Tax & Notary - Topics of Interest

IRS Analyzes Tax Preparer Data Looking for Fraud

Internal Revenue Service Commissioner Doug Shulman described in a speech how the agency is using information from its tax preparer regulation initiative to identify practitioners who are showing patterns of tax fraud.

“Given the importance of paid return preparers to the integrity of our tax system, we’re now well into the process of ensuring a basic competency level for tax return preparers and focusing our enforcement efforts on rooting out unscrupulous preparers, “ Shulman said in a speech at the National Press Club. “We have registered over 840,000 return preparers and have begun administering a competency test for any preparer who is not a CPA, attorney or enrolled agent. These individuals also have to complete 15 hours of continuing education each year from IRS-approved providers.”

He added that the agency’s next key long-term priority is an initiative the IRS started three years ago to look at how the agency interacts with paid tax return preparers.

“One of the most important tasks millions of Americans have been tackling, and will be tackling over the next two weeks, is preparing an accurate and timely tax return,” he said. “However, over the past 20 to 30 years, the way that taxpayers go about filing their taxes has dramatically changed. Today, more than 9 out of 10 taxpayers use a paid tax preparer or tax software. Despite the fact that paying taxes is one of the largest financial transactions that the average American family has each year, when I arrived at the IRS, there were no basic competency requirements for tax return preparers. In fact, while in most states you need a license to cut someone’s hair, just a few years ago almost anyone could prepare a federal tax return for any other person for a fee, regardless of their level of experience or knowledge of the tax law.”

Shulman said that the IRS has “shifted from a retail to a wholesale approach.” Instead of dealing with taxpayers one-by-one, the IRS is now dealing with the intermediaries who deal with a hundred or a thousand taxpayers at a time. He noted that 95 million individual and business income tax returns were prepared by paid preparers in 2011, accounting for $5.7 trillion of income reported.

“Given the importance of paid return preparers to the integrity of our tax system, we’re now well into the process of ensuring a basic competency level for tax return preparers and focusing our enforcement efforts on rooting out unscrupulous preparers,” he said. “We have registered over 840,000 return preparers and have begun administering a competency test for any preparer who is not a CPA, attorney or enrolled agent. These individuals also have to complete 15 hours of continuing education each year from IRS-approved providers.”

Shulman said the IRS’ s next major priority is leveraging data analytics in order to continually improve the agency’s operations.  

WANT TO LEARN MORE ABOUT BECOMING A TAX PREPARER?

Platinum Professional Services' Tax School offers an IRS Registered Tax Return Preparer Tax Class to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS CE to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

 

 

Study Finds Charities’ Tax Returns Expose Social Security Numbers

A new study has found that the Form 990 tax returns filed by tax-exempt organizations frequently expose the Social Security numbers of tax preparers, donors, employees, scholarship recipients and others to the public.

The study, released by Identity Finder LLC, used its Identity Finder DLP 6.0 software to search through 2,892,475 Form 990s from tax years 2001 through 2006 for personally identifiable information such as Social Security numbers.

Even though SSNs are not generally required on a Form 990, Identity Finder found that 132,362 organizations published 472,866 SSNs, of which 171,005 were unique.

Between 2001 and 2006, more than 18 percent of all nonprofit organizations or their tax preparers published at least one SSN on their public tax return, the study found. In all, 287,238 Form 990 returns contained at least one SSN.

All Form 990s are “open to public inspection,” and are regularly published by the Internal Revenue Service and multiple third parties, the company noted. High school and college scholarship recipients, tax preparers, directors, employees, trustees, and donors were the primary groups whose SSNs were exposed. At least 35 percent of the SSNs belonged to tax preparers who identified themselves by their SSN instead of a Preparer Tax Identification Number, or PTIN.

“Organizations and tax preparers must understand the risks of including Social Security numbers on public documents, such as the IRS 990 form,” said Identity Finder CEO Todd Feinman in a statement. “Unlike a credit card number, Social Security numbers cannot easily be revoked. Given the seriousness and ubiquity of identity fraud, tax preparers should avoid including SSNs on Form 990s.”

His company is advising nonprofit organizations that have published SSNs to warn those affected that they may be at increased risk of identity fraud. Organizations should avoid placing personal information, especially SSNs, on public documents such as Form 990s and court documents. College foundations should determine whether exposure of their students’ personally identifiable information on tax returns violates provisions of the Family Educational Rights and Privacy Act of 1974. Donors should not share their SSN with charities, the company warned.

Scholarship applicants should review the most recent Form 990 of any foundation prior to applying to verify that they do not publish SSNs, the report recommended. In addition, individuals should always require any organization to justify a request for his or her SSN.

Tax preparers should provide their PTIN rather than their SSN on tax documents, the report advised. They also should ensure that no personally identifiable information is unnecessarily disclosed on IRS forms they approve.

The report recommended that the IRS should publish explicit guidance explaining that SSNs are not to be published on Form 990s. The IRS and other stewards of past 990 filings should only provide redacted copies of the forms, according to the study. 

Platinum Tax School and Notary School is an approved provider to offer notary and tax classes such as the IRS Registered Tax Return Preparer Test Prep Course, IRS CE courses, CTEC Qualifying Tax Courses, CTEC CE, Oregon Licensed Tax Preparer  Tax Course, Oregon CE courses as well as Notary classes. For more information visit our website PlatinumProStudies.com.

 

Tax School: Seven Facts about the Expanded Adoption Credit

You may be able to take a tax credit of up to $13,360 for qualified expenses paid to adopt an eligible child. The Affordable Care Act increased the amount of the credit and made it refundable, which means it can increase the amount of your refund.

Here are seven things the IRS wants you to know about the expanded adoption credit.

1. Beginning in tax year 2011 the credit is refundable, meaning that you can get it even if you owe no tax.
2. For tax year 2011 you must file a paper tax return and Form 8839, Qualified Adoption Expenses, to get the credit and you must attach documents supporting the adoption.
3. Documents may include a final adoption decree, placement agreement from an authorized agency, court documents and the state’s determination for special needs children.
4. Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child. These expenses may include adoption fees, court costs, attorney fees and travel expenses..
5. An eligible child must be under 18 years old, or physically or mentally incapable of caring for himself or herself.
6. Families with a federal modified adjusted gross income above $225,210 cannot claim the credit; families with incomes above $185,210 can claim part credit. Anyone with incomes below the lower amount should be able to claim the full credit. (Adoptions from previous years had different income limits.)
7. Taxpayers claiming the credit will still be able to use IRS Free File to prepare their returns, but the returns must be printed and mailed to the IRS, along with all required documentation.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Eight Facts About Filing Status

The first step to filing your federal income tax return is to determine which filing status to use. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child.

Here are eight facts about the five filing status options the IRS wants you to know so that you can choose the best option for your situation.

Your marital status on the last day of the year determines your marital status for the entire year.
If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
If your spouse died during the year and you did not remarry during 2010, usually you may still file a joint return with that spouse for the year of death.
A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2009 or 2010, you have a dependent child and you meet certain other conditions.
There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Publication 501 is available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant on the IRS website to determine your filing status. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Six Important Facts about Dependents and Exemptions

Some tax rules affect every person who may have to file a federal income tax return – these rules include dependents and exemptions. Here are six important facts the IRS wants you to know about dependents and exemptions that will help you file your 2011 tax return.

Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.
Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the social security number of any dependent for whom you claim an exemption.
If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received.
If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.
Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501, Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.
For more information on exemptions, dependents and whether you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available at http://www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant at http://www.irs.gov to determine who you can claim as a dependent and how much you can deduct for each exemption you claim. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Tax School 101: Ten Important Facts About Capital Gains and Losses

Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When a capital asset is sold, the difference between the amount you paid for the asset and the amount you sold it for is a capital gain or capital loss.

Here are ten facts from the IRS about gains and losses and how they can affect your Federal income tax return.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.
2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.
3. You must report all capital gains.
4. You may deduct capital losses only on investment property, not on property held for personal use.
5. Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
6. If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.
7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2011, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.
8. If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.
9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.
10. In most cases, you must report capital gains and losses on new form 8949. Then you report certain totals from that form on Schedule D (Form 1040).

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer the CTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

The IRS has IRS2Go for your Smartphone

The Internal Revenue Service has IRS2Go, its first smartphone application that lets taxpayers check on their status of their tax refund and obtain helpful tax information.

Tax Help for Small Businesses and Self-Employed

The IRS Small Business and Self-Employed Tax Center at https://xxxwww.irs.gov/smallbiz offers extensive resources and online tools designed to help small businesses and self-employed persons.

• Small business forms and publications
• Employer Identification Number online application
• Employment tax information – federal income tax, Social Security and Medicare taxes, FUTA and self-employment tax
• Tax-related news that could affect your business
• Small business educational events
• IRS videos for small businesses
• A-Z Index for Business – find information fast using the A-Z listing
The site provides important tax information available for all stages of owning a business.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer theCTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

 

Tax School 101: Ten Tax Benefits for Parents

Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year:

Dependents In most cases, a child can be claimed as a dependent in the year they were born.

Child Tax Credit - You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit.

Child and Dependent Care Credit - You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work.

Earned Income Tax Credit - The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund.

Adoption Credit - You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included.

Children with Earned Income - If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.

Children with Investment Income - Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate.

Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.

Student loan Interest - You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.

Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of 2011, even if the child was not your dependent.

WANT TO LEARN MORE?

Platinum Professional Services offers an IRS Registered Tax Return Preparer Course to provide you with the tax knowledge needed to pass the IRS Registered Tax Preparer Competency Test and become an IRS Registered Tax Return Preparer RTRP.   Platinum is also proud to offer IRS Continuing Professional Education CPE courses to fulfill the annual 15 hour requirement for IRS Registered Tax Return Preparers.  In California or Oregon?  Platinum is an approved provider to offer theCTEC Registered Tax Preparer Qualifying Course as well as the Oregon Licensed Tax Preparer Course.

 

Platinum Tax School announces Oregon Basic Tax Course - 80 hours

Have you thought of becoming an Oregon Licensed Tax Preparer?  Platinum now offers you a way to meet your initial education requirement as established by the Oregon State Board of Tax Practitioners, with the successful completion of our course (minimum passing score of 75% or better is required).

This tax course provides 80 hours of education credit and will prepare you for the tax preparer examination administered by the Oregon Board of Tax Practitioners (OBTP).
This course covers form 1040 and related schedules and forms. Topics include income, gains and losses, standard and itemized deductions, tax credits, Oregon state taxes and mini tax problems.   

For more information visit our website PlatinumProStudies.com