The 2022 filing season begins on January 23, 2023 and the changes may cause some shock for individuals expecting large refunds.

As a reminder, the 1040EZ and 1040A were removed. There is no “easy” form when filing tax returns. Individuals either file the 1040 or the 1040SR. Other forms or schedules may need to be attached to the 1040, like the Schedule C – Profit or Loss from Business. You are essentially considered self-employed if you receive a 1099-Misc or 1099-NEC for non-employee contributions and should include the Schedule C on your returns.

Many of the extended or given credits received over the last couple of years due to the pandemic have expired. We will be reverting to the pre-pandemic situation. IRS changes, e-file changes, and new or updated forms and schedules have been released. Here are a few of the significant changes.

Due to the expiration of American Rescue Plan Act of 2021 (ARPA) (P.L. 117-2)

For the 2022 1040, Lines 12b and 12c were removed, as the election to claim a charitable contribution for taxpayers who do not itemize deductions has expired. The tax law changes of 2017. The Tax Cuts and Jobs Act, drastically affected who could use their mortgage interest, and real estate taxes, among other items on the Schedule A (Itemized Deductions) or who must use the standard deduction that the government gives to everyone. For example, unreimbursed employee business expenses for most folks were eliminated. If you work for an employer and receive a W2 at the end of the year, you can no longer write off parking, mileage, or office use of your home. The TCJA increased the standard deduction, so the overall threshold to itemize increased. However, donating to church or Goodwill was still allowed on a separate line. That will be changing this year too. Charitable Contributions are included on the Schedule A so if you do not itemize, you cannot use those.

Line 27c was removed, as the election to use prior-year earned income to figure EIC has expired. The childless EIC age range (25-65) has been reinstated. Additionally, 2019 earned income can no longer be used in place of current-year earned income to calculate EIC. The earned income credit is available for taxpayers who earn under a certain amount. The number of dependents claimed on the return increases the EIC. Last year, the IRS allowed the best income amount to receive the highest credit. So if you made more in 2020 than in 2019, the IRS allowed you to use 2019’s income to calculate the EIC. That will not be the case for 2022.

Line 30, previously used for the Recovery Rebate Credit, is now reserved. If you did not receive the full amounts for stimulus 1, 2, or 3 when they were distributed, then the RRC would reflect that on your 2020 and 2021 tax returns.

File 2022 tax returns beginning January 23, 2023

The IRS will begin accepting 2022 individual tax returns on January 23, 2023. Since the regular deadline of April 15th is on a Saturday, the deadline to file tax returns that have balances due will be April 18th.

This IRS guidance explains how to handle those personal non-taxable Venmo transactions.

The new 1099-K reporting requirements raise questions about how to input the data to ensure the income is included or excluded correctly. For excludable income, the first workaround I heard about was to use Schedule C to report the income and then use an expense line to ‘reimburse for personal use’ with the same amount. However, it turns out there is some IRS guidance available at that provides alternatives.

Adjustments to income may be more appropriate if the 1099-K does not relate to actual business transactions. 

ScenarioAction(s) to take
Personal items sold at a lossIf you receive a Form 1099-K for a personal item sold at a loss, report the information on Form 1040, Schedule 1, Additional Income and Adjustments to Income with offsetting transactions. For example, if you receive a Form 1099-K for selling your couch online for $700 you will report: Part I – Line 8z – Other Income – Form 1099-K Personal Item Sold at a Loss $700 Part II – Line 24z – Other Adjustments – Form 1099-K Personal Item Sold at a Loss $700 The net effect of these two adjustments on adjusted gross income would be $0.
Personal item sold at a gainIf you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, etc., at a gain, your gain is taxable as a capital gain. Report your gain as explained in the Instructions for Schedule D (Form 1040).For personal items sold at a loss, follow the instructions for Personal items sold at a loss.
Mix of personal items sold – some at a gain and others with a lossYour gains and losses are to be reported separately and gains for assets cannot be offset by losses from the sale of personal assets. If you sold an item you owned for personal use at a gain, see Personal items sold at a gain for information on how to report. For personal items sold at a loss, follow the instructions for Personal items sold at a loss for information on how to report.
Form 1099-K received in errorIf you received a Form 1099-K by mistake or if the form you received has incorrect information, contact the issuer of the Form 1099-K immediately. The issuer’s name appears in the upper left corner on the form along with their phone number. If you can’t get a corrected Form 1099-K, report as follows: Same as personal assets sold at a loss except changing the description as follows: Part I – Line 8z – Other Income – Form 1099-K Received in Error Part II – Line 24z – Other Adjustments – Form 1099-K Received in Error

Download the SecureFilePro app now!

The DrakePortals® SecureFilePro® mobile app is now available in Google Play and the App Store!

have instant and anytime access to the portal for:

  • File sharing
  • Return review
  • Messaging
  • And more contactless features!

To download the app

Download SecureFilePro on Google Play or Apple App Store and login with the email address you use to access your client portal.

Fraud Scams and Identity Theft: New impersonator scam from U.S. Customs and Border Patrol.

Identity theft is one of the worst possible situations that can happen.  It is such a nuisance to deal with; time-consuming, and financially devastating.  This year, several e-filed tax returns were rejected because someone had already filed using someone else’s social or the IRS informed some taxpayers prior to filing that fraud had occurred.  Most tax returns that experience identity theft must be paper-filed instead of e-filed, and the processing time is quite long.

This afternoon I experienced a different kind of situation.  I received a call on my cell phone from Jose Ortega (badge # 142K551), who works for the US Customs and Border Patrol, who informed me that there was a judgment against me for a package shipped to me (living in the U.S.) from Mexico by William Fernandez (he gave me a case number).  I wondered why an essential matter like this was not sent in writing to my home address like most other correspondence.  I let the guy know I would hang up with him and call back after doing some research.  The first thing I did was search the US Customs and Border Patrol website and found the following heading and information.

CBP Warns of Telephone Scam

Release Date: 

March 1, 2021

Callers impersonate CBP personnel

If you are a victim of either of the schemes above or another type of fraud, another step that can be taken is to file an Identity Theft Report with the Federal Trade Commission.

E-file your tax returns on time or risk having to paper file

The IRS shuts down the e-filing system at the end of every year for two months to perform updates and maintenance.  Attempting to e-file the tax returns outside of the authorized dates will cause a rejection.  Ensuring that the return has been accepted within a year is imperative because the IRS will take several years to send a letter informing you that they have not received it. 

If a balance was due on the original return, that could mean additional penalties and fees since it could be considered late.  A refund could be lost since there is a deadline for filing returns with refunds of three years.  

The e-file closure date has not been given yet (as of 11/01/2021), but last year it was 11/18/2020 so at least make sure to file by that date.

Do you still need to file 2018-2020 tax returns? Contact me at for instructions on submitting your documents.

It’s time to file: tax preparation process for current year, past years, and extensions that are due in October.

Timely File Your Tax Returns

It seems like the Internal Revenue Service is dishing out more penalties and fees than ever before, so filing on time might be in your best interest. If you generally receive a refund, you have three years to file, but if you owe, you must file by the due date, which is usually April 15th.   Any time is a good time to file, and it can be as simple as sending your documents over.

Here is the process for new clients.

  1. If you are an employee or are self-employed, upload here using the Guest Exchange.
  • For employees, send W2’s, a copy of your driver’s license, and any other documents you might have, like 1099’s or 1098’s. If you are self-employed, send your Profit/Loss Statement or Income and Expenses with all other items. Totals Only, no receipts.

2.Please shoot me an email at to start the interview and process as Ill need more information.

3. I’ll prepare the returns and send you a copy for review

4. If everything looks good, sign the e-file authorization documents, pay the tax prep costs, and the returns will be e-filed.

File Past Tax Returns

The process is the same as above. Generally, start with the last three years, and then we will determine the next steps.

Automatic 6 Month Extension of time to file

If you filed an extension, the due date is October 15th.  The extension is ‘of time to file’, not ‘of time to pay’, so if you will owe or have a balance due, it will be accruing interest/penalties for failure to pay, so filing sooner rather than later is a good idea.

If you received a 1099-G tax form but did not request benefits in 2020, or received a 1099 with incorrect information, please visit the Tax Form 1099-G page or more information (CO).

There are many types of identity theft. A few weeks ago I posted that someone had applied for unemployment benefits using my information. I still work at the company that I supposedly filed for unemployment from and they denied the claim but it seems as though Colorado granted all unemployment claims up front with the hopes of recovering that money at a later date if it turns out to be ‘not qualified’. Well folks, I just received a 1099-G from the state with the income that I did not receive to be included on my 2020 tax return.

I filed a fraud document initially, but clearly it wasn’t looked into. I followed the following next steps but its concerning because the IRS isn’t going to know that the document/income is fraud and now my tax return may not be processed correctly and timely.

Identity Theft

If you have received a 1099-G document from the Colorado Department of Labor and Employment but did not file a claim for unemployment benefits, you may be a victim of identity theft. Unfortunately, fraudsters steal or purchase private information from illicit data brokers and use that information to file fraudulent unemployment claims. While we have a sophisticated multi-factor program in place to flag suspected fraud, no system is perfect.

Here’s what you should do if you’ve received a 1099-G document from the Colorado Department of Labor and Employment but did not file a claim for unemployment benefits:

  1. Report it to us using the Report Invalid 1099 form.
  2. Contact the three consumer credit bureaus and put a fraud alert on your name and Social Security Number (SSN). Credit Bureau Contact Info:

    Equifax: 1-800-525-6285
    Experian: 1-888-397-3742
    TransUnion: 1-800-680-7289
  3. File a “counter report” with your local police department to have a record on file.
  4. Create a file where you can keep records of this identity theft in one place.


Follow this link to report unemployment fraud online for Colorado

Recently, I received paperwork from the Colorado Department of Labor and Employment with a PIN number and information on where to logon to view my unemployment information. Just one problem. I didn’t apply for unemployment benefits.

If this has happened to you too, here is the link for more information and to report fraud online.

Employee (Form W2) or Independent Contractor (Form 1099-Misc)?

There are rules that govern how an employee is to be treated versus an independent contractor but one of the easiest ways to decipher the difference is, are employment taxes paid on your behalf during the year by you and your employer? How can you tell? If you receive a paycheck stub and it shows withholdings for federal and state income tax and social security and Medicare tax then yes, you pay employment tax as you go and are considered an employee.

If you work for the same guy everyday but he cuts you a check without withholding taxes then you are most likely an independent contractor, not a true employee for tax purposes. The form(s) that you receive at the end of the year will be different. If you are an employee then you would receive a W2 but if you are considered an independent contractor then you would receive a 1099-misc( or not in some cases, see self employed self help).

Form W2 = Employee where employment taxes are “paid as you go”

Form 1099-Misc or Income Statement = Independent Contractor or self employed person who should be adding in additional expenses and usually employment taxes due are paid when the return is filed.

SMC$Hint(s): Do these things now, be less angry later!


Quickly, because contrary to popular belief, my job doesn’t just end on April 15th every year, a few public service announcements…


A big thank you to everyone who checked in on my well-being this tax season.  It was especially difficult rolling out and implementing a new tax plan to hundreds of folks that didn’t understand the previous version of this shit show.


Secondly, if you’re receiving an email from me every morning at 4 am, it’s most likely because you didn’t follow the instructions to login to the portal and check the messages and/or download your client copy that I sent to you for review.


Third, if you were pissed this year because you didn’t realize that all last year you weren’t withholding as much money as the prior year or the correct amount of tax in general, “they” are adjusting things again this year…. so, the same thing is happening right now.  Know your TAX from Tax Year 2018 and review your paycheck stub’s YTD’s to determine your withholding’s.

*The object of this game is no refund, no balance due *

  • Hint #1 If you have multiple jobs, they’re supposed to be added together.
  • Hint #2: Don’t include social security or Medicare tax withheld when calculating federal or state income tax information.


It is every individual taxpayer’s responsibility to understand this stuff, and if you don’t or can’t, in most cases, it might not be you, it’s the system. We need a real system of taxation!


Other helpful HINTS

Form W4 = Employees Withholding certificate; employee of someone else.

form W9 = Self-employed person required to give their business information for work performed, not an employee of someone else.

Form W2 = Employee’s Wage and Tax statement (employee of someone else and in most cases cannot deduct un-reimbursed employee business expenses).

1099 Misc (this is not a W2) = Generally, self employed income or Rents received (think subcontractors, taxi driver, or landlord’s;  business expenses can be deducted).


Alright, well there’s enough information to blow your minds for a few.





It’s tax time. Now what?

Updated January 27, 2019

By Stephanie Cardenas


The new tax plan is intimidating, for everyone, including tax professionals.  The <numbers> changed, many of the forms changed, many rules were revised, added or removed and much more. But the process is essentially the same just a bit more time consuming at this time.   * Tax plan for 2018-2025 mind you*


Taxpayer’s should provide their information in the same way they had in the past, the result may or may not be the same however.  Essentially, prepare the returns as you normally would.  Yes, some of your calculated deductions may not “qualify” as they had in prior years, and that will be discussed when TY18 is prepared and can be compared to TY17.

  • For Pauline’s Tax Service clients: There’s a forecast in the 2017 client copy that estimates the changes per your situation… assuming it stays relatively the same. Dropping or gaining a dependent will affect the estimate.
  • For other folks: Grab your 2017 client copy (form 1040, 1040EZ, or 1040A) and locate your key numbers.  Taxable income and Tax due per that income.   When 2018 is prepared you can compare your taxable income for both years and the tax due per that income for both years see what the changes were.  Pay special attention to last years’ tax rate compared to this years tax rate.

What you will need to prepare your returns


Collect and save all necessary tax related items and documents as they arrive.  Create a folder on your desktop or computer if necessary. Once you’re positive nothing else will arrive, upload to the portal or mail/drop off in the office. Use the 2018 tax planning document document as a guide.

-W2’s, 1099’s, 1098’s, 1095’s, any spreadsheets you create, etc.


If you had a baby. That’s fantastic.  You will need a copy of the social security card/number, their name, birth date.  Additional questions for divorced or separated parents and people who qualify for the earned income credit (EIC).

  • The exemption amounts no long apply but the child tax credit is available (For children under age 17).


If you started a business, awesome.  You will need a statement that shows the total of all of your income and expenses.  Every business is different and has different needs so tailor your income statement to suit you.  Here’s an example template.

template income statement

income statement template



Use the tax organizer or tax planning document as a checklist to ensure you have the required information.  2018 tax planning document


You’re ready to file


Upload your documents to the portal or mail/drop off packet at the office: 12365 Huron St. Suite 1800 Westminster Co 80234. Remote processing preferred.  In the event we need an in-office appointment, ask about the availability of a Saturday appointment.


We’ll prepare your returns and provide you with a copy so that we can chat about what the changes were, if any.  E-copies and/or hard copies will be provided, generally within 24-48 hours.


Pay the tax preparation costs: Cash, check or charge. Generally, the tax prep fees range from $100-350 depending on the required forms and worksheets.  Most returns are anticipated to be average resulting in fees of $150-200.  The tax prep fee includes federal, state(s), e-filing, and many other features.   I’m available year round for help with notices and responses to the IRS.

  • The audit process is generated electronically and randomly so always understand what they are PROPOSING before you agree and/or pay. But ALWAYS respond in a timely fashion.

  • Double check if the question is asking for the last 4 of your social or the last 5.
  • You will need your username and password to log on to the portal, and if any client copies are password protected use the last 5 of the primary taxpayer’s social security number.
  • Try using the forgot password, if you already have an account.  For new clients Ill need the last 4 of the social to set up a client portal so upload as a guest.



You should know, generally, what your tax liability is for the year and plan on a 3 year basis.  Take a look at the last 3 years tax return copies and locate your tax due for those years.  Pauline’s Tax Service Clients:  Included in every client copy is a Comparison Sheet that lists the last 3 years side by side.


If you generally receive large refunds, you are doing this all wrong.  Refunds aren’t extra money… unless it is like from the Earned Income Credit but that’s another topic.  Refunds are of  your money previously withheld from your paychecks to cover your estimated tax liability.  The goal is to only withhold your estimated tax liability, in which case and in theory you would come as close to receiving nothing and owing them nothing at the end of the year.


If you over estimate your tax liability the IRS holds your money interest free all year long and gives it back when its convenient for them.   A more in depth piece to come about this but the point will be to keep more of your money on your paychecks during the year.





Schedule C (Self Employment) Changes for TY 2018.

Schedule C Provisions

Entertainment Expenses
In prior years, a taxpayer generally could deduct expenses for activities considered to be
entertainment, amusement, or recreation if the expenses were directly related or associated with the active conduct of the taxpayer’s trade or business. For amounts incurred or paid after December 31, 2017, deductions for entertainment expenses are disallowed.

The TCJA deemed entertainment expenses as nondeductible regardless of the relationship of the expenses to the business activity, including meals purchased during entertainment activities. There are a few exceptions outlined in Code Sec. 274(e) including:

  •  Expenses for goods, services, and facilities that are treated as compensation to an
  • Expenses paid or incurred by the taxpayer in connection with the performance of
    services for another person, under a reimbursement or other expenses allowance
  • Expenses for recreational, social, or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees
    Businesses can still deduct 50% of amounts paid for meals associated with the active conduct of the taxpayer’s trade or business.

For example, employee travel meals are still 50% deductible.


Meals and Ent changes large.png

Are you using the correct portal?


With the tax season approaching it is a good time to verify that all of your contact information is updated, especially across social media.  Notify people like myself that need to know your current address, phone number, or e-mail if there have been any changes. 


If you are using the portal to communicate with Pauline’ s Tax Service be aware that there are 2 versions and you should ensure that you are using the correct one.   Login here. 


*Notice there is a “Public” tab in addition to the “Private” tab.  Under the public tab you will find helpful templates and information. 


TAX REFORM BASICS Publication 5307


Get 2018 tax documents ready for upcoming filing season (

Source: IR-2018-225, [UPDATE] Get 2018 tax documents ready for upcoming filing season


Get Ready for Taxes:

Get 2018 tax documents ready for upcoming filing season.

WASHINGTON –The IRS reminds taxpayers to keep a copy of their past tax returns and supporting documents for at least three years. Certain key information from their prior year return may be required to file in 2019.

This is the fifth in a series of reminders to help taxpayers Get Ready for the upcoming tax filing season. The IRS has recently updated its Get Ready page with steps to take now for the 2019 tax filing season.

Keeping copies of prior year tax returns saves time. Often previous tax information is needed to file a current year tax return or to answer questions from the Internal Revenue Service. Taxpayers claiming certain securities or debt losses should keep their tax returns and documents for at least seven years.

Use a tax return to validate identity

Taxpayers using tax filing software for the first time may need their adjusted gross income (AGI) amount from their prior year’s tax return to verify their identity. Learn more at Validating Your Electronically Filed Tax Return. Those who need a copy of their tax return should first check with their software provider or tax preparer. Taxpayers can also obtain a free tax transcript from the IRS, or for a fee, order a copy of their tax return.


Order a transcript

A tax transcript can be ordered from the IRS. It summarizes tax return information and includes AGI. Tax transcripts are free and available for the most current tax year after the IRS has processed the tax return. Tax transcripts are available for the past three tax years.


Plan ahead. Delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. Taxpayers who order by mail should allow 30 days to receive transcripts and 75 days for tax returns.


There are three ways for taxpayers to order a transcript: 

  • Online. Taxpayers can use Get Transcript Online on to view, print or download a copy of all transcript types. Those who use it must authenticate their identity and create an account using the Secure Access process. Please allow five to 10 calendar days for delivery.
  • By phone. Call 800-908-9946.
  • By mail. Taxpayers who are unable to register or prefer not to use Get Transcript Online may use Get Transcript by Mail. Taxpayers can complete and send the IRS either Form 4506-T, Request for Transcript of Tax Return, or Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Use Form 4506-T to request other tax records: tax account transcript, record of account, wage and income and verification of non-filing. These forms are available on the Forms, Instructions and Publications page on  Those who need an actual copy of a tax return can get one for the current tax year and as far back as six years. The fee per copy is $50. Taxpayers can complete and mail Form 4506 to request a copy of a tax return and mail the request to the appropriate IRS office listed on the form. 
  • If taxpayers need information to verify payments within the last 18 months or a tax amount owed, they can view their tax account.
  • The IRS is now redacting tax transcripts so that sensitive information, such as the taxpayer’s name, address and Social Security number, is partially masked. However, all financial entries, such as the adjusted gross income, are visible. The redacted transcript will better protect taxpayers from identity theft.

Watch out for scammers!


IRS warns of “Tax Transcript” email scam; dangers to business networks

WASHINGTON – The Internal Revenue Service and Security Summit partners today warned the public of a surge of fraudulent emails impersonating the IRS and using tax transcripts as bait to entice users to open documents containing malware.

The scam is especially problematic for businesses whose employees might open the malware because this malware can spread throughout the network and potentially take months to successfully remove.

This well-known malware, known as Emotet, generally poses as specific banks and financial institutions in its effort to trick people into opening infected documents. The Summit partnership of the IRS, state tax agencies and the nation’s tax industry remind taxpayers to watch out for this scam.

However, in the past few weeks, the scam masqueraded as the IRS, pretending to be from “IRS Online.” The scam email carries an attachment labeled “Tax Account Transcript” or something similar, and the subject line uses some variation of the phrase “tax transcript.”
These clues can change with each version of the malware. Scores of these malicious Emotet emails were forwarded to recently.

The IRS reminds taxpayers it does not send unsolicited emails to the public, nor would it email a sensitive document such as a tax transcript, which is a summary of a tax return. The IRS urges taxpayers not to open the email or the attachment. If using a personal computer, delete or forward the scam email to If you see these using an employer’s computer, notify the company’s technology professionals.


Contact me if you still need to have your 2017 or prior year’s tax returns prepared.


Stephanie C.   |





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

Source: IR-2018-211: 401(k) contribution limit increases to $19,000 for 2019; IRA limit increases to $6,000

One way that income tax liability can be lowered for the year is if some the earnings was shifted to retirement savings (ie IRA’s or 401-K’s).  For example, $19,000 per year can be subtracted from taxable income if that money was put into a 401-K.   An obvious point to make is that many folks live paycheck to paycheck and don’t see saving hundreds of dollars extra per month as an option,  however for the folks capable of living within a certain means that would be a pretty favorable benefit assuming it wasn’t “lost” in some sort of crash/incident.

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.

Detailed Description of Adjusted and Unchanged Limitations

Section 415 of the Internal Revenue Code (Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made following adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective Jan. 1, 2019, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $220,000 to $225,000. For a participant who separated from service before Jan. 1, 2019, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2018, by 1.0264.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2019 from $55,000 to $56,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2019 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $18,500 to $19,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $275,000 to $280,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $175,000 to $180,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from

$1,105,000 to $1,130,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $220,000 to $225,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $120,000 to $125,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $6,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $3,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $405,000 to $415,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $600.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,500 to $13,000.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $18,500 to $19,000.

The limitation under Section 664(g)(7) concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan remains unchanged at $50,000.

The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $110,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $220,000 to $225,000.

The dollar limitation on premiums paid with respect to a qualifying longevity annuity contract under Section 1.401(a)(9)-6, A-17(b)(2)(i) of the Income Tax Regulations remains unchanged at $130,000.

The Code provides that the $1,000,000,000 threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is adjusted using the cost-of-living adjustment provided under Section 432(e)(9)(H)(v)(III)(bb). After taking the applicable rounding rule into account, the threshold used to determine whether a multiemployer plan is a systemically important plan under Section 432(e)(9)(H)(v)(III)(aa) is increased for 2019 from $1,087,000,000 to $1,097,000,000.

The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2019 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $38,000 to $38,500; the limitation under Section 25B(b)(1)(B) is increased from $41,000 to $41,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $63,000 to $64,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the Retirement Savings Contribution Credit for taxpayers filing as head of household is increased from $28,500 to $28,875; the limitation under Section 25B(b)(1)(B) is increased from $30,750 to $31,125; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $47,250 to $48,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the Retirement Savings Contribution Credit for all other taxpayers is increased from $19,000 to $19,250; the limitation under Section 25B(b)(1)(B) is increased from $20,500 to $20,750; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $31,500 to $32,000.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions is increased from $5,500 to $6,000.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) increased from $101,000 to $103,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers who are active participants (other than married taxpayers filing separate returns) increased from $63,000 to $64,000. If an individual or the individual’s spouse is an active participant, the applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $189,000 to $193,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $189,000 to $193,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $120,000 to $122,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.


Find more information at



Working poor, lower middle class, upper middle class, 1%… where do you fall on the grand scheme of their scale? and food for thought on getting a bigger piece of the pie.


The scholar Richard Reeves, as detailed in the above piece by the PBS Newshour, describes the various “classes” as defined by wealth.  He also theorizes that it is not the top 1 percent necessarily obstructing the rest of us from accruing some financial stability, but the “upper middle class” group earning $117,000 (the top 20%) or more may be unintentionally keeping the the majority out of the equation.

If you “write off” any employee business expenses for yourself or your employee’s, this article may be for you.

Tax reform brings changes to fringe benefits that can affect an employer’s bottom line and what employee’s can actually deduct on their personal returns. 


Source: Tax Reform Tax Tip 2018-162: Tax reform brings changes to fringe benefits that can affect an employer’s bottom line


As most of you are aware we have a new tax plan in place for tax year’s 2018 – 2026 (as of now).  Among the many changes previously deductible employee business expenses (including fringe benefits) may be excluded or the process has changed.

Continue reading….


The IRS reminds employers that several programs have been affected as a result of the Tax Cuts and Jobs Act passed last year. This includes changes to fringe benefits, which can affect an employer’s bottom line and its employees’ deductions.

Here’s information about some of these changes that will affect employers:

Entertainment Expenses & Deduction for Meals
The new law generally eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.

However, under the new law, taxpayers can continue to deduct 50 percent of the cost of business meals if the taxpayer or an employee of the taxpayer is present, and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Food and beverages that are purchased or consumed during entertainment events will not be considered entertainment if either of these apply:

  • they are purchased separately from the entertainment
  • the cost is stated separately from the entertainment on one or more bills, invoices or receipts

Qualified Transportation
The new law also disallows deductions for expenses associated with qualified transportation fringe benefits or expenses incurred providing transportation for commuting. There is an exception when the transportation expenses are necessary for employee safety.

Bicycle Commuting Reimbursements
Under the new law, employers can deduct qualified bicycle commuting reimbursements as a business expense. The new tax law suspends the exclusion of qualified bicycle commuting reimbursements from an employee’s income. This means that employers must now include these reimbursements in the employee’s wages.

Qualified Moving Expenses Reimbursements
Employers must now include moving expense reimbursements in employees’ wages. The new tax law suspends the exclusion for qualified moving expense reimbursements.

There is one exception as members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if they meet certain requirements.

Employee Achievement Award
Special rules allow an employee to exclude achievement awards from their wages if the awards are tangible personal property. An employer also may deduct awards that are
tangible personal property
, subject to certain deduction limits. The new law clarifies the definition of tangible personal property.


Like or share this article if it pertains to you or someone you know.

-Thanks, Stephanie



It’s not too late to do your taxes.

Even though the October 15th deadline has passed to file late Tax Year 2017 returns, they can still be prepared, submitted, and even e-filed.  The process is pretty simple.

Gather your documents. W2’s, 1099’s, 1098’s, Charitable Contribution info, or business income and expense numbers, and more (depending on your situation).  It’s a good time to start thinking about where you are going to start organizing and holding information for the next tax season which will be the filing of Tax Year 2018.

Submit your documents to P.T.S. (Pauline’s Tax Service) or Stephanie.  Items can be submitted electronically or dropped off at the office on 124th and Huron.

Review and finalize.  The tax returns will be prepared and discussed, then paid for.

Submit to IRS and States.  The ultimate last step after reviewing and finalizing is e-filing, so the returns will be e-filed and there is nothing more you need to do.  Unless you have a balance due instead of a refund, then you are responsible for making the payment(s).


Pauline’s Tax Service, Ltd.
12365 Huron ST. suite 1800
Westminster CO 80234


Contact Information

 (303) 301-7167     |   |


Checkout the IRS’ site at for more information about the latest tax news and information. Older tax returns can still be prepared too.  Ask about which one’s can still be e-filed, but they can always be paper filed.


Filling out a new withholding form for your employer is beneficial. The form is called W4 and there is a new version out.

Employee’s Withholding Allowance Certificate – Form W4

A new version of Form W-4 is available to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act.


Purpose. Complete Form W-4 so that yourUntitled
employer can withhold the correct federal
income tax from your pay. Consider
completing a new Form W-4 each year and
when your personal or financial situation


If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.


Generally, on line 5 you will enter 0 to withhold the maximum amount.  However, if you are looking to come out even at the end of the year on your tax liability you may be able to get away with claiming 1 or higher, even without and dependents.


Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February


weekly wages paid income tax withholding


The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.

The updated withholding information, posted today on, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

“The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes.”

The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.
To help people determine their withholding, the IRS is revising the withholding tax calculator on The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.

The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.

The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.

In addition, the IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay.

For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.

More information is available in the Withholding Tables Frequently Asked Questions.