What’s new with the #child #tax #credit after tax #reform

Many people claim the child tax credit to help offset the cost of raising children. Tax reform legislation enacted last year made changes to that credit. Here are some important things for taxpayers to know about the changes to the credit.

  • Credit amount. The new law increases the child tax credit from $1,000 to $2,000. Eligibility for the credit has not changed. As in past years, the credit applies if all of these apply:
    • the child is younger than 17 at the end of the tax year, December 31, 2018
    • the taxpayer claims the child as a dependent
    • the child lives with the taxpayer for at least six months of the year
  • Credit refunds. The credit is refundable, now up to $1,400. If a taxpayer doesn’t owe any tax before claiming the credit, they will receive up to $1,400 as part of their refund.
  • Earned income threshold. The income threshold to claim the credit has been lowered to $2,500 per family. This means a family must earn a minimum of $2,500 to claim the credit.
  • Phaseout. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This means that more families with children younger than 17 qualify for the larger credit.

Dependents who can’t be claimed for the child tax credit may still qualify the taxpayer for the credit for other dependents.  This is a non-refundable credit of up to $500 per qualifying person. These dependents may also be dependent children who are age 17 or older at the end of 2018. It also includes parents or other qualifying relatives supported by the taxpayer.

More information:

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Some #S_corporations may want to #convert to #C_corporations  

After last year’s tax reform legislation, some S corporations may choose to revoke their S election to be a C corporation because of the new, flat 21-percent C corporation tax rate. Before taking any action, S corporations should consult their tax advisors.

S Corporations and C Corporations are among the types of business structures. A C corporation is taxed on its earnings, and then the shareholder is taxed when earnings are distributed as dividends. S corporations elect to pass corporate income, losses, deductions and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the pass-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

The Tax Cuts and Jobs Act includes two changes that affect a corporation’s revocation of an S election to be a C corporation:

  • The corporation should report net adjustments attributable to the revocation over six years. For more information see Revenue Procedure 2018-44.
  • Distributions of cash following the post-termination transition period may be treated as coming out of the corporation’s accumulated adjustments account and accumulated earnings and profits proportionally resulting in part of the distributions being non-dividend distributions from the C corporation. The non-dividend distributions may not be subject to tax at the shareholder level if the shareholder has sufficient stock basis. Additional guidance will be coming.

These law changes only apply to a C corporation that:

  • Was an S corporation on December 21, 2017,
  • Revokes its S corporation election after December 21, 2017, but before December 22, 2019, and
  • Has the same owners of stock in identical proportions on the date of revocation and on December 22, 2017.

For more information, see the Corporate Methods of Accounting topic on the Tax Reform – Businesses page.

Additional resources:
Tax Reform Business Comparison page

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#New IRS publication helps #taxpayers Get Ready for #tax #reform

The IRS issued a new publication to help taxpayers learn about tax reform and how it affects their taxes. Taxpayers can access Publication 5307, Tax Reform Basics for Individuals and Families, on IRS.gov/getready.

While last year’s Tax Cuts and Jobs Act includes tax changes for both individuals and businesses, this publication is specifically geared to individual taxpayers. It breaks down the law in easy-to-understand language. The publication highlights the changes that taxpayers will see on their 2018 federal tax returns they file in 2019.

This new publication provides important information about:

  • Increasing the standard deduction
  • Suspending personal exemptions
  • Increasing the child tax credit
  • Adding a new credit for other dependents
  • Limiting or discontinuing certain deductions

Taxpayers can also go to IRS.gov/getready to find other information about tax reform. This includes the steps taxpayers can take now to help make filing their taxes smoother next year. Following these steps will also help taxpayers avoid surprises when they file their returns.

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#401(k) contribution limit increases to $19,000 for 2019; #IRA limit increases to $6,000

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019.  The IRS today issued technical guidance detailing these items in Notice 2018-83.

Highlights of Changes for 2019

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000.

The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2019.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2019:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000, up from $63,000 to $73,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000, up from $101,000 to $121,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000, up from $189,000 and $199,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for singles and heads of household, up from $120,000 to $135,000. For married

couples filing jointly, the income phase-out range is $193,000 to $203,000, up from $189,000 to $199,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $64,000 for married couples filing jointly, up from $63,000; $48,000 for heads of household, up from $47,250; and $32,000 for singles and married individuals filing separately, up from $31,500.

Highlights of Limitations that Remain Unchanged from 2018

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.

Detailed Description of Adjusted and Unchanged Limitations

Section 415 of the Internal Revenue Code (Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made following adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective Jan. 1, 2019, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $220,000 to $225,000. For a participant who separated from service before Jan. 1, 2019, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2018, by 1.0264.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2019 from $55,000 to $56,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2019 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $18,500 to $19,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $275,000 to $280,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $175,000 to $180,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from

$1,105,000 to $1,130,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $220,000 to $225,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $120,000 to $125,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $6,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $3,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $405,000 to $415,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $600.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,500 to $13,000.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $18,500 to $19,000.

The limitation under Section 664(g)(7) concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan remains unchanged at $50,000.

The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $110,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $220,000 to $225,000.

The dollar limitation on premiums paid with respect to a qualifying longevity annuity contract under Section 1.401(a)(9)-6, A-17(b)(2)(i) of the Income Tax Regulations remains unchanged at $130,000.

The Code provides that the $1,000,000,000 threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is adjusted using the cost-of-living adjustment provided under Section 432(e)(9)(H)(v)(III)(bb). After taking the applicable rounding rule into account, the threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is increased for 2019 from $1,087,000,000 to $1,097,000,000.

The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2019 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $38,000 to $38,500; the limitation under Section 25B(b)(1)(B) is increased from $41,000 to $41,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $63,000 to $64,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the Retirement Savings Contribution Credit for taxpayers filing as head of household is increased from $28,500 to $28,875; the limitation under Section 25B(b)(1)(B) is increased from $30,750 to $31,125; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $47,250 to $48,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the Retirement Savings Contribution Credit for all other taxpayers is increased from $19,000 to $19,250; the limitation under Section 25B(b)(1)(B) is increased from $20,500 to $20,750; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $31,500 to $32,000.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions is increased from $5,500 to $6,000.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) increased from $101,000 to $103,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers who are active participants (other than married taxpayers filing separate returns) increased from $63,000 to $64,000. If an individual or the individual’s spouse is an active participant, the applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $189,000 to $193,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $189,000 to $193,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $120,000 to $122,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

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Here’s how #tax #reform affects #farmers and #ranchers 

Many farmers and ranchers will benefit from tax law changes brought about by last year’s Tax Cuts and Jobs Act. Here are some of those changes along with details about how they will affect farmers and their bottom line:

Net Operating Losses:

  • These can now be carried forward indefinitely. Under prior law, they could only be carried forward 20 years.
  • NOL deductions are limited to 80 percent of taxable income.
  • They can be carried back for two years for farm and ranch businesses. Under prior law, NOLs could be carried back five years.

Qualified Business Income Deduction:

  • For tax years beginning after Dec. 31, 2017, taxpayers other than corporations may be entitled to a deduction of up to 20 percent of their qualified business income from a qualified trade or business, including income from a passthrough entity, but not from a C corporation, plus 20 percent of qualified real estate investment trust dividends and qualified publicly traded partnership income.
  • The deduction is subject to multiple limitations such as the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid with respect to the trade or business, and the unadjusted basis immediately after acquisition of qualified property held by the trade or business.
  • The deduction can be taken in addition to the standard or itemized deductions. In some cases, patrons of horticultural or agricultural cooperatives may be required to reduce their deduction. The IRS will be issuing separate guidance for co-ops.

Accounting method changes:

  • Under the new law, more farm corporations and partnerships can now use the cash basis of accounting for tax purposes. This includes small business taxpayers, such as:

    o Farmers and ranchers with average annual gross
    receipts of $25 million or less in the prior three-year
    period.

  • Farmers can refer to IRS guidance for more information about the process that eligible small business taxpayers may use to change accounting methods.

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#IRS: Several #tax #law #changes may affect bottom line of many #business_owners

WASHINGTON — The Internal Revenue Service today reminded business owners that tax reform legislation passed last December affects nearly every business.

With just a few months left in the year, the IRS is highlighting important information for small businesses and self-employed individuals to help them understand and meet their tax obligations.

Here are several changes that could affect the bottom line of many small businesses:

Qualified Business Income Deduction 

Many owners of sole proprietorships, partnerships, trusts and S corporations may deduct 20 percent of their qualified business income. The new deduction — referred to as the Section 199A deduction or the qualified business income deduction — is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.

set of FAQs provides more information on the deduction, income and other limitations.

Temporary 100 percent expensing for certain business assets

Businesses are now able to write off most depreciable business assets in the year the business places them in service. The 100-percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

Taxpayers can find more information in the proposed regulations.

Fringe benefits

  • Entertainment and meals: The new law eliminates the deduction for expenses related to entertainment, amusement or recreation. However, taxpayers can continue to deduct 50 percent of the cost of business meals if the taxpayer or an employee of the taxpayer is present and other conditions are met. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.
  • Qualified transportation: The new law disallows deductions for expenses associated with transportation fringe benefits or expenses incurred providing transportation for commuting. There’s an exception when the transportation expenses are necessary for employee safety.
  • Bicycle commuting reimbursements: Employers can deduct qualified bicycle commuting reimbursements as a business expense for 2018 through 2025. The new tax law also suspends the exclusion of qualified bicycle commuting reimbursements from an employee’s income for 2018 through 2025. Employers must now include these reimbursements in the employee’s wages.
  • Qualified moving expenses reimbursements: Reimbursements an employer pays to an employee in 2018 for qualified moving expenses are subject to federal income tax.  Reimbursements incurred in a prior year are not subject to federal income or employment taxes; nor are payments from an employer to a moving company in 2018 for qualified moving services provided to an employee prior to 2018.
  • Employee achievement award: Special rules allow an employee to exclude certain achievement awards from their wages if the awards are tangible personal property. An employer also may deduct awards that are tangible personal property, subject to certain deduction limits. The new law clarifies that tangible personal property doesn’t include cash, cash equivalents, gift cards, gift coupons, certain gift certificates, tickets to theater or sporting events, vacations, meals, lodging, stocks, bonds, securities and other similar items.

The tax reform for businesses page has more information on fringe benefit changes.

Estimated Taxes

Individuals, including sole proprietors, partners and S corporation shareholders, may need to pay quarterly installments of estimated tax unless they owe less than $1,000 when they file their tax return or they had no tax liability in the prior year (subject to certain conditions). More information about tax withholding and estimated taxes can be found on the agency’s Pay As You Go web page as well as in Publication 505, Tax Withholding and Estimated Tax. Publication 505 has additional details, including worksheets and examples, which can help taxpayers determine whether they should pay estimated taxes. Some affected taxpayers may include those who have dividend or capital gain income, owe alternative minimum tax or have other special situations.

More information

See IRS.gov/taxreform for more information about these and many other tax law changes.

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IRS issues guidance on Tax Cuts and Jobs Act changes on #business #expense #deductions for #meals, #entertainment

WASHINGTON — The Internal Revenue Service issued guidance today on the business expense deduction for meals and entertainment following law changes in the Tax Cuts and Jobs Act (TCJA).

The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.

#Taxpayers #may_continue_to_deduct #50 #percent of the cost of business #meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.

Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.

Prior to 2018, a business could deduct up to 50 percent of entertainment expenses directly related to the active conduct of a trade or business or, if incurred immediately before or after a bona fide business discussion, associated with the active conduct of a trade or business.

The Department of the Treasury and the IRS expect to publish proposed regulations clarifying when business meal expenses are deductible and what constitutes entertainment. Until the proposed regulations are effective, taxpayers can rely on guidance in Notice 2018-76.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

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Oct. 15 #tax-filing #extension #deadline approaches for millions of #taxpayers

WASHINGTON — The Internal Revenue Service today urged taxpayers who requested the six-month filing extension to double check their tax returns and file on or before the mid-October deadline. IRS e-file and Free File are excellent filing options and are still available.

More than 14 million taxpayers filed for an extension in 2018 and, although Oct. 15 is the last day for most people to file, some may have more time. They include:

  • Members of the military and others serving in combat zonelocalities still have more time. They typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.
  • Taxpayers in several disaster area localities who already had valid extensions now have more time to file. Currently, taxpayers in parts of California, North Carolina, South Carolina and Texas qualify for this relief. For details, see the disaster relief page on IRS.gov. However, like other extension filers, these taxpayers were required to pay what they owed by April 18, which was this year’s filing deadline for 2017 tax returns.

Recordkeeping and Adjusted Gross Income

As a reminder, taxpayers should keep a copy of their tax returns and supporting documents for a minimum of three years. It’s more important than ever for taxpayers to have prior-year tax returns available as the IRS made changes last year to protect taxpayers and authenticate their identity. To authenticate their identities, taxpayers will need to enter either of two items: their prior-year AGI or their prior-year self-select PIN and their date of birth. If married filing jointly, both taxpayers must authenticate their identities with this information.

Extension filers should also plan ahead if they are using a software product for the first time as using an electronic PIN is no longer an option.

Those who lack access to their prior-year tax returns can go to irs.gov/transcript and use Get Transcript Online or Get Transcript by Mail to get last year’s AGI.

A ‘Paycheck Checkup’ is important

The Tax Cuts and Jobs Act, enacted in December, made major changes to the tax law. Any of these far-reaching changes could have an impact on the refund many taxpayers will receive when they file their 2018 tax return.

The agency urges taxpayers on extension to complete a “Paycheck Checkup” now so that if a withholding amount adjustment is necessary, there’s more time for withholding to take place during the last quarter of the year. Waiting means there are fewer pay periods to withhold the necessary federal tax – so more tax will have to be withheld from each remaining paycheck.

Withholding Calculator

This handy tool, available on IRS.gov, will help taxpayers determine if they should complete a new Form W-4 and, if so, what information to enter on a new Form W-4 for necessary withholding adjustments. It’s helpful if taxpayers have their completed 2017 tax return available when using the Withholding Calculator to estimate the amount of income, deductions, adjustments and credits to enter. Filers also need their most recent pay stubs to compute the employee’s withholding taken from their pay so far this year.

Quick and easy payment options

IRS Direct Pay offers taxpayers a fast and easy way to pay what they owe. Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration.

Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer will. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and Electronic Funds Withdrawal which is available when e-filing. Taxpayers can also pay what they owe using the IRS2Go mobile app. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”

Individual taxpayers can go to IRS.gov/account and login to view their balance, payment history, pay their taxes and access tax records through Get Transcript. Before setting up an account, taxpayers should review Secure Access: How to Register for Certain Online Self-Help Tools to make sure they have the information needed to verify their identities.

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#IRS #Never #Call #You!

#IRS #alerts #taxpayers: #Scammers #scheming around Oct. 15 deadline; Here’s what to do

WASHINGTON — The Internal Revenue Service is reminding taxpayers to beware of criminals who continue using devious tactics to steal money and personal information from unsuspecting victims, especially as the fall season approaches.

The agency warns that scammers continue to pose as the IRS, making threatening phone calls and using email phishing schemes to lure taxpayers. The scams may be particularly prevalent ahead of the Oct. 15 tax-filing extension deadline. Another tax scam, where criminals pose as charity organizations, tends to peak during hurricane season or following a natural disaster. Taxpayers should learn about these ongoing tax scams and know what to do if they’re targeted.

The IRS urges taxpayers to look out for suspicious calls, emails and donation requests and take appropriate action if they experience any of the following:

Telephone scams

How the scam works: Criminals pose as IRS employees and call victims, demanding immediate payment of a so-called tax debt. Payments are often requested via prepaid debit cards and/or money wires. The caller will ask to stay on the line or otherwise call repeatedly while the victim completes the transaction. The caller may use a condescending tone and will often threaten to file a lawsuit, call the police or involve federal law enforcement agencies if the victim doesn’t comply. The call may appear to come from emergency services and/or a local/federal law enforcement agency but the fraudsters are faking, or “spoofing” the caller ID to only appear to come from a legitimate agency.

What taxpayers should do: Hang up the phone. Know that the IRS would never call to threaten or demand immediate tax payment. The agency offers taxpayers a chance to appeal any amount in question and offers numerous ways of resolving a tax liability.

Anyone wishing to check their account after receiving this type of call can visit the IRS website and register to view your account information online. The tool allows taxpayers to view up to 24 months of payment history and balance due for any given tax year. Taxpayers who want to report scam calls can visit the Treasury Inspector General for Tax Administration’s website, TIGTA.gov, and also email phishing@irs.gov (Subject: IRS Phone Scam). Visit Report Phishing for more information.

Phishing emails

How the scam works: Criminals send an email to your personal or business account(s) appearing to be from the IRS. The email usually features the IRS logo, uses agency language and asks taxpayers to provide sensitive information. It may also ask recipients to open an attachment or click on a link embedded within the email to supposedly give the taxpayer account access. In a more recent variation called “spear phishing,” the criminal, having done research on the victim ahead of time, will send an email posing as a trusted source. The email will make an urgent plea to click on a link and update an account immediately. The link will then direct the victim to what seems to be a trusted website but is in reality a phishing website controlled by the thief who can install malicious software.

What taxpayers should do: Do not provide personal information, click on links or open attachments from emails pretending to be from the IRS. Know that the IRS does not initiate contact by email or social media channels. The agency gets in touch with taxpayers through paper letters mailed by the U.S. Postal Service. IRS letters and notices are mailed to the taxpayer’s most recent address on file. Forward the email as-is, preferably with the full email headers to phishing@irs.gov. Delete the original email.

Fake charity donation requests

How the scam works: Criminals set up fake charities to attract donations from unsuspecting contributors. The scammers prey on well-intentioned taxpayers, especially during times of distress, such as following a natural disaster. They solicit money either by phone, email or even in person. The scammers may even contact disaster victims and claim to be working on behalf of the IRS with the goal of gaining access to personal information under the pretext of filing a casualty loss claim.

What taxpayers should do: Don’t give out personal or financial information such as Social Security numbers. Be wary of charities with names that resemble nationally-known charity organizations. The IRS has an online search tool called the Tax Exempt Organization Search which allows people to find legitimate, qualified charities to whom a donation may be tax deductible. For security and tax record purposes, contribute by check or another way that provides documentation of the gift. Taxpayers who want to report suspected tax fraud activity can do so by completing Form 3949-A, Information Referral.

For more information about tax scams, visit the IRS website at www.irs.govand search for “scams and schemes,” including the agency’s 2018 Dirty Dozen list.

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