It’s tax season , we decided to make it a little easier and less stress free for you by meeting with our dear client and our insurance agent, Yana Tymoshenko at YT Insurance Agency, to discuss some deductions you can take on your taxes!
Please visit our website (www.monarchaccountinggroup.com) for more information and make sure to schedule your FREE tax review meeting with us
"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.
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For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.
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Burr Ridge, IL 60527
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The IRS offers several payment options where taxpayers can pay immediately or arrange to pay in installments. Taxpayers can pay online, by phone, or with their mobile device and the IRS2Go app. Taxpayers should pay in full whenever possible to avoid interest and penalty charges.
Here are some electronic payment options for taxpayers:
Anyone wishing to use a mobile device should remember they can access the IRS2Go app to pay with either Direct Pay or by debit or credit card. IRS2Go is the official mobile app of the IRS and is available for download from Google Play, the Apple App Store or the Amazon App Store.
Taxpayers can also visit IRS.gov/account and log in to their account. From here, they can view their taxes owed, payment history, federal tax records, and key information from their most recent tax return as originally filed.
It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely. This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.
Here are ten tips for taxpayers to remember when selecting a preparer:
The best way for taxpayers to check the status of their refund is to use the Where's My Refund? tool on IRS.gov. This tool gives taxpayers access to their tax return and refund status anytime. All they need is internet access and three pieces of information:
Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. Where’s My Refund? includes a tracker that displays progress through three stages: the IRS receives the tax return, then approves the refund, and sends the refund.
Where’s My Refund? Updates once a day, so taxpayers don’t need to check more often.
Taxpayers on the go can track their return and refund status on their mobile devices using the free IRS2Go app. Those who file an amended return should check out the Where’s My Amended Return? tool.
Generally, the IRS issues most refunds in less than 21 days, but some may take longer. IRS phone and walk-in representatives can research the status of refunds only if it's been 21 days or more since a taxpayer filed electronically, or more than six weeks since they mailed a paper return. Taxpayers can also contact the IRS if Where's My Refund? directs them to do so.
The December 2017 Tax reform legislation affects almost every taxpayer. The IRS is working closely with partners in the tax return preparation and tax software industries to prepare for tax reform affecting tax year 2018. This ongoing collaboration ensures that taxpayers can continue to rely on the IRS, tax professionals and tax software programs when it’s time to file their returns.
As people prepare to file their 2018 tax returns this year, they can visit IRS.gov for answers to their questions about tax reform. Here are several of the resources that will help taxpayers find out how this law affects them:
Tax reform provisions that affect individuals
This is the main tax reform page with information for individual taxpayers. It includes dozens of links to more information on topics from withholding and tax credits to deductions and savings plans.
Tax reform basics for individuals and families
This publication provides information to help individual taxpayers understand the Tax Cuts and Jobs Act and how to comply with federal tax return filing requirements.
Tax reform resources
On this page, taxpayers can find helpful products including news releases, tax reform tax tips, revenue procedures, fact sheets, FAQs and drop-in articles.
Steps to take now to get a jump on next year’s taxes
This page has dozens of resources and tools that people can visit now or any time before they file their 2018 tax returns.
This page has information for people doing a Paycheck Checkup to see if they’re withholding the right amount of tax from their paychecks. Taxpayers can perform a Paycheck Checkup at the beginning of 2019 to make sure their withholding is correct for the rest of the year.
IRS Withholding Calculator
One way taxpayers can do a Paycheck Checkup is to use the Withholding Calculator. Checking withholding can help taxpayers protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time.
The Taxpayer Advocate Service’s Tax Reform Changes website, available in English and Spanish, explains what is changing and what is not this year for individuals. Its interactive information can be reviewed by tax topic or line by line using a Form 1040 example and is updated to show the new 2018 Form 1040 references.
The main tax reform webpage on IRS.gov features information for individuals, but also takes users directly to info for people who are self-employed. It is also a great resource for anyone who does taxes or accounting for a business or charity.
February 4, 2019Consider This When Choosing to File Jointly or SeparatelyIf you're married, it's better to file a joint tax return, rather than separately ... right? That's usually true, but not always. It depends on your situation.
Deductions may play a role in your return status
Generally, the tax rate structure encourages couples to file joint returns. Nevertheless, you may be better off filing separately if one spouse has a disproportionate amount of expenses subject to a deduction "floor."
For example, say your annual adjusted gross income (AGI) is $150,000, while your spouse is a part-timer with an AGI of $20,000 a year. In 2018, you had unreimbursed medical expenses of $1,000, but your spouse incurred $9,000. Under recent legislation, the floor for deducting medical expenses in 2018 is 7.5 percent of AGI. (It reverted to 10 percent of AGI in 2019.)
If you file a joint return, you get no medical deduction even if you itemize, because your total expenses of $10,000 doesn't exceed 7.5 percent, or $12,750, of your combined AGI.
However, things change if you and your spouse file separately. While you still won't get a deduction, your spouse will be able to deduct the excess above 7.5 percent of their AGI, or $1,500. So your spouse's deduction is $7,500 - a big difference!
Filing separately wont help with state and local taxes (SALT)
The new law limits the annual SALT deduction to $10,000 for 2018. So if you live in a high-tax state, you may think that filing separately would provide a higher combined SALT deduction. No so. The annual limit is $5,000 for married couples filing separately.
For instance, if you pay $9,000 in SALT and your spouse pays $1,500, you can deduct $10,000 if you file jointly. But filing separately would provide a $5,000 deduction for you and $1,500 for your spouse, for a total deduction of only $6,500.
Truth be told, your return status depends on your unique circumstances. Call for help with determining the best approach on your tax return.
As people prepare to file their taxes, there are things to consider. They will want to determine if they need to file and the best way to do so.
For tax year 2018, all individual taxpayers will file using the new Form 1040. Forms 1040A and 1040EZ are no longer available. Taxpayers who previously filed these forms will now file Form 1040. The new Form 1040 uses a “building block” approach allowing individuals to add only the schedules they need to their 2018 federal tax return. Taxpayers with more complicated returns will need to complete one or more of the new Form 1040 Schedules. This group of taxpayers includes those who claim certain deductions or credits, or who owe additional taxes.
Individuals who filed their federal tax return electronically last year may not notice any changes, as the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.
Here are three more things for people to keep in mind as they prepare to file their taxes:
Who is required to file. In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or if they are a dependent of another person. For example, if a taxpayer is single and younger than age 65, they must file if their income was at least $12,000. There are other instances when a taxpayer must file. Taxpayers can visit IRS.gov/filing for more information.
Filing to get a refund. Even if a taxpayer doesn’t have to file, they should consider filing a tax return if they can get money back. If a taxpayer answers “yes” to any of these questions, they could be due a refund:
Taxpayers can file for free. Join the millions of Americans who safely file their taxes and save money using IRS Free File. Seventy percent of the nation’s taxpayers are eligible for IRS Free File. The IRS’s commercial partners offer free brand-name software to about 100 million individuals and families with incomes of $66,000 or less. Taxpayers who earned more can use Free File Fillable Forms. This option allows taxpayers to complete IRS forms electronically. It is best for those who are comfortable doing their own taxes.
Taxpayers can also use the Interactive Tax Assistant tool on IRS.gov to answer many tax questions.. They should look for “Do I need to file a return?” under general topics.
All taxpayers should keep a copy of their tax return. Taxpayers using a software product for the first time may need their adjusted gross income amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return
You may already know that contributions to a traditional IRA may be deductible on your personal tax return (subject to certain limits). You're allowed to deduct a contribution on your 2018 return that is made as late as April 15.
But are you aware that you can use this year's tax refund to make your IRA contribution for the 2018 tax year?
How to fund your IRA with a refund
The IRS says it's OK to use this year's tax refund to make your 2018 IRA contribution as long as you meet the April 15 deadline. If you want to use this strategy, however, you'll want to file your tax return early.
Here's how it works: You can contribute up to $5,500 to a traditional IRA for 2018 ($6,500 if you're age 50 or older). All you have to do is claim the IRA contribution on your 2018 return and then ensure the same amount is deposited in your IRA by April 15.
The ability to deduct contributions is phased out if you (or your spouse) actively participate in an employer's retirement plan, and your income exceeds a certain level. For instance, the deduction is gradually reduced for a single filer with a modified adjusted gross income (MAGI) between $63,000 and $73,000 on a 2018 return. Further calculations to determine your maximum contribution amount will be needed if your income falls inside a phaseout range.
The IRA refund strategy is especially beneficial for taxpayers who are struggling to make ends meet, but still want to save for retirement.
Extensions are not allowed for IRA contributions, so don't procrastinate! Typically you can file your tax return starting as early as late January.
Due to the lapse in appropriations, most IRS operations are closed during the shutdown. An IRS-wide furlough began on December 22, 2018, that affects many operations.
During this period, the IRS reminds taxpayers that the underlying tax laws remain in effect, and all taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making payments and deposits with the IRS, as they are required to do by law.
2019 Filing Season: Key Information for Taxpayers
The IRS has announced that the 2019 filing season will begin on Jan. 28, 2019, for individual taxpayers. The IRS began accepting business tax returns (non-1040 series) on Jan. 8.
Taxpayers should keep several things in mind during this challenging period:
Additional information related to the 2019 filing season will be available in coming days on IRS.gov.
Limited Operations During the Appropriations Lapse
Automated applications. IRS.gov and many automated applications remain available, including such things as Where's My Refund, the IRS2go phone app and online payment agreements.
Telephones. No live telephone customer service assistance is currently available, although the IRS will be adding staff to answer some of the telephone lines in the coming days. Due to the heavier call volume, taxpayers should be prepared for longer wait times. Most automated toll-free telephone applications will remain operational. The IRS encourages people to use IRS.gov for information.
In-person service. IRS walk-in taxpayer assistance centers (TACs) are closed. That means those offices are unable to handle large cash payments or assist identity theft victims required to visit an IRS office to establish their identity. In-person assistance will not be available for taxpayers experiencing a hardship.
Taxpayer appointments. While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date, when the IRS reopens.
Taxpayer correspondence. While able to receive mail, the IRS will be responding to paper correspondence to only a very limited degree during this lapse period. Taxpayers who mail in correspondence to the IRS during this period should expect a lengthy delay for a response after the IRS reopens due to a growing correspondence backlog.
Tax-exempt groups. The IRS will not be processing applications or determinations for tax-exempt status or pension plans.
Enforcement activity. During this period, the IRS will not be conducting audits, but automated initial contact letters will continue to be mailed. No collection activity will generally occur except for automated collection activity. For example, automated IRS collection notices will continue to be mailed. Criminal Investigation work, however, continues during this period.
Passports. The IRS will not be certifying for the State Department any individuals for passport eligibility.
For tax professionals and others interested in a more detailed view of IRS operations during the shutdown, there is an extensive listing available in the https://home.treasury.gov/system/files/266/IRS-Lapse-in-Appropriations-Contingency-Plan_Filing-Season_2019-01-15.pdf
How can you motivate employees? One way is to set up an achievement award plan that rewards length of service or safety measures. If certain requirements are met, both your company and the recipients can collect tax breaks.
Achievement awards 101
Generally, employees aren't taxed on tangible personal property given under an achievement award plan.
Recent tax legislation clarifies that "tangible personal property" does not include cash, cash equivalents, gifts cards, gift coupons, gift certificates (other than those where from the employer pre-selected or pre-approved a limited selection) vacations, meals, lodging, tickets for theatre or sporting events, securities and other non-tangible personal property.
However, items like electronic devices, watches, golf clubs and jewelry do qualify. The cost of these items is deductible by the company and tax-free to the employees.
To qualify for this favorable tax treatment, these requirements must be met:
If a company uses an award plan that doesn't meet these qualifications, an employee may receive only up to $400 in awards without owing any tax. The limit is raised to $1,600 for awards through a qualified plan. (Any excess is taxable to the employee and can't be deducted by the employer.)
There are two additional requirements for qualified plans:
Please give us a call if you have questions about setting up a tax-friendly achievement award plan for your employees.
To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!