Internal Revenue Service Releases 2016 Tax Numbers

On October 21, 2015, the Internal Revenue Service released the annual inflation adjustments for more than fifty tax provisions and the tax rate schedules for individuals, married individuals filing jointly, and heads of households. For 2016, Taxpayers will see a slight increase in some tax benefits, while other benefits will remain the same. Along with the tax benefits, several penalties have also been adjusted.

We updated our Key Tax Numbers which can be located on our website at the following link: Key Tax Numbers. Additionally, the IRS provided a summary of the provisions that it believes would be of the greatest interest to most tax payers. The summary and a link to the Revenue Procedure can be found at https://www.irs.gov/uac/Newsroom/In-2016-Some-Tax-Benefits-Increase-Slightly-Due-to-Inflation-Adjustments,-Others-Are-Unchanged. Alternatively, the Revenue Procedure will appear in the Internal Revenue Bulletin 2015-44 dated November 2.

© 2015 Houghton Vandenack Williams
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IRS Warns of Tax Scams

On August 7, 2015, the Internal Revenue Service (“IRS”) issued a warning to all taxpayers about recent tax scams. There are reports of nearly 4,000 victims and over $20 million in financial losses caused by the scams. Most of the scams involve individuals posing as representatives of the IRS and are targeting both personal and financial data. The IRS warned that tax scams continue to evolve and can occur through many mediums—phone, email, or by mail with the use of authentic looking IRS letterheads.

As tips to avoid these scams, the IRS warns they will not:

  • Angrily demand immediate payment over the phone or call about taxes without first mailing a bill
  • Threaten arrest for lack of payment
  • Demand payment without the opportunity to question or appeal the amount
  • Require specific payment methods, such as prepaid debit cards
  • Ask for credit or debit card numbers over the phone

Additionally, the IRS wants taxpayers to remember that the official website of the IRS is IRS.gov. Any other variation is likely fraudulent.

For more information, see IRS Warns Taxpayers to Guard Against New Tricks by Scam Artists; Losses Top $20 Million, available at http://www.irs.gov/uac/Newsroom/IRS-Warns-Taxpayers-to-Guard-Against-New-Tricks-by-Scam-Artists.

If would like to further educate yourself about the most common scams for 2015, the IRS provided a list of the 12 most common scams for 2015. See, IRS Completes the “Dirty Dozen” Tax Scams for 2015, available at http://www.irs.gov/uac/Newsroom/IRS-Completes-the-Dirty-Dozen-Tax-Scams-for-2015.

If you believe you have been contacted as part of one of these scams, you can report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484 and the Federal Trade Commission at FTC.gov.

© 2015 Houghton Vandenack Williams

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Tax Breaks for Grandparents Supporting Grandchildren

Grandparents providing support to grandchildren face many difficult issues. In particular, the additional costs of raising a grandchild can delay a planned retirement or other personal financial goals. However, several important tax breaks are available to ease this burden for grandparents. These include:

  •  Head of household filing status. If you are unmarried and provides at least half of the support for your grandchild who has the same principal place of abode as the taxpayer, you may be eligible to file under head of household status. This is generally more favorable than filing as a single taxpayer.
  • Dependent exemptions. If your grandchild qualifies as a dependent, you may be able to take advantage of several tax breaks. In addition to the exemption, you may be able to claim the earned income credit, child tax credit, or credit for childcare expenses.
  • Education credits. If you pay your grandchild’s education costs, several other credits may be available. These include the American Opportunity Tax Credit, the Lifetime Learning Credit, and other favorable tax breaks.

 If you have younger grandchildren, you may also be able to make tax-favorable contributions to save for their future education.

© 2014 Parsonage Vandenack Williams LLC

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