by Taxing Subjects | Nov 27, 2023 | Tax Tips and News
The IRS and its Security Summit partners from the national tax industry and state tax agencies announced the 8th annual National Tax Security Awareness Week, set to begin November 27. Protection of financial information and identity theft prevention are the focus of the week-long awareness campaign backed by the Security Summit. This coalition consists of the IRS, state agencies, tax professionals, and tax software companies whose goal is to promote private and public sector cooperation to increase knowledge of the threats tax preparers face. Drake Software® is proud to be an original member of the Security Summit and continues to hold membership with 23 other industry offices.
The National Tax Security Awareness Week Itinerary
Drake users have a lot to look forward to during this year’s National Tax Security Awareness Week:
- Partners of the Security Summit will have access to educational material in the form of IRS publications and e-posters to help spread security awareness.
- The IRS has a social media awareness campaign planned on all of the social channels used by the Security Summit.
- Press Releases sharing the central topics to National Tax Security Awareness Week will release daily, providing information to tax professionals about avoiding the dangers of tax schemes and identity theft.
During the end of the year and holiday season, increased online gift purchases and tax filing deadlines can present increased risk of losing private information by way of scams and fraud. The National Tax Security Awareness Week’s timing is designed to refresh tax preparers on how to avoid these situations which can appear in the form of identity thieves posing as charitable organizations or even the IRS using fake emails and text messages asking for personal tax information which they can use to file returns.
Both Drake Software and the IRS recommend tax professionals review their security measures this week and implement some of the strategies listed below to identify and thwart these theft attempts:
- Preparers should create data security and recovery plans to handle or prevent information breaches.
- Tax professionals can familiarize themselves with phone schemes where the caller pretends to be a new client.
- The FTC requires that tax preparers use multi-factor authentication to safeguard client data. Tax software accounts should also be protected with multi-factor authentication.
- Tax employees and professionals working remotely need to use a VPN.
The November 30 webinar, Developing a Written Security Information Plan, led by Jared Ballew, the Vice President of Government Relations at Drake Software and representatives from the IRS covers tax security to educate tax preparers on dangers and solutions from tax fraud. The registration link can be found on this IRS news release.
Additional Security Focuses for the Week
One topic at the forefront of this year’s National Tax Security Awareness Week is the IRS Identity Protection Pin program. This is a service taxpayers can use to help protect their tax returns. The pin is a six-digit code only the IRS, the filing individual, and a trustworthy tax provider should know. It guards social security information on tax refunds. If interested in this security measure, visit the IRS link here.
The Security Summit recognizes small businesses as the group most likely to be the victim of financial fraud and will cover ways to specifically protect them during tax security week. The 14039-B theft report form and W-2 income information scam and topics of conversation for small companies.
Resources and Information
Drake Software strives to offer our clients the best resources and security available in the industry. We published several blogs this year that are companion pieces for the tax preparer security topics covered this week. Read our blog posts on cybersecurity, employee retention credit scams and IRS security requirements for more preparation to fend off attacks on sensitive information.
The article from the IRS on National Tax Security Awareness Week can be found here.
– Article provided by Taxing Subjects.
by Taxing Subjects | Nov 22, 2023 | Tax Tips and News
The window for claiming a pandemic-driven tax credit is still open to taxpayers who didn’t take advantage of it during the main Covid outbreak. But closing dates are approaching, making filing a claim for eligible taxpayers (tax years 2020 or 2021) a priority for tax preparers.
For a historical background, we have to go back to 2020 as we faced national economic challenges arising from the Covid-19 pandemic. The IRS established the Recovery Rebate Credit to help those taxpayers who may have missed one or more of the Economic Impact Payments – also known as stimulus payments – that were released in 2020 and 2021.
While it is likely that the vast majority of eligible taxpayers have already gotten their Economic Impact Payments directly or by claiming the Recovery Rebate Credit, the IRS is concerned that there are still taxpayers who are due the credit, but haven’t received payment.
Any eligible taxpayers, however, must file a tax return to claim the credit – even if they had little or no income.
Who is Eligible and for How Long?
The Recovery Rebate Credit is available for the 2020 and 2021 tax years.
Taxpayers filing for 2020 must have been a U.S. citizen or resident alien in 2020 and cannot have been a dependent of another taxpayer during the tax year. In addition, qualified taxpayers must have a Social Security number issued before the due date of the tax return that’s valid for U.S. employment.
Taxpayers claiming the 2020 Recovery Rebate Credit must file a tax return by May 17, 2024.
Those taxpayers filing for 2021 must have been a U.S. citizen or resident alien in 2021 and cannot have been a dependent of another taxpayer during that tax year. Additionally for 2021 filers, taxpayers must have a Social Security number issued before the due date of the tax return that’s valid for U.S. employment or claim a dependent with an Adoption Taxpayer Identification Number.
Claims for the 2021 Recovery Rebate Credit must be filed in a federal tax return by April 15, 2025.
The Recovery Rebate Credit can also be claimed on behalf of a taxpayer who has died. The 2020 credit can be claimed for someone who died in 2020, while both the 2020 and 2021 credits can be claimed for someone who died in 2021 or later.
Note that any Recovery Rebate Credit that is received cannot be counted as income when determining one’s eligibility for federal benefits. This includes Supplemental Security Income or SSI; Supplemental Nutrition Assistance Program or SNAP; Temporary Assistance for Needy Families or TANF; or the Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC.
If someone claims the credit, it has no bearing on their immigration status or their ability to get a green card or other immigration benefits.
Taxpayers who are unsure if they got the Economic Impact Payments can check their IRS Online Account to check for payments and amounts.
Source: IRS reminds eligible 2020 and 2021 non-filers to claim Recovery Rebate Credit before time runs out
– Article provided by Taxing Subjects.
by Taxing Subjects | Nov 20, 2023 | Tax Tips and News
The Internal Revenue Service has passed along an early Christmas present of sorts to many taxpayers by increasing the maximum contribution amounts for 401(k) plans in 2024.
The contribution hike covers those employees who take part in 401(k), 403(b), or most 457 plans. Participants in the federal Thrift Savings Plan are also included in the increase. Taxpayers who participate in any of these plans can now contribute up to $23,000 for 2024; that’s up from $22,500 under the previous rules. Catch-up contribution limits for these same taxpayers, however, stay at present levels.
For those with SIMPLE retirement accounts, contribution limits have been raised from $15,500 to $16,000.
The new rules also boost the limit on contributions to an IRA, raising the bar from $6,500 to $7,000. Despite legislation including an annual cost-of-living adjustment (via the SECURE 2.0 Act of 2022), IRA 2024 catch-up contribution limits remain at $1,000 for those participants 50 and over.
Income Limits on Deduction Eligibility Increased.
A taxpayer’s eligibility to deduct their contributions to traditional IRAs or Roth IRAs, or to claim the Saver’s Credit can hinge on the filer’s income. In all three instances, these income ranges were increased by the IRS as well.
Deduction phase-out for traditional IRAs gets an overhaul from the new guidance. Affected taxpayers include Single covered by a retirement plan at work, and Married filing jointly with the spouse making the IRA contribution covered by a workplace retirement plan.
Complete details on these and deduction phase-outs – including those for Roth and SIMPLE plans, and the Saver’s Credit – are available in Notice 2023-75 on the IRS website. The Notice has technical guidance on all the cost-of-living adjustments set in motion by the SECURE Act 2.0 legislation.
Source: 401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000
– Article provided by Taxing Subjects.
by Taxing Subjects | Oct 27, 2023 | Tax Tips and News
Drake Software® Update Schools return this year in 4 U.S. cities plus our hometown of Franklin, NC! Experts from Drake Software including Chief Revenue Officer John Sapp, CPA; Director of Education Christine Reynolds; Software Trainer Ann Campbell, CPA, CIA and many others; along with industry experts Randy Adams, EA and Director of the Stakeholder Liaison organization in the IRS Derek Ganter will be sharing important updates with Users about what to expect in the 2024 Tax Season plus exciting new software updates.
Who’s going?
Drake Software users and tax preparers from across the country will be flying or driving to Update Schools to network and socialize with their peers in the industry. Attendees will earn up to 8 hours of CPE credit while reviewing best practices and getting an overview of industry updates and how they affect software use. They will also learn all about the Drake Software updates our team has been tirelessly working on and have the opportunity to ask questions and receive expert opinions from our tax software specialists. Drake Software’s team will also be joined at the event by industry sponsors such as Rightworks, the National Association of Tax Professionals, Refund Advantage, Avantax, and EPS.
Representatives from the Taxpayer Advocate service will be available at Baltimore, Dallas, Atlanta and Las Vegas locations to help attendees resolve disputes for their clients.
What to Expect
Bonus classroom training is the first event of the week. It takes place the day before each Update School and is an opportunity to ask questions and improve your understanding of tax preparation. There are two courses available for classroom training. Drake Essentials is our new user course centered around gaining practical knowledge, navigating software, preparing returns, and e-filing. Drake Expanded is a more advanced class to add to your tax preparation skills and explore how different forms, schedules, and tax situations should be handled in Drake Tax. In the evening after the classroom session, all attendees are invited to a reception hosted by our industry sponsors.
The next day kicks off the Update School with a morning session presented by John Sapp. The subjects of this first session are important tax industry topics and how they will impact your tax practice this season, along with how tax law updates will change your Drake Tax® preparation. During the afternoon session, Drake Software and tax industry leaders will participate in a panel discussion. Topics of note are Drake Tax 2023 updates and enhancements, tips and best practices, and industry insights and information to use for your e-filing businesses.
Our experts will discuss the latest changes and headlines in tax news and break down what this means for preparers and how to adapt business practices to maximize the outcome of these changes. Topics like 1099s, cryptocurrency, and EV tax credits are all important this year and will receive air time during our learning sessions.
What’s the Big Deal?
Update Schools are the perfect event for the Tax Pro who wants to achieve many goals at the same time:
- Refreshing and gaining knowledge to improve your tax practice
- Asking questions in-person to our most accomplished and experienced team members,
- Networking and socializing with other Drake users, Drake partners and vendors, and the minds behind Drake Software
Take advantage of this unique tax event!
When is it?
The Update Schools schedule begins 11/9 in Baltimore, and continues with events on 11/16 in Franklin, 11/29 in Dallas, 12/6 in Atlanta, 12/12 in Las Vegas, 12/20 in Franklin, and 01/05 in Franklin. All times are listed on the registration schedule.
Registration
To register for Drake Software’s premier User event of the year, click on our update school scheduling link here to select the location and sessions that work be for you! Our companion session and classroom training link can be selected here.
Drake Software has been planning, designing, and preparing all year for Update Schools! We are excited to host the event and are looking forward to seeing new and familiar faces and meeting up with our partners in the tax industry. We will see you all soon!
– Article provided by Taxing Subjects.
by Taxing Subjects | Oct 24, 2023 | Tax Tips and News
The Internal Revenue Service has given small business owners and others who may have unintentionally filed inaccurate claims for the Employee Retention Credit (ERC) a way to escape a portion of the monetary consequences for filing a bogus tax claim.
The IRS has now established a process allowing certain ERC filers to withdraw their credit claim before it’s processed, thereby avoiding interest and penalties.
The withdrawal option treats the claims as if they were never filed, and, because the withdrawal request is filed before the bogus claim is paid, the would-be recipient doesn’t have to pay their refund amount back to the IRS.
Filers who are worried about the accuracy of their ERC claim have legitimate reason for concern, particularly if their claim was submitted with premeditation. The IRS has made it clear that filers who knowingly submitted a fraudulent claim for credit won’t be able to escape criminal investigation or prosecution even if their bogus claim is withdrawn.
Scammers Behind the Push to File Inaccurate or Outright Bogus Claims.
The Employee Retention Credit was created as a refundable tax credit for businesses that paid their employees through the Covid-19 pandemic while the business was partially or completely shut down due to a government order or had a major drop in gross receipts during the eligibility periods.
It should be noted that the ERC is not available to individuals.
Scammers and unscrupulous promoters took the appeal of a big refund to business owners and other taxpayers who may not have qualified for the tax credit in the first place or gave in to pressure from the schemers to inflate various numbers to get a larger refund.
Promoters of these scams took to the airwaves, claiming the ERC application process was simple and fast, when, in reality, the credit is a complex piece of tax code, requiring exacting application requirements.
Under pressure from relentless marketing of these scams, the IRS was flooded with claims for the ERC, totaling some 3.6 million claims over the course of the program. We wrote about how the agency responded with a moratorium on processing new ERC claims in September. Instead, the IRS said it was doing more to screen incoming claims for compliance, to stem the flood of ineligible filings.
Some of those taxpayers, suspecting their claims for the credit may not have been strictly legitimate, are having second thoughts and may be looking for a way out.
That’s where the IRS withdrawal offer comes in. Employers seeking to withdraw their filed claims for the Employee Retention Credit may do so, but only if all the following conditions are met:
- The claim was made on an adjusted employment return, such as Forms 941-X, 943-X, 944-X or CT-1X;
- The adjusted return was filed only to claim the ERC and no other adjustments were made;
- The taxpayer seeks to withdraw the entire amount of the ERC claim; and
- The IRS has not paid the claim, or the IRS has paid the claim, but the taxpayer hasn’t cashed or deposited the refund check.
Those not eligible to use the withdrawal option still have a way back by filing an amended return that reduces or eliminates their ERC claim. Details on all the options for ERC filers are available in a Nov. 2 IRS webinar as well as a new question-and-answer checklist.
Check out Fact Sheet 2023-24 and IRS.gov/withdrawmyerc for more details on the ERC withdrawal process.
Source: IRS announces withdrawal process for Employee Retention Credit claims; special initiative aimed at helping businesses concerned about an ineligible claim amid aggressive marketing, scams
– Article provided by Taxing Subjects.
