Janell A. Israel & Associates
1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817
February 2015 Tax Newsletter
What's New in Taxes:
April 15 may be a few months away, but the Internal Revenue Service is taking preventive steps in helping taxpayers avoid fraud during the filing season.
After an increase in the number of fraudulent phone calls, the IRS has released a number of resources, including a YouTube video and podcast, to help identify scams.
Without prior written contact, getting a call from the IRS should cause red flags to immediately pop up, IRS field media relations representative David Tucker said.
"We don't initiate contact by phone, email or social media," Tucker said. "When we do contact someone, it starts first with a notice or letter through the U.S. Postal Service."
Tucker said many people are duped into giving away important information because the person on the end of the phone is impersonating an agent.
"The scammers are calling and purporting to be an IRS agent trying to get personal or financial information over the phone," Tucker said. "If the people don't comply, they threaten them with arrest or some other hostile form of threat."
The Treasury Inspector General For Tax Administration has received around 290,000 reports of fraudulent calls and is aware of nearly 3,000 victims, who have been defrauded over $14 million since 2013.
In order to help people identify scams, the IRS also released a list of things it would never ask or say:
· Call to demand immediate payment, nor will the agency call without
first sending a bill.
· Demand payment without giving citizens the opportunity to question
or appeal the amount.
· It would never ask for credit or debit card numbers over the phone.
· Ask to use a specific payment method, such as prepaid debit card.
· Threaten arrest using other law agencies.
In the event a person is suspicious of a call, Tucker said the safest measure is to contact authorities immediately.
"I would advise that people don't engage with the scammer and hang up the phone immediately," Tucker said. "We work with a variety of agencies because it's not just an issue of a tax standpoint, but it's also identity theft, so local, state and federal law enforcement is involved."
If someone is the target or victim of a scam, Tucker said he or she should call the IRS at 1-800-829-1040, the treasury inspector at 1-800-366-4484 and file a complaint with the FTC or at www.tigta.gov.
Budget Cuts To Impact IRS Service Levels
The IRS has revealed that its level of service to U.S. taxpayers is expected to decline due to a combination of factors - increased workloads and cuts to the agency's 2015 budget.
The increased workloads are partly associated with new tax issues related to the Affordable Care Act. The budget cuts will impact how the IRS is able to respond to customer service telephone and written inquiries. Also notable, the budget cuts could result in taxpayers who file paper returns experiencing delays in receiving their refunds.
On top of all this is the expectation that the IRS will have fewer resources to conduct audits, thus resulting in less revenue collection. IRS Commissioner John Koskinen says the decreased service levels are "unacceptable" and looks forward to finding a resolution.
Check The Filing Requirements For 2014 Tax Returns
Taxes are a frequent topic of conversation at this time of year, and a common question is, who has to file a tax return? The rules for filing 2014 tax returns are straightforward for most people.
* Single taxpayers (including those who are divorced or legally separated): If you're under 65 and had gross income of at least $10,150 in 2014, you must file. If you're 65 or older, the cutoff is $11,700.
* "Head of household" taxpayers (generally, unmarried people who provide a home to a child or other dependent): If you're under 65 and had income of at least $13,050, you'll need to file. If you're 65 or older, the cutoff is $14,600.
* Married taxpayers filing jointly: Filing is required if both spouses are under 65 and income is at least $20,300. If one spouse is 65 or older, the cutoff is $21,500. If both spouses are 65 or older, gross income must be at least $22,700 to require filing. If you were married but not living with your spouse at the end of 2014, filing is required if you have income of $3,950 or more, regardless of your age.
* Married taxpayers filing separately: If you made at least $3,950, you must file, regardless of your age.
Different IRS rules govern filing for certain widows and widowers, dependents, those who owe special taxes (e.g., self-employment tax), children under age 19, and aliens. If you have a refund coming, you will want to file regardless of your income level. If you qualify for certain tax credits, you may need to file a return to claim the credit even if you otherwise wouldn't be required to file.
It's worth looking into your filing requirements. This year you may not have to file at all. The IRS doesn't want people to file income tax returns that aren't necessary. The reason is simple: Processing tax returns takes time and money. The IRS doesn't want to use its resources handling returns that weren't required in the first place. If you need more information or assistance with tax filing, please call our office.
What's New in Finances:
"ABLE" Accounts Can Be Set Up To Help The Disabled
The "Tax Increase Prevention Act of 2014" includes a section that authorizes tax-favored accounts for disabled individuals who can use the money in these accounts to pay for qualified expenses.
The "Achieving a Better Life Experience (ABLE)" accounts are designed around the tax framework of Section 529 college savings plans. The 2014 law authorizes these accounts beginning January 1, 2015.
Qualified distributions from the 529-ABLE, such as transportation and housing as well as education and medical expenses, will be tax-free. Nonqualified distributions will be subject to income tax, plus a 10% penalty.
Contact our office if you would like more details about ABLE accounts.
All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad& Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.
Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted& Christensen, Janell Israel & Associates and NPC are separate and unrelated companies. NPC does not provide tax or legal advice.
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