Tax Tips

When calling the IRS, you can expect them to verify your identity before delving into personal information. Here’s what you’ll need to verify your identity:

• Social Security number
• Birthdate
• An Individual Taxpayer Identification Number if you have one instead of your SSN
• Your filing status
• Your prior tax return. You may need information from your prior year’s return to answer certain questions.
• A copy of the tax return you’re calling about
• Any letters or notices you’ve received from the IRS

Important note: the IRS will only ask for this in documents or online. Never offer this info to someone who calls you and says they are from the IRS.

Having all this information handy before you call the IRS will make the process faster because IRS phone operators will only speak with the taxpayer or a legally designated representative.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁸

Footnotes and Sources

8. ^{IRS.gov, October 23, 2023}

As a taxpayer, you can challenge the IRS’ position; this is part of the Taxpayer Bill of Rights, which outlines your fundamental rights when working with the IRS.

With this right, you can:

• Raise objections to an IRS decision
• Provide additional documentation in response to proposed or formal IRS actions
• Expect the IRS to deliver a timely objection
• Have the IRS consider any supporting documentation promptly and fairly
• Receive a response from the IRS if they disagree with your position

In some circumstances, you may have a hearing before an independent Office of Appeals.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁸

Footnotes and Sources

8. ^{IRS.gov, July 5, 2024}

The IRS sends letters and notices for many different reasons. Some letters need a response or action item, while some are to keep you informed.

Here’s what to do if you receive mail from the IRS:

• Don’t throw it away
• Don’t panic
• Don’t reply unless directed to do so
• If a response is needed, respond promptly
• Review the information to make sure it’s correct
• Respond to a disputed notice
• If you need to call the IRS, use the phone number printed on the notice
• Avoid scams through email, social media, or text messages

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁷

Footnotes and Sources

7. ^{IRS.gov, May 6, 2024}

Deductions or credits not used fully one tax year that may be eligible to be carried over into future years include:

• When you have a net operating loss
• When your total expenses for a permitted deduction exceed the amount you’re allowed to deduct in a given year
• When a credit you qualify for exceeds the amount of tax you owe in a year
• Adoption tax credits
• Foreign tax credits
• Credits for energy efficiency

Track these (or have your software do it) so you don’t forget them from one year to the next.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS¹⁰

Footnotes and Sources

10. ^{IRS.gov, January 30, 2024}

To protect heritage sites and other history, the IRS implemented its rehabilitation tax credit, which offers an incentive to renovate and restore old or historic buildings. Here are some of the highlights to help you determine whether your building is eligible:

• The credit may pay 20 percent of the qualifying costs of rehabilitating a historic building.
• This 20 percent needs to be spread out over five years.
• The credit doesn’t apply to the purchase of the building.
• Taxpayers use Form 3468, Investment Credit, to claim the rehabilitation tax credit.

Although this credit might not significantly improve many situations, it’s still a step toward preserving our country’s history.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁹

Footnotes and Sources

9. ^{IRS.gov, April 30, 2024}

Tax credits help with the cost of higher education by managing the income tax you may need to pay. The two tax credits available are the American Opportunity Tax Credit and the Lifetime Learning Credit.

Some education savings plans offer tax benefits if the individual qualifies. Also, you may be able to deduct higher education costs – such as tuition, student loan interest, and qualified education expenses – from your tax return.

Knowing your potential tax benefits may save you money if you’ve always dreamed about returning to school, whether to further your career or just learn something new.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁷

Footnotes and Sources

7. ^{IRS.gov, July 3, 2024}

Did you know that the IRS can revoke your passport if you owe the Internal Revenue Service $62,000 or more? That’s right; the IRS can revoke the passports of any taxpayer owing $62,000 or more, including penalties and interest.

Notably, if you’re currently paying off the debt or are contesting a tax bill in court, you should not be affected. However, anyone under an IRS tax lien could find their ability to travel hampered.

Contact a qualified attorney or tax specialist with questions about tax debts or other complex tax issues.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁹

Footnotes and Sources

9. ^{IRS.gov, June 12, 2024}

No matter where you live, you should be aware of possible natural disasters in your area and plan accordingly by considering the following tax tips:

• Update your emergency plan.
• Create electronic copies of all important documents.
• Document your valuables. Documenting ahead of time makes it easier to claim insurance and tax benefits if a disaster strikes.
• You can call the IRS at 866-562-5227 with any natural disaster-related questions. The agency can provide copies of previous tax returns, order transcripts showing most line items, and more.
• Net personal, casualty, and theft losses may be deductible if attributable to a federally declared disaster.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS¹⁰

Footnotes and Sources

10. ^{IRS.gov, July 24, 2024}

If you’re selling your car for less than what you paid, you likely won’t need to pay any sales tax because the Internal Revenue Service (IRS) considers selling a used car for less than what you paid a capital loss. However, if you’re selling your car for more than what you paid (like if it’s a classic car you’ve restored and it’s increased in value), you may need to pay sales tax.

If you’re buying a car from a private seller, you may need to pay sales tax, but this sales tax doesn’t go to the seller – it goes to the Department of Motor Vehicles and is part of your car’s registration.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from CarGurus⁹

Footnotes and Sources

9.  ^{cargurus.com, May 8. 2024}

Taxpayers who earn money from their hobbies might have to report the income to the Internal Revenue Service (IRS). Here are some tips to help:

1. The IRS taxes income differently depending on whether it comes from a true hobby or a for-profit business.
2. Your hobby may entail expenses required to do it well. For example, you may need to buy yarn to knit scarves. You might be able to deduct expenses associated with your hobby or business.
3. In some instances, you can deduct approvable expenses only up to the amount you brought in for income.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov¹⁰

Footnotes and Sources

10. ^{IRS.gov, May 8. 2024}