If you feel like you've heard this before, well you very likely have. The IRS has modified the just recently modified W4 form and calculator in an effort to simplify determining proper tax withholding for the tax year. If your taxes are relatively simple, then you probably don't need to make any changes. However, if your tax situation involves spousal income, dependents, child credits and/or other deductions; then it is a good idea to take a look at your withholding early in the year rather than later. Kiplinger.com has an explanation of the changes to the W4, click here to view their story. If you want to go straight to the IRS calculator click here. If your mind is spinning after visiting one or both sites, contact us.
As the end of the year closes in, the IRS reminds us to be diligent about tax scams. It's easy for complacency to creep in as we read stories of how others were scammed and think I would never fall for that. The reality is that as scams are exposed, the scammers become more sophisticated and better at disguising their intentions. The IRS has provided the latest scam methods on their website for us to be aware of. Click here to see the links and learn more how to protect yourself.
If you love examining and comparing tax situations for different events or time periods, you're in luck. Kiplinger.com has published a comparison of the tax tables for 2019 with 2018 so you can greet April 15, 2020 with anticipation rather than dread. The changes are modest but the brackets have been updated to account for inflation. Click here to view the brackets and put your pencils to work.
The IRS continues to work to catch up to the changes imposed on the tax system by the Tax Cuts and Jobs Act (TCJA). In early August, the service announced the release of a revised Withholding Calculator to better estimate tax liability after the changes. Many people were surprised that their refunds were much smaller or even worse, they owed taxes with their returns when filing for 2018 due to the new withholding tables being implemented midsummer last year. If you are interested in using the new calculator, click here to visit the IRS site.
Even though we are out of the tax filing season (for those who filed by the deadline rather than extend their due date) and our conversation is filled more with tropical storms and "feels like temperatures", the IRS recently published tips for activities that commonly occur during summer but aren't at the forefront of thought. From weddings to house purchases, there are actions to take now to ensure a smoother tax season in 2019. Click here to see what the IRS is focused on right now.
On June 5, 2019 the IRS released it's latest update on scams with the warning that being alert for tax scams is a year round pursuit. The IRS identifies two new scams and gives basic pointers on methods that the service will/won't use to contact you. Click here to see the latest from the IRS on these topics.
The IRS recently released their inflation adjusted deduction limits for contributions for 2020. The limits are increased $50 for individuals and $100 for families. Click here for a detailed explanation from the Journal of Accountancy.
With all the questions, theories and prognostications heading into the tax season after the Tax Cuts and Jobs Act (TCJA) was implemented; it appears that the tax season itself was a nonevent. Although stories abound about smaller refunds and some people having to pay additional tax with their filing, the taxfoundation.org summarizes the recent tax season and the outcome may be surprising to many. Basically, most people paid fewer taxes for 2018 and the refunds were essentially the same to 2017. If your refund was smaller than usual or you ended up paying with your filing, you can adjust your withholding now by filing out a new W4 form and submitting it to your employer. Click here for the taxfoundation.org article.
In a news release from the IRS earlier this week, they announced that the 2018 Tax Filing Season will begin January 28 irregardless of the status of the government shutdown. Click here for the full release from the IRS.
Mileage rates for 2019 were recently released and received quite a bump from 2018. However, due to the Tax Cuts and Jobs Act (TCJA) the number of people who can take advantage of the increased mileage rates will be on the decline. Specifically those that claim unreimbursed employee business expenses under the miscellaneous itemized deduction will be affected since this deduction was eliminated with the passage of the TCJA. Click here to read more about the mileage rate and those affected.
J. Alan Hayes