Protecting you against identity theft is a team effort. In the last year, the IRS has invested in a nation-wide effort to protect you from refund fraud and identity theft. By doubling IRS employees since 2011, strengthening return processing systems, and increasing punishments for offenders, sentencings of identity thieves have tripled in the last year. Here are a few highlights from the past year’s efforts to keep you safe:

to see this article in full, visit www.irs.gov’s website

• The number of IRS criminal investigations into identity theft issues more than tripled in fiscal year 2012. The IRS started 276 investigations in fiscal year 2011, a number that jumped to 898 in fiscal year 2012. So far in fiscal year 2013, there have been more than 560 criminal identity theft investigations opened.
• Total enforcement actions continue to rapidly increase against identity thieves. This category covers actions ranging from indictments and arrests to search warrants. In fiscal year 2012, enforcement actions totaled 2,400 against 1,310 suspects. After just four months in fiscal 2013, enforcement actions totaled 1,703 against 907 suspects.
• Sentencings of convicted identity thieves continue to increase. There were 80 sentencings in fiscal year 2011, which increased to 223 in fiscal year 2012.
• Jail time is increasing for identity thieves. The average sentence in fiscal year 2012 was four years or 48 months – a four-month increase from the average in fiscal year 2011. So far this fiscal year, sentences have ranged from 4 to 300 months.

There is also plenty you can do to protect yourself against identity fraud as well. We compiled a list of easy steps you can take to protect yourself and your family. To find out more information, visit the FTC’s (Federal Trade Commission) website.

• Keep your financial documents and personal information in a locked location in your home. Invest in a lock box or a locking filing cabinet to store any files with your bank accounts or social security numbers, including your tax returns.
• Shred receipts, credit card offers, insurance forms, and bank statements when you no longer need them.
• Destroy the labels on prescription bottles before your throw them out.
• Invest in a locking mail box or a PO Box if you tend to be away from home for days at a time, or ask a trusted friend or family member to remove mail from your mail box. You can also request a vacation hold on your mail through USPS at no charge.
• Wipe the hard drive of your computer and delete all personal information from mobile devices before disposing of them.
• Use only secured Wi-Fi networks when sending personal information over your laptop or smartphone.
• Read a website’s privacy policy, even if it is long and complex. Pay attention to how it uses your information and whether it shares your information with third parties.

Put these easy steps into practice every day of the year to help cut down on identity theft. We wish you and your families a safe and wonderful year!

To find out more information about us and how we strive to help you all year, not just regarding your safety or your tax return, visit our About Us page on our website. We also welcome you to call the office, (425) 242-0636, or email v@phd-tax.com.

To get your refund even faster, set up automatic deposit rather than choosing to receive your refund via check.

If your refund takes longer than 21 days, do not worry, some returns take a little longer for reviewing and processing.

Always double check your account and routing number before finalizing your tax return to prevent any delays or penalties.

You can also track your refund by visiting our Client Center and clicking on “Where’s My Refund?” Of course, we offer E-Filing to all eligible clients and keep you posted on every step of the process.

To find out more about what we do to make your filing simpler for you, you can read more about our services on our webpage; you can also reach us at 425-242-0636, or email us at v@phd-tax.com. Remember, we are here for you all through the year; if you still have questions after your refund or want to know what you can do to prepare for next year, we are happy to answer them for you.

Even if you don’t qualify this year, we are beginning a new Tax Year, and it is never too late to begin a new year of good record keeping. Ask your Tax Preparer throughout the year how you can maximize your benefits by advance Tax Planning.

from www.dor.wa.gov:
Washington State taxpayers may deduct sales tax in 2012 and 2013

Washington State residents may deduct state and local general-sales tax on their federal income returns for tax year 2012. The sales tax deduction was extended again in legislation signed by President Obama on January 2, 2013.

The deduction is available to taxpayers that itemize deductions, not those who take the standard deduction. The deduction is based on adjusted gross income and number of exemptions claimed. Taxpayers who keep all their receipts can deduct actual sales tax and use tax paid. For taxpayers who didn’t keep receipts, the IRS has an online Sales Tax Deduction Calculator to determine the amount of optional general sales tax to claim, or taxpayers can use the Optional State Sales Tax Tables.

There are other stipulations applied to this credit. Just like with any other complex tax rule or benefit, we recommend you call our office if you have any questions about whether you can take advantage of this deduction. To discover what else we can assist you with, you can read about our Services on our website or call us to make an appointment. You can reach us at (425) 242-0636 or email us at v@phd-tax.com.

The Small Business Administration explains on their website the difference between each structure type. Some of the differences may be subtle and you may not realize that you would benefit greatly from Sole Proprietorship over an S-Corporation, or even vice versa. It’s wise to enlist the expert guidance of a Tax Specialist when deciding the structure of your new business. For instance, your tax liability varies greatly whether you are an S-Corporation or a Limited Liability Company; the same goes for other entities as well.  Projected yearly income, whether or not you’ll have employees, and often just the nature of your business can greatly change your tax and financial liability.  Make sure you have done your research and your business plan is strong, so you and your Tax Specialist can make informed decisions for your future and the future success of your new business.  Washington State does not impose an “Income Tax”, however there is an Excise Tax or Business and Occupation Tax for companies to pay.  Again, the amount of tax you pay will be affected by the amount of income you are taking in, the nature of your business, and the structure of your company.  There are some credits that your Tax Specialist can apply to your B&O Excise Tax Return that can make a big difference.  Be sure you have a qualified professional who knows about and will take advantage of these tax benefits for you.  On top of the B & O, you may be asked to pay taxes to the city where your business is registered.  You may even be influenced on where you locate your business depending upon the taxes that would be imposed.  It is wise to be well informed ahead of time so you are aware of all of your options.

Once you have formed your company, and become registered and licensed, it is imperative that you have an organized accounting system.  An incorrectly established accounting system can cost you hundreds or even thousands of dollars in corrective work later.  If you are audited by the IRS and your accounting is a mess, you could be forced to pay back any expenses you claimed on your tax return if your documents do not support your claims.  This may include travel expenses, auto expenses, meals, or other crucial operating costs. The IRS is very active right now and audits are random.  Having sloppy records is just not worth the possible risk.  With clean, organized records you are much more apt to be given a needed loan for your business.  You can track your revenue and expenses easily and see where you might be able to make changes in your overhead.

Of course, there are many factors that play a part in whether a business is successful. Paying close attention to the above issues in the beginning of the process, you will have a better chance at success in the future.  If you are considering consulting a professional about the business formation process, visit our website and read about our Business Formation, Accounting, Tax Planning, and Audit Representation services to help your business be as successful as possible. Feel free to call us for a consultation at 425-242-0636 or write us an email at v@phd-tax.com.

Providing your qualified Tax Preparation Specialist with the right information is imperative in order to maximize your benefits and minimize your tax liability.  We see many clients who file their tax returns on their own the previous year, who didn’t receive possible benefits available to them. Some received letters from the IRS stating they owe more taxes than what they calculated.  In this case, the client will pay the original tax owed, the penalties for paying late and the interest incurred.  Online tax preparation software can only guide you so far, there are complex tax issues that the software simply cannot detect or know how it will relate to your tax situation.  You can find all of the current tax laws online, but just as in the case of an attorney, you need a professional to interpret these laws and apply your unique information to your tax return.

The benefits from hiring a tax preparation professional go beyond eradicating mistakes in your tax return.  With PHD Tax, you are able to meet with your consultant prior to the beginning of tax season, which gives you a jump start on organizing and planning. Tax planning will help your preparer see where you are with your taxes mid-year so you can avoid paying the IRS a large amount at the end of the year.  Additionally, you can make any necessary changes so you can benefit from any new credits or rules you may not be aware of.

In order to gather all needed data, we ask our clients particular questions.  The following questions are just a few of what very person should ask before gathering their documents:

• Did I change my marital status?
• Do I have dependents whose status changed?
• Did I receive any disability income or unemployment income?
• Did I refinance my home?
• Did I buy or sell any stocks, bonds or other investment property in that year?
• Did I make any residential energy-efficient improvements or purchases involving solar, wind, geothermal or fuel cell energy sources?
• Does anyone owe me money that has become uncollectable?
• Do I have any foreign income or interest paid?
• Do I have any foreign bank accounts or other financial accounts, such as pensions?
• Did I make a contribution into or did I receive a distribution from my retirement plan?
• Did I receive a gift totaling more than $100,000?

The previous is just a short list of the many important questions that can be missed if you are not working with a qualified tax preparer.  In order to assist our clients in the gathering of their documents and information, we provide an extensive list of “Items to Bring” to your tax appointment. This form can be found on our Client Center page and we encourage you to print it and use it for the 2012 tax season.

Tax Law and Code in the United States is not simple, in fact, it can be a daunting task to file an accurate tax return.  If you have any questions whether something you have done in 2012 will affect your tax return, we recommend seeking knowledgeable professional assistance.  Feel free to call our office to make an appointment at (425) 242-0636 or email us at s@phd-tax.com.