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.
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
The Affordable Care Act (ACA) passed in March 2010 is
generally called Obama Care.
The ACA requires most people over age 18 to have heath
coverage through private insurance, employer coverage or a government program
no later than March 31, 2014.
Starting October 2013, new qualified health insurance plans
for individuals, families, and small groups will be available for purchase for
effective dates beginning January 2014.
Who has to buy health
insurance?Beginning January 1, 2014, most US citizens and legal
immigrants will be required to by the federal government to have some form of
Year-end tax planning could be especially productive this year because
timely action could nail down a host of tax breaks that won’t be around
next year unless Congress acts to extend them, which, at the present
time, looks doubtful. These include, for individuals: the option to
deduct state and local sales and use taxes instead of state and local
income taxes; the above-the-line deduction for qualified higher
education expenses; and tax-free distributions by those age 70- 1/2 or
older from IRAs for charitable purposes.
Senate has passed the American Taxpayer Relief Act of 2012, and the
bill has been sent to the House where it is currently being reviewed.
The Act's key changes follow:
- Income taxes.The Act would keep the Bush's tax rates intact for individuals with
taxable income under $400,000 ($450,000 for married taxpayers, $425,000
for heads of household). Income above these levels would be taxed at a
- AMT patch.The Act would permanently patch the alternative minimum tax (AMT).
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.
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
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.
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
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
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.
Under the HIRE Act, individuals whose total specified foreign financial
assets exceed $50,000 (single) or 100,000 (married filed jointly) must complete Form 8938 and attach it to their 2011 Form 1040.
A specified foreign financial asset is defined as:
- Any financial account maintained by a foreign financial institution, and
- Any stock or security issued by a person other than a U.S. person
- Any financial instrument or contract held for investment that has an issuer or counterparty that is other than a U.
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.
are selected audit rates for individuals not claiming the EITC: