The McKillip Group, CPAs, 3 Oakwood Park Plaza, Suite 102, Castle Rock, CO 80104
(303) 688-8680
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S-Corporation Crack Down by the IRS

The IRS has never been fond of S-Corporations and we have seen a recent increase in audits.  For the last few years we have concentrated on reasonable compensation for S-Corporate shareholder which we have made sure our clients are compliant.  Recently, the IRS is focusing on shareholder basis in their stock.  Basis is a complicated calculation which “basically” equals the amount you paid for your stock, plus or minus income/losses and distributions/contributions taken in prior years, plus or minus other items.  A shareholder can only deduct losses up to the amount of basis in their S-corporation shares.  If we have prepared your tax returns since you began your business, we know your basis.  If we have not, you need to know your basis.  Please contact our firm if we can help you calculate your basis.  To calculate your basis we will need copies of your year tax returns from the start of your business.

How to Prevent Identity Theft When Filing Your Taxes

The IRS has joined forces with states and the tax industry to enact new safeguards that are designed to prevent identity theft when filing your taxes. Most of these safeguards are not noticeable to you as a taxpayer, but they are there, and invaluable in the fight against identity theft criminals. If you use tax software to prepare your own return, you will see new login standards as a start.

Don’t Become a Victim

Learn the best ways to protect yourself and prevent identity theft when filing your taxes with these three helpful tips.

What is Tax-related Identity Theft?

When someone steals your Social Security number and then uses it to file a tax return and claim a fraudulent refund, you have become a victim of tax-related identity theft. In most cases, victims are unaware that their identity and Social Security number has been stolen or used until they go to e-file their return, and find out that a return has already been filed using your SSN. In other cases, the IRS might send you a letter alerting you of a suspicious return by your SSN.

Reducing Your Risk

Protecting yourself against identity theft criminals can be done in a few different ways. It’s important that you use strong passwords, and only use security software that contains firewall and antivirus protection. Learn how to recognize threatening calls and texts from thieves posing as the IRS, your bank, or a credit card company. Never click on links, follow emails or download attachments from unknown senders, and be aware of phishing emails that look like a legitimate message from your bank or credit card company. It’s also important to know that the IRS does not contact taxpayers via email to request personal or financial information.

Know the Warning Signs

If you are contacted by the IRS (in the legitimate fashion of a phone call or mailed letter) it’s possible that your identity has been stolen and used for fraudulent tax claims. If the IRS or your tax professional contacts you about paying additional taxes, collection actions taken against you for not filing taxes, more than one tax return that was filed with your SSN, or alerting you that IRS records indicate wages received from a job where you were not employed, it’s important that you seek proper action to investigate your identity, and the status of your SSN in the IRS system.

Here’s Why Colorado Requires ID to File Taxes Now

This year as thousands of people received their W-2’s and 1099 tax forms, they were asked for their driver’s license numbers upon filing. Several state tax offices requested license information as an added layer of protection for those completing online forms.

Verifying your driver’s license number is a simple way for states to verify that you are a legitimate person filing their taxes, and not a fraud who is using personal data to file a fake tax return to claim a fraudulent refund.

Identity thieves will likely already have your name and Social Security number, but most criminals don’t usually have the driver’s license numbers for the stolen identities in their possession. Now that state tax return offices are requesting license numbers, it’s easier for the to match it with other federal records that confirm your identity.

For those who don’t have a driver’s license or who prefer not to share it with the state tax office, you will generally be issued a state identification number via email, which you can specifically enter in place for your requested driver’s license number. In most cases, if you opt out of entering either number, you can still file your tax return at your own risk.

Anti-fraud steps have been implemented so that state tax officials can verify that you are a legitimate taxpayer. Denying state tax officials your license number or identification number could slow the processing of your return, because the system has not verified your identity with the requested credentials.

In the grand scheme of things, the added security is intended to ensure that the right people – legitimate tax filers are receiving their refunds instead of crooks who steal people’s identities. Be aware that the added security may require a little bit more patience in both filing and waiting on your tax return.