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Most individuals are required to file their individual income tax returns or pay all of their back taxes by April 15th of each year. If you have failed to file your return, ...

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What expenses can I deduct for a home office or business use of my home?

If you work, whether you are an employee or self-employed, you may be able to deduct certain home expenses from your federal income tax. Read on to learn more about determining if you qualify to take advantage of a home office deduction.

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How can I tell if a call from the “IRS” is legitimate or a scam?

The IRS released an alert last week about the continuing rash of telephone calls from scam artists pretending to be the IRS. The alert provided guidance on how to recognize when contact from the IRS is legitimate or is from a scam artist seeking to steal money from you.

The calls from scam artists are taking one of two forms typically. The first form is an outright demand for money. The caller will claim that you have unpaid taxes or other fees you must pay to the IRS. The caller may threaten you will additional fines or legal action in the event you do not contact them quickly and meet their demands.

The second form promises a refund. In order to obtain the refund, you must provide personal information such as your Social Security Number in order to validate your identity and your bank account information so the IRS knows where to deposit the refund. However, the scam artists will in fact use this information to take money out of your bank account and possibly commit identify theft.

In either case, the scam artists will have a well-rehearsed story. They will know enough information about you to make their demands or requests sound convincing. If they have to leave you a message, they will state that returning their call is a time sensitive matter. In addition, the caller ID information for the number from which the scam artists are calling will indicate the call is coming from the IRS.

The IRS alert made a point of emphasizing that you can easily tell the difference between a call from a scam artist and legitimate contact from the IRS if you know what to look for. The IRS outlined the signs of a scam artist in a five-point summary.

Make Contact via Telephone Call First

When the IRS needs to contact a taxpayer, the IRS always initiates the contact using an official written notice. If the first contact you receive from the IRS is via a telephone call, the call is from a scam artist.

Issue Demand for Payment without Offering Opportunity for an Appeal

When the IRS determines that a taxpayer owes money to the IRS, whether that money relates to unpaid tax liability, fines, or interest, the taxpayer will always have the opportunity to appeal the case and present evidence to support the appeal. Scam artists who demand payment will do so without offering the opportunity for you to appeal the rest. If you mention an appeal, the scam artist will likely increase the threats against you.

Specify the Type of Payment Method You Must Use

When an individual legitimately owes money to the IRS, the IRS will accept payment via a debit or credit card. In addition, the IRS may allow you to establish an installment agreement to pay the money owed over time.

In the case of a scam artist, the person will want the money immediately, often requiring that you provide payment via a prepaid debit card.

Require that You Provide Payment Information over the Phone

The IRS has established partners through which it accepts payment via credit and debit card. Although you must provide your credit or debit card information to the payment partners in order to remit payment to the IRS, these processes do not require that you provide your card information verbally.

Threaten to Arrest You

If you indicate that you are unwilling or unable to pay the money the scam artist indicates you owe, the scam artist may threaten to have the police sent to your home to have you arrested.

Although the IRS may involve law enforcement officers, the involvement of law enforcement by the IRS is in only extreme cases where an individual has shown a blatant disregard for working with the IRS over time.

 

If you receive a call from someone claiming to represent the IRS who is asking for money, you should not contact them using any number they may leave. Rather, call the IRS at 1-800-829-1040. A representative from the IRS can tell you if there is a legitimate issue with your taxes.

You can report contact from scam artists claiming to be from the IRS by visiting the FTC Complaint Assistant at FTC.gov.

Whom should I speak with if I need help addressing a legitimate issue with the IRS?

If you owe money to the IRS or have other questions about preparing your tax return, you can get help by contacting a tax attorney. A tax attorney can answer questions about completing your tax return or resolving a dispute with the IRS about money you may owe.

You can contact a tax attorney by calling the number at the top of this web site or by completing the form below. Your initial conversation with a tax attorney is free, so you have every reason to get help today.

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Whom can I claim as a dependent on my tax return?

In the search for opportunities to reduce the amount we have to pay each year for income tax, a popular question is whom a taxpayer can claim as a dependent. This is a great question to re-evaluate each year, because having dependents is one of the easiest ways for taxpayers to reduce their taxable income.

For the 2014 tax year, each dependent exemption will reduce a taxpayer’s taxable income by $3,950. Therefore, every taxpayer needs to identify and claim every dependent exemption he or she can.

If you want to know whom you can claim as a dependent, read on to learn how the IRS identifies dependent exemptions.

Three Tests for Identifying a Dependent

The IRS allows a taxpayer one exemption for each individual the taxpayer can claim as a dependent. A dependent is a qualifying child or a qualifying relative of the taxpayer.

A child must meet five tests to be considered a qualifying child:

-          Relationship – child is a son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendent of any of them

  • Age – child under the age of 19 at the end of the year or under the age of 24 at the end of the year if a full-time student
  • Residency – child lived with the taxpayer for more than half the year
  • Support – child provided less than half his or her support for the year
  • Joint return – child did not provide a joint return for the year

A person must meet four tests to be considered a qualifying relative:

  • Not a qualifying child – person is not a qualifying relative if person is the taxpayer’s qualifying child or the qualifying child of someone else
  • Member of household – person lives with taxpayer all year
  • Gross income – person’s gross income less than $3,900
  • Support – taxpayer provides more than half the person’s support during the calendar year

If the individual is a qualifying child or qualifying relative, the IRS requires the qualifying child or qualifying relative to pass three tests in order for a taxpayer to claim the individual as a dependent.

Dependent Taxpayer Test

If the taxpayer can be claimed as a dependent on someone else’s tax return, the taxpayer cannot claim anyone as a dependent. This applies even if the taxpayer has a qualifying child or a qualifying relative who the taxpayer could otherwise claim as a dependent.

Likewise, if the taxpayer is filing a joint tax return and the taxpayer’s spouse can be claimed on someone else’s tax return as a dependent, the taxpayer cannot claim anyone as a dependent.

Joint Return Test

A taxpayer typically cannot claim a married person as a dependent if that married person files a joint tax return. The one exception to this test is if the married person files a joint return only for the purchase of obtaining a refund of income tax withheld or estimated tax paid.

Citizen or Resident Test

A taxpayer cannot claim an individual as a dependent unless the individual is a citizen, resident alien, or national of the United States, or the individual is a citizen of Canada or Mexico. In addition, this test is met if a citizen or national of the United States adopts a child who is not a citizen, resident alien, or national of the United States and that child lives with the taxpayer for the entire year.

Who should I speak with if I have questions about who I can claim as a dependent?

If you have questions about who qualifies as a dependent for income tax purposes, you should speak with a tax attorney. Only a tax attorney can answer your question about dependents, help you prepare your income tax return, and provide you confidentiality about your tax matters as protected by attorney-client privilege.

You can speak with a tax attorney by calling the phone number located at the top of this web site or by completing the following form. The first conversation with the attorney is free, so you have every reason to get help today.

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What are Points and How Can They Reduce my Federal Income Tax?

Interest rates for obtaining a home mortgage are still close to historically low levels. You have probably heard radio or television advertisements advising people to refinance their home mortgage if their existing interest rate is above a certain amount.

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How Do I Know if I Should Use the Standard or Itemized Deductions

When you prepare your federal income tax return, you must choose between using the standard deduction or using itemized deductions.  There is not an option whereby you can use both in the same tax year.

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FAQs about Same Sex Marriage and Income Tax Laws, Part 2

Following is Part 2 in a series of articles on frequently asked questions about federal income tax laws and same sex marriage as addressed by the IRS.  Part 1 of this FAQ at FAQs about Same Sex Marriage and Income Tax Laws, Part 1.

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What Expenses Can I Deduct if I Am Self Employed?

If you own or operate your own business, the IRS allows you to deduct certain expenses related to your business.  The IRS has a specific definition about what expenses you can deduct.

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Bridge Repairs by Inexperienced Chinese Firm Cost Taxpayers Millions

California taxpayers are feeling the loss today after state officials revealed they had to spend millions in additional taxpayer dollars to repair the San Francisco-Oakland Bay Bridge after paying a Chinese firm to perform the work.

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Protecting Your Tax Records in the Event of a Natural Disaster

A natural disaster that damages or destroys documents that support a taxpayer’s federal income tax return can mean a lot of extra stress of a taxpayer.  Without the appropriate documentation to support expenses and other deductions, the taxpayer may find in some cases that the IRS will disallow claims for casualty loss.

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Washington D.C. Plans Tax Changes, Affected Businesses Protest

Last week, the Washington D.C. City Council approved various tax changes that would reduce income tax.  However, certain businesses affected by the tax changes are now protesting the planned changes.

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