Theresa Arndt, CPA

People who waited until Wednesday’s deadline to file their tax returns may have found that someone hijacked their refund.  That’s what happened to several of my clients this year.  Here are a couple of their stories: One client arrived home to find a letter from the IRS that they were conducting a review of questionable income amounts and claims for credits listed on his return.  His conversation went like many thousands before... Client: " What return?  I haven't even filed yet. "  IRS: " Ummm…yes you have ".  Well my client was right of course; he hadn't filed his return...but someone else had filed it for him. Other clients discovered the identity theft when I attempted to electronically file the return.  The IRS will not accept a return that has already been filed. Naturally, the first question they ask me is:  " How can this happen? "  That's a good question and one I myself wanted to know the answer too. Th...

Earlier this week I received a call from a client who came home from work to find the following message on his voicemail: "Hello, we have been trying to reach you. This call is officially a final notice from the IRS, Internal Revenue Service. The reason of this call is to inform you that IRS is filing a lawsuit against you." Fortunately, my client knew better than to call the number in the message.  Instead he called me to confirm this really was a scam.  But not everyone is so fortunate. “Oh I would never fall for a scam like that”, you say?  Hopefully not.  But sadly many have.   In fact the IRS impersonation phone scam has claimed nearly 3,000 victims who have collectively paid over $14 million, according to a recent TIGTA report .  Phones are ringing in every state.  Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they ...

The IRS issued  Notice 2015-17 clarifying the application of Notice 2013-54 to certain situations. The notice provides relief for employers who are not applicable large employers (ALES), as defined in §4980H. In summary, the IRS will not assess any penalties for reimbursement arrangements for 2014 through June 30, 2015. After June 30, 2015, the IRS states they may start assessing penalties. Specifically, the IRS addresses: The transitional relief through June 30, 2015. The treatment to 2% S corporation shareholders. Reimbursing for Medicare, TRICARE or Medigap. Increasing employee compensation on an after-tax basis in a way that is not tied to health insurance. Treating insurance reimbursements as taxable wages. The IRS confirmed that for the time being, they'll allow an S corporation shareholder to deduct reimbursed insurance as a self-employed health insurance under §162 (l).  The IRS has also clarified that treating insurance rei...

So you’re getting a tax refund and now you want to know when to expect it.     The good news is that the IRS wants you to know as well.   There are three fast and easy ways to track the status of your refund. Go Online The IRS created “ Where’s My Refund?,” a digital tool designed to answer taxpayer questions about the status of their refund.   This year the IRS has refreshed, enhanced and polished the app just in time for the 2013 tax season, making it more automated and accurate than ever before. With “Where’s My Refund", a new progressive feature called a “refund tracker” displays the return progress in three separate stages.   Here are the three stages and the messages you may receive: 1. Return Received ·           We have received your tax return and it is being processed. ·           You should get your refund within 21 days from ...

According to a Treasury report last month, taxpayers wrongly received nearly $3.2 billion in American Opportunity Tax Credits (AOC) between Jan. 1, 2010 and May 28, 2010 .    The report attributes the error to ineffective IRS procedures for the review of education credits.   The Treasury has forecasted that an additional $12.8 billion in wrongfully claimed education credits will be granted over the next four years unless the current system of review is modified. Here is a breakdown of the errors: ·          $2.6 billion to 1.7 million individuals who weren’t even attending college ·          $550 million went to students who didn’t attend school at least half-time or who were in graduate school, both contrary to the tax laws ·          $88 million to students who were claimed as dependents on someone else’s tax return ·    ...

This month the first cars to be fully powered by electricity were released by many of the major auto makers. The new fully electrical vehicles, the Chevy Volt and Nissan Leaf, have no drivetrain and no combustion engine. They are leading the way for the new green revolution in the auto industry. Uncle Sam has promised big tax credits of up to $7,500 for those who purchase any of the new electric models.   This is an attempt to increase consumer interest in green technology.   At the moment consumers are concerned about battery life and whether the infrastructure is in place to support an electric vehicle.   But these big tax breaks may be just enough to make you take a second look. If you are thinking about buying a green vehicle, here is what you need to know.   How much is the credit: This credit is up to $7,500.   A credit is worth more than a deduction; how so?   A deduction reduces your taxable income, so the value depends on your tax brack...

Part of being a good CPA partner to my client’s businesses is keeping track of industry trends that can eat into their bottom line.   Many of my clients are in the construction industry so today’s topic is of particular interest to them. The residential construction industry is receiving a lot of unwanted attention from OSHA for the first time.   Injuries on residential projects have increased and now OSHA has named the Residential Construction Industry as a target industry In December 2010, OSHA introduced stronger worker safeguards to prevent falls in residential construction.   The new standards for residential construction were scheduled to go into effect on June 15, 2011, but OSHA announced a three-month phase in to allow employers time to gear up to meet the compliance requirements.   The phase in period is over and the new directive is now fully in place as of September 15, 2011. If you are a residential contractor, general or sub, are you in complia...

As year-end approaches many of my clients start thinking about next year’s tax bill and what they can do to manage it.   Since the business use of a vehicle can be one of the larger deductions, a new set of wheels is usually the first to come to their mind.   That’s why it doesn’t surprise me when a client calls to ask if he can buy a new $40,000 car for his business and write the whole thing off.     Thanks to some new tax breaks this year, you actually can write off the full cost of purchasing a new luxury SUV – provided it’s used 100% for business and its gross vehicle weight is more than 6,000 pounds.   The vehicles that qualify for the 100% write off are gas guzzlers, but your business may have a need to haul people and materials and can justify the extra fuel costs. For lighter SUVs, passenger cars and light trucks the first-year depreciation is much smaller.   Example 1: Your business buys a new $89,200 BMW X6M and uses it 100% for ...