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Monthly Archives: September 2016

Surprise! Another IRS Scam…

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Unfortunately, I feel like I have been alerting our clients of a new tax scam almost every month. Well, here I am again warning you of another IRS tax scam. In the past, we have informed you that the IRS will never call you, they will only contact you via “snail mail”. This was in response to the mass amount of fake phone calls that were being made threatening taxpayers.

It looks like they are now attacking taxpayers via e-mail. They are e-mailing out letters that look ever so similar to the actual letters the IRS sends out when they make changes to your tax returns. The main focus of the letter has to do with the Affordable Care Act, which is the health insurance tax involved with Obama Care. While the letters do look awfully similar to the real IRS letters, there are a few subtle differences. Check it out…Scam Letter

These fake notices are in the e-mail as an attachment. If you happen to receive a suspicious e-mail claiming to be from the IRS, DO NOT open the attachment and forward the e-mail to phishing@irs.gov and then delete the e-mail.

In today’s world, criminals will do anything to make a quick buck. They have been very successful in scaring taxpayers into giving them money. For some reason, the IRS and taxes tend to scare people. We are here to protect you from any fear that you may have and give you peace of mind that you are safe. The tactical creativity of the scammers keeps getting better, and I tend to think that sooner or later they will begin to use snail mail in some way.

It is important to remember that any time your receive correspondence, please bring it into our office. Not only will we be able to detect if it is legit or not, but we will also take care of corresponding with the IRS or State if it is a legit letter. Don’t forget to take advantage of our Tax Shield to protect yourself against having to deal with IRS or State letters. The Tax Shield will be a part of our tax packages that will be available this upcoming tax season.

If you have any questions in regards to this scam, or any other scam, please give us a call or e-mail.

 

Have a great weekend!

 

P.S. 2015 Tax Returns on extension are due in 2 weeks! Get your information in ASAP if you still need to file.

 

Nicholas Hammernik, EA

IRS-2

Milwaukee tax preparation, Waukesha tax preparation

 

Back To School Tax Tips

School has been back in session for almost a month now. I’m sure all of the college students were glad to get some breathing room from their parents, and the parents of elementary school, middle school, and high school students were glad to get some breathing room from their kids!

Education does not come at a small price. We often get a lot of questions about what school expenses can and cannot be deducted. So, let’s take a look at some of the tax breaks that are available to salvage some of the money spent on educational  expenses.billy-madison-back-to-school

Private School Tuition And School Uniforms 

The cost of private school tuition is not deductible on your federal tax return. However, the State of Wisconsin does allow for a subtraction to income as of 2014. The subtraction is limited to $4,000/child for grades K-8 and $10,000/child for grades 9-12. Unfortunately, even if school uniforms are required, the cost is not deductible.

Before/After School Care

For children under age 13, the cost of before or after school care may qualify for a tax credit. These costs would be treated in the same manner as day care expenses and would be categorized under the Child Care Credit.

College Tuition Credits/Deductions

There are three separate tax breaks for paying college tuition. The American Opportunity Credit is available for the first 4 years of post-secondary education at a qualified institution. The Lifetime Learning Credit can be used for tuition after the first 4 years of education, there is no limit on the amount of years this can be taken. The Tuition And Fees Deduction is an alternative to the Lifetime Learning Credit, and can be taken if it provides a better outcome than the credits. It is important to keep in mind that scholarships and grants reduce the tuition paid, and if the amount of scholarships and grants exceeds tuition, it is to be claimed as income. Qualified expenses may include required books and supplies for classes, but it does not include room and board.

Student Loan Interest

Once you make it through the college gauntlet, you have the daunting task of paying off your student loans. The amount of interest that is deductible is up to $2,500, however, this amount may phase out based on income level.

529 Plans

One way to help pay for college is to start a 529 Plan early. This is a mutual fund account that grows like an IRA. However, the earnings on this account are tax-free as long as the money is used in the future for eligible college expenses.

What About The Educators?

If you are a teacher, you are eligible to deduct up to $250 of expenses for classroom supplies. Any out of pocket expenses that you accrue, make sure to keep those receipts for tax time. As of 2015, the State Of Wisconsin also adopted this deduction for State tax return purposes.

 

As I mentioned before, education is not cheap. It is important to be aware of possible tax benefits from all of the money that you spend on your children’s education. Hopefully this list provides some clarity for all the parents out there, and as always if you have any questions, please give us a call! These deductions are just part of how we help people in Milwaukee, Waukesha, New Berlin, Brookfield, Wauwatosa with tax preparation.

Here’s to a successful school year for all of the students out there, and some relaxation for the parents!

 

Until next time,

Nicholas Hammernik, EA

Nick is Talking Tax To Milwaukee. Combing the boring topic of tax with the latest news in pop culture and sports.

Nelly’s IRS ‘Dilemma’

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The financial mishaps of wealthy celebrities always intrigues me. How can someone with millions of dollars end up in debt? This is exactly what happened to the famed rapper Nelly. I myself am a big Nelly fan and grew up listening to a lot of his hit songs. If you are reading this and have no clue who this Nelly character is, ask your child or grandchild and they can fill you in. I actually recently attended a Nelly concert at Summerfest, and while it was obvious his talent was diminishing, I had no clue his bankroll was also on the down slide.

The IRS ‘Grillz’ Nelly With A $2.40 Million Tax Lien

Yes, you read that right, he owes the IRS a whopping $2.40 million. I would be willing to bet that he had no idea he was behind in tax payments. Many times celebrities entrust their financial people to handle all financial matters for them and to make sure everything is paid for. Well, Nelly’s tax guy wasn’t keeping up with those estimated tax payments. The tax lien that the IRS imposed means that they are going to start taking his assets if he does not settle this debt. The IRS can impose a tax lien when they have tried to collect past due taxes, but have not received any response.

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What To Do If You Receive A Tax Lien

Tax liens don’t only happen to celebrities that owe millions of dollars, it happens to many taxpayers across the country that owe amounts generally above $10,000. I’m sure you have heard radio or TV commercials from the national companies claiming they can settle IRS tax debt for pennies on the dollar. In most cases, this is a lie, and just a ploy for you to give their 1-800 number a call. Many of these companies have been reported for taking clients’ money and not completing the work they said they would do for them. We work with our clients throughout the whole process and provide an in-person meeting so that they know who they are working with the entire time. As Enrolled Agents, we are able to talk to the IRS on behalf of our clients and try to reach a settlement. To find out some ways that we help people out with tax debt, visit that section of our website http://hammernikassoc.com/irs-representation/tax-resolution/ .

So, What’s Next For Nelly?

Nelly fans across the world are trying to help their beloved rapper out by streaming his songs. Spotify reported that in the last week, his songs are up 200%. However, there will need to be a lot of songs streamed to make up that amount of debt. Songs will need to be streamed between 4-5 million times to accrue the $2.4 million, and that does not even account for the share allotted to his record label, producers, etc.

Regardless, Nelly better hire a good tax professional to represent him in negotiation with the IRS, or they are about to make it hot in herre for him.

If you, or somebody you know, needs help with IRS debt, please contact our office at 414-545-1890. We help people in Milwaukee, Waukesha, Brookfield, New Berlin, Wauwatosa with tax debt and liens.

The first step in getting back to solid tax standing is to stop the bleeding. We are here for you to set up a game plan to get rid of that tax debt once and for all.

 

Have a great weekend!

Nicholas Hammernik, EA

Milwaukee WI IRS Representation

 

Your Online Shopping Habit Might Get More Expensive

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Does anybody actually go to the mall anymore? I can personally count on one hand the number of times I have been inside a mall in the last year. Many millennials, like myself, would much rather do our shopping in the comfort of our own homes. It isn’t only millennials, websites like Amazon.com and Ebay.com have seen their activity soar over the last decade. Online shopping is the new way to shop for many reasons. One of those reasons, that you may not even be aware of, is that in most cases you do not pay for sales tax on your purchases. Thus, online shopping is not only convenient, but it is also cheaper!

Well, Congress is well aware of this and the money that they are missing out on. The Census Bureau of the Department of Commerce estimated that in the 2nd quarter of 2016, there were e-commerce sales of $97.3 billion. For local purposes, let’s assume that this was all in the State of Wisconsin. At the general sales tax rate of 5%, this equates to $4.865 billion in uncollected sales tax.

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Online retailers are not required to charge sales tax if they do not have a physical location that they sell from. Therefore, the sales are charged with what is called a use tax. The use tax puts the burden on the consumer to report the sales tax on their state tax return. If you ever wonder why your tax consultant may ask if you made any internet purchases for the year, this is why. Although consumers are supposed to report their internet purchases on their tax return, many do not.

Congress wants their money!

There have been attempts in the past by Congress to impose sales tax laws against the e-commerce businesses. Those efforts have failed, but they are not giving up. Judiciary Committee Chair Bob Goodlatte has taken it upon himself to take another swing at it. The big boys like Ebay and Amazon are keeping a close eye on his proposals as it would drastically effect their businesses.

His proposal states: “A state may impose a sales, use or similar tax on a seller, or impose on a seller an obligation to collect such a tax imposed on a purchaser, with respect to remote sale of a product or service only if — (1) The State is the origin State for the remote sales (where the company had the most employees during the previous calendar year); (2) The tax is applied using the origin State’s tax base applicable to non-remote sales; and (3) The State participates in the State tax clearinghouse.”

The online shopping world is great for consumers, and it is a retail giant that is only going to continue to grow. So keep on clicking those purchases from your computer, but be aware that your checkout bag price may be a tad higher in the future.

 

Until next time,

Nicholas Hammernik, EA

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Milwaukee, Waukesha, Brookfield, New Berlin, Wauwatosa tax preparation

Tax Refunds To Be Delayed

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Are you ready for the big news? Your tax return next year is going to be delayed. If you were  planning on getting that refund quickly to pay for something…time to change your plans. The  IRS has put in place a new law which requires them to hold refunds longer. The IRS is  warning taxpayers that their refunds are going to be delayed several weeks more than the normal  time. In the past, it usually took the IRS 2-3 weeks to process refunds. Therefore, this new law  means that it is going to take at least a good month for you to receive your refund check.

                              What has caused this law to go into place?

  • Earned Income Credit & Child Tax Credit : The IRS has had issues with people taking advantage of these credits and receiving refunds they should not be receiving. Therefore, they will be spending additional time reviewing these returns for accuracy. Thus, this will cause a log jam in tax returns being processed and delay the processing of all returns.
  • Identity Theft : We all know how big of a pain in the butt Identity Theft has been, especially if you have been a victim. The IRS recognizes that it is a major problem and is taking extra steps to prevent it. They will be examining returns to look for anything that may look suspicious.

What to do if you do not want to wait for your refund…

Take your refund now…What do I mean by this? Use the remaining 4 months of the year to take larger paychecks instead of your refund. You can do this by adjusting your W-4 to lower your tax withholding. Hammernik & Associates specialized in W-4 tax planning and can help you avoid waiting for your refund later. There is a large population that loves getting that huge refund check every tax season, but how long is too long to wait for it?

We can help residents of Milwaukee, Waukesha, New Berlin, Brookfield, Wauwatosa with all of their tax preparation and tax planning needs.

Give Hammernik & Associates a call to avoid waiting for your refund next year and receiving more of that money now. After all, the Government is just taking longer to pay you back on that interest free loan you are giving them.

If you have any questions about this new law or if you want to take tax planning action, call 414-545-1890.

 

Until next time,

 

Nicholas Hammernik, EA

IRS