Coakley Business Solutions

15/12/2022

Don’t let a tax mistake ruin newlywed bliss
When people get married their tax situation often changes. A taxpayer’s marital status as of Dec. 31 determines their tax filing options for the entire year, but that’s not all newlyweds need to know.
Here's a tax checklist for newly married couples:
Name and address changes
• Name - When a name changes through marriage, it’s important to report that change to the Social Security Administration. The name on a person's tax return must match what is on file at the SSA. If it doesn't, it could delay any tax refund. To update information, taxpayers should file Form SS-5, Application for a Social Security Card. It is available on SSA.gov, by phone at 800-772-1213, or at a local SSA office.
• Address - If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, people should complete and send the IRS Form 8822, Change of Address. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or visiting their local post office.
Withholding
• After getting married, couples should consider changing their withholding. Newly married couples must give their employers a new Form W-4, Employee's Withholding Allowance within 10 days. If both spouses work, they may move into a higher tax bracket or be affected by the additional Medicare tax. They can use the Tax Withholding Estimator on IRS.gov to help complete a new Form W-4. Taxpayers should review Publication 505, Tax Withholding and Estimated Tax, for more information.
Filing status
• Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly is usually more beneficial, it's best to figure out the tax both ways to find out which makes the most sense. Taxpayers should remember, if a couple is married as of December 31, the law says they're married for the whole year for tax purposes.
Scams
• All taxpayers should be aware of and avoid tax scams. The IRS will never initiate contact using email, phone calls, social media, or text messages. First, contact generally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

01/12/2022

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Issue Number: Tax Tip 2022-183
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Good recordkeeping year-round helps taxpayers avoid tax time frustration
Wading through a pile of statements, receipts and other financial documents when it’s time to prepare a tax return can be frustrating for people who haven’t managed their records. By knowing what they need to keep and how long to keep it, people can develop a good recordkeeping system year-round and make filing their return easier.
Good recordkeeping can also help taxpayers understand their situation when they receive letters or notices from the IRS.
Good records help:
• Identify sources of income. Taxpayers may receive money or property from a variety of sources. The records can identify the sources of income and help separate business from non-business income and taxable from nontaxable income.
• Keep track of expenses. Taxpayers can use records to identify expenses for which they can claim a deduction. This will help determine whether to itemize deductions at filing. It may also help them discover potentially overlooked deductions or credits.
• Prepare tax returns. Good records help taxpayers file their tax return quickly and accurately. Throughout the year, they should add tax records to their files as they receive them to make preparing a tax return easier.
• Support items reported on tax returns. Well-organized records make it easier to prepare a tax return and help provide answers if the return is selected for examination or if the taxpayer receives an IRS notice.
In general, taxpayers should keep records for three years from the date they filed the tax return. Taxpayers should develop a system that keeps all their important information together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.
Records to keep include:
• Tax-related records. This includes wage and earning statements from all employers or payers including payment apps or cards, such as Form W-2, 1099-K, 1099-Misc, 1099-NEC. Other records include interest and dividend statements from banks, certain government payments like unemployment compensation, other income documents and records of virtual currency transactions. Taxpayers should also keep receipts, canceled checks, and other documents that support income, a deduction, or a credit reported on their tax return.
• IRS letters, notices and prior year tax returns. Taxpayers should keep copies of prior year tax returns and notices or letters they receive from the IRS. These include adjustment notices when an action takes place occurs on the taxpayer's account.
• Property records. Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
• Business income and expenses. Business taxpayers should find a bookkeeping method that clearly and accurately reflects their gross income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
• Health insurance. Taxpayers should keep records of their own and their family members' health care insurance coverage. If they're claiming the premium tax credit, they'll need information about any advance credit payments received through the Health Insurance Marketplace and the premiums they paid.
For more information on what to do to get ready to file taxes, taxpayers should visit the Get Ready page of IRS.gov.
Share this tip on social media -- : Good recordkeeping year-round helps taxpayers avoid tax time frustration. http://ow.ly/uFCr50LQhxk

Tax Tip 2022-183, November 30, 2022 — Wading through a pile of statements, receipts and other financial documents when it’s time to prepare a tax return can be frustrating for people who haven’t managed their records. By knowing what they need to keep and how long to keep it, people can develo...

28/11/2022

Issue Number: Tax Tip 2022-181
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Taxpayers shouldn’t let gift card scammers ruin the holidays
During the holiday season, taxpayers should be aware of gift card scams thieves commonly use this time of year. Con artists will target taxpayers by asking them to pay a fake tax bill with gift cards. They may also use a compromised email account to send emails requesting gift card purchases for friends, family or co-workers.
This scam is easy to avoid if taxpayers remember that the IRS never asks for or accepts gift cards as payment for a tax bill.
Here's how this scam usually happens:
• The most common way scammers request gift cards is over the phone through a government impersonation scam. However, they will also request gift cards by sending a text message, email or through social media.
• A scammer posing as an IRS agent will call the taxpayer or leave a voicemail with a callback number informing the taxpayer that they are linked to some criminal activity. For example, the scammer will tell the taxpayer their identify has been stolen and used to open fake bank accounts.
• The scammer will threaten or harass the taxpayer by telling them that they must pay a fictitious tax penalty.
• The scammer instructs the taxpayer to buy gift cards from various stores.
• Once the taxpayer buys the gift cards, the scammer will ask the taxpayer to provide the gift card number and PIN.
Here's how taxpayers can tell if it's really the IRS calling. The IRS will never:
• Call to demand immediate payment using a specific payment method such as a gift card, prepaid debit card, or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
• Demand that taxpayers pay taxes without the opportunity to question or appeal the amount they owe. All taxpayers should be aware of their rights.
• Threaten to bring in local police, immigration officers, or other law enforcement to have the taxpayer arrested for not paying.
• Threaten to revoke the taxpayer's driver's license, business license, or immigration status.
Any taxpayer who believes they've been targeted by a scammer should:
• Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their IRS Impersonation Scam Reporting webpage. They can also call 800-366-4484.
• Report phone scams to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. They should add "IRS phone scam" in the notes.
• Report threatening or harassing telephone calls claiming to be from the IRS to [email protected]. People should include "IRS phone scam" in the subject line.
More information:
IRS Impersonation Scam Reporting
Consumer Alerts
Report Phishing
Share this tip on social media -- : Taxpayers shouldn’t let gift card scammers ruin the holidays. http://ow.ly/mbiP50LNNG7
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Tax Tip 2022-181, November 28, 2022 — During the holiday season, taxpayers should be aware of gift card scams thieves commonly use this time of year. Con artists will target taxpayers by asking them to pay a fake tax bill with gift cards.

27/11/2022

26/11/2022

Issue Number: IR-2022-203
Inside This Issue

Get Ready now to file your 2022 federal income tax return
WASHINGTON — The Internal Revenue Service today encouraged taxpayers to take simple steps before the end of the year to make filing their 2022 federal tax return easier. With a little advance preparation, a preview of tax changes and convenient online tools, taxpayers can approach the upcoming tax season with confidence.
Filers can visit the Get Ready webpage at IRS.gov/getready to find guidance on what’s new and what to consider when filing a 2022 tax return. They can also find helpful information on organizing tax records and a list of online tools and resources.
Get Ready by gathering tax records
When filers have all their tax documentation gathered and organized, they’re in the best position to file an accurate return and avoid processing or refund delays or receiving IRS letters. Now’s a good time for taxpayers to consider financial transactions that occurred in 2022, if they’re taxable and how they should be reported.
The IRS encourages taxpayers to develop an electronic or paper recordkeeping system to store tax-related information in one place for easy access. Taxpayers should keep copies of filed tax returns and their supporting documents for at least three years.
Before January, taxpayers should confirm that their employer, bank and other payers have their current mailing address and email address to ensure they receive their year-end financial statements. Typically, year-end forms start arriving by mail or are available online in mid-to-late January. Taxpayers should carefully review each income statement for accuracy and contact the issuer to correct information that needs to be updated.
Get Ready for what’s new for Tax Year 2022
With the end of the year approaching, time is running out to take advantage of the Tax Withholding Estimator on IRS.gov. This online tool is designed to help taxpayers determine the right amount of tax to have withheld from their paycheck. Some people may have life changes like getting married or divorced, welcoming a child or taking on a second job. Other taxpayers may need to consider estimated tax payments due to non-wage income from unemployment, self-employment, annuity income or even digital assets. The last quarterly payment for 2022 is due on Jan. 17, 2023. The Tax Withholding Estimator on IRS.gov can help wage earners determine if there is a need to adjust their withholding, consider additional tax payments, or submit a new W-4 form to their employer to avoid an unexpected tax bill when they file.
As taxpayers gather tax records, they should remember that most income is taxable. This includes unemployment income, refund interest and income from the gig economy and digital assets.
Taxpayers should report the income they earned, including from part-time work, side jobs or the sale of goods. The American Rescue Plan Act of 2021 lowered the reporting threshold for third-party networks that process payments for those doing business. Prior to 2022, Form 1099-K was issued for third-party payment network transactions only if the total number of transactions exceeded 200 for the year and the aggregate amount of these transactions exceeded $20,000. Now a single transaction exceeding $600 can trigger a 1099-K. The lower information reporting threshold and the summary of income on Form 1099-K enables taxpayers to more easily track the amounts received. Remember, money received through third-party payment applications from friends and relatives as personal gifts or reimbursements for personal expenses is not taxable. Those who receive a 1099-K reflecting income they didn’t earn should call the issuer. The IRS cannot correct it.
Credit amounts also change each year like the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Dependent Care Credit. Taxpayers can use the Interactive Tax Assistant on IRS.gov to determine their eligibility for tax credits. Some taxpayers may qualify this year for the expanded eligibility for the Premium Tax Credit, while others may qualify for a Clean Vehicle Credit through the Inflation Reduction Act of 2022.
Refunds may be smaller in 2023. Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022. In addition, taxpayers who don’t itemize and take the standard deduction, won’t be able to deduct their charitable contributions.
The IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer. For example, the IRS and its partners in the tax industry, continue to strengthen security reviews to protect against identity theft. Additionally, refunds for people claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) can’t be issued before mid-February. The law requires the IRS to hold the entire refund – not just the portion associated with EITC or ACTC. This law helps ensure taxpayers receive the refund they're due by giving the IRS time to detect and prevent fraud.
For taxpayers who are still waiting for confirmation that last year’s tax return processed, or for a tax year 2021 refund or stimulus payment to process, their patience is appreciated. As of Nov. 11, 2022, the IRS had 3.7 million unprocessed individual returns received this year. These include tax year 2021 returns and late filed prior year returns. Of these, 1.7 million returns require error correction or other special handling, and 2 million are paper returns waiting to be reviewed and processed. They also had 900,000 unprocessed Forms 1040-X for amended tax returns. The IRS is processing these amended returns in the order received and the current timeframe can be more than 20 weeks. Taxpayers should continue to check Where's My Amended Return? for the most up-to-date processing status available.
Renew expiring tax ID numbers
Taxpayers should ensure their Individual Tax Identification Number (ITIN) hasn’t expired before filing a 2022 tax return. Those who need to file a tax return, should submit a Form W-7, Application for IRS Individual Taxpayer Identification Number now, to renew their ITIN. Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. Applying now will help avoid the rush as well as refund and processing delays in 2023.
Bookmark the following tools on IRS.gov
Online tools are easy to use and available to taxpayers 24 hours a day. They provide key information about tax accounts and a convenient way to pay taxes. IRS.gov provides information in many languages and enhanced services for people with disabilities, including the Accessibility Helpline. Taxpayers who need accessibility assistance may call 833-690-0598. Taxpayers should use IRS.gov as their first and primary resource for accurate tax information.
• Let Us Help You page. The Let Us Help You page on IRS.gov has links to information and resources on a wide range of topics.
• Online Account. An IRS online account lets taxpayers securely access their personal tax information, including tax return transcripts, payment history, certain notices, prior year adjusted gross income and power of attorney information. Filers can log in to verify if their name and address is correct. They should notify IRS if their address has changed. They must notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
• IRS Free File. Almost everyone can file electronically for free on IRS.gov/freefile or with the IRS2Go app. The IRS Free File program, available only through IRS.gov, offers brand-name tax preparation software packages at no cost. The software does all the work of finding deductions, credits and exemptions for filers. It‘s free for those who qualify. Some Free File packages offer free state tax return preparation. Those who are comfortable preparing their own taxes can use Free File Fillable Forms, regardless of their income, to file their tax return either online or by mail.
• Find a tax professional. The Choosing a Tax Professional page on IRS.gov has a wealth of information to help filers choose a tax professional. In addition, the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find preparers in their area who hold professional credentials recognized by the IRS, or who hold an Annual Filing Season Program Record of Completion.
• Interactive Tax Assistant. The Interactive Tax Assistant is a tool that provides answers to many tax questions. It can determine if a type of income is taxable and eligibility to claim certain credits or deductions. It also provides answers for general questions, such as determining filing requirement, filing status or eligibility to claim a dependent.
• Where's My Refund? Taxpayers can use the Where’s My Refund? tool to check the status of their refund. Current year refund information is typically available online within 24 hours after the IRS receives an e-filed tax return. A paper return status can take up to four weeks to appear after it is mailed. The Where’s My Refund? tool updates once every 24 hours, usually overnight, so filers only need to check once a day.
• Volunteer Income Tax Assistance. The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free basic tax return preparation to qualified individuals.
Get refunds fast with Direct Deposit
Taxpayers should prepare to file electronically and choose Direct Deposit for their tax refund – it’s the fastest and safest way to file and get a refund. Even when filing a paper return, choosing a direct deposit refund can save time. For those who do not have a bank account, the FDIC website offers information to help people open an account online.
Taxpayers can download Publication 5349, Tax Preparation is for Everyone, for more information to help them get ready to file.

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IRS Free File lets you prepare and file your federal income tax online for free. File at an IRS partner site with the IRS Free File Program or use Free File Fillable Forms. It's safe, easy and no cost to you.

23/11/2022

21/11/2022

Issue Number: Tax Tip 2022-178
Taxpayers should review the 401(k) and IRA limit increases for 2023

The amount individuals can contribute to their 401(k) plans in 2023 will increase to $22,500 -- up from $20,500 in 2022. The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and claim the Saver's Credit will also all increase for 2023.
Taxpayers can read the technical guidance regarding all of the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the tax year 2023 in Notice 2022-55 on IRS.gov.
Here are some of the changes for 2023:
• The contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan will increase to $22,500.
• The limit on annual contributions to an IRA will increase to $6,500. The IRA catch-up contribution limit for individuals age 50 and over is not subject to an annual cost of living adjustment and remains $1,000.
• The catch-up contribution limit for employees age 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan will increase to $7,500.
• The catch-up contribution limit for employees age 50 and over who participate in SIMPLE plans will increase to $3,500, up from $3,000.
• The phase-out ranges for deducting contributions to a traditional IRA will also increase. Taxpayers should review Notice 2022-55 regarding the details of their situation.
• The income phase-out range for people making contributions to a Roth IRA will increase for taxpayers filing as single, head of household, and married filing jointly. Again, taxpayers should consult Notice 2022-55 for specifics about their situation.
• The income limit for the Saver's Credit for low- and moderate-income workers is $73,000 for married couples filing jointly; $54,750 for heads of household; and $36,500 for singles and married individuals filing separately.
• The amount individuals can contribute to their SIMPLE retirement accounts will increase to $15,500.

16/11/2022

IRS reminds taxpayers IRS Free File remains open until Nov. 17
WASHINGTON — The Internal Revenue Service today reminded those who still need to file their 2021 tax returns that IRS Free File remains open until Nov. 17 and can help those who qualify claim the Child Tax Credit, Recovery Rebate Credit or Earned Income Tax Credit.
These and other tax benefits were expanded under last year’s American Rescue Plan Act and other recent legislation. The only way to get these valuable benefits, however, is to file a 2021 tax return.
Last month, the Internal Revenue Service sent letters to more than 9 million individuals and families who appeared to qualify for a variety of key tax benefits but had not yet claimed them by filing a 2021 federal income tax return.
Many in this group may be eligible to claim some or all of the 2021 Recovery Rebate Credit, the Child Tax Credit, the Earned Income Tax Credit and other tax credits, depending on their personal and family situation. The letter, printed in both English and Spanish, provided a brief overview of each of these credits.
Often, individuals and families can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don’t normally need to file a tax return should do so this year, even if they haven’t been required to file in recent years.
There’s no penalty for a refund claimed on a tax return filed after the regular April 2022 tax deadline. The fastest and easiest way to get a refund is to file an accurate return electronically and choose direct deposit.
To help people claim these benefits without charge, IRS Free File will remain open this year, until Nov. 17, 2022. Available only at IRS.gov/FreeFile, IRS Free File lets people whose incomes are $73,000 or less to file a return online for free using brand-name software.
IRS Free File is sponsored by the Free File Alliance, a partnership between the IRS and the tax software industry, a public-private partnership that provides their brand-name products for free.
IRS Free File provides two ways for taxpayers to prepare and file their 2021 federal income tax return online for free:
• IRS Partner Sites. Traditional IRS Free File provides free online tax preparation and filing options on IRS partner sites. Individual taxpayers whose adjusted gross income (AGI) is $73,000 or less qualify for any IRS Free File partner offers. Free File lets individuals electronically prepare and file their federal income tax online using guided tax preparation.
• Free Fillable Forms. For taxpayers whose AGI is greater than $73,000, there’s the Free File Fillable Forms option. It provides electronic federal tax forms that can be filled out and filed online for free. To use this option, taxpayers should know how to prepare their own tax return.
Always start at IRS.gov:
• From the homepage, select File Your Taxes for Free.
• Use the IRS Free File Lookup Tool to narrow the list of providers or the Browse All Offers page to see a full list of providers.
• Follow the link to the chosen IRS Free File provider’s website.
Prior year returns can be filed electronically only by registered tax preparers for the two previous tax years. Otherwise, taxpayers must print, sign and mail prior year returns.