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Professional Tax Articles

Use The Withholding Calculator During Client Tax Reviews

The new Tax Cuts and Jobs Act will affect tax returns that taxpayers will file in 2019.  This new law is responsible for several significant changes, including the exclusion of deductions for employee business expenses, investment expenses, investment management fees, and tax prep fees.  The new law also limits deductions for state and local taxes as well as home mortgage interest deductions in specific situations.
It is important that professional tax preparers recommend that their clients review their paycheck withholding amounts as soon as possible so that they can adjust if necessary, giving more time for the withholding to spread out evenly throughout the year.  Mitch Elbarki of Sigma Tax Pro gives fair warning, “…if taxpayers procrastinate in reviewing their paychecks with a professional to make needed adjustments, then fewer pay periods will be left to make any changes, resulting in a much more serious outcome with every unadjusted paycheck, leading to a potentially a larger tax bill or penalty by tax time in 2019.”
The Withholding Calculator, available on the IRS website, is the tool for the job.  Using this calculator, tax professionals should urge their clients to collect their most recent pay stubs and most recent income tax return (Form 1040) to begin the review.  Tax professionals should also advise their clients that if any other changes to their financial circumstances occur during the year, they need to contact them to assure the withholding amounts are still appropriate.

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Professional Tax Articles

New Variation On Banking Tax Scam

The criminals are typically sending faxes or letters to prospects requiring them to fill out Form W-8BEN, “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting”. The taxpayer is then told to fax the form back to the scammers pretending to be IRS employees.The letter they receive tells them the are exempt from withholding income tax but have to verify their details with the Internal Revenue Service.

While the Form W-8BEN is a legitimate IRS document that can be viewed at the above link it can only be handled by a withholding agent. There are also stories of scammers attacking non US residents as a means to get passport details and other pertinent personal information. Mitch Elbarki of Sigma Tax Pro points out, “An original form W-8BEN does not require the taxpayer to provide personal information.”

These kind of criminals will always find new means to prey on unsuspecting taxpayers, thousands of people have lost millions of dollars and their personal information to tax scams in recent times. As usual scammers take advantage of the regular mail, telephone, or email to contact their victims and the IRS never initiates contact with taxpayers by email, text messages to request personal or financial information. Tax pros should advise their clients to contact them directly anytime they receive a call from someone sayng they represent the IRS.