Taxes

What Taxpayers Can Do Now Before Filing Their Return in 2018

While taxpayers will not start filing their tax returns for a few months, there are a few things they can do to make the process easier next year. Here are two things that could affect the 2017 returns they will file in 2018.
1. Report name changes. Recently married or divorced taxpayers who change their name should notify the Social Security Administration. They should also notify the SSA if a dependent’s name changed. Taxpayers need to do this so that when the taxpayer files next year, the new name on the tax return matches A mismatch between the name shown on their tax return and the SSA records can cause problems in the processing of their tax return and may even delay their tax refund.
2. Renew Individual Taxpayer Identification Numbers. Taxpayers who use an Individual Taxpayer Identification Number should check to see if their number expired in 2016 or will expire this year. If so, and they need to file a return in 2018, they should apply now to renew their ITIN to avoid certain disallowed tax credits and processing delays next year. Taxpayers who have not used their ITIN to file a federal return at least once in the last three years will see their number expire Dec. 31, 2017. Additionally, ITINs with middle digits 70, 71, 72 or 80 will also expire at the end of the year. Only taxpayers with expiring ITINs need to take any action. To renew an ITIN, a taxpayer must complete a Form W-7 and submit required documentation. No tax return is required when submitting an application to renew.

Taxpayers Should Be Wary of Unsolicited Calls from the IRS

Taxpayers who get an unexpected or unsolicited phone call from the IRS should be wary – it’s probably a scam. Phone calls continue to be one of the most common ways that thieves try to get taxpayers to provide personal information. These scammers then use that information to gain access to the victim’s bank or other account.
When a taxpayer answers the phone, it might be a recording or an actual person claiming to be from the IRS. Sometimes the scammer tells the taxpayer they owe money and must pay right away. They might also say the person has a refund waiting, and then they ask for bank account information over the phone.
Taxpayers should not take the bait and fall for this trick. Here are several tips that will help taxpayers avoid becoming a scam victim.
The real IRS will not:
• Call to demand immediate payment
• Call someone if they owe taxes without first sending a bill in the mail
• Demand tax payment and not allow the taxpayer to question or appeal the amount owed
• Require that someone pay their taxes a certain way, such as with a prepaid debit card
• Ask for credit or debit card numbers over the phone
• Threaten to bring in local police or other agencies to arrest a taxpayer who doesn’t pay
• Threaten a lawsuit
Taxpayers who don’t owe taxes or who have no reason to think they do should follow these steps:
• Use the Treasury Inspector General for Tax Administration’s IRS Impersonation Scam Reporting web page to report the incident.
• Report it to the Federal Trade Commission with the FTC Complaint Assistant on FTC.gov.
• Taxpayers who think they might actually owe taxes should follow these steps:
• Ask for a call back number and an employee badge number.
• Call the IRS at 1-800-829-1040.

IRS Reminds Partnerships that Received Extensions: Returns Due Sept. 15 Tax Relief Available for those Affected by Hurricane Harvey

The IRS Monitoring Hurricane Irma, Upcoming Deadline
WASHINGTON — The Internal Revenue Service continues to monitor Hurricane Irma, but reminds calendar-year partnerships that the due date for filing a return after receiving an extension remains Sept. 15 following a recent change in the tax law.
The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 changed the date by which a partnership must file its annual return, Form 1065 or Form 1065-B. For calendar year partnerships, the due date for filing the annual return or request for an extension changed from April 15 (April 18 in 2017) to March 15. The due date for filing the return after receiving an extension of time to file was Sept. 15 when the due date was April 15, because the duration of the extension was five months. Under the new law, the due date for filing the return after receiving an extension of time to file is still Sept. 15, because the duration of the extension of time to file is now six months.
The IRS issued guidance, Notice 2017-47, providing penalty relief for certain partnerships that did not file the required returns by the new due date for their tax year that began in 2016, but filed their returns or their extension requests for that year by the15th day of the fourth month after the end of their taxable year (April 18 for calendar-year filers). If not for the Surface Transportation Act, these returns and requests for extension of time to file would have been on time.
The new deadlines are included in the instructions for Form 7004, instructions for Form 1065 and the instructions for Form 1065-B.
The IRS provided tax relief to taxpayers affected by Hurricane Harvey, including partnerships; affected taxpayers (as defined in the news release providing relief) have until Jan. 31, 2018, to file their returns. Calendar-year partnerships that are affected taxpayers that also receive relief from penalties under Notice 2017-47 if they file a return on or before Sept. 15, 2017, will receive relief from the failure-to-file penalty if they file the return by Jan. 31, 2018.
As Hurricane Irma approaches, the IRS is closely monitoring the storm and will be assessing next steps that will be needed for areas declared a federal disaster area.
The IRS projected that corporations and partnerships would file almost 6.9 million extension requests during 2017. The IRS expects to receive more than 4 million partnership returns during 2017.

Learn about Tax Benefits for Education

The beginning of the school year is a good time for a reminder of the tax benefits for education. These benefits can help offset qualifying education costs.
Here is information about two tax credits available to those who pay higher education costs for themselves, a spouse or a dependent.
The American Opportunity Tax Credit (AOTC) is:
• Worth a maximum benefit up to $2,500 per eligible student.
• Only available for the first four years at an eligible educational or vocational school.
• For students pursuing a degree or other recognized education credential.
• Partially refundable. Eligible taxpayers can get up to $1,000 of the credit as a refund, even if they do not owe any tax.
The Lifetime Learning Credit (LLC) is:
• Worth up to $2,000 per tax return, per year, no matter how many students qualify.
• Available for all years of postsecondary education and for courses to acquire or improve job skills.
• Available for an unlimited number of tax years
Taxpayers should use Form 8863, Education Credits, to claim these education credits.
Additionally:
• A student is required to have Form 1098-T, Tuition Statement, to be eligible for an education benefit. They receive this form from the school attended.
• Taxpayers may use only qualified expenses paid to figure a tax credit. These include tuition and fees and other related expenses for an eligible student.
• Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities.
• Taxpayers may only claim qualified expenses in the year paid.
• Taxpayers can’t claim either credit if someone else claims them as a dependent.
• Income limits could reduce the amount of credits.
• Taxpayers can’t claim either the AOTC or LLC for the same student or for the same expense in the same year.
• The Interactive Tax Assistant tool on IRS.gov can help determine eligibility for certain educational credits including the American Opportunity Credit and the Lifetime Learning Credit.
See IRS Publication 970, Tax Benefits for Education, for details, rules, examples and a complete explanation of benefits.

Beware of Fake Charity Scams Relating to Hurricane Harvey

WASHINGTON ― The Internal Revenue Service today issued a warning about possible fake charity scams emerging due to Hurricane Harvey and encouraged taxpayers to seek out recognized charitable groups for their donations.
While there has been an enormous wave of support across the country for the victims of Hurricane Harvey, people should be aware of criminals who look to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.
Criminals often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.
IRS.gov has the tools people need to quickly and easily check the status of charitable organizations.
The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:
• Be sure to donate to recognized charities.
• Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.
• Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution. Scam artists may use this information to steal a donor’s identity and money.
• Never give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.
• Consult IRS Publication 526, Charitable Contributions, available on IRS.gov. This free booklet describes the tax rules that apply to making legitimate tax-deductible donations. Among other things, it also provides complete details on what records to keep.
Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.”

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