Miscellaneous

Special Rule for Combat Pay. Combat pay received by members of the military serving in Afghanistan, Iraq and other combat zone localities is usually exempt from tax.
But under a special rule, the taxpayer can choose to count all of this as taxable income when figuring the EITC. In many cases, making this choice enables the person to claim the credit, or if already eligible, claim a larger credit.

If you receive a notice from IRS and you suspect your identity has been used fraudulently, respond immediately by calling the number on the notice.
If you did not receive a notice but believe you’ve been the victim of identity theft, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245 right away so we can take steps to secure your tax account and match your SSN or ITIN.
Also, fill out the IRS Identity Theft Affidavit, Form 14039. Please write legibly and follow the directions on the back of the form that relate to your specific circumstances.

Whether a taxpayer who recovers amounts lost in a fraudulent investment scheme is required to include the recovery in income depends on whether the taxpayer claimed a tax deduction for the theft loss in any prior year.
A taxpayer who has not yet claimed a tax deduction for the theft loss is not required to include in income a recovery from the trustee or receiver. Instead, the recovery will reduce the amount a taxpayer may eventually claim as a loss.
A taxpayer who claimed a tax deduction for the theft loss, however, may be required to include the recovery in income, depending on the extent to which the theft loss deduction created a “tax benefit” for the taxpayer.

Revenue Procedure 2009-20 simplifies compliance for taxpayers by providing a safe-harbor means of determining the year in which the loss is deemed to occur and a simplified means of computing the amount of the loss.
Go to IRS Website to access Ruling. http://www.irs.gov/uac/Help-for-Victims-of-Ponzi-Investment-Schemes

Revenue Ruling 2009-9 provides guidance on determining the amount and timing of losses from these schemes, which is difficult and dependent on the prospect of recovering the lost money (which may not become known for several years).
Go to IRS Website to access Ruling. http://www.irs.gov/uac/Help-for-Victims-of-Ponzi-Investment-Schemes

The IRS has expanded the number of Identity Protection Personal Identification Numbers (IP PINs) being issued to Identity Theft victims. The IP PIN is a unique identifier (6 numbers) that shows that a particular taxpayer is the rightful filer of the return.
In 2015, the IRS has issued IP PINs to more than 600,000 taxpayers who have been victimized by identity theft. That’s more than twice as many as the previous year.
The IP PIN will allow these individuals to avoid delays in filing returns and receiving refunds.

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245 (Mon. - Fri., 7 a.m. - 7 p.m. local time; Alaska & Hawaii follow Pacific Time).

Don’t carry your Social Security card or any documents with your SSN or Individual Taxpayer Identification Number (ITIN) on it.
Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
Protect your financial information. Check your credit report every 12 months.
Secure personal information in your home.
Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and change passwords for Internet accounts.
Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution to their case, they can contact the Taxpayer Advocate Service toll-free at 877-777-4778.