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Watch Out For Tax Scams!

www.taxassistonline.com keeping you up to date with tax news and tips. In TAX TIP 2006-24 the IRS Warns Taxpayers To Beware of Tax Scams Tax scams can take several forms, ranging from the promise of a large tax refund to the promotion of illegal ways of taxing yourself. Believe me, a few extra dollars is absolutely not worth the pain of

First, the good news. A last minute deal in Congress has seen the alternative minimum tax adjusted for inflation, meaning about 23 million households will avoid a tax increase of about $2000.

However, the not quite so good news is that the IRS says it will take about seven weeks to reprogram and test its systems to accommodate the change to the tax rules affecting the alternative minimum tax (AMT). That applies to electronic and paper returns, and it means that even if you file your return early, you won’t be getting any refund due to you until at least February. In the words of U.S. Treasury Secretary Henry Paulson, “It is likely there will be some delays, including the delays of some refunds.”

The AMT was introduced in 1969, with the intention of preventing a small number of wealthy households claiming excessive deductions. But it wasn’t linked to inflation, so as the years have gone by, the number of households affected has increased. There’s no denying that the fix needed to be made and that the outcome will be a positive one for many taxpayers. But the timing will be causing more than a few headaches - for those rushing to implement the changes, for the Congressmen associated with a delayed tax refund in an election year and for those taxpayers who like to file early and get their refund at the end of January.

Well don’t count on it this year.

 

The IRS has introduced a calculator to help you make sure your employer deducts the right amount of withholding tax from your pay.

The IRS website says:

Purpose of This Computer Program The purpose of this application is to help employees to ensure that they do not have too much or too little income tax withheld from their pay. It is not a replacement for Form W-4, but most people will find it more accurate and easier to use than the worksheets that accompany Form W-4. You may use the results of this program to help you complete a new Form W-4, which you will submit to your employer.

Tips For Using This Program

• Have your most recent pay stubs handy.
• Have your most recent income tax return handy.
• Fill in all information that applies to your situation.
• Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.
• Consult the information links embedded in the program whenever you have a question.
• Print out the final screen that summarizes your input and the results, then use it to complete a new Form W-4 (if necessary), and keep it for your records.

Who Can Benefit From This Application?

• Employees who would like to change their withholding to reduce their tax refund or their balance due;
• Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
• Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.

For Special Situations If your situation is among those listed below, you will probably achieve more accurate withholding by following the instructions in Publication 919, How Do I Adjust My Tax Withholding?

• If you will be subject to alternative minimum tax, self-employment tax, or other taxes; or
• If any of your current jobs will end before the end of the year.

NOTE: The information you provide is anonymous and will only be used for purposes of this calculation. It will not be shared, stored or used in any other way, nor can it be used to identify the individual who enters it. It will be discarded when you exit this program.

To access the 2007 IRS Withholding Calculator, go to http://www.irs.gov/individuals/page/0,,id=14806,00.html

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