by Fresh Start Tax | Feb 8, 2017 | Tax Help
Five Things to Know About the Child Tax Credit
The Child Tax Credit is a tax credit that may save taxpayers up to $1,000 for each eligible qualifying child. Taxpayers should make sure they qualify before they claim it.
Here are five facts from the IRS on the Child Tax Credit:
1. Qualifications. For the Child Tax Credit, a qualifying child must pass several tests:
• Age. The child must have been under age 17 on Dec. 31, 2016.
• Relationship. The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. The child may be a descendant of any of these individuals. A qualifying child could also include grandchildren, nieces or nephews.
Taxpayers would always treat an adopted child as their own child. An adopted child includes a child lawfully placed with them for legal adoption.
• Support. The child must have not provided more than half of their own support for the year.
• Dependent. The child must be a dependent that a taxpayer claims on their federal tax return.
• Joint return. The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.
• Citizenship. The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
• Residence. In most cases, the child must have lived with the taxpayer for more than half of 2016.
The IRS Interactive Tax Assistant tool – Is My Child a Qualifying Child for the Child Tax Credit? – helps taxpayers determine if a child is a qualifying child for the Child Tax Credit.
2. Limitations. The Child Tax Credit is subject to income limitations.
The limits may reduce or eliminate a taxpayer’s credit depending on their filing status and income.
3. Additional Child Tax Credit.
If a taxpayer qualifies and gets less than the full Child Tax Credit, they could receive a refund, even if they owe no tax, with the Additional Child Tax Credit.
Because of a new tax-law change, the IRS cannot issue refunds before Feb. 15 for tax returns that claim the Earned Income Tax Credit (EITC) or the ACTC. This applies to the entire refund, even the portion not associated with these credits.
The IRS will begin to release EITC/ACTC refunds starting Feb. 15. However, the IRS expects these refunds to be available in bank accounts or debit cards at the earliest, during the week of Feb. 27.
This will happen as long as there are no processing issues with the tax return and the taxpayer chose direct deposit. Read more about refund timing for early EITC/ACTC filers.
4. Schedule 8812.
If a taxpayer qualifies to claim the Child Tax Credit, they need to check to see if they must complete and attach Schedule 8812, Child Tax Credit, with their tax return. Taxpayers can visit IRS.gov to view, download or print IRS tax forms anytime.
5. IRS E-file. The easiest way to claim the Child Tax Credit is with IRS E-file. This system is safe, accurate and easy to use. Taxpayers can also use IRS Free File to prepare and e-file their taxes for free. Go to IRS.gov/filing to learn more.
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Feb 2, 2017 | Tax Help
Dangerous W-2 Phishing Scam Evolving:
1.Targeting Schools,
2.Restaurants,
3.Hospitals,
4.Tribal Groups and Others
The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.
In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice.
“This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.
When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this.
As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.
Here’s how the scam works:
Cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).
The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight.
Those businesses that received the scam email last year also are reportedly receiving it again this year.
Security Summit partners warned of this scam’s reappearance last week but have seen an upswing in reports in recent days.
New Twist to W-2 Scam: Companies Also Being Asked to Wire Money
In the latest twist, the cybercriminals follows up with an “executive” email to the payroll or comptroller and asks that a wire transfer also be made to a certain account.
Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars due to wire transfers.
The IRS, states and tax industry urge all employers to share information with their payroll, finance and human resources employees about this W-2 and wire transfer scam.
Employers should consider creating an internal policy, if one is lacking, on the distribution of employee W-2 information and conducting wire transfers.
Steps Employers Can Take If They See the W-2 Scam
Organizations receiving a W-2 scam email should forward it to phishing@irs.gov and place “W2 Scam” in the subject line. Organizations that receive the scams or fall victim to them should file a complaint with the Internet Crime Complaint Center (IC3,) operated by the Federal Bureau of Investigation.
Employees whose Forms W-2 have been stolen should review the recommended actions by the Federal Trade Commission at www.identitytheft.gov or the IRS at www.irs.gov/identitytheft. Employees should file a Form 14039, Identity Theft Affidavit, if the employee’s own tax return gets rejected because of a duplicate Social Security number or if instructed to do so by the IRS.
The W-2 scam is just one of several new variations that have appeared in the past year that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies. Individual taxpayers also can be targets of phishing scams, but cybercriminals seem to have evolved their tactics to focus on mass data thefts.
Be Safe Online
In addition to avoiding email scams during the tax season, taxpayers and tax preparers should be leery of using search engines to find technical help with taxes or tax software. Selecting the wrong “tech support” link could lead to a loss of data or an infected computer.
Also, software “tech support” will not call users randomly. This is a scam.
Taxpayers searching for a paid tax professional for tax help can use the IRS Choosing a Tax Professional lookup tool or if taxpayers need free help they can review the Free Tax Return Preparation Programs. Taxpayers searching for tax software can use Free File, which offers 12 brand-name products for free, at www.irs.gov/freefile. Taxpayer or tax preparers looking for tech support for their software products should go directly to the provider’s web page.
Tax professionals also should beware of ongoing scams related to IRS e-Services.
Thieves are trying to use IRS efforts to make e-Services more secure to send emails asking e-Services users to update their accounts. Their objective is to steal e-Services users’ credentials to access these important services.
by Fresh Start Tax | Feb 2, 2017 | Tax Help
Original Review:
My initial problem lies in a potential IRS tax lien in the total amount of $33,000. I had no idea that I would ever have this kind of problem and after some thought decided that I was going to need professional help.
I tend to be procrastinator and had put this off for some time so that when I finally emailed Fresh Start Tax I had put it off until it was almost too late. I was contacted by at the beginning of October of 2016 by Fresh Start Tax and at that time the IRS was leaving me with little time to get things fixed.
The people at Fresh Start Tax were positive that they could help me get things straightened out.
Although I was really short on funds they were great about working with me to get things done without costing more than I could afford.
They even offered me payment options that I never would have thought this kind of a company would have offered.
Within one months time they were able to provide me with an amended return sent to the IRS and just today I received the wonderful news that I owe the IRS nothing (0) and will be getting a refund in a couple of weeks.
How awesome is that! I would recommend Fresh Start Tax LLC to anyone who needs help with any kind of tax problem.
by Fresh Start Tax | Feb 1, 2017 | Tax Help
Choosing the Correct IRS Filing Status
When taxpayers file their tax return, it’s important they use the right filing status because it can affect the amount of tax they owe for the year.
It may even determine if they must file a tax return at all.
Taxpayers should keep in mind that their marital status on Dec. 31 is their status for the whole year.
Sometimes more than one filing status may apply to taxpayers. When that happens, taxpayers should choose the one that allows them to pay the least amount of tax.
When filing their tax return, taxpayers have IRS e-file as the easiest and most accurate way to file. Its tax software helps them choose the right filing status.
Most people can use tax software and e-file for free with IRS Free File. This is a free service only available on the IRS website. Visit IRS.gov and click “Free File” on the home page.
Here’s a list of the five filing statuses:
1. Single.
Normally this status is for taxpayers who aren’t married, or who are divorced or legally separated under state law.
2. Married Filing Jointly.
If taxpayers are married, they can file a joint tax return. If a spouse died in 2016, the widowed spouse can often file a joint return for that year.
3. Married Filing Separately.
A married couple can choose to file two separate tax returns. This may benefit them if it results in less tax owed than if they file a joint tax return. Taxpayers may want to prepare their taxes both ways before they choose. They can also use this status if each wants to be responsible only for their own tax.
4. Head of Household.
In most cases, this status applies to a taxpayer who is not married, but there are some special rules. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person.
Don’t choose this status by mistake. Be sure to check all the rules.
5. Qualifying Widow(er) with Dependent Child.
This status may apply to a taxpayer if their spouse died during 2014 or 2015 and they have a dependent child. Other conditions also apply.
The “Filing” tab on IRS.gov can help with many taxpayers’ federal income tax filing needs. The Interactive Tax Assistant tool can help taxpayers choose the right filing status.
More on this topic is in Publication 501, Exemptions, Standard Deduction and Filing Information. On IRS.gov/forms, people can view, download or print the tax products they need.
All taxpayers should keep a copy of their tax return.
Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Jan 31, 2017 | Tax Help
Exemptions and Dependents Can Reduce Taxable Income
Most taxpayers can claim an exemption for themselves and reduce their taxable income on their tax return. They may also be able to claim an exemption for each of their dependents. Each exemption normally allows them to deduct $4,050 on their 2016 tax return.
Here are key points to keep in mind on dependents and exemptions:
1. Personal Exemptions.
Taxpayers can usually claim exemptions for themselves and their spouses on a jointly filed tax return.
For married taxpayers filing separate returns, an exemption can only be claimed for a spouse if that spouse:
• Had no gross income,
• Is not filing a tax return, and
• Was not the dependent of another taxpayer.
2. Exemptions for Dependents.
A dependent is either a child or a relative who meets a set of tests. Taxpayers can normally claim dependents as exemptions.
List a Social Security number for each dependent. For more on these rules, see IRS Publication 501, Exemptions, Standard Deduction and Filing Information.
3. No Exemption on Dependent’s Return.
If a taxpayer can claim a person as a dependent, then that dependent cannot claim a personal exemption on his or her own tax return. This is true even if no one claims that person on a tax return.
4. Dependents May Have to File.
A dependent may have to file a tax return. This depends on certain factors like total income, whether they are married and if they owe certain taxes.
5. Exemption Phase-Out.
Taxpayers earning above a certain amount will lose part or all the $4,050 exemption. See Publication 501 for details.
6. E-file Your Tax Return.
The IRS urges taxpayers to kick the paper habit. IRS E-file options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.
7. Try the IRS Online Tool.
Get questions answered by using the Interactive Tax Assistant tool on IRS.gov.
Taxpayers should keep a copy of their tax return.
Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Jan 25, 2017 | Tax Help
Five Tips on Whether to File a 2016 Tax Return
Most people file a tax return because they have to. Even if a taxpayer doesn’t have to file, there are times they should. They may be eligible for a tax refund and not know it.
Here are five tips on whether to file a tax return:
1. General Filing Rules.
In most cases, income, filing status and age determine if a taxpayer must file a tax return.
Other rules may apply if the taxpayer is self-employed or a dependent of another person. For example, if a taxpayer is single and under age 65, they must file if their income was at least $10,350.
There are other instances when a taxpayer must file. Go to IRS.gov/filing for more information.
2. Tax Withheld or Paid.
Did the taxpayer’s employer withhold federal income tax from their pay? Did the taxpayer make estimated tax payments?
Did they overpay last year and have it applied to this year’s tax? If the answer is “yes” to any of these questions, they could be due a refund.
They have to file a tax return to get it.
3. Earned Income Tax Credit.
A taxpayer who worked and earned less than $53,505 last year could receive the EITC as a tax refund.
They must qualify and may do so with or without a qualifying child. They may be eligible for up to $6,269. Use the 2016 EITC Assistant tool on IRS.gov to find out.
Taxpayers need to file a tax return to claim the EITC.
4. Additional Child Tax Credit.
Did the taxpayer have at least one child that qualifies for the Child Tax Credit? If they do not qualify for the full credit amount, they may be eligible for the Additional Child Tax Credit.
Beginning in January 2017, by law, the IRS must hold refunds for any tax return claiming either the EITC or the Additional Child Tax Credit until Feb. 15. This means the entire refund, not just the part related to either credit.
5. American Opportunity Tax Credit. To claim the AOTC, the taxpayer, their spouse or their dependent must have been a student enrolled at least half time for one academic period to qualify.
The credit is available for four years of post-secondary education. It can be worth up to $2,500 per eligible student. Even if the taxpayer doesn’t owe any taxes, they may still qualify. Complete Form 8863, Education Credits, and file it with the tax return.
Instructions for Forms 1040, 1040A or 1040EZ list income tax filing requirements. Taxpayers can also use the Interactive Tax Assistant tool on IRS.gov.
They should look for “Do I need to file a return?” under general topics. The tool is available 24/7 to answer many tax questions.
All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
