Six Tips on Whether to File a 2015 Tax Return

From the IRS –

Six Tips on Whether to File a 2015 Tax Return

Most people file a tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. Here are six tips to help you find out if you should file a tax return:

  1. General Filing Rules. Whether you need to file a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and under age 65 you must file if your income was at least $10,300. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file.
  2. Premium Tax Credit.  If you enrolled in health insurance through the Health Insurance Marketplace in 2015, you may be eligible for the premium tax credit. You will need to file a return to claim the credit. If you chose to have advance payments of the premium tax credit sent directly to your insurer during 2015 you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The form will have information that will help you file your tax return
  3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
  4. Earned Income Tax Credit. Did you work and earn less than $53,267 last year? You could receive EITC as a tax refund, if you qualify, with or without a qualifying child. You may be eligible for up to $6,242.
  5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.
  6. American Opportunity Tax Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You, your spouse or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify.

The Individual Shared Responsibility Provision – The Basics

The following article is from the IRS. “Shared Responsibility” is the new term for “Penalty”. If we prepare your return, we will include any and all required tax forms discussed in this article. Here’s the article from the IRS –

The individual shared responsibility provision requires that you and each member of your family have qualifying health insurance, a health coverage exemption, or make a payment for any months without coverage or an exemption when you file. If you, your spouse and dependents had health insurance coverage all year, you will indicate this by simply checking a box on your tax return.

Here are some basic facts about the individual shared responsibility provision.

What is the individual shared responsibility provision?

The individual shared responsibility provision calls for each individual to have qualifying health care coverage – known as minimum essential coverage – for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.

Who is subject to the individual shared responsibility provision?

The provision applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the shared responsibility payment if the dependent does not have coverage or an exemption.

How do I get a health coverage exemption?

You can claim most exemptions when you file your tax return. There are certain exemptions that you can obtain only from the Marketplace in advance.  You can obtain some exemptions from the Marketplace or by claiming them on your tax return. You will claim or report coverage exemptions on Form 8965, Health Coverage Exemptions, and attach it to Form 1040. For any month that you or your dependents do not have coverage or qualify for an exemption, you will have to make a shared responsibility payment.

What do I need to do if I am required to make a payment with my tax return?

If you have to make an individual shared responsibility payment, you will use the worksheets found in the instructions to Form 8965, Health Coverage Exemptions, to figure the shared responsibility payment amount due. You only make a payment for the months you did not have coverage or qualify for a coverage exemption.

To learn more, visit the Reporting and Calculating the Payment page on IRS.gov/aca, or use our interactive tool, Am I Eligible for a Coverage Exemption or Required to Make an Individual Shared Responsibility Payment?

What happens if I owe an individual shared responsibility payment, but I cannot afford to make the payment when filing my tax return?

The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund that may be due to you.

For more information about the Affordable Care Act and your income tax return, visit IRS.gov/aca.

The Premium Tax Credit – The Basics

From the IRS –

 If you – or anyone on your federal tax return enrolled in health insurance coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit.

Here are some basic facts about the premium tax credit.

What is the premium tax credit?

The premium tax credit is a credit that helps eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace.

What is the Health Insurance Marketplace?

The Health Insurance Marketplace is the place where you will find information about private health insurance options, purchase health insurance, and get help with premiums and out-of-pocket costs, if you are eligible. Learn more about the Marketplace at HealthCare.gov.

How do I get the premium tax credit?

When you apply for coverage, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim for the tax year, using information you provide about your family composition and projected household income. Based upon that estimate, you can decide if you want to have all, some, or none of your estimated credit paid in advance directly to your insurance company to be applied to your monthly premiums.

If you choose to have all or some of your credit paid in advance, you will be required to reconcile on your income tax return the amount of advance payments that the government sent on your behalf with the premium tax credit that you may claim based on your actual household income and family size. You must file an income tax return for this purpose even if you are otherwise not required to file a return.

You’ll file Form 8962, Premium Tax Credit, with your tax return to claim or reconcile the credit. Failing to file your tax return will prevent you from receiving advance credit payments in future years. Filing electronically is the easiest way to file a complete and accurate tax return. [Note: Since we prepare over 100 returns we are required to file your return electronically.]

What happens if my income or family size changes during the year?  The actual premium tax credit for the year will differ from the advance credit amount estimated by the Marketplace if your family size and household income as estimated at the time of enrollment are different from the family size and household income you report on your return. The more your family size or household income differs from the Marketplace estimates used to compute your advance credit payments, the more significant the difference will be between your advance credit payments and your actual credit.

Visit the PTC Eligibility page on IRS.gov/aca or use our interactive tool, Am I eligible to claim the Premium Tax Credit? on IRS.gov to determine your eligibility.

For more information about the Affordable Care Act and your income tax return, visit IRS.gov/aca.

Taxpayer Bill of Rights

With all of the budget cuts at the IRS, their customer service has dropped significantly. Nevertheless, you do have Taxpayer Rights.

Publication 1, Your Rights as a Taxpayer, highlights a list of your rights and the agency’s obligations to protect them. Here is a summary of the Taxpayer Bill of Rights:

  1. The Right to Be Informed. Taxpayers have the right to know what is required to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to know about IRS decisions affecting their accounts and clear explanations of the outcomes.
  2. The Right to Quality Service. Taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS and the freedom to speak to a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.
  3. The Right to Pay No More than the Correct Amount of Tax. Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties. They should also expect the IRS to apply all tax payments properly.
  4. The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to object to formal IRS actions or proposed actions and provide justification with additional documentation. They should expect that the IRS will consider their timely objections and documentation promptly and fairly. If the IRS does not agree with their position, they should expect a response.
  5. The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including certain penalties. Taxpayers have the right to receive a written response regarding a decision from the Office of Appeals. Taxpayers generally have the right to take their cases to court.
  6. The Right to Finality. Taxpayers have the right to know the maximum amount of time they have to challenge an IRS position and the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS concludes an audit.
  7. The Right to Privacy. Taxpayers have the right to expect that any IRS inquiry, examination or enforcement action will comply with the law and be as unobtrusive as possible. They should expect such proceedings to respect all due process rights, including search and seizure protections. The IRS will provide, where applicable, a collection due process hearing.
  8. The Right to Confidentiality. Taxpayers have the right to expect that their tax information will remain confidential. The IRS will not disclose information unless authorized by the taxpayer or by law. Taxpayers should expect the IRS to take appropriate action against employees, return preparers and others who wrongfully use or disclose their return information.
  9. The Right to Retain Representation. Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.
  10. The Right to a Fair and Just Tax System. Taxpayers have the right to expect fairness from the tax system. This includes considering all facts and circumstances that might affect their underlying liabilities, ability to pay or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Tips to Keep Your Tax Records Secure

From the IRS –

If you’re still keeping old tax returns and receipts stuffed in a shoe box stuck in the back of the closet, you might want to rethink that approach.

The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Working in partnership with you, we can make a difference.

You should keep your tax records safe and secure, whether they are stored on paper or kept electronically. The same is true for any financial or health records you store, especially any document bearing Social Security numbers.

You should keep always keep copies of your tax returns and supporting documents for several years to support claims for tax credits and deductions.

Because of the sensitive data, the loss or theft of these documents could lead to identity theft and have an economic impact. These documents contain the Social Security numbers of you, your spouse and dependents, old W-2 income and bank account information. A burglar could easily turn your old shoe box full of documents into a tax-related identity theft crime.

Here are just a few of the easy and practical steps to better protect your tax records:

 Always retain a copy of your completed federal and state tax returns and their supporting materials. These prior-year returns will help you prepare your next year’s taxes, and receipts will document any credits or deductions you claim should question arise later.

 If you retain paper records, you should keep them in a secure location, preferably under lock and key, such as a secure desk drawer or a safe.

 If you retain you records electronically on your computer, you should always have an electronic back-up, in case your hard drive crashes. You should encrypt the files both on your computer and any back-up drives you use. You may have to purchase encryption software to ensure the files’ security.

 Dispose of old tax records properly. Never toss paper tax returns and supporting documents into the trash. Your federal and state tax records, as well as any financial or health records should be shredded before disposal.

 If you are disposing of an old computer or back-up hard drive, keep in mind there is sensitive data on these. Deleting stored tax files will not remove them from your computer. You should wipe the drives of any electronic product you trash or sell, including tablets and mobile phones, to ensure you remove all personal data. Again, this may require special disk utility software.

The IRS recommends retaining copies of your tax returns and supporting documents for a minimum of three years to a maximum of seven years. Remember to keep records relating to property you own for three to seven years after the year in which you dispose of the property. Three years is a timeframe that allows you to file amended returns, or if questions arise on your tax return, and seven years is a timeframe that allows filing a claim for adjustment in a case of bad debt deduction or a loss from worthless securities.

To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.

Claim the Premium Tax Credit & Reconcile Advance Credit Payments

You may be eligible to claim the premium tax credit on your 2015 income tax return. The premium tax credit helps eligible individuals and families with low or moderate income afford health insurance. Millions of people who purchased their coverage through a health insurance Marketplace are eligible for premium assistance through the premium tax credit, which individuals chose to either have paid upfront to their insurers as advance payments to lower their monthly premiums or receive when they file their taxes.If you received the benefit of advance credit payments, you must file a federal tax return and reconcile the advance credit payments with the actual premium tax credit you are eligible to claim on your return. Failing to file your tax return to reconcile advance payments will prevent you from receiving advance credit payments in future years.

You will use IRS Form 8962, Premium Tax Credit (PTC) to make this comparison and to claim the credit. If your advance credit payments are in excess of the amount of the premium tax credit you are eligible for, based on your actual income, you must repay some or all of the excess when you file your return, subject to certain caps.

If you or anyone on your tax return enrolled in health coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace form by early February. Use the information from Form 1095-A to file your taxes accurately. This information includes the name of your insurance company, dates of coverage, amount of monthly insurance premiums for the plan you and other members of your family enrolled in, amount of any advance payments of the premium tax credit for the year, and other information needed need to compute the premium tax credit.

From The IRS – Tips to Protect Your Personal Information While Online

Tips to Protect Your Personal Information While Online

The IRS, the states and the tax industry urge you to be safe online and remind you to take important steps to help protect your tax and financial information and guard against identity theft. Treat your personal information like cash – don’t hand it out to just anyone.

Your Social Security number, credit card numbers, and bank and utility account numbers can be used to steal your money or open new accounts in your name. Every time you are asked for your personal information think about whether you can really trust the request. In an effort to steal your information, scammers will do everything they can to appear trustworthy.

The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.

Here are some best practices you can follow to protect your tax and financial information:

Give personal information over encrypted websites only. If you’re shopping or banking online, stick to sites that use encryption to protect your information as it travels from your computer to their server. To determine if a website is encrypted, look for “https” at the beginning of the web address (the “s” is for secure). Some websites use encryption only on the sign-in page, but if any part of your session isn’t encrypted, the entire account and your financial information could be vulnerable. Look for https on every page of the site you’re on, not just where you sign in.

Protect your passwords. The longer the password, the tougher it is to crack. Use at least 10 characters; 12 is ideal for most home users. Mix letters, numbers and special characters. Try to be unpredictable – don’t use your name, birthdate or common words. Don’t use the same password for many accounts. If it’s stolen from you – or from one of the companies with which you do business – it can be used to take over all your accounts. Don’t share passwords on the phone, in texts or by email. Legitimate companies will not send you messages asking for your password. If you get such a message, it’s probably a scam. Keep your passwords in a secure place, out of plain sight.

Don’t assume ads or emails are from reputable companies. Check out companies to find out if they are legitimate. When you’re online, a little research can save you a lot of money and reduce your security risk. If you see an ad or an offer that looks too good, take a moment to check out the company behind it. Type the company or product name into your favorite search engine with terms like “review,” “complaint” or “scam.” If you find bad reviews, you’ll have to decide if the offer is worth the risk. If you can’t find contact information for the company, take your business and your financial information elsewhere. The fact that a site features an ad for another site doesn’t mean that it endorses the advertised site, or is even familiar with it.

Don’t overshare on social media – Do a web search of your name and review the results. Mostly likely, the results while turn up your past addresses, the names of people living in the household as well social media accounts and your photographs. All of these items are valuable to identity thieves. Even a social media post boasting of a new car can help thieves bypass security verification questions that depend on financial data that only you should know. Think before you post!

Back up your files. No system is completely secure. Copy important files and your federal and state tax returns onto a removable disc or a back-up drive, and store it in a safe place. If your computer is compromised, you’ll still have access to your files.

Save your tax returns and records. Your federal and state tax forms are important financial documents you may need for many reasons, ranging from home mortgages to college financial. Print out a copy and keep in a safe place. Make an electronic copy in a safe spot as well. These steps also can help you more easily prepare next year’s tax return. If you store sensitive tax and financial records on your computer, use a file encryption program to add an additional layer of security should your computer be compromised.

To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.