The Risk Management Association, Orange County Chapter is pleased to present a 2016 Annual Economic Forecast by Dr. Christopher Thornberg, founding partner of Beacon Economics, LLC, on Thursday, January 28, 2016, 11:30 a.m. – 1:30 p.m. at The Pacific Club, 4110 MacArthur Blvd., Newport Beach. WNDE is a proud sponsor of RMA Orange County.
Dr. Thornberg is a leading economist in the United States. An expert in economic forecasting, regional economics, employment and labor markets, economic policy, and industry and real estate analysis, he was one of the earliest and most accurate predictors of the subprime mortgage market crash that began in 2007, and of the global economic recession that followed. Since 2006, Dr. Thornberg has served on the advisory board of Wall Street hedge fund Paulson & Co. Inc. Between 2008 and 2012, he was a chief economic advisor to the California State Controller’s Office and served as Chair of State Controller John Chiang’s Council of Economic Advisors, the body that advises the state’s chief fiscal officer about emerging economic issues.
Widely quoted in the media, he has appeared on NBC’s The Today Show, ABC’s Nightline, CNN, FOX News Channel, NPR, and is regularly quoted in major national and California dailies including the Wall Street Journal, New York Times, Washington Post, Los Angeles Times and Chicago Tribune.
The cost to attend is $95 before January 22, 2016. $115 after and at the door. Table of 10 is $895. Parking will be validated. Register online at www.rmaoc.org or call Vicki Phillipy at (714) 267-5281.

Top 10 Tax Facts about Exemptions and Dependents
Nearly everyone can claim an exemption on their tax return. It usually lowers your taxable income. In most cases, that reduces the amount of tax you owe for the year. Here are the top 10 tax facts about exemptions to help you file your tax return.
1. E-file your tax return. Filing electronically is the easiest way to file a complete and accurate tax return. The software that you use to e-file will help you determine the number of exemptions that you can claim. E-file options include free Volunteer Assistance,IRS Free File, commercial software and professional assistance.
2. Exemptions cut income. There are two types of exemptions. The first type is a personal exemption. The second type is an exemption for a dependent. You can usually deduct $3,950 for each exemption you claim on your 2014 tax return.
3. Personal exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return, you can claim one for your spouse, too. If you file a separate return, you can claim an exemption for your spouse only if your spouse:
• had no gross income,
• is not filing a tax return, and
• was not the dependent of another taxpayer.
4. Exemptions for dependents. You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative who meets a set of tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim on your tax return. For more on these rules, see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. You can get Publication 501 on IRS.gov. Just click on the “Forms & Pubs” tab on the home page.
5. Report health care coverage. The health care law requires you to report certain health insurance information for you and your family. The individual shared responsibility provision requires you and each member of your family to either:
• Have qualifying health insurance, called minimum essential coverage, or
• Have an exemption from this coverage requirement, or
• Make a shared responsibility payment when you file your 2014 tax return.
Visit IRS.gov/ACA for more on these rules.
6. Some people don’t qualify. You normally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.
7. Dependents may have to file. A person who you can claim as your dependent may have to file their own tax return. This depends on certain factors, like the amount of their income, whether they are married and if they owe certain taxes.
8. No exemption on dependent’s return. If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person on your tax return. This rule applies because you can claim that person is your dependent.
9. Exemption phase-out. The $3,950 per exemption is subject to income limits. This rule may reduce or eliminate the amount you can claim based on the amount of your income. See Publication 501 for details.
10. Try the IRS online tool. Use the Interactive Tax Assistant tool on IRS.gov to see if a person qualifies as your dependent.
If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.
IRS YouTube Videos:
Welcome to Free File – English
First Time Filing a Tax Return? – English
Interactive Tax Assistant – English| ASL
IRS Podcast:
First Time Filing a Tax Return? – Spanish

Contributing money and property are ways that you can support a charitable cause, but in order for your donation to be tax-deductible, certain conditions must be met. Read on for six things the IRS wants taxpayers to know about deductibility of donations.
1. Tax-exempt status. Contributions must be made to qualified charitable organizations to be deductible. Ask the charity about its tax-exempt status, or look for it on IRS.gov in the Exempt Organizations Select Check, an online search tool that allows users to select an exempt organization and check certain information about its federal tax status as well as information about tax forms an organization may file that are available for public review. This search tool can also be used to find which charities have had their exempt status automatically revoked.
2. Itemizing. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. Fair market value. Cash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to several types of donated property, including cars, boats, clothing and household items. If you receive something in return for your donation, such as merchandise, goods, services, admission to a charity banquet or sporting event only the amount exceeding the fair market value of the benefit received can be deducted.
4. Records to keep. You should keep good records of any donation you make, regardless of the amount. All cash contributions must be documented to be deductible – even donations of small amounts. A cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity that includes the charity’s name, contribution date and amount usually fulfill this record-keeping requirement.

5. Large donations. All contributions valued at $250 and above require additional documentation to be deductible. For these, you should receive a written statement from the charity acknowledging your donation. The statement should specify the amount of cash donated and/or provide a description and fair market value of the property donated. It should also say whether the charity provided any goods or services in exchange for your donation. If you donate non-cash items valued at $500 or more, you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a contribution of noncash property worth more than $5,000, you typically must obtain a property appraisal and attach it to your return along with Form 8283.
6. Timing. If you pledge to donate to a qualified charity, keep in mind that for most taxpayers contributions are only deductible in the tax year they are actually made. For example, if you pledged $500 in September but paid the charity just $200 by Dec. 31 of that same year, only $200 of the pledged amount may qualify as tax-deductible for that tax year. End-of-year donations by check or credit card usually qualify as tax-deductible for that tax year, even though you may not pay the credit card bill or have your bank account debited until after Dec. 31.
Bottom line: your support of a qualified charitable organization may provide you with a money-saving tax deduction, but conditions do apply. For more information, see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Links:
• Exempt Organizations Select Check
• Schedule A (Form 1040), Itemized Deductions
• Form 8283, Noncash Charitable Contributions
• Publication 526, Charitable Contributions
• Publication 561, Determining the Value of Donated Property
• Tax Topic 506 – Charitable Contribution

Start now before you run out of time … The clock is a tickin’.
Is it just us or did 2015 screech by? We are in November now and most tax saving scenarios take time to implement and quantify.
For all of our clients, tax planning should be thoughtful and logical. In the case of business entities, planning should also consider the goals of ownership and its management. Sometimes good planning strategies conflict with good exit strategies. There are other times when they perfectly align, however. Wouldn’t you like to know that they align? Our planning involves a careful question-and-answer process designed to understand our clients’ pressure points and translate these into a value-added process which yields net cash savings for our clients. We believe it is imperative that there be an open line of communication during this process.
We are hopeful that Congress will fill our stocking with some tax benefits but we are braced for this not occurring as well.
Planning is just as essential for individuals and no less important. Those that are experiencing anomalies in their earnings for a myriad of reasons such as: options exercises, restricted stock vesting, and/or major disposition events would be well served to undertake the tax planning process. There may be simple strategies that can help reduce taxes.
We welcome the chance to help you through this process. Please contact your WNDE tax specialist today to begin this process before it is too late.
Also, please feel free to peruse our tax planning guide.

The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2016. In general, the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. However, other limitations will change because the increase in the index did meet the statutory thresholds.
The highlights of limitations that changed from 2015 to 2016 include the following:
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $184,000 and $194,000, up from $183,000 and $193,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $184,000 to $194,000 for married couples filing jointly, up from $183,000 to $193,000. For singles and heads of household, the income phase-out range is $117,000 to $132,000, up from $116,000 to $131,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,500 for married couples filing jointly, up from $61,000; $46,125 for heads of household, up from $45,750; and $30,750 for married individuals filing separately and for singles, up from $30,500.
The highlights of limitations that remain unchanged from 2015 include the following:
• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
• The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
• The AGI phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged in 2016 at $53,000.
The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,500.
The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $18,000.

For tax year 2016, the Internal Revenue Service today announced annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2015-53 provides details about these annual adjustments. The tax items for tax year 2016 of greatest interest to most taxpayers include the following dollar amounts:
• For tax year 2016, the 39.6 percent tax rate affects single taxpayers whose income exceeds $415,050 ($466,950 for married taxpayers filing jointly), up from $413,200 and $464,850, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2016 are described in the revenue procedure.
• The standard deduction for heads of household rises to $9,300 for tax year 2016, up from $9,250, for tax year 2015. The other standard deduction amounts for 2016 remain as they were for 2015.
• The limitation for itemized deductions to be claimed on tax year 2016 returns of individuals begins with incomes of $259,400 or more ($311,300 for married couples filing jointly).
• The personal exemption for tax year 2016 rises $50 to $4,050, up from the 2015 exemption of $4,000. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $259,400 ($311,300 for married couples filing jointly). It phases out completely at $381,900 ($433,800 for married couples filing jointly.)
• The Alternative Minimum Tax exemption amount for tax year 2016 is $53,900 and begins to phase out at $119,700 ($83,800, for married couples filing jointly for whom the exemption begins to phase out at $159,700). For tax year 2016, the 28 percent tax rate applies to taxpayers with taxable incomes above $186,300 ($93,150 for married individuals filing separately).
• For tax year 2016 participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,250 but not more than $3,350, both up $50 from tax year 2015. For self-only coverage the maximum out of pocket expense amount remains at $4,450. For tax year 2016 participants with family coverage, the floor for the annual deductible remains as it was in 2015 — $4,450, however the deductible cannot be more than $6,700, up $50 from the limit for tax year 2015. For family coverage, the out of pocket expense limit remains at $8,150 for tax year 2016 as it was for tax year 2015.
• For tax year 2016, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $111,000, up from $110,000 for tax year 2015.
• Estates of decedents who die during 2016 have a basic exclusion amount of $5,450,000, up from a total of $5,430,000 for estates of decedents who died in 2015.

New Electronic Filing System for Information Returns required to be filed under the ACA.
The IRS recently issued two publications setting forth new rules as to how employers must file 2015 electronic information returns under the “Affordable Care Act Information Return” system, or AIR system.
For the calendar year 2015, employers that file 250 or more ACA information returns (Forms 1094-B, 1095-B, 1094-C and 1095-C) must file the returns electronically. An employer’s existing system for filing electronic information returns with the IRS (for Forms W-2 and 1099) will not support, and cannot be used, for filing ACA information returns.
The IRS recently issued the following new publications:
• Publication 5165, “Guide for Electronic Filing Affordable Care Act (ACA) Information Returns for Software Developers and Transmitters (Processing Year 2015)” (46 pages in length) and
• Publication 5164, “Test Package for Electronic Filers of Affordable Care Act (ACA) Information Returns (AIR) (Processing Year 2015)” (19 pages in length).
These publications may be downloaded from irs.gov.
Employers that are required to file their own ACA information returns electronically will need to complete a series of steps prior to accessing the AIR system, and prior to filing returns in early 2016. Here is how the new AIR system works:
1. As the first step, each employer must identify its responsible officer(s) and contacts. The responsible officer has authority over the electronic filing of returns.
2. Responsible officers and contacts need to be registered and authenticated with the IRS. After completing the process in IRS e-Services, the IRS will mail a registration confirmation code. Upon receiving this code, the individual must log in to e-services and enter the confirmation code to complete the process.
3. Regarding ACA software that is being used by an employer, software developers must past an annual IRS test before the software package is approved.
4. Each “Issuer” or “Transmitter” that will be filing electronically must apply for a “Transmitter Control Code” (TCC). An Issuer refers to an employer that will be filing its own information returns. A Transmitter refers to a third-party who will be filing ACA information on behalf of another entity.
5. After receiving a TCC from the IRS, Issuers and Transmitters will need to complete an error-free communications test with the IRS. To pass a communications test, Issuers/Transmitters must prepare a transmission in XML (Extensible Markup Language) format, submit it for processing, receive a receipt ID, and obtain an “error” file”, if applicable.
Publications 5165 and 5164 are extremely complex, and contain many system constraints and rules that could cause rejected information returns. Thus, we recommend that employers start now on the registration and testing process.

Fraud Alert: Wire Transfer Frauds – a Growing Concern
There has been a recent global surge in schemes to trick companies into sending wire transfers to bank accounts set up for this fraudulent purpose-often in a foreign country. These schemes usually involve someone masquerading as the CEO or CFO of a company who emails an employee with an urgent request to wire funds to a special account. Most often, these emails appear to be from within the company, but there might be a slight variation in the email address (e.g., an extra space or a dash). Sometimes the email is even followed up with the phone call, particularly if the recipient is in another country and unlikely to recognize the voice or phone number of the person the fraudster is purporting to be. The fraudster often tells the employee to treat the request as highly confidential under the pretense that it relates to a ’secret deal’, such as a purchase of another company.
In carrying out these schemes, the fraudsters are relying on the human fallibility of the employees they contact, which is often referred to as ’social engineering’. These schemes are fostered by the prevalence of email as the usual means of communication in all facets of business; a lack of skepticism by the employee; and the sense of intimidation that the employees feel when receiving an urgent request from a CEO or other high level executive, causing them to rationalize their bypassing of existing prescribed procedures and controls.
A variation of this type of fraud is where someone masquerades as a company’s vendor, asking for an authorized person at the company to change the vendor payment information prior to payment of an invoice.
The fraudsters in these schemes are able to find out which company employees are authorized to implement a wire transfer simply by making a few phone calls to the company and pretending that they are from a vendor or the company’s bank. They also may try to determine whether the executive is on vacation or otherwise difficult to contact by researching publicly available information or simply by calling the executive’s assistant to ask.
It is critical that companies have controls to prevent these schemes since recovery of stolen funds may not be possible. Steps that can be taken to reduce the risk of loss from these schemes include:
• Requiring multiple approvals of wire transfers in excess of specified amounts.
• Implementing controls to validate changes to vendor information, including a requirement for such changes to be in writing (i.e. hard copy).
• Requiring those receiving wire transfer requests to confirm the authenticity of the requestor by phone, using a company phone number they know to be valid based on their experience.
• Obtaining insurance coverage at appropriate levels.
In addition to these and other actions, it is important that companies publicize any such schemes that have actually been perpetrated against it and otherwise sensitize employees about the nature of these schemes, embedding in them a sharp sense of skepticism, particularly involving something out of the ordinary.
According to BDO Global Forensic leader Glenn Pomerantz, “our teams have investigated these schemes on several occasions and the most common culprit is an employee not following protocol in the wire transfer and or the vendor master file change process. These schemes often involve multi-million dollar wires and the opportunity for recovery is very limited. Crime insurance policies can be a last resort. Enhanced training of employees with wire and vendor master file responsibilities is usually a more effective risk mitigation strategy.”
You are encouraged to discuss this growing risk with your clients.
If you have any questions about this alert, please contact your White Nelson Diehl Evans professional.

 White Nelson Diehl Evans Hires 15 New Employees

White Nelson Diehl Evans LLP is pleased to announce that 15 new employees have joined the firm, eight in the tax department and seven in the audit department. Joining the tax department are: James Murrey, tax supervisor; Tony Hwang, tax senior; Kirin Barnett, tax manager; Rachel Alcantara, Summer McMaster, Said Garcia, Megan Copeland and Antoinette Ramirez, all tax juniors. Joining the audit department are: Ryan Lagerborg, Brandon Tso, Julie Pham, Jessica Chang and Kenny Le, all audit juniors, and new audit interns Steve Ralls (currently attending Cal State Fullerton) and Andrea Lee (currently attending UCI).
Mark von Rotz, tax partner, remarked, “We’ve been pleased with White Nelson Diehl Evans’ growth in recent years, especially since our merger in 2011. We’re always on the lookout for talented accounting professionals to add to our staff, and we believe these 15 outstanding individuals will help us meet the challenges of our growth, and add value to the services we offer.”
White Nelson Diehl Evans works closely with local universities in recruiting for the firm’s internship program and for permanent full time positions

Learning you are a victim of identity theft can be a stressful event. Identity theft is also a challenge to businesses, organizations and government agencies, including the IRS. Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.
Many times, you may not be aware that someone has stolen your identity. The IRS may be the first to let you know you’re a victim of ID theft after you try to file your taxes.
The IRS combats tax-related identity theft with a strategy of prevention, detection and victim assistance. The IRS is making progress against this crime and it remains one of the agency’s highest priorities.
Here are ten things to know about ID Theft:
1. Protect your Records. Do not carry your Social Security card or other documents with your SSN on them. Only provide your SSN if it’s necessary and you know the person requesting it. Protect your personal information at home and protect your computers with anti-spam and anti-virus software. Routinely change passwords for Internet accounts.
2. Don’t Fall for Scams. The IRS will not call you to demand immediate payment, nor will it call about taxes owed without first mailing you a bill. Beware of threatening phone calls from someone claiming to be from the IRS. If you have no reason to believe you owe taxes, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.
3. Report ID Theft to Law Enforcement. If your SSN was compromised and you think you may be the victim of tax-related ID theft, file a police report. You can also file a report with the Federal Trade Commission using the FTC Complaint Assistant. It’s also important to contact one of the three credit bureaus so they can place a freeze on your account.
4. Complete an IRS Form 14039 Identity Theft Affidavit. Once you’ve filed a police report, file an IRS Form 14039 Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. Continue to pay your taxes and file your tax return, even if you must do so by paper.
5. Understand IRS Notices. Once the IRS verifies a taxpayer’s identity, the agency will mail a particular letter to the taxpayer. The notice says that the IRS is monitoring the taxpayer’s account. Some notices may contain a unique Identity Protection Personal Identification Number (IP PIN) for tax filing purposes.
6. IP PINs. If a taxpayer reports that they are a victim of ID theft or the IRS identifies a taxpayer as being a victim, they will be issued an IP PIN. The IP PIN is a unique six-digit number that a victim of ID theft uses to file a tax return. In 2014, the IRS launched an IP PIN Pilot program. The program offers residents of Florida, Georgia and Washington, D.C., the opportunity to apply for an IP PIN, due to high levels of tax-related identity theft there.
7. Data Breaches. If you learn about a data breach that may have compromised your personal information, keep in mind not every data breach results in identity theft. Further, not every identity theft case involves taxes. Make sure you know what kind of information has been stolen so you can take the appropriate steps before contacting the IRS.
8. Report Suspicious Activity. If you suspect or know of an individual or business that is committing tax fraud, you can visit IRS.gov and follow the chart on How to Report Suspected Tax Fraud Activity.
9. Combating ID Theft. Over the past few years, nearly 2,000 people were convicted in connection with refund fraud related to identity theft. The average prison sentence for identity theft-related tax refund fraud grew to 43 months in 2014 from 38 months in 2013, with the longest sentence being 27 years. During 2014, the IRS stopped more than $15 billion of fraudulent refunds, including those related to identity theft. Additionally, as the IRS improves its processing filters, the agency has also been able to halt more suspicious returns before they are processed. So far this year, new fraud filters stopped about 3 million suspicious returns for review, an increase of more than 700,000 from the year before.
10. Service Options. Information about tax-related identity theft is available online. We have a special section on IRS.gov devoted to identity theft and a phone number available for victims to obtain assistance.
For more on this Topic, see the Taxpayer Guide to Identity Theft.
Additional IRS Resources:
• Publication 5027, Identity Theft Information for Taxpayers
• Publication 5199, Tax Preparer Guide to Identity Theft
• Publication 4524, Security Awareness-Identity Theft Flyer
• Publication 4523, Beware of Phishing
IRS YouTube Videos:
• Are You a Victim of Identity Theft? – English | Spanish | ASL
• Protect Yourself From Identity Theft – English | Spanish | ASL
• IRS Identity Theft FAQ: First Steps for Victims – English | Spanish | ASL
• IRS Efforts on Identity Theft – English | Spanish | ASL
• IRS Identity Theft FAQ: Going After the Bad Guys – English | Spanish | ASL
• Phishing-Malware – English | Spanish | ASL
IRS Podcasts:
• Are You a Victim of Identity Theft? – English | Spanish
• Protect Yourself From Identity Theft – English | Spanish
Contact WNDE CPA’s for more resources