Monthly Archives: January 2020


Social Security Number Hustle Scam – In this tax scam, the victim receives a robocall saying that his or her Social Security number has been (or will be) “cancelled” because the taxpayer has not paid Social Security Scamoverdue taxes. Victims are told that they must return the call immediately to resolve the issue. Upon returning the call, the scammer will ask the victim to confirm his or her Social Security number and for a credit card number to pay the fictitious tax bill. Protect yourself and your loved ones as this scam often affects older taxpayers who may be easily frightened and mislead. Never give out your Social Security number to anyone who contacts you by telephone, and never give out credit card information or send any kind of payment to anyone contacting you by phone. When in doubt, call your local social security office at the number found on or the call the IRS at 800-829-1040.

Bogus Tax Agency Scam – A phony tax agency (e.g., Bureau of Tax Enforcement) sends a letter to the victim demanding payment of Elder Victimfictitious delinquent taxes and threatening a lien on the victim’s property or a levy on the victim’s financial accounts. The letter may reference legitimate tax agencies (such as the IRS) in an attempt to enhance the legitimacy of the fake agency. Don’t be bullied into paying money out of fear. If in doubt and they claim that you owe federal taxes, contact the IRS at 800-829-1040. If the claim is for state taxes, find the contact information online for the state in question, and call them directly. If you need help, call your tax professional who can assist you.

Spoof Taxpayer Advocate Service Scam – In this scam, the victim receives an unsolicited phone call from the scammer who claims to be from the Taxpayer Advocate Service (TAS), which is an actual government agency. The scammers are able to trick the victim’s caller ID so that the call appears to be from the TAS office of the IRS. Once the scammers gain the victim’s confidence, they request personal information, including the victim’s Social Security number or individual taxpayer identification number (ITIN). Never provide your Social Security number or any other personal information to anyone who calls you on the phone. If they are indeed with the IRS, they will have access to that information and do not need to get it from you.

Tax Transcript Malware – Targeting businesses, the scammer sends emails that appear to be from the IRS to employees. The emails contain an attachment described as the victim’s “tax transcript.” When an employee opens the attachment, malware infects the computer of the employee and then spreads to the entire computer system of the business. The malware steals sensitive information from the business and forwards it to the scammer. The tax transcript attachment is a new twist on a well-known phishing scheme where malware known as Emotet poses as an attachment from specific banks and financial institutions. This attack relies on the trust, gullibility, and natural curiosity of the victim to open the attachment. The best defense is to avoid opening email attachments and clicking on email links unless you are certain of the source.

Most tax scams have certain characteristics that reveal their true purpose.

Red flag one is a demand for immediate payment using a specific payment method, such as a credit card, a debit card, a wire transfer, cash, or even gift cards. All payments made for taxes should be made directly to the IRS at the addresses published on the IRS website or through the IRS website at  Always call the IRS at 800-829-1040 to verify that you actually have a balance due before submitting any payment.

Red flag two is when scammers threaten that the local police or other law-enforcement agency will arrest the taxpayer, revoke the taxpayer’s business or driver’s license, cancel the taxpayer’s social security number, or change the taxpayer’s citizenship or immigration status for non-payment of taxes. This extortion attempt relies on the taxpayer’s confusion and lack of knowledge regarding various tax obligations and the authority of the IRS.

Although the IRS can eventually place a legal claim against a taxpayer’s property for non-payment of taxes, the IRS cannot arrest taxpayers for non-payment nor can the IRS revoke licenses or status.

Red flag three is when the demand is immediate and urgent without the opportunity to question or appeal the tax liability. The IRS has several layers of inquiry and appeal built into its tax collection systems. There is never a rush when a legitimate tax issue is first initiated, and the IRS gives taxpayers multiple opportunities to discuss and address the issue.

Red flag four is when the scammers contact the victim via email or telephone. Nearly all IRS correspondence is through the United States Postal Service, including initial taxpayer contacts. Under very limited circumstances, and only after several notices have first been sent through the mail, the IRS may call or visit a taxpayer in-person when the taxpayer has an overdue tax bill, a delinquent tax return, or a delinquent employment tax payment, or when the IRS needs to tour a business as part of a civil or criminal investigation. If the taxpayer receives a suspicious email, the email should be forwarded to


SECURE ACT – Individuals

Cliff Hanger with 8 Things you Should know about the Secure Act

Congress recently passed—and the President signed into law—the SECURE Act, landmark legislation that may affect how you plan for your retirement.  Many of the provisions go into effect in 2020, which means now is the time to consider how these new rules may affect your tax and retirement-planning situation.
Here are some of the key provisions effecting individuals:

Repeal of the maximum age for traditional IRA contributions.
Before 2020, traditional IRA contributions were not allowed once the individual attained age 70½. Starting in 2020, the new rules allow an individual of any age to make contributions to a traditional IRA, as long as the individual has compensation, which generally means earned income from wages or self-employment.

Required minimum distribution age raised from 70½ to 72.
Before 2020, retirement plan participants and IRA owners were generally required to begin taking required minimum distributions, or RMDs, from their plan by April 1 of the year following the year they reached age 70½. The age 70½ requirement was first applied in the retirement plan context in the early 1960s and, until recently, had not been adjusted to account for increases in life expectancy.

For distributions required to be made after Dec. 31, 2019, for individuals who attain age 70½ after that date, the age at which individuals must begin taking distributions from their retirement plan or IRA is increased from 70½ to 72.

Partial elimination of stretch IRAs.
For deaths of plan participants or IRA owners occurring before 2020, beneficiaries (both spousal and nonspousal) were generally allowed to stretch out the tax-deferral advantages of the plan or IRA by taking distributions over the beneficiary s life or life expectancy (in the IRA context, this is sometimes referred to as a “stretch IRA”).

However, for deaths of plan participants or IRA owners beginning in 2020 (later for some participants in collectively bargained plans and governmental plans), distributions to most nonspouse beneficiaries are generally required to be distributed within ten years following the plan participant s or IRA owner s death. So, for those beneficiaries, the “stretching” strategy is no longer allowed.

Exceptions to the 10-year rule are allowed for distributions to (1) the surviving spouse of the plan participant or IRA owner; (2) a child of the plan participant or IRA owner who has not reached majority; (3) a chronically ill individual; and (4) any other individual who is not more than ten years younger than the plan participant or IRA owner. Those beneficiaries who qualify under this exception may generally still take their distributions over their life expectancy (as allowed under the rules in effect for deaths occurring before 2020).

Expansion of Section 529 education savings plans to cover registered apprenticeships and distributions to repay certain student loans.
A Section 529 education savings plan (a 529 plan, also known as a qualified tuition program) is a tax-exempt program established and maintained by a state, or one or more eligible educational institutions (public or private). Any person can make nondeductible cash contributions to a 529 plan on behalf of a designated beneficiary. The earnings on the contributions accumulate tax-free. Distributions from a 529 plan are excludable up to the amount of the designated beneficiary’s qualified higher education expenses.

Before 2019, qualified higher education expenses didn’t include the expenses of registered apprenticeships or student loan repayments.

But for distributions made after Dec. 31, 2018 (the effective date is retroactive), tax-free distributions from 529 plans can be used to pay for fees, books, supplies, and equipment required for the designated beneficiary s participation in an apprenticeship program. In addition, tax-free distributions (up to $10,000) are allowed to pay the principal or interest on a qualified education loan of the designated beneficiary, or a sibling of the designated beneficiary.

Kiddie tax changes for gold star children and others.
In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA, P.L. 115-97), which made changes to the so-called “kiddie tax,” which is a tax on the unearned income of certain children. Before enactment of the TCJA, the net unearned income of a child was taxed at the parents’ tax rates if the parents’ tax rates were higher than the tax rates of the child.

Under the TCJA, for tax years beginning after Dec. 31, 2017, the taxable income of a child attributable to net unearned income is taxed according to the brackets applicable to trusts and estates. Children to whom the kiddie tax rules apply and who have net unearned income also have a reduced exemption amount under the alternative minimum tax (AMT) rules.

There had been concern that the TCJA changes unfairly increased the tax on certain children, including those who were receiving government payments (i.e., unearned income) because they were survivors of deceased military personnel (“gold star children”), first responders, and emergency medical workers.

The new rules enacted on Dec. 20, 2019, repeal the kiddie tax measures that were added by the TCJA. So, starting in 2020 (with the option to start retroactively in 2018 and/or 2019), the unearned income of children is taxed under the pre-TCJA rules, and not at trust/estate rates. And starting retroactively in 2018, the new rules also eliminate the reduced AMT exemption amount for children to whom the kiddie tax rules apply and who have net unearned income.

Penalty-free retirement plan withdrawals for expenses related to the birth or adoption of a child.
Generally, a distribution from a retirement plan must be included in income. And, unless an exception applies (for example, distributions in case of financial hardship), a distribution before the age of 59-1/2 is subject to a 10% early withdrawal penalty on the amount includible in income.

Starting in 2020, plan distributions (up to $5,000) that are used to pay for expenses related to the birth or adoption of a child are penalty-free. That $5,000 amount applies on an individual basis, so for a married couple, each spouse may receive a penalty-free distribution up to $5,000 for a qualified birth or adoption.

Taxable non-tuition fellowship and stipend payments are treated as compensation for IRA purposes.
Before 2020, stipends and non-tuition fellowship payments received by graduate and postdoctoral students were not treated as compensation for IRA contribution purposes, and so could not be used as the basis for making IRA contributions.

Starting in 2020, the new rules remove that obstacle by permitting taxable non-tuition fellowship and stipend payments to be treated as compensation for IRA contribution purposes. This change will enable these students to begin saving for retirement without delay.

Tax-exempt difficulty-of-care payments are treated as compensation for determining retirement contribution limits.
Many home healthcare workers do not have taxable income because their only compensation comes from “difficulty-of-care” payments that are exempt from taxation. Because those workers do not have taxable income, they were not able to save for retirement in a qualified retirement plan or IRA.

Starting in 2020 for contributions made to IRAs (and retroactively starting in 2016 for contributions made to certain qualified retirement plans), the new rules allow home healthcare workers to contribute to a retirement plan or IRA by providing that tax-exempt difficulty-of-care payments are treated as compensation for purposes of calculating the contribution limits to certain qualified plans and IRAs.

2019 Tax Organizer Now Avaliable

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If you have questions after you download the 2019 Tax Organizer, just give us a call. Our office is up to date on all the latest tax changes and know just how to make sure you pay the lowest tax allowed by law. Our tax professionals have been helping client keep for of their hard earned money and pay less in tax for over 30 year.

Call today for a no obligation free consultation 954-563-1269 or 800-382-1040.