jump to navigation

Tax Tip of the Week | No. 304 | No Surprise, IRS Service Levels Decline May 27, 2015

Posted by bradstreetblogger in : General, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | May 27, 2015 | No. 304 | No Surprise, IRS Service Levels Decline

Here is a recent report from the Journal of Accountancy

The number of taxpayer phone calls answered by the IRS dropped significantly during this tax season and call wait times were up, according to an interim report issued by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA found that the IRS’s level of service (defined as the number of calls in the IRS’s toll-free assistance queue that are answered) dropped to 38.5%, compared with 74.7% last tax season.

The number of taxpayers helped by the IRS’s toll-free assistance lines has declined sharply in the past few years, according to TIGTA. In 2012, the IRS answered 8.25 million taxpayers’ calls. This year, only 4.21 million calls were answered—little more than half as many as in 2012.

Furthermore, because “level of service” only measures the percentage of calls in the queue that are answered, it does not actually reflect how successful taxpayers are in getting through to IRS help. In the past, TIGTA has warned that the IRS “can manage the level of Service” by increasing or decreasing the number of calls it allows in to the assistor queue.

While the IRS answered 4.21 million calls (through March 7), TIGTA reports that 45.6 million taxpayers called the IRS’s toll-free assistance lines, so it appears that less than 10% of calls to the IRS during tax season were actually answered.

TIGTA also found that the average wait time for taxpayer assistance calls to be answered was 24.6 minutes (although this only counts the wait times for the limited number of taxpayers who actually got through). In 2014, the average wait time was 11.7 minutes.

The report contained no recommendations since TIGTA will be issuing a final report on the filing season in September.

Those of us in the tax profession are allowed to call the IRS Tax Practitioner Hotline to try to expedite client account issues.  Unfortunately, service response times for this dedicated service also declined this past tax season.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 303 | Tax Scams Continue May 20, 2015

Posted by bradstreetblogger in : General, Tax Tip, Taxes, Taxes, Uncategorized , 1 comment so far

Tax Tip of the Week | May 20, 2015 | No. 303 | Tax Scams Continue

We get calls from clients about once a week who receive these calls….

Tax scams do not end with the tax season. The IRS phone scam continues to victimize taxpayers. Fraudsters make phone calls to taxpayers, pretending to be IRS agents, and inform them that they owe back taxes. They instruct the individual to transfer money to them. If a taxpayer refuses or protests, the scammers use intimidation and threats to pressure him or her into acting.

Taxpayers face the threat of this tax scam at any time because it is highly profitable for fraudsters year round. Unlike the filing of fraudulent tax returns that typically occurs during the tax season, the IRS phone scam can be carried out any time of the year.

It’s important to understand that the IRS does not make phone calls to taxpayers to inform them that they owe back taxes. They send a notice that includes the debt amount and how it can be paid. The IRS never:

1.    Demands immediate payment
2.    Demands payment without giving the opportunity to question or appeal
3.    Asks for a specific payment method, such as a prepaid debit card
4.    Asks for credit or debit card numbers over the phone
5.    Threatens law-enforcement action for not paying

Taxpayers should never share any personal, financial or tax information with any unverified sources. It’s critical to keep this type of information secure at all times. Before responding to any information requests, the identity of the party in question should always be verified.

Calls with requests for information should be ended immediately. Report the phone number to a law enforcement agency, TIGTA at 1-800-366-4484 or at www.tigta.gov, the Federal Trade Commission, or the IRS.

If you do owe back taxes or think that you might owe, call the IRS directly at 1-800-829-1040 instead of replying to an unverified communication.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 302 | Start Your 2015 Tax Planning Now! May 13, 2015

Posted by bradstreetblogger in : Tax Planning Tips, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | May 13, 2015 | No. 302 | Start Your 2015 Tax Planning Now!

Before you put your 2014 federal income tax return in the virtual or physical file drawer, check for items that can affect your 2015 planning. Here are three:

Capital loss carryovers. If your capital losses exceeded your capital gains in 2014, you may be able to carry any unused loss to future years. For planning purposes, remember you can apply the loss against 2015 capital gains as well as up to $3,000 of other income — a benefit to remember when you’re rebalancing your portfolio this year.

Tip: Keep track of your capital loss carryforward for alternative minimum tax planning and projections. In some cases, this amount can be different from the carryforward calculated for your regular income tax.

Charitable contribution carryovers. Was your charitable donation deduction limited for 2014 or prior years? You may have a carryover that you can use if you’re going to itemize on your 2015 tax return.

Tip: Take this carryover into consideration when planning your 2015 donations so you don’t lose the benefit of older unused amounts. Charitable contribution carryforwards have a five-year life.

Net operating loss carryover. If your business had a loss in 2014, you had to make an election if you wanted to carry the entire loss forward to 2015. Otherwise, the general rule of carrying the net operating loss back two years applies, with the remainder carried forward 20 years.

Tip: If you did not make the carryforward election with your 2014 return, you may be able to file an amended return to do so. Generally you have six months from the due date of your return to make the election.

Give us a call to schedule a tax planning appointment. We’re ready to help you get the most benefit from these and other carryovers, such as investment interest, tax credits, and passive activity losses.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 301 | 15 Ways To Spend A Refund May 6, 2015

Posted by bradstreetblogger in : General, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | May 6, 2015 | No. 301 | 15 Ways To Spend A Refund

Here is a tax season round-up from Accounting Today:

15 wise moves to make with your client’s enormous tax refund: The average taxpayer refund for the 2014 filing season was $2,893, slightly higher than the amount recorded in the recent years. Tax refunds can be put into good use by paying down high-interest credit-card debt and making additional mortgage payments, according to Motley Fool. Taxpayers could also consider investing their refunds in the stock market or charitable organizations. — Motley Fool

4 investments you can make completely tax-free: Setting up a Roth individual retirement account is one of the least complicated ways to make a tax-free investment because it allows most clients to invest their annual contribution of $5,500 completely free of taxes, according to Motley Fool. College savings plans, also known as 529 plans, are also tax-free, as long as the money is set aside for educational costs. — Motley Fool

How to owe less tax on your investments: Clients looking to minimize taxes on their portfolio should devote their retirement accounts to tax-inefficient investments and their taxable accounts to diversified stock funds, according to The Wall Street Journal. Use tax-deferred retirement accounts to hold investments that spawn huge taxes such as actively managed stock funds or real-estate investment trusts. Meanwhile, place diversified low-cost stock funds that one would wish to keep for longer terms into taxable accounts. The key strategy is to stick to long-term tax-efficient investments and position tax-devouring funds to tax-deferred accounts.  — The Wall Street Journal

How the mega-rich avoid paying taxes: The wealthiest Americans take advantage of their superior understanding of U.S. tax laws in minimizing their tax bills, according to Fox Business. Most of the mega-rich invest in assets with long-term capital gains that generate lower taxes compared to short-term assets. They pay themselves modest salaries, and get the rest of their compensation as dividends or stock options, which are taxed less. The mega-rich also take the full advantage of tax-deferred retirement accounts and use strategic borrowing tactics where they appear to reduce capital gains and thus minimize taxable assets. — Fox Business

Index, active, or both: 8 questions to help you decide: Investors capitalizing on taxable accounts and who are content in matching market returns may want to favor index funds over actively managed funds, according to Morningstar. People who are focused on tax-efficiency and are primarily into tax-deferred accounts would benefit from moving their portfolio towards active funds. It is also advisable to build an active portfolio if risk control is a major consideration, and to prefer an index-centric portfolio if streamlining is a key goal.  — Morningstar
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.