Key Tax Filing Date Changes
Key Tax Filing Date Changes
2016 tax return filing deadlines are changing for some. If you have foreign bank accounts, expect to receive a Form K-1 from a partnership or LLC, or participate within a C-corporation you will need to know this information
Key Tax Filing Date Changes
There are new tax filing deadlines effective for 2016 tax returns. Here are the major changes worth noting.
Small Business Partnership and Limited Liability Corps
Small businesses that are organized as a partnership or limited liability companies filing Form 1065 must file their tax return on or before March 15, 2017. This moves the required filing date up one month versus last year.
- Who: Partnerships and LLC’s taxed on Form 1065
- New filing deadline: March 15th (old filing Date was April 15th)
Calendar year C-Corporations
- Year-end C Corporation tax filing date is a month later. The old filing date of March 15th is now moved to April 15th.
Who: Year-end C Corporations
- New filing deadline: April 15th (old filing date was March 15th)
Note: If your C Corporation is a non-calendar year filer, your deadlines may change over the next few years so please be alert to this.
Foreign bank accounts
- Foreign bank account reporting dates are changing. Annual reporting of foreign bank accounts moves from June 30 to April 15th. This is FBAR Form 114
- Who: Anyone with foreign financial accounts.
New filing deadline: April 15th (old filing date was June 30th)
Tax Savings for Non-Itemizers – Can’t itemize? There are still tax breaks for you
Tax Savings for Non-Itemizers – Can’t itemize?
There are still tax breaks for you
If you own a home you probably itemize your deductions on your tax return. But what if you are a Non-itemizer? Can someone using the standard deduction still get a tax break?
Tax Savings for Non-Itemizers
A common misconception in tax filing has been that if you use the Standard Deduction versus itemizing your deductions you have few additional benefits available to reduce your tax bill. This is often not the case.
Standard or Itemize?
Every taxpayer can take the Standard Deduction to reduce their income prior to applying exemptions. However, if your deductions are going to exceed the standard amount you may choose to itemize your deductions. The primary reason someone itemizes deductions is generally due to home ownership since mortgage interest and property taxes are deductible and are generally high enough to justify itemizing.
| Standard Deductions for 2016 Tax Year | |
| Married filing jointly | $12,600 |
| Single | $6,300 |
| Head of Household | $9,300 |
| Married Filing Separately | $6,300 |
| Elderly/Blind: Unmarried | add’l $1,550 |
| Elderly/Blind: Married | add’l $1,250 |
Common sources of itemized deductions are: mortgage interest, property taxes, charitable giving, high medical expenses, and other miscellaneous deductions.
What is Available
So what opportunities to reduce your taxable income are available if you use the Standard Deduction? Here are some of the most common:
- IRA Contributions (up to $5,500 or $6,500 if age 50 or over)
- Student Loan Interest ( up to $2,500)
- Educator Expense Deduction (up to $250)
- Alimony Paid
- Health Savings Accounts (if you qualify)
- Moving Expenses for job related moves
- Self-employed health insurance premiums
- ½ of self-employment tax
- Numerous education incentives like; Savings Bond Interest, Coverdell accounts, American Opportunity Credit and Lifetime Learning Credit
- Plus numerous credits including; Earned Income Credit, Dependent Care, Child Tax Credit, Retirement Savings, and Elderly Credit
Income limitations often apply to these tax reduction opportunities, but for those who qualify, the tax savings can be significant. This list is by no means complete. What should be remembered is to rely on a complete review of your situation prior to jumping to the conclusion that tax breaks are just for someone else. That someone else might just be you, the Standard Deduction taxpayer.
File that Tax Return! – October extension deadline fast approaching
File that Tax Return! – October extension deadline fast approaching
The Form 1040 extension filing deadline is fast approaching. If you have not already done so, please consider filing your 2015 tax return in the next few weeks.
File that Tax Return!
Monday, October 17th marks the extension deadline for filing your 2015 Form 1040 Tax return. While most taxpayers have this event in the rearview mirror, if you have not filed a tax return, you still have a few weeks to get this done. Think you do not need to file a tax return? Here is a quick checklist of cases when filing one might make sense.
- You are due a refund. Without filing, the government could end up keeping these funds.
- You wish to start your audit time clock. Remember the audit time-frame never starts if you do not file your tax return.
- You are eligible for Health Insurance Premium Credit. Be aware of this possible benefit if you use the market exchange to purchase your health care insurance.
- You have withholdings, but owe no tax.
- You are eligible for a refundable credit. This is true with the popular Earned Income Tax Credit, the Additional Child Tax Credit, and a portion of the American Opportunity Tax Credit.
- Your state requires a federally filed tax return.
- You want the filed tax return for your records.
Many taxpayers have trouble gathering accurate and complete information necessary to file their tax return. When they cannot get all the necessary information, they get stuck. Should this be your situation, please ask for help. Even a reasonably close tax filing that is later amended when more information becomes available can be a better alternative than not filing at all.
The Earned Income Tax Credit (EITC) – Are you Eligible?
The Earned Income Tax Credit (EITC) – Are you Eligible?
The Earned Income Credit (EITC) is one of the most common ways Americans reduce their tax bill. Yet per the IRS, 1 out of 5 people who could qualify for the credit do not file for it. Here are answers to some common questions.
The Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) was originally established in 1975 to give low and medium income taxpayers a break on their Social Security taxes while providing an incentive to work. Unfortunately, the EITC is often the subject of missed opportunity as the IRS estimates as many as 20% of taxpayers that qualify for the credit do not include it on their tax return. Here are some things to consider:
Q. Do I have to have children to qualify? Do I have to be married?
A. No. One of the most common errors is thinking the EITC is only for married couples with children. Both single and married taxpayers can qualify for the EITC. Even taxpayers without children may qualify for the credit if they meet certain age, income, and residency requirements. You may NOT, however, file your tax return as “married filing separate” and still receive the credit.
Q. How much can I earn and still qualify for the EITC?
A. If you earned $53,505 or less in 2016 with 3 or more children you could qualify ($47,995 if you are single.)
Q. If I did not earn income can I still get the credit?
A. No, but remember the EITC is a refundable credit. This means you may still receive a refund using the EITC even if you owe no income tax. This is a common mistake made by many taxpayers. You have earned income if you work for someone else (wages and tips), are self-employed, or have income from farming. Nontaxable combat pay for military members qualifies as does some cases of disability income.
Q. How much is the credit?
A. The maximum credit could be worth up to $6,269 to you in 2016. The amount of the credit depends on your filing status (married filing jointly, single, widow, or head of household), your income, and how many qualifying children you have.
Q. What else should I know?
A. A valid social security number is required for you, your spouse, and any qualifying children to receive the credit. It is also important to save information to show you provide support for your claimed dependent. If the IRS thinks you recklessly disregarded the rules and claimed the credit in error, they could prohibit you from receiving the credit for two more years. If the filing was deemed fraudulent, you could be barred from using the credit for 10 years!
Remember to check for your EITC every year. Just because you did not qualify in the past does not mean you can’t qualify for the credit in the future. Many other rules apply, remember to seek a professional review to evaluate your qualifications.
Alert: Review Beneficiary Designations
Alert: Review Beneficiary Designations
Checking your beneficiary designation on a regular basis can help loved ones avoid a big mess after you pass away. Here’s why.
Alert: Review Beneficiary Designations
Sometimes federal tax laws make us lax in reviewing the things that matter. Beneficiary designations is one such example. This is because there is a federal estate tax exemption of $5.45 million for you and an additional $5.45 million for your spouse. This means the likelihood of your death creating an estate tax problem is remote. Correct? Not so fast. Here are reasons an annual beneficiary review is important.
Beneficiary designation can over-ride a will. There is often the false assumption that a written will or divorce decree always over-rides beneficiary designations in other accounts. This is not true. In many cases, the document with the most recent date over-rides older designations. In other cases, even though a divorce decree removes a beneficiary in an account, if it is not also done at the account level the ex-spouse could still receive the funds.
States rules differ. Just because the federal estate exemption is high, it does not mean the state exemption is also high. Many states have lower exemption limits, making a planned beneficiary approach more important for all of us.
The will is still important. Your beneficiary designation review should also include a review of your will. You may wish to add clauses to designate alternative beneficiaries should someone die. The more specific, the more likely your heirs will be able to avoid the time necessary to go through the probate process.
What accounts to check. A review of beneficiary designations should include the following:
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Your beneficiary designation should be reviewed annually or whenever there is a change in your situation. Typically that occurs with a major life-event such as marriage, divorce, a new birth or death, retirement, or moving. But a review can be required whenever something changes, including your desire to give more (or less) to someone or to add contingencies to your current beneficiary set-up.
Reminder. 3rd Quarter Estimated Tax Payment Due
Reminder. 3rd Quarter Estimated Tax Payment Due
If you are required to send in quarterly estimated tax payments using Form 1040 ES, your third quarter installment is due now.
Reminder. 3rd Quarter Estimated Tax Payment Due
If you have not already done so, now is the time to review your tax situation and make an estimated quarterly tax payment using Form 1040-ES. The third quarter due date is now here.
Normal due date: Thursday, September 15th 2016
Remember you are required to withhold at least 90% of your current tax obligation or 100% of last year’s federal tax obligation.* A quick look at last year’s tax return and a projection of this year’s obligation can help determine if a payment might be necessary. Here are some other things to consider:
- Underpayment penalty. If you do not have proper tax withholdings during the year, you could be subject to an underpayment penalty. The penalty can occur if you do not have proper withholdings throughout the year. So a quick payment at the end of the year may not help avoid the underpayment penalty.
- W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 withholdings to make up the difference.
- Self-employed. Remember to account for the need to pay your Social Security and Medicare taxes as well. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter to pay your estimated taxes.
- Don’t forget state obligations. With the exception of a few states, you are often required to make estimated state tax payments when required to do so for your federal tax obligations. Consider conducting a review of your state obligations to ensure you meet these quarterly estimated tax payments.
* If your income is over $150,000 ($75,000 if married filing separate), you must pay 110% of last year’s tax obligation to be safe from an underpayment penalty.
Avoid Name Mismatch Audits
Avoid Name Mismatch Audits
If you recently changed your name due to marriage or divorce, do not get caught in the nightmare of a rejected or changed tax return by the IRS.
Avoid Name Mismatch Audits
Audits: If you were married, divorced, or changed your name for any reason during the past year, do not forget to file to change your name prior to preparing your 2016 tax return. The IRS automatically conducts a name match on the first few letters of your last name. If the name on your tax return does not match the name on file at the Social Security Administration for your Social Security number, here’s what could happen;
- You are unable to e-file your tax return
- The IRS automatically accepts your income as taxable, but then disallows any deductions.
- You may receive a notice from the IRS with taxes owed and underpayment penalties.
Here’s what you can do.
- Prior to filing your tax return, go to www.ssa.gov and download form SS-5. Fill the form with the name change and file it as soon as possible.
- Also notify your employer. Double check the W-2 you receive to ensure the change was made correctly. If the change is made on your W-2, you must make sure it is changed at Social Security.
- If you are planning a major financial transaction in the near future you may wish to adjust the timing of the transaction or the timing of your name change to avoid complications.
- Don’t forget to also change your name on other important documents like auto titles, drivers license, property titles, bank accounts, loan agreements, beneficiary documents and other accounts.
If you are unable to make the name change in a timely manner, use the name on file at the Social Security Administration AND with your employer when filing your taxes to avoid the automatic notification of a name mismatch.
Here is a link to the Social Security web site that walks through their name change process. Please be forewarned, this process is not as simple as it was in the past. You now need to provide proof of citizenship and submit documents that show the original and new names. Spend some time going over the name change process and plan accordingly.
When to Ask for Help – OR run the risk of a high tax bill
When to Ask for Help – OR run the risk of a high tax bill
All too often taxpayers take action that will cost them dearly when they file their tax return. With a little planning, the IRS will receive their fair share, but not a dollar more, due to ignorance of tax laws.
When to Ask for Help
“Before taking action talk to your tax adviser.”
How many times have you seen this legal disclaimer and have your eyes gloss over? Unfortunately, there are too many times when taxpayers do not follow this advice and then must pay the price with an unnecessarily high tax bill.
Here are some of the most common situations that can save you money by seeking advice before you act.
- Getting married
- Selling a home
- Donating stocks and investments
- Getting divorced
- Change in dependent status
- Approaching retirement
- Starting a business
- Managing participation in tax-advantaged retirement accounts like 401(k), 403(b), and various IRAs
- Death and birth of loved ones
- Donating high value items
- Selling stocks, bonds, mutual funds or business property (rentals)
- An audit
- Tax efficient transfer of your estate
- Selling or buying high value assets (art, collectibles, real estate, and small business assets)
- Determining Social Security benefit strategy
In advance of any of these events, or when in doubt, please ask for assistance. There are too many stories that include the words “if only he had talked to someone first.”
STOLEN! Can I Deduct it?
STOLEN! Can I Deduct it?
The theft of an item of value is a terrible experience. This experience can be made worse if you cannot deduct the theft on your tax return. Here is what everyone should know.
IMPORTANT: IRS Scam Epidemic
IMPORTANT: IRS Scam Epidemic
Too many of us are being contacted by fake IRS agents demanding past due tax payments. Vulnerable taxpayers are at risk of being taken in by these theives. Here is what you need to know.