Six Reasons to E-file your Taxes in 2016

Are you one of the few tax filers who still file a paper return? If so, now may be the best time to switch to e-file. Last year almost 129 million taxpayers filed their taxes electronically. They chose to e-file because it’s the fastest and safest way to file.

Here are the top six reasons why you should file electronically in 2016:

  1. Accurate and Easy. IRS e-file is the best way to file an accurate tax return. The tax software helps you avoid mistakes by doing the math for you. It guides you through each section of your tax return. It is much easier than doing your taxes by hand and mailing paper tax forms.
  2. Safe and Secure. IRS e-file meets strict security guidelines. It uses modern encryption technology to protect tax returns. The IRS has processed more than 1.5 billion e-filed tax returns to date. This year, the IRS is working with states and tax industry leaders to protect your tax return from identity theft refund fraud. This new effort has put strong new safeguards in place to make tax filing safer than ever before.
  3. Convenient and Often Free. You can ask your tax preparer to e-file your tax return. Most paid preparers are required to file their clients’ returns electronically.
  4. Faster Refunds. In most cases, e-file helps get your refund faster. That’s because there is nothing to mail and your tax return is virtually mistake-free. The fastest way to get your refund is to combine e-file with direct deposit into your bank account. The IRS issues more than nine out of 10 refunds in less than 21 days.
  5. Health Care Tax Reporting. IRS e-file can help with tax provisions of the health care law. The software will walk you through the lines on the tax forms that relate to the Affordable Care Act.
  6. Payment Options. If you owe taxes, you can e-file early and set up an automatic payment on any day until the April 18 deadline. You can pay electronically from your bank account with IRS Direct Pay. You also have many other options to pay, including electronic funds withdrawal or payment by debit or credit card. Visit IRS.gov/payments for details.

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.

Of course, here at Northeast Financial Strategies we offer FREE E-File with every eligible return on both Federal and State returns. Contact our office for help today!


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Lost or Stolen Refund Check?

Taxpayers can always check the status of their Federal Tax refund using “Where’s My Refund?” at IRS.gov or the IRS2Go mobile app. “Where’s My Refund?” is updated no more than once every 24 hours, usually overnight. If one of these apps indicates the IRS issued your refund, but you haven’t received it, your refund may have been stolen, lost, or misplaced.

If this is the case, you can ask the IRS to do a refund trace. This is the process the IRS uses to track a stolen, lost, or misplaced check or verify that a financial institution received a direct deposit.
The Taxpayer Advocate Service provides guidance on their website on the process to follow if you have not received your refund check.

  • Direct Deposit Refunds: If your refund was a direct deposit, the financial institution will get a letter within 6 weeks from the Bureau of the Fiscal Service in the Treasury Department, to verify where the deposit went.
  • Paper Check Refunds: If the check hasn’t been cashed, you’ll get a replacement in about 6 weeks. If your original refund check was cashed, you’ll receive a claim package within 6 weeks to complete and return to the Bureau of the Fiscal Service to pursue your claim.
  • Denied Claims: If your claim is denied, the Bureau of the Fiscal Service will send you a denial letter with instructions on how to appeal the decision.

If you need further assistance in tracking down your refund, please let us know.

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Tax Filing Season is Here! Free Organizers & Discounts from NFS!

WRENTHAM, MA – Tax Season is HERE!! Some people hire a tax professional and some people choose to do it themselves – either way – NFS has an option for you!!

No matter where in the world you are, NFS can help you to prepare your US Federal and State Income Tax Returns. In person, by mail or email, we are here to help! With pricing less than most national chains, we can prepare your taxes and maximize your refund or minimize your balance due if you are one of those folks who has to pay.

All new clients receive a $30 DISCOUNT and existing clients should inquire about other discounts that may be available to them. NFS also offers free Income Tax Organizers for you to save time & money!

For those deciding to do it themselves, we offer an option to prepare your own returns directly from our Do It Yourself Online Tax Prep Website with FREE (1040EZ) & Affordable options & in most cases less than the “Boxed Software” or other popular online tax prep websites!!

Do-It-Yourself Tax Filing

If you have any questions or want to set up an appointment, feel free to drop me an email jeff@nfsnet.com or give me a call toll free at 800-560-4NFS x 14.

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Employee or Independent Contractor – Which Is It?

If you hire someone for a long-term, full-time project or a series of projects that are likely to last for an extended period, you must pay special attention to the difference between independent contractors and employees.

Why It Matters

The Internal Revenue Service and state regulators scrutinize the distinction between employees and independent contractors because many business owners try to categorize as many of their workers as possible as independent contractors rather than as employees. They do this because independent contractors are not covered by unemployment and workers’ compensation, or by federal and state wage, hour, anti-discrimination, and labor laws. In addition, businesses do not have to pay federal payroll taxes on amounts paid to independent contractors. 

Caution: If you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty.

The Difference Between Employees and Independent Contractors

Independent Contractors are individuals who contract with a business to perform a specific project or set of projects. You, the payer, have the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.

Example: Sam Smith, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. He is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if he works more or less than 400 hours to complete the work, Sam will receive $6,400. He also performs additional electrical installations under contracts with other companies that he obtained through advertisements. Sam Smith is an independent contractor.
Employees provide work in an ongoing, structured basis. In general, anyone who performs services for you is your employee if you can control what will be done and how it will be done. A worker is still considered an employee even when you give them freedom of action. What matters is that you have the right to control the details of how the services are performed.

Example: Sally Jones is a salesperson employed on a full-time basis by Rob Robinson, an auto dealer. She works 6 days a week and is on duty in Rob’s showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager’s approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Rob. Rob also pays the cost of health insurance and group term life insurance for Sally. Sally Jones is an employee of Rob Robinson.

Independent Contractor Qualification Checklist

The IRS, workers’ compensation boards, unemployment compensation boards, federal agencies, and even courts all have slightly different definitions of what an independent contractor is though their means of categorizing workers as independent contractors are similar.

One of the most prevalent approaches used to categorize a worker as either an employee or independent contractor is the analysis created by the IRS, which considers the following:

  1. What instructions the employer gives the worker about when, where, and how to work. The more specific the instructions and the more control exercised, the more likely the worker will be considered an employee.
  2. What training the employer gives the worker. Independent contractors generally do not receive training from an employer.
  3. The extent to which the worker has business expenses that are not reimbursed. Independent contractors are more likely to have unreimbursed expenses.
  4. The extent of the worker’s investment in the worker’s own business. Independent contractors typically invest their own money in equipment or facilities.
  5. The extent to which the worker makes services available to other employers. Independent contractors are more likely to make their services available to other employers.
  6. How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job.
  7. The extent to which the worker can make a profit or incur a loss. An independent contractor can make a profit or loss, but an employee does not.
  8. Whether there are written contracts describing the relationship the parties intended to create. Independent contractors generally sign written contracts stating that they are independent contractors and setting forth the terms of their employment.
  9. Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
  10. The terms of the working relationship. An employee generally is employed at will (meaning the relationship can be terminated by either party at any time). An independent contractor is usually hired for a set period.
  11. Whether the worker’s services are a key aspect of the company’s regular business. If the services are necessary for regular business activity, it is more likely that the employer has the right to direct and control the worker’s activities. The more control an employer exerts over a worker, the more likely it is that the worker will be considered an employee.

Minimize the Risk of Misclassification

If you misclassify an employee as an independent contractor, you may end up before a state taxing authority or the IRS.

Sometimes the issue comes up when a terminated worker files for unemployment benefits and it’s unclear whether the worker was an independent contractor or employee. The filing can trigger state or federal investigations that can cost many thousands of dollars to defend, even if you successfully fight the challenge.

There are ways to reduce the risk of an investigation or challenge by a state or federal authority. At a minimum, you should:

  • Familiarize yourself with the rules. Ignorance of the rules is not a legitimate defense. Knowledge of the rules will allow you to structure and carefully manage your relationships with your workers to minimize risk.
  • Document relationships with your workers and vendors. Although it won’t always save you, it helps to have a written contract stating the terms of employment.

If you have any questions about how to classify workers, please contact our office.


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Important Information Regarding Identity Protection (IP) Pins

We have been notified by the IRS that due to an error, taxpayers are receiving Identity Protection PIN letters with an incorrect year listed. Taxpayers and tax professionals should be advised the IP PIN listed on the CP 01A Notice dated January 4, 2016 is valid for use on all 2015 individual tax returns.

The notice incorrectly indicates the IP PIN issued is to be used for filing the 2014 tax return when the number is actually to be used for the 2015 tax return. The IRS emphasizes the IP PIN listed on the CP 01A notice is valid for the 2015 returns. Taxpayers and their tax professionals should use this PIN number for 2015 tax returns, which the IRS will begin accepting from taxpayers starting January 19, 2016.

The IRS apologizes for the confusion and any inconvenience.


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