IRS Removes Some Restrictions on Cuba Income

The Internal Revenue Service has followed up on the Obama administration’s opening of diplomatic relations with Cuba by releasing a new revenue ruling that removes certain restrictions on income earned in Cuba.

The previously applicable restrictions denied a foreign tax credit for income taxes paid to Cuba and disallowed deferral on income earned in Cuba through a controlled foreign corporation.

Obtaining and Claiming a Health Coverage Exemption

The Affordable Care Act requires you and each member of your family to have minimum essential coverage, qualify for an insurance coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.

You, your spouse or your dependents may be eligible to claim an exemption from the requirement to have coverage and are not required to make a payment. .For any month that you do not qualify for a coverage exemption, you will need to have minimum essential coverage or make a shared responsibility payment.

You can claim most exemptions when you file your tax return. However, you must apply for certain exemptions in advance through the Health Insurance Marketplace, You may be exempt if:

• The minimum amount you must pay for the annual premiums is more than 8.05 percent of your household income
• You have a gap in coverage that is less than three consecutive months
• You qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement

Hiding Money or Income Offshore Resides on the “Dirty Dozen” List of Tax Scams for the 2016 Filing Season

WASHINGTON — The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the 2015 filing season.

"Our continued enforcement actions should discourage anyone from trying to illegally hide money and income offshore," said IRS Commissioner John Koskinen. "We have voluntary options to help taxpayers get their taxes and filing obligations in order."

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 54,000 disclosures and we have collected more than $8 billion from this initiative alone.  The IRS conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

The IRS remains committed to our priority efforts to stop offshore tax evasion wherever it occurs.  Even though the IRS has faced several years of budget reductions, the IRS continues to pursue cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on U.S. soil.

Through the years, offshore accounts have been used to lure taxpayers into scams and schemes.

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them.

June 15, 2015 - Estimated Tax Payment Due

It’s time to make your second quarter estimated tax installment payment for the 2015 tax year. Our tax system is a “pay-as-you-go” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. These include:

1. Payroll withholding for employees;
2. Pension withholding for retirees; and 
3. Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

Falsifying Income to Claim Tax Credits Hits the IRS “Dirty Dozen” List of Tax Scams for the 2015 Filing Season

 WASHINGTON — The Internal Revenue Service today warned taxpayers about schemes to erroneously claim tax credits is on the annual list of tax scams known as the “Dirty Dozen” again for the 2015 filing season.

“Scam artists don't miss a trick and they can entice taxpayers to falsely inflate income on returns to claim tax credits they are not entitled to receive," said IRS Commissioner John Koskinen. "Taxpayers are ultimately responsible for the information on their tax returns, and I urge everyone to file the most accurate return possible."

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire professionals to do so.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.

Don’t Create Fake Income to Qualify for a Credit

Some people falsely increase the income they report to the IRS. This scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income, usually in order to maximize refundable credits.

Just like falsely claiming an expense or deduction you did not pay, claiming income you did not earn in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in taxpayers facing a large bill to repay the erroneous refunds, including interest and penalties. In some cases, they can even face criminal prosecution.

Taxpayers may encounter unscrupulous return preparers who make them aware of this scam. Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. Make sure the preparer you hire is up to the task.

Here are a few tips when choosing a tax preparer: