Dec 21

IRS, Get a IP PIN for Your Security (December-2021)

This month I want to bring your attention to a way for you to protect fraudulent filing of your tax return. The IRS has a procedure enabling you to acquire a Personal Identification Number (PIN).

The procedure is simple, and you use it while you file your return so that your identity can be confirmed. The IP PIN is a six-digit number known only to you and IRS. After you apply, the IRS will send you a new IP PIN each year.

From IRS.gov use the “Get an IP Pin” tool. If you don’t have an account on IRS.com you will need to register first. The IP PIN tool is generally available starting in mid-January through mid-November, so you may want to set a reminder on your calendar. You can also obtain an IP PIN for your spouse and dependents. In the event you lose it, you will be able to retrieve it by signing back and follow the instructions under “retrieve your IP now.”

Also, as we close out the year, you may need to evaluate Required Minimum Distributions from inheritance, contributions to your retirement arrangements, review your investments to evaluate capital gain tax laws, and review recent legislation. I wish everyone a happy and safe Holiday Season,  with success and love in the New Year. God Bless!

Nov 21

Mileage Log for Taxes (November-2021)

This month I’m going to address your mileage log.  Your mileage log is to support the miles driven for business reasons.  Sole proprietors, filing on Schedule C, and other business entities are still eligible for a business deduction for the use of their automobile.  What do you need to pass an audit of your mileage, which by the way, is a hot spot for examination.  Once your audit examination begins, the examiner likes to see this record.  If the record is missing or lacking, the IRS examiner knows your other records are probably lacking, too. This is one record everyone hates to maintain and the auditor knows this.  A taxpayer’s failure to keep a mileage log on vehicles indicates that the activity under examination is not being conducted in a businesslike manner.  I’m not sure if you know this, but as a one-owner or husband-and-wife-owned business, regardless of whether it is a corporation, a partnership, or a proprietorship, you file are required to file Form 4562.  This form asks you for the following information about your vehicle(s) mileage:  Do you have evidence to support the business/investment use claimed? (If “yes,” is the evidence written?); List your total business/investment miles on each vehicle; List your total commuting miles on each vehicle; and List your total personal miles on each vehicle.  You also have to disclose whether the vehicles are used by either a sole proprietor or an owner of more than 5 percent of a corporation, a partnership, or another entity for up to six vehicles and you have to do an attachment if more than six.  This mileage log is the record to substantiate the proof you need to use for the tax form questions.  If you lucky enough to receive the inquiry as a correspondence audit, then it requires you to provide the following information to support our deduction:  Copies of repair receipts, inspection slips, and other records reflecting the vehicle mileage on that date; Copies of logbooks and other records to support the business mileage claimed; A copy of your appointment book or calendar of business activities for the year; and if you are claiming actual expenses, copies of paid bills, invoices, and canceled checks for automobile expenses.  These would include gas, oil, tires, repairs, insurance, interest, tags, taxes, parking fees, and tolls with a copy of the bill of sale or other verification to establish your basis in the vehicle, including the trade-in of another vehicle.  This information provides the auditor the opportunity to match the repair bill odometer reading with the mileage in your logbook; the inspection slip odometer reading with the mileage in your logbook; the mileage between repair stops, to see whether that ties in with your claimed mileage; and establishes the business purpose that ties in with your appointment book or other calendar of business activities.  Each record should support the other and vice versa.  If you want to avoid your mileage deduction from being disallowed, keep a good mileage log. This includes not only the beginning and ending mileage, but who you went to see and the purpose of the trip.  The mileage log is often one of the first records that an IRS examiner will look at. A good mileage log shows that you know the rules and you respect them.  Many IRS audits end favorably and quickly upon presentation of a good mileage log.    I’m also want to express how thankful I am to provide my monthly article for you.  Our office hopes you have a wonderful Thanksgiving and grateful for what you have.  Happy Thanksgiving!!!  This is a very brief overview.   For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.

Oct 21

The Importance of The IRS to Every American (October-2021)

On September 14, 2021, Chuck Rettig, IRS 49th Commissioner released this statement I thought was worthy for all of us:  The IRS plays an important role in serving our country. We interact with more Americans than any other U.S. government agency – virtually every individual and business in the country. We process 96 percent of the funding for our nation’s vital programs, but our agency and our people have had to really step up in the past year and a half to provide even more support to Americans in need. And just like businesses and other agencies around the country, we had to pause or modify some operations during the pandemic until we had safe and secure remote options in place to enable our employees to perform their work and serve taxpayers. I am extremely proud of the dedication of our workforce toward helping American taxpayers fulfill their tax responsibilities and resolve tax issues while they dealt with the COVID-19 situation.  While we had to temporarily scale back operations, important economic relief measures passed by Congress during the pandemic gave us many new responsibilities, and we have proudly worked to deliver Economic Impact Payments, advance payments of the Child Tax Credit (CTC) and many other critical initiatives in 2020 and 2021. We appreciate and understand the frustration caused by the high volume of manually processed returns, the limited information available to taxpayers about the status of the return processing, the refund delays, and the difficulty reaching IRS employees. We also understand that complex tax issues, recent legislation and the pandemic have record numbers of taxpayers looking for help.  At every turn, our employees have gone above and beyond during the pandemic to keep our operations going, and through it all, we have appreciated the patience and understanding of taxpayers and the tax community. Even so, and despite our best efforts, pandemic-related issues are still causing us to experience record levels of activity that continue to affect operations across the agency, including the processing of tax returns and refunds. To put this in perspective, the IRS has received 199 million phone calls the first six months of this year – five times the normal annual volume – and we have manuallyreviewed 11 times more tax returns this year (11 million) to correct errors and gather missing information from taxpayers.  I am committed to ensuring the IRS will continue to do all we can to serve taxpayers. During the pandemic, we have had to find new ways to pursue our mission. As we faced enormous challenges, we didn’t always get it right, but we worked hard, often with limited resources. Where possible, we have redeployed resources to accommodate the increased demand. Our goal is to provide the quality of assistance taxpayers deserve, but we have been unable to satisfy this goal despite recent efforts to overcome significant challenges. On behalf of the entire IRS workforce, I want to assure you we will continue making progress, working together with Congress, the Administration and our partners inside and outside the tax community.  We know this has been and continues to be a frustrating time for many taxpayers and tax professionals – and it’s been a challenging time for all of us at the IRS as well. We have done the best we could under the circumstances, and we will continue to do our best as we face the current challenges. Our response to the unprecedented COVID challenges – including issuing almost $1.5 trillion in combined historic economic relief and individual refunds – illustrates the importance of every American to the IRS and the importance of the IRS to every American. I want to give you a glimpse of what we’re facing inside the IRS, and what we’re doing – to help struggling taxpayers and to get caught up during this unprecedented time.  This is only brief overview.  It is your responsibility to discuss anything in this article, prior to making any changes, with your professional advisor to assist you in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your professional advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.