MI Tax Benefits for the Military

Current and former military members may be eligible to receive:

See your tax preparer and/or your local property tax assessor if you think any of these benefits may apply to you!

Upset Over Election Results?

Many people over the last year were overheard stating they intended to leave the country if the candidate they disliked won the election for President of the U.S..  Well here are some tax consequences of the move:

If you keep your citizenship and move out of the U.S., you are still required to pay U.S. taxes on all worldwide income.  Don’t forget to indicate foreign bank accounts with more than $10,000 on your tax return.

If you give up U.S. citizenship, there is an “Exit” tax.  Yup, who would have guess it?!!!  However the tax only comes into play if your average annual tax for the previous five years was greater than $161,000 OR you have at least $2 million in net worth.  The government treat it as if you sold all your assets, lets you deduct $700,000 as an exemption, and you will pay an “Exit” tax on the remainder.

So, just how badly do you want to leave?

MI Sales Tax

As we all know, the MI return asks taxpayers to voluntarily report any unpaid sales tax on the tax return each year.  Many states haven’t been able to count on the monies generated by the sales tax generated by the purchases generated by the residents on purchases made on line.

However, a good bit of e-commerce is no longer subject to tax according to the Supreme Court. A recent decision stated that unless out-of-state sellers have a physical presence in the buyer’s home state, purchases are not taxable.  Collection is required only for retailers with a physical presence, a store, factory, warehouse etc.  Some states are now enacting laws in an effort to get around this, for example requiring tax collection if weblinks are within the state. Expect more litigation on this issue.

For now, it seems reasonable to assume that any store with a physical presence, should have purchases reported on your tax return if sales tax wasn’t paid on the purchase.

Repeat Warning About Scam Calls

It bears repeating at this time of the year that the IRS will NOT call taxpayers regarding tax debts without first sending a specific letter about the debt in question.  Even then the call would be questionable.  They will NEVER ask for payment over the phone, and will NEVER imply or state that agents or police will make a visit to your home if you do not pay while on the phone.

If you receive such a call, hang up immediately, do not engage in conversation.  Calls can be reported to Treasury inspectors at 1-800-366-4484 or by filing a complaint with the Federal Trade Commission at http://www.ftc.gov

As Holidays Approach, IRS Reminds Taxpayers of Refund Delays in 2017

Anyone with an Earned Income Credit or Additional Child Tax Credit will not have their tax return processed until Feb 15th. IRS will “stack” the returns sent earlier and begin handling returns with those two items on that date.

Source: As Holidays Approach, IRS Reminds Taxpayers of Refund Delays in 2017

Reminder about MI Sales/Use Tax

Excerpt from the MI Department of Treasury Daily Use Bulletin:

With the kick-off of the holiday shopping season beginning after Thanksgiving Day, the Michigan Department of Treasury reminds Michiganders to account for “use tax” when sales tax is not factored into the final price of items purchased online.

Michigan’s use tax generally applies to purchases made when a retailer does not collect sales tax. This often happens when individuals purchase items through online or mail-order retailers or television shopping networks without physical locations inside the state of Michigan.

“When you buy an item online and the retailer doesn’t charge sales tax, you are required to report and pay the use tax on that item,” Michigan Treasurer Nick Khouri said. “The revenue collected from these taxes fund some of our most-important community services, such as schools and local police and fire departments. By not reporting these taxes, you are shortchanging municipalities and school districts of potentially hundreds of millions of dollars.”

The Michigan Department of Treasury’s Office of Revenue and Tax Analysis estimates between $200 and $300 million is lost each year due to Michiganders not reporting their use tax. Most of the dollars collected from taxpayers go to the School Aid Fund, General Fund and to the Local Community Stabilization Authority.

The use tax is calculated at the rate of 6 percent of the total purchase. Items subject to use tax include appliances, books, clothing, computers, DVDs, CDs, electronics, furniture, pre-written computer software and tobacco products.

Taxpayers can report the use tax annually when filing their Michigan Individual Income Tax Return.

Newest Scam Per IRS: Warning!

Be wary of fraudulent CP2000s (09-21-16)

The IRS is warning taxpayers and practitioners that a new scam uses fraudulent CP2000s to solicit money from taxpayers. The fraudulent forms look convincing, and show balances due that are small enough that taxpayers just might pay rather than arguing the point.

However, upon closer inspection, these forms have telltale signs of fraud:

  • The instructions direct the taxpayer to make out a check to “I.R.S.” rather than to “United States Treasury;” and
  • The return address is “Austin Processing Center, P.O. Box 15264, Austin, TX 78761-5264,” which does not match the address listed on the IRS website for the Austin Processing Center.

Tax practitioners should advise clients to contact them if any unexpected balance due arrives from the IRS, so that the correspondence can be verified.