Category Archives: blog

We Have a New Corporate Tax Preparation Office!

Are You Looking for a New Corporate Tax Preparation Office?

About Worthtax Corporate Tax Preparers

Our new corporate tax preparation office is in Norwell, Massachusetts. While Joseph Cahill and Associates/Worthtax has multiple offices, to serve you better, in Dedham, Weymouth and Norwell, Massachusetts, our Norwell office is our new corporate tax hub.  Continue reading

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How An Accounting Pro Can Help Your Small Business Boom

An Accounting Pro Can Make All the Difference in Your Business Success

It’s true, a professional accountant can provide powerful tax strategies with limited tax obigation, which results in saving money for your small business. One of the most positive qualities that many small business owners share is a burning desire – an insatiable willingness – to “do it all.” It’s what separates entrepreneurs from employees in the first place. An employee is more than willing to set out on the path that someone else has carved for them. An entrepreneur has a need to carve a path for themselves. Continue reading

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Summer Vacation, Who Cares for the Kids?

Summer vacation is here! There is a tax break that working parents should know about. Many working parents must arrange for care of their children under 13 years of age during the school vacation periods. If the child is handicapped, then it is for any age. A popular solution that comes with a tax benefit is a day camp program. The cost of day camp can count as an expense toward the child and dependent care credit. But be careful, expenses for overnight camps do not qualify. Continue reading

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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 phishing@irs.gov.

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)
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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.

Other Tax Identity Theft Help Articles:

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Phishing Scams and Tax Scams Part 1 of 4

Phishing ScamsPhishing scams (pronounced “fishing”) is the attempt to acquire sensitive information by masquerading as a trustworthy entity in an electronic communication. Phishing is done by someone sending an email to a user. They falsely claim to be a genuine business you may be familiar with. Do not be fooled, it is attempt to scam you into providing private information that will be used to steal your identity and possibly your tax refund.

Such information includes, but is not limited to: usernames, passwords, and credit card details (and sometimes, indirectly, money). There is even an email scam claiming to be the IRS. It is probably the most likely way you would least suspect to be hooked, when it comes to identity theft.

How Is Phishing Possible?

All of us say, “I would NEVER give out my private information.” We believe you, not knowingly. However, you could get dubbed into giving out. Phishing scams are typically carried out by e-mail spoofing or instant messaging. Communications claim to be from popular social websites, auction sites, popular paid apps,  banks, online payment processors or your own in-house IT administrators, are commonly used to lure you.

Phishing e-mails are designed to entice you to visit a fake website. Of course, this is done by fear tactics. “Your account has been compromised.” As the owner, you are asked to update details about your personal information, such as passwords and credit card, social security, and bank account numbers. This is information that a legitimate organization already has. The notice directs users to a fake website and enter details there. The website is designed to look and feel almost identical to a legitimate one. It is set up ONLY to steal your information. And these scammers are so nice, they even provide links for your convenience. DO NOT click on the links, as they may lead you to a bogus website with malware on it.

In the meantime, imagine trying to file your return and it gets rejected because the IRS has it already filed. You attempt to get a copy of the return but can’t because you don’t have the ID of the other unfortunate taxpayer who was used as the other spouse on the return. All the while, the scammers are enjoying your stolen refund freely.

Are You Concerned About Phishing Scams, Tactics and Your Taxes?

Our best advice to you is if you get an email from someone that you do know, or the email subject line does not sound right, delete it. Do not open it! Don’t open attachments, and if you did open it by mistake, do not click on the links.

At Worthtax, we want you to be aware of the tactics behind phishing scams, 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.

Other Tax Identity Theft Help Articles:

 

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Address Change? Let the IRS Know!

address change, change of addressHave you changed your address lately? You may want to keep these things in mind to make sure you receive your refunds or information from the IRS. This is true for your home or business address.

Here are 11 ways to change your address on file with the IRS.

  1. Write the new address in the correct boxes on your tax return.
  2. Inform your employer of your new address, this will ensure that you get your W-2 forms on time.
  3. Send the IRS your new address in writing when you file your return. Include your full name, old and new addresses, Social Security Number or Employer Identification Number and your signature. If you filed a joint return, make sure you include the both taxpayers information. If since filing, you and your spouse or partner have moved to separate address, both of you should notify the IRS of your new information.
  4. Use a Change of Address Form, Form 8822, to submit a name or address change. You can do this any time.
  5. Should an IRS employee contact you about your account for another reason, they will do so in writing and will provide phone number to call. You may be able to verbally provide a change of address by phone while handling that other business.
  6. Notify the post office of your address change. This will help you if you changed your address after you filed your return. Your mail can be forwarded. This is especially true if you file quarterly estimated payments.
  7. You can find the address of the IRS center where you file your tax return or download Form 8822 and Change of Address information. The form is also available by calling 800-TAX-FORM (800-829-3676).
  8. Complete your change of address online. If for some reason you think your check was returned to the IRS, you can access  Where’s My Refund? on the IRS website. You will be required to provide your social security number, filing status, and the amount of your refund. For more information, read Understanding your CP31 Notice.
  9. The IRS does use the Postal Service’s change of address files to update taxpayer addresses, but it is still wise to notify the IRS directly.
  10. If you use the mailing label that comes with your tax package, make sure the correction of the address is readable.
  11. Taxpayers who make estimated payments throughout the year should mail a completed Form 8822, Change of Address, or write the IRS center where you file your return. You may continue to use your old pre-printed payment vouchers until the IRS sends you new ones with your new address. However, do not correct the address on the old voucher.

Address Change or Other Tax Information

Alex Franch, can give you excellent advise on address changes and other important tax topics. Worthtax will prepare the notices needed for the Internal Revenue Service and your state tax information. You can reach Alex at 781.849.7200. In addition to our guaranteed pricing, we are giving $50 American Express gift cards to any new clients who have their taxes completed and filed by WorthTax. Worthtax provides ultra-convenient service and triple check accuracy. We have locations in Quincy, Weymouth and Dedham.

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Broncos Win Super Bowl 50 – California Wins With Jock Tax

bronchos winBroncos win of Super Bowl 50 was a surprise to some. Not to me, they had a tight defense. I just hope their defense was just as good when planning to pay the Jock Tax.

Superbowl 50 was in California this year. California is one of those states that charges a “jock tax.” I know your are moaning, are you kidding me? A Jock Tax? It’s true! Payton Manning will have a hefty amount to share with the state after the Broncos win. But take comfort, the referees will be subject too.

Just like you may earn overtime or a bonus at your job, these Bronco and Panther athletes make a hefty bonuses for the playoffs and Superbowl. The athletes who play for the Broncos, Panthers or our beloved Patriots are subject to taxes on a State and local basis. This makes their taxes are very complicated. They have to have a really good CPA on their team. Hum, they should call Worthtax!

Since these athletes play in many cities throughout the US, each city may have a local tax imposed. And, each city is located in a state that may require a jock tax on a portion of their multi-million dollar contracts. This jock tax, another form of income tax, is not only collected where they are based, but also where they live.

Oh, and when we say the Broncos win got them a big, beautiful ring? They they may be taxed on the that as well. I guess in the end, we can really say, California won.

Each State Has Their Own Tax Rules

States tax all earnings of the residents residing in that state. However what about non-residents? That is not always the case. In Massachusetts, nonresidents are taxed on the income that results from sources within the Commonwealth.

Some states will tax nonresident income. Chances are if a city (and state they are located in) hosts a large NFL, NBA, NHL or other major league sports events, then it is likely that they have the jock tax. It is just one more opportunity for generating revenue, I guess you can say.

Not All Fun and Taxes When Broncos Win or Lose

You may ask yourself, “Why don’t more athletes live in Massachusetts?” Guess what?  Massachusetts has a jock tax. Think about it, we are home to the New England Patriots, the Boston Red Sox, Boston Celtics and New England Revolution. That is a lot of tax revenue to be made for the Commonwealth. States that do not have a jock tax are Florida, Washington, Texas and Tennessee. That is why those states, especially Florida, are able to successfully recruit those big names and keep them as residents. And I bet you thought the awesome weather was the only reason that athletes live in Florida? Well, partially, but professional athletes, who live in Florida do not have to pay taxes against the income they earn playing there.

So when a player happens to mention they would rather play in one city rather than another, it may not be due to loyalty or rivalry. Although, we would like to think that. They very well could be thinking about their tax return. Keep that in the back of your mind the next time you play fantasy football.

Regardless of the Broncos Win – We don’t discriminate if you are subject to a Jock Tax

Professional NFL player or not, we are here to help you sort through your taxes. Call Alex at 781.849.7200 . Worthtax has a sign-on bonus of our own. In addition to our guaranteed pricing, we are giving $50 American Express gift cards to any new clients who have their taxes completed and filed by WorthTax. Worthtax provides ultra-convenient service and triple check accuracy. We have locations in Quincy, Weymouth and Dedham. Although, if you are a Broncos’ fan and you booed our beloved Patriots, well … don’t do it again!

Superbowl 50 Fun Fact

What is Superbowl 50 without the commercials? Did you know that advertising for Superbowl 50 will generate $377 Million in advertising revenue. Imagine paying taxes on that!

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photo credit: Denver Broncos 2008 Schedule Wallpaper via photopin (license)
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Wrong Tax Forms Issued – Massachusetts Retirees

Wrong Tax Forms were issued on January 21, 2016 to over 50,000 Commonwealth of Massachusetts Retirees.

What happens if I file with the wrong tax forms?

About 50,000 Commonwealth of Masachusetts retirees received the wrong tax forms. An uncorrected 1099-R form would mean possible over payment of federal income taxes for retirees. Fortunately some State retirees called the office after they noticed the wrong tax forms, as tax bills were much higher than 2014. Normally, retirees who would receive refunds might have had to owe money.

The misprinted forms, because of a programming error, had bad codes assigned. The correct code should have been 7, for normal distribution of benefits. Instead, Code 1 was printed. Code 1 means a premature distribution of benefits. What would this cost the retiree? A 10 % penalty. In addition, State Retirees who should have been assigned Code 2, for early distribution of benefits with exceptions, received forms erroneously marked as Code 7. You can read more about it here on the Massachusetts government website.

Fortunately, this was caught fairly early. The issue can be resolved with the IRS should retirees file the wrong tax forms. However, it can take two years.

When Can I file my paper tax returns?

The State Treasurer’s office recommends that you wait for the revised 1099-R form to come in the mail if you file with a paper tax return. First, make sure the box at the top of the 1099-R marked “Corrected” is checked off.

2015_1099-R, corrected tax form, wrong tax forms

A corrected 1099-R form will be mailed out in early February. The board is sending postcards to make sure the 50,000 Commonwealth retirees are notified of this error. You should receive a revised 1099-R statement by Tuesday, February 16th, 2016. If not, please call the Massachusetts State Retirement Board (the number is at the end of this blog).

How Do I File Electronically?

State retirees who file electronically, can go ahead and file, just use the correct codes. If you are a retired employee of the Commonwealth of Massachusetts, up to the age of 59-1/2 in 2015, you can enter Distribution Code 2 on the electronic form. Use Distribution Code 7 if you turned older than 59-1/2 in 2015. If you have any questions, you can contact the State Treasurer’s office by email at srb@tre.state.ma.us or by telephone at (800) 392-6014 or (617) 367-7770. By the way, be easy on them. Make sure that you notify the Massachusetts State Retirement Board of any change of address. The change of address form can be found here.

You can access information on how to read your 1099-R form here. Make sure the new one you receive has “Corrected” checked off on the top.

Alex Franch, BS EA  at  781.849.7200. He can answer any questions you may have regarding tax preparation and the filing of your returns. We have ultra-convenient service at any three of our locations where you can conveniently drop off your tax documentation to be prepared, Dedham, Quincy and South Weymouth. Worthtax uses a triple check accuracy system.

If you found this information to be helpful, please share it with someone else. You are welcome to leave a comment below, or on our social media outlets below.

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Does Uncle Sam Have a Birthday Gift for You This Year? Ages 50+

birthday, surprises, giftsIn our last post we talked about, ages 0-49 birthday surprises from Uncle Sam. This week, ages 50 and up get to discover their birthday gifts or surprises from the IRS when you file your tax return next tax season. As we mentioned, in some situations the gift may not be because you reached a certain age, but will be the result of the age your dependent(s) or spouse turned this year. Unfortunately, not all of Uncle Sam’s gifts will be welcomed on this birthday, because some birthdays mark the end of eligibility for certain credits or exclusions of income. Others signal the start of needing to include retirement benefits in income.

A Birthday Over 50

Age 50 – Are you a qualified public safety employee, such as a police officer or fireman who separates from service after age 50? Did you take a distribution from your government employer’s defined benefit pension plan? You should know that the 10% early withdrawal penalty will not apply.

Age 55 – If you take a distribution from your employer’s qualified retirement plan after separation from service in or after the year you reach age 55, the distribution is not subject to the 10% penalty that usually applies when distributions are taken before age 59-1/2. To qualify for this exception to the penalty, you must be age 55 or older, and then separate from employment. This provision does not apply to IRAs.

Age 59-1/2 – The half birthday is just as important to pay attention to. Once you have reached age 59-1/2, distributions from your qualified retirement plans and traditional IRAs are no longer considered to be early distributions. Therefore, the distributions are not subject to the 10% early withdrawal penalty. However, in most cases, all of the distribution amount is included as your income and will be taxed.

Age 62 – Many individuals opt to start receiving their Social Security benefits on this birthday. The benefit will be at a reduced amount than if they had waited until they reached full retirement age. Full retirement is when they first become eligible to receive the payments, generally at age 62. If this is your first year for collecting SS benefits, whether at age 62 or another age, you may be surprised to learn that part of the benefits may be taxable. Depending on your other income and filing status, 50% to 85% of the benefits may be taxable.

Age 65 – As mentioned above, starting with the year you reach age 65, you are eligible for an additional standard deduction amount. For 2015, the extra amount is $1,550 for a taxpayer filing as single or head of household or $1,250 for those filing married joint, married separate or a qualifying widow or widower. There is no extra deduction if you itemize your deductions. If you file a joint return for you and your spouse, if he or she is also age 65 or older, you are each allowed the additional amount.

Through 2016, if you itemize deductions and either you or your spouse, filing a joint return, and you are age 65 by the end of the year, you need to reduce your medical expenses by only 7.5% of adjusted gross income. This is instead of the 10% reduction rate that applies to other taxpayers. If you are subject to the alternative minimum tax, only medical expenses exceeding 10% of your regular AGI are deductible for the AMT computation.

If you have been claiming the earned income credit without having a dependent child, you will no longer be eligible for the credit starting in the year you turn 65.

Contributions to a health savings account (HSA) are not permitted once you are entitled to benefits under Medicare. This means you are eligible for and have enrolled in Medicare. Most individuals become Medicare eligible and enroll at age 65. Contributions to the HSA may continue until the month you are actually enrolled in Medicare.

Age 70-1/2 – Remember that half birthday comment above? If you turned 70-1/2 in 2015, distributions from your traditional IRA must begin by April 1, 2016. Otherwise, a minimum distribution penalty can apply. You must continue to take distributions annually. Not only must you take distributions after turning 70-1/2, the law specifies how the minimum distribution is to be calculated. You may take a larger distribution, but the amount in excess of the required minimum distribution amount cannot be used to reduce future required distributions. You are considered age 70-1/2 on the date that is 6 calendar months after the 70th anniversary of your birth.

In general, if you are or were an employee whose employer has a qualified plan, distributions from the qualified plan must begin no later than April 1 of the year following the year in which you reach age 70-1/2 or (except if you are a 5 percent owner), if later, you retire. This “retirement, if later” exception does not apply to IRAs.

If you were required to take your first distribution in 2015 but delay the withdrawal until April 1 of 2016, you will then have two distributions to include in your 2016 income, since the regular 2016 distribution must be taken by December 31 of that year. You cannot make a contribution to a traditional IRA for the year in which you reach age 70 1/2 or for any later year. Contributions to Roth IRAs, however, are allowed regardless of age on your birthday, provided you have wages, self-employment income or alimony income.

Are you Celebrating a Birthday Milestone?

If you or a member of your tax family celebrated a milestone birthday (or half-birthday) this year and you have questions as to how the tax implications of that event will affect your return, please give Alex Franch, BS EA  a call at 781-849-7200.

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