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Need more time to file your taxes?

IRS Tax tip 2016-51

The April 18 tax deadline is coming up. If you need more time to file your taxes, you can get an automatic six-month extension from the IRS. Here are five things to know about filing an extension:

1. Use IRS Free File to file an extension. You can use IRS Free File to e-file your extension request for free. Free File is only available through IRS.gov. You must e-file the extension request by midnight April 18. If you do request an extension, come back to Free File to prepare and e-file your taxes for free. You can access the program at any time through Oct. 17.

2. Use Form 4868. You can also request an extension by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must mail this form to the IRS by April 18. Form 4868 is available on IRS.gov/forms.

3. More time to file is not more time to pay. An extension to file will give you until Oct. 17 to file your taxes. It does not, however, give you more time to pay your taxes. Estimate and pay what you owe by April 18 to avoid a potential late filing penalty. You will be charged interest on any tax that you don’t pay on time. You may also owe a penalty if you pay your tax late. Interest is normally charged on any unpaid tax.

4. IRS Direct Pay. Pay your tax with IRS Direct Pay. Visit IRS.gov/directpay to use this free and secure way to pay from your checking or savings account. You also have other electronic payment options. The IRS will automatically process your extension – and you don’t have to file a separate request — when you pay electronically. You can pay online or by phone.

5. IRS helps if you can’t pay all you owe. If you can’t pay all the tax you owe, the IRS offers you payment options. In most cases, you can apply for an installment agreement with the Online Payment Agreement application on IRS.gov. You may also file Form 9465, Installment Agreement Request. If you can’t make payments because of financial hardship, the IRS will work with you.

You can use our Interactive Tax Assistant tool  to help you determine the due date of your federal tax return, or whether you are eligible to file for an extension.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Six facts you should know before deducting a charitable donation

IRS Tax tip 2016-47

If you gave money or goods to a charity in 2015, you may be able to claim a deduction on your federal tax return. Here are six important facts you should know about charitable donations.

1. Qualified Charities. You must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible. An exception to this rule is contributions under the Slain Officer Family Support Act of 2015. To check the status of a charity, use the IRS Select Check tool.

2. Itemize Deductions. To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with your federal tax return.

3. Benefit in Return. If you get something in return for your donation, you may have to reduce your deduction. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.

4. Type of Donation. If you give property instead of cash, your deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market. If you donate used clothing and household items, they generally must be in good condition, or better, to be deductible. Special rules apply to cars, boats and other types of property donations.

5. Form to File and Records to Keep. You must file Form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year. If you need to prepare a Form 8283, you can prepare and e-file your tax return for free using IRS Free File. The type of records you must keep depends on the amount and type of your donation. To learn more about what records to keep see Publication 526.

6. Donations of $250 or More. If you donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether you received any goods or services in exchange for the gift.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Creating customer empathy

Companies with a feel for empathy can be better able to encourage customers.

Companies with a feel for empathy can be better able to encourage customers.

BUS-Create-empathy2by Diane Emo

(NAPS)—If you own, run or work for any of the approximately 23 million small- to mid-sized businesses in America, chances are, you want more sales. So, how do you make it happen? By showing customers you care. In this world of impersonal interactions and instant communication, there’s enormous value and differentiation in creating empathy for the customer’s situation.

Sales training often piles on facts, figures and details that can turn a salesperson’s brain into a mish-mash of disconnected information with no context. So, keep it simple. Train salespeople to be empathetic, consultative professionals by building on the things they already know. They know how they expect to be treated as customers—because we are all customers, right? They know how they feel when people treat them unfairly or push them into a decision. They know when someone is really listening to them, not pretending. So, start with a customer context as a way to build your story.

Here is a three-step path toward building customer empathy in your sales teams.

1. Listen for emotion to find customer pain points: An interesting thing happens when salespeople ask questions: customers talk. What’s going on here? How long has that been going on? What have you tried so far to fix it? Here’s the secret: listen for emotion in their words—disappointed, frustrated, angry, tried repeatedly, no response. Then, repeat the customer’s exact words to confirm their pain point. “It sounds like you’re pretty frustrated…” Pain points are the issues or problems that are significant enough for the customer to make a change—and buy from you instead.

2. Teach a simple consulting model for value-based conversations focused on the customer’s pain points. I write 3 columns on the whiteboard labeled “What I heard (pain point),” “What we will do (solution),” and “That will help you (value).” Then, I ask the rep to give me one of her customer’s pain points. For example, “What I heard is that the odor in your restroom continues to be a problem, even though you’ve asked your service to fix it. What we will do is use a disinfectant that kills the germs causing the odor. That will help you have a restroom that consistently smells good for your customers and employees.”

3. Feel, felt, found is still a good formula for moving people from objections to closed deals. When a customer states an objection, try this:

• Feel. Say something like, “I understand how you feel.” This lets customers know you heard them express their feelings, can relate, and understand why they feel the way they do. The customer feels validated instead of ignored.

• Felt. With a response such as, “Other people I’ve talked to have felt the same way,” you tell the customer the issue is not uncommon. He or she is not alone. It can be resolved. This also sets the rep up to position a way to positively address the issue and move on.

• Found. “They found the situation improved right away after making the decision to ____.” Convey the idea that people get positive results and improvement after choosing your product or service.

The last step is to ask for the deal! Help your reps find a simple closing statement that works for them. My favorite: “OK, let’s get the paperwork signed so we can get started right away.”

If your sales team keeps these tips in mind and your customers in their hearts, then you may find more sales on your books.

Diane Emo is Vice President of Marketing for Coverall North America, Inc.

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Ex-spouse Benefits, Taxes, and You


By: Stephanie Holland, Social Security Public Affairs Specialist

Mid-April features both Ex-Spouse Day and tax day. These two observances are extra important if you are an ex-spouse, because Social Security pays benefits to eligible former spouses. In addition, you may need to claim this income on your tax forms.

If you are age 62, unmarried, and divorced from someone entitled to Social Security retirement or disability benefits, you may be eligible to receive benefits based on his or her record. To be eligible, you must have been married to your ex-spouse for 10 years or more. If you have since remarried, you can’t collect benefits on your former spouse’s record unless your later marriage ended by annulment, divorce, or death. Also, if you’re entitled to benefits on your own record, your benefit amount must be less than you would receive based on your ex-spouse’s work. In other words, we’ll pay the higher of the two benefits for which you’re eligible, but not both.

You can apply for benefits on your ex-spouse’s record even if he or she hasn’t retired, as long as you divorced at least two years before applying. The same rules apply for a deceased former spouse.

The amount of benefits you get has no effect on the benefits of your ex-spouse and his or her current spouse. Visit Retirement Planner: If You Are Divorced at, www.socialsecurity.gov/retire2/divspouse.htm to find all the eligibility requirements you must meet to apply as a divorced spouse. Our benefits planner gives you an idea of your monthly benefit amount. If your ex-spouse died after you divorced, you can still quality for widow’s benefits. You’ll find information about that in a note at the bottom of the website.

Visit www.socialsecurity.gov/retire2/divspouse.htm today to learn whether you’re eligible for benefits on your ex-spouse’s record. That could mean a considerable amount of monthly income. What you learn may bring a smile to your face … even on tax day!

Stephanie Holland is the Public Affairs Specialist for West Michigan.  You can write her c/o Social Security Administration, 455 Bond St Benton Harbor MI 49022 or via email at stephanie.holland@ssa.gov

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SCORE: Your gateway to business success

By Ernie Birge, SCORE Counselor


SCORE is here to help entrepreneurs, and owners of small to medium-sized businesses be more successful. SCORE provides free business mentoring through more than 40 experienced individuals in our Grand Rapids Chapter. These volunteers offer more than 400 years of business management experience in many different areas.

If you have a vision of a new business you want to start, contact us and let us mentor you through the process of establishing a formal plan for your business.  We’ll show you how to plan your startup. We’ll help you analyze the competition you will face and learn how to show your potential customers why they should do business with you. Your SCORE mentor will help you determine the financial resources you will need to have available as you get ready to open your doors for business.

If you have an established business and you feel challenged in these challenging times, contact us and let one or more SCORE mentors review your business to help you shape a plan to grow your business. Your mentors will help you form a financial plan, look at your marketing activities, or simply listen to you and serve as a sounding board to give you a support system that helps you lead your business. SCORE advisors can assemble a mentoring team with experts from different specialty areas to help you get advice in areas such as finance, marketing, human resources and management.

You can meet with SCORE just once or on a long-term basis. If you have a simple business question or just want an explanation of how a cash flow statement works, SCORE can provide you with answers. However, you really get the best value from SCORE if you set up a series of confidential meetings to talk about a business problem or opportunity.

There are many factors that support your success in your business: a focused business plan, hard work, quality products and services—just to name a few.

Another contributing factor to small business success is good advice. I encourage every entrepreneur that I talk with to seek out advisors. Note that I say mentors, not necessarily a single mentor. Small business owners benefit from having access to numerous perspectives. The effective leader then takes these insights and distills the ideas and advice into what is right for his or her business.

Small businesses represent economic prosperity in America and here in Western Michigan. The success of small business is important to you as a business owner, to your employees and to this community.

Get free and confidential counseling with SCORE, 111 Pearl Street NW, Grand Rapids, MI 49503. Call (616) 771-0305. Visit our website at www.scoregr.org or email us at score@grandrapids.org.

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Claiming a tax deduction for medical and dental expenses


IRS Tax tip 2016-35

Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return:

Itemize. You can only claim your medical expenses that you paid for in 2015 if you itemize deductions on your federal tax return.

Income. Include all qualified medical costs that you paid for during the year, however, you only realize a tax benefit when your total amount is more than 10 percent of your adjusted gross income.

Temporary Threshold for Age 65.  If you or your spouse is age 65 or older, then it’s 7.5 percent of your adjusted gross income. This exception applies through Dec. 31, 2016.

Qualifying Expenses.  You can include most medical and dental costs that you paid for yourself, your spouse and your dependents including:

*The costs of diagnosing, treating, easing or preventing disease.

*The costs you pay for prescription drugs and insulin.

*The costs you pay for insurance premiums for policies that cover medical care qualify.

*Some long-term care insurance costs.

Exceptions and special rules apply. Costs reimbursed by insurance or other sources normally do not qualify for a deduction. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses. You can get it on IRS.gov/forms anytime.

Travel Costs Count.  You may be able to deduct travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 23 cents per mile for 2015.

No Double Benefit.  You can’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.

Use the Tool.  Use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. It can answer many of your questions on a wide range of tax topics including the health care law.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Five changes to watch for this tax season


(BPT) – This tax season brings changes you should know about as you’re preparing your 2015 return and planning for 2016 and beyond. Here are five areas to keep in mind.

There’s a delayed filing date. 

If you’re a procrastinator filing at the last minute, this year you have more time. Because Friday, April 15 is a federal holiday, your 2015 income tax return is due the following Monday, April 18. This is also the due date to file for an extension until Oct. 15 or to make an IRA contribution for 2015.

“The due date to file your return or for an extension may also be affected by state law,” says Robert Fishbein, a vice president and general counsel at Prudential Financial. For example, if you live in Maine or Massachusetts, Monday April 18 is a state holiday and you don’t have to file returns until the 19th. But be careful, Fishbein warns, as the delayed filing date for the 2015 returns may not delay when you must make estimated tax payments.

There are new steps for fighting fraud and ID theft.

Tax return preparation software may now require you to provide your driver’s license number for the IRS and state tax agencies to combat tax return fraud. “The rules here are tricky,” says Fishbein. “You have no legal obligation to provide that information or to have a driver’s license to file a tax return. But depending on your software, you may need to provide information to file your return. It’s possible that withholding your driver’s license will slow the process.”

Another new anti-ID theft/fraud measure is a 16-digit verification code for online filers. If the code is on your Form W-2, you’ll need to enter it when prompted by your tax software program. If you fail to provide the code, you won’t be able to e-file your return. “Not all Form W-2s will have the code,” Fishbein notes.

Note health care reporting changes. 

Again this year you must report “minimum essential coverage,” or MEC. If you indicate so on line 61 of your Form 1040, you won’t be subject to a penalty tax. This is the first year employers are required to report if coverage qualifies as MEC, and they must send the applicable form to you by March 31, 2016. “Of course, for early filers this means you may not have evidence of your coverage qualifying as MEC,” Fishbein says. “But assuming you know that you have MEC, you can still complete line 61 and file your return.”

If you do not have MEC, you must pay the penalty tax – currently $325 per adult and $162.50 per child, up to a maximum of $975 – for each month you weren’t covered, unless you can demonstrate you’re eligible for an exemption. Examples include if coverage is considered unaffordable (more than 8 percent of household income per person), if you had a short coverage gap (fewer than three months), or if your income is below the tax return filing threshold.

Watch for retroactive reinstatements. 

Until the end of 2014, taxpayers had been permitted for some time to deduct the greater of their state income tax or their state sales tax. This helped residents of states, such as Florida and Texas, that don’t have an income tax. The Protecting Americans from Tax Hikes Act of 2015 retroactively extended this provision for 2015. For those who have not tracked their state sales tax payments, there’s a table that provides a safe harbor deduction based on income. Also, the sales tax from the 2015 purchase of a new automobile can be added to the sales tax from the table.

Also reinstated retroactively to the beginning of 2015 is a provision allowing distributions from an IRA to be paid directly to a charity and excluded from income. “The amount donated to charity will avoid income tax,” Fishbein says. Without this provision, an individual would have to include the amount in income and take a charitable deduction that might not entirely offset the income amount. This provision is available up to $100,000 of charitable donations in a calendar year. You must be 70 ½ or older and required to take IRA distributions.

Roth recharacterizations may affect you.

If you converted a traditional IRA to a Roth IRA in 2015, and if the converted investment has declined in value, you can recharacterize that amount and not pay income tax on an amount greater than the current value. “The law allows this type of ‘do over’ option when you convert to a Roth IRA,” Fishbein explains. “For a 2015 conversion, you must recharacterize on or before Oct. 15, 2016 and not convert again to a Roth IRA until 2017.”

Prudential Financial, its affiliates, and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances

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Top five tips on unemployment benefits


IRS tax tip 2016-34

If you lose your job, you may qualify for unemployment benefits. While these payments may come as a relief, it’s important to remember that they may be taxable. Here are five key facts about unemployment compensation:

1. Unemployment is Taxable. You must include all unemployment compensation as income for the year. You should receive a Form 1099-G, Certain Government Payments by Jan. 31 of the following year. This form will show the amount paid to you and the amount of any federal income tax withheld.

2. Paid Under U.S. or State Law. There are various types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws. For more information, see Publication 525, Taxable and Nontaxable Income.

3. Union Benefits May be Taxable. You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and your contributions to the fund are not deductible. In that case, you only include as income any amount that you got that was more than the contributions you made.

4. You May have Tax Withheld. You can choose to have federal income tax withheld from your unemployment. You can have this done using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.

5. Visit IRS.gov for Help. If you’re facing financial difficulties, you should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of events such as job loss. For example, if your income decreased, you may be eligible for certain tax credits, like the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill check the Payments tab on IRS.gov to review your options. In many cases, the IRS can take steps to help ease your financial burden.

For more details visit IRS.gov and check Publication 525. You can view, download and print Form W-4V at IRS.gov/forms anytime.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Early withdrawals


Many people find it necessary to take out money early from their IRA or retirement plan. Doing so, however, can trigger an additional tax on top of the income tax you may have to pay. Here are a few key points to know about taking an early distribution:

1. Early Withdrawals.  An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.

2. Additional Tax.  If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an additional 10 percent tax.

3. Nontaxable Withdrawals.  The additional 10 percent tax does not apply to nontaxable withdrawals. They include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

A rollover is a type of nontaxable withdrawal. A rollover occurs when you take cash or other assets from one plan and contribute the amount to another plan. You normally have 60 days to complete a rollover to make it tax-free.

4. Check Exceptions.  There are many exceptions to the additional 10 percent tax. Some of the rules for retirement plans are different from the rules for IRAs.

5. File Form 5329.  If you took an early withdrawal last year, you may need to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with your federal tax return. See Form 5329 and its instructions for details.

6. Use IRS e-file. Early withdrawal rules can be complex. IRS e-file is the easiest and most accurate way to file your tax return. The tax software that you use to e-file will pick the right tax forms, do the math, and help you get the tax benefits you’re due. Seven out of 10 taxpayers qualify to use Free File, which is only available through the IRS website at IRS.gov/freefile.

More information on this topic is available on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Tax Time: Choose your preparer carefully

Free, IRS-certified help available for many in Michigan

By Mona Shand, Michigan News Connection

Web-TAXfcIt’s that time of year when Uncle Sam wants his share, but financial experts want to make sure Michiganders aren’t giving away any of their hard-earned money in the process.

According to the National Society of Accountants, the average family spends anywhere from $150 to $450 on income-tax preparation.

And Ross Yednock, program director with the Michigan Economic Impact Coalition, says because the multi-billion dollar tax preparation industry is unregulated, it can be tough to know exactly what you’re paying for.

“The vast majority of people don’t have very complicated taxes,” says Yednock. “And don’t need to be shelling out $300 or $400, particularly when you can go to an IRS-certified tax volunteer and get them done for free.”

People earning $54,000 a year or less can receive free, in-person tax preparation assistance at sites across the state, and households bringing in less than $62,000 can file federal taxes online, also free, with the help of a trained volunteer by phone.

Sites can be found by dialing 2-1-1 or at MichiganFreeTaxHelp.org.”

Awakon Federal Credit Union has offered free tax preparation to its members for several years, and this year, it joined many credit unions in partnering with the Voluntary Income Tax Assistance program to open the service to the entire community.

Dawn Bodnar, marketing and community development director at the credit union, says the response has been eye-opening.

“It literally takes our preparers 10 or 15 minutes, and then they walk out and they have it completely done,” she says. “And they’ve said they’ve saved between $250 and $450. So, that’s a big chunk of change.”

Yednock adds it should raise a red flag if any tax preparer claims they can get you “the most” money back.

“Whether you go to a free place, whether you pay $200, whether you pay $500, if they’re following the law, the tax return, the amount that you’ll get back or the amount you pay, is going to be the same, no matter where you go,” he says.

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