Nesteggg Accounting

When searching for a tax preparer…

Whether do it yourself or hire a preparer, you’re responsible

Did you know that it’s ultimately you, the taxpayer, who is responsible for all the information on your income tax return? So whether it’s your cousin, or yourself, or a professional who fills out your tax forms you are responsible for making sure your taxes are accurate. Here are some tips 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 local Better Business Bureau about the preparer. They should check for disciplinary actions and the license status for credentialed preparers. There are some additional organizations about specific types of preparers:
•Enrolled Agents: Go to the verify enrolled agent status page on IRS.gov.
•Certified Public Accountants: Check with the State Board of Accountancy.
•Attorneys: Check with the State Bar Association.

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.

Ask to e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and choose 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. Once they sign the return, taxpayers are accepting responsibility for the information on it.

Review details about any refund. Taxpayers should 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.

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.

More information:
Need someone to prepare your tax return?

Taxpayers can start to Get Ready now for filing their taxes next year

2019 Taxes

Most people don’t usually start thinking about their taxes until January. However, it’s not too early to start now.  In fact, taxpayers can get ready for the upcoming tax filing season by doing a few simple things.

First things first…they can visit the newly updated Get Ready page on IRS.gov. It highlights the steps taxpayers can take before they file their 2019 tax return in 2020.

These steps include: 

  • Organizing tax records
  • Checking withholding and making adjustments or tax payments
  • Renewing an expired individual taxpayer identification number

IRS.gov tools and resources help taxpayers understand their tax obligations and filing options. Aside from English, taxpayers will find info in several other languages on IRS.gov. They will find it under the language drop-down menu at the top of each page. 

Here are some of the pages taxpayers can visit now to help them get ready for filing:

If your business receives a backup withholding notice

Tax Withholding

If you are a taxpayer receiving certain types of income payments, the IRS requires the payer of these payments to report them on an information return (see types of payments below). The person or business paying you doesn’t generally withhold taxes from these types of payments, as it is assumed you will report and pay taxes on this income when you file your federal income tax return. 

What is backup withholding?

There are situations when the payer is required to withhold at the current rate of 24 percent. This 24 percent tax is taken from any future payments to ensure the IRS receives the tax due on this income.

This is known as Backup Withholding (BWH) and may be required: 

  • Under the BWH-B program because you failed to provide a correct taxpayer identification number (TIN) to the payer for reporting on the required information return. A TIN can be either your social security number (SSN), employer identification number (EIN), or individual taxpayer identification number (ITIN); or
  • Under the BWH-C program  because you failed to report or underreported interest and dividend income you received on your federal income tax return; or you failed to certify that you’re not subject to BWH for underreporting of interest and dividends. 

Payments subject to backup withholding

BWH can apply to most kinds of payments reported on Forms 1099 and W-2G, including:

  • Interest payments (Form 1099-INT) 
  • Dividends (Form 1099-DIV) 
  • Payment Card and Third Party Network Transactions (Form 1099-K) 
  • Patronage dividends, but only if at least half the payment is in money (Form 1099-PATR) 
  • Rents, profits, or other gains (Form 1099-MISC) 
  • Commissions, fees, or other payments for work you do as an independent contractor (Form 1099-MISC) 
  • Payments by brokers/barter exchanges (Form 1099-B) 
  • Payments by fishing boat operators, but only the part that is in money and that represents a share of the proceeds of the catch (Form 1099-MISC) 
  • Royalty payments (Form 1099-MISC) 
  • Gambling winnings (Form W-2G) may also be subject to backup withholding. 
  • Original issue discount reportable on (Form 1099-OID), Original Issue Discount, if the payment is in cash 
  • Certain Government Payments, Form 1099-G

Rules for receiving 1099-related payments

When you open a new account, make an investment, or begin to receive payments reportable on Form 1099, you must furnish your TIN in writing to the bank or other business and certify under penalties of perjury that it’s correct. In some cases, the bank or business will give you Form W-9, Request for Taxpayer Identification Number and Certification (PDF), or a similar form.

If your account or investment will earn interest or dividends, you must also certify that you’re not subject to backup withholding due to previous underreporting of interest and dividends.

How to prevent or stop backup withholding

To stop backup withholding, you’ll need to correct the reason you became subject to backup withholding. This can include providing the correct TIN to the payer, resolving the underreported income and paying the amount owed, or filing the missing return(s), as appropriate.

Credit for backup withholding

If you had income tax withheld under the backup withholding rule, report the federal income tax withholding (shown on Form 1099 or W-2G) on your return for the year you received the income.

Payments excluded from backup withholding

Payments that are excluded from backup withholding:

  • Real estate transactions
  • Foreclosures and abandonments
  • Cancelled debts
  • Distributions from Archer MSAs
  • Long term care benefits
  • Distributions from any retirement account
  • Distributions from an employee stock ownership plan
  • Fish purchases for cash
  • Unemployment compensation
  • State or local income tax refunds 
  • Qualified tuition program earnings

For Small Business Week: Backup withholding rate now 24 percent, bonuses 22 percent; workers urged to do a Paycheck Checkup

WASHINGTON — The Internal Revenue Service today reminded small businesses that recent tax reform legislation lowered the backup withholding tax rate to 24 percent and the withholding rate that usually applies to bonuses and other supplemental wages to 22 percent. The agency also urged employers to encourage their employees to check their withholding using the IRS Withholding Calculator. [Read more…]

With the filing deadline close, here’s why taxpayers should e-File

With the filing deadline close, here’s why taxpayers should e-File

A few taxpayers still use the old-school method of filing their tax returns: on paper. For these people, now is the time to consider filing electronically. With the April tax deadline right around the corner, it’s the perfect time to use IRS e-File.

Here are the top six reasons why taxpayers should file electronically in 2019:

It’s accurate and easy. E-File helps taxpayers avoid mistakes, such as a transposed Social Security number. Taxpayers who e-File receive an acknowledgement from the IRS within minutes, telling them their return has been accepted. If a return is rejected, the acknowledgement will detail why the IRS rejected the tax return.

It’s secure.
E-file meets strict security guidelines. It uses modern encryption technology to protect tax returns. The IRS continues to work with states and tax industry leaders to protect tax returns from tax-related identity theft. This effort has helped put strong safeguards in place to make electronic tax filing a safe and secure option.

It’s convenient.
Taxpayers can buy commercial tax software to e-File right from their home computer.  They can also ask their tax preparer to e-file their tax return.

It means faster refunds. When taxpayers e-File and use direct deposit for their refund, they can get their money in less than 21 days in most cases. On the other hand, if they mail a paper tax return to the IRS and request a refund check in the mail, it can take up to six weeks. Also, since e-Filed returns are generally more accurate, there probably won’t be additional delays. They delays can be caused when the IRS finds mistakes that must be fixed before the IRS can send a refund.

It’s often free. Most taxpayers can e-file for free through IRS Free File. Free File is only available on IRS.gov. Some taxpayers may also qualify to have their taxes e-filed for free through IRS volunteer programs. Volunteer Income Tax Assistance offers free tax preparation to people who generally earned $55,000 or less. Tax Counseling for the Elderly generally helps people who are age 60 or older.

It can be used whether a taxpayer is getting a refund or needs to make a payment. Taxpayers who owe taxes can e-File early and set up an automatic payment on any day until the April deadline. They can pay electronically from their bank account with IRS Direct Pay. Taxpayers can visit IRS.gov for information on other payment options.

As the April tax deadline approaches, the IRS reminds members of the U. S. Armed Forces of special tax breaks, helpful resources

As the April tax deadline approaches, the IRS reminds members of the U. S. Armed Forces of special tax breaks, helpful resources

WASHINGTON – The Internal Revenue Service today encouraged members of the military and their families to learn more about the special tax benefits available to them as the April 15 tax filing season deadline approaches.

Most military bases offer free tax preparation and filing assistance during the tax filing season. Some also offer free tax help after the April tax filing deadline. Service members who prepare their own return qualify to e-file their federal tax return for free using IRS Free File.

“The IRS appreciates the women and men who are serving in the United States military, both at home and abroad,” said IRS Commissioner Chuck Rettig. “We encourage military families to review the resources available at IRS.gov since there are special circumstances that can affect tax payment and return filing deadlines for military personnel. Lastly, we extend our personal appreciation to each and every member of the military, their families and veterans for your service to our country. We are extremely proud of the many veterans now employed by the IRS, and all of our employees are pleased to serve the members of the military family.”

IRS Publication 3, Armed Forces Tax Guide, is a free booklet filled with valuable information and tips designed to help service members and their families take advantage of all the tax benefits allowed by law. Several key benefits are outlined below.

  • Combat pay is partially or fully tax-free. Service members serving in support of a combat zone or in a qualified hazardous duty area may also qualify for this exclusion. In addition, U.S. citizens or resident aliens, such as spouses, that worked as contractors or employees of contractors supporting the U.S. Armed Forces in designated combat zones, may now qualify for the foreign earned income exclusion.
  • Members of the military, such as those who serve in a combat zone or are serving in contingency operations outside the United States, can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.
  • The Earned Income Tax Credit is worth up to $6,431. Low- and moderate-income service members who receive nontaxable combat pay can use a special computation method that may boost the EITC, meaning they may owe less tax or get a larger refund.
  • Those who served in the Sinai Peninsula of Egypt may qualify for combat zone tax benefits retroactive to June 2015. Under the Tax Cuts and Jobs Act (TCJA) members of the U.S. Army, U.S. Navy, U.S. Marines, U.S. Air Force, and U.S. Coast Guard who performed services in the Sinai Peninsula can now claim combat zone tax benefits.
  • Dependent care assistance programs for military personnel are excludable benefits and not included in the military member’s income.
  • The moving expenses deduction is suspended, except for certain Armed Forces members. Beginning in 2018, active duty members of the U.S. Armed Forces who must move because of a military order to a permanent change of station can still claim this deduction. Also, allowances paid to move members of the U.S. Armed Forces for a permanent change of station are excluded from tax.

Both spouses normally must sign a joint income tax return, but if one spouse is absent due to certain military duty or conditions, the other spouse may be able to sign for him or her. A power of attorney is required in other instances. A military installation’s legal office may be able to help.

The IRS has a special page on IRS.gov with Tax Information for Members of the U.S. Armed Forces.

IRS urges businesses to e-file cash transaction reports; It’s fast, easy and free

IRS urges businesses to e-file cash transaction reports; It’s fast, easy and free

WASHINGTON — The Internal Revenue Service today urged businesses required to file reports of large cash transactions to take advantage of the speed and convenience of filing these reports electronically.

Although businesses have the option of filing Form 8300, Report of Cash Payments Over $10,000, on paper, many have already found that e-filing is a faster, more convenient and cost-effective way to meet the reporting deadline. The form is due 15 days after a transaction and there’s no charge for the e-file option.

Electronically filing Form 8300 is a secure way for businesses to send sensitive information to the IRS. Although many cash transactions are legitimate, information reported on this form can help stop those who evade taxes, profit from the drug trade and engage in terrorist financing and other criminal activities. The government can often trace money from these illegal activities through the payments reported on this and other cash reporting forms.

Businesses that file Form 8300 electronically get free, automatic acknowledgment of receipt when they file. In addition, electronic filing is more accurate, reducing the need for follow-up correspondence with the IRS.

To file Form 8300 electronically, a business must  set up an account with the Financial Crimes Enforcement Network’s BSA E-Filing System. For more information, interested businesses can call the BSA E-Filing Help Desk at 866-346-9478 or email them at BSAEFilingHelp@fincen.gov. The help desk is available Monday through Friday from 8 a.m. to 6 p.m. Eastern time.

For more informationabout the reporting requirement, see FS-2019-1, available on IRS.gov. Among other things, the fact sheet includes reporting scenarios for specific businesses, such as automobile dealerships, taxi companies, landlords, colleges and universities, homebuilders and bail-bonding agents. It also lists other resources on IRS.gov related to reporting cash transactions of more than $10,000.

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.

Where’s My Refund? tool lets taxpayers check status of their refund

Where’s My Refund? tool lets taxpayers check status of their refund

The best way for taxpayers to check the status of their refund is to use the Where’s My Refund? tool on IRS.gov. This tool gives taxpayers access to their tax return and refund status anytime. All they need is internet access and three pieces of information:

  • Their Social Security number
  • Their filing status
  • The exact whole dollar amount of their refund

Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. Where’s My Refund? includes a tracker that displays progress through three stages: the IRS receives the tax return, then approves the refund, and sends the refund.

Where’s My Refund? Updates once a day, so taxpayers don’t need to check more often.

Taxpayers on the go can track their return and refund status on their mobile devices using the free IRS2Go app. Those who file an amended return should check out the Where’s My Amended Return? tool.

Generally, the IRS issues most refunds in less than 21 days, but some may take longer. IRS phone and walk-in representatives can research the status of refunds only if it’s been 21 days or more since a taxpayer filed electronically, or more than six weeks since they mailed a paper return. Taxpayers can also contact the IRS if Where’s My Refund? directs them to do so.

More information:
Understanding Tax Return Preparer Credentials and Qualifications
Tax Topic 254 – How to Choose a Tax Return Preparer
Choosing a Tax Professional
Filing for Individuals
e-File Options for Individuals
Paying Your Taxes
What to Expect for Refunds in 2019
Tax Reform: Basics for Individuals and Families

Year-End Tax Tips for Small Business

Year-End Tax Tips for Small Business

The holidays are upon us, and that means tax season is just around the corner. What records should you be gathering, and are there any tools on the market that can make organizing your finances easier? How will the new tax law changes affect the way you file? Should you expect to owe more in taxes this year, or will Uncle Sam be cutting you a bigger check?

  • What records you should be gathering to prepare for filing your 2018 taxes
  • When important deadlines are for filing business taxes
  • Highlights of the Tax Cuts and Jobs Act, and how it affects your taxes
  • What some commonly missed tax deductions are
  • What your options are in terms of tax preparation services
  • Plus more!

Contact us today for more information: (Phone) 1-888-987-NEST; ext. 108, (Fax)  1-866-902-0435, (Email)  accounting@nesteggg.com

 

 

 

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