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Gas Stimulus: What You Need to Know

gas stimulus

The inflation is directly affecting drivers and daily commuters alike with skyrocketing gas prices. In California, the average cost for regular gas is now up to $5.82, or $6.21 for premium. Recently, the government has decided to step in on federal and state levels to alleviate costs and provide support to the public. This has led to the creation of a new gas stimulus, which would support households that own vehicles.

Gas Rebate Act of 2022

The Gas Rebate was introduced by Reps Mike Thompson (CA-05), John Larson (CT-01), and Lauren Underwood (IL-14). The bill calls for an energy rebate of $100 per month, plus another $100 for each dependent for the rest of 2022.

“The Putin Price Hike is putting a strain on our economy,” Thompson said, “and I am proud to be working with Reps.  Larson and Underwood to introduce this legislation to provide middle-class Americans with monthly payments to ease the financial burden of this global crises.”

The stipulation is that the average gas prices must exceed $4.00 per gallon; meaning, if at any time during the year the gas prices drop to an affordable price, then the stimulus check would not be dispersed that month.

What are the requirements to be eligible for the gas stimulus check?

  • Single filers earning less than $75,000 and phases out to $80,000
  • Joint filers earning less than $150,000 and phases out at $160,000

If you earn more than $80,000, you could still be eligible for a smaller amount.

Gavin Newsom’s Gas Proposal

Governor Newsom proposed $400 per vehicle in direct payments for California taxpayers. The maximum is two cars per household. The proposal calls for the use of $9 billion of the state’s budget surplus to provide the $400 rebate.

Optima will continue to follow news on the Gas Rebate Act of 2022 and Governor Newsom’s proposal, and update our readers and client accordingly.

At Optima, we help clients that are facing tax debt in their journey to a resolution. Give us a call at (800)536-0734 for a free consultation today.

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IRS Backlog to Clear Up by End of 2022

irs backlog

At the start of the COVID-19 pandemic, the IRS was forced to close its doors. Since reopening, there has been an extensive backlog of tax returns that the organization couldn’t seem to catch up on. Many American taxpayers have been waiting for refunds that are a year or more behind. In recent weeks, Commissioner Charles Rettig stated that the IRS backlog is due to clear up by the end of 2022.

What has changed for the IRS?

In addition to the complications of being a business in the midst of a pandemic, being understaffed has also immensely affected the turn-around for tax returns. This month, the IRS has accelerated their recruiting process in order to reach a goal of hiring 10,000 new employees. The hiring push is expected to cut tens of millions of tax returns in the backlog.

What does a clear backlog mean for 2023 filing season?

Commissioner Rettig said, “As of today, barring any unforeseen circumstances, if the world stays as it is today, we will be what we call ‘healthy’ by the end of the calendar year 2022, and enter the 2023 filing season with normal inventories.”

This means that next year, the IRS will likely resume usual enforcement and collection activity. With a lack of backlogged returns and a mostly healthy nation, in addition to thousands of new hires, the IRS can operate normally- if not better than the last two years.

What does IRS enforcement look like?

When you have a penalty or fall behind in paying your taxes, you should expect a notice from the IRS. The notice is the first step in communicating a liability. From there, your penalty can accrue interest daily until paid.

The IRS is also known for applying liens and levies, taking legal possession of your assets. Ideally, you want to contact them before this point to gain compliance and prevent worst-case scenarios.\

What if you owe back taxes currently?

At Optima, we help clients that are facing tax debt in their journey to a resolution. Give us a call at (800)536-0734 for a free consultation today.

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Can the IRS Garnish Your Social Security?

Many taxpayers rely on Social Security to get by after retiring. Unfortunately, taxpayers with outstanding tax liabilities may be at risk of a levy on their retirement funds. How much can the IRS take and what should you do? CEO David King and Lead Tax Attorney Phillip Hwang discuss everything you need to know about Social Security garnishments.

Need more time to file your taxes? Download the Optima® TAX APP to file a free tax extension today.

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Reporting Cryptocurrency to the IRS

cryptocurrency

The topic of crypto gains more mainstream attention as the IRS takes interest in digital assets. In early March, the IRS sent out about 10,000 letters to taxpayers with digital asset transactions, requiring them to report ownership.

What information is the IRS looking for?

The criminal investigation division of the IRS tracks the selling, holding, and purchasing of digital assets. This includes blockchain assets such as Bitcoin and other cryptocurrencies. While some exchanges voluntarily report transactions to the IRS, you should report your holdings and gains as accurately as possible.

The difficulty in getting thorough reports is that digital assets are divisible by an unlimited amount and can be held anonymously. Tracking digital wallets is extremely costly and near impossible. The 10,000 letters were sent to taxpayers that the IRS suspected had failed to report digital transactions.

Because crypto income is a large component of nearly $1 trillion in annual uncollected taxes, the IRS wants to crack down on reporting requirements. However, the definition of an exchange is still a blurred line as rules are still being written. Once representatives finalize these rules, which is expected to be very soon, systems will be refined for formal reporting. In the meantime, IRS representatives are advising taxpayers to continue to report all exchanges to avoid a liability.

What you should do if you received a letter from the IRS

As with any IRS notice, you should never ignore it. Carolyn Schneck of the national fraud counsel of the IRS Fraud Enforcement Program stated, “You are now on notice that the IRS knows about your digital assets.”

There is a phone number provided in IRS notices for you to speak with someone regarding your case. The sooner you address any issues with your taxes, the lighter the penalty will be.

Do you already have a liability? We’re here to help!

At Optima, we assist our clients with resolving their tax debt to regain financial freedom. Give us a call at (800) 536-0734 for a free consultation today.

Need more time to file? Download Optima® TAX APP to file an extension for free!

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Optima Provides Free Tax Assistance to Local Community Through Partnership with VITA Program

optima vita

Optima Tax Relief has once again teamed up with the IRS to provide assistance to low-income residents and other members of their surrounding community with free tax preparation services. Over 100 members of Optima’s staff registered with the United Way of Orange County, California to participate in the Volunteer Income Tax Assistance (VITA) program, which was launched by the IRS to provide free tax preparation services to those such as:

  • Persons with disabilities
  • Limited English-speaking taxpayers
  • Elderly taxpayers
  • Low to moderate-income taxpayers

The free tax help offered by the VITA program is particularly beneficial for those who are 60 years of age and older, as it specializes in questions about pensions and other retirement-related issues that are unique to seniors. Many of the community members who would qualify for the program are retired individuals associated with non-profit organizations that receive grants from the IRS. This year, however, we saw a wide range of ages attend for assistance. We were happy to help anyone that we could!

“It gave me the opportunity to offer assistance, to the people of our community, who may not have had the fortune to go elsewhere for tax assistance and walk away with a smile on their face for the help and guidance they received,” said Associate Director of Payments Steve Stoffel.

SVP of Accounting, Richard Hamiprodjo called volunteering for the VITA program “a rewarding experience getting involved with the community and helping those who are in need.”

By partnering with the IRS, the VITA program is able to offer reliable, trustworthy tax filing services for free. Optima’s volunteers for the VITA program helped with tax preparation, greeting guests, and some gathered the appropriate tax documents from taxpayers.

Associate VP of Human Resources Kimberly Carson was also a volunteer this year. She shared her thoughts and experience, saying, “It was great to have the opportunity to give back to our community and help people with getting their taxes completed. Not everyone has extra money to get their taxes done by professionals to ensure it is done correctly, so to be able to provide this service to the community is not only needed but fulfilling. Thank you for the opportunity!”

Our volunteers exclaimed how exciting and fulfilling it was to be part of this event. The culture within Optima is very community oriented, and it shows through the tenacity Optimians have for helping others and connecting. Martha Casillas, a Payments Coordinator at Optima said, “My participation as a VITA volunteer gave me a boost of self-confidence, and self-esteem within the company. Being new to the OTR family, it also allowed me to connect with other Optimians, as well as see some of the involvements OTR has within the surrounding communities.”

Case Manager Kateri Drewes added, “For me, being a VITA volunteer means taking the time to give back to my local community. I cherish the opportunity to help folks get the care and quality service they deserve!”

Optima looks forward to working with United Way to host our very own VITA site at our California office next year. Our goal is to serve more taxpayers with a bigger outreach in the Santa Ana community.

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Optima Newsletter – March: Can you use cryptocurrency to pay taxes?

Can You Use Cryptocurrency to Pay Taxes?
While cryptocurrency has left many people skeptical of its value, the American government is validating its use with some surprising changes in taxes. In the last few years, states have been racing to make cryptocurrency mainstream, in hopes that one day Americans can use it to pay their taxes.

Can the IRS Garnish Your Social Security?
Many taxpayers rely on Social Security to get by after retiring. Unfortunately, taxpayers with outstanding tax liabilities may be at risk of a levy on their retirement funds. How much can the IRS take and what should you do? CEO David King and Lead Tax Attorney Phillip Hwang discuss everything you need to know about Social Security garnishments.

2022 IRS Interest Rates Increase
Beginning April 1, 2022, the IRS will raise its interest rates for the quarter. These changes apply to quarterly taxpayers, such as corporations and self-employed filers.

Reporting Cryptocurrency to the IRS
The topic of crypto gains more mainstream attention as the IRS takes interest in digital assets. In early March, the IRS sent out about 10,000 letters to taxpayers with digital asset transactions, requiring them to report ownership.

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Tax Implications of Cryptocurrency

Cryptocurrency is becoming more common as a form of payment for products and services. As a small business owner, do you understand the tax implications? How does the IRS view crypto? Lead Tax Attorney Philip Hwang and CEO David King discuss the gray areas of cryptocurrency and tax obligations.

Need more time to file your taxes? Download the Optima® TAX APP to file a free tax extension today.

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Taking a CARES Act Retirement Withdrawal could Lead to a Tax Liability

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

With taxpayers still dealing with the financial fallout from the COVID-19 outbreak, many are falling on hard times and needing to get cash quickly. The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, has a provision that can aid Americans that are financially strapped.

The CARES Act makes it easier for taxpayers to withdraw funds from their retirement accounts like 401(k)s and traditional Individual Retirement Accounts (IRAs). The temporary changes made to retirement accounts allows taxpayers to make early withdrawals without worrying about tax penalties as well as relaxed rules on loans you take out from your retirement.

What is my retirement contribution limit?

In most cases, taxpayers are able to deduct up to $6,000 for a traditional IRA. If you are 50 years or older, you are able to deduct $7,000. If you have a different retirement account, the amount will differ based on your age and type of plan you have chosen. Your contribution amount may also be limited based on the amount of income you earn.

Here is everything you need to know about the CARES Act.

Eligibility on early withdrawals from retirement accounts with the CARES Act

Some tax-advantaged retirement account holders may not qualify for some of the CARES Act’s relaxed early distribution and loan provisions. Legislation restricts relief to certain participants with a valid COVID-19 related reason in order to receive early access to funds. This includes:

·         If you have been diagnosed with COVID-19.

·         If your spouse or dependent is diagnosed with COVID-19.

·         Experiencing a layoff, furlough, reduction in hours, or inability to work due to COVID-19.

·         Lack of childcare because of COVID-19.

·         Closing or reducing hours of a business owned or operated by an individual or spouse due to COVID-19.

Additional rules for early distribution

Eligible participants in tax-advantaged retirement plans typically have 401(k)s, 403(b)s,457s, and Traditional IRAs. This includes taking an early distribution of up to $100,000 during the calendar year 2020 without having to pay the 10% penalty tax that is typically imposed on most retirement account withdrawals before an account owner is 59 ½.

The act also suspends the mandatory 20% tax withholding requirement that is typically applied to early distributions from a 401(k) or other workplace retirement plan. The CARES Act allows taxpayers up to three years to redeposit the withdrawn money back into their retirement account or pay it all back in 2020 if your income is much lower this year.

Can contributing to an IRA change my tax bracket?

Contributing to your retirement plan can change the tax bracket you are typically in, if your income is near a bracket level. It is important to know that contributing to your plan does not have as big of an effect on your income bracket as you may think because each level of your income is taxed at the income tax rate for that bracket.

If you need tax help, contact us for a free consultation.

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Tax Fraud: How Do You Protect Yourself From Something You Don’t Know Exists?

You’ve always filed your income tax returns electronically in the past. Your returns were less vulnerable to calculation errors and you received your tax refund much quicker than you did filing paper returns. But this year, when you attempted to e-file your federal income tax return, the IRS rejected your submission, issuing a statement that a previously filed return using your Social Security number was already on file. How could such a thing happen?

Welcome to the world of identity theft, tax fraud style. Scammers filing falsified returns reap millions for their fraudulent efforts, spending the money from their ill-gotten gains long before the IRS – or their victims – become privy to the fact that a crime has even been committed. Many victims only learn that they’ve been targeted after receiving an audit notice from the IRS. In the meantime, fines, fees, penalties and interest from tax return fraud have accumulated, – and it’s largely up to victims to straighten out the mess.

How tax fraud victims are targeted

Phone and Email Scams

The most obvious way to protect yourself against scammers is to never give out your personal information to someone you don’t know, especially over the phone. If someone from the “IRS” is attempting to contact you over the phone or by email and asks for your social security or card information, don’t give it to them. The IRS almost never contacts via phone, instead preferring to send notices via mail.  Even if you do receive a call from the IRS, they won’t ask for your social security number – they already have that information.  If you feel uncomfortable about the validity of a call, hang up and call the IRS yourself – that way you know if what they’re telling you is true.

Accountant fraud

Be wary of scammers who will pose as a tax preparer and then rip off customers through refund fraud or identity theft. These phony accountants will tell you that they can get you a large tax refund and typically prey on low-income and non-English speaking taxpayers. 

Even if you go to a legitimate tax preparer, your information can still be exposed if there is a data breach. To avoid this happening – and being left vulnerable – ask your tax preparer what more you can do to protect your information in case of a breach.

Identity theft

Make sure to protect your social security number at all costs. Identity thieves will attempt to steal this information in order to steal not only your identity but your tax refund too. As long as you notify the IRS that your information has been compromised and your refund has been stolen, the IRS will work with you to provide your refund. However, it will take extensive time and paperwork to prove that your information was stolen.

Protecting Yourself from Tax Return Fraud

The best way to protect yourself from tax return fraud is by limiting access to your Social Security number. A bit of vigilance will protect you from many fraudulent attempts to obtain your Social Security number. Don’t carry your Social Security card unless you need to provide a copy for a job application or a similar purpose. Protect sensitive information on your computer by maintaining up-to-date antivirus and antispyware software and firewalls.

Think twice before responding to unsolicited “pre-approved credit” offers received online or in the mail. Never supply sensitive personal or financial information unless you have initiated the transaction or conversation – or unless you are 110 percent sure that the person on the phone or the website you’re dealing with is the real deal. If you receive questionable communication requesting (or demanding) sensitive financial or personal information from a company you’ve done business with, contact the company directly to verify that it is indeed them requesting the information.

If you receive unsolicited email, social media or text messages claiming to be from the IRS, there is a 100 percent probability that they’re fake. The IRS only initiates communications with taxpayers by regular mail or by telephone – period. Do not respond directly to such communications in any way. Instead, report suspicious IRS-related communications to phishing@irs.gov or call 1-800-366-4484.

If You’ve Been Victimized by Tax Return Fraudtax_fraud

The first indication that you’ve been victimized by tax return fraud often comes in the form of an inquiry from the IRS about discrepancies in your return. You may be questioned about returns issued in your name which you never received or wages earned for companies you’ve never even heard of. You may also be assessed additional taxes or tax return offsets for years that you didn’t file a tax return at all. Another telltale sign is a notice from the IRS that multiple returns have been filed during a single year using your Social Security number.

Once you become aware that you’ve been targeted by tax return fraud, you must act quickly to limit the damage. File a complaint with the Federal Trade Commission and a police report with your local law enforcement agency. Contact one or more of the three major credit reporting bureaus (TransUnion, Equifax or Experian) to have a fraud alert placed on your credit report. Close any credit card or other accounts that have been compromised or opened without your knowledge. Also, check your earnings report annually with the Social Security Administration to endure that there is no fraudulent activity.

If your federal tax refund has been stolen or you have other unresolved tax-fraud related issues, contact the IRS Identity Protection Specialized Unit at (800)908-4490. You can protect yourself from further tax return fraud attempts by filing “Form 14039 – Identity Theft Affidavit” with the IRS. It’s likely that you’ll be required to file a paper return for the present tax year and it may take months to resolve your case, as well as restore any refunds to which you’re rightfully entitled.

However, the IRS will issue you a unique IP PIN that will replace your Social Security number and which will allow you to e-file future federal income tax returns safely. Do not use this IP PIN for any other reason – including state income tax returns.

2022 IRS Interest Rates Increase

irs interest rates

Beginning April 1, 2022, the IRS will raise its interest rates for the quarter. These changes apply to quarterly taxpayers, such as corporations and self-employed filers.

The IRS announced the new rates as follows:

  • 4% for overpayments (3% in the case of a corporation)
  • 1.5% for the portion of a corporate overpayment exceeding $10,000
  • 4% for underpayments; and
  • 6% for large corporate underpayments

How higher interest rates affect your liability

Liabilities accrue interest over time, so it’s likely that an outstanding balance will be affected if you are not in compliance with the IRS. The interest rate would be the short-term rate plus 3% on your liability.

For assistance with your tax liability, give us a call at (800) 536-0734 for a free consultation.

Download the Optima® TAX APP to file an extension for free and get more time to file your taxes this season.

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