Eric Buechler, Author at EricJohn Ltd | Tax and Accounting Services

March 17, 2015

MISSING SOMETHING? HINT: IT’S GREEN AND SPENDABLE.

This is a big number: $1,041,576,000.

That $1 billion is the amount the U.S. government owes to more than 1.1 million taxpayers who did not file federal tax returns for 2011.

You have to file a return – even if you don’t owe any taxes – in order to claim a refund. “People could be missing out on a substantial refund,” Internal Revenue Service Commissioner John Koskinen said.

The IRS figures the half of the refunds nationwide exceed $698. In Minnesota, about 16,500 taxpayers are missing more than $14.1 million. That’s an average refund of $857, with half of the refunds worth at least $632.

There’s some urgency here. The time to file a 2011 return and claim a refund ends on April 15, 2015, three years after the return was due. If a 2011 refund isn’t claimed by then, it goes into the U.S. Treasury’s vault, according to federal tax law.

Why would taxpayers leave their refunds on the table for the government to grab? Well, some simply might not have made much money in 2011 and were not required to file a return that year. So, they ignored it.

Perhaps others feared a late filing penalty. However, the IRS is clear. Late filing penalties do not apply if a taxpayer qualifies for a refund.

We at EricJohn Ltd. can help you retrieve those 2011 tax refunds – as well as any missing refunds from 2012 and 2013 tax years. We also look for tax credits that can increase your refunds. Until April 15, there’s no need to leave 2011 dollars in government hands for lack of a tax return!

March 7, 2015

“61” – REMEMBER THAT NUMBER.

If there’s one new line to notice on the federal tax return this year, it’s 61. Let’s call it the “Obama box,” short for the president’s signature claim to fame, the Affordable Care Act or “Obamacare.”

Line 61 on the federal 1040 return is where taxpayers testify that they are covered by some type of health insurance, whether it’s through a private source, Medicare/Medicaid or the Health Insurance Marketplace(s) created by Obamacare. (On the 1040A, see Line 38 and on the 1040EZ, it’s Line 11.)

If you and your dependents were covered by insurance for all of 2014, reporting on Line 61 is easy. Check the box and leave the space beside it blank.

If you were not covered for a month or more during the year, reporting can be much more complicated. You’ll need to claim an exemption from having insurance or you’ll need to make a “shared responsibility payment,” which is a fee for not having coverage. Both of those situations require new IRS Form 8965, which is called “Health Coverage Exemptions.” Be sure to obtain the instructions, too; you’ll need them.

Some taxpayers will find help further down on the 1040. If you bought insurance through a government-sponsored Marketplace (including MNSure in Minnesota), you will want to check Line 69. You might be able to take advantage of a tax credit for premiums you paid. There are several qualifications and you have to fill out another IRS Form, numbered 8962, but it’s worth a good look. By the way, this is where you use Form 1095-A , which the Marketplace should have sent by now.

Let us mention one more twist to the new health insurance reporting. During 2014, the government distributed advance payments of tax credits to assist some folks in paying premiums to Marketplace insurance companies. The Marketplace tells you about those advance payments on the 1095-A statement. Obviously, those early payments affect the amount of tax credits that you can claim on your return.

Recently, the system was disrupted when 800,000 taxpayers received incorrect information that could affect calculation of the premium tax credit. The government promised to send a corrected 1095-A statement to them this month. (March).

If you’d like a guide to help you through the new health insurance reporting, call or email us at EricJohn Ltd.

March 5, 2015

A 3-HOUR WINDOW TO AVOID

Minnesotans in the throes of tax preparation should scratch off the evening of March 11 for any computer work using the state’s online systems.

The Minnesota Department of Revenue announced that its e-Services systems will be taken offline for maintenance between 5 p.m. and 8 p.m. on that day.

February 21, 2015

WARNING: TAX SEASON PREDATORS NOW ON THE PROWL

The Internal Revenue Service and the Minnesota Department of Revenue are warning taxpayers about identity theft scams circulating through emails and text messages.

Both tax collection agencies say they know of phishing schemes, which use unsolicited notifications to steal personal or financial information. The bogus notices typically try to lure taxpayers to fake Web sites or email addresses, where thieves actually steal the information.

“The IRS won’t send you an email about a bill or refund out of the blue,” IRS Commissioner John Koskinen warned in an announcement.

Minnesota Revenue said one new phishing fraud now is coming through text messages. The messages refer to filing a return with the “Minnesota state tax office.” Be wary of texts from tax preparation services or tax software companies – especially those that you have not used to file a return, the agency said.

One recent phishing scam tried to trick tax preparers into revealing user names and passwords used to enter the IRS’s electronic filing and services system. An email asked them to update their individual IDs with the agency, the IRS said.

In another scheme last fall, taxpayers received phone calls from identity thieves posing as IRS workers. They gave out fake IRS badge numbers and altered caller IDs to make it appear that it was an IRS call.

The IRS has opened an email address for tax pros and taxpayers to report phishing scams. It is [email protected].

Here are some other signs of a scam. The IRS says it will NOT:

o Call or email to demand immediate payment, or call about any taxes owed without first sending a bill.
o Require prepaid debit cards or any other specific type of payment.
o Ask for debit or credit card numbers on the phone.
o Threaten to bring in local police to arrest you for not paying taxes.

EricJohn Ltd. is ready to file safe, online returns for you or your business!

February 21, 2015

LET’S HAVE A CHAT ABOUT BUSINESS

You might work alongside your small business’s directors or shareholders every day. But when was the last time you sat down formally to talk business?

Entities such as corporations, limited liability companies, etc., are required to bring their boards of directors together once a year. Even legal entities with just one or two directors or shareholders often must hold the well-known “annual meeting.” Unfortunately, the required session is overlooked by some small business owners, EricJohn Ltd. owner Eric Buechler reminds us.

We’ll leave the legal requirements to your attorneys. But you should be aware that decisions made at annual meetings can have tax implications. For example, corporate boards typically set policies about business issues ranging from reimbursement rates for expenses to employee retirement benefits. Boards and/or shareholders also approve executive salaries, loans to company officers and stock offerings, among other actions.

Documenting those decisions is evidence to the Internal Revenue Service and other tax authorities that your corporation is active. The decisions also may become important in case of a tax audit.

You probably don’t need to hold your business’s annual meeting near tax time. But it can be convenient for a small business to accomplish the meeting while dealing with a tax return, especially if it is a family business with few officers and shareholders.

EricJohn Ltd. can witness and assist in recording your company’s annual meeting. Phone or email Eric to schedule a brief annual shareholder meeting.

February 11, 2015

TRACTORS, YES; SPORTS WHEELS, FORGET IT!

The Internal Revenue Service is getting peeved over bogus claims for tax credits on fuel purchases. The IRS is so annoyed right now that it lists them among its “Dirty Dozen” tax scams for the 2015 filing season – alongside offshore tax cheating, fake charities and false documents.

Fuel tax credits probably are an obscure issue for most taxpayers. That’s because individual taxpayers typically can’t claim the credit on their personal income taxes.

But the federal government does allow credits for federal taxes paid on gasoline and other fuels for certain business uses. (They are declared on Form 4136.) A key requirement is that the fuel must be used for off-highway or off-road driving. One large exception is for school buses and transit buses.

For example, the IRS will give fuel tax credits for gasoline, diesel and kerosene used to power farming vehicles. However it will reject claims for all-terrain vehicles or boats that are used for sports or recreation.

We at EricJohn Ltd. have been able to apply for fuel tax credits for off-road, heavy machinery and for commercial lawnmowers. Fuel tax credits also scale up into operations of aircraft and train locomotives.

Nonetheless, the IRS says it computerized filters blocked $33 million worth of faulty credit claims in 2013 alone.

So, if the rumor mill or a tax avoidance company suggests using the fuel for your personal ATV for a tax credit, think twice. It might be a good time to seek some advice from EricJohn Ltd. or a reputable tax preparer.

February 9, 2015

TURBO TAX BACK AFTER IDENTITY HACKS

Minnesota’s Department of Revenue once again is taking in state income tax returns filed through TurboTax online software.

The state tax agency put the brakes on TurboTax filings on Thursday (2/5), citing “potentially fraudulent activity.” At least two taxpayers had reported that cyber-thieves filed bogus returns in their names using the online software program.

The software’s publisher, Intuit, also shut down TurboTax filings to investigate, but, by Friday evening, had resumed transmitting them to state agencies. Intuit said its security systems had not been breached. The company also boosted its protections against identity theft.

Minnesota Revenue began accepting TurboTax-generated returns again at 3 p.m. Saturday, citing Intuit’s “new, targeted, security measures.” The state agency also said taxpayers who had previously filed TurboTax returns do not need to take any further action.

Federal tax returns were not involved in the security scare.

Minnesota Revenue continued to process Intuit’s software programs for professional tax preparers. With 2014 tax filings underway, EricJohn Ltd. is ready to file your federal and state returns securely and conveniently.

January 29, 2015

IT’S 1099 TIME – AND DON’T FORGET YOUR BUSINESS’S LANDLORD!

If you run a business (even a very small one), you’ll want to get familiar with that number “1099.”

The Internal Revenue Service wants to know about many types of payments made in the course of doing business; so do some businesses or individuals that received payments. The IRS solution is Form 1099, which it calls an “information return.” There’s a large, extended family of 1099s and related forms.

Small businesses typically send Form 1099-MISC, which is short for “Miscellaneous Income,” for many types of payments. The forms go to both the IRS and the recipients of the money.

Fortunately, the businesses don’t have to declare payments made to corporations. A 1099 also is not required for buying physical goods, or for spending less than $600 during the year with a person/business. Those three exceptions cover a lot of territory.

Here are some types of financial (non-goods) payments that do have to be declared to the IRS and to the person/business receiving them:
o Rent paid to a partnership or any non-corporate owner for business offices or buildings.
o Wages or fees paid to independent contractors for their services.
o Gross proceeds of $600 or more that are paid to attorneys or law firms, even if they are incorporated.
o Prizes or awards paid to winners.
o Proceeds from crop insurance.
o Fees/expenses paid to physicians or other vendors for health care.
o Royalties greater than $10 from copyrights, mineral rights, patents and other sources.

On the 1099-MISC, business have to disclose more than $5,000 in consumer products that go to a buyer for resale outside of a retail establishment. Some small businesses also may have to file other varieties of 1099s to declare financial distributions, such as interest payments.

The deadline for mailing paper 1099s to payment recipients is Feb. 2, and they must postmarked to the IRS by March 2. But forms also can be sent out and filed electronically with the IRS.

Small business taxpayers can learn more about requirements for 1099s at this link: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Am-I-Required-to-File-a-Form-1099-or-Other-Information-Return

EricJohn Ltd. also can dig deeper with you into the details. We won’t let you forget sending a 1099 to your business’s landlord!

January 27, 2015January 27, 2015

BACK IN SYNC!

Minnesota and U.S. tax laws are back in sync, clearing the way for 2014 income tax filings without costly discrepancies.

On Saturday (Jan. 24), the governor signed a “conformity” law. It basically brings state tax codes into line with a slew of federal tax breaks that were renewed for 2014 in December.

If state law hadn’t been updated, more than 200,000 Minnesotans – especially middle- income families, students, homeowners and school teachers – would pay about $20 million more in state taxes, Gov. Mark Dayton’s office announced.

There also could have been problems with previously designed tax forms, etc. Now that everything is on the same track again, the state Department of Revenue notes that there are just a couple of adjustments to 2014 Schedule M1M, which details additions and subtractions to income. Those changes are shown on the M1Ms available online.

We at EricJohn Ltd. are relieved that the Minnesota’s tax code is coexisting nicely with federal laws. Of course, we are ready to help individual or business taxpayers file their 2014 tax returns!

January 16, 2015

READY FOR TAX TIME?

“Be prepared” is good advice for Boy Scouts AND taxpayers!

With the filing season for 2014 federal and Minnesota tax returns opening next week, let us offer some pre-season preparation that can make it easier when taxpayers or their preparers dig into those1040s and state forms.

Here are a few suggestions from the Indiana Department of Revenue that we’ve tweaked for Minnesota!

Collect your 2014 receipts for tax-related items. Sort them by category of tax (wages, capital gains, etc.) or deduction. Keep each year’s together in one place, such as a big envelope, a folder file, or even a shoebox. If you scan receipts and save them by computer, don’t neglect to back them up in separate storage, such as a portable hard drive or other safe site.
Draw up a list of documents you’ll need to file your tax return. Some examples are: W-2 forms, 529 account statement, 1099 notices, etc. Also, for the first time, taxpayers who are insured by the new Health Insurance Market will receive Form 1095A. It reports health care costs in connection with a federal tax credit. Check off the documents from your list as they arrive.
What changed last year? Marriage, having children, divorce, and moving for a job can affect both your filing status and withholding. You also might want to give an update to the human resources or personnel department of your employer, if you had a major life change.
Here’s one that’s easily forgotten or ignored. Check your online, mail order and other out-of-state purchases to see if they included Minnesota’s state sales tax. If they don’t, you might owe “use tax” for items brought into and used in Minnesota. (This can get a bit complicated, because Minnesota has a threshold amount for reporting taxable, out-of-state purchases by individuals.)
Do not use a year-end pay stub to file your federal or state tax return. Pay stubs do not contain the same details as the W-2 form. You should receive your W-2 statement from employers by the end of January.

What do you need for your 2014 tax return? You’ll get a good idea with some preparation before you start filling out forms or taking your records to EricJohn Ltd. or another tax preparer.