Friday, June 3, 2016

IRS Scams Continue To Scare People

There is a new telphone scam where the caller claims to be from the IRS (Internal Revenue Service) and is calling about a tax bill.  The caller then proceeds to indicate that the called taxpayer owes a Federal Student Tax.  This is a SCAM as 1) the IRS will not initiate contact to the general public via phone about balances due and 2) there is not a "Federal Student Tax".

If you receive a phone call, the caller will be requesting immediate payment or threatening that a warrant will be issued for your arrest.  You should remain calm and check with your tax professional or call the IRS directly to verify if any outstanding balances are true.  Do not offer any personal information or offer any payment and/or banking information to the caller.

Please check your mail box to see if you have any love notes from the IRS (if there is truly an outstanding balance, you will have received several notices indicating such).  If you don't have correspondence from the IRS, then you most likely have NOTHING to WORRY about.  If you have letters from the IRS, then be sure to read the notice and see what action is needed.

If you want to report a SCAM phone call, you can report that at the IRS website here: IRS Report Phishing.

Also consider this a good reminder to protect your Social Security Number - that number is used to claim many tax benefits and file your tax returns.  ID Theft continues to be an issue as well, that might just be another topic for another post.

Wednesday, June 1, 2016

Updates to Arizona Charitable Tax Credits


The Governor of the state of Arizona has signed a bill on May 6, 2016 that has expanded the tax credits available for Charitable Tax Credits and Foster Care Organization Tax Credits.  The effective date of the bill will be August 2016 (90 days following the Governor's signature), but it will be retroactive to the beginning of the 2016 calendar year.

Under prior law, the maximum credit for both the Charitable Tax Credit (aka Working Poor Credit) and the Foster Care Organization Tax Credit was $800 for a married couple/$400 for a single.  The credit would allow for $200/$400 towards Charitable Organizations and an additional $200/$400 towards Foster Care.  As long as the total contribution did not exceed the $400/$800 amount based on filing status, you could claim up to that amount for purposes of reducing your tax liability to the state of Arizona.

Under the new law, in 2016 there are 2 changes.  The first change is that the Charitable (Working Poor) Tax Credit will be doubled, allowing single taxpayers to make contributions of $400, married can make $800. The second change is to allow contributions to Foster Care Organizations to be $500 for single and $1,000 for married taxpayers.

The effect of these changes is to increase the allowed tax credits for the organizations that qualify under these credits.  So instead of being capped to a total of $400 for single, $800 for married, the tax credits now allow a total of $900 for single, $1,800 for married between the combination of the 2 credits.  This is the way that I am reading the text of the law but I am interested to see how the Arizona Department of Revenue applies the law to the forms and instructions for the 2016 tax returns.

If you would like to see a list of qualified organizations, visit the Arizona Department of Revenue page and select 2016 Qualifying Organizations here: Tax Credits Lists

As a reminder, these contributions may also qualify for Federal charitable deductions if you itemize on Federal Schedule A.