It’s no surprise that a big tax trap for businesses is the $600 reporting threshold. Let’s say your business uses the services of an independent contractor early in the year at a cost below the $600 threshold, and you don’t bother to obtain the necessary reporting information from the contractor.
Are you a high-income taxpayer who would like to contribute to a Roth IRA but cannot because of income limitations? Well, here is a work-around that will allow you to fund a Roth IRA.
Fake IRS Mail Notices
Crooks have tried all sorts of e-mails scams, but almost everyone has figured out that the IRS does not send out notices by e-mail. So crooks have changed their tactics. Now, there are reports of taxpayers receiving by mail (or email) fake notices requiring immediate payment to a P.O. Box. The P.O. Boxes are located in cities where the IRS has service centers, but of course are not IRS P.O. Box addresses.
Time Is Running Out!
If you did not file your 2015 return by the normal April due date and requested an extension, be aware that the final due date for your return is October 17, 2016. The date is normally October 15, but that falls on a weekend this year, giving you two extra days to meet your individual tax-filing obligation. There are no additional extensions, so this is it!
Even though you have until October 17, you need to be thinking about getting the return completed in advance of the actual due date. Preparing a return takes time, and last-minute issues may need to be resolved before the return is ready to file. In addition, between 10% and 15% of all tax returns are on extension, creating a rush for this office as many people file at once.
If you are self-employed, October 17 is also the final date when you can fund your existing self-employed retirement plan or establish a new one; without completing your return, there is no way to determine how much you can (or want to) contribute to that retirement plan.
The extended deadline for K-1s from partnerships, S-corporations, or fiduciary returns to be sent out was September 15, so if you have not received that information yet, you should make inquiries.
Extended individual federal returns are subject to a penalty of 5% of the tax due for each month (or part of a month) for which the return is not filed by the October 17 due date, with a maximum penalty of 25% of the tax due. In addition, if you end up owing taxes, the IRS will charge you interest on any tax due, going all the way back to the original April due date. If do not file a required state return and do owe state taxes, the state will also charge a late filing penalty and interest.
If we are waiting for you to supply missing information to complete your return, we will need that information at least a week before the October 17 due date. Please call our office immediately if you anticipate complications related to providing the needed information so that we can determine a course of action for avoiding potential penalties.
Did you know that in addition to winning an Olympic medal, they are also compensated by the U.S. Olympic Committee with prize money: $25,000 for a gold medal, $15,000 for a silver medal and $10,000 for a bronze medal?
Billions of dollars go unclaimed every year from federal and state governments, financial institutions and companies no longer generating activity. Everything from tax refunds, savings or checking accounts, stocks, uncashed dividends or payroll checks, traveler’s checks, trust distributions, unredeemed money orders or gift certificates (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments and contents of safe deposit boxes.
Review the Provisions of Obamacare Premium Tax Credit
Serving as a subsidy for the cost of health insurance for lower-income individuals and families is one of the key provisions of Obamacare is the premium tax credit (PTC). Although the credit is determined at the end of the year based upon income, taxpayers are allowed to estimate their income and receive the credit in advance, thereby reducing their premium costs.
Special Tax Filing Issues
With modern transportation the world continues to shrink, and it is increasingly common for a U.S. citizen to marry someone from another country who is not a U.S. citizen. If this describes your marital circumstances, there are some special tax filing issues you will have to deal with. Based on your particular situation, the filing issues could be very complicated or straightforward. But in either case, someone knowledgeable with non-U.S. citizen issues should complete the preparation of your return.
If you are like so many people that tend to wait until tax-filing season to worry about your taxes, there’s a chance that you will be missing out on opportunities to reduce your tax and avoid certain penalties.
Events That Create Tax Problems & Opportunities
The following are some events that can affect your tax return and you may need to take steps now to mitigate their impact and avoid unpleasant surprises after it is too late to address them.
Information Regarding Solar Tax Credit
If you’re thinking about solar installation, keep in mind that the federal government has a 30% tax credit for the cost of a qualified solar installation (some states also have solar credits or other incentives). However, the federal credit is non-refundable and can only be used to offset your current tax liability, and any excess carries over to future years as long as the credit still applies in future years. As of now, the credit is allowed through 2021. It’s important to know that you may not get all the credit in the first year as you might have been led to believe or assumed based upon some of the TV ads for home solar power.