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IRS Reminds of April 15 FATCA and FBAR Filing

posted Apr 6, 2019, 11:24 PM by Zaher Fallahi   [ updated Apr 6, 2019, 11:38 PM ]

IRS reminds those with foreign assets of annual April 15 FBAR deadline

 Source: Issue Number:    IR-2019-63   

WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, that if they have a foreign bank or financial account, April 15, 2019, is the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR). They should also check to see if they have a U.S. tax liability and a federal tax return filing requirement.

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

Deadline for reporting foreign accounts
The deadline for filing the FBAR is the same as for a federal income tax return. This means that the 2018 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 15, 2019. FinCEN grants filers missing the April 15 deadline an automatic extension until Oct. 15, 2019, to file the FBAR. Taxpayers don’t file the FBAR with individual, business, trust or estate tax returns. Taxpayers who want to paper-file their FBAR must call the Financial Crimes Enforcement Network’s Regulatory Helpline to request an exemption from e-filing.

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 2018. 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.

IRS ends Offshore Voluntary Disclosure Program (OVDP)

The IRS 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.

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 17, 2019. Taxpayers have two extra days because the normal extended deadline—June 15—falls on a Saturday this year.  The same applies for those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return.

Interest, currently at the rate of 6 percent per year, compounded daily, will apply to any payment received after the regular April 15 deadline.

Nonresident aliens who received income from U.S. sources in 2018 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is April 15.

Special income tax return reporting for foreign accounts and assets
In addition to the annual Report of Foreign Bank and Financial Accounts (FBAR) requirements outlined above, 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 these items for the country in which each account is located.

Also, separate from the foreign accounts reporting requirements above, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Specified 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
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.

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 December 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 2018 must file a dual-status alien tax 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 tax 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, 2019, for anyone filing a 2018 tax 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.

 End of IRS Reminder

Zaher Fallahi, Top Tax Attorney, CPA, licensed in Washington D. C. and California, advises taxpayers nationwide, including Americans Living Abroad, with Tax Returns, Offshore Voluntary Disclosure Program, Streamlined Procedures, FBAR and Late FBAR, Foreign Gifts and Late Foreign Gifts, and International Information Filing.  For an Attorney-Client Privileged Consultation, Call:

(877) 687-7558 Nationwide Toll Free

(310) 719-1040 (Los Angeles)

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E-mail taxattorney@zfcpa.com

Not reporting offshore accounts is a crime

posted Mar 17, 2019, 12:07 AM by Zaher Fallahi

IRS: Failure to report offshore funds remains a crime; IRS includes topic on its 2019 ‘Dirty Dozen’ scams list

WASHINGTON — Hiding money or assets in unreported offshore accounts remains on the Internal Revenue Service’s “Dirty Dozen” list of tax scams for 2019, the agency said today.

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, including offshore schemes. Many of these peak during filing season as people prepare their tax returns or seek help with their taxes.

Taxpayers should remain wary of offshore avoidance schemes. Following the IRS intensifying efforts on offshore issues in recent years, many taxpayers have already voluntarily disclosed their participation in these schemes. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitution.

“Offshore evasion remains a primary focal point of overall IRS enforcement efforts,” said IRS Commissioner Chuck Rettig. “Our Criminal Investigation and civil enforcement teams work closely with the Justice Department in the international arena to ensure our nation’s tax laws are followed. Taxpayers considering hiding funds or assets offshore should think twice; the civil penalties and criminal sanctions can be severe.”

Illegal scams like these can lead to significant penalties as well as interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

 

Hiding income offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. They then access the funds using debit cards, credit cards or wire transfers. Others have used foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as bankers and others suspected of helping clients hide their assets overseas.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant fines, as well as the possibility of criminal prosecution.

The IRS reminds taxpayers who have failed to properly report their offshore investments or pay tax on these investments’ income, to come forward.  Since the circumstances of taxpayers vary widely, the IRS offers several options for addressing the noncompliance.

 

Third-party reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements between the U.S. and partner jurisdictions, automatic third-party account reporting continues. The IRS receives more information regarding potential non-compliance by U.S. persons because of the Department of Justice’s Swiss Bank Program. This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.

Penalties for failure to properly report offshore transactions can be severe. A summary of these penalties as well as a comparison of what must be reported on Form 8938, Statement of Specified Foreign Financial Assets, and the Report of Foreign Bank and Financial Accounts (FBAR) can be found on IRS.gov.

 

Zaher Fallahi, CPA, Tax Attorney, nationwide representation with Offshore Accounts (OVDP), Streamlined Procedures, Foerign Bank Account Report (FBAR), Foreign Account Tax Compliance Act (FATCA), Taxation of Americans Living Abroad and Foreign Gifts. For an Attorney-Client Privileged Consultation, Call:

 (877) 687-7558 Nationwide Toll Free

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County)

E-mail taxattorney@zfcpa.com

Each and every taxpayer has a set of fundamental rights they should be aware of

posted Mar 15, 2019, 10:31 PM by Zaher Fallahi

Source: IRS Issue Number:    IR-2019-44

 

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Explore your rights and our obligations to protect them.


1-The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.


2-The Right to Quality Service

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.


3-The Right to Pay No More than the Correct Amount of Tax

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.


4-The Right to Challenge the IRS’s Position and Be Heard

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.


5-The Right to Appeal an IRS Decision in an Independent Forum

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.


6-The Right to Finality

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

 


7-The Right to Privacy

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.


8-The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.


9-The Right to Retain Representation

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.


10-The Right to a Fair and Just Tax System

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

 

Zaher Fallahi Certified Public Accountant (CPA), Esq., is licensed in California and Washington D. C., and assists taxpayers with their Tax Audit Representation and Tax Return Preparation nationwide. For an Attorney-Client Privileged consultation please call: 

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County) 

(877) 687-7558

E-mail taxattorney@zfcpa.com

Avoid improper claims for business credits; topic makes this year’s IRS ‘Dirty Dozen’ list

posted Mar 14, 2019, 9:18 PM by Zaher Fallahi   [ updated Mar 14, 2019, 9:31 PM ]

IIRS Issue Number:    IR-2019-42

 WASHINGTON — The Internal Revenue Service today warned taxpayers to avoid improperly claiming various business tax credits, a common scam used by unscrupulous tax preparers.

 

Two credits often targeted for abuse by shady tax return preparers are the Research Credit and the Fuel Tax Credit. Each of these credits has specific eligibility criteria.

 

Each year, the IRS publishes its “Dirty Dozen” list of common scams that taxpayers may encounter any time. These can peak during the tax filing season as people prepare their tax returns or hire others to help with their taxes.

 

To combat these scams, the IRS warns people to watch out for suggestions to make improper claims on their tax return. Selecting a reputable tax professional can also help. The IRS reminds taxpayers that they are responsible for the information on their tax return no matter who prepares it.

 

Research Credit scams

Section 41 of the Internal Revenue Code provides a credit for increasing research activities, commonly known as the Research Credit. Congress enacted the credit in 1981 to provide an incentive for American private industry to invest in research and experimentation.

Improper claims for this credit generally involve a failure to participate in or substantiate qualified research activities and/or a failure to satisfy the requirements related to qualified research expenses.

 

To get the credit, a taxpayer’s research activities must, among other things, involve a process of experimentation using science with a goal of improving a product or process the taxpayer uses in their business or holds for sale, lease, or license. Activities specifically excluded from qualifying for the credit include research after commercial production, adaptation of an existing business product or process, foreign research and research funded by the customer. Qualified research activities also do not include activities where there is no uncertainty about the taxpayer’s method or capability to achieve a desired result.

 

The IRS often sees expenses for nonqualified activities included in claims for the Research Credit. In addition, qualified research expenses include only in-house wages and supply expenses and a portion, typically 65 percent, of payments to contractors. Qualified research expenses do not include expenses without a proven nexus between the claimed expenses and the qualified research activity.

 

Steps to properly claim the Research Credit

Eligible taxpayers may claim up to 20 percent of qualified expenses above a base amount by completing and attaching Form 6765, Credit for Increasing Research Activities, to their tax return. For tax years beginning in 2016, eligible small businesses may use the Research Credit to offset the alternative minimum tax. Also, qualified small businesses may elect to use a portion of the Research Credit as a payroll tax credit against the employer’s portion of the Social Security tax. They make this election on Form 6765 and must complete and attach Form 8947 Qualified Small Business Payroll Tax Credit for Increasing Research Activities, to their Form941, Employer’s Quarterly Federal Tax Return.

 

To claim the Research Credit, taxpayers must evaluate and document their research activities contemporaneously (that is, over the period of time in which the research occurs) to establish the amount of qualified research expenses paid for each qualified research activity. While some expenses may be estimated, taxpayers must have a factual basis for the assumptions used to create the estimates.

 

Unsupported claims for the Research Credit may subject taxpayers to penalties. Taxpayers should carefully review any reports or studies prepared by third parties to ensure they accurately reflect their activities. Third parties who are involved in the preparation of improper claims or research credit studies also may be subject to penalties

 

Fuel Tax Credit scams

 

The Fuel Tax Credit is generally limited to off-highway business use or use in farming. For that reason, it is not available to most taxpayers. Still, the IRS routinely finds unscrupulous tax return preparers who have enticed sizable groups of taxpayers to inflate their refunds by erroneously claiming the credit.

 

Improper claims for the fuel tax credit generally come in two forms. First, an individual or business may make an erroneous claim on their otherwise legitimate tax return. Second, identity thieves file bogus claims, often as part of a broader fraudulent scheme.

 

The IRS has stepped up efforts to improve Fuel Tax Credit compliance. IRS processing systems, including new identity theft screening filters, are now stopping a significant number of questionable Fuel Tax Credit refund claims.

 

Fraud involving the Fuel Tax Credit is considered a frivolous tax claim and can result in a penalty of $5,000.

 

Additionally, illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

 

Properly claiming the Fuel Tax Credit

The federal government taxes gasoline, diesel fuel, kerosene, alternative fuels and certain other types of fuel. Certain commercial uses of these fuels are nontaxable. Taxes paid for fuel to power vehicles and equipment used off-road may qualify for the credit and may include farm equipment, certain boats, trains and airplanes. Individuals and businesses that purchase fuel for one of those purposes can claim the credit by filing Form 4136, Credit for Federal Tax Paid on Fuels.

 

Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C. , and focuses on assisting individuals and businesses with their tax audit, taxes, accounting, and tax planning. For tax audit representation through our affiliate Zaher Fallahi Tax Attorney, please call: 

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County) 

(877) 687-7558 Toll Free, click here for Zaher Fallahi Tax Attorney

E-mail taxattorney@zfcpa.com

 

Tax Time Guide: ‘Where’s My Refund?’ remains easiest way to check tax refund status

posted Mar 2, 2019, 10:58 PM by Zaher Fallahi

Source: IRS   Issue Number:    IR-2019-25    Inside This Issue

 

Tax Time Guide: ‘Where’s My Refund?’ remains easiest way to check tax refund status

WASHINGTON — The Internal Revenue Service today reminds taxpayers that the easiest way to check on a tax refund is “Where’s My Refund?,” an online tool available at IRS.gov and through the IRS2Go app. The fastest way to get a refund is to use IRS e-file and direct deposit.

This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax, and the tax reform information page.

The IRS issues nine out of 10 refunds in less than 21 days. Refunds for those claiming the Earned Income Tax Credit or the Additional Child Tax Credit had to be held, by law, until mid-February. Taxpayers claiming these credits should begin to see their refunds deposited in bank accounts February 27.

Using the “Where’s My Refund?” online tool, taxpayers can start checking on the status of their return within 24 hours after the IRS receives an e-filed return or four weeks after the taxpayer mailed a paper return. The tool has a tracker that displays progress through three phases: (1) Return Received; (2) Refund Approved; and (3) Refund Sent.

All that is needed to use “Where’s My Refund?” is the taxpayer’s Social Security number, tax filing status (such as single, married, head of household) and exact amount of the refund claimed on the return.

“Where’s My Refund?” is updated no more than once every 24 hours, usually overnight, so there’s no need to check the status more often.

Taxpayers should only call the IRS tax help hotline on the status of their refund if it has been:

1-21 days or more since the return was e-filed,

2- Six weeks or more since the return was mailed, or when

3- “Where’s My Refund?” tells the taxpayer to contact the IRS.

Taxpayers who owe should pay as much as possible to minimize interest and penalty charges

Taxpayers should visit IRS.gov/payments to explore their payment options. They can pay online, by phone (telephone numbers available at IRS.gov/payments) or using their mobile device and the IRS2Go app. Payment options available include electronic funds withdrawal (during e-file), bank account (Direct Pay), debit or credit card, and the Electronic Federal Tax Payment System (EFTPS).

Taxpayers unsure of the amount they owe they can visit IRS.gov/account, and when logged in they can view their balance, payment history, and make a payment.

It’s especially important in 2019 for taxpayers who had an unexpected result when they filed their 2018 tax return to perform a Paycheck Checkup now to determine whether the right amount is being withheld for their 2019 taxes. Taxpayers who do need to adjust their withholding should submit a 2019 Form W-4, Employee’s Withholding Allowance Certificate, to their employer as soon as possible.

Payment options for those who owe but can’t pay in full

Most taxpayers will be affected by major tax law changes, and while many will get a refund, others may owe tax. Many of those owing tax may qualify for a waiver of the estimated tax penalty that often applies. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

The IRS urges people with a filing requirement and a balance due to file by the April 15 due date even if they cannot pay in full. Taxpayers in this situation should pay what they can and then consider a payment plan for the rest.

Taxpayers who are unable to full pay what they owe should act quickly. Several payment options are available including:

1- Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes. Online applications to set up one of these plans are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time.

2- Installment Agreement — Installment agreements paid by direct deposit from a bank account or payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Taxpayers who don’t qualify for a payment agreement may still pay by installment. Certain fees apply.

3- Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.

4- Offer in Compromise — Some struggling taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

In addition, taxpayers can consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed from the convenience of home or office.

End of IRS Issue:    

Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C., and assists taxpayers in Tax Returns Preparation, installment plan, offer-in-compromise, and representation before the IRS Tax Defense Attorney throughout the United States. Tel. : (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

 

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Here’s how tax reform affects taxpayers who claim the child tax credit

posted Feb 27, 2019, 9:04 PM by Zaher Fallahi

Source: IRS Issue Number:    Tax Reform Tax Tip 2019-15

 

Here’s how tax reform affects taxpayers who claim the child tax credit

Many people claim the child tax credit to help offset the cost of raising children. The reform legislation made changes to that credit for 2018 and later. Here are some important things for taxpayers to know.

Credit amount. The new law increases the child tax credit from $1,000 to $2,000. Eligibility factors for the credit have not changed. As in past years, a taxpayer can claim the credit if all of these apply:

   (a) the child was younger than 17 at the end of the tax year

   (b) the taxpayer claims the child as a dependent

   (c)  the child lives with the taxpayer for at least six months of the year

 

Credit refunds. The credit is refundable, now up to $1,400. If a taxpayer doesn’t owe any tax before claiming the credit, they will receive up to $1,400 as part of their tax refund.
 
Earned income threshold. The income threshold to claim the credit has been lowered to $2,500 per family. This means a family must earn a minimum of $2,500 to claim the credit.
 
Phaseout. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This means that more families with children younger than 17 qualify for the larger credit.

New credit for other dependents. Dependents who can’t be claimed for the child tax credit may still qualify for the new credit for other dependents.  This is a non-refundable credit of up to $500 per qualifying person. These dependents may also be dependent children who are age 17 or older at the end of the tax year. It also includes parents or other qualifying relatives supported by the taxpayer.

End of IRS Issue:    

Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C., and assists taxpayers in Tax Returns Preparation, establishing installment plan, and representation before the IRS Tax Defense Attorney throughout the United States. Tel. : (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

 

Click here for New Tax Law 

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Beware of ‘ghost’ tax return preparers

posted Feb 24, 2019, 9:08 PM by Zaher Fallahi

Source: IRS    Beware of ‘ghost’ tax return preparers

The IRS warns taxpayers to avoid unethical tax return preparers, known as ghost preparers. By law, anyone who is paid to prepare or assist in preparing federal tax returns must sign the return and include their Preparer Tax Identification Number.

‘Ghost’ preparers, however, avoid signing the tax return. Instead, they often inflate any potential refund and print the return and instruct the taxpayer to sign and mail it to the IRS. Or, for e-filed returns, they prepare but do not digitally sign it as a paid preparer to avoid scrutiny.

The IRS.gov Choosing a Tax Professional page has information about tax preparer credentials and qualifications.

The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

Taxpayers can report abusive tax preparers to the IRS. Use Form 14157,

Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

End of IRS warning

Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C., and assists taxpayers in Tax Returns Preparation, establishing installment plan, and representation before the IRS Tax Defense Attorney throughout the United States. Tel. : (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

 

Click here for New Tax Law 

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Here’s what taxpayers should do to protect private data

posted Feb 23, 2019, 11:00 PM by Zaher Fallahi

Source: IRS

Taxpayers should protect their personal and financial data from criminals who continue to steal large amounts of information. Thieves use the data to file bogus tax returns and commit crimes while impersonating the victim.  

All taxpayers should follow these steps to protect themselves and their data.


1- Keep a secure computer. Taxpayers should:

Use security software that updates automatically. Essential tools for keeping a secure computer include a firewall, virus and malware protection, and file encryption for sensitive data.

    (a) Treat personal information like cash; don’t leave it lying around.

    (b) Give personal information only over encrypted and trusted websites.

    (c)Use strong passwords and protect them.

 

2- Avoid Phishing and Malware. Taxpayers should:

 (a) Not respond to emails, texts or calls that appear to be from the IRS, tax companies and other well-known businesses. Instead, verify contact information about companies or agencies by going directly to their website.

 (b) Be cautious of email attachments. Think twice before opening them.

 (c) Turn off the option to automatically download attachments.

 (d) Download and install software only from known and trusted websites.

 3- Protect personal information. Taxpayers should:

   (a)Not routinely carry a Social Security card or other documents showing a Social Security number.

   (b) Not overshare personal information on social media. This includes information about past addresses, a new car, a new home and children.

(c) Keep old tax returns and tax records under lock and key.

(d) Safeguard electronic files by encrypting and properly disposing them.

(e) Shred tax documents before trashing.

 Taxpayers should forward IRS-related scam emails to phishing@irs.gov. They can report IRS impersonation telephone calls at www.tigta.gov.

End of IRS warning:    


Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C., and assists taxpayers in Tax Returns Preparation, establishing installment plan, and representation before the IRS Tax Defense Attorney throughout the United States. Tel. : (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

 

Click here for New Tax Law 

Click here for General Tax Planning

IRS provides various payment options for taxpayers who owe but can’t pay in full

posted Feb 19, 2019, 10:47 PM by Zaher Fallahi

Source: IRS Issue Number:    IR-2019-15

WASHINGTON ― As the 2019 tax filing season gets into full swing, the Internal Revenue Service reminds taxpayers who owe of the many easy payment options.

The IRS anticipates that most taxpayers will be affected by major tax law changes. While most will get a tax refund, others may find that they owe taxes, many of whom may qualify for a waiver of the estimated tax penalty that normally applies. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

“The IRS understands there were many changes that affected people last year, and the new penalty waiver will help taxpayers who inadvertently had too little tax withheld,” said IRS Commissioner Chuck Rettig. “We encourage people to check their withholding again this year to make sure they have the right amount of tax withheld for 2019.”

The IRS urges people with a filing requirement and a balance due to file by the April 15 deadline even if they cannot pay in full. Taxpayers in this situation should pay what they can and consider a payment plan for the remaining balance.

Taxpayers who owe taxes can choose among the following payment options:

IRS Direct Pay allows payment directly from a checking or savings account. This service is free.

Electronic Federal Tax Payment System, or EFTPS. Pay by phone or online. This service is free.

Debit or credit card payment.  This service is free, but the processing company may charge a fee. Fees vary by company.

Check or money order made payable to the United States Treasury (or U.S. Treasury) either in person or through the mail.

Cash payments at some IRS offices or at a participating PayNearMelocation. Some restrictions apply. Taxpayers should not send cash through the mail.

Taxpayers who are unable to pay their taxes in full should act quickly. Several payment options are available including:

Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes. Online applications to establish tax payment plans, like online payment agreements and installment agreements, are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time.

Installment Agreement — Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Even taxpayers who don’t qualify for a payment agreement may still pay by installment. Certain fees apply.

Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.

Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

In addition, taxpayers can consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

End of IRS :    IR-2019-15

 

Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C., and assists taxpayers in Tax Returns Preparation, establishing installment plan, and representation before the IRS Tax Defense Attorney throughout the United States. Tel. : (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

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

posted Feb 17, 2019, 10:19 PM by Zaher Fallahi   [ updated Feb 17, 2019, 10:19 PM ]

Issue Number:    IRS Tax Tip 2019-06


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:

 1- 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.

 

2- 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

 

3- 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.

 

4- 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.

 

5- 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.

 

6- 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.

 

7- Never Sign a Blank Return. 

Taxpayers should not use a tax preparer who asks them to sign a blank tax form.

 

8- 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.

 

9- 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.

 

10- 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.


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End of IRS Tax Tip 2019-06


Zaher Fallahi Certified Public Accountant (CPA) since 1983, is licensed in California and Washington D. C., and assists individuals and businesses with their Tax Returns, Tax Planning and Accounting. Tel. : (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), and (877) 687-7558 toll free nationwide, E-mail   taxattorney@zfcpa.com

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