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
Qualifications
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.
Pitfall to Back-Door IRAs
If you are saving for retirement, many individuals favor Roth IRAs over traditional IRAs because the former allows for both accumulation and post-retirement distributions to be tax-free. In comparison, contributions to traditional IRAs may be deductible, earnings are tax-deferred and distributions are generally taxable. Anyone who is under age 70.5 and who has compensation can make a contribution to a traditional IRA (although the deduction may be limited).
File An Amended Tax Return
Did you filed your 2015 tax return and forgot to include some income or failed to claim a deduction or credit? Good news, it is not too late!
An amended return can be filed to correct an already filed tax return. Failing to report an item of income may generate an IRS inquiry, although it may take year or more after the original return was filed, but unfortunately, interest and penalties will have already built up. That’s why it’s a good idea to file an amended return as soon as possible to avoid the headache of IRS correspondence and to minimize the interest and penalties on any additional tax you might owe.
You Might Need to Adjust Your W-4
If you got money back, keep in mind that you are simply receiving your own money that was over-withheld by your employer in the first place. A better solution would be to bank the money and have access to it for the entire year instead of giving the US Government an interest-free loan.
