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Standard Mileage Rates for 2018 Up from 2017

WASHINGTON ― The Internal Revenue Service today issued the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
• 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
• 14 cents per mile driven in service of charitable organizations.

The business mileage rate and the medical and moving expense rates each increased 1 cent per mile from the rates for 2017.

The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. These and other requirements are described in Rev. Proc. 2010-51.

Notice 2018-03, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Taxpayers Should Protect Data All Year Round

With the online holiday shopping season in full swing, it’s the perfect time for all taxpayers to take steps to protect their identities and personal data. This year, the IRS kicked off this annual event with National Tax Security Awareness Week. The IRS partnered with state tax agencies, the tax industry and other groups across the country to encourage all taxpayers to think about data protection.

While the week is over, information on these five topics remains relevant year-round:

Eight Steps to Keep Online Data Safe

Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:

• Shop at familiar online retailers.
• Avoid unprotected Wi-Fi.
• Learn to recognize and avoid phishing emails that pose as a trusted source.
• Keep a secure machine.
• Use passwords that are strong, long and unique.
• Use multi-factor authentication when available.
• Sign up for account alerts.
• Encrypt sensitive data and protect it with a password.

Recognize Phishing Email Scams

The IRS reminds people to be on the lookout for new, sophisticated email phishing scams. These scams not only endanger someone’s personal information, but they can also affect a taxpayer’s refund in 2018. Even if an email is from a known source, people should use caution because cybercrooks are very good at mimicking trusted businesses, friends and family.

Five Steps Data Breach Victims Can Take

People who are the victim of a data breach should consider these five steps to help protect their sensitive information that can be used on a tax return:

• Determine what information the thieves compromised.
• Consider taking advantage of credit monitoring services offered to victims.
• Place a freeze on credit accounts to prevent access to credit records.
• Reset passwords on online accounts.
• Use multi-factor authentication when available.

Thieves Use W-2 Scam to get Employee Data

The IRS warns the nation’s business, payroll and human resource communities about a growing W-2 email scam. Criminals use this scheme to gain access to W-2 and other sensitive tax information that employers have about their employees. The IRS recommends that all employers educate employees about this scheme, especially those in human resources and payroll departments.

Five Signs of Small Business Identity Theft

Business filers should be alert for signs of identity theft. They should contact the IRS if they experience any of these issues:

• The IRS rejects an e-filed return saying it already has one with that identification number.
• The IRS rejects an extension to file request saying it already has a return with that identification number.
• The filer receives an unexpected tax transcript.
• The filer receives an IRS notice that doesn’t relate to anything they submitted.
• The filer doesn’t receive expected or routine mailings from the IRS.

NEW SOUTH CAROLINA MOTOR FUEL INCOME TAX CREDIT

A new income tax credit goes into effect in January 2018, and the South Carolina Department of Revenue (SCDOR) has released guidance to help taxpayers prepare. Beginning July 2017, the motor fuel user fee increased from 16 cents a gallon to 18 cents a gallon. It will increase by two cents a gallon each year for the next five years. The funds raised by the increase will be used for repairs, maintenance, and improvements to South Carolina existing transportation system.

To offset the motor fuel user fee increase, a tax credit was created to allow a resident taxpayer a refundable motor fuel income tax credit.

Taxpayers may claim the motor fuel income tax credit when filing their state income tax returns in 2019. Please note, this credit is applied to your 2018 SC Individual Income Taxes which are filed in 2019.

What You Need to Know

• This is a refundable credit on up to two private passenger motor vehicles or motorcycles registered in South Carolina per resident taxpayer and is provided to offset the motor fuel user fee increase.

• The taxpayer must be a South Carolina resident. A resident may be an individual, partnership, corporation, trust, estate or any other entity subject to South Carolina income tax or required to file an income tax return. A nonresident taxpayer does not qualify for the credit. A resident individual includes a “part-year” resident. A “resident corporation” is a corporation whose principal place of business is located in South Carolina. A “resident partnership” is a partnership whose principal place of business is located in South Carolina. Note: An entity “doing business” in South Carolina whose principal place of business is not in South Carolina does not qualify for the credit.

• Each individual filing a joint return is a “taxpayer.” In other words, there are two taxpayers on a joint return and each resident individual is eligible for a credit. Each spouse may claim a credit for up to two private passenger motor vehicles or motorcycles registered in his or her name in South Carolina during the year. They may not both claim a credit on the same vehicle.

• A sole proprietorship is not regarded as an entity separate from its individual owner. Accordingly, the sole proprietorship is treated as owned by the individual owner and the individual is the taxpayer eligible for the credit.

• To calculate and claim the credit amount and for personal tax records, taxpayers must save receipts and invoices from:

o Fuel purchases beginning in January 2018.

o Vehicle preventive maintenance costs beginning in 2018 (includes new tires, oil changes, and regular vehicle maintenance).

• Taxpayers receive a credit on the lesser amount paid for either the motor fuel user fee increase or the vehicle’s preventative maintenance.

• Taxpayer’s will calculate and claim the credit on Form I-385, “Motor Fuel Income Tax Credit” when filing state income tax returns in 2019. (This form will be available in January 2019).

If you have any other questions regarding this Motor Fuel Income Tax Credit, don’t hesitate to call our office!

National Tax Security Awareness Week

Eight Steps to Keep Online Data Safe

During the holiday shopping season, shoppers are looking for the perfect gifts. At the same time, criminals are looking for sensitive data. This data includes credit card numbers, financial accounts and Social Security numbers. Cybercriminals can use this information to file a fraudulent tax return.

This tip is part of National Tax Security Awareness Week. The IRS is partnering with state tax agencies, the tax industry and groups across the country to remind people about the importance of data protection.

Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:

Shop at familiar online retailers. Generally, sites with an “s” in “https” at the start of the URL are secure. Users can also look for the “lock” icon in your browser’s URL bar. That said, some criminals may get a security certificate, so the “s” may not always mean a site is legitimate.

Avoid unprotected Wi-Fi. Users should not do online financial transactions when using unprotected public Wi-Fi. Unprotected public Wi-Fi hotspots may allow thieves to view transactions.

Learn to recognize and avoid phishing emails that pose as a trusted source. These emails can come from a source that looks like a legitimate bank or even the IRS. These emails may include a link that takes the user to a fake website. From there, the thieves can steal usernames and passwords.

Keep a clean machine. This includes computers, phones and tablets. Users should install security software to protect against malware that may steal data. This software also protects against viruses that may damage files.

Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters. Use a combination of letters, numbers and special characters. Use a different password for each account.

Use multi-factor authentication when available. Some financial institutions, email providers and social media sites allow users to set their accounts for multi-factor authentication. This means users may need a security code, usually sent as a text to their mobile phone, in addition to a username and password.

Sign up for account alerts. Some financial institutions will send email or text alerts to an account holder when there is a withdrawal or change to their accounts. Generally, people can check their account profile to see what added protections may be available.

Encrypt sensitive data and protect it with a password. People who keep financial records, tax returns or any personal information on their computer should protect this data. Users should also back up important data to an external source. When disposing of a computer, mobile phone or tablet, people should make sure they wipe the hard drive of all information before trashing.

Reminder to Employers and Other Businesses

January 31st Filing Deadline Now Applies to All Wage Statements and Independent Contractor Forms

WASHINGTON — The Internal Revenue Service today reminded employers and other businesses of the Jan. 31 filing deadline that now applies to filing wage statements and independent contractor forms with the government.

The Protecting Americans from Tax Hikes (PATH) Act includes a requirement for employers to file their copies of Form W-2 and Form W-3 with the Social Security Administration by Jan. 31. The Jan. 31 deadline also applies to certain Forms 1099-MISC filed with IRS to report non-employee compensation to independent contractors. Such payments are reported in box 7 of this form.

This deadline makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud. Failure to file these forms correctly and timely may result in penalties. As always, the IRS urges employers and other businesses to take advantage of the accuracy, speed and convenience of filing these forms electronically.

Hints to help filers get ready

Employers should verify employees’ information. This includes names, addresses, Social Security or individual taxpayer identification numbers. They should also ensure their company’s account information is current and active with the Social Security Administration before January. If paper Forms W-2 are needed, they should be ordered early.

An extension of time to file Forms W-2 is no longer automatic. The IRS will only grant extensions for very specific reasons.

For more information, please give our office a call at (843) 650-9888

How to Know if the Knock on Your Door is Actually Someone from the IRS

Every Halloween, children knock on doors pretending they are everything from superheroes to movie stars. Scammers, on the other hand, don’t leave their impersonations to one day. They can happen any time of the year.

People can avoid taking the bait and falling victim to a scam by knowing how and when the IRS does contact a taxpayer in person. This can help someone determine whether an individual is truly an IRS employee.

Here are eight things to know about in-person contacts from the IRS –

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

There are special circumstances when the IRS will come to a home or business. This includes:
-When a taxpayer has an overdue tax bill
-When the IRS needs to secure a delinquent tax return or a delinquent employment tax payment
-To tour a business as part of an audit
-As part of a criminal investigation

Revenue officers are IRS employees who work cases that involve an amount owed by a taxpayer or a delinquent tax return. Generally, home or business visits are unannounced.

IRS revenue officers carry two forms of official identification. Both forms of ID have serial numbers. Taxpayers can ask to see both IDs.

The IRS can assign certain cases to private debt collectors. The IRS does this only after giving written notice to the taxpayer and any appointed representative. Private collection agencies will never visit a taxpayer at their home or business.

The IRS will not ask that a taxpayer makes a payment to anyone other than the U.S. Department of the Treasury.

IRS employees conducting audits may call taxpayers to set up appointments, but not without having first notified them by mail. Therefore, by the time the IRS visits a taxpayer at home, the taxpayer would be well aware of the audit.

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

Taxpayers who believe they were visited by someone impersonating the IRS can visit IRS.gov for information about how to report it.

IRS Encourages Taxpayers to Check Their Withholding;

WASHINGTON — As the end of 2017 approaches, the Internal Revenue Service today encouraged taxpayers to consider a tax withholding checkup. Taking a closer look at the taxes being withheld now can help ensure the right amount is withheld, either for tax refund purposes or to avoid an unexpected tax bill next year.

The withholding review takes on even more importance given a tax law change that started last year. This change requires the IRS to hold refunds a few weeks for some early filers claiming the Earned Income Tax Credit and the Additional Child Tax Credit. In addition, the IRS and state tax administrators continue to strengthen identity theft and refund fraud protections, which means some tax returns could require additional review time next year to protect against fraud.

“With only a few months left in the year, this is a good time to check on your withholding,” said IRS Commissioner John Koskinen. “How much you choose to withhold is a personal choice, but checking now can reduce the chance for a surprise tax bill when you file in 2018.”

By adjusting the Form W-4, Employee’s Withholding Allowance Certificate, taxpayers can ensure that the right amount is taken out of their pay throughout the year. Having the correct amount withheld from paychecks helps to ensure that taxpayers don’t pay too much tax during the year – and it also means taxpayers have money upfront rather than waiting for a bigger refund after filing their tax return.

The IRS also cautions people to be careful and check to make sure they have enough withheld from their paychecks. Under-withholding can lead to a tax bill as well as an additional penalty. The IRS especially encourages people with a second job, such as those in the sharing economy, or with a major life change to check whether they are having enough withheld or if they are making the appropriate estimated tax payments.

In many cases, a new Form W-4, Employee’s Withholding Allowance Certificate, is all that is needed to make an adjustment. Taxpayers submit it to their employer, and the employer uses the form to figure the amount of federal income tax to be withheld from pay. But remember – it takes time for employers to process these payroll changes, so any adjustments should be made quickly so it can take affect during the final pay periods of 2017.

The IRS offers several online resources to help taxpayers bring taxes paid closer to what is owed. They are available anytime on IRS.gov. They include:

• IRS Withholding Calculator – Online tool helps determine the correct amount of tax to withhold.
• IRS Publication 505 – Tax Withholding and Estimated Tax.
• Tax Withholding – Complete information on withholding, estimated taxes, FAQs and more.

Self-employed taxpayers, including those involved in the sharing or gig economy, can use the Form 1040-ES worksheet to correctly figure their estimated tax payments. If they also work for an employer, they can often forgo making these quarterly payments by instead having more tax taken out of their pay.

People Working in the Sharing Economy

The IRS encourages people in the sharing or ‘gig’ economy who also have a job with an employer to take a close look at their withholding. Doing so can help avoid unexpected tax issues.

Some Refunds Delayed in 2018

The IRS wants taxpayers to be aware of several factors that could affect the timing of their tax refunds next year. Due to a December 2015 law, the IRS cannot issue refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes Act, the IRS must hold the entire refund – even the portion not associated with the EITC and ACTC.

This law change, which went into effect in 2017, helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.

Stronger Security Filters and Tax Refund Processing

As the IRS steps up its efforts to combat identity theft and tax refund fraud through its many processing filters, legitimate refund returns sometimes get delayed. While the IRS is working diligently to stop fraudulent refunds from being issued, it is also focused on releasing legitimate refunds as quickly as possible.

The IRS, state tax agencies and the private sector tax industry continue to work together to fight fraud through their Security Summit partnership. Additional safeguards will be set in place for the 2018 filing season.

Eight Tips to Protect Taxpayers from Identity Theft

Identity theft happens when someone steals personal information for financial gain. Tax-related identity theft happens when someone uses another person’s stolen Social Security number (SSN) or Employer Identification Number (EIN) to file a tax return to obtain a fraudulent refund.

Many people first find out they are victims of identity theft when they submit their tax returns. That’s because the IRS lets them know someone else already used their SSN to file.

The IRS continues to work hard to stop identity theft with a strategy of prevention, detection and victim assistance. So far, the agency has stopped millions of dollars from getting into the hands of thieves.

Check out these eight tips on how to protect against identity theft:

1. Taxes. Security. Together. The IRS, the states and the tax industry need everyone’s help. The IRS launched The Taxes. Security. Together. awareness campaign in 2015 to inform people about ways to protect their personal, tax and financial data. Learn more at www.IRS.gov/TaxesSecurityTogether.

2. Protect Personal and Financial Records. Taxpayers should not carry their Social Security card in their wallet or purse. They should only provide their Social Security number if it’s necessary. Protect personal information at home and protect personal computers with anti-spam and anti-virus software. Routinely change passwords for online accounts.

3. Don’t Fall for Scams. Criminals often try to impersonate banks, credit card companies and even the IRS hoping to steal personal data. Learn to recognize and avoid those fake communications. Also, the IRS will not call a taxpayer threatening a lawsuit, arrest or to demand immediate payment. Beware of threatening phone calls from someone claiming to be from the IRS.

4. Report Tax-Related ID Theft. Here’s what taxpayers should do if they cannot e-file their return because someone already filed using their SSN:

• File a tax return by paper and pay any taxes owed.
• File an IRS Form 14039, Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. Include it with the paper tax return and/or attach a police report describing the theft if available.
• File a report with the Federal Trade Commission using the FTC Complaint Assistant.
• Contact Social Security Administration at www.ssa.gov and type in “identity theft” in the search box.
• Contact financial institutions to report the alleged identity theft.
• Contact one of the three credit bureaus so they can place a fraud alert or credit freeze on the affected account.
• Check with the applicable state tax agency to see if there are additional steps to take at the state level.

5. IRS Letters. If the IRS identifies a suspicious tax return with a taxpayer’s stolen SSN, that taxpayer may receive a letter asking them verify their identity by calling a special number or visiting an IRS Taxpayer Assistance Center.

6. IP PIN. If a taxpayer is a confirmed ID theft victim, the IRS may issue them an IP PIN. The IP PIN is a unique six-digit number that the taxpayer uses to e-file their tax return. Each year, they will receive an IRS letter with a new IP PIN.

7. Report Suspicious Activity. If taxpayers suspect or know of an individual or business that is committing tax fraud, they can visit IRS.gov and follow the chart on How to Report Suspected Tax Fraud Activity.

8. Service Options. Information about tax-related identity theft is available online. The IRS has a special section on IRS.gov devoted to identity theft and information for victims to obtain assistance.

Avoid scams. The IRS does not initiate contact using social media or text message. The first contact normally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

How Does the IRS Contact Taxpayers?

When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. The IRS doesn’t normally initiate contact with taxpayers by email, nor does it send text messages or contact through social media channels.

Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, advance notice is provided in writing via a letter or notice, but not always.

IRS Phone Calls

• IRS revenue officers work directly with taxpayers to educate them about their options to resolve delinquencies and to collect delinquent taxes and tax returns, while protecting taxpayers’ rights.
• IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit.
• Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities but only after the taxpayer and their representative has received written notice. Private debt collectors for the IRS must respect taxpayers’ rights and abide by the consumer protection provisions of the Fair Debt Collection Practices Act.

IRS Visits

• IRS revenue officers routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer; however, payment will never be requested to a source other than the US Treasury.
• IRS revenue agents usually visit taxpayers or tax professionals to conduct the audit after either mailing a notice and/or agreeing on the day and time. IRS revenue agents will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss a tax matter.
• IRS criminal investigators are federal law enforcement agents who may visit a taxpayer’s home or place of business unannounced while conducting an investigation. They will not demand any sort of payment.

Ask For Credentials

IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential (PIV). Pocket commissions describe the specific authority and responsibilities of the authorized holder. The PIV is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. Criminal investigators also have a badge and law enforcement credentials.

Paying Taxes

All tax payments are to the U.S. Treasury. Taxpayers should never use a preloaded debit card or wire transfer to make a payment. The IRS provides specific guidelines on how to make a tax payment at irs.gov/payments.

IRS employees and contractors will never:

• Be hostile or insulting
• Demand payment without giving taxpayers the opportunity to question or appeal the amount
• Require a specific payment method, such as a prepaid debit card
• Threaten lawsuits, arrest, deportation or other action for not paying
• Ask for credit or debit card numbers over the phone.

Avoid scams. The IRS never initiates contact using social media or text messages. First contact generally comes in the mail. A special page on IRS.gov, “How to know it’s really the IRS calling or knocking on your door,” helps taxpayers determine if a person claiming to be from the IRS is legitimate or an imposter.

South Carolina Sales Tax Free Weekend 2017

South Carolina’s 2017 Sales Tax Holiday is August 4-6

During the annual Sales Tax Holiday, a variety of approved school supply items are exempt from the 6% state sales tax and any applicable local taxes. In years past, shoppers have saved between $2 million and $3 million during the holiday weekend.

Shoppers will pay no sales tax on items ranging from clothing and shoes to book bags and computers. Broadly, exempt items include: clothing; clothing accessories including, but not limited to, hats, scarves, hosiery and handbags; footwear; school supplies including, but not limited to pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes and calculators; computers, printers and printer supplies and computer software; bath wash cloths, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs and mats, pillows and pillow cases.

The exemption does not apply to: sales of jewelry, cosmetics, eyewear, wallets and watches; sales of furniture; a sale of an item placed on lay-away or similar deferred payment and delivery plan; rental of clothing or footwear; a sale or lease of an item for use in a trade or business. Computers are exempt from sales tax; however, cell phones, smartphones or other handled devices that make telephone calls are not eligible. Neither are handheld devices that are primarily used to download and listen to music; handheld devices that are primarily used to download and watch videos; or devices that are primarily used to download and read books. However, portable devices that have computing and media functions, allow users to access the internet and have a multitude of software applications are considered computers and are eligible, provided that they are not capable of making telephone calls.

Only computer parts purchased along with a CPU are eligible for the exemption. A monitor, keyboard or scanner by itself is not eligible, but if any of these are purchased in a package with the computer itself, the entire package is exempt. Digital music player, digital cameras and cell phones or smartphones are not exempt regardless of whether they are purchased with a CPU.

School supplies are items used in the classroom or at home with respect to school assignments and include, but are not limited to, pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes and calculators. Items such as refrigerators and toiletries purchased by college students are not school supplies and are not exempt. Similarly, these items purchased for office, business or non-school use are not exempt.

Musical instruments are exempt, provided that they are used for school assignments. Text books are already exempt from the sales tax, but additional books used for school like dictionaries and those used for book reports and reading assignments are exempt during the Sales Tax Holiday.

Have additional questions? Want more specifics? Check out dor.sc.gov/taxfreeweekend.

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