Tracking Your Income Tax Refund

One of the hardest things about filing your taxes is waiting on your income tax refund! Fortunately, though, you don’t just have to idly wait with no clue when you’re going to get that nice little (or, if you’re really lucky, not so little) refund in the mail or in your bank account. There are things that you can do to track your refund and determine when it is going to arrive.   

Tracking your refund, like most things tax-related, is a whole lot easier if you filed your taxes electronically. However, even if you filed the old-fashioned way, by mail, there are still simple ways to determine when your refund should arrive.

Try the “Where’s My Refund?” Feature

To start off with, if you visit the official IRS website, you will find that the site offers a “Where’s my Refund?” tool that allows you to track your refund.

All that you will need in order to use this feature is your social security number, filing status, and refund amount. Using the feature, you can find out when your refund will be mailed or direct deposited and if there have been any problems or errors with processing your refund.

If you do find that there is some kind of problem with your refund, be sure to contact a tax professional to try and figure out what might have gone wrong and to rectify the problem as quickly as possible so that you can get your refund.

Give the IRS a Call

If you are having trouble using the online tool, have other questions, or just prefer to speak to a real person, be aware that you can always call the IRS directly to determine what’s going on with your refund.

With your return in hand, you can get information about your refund by calling 800-829-1954.

As you can see, you do have options for checking up on your refund and its status. By making use of these options, you can stay in the know about your refund and when it should arrive.

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Tips to Keep Your Tax Data Safe and Secure

In recent years, the number of complaints related to IRSfraud, scamming, and other types of tax fraud have gone up greatly. Anyone can suddenly find himself the victim of a tax-related crime. With that said, though, there are steps that you can take to greatly reduce the chances of being a tax crime victim and to keep your tax data as safe as possible.

Be Careful in Communication

One thing that you should be aware of is that many tax crimes take place over the internet and/or on the phone. Therefore, you should never give out any sensitive, tax-related information via these forms of communication.

One of the most common scams is for the fraudster to email or phone you, claim you owe money and that action will be taken against you if you do not pay up right then. Another popular scam is an email or phone call from the IRS asking you to update your tax information

Remember, the IRS does not typically contact people via email, and, if you are contacted by phone, proof of whom you are speaking to will be provided if you are actually speaking with an IRS representative. Furthermore, IRS representatives will not ask you for sensitive information via telephone.

It is in your best interest, always, to not share information, such as social security numbers or bank account numbers, over phone or email, regardless of who the speaker or sender claims to be.

Keep Your Computer (And Other Devices) Secure

Another important thing to be aware of is the fact that you likely have a lot of should-be secure information on your computer, tablet, and other devices.

To help keep this information safe should your computer fall into the wrong hands or be looked at by the wrong eyes, password protect any private information stored on your computer. You may also want to encrypt files that contain personal information.

It is also a good idea to avoid storing sensitive passwords, such as the password to your online banking account, in your browser’s “cookies.”

Create Secure Passwords

One final thing that can really be helpful toward improving information security is to be careful when it comes to your online passwords for all accounts.

If someone can get into your email, for example, that person may be able to access other info, such as your credit card information or your social security number, that would enable him to commit a tax crime against you.

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• TurboTax is Open and Accepting Tax Returns Now! (turbotax.intuit.com)

Does Your Business Owe Taxes?

Being a business owner is hard work even under the best of circumstances. When things go wrong, however, and when you find yourself owing taxes, things get even harder. In fact, many businesses crumple under the pressure; one of the most common approaches, if you can even call it that, is just to ignore the problem and to hope it goes away. Newsflash: it doesn’t! Ignoring owed taxes just makes the issue worse and more urgent.

There are many other “wrong” things you can do as well, things that could land your business in more trouble than it is already in. Thus, when you learn that your business owes taxes, it is extremely important that you know what NOT to do.

DON’T Throw All Your Money Away

To begin with, don’t make the mistake of emptying all of your accounts and, in short, everything that you have in an attempt to take care of your little (or not so little) tax problem. Sure, paying off a large chunk of what you owe can help, but unless you can pay the full amount all in one go, which isn’t likely, you are just setting yourself up for disaster.  

Making a large payment, even if it takes everything you have, might make the IRS think you’re made of money, which will make it even more demanding when it comes to collecting on the rest of what you owe, which could flat out ruin you and leave you and your business penniless. Even worse yet, it could make the IRS wonder where you got all that cash, triggering an audit and a deep investigation into your business on-goings that you are likely unprepared for.

A much better solution is to, with the help of a knowledgeable tax adviser, work out a reasonable, consistent payment plan with the IRS to settle what you owe in a long-term agreement. Not only will this help you to avoid the problems and scrutiny described above, but it will also help you to keep your finances in check and to avoid going destitute while paying off the IRS.

DON’T Parlay Over Full Responsibility

As mentioned, it is smart to find a tax adviser/ financial adviser who can help you to work through your difficult tax situation. The key thing there, however, is to find someone who can HELP you, not someone who will take over everything for you and leave you out of the loop.

No matter what may transpire in the course of owing and paying back taxes, it is still important that you maintain control over your business. After all, it is just that- YOUR business. If you do hand over full responsibility, you could end up with a business that is unrecognizable. Most people who take full control are going to work in the immediate best interest of your business, not in its long-term best interest, so you could come back to a business that, while its taxes may be paid, is in serious shambles.

It’s best to stay involved and in the loop. Look for an adviser that will carefully explain to you what each decision means, both now and in the long-run, and that will help you to make the best possible choices for your business overall.

If you can follow these simple tips and stay involved in the process, you can avoid turning your situation into something bad and ultimately come out on top.

When You Owe $$ to the IRS

When you’re a business owner who is in debt to the IRS, it’s easy to feel very alone and like you’re the only business that has ever found itself in this position. However, nothing could be further from the truth; a great many businesses have found themselves, at one time or another, indebted to the IRS. Contrary to what you may think if you have found yourself in this situation, this is not a mark of failure on your part. It is just something that happens, even to the best and most organized businesses, from time to time.   

Sometimes, IRS debt happens as the result of true financial problems.Maybe something happened that caused your profits to go down, or maybe a series of “somethings” happened that landed you in a position where you were unable to pay your business taxes. Family tragedies, economic downturns, a slew of clients who refuse to pay, and other issues can all lead to being in debt to the IRS. Other times, making a few simple financial or even accounting mistakes here and there can add up, leading to owing money and potentially even facing legal and/or financial consequences as a result of these innocent mistakes

Regardless of the reason for your “fall behind,” the IRS certainly doesn’t make it easy or less intimidating to be in this position. Though it recently tried to soften its approach and referred to collecting on back taxes as a way to help the economy and the tax system in general, it can still be quite aggressive when it comes to enforcing compliance for businesses, which can easily make you feel fearful and anxious for the safety and security of the business you have worked so hard to build.

However, you should know that you do NOT have to go through this process alone. In fact, it’s better if you don’t. If you are in debt to the IRS, find a financial adviser who can assist you and walk you through the process of “getting right” with this government agency. Having support and, even more importantly, expertise on your side will make all the difference. By choosing not to go through the repayment process alone, you are saying “no” to fear and anxiety and “yes” to clarity, peace and understanding, and what could be better than that?

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Identity Theft and Your Taxes

Your identity and money can be stolen in a tax-related scam via email (“phishing”), fax, phone, or letters. Some recent examples of identity theft scams are:

•    Refund scam. A bogus email, claiming to come from the IRS, tells you that you are eligible to receive a tax refund for a given amount if you just follow the instructions in the email.

•    Inherited funds, lottery winnings, and cash consignment scams. A bogus email, claiming to come from the U.S. Department of the Treasury, notifies you that you will receive millions of dollars if you follow the instructions in the email. This may be a multi-step scheme that includes instructions for you to deposit taxes on the funds before they can be paid out or the issuance of a phony check on which you must pay 10% tax before the check can be deposited.

•    EFTPS scam. A bogus email, claiming to come from the IRS, contains a realistic-looking screenshot of the IRS website with a message about fraud attempts regarding your bank account. The email states that the bank account can be unblocked if you just click a link and provide information.

•    EIN scam. A bogus fax, claiming to be from the IRS, informs you that you have failed to submit required bank account details. You are asked to fax back a form that requests your EIN, bank information, and officer signatures.

Notify the IRS

If you receive a tax-related phishing email, do not click on the links or open any attachments. Forward the email to phishing@irs.gov or call the IRS at 800-829-1040.

How the IRS Contacts Taxpayers

•    The IRS will never initiate contact with you by email or any social media tools to request personal or financial information.

•    It is unusual for the IRS to initiate contact by fax or phone call. You can call the IRS at 800-829-1040 to verify that an unexpected fax or phone call is legitimate.

Fraudulent Tax Returns

An identity thief might use your Social Security number to fraudulently file a tax return and claim a refund. You could be completely unaware that your identity has been stolen until your return is rejected for e-filing or you get an IRS notice or letter.

Rejected e-File

Your electronically filed return is rejected because the Social Security number belonging to you, your spouse, or a dependent has already been used on a tax return.

•    This situation can occur because of a mistyped num-ber or dispute about claiming a dependency exemption. Such cases do not necessarily indicate identity theft.

•    If your return has been rejected because of a previ-ously used Social Security number, it cannot be e-filed. You must file a paper return.

IRS Notice

You receive an IRS notice or letter stating that:

•    More than one return was filed in your name for the year,

•    You have a balance due, refund offset, or initiation of collection action for a year when you did not file a return, or  

•    IRS records indicate that you received wages from an employer you didn’t work for.

You should respond immediately to the name and phone number printed on the IRS notice or letter. You will be asked to complete Form 14039, Identity Theft Affidavit, and provide identifying information.

IRS Identity Protection Specialized

Unit (IPSU)

If you believe there is a risk of identity theft due to lost or stolen personal information, contact the IPSU immediately so the agency can take action to secure your tax account. • Call 800-908-4490.

• You will be asked to complete Form 14039, Identity Theft Affidavit.

Form 14039, Identity Theft Affidavit     

Form 14039 has two purposes.

1) Informs the IRS you are an actual or potential victim of identity theft that has or could affect your tax account.

2) Requests that the IRS mark your account to identify any questionable activity.

You must provide details of the actual or potential identity theft situation, tax years impacted (if known), address and other contact information, and a photocopy of valid government-issued identification.

Identity Protection PIN (IP PIN) Program

If the IPSU determines that you do have a tax-related identity theft problem, the IPSU will research your account, identify the IRS business unit handling the case, and monitor the case to ensure it is being handled in a timely manner.

•    The IRS may issue you an Identity Protection PIN (IP PIN). The computer-generated IP PIN has six digits and is specific to the tax year for which it was provided.

•    The IRS issues IP PINs to allow a legitimate taxpay-er’s return to bypass the identity theft filter, prevent fraudulent returns from being processed, and minimize taxpayer burden associated with potential delays when a return fails one or more of the identity theft filters.

•    A new IP PIN will be issued to you every filing season as long as the identity theft indicator remains on your account.

Using an IP PIN

You will receive an IRS notice in the mail containing the single-use six-digit PIN. The IRS does use email or fax to notify taxpayers of an IP PIN.

•    All six digits must be input on your Form 1040 in the space to the right of the spouse’s occupation line. Use of the IP PIN on the return acts as an authenticator to validate you as the legitimate owner of the Social Security number on the tax return.

•    If you lose or misplace the IP PIN letter, the IRS may issue a replacement IP PIN for the year. You may file a paper return without the IP PIN, but processing and refunds may be significantly delayed.

Surprise IP PIN Letter

The IRS has been known to mail an IP PIN letter to a taxpayer who was previously unaware of a potential tax-related identity theft problem. If you receive an unexpected IP PIN letter, you can call the IPSU phone number (800-908-4490) to verify that the IP PIN letter is legitimate.

Identity Theft Outside the Tax System

You may be at increased risk for tax-related identity theft for various reasons.

•    You have lost or had stolen a wallet, purse, or docu-ments that include sensitive identifying information.

•    You have noted questionable credit card activity or credit report information.

•    You have fallen victim to an identity theft scam.

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Six Tips for People Who Owe Taxes

While most people get a refund from the IRS when they file their taxes, some do not. If you owe federal taxes, the IRS has several ways for you to pay. Here are six tips for people who owe taxes:

1. Pay your tax bill.  If you get a bill from the IRS, you’ll save money by paying it as soon as you can. If you can’t pay it in full, you should pay as much as you can. That will reduce the interest and penalties charged for late payment. You should think about using a credit card or getting a loan to pay the amount you owe. 

2. Use IRS Direct Pay.  The best way to pay your taxes is with the IRS Direct Pay tool. It’s the safe, easy and free way to pay from your checking or savings account. The tool walks you through five simple steps to pay your tax in one online session. Just click on the ‘Pay Your Tax Bill’ icon on the IRS home page.

3. Get a short-term extension to pay.  You may qualify for extra time to pay your taxes if you can pay in full in 120 days or less. You can apply online at IRS.gov. If you received a bill from the IRS you can also call the phone number listed on it. If you don’t have a bill, call 800-829-1040 for help. There is usually no set-up fee for a short-term extension.

4. Apply for a monthly payment plan.  If you owe $50,000 or less and need more time to pay, you can apply for an Online Payment Agreement on IRS.gov. A direct debit payment plan is your best option. This plan is the lower-cost, hassle-free way to pay. The set-up fee is less than other plans. There are no reminders, no missed payments and no checks to write and mail. You can also use Form 9465, Installment Agreement Request, to apply. For more about payment plan options visit IRS.gov.

5. Consider an Offer in Compromise.  An Offer in Compromise lets you settle your tax debt for less than the full amount that you owe. An OIC may be an option if you can’t pay your tax in full. It may also apply if full payment will cause a financial hardship. You can use the OIC Pre-Qualifier tool to see if you qualify. It will also tell you what a reasonable offer might be.

6. Change your withholding or estimated tax.  You may be able to avoid owing the IRS in the future by having more taxes withheld from your pay. Do this by filing a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. The IRSWithholding Calculator on IRS.gov can help you fill out a new W-4. If you have income that’s not subject to withholding you may need to make estimated taxpayments. See Form 1040-ES, Estimated Tax for Individuals for more on this topic.

To find out more see Publication 594, The IRS Collection Process. You can get this booklet on IRS.gov. You may also call 800-TAX-FORM to get it by mail.

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Don’t be Victimized by contacts from fake IRS agents

A recent uptick in scam IRS e - mail and phone calls has prompted urgent government warnings

to taxpayers. But people are finding that recognizing a bogus IRS contact is tougher than they think. The tactics used by criminals to steal your identity vary widely and are surprisingly sophisticated. A common recent scam is an official-looking e - mail purporting to be from the IRS requesting an immediate update to your e-file account. Anyone who clicks on the link will be taken through a series of requests for personal information that might be used to commit fraud in your name. And if you happen to divulge bank account information, they may try to steal directly from you as well. 

So what is the best way to protect yourself against such a scheme? First, recognize what is NOT proof of a genuine IRS contact. An IRS logo on an e - mail or letter, while adding the look of authenticity, could have been lifted from the IRS website. An e - mail from an address containing the letters “IRS” is also not a reliable sign. Scammers can create e - mail addresses that look deceptively similar to IRS.gov (the official IRS site). Surprisingly, even a scammer’s possession of the last four digits of your social security number is not proof. This, too, can be obtained by a thief. 

Scammers will also try to appear genuine by following up an e - mail with a phone call, or vice versa. They often create a sense of urgency and threaten all sorts of legal and punitive actions if you don’t respond immediately. Here is what you should do in response to any IRS contact. If the first contact is by letter, forward a copy to your tax preparer to determine if it is legitimate. If the initial contact is by phone, do not provide any personal data over the phone. The call is most likely not from the IRS. And if the first contact is by e - mail, do not respond to it at all, and do not click on any attached links. The IRS does not initiate contact by e - mail – ever. Instead, send it on to the IRS at phishing@irs.gov to help prevent tax scams from spreading.

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The IRS and Phone Calls

Over the past few days,
we have received quite a few calls
from our clients indicating they have
received a phone call from someone
stating they are from the IRS
and that they have a tax issue.
Please review this noticethat the IRS issued regarding phone scams
and what to do if you receive one of these phone calls.
If after reviewing you still have questions,
do not hesitate to contact
our office at (630) 548-9600
to investigate further on your behalf.

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Easier Filing for Those Who Work From Home

Do you work from home? If so, do you have a home office? If you answered yes to both of those questions, you probably already know that you qualify for a home office deduction. What you might not realize, however, is that, as of last year, changes to tax law have resulted in an easier filing process as it relates to this deduction.

While past filers were forced to keep tally of all of their incurred home office expenses, now deductions can be made based on the size of the home office. Those who work at home can deduct $5 for every square foot of their office, not to exceed a deduction of $1,500. Even better yet, receiving the deduction now only takes one line of writing, rather than forty-three!  

If you don’t want to do the math yourself or to miss out on other possible deductions, take advantage of accounting services in your area. Susan S. Lewis, Ltd. offers a variety of Naperville accounting services geared specifically toward those who work from home.

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Don't Fall Victim to Telephone Scams

Predatory people will try to make an easy buck off of hapless victims in any way possible, and unfortunately, the IRS has recently reported a surge in the number of telephone scams. While several different types of telephone scams exist, the most common is one in which the scammer calls the victim and claims to be an IRS agent.

The scammer typically sounds very official and convincing and will often go so far as to provide a false name and even a false IRS badge number. Once the scammer has gained the victim’s trust, he or she will secure from the victim and use that information to engage in fraud and other types of illegal activities.

personal information

Checking your caller ID isn’t protection enough either; many scammers can rig caller ID displays so that the call actually appears to be coming from a legitimate IRS bureau. The best protection is to educate yourself, and you can easily do that with the help of a knowledgeable CPA. A CPA can explain to you the dos and dont’s of keeping your personal financial information secure; find your Naperville CPA at Susan S. Lewis, Ltd. of Naperville.

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2013 Tax Rates - Income Brackets

The major accomplishment of the American Taxpayer Relief Act, aside from keeping the country (and us!) from falling off the "fiscal cliff," was that it made permanent most of the tax laws we've become used to following for the last 12 years.

What does this mean for me?

I know, permanence doesn't mean the same thing to Congress as it does to you, me and dictionary editors. Officially, it simply means that we don't have to worry about tax breaks like the $1,000 amount of the child tax credit expiring at a preset date.

Of course, the biggie from this latest tax bill is that it keeps the lower tax rates first enacted under the George W. Bush administration in place, aka, permanent.

Tax (Photo credit: 401(K) 2013)

And it tacks on a new top rate for wealthier folks.

But deciding what our 2013 and future taxes would look like was just one part of the process. We had to wait for the Internal Revenue Service to figure out, based on inflation, just how much of our earnings fall into these now permanent tax brackets.

Tah-dah! We now know.

The IRS has released the remainder of the 2013 inflation adjustments, including this year's tax rates and income brackets. Bankrate has published the complete information in a spanking new 2013 tax rates table.

2013 tax rates

Tax rate	Single filers	Married filing jointly or qualifying widow/widower	Married filing separately	Head of household
10%	Up to $8,925	Up to $17,850	Up to $8,925	Up to $12,750
15%	$8,926 - $36,250	$17,851 - $72,500	$8,926- $36,250	$12,751 - $48,600
25%	$36,251 - $87,850	$72,501 - $146,400	$36,251 - $73,200	$48,601 - $125,450
28%	$87,851 - $183,250	$146,401 - $223,050	$73,201 - $111,525	$125,451 - $203,150
33%	$183,251 - $398,350	$223,051 - $398,350	$111,526 - $199,175	$203,151 - $398,350
35%	$398,351 - $400,000	$398,351 - $450,000	$199,176 - $225,000	$398,351 - $425,000
39.6%	$400,001 or more	$450,001 or more	$225,001 or more	$425,001 or more

What to expect under the new brackets

The first $8,925 of your income is taxed at 10 percent if you're a single taxpayer. A head-of-household sees $12,750 of his income taxed at this lowest rate. Married couples filing a joint return have $17,850 of their income taxed at 10 percent. If the tax bill hadn't made this Bush-era rate permanent, all this money would have been taxed at 15 percent, so there's a 5 percentage point savings.

On the much publicized other end of the scale, which we all hope to one day reach even though we'll complain about the taxes then, single taxpayers will pay a tax rate of 39.6 percent if they make more than $400,000. That top tax rate kicks in for a head-of-household at $425,000 and a jointly filing couple at $450,000.

Now here comes the fun part of the 2013 tax table.

If you're tax geeky like me (and aren't you, since you're reading this blog?), you'll also notice that the 35 percent income bracket is tiny for single taxpayers. Only about $1,650 is covered in this filing status' tax bracket -- earnings from $398,351 to $400,000.

The spread is larger for head-of-household and married joint filers. Single taxpayers claiming dependents will see $26,650 of their earnings taxed at 35 percent. The penultimate tax rate will apply to $51,650 of a married couple's income.

But that $1,650 amount could be a problem one day. Depending on inflation, a single filer could soon see his or her income tax rate jump from 33 percent to the top 39.6 percent rate.

This is one of those frequent unintended consequences of hurried tax legislation. Don't be surprised if Congress soon revisits the rate structure and we have another big Capitol Hill fight over what to do about the incredibly shrinking 35 percent income tax bracket.

By Kay Bell · Bankrate.com

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