February 2018 Blog Posts

  • How To Avoid Tax Identity Theft

    February 28, 2018

    Tax identity theft is frequently the single biggest type of identity theft according to the Federal Trade Commision. Finding out you’re a victim of tax identity theft can be a nerve-racking experience. By the time you learn you’re a victim, it’s usually too late. At that point, your options are slim and usually limited to preventing future damage.

    The best approach is to take preventative measures and avoid identity theft altogether. While there are multiple methods to be proactive, you can make the biggest impact by protecting your identity and avoiding scams. These two approaches will limit the exposure of your personal information to unauthorized eyes and dramatically lower your risk.

    Protect Your Personal Information

    Information such as your Social Security number, birth date, and other personal information should be protected at all times. The only types of people that should see this information are banking institutions, tax advisors, lending companies, and similar businesses. These types of institutions are mindful on how they ask for personal information as well. They will never have you send your SSN through email or any other unsecure method.

    In addition to only giving personal information to certain types of people, here are a few more tips that will help keep you safe:

    • Don’t carry your Social Security card with you
    • Regularly change your passwords online

    • Keep your firewall and antivirus on your computer installed and up-to-date

    Avoiding Scams

    As we move deeper into the digital age, scammers are more creative and deceitful than ever. Their scams are becoming more elaborate and harder to detect. Many tax identity theft victims unknowingly give away their personal information without knowing they are dealing with a fraudster.

    Most victims willingly give their information when they receive threatening phone calls, emails, or postal mail claiming the IRS will take some type of action if the victim doesn’t cooperate. Threats of foreclosure and jail time are usually enough to scare someone enough to send whatever information is requested.

    To avoid scams, there a few things the IRS recommends knowing:

    • You’ll never receive a call demanding immediate payment or any tax-related call from the IRS without first mailing you a bill. If you haven’t received the bill in the mail, be aware you could be dealing with a scam.

    • If you’ve completed your tax plan and don’t believe you owe any taxes, you can report any potential scam you encounter to the Treasury Inspector General for Tax Administration.

    • If you’re unsure on whether a person is who they claim, contact the institution directly and ask.

    Tax identity theft can be a scary situation if your caught in it. By protecting your personal information and being mindful of scams, you can greatly reduce your risk.

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  • Are There Home Office Tax Deductions?

    February 15, 2018

    According to a recent Gallup study, 43% of Americans report at least part of their time working from home. With more employees making the transition to home offices, the question inevitably comes up; What can I deduct?

    The IRS has two requirements that need to be met in order to claim the home office deduction. The first requirement is the space you intend to claim needs to be used as a home office regularly and excessively. The second is your home office has to be the principal place of your business.

    Regular and Exclusive Use

    The IRS is very particular about this portion. You must use your home office frequently for it to be considered eligible. This means that if you use your laptop on the couch, kitchen table, and the bedroom, you’re not eligible for the home office deduction. To keep your audit risk low, make sure your home office is:

    • An established place where you complete the majority of your work
    • Preferably a separate room that is designated for work only
    • A place where you work for a minimum of 12 hours a week

    Principal Place of Your Business

    Flexibility is a benefit here when it comes to your home office. The IRS is fairly understanding to the location of your home office as long as it’s used primarily for work. That means your garage, a corner of the living room, or a spare bedroom can all be used as a home office. To take advantage of the home office deduction, here are a few things you should know:

    • Choosing the simplified home office deduction allows you to allocate a percentage of your home as your home office.
    • Separate stand-alone buildings can be deducted if they are used primarily for business purposes.
    • Your home office should not be a communal area such as a family computer room.

    Follow these two guidelines and you’ll be well on your way to claiming your home office tax deduction. To help maximize your deductions, BIG can help you get the most back with our tax preparation services.

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