APTC / EIP Information Letters
The IRS announced that it would issue information letters (6419) to Advance Child Tax Credit (APTC) recipients starting in December and to recipients of the third round of the Economic Impact Payments (EIPs) (known as the stimulus payments) at the end of January. Using this information when preparing a tax return can reduce errors and delays in processing. The Service also urged taxpayers receiving these letters to make sure they hold onto them to assist them in preparing their 2021 federal tax returns in 2022.

Required Minimum Distributions (RMDs)
Effective 1/1/2022, the IRS will begin using a new table when calculating RMDs from your tax-deferred retirement plans.  Once you reach age 72 (or age 70 ½ if you reached 70 ½ before 1/1/2020), you are required to take a distribution from your accounts based on the account balance at the end of the preceding calendar year and an IRS tables based on your age.  The new table lowers the amount you are required to distribute annually.  (You may always take a distribution larger than this amount, if needed.)  The goal of lowering the required distribution is to provide retirement funds to participants for longer due to the increasing life spans. 

Tax Day is Monday, May 17!
If your return has already been prepared, make sure to sign and return your 8879 forms to us authorizing filing. This is the final step for clients to make sure returns are filed with and accepted by the IRS and state authorities.

If you have not yet given us your complete tax documentation, we are recommending filing an extension in most cases. Extensions will extend the final filing deadline to October 15. Please note that if it is estimated that you owe taxes, that payment will still be due by May 17.

If you worked with us to file your 2019 return and have made other arrangements for 2020 tax preparation, please notify our Tax Department as soon as possible.

IRS statement on interest payments
Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Interest payments may be received separately from the refund. READ MORE

Employee job related expenses are no longer deductible, effective 1/1/2018, under the new tax law (Tax Reduction and Jobs Act of 2017). That means employees will lose the following types of deductions on 2018 and future Federal income tax returns. Note: some states, such as Pennsylvania, continue to permit many of these deductions.

* Safety equipment, small tools, and supplies needed for your job.

* Meals and entertainment expenses.

* Travel and expenses away from home.

* Vehicle expenses while using your vehicle for employment related activity.

* Uniforms required by your employer that are not suitable for ordinary wear.

* Protective clothing required in your work, such as hard hats, safety shoes, and glasses.

* Physical examinations required by your employer.

* Passport for a business trip.

* Job search expenses in your present occupation.

* Depreciation on a computer your employer requires you to use in your work.

* Dues to professional organizations and chambers of commerce.

* Licenses and regulatory fees.

* Subscriptions to professional journals.

* Occupational taxes.

* Union dues and expenses.

* Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new job.

* Certain work-related educational expenses.

ID Validation – Personal
Income Tax Refund Fraud Prevention Efforts

Beginning with the 2014 income tax filing season,
the department instituted new security measures to identify and intercept
fraudulent refund filings.  As part of
this initiative to ensure refunds are issued only to their rightful owners,
taxpayers may be asked to confirm their identities before refunds are issued.

In such cases, the taxpayer will be contacted by the
department by way of a letter sent to the address on the taxpayer’s personal
income tax return. The letter from the department will instruct the taxpayer to
call a designated number, where the taxpayer will speak to a representative of
a company the department has partnered with for its expertise in identity
verification.  The taxpayer will be asked
to provide answers to questions to verify identity. Taxpayers who receive this
identity validation notice will authorize release of their refunds sooner if
they follow the instructions for verifying identity provided in the notice.

The IRS recently created a new application to obtain income tax return transcripts fairly easily.  Any taxpayer can create an account and pull their tax transcripts for the prior three years in real time.  Clients who need copies of past returns for mortgage applications, student loans or other uses can now obtain them from any computer or even a smart phone.

Per the IRS, Return Transcripts (2013 back to 2010) will meet the requirements of lending institutions offering mortgages and student loans.

To obtain, use the link “Order a Return or AccountTranscript” under “Tools” link on the IRS.gov homepage.

2013 Tax Planning – Don’t be surprised,
be prepared.

As January 1, 2014 gets closer, you need to finalize your year-end tax planning.  

While new tax legislation has brought greater certainty, it also created new challenges. The number of changes made to the Tax Code and the opportunities these changes bring may seem overwhelming. However, engaging us to help with tax planning will help you to maximize your potential tax savings and minimize your tax liability.

Without planning, you may be surprised that you owe additional taxes in 2013, even with the extension of the previous decade of tax brackets. Three new taxes are in effect for 2013: the Net Investment Income surtax, the Additional Medicare Tax and a revived 39.6 percent tax bracket for higher income individuals. The 3.8-percent Net Investment Income surtax very broadly applies to individuals, estates and trusts that have certain investment income above set threshold amounts. The Additional Medicare Tax applies to wages and self-employment income above threshold amounts. Please click the link here to review our Changes in Tax Rates chart summarizing the new taxes and revived brackets and phaseouts.

With these new taxes in place, make sure you don’t lose the benefit of some generous but temporary tax incentives that are available in 2013, but may not be in 2014. Please click the link here to review our 2013 Tax Planning Checklist to help you get started on your tax planning. If your situation has changed or you need more detailed planning, please contact me for more information.