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Security tips for taxpayers. The IRS suggests that you always: use security software with firewall and antivirus protections, make sure the security software is turned on and automatically updates, and encrypt sensitive files such as tax records that you store on your computer. Use strong passwords and avoid phishing emails. These are among the pointers offered by the IRS and its “Security Summit” partners partaking in the second year of...
Read moreIRS puts personal info at risk. Employees in the IRS Small Business/Self-Employed Division often don’t follow the agency’s email policies to protect personally identifiable information (PII), the Treasury Inspector General for Tax Administration (TIGTA) found in a recent audit. PII includes sensitive personal and tax return information. Auditors reviewed 80 IRS employees’ emails sent over 4 weeks. They determined 39 employees sent unencrypted emails containing taxpayers’ PPI. These employees “risked...
Read moreExpecting tax cuts next year? President-elect Trump declared one of his top priorities to be passage of a “major tax bill lowering taxes in this country.” Affected taxpayers who believe that promise will kick in for 2017 should revisit their 2016 year-end tax plans as a way to maximize possible windfall savings next year. Example: Defer income (such as bonuses, or if you’re a cash-basis taxpayer, payments for services) to...
Read moreDistributor’s TV packages don’t qualify. In two similar Technical Advice Memorandums, the IRS determined that a television subscription package sold by a multichannel video programming distributor isn’t a “qualified film” for purposes of the domestic production activities deduction (DPAD). In addition, gross receipts derived by the distributor from its packages aren’t domestic production gross receipts. With the DPAD, taxpayers can claim a deduction to offset income from domestic manufacturing and...
Read moreTaxpayers denied child tax breaks. For part of a year, a married couple lived with a child from the wife’s previous marriage. The couple claimed a dependency exemption deduction and a child tax credit on their joint tax return. The child’s father apparently also claimed the child as a dependent on his return. The IRS disallowed the couple’s tax breaks. The U.S. Tax Court agreed. The taxpayers couldn’t prove they...
Read moreThe last month or so of the year offers accrual-basis taxpayers an opportunity to make some timely moves that might enable them to save money on their 2016 tax bill. Record and recognize The key to saving tax as an accrual-basis taxpayer is to properly record and recognize expenses that were incurred this year but won’t be paid until 2017. This will enable you to deduct those expenses on your...
Read moreAccrual-basis taxpayer? One way to save tax is to properly record and recognize expenses that were incurred this year but won’t be paid until 2017 so you can deduct them on your 2016 tax return. Common examples include commissions, salaries, wages, payroll taxes, advertising, interest, utilities, insurance and property taxes. Also review prepaid expense accounts and write off any items that have been used up before the end of the...
Read moreInventory is a prime target for fraud schemes, second only to cash. Retailers, manufacturers and contractors are at risk for theft and misstatement due to inventory scams. If your year-end inventory counts aren’t adding up, don’t just write off the discrepancy as a cost of doing business; investigate why. Sudden changes in inventory ratios, such as the days in inventory and returns (or shipping costs) as a percentage of sales,...
Read moreExtra time to supply Affordable Care Act (ACA) statements. The IRS has extended the ACA information reporting due date to March 2, 2017, for furnishing individuals with 2016 Form 1095-B and Form 1095-C. The extension is automatic, but coverage providers are encouraged to supply forms and file information returns as early as possible. Good-faith penalty transition relief is also extended for 2016 information reporting to coverage providers who make reasonable...
Read moreIs your inventory being stolen by dishonest employees or customers? Inventory is a prime target for fraud schemes, second only to cash. And it doesn’t always involve the physical theft of items. Here are some early warning signs that your inventory has been targeted. Know your risk profile Some companies are more at risk for inventory fraud than others. Obviously, service companies with minimal inventory on hand bear little risk...
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