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Wednesday, July 18, 2018

IRS Tax Security 101 Campaign for Preparers


The IRS has kicked off a 10 week awareness campaign for tax professionals. This new effort by the IRS, State tax agencies and the private sector tax industry is aimed at making tax preparers aware of the continued threat to tax and financial data that is held by them.
This new campaign called “Protect Your Clients; Protect Yourself: Security 101” is intended to provide tax professionals with the basic information that they need to better protect taxpayer data and to help prevent the filing of fraudulent tax returns that is based on stolen taxpayer data taken from the preparer’s computer system. It will run for ten weeks and will focus each week on topics such as security, passwords, recognizing spear phishing, monitoring and protecting your EFIN, signs of data theft and a tax preparer’s legal obligation to protect taxpayer data.
It is important to understand that this time of year is when the cybercriminals ramp up their efforts in targeting tax preparers in an effort to obtain their clients tax return information. So it is important for tax preparers to remain vigilant and take the necessary steps to protect their computers and thus protect their customer’s information throughout the year.
For more details on this campaign see IRS News Release Tax Security 101 on the IRS website.
With this in mind here are a few recent IRS videos that can help tax preparers protect themselves against breaches of their computer systems and what to do if they are compromised:
Also, there are publications that tax return preparers will find useful as to what steps they need to take to protect themselves:
And here are some helpful IRS webpages on security for tax return preparers:

Wednesday, July 11, 2018

Form 1040 Redesign

The 2018 Form 1040 has been streamlined to only include the five most common types of income, federal withholding, EITC, Additional Child Tax Credit and the Education Credit. The detail for all other types of income, adjustments to income, nonrefundable, refundable credits, other payments and other taxes that exist on the current Form 1040 have been moved to one of six new schedules:
  • Schedule 1 (Additional Income and Adjustments to Income)
    • Includes the remaining income types such as from Schedule C, D, E and F, unemployment compensation, etc. that were shown on the current Form 1040.
    • All adjustments to income such as Educator expenses, IRA contributions, student loan interest, etc.
  • Schedule 2 (Tax) – Includes all lines that are used to calculate total tax such as the regular tax, tax on child’s unearned income, alternative minimum tax, etc.
  • Schedule 3 (Nonrefundable Credits) – Includes all nonrefundable credits such as credit for child and dependent care expenses, education credits, child tax credit and the new credit for other dependents, etc.
  • Schedule 4  (Other Taxes) – Includes all other taxes such as self-employment tax, household employment tax, etc.
  • Schedule 5 (Other Payments and Refundable Credits) – Includes the lines for other payments and refundable credits such as extension payment, credit for federal tax on fuels, etc.
  • Schedule 6 (Foreign Address and Third Party Designee) - Where foreign address and third party designee information is shown if they are applicable.
The IRS has explained that the version of the newly redesigned form released on June 29 is a pre-release draft and the IRS will be working with the tax community to finalize the Form 1040 over the summer. The final version of the form will be released towards the end of this year.
The draft of the 2018 Form 1040 also includes changes that are a result of the Tax Cuts and Jobs Act such as:
  • Removal of exemption amount boxes and the total exemptions line.
  • Addition of check box for the new credit for other dependents for each dependent.
  • New line 9 for the new qualified business income deduction (20% deduction for pass-through business income – Sec 199A).
For additional information on the redesign of the Form 1040 see IRS news release -– IRS Working on a New Form 1040 for 2019 Tax Season.
Learn More at the CrossLink Tax Resource Center: www.crosslinktax.com/customer-resources/Tax-Resource-Center.asp

Friday, June 29, 2018

IRS Press Release: IRS working on a new Form 1040 for 2019 tax season

IR-2018-146, June 29, 2018

WASHINGTON — As part of a larger effort to help taxpayers, the Internal Revenue Service plans to streamline the Form 1040 into a shorter, simpler form for the 2019 tax season.

The new 1040 – about half the size of the current version -- would replace the current Form 1040 as well as the Form 1040A and the Form 1040EZ.  The IRS circulated a copy of the new form and will work with the tax community to finalize the streamlined Form 1040 over the summer.

This new approach will simplify the 1040 so that all 150 million taxpayers can use the same form. The new form consolidates the three versions of the 1040 into one simple form. At the same time, the IRS will still obtain the information from each taxpayer needed to determine their tax liability or refund. 

The new Form 1040 uses a “building block” approach, in which the tax return is reduced to a simple form. That form can be supplemented with additional schedules if needed. Taxpayers with straightforward tax situations would only need to file this new 1040 with no additional schedules.

Since more than nine out of 10 taxpayers use software or a tax preparer, the IRS will be working with the tax community to prepare for the streamlined Form 1040. This will also help ensure a smooth transition for people familiar with software products and the interview process used to prepare tax returns.

Taxpayers who file on paper would use this new streamlined Form 1040 and supplement it with any needed schedules.

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Click here to view the original IRS Press Release: www.irs.gov/newsroom/irs-working-on-a-new-form-1040-for-2019-tax-season


Wednesday, June 27, 2018

See you in Atlanta July 10-12!



Click below to pre-schedule a meeting with your CrossLink Team:
www.crosslinktax.com/events/irs-nationwide-tax-forums.asp

IRS Press Release: June 29 deadline nears: Many who moved to mainland due to hurricanes may need to file IRS change of residence form

IRS Press Release:
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IR-2018-142, June 26, 2018
WASHINGTON — The IRS reminds any residents of Puerto Rico, the U.S. Virgin Islands and American Samoa affected by last year’s hurricanes and tropical storms who are required to file a 2017 federal income tax return or pay their 2017 tax, to be sure to do so by June 29. This special extended deadline is available regardless of whether a taxpayer’s residence changed during 2017. No interest, late-filing penalty or late-payment penalty will be due.
Further, bona fide residents of Puerto Rico, the U.S. Virgin Islands and American Samoa, who permanently relocated to the U.S. mainland due to last year’s hurricanes and tropical storms may need to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession, with the Internal Revenue Service along with their Form 1040 or Form 1040NR. Due to the disaster-related extensions granted by the IRS to residents of these three U.S. territories, Form 8898 will generally be due by Friday, June 29, 2018. In addition, anyone who files for an income-tax-filing extension will also have until Oct. 15, 2018, to file Form 8898.
This requirement to file Form 8898 applies to anyone who had total gross income exceeding $75,000 for the year, ceased to be, or became, a bona fide resident of a U.S. territory during 2017 and met other requirements. Also referred to as U.S. possessions, U.S. territories include Guam and the Commonwealth of the Northern Mariana Islands, along with Puerto Rico, the U.S. Virgin Islands and American Samoa. Bona fide resident status matters because special tax rules may apply to anyone who is a bona fide resident of a U.S. territory, compared to a resident of any of the 50 states or the District of Columbia. See Publication 570, Tax Guide for Individuals with Income from U.S. Possessions, for details.
For a married couple, the requirement to file Form 8898 with the IRS applies to each spouse separately. Likewise, the $75,000 income threshold applies to each spouse separately. A $1,000 penalty may apply if a person who is required to file Form 8898 fails to file or files an incorrect or incomplete Form 8898.
Generally, a taxpayer is a bona fide resident of a U.S. territory if they:
  • Meet the presence test — spent at least 183 days in the territory;
  • Don’t have a tax home outside the U.S territory, and
  • Don’t have a closer connection to the United States or to a foreign country than to the U.S. territory.
Generally, this means that a person who lives and works in a U.S. territory and spends most of their time there is considered a bona fide resident of that territory. Special residency rules apply for active duty military members of the U.S. Armed Forces and their civilian spouses.
Puerto Ricans and U.S. Virgin Islanders who temporarily left due to Hurricane Irma or Hurricane Maria but have already returned to the territory, or plan to do so, will generally not need to file Form 8898. That’s because under special relief, none of the time between Sept. 6, 2017, and May 31, 2018, counts as time away from the territory. See Notice 2018-19, and Publication 570, for more information.
The IRS provided federal income tax return filing and penalty relief to anyone whose mailing address is in Puerto Rico, the U.S. Virgin Islands or American Samoa. Eligible hurricane and tropical storm victims with a mailing address elsewhere, can also obtain this relief by calling the IRS disaster hotline at 866-562-5227. See the IRS disaster relief page for more information. 

Additional information:

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