The IRS is Calling! What Should I Do?!

Hang up. Or better yet, don’t answer the phone if you don’t recognize the number. Then report the call. We guarantee you it’s not the IRS on the other end of the line. 

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If you’re like most people these days, you or someone you know has received a call claiming to be from the IRS. Often the caller says there is a warrant out for your arrest and you need to pay back taxes and fines right away to avoid legal action. The script is designed to frighten and intimidate people into giving up sensitive personal information, and sadly, it often works.

Scammers are everywhere, and they continue to become more savvy and creative. The bottom line is that as long as these calls continue to work, the criminals are not going to stop. That is why we want to do our part to help put them out of business. Learning how to spot the signs of a fraudulent call is the key to avoid being scammed, so the IRS has provided the guidelines below.

Remember, the IRS will never:

  1. Call to demand immediate payment, nor call about taxes owed without first having mailed you a bill.
  2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  4. Ask for your credit or debit card number over the phone.
  5. Threaten to bring in local law enforcement to have you arrested.

That Additional IRA Withdrawal Could Be Lost to Social Security Taxes

According to the IRS, the formula to determine if you will pay taxes on your Social Security income is to take one half of your Social Security benefits and add that amount to all your other income, including tax-exempt interest. This number is known as your combined income (combined income = adjusted gross income + nontaxable interest + half of your Social Security benefits).

Combined income info

If your combined income is above a certain limit (the IRS calls this limit the base amount), you will need to pay at least some tax. The limit is $25,000 if you are a single filer, head of household or qualifying widow or widower with a dependent child. The same applies if you are married filing separately and you lived apart from your spouse for the entire tax year. The limit for joint filers is $32,000. If you are married filing jointly and you lived with your spouse for any part of the tax year, all of your Social Security income is taxable.

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When retirees need extra money their first choice is generally taking an additional IRA distribution. What they may not realize is that this is taxable income, and therefore it increases their taxable Social Security amount. For example, an additional $12,000 IRA distribution may increase the taxable Social Security portion by as much as $6,000.

If it’s available to you, the safest bet for an immediate cash need is to use your savings. Though this may seem counterintuitive, you can see how adding any money that is considered taxable income to your base limit could potentially end up costing you money.

For the same reason, if you do need to take an additional distribution from your IRA, make sure you think about how much you really need. For instance, if you only need $5,000, but take $10,000 with the idea that it will give you a rainy day fund, at least some of that money may be eaten up in taxes if it causes your taxable income to exceed the base limit. 

Whatever your circumstance, we are here to help. Give us a call if you have questions about the best course of action for your particular situation. 

Charitable Donations: A Tax Planning Win-Win 

There are many ways to reduce your overall tax burden, but perhaps the most satisfying is one where the benefit you get is the result of doing something good for others. As with all things tax-related, there are limitations, and things to watch out for, but that shouldn’t prevent you from making meaningful donations to worthy causes. The article at the link below gives a great summary of how to make the most of your generosity:

Social Security Numbers: Your Most Valuable Asset

ssn 3We frequently receive calls from clients requesting their spouse’s, children’s, and/or parents’ social security numberBy law, we cannot give clients’ social security numbers over the phone. Even if we know who’s calling. And because these numbers are more valuable than gold to identity thieves, we all need to be extra vigilant about keeping them confidential. We can only provide this information if the request is submitted in writing, via e-mail or letter, or if you visit us in person and provide the proper identification.

Protecting Your Information: Our Priority

You can hardly look at the news these days without hearing about another scam or data breach that has potentially put your personal information at risk. As keepers of sensitive information for our clients, we take our legal responsibility toward protecting that information extremely seriously. Just as your health care providers need to adhere to strict legal guidelines with regard to releasing any information, we are legally bound to follow similar rules. Unfortunately, sometimes this can be frustrating for clients.

We are fortunate to have friendly, often decades-long relationships with most of our clients. We may even recognize your voice when you call. The downside of this is that, even when we are 100% certain that it’s you on the other end of phone, we cannot release any information without properly documented authorization.

Mortgage Lenders: We Work for You, Not Them

When mortgage brokers contact us regarding your finances we are happy to provide them what they need on your behalf, but only if we have heard from you first! In order to disburse any personal financial information we require proper authorization, in writing. So while it’s easy to get caught up in the excitement of buying or refinancing a house, don’t forget to let us know in advance, via e-mail or letter, that you are in the process of applying for a loan.

We can all agree that laws and policies are that in place to keep your information safe are necessary. But they can also cause delays in getting things done. You can rest assured that the last thing we want to do is cause you any inconvenience. On the contrary, the first thing we want to do is to protect your information, and not just because we are required to by law!

Let us know if you have any questions about this subject, or if you have any life events coming up that will require us to release your financial information. We are here to help!

Lost Deductions Under the Tax Cuts and Jobs Act

There is an extensive list of deductions that can no longer be claimed under the new tax code. For instance, those of you who use your vehicle for work are no longer able to deduct your expenses for gas, meals, parking and tolls. Likewise, all miscellaneous deductions on form 2106 have been repealed, and things like union dues, work uniforms, and publications are no longer deductible. The article at the link below does a good job of explaining how the changes will likely impact your returns this year.

Government Shutdown Update: How might it affect your tax return for 2019?


We are all hoping that the shutdown will end soon. In the meantime, we will process all tax returns for our clients just as we have done in the past. 

Below you’ll find an excerpt from information provided by the National Society of Accountants about how the shutdown is affecting taxpayers:

Despite the government shutdown, the Internal Revenue Service confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled. “We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.

Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.

The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.

As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.

Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.

We will continue to keep you apprised of any events that will impact your returns.