High tax filing season is over and the numbers have been tallied. Unfortunately for Republicans who still are fighting the public relations war over their major tax reform law, the figures aren't good. Yes, fractionally more money has been delivered to taxpayers through April 21, almost a week after the filing deadline for most U.S taxpayers. But the average refund check remains smaller than it was last year. In 2018, the average refund was $2,780. This year, it came to $2,725. In case you're not good at math in your head (I'm not) and don't have a calculator handy, that's $55 less in 2019, or 2 percent smaller. Refunds that were directly deposited so far this year into taxpayer accounts were a bit larger, with that average amount coming to $2,863. But that's still a 2.7 percent drop, or $80 less, than 2018's direct deposit refund average of $2,943. Refunds ≠ tax cuts: Before fans of the Tax Cuts and Jobs Act (TCJA) blast off their emails or Twitter comments, I know. These smaller refunds are not necessarily because those folks didn't have smaller tax bills under the new tax law. In many cases, the taxpayers unhappy with their refunds got their TCJA savings throughout the 2018 tax year. I mentioned this in my pre-Tax Day conversation on NPR's weekend edition of All Things Considered. But by now we've learned that people really, really, really like using the Bank of Uncle Sam to get a big refund check every spring. And those folks who didn't get their usual large refund made sure everyone heard about how unhappy they are. Slightly fewer returns filed: That average refund amount might go up somewhat when everyone who's yet to file finally does. Yes, most folks who are getting refunds do so early in the filing season. But this first filing under the TCJA has scrambled things. Some folks are expecting a refund, but they also are still struggling with some of the new law's applications. So they haven't yet filed. That's probably why filing overall this main tax season was down a tiny bit. Very tiny. Like just 0.2 percent fewer 1040s submitted and processed through the first three weeks of April 2019. And while the number of self-prepared and electronically filed returns by taxpayers themselves was up more than 4 percent, the number of returns e-filed by paid preparers is down by 0.7 percent. From my conversations with tax professionals, I suspect that fractional drop in filings this spring is due to filing extensions as the tax pros continue to work with their clients to make the most out of the new TCJA provisions. I'm looking at you Section 199A 20 percent small business tax deduction. Tax pros generally are able to find the legal ways to save their clients some money, so when they get these extensions into the Internal Revenue Service over the next nearly six months, we might see the refund averages bump up a bit. Adjusting for a 2020 refund: Still, the main responsibility for our taxes, either owed or refunded, falls to all us taxpayers. If you are insistent on giving the U.S. Treasury interest-free use of your tax dollars for a year, that's your choice. It's not what I or many other financial folks recommend. We tend to agree that while tax refunds are nice, savings received year-round are better payoff. But you do tax refund you. That means if you want a big, fat tax refund next spring, you need to adjust your withholding now. It's not hard. Basically, if you want more money as a refund, you'll want the IRS to take more taxes out during the rest of 2019 so it can send the money back to you next year. You make those revisions by giving your payroll office a new Form W-4. It has a has a worksheet to help you arrive at the correct number of allowances or the number you want in order to get a refund next year. The easier move, however, is to use the IRS' online withholding calculator. Controlling your tax cash: Again, I'd rather have that tax cash on a weekly or whatever pay-period basis to pay down high-interest credit card bills or stick into an emergency account paying at least a minuscule percentage of interest. I also get it if you're afraid you'll just spend any extra withholding adjusted pay. I know people — OK, they're some not-so-fiscally-inclined members of my family — who are not good at saving money. If you're like them, just set up a savings account at your local credit union (they tend to be more consumer friendly than traditional banks) and have the money that previously went to the feds directly sent to there. That way, the money that used to overpay taxes stays out of sight and hopefully out of your frivolous spending mind. Even better, the account will be easily accessible if you ever truly need the money. Remember, in addition to not paying any interest at all on overwithholding, the IRS isn't going to send you a couple hundred from your excessive withholding before tax season even if you need the money for a good reason, like a car repair or your kid's dental work. But, hey. I'm not you. And you've got to do what works for you when it comes to your pay, withholding from it and taxes. If that's overwithholding so you'll get a bigger refund next year, so be it. Adjust your withholding to make that happen. You also might find these items of interest:
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Social Security might be in trouble, but as long as it's around in some form, Uncle Sam will keep collecting taxes related to it. That includes not only the payroll taxes from workers that go toward funding the federal retirement benefits, but also in some cases on the benefits themselves. Stop me if you've heard this before. Social Security is running out of money. That's the latest word from the trustees of the Social Security system. It's the same sad news as they gave of last year. But the 2019 annual report issued this week does have a glimmer of better news. Instead of facing insolvency in 2034, the date has been pushed back a year. It will now be 2035 when, according to the report, that the trust fund for Social Security will be depleted. As of the end of March, more than 68.3 million people were receiving Social Security, Supplemental Security Income or both. The average benefit was $1,347.06. The companion federal medical program Medicare isn't in very good shape, either. Combined, Social Security and Medicare accounted for about 45 percent of the federal budget in fiscal 2018. "Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing," according to the programs' trustees, who urge Congress to take action sooner rather than later so that incremental changes can be phased in to prevent a dramatic disruption. Without those changes, trustees say Social Security recipients will get only about three-quarters of currently scheduled benefits when 2035 arrives. How worried should we be? All of us are getting older. And most of us have paid into the government programs to help us out with retirement and medical costs when we enter our 60s. If you're nearing the age you can take Social Security early, the latest report might be prompting you to consider that. But before you make the call to the Social Security Administration, take a breath. Skeptics assure us that we shouldn't be too worried. The trust fund, they say, is an accounting gimmick. Instead, the tax money we thought was dedicated to Social Security has been diverted to Uncle Sam's general revenue account, with a federal IOU issued to the fund. Retirement promissory notes will continue, these folks say, or the money will simply come out of the general funding account if needed. Those who are slightly less cynical note that these annual predictions have been around since, well, the system started, or at least since 1983 when lawmakers made the last changes to the Social Security system. Congress will act, they say, although probably not until the last minute, to make necessary changes to keep the Social Security system running, which along with Medicare relies on tax revenue and interest from their respective trust funds. Once reason for such confidence that changes will be made is that older Americans are the most reliable voters. That means politicians can't afford to let a let a key component of most elderly individuals' portfolios go bust. Taxes will continue to be collected: As we await whatever tweaks might be in the offing, we'll keep seeing FICA (Federal Insurance Contributions Act) annotations on our pay stub and self-employment payments of entrepreneurs going toward these programs. But that's not the only Social Security-related tax. When you start collecting your benefits at whatever level is being paid then, you'll likely be paying tax on that, too. Yep, the no good financial deed goes unpunished rule comes into play here. You pay into Social Security while you're working. Then if you've done what advisers say and stashed cash to supplement your Social Security, you pay again when you collect. The tax cost of retirement saving: Generally, if Social Security is all that you're living on, then you don't have to worry about filing a return. Of course, if you're relying solely on Social Security to get you through your Golden Years, you have other worries, but that's a post for another day. If, however, you supplement your Social Security with other income, either earned by a job or via your investments, you might owe taxes on some of the benefits. Basically, the greater your total amount of benefits and other income, the greater the taxable part of your benefits, which could be on 50 percent and as much as 85 percent of your Social Security money. The current general rule is that single taxpayers face federal taxes on some of their Social Security benefits if their combined income is more than $25,000. Married couples who file joint returns will pay the taxes when their combined income is more than $32,000. Here's a bit closer look at how it works. Figuring how much to tax: To determine if you owe tax and if so, how much, you start with the Form SSA-1099, Social Security Benefit Statement, you got in January. It shows the amount of benefits you received (box 5) in the previous year.
This sum is your combined income for Social Security taxation purposes. If your combined income is more than the base amount determined by your filing status and noted earlier in this post, then you're going to owe some tax on your benefits. Base income, taxable percentages: You use the benefits statement when you complete your federal income tax return to find out if your benefits are subject to tax. If you file as an individual — this includes the single, head of household and qualifying widow(er) URL filing statuses — and your combined income is between $25,000 and $34,000, you may have to pay taxes on up to 50 percent of your Social Security benefits. Up to 85 percent of an individual's benefits are taxable when combined income is more than $34,000. Married couple who file a joint return may have to pay taxes on 50 percent of benefits if spouses have a combined income that is between $32,000 and $44,000. Joint filers with income of more than $44,000 will see up to 85 percent of your Social Security benefits to be subject to income tax. And if you're married but you and your spouse file separate 1040s, you probably will pay taxes on your benefits. Married filing separately filers who did not live with their spouses at any time during the tax year have the same base amount as individual filers. If, however, spouses lived together at any time during the tax year but just didn't want to file together, the base amount is zilch. That's right, zero dollars. Final calculations, possible withholding: You figure your taxable Social Security amount using your tax software or the worksheet on page 33 of the Form 1040 instruction book. The Internal Revenue Service also has an online interactive tool to help folks figure out if their federal retirement benefits are taxable and if so, just how much. If you think you discover you will owe taxes on your federal retirement benefits when you file your return, you can reduce that potential lump sum bill by having taxes withheld from your monthly Social Security payments. You can choose to have 7 percent, 10 percent, 12 percent or 22 percent of your total benefit payment withheld. Just complete Form W-4V, Voluntary Withholding Request, and file it with the Social Security Administration. Save anyway: I know. Getting taxes on Social Security is not something any of us wants. But it is what it is. Given that option or living on Social Security alone, I'll grudgingly pay the taxes. Not to be preachy, but that should be your attitude, too. So keep saving. And maybe stash a bit extra so that you can cover your added tax on your future Social Security benefits. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/taxes-on-social-security-system-running-out-of-money.html Happy Earth Day 2019
With this year's celebration falling on a weekday, many folks are looking for ways to incorporate their pro-Mother Earth efforts into their daily lives. Well, nothing is as incorporated into our day-to-day existences as our taxes. So on Earth Day 2019 and every day this year, here are 4 tax-saving environmental options. 1. Electric vehicle credits: Millions of folks drove to their offices this morning. In most cases, their vehicles are powered by fossil fuel. But there is a growing trend toward electric vehicles. And Uncle Sam can help you buy one of these autos. A federal tax credit of up to $7,500 is available for some electric vehicles, or EVs as they're referred to in official transportation and tax material. Similar to the tax break provided for hybrid autos back when they were the enviro-friendly rage, the electric vehicle credit starts phasing out once the manufacturer sells 200,000 of the plug-in vehicles. That means you'll get a small tax credit if you want one the most popular EVs. That's the case for Elon Musk's Tesla makes, as well as EVs manufactured by General Motors. A Tesla or GM EV buyer now will get a federal tax credit of just $3,750. Remember, though, that this is a tax credit, which means you get a dollar-for-dollar reduction of any tax you owe. Tesla led sales, so its credit reduction kicked in sooner, meaning the halved credit amount is available through June 30. GM's $3,750 credit runs through Sept. 30. After those dates, the credit amounts will be cut in half again, eventually phasing out altogether. In addition to my earlier blog post on the reduced EV tax credit amounts, you can find more about the electric vehicle credit at the Department of Energy and Internal Revenue Service websites. 2. Home is where the energy savings are: Unfortunately, the tax break for some relatively easy home improvements to make your residence more energy efficient have expired. But the Residential Energy Efficient Property Credit is available 2021. This credit, again the best type of tax break out there, is worth a 30 percent tax credit of the cost of solar-powered systems, such as sun driven water heaters and photovoltaic panels that produce a house's electricity. That maximum credit is available for qualifying energy systems installed in 2019. It's reduced a bit in 2020 and 2021. EnergyStar.gov has details on the tax benefits of installing these environmentally friendly systems. 3. Giving instead of taking from Mother Nature: The adage about it being better to give that to receive also applies environmentally. And in these cases, if you itemize instead of taking the standard deduction, you could get some of your charitable gift back as a tax break. Donations to IRS-approved nonprofits are still allowed under the Tax Cuts and Jobs Act. Your philanthropic gifts to 501(c)(3) approved environmental organizations count here. If you don't have a favorite, just Google "environmental nonprofits" and get ready to be overwhelmed by how many green causes are out there. You also can search the green giving groups listed in GuideStar and Charity Navigator for more charitable choices of the green variety. If you have the name of a group and want to make sure it's IRS-approved since that's one of the tax deduction rules you must follow, use the agency's online Tax Exempt Organization Search tool. 4. Check out more local tax benefits: Finally, take to heart the "think globally, act locally" advice when it comes not only to energy saving situations, but also tax breaks. There are myriad tax credits, rebates and other government-subsidized energy-related savings at state and local levels. You can find many of them in the directory at DSIRE, the acronym for Database of State Incentives for Renewables & Efficiency. The site, according to its "About" Web page, is the most comprehensive source of information on incentives and policies that support renewable energy and energy efficiency in the United States. It's been around since 1995, is operated by the North Carolina Clean Energy Technology Center at North Carolina State University and is funded by the U.S. Department of Energy (DoE). Speaking of DoE, there's the department's Energy.gov project. At that website, you can search, either nationally or by state, for programs that promote energy efficiency and offer rebates, savings and/or tax credits. I hope you have enough energy left after celebrating this Earth Day to check out these environmentally conscious tax benefits. You deserve any and all you qualify for as a small reward for working to keep Mother Earth healthy. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/4-tax-saving-ways-to-celebrate-earth-day.html The Internal Revenue Service made it relatively unscathed through the 2019 main tax filing season. That's pretty amazing when you consider the agency:
The IRS didn't have much control over those first three issues, but now is looking to take charge when it comes to its aging technology. IRS unveils upgrade plan: Uncle Sam's tax collector has developed a six-year strategy to modernize IRS Information technology (IT) systems and build the infrastructure the agency needs to move forward in our ever-changing digital world. For us taxpayers, the IRS says that once the plan is fully implemented, we will see more web tools, online applications, advanced analytics and enhanced cybersecurity. That would mean advances beyond the current online taxpayer accounts and, hopefully, no more outages like the one that happened just before the 2018 Tax Day deadline. "Modernized systems are the key component to delivering quality service to taxpayers, providing efficient and robust enforcement activities and keeping taxpayer data secure," said IRS Commissioner Chuck Rettig in a statement announcing the plan. Benefits for filers and IRS: The upgrade IT infrastructure would expand taxpayer access to information and offer live online customer support. That then should free up taxpayer assistance phone lines for those who need specific IRS attention. Technological improvements also would also help the IRS implement new tax provisions. That's a constant need since Congress, although rarely making major tax law changes, does like to continually tinker with the Internal Revenue Code. Even small changes mean that the IRS must integrate them throughout its system. "Our modernization plan includes multiple milestones and levels of accountability to ensure it is implemented efficiently and effectively," Rettig added. "The integrity of our nation's tax system depends on modernizing IRS operations and the supporting technical pieces. We look forward to working with Congress to implement this plan." Show the IRS the money: Ah, yes. Working with Congress. That's a given because all these improvements need money and the Representatives and Senators control the purse strings. How much is the IRS seeking? Lots. The tax agency estimates it will take $2.3 billion to $2.7 billion to install the IT modernization initiatives, officially titled the IRS Integrated Modernization Business Plan, in two three-year phases. That's not an easy ask in these days of ballooning deficits and residual political antipathy toward the IRS. But since the IRS put it out there, the top of its computer systems upgrade estimate is this week's By the Numbers figure. Now it's up to Capitol Hill. Upgrade timing: The IRS wants to start the technology improvements this fiscal year, which runs through Sept. 30. The good news, says the IRS, is that some components of the plan are in place for FY 2019 and the administration’s budget proposal for Fiscal Year 2020 includes $290 million in funding for the plan. But about the rest of the money to finish the job by FY 2024 … The IRS notes that "the speed at which new capabilities can be delivered will depend, in part, on the agency’s annual funding levels. The IRS will provide regular reporting to Congress and oversight organizations. The IRS will also work with partners in the tax community as the we implement and update the plan." What say you, House and Senate members? Can we please haz a technologically up-to-date IRS? You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/irs-technology-upgrade-will-require-up-to-2-point-7-billion.html Happy 420 Day, when marijuana smokers commemorate cannabis. It's not surprising that the origins of this unofficial holiday to celebrate weed are fuzzy. Some say it's based on the California police or penal code number 420 that designates marijuana smoking. Not true. Another theory is that there are 420 active chemicals in marijuana. That count must have been made after a few tokes over the line. There are more than 500 active ingredients in marijuana, with only about 70 or so being cannabinoids unique to the plant. A more likely explanation is that a group of San Rafael, California, teenage potheads, who dubbed themselves The Waldos, got together after classes in the early 1970s at 4:20 p.m. to inhale in front of a statue of scientist Louis Pasteur. Pot parties around the country: Whatever the basis for the day, by 1990 the pro-marijuana magazine High Times was using the term 420 and eventually bought the website 420.com. Now April 20 is acknowledged as National 420 Day. Marijuana Day. Weed Day. Pot Day. Regardless of what you call today, tens of thousands of Americans around the country are celebrating, either legally or not, wacky tobaccy. "Reefer Madness" was a 1936 U.S. government film made to warn of the evils of marijuana. Now the movie is part of a 420 Day celebration in Carpinteria, California.
And as pot legalization spreads, the 420 festivals will expand. Millions annually in pot tax collections: Officials in cities and states where marijuana is legal either for medical or adult recreational use, hope that means the taxes collected on the plant will increase, too. There are 34 states where marijuana use is OK with a doctor's prescription and 10 (plus Washington, D.C.) where personal pot smoking for fun is allowed. A new report from Leafly looks at some of the weed-related taxes. The cannabis information resource website says that while in the 11 jurisdictions that have legalized recreational use of pot, only seven currently tax and regulate revenue-producing pot stores. Those taxes, which typically are 10 percent to 37 percent on top of local sales taxes, go toward such government programs as school construction, drug abuse prevention programs and medical research. Leafly says Washington State is the biggest pot tax winner, collecting an estimated $319 million in 2018. California is close behind, with an estimated $300 million in 2018 pot-related tax revenue. Weed workers' wages: Mostly, though, the pro-pot group's report focuses on jobs that legal marijuana has and could produce. There are now more than 211,000 full-time jobs in the legal American cannabis industry, according to Leafly, with more than 64,000 of those positions being added last year. The report says California is predicted to add more than 10,000 cannabis jobs and Florida is looking at 9,500 weed-related workers by the end of 2019. When indirect and induced jobs are added, Leafly says the total number of full-time employees in the legal cannabis sector increases to 296,000. That means, says the report, "there are now more legal cannabis industry workers than dental hygienists in the United States." And those current and prospective weed workers will in most cases owe state and federal taxes. So on this 420 Day, the Leafly report gets this weekend's Saturday Shout Out. If you're heading to or already at a pot party today, read it later when the smoke clears. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/celebrating-marijuana-and-its-taxes-on-420-day.html Most U.S. taxpayers are breathing a sigh of relief as this week winds down. They made it through Tax Day 2019, getting their annual federal return to Uncle Sam. Millions also filed their state returns at the same time. They live in the 43 states and District of Columbia that collect some sort of personal income tax. The majority of those state tax departments follow the Internal Revenue Service's filing time frame. But not all. Five states have return due dates that are a tad later than the mid-April federal deadline. They are: Weekend rules apply: Don't freak out Aloha State taxpayers. You don't have to get your Form N-11 to the Hawaii Department of Taxation by tomorrow. But you might have to work on it over the weekend. Since Hawaii's April 20 state tax return filing deadline falls on a weekend this year, you get until the next business day. That's Monday, April 22. And a quick reminder for all y'all in the First, Hawkeye, Old Dominion and Pelican States. If you didn't already file your state returns when you submitted your federal taxes, you need to start looking at your state's tax requirements now. Your state's tax deadline will be here before you know it. File for free: The good news is that all of these states offer free online filing for their residents. Remember, though, that if you owe and pay by credit card, those payments are handled by private vendors and they collect a fee for getting your money to your state tax collector. Get state free file details at the individual state tax departments' websites. The links in the bullet list above will take you there. You also might find these items of interest:
Advertisements // from https://www.dontmesswithtaxes.com/2019/04/tax-day-still-on-the-horizon-in-5-states.html We made it! Tax Days 2019 — and yes, Days is correct, since there were two April deadlines this year — are done! OK, maybe we made it because we filed for an extension. That's OK. We got something in to the Internal Revenue Service on time. Now we can relax. But not too much. In addition to meeting that Oct. 15 due date, all of us need to be proactive with tax moves over the next few months to ensure that our 2020 bill is as small as possible when we file next year. That's what the Weekly Tax Tips, which start today, will primarily focus on for the remainder of the year. Featured weekly, kept forever: Just like the more frequent tax tips that went up during the main filing season, this weekly iteration will be highlighted at the top of the ol' blog's right column each week, with a new one appearing generally each Friday. If you miss a tax tip, no worries. The Weekly Tax Tips have their own special page. You can peruse it at your leisure since I know reading tax tips is how you want to spend your down time. As for the 10 million or so filers who got an extension to file their 2018 taxes, you can always check out the Filing Season Tax Tips that just ended with the dual arrivals of the 2019 Tax Days. They, too, have their own pages, designated by the months in which they were highlighted: January, February, March and April. Regardless of which tips you want or need, thanks for reading and hanging around in the typically slower tax time of the year. I'll do my best via tax tips and other posts to help you finish your 2018 taxes, get ready for the 2020 filing season, meet other 2019 tax year deadlines and, my main goal, keep you intelligently entertained! Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]>
from https://www.dontmesswithtaxes.com/2019/04/its-weekly-tax-tip-time.html The IRS announced they are expanding penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year. The IRS is also lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16th, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty. âWe heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year. The expanded penalty waiver will help many taxpayers who didnât have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.â â IRS Commissioner Chuck Rettig What This MeansThis is important news for taxpayers who owe(d) and have underpayments, as well as for tax preparers. It means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. What if your client already filed?If your client has already filed without asking for the penalty waiver because they did not qualify at the time, but qualifies now, you can request that waiver by filing Form 843. If they actually deposited at least 80% of the tax due and paid the penalty fee, they will receive a refund of the penalty paid. You will need to include the statement â80% Waiver of estimated tax penaltyâ on Line 7 of Form 843. Paycheck Checkups are ImportantThis is why âPaycheck Checkupsâ to review withholding for 2019 is so important to ensure the right tax is still being withheld. Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations. To help taxpayers get their withholding right in 2019, the updated Withholding Calculator is now available on IRS.gov. One thing our sister company, Peoples Tax is doing for clients, is handing out guides from the IRS on how and why to perform a Paycheck Checkup. These are given out with the clientâs copy of their tax return. This way they know how to avoid paying more tax then they need to in the future. from https://www.theincometaxschool.com/blog/irs-penalty-waiver-expanded/
Or did you? Excuses people make for not filing their taxes are right up there with rationalizations for claiming weird deductions. Both are creative exercises par excellence. And both will get you in bit trouble with the Internal Revenue Service. What won't fly: The Internal Revenue Code as we know it has been around since 1913. That means that for more than a century, Uncle Sam has heard just about every excuse for not getting a Form 1040 in on time or at all. They include: Blaming someone else: Typically, this is scapegoating of a professional hired to help file your return. In some specific instances, this might work, but generally it doesn't. The reason is that when you sign your 1040, you are swearing that you knew what was on the return and agreed to submit it. This also applies to the so-called TurboTax defense. Again, tax prep software is a tool that you, the responsible taxpayer, use to file your taxes, for which you are legally responsible. Just ask former Treasury Secretary Timothy Geithner. You can't pay what you owe: This might be true, but it's not a good enough reason for the IRS to let you off the tax filing hook. There are options, including paying what you can when you file and then setting up an installment plan to cover the balance. If your tax bill really is ginormous, you can try to settle it for a lesser amount by using the agency's offer in compromise options. Pleading confusion, ignorance, forgetfulness and/or flat-out laziness: OK, all of these might be true, too. But just like the no-money excuse, these painful tax truths aren't legitimate reasons for not getting your taxes done on time. And, no, some obscure ailment like the late-filer syndrome tried a few years ago, won't work either. Those "really?" reasons: Then there are those that are so eye-rolling bad that you almost want to applaud the audacity of the people who tried them. Some of the more imaginative ones are:
I'm sure someone at some point has even tried the old dog ate my tax return ploy. And don't even go there with frivolous anti-tax arguments, such as paying taxes is voluntary or only federal employees have to pay federal taxes or you're a sovereign citizen. Not only will these not absolve you of tax filing responsibilities, they could get you in bigger trouble. Reasonable reasons the IRS will accept: While the IRS obviously won't buy BS excuses, there are some real reason for not filing that the tax agency is sometimes inclined to accept. These include what the IRS determines is reasonable cause. Reasonable cause, as far as the tax collector is concerned, is based on all the facts and circumstances in an individual taxpayer's situation. "We will consider any reason which establishes that you used all ordinary business care and prudence to meet your Federal tax obligations but were nevertheless unable to do so," according to IRS.gov. The IRS says it will consider "any sound reason for failing to file a tax return, make a deposit or pay tax when due." Typical sound reasons, if established, include:
As noted earlier, a lack of funds in and of itself is not reasonable cause for failure to file or pay on time. However, the IRS says that the reasons for not having enough money may meet reasonable cause criteria to abate or ease a failure-to-pay penalty. Establishing reasonable cause: OK, you have a legitimate excuse for not filing on time. How do you convince the IRS? The agency says that for it to determine you had reasonable cause for not filing, it needs details from you about:
Documentation always helps: As taxpayers and readers of the ol' blog know, the IRS always likes it when you can prove your reasons for any tax action. By proof, the IRS means documentation. Most reasonable cause explanations, the agency says, require that you provide documentation to support your claim, such as:
Yeah, by now you're thinking you simply should have gotten your act together and filed a 1040 — or at least an extension — by the April due date. But if that wasn't possible for a real reason, then let the IRS know. And then get your return to the agency as quickly as you can. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/good-bad-unbelievable-reasons-for-not-filing-your-taxes.html Most U.S. taxpayers filed their annual tax returns or got extension on Monday, April 15. But what about folks who missed the Tax Day deadline? Don't panic, but don't procrastinate any longer. The IRS is serious about hearing from you each April. It imposes three main filing-related penalties, the harshest of which is for not filing. Here are four things late-filing steps you need to take ASAP. 1. File a return. You need to get something into the IRS system that will show the tax man that you realize, albeit belatedly, you have a tax responsibility and you're doing your best to meet it. Maybe you really are waiting for some tax info necessary to fill out your 1040. Fine. But fill out the return as thoroughly as you can now and amend it later. Once the IRS has your 1040 in hand, the non-filing penalty that started accruing on April 16 stops. The fastest way is to file electronically. And if you qualify for Free File — you do if your adjusted gross income, regardless of your filing status, is of $66,000 or less — use it. The IRS-tax software industry partnership is still open. 2. Pay what you can. Paying even a portion of your tax bill will reduce the amount that's subject to the non-payment penalty and interest. Again, as with filing, going electronic is your friend. It's faster than mailing a check, speeding up the penalty relief that begins when you file and pay. Check out the IRS-approved e-payment options and use the one that works best for your situation. 3. Set up a payment plan. You can set up an installment plan directly with the IRS, either by sending the agency Form 9465, Installment Agreement Request, or by using the IRS' Online Payment Agreement Application. 4. File your state returns, too. So if you didn't file your federal 1040 this week, then you probably didn't file your state return either. Each state has its own rules and penalties for late- and non-filers, but they all mean that the longer you put off that tax task, the more you'll owe your state tax collector, too. Check with your state tax department about the steps you need to take here to reduce those penalties. New England deadline today: If you live in Maine or Massachusetts , you are in the midst of meeting your Tax Day deadline today. It was pushed to April 17, thanks to back-to-back holidays in those New England states and Washington, D.C. These 13 final filing tips should help keep you from ending up in the same past-due straits as some of your fellow taxpayers in the rest of the country. Don't owe? Don't worry: If you don't owe the U.S. Treasury any taxes and didn't file your return, don't panic. Although the IRS still wants your tax paperwork, your non-filing won't cost you. Penalties are assessed based on any tax you owe. And interest charges on $0 tax due is obviously $0. Even I can do that math without a calculator! File to get your refund: But most of us don't calculate and pay our taxes, either via withholding and/or estimated taxes, down to the exact penny every year. If you do, call me and share your calculation secret. Then call the Guinness World Records people. That means if you didn't owe any taxes with your return, you're probably due a refund since few of us get our withholding and/or estimated tax payments down to the exact penny we owe every year. So if you're getting a refund, what the heck are you waiting for!?! The IRS isn't going to automatically send you your tax payment overage. You have to ask for by filing a tax return. With taxes, it truly is better late than never. You also might find these items of interest:
Advertisements // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ // <![CDATA[ (adsbygoogle = window.adsbygoogle || []).push({}); // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> // ]]> from https://www.dontmesswithtaxes.com/2019/04/missed-tax-filing-deadline-4-tax-moves-to-make-asap.html |