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The 12 Days Of Tax Tips [Part 1]


The 12 Days of Tax Tips
As the year comes to a close, we have collected twelve IRS lists with tax tips for year-end planning, safekeeping, reporting, and giving.

Part 1 Table of Contents:

  1. Twelve worst tax scams for 2017
  2. Eleven tips on distributions from Individuals Retirement Arrangements (IRAs)
  3. Ten fundamental rights of a taxpayer
  4. Nine questions to consider when determining if it is a business or hobby
  5. Eight steps to keep online data safe
  6. Seven steps to follow when an IRS letter arrives
  • Twelve worst tax scams for 2017
  1. Hiding money offshore
  2. Frivolous tax arguments
  3. Abusive micro-captive insurance tax shelters
  4. Erroneously claiming tax credits
  5. Falsely inflating deductions or expenses
  6. Improper claims for business credits
  7. Fake Charities
  8. Tax Return Preparer advertising inflated tax refunds
  9. Dishonest return preparers
  10. Identity theft
  11. Aggressive and threatening IRS impersonators
  12. Fake emails or websites stealing personal information
  • Eleven tips on distributions from Individuals Retirement Arrangements (IRAs)
  1. Qualified Charitable Distributions are generally nontaxable IRA distributions
  2. Qualified Charitable Distributions will count towards required minimum distributions
  3. Distribution must be made from the trustee to the qualified organization
  4. Distribution must be made to a qualified organization
  5. Donor must be at least 70.5 years in age when distribution was made
  6. Qualified organizations must send an adequate written donor acknowledgment
  7. Donor acknowledgments must be received by the due date of the tax return
  8. Maximum exclusion allowed is $100,000
  9. Joint filing returns can each have an exclusion of $100,000
  10. Distribution amounts over $100,000 will be included in income as normal
  11. Deductions cannot be claimed if the distribution is not included in your income
  • Ten fundamental rights of a taxpayer
  1. Right to be informed
  2. Right to quality service
  3. Right to pay no more than the correct amount of tax
  4. Right to challenge the IRS’s position and be heard
  5. Right to appeal an IRS decision in an independent forum
  6. Right to finality
  7. Right to privacy
  8. Right to confidentiality
  9. Right to retain representation
  10. Right to a fair and just tax system
  • Nine questions to consider when determining if it is a business or hobby
  1. Is the activity carried on in a businesslike manner?
  2. Is the intention to be profitable?
  3. Is the activity the only income source to live on?
  4. Are losses due to startup costs and/or unforeseeable circumstances?
  5. Has methods of operations been changed to improve profitability?
  6. Do you have the knowledge needed to carry on the activity as a successful business?
  7. Has there been successful profits in the past?
  8. Is the activity making a significant amount of profit in some years?
  9. Are future profits expected from the appreciation of assets used in the activity?
  • Eight steps to keep online data safe
  1. Shop familiar online retailers
  2. Avoid unprotected Wi-Fi
  3. Avoid phishing emails
  4. Use security software to scan, remove, and protect against malware
  5. Use strong passwords
  6. Use multi-factor authentication
  7. Use account alerts
  8. Encrypt sensitive data
  • Seven steps to follow when an IRS letter arrives
  1. Determine the question or issue
  2. Determine if there is a tax return issue and compare to originally filed return
  3. Determine if a payment is due
  4. Determine if a written response is required
  5. Determine if a call is necessary, typically it is not
  6. Determine the response date
  7. Determine where to store the letter for safe keeping

Blue & Co.’s Tax Department is happy to assist with any topic listed above. Please contact Amber Kocher, CPA at akocher@blueandco.com for any tax-exempt questions or concerns.

 

Also, read: “12 Days of Tax Tips – Part 2”

 

 

Resources:
Dirty Dozen List of Tax Scams for 2017
Publication 590-B (2016) Distribution from IRAs
IRS Taxpayer Bill of Rights
Nine factors to distinguish between a business and a hobby
Eight Steps to Keep Online Data Safe
Seven Things to Do When an IRS Letter Arrives

 

 

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