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8/31/2017

Disaster Losses: How To Recover from Hurricane Harvey


Many have seen the heartbreaking effects that Hurricane Harvey has had on southeastern Texas within the last several days. On Friday, August 25th, the storm slammed onto shore as a Category 4 hurricane and has since weakened to a tropical storm as of Saturday.

The aftermath of Hurricane Harvey has been catastrophic. The death toll of the storm is increasing daily, some areas of Houston have experienced over 50 inches of rain, homes and businesses have been destroyed, and more than 450,000 people are expected to seek federal aid once the storm has ended.

Recovering from such a life altering event is never easy. To be of assistance to those that were affected by the storm, we have provided some very beneficial information regarding disaster area losses and how to recover from a disaster:

Inventory Loss

If a disaster occurs in an area designated by FEMA and your business loses some or all of its inventory, you may choose to deduct the loss on your return or amended return when filing. If you do decide to make this deduction be sure to decrease your opening inventory for the year of the loss so that the loss won’t be reported again in inventories. 

Main Home Loss

If your home is located in a federally declared disaster area, you can postpone reporting the gain if you spend the reimbursement to repair or replace your home. For more detailed information, see Gains Realized on Homes in Disaster (Form 4684).  

Unsafe Home Due To Disaster

Your state or local government may order you to tear down or move your home if it is located in a federally declared disaster area and is no longer safe to live in due to the disaster. If this happens, treat the loss in value as a casualty loss from the disaster. An order for you to tear down or move your home must be given to you by your state or local government only within 120 days after the area was declared a disaster area. 

There are special rules that apply to replacement property. For more detailed information, see Gains Realized on Homes in Disaster (Form 4684). To learn how to figure your loss, click here.  

Qualifications for an Unsafe Home:

  • Your home became substantially more dangerous after the disaster than it was before the disaster. 
  • The danger to the area is from a substantially increased risk of future destruction from the disaster. 

How To Figure Your Loss Deduction

Your loss deduction should be figured under the usual rules for casualty losses, as if it occurred in the year preceding the disaster. Determine how to figure your deduction by clicking here.

Deducting Your Loss in the Preceding Year

If your tax return has already been filed for the preceding year you can claim a disaster loss against that year’s income by filing an amended return. This amended return should be filed on Form 1040X.

  • If you decide to deduct your loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster loss happened, include a statement stating your decision. This statement can be made on the return or filed with the return. 
    • Statement should include: name or description of the disaster, date or dates of the disaster, city, town, county or parish, state, and ZIP code where the damaged or destroyed property was located at the time of the disaster. 
  • If you are claiming a deduction for a disaster loss on the tax return for the year in which the disaster occurred and you wish to deduct the loss in the preceding year, you must file an amended return to remove the previously deducted loss on or before the date you file the return or amended return for the preceding year that includes the disaster loss deduction.
  • Deduction Deadline: If you decide to take your casualty loss for the disaster in the preceding year on or before the date that is six months after the regular due date for filing your original return for the tax year in which the disaster actually occurred.

State Disaster Relief Grants for Businesses

Businesses that receive a grant under a state program to provide reimbursement for losses incurred for damage or destruction of property because of a disaster isn’t excludable from income under the general welfare exclusion, as a gift, qualified disaster relief payment, or contribution to capital. Businesses can choose to postpone reporting gain realized from the grant if it buys qualifying replacement property within a certain period of time.  See Postponement of Gain for rules that apply.

Qualified Disaster Relief Payments

Qualified disaster relief payments are not included in the income of individuals. Also, these payments aren’t subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). No withholding applies to these payments. 

Qualified Disaster Relief Payments include payments that you receive for the following expenses: 
  1. Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. 
  2. Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence (rented or owned) due to a federally declared disaster. 
  3. Reasonable and necessary expenses incurred for the repair or replacement of contents in a personal residence due to a federally declared disaster. 
  4. Amounts paid to individuals affected by the disaster by a federal, state, or local government in connection with a federally declared disaster. 
Qualified Disaster Relief Payments do NOT include:
  1. Payments for expenses otherwise paid for by insurance or other reimbursements 
  2. Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. 

Help Spread The Word 

Do us a favor and share this post with someone that was directly affected by Hurricane Harvey or even someone who may know of others that are currently trying to make their way through the storm. This may be the first piece of the puzzle that they need to begin their recovery process.

As always, ExpressExtension is here to assist you with any tax filing extension that you may need. With ExpressExtension you can e-file a business, personal, or exempt organization tax extension to get up to six months of additional filing time within minutes. If you have questions or need assistance with filing, please don’t hesitate to contact our US based support team. We’re available Monday - Friday from 9 AM to 6 PM EST at 803.514.5155. We also offer live chat and 24/7 email support at support@expressextension.com

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8/24/2017

Till Death Do Us Part?: Divorce, Separation, and Taxes

Going through a divorce or even being separated from your spouse is never an easy process to go through. Unfortunately, your marital status is not the only area that is affected during the ordeal. A separation or divorce can directly affect your taxes in a “not so positive” way.  

Taxpayers who are in the process of divorce or have recently divorced should consider the impact that it will have when filing their annual taxes. Here are a few tips and highlighted areas that you want to look out for before tax season comes around: 

Alimony Payments

Alimony payments that are paid under a divorce or separation are deductible by the payer. The recipient of these funds, however, must report these payments and include it in their income. 

An IRS Form 1040 must be filed with the following information included: 1) Amount of alimony paid 2) Former spouse’s Social Security number or Individual Taxpayer Identification Number. 

For those receiving alimony payments, it should be reported as income on Form 1040 in the year that it was received. Since alimony is not subject to tax withholding, it may be necessary to increase the tax paid during the year to avoid a penalty. This can be done through estimated tax payments or by increasing the amount of tax withheld from wages. 

Change of Name/Address

Be sure to update handle any name or address changes with all necessary parties as much in advance to tax filing season as possible to avoid any filing errors or issues with the IRS. Individual retirement account deductions should also be reviewed as well. 

A name mismatch during tax return processing may delay a refund. Notify the Social Security Administration (www.ssa.gov) of any name changes after a divorce. 

Child Support Payments

Child support payments made by either party are NOT deductible or taxable income. 

Individual Retirement Account (IRA)

In order for a former spouse to not be able to deduct contributions that were made to their former spouse’s traditional IRA, a final decree of divorce or separate maintenance agreement must be filed by the end of the tax year in which they are filing. Only contributions to their own traditional IRA can be deducted. 


Do you know someone that is going through a divorce or separation and could utilize this helpful information? Share this post with them! And let them know that if they need extra time to file, for whatever the reason may be, ExpressExtension is here to assist with any tax extensions that they may need. Whether it is personal, business or for an organization, we provide you with extra time to file your taxes correctly to stay in good standing with the IRS. Be sure to visit our website at www.expressextension.com to find out more about how great of a resource we are!
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8/22/2017

A Return on Your Investment: Education Tax Credits & Deductions

For most, summer vacations have come to an end and school is now back in session. Whether you’ve sent your child off to school for the first time or bid them farewell as they enter into their senior year of college, some of the expenses you’ve gathered preparing them can be written off from your taxes.

Here are a few rules and credits from the IRS that you could take advantage around tax season.

Qualifying Educational Institutions


Schools that typically offer education beyond high school levels are eligible for tax deductions - these include your common vocational or post-secondary schools and accredited colleges or universities. You can confirm your school’s eligibility by asking the administration staff or searching through the U.S. Department of Education database of accreditation.

One Credit Per Student

The IRS imposes a limit of credits you can claim for each college student within your household, and each family can have a different situation. For example, if you’re claiming two or more students, you can’t write-off the same type of credit for both students - each one must be different for each student.

Deductible Expenses

Like many other tax deductions, the more you spend towards education, the more it subtracts from your owed tax amounts - these expenses are typically tuition, fees, and other related costs for qualifying students. Please check with the IRS for eligible expenses before racking up a tab - you might be surprised by which educational costs aren’t tax deductible.

Tuition and Fees Deduction

Deductions can be made during tax filing season for qualified tuition expenses and other related expenses that are paid for your education or the education of a spouse or dependent. No itemization is required for this deduction. Simply claim the deduction as an adjustment to your income when filing IRS Form 1040.
Other education benefits for education expenses include:
If your expenses qualify for both a business expense deduction as well as the tuition and fees deduction, you can only claim one deduction and not both.

Student Loan Interest Deduction

Student loan payments are never fun. But there is some good news if you do have one! Those that are required to make student loan payments can easily make a deduction for these costs each year. The first step is verifying if your loan qualifies for the deduction. A qualified student loan is one that was taken out solely to pay the expenses to attend a qualified institution of higher education. Student Loan Interest is considered to be any interest paid during the year on a qualified student loan, including required and voluntarily prepaid interest payments. Deductions for these loans can either be $2,500 or less or the amount of interest actually paid during the year can be claimed as an adjustment to your income, so no itemization of the deduction is needed.

Filing Extension

Be sure to take advantage of these credit and deductions and don’t forget to visit ExpressExtension.com to e-file a personal tax extension and get six months of extra time to file your income taxes. Download our FREE Express 4868 App for your iOS or Android device - e-file and get approved in minutes without even leaving your study session. Contact us with any questions at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST or email us at your convenience with support@ExpressExtension.com.
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8/15/2017

Beneficial Tax Information for New Business Ventures

In the world that we live in today, entrepreneurship and starting your own business is a positive trend that has impacted society as a whole. Individuals all over the country have found ways to provide creative products and materials to consumers through a unique and new business. Although starting a business has its various challenges, the hopeful success achieved once it has started and taken off is the ultimate reward.

To help lay a form foundation for your business to build on, we’ve provided some important tax related areas that will help your business significantly in the long run.

Defining the Structure of Your Business

When starting a business, you must first determine what form of a business entity that you would like to establish, which will also determine which income tax return form you will have to file annually. There are five forms of businesses; the most common of these are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC), which is a business structure that is allowed by state statute, is another business structure that can be selected.  

Business Taxes

The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax. The type of business you create normally executes what type of tax the business will have to pay. An extension for filing your business taxes can be granted by filing with ExpressExtension.

Employer Identification Number (EIN)

This ten digit number, also known as a Federal Tax Identification Number,  is extremely important for when it’s time to file your annual taxes and take care of anything that has a federal tax purpose attached to it.

Accounting Method

In order for a business to succeed, its finances must be consistent and in order. The accounting method for a business is a set of rules that is used to determine when to report income and expenses. The two most common accounting methods are the cash and accrual methods.

    • Cash Method - Reporting Income and Deducted Expenses for the year in which the taxpayer received or paid them.

    • Accrual Method - Taxpayers generally will report income and deduct expenses in the year that they earn or incur them. This method is still followed even if they receive the income or pay the expense in a later year.


So as you begin to lay the foundation for your new business, don’t forget to focus in on the little things that matter most and be sure to file your taxes each year to avoid issues with the IRS. ExpressExtension is always here to be of assistance and provide you with extension Form 7004 which grants you up to 6 months of additional time to file your taxes within minutes. For filing assistance or more information on the forms that we offer, feel free to give us a call at 803.514.5155 or email us at support@expressextension.com for any assistance you may need.

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8/10/2017

How To Handle Gambling Winnings and Losses


What happens in Vegas may not necessarily stay in Vegas, especially if taxes have anything to do with it. Did you know that it is required of taxpayers to report all gambling winnings as income? Yes, it is true, taxpayers must be able to itemize deductions to claim gambling losses on their tax return.


Gambling income is considered to be any money gained from winnings from the lottery, horse racing, and casinos. It also includes cash and non-cash prizes. The fair market value of these non-cash prizes such as cars or trips, must be reported to the IRS. Also, the payer of these winnings may issue a Form W-2G, Certain Gambling Winnings, to winning taxpayers based on the type of gambling as well as the amount they have won. The payer also sends a copy of the form to the IRS, so it is extremely important that you report these earnings as the IRS will already have them on file. Additionally, taxpayers should get a Form W-2G if the payer withholds income tax from their winnings.


One may ask, “Well how would I even report my winnings when I file?” The answer to that question is pretty easy. You would simply report all gambling winnings as income and list it in the “Other Income” section of your tax return. This will still need to be done even if the taxpayer doesn’t provide a Form W-2G.


Taxpayers are also able to deduct gambling losses on Schedule A (Itemized Deductions), but should keep in mind that you cannot deduct gambling losses that exceed your winnings. As always, it is beneficial to keep records of gambling wins and losses. Gambling receipts, statements and tickets should be kept or written in a gambling log or diary.


So whether you’re in Las Vegas having the time of your life or enjoying good times with family and friends at a local casino, or even “lucked up” with your recent lottery ticket purchase, be sure to take advantage of this info to avoid any problems with the IRS when it’s time to file your taxes. As always, ExpressExtension is here to assist you with any tax extensions that you may need. Whether it is personal, business or for an organization, we provide you with extra time to file your taxes correctly to stay in good standing with the IRS. Be sure to visit our website at www.expressextension.com to find out more about how great of a resource we can be to you!


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8/08/2017

Avoid Identity Theft With These Helpful Tips



Identity theft is considered to be the fraudulent acquisition and use of a person's private identifying information, usually for financial gain. In a tax-related identity theft situation, someone uses another person’s stolen Social Security number or Employer Identification Number to file a tax return to receive a fraudulent refund.  Most taxpayers don’t realize they have been a victim of identity theft until they file their tax returns and are then notified that someone has already used their social security number to file.

Although various government agencies, along with the IRS, have taken strategic measures to prevent and detect identity theft, there is still a large possibility that as a taxpayer someone could still take your identity prior to filing for your next tax return. Here are some ways to protect yourself against identity theft:

  1. Protect Your Personal & Financial Records - It is recommended that taxpayers not carry their Social Security card in their wallet or purse, but to only provide the number when necessary. Also utilize anti-spam or anti-virus software to protect personal information stored on computers and store personal documents in a small safe. Routinely change the passwords of your online accounts as well.

  1. Don’t Get Caught Up in Scams - Banks, credit card companies and IRS representatives are often impersonated by scammers attempting to steal personal information. Try your best to discern and avoid any fake communications. Remember, an IRS representative will not contact you threatening a lawsuit, arrest or demand any type of immediate payment.

  1. Report Tax-Related Identity Theft - If you find yourself being a victim of identity theft and unable to e-file your return due to your social security number already being used, this is what you should do:
    1. File your return by paper and pay any taxes owed. Also file a IRS Form 14039 (Identity Theft Affidavit).
    2. File a report with the Federal Trade Commission
    3. Contact the Social Security Administration at www.ssa.gov and search “Identity Theft” in the search box for more info.
    4. Contact financial institutions to report the alleged identity theft.
    5. Contact a credit bureau to have a fraud alert or credit freeze occur on the affected account.
  2. Letters from the IRS - Taxpayers may receive a letter from the IRS if the IRS identifies a suspicious tax return that was filed with the taxpayer’s stolen social security number. This letter will ask them to verify their identity by calling a special numbers or visiting an IRS Taxpayer Assistance Center.
  3. IP Pin - Taxpayers that are confirmed ID theft victims may have an “IP Pin” issued to them by the IRS. This pin is a unique six-digit number that the taxpayer will use to e-file their return. A new pin will be issued to the taxpayer each year to file with.

  1. Report Any Suspicious Activity - If you suspect or know of anyone that is committing tax fraud you can report them by clicking here.
Safety as a taxpayer is of utmost importance to us at ExpressExtension. To avoid scammers or even filing your annual return late, simply file a quick and easy extension with ExpressExtension and receive extra time to get those taxes filed. We’re always here to help so feel free to give us a call at 803.514.5155 or email us at support@expressextension.com for any assistance you may need.

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8/03/2017

Avoid IRS Scammers: 3 Ways the IRS Contacts Taxpayers

As technology continues to grow and become even more modernized, the threat of scammers still exists. Tax scammers contact taxpayers in an attempt to collect funds that they claim are owed to the IRS.  If you are unaware of the ways that IRS contacts taxpayers, you may be taken advantage of and become a victim of a sneaky tax scammer.

Luckily, we’ve done some research and found that there are only three ways of contact that the Internal Revenue Service uses. These methods of contact include:

  1. Mail - In most cases, the first point of contact from the IRS is normally by letter, which will be delivered by the U.S. Postal Service. It is very unlikely that the IRS will contact you via email, by text message, or even through social media channels.

  1. Phone Call - Based upon the severity of the situation at hand, IRS employees also known as IRS revenue officers, may contact you by phone. These officers work directly with taxpayers to educate them about options to resolve any delinquencies they may have as well as attempting to collect past due taxes and tax returns, while protecting the rights of the taxpayer. Other representatives from the IRS that may contact you are:
    1. IRS Revenue Agents or Tax Compliance Officers - these agents or officers may contact you to confirm an appointment or discuss items for a scheduled audit, in which you were notified about through a mailed notice.
    2. Private Debt Collectors - These collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities after a taxpayer and their representative have received written notice.

  1. Physical Visits - Revenue Officers can make unannounced visits routinely to a taxpayer’s home or place of business to discuss delinquent tax returns, owed taxes, a business that has fallen behind on payroll tax deposits. Payment requests of taxes owed by the taxpayer will be made, but payment will never be requested to be paid to a source other than the US Treasury.  Other necessary visits may include:
    1. Audit - IRS Revenue Agents will usually visit a taxpayer or tax professional to conduct an audit after a notice has been mailed and/or a specific date and time has been designated to meet and discuss tax matters.
    2. Investigation - Criminal investigators, who are federal law enforcement agents may visit to conduct a necessary investigation but will demand any type of payment.

Whether it is a phone call or a physical visit, ALWAYS ask for credentials. Representatives of the IRS should be able to provide two official forms of credentials: 1) Pocket Commission [describes the specific authority & responsibilities of the authorized holder] and 2) Personal Identity Verification Credential [government-wide standard for secure and reliable forms of identification for federal employees and contractors].

All payments should be made to the U.S. Treasury and should never be paid with a preloaded debit card or wire transfer. Specific guidelines for tax payments can be found at https://www.irs.gov/payments. Also, IRS employees and contracts will never be hostile, demand payment without allowing taxpayers the opportunity to ask questions or appeal the amount, require a specific payment method, threaten with lawsuits, arrest, or deportation, or ask for credit/debit card numbers over the phone.

To avoid scammers or filing late, simply file a quick and easy extension with ExpressExtension and receive extra time to get those taxes filed. We’re always here to help so feel free to give us a call at 803.514.5155 or email us at support@expressextension.com for any assistance you may need.
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8/01/2017

Rack Up on Savings During This Year's Tax Free Weekend

Several states have their annual Tax Free Weekend holiday coming up soon. It’s during this time of year that many parents and guardians rack up on an abundance of school supplies to last their kids for the school year, or even other household items that you or your family can utilize.


We’ve gathered some tips for shoppers across the country that may find themselves searching for great deals and savings this weekend or a soon to come tax free weekend.


Tax Free Weekend Shopping Tips

  1. Do Your Research - Find out what items are tax free in your state so you won’t be disappointed at the register during checkout. 
  2. Get organized before shopping - Take an inventory of what you already have and what you would need to get. The ultimate goal is to save money; so making unnecessary purchases defeats the overall purpose. 
  3. Make sure your tax free savings outweigh savings from other types of coupons
  4. Think about items that you would normally purchase in the near future and buy them during tax free weekend to save extra money. For example, holiday items and costumes can be bought now instead of during that season when prices are slightly elevated due to the demand for the product.
  5. Look over your receipt(s) in detail to ensure that you are receiving the proper tax savings and that you did not pay sales tax on exempt items. 
  6. Take advantage of any memberships that you have with stores like Sams Club, Office Depot, Staples, etc. 
  7. Know your prices. Don’t just buy something because it is tax-free. Some places will raise prices during tax-free weekend to make extra money. Be sure the deal that you’re getting is really a deal. 
  8. Save your receipts just in case you need to return something or to see how much money you saved throughout the weekend. 
  9. Shop at both local and major stores. A lot of shoppers will be crowding major stores, outlet malls, and traditional malls, however, some of the best deals can be found at smaller, local shops. 
  10. The last tip is so important we had reiterate it again. Make a list and stick to the list. Impulse buying causes most shopper to bust their budget and throw away all of the savings they expected to get.
We hope that these shopping tips will help you save even more bucks while shopping. Feel free to share this blog with your friends and spread the “summer savings joy!” Also, be sure to keep your receipts as some purchases that you make can be deducted when filing your taxes. As always, ExpressExtension is here to assist you with any tax extensions that you may need. Whether it is personal, business or for an organization, we provide you with extra time to file your taxes correctly to stay in good standing with the IRS. Be sure to visit our website at www.expressextension.com to find out more about how great of a resource we can be to you!
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