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Monthly Newsletter for July 2019

by in Newsletter on Jun. 20, 2019

Members of the armed forces are entitled to certain tax benefits

Members of the military and their families often qualify for special tax benefits. For example, members of the armed forces don’t have to pay taxes on some types of income. In addition, special rules could lower the tax they owe or allow them more time to file and pay their federal taxes.

Here are some of these special tax benefits:

  • Combat pay exclusion. If someone serves in a combat zone, part or all of their combat pay is tax-free. This also applies to people working in an area outside a combat zone when the Department of Defense certifies that area is in direct support of military operations in a combat zone. There are limits to this exclusion for commissioned officers.
  • Deadline extensions. Some members of the military – such as those who serve overseas – can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.
  • Earned income tax credit. Military members who get nontaxable combat pay may choose to include it in their taxable income. One reason they might do this is to increase the amount of their earned income tax credit. People who qualify for this credit could owe less tax or even get a larger refund.
  • Joint return signatures. Both spouses must normally sign a joint income tax return. However, if military service prevents that from happening, one spouse may be able to sign for the other or get a power of attorney.
  • Military Volunteer Income Tax Assistance program. The Armed Forces Tax Council directs the military tax programs offered worldwide. Staff at military VITA sites receive training on military tax issues, like tax benefits for service in a combat zone. Each installation’s legal office may also be a source for more information.
  • Reserve and National Guard travel. Members of a reserve component of the Armed Forces may be able to deduct their unreimbursed travel expenses on their return. In order to do so, they must travel more than 100 miles away from home in connection with their performance of services as a member of the reserves.
  • ROTC allowances. Some amounts paid to ROTC students in advanced training are not taxable. This includes things like allowances for education and subsistence. On the other hand, active duty ROTC pay is taxable. This includes things like pay for summer advanced camp.

Monthly Newsletter for May 2019

by in Newsletter on May. 1, 2019

 

How To Get Your Transcript From the IRS

What’s New?

There is a new transcript format that better protects your data.  This new format partially masks your personally identifiable information.  Financial data will remain fully visible to allow for tax preparation, tax representation or income verification.

You can get various Form 1040-series transcript types online or by mail.  If you need your prior year Adjusted Gross Income (AGI) to e-file, choose the tax return transcript type when making your request.  If you only need to find out how much you owe or verify payments you made within the last 18 months, you can view your tax account.

The method you used to file your tax return, e-file or paper, and whether you had a balance due, affects your current year transcript availability.  Note:  If you need a photocopy of your return, you must use Form 4506.

To Request Online

What you need to register and use this service:

  1. Your SSN, date of birth, filing status and mailing address from the latest tax return
  2. Access to your e-mail account
  3. Your personal account number from a credit card, mortgage, home equity loan, home equity line of credit or car loan
  4. A mobile phone with your name on the account.

What You Get:

  1. All transcript types are available online
  2. View, print or download your transcript
  3. Username and password to return later

To Request by Mail

What you need to use this service:

  1. SSN or Individual Tax Identification Number (ITIN)
  2. Date of birth
  3. Mailing address from your latest tax return

What you Get:

  1. Return or Account transcript types delivered by mail
  2. Transcripts arrive in 5 to 10 calendar days at the address we have on file for you

Monthly Newsletter for January 2019

by in Newsletter on Jan. 8, 2019

IRS confirms tax filing season to begin January 28

WASHINGTON ― Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.

Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.

The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.

“IRS employees have been hard at work over the past year to implement the biggest tax law changes the nation has seen in more than 30 years,” said Rettig.

As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019 for most taxpayers.  Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns.

Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.

Monthly Newsletter for December 2018

by in Newsletter on Dec. 4, 2018

IRS, Security Summit Partners warn public:
It’s shopping season for identity thieves, too; Tax Security Awareness Week offers tips

WASHINGTON ― With the holiday shopping season in full swing, the Internal Revenue Service and Security Summit partners warn taxpayers to take extra steps to protect their tax and financial data from identity thieves.

The holidays offer cybercriminals a chance to steal financial account information, Social Security numbers, credit card information and other sensitive data to help them file a fraudulent tax return in 2019.

The Internal Revenue Service, state tax agencies and the tax community, partners in the Security Summit, are marking “National Tax Security Awareness Week” Dec. 3 -7, with a series of reminders to taxpayers and tax professionals. In part one, the topic is online shopping.

“With tax season quickly approaching, people should be extra careful during the holidays to protect their sensitive tax and financial data,” said IRS Commissioner Chuck Rettig. “Taking a few simple steps can protect this valuable information and help prevent someone from stealing a tax refund. Taxpayers guarding their information also helps strengthen protections against identity thieves taken by the IRS, the states and the tax industry.”

In part one of a weeklong series of tips, the Summit partners warn people shopping online or in public places to remember a few basic tips that can go a long way to protecting their identity and personal information. This is part of the Summit’s “Taxes.Security.Together.” campaign.

Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund.

Here are seven steps to help with online safety and protecting tax returns and refunds:

  • Avoid unprotected Wi-Fi. Unprotected public Wi-Fi hotspots in malls or at holiday events also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.
  • Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy. Beware of purchases at unfamiliar sites or clicks on links from pop-up ads.
  • Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. The IRS has seen an increase in these schemes this year. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords. An attachment may download malware that tracks keystrokes — putting personal information at risk.
  • Keep a clean machine. This applies to all devices – computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.
  • Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. Use a password manager, if necessary.
  • Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication. This means users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords.
  • Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. And, when disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before trashing.

Monthly Newsletter for November 2018

by in Newsletter on Nov. 2, 2018

401(k) contribution limit increases to $19,000 for 2019; IRA limit increases to $6,000

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019.  The IRS today issued technical guidance detailing these items in Notice 2018-83.

Highlights of Changes for 2019

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000.

The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2019.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2019:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $64,000 to $74,000, up from $63,000 to $73,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000, up from $101,000 to $121,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000, up from $189,000 and $199,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $122,000 to $137,000 for singles and heads of household, up from $120,000 to $135,000. For married

couples filing jointly, the income phase-out range is $193,000 to $203,000, up from $189,000 to $199,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $64,000 for married couples filing jointly, up from $63,000; $48,000 for heads of household, up from $47,250; and $32,000 for singles and married individuals filing separately, up from $31,500.

Highlights of Limitations that Remain Unchanged from 2018

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.

Monthly Newsletter October 2018

by in Newsletter on Sep. 27, 2018

New credit benefits employers who provide paid family and medical leave
Eligible employers who provide paid family and medical leave to their employees during tax years 2018 and 2019 might qualify for a new business tax credit. This new employer credit for family and medical leave is part of tax reform legislation passed in December 2017. Here are some facts about the credit to help employers find out if they might be able to claim it.

To be eligible, an employer must:

  • Have a written policy that meets several requirements, as detailed in Notice 2018-71.
  • Provide:
    • At least two weeks of paid family and medical leave to full-time employees.
    • A prorated amount of paid leave for part-time employees.
    • Provide pay for leave that is at least 50 percent of the wages normally paid to that employee.

The credit applies to these dates:

  • It is available for wages paid in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2020.

The amount of the credit:

  • The credit is generally equal to 12.5 to 25 percent of paid family and medical leave for qualifying employees.

Here’s what kind of leave qualifies:

  • The leave can be for any or all of the reasons specified in the Family and Medical Leave Act:
    • Birth of an employee’s child.
    • Care for the child.
    • Placement of a child with the employee for adoption or foster care.
    • To care for the employee’s spouse, child, or parent who has a serious health condition.
    • A serious health condition that makes the employee unable to perform the functions of his or her position.
    • Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty – or having been notified of an impending call or order to covered active duty – in the Armed Forces.
    • To care for a service member who is the employee’s spouse, child, parent, or next of kin.
  • However, leave paid by a state or local government, or that is required to be provided by state or local law, does not count toward the 50 percent.

Some employers are eligible to claim the credit retroactively to the beginning of their taxable year:

  • Normally employers can only claim the credit based on eligible leave taken after their new or amended policy goes into effect.
  • Read Notice 2018-71 for a description of special rules for when an employer can claim the credit retroactively.

To claim the credit, employers will:

  • Attach Form 8994 to their return. The IRS expects to have this new form available later in 2018.

The Notice sets out special rules and limitations that apply:

  • For example, only paid family and medical leave provided to employees whose prior-year compensation was at or below a certain amount qualify for the credit.
    • Generally, for tax-year 2018, the employee’s 2017 compensation from the employer must be $72,000 or less.

More Information:
Tax Reform Provisions that Affect Businesses

Monthly Newsletter September 2018

by in Newsletter on Sep. 6, 2018

Taxpayers should check out these helpful tax tools

Questions about taxes could come up any time of the year. Whether it’s about tracking a refund or paying a bill, taxpayers can find answers to their questions on IRS.gov. Here are some of the most popular IRS tools:

  • IRS Free File. Taxpayers who filed an extension can use IRS Free File to prepare and e-file a federal tax return. Free File is available at no cost for anyone with income below $66,000. Free File is available through Oct. 15 to file a 2017 tax return. IRS Free File is available through IRS.gov or the IRS2Go mobile app.
  • Direct Deposit. Direct Deposit is the best and fastest way for taxpayers to get their tax refund electronically deposited for free into their financial account. Combining direct deposit with electronic filing is the fastest way for a taxpayer to receive their refund.
  • Where’s My Refund? Taxpayers can use “Where’s My Refund?” at IRS.gov or the IRS2Go mobile app to check the status of a refund within 24 hours after the IRS receives the e-filed return or four weeks after a mailed paper return. The IRS2Go app is free and available on Google Play, the Apple App Store or Amazon App Store.
  • Paying a Tax Bill. IRS Direct Pay is free and taxpayers can pay directly from a checking or savings account. They can choose to receive email notifications about their payments each time they use Direct Pay There are five simple steps to pay in a single online session and it’s also available with the IRS2Go mobile app. Other payment options are available at IRS.gov/payments.
  • Tax Account Information Online. At IRS.gov/account individual taxpayers can view their balance and payment history. They can also pay with their bank account, a debit or credit card or apply for an installment agreement. They can view, print or download tax records, and view their most current tax return information as originally filed. First time users must authenticate their identity through the Secure Access process. Taxpayers who already have a user name and password from Secure Access for their tax account, Get Transcript Online or Identity Protection PIN, may use the same username and password.
  • Online Payment Agreement. Taxpayers who can’t pay their taxes in full can apply for an Online Payment Agreement. Using the Direct Debit payment plan option is a lower-cost, hassle-free way to make monthly payments.
  • Interactive Tax Assistant. Taxpayers can use this tool to find answers to their tax questions. This tax law resource asks a series of questions and provides instant answers on a variety of tax topics, including general filing questions, deductions, credits and income.
  • Tax Map. The IRS Tax Map integrates web links, tax forms, instructions and publications into one search result. Taxpayers can quickly find forms, publications, frequently asked questions and news by topic.

Monthly Newsletter for August 2018

by in Newsletter on Aug. 10, 2018

North Carolina Sales and Use Tax Update

 

The Sales and Use Tax Division has published SD-18-6 Sales and Use Collections on Remote Sales 8-7-2018.  The directive comes after the U.S. Supreme Court’s June decision in South Dakota v. Wayfair, in which the court found that physical presence is not necessary to create a substantial nexus between a remote seller and a taxing state.  Accordingly, North Carolina will enforce an existing law [N.C. Gen. Stat. § 105-164.8(b)] regarding remote sales and require remote sellers to collect and remit the applicable sales and use tax on taxable retail sales sourced to North Carolina.

 

The law will be applied on a prospective basis beginning November 1, 2018.  The NCDOR will enforce the North Carolina statute concerning remote sales with regard to remote sellers having gross sales sourced to the state in excess of $100,000 or having 200 or more separate transactions sourced to the state in the previous or current calendar year.

Monthly Newsletter for July 2018

by in Newsletter on Jul. 13, 2018

Taxpayers who owed tax this year should check their withholding soon

Taxpayers who owed additional tax when they filed their federal return earlier this year should do a “paycheck checkup” as soon as possible. The IRS Withholding Calculator and Publication 505, Tax Withholding and Estimated Tax, can help these taxpayers do a checkup and avoid another possibly bigger tax bill next year.

Following the Tax Cuts and Jobs Act, which was passed last year, there are many changes to the tax law that could affect these taxpayers. Doing a checkup now will help them make sure their current tax withholding is in line with their 2018 tax situation.

Here are some things for these taxpayers to keep in mind:

  • These taxpayers may not have had enough taxes withheld from their pay throughout 2017, causing them to owe in 2018.
  • If they continue to have too little withheld from their paychecks the rest of this year, they could find themselves in the same situation again next year.
  • They might even end up with a larger tax bill when they file their 2018 return next year.
  • It’s important to remember that if a taxpayer underpays their tax too much, penalties and interest can apply.
  • The Withholding Calculator can help taxpayers apply the new law to their situation. The results from the calculator can help them make an informed decision about whether to change their withholding this year.
  • These taxpayers need to adjust their withholding as soon as possible for an even withholding amount throughout the rest of the year.
  • Waiting means there are fewer pay periods to withhold the necessary federal tax, which could have a bigger effect on each paycheck.

Taxpayers with more complex situations might find that using Publication 505 is a better option for figuring their withholding than using the Withholding Calculator. Publication 505 works better for employees who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents. It can also help those who receive non-wage income such as dividends, capital gains, rents and royalties

Monthly Newsletter for June 2018

by in Newsletter on Jul. 13, 2018

IRS offers summer tips for temporary jobs, marriage, deductions and credits

WASHINGTON – Before starting a summer job, taking a vacation or sending the kids off to camp, the Internal Revenue Service wants taxpayers to know that some summertime activities may qualify for tax credits or deductions. The IRS also recommends that taxpayers check the amount of their withholding taxes now to help avoid surprises next filing season.

Here are some tips from the IRS that may help taxpayers lower taxes and avoid issues with their taxes:

  1. Worker classification matters.  As with other workers, business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status.
  2. Summer workers may be exempt from tax withholding. Workers may not earn enough from summer jobs to owe income tax, but employers usually must withhold Social Security and Medicare taxes from pay. If self-employed or an independent contractor, workers need to pay their own Social Security and Medicare taxes, even if they have no income tax liability. This is important because these taxes count toward coverage under the Social Security system. Normally, employees receive a Form W-2, Wage and Tax Statement, from their employer (even if they don’t work there anymore) to account for the summer’s work by Jan. 31 of the following year. The Form W-2 shows the amount of earnings. It also shows withholdings for state and federal taxes, Social Security, Medicare wages and tips. Employees use the information on this form when they file their annual tax returns.
  3. Check withholding. For those who work a seasonal or part-year job, checking withholding now can help make sure employers withhold the right amount of tax. Taxpayers who work part of the year should check early in the employment period to determine an accurate amount for their withholding. The Withholding Calculator on IRS.gov helps employees determine whether they need to submit a new Form W-4, Employee’s Withholding Allowance Certificate to their employer. It estimates income, credits, adjustments and deductions for most financial situations. Employees can use their results from the calculator to fill out the form and adjust their income tax withholding. They must give their updated forms to their employers to take effect.
  4. Getting married? Newlyweds can help make wedded bliss last longer by doing a few things now to avoid problems at tax time. First, report any name change to the Social Security Administration before filing next year’s tax return. Then, report any address change to the United States Postal Service, any employers and the IRS to ensure receipt of tax-related items. Finally, use the Withholding Calculator at IRS.gov to make sure withholding is correct now that there are two people to consider. This is especially important for families with more than one wage earner, for taxpayers who have more than one job at a time, or for those who have children. For best results, do it as soon as possible.
  5. Clean out, donate, deduct.  If they are in good condition, those long-unused items found during spring or summer cleaning and donated to a qualified charity may qualify for a tax deduction. Taxpayers must itemize deductions to deduct charitable contributions, and be sure to have proof of all donations.
  6. Help with service project, deduct mileage. While there’s no tax deduction for time donated toward a charitable cause, driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2018. Keep good records of mileage.
  7. Get tax credit for summer day camp expenses. Many working parents must arrange for care of their younger children under 13 years of age during the school vacation period. A popular solution — with favorable tax consequences — is a day camp program. Unlike overnight camps, the cost of day camp may count as an expense towards the Child and Dependent Care Credit. See IRS Publication 503, Child and Dependent Care Expenses, for more information.
  8. Refunds require a tax return. Although workers may not have earned enough money from a summer job to require filing a tax return, they may still want to file when tax time comes around. It is essential to file a return to get a refund of any income tax withheld. There is no penalty for filing a late return for those receiving refunds, however, by law, a return must be filed within three years to get its refund. Otherwise, the money becomes property of the U. S. Treasury.