When a person sells a capital asset, the transaction usually results in a capital gain or loss. Capital assets include inherited property or belongings someone owns for personal use or as an investment.
Here are 10 facts you should know about capital gains and losses:
Have a question about capital gains or losses? Give Ellsworth & Associates a call at 513.272.8400. We would be happy to help.
The average taxpayer claims the standard deduction when they file their federal tax return, but some filers may be able to lower their tax bill by itemizing. You can determine which way saves the most money by figuring your taxes both ways.
Here are some tips to help you decide which way to file:
*If a taxpayer is 65 or older, or blind, the standard deduction is higher than normal. The deduction may be limited if the taxpayer can be claimed as a dependent.
Thinking about calling the IRS this President's Day? There's good news and bad news. The good news is, because calls peak this time of year, and this day in particular, the IRS toll-free lines will be open Monday, Feb. 20, from 7 a.m. to 7 p.m. The bad news is, they are at their busiest, so be prepared to wait on hold longer than usual. If your question can wait, don't call today.
If you need to call the IRS this tax season, be prepared to validate your identity when speaking with an IRS representative. This will help avoid the need for a repeat call. IRS phone representatives will only discuss personal information with the taxpayer or someone authorized to speak on their behalf.
If you're calling about your personal tax account, have the following information handy:
If you're calling to check on the status of your refund, a better option is to use the "Where's My Refund?" tool. For information on a state return, a good starting point is our Tax Refund Status page.
If you collect Social Security benefits, you might have to pay federal income tax on part of those payments. These tips can help you determine if you need to do so.
Tips on Making Charitable Contributions:
Another long-standing type of deception involves scams that happen in the wake of natural disasters.
Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned donors. Scam artists use a variety of strategies. Some scammers operating bogus charities may contact people by telephone or email to ask for money or financial information.
Before you give, utilize Select Check on the IRS website to determine if a non-profit is real or not.
The Child Tax Credit could save you up to $1,000 for each eligible, qualifying child. Make sure you qualify prior to claiming it. Here are four things to keep in mind about the Child Tax Credit:
The IRS is a common lure for scammers this time of year. These tax scams take many different forms. The most common scams are phone calls and emails from thieves who pretend to be representing the IRS. Scammers use the IRS name, logo or a fake website to attempt to steal money from taxpayers. Identity theft is often another motive.
Fake IRS Calls
Be wary of phone calls or automated messages from anyone who claims to be from the IRS. Frequently these criminals will tell you that you owe money. They also demand payment immediately. Other times scammers will lie and claim you are due a refund. The thieves ask for bank account information over the phone.
IRS employees will never:
Fake IRS Emails
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. Criminals often use fake refunds, phony tax bills or threats of an audit. Some emails link to fake websites that look real. The scammer’s objective is to convince you to give them your personal and financial information. If they get what they’re after, they use it to steal your money and identity.
If you receive a “phishing” email, remember these important tips:
It’s possible that you will find it necessary to take out money early from your IRA, 401(k), or other retirement plan. This might create an extra tax on top of your income tax.
Here are some facts to remember if you're considering taking an early distribution:
In the early parts of tax season, many early filers are anxious to hear specifics about the status of their tax refunds. This can lead to misunderstandings and speculation about refunds.
Here are five tax refund myths that tend to come up this time of year:
Myth 1: All Refunds Are Delayed
Most federal tax refunds are issued in the normal timeframe – less than 21 days. Some refunds may be delayed – but not all of them. Recent legislation requires the IRS to hold refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Other returns may require additional review for a variety of reasons and take longer.
Myth 2: Calling the IRS Will Provide a Better Refund Date
Many people think that calling the IRS can speed up their tax refund. In this case, the squeaky wheel does not get the grease. In reality, you’ll probably end up waiting on hold and getting nowhere. Your best bet is to check online through the “Where’s My Refund?” tool or via the IRS2Go app.
The IRS updates the status of refunds once a day, usually overnight, so checking more than once a day will not give you new information. “Where’s My Refund” has the same information available to IRS telephone operators, so waiting on hold is a waste of time, unless you enjoy listening to on-hold music cutting in and out for what seems like forever.
Myth 3: Ordering a Tax Transcript is a “Secret Way” to Get a Refund Date
Ordering a tax transcript will not help you find out when you will get your refund. The information on a transcript does not necessarily reflect the amount or timing of a refund. While you can use a transcript to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation, it’s easier to use “Where’s My Refund?” to check the status of your refund.
Myth 4: Something Must be Wrong Because I Don't See a Deposit Date Yet
Where's My Refund? on both IRS.gov and the IRS2Go mobile app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. If you’re claiming EITC or ACTC you will not see a refund date on Where's My Refund? until then.
These refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 — if there are no processing issues with the tax return and the taxpayer chose direct deposit. This additional period is due to several factors, including banking and financial systems needing time to process deposits. Taxpayers who have filed early in the filing season, but are claiming EITC or ACTC, should not expect their refund until the week of Feb. 27. Remember that President’s Day weekend may impact when you get your refund since many financial institutions do not process payments on weekends or holidays.
Myth 5: Refunds Claiming EITC and/or ACTC, will be Delivered on Feb. 15
By law, the IRS cannot issue refunds before Feb. 15 for any tax return claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC). The IRS must hold the entire refund, not just the part related to the EITC or ACTC. The IRS will begin to release these refunds starting Feb. 15.
These refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27. Any additional review of your tax return will cause an additional delay.
Using “Where’s My Refund?”
“Where’s My Refund?” can be checked within 24 hours after the IRS has received an e-filed return or four weeks after receipt of a mailed paper return. "Where’s My Refund?" has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved, and (3) Refund Sent.
Remember, when using “Where’s My Refund?” or the IRS2Go app, you must have information from your current, pending tax return to access your refund information.
The majority of taxpayers are able to claim an exemption for themselves, decreasing the taxable income on their tax return. You may also be able to claim an exemption for each of your dependents. Each exemption usually allows you to deduct $4,050 on your 2016 tax return.
Below are five important tips to remember when it comes to dependents and exemptions: