IRS does not call you! Phone Calls from IRS is a new Scam

The new scam is that you get a very official sounding phone call from the Internal Revenue Service or the Untied State Treasury of America.  Please do not talk or give any information to the person on the other side of the phone. The best thing is to hang up or write the number down and report it to the IRS. Usually these phone calls are about your refund, bank account error, taxes due, or error in your return.

IRS does not call anyone, if there is an issue with your taxes, you will be receiving a letter from the Treasury or your State. Even then, you need to examine the letter and make sure it is a legitimate correspondence.

 

Is my Scholarship taxable?

Scholarships  received by a student toward a degreed education is tax free for qualified expenses such as tuition, fees, books, supplies and equipment. The room and board and travelling expenses are taxable and should be included in the 1040 tax return.  The scholarships received for a non-degreed education is all taxable. For more information please refer to IRS publication 970.

I don’t have money to pay my taxes. Should I file my business tax return?

Yes, you are better off to file your business tax return on time even though you can’t pay your taxes due. You pay less in penalties if you file your taxes on time. The penalty of late filing will be added to the penalty of late payment of taxes and you end up paying more out of your pocket.

The pass-through companies such as LLC’s, S Corporations are penalized for late filing by IRS and if in California by the State.

The extension dead-line for the LLC and S Corporations is September 15th.

The extension dead-line for Individual tax return is October 15th.

 

Send your kids to day camp and save on taxes

The IRS allows the cost of day camp and babysitters for your kids to be deducted from your taxes. This saving is in the form of a tax credit and it allows you to use 35% of all eligible child care expenses up to  $6000 for two or more children. This credit is 35% of child care expenses up to $3000 for one child. Just save all your receipts and take them to your tax preparation service.

Remember your child has to be 13 or younger. Overnight camps expenses are not eligible for this credit. The cost of babysitters at home or a home facility is eligible too.

Enjoy the summer and let your kids enjoy themselves too.

 

 

Are you reaching the age of retirement?

Workers born in 1943 to 1954 can retire with full benefits at the age of 66 years. Workers born in 1960 and after have to wait until they are 67 years old. You may request to receive your benefits at age 62. However, your benefit will be reduced by almost 20%.

If you retire at your normal retirement age, i.e. 66 and start getting your full benefits and then go back work, you will not be subject to the social security test for working seniors between the age of 65 and 69. This test was eliminated in January 1, 2000.

However, you are subject to withholding for social security and medicare taxes on your wages. Social security benefits may become taxable if the retiree has other income besides his social security benefit. Please go to mztaxservice.com and click on Tax Info page to go to the IRS site for more information or contact us for any questions you may have.

 

Meals and Entertainment Receipts for IRS

What type of receipts you need to keep for IRS for your Meals and Entertainment?

Make sure that you keep the detailed and itemized receipt of the restaurants instead of your credit card receipts.

Also keep the itemized receipt of your hotel bill while travelling for your business instead of just your credit card receipts.

Six most common Tax documents

Six most common documents needed for preparing your Tax Return

1. W-2 form from your current employer and W-2 forms from all the other employers that you might have had in 2017.

2. 1099-Misc forms issued to you as an independent contractor.

3. 1099 Interest and 1099- Div from any bank or broker for accounts such as Saving accounts or Investments.

4. 1099-R form for any distribution you might have had from your retirement accounts such as IRA or 401K.

5. 1098 form for the interest you paid for your mortgage if you owned a house.

6. 1098-T from your school for any tuition paid or grants received if you are a student.