TAXPAYER DIGITAL COMMUNICATION (TDC):
The IRS is moving into electronic communication with taxpayers through Taxpayer Digital Communication (TDC). This program will allow IRS employees to resolve taxpayer issues through email, chat, and other electronic functions. The project is currently in beta testing and is only available for those going through a correspondence audit on the Schedule A. The Taxpayer Advocate Service is also testing the TDC project in four locations; Nashville, New Orleans, Dallas, and Cleveland.
All taxpayers subject to a Schedule A correspondence audit will receive a flyer with their notice from the IRS giving them the instructions on how to access the TDC system. The IRS is anticipating that they will test the program with approximately 4,200 audits. The letters started going out to taxpayers before Christmas and they continue to issue 150 audit letters per week.
You are able to represent your client through the TDC program but you must first submit the power of attorney to the CAF unit before you will be able to access your client’s account. The power of attorney system is still through fax so allow 10 business days for the Form 2848 to be posted before accessing the TDC system. The IRS says that it will be a minimum of 6 months or more before the power of attorney can be electronically submitted.
The benefits of TDC are that information can be transmitted immediately, you will be working with one auditor and all documents can be uploaded to the taxpayer account. The down side is that you will not be able to see what your client emails to the IRS. While it is unlikely that a client will draft and send a letter to the IRS it is not inconceivable that they will be more likely to send an email.
This is a significant step by the IRS to set up communication with taxpayers through electronic methods. A roadblock to this process will be the cell phone number. Each time you access TDC an access code will be sent to the cell phone number under your social security number. If you have a family plan or your cell phone is under your business EIN then the system will not work. The IRS is working on this issue, but they have no alternate solution at this point.
In order to communicate with the IRS your editor had to sign up for a basic cell phone plan under my social security number as my cell phone account has been under my business EIN for many years. Depending on how much representation you provide for your clients you may have to adopt the same strategy.
Your E1 Visa Prepaid Card is more than just a way for you to receive your tax refund. It’s a reloadable prepaid card account with very low fees that can save you money all year long. It’s a better way to bank and a great alternative to checking accounts, credit cards, and cash. Securely manage your money, make purchases at millions of locations everywhere Visa debit cards are accepted, pay bills online, and get cash at over one million ATMs worldwide. Best of all, Direct Deposit your paycheck or benefits check for free and avoid costly check cashing fees! And with the Visa Zero Liability* policy you’re protected from unauthorized purchases if your card is lost or stolen.
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E1 Visa Prepaid Card is issued by Frist Century Bank, N.A. Member FDIC, pursuant to a license from Visa U.S.A Inc. and may be used everywhere Visa debit cards are accepted. Direct deposit capabilities are subject to payer’s support of this feature. Check with your payer to find out when the direct deposit of funds will start. Funds availability is subject to timing of payer’s funding. Your Prepaid Card account and associated direct deposit account number cannot be used for preauthorized direct debits from merchant or from utility or internet service providers.
IRS YouTube Video April 18 is When Your Taxes are Due in 2017 | English
WASHINGTON ― The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 23, 2017 and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.
The IRS will begin accepting electronic tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017. The IRS again expects more than four out of five tax returns will be prepared electronically using tax return preparation software.
Many software companies and tax professionals will be accepting tax returns before Jan. 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. There is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.
The IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. In addition, the IRS wants taxpayers to be aware it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual access to their refunds until the week of Feb. 27.
“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay. Even with these significant changes, IRS employees and the entire tax community will be working hard to make this a smooth filing season for taxpayers.”
The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option. Taxpayers can visit IRS.Gov/GetReady for more tips on preparing to file their 2016 tax return.
April 18 Filing Deadline
The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday – April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.
“The opening of filing season reflects months and months of work by IRS employees,” Koskinen said. “This year, we had a number of important legislative changes to program into our systems, including the EITC refund date, as well as dealing with resource limitations. Our systems require extensive programming and testing beforehand to ensure we’re ready to accept and process more than 150 million returns.”
The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. A number of new provisions are being added in 2017 to expand progress made during the past year.
Refunds in 2017
Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund.
The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.
Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.
As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do – including returns claiming EITC and ACTC.
The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27 (assuming there are no processing issues with the tax return and the taxpayer chose direct deposit). This additional period is due to several factors, including banking and financial systems needing time to process deposits.
After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.
Where's My Refund? on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers will not see a refund date on Where's My Refund? or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.
Help for Taxpayers
The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov. Taxpayers can also, if eligible, locate help from a community volunteer. Go to IRS.gov and click on the Filing tab for more information.
Seventy percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $64,000 or less.
Online fillable forms provides electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.
Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to irs.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider.
The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice about the ever-changing tax code. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.
Renewal Reminder for Individual Taxpayer Identification Numbers (ITINS) ITINs are used by people who have tax-filing or payment obligations under U.S. law but are not eligible for a Social Security number. Under a recent change in law, any ITIN not used on a tax return at least once in the past three years will expire on Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) will also expire on that date.
This means that anyone with an expiring ITIN and a need to file a tax return in the upcoming filing season should file a renewal application in the next few weeks to avoid lengthy refund and processing delays. Failure to renew early could result in refund delays and denial of some tax benefits until the ITIN is renewed.
An ITIN renewal application filed now will be processed before one submitted at the height of tax season from mid-January to February. Currently, a complete and accurate renewal application can be processed in as little as seven weeks. But this timeframe is expected to expand to as much as 11 weeks during tax season, which runs from mid-January through April.
Several common errors are currently slowing down or holding up ITIN renewal applications. The mistakes generally center on missing information, and/or insufficient supporting documentation. ITIN renewal applicants should be sure to use the latest version of Form W-7, revised September 2016. The most current version of the form, along with its instructions, are posted on IRS.gov.
IRS LAUNCHES NEW ONLINE TOOL TO ASSIST TAXPAYERS WITH BASIC ACCOUNT INFORMATION:
The Internal Revenue Service announced the launch of an online application that will assist taxpayers with straightforward balance inquiries in a safe, easy and convenient way.
This new and secure tool, available on IRS.gov allows taxpayers to view their IRS account balance, which will include the amount they owe for tax, penalties and interest. Taxpayers may also continue to take advantage of the various online payment options available by accessing any of the payment features including: direct pay, pay by card and Online Payment Agreement. As part of the IRS vision for the future taxpayer experience, the IRS anticipates that other capabilities will continue to be added to this platform as they are developed and tested.
“This new tool is part of the IRS’s commitment to improve and expand taxpayer services by providing additional online taxpayer options,” said IRS Commissioner John Koskinen. “The new ‘balance due’ feature, paired with the existing online payment options, will increase the availability of self-service interactions with the IRS. This will give taxpayers another way to take care of their tax obligations in a fast and secure manner.”
Before accessing the tool, taxpayers must authenticate their identities through the rigorous Secure Access process. This is a two-step authentication process, which means returning users must have their credentials (username and password) plus a security code sent as a text to their mobile phones.
Taxpayers who have registered using Secure Access for Get Transcript Online or Get an IP PIN may use their same username and password. To register for the first time, taxpayers must have an email address, a text-enabled mobile phone in the user's name and specific financial information, such as a credit card number or specific loan numbers
As part of the security process to authenticate taxpayers, the IRS will send verification, activation or security codes via email and text. The IRS warns taxpayers that it will not initiate contact via text or email asking for log-in information or personal data. The IRS texts and emails will only contain one-time codes.
Link: IRS Website
Is leasing or buying the best way to finance your next car? It's hard to give this a quick answer since there are so many trade-offs. However, if you take a closer look at your lifestyle, your needs and your preferences, you can reach a sound decision.
For example, if you need an upscale car for business, perhaps to entertain clients, leasing allows you to drive a luxury vehicle for less money. It might also provide a good tax write-off. However, if you don't need the status of a new car and prefer to keep automotive costs as low as possible, the best choice would be to buy a new or used car and keep it for as long as it is reliable.
Ultimately, you can say good things about both buying and leasing. Your choice might be more of a combination of personal tastes and priorities than pure dollars and cents.
If you want to dive deeper into the economics of leasing and buying, use the Edmunds Auto Calculators to see what your lease payments would be and to compare the costs to buying a car.
Also, you can view sample calculations in this analysis of three common car financing scenarios: leasing, buying a new car and buying a used car.
Since everyone's situation is different, here's a list of the pros and cons of leasing and buying a car. Some of these points are financial factors and others relate to a person's needs and lifestyle. Keep in mind that there isn't always a perfect answer to the question of whether to lease or buy.
Advantages of Leasing:
• Lower monthly payments with a low — or no — down payment.
• You can drive a better car for less money.
• Lower repair costs because you are always under the vehicle's included factory warranty.
• You can more easily transition to a new car every two or three years.
• There are no trade-in hassles at the end of the lease.
• You pay less sales tax.
Disadvantages of Leasing
• You don't own the car at the end of the lease (although there is always the option to buy).
• Your mileage is typically limited to 12,000 miles a year (you can purchase extra).
• Lease contracts can be confusing and filled with unfamiliar terminology.
• In the long run, leasing is more expensive than buying a car and keeping it for years.
• Excessive wear-and-tear charges can be a nasty surprise at the end of the lease.
• It's costly to terminate a lease early if your driving needs change.
Advantages of Car Buying
• You can modify your car as you please.
• Car buying is more economical over the long term.
• You can drive as much as you like. There's no excess mileage penalty.
• You have more flexibility since you can sell the car whenever you want.
Disadvantages of Car Buying
• It requires a higher down payment to avoid being "upside down" in the loan, meaning you owe more than the car is worth.
• Monthly payments are higher than lease payments.
• Once the warranty expires, you're responsible for repair costs.
• You face possible trade-in or selling hassles when you decide to get your next car.
• More of your ready cash is tied up in a car, which depreciates in value.
In a nutshell, leasing makes it easier to get more car for less money. This is because you only pay for the value of the car that you drive, instead of buying and owning the entire worth of the vehicle.
Buying frees you from the oversight that's involved in leasing. The car is yours to do with as you wish. Ultimately, it's up to smart car buyers to weigh the pros and cons, determine their needs and decide what choice best suits their lifestyle.
How a Summer Wedding Can Affect Your Taxes
With all the planning and preparation that goes into a wedding, taxes may not be high on your summer wedding checklist. However, you should be aware of the tax issues that come along with marriage. Here are some basic tips to help with your planning:
• Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov, by calling 800-772-1213 or from your local SSA office.
• Change tax withholding. A change in your marital status means you must give your employer a new Form W-4, Employee's Withholding Allowance Certificate. If you and your spouse both work, your combined incomes may move you into a higher tax bracket or you may be affected by the Additional Medicare Tax. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information.
• Changes in circumstances. If you or your spouse purchased a Health Insurance Marketplace plan and receive advance payments of the premium tax credit in 2016, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace when they happen. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance credit payments are paid directly to your insurance company on your behalf to lower the out-of-pocket cost you pay for your health insurance premiums. Reporting changes now will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance, which may affect your refund or balance due when you file your tax return.
• Address change. Let the IRS know if your address changes. To do that, send the IRS Form 8822, Change of Address. You should also notify the U.S. Postal Service. You can ask them online at USPS.com to forward your mail. You may also report the change at your local post office. You should also notify your Health Insurance Marketplace when you move out of the area covered by your current health care plan.
• Tax filing status. If you’re married as of Dec. 31, that’s your marital status for the whole year for tax purposes. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to figure the tax both ways to find out which status results in the lowest tax.
• Select the right tax form. Choosing the right income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. You must claim itemized deductions on a Form 1040, not a Form 1040A or Form 1040EZ.
Remember those great New Year's resolutions for making improvements to your company? With the year half over, how have you done? If you're like most small-business owners, you spend more time working in your business than on it, and you may have completely overlooked implementing those things that could greatly improve your business. Well, now's the time to take a fresh look so that you can put your ideas into action -- and still make this year the kind of year you had resolved it would be. Some key areas to consider are sales, customers, employees, taxes, and strategic planning.
Have you met or exceeded sales targets for the first six months of 2016? Now is the time to decide what you are doing right, as well as what you are doing wrong. If you and your sales team are falling short, consider taking a sales-training course in the summer when things are usually slow. Then put your newly-acquired sales skills into action after Labor Day, when business typically picks up.
Many owners pledge to maintain better communication with their customers. Have you done this in the first half of 2016? If not, design ways to implement your goal. Consider e-mail outreach to let your customers know about special activities, such as sales or seminars. (Communications by snail mail may now be too costly anyway, in light of postal rate increases in May.) If it's appropriate, think about creating a blog to engage customers in your business concerns.
If business has been good, perhaps you want to add or enhance fringe benefit plans to retain your valued staff and boost morale. Key plans to consider are:
* Retirement plans: If you already have a 401(k) plan in place, consider increasing the company's matching contributions.
* Health plans: If you don't yet have medical coverage for staff, look into health savings accounts (HSAs) as a low-cost solution for providing some type of health-coverage assistance. Note: We have two financial advisors who held clients set up fringe benefit plans for small businesses.
It's also time to check for new minimum wage rates. The federal minimum wage averages $7.25 per hour. Click here to see your state minimum wage rate.
Are the estimated tax payments you've made thus far in line with your net revenues? You still have two estimated tax payments to go for 2016 -- one in September and another in January 2017 (or December 2016 for corporations). Make sure you don't underpay, because you'll incur estimated tax penalties. But don't overpay either -- you'll make an interest-free loan to Uncle Sam and the overpayment can't be recouped until you file your 2016 income tax return.
Another common resolution that is difficult to follow through on is a pledge to keep better records of business expenses. If you've fallen short of your objective, it's not too late to get on track. The better your records, the easier it will be to claim all the deductions to which you are entitled.
Don't wait until the end of the year to meet with your board of directors or advisors. Now is the time to brainstorm ideas that can move your business to the next level. And re-read your business plan to see if you are meeting your goals. If you don't have a formal business plan, or if you do but haven't updated it in a long time, consider writing one. This will help you to focus on your long-term goals and the ways you can achieve them. Call us to help with your financial strategy 980.202.7283
29 states, plus the District of Columbia, have set their minimum wage above the federal level of $7.25 per hour as of Jan. 1, 2015
15 states, plus the District of Columbia, index their minimum wages to rise automatically with the cost of living. 10 states currently index minimum wage increases each year: Arizona, Colorado, Florida, Missouri, Montana, Nevada, New Jersey, Ohio, Oregon and Washington. Five more states, plus the District of Columbia, will index minimum wage increases annually beginning in future years: Alaska (2017), D.C. (2017), Michigan (2019), Minnesota (2018), South Dakota (2016) and Vermont (2019).
8 states have set the tipped minimum wage equal to the value of the full minimum wage, ensuring that tipped workers are paid the full minimum wage directly by their employer
See the list below for the minimum wage in each state.
Current and Projected Minimum Wage by State (in U.S. Dollars)
|District of Columbia †||$10.50||$11.50||$11.50||$11.50|
|New Jersey *||$8.38||$8.59||$8.78||$8.97|
|South Dakota †||$8.50||$8.50||$8.50||$8.50|
* States that currently index minimum wage increases annually to rise with the cost of living. Projected indexed minimum wages are based on Congressional Budget Office projections.
† States that will index minimum wage increases annually beginning in future years. Projected indexed minimum wages are based on Congressional Budget Office projections.