Monthly Archives: February 2015

Name Changes and Income Taxes

Did you know that the IRS checks whether a Name/Taxpayer Identification Number (TIN) combination is correct by matching it against a file containing all social security numbers (SSN) issued by Social Security Administration (SSA)?   Specifically, the IRS is looking to match the Name Control.   What exactly is the Name Control?

A Name Control consists of up to four characters for individuals, corporations or trusts.   It generally consists of the first four characters of the surname (for individuals), disregards blanks between letters and omits punctuation marks, titles and suffixes.

When you file your individual income tax return keep in mind that:

      • All the names on your return must match those on file with the Social Security Administrations records.
      • A name mismatch can delay the acceptance of your return by the IRS as well as your refund.

As such, if you experience a name change, make sure you:

Inform the SSA and Get a New Card.   Did you get married and are now using your new spouse’s last name or hyphenated your last name?  Did you divorce and go back to using your former last name?  In either case, you should notify the SSA of your name change.  That way, your new name on your IRS records will match up with your SSA records.

Informing the SSA of a name change is easy; you’ll just need to file a Form SS-5Application for a Social Security Card at your local SSA office and provide a recently issued document as proof of your legal name change.  Form SS-5 is available via the link above or by calling 800-772-1213. Your new card will have the same number as your previous card, but will show your “new” name.

Notify the SSA of Dependent Name Changes.   Notify the SSA if your dependent had a name change.  For example, this could apply if you adopted a child and the child’s last name changed.  If you adopted a child who does not have a SSN, you may use an Adoption Taxpayer Identification Number (ATIN) on your tax return.  An ATIN is a temporary number.  You can apply for an ATIN by filing Form W7-A.

Report Changes To the Health Insurance Marketplace.   If you purchase health insurance coverage through the Health Insurance Marketplace, be sure to report changes to your Marketplace throughout the year.  These include changes in circumstances, name changes, a new address or a change in your income or family size

2015 IRS Dirty Dozen

Screen Shot 2013-08-04 at 10.18.30 AM

As the tax season gets under way, the IRS does us all a public service by posting a list of the top tax scams currently making the rounds.  Typically this is done by posting one scam per day over a two to three week period; usually right as the filing season opens up.  The IRS recently finished releasing their list, which can be found here.

As we often see some of these scams impacting clients that visit our office, we figured we would post a quick summary.  So without further adieu here is the…

Recap of the 2015 IRS “Dirty Dozen” scams:

  • Phone Scams: Aggressive and threatening phone calls by criminals impersonating IRS agents remains a threat to taxpayers. Callers often state that they are IRS agents and mention police arrest, deportation, license revocation and other things if the taxpayer doesn’t immediately pay their bill (i.e. as in on the phone right now as we speak). Remember, the IRS typically contacts taxpayers via letter (not phone) and don’t show up unannounced.  If someone is asking for payment over the phone, tell them to give you a phone number, that you are calling your lawyer or simply hang up!
  • Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. If you believe that a fraudulent return has been filed by someone using your Social Security Number, we urge you to follow the steps we outlined in this identity theft blog post.
  • Return Preparer Fraud: Taxpayers need to be on the lookout for unscrupulous return preparers. Most tax professionals provide honest high-quality service. But there are some dishonest preparers who’s actions hurt you and the entire profession.  Check out this post for the questions you want to ask any tax professional that you are thinking of using.
  • Inflated Refund Claims: Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund.
  • Falsifying Income to Claim Credits: Taxpayers should avoid inventing income to erroneously claim tax credits (e.g. the Earned Income Credit or EIC).
  • Claims for Fuel Tax Credits:  The fuel tax credit is generally limited to off-highway business use, including use in farming.  Consequently, the credit is not available to most taxpayers.
  • Hiding Income with Fake Documents:  The mere suggestion of falsifying documents to reduce tax bills or inflate tax refunds should be a huge red flag when using a paid tax return preparer.
  • Phishing: Fake emails or websites looking to steal personal information continue to be a problem. The IRS will not send you an email about a bill or refund out of the blue.
  • Fake Charities: Taxpayers should be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Follow the 10 steps in this post to ensure that you are giving to a “real” organization and not someone trying to steal your money.
  • Offshore Tax Avoidance: Anyone suggesting that you can avoid paying tax by hiding it in an “offshore” account is selling you lies.  Just research FACTA and you’ll see what the IRS has to say about the topic.
  • Abusive Tax Shelters: The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true.
  • Frivolous Tax Arguments:  Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. Just know that the penalty for filing a frivolous tax return is $5,000.