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     |    stephanie@paulinestaxservices.com   | stephanie.securefilepro.com

Checkout the IRS’ site at http://www.irs.gov 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.

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 your
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
changes.

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

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 IRS.gov, 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 IRS.gov. 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.

Many of the deductions that people have been taking over the last several years are going away for years’ 2018 and later.  These particular items can be found on the 1040 Schedule A.  See below.

Deduction for personal casualty and theft losses suspended (unless incurred in federally-declared disaster area)

Limitations to the deduction for state and local taxes

Limitations to the deduction for home mortgage interest in certain cases

Eliminating most miscellaneous itemized deductions such as:

• Deductions for employee business expenses
• Tax preparation fees
• Investment expenses, including investment management fees
• Employment related educational expenses
• Job search expenses
• Hobby losses
• Safe deposit box fees
• Investment expenses from pass-through entities

Eliminated the limitation on itemized deductions for certain high-income taxpayers.

Resources: IR-2017-210, IR-2018-32, IR-2018-122, IR-2018-127

https://learn.stashinvest.com/back-to-school-budgeting

Teach your kids how to navigate the back-to-school shopping jungle with this budgeting activity.

3 min read

The summer is drawing to a close, and it’s almost time for your kids to head back to school.

To get ready, you’ll need to do some back-to-school shopping, for new sneakers, notebooks, pencils and all the other items that your kids will need for a new year of classes.

But do your children know how much it will cost to buy all of that gear? It’s important for kids to learn the value of money, and how much things cost, whether that’s for a new hobby, game, or all that back-to-school merchandise.

In this activity, your children will learn how to create a budget and a spending plan. This activity will help your child practice these skills when it comes to making purchases for school. This activity is for children between 3rd and 8th grades.

What will your kids learn? Most children participate in preparing to go back to school. New clothes, shoes, backpacks, school supplies, haircuts, and technology are often found on wish lists, but they can be budget breakers. Teaching children to classify “needs” versus “wants,” prioritize needed items, and spend within a set budget, are valuable life lessons. While working on this activity, children will practice and learn valuable lessons about budgeting and buying.

Teach your kids about back to school budgeting

Download the activity sheet

What You’ll Need

• Back-to-School Shopping printables — Download and Print [PDF]
• Access to sales circulars or shopping websites

Getting Started

• Set a dollar amount for your child’s back-to-school spending budget.
• On the “Back-to-School Wishlist,” create a list of items your child wishes to buy.
• Decide which of these items are needs, and which are things you want, but could do without. Circle your selection.
• Have your child prioritize the list. Number the most important item on my list as 1.
• The child will transfer the list to the “Back-to-School Shopping List.” Help your child research each item to determine its price, and where to buy it.
• The child will find the total cost of the list. Does it if within his or her budget? If not, work together discussing priorities and possibly needing to save for an important item.

Talk to your kids!

Parents should check in with their children to make sure they understand what they’ve learned.

It is important that your child understand needs versus wants. When working on the list or reviewing after your child has completed it, discuss different opinions. Children need sneakers for school. Do children need the latest popular sneaker? There is a computer available to them at school, do they need their own?

• What do you need to start the school year? Encourage your child to set a reasonable budget and stick to it.
• Do they need to spend all of their money? What can they do with any extra? (encourage savings)
• Have a discussion about the best time to buy certain items. Although stores have back-to-school sales on clothes during the summer, if you wait those same items are permanently discounted in early fall.
• Assist your child in researching where they can get the best price. Don’t make purchases until a plan is in place.
• How can you save for items that fall outside the budget? If your child wants something you deem extravagant, make a plan.
• After completing the activity, encourage your child to continue the practice of keeping a list, identify needs vs. wants and prioritizing. Talk about continued planning for other items and events.

By Stash Team

Source: IRS Tax Reform Tax Tip 2018-124: IRS tells taxpayers who got a big refund to do a “paycheck checkup”

After filing tax returns, many people put taxes far out of their mind. However, taxpayers who received a large tax refund this year should think about taxes again…and the sooner the better. The IRS urges these taxpayers to visit the Withholding Calculator on IRS.gov and do a “paycheck checkup.” Doing so will help them make sure their employers are withholding the correct amount of taxes from their paychecks.

Most taxpayers receive refunds averaging around $2,800. Taxpayers who receive large refunds could receive more of their money throughout the rest of this year, rather than waiting until they file their tax return next year.

The Tax Cuts and Jobs Act was passed last year, and it included many tax law changes. Taxpayers who calculate their tax payments throughout the year in order to receive a refund at tax time should check to see how the new tax law affects them. A “paycheck checkup” can help taxpayers apply the new law changes to their situation.

Here are some of the changes that affect taxpayers who received a refund this year, but also many other people:

• The law reduced tax rates and changed tax brackets.
• The standard deduction nearly doubled. The new rules raise the standard deduction to $24,000 for joint filers and $12,000 for singles for 2018. Many taxpayers who previously itemized their deductions will find the standard deduction is now of bigger benefit.
• The law removed personal exemptions.
• The child tax credit is bigger and the phaseout amount is higher.
• The law added a new tax credit for dependents who can’t be claimed for the child tax credit.
• The law limited or discontinued certain deductions.

The calculator can help navigate each tax situation to make sure the amount withheld best fits the need of every taxpayer. It can help taxpayers decide if getting more money in each paycheck could make more financial sense than getting a refund at tax time next year. Adjusting withholding amounts now can also prevent having too little tax withheld, resulting in an unexpected tax bill next year.

For information about how to use the calculator and how to change withholding, taxpayers can check out the IRS Tax Reform Tax Tips on IRS.gov.

Taxpayers may also need to determine if they should make adjustments to their state or local withholding. They can contact their state’s department of revenue to learn more.

Source: Tax Tip 2018-110: Reminder for extension filers: Oct. 15 is just around the corner

Monday, October 15, 2018, is the extension deadline for most taxpayers who requested an extra six months to file their 2017 tax return.

For taxpayers who have not yet filed, here are a few tips to keep in mind about the extension deadline and taxes:

• Try IRS Free File or e-file. Taxpayers can still e-file returns for free using IRS Free File. The program is available only on IRS.gov. Filing electronically is the easiest, safest and most accurate way to file taxes.
• Use direct deposit. For taxpayers getting a refund, the fastest way to get it is to combine direct deposit and e-file.
• Use IRS online payment options. Taxpayers who owe taxes should consider using IRS Direct Pay. It’s a simple, quick and free way to pay from a checking or savings account. There are other online payment options.
• Don’t overlook tax benefits. Taxpayers should be sure to claim all entitled tax credits and deductions. These may include income and savings credits and education credits.
• Keep a copy of the tax return. Taxpayers should keep copies of tax returns and all supporting documents for at least three years. This will help when adjusting withholding, making estimated tax payments and filing next year’s return.
• File by October 15. File on time to avoid a potential late filing penalty.
• More time for the military. Military members and those serving in a combat zone generally get more time to file. Military members typically have until at least 180 days after leaving a combat zone to both file returns and pay any tax due.

Source: IRS Tax Tip 2018-101: What taxpayers can do when a letter arrives this summer

What taxpayers can do when a letter arrives this summer

Some taxpayers will receive a letter from the IRS this summer. Taxpayers should not panic and remember that they have fundamental rights when interacting with the agency.   Forward copies of any letters to your tax preparer and they can often help you navigate your options and requirements.

These rights are in the Taxpayer Bill of Rights. Among other things, these rights dictate that letters from the IRS must include:

• Details about what the taxpayer owes, such as tax, interest and penalties.
• An explanation about why the taxpayer owes the taxes.
• Specific reasons about why the IRS may have denied a refund claim.

Taxpayers who receive a letter from the IRS can do some simple things when it arrives. Taxpayers should remember to:

• Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
• Compare it with the tax return. If a letter indicates a changed or corrected tax return, taxpayer should review the information and compare it with their original return.
• Respond. Taxpayers should:
  • Respond to a letter with which they do not agree.
  • Mail a letter explaining why they disagree.
  • Mail their response to the address listed at the bottom of the letter.
  • Include information and documents for the IRS to consider.
  • Allow at least 30 days for a response.
• Reply timely if necessary. If a taxpayer agrees with the information, there’s no need to contact the IRS. However, when a specific response date is in the letter, there are two main reasons a taxpayer should respond by that date:
  • To minimize additional interest and penalty charges.
  • To preserve appeal rights if the taxpayer doesn’t agree.
• Pay. Taxpayers should pay as much as they can, even if they can’t pay the full amount they owe. They can pay online or apply for an Online Payment Agreement or Offer in Compromise.
• Contact the IRS if necessary. For most letters, there’s no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can call the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.
• Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.

Source: Tax Preparation Costs and Fees

As we all know, we have a new <income> tax plan – at least until 2026.  The new plan has many changes that will affect how we prepare for “tax time”.  Paying less tax should be a concern for everyone.  I just want to throw out there that some folks are not aware of the payroll taxes they contribute to like to social security and medicare.

In the year 2018, the employer’s portion of the FICA tax is 7.65% (the Social Security tax of 6.2% plus the Medicare tax of 1.45%) on each employee’s first $128,400 of salary and wages. On each employee’s salary and wages in excess of $128,400 the employer’s portion is the Medicare tax of 1.45%.  You, the employee, also pays 7.65% of the first $128,400.   In my humble opinion the percentages should be decreased and the amount of income taxed should be expanded.  As the owner of my small business I pay both portions so that’s 15.3% – just for employment taxes.

Quick reminder on the taxes we pay. . . before monies can be diverted to budgeting expenses like housing, food, transportation, health care, etc.

• Sales tax
• Individual Income tax
• Employment tax (social insurance)
• Property Tax
• Corporate income tax
• Other taxes

Itemizers_encouraged_to_check_withholding_in_light_of_TCJA_changes__05_18_2018_

In a news release, IRS has encouraged taxpayers who have typically itemized their deductions to use the withholding calculator on IRS’s website to perform a “payroll checkup,” noting that changes made by the Tax Cuts and Jobs Act (TCJA; P.L. 115-97 , 12/22/2017) may warrant an adjustment.

Changes made by the TCJA. The TCJA made a number of law changes, effective for tax years beginning after 2017 and before 2026, that affect the amount of itemized deductions that can be claimed and whether taxpayers choose to itemize or claim the standard deduction.

These changes include:
• nearly doubling standard deductions;
• limiting the deductions for state and local taxes;
•limiting the deduction for home mortgage interest in certain cases; and
•eliminating deductions for employee business expenses, tax preparation fees and investment expenses, including investment management fees, safe deposit box fees and investment expenses from pass-through entities.

In light of these changes, some individuals who formerly itemized may now find it more beneficial to take the standard deduction, which could affect how much a taxpayer needs to have their employer withhold from their pay. Also, even those who continue to itemize deductions should check their withholding because of TCJA changes. IRS warned that having too little tax withheld could result in an unexpected
tax bill or penalty at tax time in 2019, and also noted that taxpayers who have too much tax withheld may prefer to receive more in their paychecks instead of in the form of a tax refund.

IRS encourages payroll checkup. IRS is urging taxpayers to perform a “paycheck checkup” and to do so as early as possible so that if a withholding amount adjustment is necessary, there’s more time for withholding to take place evenly throughout the year. IRS cautioned that waiting means there are fewer pay periods to make the tax changes – which could have a bigger impact on each paycheck. Using the withholding calculator. When taxpayers use the withholding calculator (available at http://www.irs.gov/individuals/irs-withholding-calculator), they can indicate whether they are taking the standard deduction or itemizing their deductions. If they are itemizing, they’ll enter estimates of their deductions. The withholding calculator applies the new law to these amounts when figuring the user’s
withholding.

IRS encourages taxpayers to have their 2017 tax return when using the withholding calculator, as well as their most recent pay stubs. IRS also noted that if a taxpayer’s personal circumstances change during the year, they should re-calculate their withholding at that time.

Adjusting withholding. Employees who need to complete a new Form W-4, Employee’s Withholding Allowance Certificate, should submit it to their employers as soon as possible. Employees with a change in personal circumstances that reduce the number of withholding allowances must submit a new Form W-4 with corrected withholding allowances to their employer within 10 days of the change.

References: For withholding on wages, see FTC 2d/FIN ¶ H-4220 ; United States Tax Reporter ¶

P.S. If you receive refunds at tax time (not a balance due to the IRS/State) then your return is not “DUE” on the  deadline of April 15-18. The week of the the 15th, extensions and returns with balances due take priority. At least in my office.

Tax season is in full swing in my office and I’m prepared for your documents, are you?  The IRS will begin accepting returns at the end of January, the 29th to be exact so if your going to be ready let’s get started.  The filing deadline is April 17th 2018.

As your Documents arrive store them in a safe place, altogether.  Think about your life last year.  Did you have 1 job, or change jobs multiple times. Did you withdraw money from your 401k or retirement plan, or make contributions separately from what is taken out of your paycheck.  Did you go to college or make payments to your student loans. Did you have a baby or get married. All of these items and then some can have an impact on the documents you are waiting on before you can file.   Please, wait for and have all documents before you submit.  You cannot use your last paycheck stubs to file.

When you submit your documents for preparation, plan on making an initial retainer payment of $50.00 using the Authorization-Form-Credit-Card-One-Time-Payment.  This pre payment will be deducted from the final balance due which is generally between $150 – $250.  We provide certain low income (generally  full time students aged 18-22) and elderly (65+) people with lower rates on a case by case bases.

The IRS is requesting updated Power of Attorney forms (2848).  Ill be adding this form to this years’ filing.

Yay, tax time!!!!

Source: IR-2018-1: 2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17; Help Available for Taxpayers

2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17; Help Available for Taxpayers

WASHINGTON ― The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 29, 2018 and reminded taxpayers claiming certain tax credits that refunds won’t be available before late February.

The IRS will begin accepting tax returns on Jan. 29, with nearly 155 million individual tax returns expected to be filed in 2018. The nation’s tax deadline will be April 17 this year – so taxpayers will have two additional days to file beyond April 15.

Many software companies and tax professionals will be accepting tax returns before Jan. 29 and then will submit the returns when IRS systems open. Although the IRS will begin accepting both electronic and paper tax returns Jan. 29, paper returns will begin processing later in mid-February as system updates continue. The IRS strongly encourages people to file their tax returns electronically for faster refunds.

The IRS set the Jan. 29 opening date to ensure the security and readiness of key tax processing systems in advance of the opening and to assess the potential impact of tax legislation on 2017 tax returns.

The IRS reminds taxpayers that, by law, the IRS cannot issue refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) before mid-February. While the IRS will process those returns when received, it cannot issue related refunds before mid-February. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return.    The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are using a tax software product for the first time will need their adjusted gross income from their 2016 tax return to file electronically. Taxpayers who are using the same tax software they used last year will not need to enter prior-year information to electronically sign their 2017 tax return. Using an electronic filing PIN is no longer an option. Taxpayers can visit IRS.gov/GetReady for more tips on preparing to file their 2017 tax return.

April 17 Filing Deadline  

The filing deadline to submit 2017 tax returns is Tuesday, April 17, 2018, rather than the traditional April 15 date. In 2018, April 15 falls on a Sunday, and this would usually move the filing deadline to the following Monday – April 16. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 17, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. The IRS and Summit partners continued to improve these safeguards to further protect taxpayers filing in 2018.

Refunds in 2018

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS expects more than four out of five tax returns will be prepared electronically using tax software.

The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.

By law, the IRS cannot issue refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February. This applies to the entire refund — even the portion not associated with the EITC and ACTC.

The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if those taxpayers chose direct deposit and there are no other issues with the tax return. This additional period is due to several factors, including banking and financial systems needing time to process deposits.

After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving Presidents’ Day may affect their refund timing.

The Where’s My Refund? ‎tool on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers in late February. Taxpayers will not see a refund date on Where’s My Refund? ‎or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.

IRS Offers Help for Taxpayers

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.

Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process.

In addition, 70 percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $66,000 or less.

The online fillable forms provide electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to IRS.gov and enter “free tax prep” in the search box to learn more and find a nearby VITA or TCE site, or download the IRS2Go smartphone app to find a free tax prep provider. If eligible, taxpayers can also locate help from a community volunteer. Go to IRS.gov and click on the Filing tab for more information.

Source: IR-2017-201: Get Ready for Taxes: What to Do Before the Tax Year Ends Dec. 31

Get Ready for Taxes: What to Do Before the Tax Year Ends Dec. 31

Editor’s Note: This is the sixth in a series of reminders to help taxpayers prepare for the upcoming tax filing season.                                                         

WASHINGTON – As tax filing season approaches, the Internal Revenue Service reminds taxpayers there are things they should do now to get ready for filing season.

For most taxpayers, Dec. 31 is the last day to take actions that will impact their 2017 tax returns. For example, charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2017 count for the 2017 tax year, even if the bill isn’t paid until 2018. Checks to a charity count for 2017 as long as they are mailed by the last day of the year.

Taxpayers who are over age 70 ½ are generally required to receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017, though a special rule allows those who reached 70 ½ in 2017 to wait until April 1, 2018, to receive them.

Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2017 IRA contributions until April 18, 2018. For 2018, the limit for a 401(k) is $18,500. For traditional and Roth IRAs, the limit is $6,500 if age 50 or older and up to $15,500 for a Simple IRA for age 50 or older. Check IRS.gov for more information about cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2018.

Taxpayers should be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Taxpayers can take steps now to make sure the IRS can process their return next year.

Taxpayers who have moved should tell the US Postal Service, employers and the IRS. To notify the IRS, mail IRS Form 8822, Change of Address, to the address listed on the form’s instructions. For taxpayers who purchase health insurance through the Health Insurance Marketplace, they should also notify the Marketplace when they move out of the area covered by their current Marketplace plan.

For name changes due to marriage or divorce, notify the Social Security Administration so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed.  A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of a return and may even delay a refund.

Some refunds cannot be issued before mid-February. By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb 27, 2018, if they chose direct deposit and there are no other issues with the tax return.

Some Individual Taxpayer Identification Numbers must be renewed. Any Individual Taxpayer Identification Number not used on a tax return at least once in the past three years will expire on December 31, 2017. Additionally, all ITINs issued before 2013 with middle digits of 70, 71, 72 or 80 (Example: 9XX-70-XXXX) will also expire at the end of the year. As a reminder, ITINs with middle digits 78 and 79 that expired in 2016 can also be renewed. Only taxpayers who need to file a U.S. federal tax return or are claiming a refund in 2018 must renew their expired ITINs. Affected ITIN holders can avoid delays by starting the renewal process now.

Those who fail to renew before filing a return could face a delayed refund and may be ineligible for some important tax credits. More information, including answers to frequently asked questions is available on IRS.gov/ITIN.

Keeping copies of tax returns is important. Taxpayers may need a copy of their 2016 tax return to make it easier to fill out a 2017 tax return. Some taxpayers using a software product for the first time may need to provide their 2016 Adjusted Gross Income, or AGI, to e-file their 2017 tax return.

Taxpayers who do not have a copy of their 2016 return and are existing users can log in to IRS.gov/account if they need their AGI. Otherwise the IRS will mail a Tax Return Transcript if requested online or by calling 800-908-9946. Plan ahead. Allow five to 10 days for delivery. Learn more about identification verification and electronically signing tax returns.

The estimated date for the new tax plan, should the proposed bill be voted a law, should be around November 23, 2017 before thanksgiving.  I am excited, how about you?  Well,  you may or may not be thrilled depending on how it might impact you personally.  Pull out last years copy for revie, if you have no idea where it is now is a good time to look for it or request a new copy from your tax preparer.  I’ll lay down some basics and suggest the new numbers that you can insert into your own situation. It is some work, and yes, you have a tax professional but understanding how tax planning measures your life is priceless.  

• Tax is calculated on income that has been adjusted for the inclusion of other items. (Taxable income, adjusted adjusted gross income).
• Tax lingo is specific, so think, logical. Taxes are about reading. Lots of reading. which is why most folks pass the baton to the professional but think about it this way.  The tax professional reads all of the publications and instructions and updates.  The taxpayer (you) reads the 1040. It’s 2 pages.
• Taxes are about math, lots of calculations.  Example: The tax professional (me) reads each publication for the equation, calculates based on data given, and then inserts answer onto appropriate forms.  The taxpayer (you) must keep a running tally of items you can deduct or need throughout the year and then pass that data on to the professional at the end of the year (tax season).  It’s different math, and different responsibilities but they work in conjunction.

One major change I’ve noticed in the  proposed tax plan is the statuses have narrowed to Single or Married Filing Joint. No more Head of household, etc.  I read that there may be a new tax credit of $500 for taxpayers with non child dependents.

The current standard deductions given are shown on the left of the 1040 example in orange highlighter and the new numbers proposed are written in on the right.  Your itemized deductions on the Schedule A must be more than $12,000 (standard deduction) for a single person and more than $24,000 (standard deduction) for married people.

Currently every person listed on a return (including dependents) “gets” $4,050 “exemption” to deduct, but that may be eliminated.   Good news for some folks, though, the Alternative Minimum tax may be eliminated, too.  The Child Tax Credit might be increased.

– So far, known proposed items eliminated are the home office deduction as well as the deduction of prior years’ state and local taxes.

Proposed Tax Brackets 2018

Single                                                                                                     Married

$0 – 37,500 ish                                            12%                                  $0 – 75,000

$37,500  – 112,500 ish                               25%                                  $75,000 – 231,500 ish

$112,500 – $415,050 and up                    35%                                 $235,000 – 466,000 and up ish

That’s all for now but Ill try to keep you updated as November 23 approaches and then afterwards to prepare for the upcoming due date for tax returns.

The updated phone number for Pauline’s Tax Service is (720) 893 – 3712 ext 105.  Mail or drop off at the following address:

Stephanie Cardenas

12365 Huron st Suite 1800

Westminster Co 80234

Email stephanie at stephanie@paulinestaxservices.com

Taxes are intimidating.  When tax time rolls around,

stress levels increase and people get hyped.  No one knows what to do and they are definitely not prepared.  Well, that’s not true. Some people out there actually have a clue, but the majority do not.  The more prepared we are at the end of the year, the lower the tax bill.

Why should the average Sally Sue have a basic understanding of income taxes?

1. Most economic transactions have an income tax effect.  The most common example is the purchase of a home.  Mortgage interest will be deductible on the itemized deductions worksheet.  Another example is withdrawing money from a 401-k retirement account.  The tax burden in doing so could be steep.  Both of these items, for the most part, happen in life prior to discussing it with your tax adviser.  Therefor, you should have a clue whats best for you.  Then, at the end of the year your tax preparer can draft your forms for you easy peasy, because you will be in tune with your transactions for the year and come prepared to your appointment.  Back to the 401K example, if you take money out you will receive an annual tax form with the information. Don’t forget to take it to your appointment.  Along with your W2 and mortgage interest statement.

2.  The income tax law influences personal decisions of individuals.  Pretty self-explanatory. 

3.  A knowledge of the income tax law enables taxpayers to make decisions that  can reduce other costs. By having a clue one can enter into various transactions that can minimize income tax burden.  Likewise, one can avoid a transaction or defer until a time more beneficial in the future.

4.  Protects against an audit.  The IRS isn’t always right and sometimes you will have to state your case or your interpretation of things to justify items on your return if they question you.  It doesn’t mean your wrong it just means you have to be able to explain your rightful position.

5.  YOU know your financial affairs better than anyone.  Tax planning and forecasting starts with you, not your accountant, although, you should have a conversation with them for sure and keep them included.  It’s important that you are both on the same page.  Use the tax system to your advantage…