In the run-up to tax day, April 15, when returns are due to the IRS, you may have to unwind some of the complicated new tax rules — and fend off a few tax scams. Here is some help.
The IRS last week issued its annual list of “dirty dozen tax scams” and said identity theft and phone scams lead the list. Many of the scams are perpetrated by tax filers, for example, claiming false expenses or exemptions. In the case of fraud-by-phone, the IRS says, “scams include many variations, ranging from instances where callers say the victims owe money or are entitled to a huge refund. Some calls can threaten arrest and threaten a driver’s-license revocation. Sometimes, these calls are paired with follow-up calls from people saying they are from the local police department or the state motor-vehicle department.” http://goo.gl/lyHf7m
Be careful when looking for the Internal Revenue Service website. It’s at IRS.gov. Variants of that address, with “.com,” “.org,” or other extensions may look official but are not. www.irs.gov
Some “tax traps” to watch out for this year are listed by Bankrate.com’s Kay Bell, who notes that many wealthier Americans could face higher taxes, depending on their income sources and new rules that can reduce personal exemptions and itemized-deduction totals for high earners. Bell also notes that for 2014, the clock is ticking toward the March 31 Obamacare enrollment deadline for uninsured individuals. Failure to sign up by then could earn you an IRS penalty when you file your 2014 tax return next year. http://tinyurl.com/TaxHelpBankrate
The “Tax Guide” for 2014 at Forbes.com deals with things you ought to know for filing 2013 tax returns and for planning your tax strategy for the current year. Subject categories include retirement, “Family Matters,” and “dealing with the IRS.” “Why Lady Gaga can write off her work clothes, but you probably can’t” and “What to do if you don’t have the dough on April 15” are among entries on how to manage the 1040 tax form. Five “tips to keep the IRS out of your hair” stress keeping good records and filing on time. http://tinyurl.com/TaxHelpForbes
Federal tax rules, if anything, are more complicated than ever, and this post at Morningstar.com explains some of the reasons that you may need professional help with tax-return preparation this year — especially if you had a big income in 2013. Noting the appearance of several new and tricky taxes, such as something called the net investment income tax, or NIIT, the post concludes: “During the last few years, there has been much talk of simplifying the tax code. However, the addition of the NIIT and other provisions has only made the tax code more voluminous and complex.” http://tinyurl.com/TaxHelpMorningstar.
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