University students and staff should be aware of IRS impersonation email scam

People should be aware of an ongoing IRS-impersonation scam that appears to target educational institutions, including students and staff who have .edu email addresses. The suspect emails display the IRS logo and use various subject lines, such as Tax Refund Payment or Recalculation of your tax refund payment. It asks people to click a link and submit a form to claim their refund.

The scam website requests taxpayers provide their:

• Social Security number
• First name
• Last name
• Date of birth
• Prior year annual gross income
• Driver’s license number
• Current address
• City
• State/U.S. territory
• ZIP code/postal code
• Electronic filing PIN

Taxpayers who believe they have a pending refund can easily check on its status using the Where’s My Refund tool on IRS.gov.

Here are a few things people can do if they believe they are a target of the scam:

• Report the scam: People who receive this scam email should not click on the link in the email and report it to the IRS. For security reasons, they should save the email using save as and then send that attachment to phishing@irs.gov or forward the email as an attachment to phishing@irs.gov.
• Get an Identity Protection PIN: Taxpayers who believe they may have provided identity thieves with their personal information should consider immediately obtaining an Identity Protection PIN. This is a voluntary opt-in program. An IP PIN is a six-digit number that helps prevent identity thieves from filing fraudulent tax returns in the victim’s name.
• Report identity theft: Taxpayers who attempt to e-file their tax return and find it rejected because a return with their SSN has been filed should file a Form 14039, Identity Theft Affidavit to report themselves as a possible identity theft victim. See Identity Theft Central to learn about the signs of identity theft and actions to take.

More information:
Report Phishing and Online Scams
Video: Avoid Phishing Scams

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Did you know that there is still time to make your 2020 donations? You have until December 31st to make any donations for the 2020 tax year.

New for the 2020 tax year (only), the CARES (the Coronavirus Aid, Relief and Economic Security Act) the IRS has made a few changes (IRS Topic No 506).

#1 For taxpayer who do not itemize their deductions they may take up to $300 in a charitable deduction of cash contributions made during the 2020 year to qualified charities.

From the IRS Website : For contributions of cash, check or other monetary gift (regardless of amount), you must maintain a record of the contribution:

• A bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution.
• In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. See Publication 561, Determining the Value of Donated Property.
• For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
• If you are unsure if your charity qualifies please check with the Tax Exempt Organization Search tool found on IRS.gov.

#2 The CARES Act has temporarily (2020 only) suspended limits on charitable contributions and increased the limits on contributions of food inventory (again only for 2020). The new limit for charitable contribution (if you itemize) is 100% of your AGI.

To qualify, the contribution must be:

• a cash contribution;
• made to a qualifying organization;
• made during the calendar year 2020

Contributions of non-cash property do not qualify for this relief. Taxpayers may still claim non-cash contributions as a deduction, subject to the normal limits.

If you want to read more on the changes to charitable contributions do to the CARES Act please find them on the IRS website HERE 

If you have any questions please feel free to give us a call. We hope you have a wonderful Holiday season and we look forward to see you soon.

What is the Economic Impact Payment (EIP)?  

The EIP was created by Congress as part of the CARES Act 2020. In doing this they added Section 6428 which allows for a new $1,200 refundable tax credit ($2,400 on a joint return) plus an additional $500 for each qualified child (under age 17) for the 2020 tax year. What the EIP does is give you an advance of this new credit.

How does this affect me?

U.S. residents will receive the Economic Impact Payment of $1,200 for individual or head of household filers, and $2,400 for married filing jointly if they are not a dependent of another taxpayer and have a work eligible Social Security number with adjusted gross income up to:

• $75,000 for individuals
• $112,500 for head of household filers and
• $150,000 for married couples filing joint returns

Taxpayers will receive a reduced payment if their AGI is between:

• $75,000 and $99,000 if their filing status was single or married filing separately
• 112,500 and $136,500 for head of household
• $150,000 and $198,000 if their filing status was married filing jointly

The amount of the reduced payment will be based upon the taxpayers specific adjusted gross income.

Eligible retirees and recipients of Social Security, Railroad Retirement, disability or veterans’ benefits as well as taxpayers who do not make enough money to normally have to file a tax return will receive a payment. This also includes those who have no income, as well as those whose income comes entirely from certain benefit programs, such as Supplemental Security Income benefits.

Retirees who receive either Social Security retirement or Railroad Retirement benefits will also receive payments automatically.

(Per IRS https://www.irs.gov/coronavirus/economic-impact-payment-information-center)

Do I have to claim the EIP as income on my 2020 taxes?

No, this is an advance of a new credit. It will not be taxable to you when you file your 2020 taxes. You will have to reconcile your advance EIP with the credit when you file next year.

So, does this mean I have to pay it back out of my refund?

Again, No. What will happen when you file your 2020 tax return you will need to reconcile the actual credit with the advance payment you received in 2020. If you are eligible for a higher credit because your AGI is lower in 2020 then 2019 (or 2018) then you will get the additional amount of the credit as a refund on your 2020 tax return.

If you receive more on the advance, then you were eligible for you DO NOT have to pay back the advance EIP.

I still don’t understand. The news said I had to pay it back.

Please make sure that you are getting your information from multiple sources or ask us when it comes to taxes.

I have seen a couple of very confusing news reports the last few days.

Here is are a couple of examples.

#1

Bob & Sally (married) have filed their 2019 Form 1040. The AGI on the return shows $170,000.

Bob & Sally will get and EIP of $1,400 ($2,400 less 5% of 20,000 =$1,000, because they are in the phase out range, which starts at $150,000 for married filing joint)

When Bob & Sally file their 2020 taxes their Form 1040 show an AGI of $145,500.

They are now under the phase out amount and will get an additional refund of $1,000 (eligible for $2,400 and got $1,400 in advance) on their return.

#2

Bob & Sally have file their 2019 Form 1040 and the AGI was $145,500. They will receive a $2,400 advance.

When Bob & Sally file their 2020 tax return their AGI is $170,000. Bob and Sally are now in the phase out range for 2020. On their 2020 return they will do the reconcile as followed.

Advance payment $2,400 less eligible amount $1,400 equals an over payment of $1,000. This over payment is not to be repaid the tax return.

 Will my dependent get an advance payment?

Short answer, NO.

If you claim someone as a dependent for any reason, they do not qualify for this EIP. If in 2020 the person is no longer your dependent, they may qualify for the credit on the 2020 return.

Please let us know what other questions you have.

IRS Coronavirus page https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments

Treasury Coronavirus page https://home.treasury.gov/coronavirus