Protect yourself from Shady Tax Shops

From CNBC:


Every year unregulated tax preparers pop up in abandoned storefronts like weeds in a cracked sidewalk. Sprouting in low-income neighborhoods, they promise fat refund checks fast. But even without upfront charges, they can have hidden costs for the unwary.
In Congressional hearings Tuesday, consumer advocates said their investigations found significant levels of fraud and incompetence by paid tax preparers, from about 25 percent to more than 80 percent.
According to the IRS, 81.2 million of nearly 145 million individual tax returns filed for tax year 2011 were completed by a paid preparer. Should one of those preparers make a mistake, or commit outright fraud, the taxpayer is on the hook in the event of an audit. By that time the "For Rent" sign may have reappeared in the tax preparer's former storefront, with no way to find him or her.



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The state of distress

I read with some interest in today’s Chicago Tribune editorial page an editorial in regards to the state of this state.  Sub-headed “A State of Distress.”  The report card is not especially good. Illinois ranks nearly on the bottom of virtually every economic category listed.  We are tied for the second worst unemployment rate in the country with Nevada. 48th in job creation. Illinois ranks dead last in overall economic performance. And household income has dropped since 2010. Illinois is moving closer in annual  household income to Mississippi according to the Census Bureau than leader Maryland.

The Tribune writes:

Is Illinois better off in 2014 than it was four years ago? In 2010 we pored over a virtual library of statistics to assess where Illinois stood relative to other states and produced a chart much like this one. Today we replicate that exercise as closely as the data permit, with comparisons to Illinois' national stature in 2010. By economic and jobs measures, Illinois has fallen further.

I will highlight one point and link to the editorial article in our blog.

States for business: Worse (now 48th, was 46th in 2010): Illinois is among the worst states for business, says Chief Executive magazine. The Wall Street Journal on March 20 listed Illinois "near the top of any fair survey" for worst-run state in America.

Illinois has always been a tough state to do business in.  Without being accused of stating the obvious it is only getting harder.

Tax Preparers assaulted, shot at, and choked

From Accounting Today:


Chicago Heights, Ill.: In mid-February a Liberty Tax preparer pulled a gun on a customer’s boyfriend who police said threatened to beat him up during a dispute over fees. The boyfriend, 34, has reportedly been charged with assault after confronting the preparer over $500 in additional fees that the girlfriend was charged for her return. Police told reporters the preparer, 45, had a valid firearm owner’s ID.

Kirkwood, Mo.: A 53-year-old local man is accused of choking an H&R Block worker earlier this month after reportedly becoming enraged about his “tax situation.” Police told news outlets that the assailant knocked the Block employee to the ground and is now charged with misdemeanor assault. The Block worker reported minor injuries but did not require hospital treatment.

Deerfield Beach, Fla.: A bullet narrowly missed the ear of preparer Michelle Merced as she sat in the office of Dixie Fast Tax in late February. “I wanted [tax season] to be busy with people, not bullets, coming in,” she told news outlets. The shooting was connected to a dispute outside her office and police confirmed that Merced and her staff were not intended targets.



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Our latest podcast is up and rurnning and we are talking the new realty of health care

Client J Burt joins us to talk health care and deadlines and other exciting things as the coverage deadline approaches.



Click this link to listen

Two common misunderstood non deductible situations.

1. Loss for no money collected.  Common amongst landlords.  If it is vacant, I loss money.  However, if you are not reporting it as income, how can you deduct the income.                                                                                                                                                                                     
2. The value of your time is never I mean never a deduction for charitable purposes.  We loss a client over this discussion.  By IRS rules if you are volunerring to a charitable organization, you can't deduct the value of your time and other creative thoughts.  From IRS Publication 526: 
   

   Value of Time or Services

   You cannot deduct the value of your time or services, including:
   
   • Blood donations to the American Red Cross or to blood banks, and
     
   • The value of income lost while you work as an unpaid volunteer for a qualified organization.
     
   
   

   Personal Expenses

   You cannot deduct personal, living, or family expenses, such as the following items.
   

   • The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services.
     
   • Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. However, you may be able to claim a tax credit for these expenses. Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. You also may be able to claim an exemption for the child. See Exemptions for Dependents in Publication 501 for more information.
     

TaxPartner Insider Podcast up and going for March 7, 2014

Click this link to listen to our latest podcast concerning sales tax audits, same sex couples tax returns, and other tax representation excitement.

Click here to listen. 

What is a shared responsibility payment?

From IRS Health Care Tax Tip 2014-06


There are a few basic tips to keep in mind about the new health care law. Health insurance choices you make now may affect the income tax return you file in 2015.

1. Most people already have qualified health insurance coverage and will not need to do anything more than maintain qualified coverage throughout 2014.

2. If you do not have health insurance through your job or a government plan, you can buy it through the Health Insurance Marketplace.

3. If you buy your insurance through the Marketplace, you may be eligible for an advance premium tax credit to lower your out-of-pocket monthly premiums.

4. Your 2014 tax return will ask if you had insurance coverage or qualified for an exemption.  If not, you may owe a shared responsibility payment when you file in 2015.

What should you do now?
If you or your family does not have health insurance, find out more now. Talk to your employer about the coverage they offer, or visit the Marketplace online.
Find out more about the health care law and the Marketplace at www.HealthCare.gov.
Find out more about the premium tax credit and the shared responsibility payment at www.IRS.gov/aca.