In this recording, a Robot IRS Agent claims that a warrant has been issued for my arrest and that I'm being monitored by evil robots. I can avoid repercussions for my vague and non-specific tax crimes if I call the Robot IRS Agent back.
Stonecreek Accounting
The Official Blog of Stonecreek Accounting - A Full Service CPA Firm in Lawrence, Kansas
Wednesday, October 31, 2018
Your Accountant Receives Fake Robot IRS Messages Too!
You might be surprised to find out that your own accountant gets loads of threatening messages from the Fake IRS. The truth is, no one is immune. I heard from a friend who works at the IRS that it's a fun hobby in the IRS breakroom to laugh at the Fake IRS voicemail messages that all of the real IRS agents receive.
Sunday, July 15, 2018
Why Smart People Fall For IRS Phone Scams
The IRS is not calling you.
We reviewed all of the reasons why the IRS is not calling you in last month's post. So why is it that smart people fall for IRS phone scams?
We reviewed all of the reasons why the IRS is not calling you in last month's post. So why is it that smart people fall for IRS phone scams?
Scammers are persistent.
The fake IRS is persistent, and taxpayers don’t really
understand how the real IRS works. The fake IRS’ persistence combined with the
taxpayer’s ignorance starts to eat away at your confidence.
The scammers may have a lot of your personal information.
The fake IRS frequently has a lot of personal information
about you. They may know your full name, your address, and all or part of your
Social Security Number (most commonly, the last four digits).
It’s important to
remember that none of that information is very private. Heck, every time I call
the cable company, they ask for the last four digits of my SSN to confirm my
identity. So does my credit card company. And my cell phone company. And let’s
not forget about Experian and the IRS – both of whom have been hacked in recent
years.
Maybe you really do owe taxes.
Sometimes the taxpayer might actually owe the IRS money. To
them, it seems reasonable that the IRS is calling them to demand payment. As discussed previously though, calling you about your tax debt really isn’t part of
their collections process.
You're honest.
And finally, most people a fundamentally good people who
want to do the right thing and stay out of trouble. The fake IRS preys on this.
What to do if you
still have doubts?
Hang up the phone and go Google the real IRS’ phone number.
Call it. Wait an hour on hold. Talk to the real IRS.
OR – Hang up the phone and make a payment directly to the
IRS. Go to their website or look in the instructions for your tax form, look up the
address, and mail a payment to the IRS. Alternatively, you can pay them online
via IRS Directpay.
Do not write down the phone number that the fake IRS gives
you. Do not write down the address that the fake IRS gives you. Go look up that
information.
And last but not least: CALL YOUR ACCOUNTANT!
Seriously, if you have an accountant, just let them handle
it. Don’t call the IRS on your own. Call your accountant.
Wednesday, June 20, 2018
The IRS Is Not Calling You
If you’re like me, you’ve received calls from the fake IRS.
Your first instinct when “the IRS” calls you is probably that it’s a scam.
But if you’re like a lot of people, you’ve started to experience doubts due to the sheer persistence of these IRS calls. After all, you don’t want to ignore the real IRS, right?
The IRS is Not Calling You.
But how can I be so sure?
The call is often automated. It usually threatens a civil lawsuit or a criminal charge – usually both. The fake IRS will leave voicemail.
The real IRS has some fairly serious privacy restrictions. The real IRS can’t leave a voicemail or use an automated message to inform you about your tax situation, because they don’t know who might listen to that message.
Let’s go beyond that and examine the threats.
The real IRS doesn’t sue you. It doesn’t need to sue you. If the IRS has determined you have tax debt, it has the power to file a lien, garnish your wages, seize assets, all without taking you to court. They have a long list of processes they need to follow before they can do all of that – but a civil lawsuit is not part of that process. Ever heard of Tax Court? You initiate that when you disagree with the IRS. You take the IRS to court when you disagree with it, not the other way around.
There is no criminal charge for unpaid tax debt. Criminal charges might stem from tax fraud. In that case, the IRS investigates the fraud and if they find enough evidence, they recommend that the Department of Justice files charges.
If you really think you might be under investigation for tax fraud, do not call the IRS. Call an attorney.
The fake IRS demands immediate payment over the telephone.
Real IRS agents can’t accept payment information over the telephone. They’re not allowed. You can’t do it. If you try, they’ll tell you to pay online through the IRS’ website or mail a check. That’s right – only the fake IRS demands phone payments.
The real IRS doesn’t call you.
Once in a while, when you initiate a phone call to the real IRS and the call is disconnected, a real IRS agent will call you back. But only the nice ones. And that’s when you’ve initiated a real conversation with them. The fake IRS calls you first 100% of the time, and they always return your call.
The real IRS has a process for initiating contact with you. First, they send you a letter.
So, what if you've moved recently and the letter is undeliverable? Wouldn’t the IRS call you then?
No.
They’re still not calling you.
When the IRS can’t contact you via letter, your account is placed in an uncollectible status. When they are able to figure out where you live – for example, when you next file a tax return, or get a W-2 – they’ll try again.
Stay tuned for installment #2 of The IRS is Not Calling You: Why do smart people fall for the fake IRS scam?
Thursday, December 21, 2017
TAX REFORM 2018 – WHAT SHOULD YOU DO BEFORE DECEMBER 31, 2017.
Congress is fond of
passing tax bills in the last week of the year, and this year was no exception!
The standard
deduction is changing to $24,000 for married taxpayers, $18,000 for heads of
household and $12,000 for individuals. As a result, if your total itemized
deductions are below the new standard deduction number, you will no longer be
itemizing.
Your itemized
deductions include state and local taxes, property taxes, charitable
deductions, mortgage interest, etc.
Starting in 2018,
total state taxes – your state income taxes plus your property taxes – will be
limited to a $10,000 deduction.
Mortgage interest
will be limited to $750,000 of mortgage interest and home-equity line of credit
interest will no longer be deductible.
Unreimbursed
employee expenses and other 2% Miscellaneous deduction (safe deposit box, tax
return preparation, investment fees) will no longer be deductible.
What can you do
before year-end?
- Prepay your State taxes for 2017 – don’t wait until 2018 to pay. You cannot prepay next year’s taxes and take a deduction, but you can make sure to pay 2017’s tax prior to year end and take the deduction on 2017’s tax return.
- Prepay your real-estate taxes prior to year-end, if possible. For example, if you recently received a property tax bill in the mail with the option to pay “1st half” and “2nd half” – you can pay both now. This can be tricky if you escrow your tax payments with your mortgage payment.
- Make your 2018 charitable contributions before 12/31/17. This includes that trip to Goodwill you’ve been putting off!
Wednesday, August 9, 2017
Changes to Self-Employment Taxation in the State of Kansas.
Tax Increase In Kansas
Since 2012, self-employment income in Kansas has been exempt from state income tax. This massive tax cut was commonly referred to as “the LLC Loophole” and led to budget problems due to lack of tax revenue. The label “LLC Loophole” was a misnomer – this tax cut was not a loophole, it was a big tax cut that worked exactly as intended, and it really didn’t have a heck of a lot to do with LLCs.
Let me explain: a broad range of businesses became exempt
from taxation on ordinary business income that was non-wage income. These
businesses included sole proprietors, partnerships, most LLCs, and many
corporations, as well as farms and rental properties. Not only did they not
need to be LLCs to qualify, they didn’t have to be any type of entity: plain
old self-employed individuals and owners of property benefited from the tax
cut.
So you may have heard that massive quantities of new LLCs
were formed in Kansas because of this tax cut, but you’re wrong. Massive
quantities of new LLCs were formed in Kansas because people had no real
comprehension of this law and read only the headline.
What does this mean for self-employed individuals? Start making Kansas estimated tax payments. The
tax bill is retroactive to January 1, 2017, so you’ll be paying Kansas taxes on
your next tax return. Technically, you're already behind and have missed the first and second quarter estimated tax deadlines. You'll have to catch up. The Kansas Department of Revenue says they won't charge penalties for estimated tax payments that are late solely because of this tax change.
2.
Assess your structure. Now that self-employment
income is no longer exempt from tax, it’s time to re-assess whether it’s
prudent to make a tax election to become an S-Corp or a C-Corp. If that’s
what’s right for you, there are forms to file and formalities to observe.
Depending on your situation, it might be possible to make your election
retroactive to January 1, 2017.
If you're a wage earner, your tax rate also went up. The tax increase on wage earners wasn't as large as for self-employed individuals, so it's going to be less noticeable. Withholding tables should have been adjusted automatically in most payroll software. You may have noticed in the last month or so that your Kansas withholding went up a bit. There's nothing more you need to do. If your HR or payroll department changed your withholding since June 30, they have implemented the change already.
If you're a wage earner, your tax rate also went up. The tax increase on wage earners wasn't as large as for self-employed individuals, so it's going to be less noticeable. Withholding tables should have been adjusted automatically in most payroll software. You may have noticed in the last month or so that your Kansas withholding went up a bit. There's nothing more you need to do. If your HR or payroll department changed your withholding since June 30, they have implemented the change already.
Friday, December 9, 2016
Why Do Business Owners Love to Buy Trucks?
You may have noticed that some business owners like to buy a
new truck or heavy SUV each year to save on their taxes. Have you found
yourself wondering how spending money on a truck really saves money?
What are the elements that come into play?
Depreciation – All vehicles can be depreciated over 5 years.
Bonus Depreciation – New vehicles qualify to take extra
depreciation in their first year.
Section 179 deduction – All vehicles can expense a portion
of their cost outright. The limit for vehicles that weigh less than 6000 lbs is
$3,160. The limit for vehicles that weight more than 6000 lbs is $25,000.
Business use – These deductions work to some degree for
vehicles that are used 50% or more in your business. The examples used in this
discussion are for vehicles used 100% for business.
All put together, the biggest tax deductions come from
buying new vehicles that weigh more than 6000 lbs, due to the combination of
bonus depreciation and the Section 179 deduction. But used vehicles that weigh
more than 6000 lbs make a good showing on your tax return, too.
Due to limits on deductions for new and used vehicles that
weigh less than 6,000 lbs, lighter vehicles make for a less attractive tax
deduction.
What kinds of Vehicles qualify?
Dennis Bishop, a Commercial and Retail Sales Consultant at
Laird Noller Automotive was kind of enough to curate a short list of his
favorite heavy vehicles. If optioned correctly, all of these vehicles will
weigh more than 6,000 lbs – but make sure to check the weight on the tag before
buying:
Ford Explorer
Ford Expedition
Ford F-150
Ford F-250, F-350, F-450, F-550, F-650, F-750
Lincoln MKT
Lincoln Navigator
Dennis might be understandably biased toward brands that are
for sale at Laird Noller, but if you're local to Lawrence, Kansas and you’d like for him to show you any of these
models, please contact him at: dbishop@lairdnoller.com.
The Ford F-150 needs to be optioned correctly to weigh more than 6,000 lbs.
Photo courtesy of Ford Motor Company (2017 model).
Show me the Money!
Here are some examples of how much tax savings you could
see. Each example shows a self-employed business owner who reports all income
on Schedule C and has no children and no other deductions. The vehicle costs
$35,000 in each example. Tax rates will be different for C-Corps and S-Corps,
as well as for families with children. Each tax return is different – so treat
these examples as illustrative estimates.
TAX SAVINGS FROM PURCHASING A $35,000 VEHICLE ON 12/31/16 THAT IS USED 100% IN BUSINESS | |||||||||
Income | New Ford F-250 | Used Ford F-250 | New car or light SUV | ||||||
Single | Married | Single | Married | Single | Married | ||||
$40,000.00* | $7,844.00 | $5,932.00 | $6,855.00 | $5,261.00 | $3,129.00 | $2,612.00 | |||
$100,000.00 | $11,300.00 | $8,490.00 | $9,528.00 | $7,158.00 | $4,164.00 | $3,129.00 | |||
$250,000.00 | $10,911.00 | $9,167.00 | $9,197.00 | $7,727.00 | $4,392.00 | $3,381.00 | |||
* At the $40,000 income level, the taxpayer potentially qualifies for the Earned Income Tax Credit after taking this deduction - EITC is not factored in to this table as it varies considerably by family size.
From the table, we see that if a single self-employed person
who makes $100,000 in profit purchases a new truck on the very last day of the year
they will save $11,300 in taxes – or 32% of the vehicle cost! Those are some
big tax savings!
The beauty of purchasing a truck for tax savings is that
debt-financed vehicles qualify for this great tax deduction – in other words,
the taxpayer qualifies for this deduction before they’ve even paid for the
truck.
A Public Service Announcement From Your Accountant
Depending on your situation, buying trucks every year is
probably not the most efficient way to save on taxes or manage your business
budget! Please talk to your CPA about tax planning strategies for your specific
situation.
Friday, September 30, 2016
Are You Ready to File 1099-MISC?
There’s a new deadline for filing 1099-MISC for independent
contractors: this year’s 1099-MISC's that report non-employee compensation will
be due by January 31, 2017, bringing them in line with when W-2s are filed.
What is 1099-MISC and why do I care about it?
When a business hires an independent contractor and pays
them $600 or more, it is required by law to file a 1099-MISC reporting
non-employee compensation. This form is how the IRS knows that person has
income.
In general, businesses have been lackadaisical about filing
1099-MISC's, which creates an enforcement problem for the IRS. Without
1099-MISC, the IRS can’t easily tell if self-employed individuals are reporting
their income accurately.
With that in mind, the penalties for filing 1099-MISC late
or not filing at all are increasing.
What's the problem with filing 1099-MISC by January 31?
Due to poor planning or a poor understanding of the law,
businesses often neglect to have independent contractors fill out form W-9,
which is the form that provides the business all of the details they need to
file a 1099-MISC, such as the taxpayer identification number.
After contractors are paid, the business might lose touch
them, or they may be unresponsive or uncooperative about filling out a W-9.
Often, businesses don’t know they’re going to pay an
independent contractor more than $600 and don’t realize until the end of the
year when they’re reviewing their books for tax return purposes.
With one short month to get the 1099-MISC's filed, meeting
that deadline, businesses will need to be certain they are collecting W-9s in a
timely fashion.
To issue a 1099-MISC or not to issue a 1099-MISC, that is the question.
You don’t need to file a 1099-MISC if you’re not a business.
Self-employed individuals, business entities, and landlords
are all “businesses,” so contractors hired in the course of doing business need
a 1099-MISC. However, no 1099-MISC is needed if you hire an independent
contractor to perform a service to you as a private individual.
For example:
Sarah hires a contractor to make repairs on her personal
residence and pays him more than $600. NO 1099-MISC.
Sarah hires a contractor to make repairs to the offices of
Stonecreek Accounting, her business, and pays him more than $600. FILE
1099-MISC.
Sarah hires a contractor to make repairs in excess of $600 to
a rental property that she owns. FILE 1099-MISC.
You do not need to file a 1099-MISC if you pay by credit
card or PayPal.
When you use a third-party processor to make a payment, such
as a credit card or PayPal, you do not need to collect a W-9 or issue a
1099-MISC to the contractor.
Third-party processors file a different form, called a
1099-K, to report payments to the recipient. Any payment that is eligible to be
reported on a 1099-K is not eligible to be reported on a 1099-MISC.
If you did file a 1099-MISC in this situation, you run the
risk of double reporting that person’s income, which may now appear on both a
1099-MISC and a 1099-K.
If you pay by cash, check, wire transfer, ACH, or direct
deposit, then you file a 1099-MISC.
If you pay by credit card, debit card, PayPal, or via some
other processor, then you don’t file a 1099-MISC, because those payments are
reported on a 1099-K by the third party processor.
You do not need to file a 1099-MISC if the independent
contractor is something other than a self-employed individual.
The hitch here is that single-owner LLCs often count as self-employed
individuals, but you don’t know if the LLC needs a 1099-MISC without asking. An
LLC could be a partnership, an S-Corp, or a C-Corp, none of which need a
1099-MISC.
Don’t assume. Ask for a W-9 from every individual contractor
and every LLC. The independent contractor will check the appropriate boxes on
the W-9 to help you ascertain whether or not you need to file a 1099-MISC.
Who counts as an independent contractor?
We won’t go into the finer points of differentiating
independent contractors from employees, but an independent contractor is
essentially any person that you pay for services who is not your employee.
Examples may include:
An accountant or attorney
Someone hired to work on a single, short-term
project
A consultant
A worker with specialized skills needed
temporarily
A repair person
Example:
A landscaper does not have an irrigation specialist on staff,
so she hires an irrigation company that’s an LLC to install an irrigation
system for a project she’s doing. She’s not sure if she’ll end up paying this
irrigation company more than $600. She should ask the irrigation company to
fill out a W-9, because she may need to issue a 1099-MISC.
Example:
A business normally pays its accountant $500 to complete its
tax return, but this year asked the accountant to provide some additional
consultation and paid her a total of $1,000 this year. The business should ask
the accountant to fill out a W-9, because it may need to issue a 1099-MISC.
With the January 31 deadline in mind, now is the time to look back on your year and start trying to collect any W-9's that you've missed, and put a policy in place going forward to ensure you have all of the information you need to file your 1099's at the end of the year.
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