Posts Tagged "Tax"

Considering divorce? Think about your tax filing status

Posted on May 30, 2018

The advantage of filing a joint tax return is well known — couples generally save money when compared with filing separately. However, there is at least one potential disadvantage. Both spouses are liable for the entire income tax bill, including interest and penalties, even if one earned most or all of the income. The joint-filing downfall This issue most commonly arises when there are unpaid taxes from joint-filing years, and a couple later separates or divorces. The IRS can pursue either spouse for the full amount. If you’re the easiest one to find, or if you have liquid assets, you can end up paying the entire bill. When this happens, the only relief is called the innocent spouse rule. If you can prove that you had no reason to suspect tax shortfalls and you did not personally benefit from unreported income, or that you signed joint returns only under duress, you may get off the hook. Unfortunately, the IRS and the courts don’t often allow innocent spouse relief. What can you do to head off trouble? If your family spends much more money than the income shown on your tax returns, it’s an indicator that something’s not right.  Ask questions if you don’t understand all the tax and financial issues in the joint return. In certain circumstances, you may even want to consider hiring your own tax professional to advise you before signing. If you are headed toward separation or divorce, it may be best to file separately. You may pay a little more tax, but that’s better than leaving yourself liable for the tax issues of someone who is no longer on your side. Don’t sign a joint return unless you’re sure that all income has been reported and that the taxes have actually been paid. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Don’t fall for the “tax-deduction” charity scam

Posted on Apr 16, 2018

The IRS is warning taxpayers about fake charitable organizations tricking people into donating to receive tax deductions. This type of scam has made the IRS’s 2018 Dirty Dozen scam list. These scammers attempt to attract donations from unsuspecting people by using a charitable reason and a tax deduction as bait for taxpayers. In reality, donations to these “fake” groups or causes don’t qualify for tax deductions. If you plan on donating to charitable organizations, make sure you are familiar with the group. Legitimate and qualified charities are listed on the IRS’s Select Check search tool. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Know the IRS’s “Dirty Dozen” tax scams

Posted on Apr 4, 2018

Every year the IRS releases its “Dirty Dozen” list of the year’s most prevalent tax scams. They include ploys to steal personal information, talk people out of money, or engage in questionable tax activity. Here are some of the top scams: Phishing. Fake emails or websites claiming to represent the IRS, for the purpose of stealing personal information. The IRS will never try to contact you via email about a bill or refund. Phone scams. Scammers impersonating IRS agents over the phone. These impersonators may threaten you with arrest if you don’t make immediate payment for fake tax bills. Don’t fall for it – the real IRS makes contact via a letter, and never threatens or demands immediate payment. Identity theft. Using a stolen Social Security number to file a fraudulent return and claim a refund. The IRS said it is making great progress on reducing this scam as identity theft reports are down 40 percent from a year ago. Fake charities. Some fraudsters use the mask of charitable activity to get you to donate funds to fake organizations. Only donate to legitimate charities, which are listed in the IRS database. Inflated refund claims. Many taxpayers are wooed by tax-refund services offering payouts that seem too good to be true. Cheap tax-preparation services that promise unrealistic refunds are illegal and often get taxpayers in trouble. Padded deductions. The IRS is focusing on identifying tax returns that try to reduce tax by overstating deductions such as charitable deductions or business expenses. Falsifying income to claim credits. Improper use of the Earned Income Tax Credit (EITC), meant for eligible low-income taxpayers. The IRS has been cracking down on EITC fraud in recent years. Abusive tax shelters. Some fraudsters peddle complex tax avoidance schemes known as tax shelters that they portray as legal tax strategies. Make sure you get an independent opinion on any complex tax schemes. Frivolous tax arguments. Frivolous arguments to avoid paying taxes (for example, arguing a personal vacation is a business expense) can be penalized by up to $5,000 per tax return. Offshore tax avoidance. Using offshore bank accounts and complex international tax structures to avoid paying taxes is still a common scam on the radar of IRS auditors. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Here’s a roundup of your nontaxable income

Posted on Mar 30, 2018

There are several sources of revenue that are not subject to income tax. Do you know what they are? Here are the most common sources of money that are generally not taxed on your federal income tax return: Borrowed money, such as from banks or personal loans Money received as a gift or inheritance from family or friends Money paid on your behalf directly to a school or medical facility Most life insurance proceeds Child support payments Money you receive for sustaining an injury Scholarships for tuition and books Disability insurance benefits from a policy purchased with after-tax dollars Interest received on municipal bonds If you would like assistance in determining what to include on your income tax return, please contact us. We are here to help you. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Staying organized at tax time

Posted on Mar 28, 2018

Organizing your tax records not only makes filing your tax return easier, it also helps you find the financial documents you need throughout the year. Whether you’ve already filed your tax return or are about to, here are some tips to get organized. Go with the flow (of your tax return) Try organizing your records in the same order as they are required to fill out your 1040 individual tax return, using these categories: Income. Copies of W-2s, 1099s, Social Security statements, interest income and investment income. Charitable donations. Charitable donation receipts, separated by cash and noncash contributions. Include a copy of your charitable activity mileage log, if you have one. Medical and dental. All documents related to medical expenses. You may also include a note calculating your medical deduction threshold (which is 7.5 percent of your adjusted gross income during 2017 and 2018). Other itemized deductions. Proof of all other itemized deductions, including state and local tax statements, mortgage interest, casualty and theft losses, unreimbursed business expenses and other miscellaneous itemized deductions. Note that miscellaneous itemized deductions are eliminated after the 2017 tax year, but keep any records for this tax season on file. Business and hobby activity. Keep separate records for each hobby and business activity. Include records of related investments, expenses and mileage logs. Education. Records of all education expenses, including invoices, tuition, materials (including for things such as books or musical instruments) and fees. Investments. Records of investments in tax-advantaged retirement accounts, as well as contributions to investable accounts such as health savings accounts (HSAs) and 529 education savings plans. Also include records of capital gains and losses, particularly for tax-loss harvesting purposes. Odds and ends. Put all the miscellaneous receipts that don’t fit anywhere else into this file. Depending on your situation, you may be able to get tax breaks for a variety of expenses. Bonus tips: How long should you keep your records? For tax filings, the IRS requires you to keep your records on hand for at least three years after you file. Some states require you to keep records longer than that, and the federal government can ask you to keep records for six years if you understate your income. Keep track by going digital. If keeping track of your tax records year after year sounds like a chore, at least things are easier in the digital age. You can scan your paper records and keep them digitally, but remember to keep your records backed up and secure from identity theft. Make a checklist. If you’re still waiting for some tax forms to arrive, go back to last year’s return and make a checklist of all the forms you received. Add items for any new accounts or vendors you added since then, and check off the forms as they arrive. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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