The Internal Revenue Service today issued its annual tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

The following are the tax scams for 2012:

Identity Theft

Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.
 
An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. 

Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit.  For more information, visit the special identity theft page at www.IRS.gov/identitytheft. 

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.  The IRS has information that can help you protect yourself from email scams.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

• Do not sign the return or place a Preparer Tax identification Number on it.
• Do not give you a copy of your tax return.
• Promise larger than normal tax refunds.
• Charge a percentage of the refund amount as preparation fee.
• Require you to split the refund to pay the preparation fee.
• Add forms to the return you have never filed before.
• Encourage you to place false information on your return, such as false income, expenses and/or credits.

For advice on how to find a competent tax professional, see  Tips for Choosing a Tax Preparer.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.
 

“Free Money” from the IRS & Tax Scams Involving Social Security

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

Scammers prey on low income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

There are a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return. 

Beware. Intentional mistakes of this kind can result in a $5,000 penalty.

False/Inflated Income and Expenses

Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions.  This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution. 

Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit when their occupations or income levels make the claims unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

False Form 1099 Refund Claims

In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.

Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Falsely Claiming Zero Wages

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

Abuse of Charitable Organizations and Deductions

IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property. The IRS is investigating schemes that involve the donation of non-cash assets –– including situations in which several organizations claim the full value of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new standards for qualified appraisals.

Every SSB recipient has a base AGI amount which determines whether a portion of their benefits are taxable. For 2011, the base amounts are:

• $32,000 for married couples filing jointly.
• $25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouse at any time during the year.
• $0 for married persons filing separately who lived together during the year.

HOW TO DETERMINE WHETHER YOU HAVE EXCEEDED YOUR BASE AMOUNTS

• Add up your income from other sources. If your benefits were your only source of income, stop here! Your benefits are not taxable.
• Divide your SSB in half and add it to the other sources of income.
• If the resulting amount exceeds your base amount, some of your benefits may be taxable.

EXAMPLE:

Marina is filing as Head of Household for 2011. She made $5000 working at her local pizza shop and an additional $12,000 as the receptionist at her church. She also recieved social security benefits of $9861.

• When we add up her income from other sources, we get:($5000+$12,000) = $17,000
• We divide her SSB of $9861 by 2 and we get: (9861/2) = $4931
• We now add the $4931 to the $17,000 and we get: ($4931 + $17,000) = $21,931

Since she is filing as head of household (HOH), her base amount is $25,000. Since $25,000 is greater than $21,931, her SSB is not taxable.

 Contact me today to get help with your taxes or have your tax questions answered.

There are a few things to know about the EITC and an online tool that can help you calculate whether you are eligible for it or not.

Things to Know about EITC:
1. The maximum amount of the EITC is $5,751. The amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,240 last year (Source: IRS).
2. If you are not required to file a return, you may be eligible for EITC. If that is the case, you must file an income tax return, in order to claim the credit. 

3. You do not qualify for EITC if your filing status is Married Filing Separately.
4. You must have a valid Social Security number for yourself, your spouse – if filing a joint return – and any qualifying child or children you intend to claim.  
5. You must have earned income. This means that you must have made money from being self employed or worked for someone. Unemployment benefits do not qualify you for the EITC.

6. Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements, as well as dependency rules.
7. Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.

EITC Tool:

Here is the link to the EITC tool: http://apps.irs.gov/app/eitc2011/SetLanguage.do?lang=en

You answer questions and it should tell you whether you qualify for the EITC or not.
 

 Contact me today to get help with your taxe sor have your tax questions answered.

Rental property owners want managers who keep their eyes peeled for current trends and profitable opportunities. In turn, property managers want owners who are loyal and understand the pressures of the business. If the property manager becomes a conduit for real estate news, then the owner will feel satisfied on the subject of the manager’s suitability, which will result in client loyalty.

A way to convey news to the owners is through an e-newsletter, which details current trends and lucrative opportunities in the real estate market. Use this e-newsletter as a chance to discuss everything from whether the time is right to take advantage of historically low interest rates; to how the US and European debt crisis can affect rental housing. Another possible topic is the speculation that there might be a new wave of foreclosures this New Year, which means a definite increase in families looking for rental homes. In addition to these national and international news items, include information on what the local real estate scene looks like.

The combination of local and national perspective applied to their business is bound to impress the owner, which does nothing but increase their confidence in the property manager’s abilities, and confident owners are loyal clients.

To get help with your real estate or property management bookkeeping, Learn more & Contact Me Today

Landing a new client is a big deal for a property manager, but it is easy to take the client for granted. The property manager should take care to maintain an optimal relationship with the property owner in order to keep them satisfied, and thus loyal.

Here are several suggestions to help optimize the relationship with the owner/client:

• Do not take the client for granted. This includes understanding what they value, and gauging their needs and wants, in order to provide a customized response to them. The result is that they will feel that you understand them, and they are important to you, thus creating client loyalty.
•  Let the client know that you provide excellent service. Attach a personalized cover letter to your quarterly or semiannual report, which reminds them of how hard you work on their behalf. Provide updates on the latest technology and methods you use in the business, and give them an opportunity to provide feedback— when people feel involved in the process, and that their ideas are being heard, they are more satisfied with the results.
•  Reinforce their confidence in your abilities. Take every available opportunity to show the client that you have their best interests in mind. For example, when you do something new and/or economical such as streamlining the application process, send the client a brief email. This will help build trust.
•  Your reputation precedes you: invest in it. Build a reputation for ethical, competent, and efficient business practice, and make sure that this reputation is familiar to professionals in your area. Eventually, your employers will hear of this reputation, and this will reinforce their trust in you and your business.

The little details matter when pursuing a better relationship with the client and a better relationship translates into client loyalty. Remember, a satisfied client will give glowing recommendations.

To get help with your real estate or property management bookkeeping, Learn more & Contact Me Today

Without constant maintenance, property managers can find themselves faced with a rundown rental property and large repair bills. Here are three areas of a property which should be inspected and repaired on a regular basis in order to prevent this.

Advertise
Some property managers and landlords are dissuaded from advertising their rentals because they fear that they might look unprofessional. What is unprofessional is allowing this fear to stunt business opportunities.

• Take advantage of drive-by traffic by advertising available rental units through signs, which should include your contact information.
• The Internet is rife with advertising opportunities, often for little or no cost. Use Facebook, Twitter, Likedln, Craigslist, your local media’s online services, and many other services to attract applicants.

Online Applications
Take advantage of the Internet by giving potential tenants the opportunity to register submit their application online. The convenience will encourage more applicants.

• Remember to give a link or web address in your advertisements.

Encourage Recommendations
Create a resident referral program, which rewards existing tenants if they are mentioned as the source of a recommendation when a qualified referral fills out a lease or rental application.

• An additional incentive would be an additional reward, such as a one month rent credit, if the recommendation results in a renter signs a lease and moves in.

To summarize: keep the application process simple, enthusiastically advertise your rentals, and provide incentives for current tenants to encourage new tenants, and do not be afraid to try alternative methods of attracting tenants.

It is not too late to start gathering information for your tax return. The last thing you need is to wait till April and rush your return, which may result in an error. The only other thing more stressful than filing your tax return is an audit.

While you gather your papers and numbers, you may wonder whether you need to file a tax return.

Do You Need to File a Tax Return?

You need to file a tax return if any of the following applies to you:

• You meet the income requirements:

• Taxes were withheld from your paycheck or benefits
• You are a business owner with income that is greater than $400
• You sold your home
• You are a church employee with income of more than $108
• You are entitled to Earned Income Credit

If ,at least, one of these situations apply to you, you are required to file a tax return

What if I am not Required to File a Return?

There are instances when you are not required to file a return, but it is a good idea to do so anyway.

• You may qualify to get the Earned Income Credit
• You may qualify to receive the Child Tax Credit
• You may qualify to receive the additional child tax credit

These are credits you can get, even when you do not have a tax liability. In other words, if you qualify for them, you can get some money back on your tax return.

For more information about tax filing requirements, Drop me a note.

• Income or loss from a rental property
• Travel expenses related to the rental property
• Cost of repairs (these can be deducted)
• Rental income
• Management fees
• And other expenses

Instead of waiting to track down these expenses when filing taxes, consider keeping track of them throughout the year, with the aid of the property manager, and a bookkeeper.
Remember: having the documentation for these expenses is very important, in case the IRS decides to examine your tax return.

The IRS has made several changes in the 1040 Schedule E and these changes are:

• Standard mileage rate which can be claimed increased to 51¢ for miles driven before July 1st, and to 55.5¢ for miles driven after.
• It is necessary to file a 1099-MISC in certain cases (see page 16 of the General Instructions for Certain Information Returns for more details).
• There is now a new method for reporting credit and debit card payments, but this has been deferred for 2011, so enter “0”on line 3a and report all gross receipts on line 3b.

For more information on the 1040 Schedule E, look at the IRS instructions.

To get help with your real estate or property management bookkeeping, Learn more & Contact Me Today

Moving house is a tedious and tiring prospect, and people will make excuses to avoid it. Even if there is cheaper rent to be had, the quality of their current residence can influence renters to remain in their current residence. This is where the property manager comes in.

Much can be made of a property manager’s duty to attract new renters, but just as important, if not more important, is renter retention. There are several things property managers must keep in mind, so as to ensure that their current renters are happy, and have no reason to move.