Watch Out ! Latest IRS Phone Scam Is Sweeping the Nation

“The increasing number of people receiving these unsolicited calls from individuals who fraudulently claim to represent the IRS is alarming.” –  J. Russell George, Treasury inspector general for tax administration.

A new IRS phone scam is sweeping the country, and has so far stolen over $1 million from thousands of Americans.

Telephone Scams: A Common Theme

In February, the IRS released their “Dirty Dozen” tax scams for 2014 list, with phone scams at the forefront. These types of scams are common, and can creep up at any time of the year. But the dirty dozen definitely forecasted what’s now known as possibly the largest scams the IRS has ever seen.

“Taxpayers should be on the lookout for tax scams using the IRS name,” said IRS Commissioner John Koskinen. “These schemes jump every year at tax time. Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”

Telephone tax scams usually follow the same pattern. The phone rings, and the victim answers to a supposed IRS agent or representative. They spout fake names and IRS badge numbers, then begin making demands riddled with threats. If you don’t pay up, or give them your bank account information or SSN, you’ll be arrested, or lose your business or driver’s license. When calling immigrants, as this most recent scam began, criminals often threaten their victims with deportation.

With a one-two punch they’ll follow up the initial call with another by someone pretending to be with the police or DMV, further supporting their claim.

Latest IRS Phone Scam : How is it different?

The IRS releases warnings; these scams aren’t new. How come people still fall for them? Better yet, how has this scam been so successful when it’s common knowledge to not give any personal information over the phone to anyone? The IRS itself says that they’ll never ask for credit card, bank account, or any other private information by phone. We, at Optima Tax Relief, have actually received several calls from upset clients after being contacted and threatened by scammers.

This scam has been so successful for a number of reasons, but mainly because it’s so believable. Scammers often:

  • Use official-looking caller IDs and toll-free numbers,
  • Use common names and surnames,
  • Can recite the last four digits of your Social Security Number,  and may know where you work,
  • May claim to know where you live, the color of your house, and what kind of car you drive,
  • Send follow-up official looking emails and notices, using the IRS logos and language,
  • Have accomplices, also with official-looking caller IDs from the government, further threatening you.

They’ll accuse the victim of tax dodging, and warn of jail time, property seizure, deportation and so on until they pay up. The preferred pay method is by prepaid debit card, as they aren’t connected to a traceable bank account.

And it’s working, says TIGTA officials. Each and every day, hundreds of more contacts are being made, and more money is being stolen.

If the IRS calls, don’t answer

Even legitimate contacts from the government can be daunting for taxpayers, and this scam is banking on that. Know that the IRS will never call you with threats and demands, or request bank or debit information over the phone. This is the most important safeguard you have against this scam, knowing that the IRS won’t contact you by phone. Real agents will contact you by mail first, especially if you actually have unpaid tax debt and are at risk of a federal tax lien.

If you do owe taxes, or believe you might,  and have been contacted by a phony IRS agent, call the IRS at  800-829-1040. A real agent can determine whether or not you really have a payment issue.

If you’ve been targeted by this or any scam, report the incident to the TIGTA at 800-366-4484. Also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Be sure to specify”IRS Telephone Scam” in your complaint.

Photo Courtesy – Wikimedia

IRS to Employers: Hire Veterans by Dec. 31 and Save on Taxes

If you plan to hire soon, consider hiring veterans. If you do, you may be able to claim the federal Work Opportunity Tax Credit worth thousands of dollars.

You must act soon. The WOTC is available to employers that hire qualified veterans before the new year.

Here are six key facts about the WOTC:

  1. Hiring Deadline. Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012. The American Taxpayer Relief Act of 2012 extended it for one year.
  2. Maximum Credit. The tax credit limit is $9,600 per worker for employers that operate a taxable business. The limit for tax-exempt employers is $6,240 per worker.
  3. Credit Factors. The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.
  4. Disabled Veterans. Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.
  5. State Certification. Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.
  6. E-file. Some states accept Form 8850 electronically.

7 Most Outrageous Tax Deductions

Think only celebrities and big corporations get away with outrageous tax deductions? We’ve put together a few that you could take advantage of next year, and threw in a few brazen ones for fun.

1. Put your pup to work!: Employing man’s best friend to protect your company grounds can offer some leeway with the IRS. Since the animal is considered part of the “protection” system for your place of business, some of pooch’s care costs may be written off come tax time.

2. Enlarging your deduction, taken to the next level: In 1988 a stripper wrote off her breast enlargement surgery as a business expense. At first the tax courts denied her the deduction. Immediately she appealed the decision and sure enough, her implants were considered a business expense allowing her the deduction.

3. Getting a script for cash: Does your doctor feel you need to drastically improve your health in order to stay alive? Well the IRS wants you alive and kicking in order to keep up with your tax payments. If your doctor signs off on the purchase of remedies in order to drop some weight, you may be able to write the concoctions off as an expense on next year’s tax return.

4. Stick ’em up! No one escapes the IRS when there is cash involved. Even criminals in the pen must pay tax on their bounty; ironically, they may be able to write off lawyer expenses as a tax deduction. Who are the real criminals here?

5. Smoke and mirrors: Everyone seems to be trying to live a healthier lifestyle lately. Many smokers have decided to quit, if not for health reasons then for the steep increase on cigarette taxes which have made it a doubly bad habit. Smoking cessation devices, patches, or other quit smoking aids can indeed be written off come tax time. Take advantage of this and you may see some payback for cigarette taxes you paid last year.

6. Music to your ears: Signing junior up for clarinet lessons may not be such a bad idea after all. If your child has an over-bite it is scientifically proven that playing certain wind instruments can correct the problem. Junior practicing clarinet may keep you up at night, but writing off that lesson can help you sleep like a baby during tax time.

7. Moving on up: You made it. You finally got that big promotion and are moving to the city to rake in the dough and live the high life. As many people already know, you can write off your moving expenses when relocating for a job. If you have pets, moving can become a bit more costly especially if there is a jet plane ride in pup’s future. Since this is considered a moving expense, you pet’s airfare is a write off as well.

At Optima Tax Relief we can help you take advantage of some of these legal, but outrageous tax deductions. Contact us for more information on how to keep more cash in your pocket and out of the IRS’s hands.

Photo: tolworthy

IRS and Gross Overspending, Not Slacking

It’s been a rough few months for the IRS, between mandatory furloughs and the latest news on the IRS and gross overspending… They can’t catch a break.

First, the IRS came under fire for allegedly targeting conservative groups for extra scrutiny when those groups filed for tax-exempt status. Now, the IRS is under the microscope for gross overspending on conferences. According to a congressional briefing by the Treasury Inspector General for Tax Administration (TIGTA), the IRS spent over $50 million at 225 conferences between 2010 and 2012.

What exactly did the IRS get for that $50 million, you might ask? That’s a good question. $17,000 went to a speaker who conducted a workshop on “Leadership through Art” in which the speaker drew pictures of Bono and Einstein in order to encourage IRS employees to adopt an outside-the-box approach to problem solving. Another speaker was paid $27,500 for two speeches about how “random combinations of ideas can lead to radical innovations.” At a 2010 conference 132 IRS employees stayed in hotel presidential suites—rooms that can run between $1500 and $3500 a night.

In 2010, the agency held a conference in Philadelphia that cost $2.9 million, one in San Diego that cost $1.2 million and another in Atlanta that also cost $1.2 million.

All of these conferences would violate new rules imposed by the White House budget office in 2012 that cap expenses for a single conference at $500,000. In 2010 alone, the IRS had 13 conferences that cost more than that. – Concord Monitor

Other expensive included producing motivational videos such as a Star Trek parody and a video of government employees learning the Cupid Shuffle.

Though recent events will put the IRS under additional scrutiny, the IRS will continue to fulfill its most important job: enforcing United State tax laws and collecting federal taxes. Though the IRS’s overspending is good fodder for the late night comics, if you owe the IRS money the bad publicity doesn’t mean that you can take your tax debt any less seriously.

Actually, facts show that the IRS is getting more efficient and more effective at processing collections. In 2012 the IRS audited 1.5 million individual returns—about 1% of all individual returns filed. Of that 1% audited, 75% of returns received a letter stating that there was an error on their return. Overall, the IRS spent about 48 cents for every $100 they collected. Those are pretty impressive numbers—impressive enough to give you pause if you’re the person on the other end of the collection letter.

Despite the bad press, the IRS isn’t getting lazier or more forgiving. Reconciling tax debt can be intimidating, but our tax-relief experts can help. Contact us today for a free consultation.

IRS Taxpayer Issues Are Growing In Number and Complexity

Looking back 78 years ago, IRS Form 1040 instructions were a mere two pages. Today, taxpayers are forced to stumble through 214 pages of instructions – not to mention the more than 1,120 additional tax forms & schedules one might need to worry about alongside their 1040. Recently published tax codes and supporting regulations total over 14.4 million words. In total, there have been approximately 4,680 changes to the Tax Code since 2001, making the IRS tax codes perhaps the most complicated regulations to date.

These complexities have caused over 90% of taxpayers to turn to tax software and professional tax preparers to complete their returns each and every year – and even still, taxpayers made a whopping 10.6 million math errors on their returns in 2010!

In 2007, USA Today asked five tax professionals to calculate a family’s tax bill – and they all came up with a different answer. After reviewing each other’s work, they still couldn’t agree on who was right. The newspaper reported, “As the Tax Code turns ever more unwieldy, deciphering it has become more art than science, tax experts say.” Tax preparation software yielded the same unfavorable results. Additionally, in 2009 PC World ran a scenario of a hypothetical taxpaying family through five of the most popular online self-guided tax preparation sites. Each came up with a different result with a variance of almost $2,000 from lowest to highest tax owed.

The continued increase in tax regulation complexity has contributed to an aggressive expansion in taxpayer delinquencies and IRS collection efforts. According to an IRS report, the total balances owed to the IRS in unpaid assessed taxes, penalties and interest were $124.3 billion in 2012 – an increase of $8 billion over 2011 with the numbers continuing to climb.

The IRS is considered by many to be the largest, most aggressive collection agency in the world. Last year alone, they served taxpayers with over 2.9 billion tax levies, 707.7 million tax liens, 773 thousand property seizures, and are currently investigating over 3.9 million collection cases. Beyond the fiscal numbers, in 2012 alone the IRS initiated 2,291 tax crime investigations, which could result in taxpayer incarceration.

“I can confirm that our tax attorneys and CPA’s are seeing both an increase in the number and complexity of tax resolution cases they are working on,” says Jesse Stockwell, Managing Partner of Optima Tax Relief. “With so much confusion surrounding the IRS tax codes, hiring a professional is not only recommended, but essential. Without trusted advice, you could potentially be paying thousands more than what you truly owe – and that’s a lot more painful than the fees associated with professional services.”

The founders of Optima Tax Relief recognized the need for a trusted and modern approach to an antiquated tax resolution industry. The Company has expanded at a pace beyond even the most aggressive of estimates. Since the beginning of this year, Optima increased its office space by more than 10,000 square feet and added 25 new tax professionals, including both Tax Attorneys and Licensed Enrolled Agents to help taxpayers in dealing with the IRS.

Combining their unique two-phase approach to tax resolution, unparalleled technologies, and the most highly skilled professionals in the industry, Optima Tax Relief has positioned itself to be one of the fastest growing and most successful tax resolution firms in America and looks to even greater growth in the second half of the year. Since inception, the firm has assisted thousands of clients, resolved over 80% of all wage garnishment issues, and averaged a 95% reduction on all outstanding tax debts presented for settlement.

How to Find a Good Tax Attorney

When looking for tax relief, how to find a good tax attorney is critical.

Tax law is complicated and highly technical. In the legal world, the field of tax law is considered one of the more demanding specialties. Tax law covers a wide range of situations and the rules and laws are continually changing. Not only does a tax lawyer need to have superlative legal skills to succeed, they also need certain personality traits.

What makes a good tax lawyer? Consider these academic and professional guidelines for tax attorneys when looking for tax relief.

  • A good tax attorney has specific experience in the field of taxation. For example, are your tax issues related to a real estate transaction? Or are you running a business and need assistance with a sales tax challenge? Or with filing your income tax? A good tax lawyer will concentrate within certain fields and will be familiar with the laws and the protocols needed to address those particular areas of tax relief.
  • Being associated with an office that is exclusively focused on tax related matters is another important quality for a tax attorney.
  • Having an LLM (Masters Legal Degree in Law) in taxation is a sign that your attorney is serious about his profession and is academically qualified to work within the field of tax law.
  • A good tax lawyer has first hand experience working with the IRS.
  • Successful tax attorneys are continually refreshing their knowledge and keeping up with the continually changing nature of tax law.
  • Tax lawyers should be in good standing with the Better Business Bureau and their local state bar.
  • Good tax attorneys keep their clients informed and up-to-date during the tax relief process.

Tax attorneys also need to have certain personal skills and abilities to succeed in the area of tax relief.

  • A good tax lawyer has high level oral communication skills. They are the intermediary between you and the tax authorities. They need to be able to explain complicated issues and represent your case in a clear manner.
  • Above average written communication skills are another important qualification of a good tax attorney. Tax lawyers write complaints, documents and lawsuit responses.
  • Critical thinking skills are necessary when your attorney is working on a tax relief case. A good tax lawyer can take a look at a case, pick up on any weaknesses, and choose which course of action to take based on the specifics of the case.
  • Having an analytical and organized personality is highly important for a tax attorney. Tax relief cases are usually very complicated and involve numbers and specific, detailed information. A good tax attorney will be able to stay on top of all of the elements of the case.
  • Good interpersonal skills are critical for a tax attorney to work effectively with a client in a tax relief case. They need to be able to communicate effectively with both the client and with the tax authorities.
  • Having a committed and persevering personality are necessary qualities for the person who will be representing your tax relief case.

Taxes are complicated and the laws are constantly changing. Your financial future is often at stake in a legal situation involving taxes. Getting appropriate representation for tax relief is very important and knowing what makes a good tax lawyer is a very important first step in getting a resolution.

Need some tax relief? Solutions start here. Contact us and let’s get started.

Get Credit for Making Your Home Energy-Efficient

Get Credit for Making Your Home Energy-Efficient… Source: IRS Newswire

If you made your home more energy efficient last year, you may qualify for a tax credit on your 2012 federal income tax return. Here is some basic information about home energy credits that you should know.

Non-Business Energy Property Credit

  • You may claim a credit of 10 percent of the cost of certain energy saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs.
  • In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. Each type of property has a different dollar limit. Examples include the cost of qualified water heaters and qualified heating and air conditioning systems.
  • This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
  • Your main home must be located in the U.S. to qualify for the credit.
  • Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website or with the product’s packaging.
  • The credit was to expire at the end of 2011. A recent law extended it for two years through the end of 2013.

Residential Energy Efficient Property Credit

  • This tax credit is 30 percent of the cost of alternative energy equipment that you installed on or in your home.
  • Qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines.
  • There is no limit on the amount of credit available for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
  • You must install qualifying equipment in connection with your home located in the United States. It does not have to be your main home.
  • The credit is available through 2016.

The post Get Credit for Making Your Home Energy-Efficient appeared first on SuperMoney!.

Top Six Tax Tips for the Self-Employed

Top Six Tax Tips for the Self-Employed… Source: IRS Newswire

Top Six Tax Tips for the Self-Employed When you are self-employed, it typically means you work for yourself, as an independent contractor, or own your own business. Here are six key points the IRS would like you to know about self-employment and self-employment taxes:

1. Self-employment income can include pay that you receive for part-time work you do out of your home. This could include income you earn in addition to your regular job.

2. Self-employed individuals file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with their Form 1040.

3. If you are self-employed, you generally have to pay self-employment tax as well as income tax. Self-employment tax includes Social Security and Medicare taxes. You figure this tax using Schedule SE, Self-Employment Tax.

4. If you are self-employed you may have to make estimated tax payments. People typically make estimated tax payments to pay taxes on income that is not subject to withholding. If you do not make estimated tax payments, you may have to pay a penalty when you file your income tax return. The underpayment of estimated tax penalty applies if you do not pay enough taxes during the year.

5. When you file your tax return, you can deduct some business expenses for the costs you paid to run your trade or business. You can deduct most business expenses in full, but some costs must be ’capitalized.’ This means you can deduct a portion of the expense each year over a period of years.

6. You may deduct only the costs that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.

The post Top Six Tax Tips for the Self-Employed appeared first on SuperMoney!.

Nine Tips on Deducting Charitable Contributions

Charitable Contributions….Source: IRS Newswire

Giving to charity may make you feel good and help you lower your tax bill. The IRS offers these nine tips to help ensure your contributions pay off on your tax return.

1. If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization or a political candidate

2. You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all non-cash contributions for the year is more than $500, you must also file Form 8283, Non-cash  Charitable Contributions, with your tax return.

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event or other goods and services.

4. Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.

5. Fair market value is generally the price at which someone can sell the property.

6. You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.

7. To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.

8. You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.

9. If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.

For more information on charitable contributions, see Publication 526, Charitable Contributions. For information about non-cash contributions, see Publication 561, Determining the Value of Donated Property. Forms and publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:

Two Education Credits Help Pay Higher Education Costs

Source: IRS Newswire

The American Opportunity Credit and the Lifetime Learning Credit may help you pay for the costs of higher education. If you pay tuition and fees for yourself, your spouse or your dependent you may qualify for these credits.

Here are some facts the IRS wants you to know about these important credits:

The American Opportunity Credit

  • The AOTC is worth up to $2,500 per eligible student.
  • The credit is available for the first four years of higher education at an eligible college, university or vocational school.
  • The credit lowers your taxes and is partially refundable. This means you could get a refund of up to $1,000 even if you owe zero tax.
  • An eligible student must be working toward a degree, certificate or other recognized credential.
  • The student must be enrolled at least half time for at least one academic period that began during the year.
  • You generally can claim the costs of tuition and required fees, books and other required course materials. Other expenses, such as room and board, do not qualify.

The Lifetime Learning Credit

  • The credit is worth up to $2,000 per tax return per year. The yearly limit applies no matter how many students are eligible for the credit.
  • The credit is nonrefundable. This means the amount you can claim is limited to the amount of tax you owe.
  • The credit is available for all years of higher education. This includes courses taken to acquire or improve job skills.
  • You can claim the costs of tuition and fees required for enrollment or attendance. This includes amounts you were required to pay to the institution for course-related books, supplies and equipment.

You cannot claim either of these credits if someone else claims you as a dependent on his or her tax return. Both credits are subject to income limitations and may be reduced or eliminated depending on your income.

Keep in mind that you can’t claim both credits for the same student in the same year. You may not claim both credits for the same expense. Parents or students claiming either credit should receive a Form 1098-T, Tuition Statement, from their educational institution. You should make sure it is complete and correct.

Find out more details about these credits and other college tax benefits in Publication 970, Tax Benefits for Education. You can get the booklet at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:

Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

The post Two Education Credits Help Pay Higher Education Costs appeared first on SuperMoney!.