Late Start and Refund Delays

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The IRS has not announced when it will begin accepting 2018 tax returns. With all of the programing changes it has to make and test I expect that filing in the last week of January 2019 may be optimistic. 

Also, they are required to hold tax returns with Earned Income Credits and Child Tax Credits until February 15, 2019. Some taxpayers may not receive their refunds until late February. There is nothing we or any tax preparer can do to make this faster.

We will not begin our regular tax season until January 25th. We may be able to complete some tax returns before then when our 2018 software arrives.

2018 Federal Tax Law Changes

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Contrary to much of the politicized rhetoric we have all heard about this, the new tax laws do not simplify the tax code or make tax preparation easier for everyone.  A few forms have been eliminated since you will no longer qualify for those adjustments and deductions. Yet it looks as though additional forms will be needed to calculate the rather complex subtractions and credits that are part of the new code. Ideas of fairness have been sacrificed to make a one size fits all standard deduction while eliminating the personal exemptions that relate to family size. Fortunately an increased Child Tax Credit can more than make up for that, for those with children under 17 years old.

Just where you will end up with the new tax laws is uncertain. The IRS is undergoing a change to withholding instructions that will not be out until at least February. Even with this, the instructions for Federal tax withholding form W-4 is already confusing and beyond normal human comprehension. With the increased standard deduction reflected on each job you have, it is highly likely that you will not have enough withholding if you and your spouse work two or more jobs combined.  If you notice a big increase in your regular paycheck in 2018 it may be because your withholding is too low. If it is, and you do not get it fixed; you could owe big money by April of 2019 when your 2018 tax return is due.  After we complete your tax return this year we will work out an analysis and recommendation for your 2018 withholding so that you can prevent a big disappointment in 2019.

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Healthcare Premium Credits and Penalties

REMEMBER: bring in Form 1095-A if you purchased health insurance through the State market exchange. You will need to know the Adjusted Gross Income of anyone you claim as a dependent to figure the credit. It is best to arrange an appointment to complete your families tax returns at the same setting. If you received a credit toward the payment of Healthcare Premiums last year you will need to bring your Form 1095-A and reconcile the credit you obtained for your estimated income with the credit you should have received for your actual income. Failure to do so will result in a delay of the processing of your tax return.

The tax penalty no longer applies for tax years 2019 and beyond.

Documentation of dependent children needed this year

The IRS has increased penalties on tax preparers to as much as $2,080 per return for failure of due diligence in claiming  Head of Household, Earned Income Credit, Child Tax Credit and American Opportunity (Education) Credit.

Please bring any documentation that shows your children live with you and can be properly claimed. This can include school, medical or childcare records that show the child’s address. Medical insurance forms 1095-A from MNsure, and 1095-B and 1095-C obtained from your employer can be very helpful. This is the

https://www.eitc.irs.gov/tax-preparer-toolkit/tools-and-tips/form-886-can-assist-you/forms-886-can-assist-you 

that specifies what could be needed to show your eligibility.

REMEMBER: bring Form 1098-T to claim any Education Credits. This is provided by the school or college and is required  to claim credits.

We ask for your patience since we will probably need to ask you more questions this year to satisfy the new IRS requirements.

URGENT notice: W-2 and 1099 filing due by January 31st.

The date for Filing 2018 W-2’s and 1099’s for non- employee compensation (box 7) and has been changed to January 31st 2019.

There are stiff penalties for missing this due date.

Penalties for Late or Incorrect W-2s

Penalties are assessed based on the date when a correct W-2 is filed or furnished to employees:

  • $50 per W-2 if filed within 30 days of due date.
  • $100 per W-2 if filed more than 30 days from the due date but before August 1st.
  • $260 per W-2 if filed later than August 1st, if no correction is filed, or if no W-2 is filed al all.

If a business submits Form 1099 within 30 days from the due date, the penalty is $30 per form. If you file the form more than 30 days late but before Aug. 1, the penalty is $60 per form. The penalty increases to $100 for any form filed after Aug. 1 or not filed at all. 

Extensions: Taxpaying businesses may apply for a 30-day extension on filing a 1099 form by completing Form 8809, an Application for Extension of Time to File Information Returns. You may submit Form 8809 either electronically or on paper, and need not sign the form. However, the extension only takes effect if the business applies for it before the due date.

Foreign Asset Reporting in 2017

If you have any foreign financial accounts with total value of $10,000 US or more, at any time in the last year, you MUST E-FILE FinCEN Form 114 with the US Treasury by April 15th of this year. You must file at: http://bsaefiling1.fincen.treas.gov/AddIndividual/User.

This is not part of your tax return; but you are expected to file it. There are huge penaties for not filing, up to the greater of $100,000 or half the value of the accounts!

If you have foreign financial accounts, including foreign stocks and ownership interest, which exceeded $50,000 in value at the end of the year, or exceeded $75,000 in value at any time last year ($100,000 and $150,000 if married filing jointly) you must file form 8938 with your tax return. Your return will need to be paper filed.

Please notify us immediately if this is the case. Penaties may be up to $50,000 for willful neglect of filing. To prevent delay in preparing your return please download and complete one form 8938 for each foreign account at www.irs.gov/pub/irs-pdf/8938.pdf per instructions at www.irs.gov/pub/irs-pdf/i8938.pdf

Beginning in 2017 for 2016 reporting FinCEN Form 114 is now due April 15th rather than the later June 30th due date of the past.

Tax Scams

Beware of scam phone calls demanding money. These are not IRS agents. The IRS will always send a written notice of anything you owe. If you receive an IRS notice in the mail call me immediately.
-Mark Deziel,   651 631-0571

IRS.gov:   Tax Scams/Consumer Alerts
An aggressive and sophisticated phone scam targeting taxpayers, including recent immigrants, has been making the rounds throughout the country. Callers claim to be employees of the IRS, but are not. These con artists can sound convincing when they call. They use fake names and bogus IRS identification. Never give your personal information, especially your Social Security Number, to someone contacting you and claiming to be the IRS.

A new development in 2017, the IRS has authorized private collection agencies to act on behalf of the IRS. HOWEVER while these may email or phone you they are only used in the event of very delinquent accounts. And payments are made ONLY to the IRS. Please call me before making any payments. For more information: https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection