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Tax Tip of the Week | No. 339 | Tax Quiz to Return as ODT Claims $534 Million in Tax Theft Blocked January 27, 2016

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

Tax Tip of the Week | January 27, 2016 | No. 339 | Tax Quiz to Return as ODT Claims $534 Million in Tax Theft Blocked

Here is a recent article published by the Ohio Society of CPAs….

Ohio Tax Commissioner Joe Testa recently said the ID Confirmation Quiz will return this upcoming tax season as the state continues to combat rampant fraud attempts on income tax returns.

The Ohio Department of Taxation said it has blocked more than 297,000 fraudulent income tax returns attempting to steal $533.7 million in refunds since the flood of tax fraud started in 2014 in Ohio and nationally.

In 2015, ODT saw a nearly 400 percent increase from the previous filing season in the number of fraudulent refund requests, but for significantly smaller amounts. Through November, ODT intercepted 232,898 suspicious returns claiming $256.5 million in illegitimate refunds.

Testa said while he expects fraud attempts to grow in 2016, the state continues to develop more information and understanding of the schemes and is using that knowledge to further strengthen security efforts.

“While these would-be thieves will continue to craft new strategies to steal from Ohioans, we’ll keep finding ways to stop them,” he said.

He said the ID Confirmation Quiz will remain a key part of that effort.

“We appreciate the taxpayer’s time in taking this extra step before receiving their refund,” Testa said. “We also heard their feedback and made some changes to improve the process and provide a better experience for taxpayers who take the quiz.”

The quiz proved controversial, as legislators said during budget hearings that they were receiving complaints about it from constituents frustrated by the questions. However Gov. Kasich this past summer vetoed a budget provision that would have limited the questions to information obtained from the previous five years. Testa told OSCPA that the provision would have hamstrung his department’s ability to examine tax returns.

He said one important change this year is that security measures will be expanded to protect the identity of minors, as well as adults. Criminals are also stealing the identities of minors, and if ODT identifies a situation where it appears a child’s identity has been compromised, the state will notify the household, allowing the filer to take additional steps to thwart illegitimate use of that minor’s identity.
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. 338 | Changes Coming to W-2, 1099 and 1095 Forms – Part 2 January 20, 2016

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

Tax Tip of the Week | January 20, 2016 | No. 338 | Changes Coming to W-2, 1099 and 1095 Forms – Part 2

Pretty soon you will start to receive your year-end tax documents.  This year, you need to be prepared for some new forms and new looks to old forms.  Last week we looked at changes required for compliance of the Affordable Care Act and W-2s.  In this article, we will look at changes required for 1099s.

1099 and Related Form Changes

1096 – Compilation sheet that shows the totals of the information returns that you are physically mailing to the IRS. The check box for Form 1099-H was removed from line 6, while a check box for Form 1098-Q was added to line 6. The spacing for all check boxes on line 6 was expanded. The amounts reported in Box 13 of Form 1099-INT should now be included in box 5 of Form 1096 when filing Form 1099-INT with the IRS.

1098-C – This form is for contributions of motor vehicles, boats, and airplanes. A donee organization must file a separate Form 1098-C with the IRS for each contribution of a qualified vehicle that has a claimed value of more than $500. All filers of this form may truncate a donor’s identification number (social security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number), on written acknowledgements. Truncation is not allowed, however, on any documents the filer files with the IRS.

1099-B – This form is issued by a broker or barter exchange that summarizes the proceeds of transactions. For a sale of a debt instrument that is a wash sale and has accrued market discount, enter code “W” in box 1f and the amount of the wash sale loss disallowed in box 1g.

1099-DIV – This form is issued to those who have received dividends from stocks. A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.

1099-INT – This form is used to report interest income from banks and other financial institutions. Box 13 was added to report bond premium on tax-exempt bonds. All later boxes were renumbered.  A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.

1099-K – This form is given to those merchants accepting payment card transactions. Completion of box 1b (Card Not Present transactions) is now mandatory for 2015.

1099-MISC – This form reports the total paid during the year to a single person or entity for services provided. Certain Medicaid waiver payments may be excludable from the income as difficulty of care payments.  A new check box was added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.
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. 337 | Changes Coming to W-2, 1099 and 1095 Forms – Part 1 January 13, 2016

Posted by bradstreetblogger in : General, tax changes, Tax Preparation, Tax Tip, Taxes, Taxes , 2comments

Tax Tip of the Week | January 13, 2016 | No. 337 | Changes Coming to W-2, 1099 and 1095 Forms – Part 1

Pretty soon you will start to receive your year-end tax documents.  This year, you need to be prepared for some new forms and new looks to some old forms.  In this article, we will look at changes required for compliance of the Affordable Care Act and W-2s.  Next week we will look at 1099 changes.

The Internal Revenue Service is making yearly adjustments to W-2 and 1099 forms, while adding brand new 1095 forms related to the Affordable Care Act to the list of required forms for filers this year.

Greatland Corporation, a provider of W-2 and 1099 products for businesses, has compiled a list of what businesses need to be aware of when filing this year.

2015 Affordable Care Act Forms Required for 2015 Reporting

Under the ACA, or Obamacare, all providers of health care, including employers that provide self-insured coverage, must file returns with the IRS that include information about the coverage and each covered individual.

Employers should report this information on Forms 1095-B or 1095-C, depending on the size of the employer. Providing 1095 forms became mandatory starting in the 2015 tax year and filers must send the forms not only to their eligible recipients but also to the IRS in order to remain in compliance with ACA reporting requirements.  Filers with 250 or more forms must file them electronically. Incorrect filings will not be penalized for calendar year 2015 filing (reported in 2016) if employers/insurers file on time and make a good faith effort to comply. Below is a summary of each new form related to the Affordable Care Act:

•    Form 1095-B—Health Coverage

Insurers and self-insured employers that provide health plans are required to report data on all covered individuals.

•    Form 1094-B—Transmittal of Health Coverage Information Returns
•    Form 1094-B is the transmittal for Form 1095-B.
•    Form 1095-C—Employer-Provided Health Insurance Offer and Coverage

Employers with 50 or more full-time employees (including full-time equivalent employees) are required to report (whether or not they offered coverage to their employees) by providing each full-time employee with Form 1095-C. This form requires information such as whether the employee was offered coverage, for which months, and the employee’s share of the lowest-cost monthly premium for self-only minimum value coverage. A large employer with a self-insured plan will only be required to submit Form 1095-C, as the information on Form 1095-B can be included on Form 1095-C.

•    Form 1094-C—Transmittal of Employer-Provided Health Insurance offer and Coverage Information Returns

2015 W-2 Form Changes

Third-party Sick Pay Recap Reporting

For wages paid in 2015, Form 8922, Third-Party Sick Pay Recap, will be used to report total third-party sick pay wages paid to employees when liability for the employer and the employee portions of Federal Insurance Contributions Act (FICA) taxes on the wages is split  between the employer for whom services are normally rendered and the third-party payer. Form 8922 replaces the Third-Party Sick Pay Recap Form W-2 and W-3. Form 8922 is filed with the IRS rather than the SSA.

Virtual Currency

The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, FICA tax and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2.
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. 336 | The Tax Extenders in Detail January 6, 2016

Posted by bradstreetblogger in : Deductions, General, Section 168, Section 179, tax changes, Tax Planning Tips, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | January 6, 2016 | No. 336 | The Tax Extenders in Detail

Congress finally passed “The Protecting Americans from Tax Hikes Act of 2015”. This was the long anticipated bill that will finally extend more than 50 tax provisions that have left tax payers in doubt over the last several years.  One nice thing about this last-minute tax bill, unlike in prior years, is that many of the tax laws have been marked permanent. Others have been extended through 2019 and others through 2016.  So we will at least know what the tax laws will be for two whole years! The following is a summary of the major “Extender” changes:

Permanent Changes:

The Research & Development credit;

Increased expensing limitations and treatment of certain real property as Section 179 property;

The exclusion of 100% of gain on certain small business stock;

Reduction in S corporation recognition period for built-in gains tax;

The enhanced Child Tax Credit;

The enhanced American Opportunity Tax Credit;

The enhanced Earned Income Tax Credit;

The deduction for certain expenses of elementary and secondary school teachers;

The deduction of state and local general sales taxes;

The special rule for contributions of capital gain real property made for conservation purposes;

Tax-free distributions from individual retirement plans for charitable purposes;

The charitable deduction for contributions of food inventory;

The tax treatment of certain payments to controlling exempt organizations;

Basis adjustment to stock of S corporations making charitable contributions of property;

The employer wage credit for employees who are active duty members of the uniformed services;

15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;

The treatment of certain dividends of regulated investment companies;

The Subpart F exception for active financing income;

The minimum low-income housing tax credit rates for non-federally subsidized buildings;

The following provisions were extended and modified through 2019:

Bonus depreciation, at 50 percent for 2015-2017 and phased down to 40 percent in 2018 and 30 percent in 2019;

The Work Opportunity Tax Credit, modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more) to 40 percent of the first $6,000 of wages;

The New Markets Tax Credit, providing $3.5-billion allocation each year through 2019, the carryover period for the credit has also been extended to 2024.

And the following are revived and extended through 2016:

Modification of the exclusion of mortgage debt discharge;

Mortgage insurance premiums treated as qualified residence interest;

The above-the-line deduction for qualified tuition and related expenses; and,

Over a dozen incentives for energy production and conservation.

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.