Tips on the ways to submit payments to the IRS for taxes due.

Source: Tax Tip 2019-65: It’s not too late to check IRS payment options

 

It’s not too late to check IRS payment options

IRS offers taxpayers convenient, secure ways to pay their taxes throughout the year. Taxpayers can pay:

  • Online
  • By phone
  • With their mobile device using the IRS2Go app

Additionally, some taxpayers must make quarterly estimated tax payments throughout the year. These taxpayers may include sole proprietors, partners, and S-corporation shareholders who expect to owe $1,000 or more when they file. Individuals who participate in the sharing economy might also have to make estimated payments.

There are several options for taxpayers who need to pay their taxes. They can:

  • Pay using their bank account when they e-file their return. Taxpayers can do this for free using electronic funds withdrawal.
  • Use IRS Direct Pay to pay their taxes, including estimated taxes. Direct Pay allows taxpayers to pay electronically directly from their checking or savings account for free. Taxpayers can also choose to receive email notifications about their payments. Taxpayers should remember to watch out for email scams. IRS Direct Pay sends emails only to users who requested the service.
  • Pay by credit or debit card through a card processor. There is a fee to pay this way. Taxpayers can make these payments online, by phone, or using their mobile device with the IRS2Go app.
  • Make a cash payment at a participating 7-Eleven store. Taxpayers can do this at more than 7,000 store locations nationwide. To pay with cash, taxpayers can visit IRS.gov/paywithcash and follow the instructions.
  • Spread out their payments over time by applying for an online payment agreement. Once the IRS accepts an agreement, the taxpayers can make their payment in monthly installments.

More information:
Electronic payment options
Topic No. 202: Tax Payment Options

IRS YouTube Videos:
Owe Taxes but Can’t Pay  –  English | Spanish | ASL

Share this tip on social media — #IRSTaxTip: It’s not too late to check IRS payment options. https://go.usa.gov/xmdjE

 

http://www.paulinestaxservices.com

Tips on tracking and reporting rental income (from any source).

Q: We’re about to rent out my place and wanted to know how we would go about claiming the income for taxes? Do I have to ?

 

Along with Lyft and Uber driver’s, landlord’s are popping up all over the place.  Short term, long term, vacation spots, single bedrooms, whole house, and yes, I have seen tents in people’s backyards being rented out to earn some extra cash or simply to utilize dead space.   This is all grand until folks start thinking about the tax implications of the these endeavors or “how exactly does this all work on my taxes?”

Tax planning for 3-5 years into the future is imperative for everyone’s situation and that’s no different for people looking to convert a personal or primary residence into a rental property, or if purchasing a property outright for that purpose in general.  It is key to maintain “the books” every year ( and on a monthly basis) for personal expenditures and for business expenditures.  This means adding all income together, adding all expenses (separated by account) together, and subtracting expenses from income. The difference is the “taxable” portion.

To be real though, its often beneficial to report rental income and expenses because any loss may lower other taxable income, subsequently lowering tax liability.

 

Rental income: This could be reported on a 1099MISC or by keeping track of any payments (income)  yourself.

Expenses:  

Advertising:

Cleaning and Maintenance:

Mortgage Interest/Property tax : Always provide/have/use the form 1098 that provides this info.

Repairs and Supplies:  (Home Depot+Lowes+Ace hardware)

 

Here is a template for an income statement and its concept . Download it to your computer and use the Save As feature to save the document in a safe place that you can use in the future.

Rental-Income-Expenses-Template (2)

Rental Income Template

 

 

FOR YOUR TAX RETURNS:

This information is reported on the Schedule E and must be added to your 1040 at the time of preparation.  Tax is paid on net income (Gross income – expenses = net income).  A silent expense that is often overlooked is depreciation and is added at the time of preparation so it will most likely not be on your monthly summaries but is significant.

Schedule E for rental income and other misc type income

Schedule E instructions

 

The instructions for the schedule E are only 12 pages long, but the IRS estimates the following.

Recordkeeping ………                                                                3 hrs., 3 min.
Learning about the law or the form ……………                     1hr., 2 min.
Preparing the form ……                                                           1 hr., 34 min.
Copying, assembling, and sending the form to the IRS .  34 min

 

It’s time: Check the number’s ya’ll. Also known as ‘paycheck checkup’.

It’s almost halfway through the year (2019) and it’s time to review some data that surrounds your life. If you’re an “employee” and receive a W2 at the end of the year, this means reviewing your latest paycheck stub(s) to ensure that you are withholding enough to cover the annual tax due; even if your paycheck is direct deposited you should be able to review the voided stub.

Image result for example paycheck stub

What’s your ‘year to date’ income so far?

How much have you withheld for federal and state taxes ‘year to date’ so far?

How much have you paid into social security and medicaid thus far? Keep in mind, your employer pays the same amounts on your behalf, theses are considered payroll and employment taxes, not part of income taxes.

Below is an example of what page 2 of the 1040 looks like, feel free to locate your actual tax return and follow along. Line 11 of your 1040 page 2 is the tax you owe for the year based on “taxable income”, and line 15 is the actual tax due for the year based on any credits subtracted plus additional tax due.

line 16 is what was actually withheld from your paychecks (or other forms like 1099’s) combined.

2018 1040 page 2

Your tax due (which I often refer to as tax liability), can change from year to year. For example, kids under 16 qualify for the child tax credit which lowers the tax liability due for the year. Your tax liability will increase when your kid turns 17 and no longer qualifies for that credit. This can easily be determined ahead of time so you shouldn’t be shocked that 17th year and should plan accordingly.

Below is some information from the IRS on the topic.

IRS: Doing a ‘Paycheck Checkup’ is a good idea for workers with multiple jobs

WASHINGTON — The Internal Revenue Service urges taxpayers who work multiple jobs or who may be adding summer employment to complete a Paycheck Checkup. Doing so will help them check if they are having the right amount of tax withheld from their paychecks.

Checking and adjusting tax withholding as early as possible in 2019 is the best way to head off a tax-time surprise next year.

The Tax Cuts and Jobs Act (TCJA) made changes to the tax law. Among other things, the new law increased the standard deduction, eliminated personal exemptions, increased the child tax credit, limited or discontinued certain deductions and changed the tax rates and brackets. As a result, many taxpayers ended up receiving refunds that were larger or smaller than expected, while others unexpectedly owed additional tax when they filed their 2018 tax returns.

Two-income families and people with multiple jobs may be more vulnerable to being under-withheld or over-withheld following these major law changes. For 2019, a Paycheck Checkup is especially important for taxpayers who adjusted their withholding in 2018, specifcally in the middle or later parts of the year. Doing a Paycheck Checkup can help determine the correct amount of tax for each of their employers to withhold.

The IRS urges everyone to do a Paycheck Checkup as early in the year as possible so that if an adjustment is needed, there is more time for withholding to happen evenly during the rest of the year. Waiting means there are fewer pay periods to withhold the necessary federal tax.

The easiest way to do a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. The Withholding Calculator can help taxpayers estimate their income, credits, adjustments and deductions more accurately and check if they have the right amount of tax withheld for their financial situation. When using the calculator, it’s helpful to have a completed 2018 tax return and a recent pay stub available.

Based on the Withholding Calculator’s recommendations, the taxpayer can then fill out and submit a new Form W-4 to their employer. In many instances, this means claiming fewer withholding allowances or having an extra flat-dollar amount withheld from their pay.

Self-employment
Some workers are considered self-employed and are responsible for paying taxes directly to the IRS. Often, this includes people involved in the sharing economy. One way to pay taxes directly to the IRS is by making estimated tax payments during the year.

TCJA changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. As a result, many taxpayers may need to raise or lower the amount of tax they pay each quarter through the estimated tax system.

The revised estimated tax package, Form 1040-ES, on IRS.gov is designed to help taxpayers figure these payments correctly. The package includes a quick rundown of key tax changes, income tax rate schedules for 2019 and a useful worksheet for figuring the right amount to pay.

Other situations
Anyone who had a life change, such as getting married or divorced, buying a home or having a baby should also consider a Paycheck Checkup.

Pay electronically anytime
Taxpayers can pay their 2019 estimated tax payments electronically anytime before the final due date for the tax year. Most taxpayers make estimated tax payments in equal amounts by the four established due dates. The three remaining due dates for tax year 2019 estimated taxes are June 17, Sept. 16, and the final payment is due Jan. 15, 2020. Direct Pay and EFTPS are both free payments options, and taxpayers can schedule their payments in advance as well as receive email notifications about the payment. Visit IRS.gov/payments to schedule electronic payments online, by phone or the IRS2go mobile app.

More information:

http://www.paulinestaxservices.com

Appropriate communication for business

 

Text messages are not the appropriate communication for some businesses.  Accounting, finance, and tax preparation are some types of businesses that require a way of communicating that produces a professional trail.   In the event that the situation must be referred to many years down the line,  all of the information must/will be in the same place and easily accessible.

 

We can always have phone calls to discuss whatever you like until your heart’s content, but ultimately that information will still end up in an e-mail of some sort to ‘confirm’; e-mails are more appropriate because they originate a hard copy and documentation of what is discussed.

 

Essentially, you prepare your return’s once a year or apply for various things throughout the year.  When it’s time to do these things, be proactive and responsible and check your snail mail, e-mails, and voicemails for correspondence and respond in the same manner…  save the texts for social event’s or your buddies.

 

Be sure to check out http://www.paulinestaxservices.com for more information including downloadable templates for budgets and business.

 

 

Don’t use this software: Gruntworx

 

With the new tax plan “overhaul” of 2018 I knew that this year was going to be a special type of hell.  I was not expecting to run into obstacles at every turn from dealing with the Internal Revenue Service, the tax preparation software company (Drake Software), their affiliates Gruntworx and SecureFilePro, the unaware individual taxpayer’s, and every company or business that sends documentation out late.

 

Gruntworx describes their software and service as “time saving” and states that on average they save over an hour of preparation time. Lies, all lies. After uploading 134 clients costing a total of $510.50, I am thoroughly dissatisfied and there isn’t any recourse for me at this point but I am hoping to really save folks time.  In fact, I stopped using the software but they don’t give “refunds” so the remaining funds held in the balance that weren’t used are going to be held there indefinitely. Cool, real cool.

 

Let’s go back to mid tax season when things were crazy.  I am the sole person running the show in my office and I have over 500 clients.  Yes, it’s no surprise that I would be very interested in saving time, this year especially, by using software to streamline certain data entry processes.  Turns out, you’re just sending the information over to Joe Shmo who may or may not be qualified or as qualified as you to do the job.  On multiple occasions data was entered incorrectly or not entered at all, yet you’re still charged “per page”.

 

Here’s an example, I uploaded a 1099-R and when it was completed and downloaded (and paid for) on the check of the return the federal ID number was entered incorrectly, there was an error for the amount of  gross distribution income and the address was entered incorrectly.  The amount was supposed to be $10,000 and they entered $100,000. So, basically I have to delete/redo what they did and pay for it.  Wasting time!  This happened to me countless times, I laughed out loud often.

 

Another example, I uploaded 1098-E’s for student loan interest, never entered.  Either the folks don’t know how to enter it in the software, or they need to say “Hey, don’t upload documents like that because we don’t accept them”.  – If this is in the user agreement, please send that over.  A representative that I spoke with this morning couldn’t find anything in the user agreement, yet swore things were in there. And another thing…. NOONE gives two F’s about your stupid user agreement. You don’t even know how your software works or where the user agreement is.   You see, I called last month to ask some clarifying questions and apparently was given the wrong information by an employee, I hate when that happens. Magically, there is a record of other calls made with within the same time frame but the notes in question are missing.  Seems suspect.

 

I was told that I wouldn’t be charged unless the data was “downloaded” into my software. So, I uploaded my clients as they came in but after many days for some files, I’m talking 4 or 5 days that my documents had been uploaded, I finally prepared the returns myself (when they say it’s supposed to be less than 24 hour turnaround) .  Still, a few more days later those returns were “completed” in Gruntworx  but I never downloaded them (one of those laugh out loud moments).   Turns out, you still have to pay for that.

 

Gruntworx makes you purchase “tokens” in increments, but if you don’t use all the money they don’t give it back. I will never use this software again, yet I’ve got funds in there, it’s just not customer service like and it doesn’t show that you back your product.  I don’t want to use your service because it doesn’t work as advertised, but I’m forced to or simply lose the money. Alrighty.

 

Anyway, take my advise and stick to your own processes and don’t use Gruntworx, you will save yourself time and money.

 

 

 

 

 

 

 

 

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.

 

 

$SMCtaxhints$Keepyourmoney$Taxscam$thedollarsignisthenewhashtag$realtaxreform

 

Un-reimbursed Employee Business Expenses are no longer deductible for individuals: Default your anger to the new tax plan and not your tax professional.

 

You are considered an employee of a company if that company provides you with a form W2 (W2’s coincide with form W4 to estimate tax withholding’s).  Prior to 2018, some expenses that were not reimbursed by the employer were eligible to be included on the Schedule  A (Itemized deductions). 

The standard deduction amounts were doubled for Tax Years 2018-2025 and some of those previously eligible deductions are no longer…. like tax preparation fees (for states conforming to the new tax law).  You should still keep track and provide that information.

     * Note: The law gives a “standard deduction” amount, but there is an opportunity to calculate an itemized amount based on many other items. Then, take the amount that generates the largest and most favorable deduction. 

Changes to the deduction for move-related vehicle expenses

The Tax Cuts and Jobs Act suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, and goes through Jan. 1, 2026. Thus, during the suspension no deduction is allowed for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.

Changes to the deduction for un-reimbursed employee expenses

The Tax Cuts and Jobs Act also suspends all miscellaneous itemized deductions that are subject to the 2 percent of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.

Thus, the business standard mileage rate listed in Notice 2018-03, which was issued before the Tax Cuts and Jobs Act passed, cannot be used to claim an itemized deduction for un-reimbursed employee travel expenses in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2026. The IRS issued revised guidance today in Notice 2018-42.