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5 posts from November 2016

11/30/2016

Trump's Take on Taxes

President-Elect Donald Trump’s tax plan promises to take a hatchet to the current tax code affecting individuals and businesses alike.  Experts and analysts have varied views about what his administration will do and how soon, but they agree that the Republican control of both the House and Senate will enable faster action and more radical moves.

Trump speakingComprehensive tax plans which would reduce tax rates for individuals and businesses while eliminating many deductions and tax breaks have been in the works, but politics prevented their introduction.  Because most of this legislation has already been written, pulling together the plans into a Trump-approved tax bill for debate could happen at lightning speed.

Considering ordinary income taxes only, the current tax code charges individuals complicated graduated tax rates from 10% to 39.6%.  Trump’s proposal includes only three individual income tax brackets: 12%, 25% and 33%.  Itemized deductions would be capped or no longer allowed and personal exemptions would be eliminated.

Under the Trump tax plan business taxes would be slashed and corporations would pay 15% instead of 35% on earnings.  A more simplified tax structure would eliminate most business deductions including interest on debt.  Depreciation of assets would also be calculated differently through a more limited and simplified tax code.

Trump plans to eliminate estate taxes which currently charge 40% tax on assets above $5.45 million.  His plan would still allow an income tax on the appreciation inherent in the assets for larger estates that would be paid when the assets are sold by the beneficiary.

America’s new President is set to be sworn in January 20th.  In the footsteps of two former Presidents, John F. Kennedy and Herbert Hoover, as billionaire real estate mogul Trump has opted to forego the annual Presidential salary of $400,000.  He is quickly putting together a team of lawmakers who will fulfill his campaign promises to slash taxes and repeal major provisions of the Affordable Care Act (see more below in “2017 Tax Rates (If Nothing Changes)”) among his first days in office.

This is a good time to review and understand your options. Contact us now to confirm your year-end tax planning session and we’ll help you determine the best tax strategy during changing times.

11/29/2016

Military Service and Taxes

Military-veteran 2Here's a quick update on tax issues affecting active duty military and veterans:

The IRS has updated its tax guide with information on the special tax benefits available to active duty military personnel and disabled veterans. Click here for more.

11/28/2016

2017 Tax ID Theft Guards in Place

Taxpayer id theftLaw enforcement officials designate identity theft as the fastest growing crime in the world.  New tax-related fraud prevention steps are set to kick in for the 2017 tax season. 

New or expanded tax-related identity theft features protecting taxpayers in 2017 include:

*37 new data elements that authenticate electronically transmitted individual tax returns

*32 new data elements that authenticate electronically transmitted business tax returns

*designation of what’s called “ultimate bank accounts” to ensure the refunds are deposited into a taxpayer’s real bank account

*the 16-digit Form W-2 Verification Code that will now be added to 50 millionW-2 forms to validate the information

*additional and more elaborate password requirements for software used by individuals and tax preparation experts that will both protect personal information and prevent multiple filings under the same Social Security number

More information resources will also be shared between federal, state and local tax authorities regarding identity-theft tax fraud. This is expected to not only help with early fraud detection, but also uncover trends that can more quickly uncover more complicated schemes that may affect a large number of taxpayers all at once.

Click here to find out more about the tax-related identity theft fraud prevention campaign called “Taxes. Security. Together.”

11/15/2016

Tax-Related ID Theft Drops

The IRS and its Security Summit partners say collective efforts to stop tax-related identity theft appear to be working.  New statistics show that the number of new people filing affidavits with the IRS claiming they have been victims of identity theft regarding their federal tax returns has dropped more than 50 percent compared to 2015.

Identity thieves typically file fake tax returns seeking refunds.  A taxpayer doesn’t know their personal information has been stolen until they file a tax return and are alerted that a refund was already issued.  So far in 2016, nearly 238,000 claims of tax-related identity theft have been filed compared to more than 512,000 in the same time period of 2015.  Overall, more than 74.5 million individual tax returns were filed in the 2015 tax year. 2016 totals are not yet available.

Identity theftThe IRS credits new systems checks with catching fraudulent returns before they are processed.  Through September of this year, the IRS stopped 787,000 confirmed identity theft returns, preventing more than $4 billion in losses from fake refunds.

More banks are also joining the tax fraud fight by using internet-related signals to stop suspect refunds from being auto-deposited, especially refunds with an unusually high dollar amounts.  Shared information between state and regional tax offices has improved fraud filters and alerts.  New hidden data elements on tax returns filed by professional preparers has also helped detect suspicious returns.

11/01/2016

New IRS Installment Payment Fees in 2017

The IRS is proposing a substantial increase in the user fee it charges taxpayers who seek to pay the taxes they owe through the agency’s installment agreement program.  But, as a means of balance, if the taxpayer chooses more online and automatic deduction options, the fee will be greatly reduced compared to 2016 rates.

Currently, it costs $120 to apply for the payment agreement which sets the taxpayer up to pay off the tax amount owed month-by-month.  The application fee can be lowered to $52 for a taxpayer who agrees to have the payment automatically deducted as direct debits (auto-debits) from their bank account.

Pvc-incremento-estados-unidos-gUnder proposed changes, the new application fee would be $225 or may be lowered to $107 if the taxpayer agrees to auto-debits.  Taxpayers who apply online, but pay by check or through the online EFTPS system would pay a $149 fee.  The fee would lower considerably to $31 if the taxpayer chooses an all-digital option by applying online and agreeing to auto-debits.

Taxpayers have the option of contacting the IRS online, in person, by phone or by mail to set up an installment agreement.  As the tax collection agency continues to update software and systems, it is finding new ways to utilize the internet to speed up the time it takes to file and process a return, collect tax payments and administer tax refunds.

Click here to find out more.

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