the EITC. The calculation providing the larger EITC benefit can be used.

Please understand that a taxpayer who might not normally be required to file a return might still benefit from filing to claim the EITC.

However, because the potential payout of this credit is so generous, it is the constant target of scammers. In 2014 the government paid out nearly $18 billion in improper EITC payments. Besides scammers, the qualification for EITC is frequently contested between divorced parents who are both attempting to claim the same child in an effort to qualify for the EITC.

The IRS is authorized to ban taxpayers from claiming the EITC for two years if it determines during an audit that they claimed the credit improperly. This can be due to reckless or intentional disregard of the rules. Last year, there were more than 67,000 two-year bans in effect. The ban lasts 10 years if credit was claimed in an earlier year due to fraud.

IRS Promotes the Earned Income Tax Credit – Use It Wisely

The government wants those who are entitled to the credit to claim it. That is why the IRS widely promotes the credit. However, the rules are complex and best addressed by a tax professional. Here is where Worthtax can help. If you have questions about how the EITC might apply to you, call Alex at call Alex Franch, BS EA at 781.849.7200 for additional information. He understands the details involved with the Earned Income Credit and the IRS requirements. We have locations in Quincy, Weymouth and Dedham.

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IRS Alerts Payroll, HR Professionals of Phishing Scheme

IRS Alerts Payroll and HR Professionals to Phishing Scheme Involving W-2s

phishing, scams, spoofing, warning, IDENTITY THEFTThis IRS alerts payroll and human resources professionals to beware of a phishing email scheme that claims to be from company executives. Why should this matter to you as a reader? You could work for a company that may have been scammed. The fake company email requests personal information on employees. This is part of a surge in other phishing email schemes. It has already claimed several victims in payroll and human resources offices.

This spoofing email, a type of phishing scam, has name of the company executive, a CEO or CFO. The impersonator of the executive sends an email to a company payroll office employee requesting a list of employees and information including SSNs. In response to the email, the HR and Payroll representatives send payroll data, which includes employee’s information from the Form W-2. As most may know, W-2s have Social Security numbers and other personal information, which is just enough for a cyber thief to steal an identity, possibly yours!

IRS Commissioner John Koskinen states,

“This is a new twist on an old scheme using the cover of the tax season and W-2 filings to try tricking people into sharing personal data. Now the criminals are focusing their schemes on company payroll departments… . If your CEO appears to be emailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

There are several cases that are already before the IRS Criminal Investigation for review. These include people who have been tricked into sharing SSNs with what turned out to be cybercriminals. These scam artists use the stolen personal information to file fraudulent tax returns for refunds.

The IRS Alerts Reveal Some Email Details:

  • Kindly send me the individual 2015 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
  • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary) as at 2/2/2016.
  • I want you to send me the list of W-2 copy of employees wage and tax statement for 2015, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap.

One Month Until the End of tax season.

There have been other reports of scams targeting a wider tax community. The IRS warned there has been a 400 percent surge between phishing and malware events so far this tax season. As a result, the IRS has renewed a broader consumer alert for e-mail schemes.

The emails are drafted to deceive taxpayers into believing these are official communications from the IRS. Not just the IRS, but others in the tax industry, including tax software companies. The phishing schemes ask taxpayers about a wide range of topics, asking information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

Could You Be Caught in a Phishing Scam?

WorthTax, as well as any viable tax business, would NEVER ask you personal tax information. First, because if you  are our client and you would have already provided that information to us. If you believe your are being tricked into giving sensitive and personal information over, call Alex immediately at 781-849-7200. Worthtax has a Tax Identity Theft program ready to assist you in any three of our tax offices located in Quincy, Dedham or Weymouth.

The IRS, state tax agencies and tax industry are engaged in a public awareness campaign – Taxes. Security. Together. We are strongly encouraged to do more to protect personal, financial and tax data. Also visit Publication 4524 for other ways to protect yourself.

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What Is In Your Wallet? Part 4

What's in your walletWhat is in your wallet or purse can make a big difference if it is stolen. Besides the credit cards and whatever cash or valuables you might be carrying, you also need to be concerned about your identity being stolen, which is a far more serious problem. Thieves can use your identity to set up phony bank accounts, take out loans, file bogus tax returns and otherwise invade your finances, and all an identity thief needs to be able to do these things is your name, Social Security number, and birth date.

Think about it, what’s in your wallet?

Most things you carry in your wallet, contribute to your identity. Your driver’s license has two of the three keys to your identity, your birth date and your address. If you also carry your Social Security card or Medicare card, bingo! An identity thief then has all the information he needs.

You can always cancel stolen credit cards or close compromised bank and charge accounts. Oh, but when someone steals your identity and opens accounts you don’t know about, you can’t take any action until it is too late.

So if you carry your Social Security card along with your driver’s license, reconsider that habit for identity-safety purposes.

What You Should NEVER Do:

Never provide financial information over the phone, via the Internet or by e-mail unless you are absolutely sure of with whom you are dealing. That includes:

  • Social Security Number – Always resist giving your Social Security number to anyone. The more firms or individuals who have it, the greater the chance it can be stolen.
  • Birth Date – Your birth date is frequently used as a cross check with your Social Security number. A combination of birth date and Social Security number can open many doors for ID thieves. Is your birth date posted on social media? Take it down. That goes for your children, as well.
  • Bank Account and Bank Routing Numbers – These along with your name and address will allow thieves to tap your bank accounts. To counter this threat, many banks now provide automated e-mails alerting you to account withdrawals and deposits. However, if you do get an email alerting you to contact the bank. Back out of the email, and call your bank directly from the banks website, not the email phone number provided, as this is could be a phishing scam.
  • Credit/Debit Card Numbers – Be especially cautious with these numbers, since they provide thieves with easy access to your accounts.

There are individuals whose sole intent is to steal your identity and sell it to others. Limit your exposure by minimizing the number of charges and credit card accounts you have. The more accounts that have your information, the greater the chances of it being stolen. Do not think all the big firms are safe; there have been several high-profile database breaches in the last year.

Are You Concerned About Scams, Tax Identity Theft and the Tactics Used To Steal Your Taxes?

You should be! At Worthtax, we want you to be aware that what’s in your wallet is used by identity thieves to scam you, especially when it comes to your tax refunds. If you have not received your refund, and you believe you may have become a victim of tax identity theft, visit our Tax Identity Theft Information Center or call Alex Franch, BS EA at 781.849.7200. He can help you with the paper work involved to restore your right identity with the IRS. We have locations in Quincy, Weymouth and Dedham.

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IRS Email Scam: Stop, Think, Delete – Part 3

An Email scam is nothing new. However, an IRS email scam? That is another story. It is brazen to claim to be the IRS in an email scam.  Always remember, the first contact you will receive from the IRS will be by U.S. mail.

IRS Email Scam, Email Scam

How to Recognize An IRS Email Scam

If you receive email or a phone call claiming to be from the IRS, consider it a scam. Do not click through to any links. Do not respond through a link either. Instead, help the government combat these email scams by forwarding the IRS email scam to

Unscrupulous people are out there dreaming up schemes to get your money . They become very active toward the end of the year and during tax season. They create bogus emails disguised as authentic e-mails from the IRS, your bank, or your credit card company, none of which ever request information that way. They are trying to trick you into divulging personal and financial information they can use to invade your bank accounts, make charges against your credit card or pretend to be you to file phony tax returns or apply for loans or credit cards.

Don’t Be a Victim: STOP-THINK-DELETE

Scammers become very active toward the end of the year and during tax season.

What they try to do is trick you into giving your personal information, such bank account numbers, passwords, credit card numbers, Social Security numbers, etc.

You need to be very careful when responding to emails asking you to update such things as your account information, pin number, password, etc. First and foremost, you should be aware that no legitimate company would make such a request by email. If you get such an IRS email scam or other emails, they should be deleted and ignored, just like spam emails.

We have seen bogus emails that looked like they were from the IRS, well-known banks, credit card companies and other pseudo-legitimate enterprises. The intent is to fool you and have you click through to a website that also appears legitimate. That website is where they have you enter your secure information.

Examples of Email Scams

  • Emails that appeared to be from the IRS indicating you have a refund coming and that IRS official need information to process the refund is an IRS email scam. The IRS NEVER initiates communication via email! So right away, you should know it is bogus. If you are concerned, please feel free to call this office.
  • Emails from a bank that indicates it is holding a wire transfer and needs your bank routing information and account number. Do not respond. If you have any doubt, call your bank.
  • E-mails saying you have a foreign inheritance and require your bank information to wire the funds. The funds that will get wired are yours going the other way. Remember, if it is too good to be true, it generally is not true.

We could go on and on with examples. The key here is for you to be highly suspicious of any email requesting personal or financial information.

As mentioned prior, if you are concerned or you believe you may have fallen victim to an IRS scam email, please call Alex Franch, BS EA at 781.849.7200. He can help you with the paper work involved to restore your right identity with the IRS. We have locations in Quincy, Weymouth and Dedham. You can also visit our Tax Identity Theft Information Center.

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photo credit: Old school communication. via photopin (license)

Scams: Identify, Avoid Them! Part 2

Don't be fooled by scams!Scams are constantly popping up. Thieves use taxpayers’ natural fear of the IRS and other government entities, including email and phone scams, to steal your money. They also use phishing schemes to trick you into divulging your SSN, date of birth, account numbers, passwords and other personal data that allow them to scam the IRS and others using your name and destroy your credit in the process. They are clever and are always coming up with new and unique schemes to trick you.

These scams have reached epidemic proportions, and this article will hopefully provide you with the knowledge to identify scams and avoid becoming a victim.

The very first thing you should be aware of is that the IRS never initiates contact in any other way than by U.S. mail. So if you receive an email or a phone call out of the blue with no prior contact, then it is a scam. DO NOT RESPOND to the email or open any links included in the email. If it is a phone call, simply HANG UP.

The IRS Does and Does Not Do

Additionally, it is important for taxpayers to know that the IRS:

Never asks for credit card, debit card, or prepaid card information over the telephone.
Never insists that taxpayers use a specific payment method to pay tax obligations.
Never requests immediate payment over the telephone.
Will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior written notification of IRS enforcement action involving IRS tax liens or levies.

Phone Scams

Potential phone scam victims may be told that they owe money that must be paid immediately to the IRS or, on the flip side, that they are entitled to big refunds. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy. Other characteristics of these scams include:

Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.

Scammers may be able to recite the last four digits of a victim’s Social Security number. Make asure you do not provide the rest of the number or your birth date.

Scammers alter the IRS toll-free number that shows up on caller ID to make it appear that the IRS is calling.
Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
Victims hear background noise of other calls being conducted to mimic a call site.
After threatening victims with jail time or driver’s license revocation, scammers hang up. Soon, others call back pretending to be from the local police or DMV, and the caller ID supports their claim.

DON’T GET HOODWINKED. This is a scam. If you get a phone call from someone claiming to be from the IRS, DO NOT give the caller any information or money. Instead, you should immediately hang up. Call this office if you are concerned about the validity of the call.

In our next blog, we will show you how to identify an IRS email scam and what steps to take if you receive one.

If you are concerned you may have been tricked by an IRS scam, please call us. Worthtax is experienced in helping taxpayers who may have fallen victim to tax identity theft? Call Alex Franch, BS EA can help you work through all the criteria of a business versus hobby. Call him at 781.849.7200 to determine if you will get any tax benefit from your business investment. We invite you to leave your comments below or on our Facebook or Google + pages. If you found this information helpful , and you think someone else might benefit from it, feel free to share it on your social media pages.

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Top 12 IRS Tax Scams for 2016

We are interrupting our regularly scheduled series, to bring you the Top 12 IRS Tax Scams for 2016 — and, it is revealing. Our series will resume in our next blog.

1. Identity Theft. A tax returned filed under another personal identity.

2. Phone Scams. These scams involve threats of the IRS coming after you. Fear tactics are used to scare individuals into giving over personal information.

3. Phishing. Emails are used to trick you into clicking on links and responding to false inquiries. You can read more in Phishing Scams, Tax Scams Part 1 of 4 in our scams series.

4. Return Preparer Fraud. These are not tax preparers at all, but instead people who claim to be qualified to file your tax papers. You should always vet who you chose to do your taxes.  Of course, once you hand over your information, they will then steal your identity and your refund.

The IRS has launched the Directory of Federal Tax Return Preparers.  If you search Massachusetts 02169, 5 miles, Franch, and Enrolled Agent Credentials, you will find Alex Franch, BS EA of Worthtax listed.


2016_01_09 IRS Tax Preparaer's Directory, Top 12 IRS Tax Scams


5. Offshore Tax Avoidance. This is the attempt to hide money and income through offshore accounts for the purpose of evading taxes. The IRS suggests that if someone is involved in this to come clean and voluntarily get caught up on tax filings.

6. Inflated Refund Claims. Beware of any tax preparer who promises you a large refund before doing your taxes. This goes hand and hand with #4 above.

7. Fake Charities. This is low, I mean low. These are set up at the most vulnerable and devastating time.  Scammers pull at your heart strings to give to a cause, only to turn around and steal your money.

8. Falsely Padding Deductions. Don’t claim a deduction that isn’t yours. Don’t overstate an amount. Do not claim a credit that does not apply to you. And carefully consider what you take as a deduction for charitable contributions, and rental and business expenses.

9. Excessive Claims for Business Credits. This goes hand and hand with Falsely Padding Deductions. Fuel Tax Credits is one common area of abuse by overstating mileage. Another example given is the Research Credit. Make certain you can adequately prove any credits you take.

10. Falsifying Income to Claim Credits. Don’t make up a tax credit on your tax return. Remember those false tax preparers in #4, well these scammers will try to get you to agree to falsifying your tax return just so you will get a bigger refund. Oops, did I say you? I meant them a bigger refund. Because the scammer will steal your money.

11. Abusive Tax Shelters. The IRS has means of finding abuse. They are determined to find complicated and convoluted tax evasion plots.

12. Frivolous Tax Arguments. These frivolous tax arguments are designed by scammers to convince you to come up with every imaginable argument for not paying taxes. They convince you you have a case, only to put you in a worse predicament. They are often repeat offenders. And, the claims they make irrational and bizarre.


Do you think you fell victim to the IRS “Dirty Dozen” List of Scams?

So there you have it! The IRS “Dirty Dozen” List of Scams. If you think that you fell victim to any of the above scams call Alex Franch, BS EA at 781.849.7200. He can help you with the paper work involved to restore your right identity with the IRS. You can also visit our Tax Identity Theft Information Center. Worthtax has locations in Quincy, Weymouth and Dedham.

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