IRS Urges Taxpayers to Avoid Becoming Victims of Tax Scams

WASHINGTON — The Internal Revenue Service today encouraged taxpayers to guard against being misled by unscrupulous individuals trying to persuade them to file false claims for tax credits or rebates.

The IRS has noted an increase in tax-return-related scams, frequently involving unsuspecting taxpayers who normally do not have a filing requirement in the first place. These taxpayers are led to believe they should file a return with the IRS for tax credits, refunds or rebates for which they are not really entitled. Many of these recent scams have been targeted in the South and Midwest.

Most paid tax return preparers provide honest and professional service, but there are some who engage in fraud and other illegal activities. Unscrupulous promoters deceive people into paying for advice on how to file false claims. Some promoters may charge unreasonable amounts for preparing legitimate returns that could have been prepared for free by the IRS or IRS sponsored Volunteer Income Tax Assistance partners. In other situations, identity theft is involved.

Taxpayers should be wary of any of the following:

• Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.

• Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.

• Unfamiliar for-profit tax services teaming up with local churches.

• Home-made flyers and brochures implying credits or refunds are available without proof of eligibility.

• Offers of free money with no documentation required.

• Promises of refunds for “Low Income – No Documents Tax Returns.”

• Claims for the expired Economic Recovery Credit Program or Recovery Rebate Credit.

• Advice on claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income.

In some cases non-existent Social Security refunds or rebates have been the bait used by the con artists. In other situations, taxpayers deserve the tax credits they are promised but the preparer uses fictitious or inflated information on the return which results in a fraudulent return.

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file with little or no documentation, have been appearing in community churches around the country. Promoters are targeting church congregations, exploiting their good intentions and credibility. These schemes also often spread by word of mouth among unsuspecting and well-intentioned people telling their friends and relatives.

Promoters of these scams often prey upon low income individuals and the elderly.

They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected or the refund barely exceeds what they paid the promoter. Meanwhile, their money and the promoters are long gone.

Unsuspecting individuals are most likely to get caught up in scams and the IRS is warning all taxpayers, and those that help others prepare returns, to remain vigilant. If it sounds too good to be true, it probably is.

Anyone with questions about a tax credit or program should visit www.IRS.gov, call the IRS toll-free number at 800-829-1040 or visit a local IRS Taxpayer Assistance Center.

Do I have to File a Tax Return?

Below is some valuable information form the IRS about whether you need to file a tax return this year.

Do I have to File a Tax Return?

You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive.

Check the Individuals section of the IRS website at http://www.irs.gov or consult the instructions for Form 1040, 1040A, or 1040EZ for specific details that may help you determine if you need to file a tax return with the IRS this year. You can also use the Interactive Tax Assistant available on the IRS website to determine if you need to file a tax return. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

There are some instances when you may want to file a tax return even though you are not required to do so. Even if you don’t have to file, here are seven reasons why you may want to:

1. Federal Income Tax Withheld You should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.

2. Making Work Pay Credit You may be able to take this credit if you had earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.

3. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money.EITC is a refundable tax credit; which means you could qualify for a tax refund.

4. Additional Child Tax Credit This refundable credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.

5. American Opportunity Credit The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.

6. First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. To qualify for the credit, taxpayers must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010. If you bought a home as your principle residence in 2010, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.

7. Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2010 tax return.

For more information about filing requirements and your eligibility to receive tax credits, visit http://www.irs.gov.

Reg Baker, CPA PFS
http://www.regbaker.com/
Ph: (702) 283-0784

IRS Announces Tax Filing Delay

Per the IRS, if you file a Schedule A or take an education deduction, wait until mid Feb to file your returns!  IRS needs time to reprogram their systems due to late tax law changes.

Need help with your taxes?  Please let me know how I can help.

Reg Baker, CPA

http://www.regbaker.com/

IRS Change-of-address Procedures

IRS Updates Change-of-address Notification Procedures

 If you have or are planning to move - whether it's a change of personal residence or a change of business address - you want the IRS to know about your change of address. The IRS has recently updated its procedures for taxpayers to follow when notifying the IRS of a change of address. The IRS uses a taxpayer's "address of record" for mailing certain notices and documents that the agency is required to send to a taxpayer's last known address.

The IRS's process for updating changes of address is important for both individual and business taxpayers because a notice or document sent to your (or your business') "last known address" is legally effective and binding, even if you never receive it because you have moved. This presumption of delivery includes such important correspondence as notices of deficiency, liens and levies.

Have you moved since April 15?

If you have already filed your federal income tax return (or any other respective business tax return, such as Form 1065, U.S. Return of Partnership Income), and have since moved from the address that you provided on your return, you need to inform the IRS. This is because the IRS automatically uses the address on your return as its "address of record." Thus, when a taxpayer files a tax return, such as a Form 1040, U.S. Individual Income Tax Return, the address on your return is automatically updated by the IRS after the return has been properly processed (tax returns are considered properly processed after a 45-day period that begins on the day after the return is received by the IRS.)

Therefore, if you move to a new address after filing your return, you need to ensure the IRS has your new address. This can generally be done in one of several ways. First, when a taxpayer provides the U.S. Postal Service (USPS) with a new address, the IRS automatically updates the taxpayer's address of record with the address maintained in the USPS's National Change of Address database. So, when you change your address with the USPS to have your mail forwarded to your new address, the IRS may also update you address of record based on the new address you provide the USPS. However, take caution. You should nonetheless notify the IRS directly of your change of address to ensure the IRS has your correct address. This can be done by filing Form 8822, Change of Address, with the IRS.

However, you can also provide the IRS with your change of address by giving the agency "clear and concise notification" of the change. This can be done electronically, written, or orally, and is discussed below. We recommend such follow-up notification just in case the IRS fails to follow one of its updating procedures.

Types of returns automatically updated when filed:

The IRS's updated procedure (Revenue Procedure 2010-16) not only lists the types of returns on which address provided thereon are automatically updated into its "address of record" database, it also makes clear that certain forms are not considered returns and therefore not automatically updated if a new address is listed. Specifically, a new address listed on (1) Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, or (2) Power of Attorney and Declaration of Representative, are not used by the IRS to automatically update a taxpayer's address. The IRS does not consider these to be returns. Therefore, if you file these forms providing a new address, you will need to use another method for informing the IRS of the address change, such as filing Form 8822.

The types of returns from which addresses are automatically updated by the IRS include, but are not limited to:

-- Individual income tax returns (e.g., Forms 1040, 1040A, Form 1040X, 1040-SS, 1040EZ, 1040NR, 1040NR-EZ); -- Gift, estate, and generation-skipping transfer tax returns (e.g. Forms 706 series, 709 series); and -- Returns filed under an employer identification number (e.g., Forms 720, 730, 940, 941 series, 943, 945, 940, 990 series, 1041, 1042, 1065 series, and 1120 series.

Comment. Because the IRS maintains address records for gift, estate, and generation-skipping transfer (GST) tax returns that are separate from records maintained for individual income tax returns, an individual's notification of a change of address should identify whether any gift, estate, or GST transfer tax returns are affected.

Documents and notices

The IRS uses the last known address for mailing a number of important documents and notices, as well as any refund you may be owed. Therefore, it is imperative for taxpayers to ensure that the IRS has your proper change of address information. Such notices and documents include, among others, deficiency notices, notices of intent to levy, notices and demand for tax, employment status determinations, notices of third party summonses, notices regarding interest abatements, and notices of final determinations regarding spousal support.

Clear and concise notification

Taxpayers that want to change their address of record can do so by providing the IRS with a "clear and concise notification" that is in accord with the agency's procedures. As previously mentioned, clear and concise notification may be made in writing, electronically, or orally. You must in any case, must provide the your full name, new address, old address, and Social Security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN) when providing the "clear and concise notification" procedures.

Written. The filing of Form 8822, Change of Address, is one way to meet the "clear and concise notification" requirement, for example. You can also provide the IRS with a written statement signed by you, informing the IRS you wish to change your address of record. You must include information such as your full name, new and old address, SSN, ITIN, or EIN as well. If you file a return with your spouse, you should both provide this information as well.

Electronic. You can also satisfy the "clear and concise" requirement by electronically notifying the IRS. You must use a secure application located on the IRS's website, www.irs.gov. A "secure application" is one that requires the taxpayer to verify the taxpayer's identity before accessing the application. However, other forms of electronic notice, such as emailing an IRS email address, do not constitute clear and concise notification.

Verbal. You can also provide the IRS with a change of address orally, by providing a statement - whether in person or directly via telephone -- to an IRS employee. Again, it is a good idea to follow up your telephone call with another call to verify that your address has in fact been inputted properly.

If you have any questions about change of address procedures, please call my office.

Reg Baker, CPA PFS
Cell: (702) 283-0784
Email: Reg@regbaker.com
Website: http://www.regbaker.com/

http://regbakercpa.blogspot.com/

www.linkedin.com/in/regbaker

Year End Tax Tips

Please check out my website for yearend tips on reducing your tax payments (posting on November 1). Only two months left! www.regbaker.com/newsletter.html


Although still a challenge due to possible year tax changes by the current administration, there are some steps you can take to reduce the bite of the tax man.

If no tax changes occur before year end then consider taking as much income this year (2010) and push deductions to next year (2011). If the Obama gang extends the current tax cuts then do the opposite.

If in doubt, then give me a call or email.

Reg Baker, CPA
Ph: (702) 283-0874
Email: Reg@regbaker.com

Non-Profit Tax Status Might Be Lost!

Non-profits must file their tax return by October 15 or run the risk of losing their non-profit status!

Please see the IRS notice below for more specifics. Contact me should you need help.

Ten Things Tax-Exempt Organizations Need to Know About the Oct. 15 Due Date

A crucial filing deadline of Oct. 15 is looming for many tax-exempt organizations that are required by law to file their Form 990 with the Internal Revenue Service or risk having their federal tax-exempt status revoked. Nonprofit organizations that are at risk can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.

The Pension Protection Act of 2006 mandates that most tax-exempt organizations must file an annual return or submit an electronic notice, with the IRS and it also requires that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.

Here are 10 facts to help nonprofit organizations maintain their tax-exempt status.

1. Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010.

2. Among the organizations that could lose their tax-exempt status are local sports associations and community support groups, volunteer fire and ambulance associations and their auxiliaries, social clubs, educational societies, veterans groups, church-affiliated groups, groups designed to assist those with special needs and a variety of others.

3. A list of the organizations that were at-risk as of the end of July is posted at IRS.gov along with instructions on how to comply with the new law.

4. Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice and a voluntary compliance program for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

5. Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N also known as the e-Postcard. To file the e-Postcard go to the IRS website and supply the eight information items called for on the form.

6. Under the voluntary compliance program, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee.

7. The relief is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.

8. Organizations that have not filed the required information return by the extended Oct. 15 due date will have their tax-exempt status revoked.

9. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status and any income received between the revocation date and renewed exemption may be taxable.

10. Donors who contribute to at-risk organizations are protected until the final revocation list is published by the IRS.


Reg Baker, CPA
http://www.regbaker.com/

IRS Mandatory Preparer Registration Begins!

IRS just launched their mandatory tax preparer registration system.  Make sure your preparer has registered and is legal!

All preparers are required to register and have a PTIN (Preparer Tax ID Number).  If your preparer does not have a PTIN then they are not registered or allowed to prepare and file tax forms with the IRS.  This will definitely cause problems for the preparer and could complicate things for the tax payer.

Word of caution - just because your preparer has registered does not mean they are qualified.  Ask them about their certifications, training, continuing education and length of experience.  In this economy many unemployed and underemployed are claiming to be experienced tax preparers and offering their services to the public to make an extra buck.  Do not be fooled but these newbies; they can really cause you problems with the IRS and then you will have to pay higher fees later to a real professional to fix their mistakes.   

If in doubt ask for a second opinion.  It can save you a lot of stress later.

Reg Baker, CPA

www.regbaker.com

Self Employed Medical Insurnace Deduction

For the first time ever the self the employed can deduct their medical insurance premiums on Schedule C shaving 15.3% off their tax bill. Don’t miss this!

Normally these insurance deductions are taken in other sections of the tax return helping reduce income taxes but not the 15.3% self employment tax. For the first time (for 2010 only, at least for now) this deduction can be taken on Schedule C and reduce self employment taxes (15.3%) and cut your income tax bill.

Although it is hard to understand why the Washington has finally decided to treat the self employeds the same as any other business this is an opportunity you don’t want to miss.

Let me know if I can be of any help!

Reg Baker, CPA
http://www.regbaker.com/

IRS Open House for Veterans

September 25th – IRS Open House for Veterans. 

See http://www.irs.gov/localcontacts/article/0,,id=220631,00.html for locations. 

See the IRS announcement below -

The Internal Revenue Service will host a special nationwide open house in 100 offices across the country on Saturday, Sept. 25 to help taxpayers –– especially veterans and people with disabilities –– solve tax problems and respond to IRS notices. IRS staff will be available on site or by telephone to help taxpayers work through issues and leave with solutions.


Here are five things you need to know about the special open house.

1. One hundred offices, at least one in every state, will be open from 9 a.m. to 2 p.m. local time.
2. In many locations, the IRS will partner with organizations that serve veterans and the disabled to offer additional help and information to people in these communities.  
3. IRS locations will be equipped to handle issues involving notices and payments, return preparation, audits and a variety of other issues.
4. Taxpayers requiring special services, such as interpretation for the deaf or hard of hearing, should check local listings and call the local IRS Office/Taxpayer Assistance Center ahead of time to schedule an appointment.
5. A complete list of IRS offices open on Saturday, Sept. 25 is available at IRS.gov.

Good Luck!

Reg Baker, CPA
http://www.regbaker.com/

1099 Contractors Being Challenged Again

IRS looking at 1099 contractors again. Are you prepared? Penalties are huge if reclassed to employee!

Tax Preparer Registration is Finally Here!

Is Your Tax Preparer Registered?

IRS is now registering all tax preparers. I registered years ago. Is your tax preparer registered? If not, why not?

The IRS is implementing new registration requirements for all tax preparers. Each preparer will be issued a Preparer Tax Identification Number (PTIN). The cost is expected to be about $50 a year with a possible small processing fee. The $50 is not very much money to ensure that all tax preparers are legitimate.

There will also be a tax exam requirement to ensure a basic understanding to the tax code, rules and regulations. This will be phased in over the next year or two. The tax exam should be a relatively easy one to pass for those preparers that are trained on the basics and know what they are doing.

If your current tax preparer is not registered you need to find out why. The cost of $50 should not be the issue. Loss of privacy should not be the issue; like I mentioned above, I have been registered for years and have never had an issue with the IRS invading my privacy. So if they are not registered there must be another reason other than cost or privacy concerns.

Has your preparer passed a tax competency test? If not ask why? Don’t be fooled with the worthless “in-house” tests given by some tax preparation firms to their employees. There is a clear conflict of interest with companies testing their own employees on tax rules so they can go out and generate tax revenue for them. The tax test needs to be given by an independent third party for it to be considered legitimate.

The world of tax preparation is finally changing in a positive direction! No more shady under the table deals, scams and rip offs. By requiring a basic understanding of the tax rules and registration, the level of knowledge and professionalism will certainly improve.

Reg Baker, CPA PFS
http://www.regbaker.com/
reg@regbaker.com

Tax Scam Alert

IRS issued another tax scam alert.

Watch for bogus IRS letters & emails claiming you have a refund or credit due you!

This happens a lot more often when the economy is suffering. The scammers are out there trying to take advantage of those hurting the most. Don’t be fooled!

If you receive a letter form the IRS check with your local IRS office or CPA to determine if it is authentic. Be especially suspicious if the letter or email is asking for you to respond with social security number or other personal information and there is a short time frame. The IRS normally does not work this way.

Contact me if you need a second opinion!

Reg Baker CPA PFS
Reg@regbaker.com
http://www.regabker.com/

Deduct Job Hunting Expenses

Six Tax Benefits for Job Seekers

(IRS Tax Tips) 

Did you know that you may be able to deduct some of your job search expenses on your tax return?

Many taxpayers spend time during the summer months updating their résumé and attending career fairs. If you are searching for a job this summer, you may be able to deduct some of your expenses on your tax return. Here are six things the IRS wants you to know about deducting costs related to your job search.  

1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses incurred while looking for a job in a new occupation.
2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year.
3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.  
6. You cannot deduct job search expenses if you are looking for a job for the first time.

For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

 

Contact me if you need advice on how to take advantage of these deductions.

Reg Baker, CPA PFS
(702) 283-0784
reg@regbaker.com
http://www.regbaker.com/

Summertime Child Care

Summertime Child Care Expenses May Qualify for a Tax Credit

 

Did you know that your summer day care expenses may qualify for an income tax credit? Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s tax return.

 

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS Web site, IRS.gov or  Reg Baker CPA Internet Links (click on IRS Web Site)

 

Links:  

IRS Publication 503, Child and Dependent Care Expenses

http://www.regbaker.com/

 

Please contact me to discuss if you want a second opinion on any tax or personal financial planning topic.  I am always here to help!

Reg Baker CPA PFS

Child Care Expenses - What's Deductible?

Child care expenses for work: summer camp to after-school programs to babysitting: what's deductible and what's not

With school out for the summer, working parents will not only need to arrange care for their children while at work, but how to do so in a cost effective way. For parents facing a summer season that requires juggling childcare and work (or finding work), the IRS provides a few tax breaks that can help make this balancing act a little less painful to the pocket. From the cost of day camp to summer school, how do you determine what kind of childcare is deductible and what is not? Let's take a look.

Child and dependent care credit:

The child and dependent care credit is a popular credit that, in part, enables you and your spouse (if married) to reduce your taxes by the cost of certain qualifying expenses you incur to have someone care for your child or children who are under age 13 so that you can work or look for work. While the credit applies to a wide range of childcare services, there are a variety of popular childcare services that do not qualify. Not only are there limits on the types of care and services that qualify, but the credit is also subject to income and percentage limitations as well.

Eligibility and amounts:

For 2009, you can claim up to $3,000 of expenses paid in the year for one qualifying individual, or $6,000 for two or more qualifying individuals, under the dependent and child care credit. However, as discussed below, the credit can only be taken for up to 35 percent of qualifying expenses. This means that you essentially will not be able to claim the full $3,000/$6,000 amount. Additionally, to be eligible for the credit, you and your spouse must meet certain conditions, including:

• You and your spouse (if married) must have earned income from wages, salaries, tips, other taxable compensation, or net earnings from self-employment for the year;

• The expenses must be made for children age 13 or younger;

• The expenses must have been incurred to enable you and your spouse to work or look for work (unless you or your spouse is a full-time student or incapacitated);

• The care payments must be made to someone you and your spouse cannot claim as a dependent; and:

• Your child must have lived with you for more than half of the year.

Percentage and more restrictions:

Another restriction limits the actual credit amount you can take to a percentage of your expenses. Depending on your income, the credit can reach up to 35 percent of your expenses. Thus, the potential maximum credit you can claim for 2009 is only $1,050 (35 percent of $3,000) for the care of one qualifying child, and $2,100 for the care of two children under the age of 13. The credit falls to 20 percent as your income level rises (at $43,000 adjusted gross income, the credit falls to 20 percent of expenses). Additionally, the child and dependent care credit is nonrefundable, meaning that any excess credit can not be carried over and used in later years to reduce your tax bill.

Comment. The $3,000 and $6,000 credit amounts must be further reduced by any child and dependent care benefits that your employer provides and that you exclude from your income.

Camp to day care, what expenses qualify?

To qualify for the credit, expenses must be incurred for the "care" of your child. With the dollar and percentage limitations, the child and dependent care credit will likely not pay for all of the expenses you incur to have someone care for your child (or children) when you're at work, or looking for work this summer. The IRS considers expenses are "for care" if their main purpose is the individual's well-being and protection.

Expenses that do not qualify for the child and dependent care credit:

• Kindergarten (the IRS considers both full-time and part-time kindergarten a non-qualifying educational expense);

• Overnight camp;

• Summer school;

• Tutoring programs; and

• Private school.

Expenses that qualify for the child and dependent care credit:

• Day camps or similar programs (even if the camp specializes in a particular activity, such as reading, writing, tennis, or computer skills);

• Nursery school, pre-school, or similar programs for children below the kindergarten level;

• Expenses for before- or after-school care of a child in kindergarten or higher may be expenses for care;

• Fees you paid to an agency to obtain services of a care provider; and

• Indirect expenses, such as application fees, agency or pre-school deposits, that you paid for purposes of obtaining child care.

Flexible Spending Accounts:

Instead of taking the child care credit, consider taking advantage of a flexible spending account that covers dependent care expenses. Employers who allow medical flexible spending accounts usually have one for dependent care as well. Contributions are pre-tax and, unlike the child and dependent care credit, they are not limited by adjusted gross income. If you take the credit, however, you can't double dip and pay for the expenses through a flexible spending account.

Some employers go one step better for their employees than sponsoring a dependent care flexible spending account: they provide on-the-premises day care facilities. If set up properly, it can be a win-win for employers and employees.

If you have questions on the type of child care that qualifies for the child and dependent care credit, a flexible spending account or other tax benefit, please contact me.

Reg Baker, CPA PFS
http://www.regbaker.com/

Tanning Cost Increase Coming!

IRS Issues Regulations on 10-Percent Tax on Tanning Services Effective July 1

WASHINGTON — The Internal Revenue Service today issued regulations outlining the administration of a 10-percent excise tax on indoor tanning services that goes into effect on July 1.

The regulations were published today (June 11, 2010) in the Federal Register.

In general, providers of indoor tanning services will collect the tax at the time the purchaser pays for the tanning services. The provider then pays over these amounts to the government, quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return.

The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises. The regulations also provide an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.

Contact me with any questions!

Rge Baker, CPA

IRS Audits

Hi Gang!

I am getting reports from clients that the IRS is poking around looking for tax dollars. If you receive an IRS audit letter contact me ASAP!

As we all know, the Fed's are under some very heavy pressure to figure a way to reduce the deficit. Of course cutting programs and related expenditures is not an option for the the current administration so the only other option is to collect more taxes. This has been building for some time and the IRS letters are apparnetly going out to anyone that might be willing to just pay up.

Most of these IRS letters are mass mailings triggered by a computer program with preset conditions. For example, a few years back tax payers were receiving automated IRS letters if they received a form 1099. The letter stated that the IRS could not agree the form 1099 to their tax return. Well for taxpayers that receive multiple form 1099's the IRS will never be able to tie the individual 1099 amounts to the tax return. But this rattled many tax payer cages and many just paid up the requested extra tax payment without pushing back. That is expensive for the taxpayer and a good revenue source for the IRS.

If you receive an audit type letter from the IRS, please get it to me ASAP. We'll discuss the options and decide what the best course of action is. I can get involved and handle this situation for you and hopefully reduce or eliminate any additional tax, penalties and interest.

Reg Baker, CPA PFS
http://www.regbaker.com/

Little Known Real Estate Tax Credits

I just attended some well received commercial real estate tax credit meetings with Engineered Tax Services (ETS). Lots of interest in these little known tax credits!  Some of these tax credits are expiring soon due to carry back limitations.  IRS claims that less than 2% of credits available are being claimed.  Working with local CPA's, ETS processes over $25 million a month of these credits for Property Owners, Architects and Engineers. 

Call me if interested in more information.

ROTH Conversions - BEWARE

Beware of ROTH Conversions!

If you are getting pressured to covert your IRA to a ROTH; be careful.  Do the math and ensure it makes sense for you.  This conversion opportunity is not for everyone.  The taxes that will be due, even if spread out over two years, may not fit into your overall financial plan.

Please get a second opinion from your CPA or another financial advisor.  Or call me and we can kick the idea around and see if it makes sense for you.


Reg Baker, CPA PFS
Ph: (702) 360-2823
Cell: (702) 283-0784
Email: Reg@regbaker.com
http://www.regbaker.com/
www.linkedin.com/in/regbaker

IRS Reports Wide Spread IRA Abuse

IRS Reports Wide Spread Abuse of IRA Contributions & Distributions.

Problems are related to inappropriate contributions and not taking required minimum distributions.  IRS will be taking measures to clean this abuse up.

This could be the next big issue for many taxpayers.

Contact me before the IRS contacts you!

Reg Baker, CPA PFS
Ph: (702) 360-2823
Cell: (702) 283-0784
Email: Reg@regbaker.com
http://www.regbaker.com/
www.linkedin.com/in/regbaker