With couple of weeks to the 2017 Tax filing season, the Internal Revenue Service, IRS has launched a “National Tax Security Awareness Week” tagged “Taxes. Security. Together.” to prepare and protect taxpayers and tax professionals from frauds when filing this year’s tax returns.
Also to ensure smooth processing of 2016 tax return and avoid a delay in getting their tax refund next year, the IRS has reminded taxpayers to be sure they have all the documents they need, such as W-2s and 1099s, before filing a tax return. Taxpayers may also need a copy of the 2015 tax return to make it easier to fill out a 2016 tax return.
Beginning in 2017, claim on the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) on tax return, the IRS must hold refund until at least February 15.
IRS advised taxpayers to “choose tax preparers wisely,” It warned: “Avoid preparers who base fees on a percentage of their client’s refund. Also avoid those who boast bigger refunds than their competition. Make sure that your refund goes directly to you – not into your preparer’s bank account.”
Choose tax return preparer wisely – IRS
The Internal Revenue Service, IRS has advised taxpayers using tax return preparer to choose wisely as taxpayers are responsible for the information on their income tax returns.
TheNewAmericans spoke with some IRS-certified tax prepares in Columbus, Ohio:-
It’s doing it right using Tax Preparers – Sanmi Fatoba
The main purpose of filing your tax is to zero out the previous financial year before starting the new one. If you owe government, you pay government; if the government owes you, you get a refund. Not everybody gets a refund. It is like balancing the previous account before moving to a new one. It is not time to get money from the government; that is a misconception. It is completely wrong.
Tax return is used for many things. If you want to buy a house; if you are requesting for financial assistance at the hospital; to file for any relation or family to come to the United States; and sometimes the government may want to see how a person is doing. It gives the whole picture of a person’s financial dealings. It balances the previous accounting year before a new one is started. Usually it is from January 1 to December 31 of every year.
A person will be helping himself by using an IRS-certified tax preparer. A lot of people think that they are losing money by going to tax preparers rather it is doing it right. When there is problem the person will know where to go. A lot of mistakes that people make doing it themselves is that they deny themselves of certain benefits they would have received.
There are certain detailed and technical areas like for a married couple, home owners and business owners that require professional handling. The easy 1040 tax forms could be handled by self. It is always better to go to someone that knows how to fix it.
Another important aspect is having your information in one place. It is not advisable moving from one preparer to another because you are told that somebody is going to enable you make more money. You will get the same thing regardless of who handles it if it is done right.
For instance someone who does not have a house or not paying high medical bills who is doing itemization is looking for trouble. Don’t create anything fictitious that you will not be able to back up.
Everybody is due for auditing, anytime, at least in five years.(Sanmi Fatoba, Evergreen Insurance Agency and Financial Services)
Business owner with profit of $400 must file tax return — Adu K Bonna, Ph.D.
It is required by law for everybody to file his tax returns. It is involuntary. Though we have voluntary tax filing for someone that his income is too little. Even if they don’t file, they don’t get punishment. There is a certain threshold of income that somebody had to file. For instance, a single person that earns say $8,000 a year may not have to file.
|Dr. Adu K Bonna
But even if your income is below the threshold you might be qualified for Earn Income Tax credit. Government may give you something back because your income is low. You have to file because you might get a refund. If you have W2 and you’ve paid taxes on it, that tax withholding will have to be refunded to you. You might also be qualified for Earn Income Tax credit. Therefore it is good to file, even when your income is low.
Those whose incomes are above the threshold are required to file because they have to pay taxes to the government. But there is a refund where any amount is paid in excess to the government.
So we file taxes to pay our taxes and to qualify for some credit. For instance, a student whose income is little may not have to file tax returns but if he files, it is to his benefit because he will get the student credit and all the taxes taken from his pay check will be returned.
Also it is possible a person may make a mistake while preparing his taxes and get a letter from the IRS. This may require tax amendment which is very complicated.
The tax laws keep changing and becoming complicated though there are some very simple methods of filing tax returns. Table taxes can be bought at any store or online to prepare your own tax. It is very simple if the person is not doing any deduction and does not qualify for any credit.
But it is better to use a professional because a person may qualify for some credit and does not know. Some of the software that are sold in the stores for personal taxes are limited in such a way that it will not allow a person to make certain deductions.
Another reason people need a professional tax preparer is when they get audited. A person may be audited if for instance he filed his tax wrongly, or claimed too much deductions, or IRS sees anything suspicious.
For a business owner, if he makes a profit of up to $400, he must file a tax return for the business. If you have a schedule C and your expenses and everything come to $400 you have to file. Even if the business is not active, or it just started and no money was made, it is better to file. The Employer Identification Number is in the system and must be active. Based on this, the IRS need to know that the income is zero for the Employer Identification Number to become active.
Also for a new business, there could be some expenses like registering the business, rent and other expenses. These expenses can be claimed. The IRS will need the record for the business to get credit for it.
Another aspect is that record keeping is very important. Anyone in business must keep records. The IRS will not accept verbal explanation. Everything must be on paper by keeping receipts, all business transactions must go through the business account. Bank information or statement is a very important document to the IRS, it is an option where certain records or receipts are not kept by the business owner.
Cash transaction should be out where there is no receipt. Nothing can be claimed on taxes. The easiest thing is to use the business bank card for transactions. If you cannot prove you cannot claim. Certain things can be avoided by documentation. Bookkeeping is part of business transaction. It is basic accounting procedure in business. It is keeping records of daily sales or transactions. There are software that can be purchased for use.
Head of Household
Things are changing and the IRS is watching. Married people must file with honesty. Anyone that is claiming head of household must be able to prove it. This is because some married couple file differently claiming head of household separately, thereby claiming as two heads of household.
Also there are certain tests that the IRS will require for head of household with kids to pass. It is the residency test. There must be school records showing the address, hospital record and a letter from a social worker or a pastor testifying that the children reside with the parent in the same address.
A relationship test must be proven too. It is illegal to claim a child/ward that does not belong to a person. It is the birth certificates that will be required to prove the relationship test and is part of the filing from this tax year going.
Another is the support test. A person must be able to support the child by taking care of the child. A utility bill will be required. Married couple filing jointly do not need to provide all these documents but somebody that is claiming as head of household needs to provide these in order to claim the Earn Income Tax Credit. (Adu Bonna, Ph.D. Lifeline Financial Services, Columbus, Ohio)
Don’t have to be legal resident to file tax return— Abdi Yusuf
According to the law, anyone who has an income, whether it’s by employment or by self-employment or certain retirement income or investment income must file a federal income tax.
Also most States have income tax and in Ohio, there is the city income tax as well. People file as individuals, and those in business file business income tax.
Filing taxes start by the middle of January and the last day it is due is April 15. Unless you file an extension. The government allows for six months extension, if you don’t have your documents and the W2 you could request for extension up to October. But in actual fact, if you owe any taxes you still have to pay by April 15. Even if you file an extension, it doesn’t give you the right to extend your payment. You can extend your filing but not the payment. A lot of people think once you do the extension, everything will be extended till October. It is not so. The tax due date is April 15. If you don’t pay until October you will pay interest from April to October.
It is very important that immigrants, especially, file their taxes. They don’t have to be legal resident. As long as they have income they must file their income tax. They will get the tax income number and file their taxes with the tax number. They don’t require social security number to file their taxes. That will help them in the future when they get social security number. The earnings will transfer to the social security number.
There is a penalty for not filing. It is a felony for not filing your taxes. Especially for immigrants, if you try to become a citizen or to renew your green card, and you did not file your taxes, that is considered a felony. That could affect your immigration status, like denial of citizenship. It is considered as not having good moral character.
It is very important that people file their taxes and they file it correctly. An incorrect tax returns is as bad as not filing it. You either owe less or get more deductions. There is a penalty for not filing taxes correctly. It is also part of not being of good moral character.
That is why it is very important that people go to tax preparers who are reputable, have the experience, with the tax laws. Not knowing is not an excuse. You can say you didn’t know the tax was due or you didn’t know the due date. You must file your taxes, there is no excuse.
I recommend that everybody must take this issue very seriously and file their taxes very correctly.
And if they’re going to use services, they have to use reputable and IRS authorized tax preparers. (Abdi Yusuf, Immigration Resource Center, Benadir Mall, Columbus, Ohio)
Tax return becoming a little more complex — Umesh Patel
I hold a franchise to Liberty Tax Services. When anybody does Tax Returns through Liberty Tax Services we can guarantee that we are open throughout the year not only during the tax season. We provide them with 100percent satisfaction and 100percent accuracy.
We provide free consultation to our clients if they need to know more or need to answer some of the questions in case they have any letter from IRS or any queries about their own taxes.
We give them free copies of tax returns, and as many copies as they want. We don’t charge for any of the tax returns.
We employ professional tax preparers and we make sure that all the privacy information of our clients are stored in very secured place nobody has access to, except certain staff.
This year, as it was last year, there is a need for tax preparers because the tax return is becoming a little more complicated. This is because of affordable healthcare which is also known as Obamacare. We are certified in affordable care act and federally facilitated market place. If anybody needs health insurance in the market place, we can help him get health insurance through the market place.
Instead of tax return by themselves, if they are not aware of Obamacare, it is better that they come to us so we can assist them correctly.
There is no chance for errors at Liberty Tax because of our tax program. Returns are done by the tax preparer, the processor, the manager checks the returns, they send to head office, they also check before it gets to IRS. We give them guarantee of no errors unless the customer gives false information.
Instant cash refund
We also provide instant cash refund. As soon as the tax returns are done, we have a process, if they need the money quicker, by rapid refund, they can apply for the loan through our bank and they can get the money. Whatever refund they are expecting from the IRS after the return is done, they can make an application if they need part of the money quicker, we can apply for them through the bank and they can get the money quickly. (Umesh Patel, Liberty Tax, Dublin-Granville Road, Columbus, Ohio)