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Our newsline provides the latest news from the IRS, due dates, reminders, and thoughtful insights on accounting and tax related topics

IRS Announces 2017 Standard Mileage Rates for Business, Medical and Moving

12/13/2016

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Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations​

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

​Taxpayers have the option of using the standard mileage rate or the business % of their actual expenses.  It is often advantageous to take advantage of accelarated deprecation deductions (MACRS & Section 179) in the firt year or two a new vehicle is placed in service.  Later as the depreciation deduction is reduced in years 3, 4, & 5, there is less to deduct and less tax savigns.  After a vehicle is fully depreciated the standard mileage is often a better option tax wise, but remember that when one uses actual expenses in the year a vehicle is placed in service, one does not have the option to switch back to standard mileage in a later year.  In order to switch back and forth between the actual expenses and standard mileage a taxpayer needs to take the standard mileage in the first year they use the vehicle for business purposes. 

Deciding whether to take standard mileage or actual expenses in the first year depends on a number of factors:
  1. Was the vehicle new or used?  (Used vehicles do not qualify for certain accelerated depreciation methods.)
  2. The cost basis of the vehicle.  (Higher cost vehicle offers more deprecation & loan interest deductions.)
  3. How long you own the vehicle.  (Actual expenses is usually more advantageous for vehicles owned less than 5 years.)
  4. Whether you want to keep track of vehicle expenses (you are required to keep track of mileage either way.)
If buying a new vehicle, keep in mind the option to take a Section 179 expense deduction under actual expenses in the year the vehicle is placed in service.  It doens't mean you can write the whole cost off as some auto dealers try to make you think.  The personal use portion is not deductible and there are limitations set by the IRS on the total deduction in any given year.  While a Section 179 provides a larger deduction in the first year, it often reduces the deduction in future years when it may be needed more.  If buying a new vehicle, be sure to consult with us before counting on a Section 179 expense deduction. 
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April 18 is When Your Taxes are Due in 2017 

12/11/2016

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2017 Tax Filing Season Begins Jan. 23, Tax Returns due April 18

12/11/2016

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The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 23, 2017 and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.  January 23rd marks the first day that the IRS will be accepting electronically filed tax returns . 

Nonetheless, the IRS also reminded taxpayers that  a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15.  Any returns that claim either of these credits will have refunds held until February 15th.  Note that this is the day they begin to process the delayed refunds, not the day they will arrive.  It is most likely that the refunds will arrive after February 27th. 

Irregardless, the sooner one files the sooner they'll get the refund once the IRS begins processing them.  Taxpayers who do not claim either of these credits will receive refunds on a typical schedule, usually 7 - 10 days for a direct deposit and 2 - 3 weeks for a check in the mail.

For those who usually owe money this information is irrelevant, expect to say that filing early provides taxpayers with the amount due.  The payment does not need to be sent in until April 18th even if that taxes are filed early.  Filing early is a good planning tool to avoid surprises that may happen when waiting until the last minute to file.

 
April 18 Filing Deadline

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday – April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. 
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Tax Preparedness Series: Tax Records – What to Keep

12/8/2016

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Note to Editor: This is the fifth in a series of reminders to help taxpayers prepare for the upcoming tax filing season.
WASHINGTON – As tax filing season approaches, the Internal Revenue Service has information for taxpayers who wonder how long to keep tax returns and other documents.
Generally, the IRS recommends keeping copies of tax returns and supporting documents at least three years. Some documents should be kept up to seven years in case a taxpayer needs to file an amended return or if questions arise. Keep records relating to real estate up to seven years after disposing of the property.
Health care information statements should be kept with other tax records. Taxpayers do not need to send these forms to IRS as proof of health coverage. The records taxpayers should keep include records of any employer-provided coverage, premiums paid, advance payments of the premium tax credit received and type of coverage. Taxpayers should keep these – as they do other tax records – generally for three years after they file their tax returns.
Whether stored on paper or kept electronically, the IRS urges taxpayers to keep tax records safe and secure, especially any documents bearing Social Security numbers. The IRS also suggests scanning paper tax and financial records into a format that can be encrypted and stored securely on a flash drive, CD or DVD with photos or videos of valuables. 
Now is a good time to set up a system to keep tax records safe and easy to find when filing next year, applying for a home loan or financial aid. Tax records must support the income, deductions and credits claimed on returns. Taxpayers need to keep these records if the IRS asks questions about a tax return or to file an amended return.
It is even more important for taxpayers to have a copy of last year’s tax return as the IRS makes changes to authenticate and protect taxpayer identity. Beginning in 2017, some taxpayers who e-file will need to enter either the prior-year Adjusted Gross Income or the prior-year self-select PIN and date of birth. If filing jointly, both taxpayers’ identities must be authenticated with this information. The AGI is clearly labeled on the tax return. Learn more at Validating Your Electronically Filed Tax Return.
Taxpayers who need tax information can request a free transcript for the past three tax years. The ‘Get Transcript’ tool on IRS.gov is the fastest way to get a transcript. 
If taxpayers are still keeping old tax returns and receipts stuffed in a shoebox in the back of the closet, they might want to rethink that approach. Keep tax, financial and health records safe and secure whether stored on paper or kept electronically. When records are no longer needed for tax purposes, ensure the data is properly destroyed to prevent the information from being used by identity thieves. 
If disposing of an old computer, tablet, mobile phone or back-up hard drive, keep in mind it includes files and personal data. Removing this information may require special disk utility software. More information is available on IRS.gov at How long should I keep records?. 
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IRS, Partners Urge Taxpayers to Beware of IRS Impersonations and Tax Scams

12/8/2016

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If you get a call from the “IRS” threatening you with lawsuits or jail unless you pay up immediately … Guess what? It’s a scam.
IRS impersonation and tax scams by phone, email, postal mail and text are ongoing. Criminals use more  and more creative ploys to trick taxpayers and tax preparers. Don’t be a victim.
​ 

The IRS, state tax agencies and the private-sector tax industry are asking for your help in the effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference.
 
That’s why for the second year in a row, we launched a public awareness campaign that we call “Taxes. Security. Together.” And, we’ve launched a series of security awareness tips that can help protect you from cybercriminals.

 
The IRS doesn't initiate contact with taxpayers by email, text message or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
 
Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.
​  
The IRS will never:
  • Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
   
If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
If you don’t owe taxes, or have no reason to think that you do:
  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.

If you know you owe, or think you may owe tax:
  • Call the IRS at 800-829-1040. IRS workers can help you.

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.
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