Taxpayers Who are Victims of Domestic Abuse Should Know Their Rights

Domestic abuse often includes control over finances. An important part of managing finances is understanding one’s tax rights. Taxpayers have the right to expect the IRS to consider facts and circumstances that might affect the individual’s taxes.

Taxpayers have the right to:

  • File a separate return even if they’re married.
  • Review the entire tax return before signing a joint return.
  • Review supporting documents for a joint return.
  • Refuse to sign a joint return.
  • Request more time to file their tax return.
  • Get copies of prior year tax returns from the IRS.
  • Seek independent legal advice.

Taxpayers also have the right to request relief from the liability shown on a joint return. This is known as innocent spouse relief. Here are a couple of examples:

Example 1:

  • A taxpayer signs a joint return with their spouse.
  • The taxpayer thought their spouse paid all taxes due.
  • The IRS contacts the taxpayer because the taxes shown on the joint return were not paid.

Example 2:

  • The taxpayer signs a joint return with their spouse.
  • The taxpayer didn’t know about their spouse’s unreported income or erroneous deductions.
  • The IRS adjusted the taxes due because of their spouse’s improper items.

To apply for Innocent Spouse Relief, a taxpayer fills out Form 8857, Request for Innocent Spouse Relief.   More Information:

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With 2017 Extension Deadline Passed, All Eyes on 2018

Now that the tax return extension filing deadline has passed, the IRS suggests that taxpayers look ahead and get ready for next year.

Taxpayers still have time to take these three actions that may affect the 2017 tax return they will file in 2018.

  1. Charitable contributions. Taxpayers can deduct contributions that they make to charitable organizations only in the year the donation is made. There is still time for taxpayers to contribute to a charity before the end of 2017. After several storms this year, many taxpayers are making donations to disaster relief organizations. Taxpayers can use the IRS Exempt Organization Select Check tool on IRS.gov to make sure that these charities and any other tax-exempt organization is eligible to receive tax-deductible contributions.
  2. IRA distributions. Taxpayers over age 70 ½ should receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017. A special rule allows those who reached 70 ½ in 2017 to wait until April 1, 2018 to receive their distributions.
  3. IRA Contributions. Taxpayers generally must make workplace retirement account contributions by the end of the year. However, they can make 2017 IRA contributions until April 17, 2018.

More Information:

IRS Offers Web Conference on Tax Relief for Disaster Victims

In response to recent natural disasters, the IRS is offering two webinars. These online events help tax professionals better understand tax relief for victims of disasters.

  • The web conferences cover:
  • Tax relief for individuals and businesses
  • Special rules for disaster areas
  • How disaster losses affect taxes
  • Calculating and reporting disaster area losses
  • Tax issues related to Hurricanes Harvey, Irma and Maria

Each session will also include a live question and answer session.

The IRS designed these webinars to help tax professionals with disaster related issues.  Tax preparers receive a certificate of completion. They can also earn up to two continuing education credits for attending.  Use these links to register:

For more information about tax issues related to disasters, tax preparers and taxpayers can visit the Tax Relief in Disaster Situations page on IRS.gov.

IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File

WASHINGTON –– Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.

This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected, including the Oct. 31deadline for quarterly payroll and excise tax returns. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017 also qualify for the extra time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due after Oct. 8 and before Oct. 23, if the deposits are made by Oct. 23, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year) or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Tax Tips to Help You Determine What Makes a Gift Taxable

Taxpayers who give money or property to others may wonder about the federal gift tax and if it applies. Most gifts are not subject to the gift tax.

Here are seven tax tips about the gift tax and giving:

1. Nontaxable Gifts. The general rule is that any gift is potentially taxable. However, there are exceptions to this rule. The following are nontaxable gifts:

  • Gifts that do not exceed the annual exclusion amount for the calendar year,
  • Tuition or medical expenses a taxpayer pays directly to a medical or educational institution for another person,
  • A taxpayer’s gifts to their spouse,
  • Gifts to a political organization for its use, and
  • Gifts to charities.

2. Annual Exclusion. For 2016, the annual exclusion amount is $14,000. Most gifts are not subject to the gift tax. For example, there is usually no tax if the taxpayer makes a gift to their spouse or to a charity. If a taxpayer makes a gift to another person, the gift tax usually does not apply until the value of the gift exceeds the annual exclusion amount for the year.

3. No Tax on Recipient. Generally, the person who receives the gift will not have to pay tax on it.

4. Gifts Not Deductible. Making a gift does not ordinarily affect the taxpayer’s situation. A taxpayer cannot deduct the value of gifts they make (other than deductible charitable contributions as subject to the tax code).

5. Forgiven Debt and Certain Loans. Taxpayers who forgive debt or make a loan interest-free or below the applicable market interest rate may be subject to the gift tax.

6. Gift-Splitting. A taxpayer and their spouse can give up to $28,000 to a third party without making that gift taxable. Taxpayers need to consider one-half of the gift as from them and one-half given by their spouse.

7. Filing Requirement. Taxpayers need to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if any of the following apply:

  • The taxpayer gave gifts to at least one person (other than their spouse) that amounts to more than the annual exclusion for the year.
  • The taxpayer and their spouse are splitting a gift. This is true even if half of the split gift is less than the annual exclusion.
  • If the taxpayer gave a person (other than their spouse) a gift of a future interest that the recipient can’t actually possess, enjoy, or from which that person will receive income later.
  • A taxpayer gifting their spouse an interest in property that will terminate due to a future event.

Extension Filers Should Review Tax Credits Before Filing

Taxpayers who requested an extension of time to file their federal tax returns have until Oct.16 to double-check their returns for tax benefits that people often overlook. These taxpayers still have time to see if they can benefit from these four credits.

Earned Income Tax Credit

The Earned Income Tax Credit – also known as EITC and EIC –  benefits people who work and who have low-to-moderate incomes. This credit reduces the amount of tax owed and may result in a refund. To qualify for this credit, a person must meet certain requirements. They must also file a tax return.

Child Tax Credit

This is a credit of up to $1,000 per qualifying child. Taxpayers who claim this credit – but who do not qualify for the full amount – may also be able to take the additional child tax credit.

Saver’s Credit

This credit helps low-to-moderate-income workers save for retirement. It is also known as the Retirement Savings Contributions Credit.

American Opportunity Credit

A credit for tuition, enrollment fees, and class material for the first four years of higher education. The amount of this credit is up to $2,500 per eligible student per year.

Taxpayers should check IRS.gov/credits-deductions to learn more about other credits they may be qualified to claim when they file. Taxpayers who must file their 2016 taxes by October 16 should consider filing electronically using IRS e-file or the Free File system.

Additional filing information for taxpayers in disaster areas and combat zones:

Although Oct. 16 is the last day for most people to file, some still have more time. This includes taxpayers in places recently hit by hurricanes that are federally-declared disaster areas. It also includes members of the military and others serving in a combat zone who have at least 180 days after they leave the combat zone to file returns and pay their taxes due.

When does a trademark become generic? Part 2

By Debby Winters

Recently we talked about the possibility of the trademark for Google to become generic, meaning any internet search not just one conducted with the Google search engine.  Well, the folks at Velcro are at risk of the same thing.  So they have gotten creative and made a video to remind the public not to use their trademarked name in a generic way since some people might be referring to hook and loop-type fasteners made by other companies as “velcro.”

When this happens, most trademark owners take some kind of action to remind the public that their mark represents a brand, not a generic term.  It works best if your action is one that people might like well enough to pay attention to, rather than just ignore.  Velcro has done that with a new campaign that features the entertaining video, “Don’t Say Velcro.”  The video features people purportedly from the Velcro legal team, singing and dancing while instructing you on the proper use of their mark.

Not only can you enjoy the video, but they also have a behind the scenes video of its making. If you want to understand more about this process of being generic, check out the videos!