Archive for the ‘Personal Tax’ Category

Is Your Business A Family Affair?

Wednesday, November 16th, 2016

Top Tax Savings Strategies For The Family-Run Business

Family Business- Ohio Tax Planning

Instead of chores, how about give your children a job to do in your family-run business. The money they earn can go to their college savings account and the savings you accumulate can be reinvested to help your company find future growth. Read on to learn more.

There’s a certain freedom associated with being self-employed, but there’s also a lot of responsibility … and expenses. Fortunately, the family that’s invested in the success of the business, and is willing to roll up their sleeves and get to work, may be able to secure some significant tax savings.

Marriage Has It’s Benefits

If you’re married, chances are good that your spouse is already doing helping out in some aspect of your business. So why not extend a formal job offer? While you may be hesitant to bring them aboard (officially), there are several key reasons why it pays to add your spouse to the payroll.

  • Retirement benefits – Once hired, federal taxes will begin to be withheld from your spouse’s paycheck. That means that they will start receiving Social Security credits toward retirement. This alone is a pretty great (when it comes to retirement – every little bit helps), but the retirement benefits of hiring your spouse don’t stop there. If your business already offers employees a retirement plan, those benefits can be extended to your spouse when they opt in to the plan as well. Furthermore, contributions your company makes to the plan are tax deductible – up to 25 percent of compensation or $49,000, whichever is less.
  • Health Insurance – Business owners everywhere continue to struggle with the affordability of health care. But those who do offer this benefit to their employees, might be able to secure some additional savings by opting to cover their spouse as an employee rather than as a dependent. Especially if you consider the fact that your company can deduct the premiums it pays for employee health coverage. Then you may want to ask your tax advisor if you are also eligible to receive the health care tax credit.
  • Life Insurance – Because they are employees of your business, your spouse is eligible for the same benefits as all your other employees. That includes life insurance. And those costs are deductible as business expenses as well.

All Hands On Deck

Raise your hand if you had to do chores as a kid. We all did. It taught us work ethic and the value of a dollar. These days, families that own their own businesses can go a step further. Instead of paying your son or daughter a few dollars to mow the lawn, how about hiring them as a grounds keeper for your business? These days giving your kids a job in your business isn’t just a huge help when it comes to managing the day-to-day responsibilities of the company, it can be advantageous from a tax perspective. Business owners who welcome their kids to the family workforce, may be able to:

  • Deduct their children’s salary from the business’s income as a business expense.
  • Avoid paying FICA tax on their children’s salary.
  • Shift a portion of business income from your tax bracket to your child’s to significantly reduce your taxable income.

But, in order to make this strategy work, you must be able to prove that your children are legitimate employees and that their work is necessary. And don’t forget to fill out all the proper forms that go along with hiring any new employee (W-4, U.S. Citizenship and Immigration Services Form I-9, Employment Eligibility Verification, etc.). It’s also wise to keep track of their work and the time they put in by maintaining a time sheet. Also, while it may be tempting to pay your kids top-dollar for answering phones or cleaning the office, the IRS is on the lookout for unreasonable compensation practices. Don’t pay your son or daughter more than what you would pay a stranger for doing the same job and pay them regularly, as you would with any other employee. Your child’s paycheck can then be directly deposited into an account in your child’s name.

TIP: Get more out of your child’s earnings by opening a Roth IRA or 529 College Savings Plan in your child’s name and direct deposit their wages into the account and watch it grow.

Start taking advantage of the various strategies available for family-run businesses. Email rea.news@reacpa.com or ted.klimczak@reacpa.com to find out how.

By Ted Klimczak (Medina office)

Check out these articles for more tax tips and insight:

5 Tax Deductions To Ease Your Business’s Tax Burden

How To Drive For Business And Save On Your Tax Bill

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Big Financial News Grabs Reader Attention In September

Tuesday, October 4th, 2016

lady on computerThere was certainly a lot to think about in September. From tax prep to QuickBooks tips, it looked like you were using this month to brush up on some critical business issues and important financial news. Here were our top five posts for the month of September.

  1. Fall Into Tax Prep … According to the calendar, summer 2016 has officially come to an end. But, fortunately for you, there are a lot of reasons to smile in autumn! All it takes is a little tax prep on your part.
  2. Help The FBI Find A Defense Against Ransomware The FBI recently released a public service announcement urging victims of Ransomware attacks to come forward and report these cyber infections to federal law enforcement. Keep reading to learn more about what the FBI is doing to reduce ransomware attacks.
  3. What Happens if My 401(k) Plan is Out of Compliance with an IRS or DOL Rule? Learn more about the statute of limitations and how you can work to rectify any issues you may have with your business’s retirement plan.
  4. How Can You Track Use Tax in QuickBooks? If you owe use tax for a few separate counties or states, you can set up and use multiple Use Tax Payable accounts in your chart of accounts in QuickBooks. Learn how.
  5.  Late Rollovers May Benefit From New IRS Guidance Did you miss the deadline to rollover your retirement plan or traditional IRA funds due to circumstances beyond your control? In the past, such an issue would have resulted in issues on your tax return and/or an expensive private letter ruling request, culminating in a full-fledged assault on your retirement nest egg. Fortunately, the IRS released new guidance that may eliminate this costly headache by simplifying the way retirement rollovers are managed when they are made outside of the 60-day rollover deadline.

As we make our way into autumn and inch closer to the end of the year, what business and financial questions would you like our experts at Rea & Associates to answer? We’d love to hear from you.

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Fall Into Tax Prep …

Thursday, September 22nd, 2016
tax planning

Today is the first day of Fall, how are you getting your taxes ready for the end of the year?

According to the calendar, summer 2016 has officially come to an end. But, fortunately for you, there are a lot of reasons to smile in autumn! From sipping on a pumpkin spice latte while snuggling deeper into your favorite hoodie to enjoying a great college football game with friends and family; these months certainly seem to bring with them a certain type of comfort and tranquility. Did you know that you can extend this calmness and well-being into the tax season as well? All it takes is a little tax prep on your part. Then, when January rolls around, you can rest easy knowing that you are prepared and poised to take advantage of more tax savings than ever before.

Take a look at these helpful articles to get you started on the right foot.

Organization Is The Key To Your Tax Prep Success

  • File Faster With This Tax Prep Checklist It’s that time of year again – time to gather your information and prepare to file your tax return. If you want the process to go smoothly, make sure to gather and organize your information before sitting down with your tax preparer. You may be surprised how fast the entire filing process goes if you spend a little time preparing!
  • If You Can’t Avoid It, Organize It: Organization Is Critical To Financial Planning and Tax Preparation Tax planning is one of the essentials to personal financial planning and wealth creation. And taxes are one of those things you need to think about all year long, not just during filing season. Having recently filed (or extended) your return, it’s time to take a look back and a look forward and determine how you can be better prepared for next year’s tax season.
  • Stay Organized Year-Round To Make Tax Prep EasierThe best advice to get ready to prepare your taxes is “don’t wait!” Stay organized year-round in accumulating information that will be needed for tax filing.

Wondering what more can do to better prepare the upcoming tax season? Reach out to the team at Rea & Associates for some tips. And while you have a professional tax advisor on the phone, schedule a day and time to meet with them to discuss your unique tax situation. The best way to optimize your tax savings is to work one-on-one with the experts and meeting times fill up fast once tax season begins!

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Late Rollovers May Benefit From New IRS Guidance

Tuesday, September 20th, 2016
IRS Lifts Restrictions | Retirement Savings | Ohio CPA Firm

American taxpayers can celebrate now that a range of restrictions known to hinder taxpayers’ efforts to save for their golden years due to circumstances beyond their control have been lifted by the IRS. This is a big win that will save thousands of IRAs from the harsh bite of needless and accelerated taxation. Keep reading to learn more.

Did you miss the deadline to rollover your retirement plan or traditional IRA funds due to circumstances beyond your control? In the past, such an issue would have resulted in issues on your tax return and/or an expensive private letter ruling request, culminating in a full-fledged assault on your retirement nest egg. Fortunately, the IRS released new guidance that may eliminate this costly headache by simplifying the way retirement rollovers are managed when they are made outside of the 60-day rollover deadline.

Effective Aug. 24, 2016, according to the IRS, taxpayers who miss the 60-day deadline for at least one of the 11 specific reasons outlined in Rev. Proc. 2016-47, may avoid immediate taxation if a self-certification letter is submitted to the IRA trustee or plan administrator.  Under the new rule, as long as the reason for their tardiness meets one or more of the 11 conditions outlined in the provision and the late rollover contribution is completed “as soon as practicable after the applicable reason (s) no longer prevents the taxpayer from making the contribution. The practicable timeframe is noted as 30 days in the guidance.

Read Also: Brush Up On These New Tax Form Due Dates

With regard to the validity of the taxpayer’s claim, the revenue procedure indicates that self-certification is all that’s required to be completed and submitted to the trustee or plan administrator. Please note, however, that the self-certification is not to be considered a waiver of the 60-day requirement as the IRS reserves the right to deny the request if an audit finds that the taxpayer failed to meet the requirements of Rev. Proc. 2016-47.

11 Reasons To File Your Late Rollover Contribution Self-Certification Letter

As long as the IRS has not previously denied the taxpayer’s waiver request made with respect to a rollover contribution of all or part of a related distribution, the 11 conditions considered to be acceptable for missing the 60-day deadline are:

  1. An error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates;
  2. The distribution having been made in the form of a check, was misplaced and never cashed;
  3. The distribution was deposited into and remained in an account that the taxpayer mistakenly thought was an eligible retirement plan;
  4. The taxpayer’s principal residence was severely damaged;
  5. A member of the taxpayer’s family died;
  6. The taxpayer or a member of the taxpayer’s family was seriously ill;
  7. The taxpayer was incarcerated;
  8. Restrictions were imposed by a foreign country;
  9. A postal error occurred;
  10. The distribution was made on account of a levy under § 6331 and the proceeds of the levy have been returned to the taxpayer; or
  11. The party making the distribution to which the rollover relates delayed providing information that the receiving plan or IRA required to complete the rollover despite the taxpayer’s reasonable efforts to obtain the information.

This is a big win for the American taxpayer, as it effectively lifts a range of restrictions known to hinder taxpayers’ efforts to save for their golden years due to circumstances beyond their control – saving “thousands of IRAs from the harsh bite of needless and accelerated taxation.” To make a certified late rollover contribution, your letter must also adhere to certain specifications. I recommend customizing the letter provided by the IRS in Rev. Proc. 2016-47. It can be accessed here. Once you have completed the letter, remember to retain a copy of it in your files to ensure it is available if the IRS requests this information during an audit.

Email Rea & Associates to learn more about how this new provision will be beneficial to you.

By Wendy Shick, CPA, CFP (Mentor office)

Check out these articles for more great helpful information to review as you prepare to file your taxes:

Can My Summer Daycare Expenses Earn A Tax Credit?

How Will A Tax Credits And Incentives Plan Benefit Your Business?

Environmentally Friendly Tax Savings

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Summer May Be Over But Top Blog Posts Are Always In Season

Friday, September 2nd, 2016

I don’t know about you, but September seemed to come out of nowhere! But fear not. Even though summer is officially over, we still have a lot to celebrate – like all those great blog posts we featured on Dear Drebit last month?! So, before we officially make the leap into fall, join me as I take a look back at some of the top posts business owners were reading in August.

  1. Get Ready, Get Set, Get Shopping! Were you one of the many shoppers flooding stores the first weekend in August in search of some great back-to-school bargains? If so, then you were able to take advantage of this year’s Sales Tax Holiday. Missed it? That is ok, read on to learn more about it and how you can take advantage of these savings next year.
  2. How To React To A Data Breach It was 2013 when a medium-sized library in Ohio found itself in the midst of a data breach that would later serve as a powerful case study warning against the very real threat of electronic fraud. While originally developed by the Ohio Auditor of State’s office as a tool for government entities throughout the state, Cash Management 240: Financial Fraud – A Case Study, has found usefulness beyond just the government sphere. Read more about it now!
  3. Did Fraudsters Counterfeit Your Organization’s Checks?The internet can be a valuable tool for so many honest, well-meaning people. Unfortunately, it can also be a playground for fraudsters. Keep reading to find out how fraudsters are counterfeiting checks.
  4. How Can You Track Use Tax in QuickBooks?Do you filed for use tax amnesty with QuickBooks? How are you going to track it daily going forward? The answer is as simple as 1-2-3.
  5. Could An FSA Bring Value To Your Business’s Benefit Plan? Does your company’s benefit package feature access to a Flexible Spending Account? Have you considered adding one in the past but still have questions? As health costs continue to rise, we continue to learn more and more about how this pre-tax health benefit can help level the playing field for employees. But in order to get maximum benefit from this incentive, your team needs to know what it’s capable of doing. Read on to learn more.

Did we leave you wanting more? Great! We love to hear from you about what information or updates you are looking forward to seeing this month. Just reach out to us with your question or topic and one of our accounting and business consulting experts may pick it up for a future post!

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Get Ready, Get Set, Get Shopping!

Monday, August 1st, 2016

2016 Tax Free Holiday Is Aug. 5-Aug. 7

2016 Sales Tax Holiday | Rea & Associates | Ohio CPA Firm

This weekend when you are out back-to-school shopping, don’t be afraid to fill the cart with a little bit more! Friday, Aug. 5-Sunday, Aug. 7 is Ohio’s sales tax holiday! Read on to find out which items will be exempt from sales and use tax.  Don’t forget to share this post and/or this photo to remind friends and family of this event!

Will you be one of the many shoppers flooding stores this weekend in search of some great back-to-school bargains? If so, then your shopping trip got a whole lot better! This year’s Sales Tax Holiday will take place Friday, Aug. 5-Sunday, Aug. 7.

Read Also: Five Things You Didn’t Know About Ohio’s Tax Holiday

Without the burden of paying sales tax on a variety of items, shoppers will be able to make their dollars go a little further, which is especially great for those looking to fill their closets with the latest back-to-school fashions and their desks with school-time necessities.

This year during the sales-tax holiday, according to the Ohio Department of Taxation, the following items will be exempt from sales and use tax:

  • Clothing priced at $75 per item or less;
  • School supplies priced at $20 per item or less; and
  • School instructional material priced at $20 per item or less.

If you have Sales Tax Holiday questions, including how the tax free holiday works, how coupons and discounts are handled, and what products are eligible for the exemption, check out this helpful FAQ page, or you can call 800-304-3211.

By Lisa Beamer, CPA (New Philadelphia office)

Looking for more ways to save money, check out these articles!

Three College Savings Account Tips You Can’t Afford To Ignore

From Toddler To Teen And Beyond: Tax Breaks For Families

Make Traveling For Charity Part Of Your Summertime Tax Savings Strategy

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Work or Pleasure?

Thursday, June 30th, 2016

Make Traveling for Charity Part Of Your Summertime Tax Savings Strategy

Travelling for Charity - Ohio CPA Firm

Transportation to and from the job site via plane, train or automobile are deductible on your next tax return if you will be volunteering your time and talents this summer. This includes any transportation costs accrued for travel between the airport or train station and your hotel. Read on to learn more!

In addition to planning a fun family get-away this summer, you might want to carve out some time to donate your services to a noble cause as well. For all of you summertime volunteers, listen up and make plans to use some of your travel expenses to help lower your tax bill. Here’s how.

Read Also: Can My Summer Daycare Expenses Earn A Tax Credit?

  • Make sure you are volunteering your services to qualified charities. If you want to deduct your expenses, the IRS needs to know that the charity you are working with is legit. There are several great online resources that can help you determine if the organization you are helping out is qualified. The IRS’s EO Select Check tool and Guidestar are two of my favorites.
  • Track all out-of-pocket expenses. If you are making necessary purchases that are not directly connected with the services you are performing and are not considered personal living or family expenses; and these expenses were directly result of the volunteerism opportunity, then you may be able take a deduction on your tax return. Keep in mind that you also can’t receive reimbursement by any other means. The ability to deduct out-of-pocket expenses, particularly travel expenses, has huge savings implications. Some of the types of expenses you can deduct include:
    • Lodging
    • Meals
    • Transportation to and from the job site via plane, train or automobile. This includes any transportation costs accrued for travel between the airport or train station and your hotel.
  • Roll up your sleeves and make a big impact. If you are only tagging along or if your duties are minimal, you are not going to be able to make a claim on your tax return. According to the IRS, your charity work must be “real and substantial throughout the trip.” In other words, don’t dillydally!

Now that you know what to do to, let’s take a look at what not to do – or rather, what is not tax deductible.

  • Travel expenses for tagalongs are not deductible. Meaning, only the expenses for the individual(s) volunteering their services can be written off at tax time. For example, if you decided to take your children along on the trip but they will not be logging volunteer hours, you cannot deduct their portion of the travel expenses.
  • Your time and services are valuable, but you can’t deduct the value of your time and services. This is particularly true for those who are donating professional services, including medical, financial and legal. You also can’t deduct the income you may have lost while you were working as an unpaid volunteer for a qualified charity.
  • You cannot package work and play into a single deductible expense. That’s not to say that you can’t enjoy yourself or go out to the beach after a long day of building schools in a third-world country; but if a significant part of your trip is reserved solely for recreational purposes or a vacation, your claim will be denied.

For more information about potential summertime tax savings, email Rea & Associates. You may be surprised by how much you can save when you’re on a mission to do work for those in need!

By Maribeth Wright, CPA (Cambridge office)

Check out these articles for more summertime tax strategies:

School’s Out For Summer, But Tax Credits Are Still In

The Do’s And Don’ts Of Summertime Tax Prep

How To Become A Millionaire

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Brush Up On These New Tax Form Due Dates

Wednesday, June 29th, 2016
Tax Form Due Dates - Ohio CPA Firm

Want a tip to help you stay out of trouble with the IRS? Start studying up on the new tax form due dates.

Did you know that the IRS has changed the due dates for many of your tax return forms? These changes will be effective for taxable years starting after Dec. 31, 2015, meaning your 2016 tax returns filed next year (2017) will be impacted. Since some due dates have been altered quite a bit and others have not even been touched, it’s incredibly important to pay attention to the changes.

Read Also: Join The Fight Against Identity Theft & Income Tax Fraud

Stay out of trouble with the IRS. Start studying up on the new tax form due dates, below.

  • Form 1065 pertaining to partnerships operating on a calendar year are now due March 15. A six-month extension from that date is allowable. Previously, the due date was April 15. According to the new law, partnership returns are now due on the 15th day of the third month after the year end.
  • Form 1041, which refers to trust and estate taxes, gained a 5½-month extension from the original filing date of April 15. This was an increase of half a month.
  • Your 2016 C Corp tax returns for returns that impact businesses with traditional Dec. 31 and June 30 year-end deadlines will be due on the 15th of the fourth month after the year end. A six-month extension from that date will be allowed.

o   If your year-end is before Jan. 1, 2016, your due date is April 15, with a Sept. 15, extension.

o   If your year-end is after Dec. 31, 2015, your new due date is April 15 with an Oct. 15, extension.

  • For C Corps operating outside a traditional fiscal year end (with fiscal years other than Dec. 31 and June 30), the new due date for your tax return forms is the 15th day of the 4th month after year end and the 15th day of the 10th month after year end.
  • A special rule for C Corps with a June 30 fiscal year end was established and will impact the due date for Form 1120. The new due date will go into effect for returns with taxable years beginning after Dec. 31, 2015 for the 2017 filing season.

o   Before Jan. 1, 2016, Form 1120 is due Sept. 15 with an April 15 extension.

o   After Dec. 31, 2015, the due date for this form is Oct. 15. The April 15 extension date will not change.

  • For exempt organizations required to file Form 990, the new extension date becomes a single, automatic 6-month extension. This eliminates the need to process the current first 90-day extension.
  • Those filing the Foreign Bank and Financial Accounts Report (FBAR) will have to adhere to a new April 15 due date. An Oct. 15 extension date was also established. This report was previously due on June 30.
  • All W-2 and certain 1099-MISC forms are now due to the IRS/SSA no later than Jan. 31, which is the same day they are due to the taxpayer. All other Forms 1099 are due Feb. 28 or, if filed electronically, March 31. This is a change from the Feb. 28 due date (and March 31 date if filed electronically) for all W-2 and 1099 forms that was previously enforced.

For all the changes outlined above, there are a few rules that will remain unchanged. Below are four due dates that will not change in 2017.

  • Form 1120S – These forms are due on March 15 with a six-month extension from the due date.
  • Form 1040 – The individual tax form will continue to be due on April 15 with an Oct. 15 extension date.
  • The due date for Form 5500, concerning employee benefit plans, will not change as a federal law that was enacted in December 2015 effectively repealed a previously enacted extension. These forms are due on July 31 with an Oct. 15 extension due date.
  • Form 3520-A for foreign trusts with a U.S. owner will not be changing. These forms will continue to be due on March 15 with a Sept. 15 extension due date.

Check with your tax advisor to find out if you will be ready to comply with these changes and to ask any tax planning questions you might have. Believe it or not, tax season is closer than you think. Be a proactive business owner. With enough lead time, you can implement a tax savings strategy capable of delivering amazing results. Email Rea & Associates to learn more.

By Lisa Beamer, CPA (New Philadelphia office)

Are you looking for more tax insight? Check out these articles?

Can The IRS Collect Back Taxes 10-Years After The Organization?

Environmentally Friendly Tax Savings

Don’t Miss Out! Claim The Work Opportunity Tax Credit

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Looking to Start a Business? Do It the Right Way

Monday, June 20th, 2016
Starting new Ohio Business - Ohio CPA Firm

Starting a new business is a brave and exciting endeavor. Avoid common slip-ups by following the advice found in this post and you’ll be well on your way to a successful start.

Starting your own business and becoming a small business owner is part of many Americans’ dreams. For some though, it can become a nightmare. There are definitely some right ways and wrong ways to approach starting your own business. Over my tenure as an experienced business advisor, I have seen plenty of heartache and additional expense along the way. Here are some of Do’s and Don’ts to consider if you want to start your own business:

Read Also: Dream Big: Considerations For The Aspiring Business Owner

  • Do: Go simple – Unless someone besides your spouse will own the business with you, you don’t need anything other than a simple limited liability company. It offers you liability protection while minimizing your tax filing requirements. Being the sole owner and having this sort of entity allows you to file you business’s activity on a Schedule C on your Form 1040. Until the business grows and is successful, this entity type will likely be sufficient for your small start-up.
  • Don’t: Go cheap – Small business owners tend to think they can or should do everything themselves. A lot of sweat equity goes into starting a new business, but be smart and humble enough to know the difference between what you can do and what you should do. It’s OK to ask for help!
  • Do: Involve professionals – This is an area where new business owners tend to want to go cheap. No one likes paying attorneys and folks don’t know they need a tax professional sometimes until it’s too late. Getting set up with the proper legal documents is a critical first step, and it’s one that new business owners like to try to tackle on their own. I know from experience that a good attorney is worth the expense. Don’t know who to ask? Start asking other established business owners who they use.
  • Don’t: Do payroll yourself (unless you have experience) – Some of the heftiest penalties the IRS assesses involves payroll taxes. They don’t mess around when it comes to properly assessing and remitting payroll taxes and paying your employees. Even one slip up can set a business back several thousand dollars. The issues continue to compound if they are not properly taken care of, so don’t ignore this extremely important aspect of your business. Unless you have prior experience with payroll or you hire someone with experience, this is an area where you should seek professional help.
  • Do: Consult your local Chamber of Commerce – Chambers of Commerce exist to assist businesses in a multitude of ways. Our local Chamber offers Small Business Counseling classes that are meant for new business owners who are just starting up a business. These classes include counseling, training and assistance for start-up businesses. This local resource can be invaluable if you choose to utilize it.

Starting a new business is a brave and exciting endeavor. Avoid common slip-ups by following the advice above and you’ll be well on your way to a successful start.

Around the same time you start your business, you’ll also want to consider your business’s growth strategy. Lee Beall, CPA, CEO at Rea & Associates, covered this topic in a podcast episode on unsuitable on Rea Radio. Check it out to learn what you need to do to establish or strengthen your business’s strategic plan.

By Lesley Mast, CPA, MAcc – Taxation (Wooster office)

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Can The IRS Collect Back Taxes 10-Years After The Original Date Of Assessment?

Wednesday, May 11th, 2016

Greetings Drebit! Please excuse my ignorance when it comes to IRS matters. I read your article about finding the date of assessment on my IRS Transcript. My transcript code is 150-5/29/2006. When can I exercise my right under the 10-year Statutes of Limitations? Thank you. – Wendy


Click here to read the original article


Dear Wendy,

Thank you for taking the time to send in your question. You correctly identified the date of assessment on your account transcript by zeroing in on the “150” Transaction Code. Based on this date, I can determine that your tax return was assessed on “5/29/2006.” Because the statute of limitations almost always begins the day after the taxpayer files their income tax return, the simple answer to your question is that the 10-year statute is set to expire on May 30, 2016.

However, there may be other factors to consider. For example, if you entered into an installment agreement with the IRS to pay any amount that was owed, as identified on your 2005 tax return, it’s highly likely that the 10-year statute of limitations date would have been extended to a date ending after May 29, 2016. While we have no way to know for certain if your assessment date was adjusted, I can tell you that, in this scenario, it is common practice for the IRS to extend the timeline to accommodate their ability to collect taxes owed – particularly if the installment payment period extends beyond the original expiration date.

I recommend that you speak with your financial advisor about this matter or email Rea & Associates to speak with a member of our team’s tax experts. You also might find value in the following articles.

Good luck!

By Christopher Axene, CPA (Dublin office)

Check out these articles for more helpful tax advice:

IRS Says You Owe More? Don’t Write That Check Yet!

How Far Back Can The IRS Go For Tax Auditing

When You Make A Mistake On Your Tax Return

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Did Prince Forfeit Control Over His Multimillion Dollar Estate?

Wednesday, April 27th, 2016

Learn How A Will Protects Your Fortune After Death

Did Prince Have A Will | Why A Will Matters | Ohio CPA Firm

PHOTO CREDIT: www.Billboard.com
According to Prince’s sister, Tyka Nelson, the music legend neglected to draw up a will before he died. Regardless of how large (or how small) your fortune is, estate planning is essential and drawing up a will is a critical component of the plan – one you literally can’t afford to ignore. Keep reading to find out why a will is one of the most important documents you will ever have drawn up.

While driving my sons to school this morning, we heard on the radio that, according to his sister, Tyka Nelson, music legend Prince died without having a will in place. This means, if the reports are true, Prince’s estate will be managed by a Minnesota probate court and will likely come with a large tax bill.

Naturally, this story has already generated national attention concerning the future of Prince’s multimillion dollar estate. What is certain, however, is that if Prince did die without having a will, his sister and five other half-siblings would stand to acquire a significant inheritance – after taxes, of course.

Read Also: You Can Still Have The Final Say After Death

Who Will Inherit Your Fortune?

I know that my sons truly love each other but, like most siblings, they fight like cats and dogs. So I decided to use the drive to school as a teachable moment.

Because both of my sons dream of becoming professional sports stars (let them dream), I advised them to heed the warning tucked within the morning’s news report. If you don’t want your brother to inherit your fortune when you pass away, you need to have a will in place that will determine where your millions go. Otherwise, the state will give everything to your next of kin.

Still Not Sure If A Will Is Necessary?

Regardless of how large (or how small) your fortune is, estate planning is essential and drawing up a will is a critical component of the plan – one you literally can’t afford to ignore. Among the many benefits of establishing a will, this document will:

  • Give you the final say over how your finances will be distributed.
  • Establish who will be legally responsible for caring for your minor children.
  • Help you avoid a drawn-out probate process.
  • Provide you with an opportunity to minimize your tax burden.
  • Let you determine who will be responsible for managing the affairs of your estate.

Lesson Learned?

You don’t have to be a teacher to pass along a few solid words of wisdom to your children. You just need seize teachable moments when they present themselves – even if all you can do is begin laying the groundwork for an even bigger lesson. Here’s what we accomplished on this morning’s drive:

  • I’m certain my boys now agree on one thing – that when they become professional sports stars (or whatever profession they choose), a will is a must have.
  • They now know who Prince is and that he acquired a lot of money over the course of his career.
  • Hopefully, they now have a basic understanding of the importance of a will. (I’m probably going to have to have a follow-up conversation about this one.)

Eh, I tried.

Would you like to learn more about estate planning and how to ensure your assets are distributed in accordance with your wishes after you die? Listen to episode 6 of unsuitable on Rea Radio with Dave McCarthy – The Grim Reaper Is Coming And He Wants Your Money. You can also email Rea & Associates to learn more.

By Inez Bowie, CPA, CSEP (Marietta office)

The following articles offer some more great advice about the importance of drawing up a will.

How Do You Value Property For An Estate In Ohio?

Why Should Your Digital Assets Be Part Of Your Estate Plan?

What Tax Liabilities Accompany Inherited Real Estate?

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Protect Yourself From Fake Charity Scams

Wednesday, April 20th, 2016

Questions to Ask Yourself Before Making A Donation

Charity Scams - Ohio CP A Firm

Would you be able to spot the charity scam? Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to ask yourself a few questions. Read on to find out which ones.

From identity theft and tax fraud to criminals finding ways to hack into your company’s network, we are learning every day that it’s simply not safe to let your guard down – for anyone or anything. Unfortunately, that mindset should apply when you are considering gifting a charitable donation as well.

Some fraudsters, in an attempt to prey on the generosity of strangers, have begun to solicit funds for fake charities particularly during and immediately after tax season. But you can shut down these scams by asking yourself these critical questions.

Read also: Join The Fight Against Identity Theft & Income Tax Fraud

Is this the charity I know and love or is it a spin off?

We are a sucker for the brands we know and love, and criminals will invoke similar names, attributes, branding to trip you up and get you to write that check. Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to conduct a quick search online to remove all doubt. Two resources to consider are:

  • The Exempt Organization Select Check Tool – this search tool is designed to help you determine the legitimacy of the not-for-profit in question by providing users with information about the organization’s federal tax status and filings.
  • Guidestar – this online resource is great for users who want to find out about the validity of tax-exempt organizations as well as other faith-based nonprofits, community foundations and other groups that are typically not required to register with the IRS.

Do nonprofit organizations ask for personal information?

Don’t make it easy for a fraudster to steal your identity by willingly providing them with your Social Security Number. Legitimate nonprofit organizations will never need your SSN to complete a transaction and they should never need to retain any of your personal information for their records – this includes passwords.

Should my donation be in the form of a check or is it OK to give cash?

Yes! For your own security, and tax purposes, be sure to establish a paper trail. The best way to do this is to avoid making any type of cash donations. Instead, every time you give money to a charity, consider using a check or credit card to establish proof of the transaction. Not only is it important to establish a paper trail as a safety measure, it will help you when to go to claim the contribution on next year’s tax return.

I’m still not sure if it’s a valid nonprofit organization?

If the questions above don’t provide you with the reassurance you need, reach out to a trusted advisor who can help you identify whether a particular charitable organization is reputable or not while giving you pointers to help you protect your hard-earned dollars as well as your identity.

 By Maribeth Wright, CPA (Cambridge office)

Check out these articles to learn to learn about other fraud scenarios taxpayers should know about.

Stop Criminals From Hijacking Your Identity With These Top 5 ID Theft Prevention Posts

Then & Now: Data Security In America Since The Target Breach

Malware Threat Spreads To Smart Phones

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There’s Nothing Wrong With 3-Year-Old Money

Friday, April 8th, 2016

Time’s Running Out To Claim 2012 Refund Checks

Unclaimed Tax Refunds  - Ohio CPA Firm

Grab your unclaimed cash before it’s too late! The IRS owes taxpayers about $950 million of unclaimed tax refunds from 2012. But the deadline to file your late return is April 18, 2016. Read on to learn more.

If you are one of the nearly one million taxpayers who didn’t file a tax return in 2012, you may be eligible to receive an additional refund check from Uncle Sam. But if you don’t act fast you will miss your chance to claim your portion of the $950 million.

Funds that are not claimed by April 18, 2016 will become the property of the U.S. Treasury.

Were you a student in 2012 or was your income such that you weren’t legally required to file a 2012 tax return? It’s possible that, at that time, you had too much withheld from your wages (or paid higher quarterly estimated payments) than was actually necessary. And now the government owes you a refund. Additionally, depending on your particular circumstances, you could have also been eligible to claim certain tax credits, which are also just sitting there … waiting for somebody to claim them.

Read Also: From Toddler To Teen And Beyond: Tax Breaks For Families

According to IRS estimates, half the potential refunds are for more than $715. Unfortunately, if you don’t claim this money now, you never will. Taxpayers have three years to file a claim for a tax refund. Funds not claimed in time will become government property.

Here are a few other points to remember if you plan on claiming your share of unclaimed funds.

  • You must file a 2012 federal income tax return to claim your refund. The IRS needs to make sure you don’t owe any federal or state taxes for 2013 or 2014 as well, so if you haven’t filed those returns yet, the IRS may hold your refund to satisfy any tax debts that are owed as well as any past due child support or federal debts, such as student loans.
  • To claim your refund, you must properly address, mail and postmark your tax return no later than this year’s tax deadline (April 18, 2016).
  • Be sure to collect any and all necessary forms and include them with your return, including Forms W-2, 1098, 1099 or 5498. If you are missing a form or two, you can request copies from your employer (current and/or previous), your bank or another payer.

If you didn’t file a 2012 tax return and think the government owes you money, you have no time to waste. The IRS provides taxpayers with current and prior year tax forms and instructions on its website or by calling 1-800-TAX-FORM (1-800-829-3676). You can find additional help, such as tax calculators, refund tracker, record retention schedule and more in the financial resources section of the Rea & Associates website. Check it out!

By Lesley Mast, CPA, MAcc-Taxation (Wooster office)

Check out these articles for more last-minute tax help?

How To Trigger An IRS Audit

How To Make Dealing With The IRS Less Stressful

Join The Fight Against Identity Theft & Income Tax Fraud

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What Are You Waiting For?!

Thursday, April 7th, 2016

3 Tips For Taxpayers Who Haven’t Filed Yet

Did you know that according to the IRS 20-25 percent of Americans wait till the last two weeks to file their taxes?! The thought alone is enough to make even the most experienced accountant nervous.

If you’re a last-minute filer, here are some tips to help you (and your accountant) get through the 2016 tax deadline unscathed.

  1. The Truth About Tax Extensions Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, I will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight. Check out the slideshow and get the facts about tax extensions!
  1. How To Pay Your Tax Bill In 6 Easy Steps Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances. Want to learn more about the benefits of Direct Pay, just click here.
  1. Breaking The Tax Bracket Myth Myths and misconceptions about the tax code are rampant and clients frequently express their concerns about a variety of tax-related issues. One topic that comes up frequently is our federal government’s graduated tax bracket system. Oftentimes, people worry that if they make “too much” money, their entire income will be taxed at a higher rate – a worry that has kept countless hard-working taxpayers up at night. But are these concerns valid? Find out.

Don’t wait much longer to file your taxes or request an extension, April 18 will be here before you know it.

Treat Yourself

Don’t want to go through the mad rush again next year? We like to encourage our clients to think about taxes all year long – not just the first four months of the year. Sign up for our bi-weekly digital newsletter to for tax tips and business advice guaranteed to keep you motivated and tax-time ready all year long. And, of course, you can always email Rea & Associates for help along the way.

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Business Leaders Turned To Drebit For Fool-Proof Tax Tips

Friday, April 1st, 2016

When it comes to providing readers with top-notch tips and expert financial advice, we take our job very seriously. That’s why our top blog posts in March were related to tax, compliance and general financial wellness topics. Take a look this month’s top five blog posts for business owners.

1. Does The IRS Care About Your Fantasy Football Team?

Fantasy Football | Tax Guidance | Ohio CPA Firm

When you sit down with your CPA to go over last year’s taxable income and they ask you how your fantasy football team did this year, they aren’t just looking to engage you in casual conversation. In fact, how well (or how poorly) you did over the last year might make a difference in the size of your tax bill. Read on to learn more.

 

 

2. Payroll, HR Departments Targeted By Cyber Criminals

paper dollsOver the last few years, the threat of refund fraud and identity theft has become a very real concern, and criminals have proven that they will go to great lengths to get the information they need to complete their scams. This recent phishing scam is no exception.

 

 

 

 

3. The ACA: Small Businesses Are Also At Risk

Small Business Penalties | ACA | Ohio CPA Firm

Thinking the provisions outlined in the Affordable Care Act doesn’t apply to your business because you are “under the threshold of 50 employees” is a very dangerous assumption to make. Keep reading to find out why.

 

 

 

4. Don’t Miss Out! Claim The Work Opportunity Tax Credit

2016 individual mandate penaltiesThe IRS has finally issued guidance on how to deal with the retroactive extension of the Work Opportunity Tax Credit (WOTC) for 2015. In short, it’s an opportunity you don’t want to pass up.

 

 

 

 

 

5. Can You Afford To Lose Them?

Recruitment & Staffing Strategy | Ohio CPA Firm

When you lose a member of your team, regardless of their position, you can expect their departure to impact your organization’s bottom line. That’s why it’s so important to take a proactive stance with regard to staffing and minimizing your financial burden.

 

 

 

 

 

April brings an end to the 2016 tax season. Don’t forget that the tax deadline is April 18 this year. Looking ahead, you can expect to see some great tips from our business experts as well as some fantastic spring cleaning advice that can be used to prepare for tax season 2017. And, as always, if you have a question for one of our financial experts or business consultants fill out the Ask Drebit a Question form. We are always happy to provide you with responses to your specific questions.

Happy Spring!

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Phishing Scam Is A Threat To Ohio Businesses

Monday, March 28th, 2016
IRS Phishing Scam - Ohio CPA Firm

You can take a proactive stance when it comes to protecting your company from these scams by encouraging your employees to pay close attention to emails that request sensitive information, such as the names of employees, Social Security numbers, dates of birth, addresses and/or salary information or copies of employee’s W-2 information.

The Ohio Department of Taxation (ODT) is echoing phishing scam alerts made by the IRS earlier this month in an effort to protect businesses and employees state-wide from identity theft and tax fraud.

Read Also: Payroll, HR Departments Targeted By Cyber Criminals

According to ODT, payroll and human resources offices at companies nationwide – including some in Ohio – reportedly received emailed requests that appear to be sent from a high ranking member of the company’s management team requesting confidential payroll data. While the emails appear to be legitimate, they are actually being sent by cybercriminals who are looking to fool employees into sending them detailed payroll and W-2 information. The imposters then use the information to file fraudulent tax returns.

“The scam has worked on more than 30 companies resulting in the theft of W-2 tax information for thousands of current and former employees,” ODT’s news release states. “The W-2 form contains an employee’s Social Security number, salary and other confidential data. This information enables thieves to create a realistic looking, but fraudulent tax return requesting a tax refund that is then filed with Ohio or other states, and the IRS.”

The frequency of tax fraud and identity theft continues to increase at an alarming rate. This tax season alone, the IRS reported an approximate 400 percent increase in phishing and malware incidents – a surge that was addressed back in February.

“If your CEO appears to be emailing you for a list of company employees, check it out before you respond,” said IRS Commissioner John Koskinen. “Everybody has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

You can take a proactive stance when it comes to protecting your company from these scams by encouraging your employees to pay close attention to emails that request sensitive information, such as the names of employees, Social Security numbers, dates of birth, addresses and/or salary information or copies of employee’s W-2 information. You can also let them know that they should never send sensitive information until a conversation takes place, either in-person or over the phone, with the member of management seeking the information. You can also check out the information provided here for general insight from ODT that could be used to help your employees identify phishing attempts and email scams.

If your Ohio business has been the victim of or experienced this or any other type of email phishing scheme, contact ODT immediately at 800.282.1780 to protect against potential tax fraud and safeguard Ohio taxpayer dollars.

Those who are interested in learning more about the increasing threat of cybercrime should check out The Columbus Cybersecurity Series. Presentations are scheduled to take place throughout the year and will focus on ways to help business owners learn more about cyber threats. The first installment is scheduled for Wednesday, April 6. The event is free but registration is required to attend. Attendees will walk away with new insight into these attacks as well as tips and advice that will help you protect your business.

By Lisa Beamer, CPA (New Philadelphia office)

Want to protect your employees from identity theft and tax fraud or need help recovering? Check out these articles:

How Can You Protect Yourself From Tax Fraud

Identity Theft Prevention: Tips To Reduce Your Risk of Becoming a Victim

How To Recover From Identity Theft & Refund Fraud

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How To Trigger An IRS Audit

Friday, March 25th, 2016
How To Trigger An IRS Audit - Ohio CPA

When was the last time you were happy – jubilant even – after receiving a letter from the IRS ? Exactly … Keep reading to learn how to keep the tax man out of your mailbox.

Only .84 percent of the 146.9 million individual tax returns filed in 2015 were audited by the IRS. The last time the audit rate was that low it was 2004 and most of us were walking around in Uggs. And even though the IRS says it expects to see even fewer audits in 2016, your chance of being audited tends to increase when:

You fail to report all taxable income

You will be notified if the IRS notices any inconsistencies between the taxable income reported on your tax return and the combined amount reported on your 1099s and W2s. Be sure to make the issuer of your 1099 aware of any mistakes, including incorrect income reported or receiving a form that is not yours.

You own a cash-intensive business

If you operate a taxi, car wash, bar, hair salon, restaurant or any other cash-intensive business, the IRS will be watching your tax return closely. Historically, cash-intensive businesses have been less accurate in reporting all taxable income. In response, agents are using special techniques to interview business owners and audit for unreported income.

Read Also: What’s Worse: An IRS Audit Or A Root Canal?

You claim large charitable deductions

IRS agents don’t have a problem with you philanthropic behavior, it’s the people abuse this tax deduction they have a problem with. This is another area the agency has had problems with in the past, which is why agents pay special attention to these types of deductions – especially if the deduction is disproportionately large in relation to your taxable income. So, if you are going to make a gift to a nonprofit organization, make sure to do it the right way. Keep your receipts, document everything and obtain an appraisal if the donation is for property worth more than $500 (and be sure to file Form 8283 with your return). It’s also important to note that donated cars, boats and planes continue to draw special attention.

You claim home office deductions

If you can claim the home office deduction – great! However, many are often unsuccessful because they ultimately realize that they don’t meet the strict requirements. Or, if they do successfully claim it, they overstate the deduction. For this reason, this is another area the IRS tends to scrutinize. Remember, if home office space must be used exclusively and on a regular basis as your primary place of business in order to claim a percentage of the rent, real estate taxes, utilities, phone bills, insurance and other costs.

Your claim for meals, travel and entertainment is disproportionately high

This is another area where taxpayers have made excessive claims in the past, causing the IRS to look closely at meal, travel and entertainment deductions for self-employed taxpayers. When the deduction appears too large for the business, agents look for detailed documentation including the amount, place, persons attending, business purpose and nature of the discussion or meeting.

You claimed 100% business use of a vehicle

It’s very rare that a taxpayer actually uses vehicle exclusively for business, especially if no other vehicle is available for personal use. If an IRS agent sees this type of claim, they won’t just see red flags, they will hear sirens. If you are planning to claim a percentage of your vehicle usage on your tax return, be sure to keep detailed mileage logs and precise calendar entries for the purpose of every road trip.

The best way to guard against an IRS audit is to have your business and personal tax returns prepared correctly every year by a team of tax specialists. Email Rea & Associates to learn what other red flags the IRS is looking for.

By Chad Bice, CPA (Zanesville office)

Check out these articles for even more popular tax tips:

How To Make Dealing With The IRS Less Stressful

How Far Back Can The IRS Go For Tax Auditing?

A Use Tax Audit Could Cost You

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Readers Were Happy To Leap Into Tax Season This February

Friday, March 4th, 2016

Upon reviewing our most popular blog posts for the month of February we are left to conclude that it is once again that time of year – tax season.

February’s most read blog posts were mostly tax related. From additional insight into the Affordable Care Act, to recommendations about how to report your fantasy football winnings and updates about Ohio’s identity theft quiz; one thing is certain – this is shaping up to be another busy year in the world of taxes.

Read on to find out what others were reading in February.

  1. Are Your Employees Skimming From The Top? A question from one of our readers: As a new business without a cash register, what is the best way (accounting method-wise or other) to protect cash receipts from sales against employee theft or dishonest activity? Want the answer? Keep reading to find out how to prevent fraud in your small business.
  2. Five Reasons To Fall In Love With Your Financial Advisor While your financial advisor is probably the last person you are thinking about during those romantic holidays, you may want to reconsider and here’s why
  3. Don’t Miss Your Chance To Secure Tax-Free Wealth We already know that making contributions to tax deferred retirement accounts (i.e. deductible IRAs, SEPs, SIMPLEs and 401(k) plans) is the most obvious way to reduce your current year taxes, but with a little planning, you could develop a strategy to avoid paying future taxes as well. Take a look at these five tax advantage savings ideas and discover how easy it can be to hold on to more of your money.
  4. How Far Back Can The IRS Go For Tax Auditing? As usual, this is a pretty critical topic for our readers, which is why it’s a top blog post again this month! Read on to learn how far back the IRS can audit your tax return.
  5. Theft Safeguards To Cause Tax Return Delays In Ohio Get ready to watch your mailbox – at least if you want to make sure you get your state tax refund. The Ohio Department of Taxation will once again ask some Ohioans to confirm their identity before their refunds are issued. Why? Keep reading to find out.

We have a lot more tips and tidbits coming up in March, so make sure you have subscribed to our blog so you don’t miss a single post.

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Does The IRS Care About Your Fantasy Football Team?

Monday, February 29th, 2016

What to know when reporting your fantasy football winnings – or losses

Fantasy Football Tax Guidance - Ohio CPA Firm

How your fantasy sports activity is classified will affect how your income – or lack thereof – is reported. Specifically, taxpayers need to know whether or not the IRS considers their fantasy football activity to be gambling and whether “the activity is not engaged in for profit (i.e., a hobby activity, if it is not gambling, or casual gambling, if it is gambling) or if the activity rises to the level of being a trade or business.” Read on to learn more.

When you sit down with your CPA to go over last year’s taxable income and they ask you how your fantasy football team did this year, they aren’t just looking to engage you in casual conversation. In fact, how well (or how poorly) you did over the last year might make a difference in the size of your tax bill.

According to the Fantasy Sports Trade Association (FSTA), about 56.8 million people spent their time and money on fantasy sports in 2015 – 73 percent of them were fantasy football players.  And, on average, over a 12-month period, players spent about $465 on league-related costs, single-player challenge games and league-related material. In short – fantasy sports has become a serious business and, as with most business matters, you should be prepared to report your fantasy sports winnings (or losses) to the IRS on Form 1040.

Read Also: Are You Missing Out On Tax Incentives?

Fantasy Money Spends The Same As Real Money

Just because your football team is fantasy doesn’t mean your money is, and when real money is being exchanged, you have an obligation to report it on your tax forms. However, because the IRS has yet to identify proper treatment of fantasy sport income and losses, the jury is still out on the “proper” way to report these fantasy winnings/losses on tax returns. And, from a state perspective, while most departments of taxation are struggling to identify the proper treatment of these funds, a few have issued guidance focused on fantasy sports operators.

Not Just A Hobby?

How your fantasy sports activity is classified will affect how your income – or lack thereof – is reported. Specifically, taxpayers need to know whether or not the IRS considers their fantasy football activity to be gambling and whether “the activity is not engaged in for profit (i.e., a hobby activity, if it is not gambling, or casual gambling, if it is gambling) or if the activity rises to the level of being a trade or business.”

In the article, “How to report clients’ fantasy football winnings,” that appeared in the February edition of the Journal of Accountancy, David Baldwin, CPA/PFS and Donald J. Zidik, CPA, provided some excellent insight into the 4 primary types of activity your fantasy football pastime could be classified as. Below is a brief synopsis.

Ultimately, at this time, how your CPA will classify your fantasy football activity depends on your own facts and circumstances. While you may consider fantasy football to be a hobby, someone else may be using it has a significant source of income.

  • A hobby activity

For most people, fantasy football would be classified as a hobby – meaning that it does not receive the level of activity required to qualify as a trade or business. In this case, your reporting would be guided by hobby loss rules and reported on line 21 of your IRS Form 1040. Deductions are generally allowed only up to the amount of income you secured as a result of the activity and only if you itemize your deductions. Your expenses, which are reported as miscellaneous itemized deductions, are subject to the 2 percent-of-adjusted-gross-income (AGI) floor and disallowed for alternative minimum tax (AMT) purposes. Your expenses would include your entrance fees for losing contests and other expenses you incurred as a result of the activity.

  • A nongambling activity – trade or business

Do you keep accurate books and records and conduct your fantasy football activity in a businesslike manner? Then it may qualify as a trade or business. Final judgment, however, is left to the IRS, which will determine if the activity contains elements of personal pleasure or recreation. If you do qualify for this classification though, your ordinary and necessary expenses could be deductible and your net income would be subject to self-employment tax. Your activity will be reported to the IRS on Schedule C.

  • Casual gambling activity

Would you consider your fantasy football gambling? If so, then you will need to refer to the usual rules governing gambling activities, which means that your entrance fees for losing contests should be reported as gambling losses and allowable only if you itemize your deductions. Different from hobby activity, your losses (to the extent of your winnings) are considered miscellaneous itemized deductions and are not subject to the 2 percent-of-AGI floor and, therefore, are not disallowed for AMT purposes and excess losses cannot be carried over to another year. Your winnings, on the other hand, will need to be reported as income – even if your losses exceed your winnings.

  • Professional gambling activity – trade or business

If you consider your fantasy football activity to be gambling, and you consider you level of involvement to be “full-time,” and as a means for producing income to sustain a livelihood, you could be considered a professional gambler in the grade or business of gambling. This means that your gambling losses can only be deducted to the extent of your gains and your losses in excess of your gains cannot be carried over to another year. That being said, ordinary and necessary business expenses you incur to engage in the gambling activity are deductible. You will need to report your winnings and losses on Form Schedule C.

For more tax tips, listen to episode 9: taxes are like fishing, of unsuitable on Rea Radio to learn more about strategic tax preparation with Melane Howell, CPA, a tax manager with Rea.

By Wendy Shick, CPA, CFP (Mentor office)

Are you looking for more helpful articles to help you with your tax preparation? These should help:

10 Reasons Why You Could Be Audited

Hobby Losses Versus Business Expenses

What Are The Tax Rules For Gamblers?

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Readers Sought Last-Minute Tax Tips In January

Friday, February 5th, 2016

Top 5 Business Blog Posts Revealed

Not a lot happens in January, unless you are a business owner who is scrambling to meet the IRS deadlines in preparation for the upcoming tax season – 2016 is no different. This is why I am glad to be able to provide you with some great tax and IRS articles from the financial experts at Rea & Associates!

If you haven’t read our top five blog posts from January, now’s your chance. You’re sure to find useful tidbit or two to use help you stay on top of your annual responsibilities while continuing to enhance your business over the next year.

  1. IRS Gives Business Owners The Gift Of More Time – While some taxpayers may be rejoicing after learning that the IRS has delayed 1095-C reporting deadline, it’s important to remember that this late Christmas gift may not be as great as it seems – especially when it comes to meeting the deadline to file your individual tax return. Read on to learn what this deadline delay means to you.
  2. National ID Theft Awareness Month: Get In The Know – December was National ID Theft Awareness Month and the fraud prevention team at Rea is a wealth of information when it comes to sharing great tips to help taxpayers protect their identities from fraudsters. Instead of scrolling past posts in our expansive article library or award-winning blog, we’ve compiled this Top 5 list to make your search for information easier. Read on to discover how you can prevent cyber criminals from hijacking your identity all year long.
  3. Anything Can Happen In Cleveland – Since 1999 that phrase has been uttered so many times in reference to the Cleveland Browns it should have been declared Ohio’s state motto. Well, it’s now 2016 and it looks as though next year might finally be THE year. Why am I so optimistic? Because the day after the Browns cleaned house, the franchise announced who would step in as the new Chief Strategy Officer to help rebuild the team – Paul DePodesta! Read on to learn how this move in Cleveland could mean positive things for your business.
  4. How Far Back Can The IRS Go For Tax Auditing – This is a hot topic every month, especially during tax season. Read on to learn how far back the IRS can go when auditing your taxes.
  5. 16 Resolutions For Business Growth In 2016 – New Year’s resolutions aren’t just great ways to set personal goals; they can help keep us on track professionally as well. This year, instead of worrying about which goal you are going to pick from the New Year’s Resolution menu, why not consider committing your energy and resources into ways that will improve the overall health of your business? Keep reading to find out how.

With tax season in full swing, this month we are busy sharing tips of getting ready for meeting with your accountant, preventing tax fraud and so much more. Don’t want to miss a post? Just subscribe to our blog and have them delivered directly to your inbox.

And don’t forget, if you have a question that pops up this tax season, email the team at Rea & Associates!

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Join The Fight Against Identity Theft & Income Tax Fraud

Friday, January 29th, 2016

Income tax identity theft and refund fraud has become a huge problem over the last few years; and while billions of dollars are finding their way into the pockets of fraudsters, the IRS is working hard to shut down these schemes.

The IRS paid roughly $5.8 billion dollars in fraudulent refunds to identity thieves over the course of the 2013 filing season. While that is a huge number, it could have been a lot worse. During the same time period, the amount the IRS successfully prevented or recovered totaled around $24.2 billion. But these statistics only take into consideration the fraud we know about.

Identity theft isn’t just a threat during tax season, scammers are exploiting a lot of cracks in your armor. Listen to episode 12: the great data saver on unsuitable on Rea Radio for insight from Joe Welker, CISA, Rea’s IT Audit Manager

The Unknown Number

While it is nice to know that the IRS is working hard to prevent identity theft and refund fraud, the truth is that we don’t yet have all the information to determine how bad the income tax fraud epidemic really is. This means that we continue to be at risk of becoming a fraud victim again this tax season. Perhaps if we knew how many fraudulent tax returns went on to be processed and how many billions of dollars were paid out to scammers looking to make a quick buck we could finally make some educated assumptions about the likelihood of being defrauded out of your refund check.

I don’t like not having all the necessary information.

Read Also: Ohio Department of Taxation Stops Thieves From Stealing Millions

This year, income tax fraud is expected to be higher than ever. This video, produced by abc6 out of Columbus, Ohio, shines more light on the topic of identity theft in Ohio.

Calling In Reinforcements

The IRS has realized that identity theft and refund fraud are threats that are showing no signs of going away. So the agency has requested help. The Internal Revenue Service, in cooperation with state tax administrators and tax industry leaders, has formed a public-private sector partnership to identify and test more than 20 new data elements on tax return submissions that will be shared with the IRS to detect and prevent fraudulent filings. The software industry is doing its part by putting enhanced identity validation requirements in place to protect customers and their personal information from identity thieves.

As of October 2015, 34 state departments of revenue and 20 tax industry members have signed memorandums of understanding regarding coalition’s roles, responsibilities and information sharing measures. More states are expected to sign on later.

Taxpayers Are Encouraged To Fight Back Against Fraud

Over the last 3 years, the IRS has initiated more than 3,000 fraud investigations. Those investigations have gone forward to convict and sentence close to 2,000 thieves to around 40 months in prison apiece. But there is still much to be done. They are doing their part.  We as taxpayers have to do ours.

In January, the IRS launched the “Taxes. Security. Together.” initiative to educate taxpayers on income tax identity theft and ways they can safeguard their information and protect themselves. According to the agency, there are several ways you can protect yourself from identity theft – especially during tax season:

  • Keep your computer secure
  • Avoid phishing email and malware
  • Protect your personal information

Above all, choose your tax preparer wisely and make sure they take their responsibility to safeguard your information very seriously. A tax preparer can also help if you do encounter a situation in which your information could be compromised.

By Ashley Matthews, CPA (Dublin office)

Want to take steps to ensure that you won’t be a fraud victim this year? These articles feature information that can help.

Should I still be concerned about identity theft and tax fraud?

How can you protect yourself from tax fraud

Identity Theft Prevention: Tips To Reduce Your Risk of Becoming a Victim

How To Recover From Identity Theft & Refund Fraud

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The 2016 Tax Season Is In Full Swing, Are You Ready?

Friday, January 22nd, 2016
Tax Planning - Ohio CPA Firm

Tax season doesn’t have to be the stuff nightmares are made of. Believe it or not, it can be a smooth, uneventful process. Just remember, preparation is the key to tax season success.

Your holiday decorations have been tucked away, subzero temperatures have found their way to your neighborhood and your W-2’s are in the mail … tax season is upon us once again!

This year, don’t let the hunt for tax forms, pay stubs and receipts stress you out. Instead, take a few minutes to brush up on some of our best tax season tips and avoid becoming a victim of the last-minute filing chaos that ultimately ensues in April.

Top 5 Tax Season Planning Tools

  1. File Faster With This Tax Prep ChecklistIt’s that time of year again – time to gather your information and prepare to file your tax return. You may be surprised how fast the entire filing process goes if you spend a little time preparing before you make your appointment with the tax preparer. Get your tax prep checklist here to avoid missing the filing deadline.
  1. From Toddler To Teen And Beyond: Tax Breaks For Families: With parenthood comes many rewarding experiences – and expenses. You hear about how expensive it is to raise a child, but you never really know what to expect until that little bundle of joy enters your life. From diapers, pre-school, extracurricular activities and saving for college, the costs of raising kids adds up fast. Read on to discover what tax breaks are available to families?
  1. How To Win Tax SeasonBy mid-January, statistically, most Americans have already abandoned their New Year’s resolutions – those promises you make to yourself to hit the gym, get more sleep or become more organized. But hopefully, you’re not like most Americans – especially if better organization is the goal. Today I want to urge you not to give up at least not until April 15. Keep reading to find out how you can win tax season with these four tax prep tips.
  1. Taxes Are Like FishingAre you wondering where I’m going with this, wonder no more. You are sure to find a lot of valuable insight in this episode of unsuitable on Rea Radio. Episode 9, Taxes Are Like Fishing, features Melane Howell, CPA, a tax manager at Rea, talking about the importance of strategic preparation, just in time for tax season. Listen now for great insight and sound tax tips that are sure to make this tax season the easiest one yet!
  1. The Truth About Tax ExtensionsWhile the first four months of the year is a busy time for accountants, we know that things don’t always go according to plan. But instead of enduring penalties for filing a late return, you may find that filing a tax extension is a better option. Contrary to popular belief, tax extensions aren’t as bad as you may have heard. Read on to learn the truth about tax extensions, and don’t forget to check out the slideshow.

Tax season doesn’t have to be the stuff nightmares are made of. Believe it or not, it can be a smooth, uneventful process. Just remember, preparation is the key to tax season success.

Need help filing your individual or business tax return? Email Rea & Associates for help. Our team of tax advisors can help you change your perspective of tax season into one that is more positive for everyone.

By Lesley Mast, CPA (Wooster office)

Check out these articles for more helpful tips for individuals:

Cyber Crime: It Can Happen To You

You Can Still Have The Final Say After Death

Debt vs. Taxes: Should You Pay Off Your Loan

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Go Green for the Planet and Pocket the Savings

Monday, January 11th, 2016
Think Green To Save Money | Rea & Associates | Ohio CPA Firm

Bright Idea:
Start saving in 2016. If you haven’t already, replace discontinued incandescent light bulbs with LED and other energy-efficient bulb options and save on your electric bill. Read on for more great tips!

It’s always a good time to talk about ways to realize some significant savings, and sometimes all you have to do is go green to save some green. Even though some green initiatives may seem to have a higher upfront cost, the IRS continues to offer a variety of tax saving incentives to help balance the burden as well as to reward you for making a few pro-planet upgrades to your home and/or business property.

Since it’s the beginning of the year and we are already open to the idea of making a few changes, we have another one for you to consider. Because Jan. 10 was national cut your engine cost day, we wanted to give you some ideas to help you celebrate the occasion while investing in the long-term sustainability of both your planet and finances.

For Individuals:

Planning to install a residential fuel cell and micro turbine system in the near future? Through the end of 2016 you may qualify for a tax credit of 30 percent of the cost of the project, up to $500 per 0.5 kilowatt of power capacity.

Looking to purchase a new car soon? Tax credits are available for all electrical cars. You can visit the DOE’s Fuel Economy website to search what cars are eligible. Based on the vehicle’s battery capacity the credit can be between $2,500 to $7,500.

For Business Owners:

If your business has installed solar panels at company properties, then you may be eligible for up to a 30 percent tax credit for installation and project costs. This credit is available until Dec. 31, 2016.

An energy-efficient commercial building tax deduction allows businesses to deduct certain costs related to making a building energy-efficient rather than capitalize those costs over 39 years. Some improvements that might apply include:

  • interior lighting systems
  • HVAC systems
  • hot water systems
  • insulation and exterior windows and doors

But there’s a catch – you have to get a certified licensed engineer to review the project and verify that it meets the IRS’s requirements for a tax deduction. The maximum deduction that can be taken is calculated at $1.80 times the building square footage for property placed into service in 2016.

Finally, if you plan to install a geothermal system, your business may qualify for a 10 percent tax credit.

With rising electric costs, implementing some of these green initiatives can garner you tax savings now and energy cost savings in the future.

Looking to more ways to go green and cut expenses? Email Rea & Associates and ask for more tips.

By Brian Kempf, CPA (Millersburg)

Looking for more ways to improve your business in the new year? Check out these posts:

16 Resolutions For Business Growth In 2016

Easy Year-End Tax Tips For Business Owners

It’s OK To ‘Think Small’

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Egg Nog & Tax Tips: Top 5 Posts In December

Wednesday, January 6th, 2016

December is such an exciting time. Shopping, baking, decorating and spending time with family and friends celebrating keeps a frog busy. But, in-between the office parties and family gatherings, the team and I were still able to address some of your end-of-the-year questions and concerns.

From the updates we received from our pals over on Capital Hill to year-end tax tips, there was certainly a lot to write about this month. These were the top-read posts in December

  1. Easy Year-End Tax Tips For Business Owners: There’s no doubt about it, this time of year is busy! I’m willing to be that sitting down at the computer to research tax deductions is the last thing on your mind. You’re in luck! We’ve done the work for you. Click here for some great tips, deductions and insight that will help you keep more of your hard-earned money in your bank account.
  2. Employers: Are You Ready To Change The Way You Withhold Municipal Tax Payments?:  Ready or not, all Ohio municipalities will be welcoming a slew of new provisions designed to bring about a unified system of income tax reporting. House Bill 5 was signed into law by Gov. Kasich on Dec. 19, 2014. The bill, which was championed by the Ohio Society of CPAs and supporters, helped streamline several key measures that help establish meaningful municipal tax reform. Per the legislation, many key provisions are scheduled went into effect Jan. 1 of this year. Read on for Four facts about the changes you need to know.
  3. Congress Gives Taxpayers An Early Christmas Present: Year after year, Congress promises to address the future of many expired tax provisions, and year after year they fail to make a definitive decision – opting only to pass legislation that extends the provisions for another year. In the meantime, taxpayers are expected to take on the impossible task of navigating the terrain amidst legislative uncertainty. Happily, things are about to change. Read on to learn why.
  4. How Far Back Can The IRS Go For Tax Auditing? – As a CPA I’m frequently asked, “How far back can the IRS look to audit my tax return?” That’s a great question. Can the IRS go back and audit your tax return from five years ago? 10 years ago? 25 years ago? Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax. Keep reading to find out how far back they can go.
  5. Cyber Crime: It Can Happen To You: Fraudsters don’t take holidays. In fact, they tend to be more active this time of year because they believe we are more likely to let our guards down. I don’t intend on falling for any of their traps, and I encourage you to do the same. Check out what you can do to protect yourself.

Now that December is history, let’s look forward to a great 2016. Stay tuned as we provide you with the latest and greatest news in the business and financial world. While you’re at it, don’t forget subscribe to our blog to receive email reminders when new stories are posted.

You can also ask your own question by filling out the simple form at the top, right side of this page.

Finally, remember that the team at Rea is always available to discuss your specific business issues in more depth. All you have to do is email Rea & Associates and we would be happy to set up a time to talk more.

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IRS Gives Business Owners The Gift Of More Time

Monday, January 4th, 2016
Form 1095 Deadline Extended - Ohio CPA Firm

Failure to comply with provisions set forth in the ACA can lead to catastrophic penalties, which is why we have actively sought to inform business owners of their responsibility to file Form 1095-C. Unfortunately, we knew that while we could successfully inform many businesses in advance of the original deadline – some were going to be left behind. Time, it seemed, just wasn’t on our side. But the IRS saw this threat and, as 2015 came to a close, took action to delay the 1095-C reporting deadline – (hopefully) keeping many small businesses intact.

While some taxpayers may be rejoicing after learning that the IRS has delayed 1095-C reporting deadline, it’s important to remember that this late Christmas gift may not be as great as it seems – especially when it comes to meeting the deadline to file your individual tax return.

Read Also: Make BIG Changes Or Face BIG Fines

1095-C Reporting Deadline Postponed

As you may already know, failure to comply with provisions set forth in the Affordable Care Act can lead to catastrophic penalties, which is why we have actively sought to inform business owners of their responsibility to file Form 1095-C. Unfortunately, we knew that while we could successfully inform many businesses in advance of the original Jan. 31 deadline – some were going to be left behind. Time, it seemed, just wasn’t on our side. But the IRS saw this threat and, as 2015 came to a close, took action to delay the 1095-C reporting deadline – (hopefully) keeping many small businesses in tact.

Employers now have until March 31 to provide employees with Form 1095-C and the deadline to file the form electronically with the IRS was moved to June 30. The IRS also extended the deadlines for 1095-Bs to these new dates as well.

Remember, all 2014 large employers are required to file these forms, based on 2015 data. Per employee penalties will accrue for those who file late or fail to file. Some businesses may be considered large employers under the ACA, and not even know it; but there are ways to determine your employer status before it’s too late.

That Sounds Great, Except …

Now for the bad news – there will be some individual tax payers who may not get these forms to us until the first week of April. For most taxpayers, this will simply require some additional due diligence with no delay to filing their tax return. However, there will be some individuals who will likely have to file an extension if they do not get their forms in time. Don’t be afraid of tax extensions. As long as you work proactively with your tax advisor, there is absolutely nothing to worry about. In fact, filing a tax extension could be very helpful. Click here to get “The Truth About Tax Extensions”

You Do Not Have Permission To Do Nothing

You’ve been given extra time. Now let’s make the most of it. Rea & Associates is still accepting new clients for 1095-C Form preparation projects, And, as we have previously stated, the top payroll companies are already booked to capacity with wait lists growing by the day. If you haven’t started on this project yet and know that you should, take advantage of this delay and email me for help. My team here at Rea can also help you determine if your business is considered a large employer – which can keep you from being blindsided when the IRS determines that you do, indeed meet the large employer qualifications.

By Joe Popp, JD, LLM (Dublin office)

Want to learn more about your responsibilities under the ACA? These articles will provide you with more insight:

The Cost Of Reimbursing Employees For Health Care

Obamacare: Discrimination Is Not An Option

Secure Form 1095-C Help Now And Avoid Penalties

 

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Business Leaders Were Reading What?!

Monday, December 28th, 2015

2015’s Most Popular Blog Posts

Best Business Blog Posts 2015- Ohio CPA FirmIf you take a moment to scroll through the list of categories, authors and archives on the right-hand side of this page, it’s pretty clear to see just how active Rea’s team of experts are when it comes to providing leaders in the business community with accurate, timely and easy to digest content. We are fortunate to have so much experience and expertise on our staff, and their eagerness to serve you better has allowed us to maintain a bi-weekly electronic newsletter, a quarterly print newsletter, three blogs and a handful of electronic segment specific newsletters. That’s a lot of content – but we are not even thinking about slowing down! I hope you hang around my lily pad for awhile. I’m pretty sure you’ll find a lot of great little tidbits to read about in 2016 too. Until then, I want to invite you to take a look at some of our most popular blog posts and articles. And, if you haven’t already, take a moment to look through the newsletters we offer and sign up to have news, tips and valuable information delivered to your inbox all year long!

Top 5 Dear Drebit Posts In 2015

Dear Drebit is updated every few days with timely information and advice. In addition to covering current trends and issues, readers are also invited to ask financial and business questions on the page, which will be answered by one of Rea’s industry experts. Here are last year’s top posts:

  1. How Far Back Can The IRS Go For Auditing?
  2. Theft Safeguards To Cause Tax Return Delays In Ohio
  3. Six Things 401K Plan Sponsors Need To Do Now
  4. New Adjustments Will Affect Your 2015 Tax Return
  5. File Faster With This Tax Prep Checklist

5 Most Popular Posts On Brushing Up Blog

Brushing Up: The Dental Accounting Blog features a variety of finance and business advice specifically tailored to dental professionals. From purchasing a practice, knowing what to expect from a career in dentistry and hiring the best staff for your practice to general accounting advice, tips for cashing out at retirement and tax tips, this blog is a valuable tool for dental professionals who are looking for ways to secure long-term success in their career. The year’s most-read blog posts are:

  1. How Sales & Use Taxes Apply To Ohio Dental Practices
  2. 6 QuickBooks Tips Every Dentist Should Know
  3. Could A Crown Be A Tax Deduction?
  4. 10 Year-End Tax Planning Strategies For Dentists
  5. Buying An Established Dental Practice? Master The Changeover 

Cultivating Your Business Readers Choose Top 5 2015 Posts

The Cultivating Your Business blog is a resource provided to clients and visitors on the firm’s Know & Grow website. Updated a few times per month, business owners have access to advice, tips and general insight into how to grow their businesses and realize an optimal return on their investment upon retirement. Here are the top blog posts from last year:

  1. Bad Buy-Sell Agreement Claims Another Family Dinner
  2. Will Your Summer Reading List Make You A Better Business Owner?
  3. WARNING: Free Business Valuation Offer Is Unbelievable
  4. Uncover The Secrets To Cashing In On Your Business
  5. How To Communicate To Your Employees That You’re Selling Your Business

Top 10 Articles In Rea’s Library In 2015

In addition to our blogs, the Rea team publishes a lot of other valuable content in print and electronic newsletters. We make sure that all these articles are easily accessible in our article library. This is where you will find many of our niche pieces as well as a lot of general accounting tips and insights. Take a look at some of our most popular posts over the last year.

  1. What Is The Mid-Quarter Convention?
  2. Dangers Of Paying Under The Table
  3. Revenue Recognition Changes Are Coming
  4. Football Ticket Deductions
  5. 401K Loans And Keeping Your Plan In Compliance
  6. Take Control Of Your Vendor Master In Nine Steps
  7. Why Your Traditional Employee Management Method Is Failing
  8. The Birth Of The Taxpayer’s Estate
  9. Parting Is Such Sweet Sorrow: But What About Your 401K?
  10. Purchasing Cards Compromise Business Security
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Congress Gives Taxpayers An Early Christmas Present

Monday, December 21st, 2015

PATH Act Makes Several Key Tax Provisions Permanent

PATH Act Makes Several Key Tax Provisions Permanent | Rea & Associates | Ohio CPA Firm

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. Read on to learn more.

There is nothing like waiting until the last minute to complete a task. We’ve all been there and we all promise we’ll never do it again. Unfortunately (especially when it comes to determining the future of several valuable tax provisions) our government has fallen victim to the same bad habit.

Year after year, Congress promises to address the future of many expired tax provisions, and year after year they fail to make a definitive decision – opting only to pass legislation that extends the provisions for another year. In the meantime, taxpayers are expected to take on the impossible task of navigating the terrain amidst legislative uncertainty. Happily, things are about to change.

Listen To Our Podcast Taxes Are Like Fishing To Learn More About Tax Strategy

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. The legislation, Protecting Americans From Tax Hikes Act of 2015 (PATH Act), is retroactive to Jan. 1, 2015, and provides taxpayers a level of certainty that they have been without for quite some time.

This legislation offers a lot of relief to individuals and businesses, alike. Here’s an overview of what you can expect moving forward.

Key Tax Provisions Made Permanent By The PATH Act:

  • 15-year recovery period for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Extension and modification of the research & development credit, including allowing certain small businesses to claim the credit against AMT liability and employer’s payroll (ie: FICA) liability
  • 179 expensing limitations and phase out increased to $500,000 and $2 million respectively
  • Exclusion of 100 percent of gain on certain small business stock
  • Extension of tax-free distributions from IRAs for charitable purposes
  • Earned income tax credit
  • Child tax credit

Key Provisions Extended Through 2019

  • Extension of the new markets tax credit in which Congress authorized $3.5 billion allocation of credits each year from 2015 until 2019
  • Extension and expansion of the work opportunity tax credit
  • Bonus depreciation is extended at 50 percent for 2015 through 2017, 40 percent for 2018, and 30 percent for 2019

Key Provisions Extended Through 2016

  • Extension and expansion of empowerment zone tax incentives
  • Two-year moratorium on the 2.3 percent medical excise tax imposed on the sale of medical devices
  • Extension of energy efficient commercial buildings deduction

In addition to the extension of key tax provisions, the PATH act also puts more scrutiny on the operations of the IRS. IRS agents will be held accountable for knowing and acting in accordance with the taxpayer bill of rights and prohibits the use of IRS business for political gain.

The passage of the PATH act is a huge victory for American taxpayers, and will allow them to partner more efficiently and effectively with their tax advisors on key issues in years to come without the uncertainty that has plagued them for many years.

Be sure to set up an appointment to speak with your tax advisor or financial planner to talk about how the PATH act will impact your ability to take advantage of tax planning strategies. Do you have questions about specific aspects of the PATH act? Fill out the form on the top, right side of this page to submit your question to Dear Drebit.

By Ashley Matthews (Dublin office)

Are you looking for more ways to save on your tax bill? These articles can help:

Year-End Tax Tips For Business Owners

Dos & Don’ts of Gifting Donations

Should I Make A Big Purchase To Cut Taxes?

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Easy Year-End Tax Tips For Business Owners

Friday, December 11th, 2015
Tax Savings - Ohio CPA Firm

Put some extra cash in your piggy bank this tax season with these deductions.

In just a few days … this year will be history. And while you may have run out of time to wrap up (or start, let’s face it …) last year’s resolutions, it’s not too late to tap in to some last-minute tax saving strategies to help reduce your tax bill. Actually, there are quite a few things you can do to before the ball drops to secure some valuable savings.

Read: How Can You Best Prepare For The Upcoming Tax Season?

We’ve Done The Research For You

There’s no doubt about it, this time of year is busy! Family gatherings, shopping, decorating, cooking … sitting down at the computer to research tax deductions are probably isn’t ranking too high on your priority list. Happily, we’ve done the work for you. Check out the four articles below for some great tips, deductions and insight that will help you keep more of your hard-earned money in your bank account.

  1. What companies can do now to get ready for tax season: Are you willing to accept a larger-than-expected tax bill simply because you didn’t make time to touch base with your financial advisor before the end of the year? Well, if you failed to let your CPA know about any significant changes that occurred over the last year, you could miss a valuable opportunity. Read on to learn more.
  2. 5 Tax Deductions To Ease Your Business’s Tax Burden: From claiming the Ohio small business deduction to taking a personal vehicle deduction, these frequently overlooked deductions can result in real savings. Read on to learn more.
  3. Should I Make a Big Purchase to Cut Taxes?: Maybe you’ve been toying with the idea of buying a big piece of machinery for your business for a while now, but you haven’t really been sure if it’s the right move. A call to your tax advisor could help point the right direction. Oftentimes, business owners can realize some really great savings opportunities just by spending a little bit more. That’s right, you get the upgrade you’ve been wanting AND the tax deduction. Who said you can’t have your cake and eat it too?!
  4. Don’t Wait Until It’s Too Late! Year-End Tax Planning Tips: Business owners aren’t the only ones who are able to tap into last-minute tax savings. There are ways individuals can make the most of the month of December too. From paying state & local tax estimates by the end of the year to prepaying your real estate taxes, taking a little time to plan ahead can help put more money in your pocket.

Do you think you can benefit from any of these tips? Email a tax expert at Rea & Associates to discuss what you should do before year-end to take advantage of major tax savings opportunities you may have missed in the past.

By Lesley Mast, CPA (Wooster Office)

Want more? Here are more tips to help you start the year off on the right foot.

Employers: Are You Ready To Change The Way You Withhold Municipal Tax Payments?

How to develop a forward-looking financial forecast for your business

Don’t Start The New Year Without Updating Your Business Plan

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Cyber Crime: It Can Happen To You

Tuesday, December 1st, 2015

Phishing Scam Targets Tax Preparers To Get To Taxpayers

IRS Phishing Scams - Ohio CPA Firm

One thing you can do to help protect yourself from cyber criminals is to make sure your address bar reads “https” and NOT like the one pictured above. Read on for additional tips.

Fraudsters don’t take holidays. In fact, they tend to be more active this time of year because they believe we are more likely to let our guards down. Instead, I don’t intend on falling for any of their traps, and I encourage you to do the same.

It’s A Trap

We recently published a blog post with tips to help online shoppers protect themselves against some of the more common tactics used by cyber criminals. From click bait to phishing emails, every link, sponsored post and flashing banner ad is a potential threat and we encourage you to protect yourself at all costs.

For example, you likely receive regular electronic correspondence from companies, organizations, groups and other reputable groups. In fact, you probably willingly provided them with your email address. You may even trust these contacts so much that you never thinking twice about whether their email is valid, and that’s what criminals are counting on. Nobody is immune.

Read Also: Who Is That Email Really From?

A current scam finding its way into inboxes across the country is targeting tax preparers. The email, which is supposedly being sent by the IRS, looks legit and includes the agency’s letterhead, logo and copyright language, among other information designed to add credibility to the piece. But there’s a problem – this email is not official IRS correspondence. Instead, it’s being sent by cyber criminals who are looking to capture usernames and passwords to gain access to taxpayers’ sensitive data.

We’re Not Falling For It

The American Institute of CPAs reached out to the IRS to verify whether the email in question is, indeed, a phishing scam. The government agency confirmed that the email was a scam and were quick to advise recipients to delete the message immediately.

This is just one example of a phishing scam in action. Emails like these are distributed every day and, oftentimes, they come from trusted businesses, organizations or people. As cyber threats continue to be rampant in our society, we must never allow ourselves to become complacent.

What You Can Do

Here are some tips to help keep you safe.

  1. Do It Yourself – Never click on hyperlinks found within the body text of the email – especially if you received the message from an unknown sender. If you do want to check the validity of an offer or content, manually type the URL into your web browser. Same results, less risk.
  2. ‘S’ For Safety – If confidential information is being traded, take a look at your address bar to make sure it reads “https” rather than the standard “http” to be sure the web page you are visiting is, indeed, secure.
  3. If It Pops, Run – Sometimes, the best and easiest strategy you can take to protect yourself from scammers is to configure your computer’s settings and buy and install the proper tools. We recommend disabling all popups, keeping an updated antivirus, use anti-spam and anti-spy software and install and maintain a firewall. Cyber criminals are always looking for ways to get around these measures, but they still provide you with a great first defense.
  4. Watch Your Back With A Backup – We keep a lot of irreplaceable items on our computers and, to many, the thought of permanently losing their data, photos and other documents is terrifying. One way to take the power away from the scammers is to create and maintain a backup of your data – especially when considering the very real threat of ransomware. That way, if something were to happen, you wouldn’t lose these vital items.
  5. Education Is Power – These criminals are slick and they are always finding new ways to take what belongs to you. So, one of the absolute best ways to guard against an attack is to educate yourself on current cybercrimes, identity theft trends and tactics being used by fraudsters.

By Lesley Mast, CPA (Wooster Office)

Want to know more about what other threats are out there? Check out these articles:

Malware Threat Spreads To Smart Phones

Fraudulent Credit Card Transactions Will Become Merchant’s Problem On Oct. 1

How Much Is Your Data Worth To Criminals?

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You Can Still Have The Final Say After Death

Friday, October 23rd, 2015
Estate Planning - Ohio CPA Firm

It doesn’t matter if you have a lot of assets to pass on or very few, estate planning is one of the best things you can do for yourself and for those you love.

Life is full of enjoyable experiences. Spending time with family and friends, hiking through the woods, spending the afternoon on the lake, immersing yourself in a hobby – these are the moments we live for. What if you could give yourself the opportunity to make those moments more enjoyable? Would you take that opportunity?

Click To Listen To Episode 6 of Unsuitable on Rea Radio: The Grim Reaper Is Coming … And He Wants Your Money

Every time you avoid the conversation about estate planning you miss out on a chance to make this period of your life even more enjoyable – for you, and for your loved ones. Once you have made your plans with regard to what you want to happen after your death, those thoughts are no longer in the back of your mind. They are decided and you can truly enjoy the moment with your friends and family.

Three Things Everybody Should Know About Estate Planning

  1. Estate planning is for everybody. Estate planning isn’t just dependent on your assets; it’s about identifying what you want to happen after you pass away. Who do you want to take care of your children, for example, and do you want that person to be financially responsible for them as well – they don’t necessarily have to be the same people. When you take control of your estate planning, you are effectively helping to ease the burden that is already felt by your loved ones. Not only will you have already made the difficult decisions, but you can do so in a way that provides additional benefits for your heirs while securing your legacy.
  2. If you have an IRA, don’t forget to name your contingent beneficiary.  It’s common to have an IRA through your employer, but oftentimes naming the IRA’s contingent beneficiary is forgotten. Usually it’s your spouse, but if your spouse has already passed away, you need to make sure to name a new contingent beneficiary. This is just one simple way to plan ahead, but it’s frequently overlooked.
  3. Probate Court isn’t always a bad thing. You hear people say things like: “You want to avoid probate at all costs.” But that’s not necessarily the case. For example, imagine that you’ve made plans to have all your assets go directly to your three children – avoiding the probate process altogether. When it comes time to pay for your funeral, you would hope that your three children would split the cost three ways without much ado. But, without Probate Court to mediate the situation, one child could decide that they don’t want to pay their portion, which would leave the other two children with the bill. When you bring probate into the equation, you help ensure that there is enough money available to cover these necessary funeral expenses.

Find Time To Enjoy More

It doesn’t matter if you have a lot of assets to pass on or very few, estate planning is one of the best things you can do for yourself and for those you love. The sooner you start planning yours, the sooner you can get back to enjoying the moments that truly make life worth living.

By Dave McCarthy, CPA, CSEP (Medina office)

Dave McCarthy Discusses Estate Planning during Unsuitable on Rea RadioLearn more about the importance of estate planning. Listen to “The Grim Reaper Is Coming … And He Wants Your Money” podcast on Unsuitable on Rea Radio at www.reacpa.com/podcast or on iTunes or SoundCloud.

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Debt vs. Taxes: Should You Pay Off Your Loan

Friday, October 9th, 2015
Loan Repayment - Ohio CPA Firm

Without the tax deduction, you will pay a little more in income taxes but you will be left with more money in your bank account at the end of the day.

Have you ever heard someone say they couldn’t afford to pay off their loan because they would lose the interest deduction on their tax return?

Although it’s true that the taxpayer will be able to deduct their loan interest at tax time, there’s a lot more to consider – read on to learn more about the tax treatment of loans and interest to identify a repayment strategy that works best for you.

Read Also: Don’t Let Tax Incentives Determine How You Donate

It Is Worth It To Be In Debt?

Let’s assume that you are in the 25 percent tax bracket, which means that for every dollar you pay the bank in interest, the government will give you 25 cents back in tax savings. BUT – you have to remember that you are still out of pocket 75 cents of every dollar you pay the bank in interest. From an overall cash flow standpoint, that doesn’t really sound like a winning strategy to me.

Even though it would be nice to have a tax break to look forward to in the spring, you will ultimately end up paying more over the duration of your repayment period if you choose not to pay your loan off. That being said, if you have the funds available to pay off the principal loan balance you will save yourself the cost of the interest you are being charged by the bank.

Without the tax deduction, you will pay a little more in income taxes but you will be left with more money in your bank account at the end of the day.

Possible Reasons to Hold On To Your Loan

  • Investment Opportunities

Let’s say your loan balance is $50,000. If you have $50,000 of excess funds available to pay off your loan, you may also want to consider what your investment options are if you didn’t pay that loan off. Could you earn a rate of return greater than the interest rate you are paying on your loan? If so, then you may be better off keeping the loan and investing your excess funds.

  • Liquidity

Another consideration is the liquidity. You may have the funds to pay off the loan but you may want to keep a reserve of funds for an emergency or unknown need that may arise. Everyone has their own comfort level when it comes to maintaining an excess supply of cash reserves and your decision may vary whether you are holding on to a home mortgage loan or a business loan. As a business owner, for example, you might find it to be more beneficial to keep the borrowed money readily available to cover any fluctuations pertaining to your company’s equipment or inventory needs. Or you may want to keep a reserve of funds to get through your slow season.

Depending on where you are with your business or personal finances, you’ll want to consider various factors when deciding if you should pay off your mortgage or business loan. If you are only looking at the tax savings, then paying off the loan is likely your best option. However, it may also be important to consider other factors such as alternative investment options and liquidity. If you have questions about paying off your loan, email your Rea advisor.

By Mark Fearon, CPA (New Philadelphia office)

Are you looking for more tips and tax breaks to maintain your financial security? Check out these articles for more tips and advice.

Become A Brank Reconciliation Warrior

Does Your Vacation Home Provide Tax Relief?

The Birth Of The Taxpayer’s Estate

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Don’t Get Blown Away By A Cash Windfall

Monday, September 28th, 2015

4 Tips for Managing Sudden Wealth

Manage Sudden Wealth -  Ohio CPA Firm

Before you make a move with your money, take a little time to think about you want to do with your cash and consider getting some advice from a financial professional and review these four tips for managing sudden wealth.

Congratulations – you just won the lottery! Or, in a more realistic scenario, a significant amount of money has landed in your lap through an inheritance or the sale of property.

Now what?

As many who have been in your shoes will attest, it’s important to pause, take a step back, and evaluate your options before making any big financial decisions. Sure, that brand new sports car would look
great in your driveway, but will you regret spending the money down the road? Significant money creates many opportunities. Some? Wonderful. Others? Money pits.

Read Also: Considering Gifting Your Family Owned Business?

Before you make a move with your money, think it through and talk to a pro. The truth is, there’s no right answer, as no two financial situations are exactly alike. But these four steps will help you decide what’s best for you.

  1. SLOW DOWN. It’s easy to get caught up in the excitement of new wealth, and the tailspin that can ensue. But don’t allow yourself to lose your footing and don’t be tempted to make excuses for reckless spending. Avoid making any significant or impulsive purchases for at least a month or two. Take a step back from the moment and think long-term … what sort of financial goals do you have for the future? How do you really want to spend this money? Begin thinking about this and write down your thoughts. Writing down goals and thoughts is a proven method of helping you achieve your goals. It’s also helpful to have these things in writing when you meet with your advisors.
  2. FAIL FORWARD. Think about some of your past financial blunders. We’ve all made mistakes – but they’re only truly mistakes if you don’t learn something and prevent them from happening again. You know yourself better than anyone, and you owe yourself this honest examination. Use your missteps to your advantage.
  3. DO YOUR HOMEWORK. If your decisions affect others, talk with them before acting. If someone has an investment idea, consider whether it’s too good to be true. If you are approached to help a charitable cause, ask yourself if it’s something you’re passionate about. And make sure you have an understanding of the organization. You should also find out if they will publicize your contribution.
  4. CONSULT WITH A PRO. Navigating new wealth is complicated, and it’s imperative you find experts to help guide you through the process. Talk with a few people you trust and respect. If an advisor’s name is mentioned more than once, it’s probably someone you should talk to. If you already have an advisor, consider whether or not they are up to the task at hand. You’ll want to work with a CPA, attorney and investment advisor. Be prepared to invest some time meeting with each advisor in an effort to decide who to hire. Each one will play a different, but valuable role. Depending on your situation, you could lose a chunk of your newfound wealth to income taxes, so be sure to talk to a CPA with a specialty in income tax. You will want to know what you owe and when you owe it. More importantly, you’ll want to learn if you can avoid, reduce or defer any of the tax.

Finally, before selecting the advisors you want to work with be sure you understand all of the fees involved with their services up-front. Be prepared to get what you pay for.

 

Whatever the reason for your windfall, make sure you take the time to respect it – and your financial future. Email Rea & Associates to learn more about managing sudden wealth.

By Ryan Dumermuth, CPA, CFP (Mentor office)

Want to learn more about managing your sudden wealth? You may like these articles:

How Can I Make The Most Of My Retirement?
Estate And Gift Tax Exemptions: New Wealth Transfer Rules

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Colored Pencils, Glue and … Rubber Pants? Oh My!

Monday, August 3rd, 2015

Five Things You Didn’t Know About Ohio’s Tax Holiday

Ohio Sales Tax Holiday - Rea & Associates - Ohio CPA FirmRegardless of whether you are a parent with younger children, a student, a teacher, or maybe just someone who wants to stock up on a ridiculously large supply of colored pencils and glue, by the time you buy everything you need for that first day of school, you (and your bank account) are drained. OK – maybe it’s really not that bad, but by the time you purchase new clothes and shoes, a book bag or two and all the items that go in it, you will have spent a large sum of money.

Fear not fellow Ohioans! The Department of Taxation is offering relief.

This year, for the first time ever, the State of Ohio is giving those who shop for clothing (priced at $75 or less per item), school supplies (priced at $20 or less per item) and school instructional material (priced at $20 or less per item) a break from paying sales tax beginning 12:01 a.m. Friday, Aug. 7 and ending 11:59 p.m. Sunday, Aug. 9, 2015. And there is no limit on the quantity of items you can purchase.

“As the new school year approaches, additional expenses can put a strain on family budgets, said Ohio Tax Commissioner in a news release. “The sales tax holiday will give back-to-school shoppers a break from paying sales tax, and let Ohio families save some money.”

The one-time tax holiday, which was enacted as a result of Senate Bill 243, also applies to eligible items purchased online, by mail, telephone or email. But to qualify, the order must be placed, paid for and accepted by the retailer for immediate shipment during the hours the tax holiday is in effect. That being said, actual delivery can occur following the tax exemption period.

Read on to learn five interesting facts about the upcoming tax holiday.

Five Things You Didn’t Know About Ohio’s Tax Holiday

  1. Retailers cannot “opt out” of the 2015 Ohio Sales Tax Holiday event. The holiday is set by law, therefore all vendors must comply.
  2. Qualifying items placed on, or picked up from, layaway during the sales tax holiday ARE exempt from sales tax.
  3. During the sales tax holiday, all clothing that costs $75 or less is exempt from sales tax. So, obviously items such as shirts, pants, dresses, uniforms, shoes, coats, etc. are tax exempt; but items like receiving blankets, diapers, rubber pants and athletic supporters also made the cut.
  4. While you won’t have to pay sales tax on your aprons, belts and beach capes, wigs, belt buckles and wetsuits are another story. Make sure to check the official web page for more clarification.
  5. Teachers are also encouraged to take advantage of the holiday! In addition to traditional school supplies, the tax exemption is valid for reference books, maps, globes, textbooks and workbooks.

SOURCE: http://www.tax.ohio.gov/sales_and_use/salestaxholiday/holidayfaq.aspx

Click here to learn more about Ohio’s 2015 Sales Tax Holiday. Happy back-to-school shopping!

By Lisa Beamer, CPA (New Philadelphia office)

 Want to learn more about state and local tax topics that impact your life?
You might like these articles:

[SLIDESHOW] The Truth About Tax Extensions
[INFOGRAPHIC] Top 3 College Savings Account Strategies
How To Pay Your Tax Bill In 6 Easy Steps

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Like Losing Your Wallet – Only Worse

Friday, July 31st, 2015
Retirement Plan Returns- Ohio CPA Firm

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune.

For most of us, misplacing our keys, losing sight of our shoes and occasionally forgetting to pay the phone bill on time is not a catastrophic phenomenon. It happens; and most likely we will freak out for a minute, find what we were looking for and move on – only to repeat our dysfunctional routine countless times over the course of a lifetime. Forgetting to file your retirement plan returns on the other hand … well, let’s just say that’s typically not a stress-free event.

Read Also: Do You Know What Your Retirement Plan Is Costing You?

Typically, owners of businesses and their spouses who fail to file their annual retirement plan returns (Form 5500-EZ) are in full-scale crisis mode – and rightfully so, since missing this deadline results in a penalty that’s about the size of a small fortune. To be more precise, in years past, those who failed to meet their filing obligation could face a penalty totaling up to $15,000 per return. Fortunately, the IRS recently announced that instead of facing such an extreme late fee, eligible business owners can take advantage of a “low-cost penalty relief program.”

How Much Would You Pay?

The relief initiative, which started as a one-year pilot program in 2014, was tremendously successful, resulting in the collection of about 12,000 late returns. Because of this success, the program secured it’s permanency in May of this year. According to the news release, the program allows eligible business owners and their spouses to file late returns and only pay a $500 penalty for each return submitted with a maximum of $1,500 per plan. Because the IRS caps the maximum penalty at $1,500, applicants are encouraged to include multiple late returns in a single submission.

Eligibility

The IRS says that businesses with plans that cover the owner or the business’s partners (depending on how the business is set up) and their spouses are eligible to take advantage of this low-cost plan. Complete information about the program can be found by clicking here.

Learn More

Remember, your return must be filed annually no later than the end of the seventh month following the close of your plan year. So, for example, if your plan is governed by the calendar-year, as most are, your 2014 return was due today (Friday, July 31, 2015). Did you fail to file your small business’s annual retirement plan returns? Would you like to find out if you qualify for this program? Email a retirement plan expert at Rea & Associates and take control of your IRS debt now.

By Andrea McLane, QKA (Dublin office)

Want to read more about the importance of Retirement Plan Compliance?
Check out these articles:

401(k) Loans and Keeping Your Plan In Compliance
Retirement Roulette
The ‘Van Halen Philosophy’ of Retirement Plan Compliance

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A Fair Assessment?

Tuesday, July 21st, 2015
Back taxes - Ohio CPA Firm

When a taxpayer files a false or fraudulent return, the taxpayer waves their right to statute of limitations protection. And if a taxpayer fails to file their income tax return, the IRS is allowed to undertake collection proceedings at any time and without assessment.

Bob recently received a copy of his account transcripts from the IRS. Upon reviewing the paperwork, he noticed that the government agency made note of a “date of assessment,” which prompted him to wonder how the date of assessment was determined? Moreover, he wanted to know what role one’s date of assessment plays with regard to the time frame the government has to collect back taxes.

If you ever find yourself in a situation similar to Bob’s, with questions about your tax history, in addition to speaking with your tax advisor, you can request that a copy of your tax return transcript and tax account transcript be mailed to you. Fill out the online form here, but make sure you are making the request for the current tax year’s transcript or transcripts for three years prior.

If you are requesting transcripts for older tax years or you need a wage and income transcript or verification of non-filing letter, you’ll need to complete Form 4506-T and send it to the address listed on the form’s instructions. Due to a recent security breach, your transcripts will not be sent electronically.

How Far Back Can The IRS Go To Collect Back Taxes?

If the IRS is attempting to collect past due taxes, the agency will assign a date of assessment to your IRS account transcript.

Read Also: IRS Says You Owe More? Don’t Write That Check Yet!

Like many of the invoices you see every day, every item on your transcript will be assigned a code. Your date of assessment is no different. To identify the date of assessment on your account transcript for the tax year in question, look for Transaction Code “150.”

As a general rule, the IRS must assess tax, or file suit against the taxpayer to collect the back taxes, within three years after the original tax return was filed. This three-year period of limitation on assessments also applies to penalties. In fact, this rule continues to apply regardless of whether the return was filed on time or not. In general, the statute of limitations will almost always begin the day after the taxpayer files their income tax return.

The Rules May Not Apply

It seems as though there are always exceptions to the rules we work so hard to uphold – taxes are not excluded from this trend. For instance, when a taxpayer files a false or fraudulent return, the taxpayer waves their right to statute of limitations protection. And if a taxpayer fails to file their income tax return, the IRS is allowed to undertake collection proceedings at any time and without assessment.

Parting Shots

While the statute of limitations for assessment is three years after your return has been filed, the IRS still has 10 years to actually collect the assessed tax. Below is an example of the assessment process in action:

  • April 15, 2015 – you filed your 2014 tax return with the IRS
  • March 31, 2018 – the IRS assesses additional taxes on your 2014 tax return
  • The IRS has until March 31, 2028, to collect the additional tax or file suit against you.

While this information may help to shine some light on IRS assessments and statute of limitations rules, every situation is unique and hinges on several specific variables. Your tax advisor can help you sort through codes and details to get you back on the right track. Email Rea & Associates to learn more.

By Christopher Axene, CPA (Dublin office)

Check out these articles to learn more about your responsibilities as a taxpayer:

How Far Back Can The IRS Go For Tax Auditing?

The Truth About Tax Extensions

If Something Happens To me, What Will Happen With My Financial Matters?

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Should I still be concerned about identity theft and tax fraud?

Thursday, July 9th, 2015

This article was published in the July 2015 issue of Columbus Business First – Ask The Expert.

Identity theft and tax fraud are problems that show no signs of stopping. This year, in an attempt to provide an added layer of protection, taxpayers in Ohio had the opportunity to get up close and personal with the Ohio Department of Taxation’s (ODT) newest fraud safety measure – the Identification Confirmation Quiz.

fraud_small

We hear about cases of fraud every week, but steps are being taken to slow it down and ultimately stop it.

While you may have heard your friends and family comment (perhaps unfavorably) about this added step, government officials have said that the quiz helped thwart countless attempts to steal refund checks from Ohio taxpayers this year. During the 2014 tax season, fraudsters pocketed more than $250 million worth of taxpayer refunds, prompting the need for additional safety measures. Due to its success, the ODT expects the quiz to become a mainstay of your tax prep routine.

But just because tax season is over, doesn’t mean you should let your guard down – quite the contrary. When it comes to protecting your identity, you must remain vigilant. Whether you are aware of it or not, criminals are still looking for ways to steal your personal identification information for a myriad of uses.

Do you know what to do if your ID is compromised? Visit www.reacpa.com and click on the “Tools” button in the top navigation bar. From there, you can read our compilation piece How to Recover from Identity Theft & Refund Fraud for more insight and information that can help you recover from identity theft and tax fraud.

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The Plight of the Snowbird

Friday, June 19th, 2015

It’s warm and muggy now, but once winter blankets the Buckeye State with record snowfall and subzero temperatures again, you will likely be kicking yourself for not having hightailed it to Florida after last year’s bitter cold snap. Sure, it’s easy to say that you would like to pack up and head for a warmer climate during a seemingly endless freeze, but once the icicles melt and the flowers bloom, you begin to remember why you’ve stayed around for so long in the first place. Maybe the fact that your family and friends still call Ohio home is enough to convince you to stay put. Or perhaps its memories of your own childhood that are keeping you tethered to the state. Either way, now that it’s summer – the need doesn’t seem so intense anymore … that is, unless you are considering taking advantage of possible tax savings.

Will Taxes Influence Your Decision To Fly South This Winter?

The Plight of the Snowbird - Rea & Associates - Ohio CPA Firm

Now that you have settled on whether or not you will be packing up and moving for tax and/or weather reasons, make sure you know what’s involved when it comes to changing your state of domicile.

What if I told you that the State of Ohio has made it a little easier for you to escape the winter chill, spend more time in the nation’s heartland during the seasons you love and save on your tax bill? Would you consider making the move then? If so, you’re in luck!

Read: How Can I Make The Most Of My Retirement?

Which State Do I Call Home?

For some, it’s relatively easy to buy and maintain several homes across state lines. The hard part comes when the Internal Revenue Service wants you to decide which home should be considered your primary residence based on how much time you spend in each state. These are the facts that will ultimately influence whether you pay taxes or not. If you are a snowbird who flocks back and forth between Ohio and Florida, for example, to avoid reporting your income to Ohio for tax purposes, it’s up to you to prove that you have spent no more than seven months (or fewer than 212 contact periods) in the Buckeye State. That compares to the 182 contact sessions (or six months) snowbirds were allowed to remain in Ohio under prior rules. The rules were changed in March.

How Do I Change My Residence For Tax Purposes?

Now that you have settled on whether or not you will be packing up and moving for tax and/or weather reasons, make sure you know what’s involved when it comes to changing your state of domicile. Some states, such as Florida, require basic documentation to establish your change of domicile. Therefore, you should make sure all your paperwork is in order, including your Declaration of Domicile. And while you are filing paper work to establish your new residence for tax purposes, keep in mind that some states, including Ohio, require documentation in order to relinquish your residency. Ohioans looking to relocate must complete and sign an Affidavit of Non-Ohio Residency/Domicile. This document helps establish your desire to establish nonresidency within the state. But keep in mind that there are there are other bright line tests the State of Ohio may look at to help determine whether you are actually domiciled in another state. For example, the State may look for information that indicates where you are registered to vote, which state issued your driver’s license, where your vehicles are titled and what address is listed on your tax return.

Email Rea & Associates to learn more about the tax benefits some snowbirds enjoy and whether migration is right for you.

By Trista Acker, CPA, CFP (Dublin office)

 

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Hackers Target IRS – 100,000 Taxpayer Accounts Breached

Wednesday, May 27th, 2015
Hackers Target IRS – 100,000 Taxpayer Accounts Breached  - Rea & Associates - Ohio CPA Firm

Reports state that cyber-criminals were able to gain access to taxpayer accounts by obtaining specific, personal information, which allowed them to navigate the Get Transcript authentication process. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Just when you thought it was safe to let your guard down, cyber-criminals have blindsided us again. This time they’ve used the Internal Revenue Service’s “Get Transcript” application to gain access to approximately 100,000 taxpayer accounts.

Read: Could A Cyber-Attack Cripple Your Business In 2015?

The IRS released a statement Tuesday stating the government agency is “working aggressively to protect affected taxpayers and strengthen [their] protocols even further going forward,” after learning that hackers used “non-IRS sources” to access data, including Social Security information, dates of birth and street addresses associated with the accounts of nearly 100,000 taxpayers. The IRS said the security breach occurred when criminals gained access to its online Get Transcript application, which has since been shut down pending a full investigation by the Treasury Inspector General for Tax Administration.

According to the IRS, “the online application will remain disabled until the IRS makes modifications and further strengthens security for it.”

The data breach was limited to the Get Transcript application, said an IRS representative. The main IRS computer system that manages tax filing submissions was not affected and remains secure.

Reports state that the criminals were able to gain access to the accounts by obtaining information specific to the certain taxpayers, which allowed them to navigate the Get Transcript authentication process, which includes asking the user to answer several personal questions to confirm their identity. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Expect to receive a letter in the mail if your account was one of the 200,000 accounts targeted. And if your account was one of those that were compromised, your letter will provide additional information, including specific instructions to access free credit monitoring services that will be provided by the IRS to ensure your data is not being used in other financially damaging ways. According to the IRS, the letters started going out this week.

Concerned about identity theft as a result of this breach? Click here to learn what to do if your identity is stolen or if your personal information is compromised.

If you are a business owner, do you have protocols in place to protect your business from a cybercriminal?Email Rea & Associates to learn how you can protect your business from a cyberattack. You can also get some useful tips and information in the related articles below.

By Lesley Mast, CPA (Wooster office)

 

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How Much Is Your Data Worth To Criminals?
When Scammers Demand That You Pay Up, IRS Says You Should Hang Up
8 Tips For Crafting A Strong Password
How Do You Protect Yourself From Identity Theft?

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School’s Out For Summer, But Tax Credits Are Still In

Tuesday, May 26th, 2015

Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school. In fact, you may be able to claim a variety of summertime childcare expenses when tax season rolls around again. Check out the list below to familiarize yourself with this credit.

Read: Can My Summer Day Care Expenses Earn A Tax Credit?

8 Tips To Help You Claim The Child Care Tax Credit

  1. Child care must have been provided so that you (and your spouse if filing jointly) can work or actively look for work. Your spouse must also meet this obligation during any month in which the child was a full-time student or was physically and/or mentally incapable of self-care.
  2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There’s an exception to this rule for a spouse who is a full-time student or who is physically and/or mentally incapable of self-care.
  3. Care must have been provided for dependent(s) younger than 13 years old. Your spouse or another dependent qualifies if they lived with you for more than have the year and are physically and/or mentally incapable of self-care.
  4. Qualifying child care expenses include those that are used to secure enrollment at a daycare facility outside the home or at a day camp. Expenses for overnight camps or summer school tutoring do not qualify. NOTE: If you pay someone to come to your home to care for your child or children, you may be a household employer. For more information, see IRS Household Employer’s Tax Guide.
  5. If your employer provides dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses.
  6. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person and can be up to 35 percent of your expenses, depending on your income.
  7. You can claim up to $3,000 of your total unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying persons.
  8. Keep your receipts and records to use when you file your 2015 tax return next year.  Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

Email Rea & Associates to learn more about the Child and Dependent Care Tax Credit or other tax incentives you may qualify for.

By Denell Skelton, CPA (Coshocton office)

 

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The Truth About Tax Extensions

Friday, April 10th, 2015

We find ourselves, once again, at the end of another income tax season. A time of year that many American taxpayers (and accountants) hold dear. We, however, know that while tax season may be “officially” over, there is still plenty of tax work to be done.

The first four months of the year is a busy time for accountants and, because we work closely with so many small businesses all year long, we are acutely aware of how much stress you are under to meet your first quarter obligations. This is why, instead of rushing just to get your taxes filed and out the door ahead of the April 15 deadline, we frequently recommend that our clients file for a tax extension.

Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, I will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight. Check out the slideshow and get the facts about tax extensions!


The Truth About Tax Extensions – Created with Haiku Deck, presentation software that inspires

Myth 1:

Filing a tax extension increases your chance of an audit.

Truth:

First and foremost, your chance of being audited by the IRS does not increase simply because you chose to file a tax extension. In fact, in the event that you are chosen to undergo an audit, you will be able to go into the process with more confidence. Tax extensions can be great for businesses that were simply overwhelmed by other critical responsibilities during the first quarter of the year. When you give yourself the luxury of filing an extension, you give yourself more time to compile all the files and information necessary to make tax return prep as seamless and thorough as possible.

Myth 2:

Tax extensions burden accountants.

Truth:

On the contrary, fling an extension not only gives your accountant extra time to check and double check the work, it gives them the added time needed to provide better service. For example, we pride ourselves on our work ethic, attention to detail and client service – especially during busy season. However, as trusted financial advisors, we are able to better serve our clients better when we have a chance to help them understand the opportunities they qualify for and how they can use certain tax strategies to help plan for the future. Believe me when I tell you that we do not look at extensions as burdens.

Myth 3:

There is nothing to gain by filing a tax extension; it’s just a way to prolong the inevitable.

Truth:

Filing a tax extension not only gives you more time to file your return with the IRS and the state, it effectively stalls some of your other looming deadlines as well. For example, a tax extension can award you more time pay your profit sharing plan, defined benefit, or your SEP IRA as part of your retirement plan contribution, which is an excellent short- and long-term benefit! Once your extension has been filed, you will have more time to file your retirement plan contribution, all while claiming the deduction in your prior year’s return.

Email Rea & Associates to learn more about the benefits of filing income tax extension with the IRS and the state.

By Joe Popp, LD, LLM (Dublin office)

 

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Preserve Ohio History While Filing Your Taxes

Wednesday, April 8th, 2015

We’re down to the wire. Just another week to go before April 15 – Tax Day. If you’re still working on your taxes, and are looking for an opportunity to make a donation on your state tax return – consider supporting the Ohio History Connection’s efforts. Read on to find out how you can support history preservation efforts throughout Ohio and even in your community.

 

Guest blog post by Emmy Beach of the Ohio History Connection:

The Ohio History Connection has developed an innovative way to help Ohioans support history preservation efforts across the state and in their communities. The best part: it can all happen in a matter of seconds.

It’s called the History Fund. The History Fund creates grants to help support local history and preservation-related projects in communities throughout Ohio. The History Fund is supported by Ohio taxpayers that select “Ohio Historical Society” as a donation fund on their state tax returns (the state tax form hasn’t caught up with their recent name change yet.).The entire process takes just seconds to complete.

The impact of donations can last for generations. Over the last three years, the History Fund has received nearly $300,000 in voluntary funding from Ohio taxpayers. This allowed the Ohio History Connection to green light more than 30 historic preservation projects that wouldn’t have received funding otherwise. History organizations have been able to accomplish important projects that have been on their wish-lists for years.

The History Fund impacts organizations big and small. This year, Cleveland’s Rock and Roll Hall of Fame received a grant to preserve the work of Plain Dealer rock and roll reporter Jane Scott; in Athens, the Dairy Barn Arts Center received a grant to repair the structure of their community’s popular arts venue. In each case, the generosity of Ohioans helped preserve a chapter of Ohio’s more than 200-year-old story.

“The History Fund helps us share and preserve Ohio’s story by supporting local projects and programs in communities throughout the state,” said Burt Logan, executive director and CEO for the Ohio History Connection. “The work of local history organizations is helping to strengthen our heritage and ensure Ohio’s story is told for years to come.”

The History Fund needs to receive at least $150,000 this coming tax season to stay on Ohio’s tax forms for the next two years.

The grant program received $165,000 last year, with average donations of around $10.

“Small donations can make a big difference,” said Andy Verhoff, History Fund grants manager. “If every donor who gave last year gives just $10 from their refund, we’ll cross over the $150,000 threshold easily and have even more to grant in the future.”

The tax check-off process is a win-win for taxpayers and the state. History and preservation organizations across Ohio are revitalizing their communities, one project at a time.

You can see historic Ohioans Annie Oakley and the Wright Brothers promote the History Fund in public service announcements videos below.

 

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How To Pay Your Tax Bill In 6 Easy Steps

Wednesday, April 1st, 2015
Pay Your Tax Bill With Direct Pay - Rea & Associates

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances.

By now, you probably have a good idea whether you have an outstanding tax bill from the government, but did you know you can settle your balance online? Since May 2014, Direct Pay, a free and secure payment option, has provided millions of taxpayers with the option of making payments to the Internal Revenue Service at a time, and in a place that is convenient for them.

Late last year, employers learned that they were expected to file their taxes and make payments exclusively online. Click here to read more.

According to the IRS, four months after the initial launch of the payment program, more than a million payments, totaling more than $1.7 billion, were successfully processed. The web site currently accepts payments for current year tax returns, estimated tax payments, extension payments and prior year balances.

Available 24 hours a day, seven days a week, Direct Pay has proven to be a popular choice among Americans who are looking for a quick and easy option for settling their tax balances. Those who make payments receive an instant confirmation message that their payment has been submitted. Or, if you need a little more time, you can schedule your payment up to 30 days in advance as well as choose if you would like your payment to be withdrawn directly from a checking or savings account. Making a payment is as easy as following six simple steps.

How To Make An Online Tax Payment

  1. Visit the government website at www.irs.gov/payments
  2. Click on the blue box labeled: “IRS Direct Pay”
  3. Choose the reason for making your payment. Your choices are that you are making an installment agreement payment, a tax return payment, an estimated tax payment, an amended return payment or “other” type of payment. Be sure to choose the applicable year.
  4. Next, verify your identity by confirming your filing status, social security number, address and date of birth. ID verification is required for each payment requested.
  5. Then, you must enter the amount you plan to pay and your bank information. (The IRS does not retain any routing or account numbers.
  6. Finally, you will be directed to a “final authorization” page, which will provide you with an online confirmation.

Once your payment has been submitted using Direct Pay, allow two business days for processing. Note: Payments submitted after 8 p.m. EST will be processed on the next business day. And if you need to make a change to your scheduled payment, you can edit or cancel the payment up to 11:59 p.m. EST two business days before the payment is scheduled payment date.

Ohio Online Tax Payments

If you owe taxes to the State of Ohio, you can make your payments online as well by visiting www.tax.ohio.gov. The state’s online payment system also allows for advance payments and does not require registration.

Online payment options are another way government entities are making an effort to provide more user friendly services. By using Direct Pay, or the state’s web-based payment option, you can avoid a trip to the post office and, better yet, have more control over when your payment is made and received. Your tax preparer can help you determine if online payments make sense for you and can answer any questions you may have. Email Rea & Associates to learn more.

By Wendy Shick, CPA (Mentor office)

 

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Update: Ohio Tax Quiz Appears To Be Working

Friday, March 13th, 2015
Tax ID Quiz

According to officials at the Ohio Department of Taxation, while the new Identification Confirmation Quiz may be a pain in the neck, it appears to be working as a identity theft deterrent – Rea & Associates – Ohio CPA Firm

We have learned over the last month that Ohio’s new system of validating taxpayer identification, the Identification Confirmation Quiz, appears to be working.

In an effort to boost security and prevent tax-fraud in the state, the Ohio Department of Taxation introduced the quiz at the onset of the 2015 tax season and began flagging tax returns with data points that are inconsistent with public and commercial data sources. If their returns are flagged, taxpayers are required to take a Quiz to prove their identities.

Read: Theft Safeguards To Cause Tax Return Delays In Ohio

“Through Feb. 18, more than 1.3 million tax returns have been filed with about 874,000 requesting a state income tax refund. About half of the refund requests have been selected for additional screening to ensure that they were not filed by an I.D. thief,” stated Ohio’s Tax Commissioner Joe Testa in a press release. “About 97 percent of taxpayers taking the quiz are passing. That proves they are who they say they are.”

That means about 3 percent who fail the test are being declined to receive refunds that they would have normally received in previous years. As long as that 3 percent consists of actual identity thieves, the results reported are significant.

By Lisa Beamer, CPA (New Philadelphia Office)

 

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5 Tax Deductions To Ease Your Business’s Tax Burden

Thursday, March 12th, 2015
Tax Deductions Add Up

If you made a donation to a nonprofit organization last year, it’s almost guaranteed that you are eligible to deduct at least a portion of your contribution from your income.

The Internal Revenue Service (IRS) reported earlier this month that nearly 59 million 2014 federal tax returns have been filed so far this filing season. While that may sound like a lot, there’s still a ways to go as, according to IRS estimates, three of five taxpayers are still waiting to file. For those of you still working on your tax prep, there is still time to claim some valuable deductions. Here are five deduction options to help small businesses make the most of the 2015 filing season:

1. Ohio Small Business Deduction

Many small business owners in Ohio are eligible to receive help from the state on their 2014 tax returns through the Ohio Small Business Deduction. Initiated by Ohio Gov. John Kasich and considered to be “the largest overall tax reduction in the country,” the deduction allows eligible small businesses to take a 50 percent tax deduction on their first $250,000 of business income. However, for the 2014 taxable year only, that percentage was increased to become a 75 percent deduction of “net business income from an individual’s adjusted gross income reported on their Ohio personal income tax return.” Your financial advisor can help you learn more about the Ohio Small Business deduction and help you take your business strategy to the next level.

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2. Section 179 Deduction

When Congress voted in favor of the Tax Extenders Act late last year, among the many tax incentives that were extended included an action to retroactively reinstate the $500,000 depreciation limit on the Section 179 deduction as well as the 50 percent bonus depreciation. Together, these tax incentives have the potential to save you and your company hundreds of thousands of dollars on equipment purchases. Limits and restrictions do apply, however, so make sure to work with a trusted advisor who can make sure your purchases actually qualify.

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3. Personal Vehicle Deduction

If you drive your personal vehicle for business, then you may be able to deduct the expenses related to your car or truck as long as the vehicle was actually used for business purposes and not just commuting. A professional advisor can help you determine if you qualify to claim the deduction and can help determine which deduction method is the best one to use given your personal circumstances.

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4. Stock Gains Deduction

Some qualified businesses may also be able to exclude the gains generated by qualified small business stock per provision IRC Sec. 1202. Originally passed by Congress in the 1990s, this provision was designed to help reinvigorate the importance of continued investment into our country’s small business infrastructure. This incentive is a little more difficult than some of the others, but if you qualify, you could realize significant savings. Because of the complicated nature of this particular provision, it is essential that you work with a tax advisor to find out if you qualify.

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5. Charitable Giving Deduction

If you make a donation to a nonprofit organization during the year, it is almost guaranteed that you will be able to deduct at least a portion of your contribution from your income. But there are rules that need to be adhered to. A good financial advisor can help you get the maximum benefit for every dollar donated.

Read More

For more information related to specific tax and deduction questions related to your business, email Rea & Associates.

By Lesley Mast, CPA (Wooster office)

 

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Is It A Charity Or A Scam?

Tuesday, February 3rd, 2015

Remember when writing a check to a charity left you with a feeling of satisfaction and accomplishment? Unfortunately that feeling has been replaced with vulnerability and uncertainty as soliciting for fake charities has become a common way for scammers to prey on the generosity of strangers.

Remember when writing a check to a charity left you with a feeling of satisfaction and accomplishment? Unfortunately that feeling has been replaced with vulnerability and uncertainty as soliciting for fake charities has become a common way for scammers to prey on the generosity of strangers. Before you tear that check from your checkbook, take another look at the “Pay to the Order Of” line. That person who just spent the last 15 minutes explaining why your donation is critical to their organization might have less-than-admirable intentions.

Every year the Internal Revenue Service (IRS) warns taxpayers about what it considers to be the “Dirty Dozen” of tax scams. The annual report identifies schemes that appear to be more prevalent during filing season. And while you may be inclined to use some of your refund to help a worthwhile charity, the IRS reminds taxpayers to remain vigilant against scammers “masquerading as a charitable organization to attract donations from unsuspecting contributors” – particularly this time of year when scammers appear to be more active.

If you are approached by somebody who claims to be soliciting money for charity, here are a few tips to ensure that your money will be used for a worthwhile cause.

What’s In A Name?

Sometimes fake charities will adopt a name that’s similar to one you are sure to recognize and consider to be a respected organization within your community or nationwide. Even if you are confident that the not-for-profit you are about to donate to is reputable, a quick online search can remove any doubt. The IRS provides access to a search tool designed to help the public identify valid charitable organizations. You can also find registered 501(c)(3) organizations on Guidestar, an online tool that provides users with data and information about tax-exempt organizations and other faith-based nonprofits, community foundations and other groups typically not required to register with the IRS.

Keep Personal Information Private

Nonprofit organizations do not need your Social Security Number to complete the transaction, nor do they need to retain it for their files. So if someone claims to represent a charity and asks for any of your personal information (including passwords) – don’t give it to them! Scammers use this information to steal their victim’s identity. Protect yourself from fraud and remember to keep your personal information private.

Where’s The Proof?

When you make a decision to donate to a tax-exempt organization, make sure to have proof of the transaction. For your own security – and for tax record purposes – you should never make a cash donation. Use a check or credit card every time you give money to charity. Doing so not only proves that you made the donation; it will help you claim the contribution on next year’s tax return.

Ask An Expert

A trusted advisor can help you identify whether a particular charitable organization is reputable or not and can help you make the most of your donated dollars. Email Rea & Associates for more information.

By Maribeth Wright, CPA (Cambridge office)

 

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From Toddler To Teen And Beyond: Tax Breaks For Families

Monday, February 2nd, 2015
Families of all kinds can take advantage of a variety of tax incentives, which can ease some of the financial burden.

Families of all kinds can take advantage of a variety of tax incentives, which can ease some of the financial burden.

With parenthood comes many rewarding experiences – and expenses. You hear about how expensive it is to raise a child, but you never really know what to expect until that little bundle of joy enters your life. From diapers, pre-school, extracurricular activities and saving for college, the costs of raising kids adds up fast. My wife and I welcomed our daughter into our family last year; and this life-changing event got me thinking: What tax breaks are available to families?

Relief for New Parents

Families of all kinds can take advantage of a variety of tax incentives, which can ease some of the financial burden. From deductions to credits, this list will give you a good idea as to what is available to you.

  • Adoption Credit

–         A credit of up to $13,190 – dollar for dollar of qualified expenses – is available to families who have adopted children.

–         Qualified expenses include adoption fees, attorney fees, court costs, etc.

–         Adopting a child with special needs results in the full credit amount regardless of whether qualifying expenses were made.

  • Child Credit/Additional Child Credit/Dependent

–         Child Credit – This credit applies to up to $1,000 for qualifying children younger than 17. This credit is generally non-refundable, but the taxpayer may be able to qualify for the additional child credit if he/she has enough earned income.

–         Additional Child Credit – Part of the child credit may be refundable for taxpayers with more than $3,000 worth of earned income.

–         Dependent – Each child listed on a tax return may be eligible to be listed as a dependent, which results in an additional $3,950 exemption per dependent.

  • Earned Income Credit

–         This is one of the largest credits available to taxpayers and claiming it can save you thousands of dollars in taxes. Taxpayers with three or more children and who have earned income as high as $52,427 may qualify for the earned income credit. This credit generally decreases with fewer qualifying children or for those with higher income levels.

More To Know As They Grow

In addition to child and earned income credits, here are some additional ways to save on your taxes as your children continue to grow.

  • Dependent Care Credit

–         This non-refundable credit goes toward a portion of a dependent’s child care expenses. Common qualifying expenses include day care, pre-school, day camps and similar programs.

  • Preempting College Costs

–         Education Savings Accounts allow taxpayers to contribute up to $2,000 per year for children younger than 17. While there are no tax benefits for the year of the contribution, distributions toward qualified higher education expenses (including earnings on contributions) are tax-free. Taxes and penalties may apply if the funds are not used for qualified education expenses.

–         State College Savings (529 plans) allow taxpayers to make contributions to an investment account and take a deduction toward their state income tax. (There is no federal income tax deduction available when taking this option.) Similar to education savings accounts, taxes and penalties may apply to funds used on unqualified expenses.

  • Flexible Spending Plans

–         If you have a flexible spending plan through your employer, remember that your child-related medical expenses qualify under the plan too. The funds you already contribute to your plan are deducted pre-tax up to certain thresholds. But don’t forget to use the entire amount withheld in your plan before March 15 of the following year or you will lose it.

The College Years

It probably seems like it was just yesterday that your son or daughter was crawling across the living room floor – now you are preparing to send them off to college. But just because they are all grown up doesn’t mean that the tax incentives end. Here are some tax perks to help during your child’s transition into adulthood:

  • Dependency Extension

–         You can claim your child as a dependent until they are 19-years-old as long as you continue to provide more than half of their support and they lived with you for more than half the year. You may also continue to claim your child if they are younger than 24 and a full-time student.

  • Tax Relief For Education

When it comes to paying for higher education, there are a few opportunities for tax relief. Below are a few of your options. Remember that you may only claim one of these options. A financial advisor can help you determine which option is right for you.

–         You can claim the American Opportunity Credit for up to $2,500 (100 percent of the first $2,000 and 25 percent of next $2,000) for qualified education expenses. This tax credit is only available for undergraduate students. Qualified expenses include tuition, fees, books, supplies, etc. This credit is also 40 percent refundable.

–         Qualified education expenses, such as tuition, fees, books, etc., qualify you to claim the Lifetime Learning Credit, which could total up to $2,000 (20 percent of up to $10,000). Even though this credit is entirely nonrefundable, it helps reduce your tax bill.

–         If you are paying for tuition, fees, books and other school supplies for your student, you may find this above the line deduction of up to $4,000 for these expenses to be beneficial.

  • Student Loan Relief

–         Help is also available to those making payments on student loans. An above the line deduction of up to $2,500 is available for interest paid on education loans.

In addition to being expensive, taking care of children can be confusing at times. Claiming these tax deductions and tax credits doesn’t have to be. Email Rea & Associates to learn more.

By Jordan Miller, CPA (Millersburg office)

 

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How To Prepare For A Federal Tax Return Headache

Tuesday, January 20th, 2015

Planning to buy a new big-screen television? Airline tickets for that Caribbean vacation you’ve been looking forward to?  A new car? You might want to wait a little longer.

IRS Commissioner John Koskinen recently warned American taxpayers that some federal refunds could be delayed for a week or more because of recent budget cuts. So, if you file your tax return on paper, before you start spending that income tax refund check, you might want to wait for the cash to actually find its way into your bank account. Expect to feel a little discomfort during this tax season.

Refund Delays

Historically, refunds for electronically filed federal returns were processed within 21 days of the e-filing acceptance date. Paper returns were typically processed within six to eight weeks from the date they were received. Amended tax return refunds take even longer – the turnaround for these returns were typically 12 weeks.

“People who paper file tax returns could wait an extra week – or possibly longer – to see their refund,” said Koskinen in a memo sent to IRS staff. “Taxpayers with errors or questions on their returns that require additional manual review will also face delays.”

In his memo, Koskinen didn’t explicitly address electronically filed returns, but it wouldn’t be a surprise for these refunds to be delayed (at least a little bit) as well.

Phone Jams

Nearly eight out of ten taxpayers receive an average tax refund totaling $2,800, which prompts many taxpayers to check in on the status of their refunds by calling the IRS. The agency is predicting an abysmal connection rate of these calls this year – 43 percent connection rate with a hold time of 30 minutes or more.

Instead, if you would like to track the status of your refund, hang up the phone and log onto the IRS’s website to use its Where’s My Refund feature.

Time will only tell how these budget cuts will impact next year’s tax return process, as well as other services provided by the IRS. In the meantime, start preparing to file your tax return as early as possible to avoid additional delays. Email Rea & Associates to learn more.

By: Trista Acker, CPA, CFP (Dublin office)

 

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File Faster With This Tax Prep Checklist

Tuesday, January 20th, 2015

It’s that time of year again – time to gather your information and prepare to file your tax return. If you want the process to go smoothly, make sure to gather and organize your information before sitting down with your tax preparer. You may be surprised how fast the entire filing process goes if you spend a little time preparing!

Here’s a list of some items to compile before you get started.

Personal Information

Hopefully you know YOUR social security number and date of birth by heart. But do you know your spouse’s SSN? Your kids? Make sure you remember to bring the social security numbers and birth dates of everybody who will be claimed on your tax return.

Income Info

While your W-2 is important, there are many other pieces of information you will need to collect before you will be able to get started. Gather the following pieces of relevant information:

  • W-2s for you and your spouse.
  • Investment income: This type of income will be listed on various 1099 forms including –INT, -DIV, -B, etc.). You may also have K-1s and stock option information to provide to your tax preparer.
  • Income received from state and local income tax refunds and/or unemployment. This income can be found on the Form 1099-G.
  • Gather information about any alimony you may have received.
  • If you are a business owner or farmer, don’t forget to provide a profit/loss statement and capital equipment information.  And if you use your home for business, your tax preparer will need to know the size of your house, the size of your office and what you have paid to maintain your home and office.
  • You will need to provide your IRA/pension distributions as well. This information will be provided to you on Forms 1099-R or 8606.
  • If you rent a home or other type of property, be sure to gather that information that proves the profit or losses you realized as a result of the rental.
  • Be sure to claim any Social Security benefits you may have received. This information is found on Form SSA-1099.
  • If you sold your house in 2014, you must provide your tax provider with Form 1099-C, which will include the income you received from the sale of the property. Your preparer will also take the home’s original cost and cost of improvements, the escrow closing statement and cancelled debt information into consideration.
  • Some other information you will need to pass along to your tax preparer includes items such as jury duty, gambling winnings, scholarships, etc..

Adjustments To Your Income

Now that you have collected all the information you can to adequately identify your income in 2014, some adjustments may need to be made. Making the following adjustments to your income may help increase your tax refund or lower the amount you owe to the government. If you have documentation of any of the following information, be sure to bring them to your appointment.

  • IRA contributions
  • Student loan interest
  • Medical Savings Account contributions
  • Moving expenses
  • Self-employed health insurance payments
  • Pension plans such as SEP and SIMPLE
  • Alimony you paid
  • Educator expenses

Itemized tax deductions and credits

This is another way to increase your refund or reduce what you owe. The following deductions and credits help lower the tax burden on individuals. Be sure to collect this information before filing your return.

  • Child care costs – child care provider’s name, address, tax ID number and amount paid
  • Education costs – these can be found on Form 1098-T
  • Adoption costs – the SSN of the child as well as legal, medical and transportation costs associated with the adoption
  • Home mortgage interest and points you paid, which can be found on Form 1098
  • Investment interest expense
  • Charitable donations that were made to not-for-profit organizations. Make sure you have the amounts and value of the donated property, and any out-of-pocket expenses you may have accrued in your effort to make the donation, including transportation costs. Include receipts for any contribution over $250

o   Losses you realized as a result of casualty and loss (the cost of the damage and insurance reimbursements

  • Medical and dental expenses
  • Energy credits
  • Other deductions include items such as union dues, unreimbursed employee expenses, such as unreimbursed employee expenses

New for 2014 returns

For the first time, you will need to provide information about your health insurance coverage to your tax preparer. Be prepared to answer questions such as these:

  • Was everyone claimed on your tax return covered by health insurance?

o   If not, why?

  • Did you or anyone on your return obtain health insurance coverage through Healthcare.gov or through a state run exchange in 2014?

o   If yes, did any of those individuals receive a premium tax subsidy, cost reduction, or premium tax credit? If yes, provide Form 1095-A.

It’s likely that you have already started receiving tax forms in the mail from various places. It’s easy to misplace these documents if you’re not careful. If you haven’t already, set aside a place for these items until you have collected them all. Once you have everything you need, you can set an appointment to file your taxes with your financial advisor or tax preparer. For additional tax information, or to speak with a tax expert, email Rea & Associates.

By Lesley Mast, CPA (Wooster office)

 

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The Tax Professional’s Christmas List

Friday, December 12th, 2014

Move Over Santa, This One’s For Congress

While the holidays typically bring about feelings of joy and comfort, they can also be a time of stress. And as the year comes to a close, many individuals are left to frantically resolve a number of tasks that they had hoped would be completed before the end of 2014 – yet they are still lingering on their to-do lists.

If tax professionals across the country were to compose a letter this holiday season, it wouldn’t be sent to Santa. Instead, it would pass over the North Pole en route to Washington D.C. – and it would be addressed to the members of the United States Congress.

This year, all we want for Christmas is for our congressional leaders to extend the more than 50 tax provisions that were left to expire at the end of 2013 – before the end of the year. Failure to do so could have a negative impact on the 2015 tax season.

While it is possible for Congress to wait until the New Year to enact these provisions next month, a retroactive approach would ultimately hurt the IRS, tax professionals and software providers. This is why it is so important for the provisions to be extended before Dec. 31.

Furthermore, postponing this legislative action could postpone the start of the 2015 tax season, which would delay refunds to millions of American taxpayers.

What tax provisions are at risk?

Individual tax payers are at risk of losing:

  • A $250 above-the-line tuition deduction
  • An election to deduct state and local sales tax
  • Tax-free charitable distributions from individual retirement accounts (IRAs)
  • The private mortgage insurance (PMI) itemized deduction
  • The energy efficient home improvement tax credit

Popular business tax benefits at risk of disappearing include:

  • The work opportunity tax credit
  • A research credit
  • The Section 179 expensing limit
  • Bonus depreciation

This holiday season, it is our hope that Congress will move quickly to resolve this issue in a way that is favorable for American tax payers. Doing so would not only provide the IRS and tax professionals with the time they need to prepare for the 2015 tax season; such legislative action would help promote the financial wellbeing of the American taxpayers.

Would you like to discuss tax planning options for yourself or your business? Email Rea & Associates to speak with a tax professional today. Will you want help filing your 2014 business taxes and/or personal taxes? Would you like a little extra help preparing for the 2015 tax season, our tax experts will work with you to make your experience as worry-free and seamless as possible.

By Lisa Beamer, CPA (New Philadelphia office)

 

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New Adjustments Will Affect Your 2015 Tax Return

Tuesday, November 18th, 2014

The calendar may still say 2014, but the IRS is already looking ahead to 2016 – when you will file your 2015 tax returns. In doing so, it recently announced slight adjustments to more than 40 tax provisions to account for inflation. So, what can you expect? The adjustments are outlined fully in Revenue Procedure 2014-61, but a few points that may be of special interest include:

  • The new 39.6 tax rate. This rate will affect those who are single with income that exceeds $413,200, which is up from $406,750. Those who are married filing jointly will be affected if their income exceeds $464,850 – up from $457, 600. You can check out a great break down of the other tax rate increases here.
  • A slight standard deduction increase. Those who are single, or married filing separately, can expect their standard deduction to be $6,300 – up from $6,200. Married couples filing jointly will see standard deductions increase to $12,600 – up from $12,400.
  • Increasing elective contribution limits. In 2015, taxpayers will be allowed to defer $18,000 to your 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan. The deferral limit in 2014 was $17,500. The catch-up contribution limit for employees who are 50 and older will increase to $6,000 – up from the 2014 rate of $5,500.

You can read the full IRS article here. Navigating tax rate and IRS procedure changes can be difficult – not to mention time consuming. To get more information on how you may be impacted by these adjustments, email Rea & Associates.

By Lesley Mast, CPA (Wooster office)

 

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IRS Says You Owe More? Don’t Write That Check Yet!

Tuesday, September 23rd, 2014

Tax season can be rough for any business. Just about the time you allow yourself to move on to something else and breathe a sigh of relief … it happens. You sift through your mail and find yourself staring face-to-face with a letter from the Internal Revenue Service (IRS). In a matter of seconds your adrenaline levels are through the roof. You know that what’s inside the envelope isn’t a simple thank-you note for filing your taxes on time. You carefully tear it open.

Nobody likes to hear that they have to pay more to the IRS than they originally thought. But, before you jump to conclusions and quickly write out a check for the amount the letter says you owe:

  • Stop
  • Take a deep breath
  • Call your financial advisor

4 Tips For Resolving Your Tax Dispute

Believe it or not, the IRS does make mistakes. Agents can accidentally input incorrect information, computers can misread data and tax codes can be inadvertently overlooked or misinterpreted. It happens. If you believe that the IRS was wrong in a decision it made about your business’s tax returns, follow these four steps to reach a resolution.

  1. Follow Instructions. Sometimes the easiest way to resolve the issue is to follow the instructions. Sounds easy enough, but not everybody gets this part right. If the IRS sent you a notice, look for the section that explains what to do if you disagree with their decision and follow directions. Additionally, be sure to attach any supporting documentation and mail it back to the address given by the deadline requested. After the IRS has made its decision, you will be notified via U.S. Mail. When in doubt, opt to send inquiries to the IRS via certified mail and request a receipt.
  2. Make The Call. If your initial challenge was rejected, your next step is to follow up with a phone call. The rejection notice you received should have included another important piece of information: the contact name and number of the IRS employee who rejected your challenge. When you call, in a polite and professional manner, ask to speak to the employee’s manager. Even though you are passing over the employee on the chain of command, take care not to say anything about why you are asking to speak with their supervisor. The last thing you need is to create animosity. When you finally have the opportunity to speak with a supervisor, your case should be laid out in much the same way as your original challenge. You should be clear and concise in your explanation while taking care to address any concerns that were noted by the original employee in their rejection letter. If your letter didn’t include an employee’s name and phone number, send another certified letter to a general supervisor with the agency and request that they reconsider your case.
  3. Appealing To A Higher Office. If you still haven’t convinced the IRS to change its mind, don’t give up – even if you have already mailed several letters and racked up a lot of call time with the agency. Further up the chain of command is the Office of Appeals, an independent office within the IRS. This is just one more step you have to take on your journey to find an IRS employee who agrees with your. To get your case to the Office of Appeals, follow the instructions that were found in the earlier notices. If you are unable to locate these instructions, you can find them on the IRS website.
  4. Welcome to U.S. Tax Court. Sometimes a resolution can’t be achieved in the first three steps of the appeal process. If you find yourself in this situation your final option is to take the case to the U.S. Tax Court. At this point you may be discouraged and may even question whether you should continue on with the fight, but if you still believe that the IRS is wrong it is probably in your best interest to see it out to the end.

If your dispute is less than $50,000 you will have the option to represent yourself. Similar to how a small-claims court operates, there is no jury and the judge will not hold your inexperience against you. Once court is in session you will state your case again, provide evidence and answer any questions a judge may ask about the claim. Be advised, however, that once a decision is made at this phase it is final and cannot be appealed.

Sometimes, even though you have decided that you want to move forward, an IRS attorney may offer to settle out of court for a figure less than what the IRS says you owe. If this happens, you need to decide whether you will accept the settlement or if you will move forward with presenting your case to the judge. The choice is yours.

If you find yourself at odds with the IRS over a tax issue and are not sure how to proceed, email Rea & Associates for more information.

Author: Clayton W. Rose, III, CPA

 

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College Costs Keeping You Up All Night? Tax Credits Could Offer Relief

Tuesday, September 2nd, 2014

As a parent you have spent countless hours preparing your child for adulthood. You have thumbed through your share of board books, mastered the art of singing The ABC Song and Twinkle, Twinkle Little Star on a whim, and have racked up enough mileage driving back and forth from piano lessons, soccer games and summer camps to make a space shuttle cringe. But now it’s here. After nearly 18 years, your son or daughter has become a college student.

Many parents describe this milestone moment as bittersweet; others say they are caught off guard by feelings of anxiety and sadness. And while all parents are proud of their child’s accomplishment, it’s hard not to feel a little buyer’s remorse when you see the statement for the first semester in the mail – especially if you offered to pick up the tab.

College is not cheap, and according to the National Center for Educational Statistics (NCES), it’s only getting more costly. The NCES reported that the prices for an undergraduate to attend college at a public institution rose 40 percent between the 2001-02 and 2011-12 academic years; a student who chose to attend a private nonprofit institution saw a 28 percent increase over the same period. The report found that an average undergraduate student paid $14,300 annually for their tuition, room and board at a public institution while a student attending a private for-profit school paid $23,300 per year. And those numbers don’t include the price of books, meals, transportation, insurance, and extracurricular activities … to name a few.

Consider A Tax Credit

Don’t abandon ship just yet. Here are three tips to help give your bank account a break.

  • Utilize the American Opportunity Tax Credit or the Lifetime Learning Credit. These two tax credits could help take the edge off of your initial statement shock. If you qualify for the American Opportunity Tax Credit, you could save up to $2,500 annually for an eligible student during their first four years of school. Because 40 percent of this credit is refundable, you may be able to get up to $1,000 of the credit as a refund. The Lifetime Learning Credit, on the other hand, gives you the opportunity to claim up to $2,000 on your federal tax return and has no limit on the number of years it can be claimed. If you decide to take a credit, keep in mind that the IRS will only let you claim only one type of education tax credit per student.
  • Claim your qualified education expenses. Be sure to keep track of the expenses you paid toward tuition and student activity fees that were paid to complete enrollment. According to the IRS, you can make a claim if you paid for any of these expenses with cash, check, a credit or debit card or with money secured from a loan. If you will be taking the American Opportunity Tax Credit, expenses for books, supplies and course equipment are also considered a qualified education expense.
  • Don’t forget your 1098-T. This form, in addition to your receipts, is critical to claim a tax credit. Most schools will send this to you in the mail. Don’t be surprised if the amount on your form doesn’t match your numbers. The 1098-T doesn’t include items such as textbooks.

College doesn’t have to break the bank. To learn more about your college saving options, email Rea & Associates. Our team of tax professionals can guide you through the tax credit process and other college savings options.

Author: Brian Kempf, CPA (Millersburg)

 

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How Far Back Can The IRS Go For Tax Auditing?

Friday, June 20th, 2014

As a CPA I am frequently asked, “How far back can the IRS look to audit my tax return?” That’s a great question. Can the IRS go back and audit your tax return from five years ago? 10 years ago? 25 years ago? Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax.

Typically, the statute of limitations is three years for the IRS to include a tax return in an audit. This means the statute of limitations likely ran out on the majority of 2010 returns. The 2010 returns would have been due on April 15, 2011 … three years from that date was April 15, 2014. So most taxpayers are out of the woods for 2010 tax returns and all prior years. This same statute of limitations applies to the taxpayer when they would request a tax refund – you can only go back three years’ worth of returns to request a tax refund.

IRS Statute of Limitations Can Be Extended

But wait, before you start high-fiving everyone around you … that statute of limitations can be stretched out to six years if a substantial error is identified. A substantial error is defined as an omission of 25 percent or more of gross income. This may also apply to basis overstatements whenever property is sold.  Basis generally means the amount of capital investment in a property for tax purposes.

The U.S. Tax Court has given mixed results on whether or not basis overstatements constitute understatements of gross income. The Federal, Washington D.C., 7th  and 10th circuits have ruled in favor of the IRS, supporting the concept that basis overstatements open up the six-year statute. However, the 4th, 5th, and 9th circuits have ruled in favor of the taxpayer, holding that basis overstatements do not constitute substantial understatements of gross income.

When The IRS Statute of Limitations Doesn’t Expire

There are situations when the statute of limitations never expires. The most common is when a return never is filed. The other situation is when the IRS sues for civil tax fraud. Civil tax fraud cases are extremely rare because the burden of proof is so high for the IRS. The older the fraud, the colder the trail gets.

The IRS has stated that it tries to audit tax returns as soon as possible after they are filed. But in my professional experience, most audits are typically of returns filed within the last two years.

If an audit is not finished, the taxpayer may be asked to extend the statute of limitations for assessment of his or her tax return. Extending the statute will allow additional time to provide additional documentation to support a position, request an appeal if there is a disagreement with the audit results, or to claim a tax refund or credit. The extension will also allow the IRS time to complete the audit and provide additional time to process the audit results. It’s not mandatory to agree to extend the statute of limitations date. However, if the taxpayer does not agree, the auditor will be forced to make a determination based upon the information on hand at the time, which may not be favorable.

Tax Audit Help

If you’re concerned you’re at risk of an IRS audit or are looking for some clarity on the IRS statute of limitation for tax auditing, contact Rea & Associates. Our team of Ohio tax professionals can help you determine if you could be facing an audit, and can walk you through the process.

Author: Matt Pottmeyer, CPA (Marietta office)

 

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Where’s Your Tax Refund?

Friday, March 28th, 2014

Do you find yourself checking your mailbox every day? Or maybe you’re watching your bank account to see if your account balance went up? It’s the time of year that many Americans are waiting with bated breath for their coveted tax refund. If you haven’t already, you’re probably getting ready to file your tax returns in the next few weeks, and you may be wondering when you can expect to receive your refund or if there’s anything you can do to speed it up. Well, wonder no more and read on!

Speeding Up Your 2013 Tax Refund

The best way to receive your tax refund sooner than later is to file your tax return electronically and to select “direct deposit” as the delivery method for your refund. Electronic filing is faster, more accurate, and more secure than paper-filing your return. Likewise, direct deposit is faster and more secure than receiving a paper check refund. There’s no chance of your refund check being lost or stolen if it’s electronically deposited directly into your bank account. Please note that calling the IRS will not speed up your refund.

When Will You Receive Your Federal Tax Refund?

If you’ve already submitted your 2013 tax return and are curious where your refund is at, you can check the status of your federal tax refund using the IRS program, “Where’s My Refund?” This is available at http://www.irs.gov/Refunds, or you can use the mobile app, IRS2GO. If you file your return electronically, you can check the status 24 hours after your return was electronically submitted. If you file a paper return, you can check the status four weeks after your return is mailed.

In order to use “Where’s My Refund?”, you’ll need the primary taxpayer’s social security number, the filing status, and the exact amount of the refund. Your return will be in one of three stages:  Return Received, Refund Approved, or Refund Sent. While using “Where’s My Refund?” will not speed up the waiting time, it’s a convenient way to check the status of your refund.

Got Tax Questions?

If you have tax-related questions, contact Rea & Associates. Our team of Ohio tax professionals would be happy to answer any questions you may have.

Author: Cathy Troyer, CPA (New Philadelphia office)

 

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What Tax Benefits Exist When You Donate to Charity?

Tuesday, March 18th, 2014

We’re three months into 2014, and you may be thinking about what charitable donations you’d like to make this year. If you’re planning to make a donation to a qualified 501(c)(3) non-profit organization, make sure to look at your investment portfolio before you write a check.  (more…)

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Will You Be Paying With Cash, Credit Or Bitcoins?

Wednesday, January 29th, 2014

Bitcoin has been all over the news lately, and you may be asking – what exactly is it? Bitcoin is a virtual currency. Only existing online, it’s powered by its users and not backed by any government agency. This new currency offers anonymity, convenience, helps facilitate international commerce and can fluctuate in value. Check out www.bitcoin.org for more information and frequently asked questions.  (more…)

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Do I Need To Have Health Care Coverage Before Jan. 1, 2014?

Friday, December 20th, 2013

Christmas is upon us, but you know what else is? The federal deadline to pay for exchange insurance that’s effective Jan. 1, 2014. Yes, that’s right. If you want health insurance through the federal government, you’ve got until Monday, Dec. 23, 2013, to apply and pay for it. Some insurance companies have delayed this deadline to Jan. 10, 2014 – but not all. So don’t wait – make sure you’re covered today.  (more…)

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How Does DOMA Affect Me?

Friday, September 6th, 2013

This article discusses the changes to individual tax payers that are in a legal same-sex marriage.

Earlier this year the Supreme Court declared that section 3 of the Defense of Marriage Act (DOMA) was unconstitutional.  Section 3 of DOMA required that same-sex spouses are to be treated as unmarried for purpose of federal law.  It is now recognized that same-sex couples that were legally married in states that recognize same-sex marriages, will be treated as married for federal tax purposes, even if the state they are currently residing in does not allow same-sex marriages.  The same is true for couples married legally in a foreign jurisdiction.  This now allows for same-sex married couples to file with the status of “married filing jointly” (MFJ) or “married filing separately” (MFS). (more…)

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Need Some Cash Now?

Friday, July 19th, 2013

Are you in the market for a new home? Or maybe you’re looking to purchase a new car for your daughter or son? Don’t have enough cash for a down payment? No problem. There’s a nice workaround that can provide short-term relief for your immediate need.  (more…)

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How Does Getting Divorced Impact Your Taxes?

Friday, March 15th, 2013

Like so many Hollywood couples these days, maybe you are finding yourself a newly divorced person. With all the legal shenanigans that can happen during a divorce proceeding, have you taken the time to consider some of the more practical matters related to your finances? There are several tax-related items and helpful advice tidbits to be discovered after a change in your marital status. (more…)

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How Do You Keep Your Tax Documents Organized?

Friday, January 25th, 2013

It’s mid-January. Statistically, most Americans have already abandoned their New Year’s resolutions – those promises you make to yourself to hit the gym, get more sleep and read your favorite accounting blog every day (hey, it was worth a shot). But if you resolved to be more organized in 2013, don’t give up on it just yet – at least not until April 15.

This tax filing season carries extra challenges, thanks to the late passage of the “Fiscal Cliff” tax laws. The IRS isn’t going to be able to process tax returns until around February 1, which gives us a much smaller window of opportunity.

Follow these tips to stay organized this tax season and hopefully experience a few fewer headaches with Uncle Sam’s name on them. (more…)

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Do You Have to Take a 2012 Required Minimum Distribution?

Wednesday, January 23rd, 2013

ACT FAST: Limited Time Offer for RMDs

Thanks to a hot-off-the-presses provision in the new tax law, taxpayers over 70 ½ have a very limited window to address 2012 required minimum distributions (RMDs) from their retirement accounts.

Here’s what happened: an incentive for donating your RMDs directly to charity tax-free expired in 2011, so at the end of 2012 many of you weren’t sure what to do. Some of you may have taken your RMD as usual and used that money toward regular living expenses, but other retirees who typically donate their RMD to charity may have taken a different approach. (more…)

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What are the Tax Rules for Gamblers?

Thursday, October 25th, 2012

With the new Cleveland Horeshoe Casino, gaming is becoming big business in Ohio.  From occasional slot machine players to poker pros, Ohioans are experiencing gambling and all the wins and losses that come with it.  While residents of Las Vegas may already be familiar with the IRS’s tax treatment of gambling wins and losses, Ohio gamers might not be  The IRS has special rules for gaming income and losses, which I’ll describe below, but the general rule is this: gambling winnings are taxable. (more…)

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You Got a Tax Notice… Now What?!

Wednesday, September 19th, 2012

You know the feeling well… you’re just going about your business, walking out to the mailbox to pick up the daily mail. For some reason, the pile feels a bit heavier today. And as you sort through the junk and the magazines and the bills, you find that you’ve received a little love note in the form of a tax notice from the Internal Revenue Service (IRS). No wonder the mail is so heavy today… the IRS is looking for more of your well-earned money. (more…)

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How Do You Get Your Social Security Statement?

Thursday, May 10th, 2012

If you’re not yet nearing retirement age, Social Security probably means two things to you: the amount of money that disappears from your pay checks and the annual statements that you get in the mail. If you’ve ever taken the time to read these statements, you’ve probably learned some neat things about your finances – like your lifelong earning history and the amount of Social Security benefits that you’d receive if you were to need them right now. (more…)

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What if you can’t pay your taxes?

Friday, April 13th, 2012

The April 17th tax deadline is looming closer and you know that you’ve got to get your payment in soon.  But, what if you don’t have the cash on hand?  Don’t panic, there are ways to file your taxes and avoid penalties – even if you can’t pay everything that you owe right away. (more…)

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Did you send a wedding announcement to Social Security?

Tuesday, April 3rd, 2012

When you’re newly married, there’s so much to think about.  Did you remember to thank Aunt Joan for that silver tray?  Did you remember to have your mail forwarded to your new address?  One thing that may not make the list: Did you remember to notify the Social Security Administration of your name change? (more…)

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How can you protect yourself from tax fraud?

Friday, March 16th, 2012

Tax identity theft is an increasingly enormous problem. The IRS has been bombarding us with warnings of identity theft and scams this tax season.

Here’s a summary of some of the latest information you should know. (more…)

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Do you have to file taxes for your dependent children?

Tuesday, March 6th, 2012

A question we hear quite often during tax season relates to when it is necessary to file a tax return for a dependent child. Some people think that money held in an account intended for college education is exempt from taxation. That is not the case, unless the account is an Education IRA or Section 529 plan. If the investments are held in a custodial account or held in the child’s individual name, the child is deemed the owner and the income is attributable to him/her. (more…)

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When Can You Expect to Receive Your Tax Refund?

Thursday, February 16th, 2012

If you’re expecting a federal tax refund this year, it could be delayed. The agency reports that new anti-fraud measures could slow the refund process by approximately one week. (more…)

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Did You Discuss Finances Before Saying “I Do?”

Tuesday, February 14th, 2012

It may not be the most romantic Valentine’s Day conversation, but financial planning is an important part of starting your marriage on solid financial footing. After all, married couples fight over personal finances more than they fight over anything else. (more…)

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Are You Ready for Tax Time? Have More Than a Shoe Box

Wednesday, February 8th, 2012

So it’s tax time. While that thought might conjure up images of lots of receipts in a shoe box, you don’t want to be that person. With a little preparation, you can help make your visit to your accounting professional less expensive and more enjoyable. Here are a few tips to help you prepare. (more…)

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Thinking of Gifting Money to Relatives? Late 2011 and Early 2012 May Be Best Timing

Wednesday, December 28th, 2011

If you’ve been considering making a monetary gift to your children or other relatives, you may want to make your gift well before December 31. And better yet, if you haven’t made any previous gifts in 2011, you can gift up to $13,000 in 2011 and follow up with a gift of up to $13,000 in early 2012. (more…)

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Is 2011 the Year to Give? IRA Contributions to Charity

Friday, December 9th, 2011

If you’re thinking about donating a portion of your IRA to charity, you’ll receive a greater tax benefit if you do so before December 31. A popular provision is set to expire at the end of the year, and there is no guarantee the provision will appear in an extender bill in Congress anytime soon. (more…)

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Have You Received an IRS Notice? Nine Things to Know

Monday, October 3rd, 2011

The Internal Revenue Service sends millions of letters and notices to taxpayers for a variety of reasons each year. Here are some things to know if you receive one. (more…)

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What to Do? Uncertainty Continues to Make Tax Planning Difficult

Friday, September 2nd, 2011

Ohio business and individual taxpayers, as well as their tax professionals, faced a great amount of uncertainty in 2010 as they waited to see what tax rules would apply to them for 2011 and 2012, until the 2010 Tax Relief Act was signed into law in December. Now, the recently approved debt ceiling legislation averted another immediate crisis, but continued this guessing game as Americans wait to see if comprehensive tax reform will be accomplished. (more…)

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Have Offshore Income? Time is Running Out for Voluntary Disclosure

Friday, August 26th, 2011

If you have undisclosed income through offshore accounts, time is running out to voluntarily disclose it and bring your taxes current. The IRS is winding down a voluntary disclosure program that began February 8 and will end on August 31. (more…)

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Waiting on the Airline Refund? Now It’s Not on the Way

Thursday, August 11th, 2011

So much for the airline tax refund you may have been expecting.

If you traveled by air and purchased a plane ticket on or before July 22, 2011, for a trip leaving July 23 or later, you may have heard that you may be eligible for a refund on the air transportation excise tax you paid. Recent legislation means there will not be a refund. (more…)

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Are You Eligible for an Airline Tax Refund?

Wednesday, August 10th, 2011

If you traveled by air and purchased a plane ticket on or before July 22, 2011, for a trip leaving July 23 or later, you may be entitled to a refund on the air transportation excise tax you paid. (more…)

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Less Ohio Tax Centers, No Tax Booklets, But Still Many Resources

Wednesday, August 3rd, 2011

With more Ohio taxpayers now filing state returns electronically, the Ohio Department of Taxation has closed seven regional taxpayer centers and will no longer mail its income tax booklets to taxpayers. (more…)

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Higher Gas Prices Mean Higher Business Mileage Deduction

Friday, June 24th, 2011

In a nod to higher gas prices, the IRS has increased the business mileage rate deduction to 55.5 cents per mile.   The new rate becomes effective July 1 and raises the rate 4.5 cents.   The deduction for medical and moving expenses also increases 4.5 cents to 23.5 cents per mile.  (more…)

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Live or Do Business in Michigan? Your Tax Laws Are Changing!

Wednesday, June 1st, 2011

In late May, the Michigan legislature voted to make dramatic changes to Michigan’s corporate and individual income tax laws. The measure repeals the Michigan Business Tax and eliminates numerous individual income tax credits, deductions and exemptions as well as changes future income tax rates. (more…)

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What If Will and Kate Married in the US? Financial Advice for Newlyweds

Friday, May 13th, 2011

As the Duke and Duchess of Cambridge settle into married life, they may manage many of the same financial issues that any other newlyweds face with a new union. So, what if William and Kate got married in the United States instead? What financial advice might they receive that soon-to-be brides and grooms might also heed? (more…)

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Didn’t File Your Taxes or Can’t Pay Them Now? Here’s What To Do

Friday, April 29th, 2011

The federal tax deadline has come and gone. What if you haven’t filed your taxes? (more…)

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Did You Win at March Madness? Remember to Pay Uncle Sam

Tuesday, April 12th, 2011

If your NCAA college basketball bracket brought you some winnings, remember that your earnings count as taxable income, and you’ll need to report it when you file your 2011 taxes. (more…)

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