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IRS Warns of Tax-time Scams

It’s true: tax scams proliferate during the income tax filing season. This year’s season opens on Jan. 31. The IRS provides the following scam warnings so you can protect yourself and avoid becoming a victim of these crimes:

  • Be vigilant of any unexpected communication purportedly from the IRS at the start of tax season.
  • Don’t fall for phone and phishing email scams that use the IRS as a lure. Thieves often pose as the IRS using a bogus refund scheme or warnings to pay past-due taxes.
  • The IRS doesn’t initiate contact with taxpayers by email to request personal or financial information. This includes any type of e-communication, such as text messages and social media channels.
  • The IRS doesn’t ask for PINs, passwords or similar confidential information for credit card, bank or other accounts.
  • If you get an unexpected email, don’t open any attachments or click on any links contained in the message. Instead, forward the email to phishing@irs.gov. For more about how to report phishing scams involving the IRS visit the genuine IRS website, IRS.gov.

Here are several steps you can take to help protect yourself against scams and identity theft:

  • Don’t carry your Social Security card or any documents that include your Social Security number or Individual Taxpayer Identification Number.
  • Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient.
  • Be careful when you choose a tax preparer. Most preparers provide excellent service, but there are a few who are unscrupulous. Refer to Tips to Help you Choose a Tax Preparer for more details.

For more on this topic, see the special identity theft section on IRS.gov. Also check out IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.

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Charitable contributions may help lower your tax bill

Charitable contributions made to qualified organizations may help lower your tax bill. The IRS put together the following tips to help ensure your contributions pay off on your tax return.

• You must give to a qualified organization to have a legitimate tax deduction. To check if an organization is qualified to receive deductible charitable contributions, visit http://www.irs.gov/charities.

• You must file Form 1040, Individual Income Tax Return, and itemize your deductions on Schedule A.

• You can’t take a deduction for contributions made to specific individuals, political organizations or candidates or most foreign organizations.

• If you receive a benefit because of your contribution, such as merchandise, tickets to a ball game, dinner or other goods and services, you can deduct only the amount that exceeds the fair market value of the benefit received.

• Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good, used condition or better to be deductible. Special rules apply to vehicle donations.

• Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.

• Regardless of the amount, to deduct a contribution of cash, check or other monetary gift, taxpayers must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the recordkeeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given.

• To claim a deduction for contributions of cash or property equaling $250 or more, you must have a written acknowledgment from the qualified organization or certain payroll deduction records. The acknowledgement must be written and include the amount contributed — or a description of the property contributed — and whether the organization provided any goods or services in exchange for the gift. If you received any goods or services, the acknowledgement
must provide a description and good faith estimate of the value. The acknowledgement should state that the only benefit you received was an intangible religious benefit, if that was the case.

• If the total deduction for all noncash contributions for the year is more than $500, taxpayers must complete and attach IRS Form 8283, Noncash Charitable Contributions, to their return.

• Taxpayers, donating an item or a group of similar items valued at more than $5,000, must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.

• Other records may be required. Consult Publication 526, Charitable Contributions, for details

Image  —  Posted: October 24, 2013 in Uncategorized
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IRS Repeals Registered Tax Return Preparer (RTRP) Registration by citing 1884 “Dead Horse” law.

Image  —  Posted: September 25, 2013 in Uncategorized

Disappearing Tax Deductions

Deductions, credits and other provisions that will expire unless Congress takes action:

Educator’s Expenses
IRC Sec. 62(a)(D)
What it is now: Grades K–12 teachers, instructors, counselors, principals and aides can deduct up to $250 of out-of-pocket costs above the line.
What happens in 2014: Expires on Dec. 31, 2013

Cancellation of Debt — Mortgage Debt
IRC Sec. 108(a)(1)(E)
What it is now: Individuals can exclude up to $2 million ($1 million for married filing separately) of COD income from qualified principal residence indebtedness that is canceled because of their financial condition or decline in value of the residence.
What happens in 2014: Expires on Dec. 31, 2013

Mortgage Insurance Premiums Deduction
IRC Sec. 163(h)(3)
What it is now: Taxpayers with AGI no greater than $109,000 can treat qualified mortgage insurance premiums as home mortgage interest.
What happens in 2014: Expires on Dec. 31, 2013

Personal Energy Property Credit
IRC Sec. 25C
What it is now: A credit (subject to a $500 lifetime cap) is available for qualified energy efficiency improvements and expenditures to a taxpayer’s principal residence.
What happens in 2014: Expires on Dec. 31, 2013

Qualified Conservation Contributions
IRC Sec. 170(b)(1)(E)(vi), 170(b)(2)(B)(iii)
What it is now: The deduction limit for qualified conservation contributions by individuals is increased from 30% of AGI to 50% of AGI (100% of AGI for qualified farmers and ranchers) and the carry-forward period for qualified contributions in excess of the AGI limit is 15 years.
What happens in 2014: No special rules for qualified conservation contributions, so they are subject to the 30%-of-AGI limit and have a five-year carry-forward period.

Qualified Small Business Stock Gain Exclusion
IRC Sec. 1202(a)(4)
What it is now: QSBS acquired Sept. 28, 2010–Dec. 31, 2013 qualifies for 100% gain exclusion (if the holding period is met). For stock acquired during that period, the following rules also apply: 1. None of the 60% gain exclusion rules for QSBS issued by a QBE apply. 2. No portion of the excluded gain is added back to determine alternative minimum taxable income.
What happens in 2014: Gains on QSBS acquired after Dec. 31, 2013, qualify for a 50% gain exclusion [60% for QSBS issued by a qualified business entity (QBE)]. Also, a percentage of the excluded gain is an AMT preference item.

State and Local Sales Taxes Deduction
IRC Sec. 164(b)(5)
What it is now: Individuals can elect to deduct state and local general sales taxes instead of state and local income taxes.
What happens in 2014: Expires on Dec. 31, 2013

Tuition and Fees Deduction
IRC Sec. 222
What it is now: Individuals can claim an above-the-line deduction for tuition and fees for qualified higher education expenses.
What happens in 2014: Expires on Dec. 31, 2013

Qualified Charitable Distributions
IRC Sec. 408(d)
What it is now: Taxpayers over age 70-1/2 can make tax-free transfers from an IRA directly to a charity. Any amounts so transferred count toward the individual’s required minimum distribution, but are not deductible as charitable contributions.
What happens in 2014: Income exclusion for QCDs expires on Dec. 31, 2013

Qualified Leasehold, Restaurant and Retail Improvement Property
IRC Sec. 168(e)(3)(E)
What it is now: Qualified leasehold improvements, qualified restaurant property and qualified retail improvements are assigned a 15-year (straight-line) recovery period.
What happens in 2014: All are assigned a 39-year (straight-line) recovery period.

Section 179 — Deduction Limit
IRC Sec. 179(b), (c) and (d)
What it is now: The Section 179 deduction and qualifying property limits are $500,000 and $2,000,000, respectively. In addition, off-the shelf computer software qualifies for Section 179 expensing and taxpayers can amend or irrevocably revoke a Section 179 election.
What happens in 2014: After 2013, the deduction and qualifying property limits are $25,000 and $200,000, respectively. Off-the-shelf software does not qualify for Section 179 expensing and the election generally is irrevocable with IRS consent.

Section 179—Qualified Real Property
IRC Sec. 179(f)
What it is now: Taxpayers can claim the Section 179 deduction on up to $250,000 of qualified real property (qualified leasehold improvements, qualified restaurant property and qualified retail improvement property).
What happens in 2014: Qualified real property is not eligible for Section 179 expensing.

Special (Bonus) Depreciation
IRC Sec. 168(k)
What it is now: 50% special depreciation is allowed for qualified property additions placed in service in 2013. (Note: For 2013, the Section 280F limit on depreciation for passenger autos is also increased by $8,000 for qualified property and no AMT adjustment applies to property for which the special depreciation allowance is claimed.)
What happens in 2014: Special deprecation only available for long production-period property and certain aircraft.

http://www.accountingtoday.com/taxprotoday/

Image  —  Posted: September 23, 2013 in Uncategorized

New Year-End, New Headaches

Ideas for tax planning as 2013 begins to wind up

Image  —  Posted: September 11, 2013 in Uncategorized

When an adult took standardized tests forced on kids

Original post:

This was written by Marion Brady, veteran teacher, administrator, curriculum designer and author.

By Marion Brady

A longtime friend on the school board of one of the largest school systems in America did something that few public servants are willing to do. He took versions of his state’s high-stakes standardized math and reading tests for 10th graders, and said he’d make his scores public.

By any reasonable measure, my friend is a success. His now-grown kids are well-educated. He has a big house in a good part of town. Paid-for condo in the Caribbean. Influential friends. Lots of frequent flyer miles. Enough time of his own to give serious attention to his school board responsibilities. The margins of his electoral wins and his good relationships with administrators and teachers testify to his openness to dialogue and willingness to listen.

He called me the morning he took the test to say he was sure he hadn’t done well, but had to wait for the results. A couple of days ago, realizing that local school board members don’t seem to be playing much of a role in the current “reform” brouhaha, I asked him what he now thought about the tests he’d taken.

“I won’t beat around the bush,” he wrote in an email. “The math section had 60 questions. I knew the answers to none of them, but managed to guess ten out of the 60 correctly. On the reading test, I got 62% . In our system, that’s a “D”, and would get me a mandatory assignment to a double block of reading instruction.

He continued, “It seems to me something is seriously wrong. I have a bachelor of science degree, two masters degrees, and 15 credit hours toward a doctorate.

“I help oversee an organization with 22,000 employees and a $3 billion operations and capital budget, and am able to make sense of complex data related to those responsibilities.

“I have a wide circle of friends in various professions. Since taking the test, I’ve detailed its contents as best I can to many of them, particularly the math section, which does more than its share of shoving students in our system out of school and on to the street. Not a single one of them said that the math I described was necessary in their profession.

“It might be argued that I’ve been out of school too long, that if I’d actually been in the 10th grade prior to taking the test, the material would have been fresh. But doesn’t that miss the point? A test that can determine a student’s future life chances should surely relate in some practical way to the requirements of life. I can’t see how that could possibly be true of the test I took.”

Here’s the clincher in what he wrote:

“If I’d been required to take those two tests when I was a 10th grader, my life would almost certainly have been very different. I’d have been told I wasn’t ‘college material,’ would probably have believed it, and looked for work appropriate for the level of ability that the test said I had.

“It makes no sense to me that a test with the potential for shaping a student’s entire future has so little apparent relevance to adult, real-world functioning. Who decided the kind of questions and their level of difficulty? Using what criteria? To whom did they have to defend their decisions? As subject-matter specialists, how qualified were they to make general judgments about the needs of this state’s children in a future they can’t possibly predict? Who set the pass-fail “cut score”? How?”

“I can’t escape the conclusion that decisions about the [state test] in particular and standardized tests in general are being made by individuals who lack perspective and aren’t really accountable.”

There you have it. A concise summary of what’s wrong with present corporately driven education change: Decisions are being made by individuals who lack perspective and aren’t really accountable.

Those decisions are shaped not by knowledge or understanding of educating, but by ideology, politics, hubris, greed, ignorance, the conventional wisdom, and various combinations thereof. And then they’re sold to the public by the rich and powerful.

All that without so much as a pilot program to see if their simplistic, worn-out ideas work, and without a single procedure in place that imposes on them what they demand of teachers: accountability.

But maybe there’s hope. As I write, a New York Times story by Michael Winerip makes my day. The stupidity of the current test-based thrust of reform has triggered the first revolt of school principals.

Winerip writes: “As of last night, 658 principals around the state (New York) had signed a letter — 488 of them from Long Island, where the insurrection began — protesting the use of students’ test scores to evaluate teachers’ and principals’ performance.”

One of those school principals, Winerip says, is Bernard Kaplan. Kaplan runs one of the highest-achieving schools in the state, but is required to attend 10 training sessions.

“It’s education by humiliation,” Kaplan said. “I’ve never seen teachers and principals so degraded.”

Carol Burris, named the 2010 Educator of the Year by the School Administrators Association of New York State, has to attend those 10 training sessions.

Katie Zahedi, another principal, said the session she attended was “two days of total nonsense. I have a Ph.D., I’m in a school every day, and some consultant is supposed to be teaching me to do evaluations.”

A fourth principal, Mario Fernandez, called the evaluation process a product of “ludicrous, shallow thinking. They’re expecting a tornado to go through a junkyard and have a brand new Mercedes pop up.”

My school board member-friend concluded his email with this: “I can’t escape the conclusion that those of us who are expected to follow through on decisions that have been made for us are doing something ethically questionable.”

He’s wrong. What they’re being made to do isn’t ethically questionable. It’s ethically unacceptable. Ethically reprehensible. Ethically indefensible.

How many of the approximately 100,000 school principals in the U.S. would join the revolt if their ethical principles trumped their fears of retribution? Why haven’t they been asked?

QUIZ: How would you do on this same test taken by a school board member? Find out: Reading Quiz | Math Quiz. Questions come from the Florida Comprehensive Assessment Test (FCAT) for 10th grade. Or try your hand at questions from the National Assessment of Education Progress for fourth and eigth graders.

Follow The Answer Sheet every day by bookmarking http://www.washingtonpost.com/blogs/answer-sheet. And for admissions advice, college news and links to campus papers, please check out our Higher Education page. Bookmark it!

Image  —  Posted: September 8, 2013 in Interesting News
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What do you do when you’re a politician live on television and a pastor who is against marriage equality asks you why you support marriage rights for all? You take note from Australia’s prime minister, Kevin Rudd, a devout Christian, and do exactly what he does in these amazing four minutes.

At 2:00, he sets a righteous trap, and by the end you’ll be giving him a standing ovation.

Video  —  Posted: September 7, 2013 in Interesting News
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Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples

IR-2013-72, Aug. 29, 2013

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.
Click for Details

Image  —  Posted: August 29, 2013 in Interesting News, IRS, IRS Update, News, Planning, Tax
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North Carolina puts school funding on the back burner, deny voting rights, and now rapes you of your personal property!

school funding, they deny our voting rights, now they are proposing forced Hydro Fracking on our lands. I’m so close to protesting! http://www.newsobserver.com/2013/08/28/3145187/officials-ok-rule-to-force-fracking.html

Image  —  Posted: August 29, 2013 in Business, General Business, Interesting News
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IRS Considers Tax Protesters ‘Constitutionally Challenged’

Image  —  Posted: August 27, 2013 in IRS, News
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