Now is the time to make your estimated tax payment 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.
Due date: Monday, Sept. 16, 2024 You are required to withhold at least 90 percent of your 2024 tax obligation or 100 percent of your 2023 obligation.* A quick look at last year’s tax return and a projection of this year’s obligation can help determine if a payment is necessary. Here are some other things to consider:
"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA
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IRS Online Account and Identity Protection PINs protect against identity thieves and scammers9/5/2024 IRS Identity Protection PINs, or IP PINs, are a vital tool to protect taxpayers from identity thieves. The IRS encourages taxpayers to get an IP PIN and establish their IRS Online Account. These tools help guard against fraudsters trying to steal personal and financial information.
Important things to know about an IP PIN • It's a six-digit number known only to the taxpayer and the IRS. • The program is voluntary, though it’s strongly encouraged. • In cases of proven identity theft, taxpayers will be assigned an IP PIN. • The IP PIN should be entered on the electronic tax return when prompted by the software product or on a paper return next to the signature line. • Only taxpayers who can verify their identity can get an IP PIN. • Tax professionals cannot get an IP PIN on behalf of their clients. • Each IP PIN is valid for one year. When it expires, a new one is generated for security reasons. • Some participants will receive their IP PIN in the mail. Others will have to log in to the Get an IP PIN tool to get their IP PIN. • Taxpayers already enrolled in the program can log in to the Get an IP PIN tool to see their current IP PIN. • Taxpayers with an IP PIN must use it when filing any federal tax returns during the year, including prior year tax returns or amended returns. • IP PIN users should share their number only with the IRS and their tax preparation provider. • The IRS will never call, email or text the taxpayer to request their IP PIN. How to request an IP PIN After a taxpayer verifies their identity, the Get an IP PIN tool lets people with a Social Security number or individual taxpayer identification number to request an IP PIN online. Taxpayers should review the identity verification requirements before they use the Get An IP PIN tool. Tax professionals should advise clients affected by identity theft to request an IP PIN. Even if a thief has already filed a fraudulent tax return, an IP PIN could prevent the taxpayer from being a repeat victim of tax-related identity theft. Taxpayers who can't validate their identity online can still get an IP PIN Taxpayers who can't validate their identity online and whose income is below a certain threshold can file Form 15227 (EN-SP), Application for an Identity Protection Personal Identification Number. The 2024 threshold is $79,000 for individuals or $158,000 for married couples filing joint returns. Taxpayers who can't validate their identity online or by phone, those who are ineligible to file a Form 15227 or those who are having or technical difficulties can make an appointment at a Taxpayer Assistance Center. More information • IP PIN Opt-In Program for Taxpayers (English/Spanish Version), Publication 5367 (en-sp) • Safeguarding Taxpayer Data, Publication 4557 • Data Security Resource Guide for Tax Professionals, Publication 5293 • Identity Theft Central  Now is the tax planning season. Those that treat tax filing as an event and not a process often are the ones paying more than they need. So how do you go about moving from the event to planning? By looking at triggers that should stimulate a discussion. Here are some of the more common:
1. You owed tax last year. Having a surprising tax bill is never fun. So if you owed taxes last year, project your current year obligation with a little planning if you have not already done so. 2. Your household income is over $150,000 single and $200,000 joint. As your income grows, so does your tax bill. This occurs because tax rates increase, and tax benefits phase out. This includes things like; lower child tax credit amounts, increases in capital gains tax rates, higher income tax rates, medicare surtaxes plus more. 3. You are getting married or divorced. The tax penalty for being married is higher than ever. Are you prepared? And if going through a divorce, not all assets are treated the same in the eyes of the IRS. 4. You have kids attending college in the next few years. There are a number of tax programs that can help, you may wish to review your options and their impact on your tax return. 5. You have a small business. There are depreciation benefits, qualified business deductions, and numerous small business tax credits to consider. A review is especially important if you have a business that is a flow through entity like Sub Chapter S, partnership or sole proprietor as these entities are taxed on your personal tax return.. 6. You plan on selling investments. Capital Gains tax rates can now range from 0% to 37% (or even higher with the Net Investment Tax). 7. There are changes in your employer provided benefits. These changes could impact your taxable income this year. It is especially important if you are provided with high deductible insurance options. 8. You buy a home, sell one, or go through home foreclosure. There are great tax benefits within your home, but only if you know about them and plan accordingly. 9. You have major medical expenses. It is harder than ever to itemize deductions, but one way it's possible to itemize is if you have a major medical expense. When this happens it is time to review ALL itemized deductions to minimize your taxes. 10. You recently lost or changed jobs. Understanding the tax impact of unemployment benefits is crucial. 11. You have not conducted a tax withholding review. To avoid under withholding penalties, you need to ensure your withholdings are sufficient. 12. Your estate has not been reviewed in the past 12 months. Recently passed estate laws and potential changes in these rules make an annual review a must. If any of these triggers apply to you, please schedule a tax planning appointment. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA A great tip to stay out of the audit spotlight.  One of the best audit tips available can be summed up in one simple word – Match.
Spend a minute or two pretending you work for the IRS. What would you do to identify tax returns worth auditing? If you suggest matching information on filed tax returns with the information provided about that taxpayer from other sources, you would be right on the mark. The IRS runs an automated matching program that kicks out mismatches and helps identify audit targets without much effort on their part. Knowing this: Double check name matches. If you are recently married or divorced, ensure your filed tax return matches the name on file with the Social Security Administration. This may mean filing a tax return with an outdated name until the name change can be processed. Create a master list of tax forms given to you. Who is sending information about you to the IRS? The most common sources are your employer, your bank, your investment bank, your health insurance company, and your retirement accounts. Make a list of these sources and ensure your tax return matches the information they are providing. Correct before filing. Try not to file tax returns with incorrectly reported information on your W-2s or 1099s. Contact the provider of the form as soon as possible and try to have the form corrected and resubmitted to the government. Match incorrect, then correct. If you have incorrect information on forms already sent to the government, first enter the incorrect information on your tax return. This is for the benefit of the IRS matching program. Then correct the information. Include comments explaining why the original form is in error. Save the documentation that supports your position. With this approach, you will be filing a correct tax return without triggering the government's matching program. If you receive a notice from the IRS that something does not match what was submitted by you, consider requesting a copy of the information reported to them to determine where the mismatch occurred "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA The Internal Revenue Service is continuing to expand the features within Business Tax Account (BTA), an online self-service tool for business taxpayers that now allows them to view and make balance-due payments.
Launched last fall, BTA is a key part of the agency’s service improvement initiative funded under the Inflation Reduction Act (IRA). When fully developed, BTA will allow many types of business taxpayers to check their tax history, make payments, view notices, authorize powers of attorney and conduct other business with the IRS. With the latest expansion, an eligible business taxpayer can now use BTA to pay Federal Tax Deposits (FTDs) and see and make a payment on their full balance due – all in one place. The account is also now accessible in Spanish with more translations planned. BTA is a key part of the agency’s ongoing work to transform and modernize service at the IRS by offering a seamless and convenient digital experience. It’s also an important part of a wide-ranging initiative to reduce paper-based processes that hamper the IRS and frustrate taxpayers. Who can use BTA now? Business taxpayers who can activate and use their IRS business tax account include: A sole proprietor who has an Employer Identification Number (EIN) issued by the IRS. An individual partner or individual shareholder with both: A Social Security number or an individual tax ID number (ITIN). A Schedule K-1 on file (for partners, from 2012-2023; for shareholders, from 2006-2023). Currently, a limited liability company that reports business income on a Schedule C can’t access Business Tax Account. Future access will be available for these businesses, as well as other entities including tax-exempt organizations, government agencies, partnerships, C corporations and S corporations. What can business taxpayers do now? Within BTA, business taxpayers can now: View and make a payment toward a balance due by using a bank account. This includes a payment on a return filed for the current year as well as late payments for past tax years and Federal Tax Deposits. Schedule a payment for any business day for up to a year and cancel a scheduled payment. View recently processed payments, including payments made through the Electronic Federal Tax Payment System (EFTPS) online, wire transfers, checks or money orders, and see if any payments were returned or refused. Store multiple bank accounts in their online “wallet” to manage tax payments. Request a tax compliance check. View the business name and address on file. Give account access to employees of the business. Register for clean energy credits (if eligible). View and download transcripts for various payroll, income and excise tax returns. Sole proprietors can now download business entity transcripts from their BTA account. The transcript shows entity information like business name, mailing address, location address and more for the Employer Identification Number on file. View and download select digital notices including: CP080: Reminder - We Have Not Received Your Return, Credits May be on Your Account. CP136: Annual Notification of Federal Tax Deposit (FTD) Requirements (Forms: 941, 941-SS). CP216F: Application for Extension of Time to File an Employee Plan Return – Approved. What new features will be added to BTA in the future? Future capabilities made available through funding from the IRA will enable access by all business and organizational entities and help the business tax account become a robust online self-service tool. To set up a new business tax account, or for more information visit Business Tax Account. Can't itemize? There are still tax breaks for you. 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. Common sources of itemized deductions are: mortgage interest, property taxes, charitable giving, and high medical expenses. What is Available So what opportunities are available to reduce your taxable income if you use the standard deduction? Here are some of the most common:
"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA Covering the bases on basis Basis is a common IRS term, but probably does not enter into your everyday conversation. This IRS term is important because it impacts the taxes you pay when you sell, exchange or give away property.
What basis is The IRS describes basis as: The amount of your capital investment in a property for tax purposes. Use your basis to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale, exchange or other disposition of the property. In plain language, basis is the cost of your property as defined by the tax code. There are a few different types of basis that apply to different situations, including cost basis, adjusted basis, and basis other than cost. Types of basis Cost basis. Your basis usually starts with what the item cost. Cost basis also includes sales tax paid, freight, installation, testing, legal fees, and other fees to purchase the property. If you acquire a business you must often allocate the purchase price to each of the assets to establish their basis. Tip: Retain records of any major transaction. Ensure the documentation includes all allowable costs that could be applied to your basis. This will help reduce taxes when you sell or dispose of the property. Adjusted basis. When you sell, exchange or dispose of property, such as your home, you may have to adjust its basis to account for changes to the property since you acquired it. This is known as its adjusted basis. A common example of adjusted basis is when you add the costs of capital improvements to property that have a useful life for more than one year. Adjusted basis can decrease the value of property as well. This is the case when property is affected by things such as casualty or theft losses, depreciation and other deductions. Home tax tip: Adjusted basis applies to many home improvements. These could include a full roof replacement, adding a room to your home, or even special assessments for local improvements. Create a folder and retain all documentation that could add to your home’s basis. It may lower your capital gain when you sell your home. Basis other than cost. What is the basis when you inherit property, receive property for services or receive property as a gift? In most cases, the basis is the fair market value of the item. This is the price a willing buyer would pay for the item and a willing seller would be willing to receive for that item. But there are also special basis rules for:
Should any of these situations apply to you, please ask for a review of your circumstances, as establishing basis can become fairly complex. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA It's never too early to understand how it works Determining the best time and best way to take Social Security benefits can make a big difference in the amount you receive over the balance of your lifetime. What is prudent, is understanding how it works and, if appropriate, running calculations prior to making your benefit decision. Here are some things to consider.
Full retirement age is quickly becoming 67. Your full Social Security retirement benefit can be claimed when you reach your target retirement age. This is age 66 for those born between 1943 and 1954. Those born after 1954 have their full retirement age increase by two months per year until full retirement age becomes 67 years old for those born in 1960 or later. Taking it as early as 62. You may begin taking your Social Security benefit as early as age 62. But if you do so, your full retirement benefit amount will be reduced for each month you are short of your full retirement age. The Social Security Administration estimates up to a 30% reduction in your benefits if you choose to take benefits when you reach age 62. Delaying the benefit up to age 70. After your full retirement target age, for each year you delay the start of receiving your Social Security retirement benefits (up to age 70), the benefit amount increases by approximately 8%. Receiving survivor benefits. If a spouse dies, the surviving spouse is eligible to receive a Social Security Survivors benefit. The survivor benefit can be collected by as early as age 60. However, the benefit received is reduced for each month the survivor is short of their own full retirement age. You may not receive both a Survivor Benefit and your own Social Security retirement benefit, but you can switch from Survivor's Benefits to your own retirement benefits and vice versa. Taxability of benefits. Up to 85% of Social Security Benefits can be taxable. This can happen when you still work or are taking taxable funds out of retirement accounts. Life expectancy comes into the calculation. Once you start your Social Security benefits, you will receive them until you pass away. Receiving benefits at an earlier date means receiving more payments over your lifetime, but at a lower benefit amount. Delaying the start means fewer, but higher, payments during your lifetime. Benefit reduction risk. In addition to having your benefits subject to tax, you can also have your benefits reduced. This may occur when you are not at your full retirement age and you are also receiving wages or business income subject to Social Security tax. Spousal benefits. Another variable to consider is the availability of receiving spousal benefits instead of receiving your own Social Security retirement benefit. So what is your best bet? The best tip for all of us is to know how it works long before retirement and develop a plan before you begin receiving Social Security benefits. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA The importance of personally identifiable information Personally Identifiable Information, or (PII), is in the spotlight at the IRS, the Federal Trade Commission (FTC) and the Department of Labor (DOL), plus other federal agencies. Moving beyond the buzz and into understanding what it means for you relates directly to protecting your personal information from would-be thieves.
The Concept PII is information that identifies you or relates specifically to you. This includes the obvious: name, address, phone number, and Social Security number. It also includes information that identifies your financial data, such as credit card information, emails, account numbers, user IDs, and passwords. The point is that federal agencies are now focusing on identifying who legitimately has your PII and requiring that they have an active plan to protect it from hackers and thieves. In fact, anyone who has PII or other financial information must now have a Written Information Security Plan to outline how they plan to protect this information. What you need to know Your tax information is key PII. As you can imagine, your tax information is loaded with data that's a target for thieves. So be aware of how you store this information. Also let vendors know you don't want your Social Security number exposed on any mailed forms like W-2s and 1099s. Know who has your PII. Be aware who has your personal data and be deliberate about deciding who really needs it. Close unused accounts and ask them to delete their records as soon as possible. Remember, this is not just your bank or tax professional. It includes any vender that stores your credit card number for future transactions or anyone you autopay with a link to your bank account. Be watchful. As part of the federal requirements, any suspected security breach incident is to be reported to you on a timely basis. But despite these requirements, this does not always happen. So be diligent, and take advantage of the free annual credit report from each of the major credit reporting agencies to double check for any suspicious activity. Your information is secure. As your tax professional, we protect your personal information and take this task seriously. While no one can guarantee something bad won’t happen (just look at recent cases of data theft at United Health Care and AT&T), it is our obligation to identify personally identifiable information, have a plan to protect it, and be constantly vigilant. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA |
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Monarch Accounting Group Inc 145 Tower Drive, Suite 10 Burr Ridge, IL 60527-7836 Email: [email protected] |
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