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Helpful Information
► Check Withholding to Avoid a Tax Surprise
If you owed tax last year or received a large refund you may want to adjust your tax withholding. Owing tax at the end of the year could result in penalties being assessed. Whether or not you owed taxes or received a refund last year, check your tax withholding to avoid not having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. Changing jobs, getting married or divorced, buying a home or having children can all result in changes in your tax calculations.
The IRS withholding calculator on IRS.gov can help compute the proper tax withholding. The worksheets in Publication 505, Tax Withholding and Estimated Tax can also be used to do the calculation. If the result suggests an adjustment is necessary, you can submit a new W-4, Withholding Allowance Certificate, to your employer.
► July 2023 IRS Scam Warning
JULY 2023
The Internal Revenue Service issued a warning for taxpayers to be on the lookout for a new mailing scam that tries to mislead people into believing they are owed a refund.
The new scheme involves a mailing coming in a cardboard envelope from a delivery service, containing a letter that displays the IRS masthead and misleading language regarding an “unclaimed refund.” The letter provides contact information and a phone number that does not belong to the IRS, along with a request for sensitive personal information such as detailed pictures of driver’s licenses.
In this new scam, there are many warning signs that can be seen in many similar schemes via email or by text. The letter tells the recipients they need to provide "Filing Information" for their refund. This includes some awkwardly worded requests like this:
"A Clear Phone of Your Driver's License That Clearly Displays All Four (4) Angles, Taken in a Place with Good Lighting."
The letter proceeds to request more sensitive information including cellphone number, bank routing information, Social Security number and bank account type. This letter contains a variety of warning signs, including odd punctuation and a mixture of fonts as well as inaccuracies followed by a poorly worded warning:
"You'll Need to Get This to Get Your Refunds After Filing. These Must Be Given to a Filing Agent Who Will Help You Submit Your Unclaimed Property Claim. Once You Send All The Information Please Try to Be Checking Your Email for Response From The Agents Thanks".
As a reminder: The IRS never initiates contact with taxpayers by email, text or social media regarding a bill or tax refund.
Where to report scams
Taxpayers should report scams by sending the email or a copy of the text as an attachment to phishing@irs.gov, including relevant details like caller ID, date, time, and time zone.
Reports of scams can also be made to the Treasury Inspector General for Tax Administration or the Internet Crime Complaint Center. The IRS provides comprehensive information on reporting phishing and online scams on their website. Additionally, the Federal Communications Commission’s Smartphone Security Checker is a helpful tool to guard against mobile security threats.
►Tips For Early Preparation
Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.
Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don't forget to save a copy for your files.
Take your time. Don't forget to leave room for a coffee break when filling out your tax return. Rushing can mean making a mistake.
Double-check your math and Social Security number. These are among the most common errors on tax returns. Taking care on these reduces your chances of hearing from the IRS.
Get the fastest refund. When you file early, you get your refund faster. Using e-filing with direct deposit gets you a refund in half the time as paper filing.
►Tax records: How long is long enough?
Period of limitation that applies to income tax returns: Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the "three-year law" and leads many people to believe they're safe provided they retain their documents for this period of time.
However, if the IRS believes you have significantly under reported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. Keep records for individual tax returns as follows:
3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
7 years if you file a claim for a loss from worthless securities or bad debt deduction.
6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
Keep records indefinitely if you do not file a return, if you file a fraudulent return
Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
Records connected to property generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
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