Yes, it’s tax season again, something many of us dread. But I’d like to share with you a few tax tips and information to help you get through the season and make the entire effort a little less TAXING...
1. CREATE A TAX FOLDER
Set up a “Tax Folder” early in the year. As things occur during the year that are tax-related, just pop them into that folder. As January rolls around, many more tax documents can be added to the folder. The idea is to have everything in this one folder, ready to review when it comes time to go through your tax organizer and submit your documents to your tax preparer. NO SEARCHING, NO STRESS – You’ve got it all together and ready to submit.
2. MAKE SURE YOUR REPRESENTATIVE CAN REPRESENT YOU IN FRONT OF THE IRS
Who can represent you before the IRS changed on Jan 1, 2016. Tax practitioners have varying levels of skills, education and expertise.Only practitioners with “unlimited representation rights” such as an Enrolled Agent can represent their clients in ANY matter including audits, payment/collection issues and appeals.Enrolled Agents are licensed by the IRS and must pass a comprehensive three-part exam demonstrating proficiency in tax planning, tax preparation and representation as well as completing 72 hours of continuing education every three years.Other preparers may be able to prepare your return but may not have the ability to support you in an audit situation leaving you to respond directly to the IRS on how your return was prepared.
3. ENHANCE IDENTITY THEFT PROTECTION
Tax-related identify theft is something that’s been in the news a lot lately.This particular type of identity theft occurs when someone other than you files a tax return falsely claiming to be you.This can cause a significant delay in processing your return and require you to file paperwork to prove who you are.
The IRS has implemented an Identity Protection (IP) PIN program for those who have experienced tax-related identity theft.You receive a unique six-digit PIN that you must provide in order to submit your tax return.In addition, some states (not Illinois at present) are also requiring individuals’ driver’s license numbers be included to verify the State tax return.
The focus has been on verifying your identity and validating your tax return before it is accepted for processing.There is a Taxpayer Guide to Identity Theft and information on ways to reduce your risk on the IRS website at www.irs.gov.
4. PLAN FOR YOUR REFUND
The State of Illinois has put in place a new review process to combat fraudulently filed returns, so State tax refunds will not be available until 2 to 3 weeks after March 1stor after they are filed.Therefore, you will not receive your state refund until the latter part of March even if you file much earlier.
5. MAKE SURE HEALTH CARE IS PART OF YOUR TAXES?
Since the implementation of the Affordable Care Act, your tax return has been used to report healthcare coverage and assess penalties and true-ups if you do not maintain “minimum essential healthcare coverage” during the year.To demystify the process, determine which category you fall into:
- If you have healthcare through the Health Insurance Marketplace, you should have received a Form 1095-A by Feb 1, 2016. This form is required to determine if you can claim a Premium Tax Credit on your tax return and to reconcile advance payments.
- If you have healthcare through your Employer or through Non-Marketplace Providers you may receive a Form 1095-B or 1095-C. If you receive these forms prior to filing your return, you should use that information to complete your return. If you do not receive these forms in time, you should have other forms of documentation that can prove your insurance coverage in 2015.
- If you have a situation where you did not have health insurance for any part of 2015, you may need to file for a Healthcare Exemption or may owe a Shared Responsibility Payment (penalty).
6. DON'T FALL FOR SCAMS
We’ve all heard about it—or even received one! Someone claiming to be with the IRS and threatening that if you don’t respond serious action will be taken.Even though you may know it’s a scam, it can scare you!The IRS does not contact you by phone or email.The IRS always sends a letter to you first.Never provide your personal or financial information to anyone over the phone or by email.
Judy Stafford is the Owner of Padgett Business Services of DuPage who works exclusively with small business owners, like herself, to enable them to focus on growing their business by relieving the burdens of financial reporting and tax compliance and acting as a trusted advisor. Our services include financial reporting, tax preparation, government compliance, complete payroll solutions, and business consulting.
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Linked In: https://www.linkedin.com/in/judystafford