Changes to Due Dates Effective Now

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In a bill for highway funding extension some provisions in the bill were what you would not expect, they were tax provision that changed due dates and additional requirements. The bill was signed into law by President Barack Obama on July 31, 2015. While the tax provisions are divided between new tax return due dates and clarification of previous tax laws. It is clear to see that legislators are starting to listen to the profession. As these changes are what the AICPA and other accounting societies have been trying to suggest would make it easier for preparers.

 

Changes to Form 1098 Mortgage Interest Statements

 

New information will start showing on Forms 1098, which many of you will recognize as the form that you turn in to your accountant. The form has information about your mortgage interest. These forms will require to provide more information such as the outstanding principal on the mortgage at the beginning of the year, the date the mortgage started and the address of the property that the information relates to. Certain companies have already started to add this information but does not become mandatory until 2017.

 

Consistent Reporting For Estate

 

Estate reporting will now require executor to furnish informational returns to the IRS and to any person receiving interest in property from the estate. Additionally it now adds a new law that requires inherited property cannot have a higher basis than what is reported by the estate. This is meant to curtail any confusion in basis as it has happened before. This change is effective for any estate tax return filed past the date of the new law.

 

6 Year Statute Of Limitations In Cases Of Overstatement Of Basis.

 

After the IRS lost in court back in 2012 due to the vague writing of a law in the case of U.S.  v. Home Concrete & Supply, LLC. The Supreme court held that the IRS could not extend the statute of limitations to six years when it applied to matters of capital gains and overstatement of basis. Resulting in the taxpayer keeping the three year statute of limitation. The IRS decided to correct this mistake by making it clear that an overstatement in basis will be considered an omission from gross income and therefore they will be able to extend the statute of limitations to six years. This change applied to any returns that are filed after this new law becomes effective and also for any other returns that are still within the statute of limitations.

 

Modification to Tax Return Due Dates

 

  • Partnership Tax Return will now be due March 15 previously these were due April 15, For fiscal year partnership they are due on the 15th day of the third month after their closing.
  • C Corporations their new due date is 15th day of the fourth month after their closing. currently they are due on the third month
  • FinCEN Report 114 is now due April 15 much earlier than previous deadline which was June 30. an Extension is now available.
  • Corporations will be allowed a six month extension with different starting dates depending on  if you are calendar or fiscal year corporation.
  • Foreign trust reporting Form 3520-A Annual Information Return of a Foreign Trust with a United states Owner has been changed to the 15th day of the third month after closing.
  • Form 3520 Annual Return to Report transactions with Foreign Trust with Receipt Of Certain Foreign Gifts has been changed to April 15.
  • Due dates apply to taxable years beginning after December 31, 2015 with one exception C corporation with fiscal years have an extra ten years to make the change.

 

Modification to Extensions

 

  • Form 1065: 6 Month Extension ending on September 15 for Calendar year taxpayers.
  • Form 1041: 5 ½ Month period ending on September 30 dor calendar year taxpayer.
  • Form 5500: Automatic 3 ½ month period ending on November 15 for calendar year plans
  • Form 990: Automatic 6 month period ending on November 15 for calendar year
  • Form 4720: Automatic 6 month period beginning on the due date for filing the return.
  • Form 5227:  Automatic 6 month period beginning on the due date for filing the return.
  • Form 6069:  Automatic 6 month period beginning on the due date for filing the return.
  • Form 8870:  Automatic 6 month period beginning on the due date for filing the return.
  • Form 3520-A: 6  Month Extension
  • Form 3520:     6 Month Extension
  • FinCEN Report 114: 6 month period ending on October 15

Does Your Tax Preparer Have A Record Of Completion?

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Record of Completion

 

Many of you know that it is important to find a tax preparer that knows what they’re doing because in the end it affects you. This year was the start of a new program by the IRS called the Annual Filing Season Program. What this program aims to do is make sure that the people that are preparing tax returns for compensation are competent and know what they are doing. Recently the IRS has stated that 44,000 preparers completed the program for the first year. This is a good sign for people that are looking for help when it comes to preparing and filing their taxes.

The Annual Filing Season Program was started in the hopes that all tax return preparers will maintain a level of knowledge that will help their clients. In order to complete this program a person must complete a certain amount of continuing education. The total needed is 18 hours which consists of 6 hours of “refresher courses”, 10 hours on federal tax laws, and 2 hours of ethics. On top of these requirements those that participate in this program must agree to specific obligations set by the IRS which will make them accountable for their actions.

This program is completely voluntary but can negatively affect the preparer and the taxpayer if they choose to not participate. After December 31, 2015 those who do not participate in the Annual Filing Season Program will not be able to represent their clients before the IRS for tax returns and claims for refunds. This means that if your return is selected for additional review, your tax preparer may not be able to help you with the review. Attorneys, CPA, and Enrolled Agents will have full representation rights for clients but are usually expensive to keep. Those who are part of the Annual Filing Season Program will have limited representation rights, but will still be able to represent clients they have prepared a return for.

We at Cloud Accounting Professionals are proud to say that all our tax preparers have earned the Annual Filing Season Program Record of Completion. This means that we have put time into keeping up with changing tax laws and made sure we can help our clients when needed. The IRS shows that as of the start of the 2015 filing season there were more than 666,000 tax return preparers with active PTINs. This means that only 6% of those tax return preparers volunteered to take and finished the program.

Many people do not make the commitment to sign the taxes they prepare and to stand by their work. We are proud of helping others to prepare and file their returns and will continue to show it. When you come to Cloud Accounting Professionals to help prepare your taxes, you can rest assured that you are in good hands.

Why I Should Use Cloud Accounting Professionals ?

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We welcome you to try our expert services. Our staff has over ten years experience in the accounting industry.  We are focused on helping you achieve financial success. You will never worry about crunching numbers,meeting costly deadlines or procuring IRS Penalties.

Cloud Access

Our cloud technology lets you access all your personal information regardless of where you are. It also allows us to assist you in ways a traditional company structure can not. We know keeping in touch with your accountant is difficult, so we made sure you have access our services and experience from anywhere in the world.

Convenient

We offer a convenient way to file your taxes. Documents are sent through the online client portal, so our accountants are ready when you are. If you forget to file a form, there’s no need to worry and reschedule; just upload it at your convenience! We make the process easier by allowing you to submit documents online.

Security

Security is our primary concern. We use data encryption to make sure all communication and data sharing is protected. It’s the same encryption used by big banks. Additionally our Client portal servers reside in accredited data centers with additional power sources and data backups. Your information is protected against almost any disaster.

Expertise

From bookkeeping to taxes, we make sure our staff is experienced in handling all possible problems that may arise when organizing your business information. Unlike other large companies, our professionals are trained year long and serve solely to help you with your accounting needs.

Year long support

Unlike most tax companies, we operate outside tax season to assist you with all your financial needs. We’re open year round so you can call or pass by our office for immediate service. No matter what happens to you or your business, we will assist you during any time of the year.

One Stop Shop

The days of going to one business for taxes and another for bookkeeping are gone.  We get it all done for you under the same roof. We analyze your financial information to see how it affects your taxes. We get you started and review the information to see what other services you benefit from.

Florida Number One In Identity Theft

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ID Theft

 

 

Identity theft as defined by the IRS occurs when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes.

 

“Identity theft continues to top the Federal Trade Commission’s national ranking of consumer complaints, and American consumers reported losing over $1.6 billion to fraud overall in 2013, according to the FTC’s annual report on consumer complaints released today.”

Information Valuable to Identity thieves:

  •         Name, address
  •         Date of birth
  •         Medicare card number
  •         Driver’s license number
  •         Social Security number
  •         Passwords

How does Identity theft happen?

  •          Data breaches
  •          Phony emails from imposters
  •          Social networking
  •          Stolen wallets
  •          Corrupt tax preparation services

Warning signs:

  •         Unusual delay in getting a refund
  •         IRS notifications:

o   Duplicate tax return filing

o   Unreported income

o   Duplicate dependents

Although there are many ways someone may try to steal your identity there are many ways to reduce the risk of theft.

  1.       Minimize personal information kept in your purse, wallet and smartphone.
  2.       Shred documents with any personal information.
  3.       Do not give out personal information.
  4.       Do not click on links sent from strange emails.
  5.       Use complex passwords
  6.       Check your annual credit reports, one CRA every quarter.

 

In previous posts we have said how it is important to trust your tax preparer as you have voluntarily given them the information needed to steal your identity. According to a Treasury Department report, in 2012 there were more than 1.8 million cases of stolen returns from taxpayer identity theft. This crime costs taxpayers billions of dollars every year and the statistics show that is it growing. Which state is currently leading the country in the number of cases, none other than our very own sunshine state Florida.

It seems lawmakers have taken notice of the increasing number of cases and are doing something about it. Last month leaders of the the Senate Finance Committee introduced a bill to improve the protection taxpayers have against fraudulent refunds that were claimed with stolen identities. This month the House passed a bill that was introduced by Debbie Wasserman Schultz. D-Fla,  with co-sponsors Lamar Smith, R-Texas, and Bob Goodlatte, R-Va, that would make tougher penalties for people that would try to steal tax returns through identity theft.

The intent of the bill is to make stealing the identity of someone less appealing. The bill would increase the maximum penalties for someone caught stealing an identity. It would also add to the definition of identity theft the use of a business or charitable organization to gain sensitive information from people, also known as “phishing”. Another point of the bill would be to have local law enforcement working in better coordination with Justice Department.

It is good to see that lawmakers are trying to put a stop to a growing problem with fraudulent returns and identity theft. As this crime is prevalent here in south Florida it is important to remember that as of right now this bill is not a law, so take care of your sensitive information and make sure to take it to a reputable person if you need help preparing and filing your taxes.

 

Resources:

Ftc.gov/idtheft

Ftc.gov/taxidtheft

 

 

Your Appeal Rights

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Rights

On publication 5; published by the Internal Revenue Service shows the process for taxpayers to follow if the taxpayer disagree with an IRS decision.

According to the IRS If you don’t agree with any or all of the IRS findings given you, you may request a meeting or a telephone conference with the supervisor of the person who issued the findings. If you still don’t agree, you may appeal your case to the Appeals Office of IRS.

You may represent yourself at your appeals conference, or you may have an attorney, certified public accountant, or an individual enrolled to practice before the IRS represent you.

If the meeting did not resolve the disagreement, the taxpayer can appeal the case. Appealing the case may require a written letter of protest outlining why the taxpayer doesn’t agree with the IRS findings. Conferences with Appeals Office personnel are held on an informal manner by correspondence, by telephone or at a personal conference.

”However, if you are a nonresident alien, you cannot take your case to a United States District Court.”

 

 

If you would like to learn more about your appeal rights please visit

http://www.irs.gov/pub/irs-pdf/p5.pdf

Trusting Your Tax Preparer

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Every year many people become victims of tax related identity theft, a few of those cases are due to the tax preparer themselves altering the tax return for their own benefit. When it comes to preparing your taxes, it is easy enough to find someone to do it. Between January and April 15th you can generally find someone advertising their availability to prepare and file taxes around every corner, the problem that comes up is how credible is this preparer is.

 

Given the choice between someone that will prepare your taxes for $40 and someone that will do it for triple that amount, (with no other knowledge about the preparer) people will tend to go with the lower price in order to try to save money. This may work out well for you and you’ll get your refund and be on your way. But on the other hand it may end poorly resulting in missed out credits or even worse an audit.

 

 As a taxpayer you must remember you are paying someone to handle your sensitive information, date of birth, social security number, address, these are all pieces of information you are voluntarily giving to someone who is meant to take this information and keep it safe and secure.

One of the biggest red flags that you should notice when going to any tax preparer is whether or not they signed their name as the person preparing the return. Signing your name as the person that prepared the return means that you are accountable for what is on that document, that you are not trying to defraud the government. It is very easy for a tax preparer to leave the return as self-prepared, leaving the liability on the taxpayer rather than the preparer. There have been many incidents where a tax preparer is around for a season or two then suddenly vanishes. Should their clients get a notice from the IRS and the preparer is no where to be found the clients are left perplexed as to what happened when they need to speak before the IRS.

 

In the end you have many choices when it comes to getting your taxes done, always make sure to double check the information that is on the return, and find a credible preparer that will sign their name on the return and not disappear. It tends to be that you get what you pay for so the question is, how much value do you put on your information and your preparer.

3 Common Mistakes on Taxes to Avoid!

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 1-  Incorrect or missing social security number

This is a common mistake constantly noted by the IRS. The Social Security number for the taxpayer, spouse, dependents, and children who qualify for the Earned Income Credit or Child Tax Credit, must be written on the return form exactly as they appear on the Social Security Card. Always double-check.

 

SS

 

2-  Misspelled or different names

Although the IRS is all about numbers, words are important too. When your name or the name of your spouse, children, etc. do not match, this causes the to IRS to slow down the processing time on your tax return or throw it out completely. One common cause is when a taxpayer legally changes their name, most notably after getting married.

 

diffnames

 

“Remember to notify the Social Security Administration of your name change after your wedding”

 

3-  Failing to sign/ date a return

Sounds simple, yet every year, hundreds commit this common mistake of forgetting to sign their tax return. The IRS won’t process your return it if it’s missing a signature, even on e-filed returns. The IRS does not accept tax returns that are not signed, Period.

 

“Both spouses must sign a joint return.”

 

signature

 

 

 

For more information please visit: http://www.irs.gov/taxtopics/tc303.html

 

Foreign Banks Agree to Share Tax Info

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In response to a 2010 law known as FATCA (Foreign Account Tax Compliance Act) the U.S has encouraged foreign institutions to supply the IRS with names, account numbers and balances for accounts controlled by U.S. Taxpayers. All this in an effort to target Americans hiding assets overseas.

Nearly 70 countries have agreed to share this information with the IRS due to a new penalty they will incur under the FATCA that withholds 30% of a foreign banks transactions if they refuse to share information with the IRS. This is a steep penalty that most countries are trying to avoid.

Additionally U.S. banks that fail to withhold the 30% tax would be liable for it themselves and could face steep charges.

More than 77-thousand foreign banks, investment funds and other financial institutions have already agreed to share this information. The Treasury will keep an updated list of all complying banks so American Financial Institutions will know it is OK to send them payments without withholding tax information. As a side note to those with investments in Russia; 515 Russian institutions were forced to apply directly with the IRS because the U.S. halted negotiations with the Russian Government due to the crisis in the Ukraine.

 

     Robert Stack, deputy assistant treasury secretary for international tax affairs, said “The strong international support for FATCA is clear, and this success will help us in our goal of stopping tax evasion and narrowing the tax gap.”

 

The law is so strong, foreign banks are using loopholes in their own laws to provide personal information to the U.S. They circumvent their countries privacy laws by providing the information to their local government and having them release it to the U.S. As the provisions of this law affect more financial institutions, the U.S. is slowly making tax havens a thing of the past.

Officials are still debating a “tax holiday” which would allow corporations and individuals to transfer funds from their foreign accounts to the U.S. at little or no tax at all. The reason why it’s still being disputed is in 2004, when the policy was being tested, it did little for the economy as most companies just transferred some income in order to make their financial statement look better to investors.

As long as companies and investors keep receiving preferred tax rates in other countries, they will keep their income overseas and maximize their tax savings and investment opportunities.

IRS Taxpayer Bill Of Rights

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The Internal Revenue Service adopted a “Taxpayer Bill Of Rights.” Most of them are rights that are already exist in the tax code, but this allows them to be more visible to clients.

Taxpayer Bill of Rights

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay no More than the Correct Amount Of Tax
  4. The Right to challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System

 

These rights can be found under the IRS Publication 1. They will also be sent to taxpayers when they receive notices from the IRS; including audits and collections.

 

“The Taxpayer Bill of Rights contains fundamental information to help taxpayers,” said IRS Commissioner John A. Koskinen.

“These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”

 

The IRS released the Taxpayer Bill of Rights after an extensive discussion with the Taxpayer Advocate Service; an independent office inside the IRS that represents the interest of U.S. taxpayers. Since 2007, it has been the Offices priority to publish the Taxpayer Bill of Rights and report it in their most recent Annual Report to Congress.

 

“Congress has passed multiple pieces of legislation with the title of ‘Taxpayer Bill of Rights,'” Olson said. “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS, and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”

 

The timing of this Bill is important because the IRS is currently at its peak of sending notices to taxpayers from the 2014 filing season. The publication will initially be available in English and Spanish, but will be translated to other languages in the future. To help spread the word, the IRS created a special section on the IRS.gov website highlighting the ten rights. They will also add posters and signs to its public offices in the coming months.

 

The importance of this was echoed by IRS Commissioner Koskinen, who said.  “This information is critically important for taxpayers to read and understand. We encourage people to take a moment to read the Taxpayer Bill of Rights, especially when they are interacting with the IRS. While these rights have always been there for taxpayers, we think the time is right to highlight and showcase these rights for people to plainly see.”

 

“I also want to emphasize that the concept of taxpayer rights is not a new one for IRS employees; they embrace it in their work every day,” Koskinen added. “But our establishment of the Taxpayer Bill of Rights is also a clear reminder that all of the IRS takes seriously our responsibility to treat taxpayers fairly. Koskinen added, “The Taxpayer Bill of Rights will serve as an important educational tool, and we plan to highlight it in many different forums and venues.”

 

This is a move in the right direction because many taxpayers are afraid of the IRS and unaware they have rights. As they become more aware of their rights, it might subside the general feeling of fear.

 

In my professional career, I have seen clients so scared of opening letters from the IRS they wait for me to open it for them. Most of the time it’s nothing but a harmless notification, But the fact remains the IRS logo scares people and makes them unsure of what to do next. If you ever do get a notice from the IRS, be aware you do have rights and there are professionals who can help you resolve any issue.


Source:
http://www.irs.gov/uac/Newsroom/IRS-Adopts-Taxpayer-Bill-of-Rights;-10-Provisions-to-be-Highlighted-on-IRSgov,-in-Publication-1

Qualified Educator Expense Still Unchanged 11 Years Later

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Since 2003, an eligible educator can take a Pre-AGI (adjusted gross income) deduction of up to $250. Although helpful, the rising cost of standard of living and inflation leaves our educators ignored.

 (Latest annual inflation rate for the United States is 2.0%, as reported by the Bureau of Labor Statistics)

It’s time for that to change; educators should receive more benefits during tax time. Educators use these funds on items such as books, school supplies, and even software which is paid out-of-pocket to ensure their students have all the materials they need to learn and master their craft.

(In some states, home schools are considered private schools by case law and statute.)

Any expenses educators incur past the original $250 can be deducted towards their AGI, but the problem is they are entered as a Miscellaneous Business Expense, which is hindered by the 2% limitation.This meansif they haven’t reached the limitation, they won’t benefit from their contribution to a student’s learning, and if they have, their contributions will be limited.

EducatorExpense

 

 

Who qualifies?

  • You are a kindergarten through grade 12:

-Teacher
-Instructor
-Counselor
-Principal
-Aide

  • You work at least 900 hours a school year in a school that provides elementary or secondary education, as determined under state law.

 

 Benefits:

  • An Increase to Educator Expense would assist our educators financially.
  • Benefits would trickle down to students as more learning materials are provided to them.
  • It will give us clear understanding of the burden we place on our educators.
  • More incentive for teacher to remain in their profession and give a better experience to students


Sources:
Inflation: http://www.bls.gov/
Qualifications: http://www.irs.gov/taxtopics/tc458.html