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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More dependent children info needed this year

The IRS has increased penalties on tax preparers from $500 to $1530 per return for failure of due dilligence in claiming 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. This is the IRS Form 886-H-EIC 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.

Late Start & Refund Delays

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The IRS will not be accepting returns until Monday Jan 29th 2018. We expect to be opened for business Friday Jan. 26th.

Also, they are required to hold tax returns with Earned Income Credits and Child Tax Credits until February 15, 2018. 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 26th. If you need to do your return sooner please call to make a special appointment.

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 Credits & Heath Insurance Premiums

Heath Insurance premiums are really jumping up this next year (2017). My family coverage is going from $826.02 to $1,440.30 per month. BUT when I buy through MNsure.org my premium tax credit jumped even MORE. I expect to save $118.75 per month for the same policy we have for 2016! You may be able to do the same; but you need to act quickly.

For the first time, this year, there will be limits to the number of those who can enroll. MNsure enrollment for 2017 is now closed unless you have a life changing event.

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

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.