If you have not done so already, here is a reminder to please send Smith Dickson your tax records, W-2s and all supporting documentation. We look forward to serving your tax needs this March and April!
SECRET LIVES OF THE RICH AND FAMOUS
So with all the celebrity awards being passed out in the past few weeks, you think it can't be better than to be rich and famous? Well, think again. Life isn't always so grand for celebrities, especially when it comes to run-ins with the IRS.
According to a report by Bloomberg Business, entertainers can get in a load of trouble. Singers, actors, and professional athletes get ensnared in complicated money situations that require CPAs and lawyers to resolve.
Here are some examples of how entertainers get in tax trouble: Those who travel can end up owing taxes to dozens of jurisdictions; states, the IRS, and foreign countries all want a piece of the pie. Many spend money that they should have paid to the IRS, owing back-taxes and penalties; gifts to friends and family, although well-intended, can be a headache. If an individual gifts large sums of money, the giver needs to fill out a gift tax return (he or she may be family, but the IRS demands the correct form!). Keeping track of expenses can be difficult because entertainers often tip large sums in cash -- and record-keeping isn't at the top of their list. See, you really aren't that different from them after all!
IRS AUDIT RATE DROPS FOR INDIVIDUAL TAXPAYERS
Need some good news after getting your IRS tax bill? According to a USA Today report, your chances of facing an I.R.S. audit rate dropped to the lowest level in at least a decade (in 2014). This trend is expected to continue in 2015.
The audit rate (percentage of individuals' tax returns IRS revenue agents examined either in person or via correspondence) fell to 0.86% last year, which represents the lowest rate since at least fiscal year 2005. IRS data shows that after rising steadily from 2005-10, the number of IRS audits for individual taxpayers fell 21.4% during the succeeding five years.
Not that your life is consumed with worries about IRS audits but this is better news than hearing that audits are on the increase, isn't it?
WATCH OUT FOR PHONE SCAM: IRS IS NOT CALLING!
You might recall that we warned you last year about telephone scams from con artists claiming to be IRS agents. Unfortunately these fraudulent acts continue. According to a report in the New York Times, the Internal Revenue Service has posted repeated warnings about tax phone frauds, in which criminals call consumers pretending to be agents from the IRS. The impostors claim the taxpayer owes back taxes, then threaten arrest or legal action, unless the individual makes a payment quickly. Sometimes victims are urged to wire money, but more commonly they are directed to obtain a prepaid money card at a retailer and provide the number to the caller.
Here are some questions and answers about tax fraud schemes:
What should I do if a caller says they are with the IRS?
Don't provide any personal information and don't engage with the caller (other than, perhaps, to ask their name, the Federal Trade Commission (FTC) advises, so you can include it in a complaint). Then, hang up. You can report the incident to the Treasury inspector general for tax administration by filling out an online form.
When you file the complaint, you will be asked to choose a five-digit PIN. If you are contacted about the incident, you should ask for the PIN, so you can be sure you are speaking to a legitimate agent.
You can also file a complaint with the FTC on its website.
What should I do if I get an email that indicates it is from the IRS?
The agency says it does not initiate contact with taxpayers by email, so such messages are most likely "phishing" attempts to try to obtain sensitive information, like user names and passwords. (This month, for instance, the agency warned of "bogus" emails asking tax professionals to update information like their electronic filing identification numbers.) Don't respond to such email or click on any attachments, the agency advises. Rather, forward it to email@example.com, then delete it.
Smith Dickson is pleased to provide our year-round "Tax Calendar" available on our website. Reference it for key dates for individuals, businesses (of all types), employers and estates/fiduciaries.
For March and April, there are far too many deadlines to list in this space but here are a just a few:
- March 15: Corporations - File Form 1120 for calendar year and pay any tax due. For automatic 6-month extension, file Form 7004 and deposit estimated tax.
- March 31: Electronically file Forms W-2, W-2G, 1098, 1099, and 8027.
- April 15: Individuals - File Form 1040, 1040A, or 1040EZ. For automatic 6-month extension file Form 4868 and deposit estimated tax. Pay the first installment of 2015 estimated tax.
- April 15: Corporations - Deposit the first installment of your 2015 estimated tax.
- April 15: Employers - Deposit payroll tax for March if the monthly deposit rule applies.
- April 30: Employers - File Form 941 for the first quarter.
- April 30: Deposit FUTA tax owed through March if more than $500.
Be sure to contact us to discuss your tax questions and needs.
ABOUT SMITH DICKSON
Smith Dickson is a full-service Southern California CPA firm that specializes in providing high-quality services designed to create long-term value for our clients. Our services include accounting, tax compliance and planning, litigation support, business consulting and estate/trust tax compliance. Please contact us with your questions.