On June 1, 2017, the United States District court for the District of Columbia upheld the Internal Revenue Service’s authority to require the use of a Preparer Tax Identification Number (PTIN), but enjoined the IRS from charging a user fee for the issuance and renewal of PTINs. In accordance with this order, PTIN registration and renewal is currently suspended.

The IRS, working with the Department of Justice, is considering how to proceed. As additional information becomes available, it will be posted at www.irs.gov/taxpros.

WASHINGTON — The Internal Revenue Service today reminded small business owners who work from a home office that there are two options for claiming the Home Office Deduction. The Home Office Deduction is often overlooked by small business owners.

As part of National Small Business Week (April 30-May 6), the IRS is highlighting a series of tips and resources available for small business owners.

Regular Method

The first option for calculating the Home Office Deduction is the Regular Method. This method requires computing the business use of the home by dividing the expenses of operating the home between personal and business use. Direct business expenses are fully deductible and the percentage of the home floor space used for business is assignable to indirect total expenses. Self-employed taxpayers file Form 1040, Schedule C , Profit or Loss From Business (Sole Proprietorship), and compute this deduction on Form 8829, Expenses for Business Use of Your Home.

Simplified Method

The second option, the Simplified Method, reduces the paperwork and recordkeeping burden for small businesses. The simplified method has a prescribed rate of $5 a square foot for business use of the home. There is a maximum allowable deduction available based on up to  300 square feet. Choosing this option requires taxpayers to complete a short worksheet in the tax instructions and entering the result on the tax return. There is a special calculation for daycare providers. Self-employed individuals claim the home office deduction on Form 1040, Schedule C , Line 30; farmers claim it on Schedule F, Line 32 and eligible employees claim it on Schedule A, Line 21.

Regardless of the method used to compute the deduction, business expenses in excess of the gross income limitation are not deductible. Deductible expenses for business use of a home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs. In general, expenses for the parts of the home not used for business are not deductible.

Deductions for business storage are deductible when the dwelling unit is the sole fixed location of the business or for regular use of a residence for the provision of daycare services; exclusive use isn't required in these cases.

Further details on the home office deduction and the simplified method can be found in Publication 587 on IRS.gov. 

IRS YouTube Videos:

• Tax Scams - English | Spanish | ASL
• Security Summit Identity Theft Tips Overview – English

WASHINGTON — The Internal Revenue Service has created a special new page on IRS.gov to help taxpayers determine if a person visiting their home or place of business claiming to be from the IRS is legitimate or an imposter.

With continuing phone scams and in-person scams taking place across the country, the IRS reminds taxpayers that IRS employees do make official, sometimes unannounced, visits to taxpayers as part of their routine casework. Taxpayers should keep in mind the reasons these visits occur and understand how to verify if it is the IRS knocking at their door.

Visits typically fall into three categories:

IRS revenue officers will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed or tax returns due. Revenue officers are IRS civil enforcement employees whose role involves education, investigation, and when necessary, appropriate enforcement.

IRS revenue agents will sometimes visit a taxpayer who is being audited. That taxpayer would have first been notified by mail about the audit and set an agreed-upon appointment time with the revenue agent. Also, after mailing an initial appointment letter to a taxpayer, an auditor may call to confirm and discuss items pertaining to the scheduled audit appointment.

IRS criminal investigators may visit a taxpayer’s home or place of business unannounced while conducting an investigation. However, these are federal law enforcement agents, and they will not demand any sort of payment. Criminal investigators also carry law enforcement credentials, including a badge.

For more information, visit “How to know it’s really the IRS calling or knocking on your door” on IRS.gov.

The IRS reminds people who owe taxes – or think they do – to stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more information, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Taxpayers have a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore these rights and the agency’s obligations to protect them on IRS.gov.

The fax number for Form 8655, Reporting Agent Authorization, has been changed to 855-214-7523. Forms recently sent to the previous number, 801-620-4142, have been received. But this number will soon be deactivated.

Remember: When faxing Forms 8655, send no more than 25 forms in a single transmission. Also, consider sending faxes directly from your computer rather than a fax machine – the generally improved legibility makes the forms easier to process.

Do you need more time to file a client’s return? This new YouTube video explains how to get an extension.

Also, if you work with international tax issues, another YouTube video explains how to determine the form 1099 foreign tax withholding that is eligible for the Foreign Tax Credit.

To help meet the high demand to its toll-free call center that typically comes as the tax deadline nears, the Internal Revenue Service is extending its customer service hours on Saturday, April 15.

The Practitioner Priority Service, 866-860-4259, will be open from 9 a.m to 5 p.m. local time.

The IRS reminds taxpayers that unclaimed federal income tax refunds totaling more than $1 billion may be waiting for an estimated 1 million taxpayers who did not file a 2013 federal income tax return. But time is running out. To claim this money, taxpayers must file a 2013 federal tax return by April 18.

The Internal Revenue Service is sending letters to a relatively small group of taxpayers whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies.

The new program, enacted by Congress, enables designated contractors to collect, on the government’s behalf, unpaid tax debts. Usually these are unpaid individual tax obligations that are several years old and not currently being pursued by IRS collection employees.

NEW - 3/22/2017 Phishing Alert 

The Internal Revenue Service has received reports at phishing@irs.gov of an email scam that claims to be an update from a legitimate state CPA professional organization. Instead, it is a scam that seeks to steal password information.

The phishing email uses the name of a legitimate tax preparer who may also have been victimized. The email contains a PDF attachment that claims to be a “Secured File.” The attachment contains a hyperlink to view the file that the recipient is directed to open. The link directs the recipient to a phishing site that asks for the recipients email address and password.

If you receive an email similar to what has been described above, DO NOT click the links in the email. Delete the email immediately.

Keep this security tip in mind - If you receive an email with a link in it from someone that you either don't know or aren't expecting, never click on that link until you've contacted the sender and made sure it is safe. 

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry today warned both tax professionals and taxpayers of last-minute phishing email scams, especially those requesting last-minute deposit changes for refunds or account updates.

As the 2017 tax filing season winds down to the April 18 deadline, tax-related scams of various sorts are at their peak. The IRS urged both tax professionals and taxpayers to be on guard against suspicious activity.

The IRS, state tax agencies and the tax industry, acting as the Security Summit, enacted many safeguards against identity theft for 2017, but cybercriminals are ever evolving and make use of sophisticated scams to trick people into divulging sensitive data.

For example, one new scam poses as taxpayers asking their tax preparer to make a last-minute change to their refund destination, often to a prepaid debit card. The IRS urges tax preparers to verbally reconfirm information with the client should they receive last-minute email request to change an address or direct deposit account for refunds.

The IRS also suggests that tax professionals change and strengthen their own email passwords to better protect their email accounts used to exchange sensitive data with clients.

This is also the time of year when taxpayers may see scam emails from their tax software provider or others asking them to update online accounts. Taxpayers should learn to recognize phishing emails, calls or texts that pose as familiar organizations such as banks, credit card companies, tax software providers or even the IRS. These ruses generally urge taxpayers to give up sensitive data such as passwords, Social Security numbers and bank account or credit card numbers.

Taxpayers who receive suspicious emails purporting to be from a tax software provider or from the IRS should forward them to phishing@irs.gov. Remember: never open an attachment or link from an unknown or suspicious source. It may infect your computer with malware or steal information. Also, the IRS does not send unsolicited emails or request sensitive data via email.

The Security Summit maintains a public awareness campaign for taxpayers – Taxes. Security. Together. – and an awareness campaign for tax professionals – Protect Your Clients; Protect Yourself – as part of its effort to combat identity theft.