Trusts, Estates and Succession

It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely.  This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.

Here are ten tips from the IRS for taxpayers to remember when selecting a preparer:

1. Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to the verify enrolled agent status page on IRS.gov or check the directory.
3. Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.
4. Ask to E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit.
5. Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 17 due date. Avoid fly-by-night preparers.
6. Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.
7. Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form.
8. Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return.
9. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN.
10. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

HAPPY TAX FILING!

Are you nervous to open the envelope to review the contents? Before your blood pressure rises, take a breath and consider these things to do as suggested by the IRS:

Individual Taxpayers: Seven Things to Do When an IRS Letter Arrives

The IRS mails millions of letters to taxpayers every year for many reasons. Here are seven simple suggestions on how individuals can handle a letter or notice from the IRS:

1. Don’t panic. Simply responding will take care of most IRS letters and notices.
2. Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
3. Compare it with the tax return. If a letter indicates a changed or corrected tax return, the taxpayer should review the information and compare it with their original return.
4. Only reply if necessary. There is usually no need to reply to a letter unless specifically instructed to do so, or to make a payment.
5. Respond timely. Taxpayers should respond to a letter with which they do not agree. They should mail a letter explaining why they disagree. They should mail their response to the address listed at the bottom of the letter. The taxpayer should include information and documents for the IRS to consider. The taxpayer should allow at least 30 days for a response.

When a specific date is listed in the letter, there are two main reasons taxpayers should respond by that date:

• To minimize additional interest and penalty charges.
• To preserve appeal rights if the taxpayers doesn’t agree.

6. Don’t call. For most letters, there is no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can use the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.
7. Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.

KEEP BREATHING – IT MAY NOT BE AS BAD AS YOU THINK!

TIS the holiday shopping season and you are surfing the internet for the perfect gifts.  You have a few minutes while waiting somewhere so you take advantage of free wi-fi.  You found the perfect gift on a website you haven’t visited before and set up an account.  But WAIT, are you going to get more than that perfect gift?  Is your personal information vulnerable on the free wi-fi?  Here are some tips from the IRS to help keep your data safe:

During the holiday shopping season, shoppers are looking for the perfect gifts. At the same time, criminals are looking for sensitive data. This data includes credit card numbers, financial accounts and Social Security numbers. Cybercriminals can use this information to file a fraudulent tax return.

This tip is part of National Tax Security Awareness Week. The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.

Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:

• Shop at familiar online retailers. Generally, sites with an “s” in “https” at the start of the URL are secure. Users can also look for the “lock” icon in your browser’s URL bar. That said, some criminals may get a security certificate, so the “s” may not always mean a site is legitimate.
• Avoid unprotected Wi-Fi. Users should not do online financial transactions when using unprotected public Wi-Fi. Unprotected public Wi-Fi hotspots may allow thieves to view transactions.
• Learn to recognize and avoid phishing emails that pose as a trusted source. These emails can come from a source that looks like a legitimate bank or even the IRS. These emails may include a link that takes the user to a fake website. From there, the thieves can steal usernames and passwords.
• Keep a clean machine. This includes computers, phones and tablets. Users should install security software to protect against malware that may steal data. This software also protects against viruses that may damage files.
• Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters. Use a combination of letters, numbers and special characters. Use a different password for each account.
• Use multi-factor authentication when available. Some financial institutions, email providers and social media sites allow users to set their accounts for multi-factor authentication. This means users may need a security code, usually sent as a text to their mobile phone, in addition to a username and password.
• Sign up for account alerts. Some financial institutions will send email or text alerts to an account holder when there is a withdrawal or change to their accounts. Generally, people can check their account profile to see what added protections may be available.
• Encrypt sensitive data and protect it with a password. People who keep financial records, tax returns or any personal information on their computer should protect this data. Users should also back up important data to an external source. When disposing of a computer, mobile phone or tablet, people should make sure they wipe the hard drive of all information before trashing.

The IRS has experienced more and more potential harm being caused to taxpayers by the sophisticated individuals who have nothing better to do than find ways to scam people.  The following is information published by the IRS to help individuals become more aware of potential threats:

The IRS reminds people to be on the lookout for new, sophisticated email phishing scams. These scams not only endanger someone’s personal information, but they can also affect a taxpayer’s refund in 2018.

This tip is part of National Tax Security Awareness Week. The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.

Phishing attacks use email or malicious websites to get personal information from the user. In many cases, the criminal fools someone into believing the phishing email is from someone they trust. The emails often have the look and feel of authentic communications. These targeted messages can trick even the most cautious person into doing something that may compromise data.

People should be vigilant and skeptical. Even if the email is from a known source, people should use caution because cybercrooks are very good at mimicking trusted businesses, friends and family.

Here are six examples of email phishing scams:

• Emails requesting personal information. The thief might ask for bank account numbers, passwords, credit cards and Social Security numbers. This is the most common way thieves steal data.
• An email urgently warning the recipient to update online financial accounts at a hyperlink provided in the email. The link goes to a fake site.
• A message with an email address spoofing a familiar address to look like trusted businesses, friends and family. The fake address has a slight change in text, such as name@example.com vs narne@example.com. Merely changing the “m” to an “r” and “n” can trick people.
• Emails saying the recipient has a tax refund waiting at the IRS or that the IRS needs information about insurance policies. The IRS doesn’t initiate spontaneous contact with taxpayers by email to request personal or financial information.
• The message has hyperlinks that take someone to a fake site. In one example, the email says: “Following recent calculations, we notice that you are eligible to receive a tax refund. In order to start the refund procedure, please visit this link and follow the steps required.” The link goes to a fake site. The IRS doesn’t send emails asking for refund verification.
• The message includes a PDF attachment that may download malware or viruses. Never open an attachment from a suspicious email address.

BE AWARE – PROTECT YOURSELF AND YOUR INFORMATION!

The last few months have brought dramatic changes in the taxation of an individual’s assets upon his or her death. For many, there will no longer be any need to plan for the minimization of death taxes.

Residents of the State of New Jersey are subject to three death taxes: (1) the federal estate tax, (2) the New Jersey estate tax, and (3) the New Jersey Transfer inheritance tax. Residents of the Commonwealth of Pennsylvania are subject to the federal estate tax and their own version of the inheritance tax. Practically speaking Pennsylvania does not have an estate tax, as its law provides that it would absorb any credit, or sponge tax, allowed from the federal estate tax, but that concept has been repealed for years.

In 2017, the New Jersey Estate tax exemption will increase to $2,000,000. In 2018, the New Jersey estate tax will be no more.

In 2017, the exemption from the federal estate tax will increase to $5,490,000 per person, and, if portability is properly used, $10,980,000 per couple. Although the intentions of an incoming president are not always translated into legislative action, President-Elect Trump seeks to eliminate the federal estate tax altogether. With Republicans controlling both the House and the Senate, that objective may well be realized. In exchange for repealing this tax, the step-up in basis for capital assets would be eliminated for estate assets in excess of $10,000,000.

The gift tax exemption will remain at $14,000 per person per year.

There is no adjustment from either New Jersey or Pennsylvania for its inheritance taxes. Both remain alive and well.