Nissly and Nissly Tax Tips
Welcome! Another year has passed and we are gearing up for another tax season. The postcard you received highlights several tabs on our website that you should explore. The back of the post card highlighted the ”Income Tax” tab, the “News” tab and the “Guides” tab. All three of these areas have a tremendous amount of tax and financial data for your use. The “News” tab specifically has information updated frequently and archived monthly material which will keep you up to date throughout the year. It is all free of charge and we hope that you will make this your favored spot to look up financial information.
Important information regarding the timing of your refunds - The Path Act directed IRS to withhold refunds for taxpayers claiming the earned income tax credit and the additional child tax credit until February 15. This is a fraud prevention measure. IRS has stated that refunds for returns claiming these credits will likely not be available until the week of February 27 at the earliest.
The Iowa Department of Revenue has just announced that it will likely not issue refunds for returns claiming the earned income tax credit until early March because of the same fraud prevention concerns.
When you get your Form W-2 in early 2017, you may notice a new entry – a 16-digit verification code. This is part of an effort conducted by the Internal Revenue Service to protect taxpayers and strengthen anti-fraud efforts.
The expanded use of the W-2 Verification Code is a way to validate the wage and tax withholding information on the tax form. For taxpayers, taking a moment to add this code when filling out their taxes helps the IRS authenticate the information. This in turn helps protect against identity theft and unnecessary refund delays.
For 2017, the IRS and its partners in the payroll service provider industry will place the code on 50 million Forms W-2. This is up from two million forms in 2016.
The IRS, state tax agencies and the nation’s tax industry – partners in combating identity theft – ask for your help in their efforts. Working in partnership with you, we can make a difference.
If you get a call from the “IRS” threatening you with lawsuits or jail unless you pay up immediately … Guess what? It’s a scam.
IRS impersonation and tax scams by phone, email, postal mail and text are ongoing. Criminals use more and more creative ploys to trick taxpayers and tax preparers. Don’t be a victim.
The IRS, state tax agencies and the private-sector tax industry are asking for your help in the effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference.
The IRS doesn't initiate contact with taxpayers by email, text message or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.
The IRS will never:
Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
Require you to use a specific payment method for your taxes, such as a prepaid debit card.
Ask for credit or debit card numbers over the phone.
Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
If you don’t owe taxes, or have no reason to think that you do:
Do not give out any information. Hang up immediately.
Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" in the notes.
Affordable Care Act – Reminders Last year was the first year for some important forms regarding your Health Insurance. These forms are critical for use to compute your premium tax credits
Many individuals will receive new ACA information statements for the first time in 2016:
• Form 1095-B, Health Coverage
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
In addition, Form 1095-A will continue to be issued by the Marketplace.
Here are eight facts about these forms:
• The information on these forms will assist in completing the tax return, they are not needed to file. But will assist you in determining your client’s compliance with the Healthcare law.
• Form 1095-B, Health Coverage, is used by coverage providers to report certain information to the IRS and to your client about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment.
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage is used by employers with 50 or more full-time employees, including full-time equivalent employees, in the previous year use, to report the information required about offers of health coverage and enrollment in health coverage for their employees.
• Form 1095-C is also used by employers that offer employer-sponsored self-insured coverage to report information to the IRS and to employees about individuals who have minimum essential coverage under the employer plan and therefore are not liable for the individual shared responsibility payment for the months that they are covered under the plan.
• Individuals who worked for multiple employers that are required to file Form 1095-C may receive a Form 1095-C from each employer.
• The Form 1095-B and 1095-C may include only the last four digits of the social security number or taxpayer identification number, replacing the first five digits with asterisks or X’s.
• In general, 1095-B and 1095-C must be sent on paper by mail or hand delivered, unless the taxpayer consents to receive the statement in an electronic format.
• Health coverage providers should furnish a copy of Form 1095-B, to your clients if they are identified as the “responsible individual.”
Health Coverage Tax Credit See information regarding the Health Coverage Tax Credit on the IRS.GOV website. Search for HCTC and follow the links. For qualifying individuals this will be a significant credit to claim as it could pay up to 72.5% of your qualified health insurance premiums.
A reminder about the special provisions of the PATH Act that was signed by President Obama on December 18, 2015. This bill was significantly different from previous year end tax bills in that it included some permanent tax provisions! So now we will actually be able to do some tax planning instead of waiting until the end of the year to know for sure Congress was going to pass our favorite provisions. Those important provisions extended permanently:
Section 179 Expensing method depreciation at $500,000 with a spending cap of $2 million.
Distributions from IRA’s direct to a Charity are tax exempt up to $100,000 for those taxpayers that are over 70.5
The enhanced child tax credit of $1,000 per qualifying child, the enhanced earned income tax credit and the enhanced American Opportunity Tax Credit.
Teachers’ $250 deduction for purchasing supplies for their K-12 Classrooms
Option to claim state and local sales tax instead of state and local income tax.
Some other items of interest:
While not made permanent the 50% bonus depreciation for the value of qualifying property will be phased out over the next 5 years.During the years 2015, 16 & 17 the amount will remain at 50%.In 2018 it will be reduced to 40% and then lowered to 30% in 2019 and it is slated to end in 2020.
Solar Investment Tax Credit is currently at 30% and this will be phased out over five years as follows: 2015-2019 30%, 2020 26%, 2021 22%, 2022 and beyond 0%.
Mortgage insurance premiums will be deductible for another 2 years.
Of course there were many more provision in the massive bill, but these are the ones that pertain to most of our clients.
Other Items of interest:
Be sure to bring all letters received from the IRS to the Nissly and Nissly office. These notices usually have a deadline to be answered.
The IRS is still closely monitoring tax returns with an Earned Income Credit. We are now required to complete Form 8867 with your return. Make sure you accurately state your situation to us when filing. There are consequences for both the tax preparer and the taxpayer if facts are not reported accurately.
The Standard Mileage rate for 2017 decreases from .54/mile to .53.5/mile.
A dependent child can earn $6,300 before the filing requirement is met (assuming there is no investment income).
We look forward to meeting with you in 2017. Our full staff is back and ready to help you with your tax issues. Be sure to call us at 641-648-4285 to set your appointment.