The IRS warns consumers not to fall for bogus charity scams. Scams often occur in the wake of major disasters like the recent tornadoes in the Midwest or the typhoon in the Philippines. Thieves play on the goodwill of people who want to help disaster victims. They pose as a real charity in order to steal money or get private information to commit identity theft. The scams use different tactics. Offering charity relief, criminals often: • Claim to be with real charities to gain public trust. • Use names similar to legitimate charities. • Use email to steer people to bogus websites that often look like real charity sites. • Contact people by phone or email to get them to ‘donate’ money or give their financial information. The IRS offers the following tips to help taxpayers who wish to donate to victims: • Donate to qualified charities. Use the Exempt Organizations Select Check tool at IRS.gov to find qualified charities. Only donations to qualified organizations are tax-deductible. You can also find legitimate charities at the Federal Emergency Management Agency website, fema.gov. For more information about the kinds of charities that can receive deductible contributions, see Publication 526, Charitable Contributions. • Don’t give out information. Don’t give your Social Security number, credit card and bank account numbers or passwords to anyone. Scam artists use this information to steal your identity and money. • Don’t give or send cash. For security and tax record purposes, don’t give or send cash. Contribute by check, credit card or another way that provides documentation of the donation. • Report suspected fraud. If you suspect tax or charity-related fraud, visit IRS.gov and click on ‘Reporting Phishing’ at the bottom of the home page.

IRS is more aggressive in assessing penalties on tax returns. Although the IRS rules and regulations have had the penalties listed and how they were to be applied many times the penalties were not assessed. A prime example is the extension on a tax return. The extension is an extension of time to file the return not an extension of time to pay the tax due. In past years the IRS would charge interest on the tax due from April 15th until it was paid. Currently that same return will also have a failure to pay penalty and a failure to pay proper estimated payments penalty assessed in addition to the interest. Depending on the amount of tax due, the interest is $100 and the penalties are $200. In 2013 the IRS has been agreeable to removing the penalties because of good behavior of paying timely in the past. But you can only use your "Get out of jail free" card once every 3 years. It appears the IRS will be even more aggressive in 2014 with penalties. Most of the penalties will relate to the 2012 and 2013 tax years so you also have one or two years of interest assessed also. Unfortunately the interest is not waived. Any questions please give KatTax a call at 702-796-1040 ext. 105 for Larry or 106 for Kathy

2014 Tax year updates to IRS deductions. Revenue Procedure 2013-35 provides the new inflation adjusted numbers for 2014, which include: • The standard deduction rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly; • The personal exemption rises to $3,950; • The Alternative Minimum Tax exemption amount for tax year 2014 is $52,800 ($82,100, for married couples filing jointly); • Estates of decedents who die during 2014 have a basic exclusion amount of $5,340,000; • The annual exclusion for gifts remains at $14,000; • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains at $2,500; and • The foreign earned income exclusion rises to $99,200 for tax year 2014.