Why Do Illegal Immigrants Steal Social Security Numbers for Taxes?

Illegal immigrants often obtain the social security numbers of the deceased in order to create an appearance of legality. One of the biggest problems surrounding this matter is that the IRS really isn’t doing anything about it. The IRS has stated that it is not actively making corrections to current policy reflecting this issue.ImmigrationPic

Obtaining Employment

Immigrants need to work to support their families just like everyone else. Sometimes, however, they go about obtaining proper documentation in an improper fashion. It is creating a false identity, and in most cases, the name and profile of that deceased person isn’t even a close comparison. Even so, oftentimes this false identity is sufficient for them to obtain some type of employment in the U.S.

Obtaining Housing

In order to rent or purchase property, you have to show that you can legally reside in the United States. Questions on applications clearly ask if the applicant can legally live in the U.S. and if proper documentation is available. The thing here is, most rental agencies do not check thoroughly into the social security number supplied by the applicant.

Obtaining Benefits

Even when a social security number does not match the number on the photo ID of an immigrant, they can still obtain state-paid benefits like food stamps and healthcare coverage. Some programs, city-funded, also require proper documentation.

Bottom Line

Many agencies do not double check numbers and often bypass incorrect matching notifications. For these reasons it seems likely that the issue may never be solved. If the government and IRS say that they ignore notifications of mismatches, who’s to say that other institutions don’t do the same thing? What many don’t realize is that this will create a much larger issue in the future as Social Security claims may attempt to be made from those invalid numbers.

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How to Make Tax Day Easier

Tax day is a day that many Americans do not look forward to. For those having to pay, coming up with a big chunk of money at once may be impossible. Payment arrangements can be made in those situations. You can make the day a bit easier if you are properly prepared from the start.IncomeTaxDay

Don’t Wait

Start your taxes in February. Waiting until the last minute often leads to mistakes, rejected returns and missed tax credits or deductions. Create a checklist and a time line for completing your taxes. Doing just a little at a time is far less stressful than the alternative.

Gather Paperwork

Get your paperwork in order and separate it by category. If you notice that a document is missing, make arrangements to obtain it as quickly as possible. One missing piece of paperwork can hold up the entire tax return completion process. Separate categories with paperclips or crisscrossed piles to reduce clutter and improve organization.

View Available Tax Credits and Deductions

In January of each year, it is ideal to view the available tax credits and deductions for the appropriate tax year. You may qualify for a credit or deduction that you were unaware of that can reap a larger tax refund. You may also find credits that you thought you would qualify for but are not. Educating yourself ahead of time is a stress prevention tactic during tax time.

Final Thoughts

Before turning in your tax return, make sure that it is correct. The simplest mistake, like transposing a number, can lead to a rejected return or possibly an audit. Take your time and start well in advance. You will save yourself a bit of frustration later.

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Why Passport Holders Need to Stay Out of Tax Trouble

If you owe back taxes and have lived abroad, you may be at risk for a passport revocation. Living abroad gives Americans two extra months to file their taxes. Some, holding dual citizenship, must file income taxes in both countries.PassportCloseUp

Difficulty Filing

Filing from an overseas location can be difficult. Additional forms must be completed and the process takes far longer. Some people living abroad are unaware that they even have to file a tax return. For this purpose, no matter where you reside, always speak with an accountant or certified tax preparer to see if you must file while living abroad.

Passport Revocation

United States citizens owing more than $50,000 in tax debt can have their passports revoked. President Obama signed the passport-revocation rule into effect as part of a transportation funding bill. For those with median incomes it would take years to build-up this amount of tax debt.

Big Penalty

A rather steep penalty, up to $10,000 each, can be applied to each violation of the rules. All bank accounts must be reported, all earnings must be reported and taxes paid to foreign governments must be reported. Essentially, every detail of your financial life must be made transparent.

For Americans who work abroad, and require a valid passport, it is best to hire a tax preparation specialist or accountant. These individuals would handle your tax preparation needs and ensure that your return is accurate. Hiring a professional will help avoid the potential loss of your passport through the passport-revocation rule.

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What Happens if Someone Steals Your Tax Refund

Tax refunds are not just stolen from mailboxes and bank accounts. Some thieves go a step further and steal a person’s entire identity, even filing taxes under their name. This allows the thief to have a refund sent to their banking institution rather than yours. Here’s a “to do” list for anyone who experiences the misfortune of having their tax refund and identity stolen.TaxRefundCheckPic

Report Fraud Immediately

The minute that you are aware that you are a victim of fraud or tax refund theft, contact the IRS to report it. This gets the ball rolling and the IRS can begin tracking down where your money went and who stole it. Waiting even one day to report fraud can lead to it taking more time to remedy the situation.

Gather Proof of Identity Documents

You will have to provide proof of identity documentation to the IRS. This means that you will need to submit a copy of your birth certificate, social security card, photo ID, and in some cases, marriage licenses. It is frustrating to have to prove that you are yourself, but the IRS cannot complete their investigation without this information.

Cooperate with the IRS

The IRS can work faster in their investigation when you cooperate. Spend the extra couple of dollars to have items faxed rather than mailing them. The IRS is going to ask a lot of personal questions, and it is important that you answer them directly.

Keep in mind that this is a process and will take some time. This can delay your tax refund for quite some time. In rare cases, it can take until the next tax year to resolve the issue.

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5 Tips for Those Who Receive an Audit Letter

When you get a letter from the IRS regarding an audit being issued, stay calm. An audit is not the end of the world and is often triggered from something very minor.AuditLetter

Offer Information with Caution

During the audit process, keep your answers brief. Do not offer any additional information that may stir up questions for the auditor. Keep your answers to the point without opening doors for further prying.

Hire Professional Assistance

Tax codes and languages are difficult to understand. Hire a professional to help you understand these abstruse things. The professional can also help you see where the mistake was made so that you are aware of what the auditor will be looking for in advance.

Gather Requested Documents

It is best to have documentation from the last 5 years of tax returns. This includes all itemized deduction paperwork and receipts. The process goes much faster if you have what is asked for.

Read Everything Twice

All correspondence regarding the issuance of an audit and when it will be completed are done via mailed letters. Read the letter and any additional correspondence twice, perhaps even three times. Read it once aloud to ensure that the information is fully understood and mentally processed.

Reply to the Letter

You are required to reply to letters regarding audits within 30 days. Do not ignore the letter. You must reply to prevent facing additional penalties and fees. In most cases, the audit is completed quickly and the issue is resolved. The best thing that you can do is be prepared.

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Do Legal Marijuana Businesses Have to Pay Taxes?

Medical marijuana is a fairly new business for many states. However, though it may be new, it is still considered a business, and the one thing that all businesses have in common is that they have to pay taxes. If you are interested in getting into the medical marijuana business, or want to know about the back end, taxes will be a necessity. MedicalMarijuana

Sales and State Taxes

No matter the state, most medical marijuana businesses require businesses to pay state sales tax. Some places also have local tax that must be collected, as well. For customers, sales tax is charged on every single transaction and collected by the local governments. This tax collection is fairly straight forward, however, getting into business taxes is a little but more taxing.

Business Taxes and the Government

Business taxes are collected from marijuana dispensaries. Dispensaries are required to be set up as legal businesses in their area. The states that allow medical marijuana will treat these businesses as any other and collect business taxes from income, minus write offs. The issues come along with the federal tax. Since marijuana is still not federally legal, the business is not treated as a business, but as individual income. Marijuana business owners will pay up to 70% tax on their income, due to tax code 280E, which states that controlled substances may not use business write offs in any manner.

Conclusion

If you own a marijuana business, it is a good idea to have a tax attorney on your side to go over issues with. Make sure you are taking advantage of write offs where you can and figuring out your income for federal taxes.

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Why is it Taking So Long to Get My Tax Refund?

If you expect a tax refund this year, you may be wondering why it’s taking so long. It’s a stressful time and you may be tempted to panic and wonder where things could have gone wrong. The truth is nothing is wrong at all and it simply hasn’t arrived yet.TaxRefundDictionary

Here’s what you can do about it.

Use the Official Website

The IRS’s “Where’s My Refund” website is the site setup to help you find out where your refund is. It is updated daily and will reveal at what stage of the process your tax return has reached. This will allow you to keep track of your refund at all times.

Is there an Error?

Sometimes information is being double-checked. The IRS is notorious when it comes to checking the accuracy of names and dates and various other pieces of information. Go over your tax return again and see if you have made any errors. Even a single wrong number or letter can cause you significant problems.

Look Online

Sometimes there are delays in delivering tax refunds simply because major changes have been made. When Obamacare first came in there were significant delays in processing refunds. The IRS is new at this as well and so they are getting used to changes in the tax system.

Also, many people make mistakes when the rules change. This means the whole process is gradually slowed down and delayed.

Look online and see what people are saying. If there are lots of people in the same boat, it’s likely just a general delay.

As you can see, all delays have a reasonable explanation. There’s no need to panic and certainly no need to badger the IRS lines all day.

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Filing Early Can Help You Avoid Tax Refund Fraud

Accusations of fraud are extremely serious and shouldn’t be taken lightly. But did you know that filing early can help you avoid tax refund fraud? If you didn’t, read through this article and find out just how it works.PaperCheckRefundPic

How Tax Refund Fraud Works

Tax refund fraud relies on criminals gathering your personal information and using it to file on your behalf. Their tax form arrives at the IRS first and they claim lots of deductions in your name. They take the money and run.

The real person (you) gets a nasty surprise when they discover the IRS won’t accept their legitimate tax form. It can take months to clear up this mess.

Filing Early Beats Criminals to the Punch

The reason why filing early is the best defense is due to the fact your tax forms will reach the IRS first. That means you have beaten the scammers to the punch and their fraudulent tax return is invalid. As soon as you receive your tax forms, file them electronically.

Protect Personal Information

But you must remember that criminals need to get your personal information in the first place. If you protect your personal information, there’s no reason why you should ever run into tax identity fraud. Make sure you avoid giving out any personal information and shred any documentation rather than throwing it in the trash.

The criminals are getting smarter and you need to be more vigilant when it comes to the security of your personal data than ever before.

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Five Things You Absolutely Need to Know About Taxes

Taxes are important business and you have to get them right. If you don’t have the experience you would like, we are going to show you what you need to know about taxes. These five things will set you straight.TaxDayPic

  1.      No Need to File

Not everyone has to file a Federal income tax return. 47% of Americans don’t pay any tax at all because they don’t meet the income threshold. But that doesn’t mean you can’t take advantage of special tax breaks and credits. Therefore, even if you are not legally required to file, sometimes it can be in your best interest to do so anyways.

  1.      Estimated Payments

Self-employed people have the problem of not necessarily knowing how much they are going to earn in a year. The IRS allows them to make estimated payments, and by doing so you avoid a penalty.

  1.      Can’t Pay

Even if you can’t pay and you will be negotiating for some extra time, it’s still important to file the return first. The IRS always gives additional breathing space to people who follow the rules and don’t simply bury their head in the sand.

  1.      Extensions

An extension is not an extension on when you have to pay. It’s simply an extension of when you can file. The original deadline date for paying your taxes remains in place. This is how a lot of people receive unexpected fines from the IRS.

  1.      End of Year Opportunity

Even if the end of the year passes, you still have an additional “last chance” to reduce your tax bill. And this opportunity should be taken with both hands to ensure you pay the minimum amount possible. One way decrease the amount of taxes that you owe after the end of the year has passed is to pay the maximum amount allowable to your retirement accounts.

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Common Mistakes Which Can Lead to Tax Identity Theft

Tax identity theft is a serious issue. It can lead to a loss of money and trouble with the IRS for you. There are people who have had their identities stolen and it’s resulted in years of problems, both with the tax authorities and with their finances.IdentityTheftPicTwo

There are ways to avoid tax identity theft, and it all begins with knowing how it happens in the first place.

Don’t Shred Personal Documents

Criminals will search the trash in order to find documentation, including account numbers and social security numbers. Using this information, they can build up a profile of you. When they have enough, they can steal your identity and commit fraud in your name.

Giving Information to those Who Don’t Need It

Another common way is giving your information out over the phone and online. Senior citizens tend to fall for this most often of all. Someone will call claiming to be from an official or reputable organization, including the bank. They will ask for their information and they will give it out.

No genuine organization will ever request this information from you.

Use a Bad Quality Tax Preparer

There have been cases where tax preparers have stolen the IDs of previous clients and filed on their behalf. They pocketed the tax refunds before the actual person could file their return. Before they knew what hit them, the tax preparer had already run away with the money.

This is why we can’t emphasize enough how important giving out your personal information to only a qualified professional with a strong record of accomplishment is.

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  • Huddleston Tax Accountants / Huddleston Tax CPAs – Redmond, WA
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    8201 164th Ave NE Suite 200 / Redmond WA 98052
    425-483-6600

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve Tukwila, Auburn, Federal Way. We have a few meeting locations. If you are looking for a Redmond CPA firm, get in touch with us! Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.