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Why do you need bank reconciliation?
Taxpayer Beware - IRS impersonators
Identity Theft & Tax Filing
Social Security and Your Retirement
AZ Tax Credits

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Why do you need bank reconciliation?

Bank reconciliation is the process of comparing your accounting records to the bank’s records. You go through every transaction in your account and make sure your book and the bank agree on the transaction. You should do a bank reconciliation at least every month to make sure you know what’s going on with your accounts.

Reconciliation can help you detect your recording errors. It can also help you detect other problems such as people stealing from your account or bank errors.

Your record can differ from the bank's and they need to get reconciled. Some items, such as outstanding checks, won’t show up on your bank statement because the bank doesn’t know about them yet. Likewise, there may have been electronic transfers at the bank that you didn’t know about. Bringing all of these things into the open is what bank reconciliation is all about.

Taxpayer Beware - IRS impersonators

Treasury officials have warned of a widespread and sophisticated phone scam involving callers who impersonate Internal Revenue Service representatives and demand immediate payments with pre-paid debit cards and wire transfers.

http://www.washingtonpost.com/blogs/federal-eye/wp/2014/04/16/listen-the-largest-ever-phone-scam-involving-irs-impersonators/

Identity Theft & Tax Filing

Identity theft is rampant in America today. This year when I tried to e-file the returns for a couple of clients, I got a message from the software saying that the social security number was already used by someone else. That is a sign of identity theft. Later I talked to other CPAs and it seems that quite a few of them have seen identity theft cases in their firm.

IRS Intensifies Work on Identity Theft and Refund Fraud

The IRS is taking several steps to alleviate identity theft and refund fraud.

Social Security and Your Retirement

Social Security at some point will touch the lives of nearly all Americans. It is probably the only real pension most people have.  It is a defined benefit plan - the longer you live, the more you get. 

Will social security benefits be around in the future? 

A research shows that there will be enough funds to pay full benefits till 2036. Without reform, the benefits will be reduced to 77% in 2036. The baby boomers will not likely to be affected by social security reform. 

When to take social security benefits?

AZ Tax Credits

1 - Charitable Contributions (Working Poor) Tax Credit

  • Maximum $200/yr (single) or $400/yr (married filing jointly) .
  • Your donations must be received by the agency by December 31, 2012 to be able to take the credit for 2012.
  • You have to itemize deductions on your Arizona return in order to get this tax credit.
  • The charity knows if they qualify for the tax credit.

2 - Public School Tax Credit

  • Maximum $200/yr (single) or $400/yr (married filing jointly).
  • In order to take the tax credit, your donations must be received by the school by December 31, 2012.

IRS Penalty and Relief

1. Failure to file penalty. It is usually 5% of the unpaid taxes for each month or part of a month that a tax return is late. This penalty will not exceed 25% of the unpaid taxes. If a taxpayer files his tax return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

2. Failure to pay penalty. It is one-half of one percent of the unpaid taxes for each month or part of a month after the due date that the taxes aren't paid.

What are your chances for being audited?

IRS has issued its annual data bookhttp://www.irs.gov/pub/irs-soi/10databk.pdf, which provides statistical data on its fiscal year (FY) 2010 activities.

Of the 142,823,105 total individual income tax returns with a filing requirement, 1,581,394 were audited. This works out to roughly 1.1%. Of the total number of individual income tax returns audited in FY 2010, 473,999 (30%) were for returns with an earned income tax credit (EITC) claim.

Following are selected audit rates for individuals not claiming the EITC: