News & Articles

You should have received your W-2, Wage and Tax Statement, by the end of January.  If you have not, the IRS provides these suggestions:

1. Contact your employer. Ask for a copy, and make sure they have your correct address.
2. If you haven’t received anything by February 23, you can call the IRS at 800-829-1040. They say the will send a letter to your employer on your behalf.  However, considering the IRS’s own comments as to their inability to answer all their calls this year, you may be hard pressed to get through.  If you do get through, you will need to supply the following information:
   1. Your name
   2. Address,
   3. Social Security number
   4. Phone number,
   5. Employer’s name, address and phone number
   6. An estimate of your wages and federal income tax withheld in 2014; your final pay stub for the year has this information.
3. If you don’t receive a W-2 by the filing due date of April 15, you should file your return anyway, using the information from your final paystub for 2014. You will need to include Form 4852, Substitute for Form W-2, with your return.
4. If you need more time to file your return, you can apply for an extension using form 4868, which can be filed electronically. Please remember that this is an extension of time to file, not pay your taxes.

If, after you file your return, you get your W-2 and you realize that your return includes incorrect information, don’t worry. You can file an amended return, form 1040X, to update for your correct information (you would need to amend your state return as well.)

The most important thing is to file your return, don’t let a lack of W-2 deter you from filing

We have received several calls from clients who have been called by “IRS Phone Scammers.” These scammers may claim to be “Officer Jennifer So and So,” and have a heavy accent. The caller tells the person that he/she owes money for taxes and makes veiled threats if they don’t pay up.

Please be aware that this is a SCAM!!! Taxpayers should know that the IRS does NOT make first contact with taxpayers by phone; letters (or several) are always sent.

The IRS will never:

1.    Call you about taxes you owe without first mailing you an official notice.

2. Demand that you pay taxes without giving you the chance to question or appeal the amount they say you owe.
3. Require you to use a certain payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police or other law-enforcement to have you arrested for not paying.

If you receive such a phone call, please hang up immediately. You can contact the Treasury Inspector General for Tax Administration at 1-800-366-4484 to make a report, or you can file a complaint using the FTC Complaint Assistant, and choose “Other” and then “Imposter Scams.”

For more information, click here.

Several of our clients have asked if they can electronically pay their tax bills, and the answer is yes! Individuals can pay their federal income tax and estimated tax payments online at the IRS.gov website. At the IRS.gov site, click on the “Payments” tab a the top, then go “Direct pay” and follow the instructions. Individuals do not need to enroll in the Electronic Federal Tax payment System (EFTPS) to use Direct Pay. Click here for more info.

Business taxes cannot be paid via Direct Pay. Businesses should use the EFTPS to pay their taxes online.

State of Maine taxes can also be paid online using the Maine Revenue Service “E-Z Pay.” You will need to be an established tax payer with Maine Revenue Service and will need to register with a user name and password. Click here for more info.

Some of our clients have received phone calls from a group of very aggressive phone scammers, posing as IRS agents. These scammers tell their potential victims that they owe large amounts in  back taxes and must be paid right away, in cash, or the police will be arriving at their home that day. Demands for cash payments are made, and other threats, such as losing drivers licenses or having utilities shut off  have been made.  Sometimes the scammers tell their marks they have a large refund coming if they divulge their social security numbers or other personal information.

Please be aware that the IRS always sends taxpayers written notification of any taxes due, and they never ask for any cash, a credit card, or debit card info over the phone.  The IRS never initiates contact with taxpayers by email to request personal or financial information, such as PINS or passwords. If you get such an email, you should not open it and forward it to [email protected].  Other aspects of this scam include follow up phone calls by other scammers pretending to be from the police or DMV, supporting the IRS scammers claims.

If you think you have been targeted by scammers posing as IRS agents, please call the Treasury Inspector General for Tax Administration at 1.800.366.4484.  For more information about this  click here.

We would like to help spread the word about the Maine Educational Opportunity Tax Credit! This is a credit against Maine income taxes for people who took out loans to attend college in Maine and then go on to work in Maine. There are credits available for both an associate’s and bachelor’s degrees, and “extra credit” for those whose degrees are in the “STEM” fields; science, technology, engineering and math.

The credit works by using your monthly loan payment to calculate your credit, which reduces your Maine income tax. For degrees in the STEM fields, your credit may be refundable, which means if the credit is larger than that tax you owe, you would get a check from the state. For other fields, any unused credits can be carried forward for ten years against Maine income taxes in future years.

Your credit is for course work after January 2008, and you must do this course work at a Maine college.  According the “Opportunity Maine” website, the average Educational Opportunity tax credit for fully eligible students will be $2100 each year, but for those students with higher college debt, the credit can be worth up to $5900 a year.

If your employer pays your student loans, then your employer is eligible for the credit!

For more information about the credit, eligible loans payments and your eligibility for the credit, click here for  information from Maine Revenue Services, and here for  information and FAQs from OpportunityMaine.org.

Be sure to tell your tax preparer  that you have student loans from a Maine school.

Several of our clients have asked if they can keep digital copies of their tax return documents on their computer in place of keeping the paper copies.

The IRS requires that you keep records to demonstrate how you have complied with that tax law. This documentation should support the information on your tax return and be available for examination as requested by the IRS. Recent guidance from the IRS states that keeping digital copies of this information is acceptable. So feel free to scan all your documents, but be sure to keep your digital information secure and backed up. For more information about how long to keep your tax records, click here.

The IRS announced on Oct. 22 that the 2014 tax filing season will be delayed by one to two weeks to allow for adequate testing of their computer systems. The testing was delayed due to the 16 day federal government closure.  A final decision on the official start date of the filing season will be made in December.

The original start date, the first day paper filed returns would be accepted, was to have been Jan. 21. With a one or two week delay, this date would be sometime between Jan. 28 and Feb. 4.

The due date for returns, however, remains April 15, a date set by statute.

Whatever the actual “start” date for the filing season, we suggest you gather up your tax records and information as usual and submit them as early as possible to your CPA.  We can still start your return, even if we can’t officially file it until Feb. 4 or later.

The IRS recently ruled that same-sex couples who are married in states where this is legal must file their federal tax returns as married filing jointly, or married filing separately.  This applies whether or not the couple currently lives in a state where same-sex marriage is recognized. This ruling applies to estate and gift taxes as well.

This ruling does not apply to registered domestic partnerships, civil unions or other formal relationships recognized by state law.

Individuals who were in same sex marriages in prior years but filed federal income tax returns with a “single” status, may file amended returns as married filing jointly, but are not required to. For example, in Maine in 2012, same-sex couples were required to file a “married filing joint” return for state income tax purposes, but had to file “single” for federal tax purposes. That couple can amend their 2012 federal returns and file jointly if this would be of any benefit to them.

Same -sex married couples should take this into consideration when making any estimated payments for 2013, or for any tax planning issues that may be impacted by a “married” filing status.   Should you have any questions about this, contact your CPA.

“Ask yourself: ‘Do I feel the need to laminate?’ Then teaching is for you.”
– Gordon Korman

If you are a teacher, you may or may not want to laminate, but if you do, be sure to keep track of those expenses. Eligible educators can deduct up to $250 of unreimbursed expenses paid for books, supplies and other supplementary material bought for the classroom. Surveys show that many teachers spend an average of $300 a year on these types of supplies, so this deduction can help.

An “eligible educator” is someone who works in grades k-12 as a teacher, instructor, counselor, Principal, and/or aide. Additionally, the individual must work at least 900 hours in a school year.

These expenses are deductible even if you do not itemize, so keep track of those expenses and record them on line 23 of your 1040. Or ask your CPA about them.

The IRS offers two credits for those paying those high college bills, the American Opportunity Tax Credit and the Lifetime Learning Credit.

The American Opportunity Tax Credit can reduce your tax bill by up to $2500 per eligible student.  Eligible costs include tuition, fees, related books, supplies and equipment during the first four years of post-secondary education (note that graduate school does not count).  Up to forty percent of the credit is refundable, which means that even if your tax liability is zero, you could get a refund of a portion of the eligible credit.

The Lifetime Learning Credit can reduce your tax bill by up to $2000 for qualified education expenses.  There is no limit on the numbers of years you can claim this credit and it covers both undergraduate and graduate courses. Qualified education expenses include costs of a post-secondary education or costs to acquire or improve job skills. Related costs such as student fees, supplies, course books and equipment are included only if they must be paid directly to the school as part of enrollment.

Both credits cannot be claimed the same year. So if you or a dependent are eligible for both, you would use the one giving you the greater tax benefit. Beware that both credits are subject to phase outs, meaning reduced benefits, at higher income levels.

Aside from the credits there are two education related deductions available as well.

The Tuition and Fees Deduction is deducted on the front of your Form 1040. The amount of the deduction is limited to $4000 of qualified expenses for either undergraduate or graduate courses.

Using the Student Loan Interest Deduction, you may be able to deduct up to $2500 on the front of your Form 1040. Beware that these deductions, like the credits, may be reduced or eliminated at higher income levels.

Your CPA can help you sort through which of the above will be best for you. When you bring your information to your accountant, be sure to bring all your receipts related to education expenses and any forms 1098-T you receive as a result of paying tuition, and forms 1098-E, which reports student interest you may have paid.