Andrew Becker CPA. PC

New Limits On IRA's & Pension Plans

IRS announced the 2019 COLA adjustments to retirement plan limits on November 1, 2018 in Notice 2018-83.

Elective deferrals for 401(k), 403(b), etc. plans rise from $18,500 to $19,000, plus $6,000 for those age 50 or older.

The limit on defined contribution accounts increases from $55,000 to $56,000.

The definition of a key employee in a top-heavy plan rises from $175,000 to $180,000.

The definition of a highly compensated employee is now $125,000, up from $120,000.

The maximum amount an employee can defer to a SIMPLE plan rises from $12,500 to $13,000.

The deductible amount under IRA limits rises to $6,000 from $5,500, plus an additional $1,000 for those age 50 or older.

These numbers are particularly important for those attempting to initiate a pension plan by year-end in order to decrease income and potentially avoid the income limitation thresholds of §199A – especially those applicable to service businesses.

Time for a Paycheck Checkup You should check if you:

Are a two-income family.
Have two or more jobs at the same time or only work part of the year.
Claim credits like the child tax credit.
Have dependents age 17 or older.
Itemized deductions in 2017.
Have high income or a complex tax return.
Have a large tax refund or tax bill for 2017.

https://www.irs.gov/newsroom/businesses

Businesses | Internal Revenue Service As the IRS implements this major tax legislation, check this page for updates and resources to learn how the Tax Cuts and Jobs Act (TCJA) affects businesses.

https://www.irs.gov/newsroom/individuals

Individuals | Internal Revenue Service tax reform individuals landing page

https://www.cpapracticeadvisor.com/news/12426371/75-years-ago-she-became-the-first-african-american-female-cpa?utm_source=dlvr.it&utm_medium=facebook

75 Years Ago, She Became the First African American Female CPA In 1939, when virtually no firms would hire African-Americans or females, let alone an African-American female, she began her own firm in a basement on the South Side of Chicago where she opened doors for future generations of African-American ...

https://www.irs.gov/newsroom/taxpayers-with-high-incomes-complex-returns-check-withholding-soon

Taxpayers with high incomes, complex returns: Check withholding soon | Internal Revenue Service IR-2018-165, Aug. 14, 2018 — The Internal Revenue Service today urged high-income taxpayers and those with complex tax returns to check their withholding soon to avoid an unexpected tax bill or penalty when they file their 2018 federal income tax return in 2019.

A Mid-Year Tax Checkup May Be Appropriate

Taxes are similar to vehicles, in that they sometimes need a check-up to make sure they are performing as expected. That is especially true for 2018, with all of the changes brought about by tax reform.

One area of major concern is the amount of taxes individuals are withholding from their wages. Tax reform was passed late in 2017, and there was a considerable amount of confusion among employers related to the amount of taxes to withhold in 2018. It took the IRS a couple of months to come out with a revised Form W-4 (Employee's Withholding Allowance Certificate) and withholding tables, and even then, there were concerns about whether the revised and more complicated W-4s were being filled out correctly by employees and whether the revised W-4s were actually being submitted to employers at all. The IRS has even been issuing notices cautioning taxpayers to be sure they are withholding enough.

While most people will see an overall tax reduction as a result of the tax reforms, the amount of their refund or tax due hinges on the amount of pre-payments, which include withholding and estimated tax payments. All this confusion related to withholding can lead to unpleasant surprises at tax time. If you count on a refund each year, it might be appropriate to have this office run a mid-year tax projection to ensure that the projected refund will be as expected.

This is also true for retirees receiving pensions and Social Security benefits and for self-employed taxpayers who are making pre-payments via estimated taxes. You obviously do not want to pay too much and generally don’t want to end up with a huge tax liability. A mid-year check-up will allow adjustments to the 3rd- and 4th-quarter estimated tax payments so that the end result will be as desired.

Married couples with two working spouses, individuals with multiple jobs and situations in which taxpayers are both wage earners and self-employed cause the most difficulty in getting the prepayments correct. If you would like a mid-year projection and withholding check-up, please call for an appointment.

There are a number of other circumstances that can impact your taxes, and you probably should not wait until tax time to see the results. You could even be missing opportunities to decrease your prepayments and obtain more cash flow. With mid-year tax planning, you may be able to take steps to mitigate the tax impact of certain events and thus avoid unpleasant surprises before it is too late to address them. Here are some events that can significantly impact your tax liability:

-Getting married or divorced, or becoming widowed
Changing jobs or your spouse starting to work
Having a substantial increase or decrease in income
Having a substantial gain from the sale of stocks or bonds
Buying or selling a rental
Starting, acquiring, or selling a business
Buying or selling a main or vacation home
Retiring or going to retire this year
Being the beneficiary of an inheritance
Giving birth to or adopting a child
Making significant business purchases
Having substantial investment income or gains from the sale of investment assets
Making unplanned withdrawals from an IRA or pension plan

If you anticipate or have already encountered any of the above events or conditions, it may be appropriate to consult with my office—preferably before the event and definitely before the end of the year.

https://www.forbes.com/sites/kellyphillipserb/2017/06/15/irs-warns-on-new-twist-to-old-phone-scams/

IRS Warns On 'New Twist' To Old Phone Scams The Internal Revenue Service (IRS) has issued a warning about a new telephone scam making the rounds.

https://smallbiztrends.com/wp-content/uploads/2016/05/Sales-Tax-Compliance_Checklist.pdf

smallbiztrends.com

https://smallbiztrends.com/2017/05/catch-up-on-retirement-savings.html?utm_source=dlvr.it&utm_medium=facebook

Apply These 5 Secret Techniques to Catch Up on Retirement Savings Good news: growing older entitles you to make “catch-up contributions” designed to enable small business owners to catch up on retirement savings.

https://www.irs.gov/uac/choose-your-tax-preparer-wisely

Choose Your Tax Preparer Wisely IRS Tax Tip 2016-06, January 26, 2016

2017 Tax Filing Season Begins Jan. 23 for Nation’s Taxpayers, Tax Returns due April 18

IRS YouTube Video April 18 is When Your Taxes are Due in 2017 | English





WASHINGTON ― The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 23, 2017 and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.



The IRS will begin accepting electronic tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017. The IRS again expects more than four out of five tax returns will be prepared electronically using tax return preparation software.



Many software companies and tax professionals will be accepting tax returns before Jan. 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. There is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.



The IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. In addition, the IRS wants taxpayers to be aware it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual access to their refunds until the week of Feb. 27.



“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay. Even with these significant changes, IRS employees and the entire tax community will be working hard to make this a smooth filing season for taxpayers.”



The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option. Taxpayers can visit IRS.Gov/GetReady for more tips on preparing to file their 2016 tax return.



April 18 Filing Deadline

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday – April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.





“The opening of filing season reflects months and months of work by IRS employees,” Koskinen said. “This year, we had a number of important legislative changes to program into our systems, including the EITC refund date, as well as dealing with resource limitations. Our systems require extensive programming and testing beforehand to ensure we’re ready to accept and process more than 150 million returns.”



The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. A number of new provisions are being added in 2017 to expand progress made during the past year.



Refunds in 2017

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund.



The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.

Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.

As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do – including returns claiming EITC and ACTC.



The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27 (assuming there are no processing issues with the tax return and the taxpayer chose direct deposit). This additional period is due to several factors, including banking and financial systems needing time to process deposits.

After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.



Where's My Refund? ‎on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers will not see a refund date on Where's My Refund? ‎or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.



Help for Taxpayers



The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov. Taxpayers can also, if eligible, locate help from a community volunteer. Go to IRS.gov and click on the Filing tab for more information.



Seventy percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $64,000 or less.



Online fillable forms provides electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.



Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to irs.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider.



The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice about the ever-changing tax code. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.



Renewal Reminder for Individual Taxpayer Identification Numbers (ITINS) ITINs are used by people who have tax-filing or payment obligations under U.S. law but are not eligible for a Social Security number. Under a recent change in law, any ITIN not used on a tax return at least once in the past three years will expire on Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) will also expire on that date.



This means that anyone with an expiring ITIN and a need to file a tax return in the upcoming filing season should file a renewal application in the next few weeks to avoid lengthy refund and processing delays. Failure to renew early could result in refund delays and denial of some tax benefits until the ITIN is renewed.



An ITIN renewal application filed now will be processed before one submitted at the height of tax season from mid-January to February. Currently, a complete and accurate renewal application can be processed in as little as seven weeks. But this timeframe is expected to expand to as much as 11 weeks during tax season, which runs from mid-January through April.



Several common errors are currently slowing down or holding up ITIN renewal applications. The mistakes generally center on missing information, and/or insufficient supporting documentation. ITIN renewal applicants should be sure to use the latest version of Form W-7, revised September 2016. The most current version of the form, along with its instructions, are posted on IRS.gov

Take Steps Now for Tax Filing Season

Year-End Tax Tips

Steps to take before the New Year for a better tax return in 2017
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December 3, 2016

By Daniel Hood

With Dec. 31 just around the corner, it’s time to start thinking about next season – and to make any last-minute moves that might improve a client’s tax position.

With that in mind, here’s a list of tax tips for you and your clients to think about before the end of 2016, from the National Society of Accountants and others in the field. (A slideshow version of these tips is available here.)

1. First – what’s not changing:While President-elect Trump is in a strong position to enact his promise of lower tax brackets next year, it’s important to remember that the current income tax rates of 10, 15, 25, 33, 35 and 39.6 percent are still in effect for the tax returns being filed next mid-April. The standard deduction amounts remain $6,300 single/married filing separately, and $12,600 for married filing jointly. The standard deduction for heads of households, however, rises to $9,300.

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2. Deferring income: If the president-elect does manage to lower and simplify the individual tax brackets per his plan, that means rates next year will be lower, so it might be worth it for individuals to consider deferring some income into 2017. That may mean getting a bonus in January, instead of December, or waiting to redeem a savings bond, or putting off debt forgiveness income.

3. Keep an eye on AGI: Since some tax benefits -- including itemized deductions. personal exemptions, and education and adoption credits -- get phased out depending on a taxpayer’s adjusted gross income, deferring income may also make sense depending on their current AGI.

4. New permanent incentives for individuals: The PATH Act of 2015 made a number of tax incentives permanent. For individuals, these include:

The American Opportunity Tax Credit;
The teachers’ $250 classroom expense deduction;
The ability to deduct state and local sales tax instead of state income taxes; <
The exclusion for direct charitable donation of up to $100,000 from an IRA; and,
The 100 percent gain exclusion on qualified small-business stock.

5. New permanent incentives for businesses: The PATH Act of 2015 made a number of tax incentives permanent. For businesses, these include:

The reduced five year recognition period for S corp built-in gains tax;
15-year straight-line cost recovery for qualified leasehold improvements, restaurant property and retail improvements; and,
Charitable deductions for the contribution of food inventory.

6. Max out retirement accounts: If a taxpayer’s employer offers matching, then maxing out contributions to a 401(k) is as close to a no-brainer as you can get – but even without matching, sequestering income in 401(ks), IRAs, Keoghs and the like is still a great deal.

7. Tax-loss harvesting: Even in the current bull market, a portfolio can contain some duds – but they can still be useful! Taxpayers with large amounts of taxable gains in 2016 may want to offset some of those by realizing losses on those duds to lower their overall capital gains exposure.

8. Be careful with mutual funds: Many mutual funds make capital gains distributions in December, so taxpayers will want to bear that in mind when buying or selling. That a fund is or isn’t planning a major distribution needn’t necessarily be a deal-breaker – but it may add to the eventual tax bill.

Tax Preparedness Series: Tax Records – What to Keep

Note to Editor: This is the fifth in a series of reminders to help taxpayers prepare for the upcoming tax filing season.

WASHINGTON – As tax filing season approaches, the Internal Revenue Service has information for taxpayers who wonder how long to keep tax returns and other documents.

Generally, the IRS recommends keeping copies of tax returns and supporting documents at least three years. Some documents should be kept up to seven years in case a taxpayer needs to file an amended return or if questions arise. Keep records relating to real estate up to seven years after disposing of the property.

Health care information statements should be kept with other tax records. Taxpayers do not need to send these forms to IRS as proof of health coverage. The records taxpayers should keep include records of any employer-provided coverage, premiums paid, advance payments of the premium tax credit received and type of coverage. Taxpayers should keep these – as they do other tax records – generally for three years after they file their tax returns.

Whether stored on paper or kept electronically, the IRS urges taxpayers to keep tax records safe and secure, especially any documents bearing Social Security numbers. The IRS also suggests scanning paper tax and financial records into a format that can be encrypted and stored securely on a flash drive, CD or DVD with photos or videos of valuables.

Now is a good time to set up a system to keep tax records safe and easy to find when filing next year, applying for a home loan or financial aid. Tax records must support the income, deductions and credits claimed on returns. Taxpayers need to keep these records if the IRS asks questions about a tax return or to file an amended return.

It is even more important for taxpayers to have a copy of last year’s tax return as the IRS makes changes to authenticate and protect taxpayer identity. Beginning in 2017, some taxpayers who e-file will need to enter either the prior-year Adjusted Gross Income or the prior-year self-select PIN and date of birth. If filing jointly, both taxpayers’ identities must be authenticated with this information. The AGI is clearly labeled on the tax return. Learn more at Validating Your Electronically Filed Tax Return.

Taxpayers who need tax information can request a free transcript for the past three tax years. The ‘Get Transcript’ tool on IRS.gov is the fastest way to get a transcript.

If taxpayers are still keeping old tax returns and receipts stuffed in a shoebox in the back of the closet, they might want to rethink that approach. Keep tax, financial and health records safe and secure whether stored on paper or kept electronically. When records are no longer needed for tax purposes, ensure the data is properly destroyed to prevent the information from being used by identity thieves.

If disposing of an old computer, tablet, mobile phone or back-up hard drive, keep in mind it includes files and personal data. Removing this information may require special disk utility software. More information is available on IRS.gov at How long should I keep records?.

Instead of facing charges, call me and I'll help you with the IRS!

Man Faces Charges for Cursing out IRS A taxpayer has been charged with mailing a threatening communication after he responded to a notice from the Internal Revenue Service about overdue taxes by scribbling a profanity on the letter and mailing it back to the IRS.