Wednesday, December 16, 2015

Keeping Your Passwords Protected

From Neikirk, Mahoney & Smith, the IRS has published tips on the topic of protecting your passwords. Much of the public uses the same password over and over again on their different accounts online. This is partially why a single successful phishing scam can be so devastating, because when they get a password for one of your accounts it is likely that password will work on another.

For this reason, new stronger standards are being implemented in tax software products for 2016. Those standards include:

  • A password that has eight or more characters, including upper case, and lower case letters as well as numbers and a special character.
  • New features include a timed lockout and limits on unsuccessful log-in attempts.
  • You must complete three security questions.
  • Tax software partners must verify email addresses. In many cases, this means a PIN will be sent to your email or text that you must use to verify your address before you can proceed with your tax software.

These are just a few of the new protections that will be in place for the 2016 tax season to protect you from identity thieves. Most of the protections we are taking may not be visible to you, but they will add layers of protection nonetheless, adding new and stronger protections during tax time.

While these are changes that are being implemented in tax software, it would be a good idea to think about these standards with all passwords that you create.
You can contact Neikirk, Mahoney & Smith by phone at 502-896-2999, or through their website contact form

Wednesday, December 9, 2015

Seven Steps for Making Identity Protection Part of Your Regular Routine

From Neikirk, Mahoney & Smith, the IRS has recently published seven steps for making identity protection part of your routine. Identity theft can be incredibly traumatic and frustrating. And in this day and age, it's always best to be on your guard against it.

Here are their seven tips on keeping yourself protected:

1. Regularly read your credit card and banking statements. Keep and eye out for anything that looks remotely suspicious. Keep in mind that neither your credit card nor bank – or the IRS – will send you emails asking for sensitive personal and financial information such as asking you to update your account.

2. Review and respond to all correspondences and notices from the IRS. Warning signs of tax-related identity theft can include IRS notices about tax returns you did not file, income you did not receive or employers you’ve never heard of or where you’ve never worked.  

3. Review each of your three credit reports at least once a year. Visit to get your free reports.

4. Review your annual Social Security income statement for excessive income reported. You can sign up for an electronic account at

5. Read your health insurance statements; look for claims you never filed or care you never received.

6. Shred any documents with personal and financial information. Never toss documents with your personally identifiable information, especially your social security number, in the trash.

7. If you receive any routine federal deposit such as Social Security Administrator or Department of Veterans Affairs benefits, you probably receive those deposits electronically. You can use the same direct deposit process for your federal and state tax refund. IRS direct deposit is safe and secure and places your tax refund directly into the financial account of your choice.

To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.

You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Friday, December 4, 2015

IRS: Five Common Questions from Taxpayers

From Neikirk, Mahoney & Smith, the IRS has released five common questions that they receive from taxpayers, along with the answers.

1. What is included in household income?
"For purposes of the PTC, household income is the modified adjusted gross income of you and your spouse if filing a joint return, plus the modified AGI of each individual in your tax family whom you claim as a dependent and who is required to file a tax return because their income meets the income tax return filing threshold. Household income does not include the modified AGI of those individuals you claim as dependents and who are filing a return only to claim a refund of withheld income tax or estimated tax."

2. The IRS is asking to see my 1095-A. What should I do?
"You should follow the instructions on the correspondence that you received from the IRS.  You may be asked for a copy of Form 1095-A in order to verify information that has been entered on your tax return."

3. If I got advance payments of the PTC, do I have to file even if I never had a filing requirement before?
"Yes. If you received the benefit of advance payments of the premium tax credit, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file a return and submit a Form 8962 for this purpose even if you are otherwise not required to file a return."

4. Marketplace says I did not file, but I did file before the extended due date.  What should I do?
"In advance of the open enrollment period that runs through January 31, 2016, the Marketplace sent Marketplace Open Enrollment and Annual Redetermination letters to individuals who might not have filed a tax return. Follow the instructions in the letter you received."

5. What are my options to receive help with filing a return and reconciling?
"Filing electronically is the easiest way to file a complete and accurate tax return as the software guides you through the filing process. Electronic filing options include free Volunteer Assistance, IRS Free File, commercial software, and professional assistance."

For more information from the IRS, check out their website at
You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Wednesday, December 2, 2015

Tax Planning Strategies for the Year's End

From Neikirk, Mahoney & Smith...
The year is coming to an end, and the Journal of Accountancy has published some tips on last minute tax planning strategies.
According to the Journal of Accountancy, "Taxpayers who have been sitting on the sidelines due to the lack of certainty on the expanded Section 179 deduction, bonus depreciation, the R&D credit and other items normally renewed in an extender package need to take action soon, according to Michael Silvio, director of tax services at Hall & Co. CPAs."

Their last minute strategies include:

1) A Hierarchy of Planning
"Last-minute tax issues could be things that can be done by the end of the year before it’s too late to do them, or could be things that can still be done up to the time you file the tax return or later, to get a better result for that prior year, according to Matthew Frooman, a member at the Atlanta office of Top 100 Firm Warren Averett."

2) New Due Dates
"For tax years beginning after Dec. 31, 2015, the due dates for partnership tax returns will change from April 15 for calendar-year partnerships to March 15, and the fifteenth day of the third month after the end of the fiscal year for fiscal-year partnerships. The due date for C corporations will be April 15, or the fifteenth day of the fourth month after the close of their year. S corporation return due dates continue to be March 15, or the third month following the close of the taxable year."

3) Extender Watch 
"The tax extenders have historically been passed, so we have to plan for the fact that they will be passed, advised Gary Fox, managing partner of tax services at Top 100 Firm Crowe Horwath."

4) Hoping for Better
"Next filing season can’t be as bad as the previous one, according to Rick Wojciechowski of Top 100 Firm The Bonadio Group: 'Provided the extenders get passed earlier than they did for 2014, it should be better. Plus, the tangible property regs are better understood now. But we do have layering of the ACA, which affects business clients. CPAs need to communicate the rules to their clients.'"

You can check out the full article at the Journal of Accountancy.
You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Wednesday, November 25, 2015

FASB Proposes Clarifying the Definition of a Business

From Neikirk, Mahoney & Smith, the FASB is proposing clarifications to the definition of the business. This proposal is not because the FASB believes that the current definition is too narrow, but rather that it is too broad. They are concerned that this broad definition can lead to transactions being reported as acquisitions or disposals of businesses rather than assets.

"Clarifying the Definition of a Business, would require that under FASB’s definition, a business would include at least an input and a substantive process that together contribute to the ability to create outputs and would remove the evaluation of whether a market participant could replace any missing element."

You can check out the full article at the Journal of Accountancy.
You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Friday, November 20, 2015

AICPA Proposes Peer Review Standards Changes

From Neikirk, Mahoney & Smith, according to the Journal of Accountancy the AICPA has proposed changes to the peer review standards "to help audit firms increase their focus on the proper design and operating effectiveness of their systems of quality control."

The AICPA peer review program monitors the quality of reviewed firms’ accounting and auditing engagements and evaluates the systems under which those engagements are performed. Participation in the peer review program is mandatory for AICPA membership, and peer review is required for licensure in nearly every state.

For more details on the specific changes that have been proposed to the peer review standards, check out the full article at The Journal of Accountancy 

You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Wednesday, November 18, 2015

IRS Instructions for Requesting Copy of Fraudulent Returns

From Neikirk, Mahoney & Smith, the IRS has published the following instructions for requesting copy of fraudulent returns.

A victim of identity theft or a person authorized to obtain the identity theft victim’s tax information may request a redacted copy (one with some information blacked-out) of a fraudulent return that was filed and accepted by the IRS using the identity theft victim’s name and SSN. Due to federal privacy laws, the victim’s name and SSN must be listed as either the primary or secondary taxpayer on the fraudulent return; otherwise the IRS cannot disclose the return information. For this reason, the IRS cannot disclose return information to any person listed only as a dependent.
Partial or full redaction will protect additional possible victims on the return. However, there will be enough data for you to determine how your personal information was used.
To make the request, you will need to prepare a signed letter with the information described below and mail it and any additional documentation to the following address:

P.O. Box 9039
Andover, MA 01810-0939

The IRS may return your request if it is missing the required information and/or documentation, or is made in a manner other than described in these instructions.

If you are the victim of identity theft requesting a copy of fraudulent returns, you will need to provide the following information and documentation:

  • Your name and SSN
  • Your mailing address
  • Tax year(s) of the fraudulent return(s) you are requesting
  • The following statement, with your signature beneath: “I declare that I am the taxpayer.”

If you are a person authorized to obtain the identity theft victim’s tax information however, you will need to provide quite a bit more documentation.

For more information on what that documentation is, you can see the full IRS article here.
You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Friday, November 13, 2015

Three Tax Considerations during Marketplace Open Enrollment

From Neikirk, Mahoney & Smith, the IRS has just published some tips on the health insurance marketplace. When you apply for assistance to help pay the premiums for health coverage through the Health Insurance Marketplace, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim.  The Marketplace will use information you provide about your family composition, your projected household income, whether those that you are enrolling are eligible for other non-Marketplace coverage, and certain other information to estimate your credit.

Here are three things you should consider during the Health Insurance Marketplace Open Enrollment period:

1. Advance credit payments lower premiums - You can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit or advance credit payments.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.

2. A tax return may be required - If you received the benefit of advance credit payments, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file an income tax return for this purpose even if you are otherwise not required to file a return.

3. Credit can be claimed at tax time - If you choose not to get advance credit payments, or get less than the full amount in advance, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. This will increase your refund or lower the amount of tax that you would otherwise owe.

For more information about open season enrollment, which runs through January 31, 2016, visit You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

Wednesday, November 11, 2015

Are You Underestimating Your Retirement Expenses?

From Neikirk, Mahoney & Smith, a recent AICPA survey revealed that over 50% of people underestimated their retirement expenses and the amount of money that they would need to be able to retire. According to the survey, the main cause for people having to change their retirement plans included overspending, health care costs, and poor estimates of retirement spending and income. According to the Journal of Accountancy, to increase clients’ confidence about investing, CPA financial planners who hold the PFS credential recommend that advisers take the following three steps.

1. Help clients create disciplined investing plans
2. Educate clients about the factors that cause volatility
3. Remind clients that stock market returns should be evaluated in terms of three-to-five-year cycles, not quarterly returns.

You can read more on this topic from this article at the Journal of Accountancy.

If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999. You can also contact us through our website contact form.

Friday, November 6, 2015

U.S. Treasury Launches myRA Program

From Neikirk, Mahoney & Smith, the U.S. Department of the Treasury has just released this information on their new myRA program. The myRA (my Retirement Account) program is designed to help bridge America's retirement savings gap. This program is much needed because many Americans aren't making a large effort to put money into a savings account. A Survey in October by GOBankingRates found that 62% of Americans Have Under $1,000 in Savings. Luckily myRA has arrived to help us out, a simple, safe and affordable new savings option for those who don’t have access to a retirement savings plan at work. People can get information about myRA and sign up for an account at

The program is now available nationwide with multiple ways for people to start saving:

  • Paycheck. Set up automatic direct deposit contributions to myRA through an employer.
  • Checking or savings account. Now savers can fund a myRA account directly by setting up recurring or one-time contributions from a checking or savings account.
  • Federal tax refund. At tax time, direct all or a portion of a federal tax refund to myRA.

For more information about myRA or to sign up for an account, visit myRA. gov. If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999. You can also contact us through our website contact form.

Wednesday, November 4, 2015

Understanding Your Form 1095-B, Health Coverage

From Neikirk, Mahoney & Smith, the IRS has just released the following information to help the public understand Form 1095-B.

"Form 1095-B, Health Coverage, is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment.

Minimum essential coverage includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, and other coverage the Department of Health and Human Services designates as minimum essential coverage.

By January 31, 2016, health coverage providers should furnish a copy of Form 1095-B, to you if you are identified as the “responsible individual” on the form.

The “responsible individual” is the person who, based on a relationship to the covered individuals, the primary name on the coverage, or some other circumstances, should receive the statement. Generally, the recipient should be the taxpayer who would be liable for the individual shared responsibility payment for the covered individuals. A recipient may be a parent if only minor children are covered individuals, a primary subscriber for insured coverage, an employee or former employee in the case of employer-sponsored coverage, a uniformed services sponsor for TRICARE, or another individual who should receive the statement. Health coverage providers may, but aren't required to, furnish a statement to more than one recipient.

The Form 1095-B sent to you may include  only the last four digits of your social security number or taxpayer identification number, replacing the first five digits with asterisks or Xs. In general, statements must be sent on paper by mail or hand delivered, unless you consent to receive the statement in an electronic format.  The consent ensures that you will be able to access the electronic statement. If mailed, the statement must be sent to your last known permanent address, or, if no permanent address is known, to your temporary address."

If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999. You can also contact us through our website contact form.

Friday, October 30, 2015

Tax Preparedness: Most Retirees Need to Take Required Retirement Plan Distributions by Dec. 31

From Neikirk, Mahoney & Smith, the Internal Revenue Service today reminded taxpayers born before July 1, 1945, that they generally must receive payments from their individual retirement arrangements (IRAs) and workplace retirement plans by Dec. 31.

Known as required minimum distributions (RMDs), these payments normally must be made by the end of 2015. But a special rule allows first-year recipients of these payments, those who reached age 70½ during 2015, to wait until as late as April 1, 2016 to receive their first RMDs. This means that those born after June 30, 1944 and before July 1, 1945 are eligible for this special rule. Though payments made to these taxpayers in early 2016 can be counted toward their 2015 RMD, they are still taxable in 2016.  

This is the second in a series of weekly tax preparedness releases designed to help taxpayers begin planning to file their 2015 return.

The required distribution rules apply to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plans for Employees (SIMPLE) IRAs but not Roth IRAs while the original owner is alive. They also apply to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount on Form 5498 in Box 12b. For a 2015 RMD, this amount is on the 2014 Form 5498 normally issued to the owner during January 2015.

The special April 1 deadline only applies to the RMD for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, for example, a taxpayer who turned 70½ in 2014 (born after June 30, 1943 and before July 1, 1944) and received the first RMD (for 2014) on April 1, 2015 must still receive a second RMD (for 2015) by Dec. 31, 2015.

The RMD for 2015 is based on the taxpayer’s life expectancy on Dec. 31, 2015, and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Use the online worksheets on or find worksheets and life expectancy tables to make this computation in the Appendices to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

For most taxpayers, the RMD is based on Table III (Uniform Lifetime Table) in IRS Publication 590-B. So for a taxpayer who turned 72 in 2015, the required distribution would be based on a life expectancy of 25.6 years. A separate table, Table II, applies to a taxpayer whose spouse is more than 10 years younger and is the taxpayer’s only beneficiary.

Though the RMD rules are mandatory for all owners of traditional, SEP and SIMPLE IRAs and participants in workplace retirement plans, some people in workplace plans can wait longer to receive their RMDs. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. See Tax on Excess Accumulations in Publication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.

If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999.

Monday, October 26, 2015

IRS, States, Industry Continue Progress to Protect Taxpayers from Identity Theft

From Neikirk, Mahoney & Smith, the Internal Revenue Service, state tax administrators and leaders of the tax industry announced today continued progress to expand and strengthen protections against identity theft refund fraud for the 2016 tax season.

The public-private sector partnership announced success in identifying and testing more than 20 new data elements on tax return submissions that will be shared with the IRS and the states to help detect and prevent identity-theft related filings. In addition, the software industry is putting in place enhanced identity requirements and validation procedures for their customers to protect accounts from identity thieves.

“This unprecedented partnership continues to put strong new safeguards in place for the 2016 tax season,” IRS Commissioner John Koskinen said. “We are breaking new ground in the battle against identity theft. Taxpayers will have more protection than ever when they file their tax returns.”
Known as the Security Summit, the unprecedented collaborative effort began in March and culminated in the development of several recommendations in June between the IRS, leaders of tax preparation and software firms, payroll and tax financial product processors and state tax administrators. Security Summit participants also identified additional topics for collaboration in the months ahead, and have continued to work together as a group to leverage their collective resources and efforts to protect taxpayers.

Koskinen and other leaders met in Washington, D.C., Tuesday to update the effort. To date, 34 state departments of revenue and 20 tax industry members have signed memorandums of understanding regarding roles, responsibilities and information sharing, with more expected to sign later.

As part of the Security Summit process, members from the IRS, states and industry are co-chairing and serving on several teams. The teams have focused on a number of areas including improved validation of the authenticity of taxpayers and information included on tax return submissions, increased information sharing to improve refund fraud detection and expand prevention, as well as more sophisticated threat assessment and strategy development to prevent risks and threats.

The industry and government groups identified numerous new data elements that can be shared at the time of filing with the IRS and states to help authenticate a taxpayer and detect identity theft refund fraud. There are more than 20 new data components that will help detect possible identity theft. The data will be submitted with the tax return transmission for the 2016 filing season, a step that will help detect and prevent refund fraud on both the federal and state level.

Another component will enhance identity validation for taxpayers using tax software. These stronger steps will protect taxpayer accounts by creating stronger verification of customers. This effort will include creation of security questions and device identity recognition at the time of log-on — both steps being used in the financial sector.

“We are taking new steps upfront to protect taxpayers at the time they file and beyond,” Koskinen said. “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.”

In addition to the states and companies from the private sector, the summit team includes several groups including the Federation of Tax Administrators (FTA) representing the states, the Council for Electronic Revenue Communication Advancement (CERCA) and the American Coalition for Taxpayer Rights (ACTR). A wide variety of groups have also joined in supporting the summit effort, including Free File Inc., the National Association of Computerized Tax Processors, the Network Branded Prepaid Card Association and the Financial Services Roundtable.

If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999.

Tuesday, September 29, 2015

How Your Income Affects Your Premium Tax Credit

shared by Neikirk, Mahoney & Smith, a CPA Firm

The Internal Revenue Service says you are allowed a premium tax credit only for health insurance coverage you purchase through the Marketplace for yourself or other members of your tax family. However, to be eligible for the premium tax credit, your household income must be at least 100, but no more than 400 percent of the federal poverty line for your family size. An individual who meets these income requirements must also meet other eligibility criteria.

The amount of the premium tax credit is based on a sliding scale, with greater credit amounts available to those with lower incomes.  Based on the estimate from the Marketplace, you can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.

If the advance credit payments are more than the allowed premium tax credit, you will have to repay some or all the excess.  If your projected household income is close to the 400 percent upper limit, be sure to consider the amount of advance credit payments you choose to have paid on your behalf.  You want to consider this carefully because if your household income on your tax return is 400 percent or more of the federal poverty line for your family size, you will have to repay all of the advance credit payments made on behalf of you and your family members. 
For purposes of claiming the premium tax credit for 2014 for residents of the 48 contiguous states or Washington, D.C., the following table outlines household income that is at least 100 percent but no more than 400 percent of the federal poverty line:

Federal Poverty Line for 2014 Returns

                                100% of FPL                          400% of FPL
One Individual           $11,490                               up to $45,960
Family of two            $15,510                               up to $62,040
Family of four           $23,550                                up to $94,200

The Department of Health and Human Services provides guidelines for residents of the 48 contiguous states and Washington D.C., one for Alaska residents and one for Hawaii residents. For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period for coverage for that year. As a result, the premium tax credit for 2014 is based on the guidelines published in 2013. The premium tax credit for coverage in 2015 is based on the 2014 guidelines.

For more information, you can spend hours digging through or you can spend a half hour on the phone with one of the tax professionals at Neikirk, Mahoney & Smith at (502) 896-2999.

Friday, September 11, 2015

Many Businesses Must File Their Tax Returns by Sept. 15

The Internal Revenue Service today reminded corporations and partnerships that took extensions to file their income tax returns by the Sept. 15 deadline, which applies to any business whose fiscal year is also the calendar year.

The IRS continues to see strong growth in corporations and partnerships shifting from paper returns to e-file. As of Aug. 30, more than 6 million corporations and partnerships have electronically filed their returns this year, representing a nearly 8 percent overall increase from the prior year.

Most large corporations and partnerships are already required to e-file. Corporations with $10 million or more in total assets are generally required to e-file Forms 1120 and 1120S. Partnerships with more than 100 partners as defined by their Schedules K-1 filings are also generally required to e-file their returns.

The use of e-file has also shown strong growth this year among businesses not required to use it.

Information on the benefits of e-file and details about the Modernized e-File (MeF) program are available at - or by calling Neikirk, Mahoney & Smith at 502-896-2999. The IRS expects to receive millions more e-filed returns by the deadline.

HIRE Act Update from Neikirk, Mahoney & Smith

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

If you have questions, contact Neikirk, Mahoney & Smith CPAs at 502-896-2999.

Monday, August 31, 2015

Filing an Amended Tax Return

From Neikirk, Mahoney & Smith CPAs, here are the Internal Revenue Services' Top 10 Tax Tips about Filing an Amended Tax Return

We all make mistakes so don’t panic if you made one on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return if you forgot to claim a tax credit or deduction. Men with big dogs won't show up at your door if you goof, but here are some tips to help you handle this sort of thing.

1. When to amend.  You should amend your tax return if you need to correct your filing status, the number of dependents you claimed, or your total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return.

Note: If, as allowed by recent legislation, you plan to amend your tax year 2014 return to retroactively claim the Health Coverage Tax Credit, see IRS.Gov/HCTC first for more information.

2. When NOT to amend.  In some cases, you don’t need to amend your tax return. The IRS usually corrects math errors when processing your original return. If you didn’t include a required form or schedule, the IRS will send you a notice via U.S. mail about the missing item.

3. Form 1040X.  Use Form 1040X to amend a federal income tax return that you filed before. Make sure you check the box at the top of the form that shows which year you are amending. Since you can’t e-file an amended return, you’ll need to file your Form 1040X on paper and mail it to the IRS.

Form 1040X has three columns. Column A shows amounts from the original return. Column B shows the net increase or decrease for the amounts you are changing. Column C shows the corrected amounts. You should explain what you are changing and the reasons why on the back of the form.

4. More than one year.  If you file an amended return for more than one year, use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS. See "Where to File" in the instructions for Form 1040X for the address you should use.

5. Other forms or schedules.  If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file the form. If you don’t, this will cause a delay in processing.

6. Amending to claim an additional refund.  If you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund. You may cash the refund check from your original return. Amended returns take up to 16 weeks to process. You will receive any additional refund you are owed.

7. Amending to pay additional tax.  If you’re filing an amended tax return because you owe more tax, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.

8. Corrected Forms 1095-A.  If you or anyone on your return enrolled in qualifying health care coverage through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement. You may have also received a corrected Form 1095-A. If you filed your tax return based on the original Form 1095-A, you do not need to file an amended return based on a corrected Form 1095-A.  This is true even if you would owe additional taxes based on the new information. However, you may choose to file an amended return.

In some cases, the information on the new Form 1095-A may lower the amount of taxes you owe or increase your refund.  You may also want to file an amended return if:

 You filed and incorrectly claimed a premium tax credit, or
 You filed an income tax return and failed to file Form 8962, Premium Tax Credit, to reconcile your advance payments of the premium tax credit.
Before amending your return, if you received a letter regarding your premium tax credit or Form 8962 you should follow the instructions in the letter.

9. When to file.  To claim a refund file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.

10. Track your return.  You can track the status of your amended tax return three weeks after you file with “Where’s My Amended Return?” This tool is available on or by phone at 866-464-2050.

Still have questions? Contact Neikirk, Mahoney & Smith at (502) 896-2999.

Friday, August 28, 2015

Freshly released income statistics

The Internal Revenue Service today announced the availability of Statistics of Income—2013, Individual Income Tax Returns Complete Report (Publication 1304). U.S. taxpayers filed almost 147.4 million individual income tax returns for tax year 2013, up 1.7 percent from 2012. The adjusted gross income less deficit reported on these returns fell $6.5 billion, which is a 0.1-percent decrease from the prior year.

The report is based on a sample drawn from the 147.4 million individual income tax returns filed for tax year 2013 and provides estimates on sources of income, adjusted gross income, exemptions, deductions, taxable income, income tax, modified income tax, tax credits, self-employment tax, and tax payments.

Classifications include tax status, size of adjusted gross income, marital status, age, and type of tax computation.

Other interesting stats include:

  • High-Income Tax Returns for 2012. For 2012, there were more than 5 million individual income tax returns with an income of $200,000 or more, accounting for almost 4 percent of all returns for the year. The total number of returns with incomes of $200,000 or more increased by almost 12 percent compared to the total number of returns at that income level for 2011.
  • Foreign-Controlled Domestic Corporations, 2012. Although foreign-controlled domestic corporations made up just over one percent of all corporate Federal income tax returns filed for tax year 2012, they accounted for about 16 percent of all corporate receipts – $4.7 trillion and held more than 14 percent of corporate assets – about $12.3  trillion. 
If you'd like to learn more about these or any other tax-related subjects, contact Neikirk, Mahoney & Smith at (502) 896-2999 or visit us online at

Monday, August 24, 2015

Taypayer Bill of Rights

If you've never seen this before, it's certainly worth reviewing again as we plow our way toward 4th Quarter. Brought to you by the tax professionals at Neikirk, Mahoney & Smith.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. Know your rights and understand the nation's obligations to protect them.

The Right to Be Informed
Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

The Right to Quality Service
Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

The Right to Pay No More than the Correct Amount of Tax
Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

The Right to Challenge the IRS’s Position and Be Heard
Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

The Right to Appeal an IRS Decision in an Independent Forum
Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

The Right to Finality
Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

The Right to Privacy
Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

The Right to Confidentiality
Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

The Right to Retain Representation
Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

The Right to a Fair and Just Tax System
Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

If you have questions, don't hesitate to contact Neikirk, Mahoney & Smith at 502-896-2999.

Friday, August 21, 2015

Is your small business growing?

That's the thing about small business. It's either growing or its dying!
If you're among the lucky ones - we all know it isn't just "luck" - your accounting needs are going to be changing as quickly as your business is growing.
That's why you should seek out the advice of one of Louisville's leading accounting firms, Neikirk, Mahoney & Smith.
They can help you plan the right financial strategies you're going to need to make sure your business is ready to meet the challenges that lie ahead.
Do something good for your business. Call Neikirk, Mahoney & Smith today. 502-896-2999.

Thursday, August 20, 2015

Health Care Law Tax Provisions in Video

Employers and health coverage providers now have access to recorded webinars from IRS about the Affordable Care Act’s employer provisions and related tax requirements. If you are a business owner, tax manager, employee benefits manager, or health coverage provider, you can access and review these videos anytime to better understand how the health care law may affect your organization.

Each of the following ACA videos on the IRS Video Portal provides about 40 minutes of detailed information on the specific tax provision mentioned in the title.

Learn about determining applicable large employer status, payments, and transition relief for 2015.

Employer-Sponsored Health Coverage Information Reporting Requirements for Applicable Large Employers (37 minutes)
Learn about employer-sponsored health coverage information reporting requirements for applicable large employers, including:

  • who is required to report
  • what information the law requires you to report
  • how to complete the required forms

Information Reporting Requirements for Providers of Minimum Essential Coverage (35 minutes)
Learn about the information reporting requirements for providers of minimum essential coverage, including employers that provide self-insured coverage.  Learn about:

  • who is required to report
  • what information the law requires you to report
  • how to complete the required forms

View the recorded webinars in the IRS Video Portal using one of the following tabs: Businesses, Tax Professionals, Governments and Non-Profits. After clicking on one of these tabs, simply select “Affordable Care Act” from the list of topics on the left side of the screen, and you will see a list of recordings about these and other ACA topics.

In addition to videos about the tax provisions of the Affordable Care Act on the IRS Video Portal, there is a wide range of videos on other tax topics for individuals, businesses and tax professionals.

For more information about the Affordable Care Act visit or call your Louisville Tax Professionals at Neikirk, Mahoney & Smith, PLLC at 502-896-2999.

Friday, August 14, 2015

IRS's Summertime Tax Tips

Straight from the horse's mouth - assuming the IRS is the horse - on this beautiful Friday in the Bluegrass State! If you owe tax, the IRS offers safe and easy ways to pay. Check with Neikirk, Mahoney & Smith CPAs at 502-896-2999 if you have questions or need any help.

Summertime tax payment tips:

  • Pay your tax bill.  If you get a bill, you should pay it as soon as you can. You should always try to pay in full to avoid any additional charges. See if you can use your credit card or to get a loan to pay in full. If you can’t pay in full, you’ll save if you pay as much as you can. The more you can pay, the less interest and penalties you will owe for late payment. The IRS offers several payment options on 
  • Use IRS Direct Pay.  The best way to pay your taxes is with IRS Direct Pay. It’s the safe, easy and free way to pay from your checking or savings account. You can pay your tax in just five simple steps in one online session. Just click on the “Payment” tab on You can now use Direct Pay with the IRS2Go mobile app.
  • Get a short-term payment plan.  If you owe more tax than you can pay, you may qualify for more time, up to 120 days, to pay in full. You do not have to pay a user fee to set up a short-term full payment agreement. However, the IRS will charge interest and penalties until you pay in full. It’s easy to apply online at If you get a bill from the IRS, you may call the phone number listed on it. If you don’t have a bill, call 800-829-1040 for help.
  • Apply for an installment agreement.  Most people who need more time to pay can apply for an Online Payment Agreement on A direct debit payment plan is the hassle-free way to pay. The set-up fee is much less than other plans and you won’t miss a payment. If you can’t apply online, or prefer to do so in writing, use Form 9465, Installment Agreement Request. Individuals can use Direct Pay to make their installment payments. For more about payment plan options, visit
  • Check out an offer in compromise.  An offer in compromise, or OIC, may let you settle your tax debt for less than the full amount you owe. An OIC may be an option if you can’t pay your tax in full. It may also apply if full payment will cause a financial hardship. Not everyone qualifies, so make sure you explore all other ways to pay your tax before you submit an OIC to the IRS. Use the OIC Pre-Qualifier tool to see if you qualify. It will also tell you what a reasonable offer might be.
  • Change your withholding or estimated tax.  If you are an employee, you can avoid a tax bill by having more taxes withheld from your pay. To do this, file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. The IRS Withholding Calculator tool on can help you fill out the form. If you are self-employed you may need to make or change your estimated tax payments. See Form 1040-ES, Estimated Tax for Individuals for learn more.

Thursday, August 13, 2015

IRS Offers Tips for Starting a New Business

When you start a business, a key to your success is to know your tax obligations. You may need to not only know about tax rules but also on rules payroll tax.

Here are five tips IRS tax that can help make your business off to a good start.

Business structure. Need early to decide what type of structure will choose for your business.

Business tax. There are four general types of business taxes. These are: income tax, self-employment tax, employment tax and excise duties. In most cases, the types of taxes you pay your business depends on the type of business structure that you set. You may have to make payments of estimated taxes. If you do, use IRS Direct Pay to pay. It's fast, easy and secure way to pay for your checking or savings account so.

Employer Identification Number (EIN). You may need to get an EIN for federal tax purposes. Visit to find out if you need it and to apply online.

Method of accounting. An accounting method is a set of rules used to determine when to report income and expenses. You must use a consistent method. The two most common are the cash method and accrual method. Under the cash method, you generally report income and expenses deducted in the year they are received or paid. Under the accrual method, you generally report income and deduct expenses in the year in which the gains or incurred. This is true even if the income is earned or paid the expense in a year later.

Employee health care. The health tax credit for small businesses helps small businesses and tax-exempt organizations to pay for the health care coverage they offer their employees. A small employer is eligible for the credit if you have fewer than 25 employees working full time, or a combination of full time and part time. The maximum credit is 50 percent of the premiums paid by small business employers and 35 percent of premiums paid by small tax-exempt employers such as charities.

The provisions of the shared responsibility of the employer of the Health Care Act Affordable affect employers who employ at least a certain number of employees (usually 50 full-time employees or a combination of full- and time partial). These employers are called large employers applicable (ALE).

ALEs must offer minimum essential coverage for full-time employees (and their dependents), or potentially make a payment dela shared responsibility of the employer to the IRS. The vast majority of employers fall under the threshold number of employees of ALE and, therefore, not subject to the provisions of shared responsibility of employers.

Employers also have the responsibility to report the information in relation to the minimum essential coverage offered or provided to full-time employees. Employers must send reports to employees and the IRS about new forms that the IRS created for this purpose.

Get all the tax bases of starting a business on in the Small Business Center and the Center for self-employment taxes.

IRS Removes Automatic W2 Extensions

The Internal Revenue Service has issued final and temporary regulations removing the automatic 30-day extension of time to file information returns on forms in the W-2 series, with the exception of Form W-2G, in an effort to combat tax-related identity theft, starting in 2017, according to an article in Accounting Today by Michael Cohn.

They are doing this to fight identity theft.

If you'd like to read the entire article, click here.

Wednesday, July 22, 2015

Tax Laws Slowing Growth of Small Business

In a recent testimony before Congress, Troy Lewis, CPA, CGMA, and chair of the American Institute of CPAs’ (AICPA) Tax Executive Committee, claimed that that compliance with federal tax laws can act as a road block in the growth of small businesses, according to Seth Fineberg, writing in Accounting Web.

 “It is imperative that small businesses and their tax return preparers have the ability to communicate with the IRS when preparing their taxes and addressing compliance issues,” Lewis told committee members. “However, there has been increasingly limited access to the agency. Taxpayer service must remain a high priority in order for small businesses to receive the assistance they need on tax issues.”

Click here to read the complete article.

Tuesday, July 21, 2015

Inverting Companies Regain Contract Eligibility

In an article published in Bloomberg News, Zachary R. Mider reports that the Obama administration quietly handed a victory to U.S. companies that avoid taxes by claiming a foreign address, suggesting that virtually all of them are still eligible for government contracts.

The Department of Homeland Security last year endorsed a legal memorandum that argued in part that a 2002 law banning such companies from federal contracts was invalid, according to a copy of the memo obtained by Bloomberg News. Although President Barack Obama later began publicly criticizing the tax maneuvers known as inversions, there’s no sign that he has reversed the department’s decision.

The March 2013 memo was submitted to Homeland Security by one of the country’s largest inverted companies, the manufacturer Ingersoll-Rand Plc. The company argued in part that U.S. trade agreements with foreign governments invalidated the law that would prohibit it from winning federal contracts.

You can ask a real person what this means by calling Neikirk, Mahoney & Smith CPAs at 502-896-2999.

To read the full article, click here.

Monday, July 20, 2015

State-based marketplaces lag behind federal exchange

Brian M. Kalish, writing in the Employment Benefit Advisor, reports that state-based health insurance marketplaces aren't performing up to the Obama Administration's expectations.

As they struggle to become financially stable, state-based marketplaces are lagging behind the federally-facilitated marketplace and are likely to continue to do so in the near future.

Despite improvement efforts, it is safe to “say that the experience for issuers on the public exchange has been challenging,” said Scott Rathke, vice president of government relations at Tampa, Fla.-based Health Plan Services, a third-party administrator which works in the FFM and eight state-based marketplaces.

“Pretty much from the get-go, while the marketplaces have been improving, you still have lots of nuances and problems.”

If you have questions about your company's employee benefit structure, contact Neikirk, Mahoney & Smith at 502-896-2999.

Then read the rest of the article here!

Friday, July 17, 2015

Scam Phone Calls Continue; IRS Identifies Five Easy Ways to Spot Suspicious Calls

The Internal Revenue Service issued a consumer alert today providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.
These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.
“These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”
The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam. The IRS will never:
  1. Call to demand immediate payment, nor will we call about taxes owed without first having mailed you a bill..
  2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  4. Ask for credit or debit card numbers over the phone.
  5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
  • If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
  • If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or
  • You can file a complaint using the FTC Complaint Assistant; choose “Other” and then “Imposter Scams.” If the complaint involves someone impersonating the IRS, include the words “IRS Telephone Scam” in the notes.
Remember, too, the IRS does not use unsolicited email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to and type “scam” in the search box.
Additional information about tax scams are available on IRS social media sites, including YouTube and Tumblr where people can search “scam” to find all the scam-related posts.

Thursday, June 18, 2015

Tax Tips for Students with Summer Jobs from Neikirk, Mahoney & Smith

Students often get a job in the summer. If it’s your first job it gives you a chance to learn about work and paying tax. The tax you pay supports your home town, your state and our nation. Here are some tips students should know about summer jobs and taxes:

  • Withholding and Estimated Tax.  If you are an employee, your employer withholds tax from your paychecks. If you are self-employed, you may have to pay estimated tax directly to the IRS on set dates during the year. This is how our pay-as-you-go tax system works.
  • New Employees.  When you get a new job, you will need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use it to figure how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on can help you fill out the form.
  • Self-Employment.  Money you earn doing work for others is taxable. Some work you do may count as self-employment. These can be jobs like baby-sitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction can cut taxes.
  • Tip Income.  All tip income is taxable. Keep a daily log to report them. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return.
  • Payroll Taxes.  You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count for your coverage under the Social Security system.
  • Newspaper Carriers.  Special rules apply to a newspaper carrier or distributor. If you meet certain conditions, you are self-employed. If you do not meet those conditions, and are under age 18, you may be exempt from social security and Medicare taxes.
  • ROTC Pay.  If you’re in ROTC, active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training is not taxable.
  • Use IRS Free File.  You can prepare and e-file your tax return for free using IRS Free File. It is only available on 
  • You may not earn enough money to be required to file a federal tax return. Even if that is true, you may still want to file. For example, if your employer withheld income tax from your pay, you will have to file a return to get a tax refund.
If you have more questions, or if you could use some advice, contact Neikirk, Mahoney & Smith PLLC, at (502) 896-2999.

Friday, May 8, 2015

Tax Tips From the IRS for Self-employed Folks

IRS recognizes Small Business Week May 4 – 8, 2015, by highlighting some of its most popular educational products, videos and webinars to help your small business thrive. If you are self-employed, be sure to view the IRS webinar “Business Taxes for the Self-Employed: The Basics.” 

Here are some topics included in the webinar or on that you should know:

Accounting Method.  An accounting method is a set of rules about when to report income and expenses. Many small businesses use the cash method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Find out more in IRS Publication 538, Accounting Periods and Methods.

Business Taxes.  There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. You may have to pay self-employment tax as well as income tax if you make a profit. Self-employment tax, or SE tax, includes Social Security and Medicare taxes. You may need to pay your taxes by making estimated tax payments. If you do, use IRS Direct Pay to pay them. It’s the fast, easy and secure way to pay from your checking or savings account.

Tax Forms.  There are two forms to report self-employment income. You must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet other conditions. See the form instructions to find out if you can use the form. Use Schedule SE, Self-Employment Tax, to figure your SE tax. If you owe this tax, make sure you file the schedule with your federal tax return.

Allowable Deductions.  You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business. View the webinar “Small Business Owners: Get All the Tax Benefits You Deserve” to learn more.

Business Use of a Vehicle.  If you use your car or truck for your business, you may be able to deduct the costs to operate the vehicle for the business use. Refer to IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses for details.

Follow the IRS on Twitter! The IRS has three key accounts: @IRSnews, @IRStaxpros and @IRSenEspanol. For all the IRS Small Business Week information, keep an eye on these IRS Twitter accounts and the key hashtags: #IRSsbw15 and #DreamSmallBiz.

Thursday, April 30, 2015

The good news is your Derby betting losses are (probably) tax deductible!

But the bad news is that your winnings are taxable. According to the IRS, gambling winnings are fully taxable and you must report them on your tax return.

Gambling income includes but is not limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.

A payer is required to issue you a Form W-2G (PDF), Certain Gambling Winnings, if you receive certain gambling winnings or if you have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings on your Form 1040 (PDF) as "Other Income" (line 21), including winnings that are not subject to withholding.

In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax. If you are considered a nonresident alien - like a Martian or something - of the United States for income tax purposes and you have to file a tax return, you must use Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return. Refer to Publication 519, U.S. Tax Guide for Aliens, and Publication 901, U.S. Tax Treaties, for more information.

You may deduct gambling losses only if you itemize deductions. However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. Claim your gambling losses on Form 1040, Schedule A (PDF) as an "Other Miscellaneous Deduction" (line 28) that is not subject to the 2% limit. A nonresident alien of the United States cannot deduct gambling losses.

It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.

Just a quick reminder from Neikirk, Mahoney & Smith on the horsiest weekend of the year!

Saturday, April 25, 2015

Treasury Exec Blasts Tax System

Mark Mazur is a heavyweight numbers guy and he didn't mince words about the current state of American business tax policies during a recent speech.

“The business tax system today is inefficient, overly complex, and too riddled with loopholes,” Mazur said, making it difficult for US business to function as a world-class system.

Mazur, assistant secretary for tax policy at the U.S. Department of Treasury, a position to which he was appointed in 2011 by President Barack Obama, made the comments while addressing the NYU/KPMG Tax Lecture Series, according to an article in Accounting Today.

Chances are, Mazur's patience is wearing thin from having to help his employer deal with the intense criticism aimed at the Treasury Department's red-headed stepchild - the Internal Revenue Service - over the past few years.

Worse news came today when, writing for Forbes Magazine, Robert W. Wood reported that the IRS doled out $3 billion in erroneous business tax credits to corporations that did not qualify and handed out $5.8 billion in erroneous tax refunds in 2013 alone.

The tax credits are for business taxpayers, Wood said, and covered such varied activities as providing childcare for their employees’ children. In 2013, corporations claimed more than $93 billion worth of tax credits, the report reveals. But it turns out many of those credits were wrong. Mistakes were found in over 3,000 electronically filed corporate tax returns.

Ironically, just last week, IRS Commissioner John Koskinen said that the agency is significantly under-funded, and those cuts mean there will be a decline in service for taxpayers, and pledged that service would improve if they got more money.

"Customer service -- both on the phone and in person -- has been far worse than anyone would want," Koskinen said. "It's simply a matter of not having enough people to answer the phones and provide service at our walk-in sites as a result of cuts to our budget."

But a congressional panel report found recently that the IRS had cut customer services while continuing to hand out bonuses to employees, allowing staff to conduct union activities, failing to collect debt owed by employees of the federal government and spending over $1.2 billion on implementing ObamaCare, according to Fox News.

The panel reported that even though the IRS’s budget for taxpayer assistance remained flat from fiscal year 2014 to 2015, the level of over-the-phone customer service significantly decreased, with the agency shifting staff in customer service to focus on written correspondence instead of telephone calls. Meanwhile, the number of calls doubled in that period.

The panel found that wait times increased from 18.7 minutes to 34.4 minutes, and answered calls decreased from 6.6 million to 5.3 million.

“In January 2015, the IRS commissioner estimated that taxpayer service would decline while delays in tax refunds would increase. While the IRS commissioner has blamed this solely on budget cuts, in reality the IRS deliberately diverted resources away from taxpayer services,” the report found.

Despite the drop in service, there was no significant decrease in bonuses for IRS employees. Notably, in November 2014, despite another round of budget cuts at the IRS, Koskinen announced that employees would receive bonuses at the same level as for the previous year, unless they had substantiated conduct issues, the report said.

So clearly, Mazur has reason to be concerned. The IRS is a complete mess. The question, though, remains...what will be done about it?

Tuesday, April 14, 2015

Eight Last Minute Tax Tips from Accounting Today

Our friends at Accounting Today offers up some great tax tips you may find to be of value. If you have any questions, contact Neikirk, Mahoney & Smith at 502-896-2999.

1. Fear Not the Extension
"Everyone is afraid of an extension," says Kyle Brownlee, CEO of Enid, Okla.-based Wymer Brownlee, part of the HD Vest network of tax-focused planning firms. "Everyone is just afraid of the IRS. They think: I am sending in my return late."

But an extension doesn't raise a red flag with the IRS, nor does it really mean clients are "late," he says -- although estimated taxes are still due April 15, even if the full return is not.

"I would much, much rather file an extension and get my ducks in a row and file later," he says, adding that an extension can be for a month or up to six months. "An extension is just no big deal and nothing to be afraid of."

2. Let Entrepreneurs Wait on Funding SEP Plans
Small business owners and sole proprietors can wait until Oct. 15 to fully fund their simplified employee pension (or SEP) retirement plans -- which allow them to contribute up to 25% of the income on which they pay Social Security tax.

Many people pay their taxes on April 15 and fail to fund their SEP retirement plans because they don't have the money to pay taxes and fund their plan all at the same time, says Heather Locus, with Balasa Dinverno Foltz in Itasca, Ill.

For that very reason, the IRS allows clients to wait until Oct. 15 to fund their SEP plans if they file for an extension. "That is something people don't necessarily realize that one can actually do," Locus says.

3. Accelerate Deductions for 2014
Many deductions may expire in the 2015 tax year, including deductions for manufacturing and other business equipment -- a category that includes vehicles of 6,000 pounds in weight, allowing many Land Rovers, GMC Yukons and Toyota Highlanders, Brownlee says.

These deductions, from Section 179 in the Tax Code, remain in place for the 2014 tax year -- but no one knows if they will be extended or significantly reduced for 2015, Brownlee says. He recommends that high-net-worth business owners in particular accelerate all the deductions they can under this code for the 2014 tax year, rather than take them in increments of one-fifth per year over the next five years and risk the expiration, he says.

"You can elect up to $500,000 to expense on that equipment in 2014," he says.

The deduction pertains specifically to portable equipment; in addition to jumbo SUVs, the category includes tractors, heavy vehicles, computers, servers, desks and office equipment. Even heavy manufacturing equipment that may be bolted down, but can be shifted elsewhere in an assembly or manufacturing plan reorganization would qualify, he says.

"Think about it like this," Brownlee says. "It's for any type of non-permanent equipment. If I can pick it up and move it or if I can drive it or ride it or if it's not fixed."

4. Put Alimony in an IRA
Alimony is considered "earned income" -- which is taxable compensation and, as a result, qualifies for saving in an IRAs, Locus says. That could help some recipients who are retired or otherwise not working, Locus says.

"To make an IRA contribution, you have to have earned income, so even if you have a $5 million portfolio and you have $100,000 in dividends, that doesn't qualify," she explains. "But getting paid alimony qualifies."

"A lot of CPAs don't think about that," she adds. "A lot of people who've gotten divorced don't think about that."

5. Make Up for Lost Time
Remember that even seemingly well-off clients may need last-minute retirement help, cautions Paul Auslander, director of financial planning at ProVise Management Group in Clearwater, Fla.

"There are those heart-wrenching meetings when you have someone where you think they are doing fine and they are not," he says, citing one example.

"There was a well-known M.D. in town who for whatever reason had her world kind of blow up, and she had to pay most of her money to a spouse in a divorce," Auslander recalls. "He thought he was going to be a novelist, yet never wrote a book. Now she's 58 years old and she has to scramble.

"She's paid for all the kids' education because she was the breadwinner," he adds. "Now she's panicking and worried about her own security. I've seen [similar] cases, male and female."

Doctors and lawyers—especially trial lawyers, Auslander says -- can find themselves in this predicament as they near retirement. The answer is to get them to make catch-up contributions to their traditional or Roth retirement plans.

Some clients can also open up a SEP right before they file their tax return, he says.

"They can deposit 25% of their income -- up to $52,000 for 2014 -- and $53,000 for the 2015 tax year. It's an opportunity to make up lost ground," he says. "That's an old strategy, but ... it keeps coming back and is valuable."

6. Take State Deductions on Lease Income
Clients who receive lease income from oil and gas producing companies -- who lease the right to drill for oil on their land -- are profiting now, Brownlee says. Although oil producers are sitting on their heels, waiting for the price of oil to rebound, they are still paying pricey three-year leases to property owners for the right to drill eventually.

Lease holders must file a state tax return wherever they derive this income from, Brownlee says -- as long as that state has an income tax -- but some states also offer a deduction on that income.

Brownlee cites an example. "A client had a $400,000 lease bonus check" from Oklahoma this year, he says, and that state's 22% deduction gave her an $88,000 deduction against Oklahoma income, saving her roughly $4,400 on her state tax return. Out-of-state CPAs and planners might miss that, he notes.

7. Switch Deductions among Divorced Couples
This tactic might require ex-spouses to work together amicably, but there's a worthwhile payoff, Locus says.

Because the IRS is phasing out certain deductions for high earners who bring in $254,000 or more annually, she explains, formerly married couples may want to switch some deductions from the high-earning parent to the lower-earning one to reduce the total amount paid to the feds.

"Usually the person [in a divorced couple] who has the higher income takes the kids as a deduction exemption," she says, to get the biggest bang for the buck. However, "in 2013, a phase-out for itemized deductions and personal exemptions for high earners began again -- and now people who have an adjusted gross income of $376,000 for a single person or $402,125 for a head of a household don't get any benefit from it. So, it may make sense that the person in the higher tax bracket lets the other spouse take the deduction and the [co-parents] either split the tax benefit or put that money in a 529 college account for a kid."

Failing to swap these deductions means that, she says, "the IRS is just getting more money."

8. Remind Clients to Max Out 401(k)s
Occasionally, Auslander takes on new clients whose former advisors convinced them that they would do better by not investing as much in their 401(k)s. However, those advisors' aims in giving that advice was entirely self-serving: to keep more assets to manage for themselves, he says.

In reality, clients are always better off putting the maximum amounts into their company's retirement plans, he says.

"The math is so compelling that you'd have to be an absolute fool not to," Auslander says.

Friday, April 10, 2015

Last Minute Input from IRS

Your friends at the Internal Revenue Service today want to threaten remind taxpayers that quick and easy solutions are available if you can’t file your returns or pay your taxes on time, and you can even ask for an extension, make a payment or request payment options online at

Most taxpayers have already filed their 2014 returns. Figures released today show that as of April 3, the IRS had already received just over 99 million returns and issued more than 77 million refunds averaging over $2,800.

For those who have yet to file, the IRS says don’t panic. Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember, this is an extension of time to file; not an extension of time to pay. However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief.

- WARNING - this is tedious reading. If you'd like to discuss tax issues with a real person and a tax professional, contact Neikirk, Mahoney & Smith PLLC at (502) 896-2999. Or if you have nothing better to do, then continue -

Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. While taxpayers should pay as much as they can to minimize any penalties and interest, they should always file even if they can’t pay the full amount due. Here are further details on the options available.

More Time to File
People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The interest rate is currently three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on Of the nearly13 million extension forms received by the IRS last year, almost 8 million were filed electronically.

Those who owe taxes and need a tax-filing extension can get a two-for-one deal. Use IRS Direct Pay or one of the other electronic payment options to pay by April 15 the estimated amount of tax owed, designate the payment as an extension payment, and the IRS will count that as a validly-requested extension – no need to separately file a Form 4868.

Some taxpayers get more time to file without having to ask for it. These include:

Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 15 to file. Tax payments are still due April 15.
Members of the military and others serving in Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces’ Tax Guide.

People affected by certain recent natural disasters.

Easy Ways to E-Pay
Taxpayers who owe taxes can now choose among several quick and easy e-pay options, including the newest and easiest, IRS Direct Pay. Again, making a payment through one of these electronic options and designating it as an extension payment counts as filing for an extension. Available options include:

  • Direct Pay. Available at, this free online tool allows individuals to securely pay their income tax directly from checking or savings accounts without any fees or pre-registration. No need to write a check, buy a stamp or find a mailbox. Payments can even be scheduled up to 30 days in advance, and the tool is available round the clock. Any taxpayer who uses the tool receives instant confirmation that their payment was submitted. More than 3.5 million tax payments totaling more than $7.2 billion have been received from individual taxpayers since Direct Pay debuted during last year’s tax-filing season.
  • Electronic Federal Tax Payment System. This free service gives taxpayers a safe and convenient way to pay individual and business taxes online or by phone. Pre-registration is required. To enroll or for more information, visit or call 800-316-6541.
  • Electronic funds withdrawal. E-file and e-pay from a checking or savings account in a single step.
  • Credit or debit card. Both paper and electronic filers can pay their taxes online or by phone through any of several authorized credit and debit card processors. Though the IRS does not charge a fee for this service, the card processors do. For taxpayers who itemize their deductions, these convenience fees can be claimed on Schedule A Line 23.

Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” Write “2014 Form 1040,” name, address, daytime phone number and Social Security number on the front of the check or money order. To help ensure that the payment is credited promptly, also enclose a Form 1040-V payment voucher.

More Time to Pay
Taxpayers who have finished their returns should file by the regular April 15 deadline, even if they can’t pay the full amount due. In many cases, those struggling with unpaid taxes qualify for one of several relief programs, including the following:

Most people can set up a payment agreement with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS and qualified taxpayers can avoid the filing of a Notice of Federal Tax Lien if one was not previously filed. Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from and mailed along with a tax return, bill or notice.
Some struggling taxpayers may qualify for anOffer in Compromise. This is an agreement with the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, individuals can use theOffer in Compromise Pre-Qualifier, a free online tool available on
Details on all filing and payment options are on

Thursday, March 26, 2015

Yes, Virginia, it IS taking longer to do your taxes this year:-)

Tax season is supposed to be over on April 15. But among certain groups—especially the wealthy—filing for an extension until Oct. 15 is now routine, according to Bloomberg Business and Neikirk, Mahoney & Smith CPAs.

In 2011, 11 million taxpayers filed for an extension; two years later, 13 million did, an increase of almost 20 percent. At the end of September 2014, more than 25 percent of those who had filed for an extension were still working on their filings. We're not just procrastinators. It has gotten harder to file on time. Here’s why:

1. You don't have the forms you need.

The more complicated your investments, the more likely it is that you won't have everything you need to file your taxes by April 15. Often, private equity, venture capital, and hedge funds are structured as partnerships, which means their earnings generate so-called “Schedule K-1” forms, which sometimes take until late summer to arrive.

Christine Freeland, a certified public accountant in Chandler, Ariz., says brokers are putting more of her clients in energy or real estate partnerships instead of (or in addition to) mutual funds, which means more K-1s. Some clients don't even know how many K-1s they'll be getting, she says, and they think their return is ready until they receive an additional K-1 in the mail. Sometimes the partnerships—which have to finish their own returns before they can issue K-1 forms—get extensions, although they must file by Sept. 15.

Simpler investments that generate 1099 forms can slow down the process, too. Brokerage statements have to be out by Feb. 15, but many note that the information may not be final. One of Freeland's clients once handed her a corrected brokerage statement that hadn't arrived until April 15.

2. You're waiting on other people.

The more middlemen standing between you and your tax forms, the greater the chances of delay. According to Bill Zatorski of accounting firm PwC, a common sticking point for wealthy taxpayers is data from funds of funds, hedge funds that invest in hedge funds. A fund of funds can’t send you a K-1 until it receives K-1s, or other needed forms, from all the various funds it holds.

Adding to the delay, says Kevin Meehan of Wealth Enhancement Group, is that investors rarely hold funds or other investments directly. Everything gets funneled through brokerages. You wait for your brokerage, which is waiting for your fund-of-funds, which is awaiting forms for all the funds it holds. An extension until Oct. 15 is only a partial solution for taxpayers with late tax forms: They still must pay an estimate of what they owe by April 15, even if the full return comes later.

3. The tax code is more complicated.

If all else fails, blame Congress. Taxpayers already must follow different rules for wages, capital gains, and two types of dividends—those that get taxed at a lower tax rate and those that don’t meet the “qualified” criteria. In 2013, yet another tax category was added, a 3.8 percent net investment income tax on married couples earning more than $250,000 per year.

Under a 2010 law, taxpayers also now must report all their overseas holdings—a process that sometimes requires the close reading of K-1 footnotes, Zatorski says. Finally, there’s the alternative minimum tax, or AMT, a parallel tax system designed to limit the deductions that wealthier Americans can take. Plenty of those affected aren’t particularly wealthy. About 4.2 million people were ensnared by the AMT in 2014, the Tax Policy Center estimates, up 8 percent from the year before. The AMT alone can almost double how long it takes to fill out a tax return, the National Taxpayer Advocate says.