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Ten things for taxpayers to think about when choosing a tax preparer

Ten things for taxpayers to think about when choosing a tax preparer

It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely.  This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.

Here are ten tips for taxpayers to remember when selecting a preparer:

  • Check the Preparer’s Qualifications. People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
  • Check the Preparer’s History. Taxpayers can ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, people can check with the State Board of Accountancy. For attorneys, they can check with the State Bar Association. For Enrolled Agents, taxpayers can go to the verify enrolled agent status page on IRS.gov or check the directory.
  • Ask about Service Fees. People should avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.
  • Ask to E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit.
  • Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 15 due date. People should avoid fly-by-night preparers.
  • Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.
  • Never Sign a Blank Return. Taxpayers should not use a tax preparer who asks them to sign a blank tax form.
  • Review Before Signing. Before signing a tax return, the taxpayer should review it. They should ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. The taxpayer should review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return.
  • Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN.
  • Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. People can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

Starting a Business Checklist

Starting a Business Checklist

For any new business owner, starting a business checklist should be a top priority.

Opportunities to launch a business, in many respects, have never been easier than today. Technology has advanced to a point where many necessary components can be addressed online, without the time-consuming and labor-intensive obligations of the past.

Nevertheless, if you want to launch a business, you may need to take certain key actions to tilt the odds of success in your favor. While great ideas for startups are unique to most individual entrepreneurs, a business checklist is often similar for everyone.

What are some must-have elements of any effective business strategy? Which processes should be initiated and completed? What other to-do action steps should be followed?

Here is a starter list of must-dos to include in your own business checklist:

Bring passion to your enterprise. A new business will probably consume most of your waking hours, so it’s important that you care deeply about your proposed product or service. This can get you through difficult times and keep you energized on a continual basis.

Do industry research. Before going further, it’s important to know that someone else hasn’t already preempted your great new idea. Fundamental market research may quickly indicate whether there’s a void in the marketplace that your new product or service idea can fill.

Address essential elements in your startup tool kit. Deborah Sweeney, CEO of MyCorporation, which provides leading online legal filing services for entrepreneurs and businesses, pinpoints crucial elements every would-be business owner should address:

Make sure your business is protected by forming a corporation or an LLC. A separate corporate entity helps to protect your personal assets from those of your business, partners, and investors. It also helps to maintain a separate corporate presence that protects you personally and limits your personal liability. This adds a level of credibility and professionalism. Finally, having a corporate structure lends itself to potential tax savings – especially with new business-friendly tax laws.
Ensure that you have bylaws or an operating agreement in place. Set forth the terms of your business, including money invested, owners, roles, and responsibilities. Having everything in writing from the outset is key. If all partners and investors know their roles and the revenue opportunities of profits and losses, it is much clearer when questions arise.
Protect your business’s intellectual property. Trademarks, copyrights, and patents can be a critical business asset. Make sure to protect your assets because they often involve a huge investment from the business owners, and therefore, should be adequately protected.
Business licenses may be a critical part of your business. Depending on the business type, different business licenses requirements may vary. Even if a business does not incorporate, most states and counties require a “DBA” or business license to designate the business is operating. It is important to be aware of these licenses and to make sure they are timely filed to avoid penalties.
“As the entrepreneur decides to move forward, it’s important to remember that a small business is a living and breathing entity,” Sweeney notes. “Things change. Businesses grow. You need to remain flexible as the business grows, but you don’t need to have all of the answers at the outset.”

How does a business plan fit in?
Your new venture requires a detailed plan that covers some of the above-mentioned components, but should also include your strategy to launch and maintain the new business. Other aspects of the plan may cover marketing and technology needs, a method for identifying your target audience, anticipated expenses, cash-flow scenarios, and hiring strategies.

Many plans include a financial forecast, where the business is likely to be within one year, three years, and five years. The Small Business Administration offers a free business plan tool, noting that a well-crafted plan “helps you to step back and think objectively about the key elements of your business venture and informs your decision-making on a regular basis.”

“The business plan is associated with how the business will be expected to run, but that will still be a moving, changing document,” Sweeney says. “A key component of a business plan is finance. Evaluate the key strategies for income and associated expenses. Make sure to continuously evaluate return on investment (ROI) because this part of the plan will change as you recognize that ROI is higher for some initiatives.”

“Things change. Businesses grow. You need to remain flexible as the business grows, but you don’t need to have all of the answers at the outset.”

Also, consider:

Marketing strategy: How do you anticipate going to market and growing your customer base?
Sales and promotions: Will your product or service be sold online, in stores, via referrals, or storefront?
Branding: Evaluate your brand name, logos, slogans, and the associated protection of the business from an intellectual property perspective.
Key employees and roles in the company: Define their roles and your expectations of these positions.
Key investors and advisors to your business: You may want to have someone to turn to for advice and guidance, perhaps in the form of an advisory board.
A market and competitive analysis: Look at who your target market is, what the competitors in the industry are doing, and how you differentiate.
“As a new business owner, you won’t have all of the answers,” Sweeney says, “but a strong start in these key areas will give you the base from which to grow and evolve.”

Anticipate the costs of your startup
Any startup launch checklist must include an advance plan for addressing the costs involved in getting that business off the ground (and maintaining it in the future).

“It’s very difficult to anticipate expenses with any business,” Sweeney says. “I believe the number one way to grow is to associate business costs with a particular return. When you evaluate where your expenses relate to that specific return, it can be very eye-opening for an entrepreneur.”

She offers this example:

If you invest in paid search, you may learn that your ROI is 1:1. For every dollar you spend on Google, you make $1. You may grow because you offer annuity (ongoing services), so you’re fine to be “revenue-neutral” on the initial customer acquisition.

On the other hand, you may learn that by hiring a sales person, you make 2:1 ROI. In this instance, having the salesperson leads to a higher ROI, so you may decide to double down and hire a second salesperson rather than invest more of your cash flow in online advertisements.

“Each of your costs likely has a return (or lack of return), so it’s not just important to know your costs, but also to know how your costs impact your return,” Sweeney says. “If your intent is to grow organically, spend carefully. Hire as you need based upon customer demand. Do not hire in anticipation of growth. Costs may also come in the form of unexpected expenses – consider your rent, insurance, employee expenses, benefits, marketing, advisors, etc.”

Here are some critical elements to factor into your planning:

Put together a realistic budget. It’s impossible to determine down to the last penny what your operating costs will be. But putting together an estimate helps you create a working budget and get a better grasp of where funds should be allocated and in what order. Nearly everything about a startup costs money. Your job is to establish a realistic budget that accounts for all these outgoing expenses. Typically, this involves planning your startup’s “burn rate” – the amount of money you’ll likely spend per month before making a profit becomes necessary. As a general rule of thumb, it’s a good idea to add 15-20 percent to your estimated burn rate in order to cover all the expenses you don’t foresee at this time. Additional potential expenses include renting retail space, interior or exterior renovations, funds to hire employees, and branding and marketing materials.
Start the search for funding. You’ll need financial resources to get your business off the ground. If you have funds in reserve, be sure to place them in an account that’s separate from your personal savings or checking account. Establishing a free business account at a bank or credit union generally requires no more than an initial deposit, filing paperwork, and proprietor licensing data.
It’s impossible to determine down to the last penny what your operating costs will be. But putting together an estimate helps you create a working budget and get a better grasp of where funds should be allocated and in what order.

Sweeney offers insights into other potential funding sources:

Family and friends: “Funds from these sources are often easiest to come by, but can lead to personal and family conflict if the parties don’t get out of it what they hope for. It’s important to have everything in writing and to make sure that all parties have a strong understanding of the investment and risk of return.”
Venture capitalists: “Venture capitalists may take an ownership interest in a successful, thriving startup (or one that presents unique revenue opportunities). Often, the money is significant, but there is also traditionally significant involvement of the investors. You may have to give up a big portion of your business to have VC funding.”
Bank or online business loan: “A bank or online business loan could be a great resource for funds, especially if you have strong credit. Your hope is to get a loan with low interest and strong terms of repayment. The better your credit, the stronger the loan potential is. You may also have to have a strong business plan to present to the bank so they can evaluate your potential for repayment.”
Organic funding: “Start selling your product or service with just you and one or two employees, and then grow the space, number of employees, and products as the revenue starts to flow in. Online funding sites like GoFundMe can be a great way to get initial capital. Some of the amount donated goes to the funding source (i.e., the site that is collecting the money), but the rest of the funds get your business going.”
Determine your startup’s legal status and tax structure
As noted above, you must be prepared to attend to all city, county, municipality, or state licensing requirements for your new business. Designating yourself as “sole proprietor” has both advantages and disadvantages, so consult a local attorney or tax professional for the best guidance on how to proceed.

Adhering to certain legalities (which can differ from state to state) is mandatory. Remember, everything in business from trademarks and intellectual property protection to contracts with vendors is legal in nature. This also includes obtaining the appropriate permits and licenses, as well as formally registering the name of your new business.

As for taxes, it’s important to interact with the Internal Revenue Service (IRS) in the proper manner. Here are some valuable tips:

Learn about tax responsibilities. As a new business owner, you have many tax responsibilities, including:

Filing your business’s annual income tax return;
Paying estimated taxes if you own a pass-through entity or for your C corporation;
Payroll tax responsibilities (figuring withholding, depositing payments, and filing employer tax returns); and
Submitting information returns. This may be necessary if you have independent contractors, maintain a qualified retirement plan, or have certain other benefit programs for your staff.
The IRS provides more information about filing and paying your business taxes.

Get a tax ID number. When you start a business, even if you have no employees, you usually need to obtain an employer identification number (EIN), which you can get online. You don’t need an accountant or attorney to do this. If you’re a sole proprietor or independent contractor, you can use your Social Security number and don’t need an EIN in most situations. However, it may be wise to obtain an EIN for identity theft protection purposes, and use it whenever your tax ID number is requested.

“If you are leveraging payroll to pay employees, it is critical to make sure you have your state ID accounts established,” Sweeney notes. “These may include state withholding IDs and state unemployment insurance IDs. Make sure you have established the appropriate accounts and ensured you are paying into the right holding accounts pursuant to your state laws.”

Depositing taxes. If you have a payroll or make estimated tax payments, you can do this electronically. There is no cost for using this service, and you can schedule your tax deposits in advance. Using EFTPS.gov doesn’t give the government access to your bank account; instead you authorize the bank to make withdrawals from your account to cover the tax deposits or payments you specify.

Transmitting W-2s to the Social Security Administration. You can submit copies of employees’ W-2s, along with an IRS transmittal form (Form W-3) to the Social Security Administration through its Business Services Online. You can even register by telephone to create a password.

Remitting information returns to the IRS. If you engage independent contractors, you may have to file annual information returns to inform the IRS about your payments to them. This can be done through the Filing Information Returns Electronically (FIRE) system.

Filing annual retirement plan returns. If you want or need to file electronically a form in the 5500 series (e.g., you maintain a 401(k) plan for you and your staff), it is done through the Department of Labor’s EFAST2. This is the portal to use even though you’re filing an IRS form.

Interacting with the IRS may seem intimidating to some new business owners, but as long as you’re in business, interaction is required. You can call upon valuable experts, as well as IRS guides, such as the Small Business Self-Employed Tax Center and an A-Z Index for Business.

Importance of business insurance
Some of the most common varieties of business insurance are commercial property, home-based business insurance, and general and/or product liability. Selecting the most appropriate insurance coverage depends on the type of product or service you intend to sell, as well as any planned need to bring on employees. You may also need to have workers’ compensation coverage.

“It’s important to consider insurance for your employees, for business interruption, and if you’re a professional, for your professional services,” Sweeney says. “Business insurance protects your personal assets and ensures that you’re protected in the event of business interruption, theft, or lawsuits. You may think you’re too small to get insurance, but often insurance is not as expensive when you are smaller. Insurance is often based on revenue and risk and the lower your revenue, often, the risk is less.”

IRS issues guidance on small business accounting method changes under Tax Cuts and Jobs Act

IRS issues guidance on small business accounting method changes under Tax Cuts and Jobs Act

 

IR-2018-160, Aug. 3, 2018

 

WASHINGTON – The Internal Revenue Service issued guidance today on new tax law changes that allow small business taxpayers with average annual gross earnings of $25 million or less in the prior three-year period to use the cash method of accounting.

 

The Revenue Procedure outlines the process that eligible small business taxpayers may obtain automatic consent to change accounting methods that are now permitted under the Tax Cuts and Jobs Act, or TCJA.

 

The TCJA, enacted in December 2017, expands the number of small business taxpayers eligible to use the cash method of accounting and exempts these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts.  As a result, more small business taxpayers will be allowed to change to cash method accounting starting after Dec. 31, 2017.

 

The Department of the Treasury and the Internal Revenue Service welcome public comments on future guidance. For details on submitting comments, see the Revenue Procedure.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

California Business Search

 Business Search


This search provides access to available information for corporations, limited liability companies and limited partnerships of record with the California Secretary of State, including free PDF copies of imaged business entity documents, including the most recent imaged Statements of Information filed for corporations and limited liability companies. Please note: This search is not intended to serve as a name availability search. For information on checking or reserving a name, refer to Name Availability.

To conduct a search:

  • Select the applicable search type.
  • In the “Search Criteria” box, enter the entity name or number you wish to search. Note: If entering the entity number of a corporation, the number must begin with the letter C.
  • Select the search filter you wish to use to locate the entity if searching for an entity name.
  • Select the Search button.
  • For help with searching an entity name or number, refer to Search Tips.

All fields marked with an asterisk (*) are required.

Search Type *

     

 
 

Disclaimer: This tool allows you to search the Secretary of State’s California Business Search database for abstracts of information for domestic stock, domestic nonprofit and qualified foreign corporations, limited liability companies and limited partnerships that have filed with this office. This search tool groups corporations separately from limited liability companies and limited partnerships and returns all entities for the search criteria in the respective groups regardless of the current status.

Although every attempt has been made to ensure that the information contained in the database is accurate, the Secretary of State’s office is not responsible for any loss, consequence, or damage resulting directly or indirectly from reliance on the accuracy, reliability, or timeliness of the information that is provided. All such information is provided “as is.” For information on ordering copies of the official business entity records for a particular entity, please refer to Information Requests.

Business Travel, can become a Nightmare!

Motivator excursions, meetings and different kinds of worker travel are basic courses for businesses to prepare, compensate and inspire their best representatives and chiefs. In any case, off-site work occasions can likewise be a legitimate land mine. From wounds to ambushes to liquor related episodes, your independent venture needs laborers’ comp scope to be set up for the different issues that can surface on work-supported treks—and possibly prompt exorbitant claims.

Here are probably the most widely recognized significant issues that jump up amid worker excursions and gatherings, alongside genuine circumstances:

Genuine damage.

In 2006, Danny Douglas, a PC bolster examiner for Advertisement Astra in Overland Stop, Kansas, went to an organization supported “group building” occasion at an indoor go-truck hustling office. Representatives were given a short get up and go discuss an up and coming item and were then isolated into groups and told they could win prizes by going the quickest. While adjusting a bend at 25 miles for every hour, Douglas was tossed from his go-truck and arrived on his side and endured a broke rib and lung damage that required prompt medical procedure.

His organization at first declined to pay laborers pay since it guaranteed the movement was willful; a judge later decided that the organization must pay specialists’ comp, as indicated by SafetyNewsAlert.com. The case in the long run achieved the Kansas Incomparable Court, which concurred that it seemed likely that Douglas was required to either be working or at the go-truck office, however said the state’s specialist remuneration board expected to reconsider the case utilizing an alternate test.

Representative wrongdoing.

A previous Microsoft director in the Assembled Kingdom, Simon Negus, was fired for “untrustworthiness” after he was professedly observed kissing another Microsoft worker at an Atlanta meeting in 2009. The organization rejected Negus the next September and sued him for $126,000—some portion of his 2008 marking reward—and for another piece of his vacation pay, as indicated by Bloomberg. Negus later counter-sued. For another situation of asserted offense, no less than one programming designer was laid off from his manager in 2013 after a tech blogger caught him and another engineer making jokes sexual in nature about “dongles” at PyCon, a Python designer meeting in Santa Clause Clara, California, as indicated by ArsTechnica.com.

Sickness and sustenance harming.

Legionnaire’s sickness is maybe the most scandalous instance of a noteworthy ailment episode amid a tradition (of the American Army in 1976). Be that as it may, representatives becoming ill amid a business related occasion isn’t so bizarre, truly. There’s dependably the hazard that representatives they will get sustenance harming or get an infectious ailment when going for work. Prior this year, indeed, in excess of 100 participants of—amusingly—a nourishment security summit in Baltimore, Maryland clearly got tired after one of the dinners, as per NBC News. Around 12 hours after the dinner, numerous visitors revealed queasiness, the runs and different side effects regularly connected with nourishment borne ailments. No participants were hospitalized and nourishment security overseers couldn’t promptly find the reason for the disease. Episodes, for example, this are simply one more motivation behind why organizations ought to consider a laborers’ pay protection design.

Worker captured.

At the point when outside the workplace—notwithstanding when actually on the clock—in some cases representatives can get stuck in an unfortunate situation. A judge in Guadalupe Area, Texas, Mike Wiggins, was captured on medicate ownership when going to a gathering in 2012. A laborer at the inn where the meeting was occurring noticed pot amid the gathering and followed it back to Wiggins’ room, as per KWTX.com.

Following stages: Would you say you are hoping to deal with your representatives all the more viably however don’t have room schedule-wise to stay aware of the most recent research and patterns in ability administration? We have you secured with the week by week Little Business Ahead Bulletin. Join today and begin accepting the week after week pamphlet stuffed with the most recent devices and assets to enable you to maintain an effective business.

For Small Business Week, IRS offers tips to small business owners about the overlooked home office deduction

For Small Business Week, IRS offers tips to small business owners about the overlooked home office deduction

The Internal Revenue Service today reminded small business owners who work from a home office that they may be overlooking a common deduction.

The IRS encourages small business owners to explore the guidelines surrounding home office deductions so they understand the legal guidelines and options available. More details are available in Publication 587.

As part of National Small Business Week (April 29-May 5), the IRS is highlighting a series of tips and resources available for small business owners. For someone considering claiming the home office deduction, there are two options available:

Regular method

The first option for calculating the home office deduction is the regular method. This method requires computing the business use of the home by dividing the expenses of operating the home between personal and business use. Direct business expenses are fully deductible and the percentage of the home floor space used for business is assignable to indirect total expenses. Self-employed taxpayers file Schedule C, Profit or Loss From Business (Sole Proprietorship), and compute this deduction on Form 8829, Expenses for Business Use of Your Home.

Simplified method

The second option, the simplified method, reduces the paperwork and recordkeeping burden. The simplified method has a prescribed rate of $5 a square foot for business use of the home. There is a maximum allowable deduction available based on up to 300 square feet. Choosing this option requires taxpayers to complete a short worksheet in the tax instructions and enter the result on the tax return. There is a special calculation for daycare providers. Self-employed individuals claim the home office deduction on Schedule C, Line 30, and farmers claim it on Schedule F, Profits or Loss from Farming, Line 32.

Regardless of the method used to compute the deduction, business expenses in excess of the gross income limitation are not deductible. Deductible expenses for business use of a home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs. In general, expenses for the parts of the home not used for business are not deductible.

Deductions for business storage are allowed when the home is the only fixed location of the business, or for regular use of a residence for daycare services; exclusive use isn’t required in these cases.

 

IRS reminds those with foreign assets about U.S. tax obligations

IRS reminds those with foreign assets about U.S. tax obligations

The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, to check if they have a U.S. tax liability and a filing requirement. At the same time, the agency advised anyone with a foreign bank or financial account to remember the upcoming deadline that applies to reports for these accounts, often referred to as FBARs.

Here is a rundown of key points to keep in mind:

Deadline for reporting foreign accounts

The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is the same as for a federal income tax return. This means that the 2017 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 17, 2018. FinCEN grants filers missing the April 17 deadline an automatic extension until Oct. 15, 2018, to file the FBAR. Specific extension requests are not required. In the past, the FBAR deadline was June 30 and no extensions were available.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2017. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.

Reminder: IRS to end Offshore Voluntary Disclosure Program

The Offshore Voluntary Disclosure Program will close on Sept. 28, 2018. Taxpayers with undisclosed foreign financial assets still have time to use OVDP before the deadline. For further details about the OVDP, see the OVDP FAQs.

The IRS noted it will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, whistleblower leads, civil examination and criminal prosecution. The IRS continues to use streamlined filing compliance procedures that will remain in place and be available to eligible taxpayers. But, as with OVDP, the IRS said it may end the streamlined filing compliance procedures at some point. Full details of the OVDP and the streamlined filing compliance procedures are available at Options Available for U.S. Taxpayers with Undisclosed Foreign Financial Assets.

Most people abroad need to file

An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

A special extended filing and payment deadline applies to U.S. citizens and resident aliens who live and work abroad. For U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico, the income tax filing and payment deadline is June 15, 2018. The same applies for those serving in the military outside the U.S. and Puerto Rico.

Interest, currently at the rate of five percent per year, compounded daily, will apply to any payment received after the regular April 17 deadline. See U.S. Citizens and Resident Aliens Abroad for details.

Nonresident aliens who received income from U.S. sources in 2017 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is April 17. See Taxation of Nonresident Aliens on IRS.gov.

Special income tax return reporting for foreign accounts and assets

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

Specified domestic entity reporting

For tax year 2017, certain domestic corporations, partnerships and trusts that are considered formed for the purpose of holding (directly or indirectly) specified foreign financial assets must file Form 8938 if the total value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year.

For more information on domestic corporations, partnerships and trusts that are specified domestic entities and must file Form 8938, as well as the types of specified foreign financial assets that must be reported, see Do I need to file Form 8938, “Statement of Specified Foreign Financial Assets”? and Form 8938 instructions.

Report in U.S. dollars

Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.

Both FinCen Form 114 and IRS Form 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.

Expatriate reporting

Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2017 must file a dual-status alien return, attaching Form 8854, Initial and Annual Expatriation Statement. A copy of the Form 8854 must also be filed with Internal Revenue Service, Philadelphia, PA 19255-0049, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.

Choose Free File or e-file

U.S. citizens and resident aliens living abroad can use IRS Free File to prepare and electronically file their returns for free. This means both U.S. citizens and resident aliens living abroad with adjusted gross incomes (AGI) of $66,000 or less can use brand-name software to prepare their returns and then e-file them for free. A limited number of companies provide software that can accommodate foreign addresses.

A second option, Free File Fillable Forms, the electronic version of IRS paper forms, has no income limit and is best suited to people who are comfortable preparing their own tax return. Both the e-file and Free File electronic filing options are available until Oct. 15, 2018, for anyone filing a 2017 return. Check out the e-file link on IRS.gov for details on the various electronic filing options. Free File is not available to nonresident aliens required to file a Form 1040NR.

More information available

Any U.S. taxpayer here or abroad with tax questions can refer to the International Taxpayers page and use the online IRS Tax Map and the International Tax Topic Index to get answers. These online tools group IRS forms, publications and web pages by subject and provide users with a single-entry point to find tax information.

Taxpayers who are looking for return preparers abroad should visit the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.

To help avoid delays with tax refunds, taxpayers living abroad should visit Helpful Tips for Effectively Receiving a Tax Refund for Taxpayers Living Abroad on IRS.gov.

More information on the tax rules that apply to U.S. citizens and resident aliens living abroad can be found in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, available on IRS.gov.

Tips for Getting Unclaimed 2014 Tax Refunds

egggsact-tax-irs

 

Tips for Getting Unclaimed 2014 Tax Refunds 

The IRS reminds taxpayers they may have money waiting for them. About 1 million taxpayers who did not file a 2014 federal income tax return have unclaimed tax refunds totaling about $1.1 billion. Here are some things taxpayers should know about these unclaimed refunds:

 

  • To collect the money, taxpayers must file their 2014 tax return with the IRS no later than this year’s tax deadline, Tuesday, April 17.
  • The IRS estimates that half of the refunds are more than $847.
  • When a taxpayer who is getting a refund does not file a return, the law gives them three years to claim that tax refund. If the taxpayer does not file a tax return within three years, the money goes back to the U.S. Treasury. For 2014 tax returns, the three-year window closes April 17, 2018.
  • The law requires taxpayers to properly address and mail the tax return to the IRS. It must be postmarked by the April deadline.
  • The IRS may hold the 2014 refunds of taxpayers who have not filed tax returns for 2015 and 2016.
  • The unclaimed money will be applied to any amounts still owed to the IRS or a state tax agency. The money may also be used to offset unpaid child support or past due federal debts, such as student loans.
  • By failing to file a tax return, people stand to lose more than just their tax refund. Many low- and moderate-income workers may be eligible for the earned income tax credit. For 2014, the credit was worth as much as $6,143.
  • Current and prior year tax forms are available on the IRS.gov Forms, Instructions and Publications page or by calling toll-free 800-TAX-FORM. This includes forms 1040, 1040A and 1040EZ for 2014.
  • Taxpayers who are missing forms W-2, 1098, 1099 or 5498 for the years 2014, 2015 or 2016 should request copies from their employer, bank or other payer. Taxpayers who are unable to get missing forms can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool. Taxpayers can use the information on the transcript to file their tax return.

Free tax preparation services available nationwide for those who qualify

Free tax preparation services available nationwide for those who qualify

The Internal Revenue Service reminded taxpayers today that they may qualify for free tax help at over 11,000 Volunteer Income Tax Assistance (VITA) sites nationwide. VITA sites are located at community and neighborhood centers and provide tax assistance to taxpayers whose incomes qualify for the program.

The VITA program offers free tax help to individuals who generally make $54,000 or less, persons with disabilities, the elderly and individuals with limited English proficiency who need assistance in preparing their taxes. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those ages 60 and older. The IRS certified VITA and TCE volunteers are trained to help with many tax questions, including credits such as the Earned Income Tax Credit and the Child and Dependent Care Credit.

The Earned Income Tax Credit (EITC) is a significant tax credit for workers who earned $53,930 or less in 2017. Last year, almost 27 million eligible workers and families received over $65 billion in EITC, with an average EITC amount of $2,445. The maximum EITC amount for 2017 is $6,318 for qualifying families with three or more children. To receive the credit, eligible taxpayers must file a tax return, even if they do not have a filing requirement. The VITA and TCE programs can help answer many EITC questions and help taxpayers claim the credit if they qualify. Taxpayers may also use the IRS.gov EITC Assistant to help them determine their eligibility.

Before visiting a VITA or TCE site, taxpayers should review Publication 3676-B to be aware of the services provided and what to bring to a site. To find the nearest VITA or TCE site, taxpayers can use the VITA and TCE locator tools available on IRS.gov, download the IRS mobile app IRS2Go or call 800-906-9887.

For assistance preparing a tax return at a VITA or TCE site, taxpayers must bring all required documents and information including:

  • Proof of identification (photo ID) for taxpayer and spouse
  • Social Security cards for the taxpayer, spouse and dependents
  • An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for those who do not have a Social Security number
  • Proof of foreign status, if applying for an ITIN
  • Birth dates for the taxpayer, spouse and dependents
  • Wage and earning statements (Form W-2, W-2G, 1099-R,1099-Misc) from all employers and other payers
  • Interest and dividend statements from banks (Forms 1099)
  • Health Insurance Exemption Certificate, if received
  • A copy of last year’s federal and state tax returns, if available
  • Proof of bank account routing and account numbers for direct deposit, such as a blank check
  • To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms
  • Total amount paid for daycare services and the daycare provider’s tax identifying number such as their Social Security number or business Employer Identification Number
  • Forms 1095-A, B and C, Health Coverage Statements
  • Copies of income transcripts from IRS and state, if applicable

In addition, the military and the IRS join together to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council (AFTC) consists of tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. Volunteers can also address military specific tax issues, such as combat zone tax benefits and the impact of the EITC guidelines.

In addition to free tax return preparation assistance, each site will file returns electronically for free. Combining e-file with direct deposit is the fastest and most accurate way to file. The IRS issues nine out of 10 refunds in 21 days or less. Paper returns take longer to process. Taxpayers who chose to file electronically and owe can make a payment by the April 17, 2018, deadline using Direct Pay. This IRS free service allows taxpayers to make secure payments from a checking or savings account. It also allows the taxpayer to get an automatic extension of time to file when Direct Pay is used to make a payment.

Taxpayers that prefer to file their tax returns electronically have the option of using IRS Free File. IRS Free File offers brand-name tax software to taxpayers who earned $66,000 or less in 2017 to file their tax returns free. Taxpayers who earned more can use Free Fillable Forms, the electronic version of IRS paper forms. IRS Free File is only available through the IRS website by visiting IRS.gov/freefile.

Taxpayers Have Several Tax Return Preparation Options

Taxpayers Have Several Tax Return Preparation Options

As taxpayers look ahead to the April 17 filing deadline this year, they’ll consider how to prepare their returns. Taxpayers have several options:

  • Prepare their own return:

o E-file — Taxpayers can use commercial tax software to prepare and file their tax returns.   The software uses a question and answer format that makes doing taxes easier. After the taxpayer responds to the questions, the software selects the appropriate tax forms and does the calculations automatically. Once complete, the software securely transmits the return to the IRS.

o Free File — Seventy percent of taxpayers have an adjusted gross income of $66,000 or less and are therefore eligible to file using free, brand-name software. Taxpayers can find the right software for them at IRS.gov.

o Paper Forms — Free File Fillable Forms have no age, income or residency restrictions for taxpayers who are comfortable completing a paper return. Taxpayers can also find forms on IRS.gov, fill them out in Adobe Acrobat, and then print and mail them to the IRS. Taxpayers may also fill out their forms by hand after they print them. Taxpayers who mail a paper Form 1040, U.S. Individual Income Tax Return, should know that it can take six to eight weeks for the IRS to process their return.

  • Free Volunteer Tax Preparation — The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs provide free tax preparation help for qualifying taxpayers.

o Volunteer Income Tax Assistance: This program is also known as VITA. IRS-certified volunteers provide free, basic income tax return preparation with electronic filing to eligible taxpayers who generally earn $54,000 or less.

o Tax Counseling for the Elderly: TCE is mainly for people age 60 or older, but offers service to all taxpayers. The program focuses on tax issues unique to seniors. AARP participates in the TCE program through AARP Tax-Aide.

  • Tax Preparers — Professional tax preparers across the country provide paid tax preparation services. Taxpayers can visit the Choosing a Tax Professional page on IRS.gov for tips on choosing a preparer who fits their needs.

All taxpayers should keep a copy of their tax return. Taxpayers using a software product for the first time may need their adjusted gross income amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return

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