IRS Accepting Requests from Victims of Fraudulently Filed Tax Returns

Fraud Web

Victims of tax identity theft may now request copies of fraudulent tax returns filed under the taxpayer’s name and social security number. The Internal Revenue Service (IRS) previously disallowed the release of fraudulently filed tax returns for privacy reasons. Earlier in 2015, US Senator Kelly Ayotte wrote a letter to IRS Commissioner Koskinen addressing the issue and argued that if taxpayers cannot access the fraudulent returns, then they cannot take corrective and preventive measures to protect themselves from any further identity theft. In response, the IRS is allowing taxpayers to request redacted copies of fraudulently filed returns that used their personal information. Keep in mind, only the taxpayers who are primary and secondary on the tax return will be able to request this information. Dependents or other individuals will not be allowed to request the copies due to federal privacy laws. The IRS is also not releasing copies of identity theft returns that are in the process of being resolved.

To access additional information or to request a copy of a fraudulently filed tax return, please visit https://www.irs.gov/Individuals/Instructions-for-Requesting-Copy-of-Fraudulent-Returns.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Year-End Charitable Contribution Tips

year end charity

 

As 2015 nears its end, many taxpayers are not only planning their holiday season, but also planning their year-end charitable giving. To qualify as a 2015 tax deduction, any donations must be made prior to year-end. For those taxpayers who are considering making charitable contributions before the end of the year, there are a number of tax law provisions, substantiation requirements, and helpful tips to keep in mind.

First and foremost, it is important to remember that only contributions made to qualified charitable organizations are tax deductible. If you are unsure of whether or not the organization that you are planning on contributing to is qualified, you can search the charity’s name on the IRS’s Exempt Organization Select Check database, which is available here. Be sure to note that contributions made to churches, synagogues, temples, mosques, and government agencies are deductible, even though these organizations may not be included in the IRS’s database.

Charitable donations are either made in the form of monetary or nonmonetary contributions. Monetary contributions include those made in cash or by check, credit card, electronic funds transfer, or even as a payroll deduction. Regardless of the amount given, the taxpayer must maintain a bank record or written communication from the charitable organization indicating the name of the charity as well as the date and amount contributed in order to claim the amount as a charitable tax deduction. Nonmonetary contributions often include, but are not limited to clothing or household items. In order to be tax deductible, these items generally must be in good condition or better at the time they are donated to charity. The same written acknowledgement described above applies to nonmonetary contributions valued at $250 or above.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Planning Strategies for the Net Investment Income Tax

NIIT website

Many taxpayers are now familiar with the Net Investment Income Tax (NIIT) which was signed into law as part of the Affordable Care Act in 2013. The NIIT was created to impose a 3.8% tax on the passive income of high income earning individuals and trusts. Passive income includes any interest, dividends, capital gains, rental income (pending your level of activity), and passive business investments. The tax is applicable for individuals that have modified adjusted gross income (MAGI) of greater than $250,000 for married filing jointly taxpayers ($200,000 for single taxpayers). Given that many individuals fall within the NIIT MAGI limits, we are focusing this week’s Tax Scoop Tuesday on planning strategies to minimize the NIIT.

One strategy for minimizing the NIIT is to limit their capital gains income for the year. This can be done by offsetting capital gains with capital losses, deferring a capital gain to the following year or considering installment sales to spread a gain out over more than one year. Another strategy is to invest in tax exempt municipal bonds. These bonds and other tax exempt income will be excluded from the NIIT calculation. A taxpayer should consult their investment advisor before implementing either of these strategies.

A final strategy is to become more actively involved in a partnership or S corporation business in which that you have historically had a passive role. The NIIT only applies to passive business investments. The IRS provides several tests to determine if your activities working for the business will rise above a passive investment. The most common test is the 500 hour participation rule. If this number of hours is attainable, an individual can consider increasing their hours working in the business to limit their NIIT.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

New Jersey Extends Homestead Rebate Deadline

NJ Extension Web

 In an attempt to provide property tax relief to residents, the state of New Jersey has established the Homestead Benefit Program, which allows for a credit against property taxes paid in prior years. For 2015, applicants may apply for a credit against 2013 New Jersey property tax paid, assuming they meet certain eligibility requirements.  In order for a New Jersey resident to qualify, they must have paid their 2013 property taxes for a home which was their principal residence on October 1, 2013. The Homestead Benefit is available only to those whose New Jersey gross income (does not include tax-exempt income) was less than $75,000 in 2013. The income limit is increased to $150,000 for those 65 or older or blind or disabled in 2013.  Income limits apply equivocally to a single individual, as well as those married filing joint and separate. 

According to the 2012 Homestead Benefit Program, the state paid more than $369 million in benefits to New Jersey homeowners, averaging around a $450 benefit per taxpayer. The state has not received the typical amount of applications for 2015 and has extended the due date to December 31, 2015 from October 30, 2015. Eligible homeowners may file applications with the state of New Jersey either online on the state website or by phone at 1-877-658-2972.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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