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.
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. 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.
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. 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
- Tax Returns
- Inheritance records
- Stock and bond basis records
- Pension Documentation
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.
- 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!
- Give, 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.
- 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!
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. 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
Tax season may seem like a long ways away, but you need to be thinking about your tax obligations over the summer. Some of the things that you do over the course of the summer months can impact your taxes, and you should consider talking to a tax professional at Brennan & Company CPA, PC.about what you should be doing now so you are ready when April comes. We can offer summer tax tips so you are not caught off guard in tax season. One thing to be aware of is that summer camp expenses may be deductible expenses. It is possible to claim expenses for summer camp if you are working. This is because the summer camp can be considered child care, and child care expenses may entitle you to a tax credit. You should also be aware that if you have a garage sale or a yard sale, you may need to declare income that you make. This depends upon what the cost of goods sold was and whether or not you make a profit. If you are one of those lucky “trash pickers” and find a valuable or rare object among the junk at a garage sale, such rare finds are referred to as a “treasure trove” and are immediately taxable to the recipient. Brennan & Company CPA, PC summer tax tips can help you to be prepared for tax season or any season. Call us at 215.951.5585 or “like” us on FaceBook .
There are many different things that you need to do in the United States in order to comply with the tax laws and avoid tax penalties imposed by the Internal Revenue Service (IRS). Failure to fulfill any of your obligations could end up costing you a lot of money as you end up paying back taxes with interest and, in some cases, you also end up paying penalties and fees. A professional tax preparation service can help you to understand the things that will trigger a penalty and can help you to ensure that you don’t get hit with unexpected expenses. For example, some of the different things that could end up resulting in you getting hit with a penalty include:
- Not purchasing insurance as required by the Patient Protection and Affordable Care Act (PPACA)
- Underestimating your income and qualifying for subsidies under the PPACA that are too large
- Failing to file and pay your taxes by the deadline
- Failing to submit quarterly estimated taxes for self-employment income