Here are three things that you should know about filing your tax return this year:
1.
We are still operating basically under the old law. That means that
certain deductions will be returning for their final appearance.
Deductions such as personal exemptions, moving expenses, miscellaneous
itemized deductions, and in reality the need to itemize deductions for
most taxpayers will disappear after this year. So our very popular list
of overlooked deductions published for the last 20 plus years is now
retiring. What has not disappeared is the penalty for not having health
insurance. If you did not have health insurance in 2017 or do not have
health insurance in 2018, you will be penalized. For tax year 2017
the penalty is 2.5% of your total household adjusted gross income, or
$695 per adult and $347.50 per child, up to a maximum of $2,085. The
repeal of the penalty does not apply until 2019.
2.
Even though IRS is not accepting returns until ten days from now, if
you have all the information you need to file your tax return, you
should do it now. IRS processes refunds on a first come first basis.
Early filers will get processed earlier and receive their refund sooner.
The Motley Fool writes “there are several benefits to preparing your
taxes ahead of schedule. If you're due a refund, you'll get your hands
on that money sooner than you would by waiting until April. And on the
flip side, if you end up owing money to the IRS, you'll have
two-and-a-half months to figure out how to pay your tax bill. If you
wait till April, you'll have fewer options if you find that you've
underpaid your taxes.”
One
caveat about refunds and early filing. Again the Motley Fool writes
“most refunds will be issued within 21 days of filing -- but some will
be delayed. If you're expecting a refund this year, here's something
positive to chew on: The IRS expects most refunds to go out within three
weeks of when returns are submitted. That said, if you're claiming
certain tax credits, you can bank on your refund getting delayed.
Specifically, the IRS must withhold refunds for the Earned Income Tax
Credit and the Additional Child Tax Credit until Feb. 15 due to high
levels of fraud associated with both. If you're claiming one of these
credits, expect your entire refund to be delayed -- even the portion not
associated with the credit you're taking.”
3.
Most tax forms are due to be mailed to you no later than January 31,
2018. However, there are some exceptions. Specifically forms K-1 and
1099 brokerage statements. If you have a brokerage account, the due
date to mail those 1099 forms to you is February 15, 2018. Many clients
have received multiple forms for the same tax year from their brokerage
companies during last tax seasons. These so called “amended” forms
1099 cost brokerage companies millions of dollars of IRS penalties. I
found out about the penalty assessment for amending form 1099, with no
end in sight, this year at one of the tax workshops I attended. It is a
real issue in our tax preparation world.
If
you have ownership interest in a partnership, or S corporation, or are a
beneficiary of an estate or trust, you will be receiving a form K-1.
The due date to mail the form is the due date of the tax return for the
entity. In most cases it is March 15, 2018. However, if the entity
files for an automatic six month extension, you may not receive the form
until September 15, 2018. Not to worry. We know what to do. By the
way this year we have instituted a new policy to help clients make sure
that they have all the correct income documents before filing their tax
return.
As
we face the largest change in tax laws in 31 years, I have only one
thing to say…..Wow. So much for the promise of a postcard tax return.
The new tax law is complicated. Very complicated. It looks like your
tax guys are going to be around for a while. The new tax laws contains
some very good things for small business owners and individual
taxpayers. Getting to the tax savings just got a lot more complicated.
We
will talking to you about the new tax laws all this year as we sort
through the analysis and pass on things that will help you save money.
So stay tuned for the good stuff.
