Three things you should know about filing your taxes this year.

It is that time again.  Time to make our annual accounting to our Uncle Sam.  In other words filing your tax return.  

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.