Category: Blog

The IRS Can Audit You Back Farther Thank You Think

While we never anticipate it will happen to us, there is always that lingering possibility that you might get audited by the IRS. In the past, the statute of limitations was three years. However, there are caveats to this. Recently, the statute of limitation has doubled to six years, in some cases.

 

The IRS can go back and audit you under the following conditions:

3 years

This is the normal statute of limitations on tax audits. It’s important to note, however, that if you file an extension, the statute does not begin at the deadline in April. It starts on the date that you file.

6 years

The IRS is authorized to go back up to SIX years if you exclude more than twenty five percent of your stated gross income. They can also go back this far if you excluded more than $5,000 of FOREIGN income such as interest made on an overseas account.

Forever

Basically the IRS can go back and audit you at any time if you just fail to file altogether or you exclude certain tax forms. In addition, if you fail to report foreign assets or there is potential fraud, there are no time limits.

 

If you need help learning about and preparing your taxes this year or would like more information on the statute of limitations, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444. We’re excited to hear from you!

 

Sources:

http://www.forbes.com/sites/robertwood/2016/01/15/beware-irs-now-has-six-years-to-audit-your-taxes-up-from-three/#1bef2c284216

http://www.cbsnews.com/news/how-far-back-can-the-irs-audit-you/

http://www.forbes.com/sites/robertwood/2014/04/03/how-long-can-irs-audit-it-all-depends-on-you/#1099215d9597

Scanning Apps: Which is worth the download?

If you’re a business owner or just a financially mindful individual, keeping records of your transactions is essential. It’s also much less tedious using your phone to scan a document than finding a printer, scanner or fax machine…yes, fax machines still exist. We wanted to take a look at a few of the most popular scanning apps out there and see which one should be your next download.

 Evernote Scannable:

Scannable is definitely an app tailored to avid users of Evernote.  While you are able to email and save to Evernote, the free version does not allow you to export to different sites like other apps do.  One really cool feature is it allows you to scan business cards and save them to your contacts. It also allows you to save your scan as a jpeg or PDF. In terms of the actual scanning, you can’t easily crop the image, but the quality is still very good.

1

 

Tiny Scanner:

Tiny Scanner, available to both iPhone and Android, is for Instagram lovers for sure. It has multiple filters to choose from and brightness adjusting features. Unlike Scannable, users are able to send their scans via Dropbox, Google Drive, Box, OneDrive, iCloud as well as Evernote. However, there is a limited amount of storage space in the free version. The scanning quality is great and you can easily crop the edges of your document. Although it only saves as a PDF, it does allow you to choose the size of the PDF export (A4, Letter, etc).

2

 

Genius Scan:

Quality wise, Genius scan is very comparable to the other two apps. What sets it apart is an awesome magnifying tool to help you crop perfectly. Like Tiny Scanner, you can save your image as a jpeg and a PDF. The only downfall is there are so many other great features…but you have to pay. Genius Sign ($4.99) allows you to sign documents right on your phone while Genius Scan+ ($6.99) can export your receipts to Expensify to help you track your finances.

3

 

Overall, all of the apps are a great way to keep track of receipts or send documents. From a tax perspective, it is always favorable to have a backup of all of your transactions. If you need help preparing your taxes this year, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444. We’re excited to hear from you!

 

Get Your Finances in Shape for 2016

With the arrival of the New Year comes an influx of resolutions, many of which will soon be forgotten. New goals are set and changes are made in an effort to improve our lifestyles for the better. Many of these New Year’s resolutions focus around health and wellness, such as eating healthier or getting in shape. But what about financial resolutions? The New Year is the perfect time to reevaluate your finances, establish financial goals, and develop a strong action plan that will help you maintain your resolution year-round. It’s time to set yourself up for the most fiscally sound year yet!

 

Begin by reevaluating your 2015 finances. In order to get where you want to be, you must first look at where you were. Take note of where money was spent to gain insight about where money can be saved going forward. If you have debt, make yourself aware of everything you owe. Looking at your financial year in review is also a great way to determine your financial strengths as well as uncover areas in need of improvement. This will help you decide what it is you want to improve upon and accomplish in 2016.

 

Using the insights gained from reevaluating 2015, ask yourself, “What do I want to accomplish this year?”  Whether you want to save money, decrease debt, or simply develop smart financial habits, no goals are too big or too small as long as they are attainable and conducive to your lifestyle. The best way to keep your resolutions throughout the year is to set realistic and achievable goals.

 

Once you have decided what it is you want to achieve in 2016, you can implement a plan to help you reach your targets. When creating your plan, set two dates within the year to review your finances. Doing so will give you insight into what is working and what is not in regards to your budget, savings, spending, investments, and tax prep. The use of a financial calendar can be extremely helpful in keeping you organized and ensuring all your financial deadlines are met, especially important tax dates. The IRS provides a comprehensive tax calendar online that can help get you started. A financial calendar eliminates the element of surprise, as you will be aware and prepared for what is to come.

Creating and employing a spending budget is a key way to achieve financial stability. While it may seem obvious to spend less money than you earn, it is not always easy to adhere to. A spending budget accounts for every dollar and should you abide by it, ensures you do not overspend. And don’t forget to prepare for the unexpected when creating your budget! The best way to financially survive unplanned events is to anticipate them. Allocate a portion of your budget for emergency funds and those unexpected events won’t seem nearly as impactful. A detailed spending budget is a strong asset for anyone and everyone and is imperative in achieving your financial goals, whatever they may be.

 

There are numerous ways to take control of your finances. If the commitment of a financial resolution overwhelms you, start by educating yourself on the subject. There is a wealth of information and advice as well as budget and bookkeeping tools available online that can help you better understand your personal finances. Mint is a free and powerful budgeting tool that gathers all your financial information into one place, making it easy to see and understand your spending behaviors. Billguard is another budgeting tool available for Android and iPhone that works to track and protect your finances. If you are having trouble reaching your financial objectives, don’t be afraid to ask! Your local CPA can happily provide advice. Adopting smart money habits is an easy and powerful way to take control of your finances. Think before you make a purchase, pay attention to bank statements, check in with your budget every month, etc. A strong bookkeeping strategy can make all the difference.

 

Always be proactive when it comes to your finances. Learn as much as you can and implement your understandings into your day to day life. While it is never easy to keep a New Year’s resolution, a committed attitude and a solid plan can keep you from reverting back to old habits. Gaining control of your finances will not only have a positive effect on your bank account, it will also give you peace of mind and a solid financial foundation you can rely on. It’s not too late to begin your 2016 New Year’s financial resolution!

For help with your financial needs, call (866) 736-2444 today.  http://www.semaphoretax.com/

 

Written by Kaley Halliburton

 

LINKS TO TOOLS MENTIONED ABOVE:

IRS Tax Calendar

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/IRS-Tax-Calendar-for-Businesses-and-Self-Employed

Mint

https://www.mint.com/

Billguard

https://www.billguard.com/

 

Tax Penalties: The Reality of Filing Late vs. Paying Late

Uncertainty, fear and confusion are only some of the familiar feelings that flood our thoughts during the inevitable tax season. If you a
re prepared, organized and don’t anticipate an outstanding balance this year, you should be sweat free. If you do, however, have an unpaid balance and don’t have the cash to pay in time, not all is lost! Make the financial decision that has the least impact on your bank account.

FILING your taxes late and PAYING your taxes late hold completely different penalties. In general, here’s what you can expect to pay for each scenario.

(Based on information provided by the IRS)

What if I don’t have the money to pay on time? (failure-to-pay penalty)

  • Every month or part of a month that the tax goes unpaid after it’s due, a 5% penalty is charged on the unpaid taxes (up to 25%)
  • If you filed on time and opted for a payment plan, the penalty drops to 25% once the plan is in effect
  • If you paid up to 90 percent of your taxes and you file for an extension, you may not be responsible for the failure-to-pay penalty (note ̶  you will still pay interest on any outstanding taxes)

What if I file late and I still owe tax? (penalty for failure to file)

  • Every month or part of a month that the return was late, a 5% penalty is charged on unpaid taxes (up to 25%)
  • If you file over 60 days past the due date, the minimum penalty is the lesser of $135 or 100 percent of unpaid tax.

 

As a general rule, it is important to always file on time regardless of if you can pay, as the penalty for failure to file is typically much higher than the failure to pay penalty.If you need help learning about and preparing your taxes this year, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444. We’re excited to hear from you!

 

Sources:

https://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/IRS-Procedures/Collection-Procedural-Questions/Collection-Procedural-Questions-3

Social Engineering: What Attacks Look Like

Identity-theft

Twenty minutes is all it took for Shane MacDougall to exploit a Walmart manager into giving him highly sensitive information regarding the big box superstore. From specific details on contractors and pay-cycles to operating systems, the unsuspecting manager did not skip a beat in gladly offering whatever MacDougal needed. Luckily, the social engineer and hacker orchestrated this attack to raise awareness about the issue in front a captivated audience at Defcon’s “Capture the Flag” event.

Social Engineering is manipulating human weakness to gain access to private information. With tax season approaching and refund fraud at an all-time high, it’s important for businesses to be aware of this kind of cunning criminal activity.

 

 

What do attacks look like?          

Curiosity and carelessness are what make social engineers so successful in their pursuit. Here are some of the most common forms of attack:

  • Pretexting: This, like in the Walmart case, is an instance where a hacker impersonates someone in an authority position. Hackers attempt to create a sincere story and background while also trying to form a rapport with the victim
  • Phishing: Typically in the form of an email, phishing thrives on emotions such as fear, greed and a sense of urgency. When a friend is claiming to be held hostage internationally or a company is giving away free Ray Bans, the email may just be infected with malware.
  • Baiting: Just as the name suggests, baiting uses something to lure in victims; this could be anything from signing up for a free music download or plugging in a found USB drive to satisfy curiosity.
  • Tailgating: This happens when an attacker gets access to a secure or restricted area by following in an employee or other authorized personnel.

 

Regardless of the type, a socially engineering attack could be detrimental to individuals as well as businesses this tax season. Ensure that you and you company take the necessary and extra precautions to protect your privacy.

If you think you have been a target of social engineering or need more help understanding your taxes, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444.

 

 

http://www.chubb.com/businesses/csi/chubb19441.pdf

http://www.propertycasualty360.com/2015/05/13/businesses-beware-social-engineering-fraud-could-c

http://www.tripwire.com/state-of-security/security-awareness/5-social-engineering-attacks-to-watch-out-for/

http://money.cnn.com/2012/08/07/technology/walmart-hack-defcon/

Tax Fraud: How is the IRS Protecting you this Tax Season?

With thshutterstock_45292546-1e familiar scent of the rapidly approaching tax season in the air, the issue of security and tax fraud linger from years past.

Earlier this year, the IRS confirmed an upsetting $39 million breach where hackers made 200,000 attempts to retrieve taxpayer data. Roughly 100,000 of those attempts were successful.

Based on the August 2014 Identity Theft Report from the Government Accountability Office (GAO), the IRS paid out eighteen percent, or $5.2 billion, in refund fraud. Although areas remain where the IRS continue to fall short such as authorization controls, this year the GAO reported that the IRS showed to be making improvements.

Tax software providers are following suit by reinforcing security precautions for all users. These include password requirements, security questions and lockout functions.  At the 2015 Security Summit, IRS Commissioner, John Koskinen distinguished twenty new factors to consider when assessing fraud.  “Thanks to the cooperative efforts taking place between the industry, the states and the IRS, we will have new tools in place this January to protect taxpayers during the 2016 filing season.”, says Koskinen.

This, along with the efforts of all taxpayers, will help thwart identity thieves. Here are some ways the IRS urges you protect yourself:

  • Use reliable computer security software with firewalls and virus protection
  • Create secure computer passwords
  • Avoid giving out any personal information over the phone to those claiming to be from the IRS
  • Check your credit report every year
  • Safeguard your SSN and always verify identities of those you give it to

If you think you have been a target of tax fraud or need more help understanding your taxes, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444.

 

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor or tax advisor with respect to matters referenced in this post. Semaphore assumes no liability for actions taken in reliance upon the information contained herein.

Sources:

https://www.irs.gov/uac/Newsroom/IRS,-States,-Industry-Continue-Progress-to-Protect-Taxpayers-from-Identity-Theft

http://www.gao.gov/assets/670/665368.pdf

http://www.gao.gov/assets/670/667965.pdf

http://www.usatoday.com/story/money/2015/06/02/irs-data-breach-senate-hearing/28353983/

http://www.usatoday.com/story/money/2015/10/20/irs-identity-theft-protection-effort/74262804/

 

One Billion Dollar El Nino Damage Possible Says Orange County CPA

elnino

As the first days of fall have quickly come and gone we patiently wait for things to cool down as well as this winter’s El Nino to start bringing Orange County some much needed wet weather. As an Orange County CPA I thought it would be interesting to look back at some of the financial implications past El Nino winters have brought to The O.C. and Southern California.

We have all been reading and watching reports of the impending doom the El Nino of 2016 has in store. Scientists are quoted as calling this event the “Godzilla El Nino,” as well as other outlets reporting predictions of, “storms of a generation.” With these kinds of titles being broadcasted it brings back memories of the past so called “worst” El Nino years of 1982 and most recently 1997. If this is being forecasted to be more severe than these crippling events, as a community, we need to be ready. Lets take a look at what happened during past El Nino, winters.

In a normal winter Orange County receives around ten inches of rain depending on the area. To put the drought into perspective last winter we received six inches of rain. From October of 1982 to April of 1983, Southern California received 18+ inches of rain setting the records at the time as the wettest winter in recorded history. That is only a two-inch difference of what we have seen in the past 3 years combined. The 1997 – 98’ winter was even worse. Many cities in both Orange County and Los Angeles County recorded rainfall totals of 15 inches or more just in the month of February alone! With this much rain, storm surge and winds we saw major damages.

The storms from the 1982-83’ El Nino brought 1.2 billion dollars in damage to the state. Strong winds, rain and snow tragically killed 36 people and injured 481. These storms are often considered the worst weather disaster in modern California history. After what we learned from the storms of 1982 and the advancement of more modern weather forecasting technology we were more prepared for the event and less damage was sustained during the 1997 event. Many properties and cities were impacted and the state suffered from 1.1 billion in damages.

History shows, these storms do serious damage and they should not be taken lightly. 

One advantage we can capitalize on from these dry times is our ability as community to prepare our wastewater and runoff infrastructure as well as our coastlines. We have had four years of empty drainage basins and runoff basins. Lets hope our city planners and mangers take this time to remove the debris and build up the dams so we can also capture as much water as we can in preparation for more dry weather we may see ahead.

As an Orange County CPA for many years I remember how terrible and scary the stories of people losing everything to mother nature. As much as we need the rain, let’s hope we are prepared so we don’t go down in the history books as the new worst weather disaster in California history.

Sources:

http://www.ocregister.com/articles/california-672189-ni241o-ocean.html

http://www.ocregister.com/articles/nino-677332-past-ninos.html

http://www.ocregister.com/articles/saying-678846-climate-service.html

http://www.ocregister.com/articles/water-681268-rain-basins.html

http://www1.ncdc.noaa.gov/pub/data/techrpts/tr9802/tr9802.pdf

http://flare.creighton.edu/schragej/ats553-backupplan/changnon.pdf

Irvine Accounting Firm Explores Job Growth in Orange County

irvineAs we enter into the dog days of summer and the temperatures are heating up, so does the housing market and overall job growth outlook in Orange County. As an Irvine CA accounting company we thought it would be interesting to explore this job growth and how it is affecting the overall regional economy and the housing market.

In June the Orange County Register reported that Orange County has finally recovered all of the jobs it lost during the Great Recession. Last month positions reached a historic high beating the previous peak in 2006.

According to state employment officials, that number of jobs was 1,548,800. In the past year payrolls have grown 3.4%. That’s faster than the state rate of 3% and national rate of 2.2%.

Orange County has Southern California’s lowest unemployment rate at 4.2%. That is down a full percent from 5.2% the year before. This low unemployment rate shows that the county is producing more jobs than people available. Employers are now finally looking for people who have been out of work long term.

One interesting correlation we see here are peaks in the real estate market both around this magic number. With record numbers of Orange County citizens working in 2006 and now 2015 we see similar trends in the housing markets.

These indicators tell us that as the job market grows, people generate more income and are confident with their job stability they then in turn are more likely to purchase a home. With limited inventory, as demand grows so do prices. One difference between the 2006 market vs. the 2015 market are interest rates.

The average 30 year fixed rate on a mortgage in 2006 was 6.41%. In 2015 that rate through July is 3.81%. One can only conclude that if household incomes and payrolls are at matching record highs in 2006 and 2015 and interest rates are around 40% lower the market is only going to continue to grow as long as job growth stay stable.

Low levels of homes for sale will also drive housing construction creating more jobs.

Orange County’s own Chapman University released a report in June forecasting a 3.1% increase in jobs in 2015. As the Orange County economy grows, as an Irvine CPA Firm we feel its safe to say that the financial outlook and housing markets are looking strong as long as job growth remains stable.

Sources:

http://www.ocregister.com/articles/percent-667537-year-county.html

http://www.latimes.com/business/la-fi-oc-economy-20150624-story.html

http://www.oceconomy.org/population/

http://www.ocregister.com/articles/percent-663619-affordability-quarter.html

http://www.freddiemac.com/pmms/pmms30.htm

Irvine Accountant Looks at Economic Impacts from the Orange County Fair

Residents of Orange County know summertime means longer days and warmer nights at the O.C. Fair. Every summer Orange County looks forward to the economic boost the fair brings to the region. As an accountant in Irvine, CA for over 25 years I thought it would be fun to take a look at just how much the area is financially impacted.

Last year, overall attendance to the fair dipped 3% even though in the final 2 days the attendance surpassed 80,000 people each day. The overall attendance was 1,337,167 compared with 2013 attendance of 1,374,579. That was up from around 1.3 million visitors in 2012.

In December of 2014 the California Department of Food and Agriculture published an economic impact snapshot exploring the 2012 fair.

• In 2012 the O.C. Fair generated approximately $256,239,000 in spending activity.
• In 2012 the equivalent of 2,255 jobs were created as a result of spending by the Orange County Fair.
• The labor income generated by these additional jobs was approximately $85,447,000.

As it turns out the network of California fairs is a huge revenue generator with upward growth of $3.1 billion in economic activity benefiting the local, state and global economy. Fairs in California provide a major return on investment as well as provide the communities fantastic opportunities for fun, culture, tradition, heritage, and education.

Although the 2015 attendance numbers have not been released yet, we can look at the 2012 attendance as a reference in conjunction with the report. If 2013 saw around a 25% increase in attendance compared to 2012, of which generated $256,239,000 in spending, it’s safe to say 2013 generated around $64 million more in spending!

With high expectations that attendance would be up this year in 2015, it will be interesting to see how the Orange County area will be affected by the injection of over $320 million in spending. One factor I would also love to look into one day are the local business impacts on restaurants, hotels and gas stations in Costa Mesa and other neighboring cities that host the fair grounds. I’ll save this for another post.

The O.C. Fair runs through the weekend, so be sure to check out all it has to offer! My favorites of course are the funnel cakes, concerts, rides, and carnival games. As an accountant in the Irvine area I find all of these figures really intriguing and impressive. I hope you do to.
Sources:

Economic Impact of California CDFA 32nd_DAA.pdf
http://www.ocregister.com/articles/fair-631576-attendance-year.html
https://en.wikipedia.org/wiki/Orange_County_Fair_(California)

Revised Publications: 3 out of 5 People Still Need to File

With almost 59 million tax returns filed so far, the IRS estimates that three out of five taxpayers have yet to file their tax returns, according to statistics released today. Are you one of them?

For those of us still working on their taxes, the IRS added three revised publications to IRS.gov just this week. These publications will help businesses and individuals understand how to figure depreciation as well as pension options.

Breakdown:

Publication 946, “How to Depreciate Property” explains how you can recover the cost of business or income-producing property through deductions for depreciation. The publication was updated to reflect the extension of expiring tax provisions in legislation signed into law on Dec. 19.

Publication 4587, “Payroll Deduction IRAs for Small Businesses” explains that individuals saving in a traditional IRA may be able to receive some tax advantages on the money they contribute, and the investments can grow tax-deferred.

Publication 4334, “SIMPLE IRA Plans for Small Businesses” explains how a SIMPLE (Savings Incentive Match Plan for Employees of Small Employers) IRA plan offers great advantages for businesses that have 100 or fewer employees (who earned $5,000 or more during the preceding calendar year) and that do not have another retirement plan.

The IRS constantly adds revised tax forms, publications, instructions and tax information to IRS.gov. They encourage taxpayers to frequently visit IRS.gov, including the forms and pubs page for all current forms and publications, updates and changes, and additional information.