If you’re convinced the IRS is out to get you, we’re here with good news: They’re actually on your side when it comes to filing your taxes. IRS.gov has plenty of awesome tax tools to speed up and smooth out the filing process.
We’ve picked out a few of our favorite IRS tax resources, specifically for filing prep, credits and deductions, trouble paying taxes, and checking on your refund status.
Before you file
Tax Records Transcript –You have to know your prior-year AGI (for this season, your 2015 AGI) to file your taxes online, so if you don’t have a copy of last year’s tax return, you can get your AGI amount and other key information by requesting a transcript. This free printout is usually available for the current year and the past three years. Keep in mind, though, that an actual copy of a filed tax return will cost $50.
Credits and deductions
Exempt Organizations Select Check – Most non-profits will clearly identify themselves as qualified tax-deductible organizations, meaning that you can deduct the funds you donated to them. However, if you want to double check, this site allows you to confirm a charity’s official 501(c)(3) tax exempt status. Also, you can verify how much of your contribution is tax deductible.
First-Time Homebuyer Credit Account Look-up – If you qualified for and received the First-Time Homebuyer Credit (FTHBC), here’s where you can come to check the status of your FTHBC. The lookup page is online and available 24/7 for information on your repayments and account balance.
Sales Tax Deduction Calculator – If your state and local sales tax is higher than your state and local income tax, you can deduct those sales taxes on your federal return. This deduction is especially more common in states that don’t have a state income tax.
After you file
Where’s My Refund? – And here you are, all said and done, with money on the way. But just how “on the way” is it? The “Where’s My Refund?” tracker tells you the status of your refund: Processing, Awaiting Payment, or so forth. Check “Where’s My Refund?” 24 hours after you’ve e-filed your return or four weeks after you mailed in a paper return. This tool is updated once a day, so keep that in mind when checking on your refund status.
Here is a chart tax design of when you can expect your tax refund for when the return was accepted (based on e-Filing). This is an estimate based on past years trends, but based on early information, does seem accurate for about 90% of taxpayers. Also, as always, you can use the link after the calendar to get your specific refund status.
Now, when to expect my tax refund!
|Date Accepted||Direct Deposit Sent||Paper Check Mailed|
|Jan 29 – Feb 4, 2018||Feb 17, 2018||Feb 24, 2018|
|Feb 5 – Feb 11, 2018||Feb 24, 2018||Mar 3, 2018|
|Feb 12 – Feb 18, 2018||Mar 3, 2018||Mar 10, 2018|
|Feb 19 – Feb 25, 2018||Mar 10, 2018||Mar 17, 2018|
|Feb 27 – Mar 4, 2018||Mar 17, 2018||Mar 24, 2018|
|Mar 5 – Mar 11, 2018||Mar 24, 2018||Mar 31, 2018|
|Mar 12 – Mar 18, 2018||Mar 31, 2018||Apr 7, 2018|
|Mar 19 – Mar 25, 2018||Apr 7, 2018||Apr 14, 2018|
|Mar 26 – Apr 1, 2018||Apr 14, 2018||Apr 21, 2018|
|Apr 2 – Apr 8, 2018||Apr 21, 2018||April 28, 2018|
|Apr 9 – Apr 15, 2018||April 28, 2018||May 5, 2018|
|Apr 16 – Apr 22, 2018||May 5, 2018||May 12, 2018|
|Apr 23 – Apr 29, 2018||May 12, 2018||May 19, 2018|
If, for some reason, you didn’t receive your return in the time specified above, give or take a few days, you can always use the IRS’s tool called Get Refund Status.
Once you enter all your information, it will tell you what is going on with your refund. Remember, if you input the wrong SSN, it could cause an IRS Error Code 9001, and might make your return be held for Identity Verification.
Also, many people are concerned because they received a Reference Code when checking WMR. Here is a complete list of IRS Reference Codes. Just match up the code with the one in the list, and see what the problem could be. For more another information visit us at http://www.makemytaxes.com
Foreign bank accounts that peak over $10,000 in a given tax year have to be reported too. The amount isn’t taxed, but it must be reported. A Statement of Foreign Assets (8938) also needs to be filed when you own foreign assets over a certain value.Foreign banks accounts include many types of financial accounts and also accounts that you have signed authority over.
We provide an FBAR filing process when we also prepare your Federal tax return.Considering all types of foreign bank accounts including those that you may only have sigining authority over.When it comes to reporting the FATCA 8938 Statement of Foreign Assets, add up the value of all these accounts; remember to consider the highest value during the tax year.
- Foreign trusts, bank & security accounts
- Business ownership and partnerships
- Stockholdings & pensions
- Securities, mutual funds, hedge funds, life insurance
If you file as an individual, you need to file the 8938 along with your tax return if you are residing out of the United States, then you need to check if the total value of assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
Given today’s contentious legislative environment, it’s not often that Congress passes anything. So when a bill actually is on track for approval, various members of Congress often try to tack on a number of provisions. Such was the path of the new federal budget (H.R. 1892), passed by President Trump in February. Though it was intended primarily to avoid a government shutdown, buried within were a number of tax-related provisions — some temporary, others permanent — that have the potential to impact both high- and low-income households.
Consequently, as we’re now in tax season, it’s worth dissecting the provisions individually to better understand how they may or may not impact our clients.
Since 2006, the Medicare Modernization Act has required that certain high-income individuals pay an Income-Related Monthly Adjustment Amount, or IRMAA, as a surcharge on their Medicare Part B premiums. In 2018, the surcharge starts at an extra $53.50/month but can rise as high as an extra $294.60/month on Medicare Part B, and applies to those whose modified adjusted gross income exceeds $85,000 for individuals, or a MAGI above $170,000 for married couples.
The ultimate objective of these IRMAA surcharges is to increase the total percentage of Part B costs that are covered by premiums, from 25% — that is, the amount covered by the base $134/month Medicare Part B premium — to as high as 80% for those paying the full $134 + $294.60 = $428.60/month premium.
Kitces IRMAA Trump Budget
Under the new Bipartisan Budget Act of 2018 though, an additional tier of surcharges is being introduced for 2019 at a MAGI threshold of $500,000 for individuals, or $750,000 for married couples. Notably, the threshold for married couples is only 150% of the threshold for individuals, introducing a sort of marriage penalty for high-income couples on Medicare. The new tier is intended to lift the Part B premium coverage from 80% to 85% for those high-income earners.
It’s also important to note that the new IRMAA tier for 2019 stacks on top of the changes to IRMAA tiers that just took effect in 2018 as a part of the Medicare Access And CHIP Reauthorization Act of 2015, which had already reduced the top IRMAA tier — i.e., where the 80%-of-costs threshold kicks in — from $214,000 in 2017 to only $160,000 in 2018, with thresholds doubled for married couples.
Thus, in the span of two years, the depth of the top IRMAA tiers has been expanded rapidly, while the bottom three IRMAA tiers have become compressed — albeit still with an individual threshold of $85,000 for individuals, or $170,000 for married couples, which means it only applies to a limited number of households.
TAX BREAKS REINSTATED
For much of the past decade, a handful of individual tax incentives have been regularly subject to a series of short-term extensions, after which they would lapse until/unless they were reinstated and extended again. In practice, this happened so often that they literally became known as the Tax Extenders.
In the Protecting Americans from Tax Hikes (PATH) Act of 2015, a number of popular Tax Extenders became permanent, including Qualified Charitable Distributions from IRAs, the deduction for State and Local Sales Taxes — albeit now subject to the overall $10,000 SALT deduction cap from TCJA 2017 — and the American Opportunity Tax Credit that replaced the old Hope Scholarship Credit back in 2009.
However, a handful of popular individual tax breaks were not made permanent under the PATH Act, and instead were only extended temporarily for two years, through the end of 2016, and lapsed as of December 31 of that year. Accordingly, the Bipartisan Budget Act has reinstated those provisions retroactively for the 2017 tax year, including the above-the-line deduction for tuition and fees, the deductibility of mortgage insurance premiums, and the ability to exclude discharged primary residence mortgage debt from income.
The above-the-line education deduction for tuition and fees allows taxpayers to deduct up to $4,000 of tuition and enrollment fees for college for themselves or their dependents. Any expenses claimed for the Tuition and Fees deduction cannot have been paid from an already tax-favored 529 college savings plan, a Coverdell Education Savings Account or via tax-free interest from a savings bond.
The Tuition and Fees deduction is partially phased out from a $4,000 maximum down to only $2,000 for individuals with modified adjusted gross Income above $65,000, or $130,000 for married couples, and is completely phased out once income exceeds $80,000 for individuals, or $160,000 for married couples.
Notably, the Tuition and Fees deduction also cannot be claimed on behalf of any student who already claimed the American Opportunity Tax Credit, or Lifetime Learning Credit, in the same tax year. And since the American Opportunity Tax Credit is actually a dollar-for-dollar credit for the first $2,000 of expenses, and 25 cents on the dollar for the next $2,000, it is always better to claim the AOTC where available — generally, the first four years of college — especially since it has higher income phase-out limits anyway.
In practice, the reinstatement of the Tuition and Fees deduction will be primarily beneficial for:
- Students who are beyond their first four years of undergrad education or are in graduate school;
- Students/families with income above $56,000 when filing as individuals, or $112,000 for married couples, but under $80,000 and $160,000, respectively, where the Lifetime Learning Credit will be phasing out faster than the Tuition and Fees deduction;
- Families with multiple students beyond the first four years of college, where the Lifetime Learning Credit can only be claimed once per tax return — i.e., per family with multiple students. Meanwhile, the Tuition and Fees deduction can be claimed across multiple students as long as the family remains below the income phase-out threshold.
However, the reinstatement of the Tuition and Fees Deduction is only for the 2017 tax year, and has already implicitly re-expired at the end of 2017, which means it is not currently available for the 2018 tax year. In addition, because the Tuition and Fees Deduction was just reinstated retroactively for 2017 as of February 9, some tax reporting software may not yet be updated for the retroactive change for 2017 tax filings. Though fortunately on Form 1040 for 2017, it appears it can still be claimed on Line 34 where it was previously claimed, albeit on a line that is currently marked as “Reserved for Future Use.”
MORTGAGE INSURANCE PREMIUMS
Under IRC Section 163(h), mortgage interest is deductible as an itemized deduction, and since 2007 the tax law has also permitted those who pay mortgage insurance premiums — e.g., Private Mortgage Insurance on a mortgage that had a less-than-20% down payment — to deduct them as mortgage interest as well. The deduction began to phase out once Adjusted Gross Income exceeded $100,000 for individuals and married couples, and fully phased out by $110,000 of AGI.
This deduction for mortgage insurance premiums was one of the tax extenders that was repeatedly extended, lapsed, extended again and lapsed again over the span of a decade, having last been extended under the PATH Act through the end of 2016.
Kitces IRMAA Trump Budget
With the Bipartisan Budget Act of 2018, the mortgage insurance premium deduction is retroactively reinstated for 2017. This means that those who had already paid mortgage insurance premiums will simply find they can deduct them on the 2017 tax return as a part of their mortgage interest deduction on Line 13 of Schedule A, where a placeholder for the mortgage insurance premium deduction was retained.
Notably, the reinstatement for deducting mortgage insurance premiums has no relationship to the new rules limiting mortgage interest deductibility, including the elimination of deductions for home equity indebtedness, under the Tax Cuts and Jobs Act, as those rules only apply for the 2018 tax years and beyond, while the mortgage insurance premium deduction is only reinstated retroactively for 2017.
#makemytaxes #online tax service makemytaxes #makemytaxes.com
One month after the US slashed its corporate tax rate to 21 percent, 287 companies have announced wage hikes or plans to expand their investments in the US, according to Americans for Tax Reform.
Chief among those surfacing in recent days were announcements from The Home Depot, Starbucks, FedEx, and Exxon Mobil.
The Home Depot has announced plans to provide a new one-time tax reform cash bonus for US hourly associates of up to USD1,000. “This incremental investment in our associates was made possible by the new tax reform bill,” said Chairman and CEO Craig Menear in a January 25 statement. Although the company estimates additional net tax expense of approximately USD150m for the fourth quarter of fiscal 2017, primarily related to taxes on unremitted offshore earnings, it currently estimates that the net impact of tax reform on its 2018 tax provision and cash taxes paid will be beneficial.
Starbucks on January 24 announced a series of perks for employees, including a wage increase for all US hourly and salaried employees and a new employee and family sick time benefit, along with a commitment to create more than 8,000 new retail jobs and 500 manufacturing jobs in 2018. “These offerings will total more than USD250m for more than 150,000 [employees] and are accelerated by recent changes in the US tax law,” said the company on January 24.
FedEx has confirmed plans to invest an additional USD3.2bn, made up of wage increases, bonuses, increased pension fund allocations, and expanded capital investment into the US as a direct result of the Tax Cuts and Jobs Act. Specifically USD200m is to be allocated to increasing employee compensation, a voluntary contribution of USD1.5bn will be made to the FedEx pension plan, and USD1.5bn will be invested in FedEx Express’s Indianapolis hub. “FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the US,” said the company in a January 26 press release.
Most recently, Exxon Mobil on January 30 announced plans to invest more than USD2bn into terminal and transportation expansion and triple production in the Permian basin (a US shale oil field located across Texas and New Mexico) by 2025. “Recent changes in the US. Corporate tax rate create an environment for increased future capital investments,” said the company.
House Ways and Means Chairman Kevin Brady (R-TX) commented last week that economic growth figures for the fourth quarter also look promising, with the tax reforms expected to provide a boost to the economy over the coming year.
“With a new tax code built for growth, I’m confident our economy will continue to improve,” he said in a January 26 statement. “2018 is already off to a promising start. Every day, American businesses big and small are announcing plans to hire more workers, increase paychecks, and invest in our communities.”
The latest figures from the Bureau of Economic Analysis estimate that real GDP increased at an annual rate of 2.6 percent in the fourth quarter of 2017 and by 2.3 percent over the full year.
If you’re used to filing taxes, you’re probably aware that they’re due sometime around mid-April. Typically, tax returns must be submitted by April 15, but this year, you get a couple of days’ worth of leeway.
That’s because April 15 falls on a Sunday, but since the following Monday is Emancipation Day — a Washington, D.C., holiday — filers get until April 17 to get their returns over to the IRS.
That said, you can submit your tax return as early as Jan. 29 this year, and it pays to aim for that deadline, or one shortly thereafter, even if it means putting in some extra effort in the coming weeks. Here’s why.
1. You’ll get your money sooner
An estimated 80% of tax filers get a refund each year, and not a small one, either. In fact, last year, the typical refund was $2,763 — not exactly pocket change. If you have outstanding bills to pay, a vacation you’re looking to fund, or just a general desire to get your hands on the cash that’s rightfully yours, then filing early is the best way to do just that.
Keep in mind, however, that if you’re planning to claim the Earned Income Tax Credit or the Additional Child Tax Credit, the earliest you can expect your tax refund is late February. Why? Because of high levels of fraud associated with these credits in particular, the IRS is required to withhold associated refunds longer. Furthermore, this restriction applies to your entire refund, even the portion of it having nothing to do with these credits. But if you’re not planning to claim the Earned Income Tax Credit or the Additional Child Tax, and you file your return electronically without errors, you can typically expect to get your money back within three weeks’ time.
2. You’ll give yourself more time to address an underpayment
Though most tax filers wind up with a refund each year, you may land in that rare but notable category of workers who end up owing money on their taxes. And if that’s the case, you may be in trouble, especially if your underpayment is sizable and your savings are nonexistent. On the other hand, if you give yourself two and a half months to come up with a plan for paying your tax debt, as opposed to waiting until the last minute, you stand a better chance of avoiding the penalties that come with paying the IRS late.
Consider this: An estimated 39% of Americans have absolutely no money in the bank. If you’re one of them and realize in early April that you owe the IRS $1,000 by virtue of having underpaid your 2017 taxes, you’ll have limited resources at your disposal for coming up with that lump sum. But if you prepare your return in late January and make that discovery sooner, you’ll have the opportunity to, say, take on a second job temporarily to drum up that cash.
3. You can avoid tax fraud
Tax fraud is a major problem for filers of all ages, but believe it or not, filing your return early might actually help you avoid falling victim. What will typically happen is that a criminal will access your information, file a return in your name, and attempt to snatch your refund in the process. But if you file your return early enough, that’ll be a harder feat for someone to pull off.
See, the IRS has software that’s designed to flag duplicate returns, and so if it has one on file for you and someone else then submits a second one, it’s the fraudulent return that’ll get rejected. On the other hand, if a criminal beats you to the punch, it’ll be on you to get things sorted out, which could not only delay your refund but also constitute a major headache.
4. You want to lower your stress level
Let’s face it: The tax-filing process can be stressful to say the least, especially if your return is complicated and requires a lot of legwork (such as needing to calculate deductions or follow up on missing documentation). One final benefit of getting your return in early is having one less thing to worry about between now and mid-April. Once that return is out of your hands, you’ll be able to move forward and focus your efforts and mental energy elsewhere.
Though there are plenty of good reasons to file your taxes early this year, here’s one good reason not to: You’re missing key information that could compromise the accuracy of your return. While it’s helpful to get your taxes in ahead of schedule, if you don’t have the data needed to be precise, you’re better off waiting. Otherwise, you’ll increase your chances of getting audited, and that’s a whole other potential nightmare to contend with
Source:- Above Blog Was Published By Maurie Backman Of The Motley Fool on USA Today Website,Dated 25th Jan 2018.
As your mailbox fills up with the forms you need to file your 2017 returns, you may already be thinking ahead to how tax reform legislation will impact you in 2018. This newsletter outlines seven issues resulting from the Tax Cuts and Jobs Act to think about after the 2017 tax season. The new tax rules affecting small businesses are also explored in detail here, as well as some guidelines for virtual currencies like Bitcoin. Also included: a primer on the current world of crowdfunding, both for entertainment and for entrepreneurs who want to try it themselves.
Should you wish to review your situation please feel free to call. Also feel free to forward this newsletter to someone who may benefit from this information.
Though many taxpayers appreciate the income tax cuts in the Tax Cuts and Jobs Act (TCJA) passed late last year, others are skeptical that it will simplify their tax planning. With every simplification, there are many more tax issues that still require planning to realize extra tax benefits. Here are seven of them:
1 Planning for all the moving parts
In many ways, the TCJA gives with one hand and takes away with the other. The “giving hand” provides a lower income tax rate structure and a higher standard deduction, while the “taking hand” gets rid of personal exemptions, suspends many itemized deductions and limits deductions that remain. There are many variables that determine whether you come out ahead or behind and a tax planning session can help you figure it all out. Seven Tax Reform Areas
2 Getting creative and flexible about itemizing
Many itemized deductions remain the same, others were eliminated completely and some have new limits. For example, while charitable contributions are still a qualified deduction, there is now a $10,000 combined cap on state, local and property tax deductions. The new constraints mean considering creative solutions to maximize these deductions. One idea is to make better use of the donation of appreciated stock as part of your charitable giving.
3 Dealing with new complexity in small business ownership
Small business owners and sole proprietors will have to do a complicated calculation to see how much of the 20 percent reduction to pass-through qualified business income they can take. It depends on your profession and your expenditures on capital and wages. This calculation can get complicated very quickly.
4 Understanding the newly changed “marriage penalty”
The disadvantage for married couples within the tax code is still very much in place, but it is changing. For instance, the marriage penalty that had given unfavorable income tax rates to married joint filers when compared to single individuals goes away in the TCJA for most income levels. But it rears its head again in the $10,000 combined state, local and property tax limitation, which does not double for married joint filers. This is something you’ll have to plan around.
5 Getting credit for your kids
There are many new tax benefits for parents in the TCJA. The child tax credit doubles to $2,000 and the phaseout threshold jumps to $400,000 from $110,000 previously for joint filers, making it available to more taxpayers. Dependents ineligible for the child tax credit can qualify for a new $500 per-person family tax credit. On top of that, distributions from 529 education savings plans can now be used to pay private school tuition for K-12 students.
6 Adjusting to disappearing tax breaks
If your tax planning was built on any of the following expiring tax provisions, you’ll have to change your plan: personal exemptions; miscellaneous itemized deductions; home equity interest; alimony deductions (expiring in 2019); the additional child tax credit; theft and casualty losses; and the domestic production activity deduction (DPAD).
7 Facing the old complexities
Many areas of the tax code remain largely the same and contain both potential pitfalls and opportunities to find tax savings: Managing capital gains and tax-loss harvesting; charitable activity deductions; and a tax-advantaged retirement strategy are just a few areas where you can unlock extra value with smart planning.
The big changes to tax reform this year may be disconcerting at first, but in change there is opportunity. After the dust settles on the 2017 tax season, get ready to take a detailed look at what 2018 tax reform means for you.