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Archives for July 2020

2020 Scams to Watch Out For

July 21, 2020 by Dana Lee CPA LLC Team

As it does every year, the IRS recently unveiled the list of current scams to be aware of especially considering the current crisis situation. You are encouraged to be on guard against these threats, especially schemes related to Corona virus tax relief, including Economic impact payments.

Look out for the following threats designed to steal not just your money, but your sensitive personal financial information as well.

Phishing

These schemes disguise as an official email from the IRS using keywords like Covid relief and Stimulus Pay in various ways to trick you to reveal confidential information. Be cautious about all such communication and do not click on any links or open any attachments contained in a suspicious email.

Fake Charities

Many fake charities have arisen to exploit the current pandemic situation and steal your money. Before donating to any charity, you can verify its legitimacy by asking for its Employer Identification Number (EIN) and using the search tool on IRS.gov to find qualified and legitimate charities.

Threatening Impersonator Phone Calls, Also Known As “Vishing” (Phone Phishing)

These bogus phone calls pose a major threat these days. Remember IRS will never threaten or ask for financial information over the phone or call about an unexpected refund or about economic impact payments. You should call the IRS to verify and see if there is any tax problem.

Social Media Scams

The social media scammers would impersonate as your family or friends and convince you to trust them. They may email you a link of something of your interest which could contain malware intended to infiltrate and steal sensitive personal information.

Senior Fraud

If you are a senior citizen you are more likely to be victimized with fake emails, text messages, websites and social media attempts. However, you can protect yourself against these threats by having a trusted family member or friend to take interest in your affairs.

Non-English Speakers

These scams mostly take form of robocalls, although they can also be phone calls made by real persons. They are often threatening in nature, targeted towards people with limited English proficiency. If you are a recent immigrant you are more vulnerable to such scams. Make sure you ignore such phone calls and do not engage the scammers.

Unscrupulous Return Preparers

Selecting the right return preparer is very important for your financial security, as you entrust them with sensitive personal data. Be sure to avoid preparers who ask you to sign a blank return or promise a big refund even before looking at your records.

Offer In Compromise Mills

You need to be aware of companies exaggerating your chances of settling your tax debt. Offers in compromise are available only if you meet specific criteria under the law. To safeguard yourself against this threat you can use a simple Pre-Qualifier tool available on IRS.gov.

Fake Payments with Repayment Demands

If you are a victim of this threat you will see a fake refund in your bank account as a result of a bogus tax return filed by the scammer, after stealing your personal information. The scammer, posing as an IRS employee, will then ask you to pay back the money. You might be told that the IRS made an error and that you should return the money immediately in a specific manner like buying gift cards of certain denominations for the amount of the refund.

Payroll & HR Scams

The common types of such scams are gift card and direct deposit scams, which are done through compromised email accounts.

For the gift card scams, the scammer impersonates to be your employer and asks you to purchase a gift card and mail it to a specific address, to be reimbursed later.

For the direct deposit scam, the scammer, poses as the employee and asks the employer to change  the employee’s direct deposit information to reroute their deposit to an account the scammer controls.

If you think you are targeted or are a victim of such threat you can file a complaint with the Federal Bureau of Investigation Internet Crime Center (IC3)

Ransomware

Last but not the least on the IRS list is invasive software that you might download. The malware is targeted to infect your computer, network or server and look for critical data that can be used to steal your personal information and money.

A few simple measures like using two step authentications for your accounts, getting an IRS Identity Protection PIN, using antivirus software, freezing your credit can help protect you from many of the above threats and misuse of your sensitive personal information.

 If you need more information on how to obtain an IRS IP PIN or need help with your taxes, give us a call.

Filed Under: Tax Regulations

RMDs and CARES Act Relief

July 4, 2020 by Dana Lee CPA LLC Team

Required Minimum Distribution Requirement

After a certain age, the beneficiaries of certain retirement accounts are required to withdraw  money from their retirement accounts. That is because the IRS wants to collect tax on the income accumulated tax-free in these accounts. Before 2020, the required minimum distribution (RMD) applied to anyone over 701/2. Starting with 2020 the RMD beginning age is 72. If in 2019 you turned 701/2  you had until April 1st, 2020 to withdraw from your retirement account the 2019 distributions and normally you would have had until December 31st, 2020 to take out the 2020 RMD.

CARES Act Relief – 2020 RMDs Suspended

As part of the COVID-19 relief, the CARES Act suspended the 2020 RMD requirement. Thus anyone required to take RMDs in 2020 can skip them. The waiver applies to defined-contribution retirement accounts, such as: IRAs, SEP IRAs, 401(k), 403(b). The waiver does not apply to defined benefit plans. Roth IRAs are not subject to RMD rules and are unaffected by the waiver.

RMD Rollover Relief

What if you already took RMDs in 2020, prior to the enactment of the CARES act?

On June 23rd 2020 IRS announced rollover relief for RMDs from retirement accounts that were waived under the CARES Act.

Normally taxpayers are allowed to roll over only one distribution in a 12-month period and no later than 60th day following the day of receipt. In addition, an RMD can not to be rolled over.

But Notice 2020-51 extends the 60-day rollover period for any RMD already taken this year to August 31, 2020.

Retirement account owners who have already received distributions in 2020 now get an extended period until August 31st 2020 to repay such amounts back, without being subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

In addition, because the CARES Act allows you to skip RMDs for 2020, you might consider converting assets from a traditional IRA to a Roth IRA this year without first satisfying the typically required RMD.

If you need help with your taxes, give us a call or schedule an online appointment here.

Filed Under: Tax Regulations

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