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2017 Tax Year Filing

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IRS and Partners Look to Start of 2018 Tax Season- Tax Tip

IRS Tax Tip 2017-57, October 12, 2017

While taxpayers will not start filing their tax returns for a few months, there are a few things they can do to make the process easier next year. Here are two things that could affect the 2017 returns they will file in 2018.

1. Report name changes. Recently married or divorced taxpayers who change their name should notify the Social Security Administration. They should also notify the SSA if a dependent’s name changed.  Taxpayers need to do this so that when the taxpayer files next year, the new name on the tax return matches A mismatch between the name shown on their tax return and the SSA records can cause problems in the processing of their tax return and may even delay their tax refund.

2. Renew Individual Taxpayer Identification Numbers. Taxpayers who use an Individual Taxpayer Identification Number should check to see if their number expired in 2016 or will expire this year. If so, and they need to file a return in 2018, they should apply now to renew their ITIN to avoid certain disallowed tax credits and processing delays next year. Taxpayers who have not used their ITIN to file a federal return at least once in the last three years will see their number expire Dec. 31, 2017. Additionally, ITINs with middle digits 70, 71, 72 or 80 will also expire at the end of the year. Only taxpayers with expiring ITINs need to take any action. To renew an ITIN, a taxpayer must complete a Form W-7 and submit required documentation. No tax return is required when submitting an application to renew.

 

IRS and Partners Look to Start of 2017 Tax
Season; Encourage use of IRS.gov and eFile;
Warn of Refund Delays IRS Tax Tip
Jan. 5, 2017

WASHINGTON — The Internal Revenue Service and partners from the states and tax industry today reminded taxpayers that the nation’s 2017 individual income tax filing season opens January 23.

The IRS expects more than 153 million tax returns to be filed this year and taxpayers have until Tuesday, April 18, 2017, to file their 2016 tax returns and pay any tax due.

The deadline is extended because the Emancipation Day, a holiday in Washington, D.C., will be observed on Monday, April 17 pushing the nation’s filing deadline to April 18.

“There are a number of important changes this year involving refunds and tax law changes that we
encourage people to keep in mind,” said IRS Commissioner John Koskinen. “We encourage
taxpayers to plan ahead and take a few minutes to review these changes. As we enter the filing
season, taxpayers should know that the dedicated workforce of the IRS and the nation’s tax
community stand ready to help.”

Taxpayers that are efiling can still submit returns to their software provider before Jan. 23.

They will hold the return and transmit it to the IRS when the systems open. The IRS also reminds taxpayers that they don’t have to wait until Jan. 23 to contact their tax professional.

In 2016, the IRS issued 111 million individual tax refunds and expects more than 70 percent of
taxpayers to receive a refund in 2017. Also, the IRS reminds taxpayers that a new law requires the
IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax
Credit (ACTC) until Feb. 15.

“We encourage taxpayers to file as they normally would, including returns claiming the EITC or
ACTC” Koskinen said. “The IRS and the nation’s tax community are committed to making this
another smooth filing season.”

eFile and Free File

More than four out of five returns are expected to be filed electronically, with a similar proportion of
refunds issued through direct deposit. Tax Tip: The IRS encourages taxpayers to plan ahead and take
advantage of the online resources available on IRS.gov.

Choosing efile and direct deposit for refunds remains the fastest and safest way to file an accurate
income tax return and receive a refund. The IRS anticipates issuing more than nine out of 10         refunds in less than 21 days from the time returns are received.

The IRS Free File program, available at IRS.gov, opens Friday, January 13. Commercial partners of           the IRS offer free brand name software to about 100 million individuals and families with incomes         of $64,000 or less.  Seventy percent of the nation’s taxpayers are eligible for IRS Free File.

Protecting Taxpayers from ID Theft Related Refund Fraud

The IRS continues to work with state tax authorities and the tax industry to address tax related
identity theft and refund fraud. As part of the Security Summit, the IRS made significant inroads
against fraudulent returns in 2016.

Summit leaders detailed new and expanded safeguards for taxpayers in the upcoming
2017 tax season. The 2017 focus revolves around “trusted customer” features that will help
the authenticity of the taxpayer and the tax return before, during and after a tax return is filed. Additional protections will build on the 2016 successes that prevented fraudulent returns and
protected tax refunds.

Health Care Basics

Again this year, meeting the tax obligation of the Affordable Care Act for the vast majority of
taxpayers will simply mean checking a box to verify everyone on their return has health coverage.
For others, IRS.gov/aca features useful information, tips and interactive online tools to help
taxpayers with the premium tax credit, the individual shared responsibility requirement and other tax related provisions of the ACA.

The Affordable Care Act requires that a taxpayer and each member of their family either has
qualifying health coverage for each month of the year, qualifies for an exemption, or makes an
individual shared responsibility payment when filing their tax returns.

Assistance Filing the Tax Return

More than 90 percent of all tax returns are prepared using tax return preparation software. This
software generally includes tax law help along with reminders and prompts about tax breaks and
responsibilities.

Tax Tip: The IRS reminds taxpayers that a trusted tax professional can also provide helpful information about the tax law. Information on tips about selecting a preparer and national tax professional groups are available on IRS.gov.

The IRS urges all taxpayers to make sure they have all their year end statements in hand before they file their return. This includes Forms W2 from employers, Forms 1099 from banks and other payers, and for those claiming the premium tax credit, Form 1095A from the Marketplace. Doing so will help avoid refund delays and the need to file an amended return later.

Delayed Refunds

The IRS expects to issue more than nine out of 10 refunds in less than 21 days. However, the
Protecting Americans from Tax Hikes (PATH) Act mandates the IRS hold refunds on tax returns
claiming the EITC or the Additional Child Tax Credit (ACTC) until midFebruary.

The change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent tax fraud.

The IRS will begin releasing EITC and ACTC refunds starting Feb. 15, but cautions taxpayers that
these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb.
27. The IRS wants taxpayers to know it will take additional time for their refunds to be processed.

The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the threeday
holiday weekend involving President’s Day may affect their refund timing.

Where’s My Refund? on IRS.gov and the IRS2Go phone app will be updated with projected
deposit dates for early EITC and ACTC refund filers a few days after Feb. 15.

Taxpayers will not see a refund date on Where’s My Refund? or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.

Expired Individual Taxpayer Identification Numbers (ITIN)

The PATH Act requires that certain ITINs expire on Jan. 1, 2017. Any ITIN not used on tax returns once in the past three years and any ITIN with middle digits of either 78 or 79 must be renewed before a return can be processed.

Anyone filing a tax return with an expired ITIN could experience return processing and refund delay as well as denial of some tax benefits until the ITIN is renewed. An ITIN renewal application could take as long as 11 weeks to process during tax filing season. ITINs are used by people who have tax filing or payment obligations under U.S. law but are not eligible for a Social Security number.

Help for Taxpayers

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax
return on IRS.gov. Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly 
offer free tax help to people who qualify.

Go to irs.gov and enter “free tax prep” in the search box to find a nearby VITA or TCE site. The IRS2Go Mobile App can help find free tax preparation assistance, check your refund status.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software
product for the first time may need their Adjusted Gross Income (AGI) amount from their prior year
tax return to verify their identity. Taxpayers can learn more about how to verify their identity and
electronically sign tax returns at Validating Your Electronically Filed Tax Return.

The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and
advice about the ever changing tax code. Another IRS Tax Tip for choosing a return preparer and details about
national tax professional groups are available on IRS.gov.

Don’t Miss Your Last Estimated Tax Payment

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As the year comes to an end, it’s easy to find yourself overwhelmed as you try and wrap things up and close out the books for the year. Depending on your business, you could be frantically trying to send out 1099s, receiving final payments, etc. And once all that is wrapped up, you likely are looking to get started on your tax return for the year. However, it’s important that you not jump the gun and overlook important details. last estimated tax payment IRS Tax Return Brennan One such detail is that last estimated tax payment for the year. When is it due? January 15.

This is probably the most overlooked payment for the year, as some people get mixed up as to which year that goes toward. Yes, you pay it in 2017, but the payment will go towards the previous year. Failing to make the payment can leave you short for the year, which could cause penalties—not to mention you could end up owing rather than getting a refund.

So whatever you do, make sure you make that final payment on January 15. For more info on important tax dates, Contact us today! Like us on FaceBook.

Saving Tax Preparation Records?

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When it comes to gathering and organizing all of the different tax preparation records and information for your business tax preparation- the papers can stack up quickly. The accumulation of years of tax returns, receipts, and other important business information could take several days to sift through. People wonder if it’s even necessary to be saving tax records and documentation.

The truth is that while it’s extremely important to keep certain business and personal tax information available and readily organized, many of these documents only need to be kept for a maximum of six years.saving tax records brennan and company

The following documents that deal with tax preparation should be kept for at least six years:

  • Tax receipts
  • Business records
  • Employee business expenses
  • Closing papers from the sale or purchase of a home
  • Investment records
  • Payroll records

While the statute of limitations for record keeping in most cases is three years, it may be a good idea to be saving tax records indefinitely.

Some other documents to hold indefinitely are:

  • Tax Returns
  • Inheritance records
  • Stock and bond basis records
  • Deeds
  • Pension Documentation

During the past year a client came to our office with a notice from the State of Pennsylvania which was requesting a copy of the clients 1983 tax return.   Being a senior in high school at the time my office was not responsible for this omission but this example does highlight the need to retain tax preparation documentation – at least the tax return – indefinitely.

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financing college accounting tax Financing College Education

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The cost of financing college education continually increases. Parents and students need to understand some basic college financing options and start saving – now!  It is never too early!

The Uniform Transfers to Minors Act (UTMA) and Section 529 plans are two investment vehicles that, when used properly, can assist with reducing or eliminating taxes on certain college investments. The more money received from investments – obviously, the less your college student will borrow.

Parents can shelter up to $2,100 of passive income, in the form of dividends and net capital gains, without having taxes. The income must be dividends or net capital gains to be certain of that treatment. When the income is a mix of dividends and capital gains and say, interest income, then some of the income could become taxable.

Income in the students account that exceeds the $2,100 thresh-hold may incur taxes at the parents marginal rate.  This could become costly. Financing college does not need to incur these high rates.

Earnings from Section 529 plans (named after the relevant IRS code section) are not taxed currently nor are the plan distributions used to pay for higher education costs.  Section 529 plan contributions are deductible in the State of Pennsylvania (and most states) but not for federal tax purposes.

Certain 529 plans are considered pre-payment plans.  These plans will index and increase the 529 investment amount if the student’s selected college increases its tuition.  This is an important protection against the ever increasing cost of higher education.

The more – small job, birthday, gift and special occasion money received over the years, the more years that money can grow.  So maximize the time you invest for college tuition in-order to maximize the college funds available – while minimizing taxes with some basic tax strategies – a highly intelligent strategy indeed! Brennan and Co can consult with you on this matter.

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3 Ways You Can Reduce Your Taxes This New Year

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While you need to start thinking about preparing your 2014 taxes, you also need to shift your thinking to the next year. Since you have a fresh start, you want to try and implement some of the following tips to try and reduce your taxes.

  1. Buy things you need last minute. Buying at the very end of the year is a good way to take advantage of deductions. However, don’t buy unless you really need it. Spending money is still spending money!
  2. 3 ways to reduce your taxes Brennan and CompanyGive, give, give. Not only do charitable donations represent one of the best ways to cut down your tax bill, but they also help other people and make you feel better about yourself. Just remember that your volunteering time doesn’t count.
  3. Maximize home office deductions. You can take a deduction of $5 per square foot on your home office. You are able to do this up to 300 square feet. Make sure though that your home office really is exactly that. You have to be able to prove it if you should ever be audited!

For more tips and tax help, Contact us today! Like us on FaceBook.

How to Make Sure You’re Paying Enough for Your Quarterlies

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Although taxes are no fun to begin with, they can become even worse if you are not handling them correctly. Not paying enough for your quarterlies, not keeping record of what you are paying, and even not paying enough taxes can all get you into trouble with the IRS. This can lead to a potential halt to your business and a shutdown of your company. Because of this, you’ll want to be sure that you are dealing with every aspect of your company’s taxes properly.

paying enough for your quarterlies taxWhile getting into trouble with the IRS is a more extreme consequence to improper tax handling, there are also many less extreme, but definitely still detrimental, consequences.
If you fail to deduct enough money out of your company’s quarterly revenue, you may be responsible for paying a large sum of money at the end of the taxable year. Rather than receiving money back on your tax return, you will be liable to pay however much you failed to tax yourself quarterly. This can definitely catch you off guard and get you into financial trouble, so don’t run into this problem.

As the year approaches its end, it’s crucial that you are paying enough for your quarterlies this year.

Brennan & Company CPA can help your business with all of its accounting needs and taxing qualms. Contact us today! Like us on FaceBook.

End of Year Tax Preparation

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With the year quickly coming to an end, you’ll definitely want to make sure that you have all of your tax information sorted, organized, and ready to be archived or handled appropriately. The transmission into a new year can sometimes be hectic, especially for businesses, and when you have the chance at being audited, you’ll definitely want to have confidence that you’re handling all of your tax prep and documentation correctly.

Not only that, but you’ll want to be sure that you’re dealing with your company’s tax and accounting data in a timely manner. If you don’t, paperwork can add up quickly and you can get behind before you even realize what is happening. Dealing with any company’s taxes and all of the consequent documents, information, and numerical data can be an extremely huge task. That’s why when it comes to your business’s tax dealings, you should employ the help of an experienced accounting firm, like Brennan & Company, CPA.end of year tax prep

Just a few of the services that Brennan Tax has to offer include:

  • Preparing financial statements for auditing
  • Taking over all of your company’s accounting needs
  • Providing tax representation services
  • Offering payroll services
  • A variety of consultation services

Get help preparing for the end of your year now!

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The Affordable Care Act and Tax Subsidies

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The Affordable Care Act, or Obamacare as it is sometimes called, aims to make it easier for people to buy health insurance by offering tax subsidies to bring down the cost of insurance. Under the ACA, people who do not purchase a qualifying health plan will be fined. The fines can vary each year and in 2014, you will pay a percentage of income or $95 if you did not purchase an insurance plan.

the affordable care act and tax subsidies
Because of the changes to the tax laws that occurred under the ACA, it is important to understand exactly what your tax obligations will be when you pay your taxes this year. You may wish to find out now what you can expect regarding your obligations under Obamacare, as you may need to adjust your withholding or adjust the amount you pay in quarterly estimated taxes.  An experienced tax professional can provide you with more information on the income that the Affordable Care Act is going to have on your tax filing this year. Get the information you need from the tax professionals at Brennan & Co CPA,

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Should You Have A Tax Professional Help Calculate Your Quarterly Taxes?

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If you are self-employed or you earn other income that does not come from wages at a job, you likely know that you are required to file estimated quarterly taxes four times per year. If you do not file the estimated taxes by the deadlines, then you could be assessed additional fines and fees for not paying as required.

quarterly taxes brennan and company cpaThe next estimated tax payment is coming up in September and if you have not yet sent in your payment, it is time to get started. You should consider contacting an experienced tax professional in order to calculate the amount that you will owe and to get help sending in the payment.

Hiring a tax professional to help you determine how much to send in is important because the amount you must pay can vary depending upon what your earnings are over the course of the year. For most people who earn income that necessitates filing quarterly taxes, their incomes are irregular. Even if yours is not irregular, tax rates and other tax situations can change. You don’t want to take a chance on paying an incorrect amount- act now to talk to a tax professional. Call the tax professionals at brennantax.com.

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Taxes and Summer Employment for Kids

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If you own a business and your children are off from school this summer, it may make sense to employ your kids at your business. Take advantage of summer employment tax benefits! Doing this can allow you to benefit from a tax deduction for paying your kids wages. This can be a far better way to give your kids money for their summer activities than simply giving them an allowance, since you can reduce your taxable income.

summer employment tax benefits brennan and companyWhen you are thinking about hiring your kids this summer at your business, you should talk to a tax professional at Brennan & Company CPA, PC.  The implications of this choice and questions about your obligations as an employer are both issues we can address.

Brennan & Company CPA, PC.can help you to make sure that hiring your kids over the summer is a smart choice based on your tax situation. and can help you to take care of everything you need so you act in accordance with the IRS rules.   Call us at 215.951.5585 or “like” us on FaceBook.