Welcome to PayTech’s April Update
Tax Time Guide: Updated Tax Guide Helps People with Their 2015 Taxes
Taxpayers can get the most out of various tax benefits and get useful tips on preparing their 2015 federal income tax returns by consulting a free comprehensive tax guide available on IRS.gov.
Publication 17, Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American Opportunity Tax Credit for parents and college students, the Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers. It also features a rundown on tax changes for 2015 including information on revised tax rates, limits on various tax benefits for some taxpayers and reporting requirements of the Affordable Care Act. This useful 286-page guide also provides thousands of interactive links to help taxpayers quickly get answers to their questions.This is the second in a series of 10 tips called the Tax Time Guide. These tips are designed to help taxpayers navigate common tax issues as this year’s April 18 deadline approaches.
Publication 17 has been published annually by the IRS since the 1940s and has been available on the IRS web site since 1996. As in prior years, this publication is packed with basic tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions, and using IRAs to save for retirement.Besides Pub.17, IRS.gov offers many other helpful resources for taxpayers.
DOL Overtime Rule May Go Public Sooner Than Expected
- The U.S. Department of Labor (DOL) had indicated that its final, potentially controversial overtime rules are due to be published in July, but there are signs to suggest they may be released earlier, according to a National Law Review article.
- Washington, D.C.’s adversarial climate plus the presidential election are potential reasons why the DOL may be hurrying. The Congressional Review Act gives Congress 60 legislative days to review any federal agency final rule, meaning the GOP-controlled Congress could pass a resolution nullifying the OT rule.
- The current salary threshold for white collar exemptions is $23,000, but the new rule is set to move the threshold to more than $50,000 per year, meaning employers need to get ready now, according to National Law Review.
The proposed rule has created a lot of buzz, mainly from employers who will have to make major adjustments to their current compensation strategies if and when the rule takes effect.
A shorter timeline for the new rule means employers need to take steps now to decide how to handle employees who would no longer qualify as exempt, according to the National Law Review. For example, some employers have the option to boost exempt employee salaries to match the new threshold, whatever it is, in order to have the exemption. Another option is to change worker status of some to non-exempt and pay overtime.
Either way, employers must act quickly to avoid potential legal wage and hour claims should the final rule take effect.
IRS Alerts Payroll and HR Professionals to Phishing Scheme Involving W-2s
The Internal Revenue Service issued an alert to payroll and human resources professionals to beware of an emerging phishing email scheme that purports to be from company executives and requests personal information on employees.
The IRS has learned this scheme — part of the surge in phishing emails seen this year — already has claimed several victims as payroll and human resources offices mistakenly email payroll data including Forms W-2 that contain Social Security numbers and other personally identifiable information to cybercriminals posing as company executives.
“This is a new twist on an old scheme using the cover of the tax season and W-2 filings to try tricking people into sharing personal data. Now the criminals are focusing their schemes on company payroll departments,” said IRS Commissioner John Koskinen. “If your CEO appears to be emailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”
IRS Criminal Investigation already is reviewing several cases in which people have been tricked into sharing SSNs with what turned out to be cybercriminals. Criminals using personal information stolen elsewhere seek to monetize data, including by filing fraudulent tax returns for refunds.
This phishing variation is known as a “spoofing” email. It will contain, for example, the actual name of the company chief executive officer. In this variation, the “CEO” sends an email to a company payroll office employee and requests a list of employees and information including SSNs.
The following are some of the details contained in the e-mails:
- Kindly send me the individual 2015 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
- Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary).
- I want you to send me the list of W-2 copy of employees wage and tax statement for 2015, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap.
The IRS recently renewed a wider consumer alert for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season and other reports of scams targeting others in a wider tax community.
The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.
The IRS, state tax agencies and tax industry are engaged in a public awareness campaign — Taxes. Security. Together. — to encourage everyone to do more to protect personal, financial and tax data.
Many Home-Based Businesses Can Use Simplified Method for Claiming Home Office Deduction; Taxpayers May Deduct up to $1,500 a Year
The Internal Revenue Service reminded people with home-based businesses filling out their 2015 federal income tax returns that they can choose a simplified method for claiming the deduction for business use of a home.
This is the fourth in a series of 10 IRS tips called the Tax Time Guide. These tips are designed to help taxpayers navigate common tax issues as this year’s April 18 deadline approaches.
In tax year 2013, the most recent year for which figures are available, more than 3.4 million taxpayers claimed deductions totaling just over $9.6 billion for business use of a home, commonly referred to as the home office deduction.
Introduced in tax year 2013, the optional deduction is designed to reduce the paperwork and recordkeeping burden for small businesses. The optional deduction is capped at $1,500 per year, based on $5 a square foot for up to 300 square feet.
Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Instead, taxpayers choosing the simplified method need only complete a short worksheet in the tax instructions and enter the result on their tax return. Self-employed individuals claim the home office deduction on Schedule C, Line 30; farmers claim it on Schedule F, Line 32 and eligible employees claim it on Schedule A, Line 21.
Though homeowners using the simplified method cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible. Long-standing restrictions on the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the simplified method.