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Scam Phone Calls Continue; IRS Identifies Five Easy Ways to Spot Suspicious Calls
What You Should Know if You Changed Your Name
Ten Facts That You Should Know about Capital Gains and Losses
REMINDER OF DIRECT A DEPOSIT LIMITS
How to Claim the Premium Tax Credit and Health Coverage Exemptions
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Scam Phone Calls Continue; IRS Identifies Five Easy Ways to Spot Suspicious Calls

The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam. The IRS will never:

1.Call to demand immediate payment, nor will we call about taxes owed without first having mailed you a bill.

2.Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

3.Require you to use a specific payment method for your taxes, such as a prepaid debit card.

4.Ask for credit or debit card numbers over the phone.

5.Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

What You Should Know if You Changed Your Name

Did you change your name last year? If you did, it can affect your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:

Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.

Dependent Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.

If you adopted a child who does not have a SSN, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. 

Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on ssa dot gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.

Report Changes in Circumstances in 2015. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, be sure to report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace throughout the year. Reporting changes will help make sure that you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance.

Ten Facts That You Should Know about Capital Gains and Losses

When you sell a capital asset the sale results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are 10 facts that you should know about capital gains and losses:

1. Capital Assets. Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds.

2. Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.

3. Net Investment Income Tax. You must include all capital gains in your income and you may be subject to the Net Investment Income Tax. This tax applies to certain net investment income of individuals, estates and trusts that have income above statutory threshold amounts. The rate of this tax is 3.8 percent.

4. Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.

5. Long and Short Term. Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term. If you held it one year or less, the gain or loss is short-term.

6. Net Capital Gain. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain.

7. Tax Rate. The capital gains tax rate usually depends on your income. The maximum net capital gain tax rate is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gains.

8. Limit on Losses. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return.

9. Carryover Losses. If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened in that next year.

10. Forms to File. You often will need to file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses with your tax return.

REMINDER OF DIRECT A DEPOSIT LIMITS

In an effort to combat fraud and identity theft, new IRS procedures effective January 2015 will limit the number of refunds electronically deposited into a single financial account or pre-paid debit card to three. The fourth and subsequent refunds automatically will convert to a paper refund check and be mailed to the taxpayer. Taxpayers also will receive a notice informing them that the account has exceeded the direct deposit limits and that they will receive a paper refund check in approximately four weeks if there are no other issues with the return.

The direct deposit limit will prevent criminals from easily obtaining multiple refunds. The limit applies to financial accounts, such as bank savings or checking accounts, and to prepaid, reloadable cards or debit cards.

The new limitation also will protect taxpayers from preparers who obtain payment for their tax preparation services by depositing part or all of their clients' refunds into the preparers' own bank accounts. The new direct deposit limits will help eliminate this type of abuse.

Direct deposit must only be made to accounts bearing the taxpayer's name. Preparer fees cannot be recovered by using Form 8888 to split the refund or by preparers opening a joint bank account with taxpayers. These actions by preparers are subject to penalty under the Internal Revenue Code and to discipline under Treasury Circular 230 (also, see Circular 230 Tax Professionals page).

However, the limitation may affect some taxpayers, such as families in which the parent's and children's refunds are deposited into a family-held bank account. Taxpayers in this situation should make other deposit arrangements or expect to receive paper refund checks.

How to Claim the Premium Tax Credit and Health Coverage Exemptions

According to a statement released February 4, by the IRS, “Form 1095-A will tell you the dates of coverage, total amount of the monthly premiums for your insurance plan, information you may use to determine the amount of your premium tax credit, and any amounts of advance payments of the premium tax credit.”

You may receive more than one Form 1095-A if different members of your household had different health plans or if you changed or updated your coverage during the year.

Using the information provided on the Form 1095-A, you can reconcile advance payments and claim a tax credit for premiums paid on IRS Form 8962 Premium Tax Credit (PTC), which will be filed with your income tax return.

If you haven’t yet received Form 1095-A and you had purchased health care coverage last year from the Marketplace, contact them immediately to get the form. Or if you think any information is incorrect on the form you did receive, contact the Marketplace for a corrected Form 1095-A.

If for any reason you did not have health care coverage last year, you will be required to pay a penalty based on your income level and beginning at $95. However, you may enjoy an exemption based on your particular circumstances. To claim the exemption, you will be required to file IRS Form 8965 Health Coverage Exemptions.

Exemptions can be enjoyed for a variety of reasons from having income below the poverty level to being covered by Medicaid to other hardship issues. In fact, there are a total of 18 qualifying exemptions. Check out page 2 of the Instructions for Form 8965 to see a listing of the qualifying exemptions.

If your exemption is based on poverty or for another reason granted by the Marketplace, you will be required to list the Certificate number of the exemption issued to you by the Marketplace on Form 8965. This number will have been issued to you at the time you applied for coverage. If you don’t have the certificate number, contact the Marketplace to acquire it.

Think you qualify for a hardship exemption for not having health insurance?

You can file your tax return before the exemption has been OK’d

IRS says in the Form 8965 instructions the new form for reporting health coverage exemptions. Under the health reform law’s individual mandate, people without health insurance will owe a tax when they file their income tax returns unless they have an exemption.Folks seeking one of the hardship exemptions must submit a multipage application plus any required documentation to the exchange before filing their tax returns. Once they’ve done so, they can enter “pending” in column c of Part 1 of the 8965 and file their 2014 returns while waiting for the exchange to process their application.

Tax Tips for Separated Couples

Ending a marriage puts both partners on a federal tax path requiring forethought and planning to navigate. In addition to decisions about assets and child custody, separated couples have choices that affect how much they pay Uncle Sam. Some of these choices can be made independently; others require you to communicate with each other.

Legal fees

The Internal Revenue Service offers no deductions for court costs and legal fees for a divorce. It does, however, let you deduct any portions of those fees related to tax advice and alimony. These can include expert counsel on how your separation or pending divorce affects all types of taxes, such as income, property and estate, at all levels of taxation. To take advantage of these potential deductions, you need itemized billing statements from your attorney that clearly identify charges for each service billed.


Filing status

December 31 is an important day for separated couples. The IRS considers you married for the entire tax year when you have no separation maintenance decree by the final day of the year. If you are married by IRS standards, you can only choose "married filing jointly" or "married filing separately" status. You cannot file as "single" or "head of household."

Since the IRS honors the divorce laws of the states, where you live affects your options as well. In Texas, for example, you remain married from a tax perspective until your divorce is final, even though you're legally separated.

Joint return considerations

Your filing status affects your tax rate and determines which credits you can claim. Filing jointly can result in a lower tax bill than filing separately, so the IRS recommends calculating your tax liability as single and joint filers to learn which offers the most savings (TurboTax can help with this, and recommend the best filing status for you).

Filing jointly could pose risks, however, since you share responsibility for any taxes due along with related penalties and interest. That means if your estranged spouse skips out on his or her taxes, you’re responsible for paying them.The IRS may relieve you from your partner's tax debts based on information you provide on Form 8857 Request for Innocent Spouse Relief.

Married filing separately

The IRS acknowledges that filing separately leads to paying more taxes but doing so avoids sharing liability for each other's tax obligation. As married filing separately, you have to agree on taking the standard deduction or itemizing -- if one itemizes, you both must itemize. You must limit itemized deductions such as mortgage interest and property taxes to what you paid as individuals, although you can split any medical expenses paid from a joint account. By filing separately, you lose the ability to claim earned income and higher education tax credits among other breaks the IRS offers.


Legally separated filing options

If tax law considers you "unmarried" because you got a decree of separation maintenance prior to December 31, you can file with "single" or "head of household" status.

"Head of household" requires you to have a dependent and pay at least half of the expenses needed to maintain a home. If your dependent is a child who lives with you more than with your spouse, the IRS considers you to be the custodial parent. Your deductions and credits as custodial parent depend on whether your spouse has agreed to waive his ability to claim the child as an exemption under Box 6a on the 1040 form -- only one of you can claim the child as an exemption. When you can claim the dependency exemption, you can claim child-related credits.


Exemption considerations

If you, as custodial parent, agree to let your spouse claim your child as a dependent exemption, you must sign form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Your noncustodial spouse must attach it to his tax return. Relinquishing this exemption does not affect your ability to file as head of household or take advantage of tax breaks such as the work-related child care expense deduction, as long as you remain the custodial parent.

Exemption from health insurance coverage

If you qualify from a exemption from health insurance coverage you will need to apply for a ECN (Exemption Certificate Number) if you have not applied for a ECN yet please do so as soon as possible.

https://www.healthcare.gov/fees-exemptions/hardship-exemptions/

Six Tips on Who Should File a 2014 Tax Return

Most people file their tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. This year, there are a few new rules for some who must file. Here are six tax tips to help you find out if you should file a tax return:

1. General Filing Rules. Whether you need to fil...e a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and 28 years old you must file if your income was at least $10,150. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to IRS.gov/filing to find out if you need to file.

2. New for 2014: Premium Tax Credit. If you bought health insurance through the Health Insurance Marketplace in 2014, you may be eligible for the new Premium Tax Credit. You will need to file a return to claim the credit. If you purchased coverage from the Marketplace in 2014 and chose to have advance payments of the premium tax credit sent directly to your insurer during the year you must file a federal tax return. You will reconcile any advance payments with the allowable Premium Tax Credit. Your Marketplace will provide Form 1095-A, Health Insurance Marketplace Statement, to you by Jan. 31, 2015, containing information that will help you file your tax return.

3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.

4. Earned Income Tax Credit. Did you work and earn less than $52,427 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,143. Use the 2014 EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return to claim it.

5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.

6. American Opportunity Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. However, you must complete Form 8863, Education Credits, and file a return to claim the credit. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim the credit. Learn more by visiting the IRS’ Education Credits Web page.

Premium Tax Credit Brings Changes to Your 2014 Income Tax Returns

When filing your 2014 federal income tax return, you will see some changes related to the Affordable Care Act. Millions of people who purchased their coverage through a health insurance Marketplace are eligible for premium assistance through the new premium tax credit, which individuals chose to either have paid upfront to their insurers to lower their monthly premiums, or receive when they file their taxes. When you bought your insurance, if you chose to have advance payments of the premium tax credit, the Marketplace estimated the amount based on information you provided about your expected household income and family size for the year.

If you received the benefit of advance credit payments, you must file a federal tax return and reconcile the advance credit payments with the actual premium tax credit you are eligible to claim on your return. You will use IRS Form 8962, Premium Tax Credit (PTC) to make this comparison and to claim the credit. If your advance credit payments are in excess of the amount of the premium tax credit you are eligible for, based on your actual income, you must repay some or all of the excess when you file your return, subject to certain caps.

If you purchased your coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace. You should receive this form by early February.

Form 1095-A will provide the information you need to file your taxes, including the name of your insurance company, dates of coverage, amount of monthly insurance premiums for the plan you and other members of your family enrolled in, amount of any advance payments of the premium tax credit for the year, and other information needed need to compute the premium tax credit.