2019 Tax Season – 5 Important IRS Tips

2019 Tax Season – 5 Important IRS Tips

It’s January, with many taxpayers hopeful that new laws will result in bigger refunds. Yet with the government shutdown having hit at a particularly bad time for the Internal Revenue Service, it’s still not clear exactly when tax season will officially start.

But even if you can’t know for sure exactly when you’ll be able to file your return, it’s not too early to get ready for tax season — whenever it comes.

Here are the 5 IRS Tips for the 2019 Tax Season

1. Watch your withholding
Tax reform caused the amount of money withheld from paychecks to go down in 2018 for many taxpayers. That made their paychecks bigger, but it could result in smaller refund checks for many, and some might even end up owing tax when they file their returns.

The IRS has come up with a tool to assess whether your withholding is correct. If it’s not, you can make adjustments to your payroll withholding by filing a new Form W-4 with your employer. Or looking at estimated tax payments can prevent you from owing penalties and interest.

2. Predict what your refund will be — and when you’ll get it
The biggest motivator for many to file their returns is to get their refund. But tax reform will likely affect those refund amounts in many ways. Higher standard deductions, lower tax rates, and larger child tax credits could boost refunds, while the elimination of personal exemptions, limitations on certain itemized deductions, and the phase-out of various other tax benefits could reduce them.

One thing families should remember is that if you’re eligible for the earned income credit or the additional child tax credit, then your refund will be delayed at least until mid-February. Given the potential for delays to the beginning of tax season, it’s likely that even those who aren’t seeking those credits could have to wait at least that long to get money back from the IRS.

3. Look at these special rules for those without Social Security numbers
If you’re required to file taxes but don’t have a Social Security number and aren’t eligible to get one, then the IRS issues what it calls individual taxpayer identification numbers. These ITINs fill the same role as a Social Security number for tax purposes for certain nonresident aliens, as well as a set of resident aliens and dependents or spouses.

The critical thing about ITINs is that they expire. Therefore, the IRS urges those whose ITINs could expire before they file their returns to submit a renewal application now in order to avoid any future hassles.

4. Familiarize yourself with new tax forms
Millions of taxpayers will have to deal with a new tax form for the very first time during the 2019 tax season. Everyone will use a shortened version of Form 1040, which has been shortened to more closely resemble short-form returns like the 1040-EZ and 1040A. Yet the 1040 will also require new schedules that taxpayers will have to attach in certain circumstances. With the new forms available on the IRS website, it’s smart to get a head start by looking at them before starting your tax prep for the year.

5. Know where to get help
The IRS knows that tax reform will create a lot of confusion, but there’s help available. From online assistance to taxpayer assistance centers and the Volunteer Income Tax Assistance program, Americans can get the guidance they need to deal successfully with their tax returns in the coming months.

Be ready for tax season
Preparing your tax return might seem daunting this year, especially with all the changes that have occurred lately. But with the prospect of possible tax savings, you have a big incentive, and getting ready now will help you get off to a running start when tax season officially opens.

Need more help? Give us a call or setup an appointment, we would more than happy to serve you!

California to Consider Taxing Text Messages in 2019

California to Consider Taxing Text Messages in 2019

California regulators are currently contemplating whether residents would have to pay a fee on text messages from their cellphones.

The proposed tax  would help fund programs in the state that provides low-income  Californians with phone service and will be discussed further during the January 2019 meeting by the California Public Utilities Commission.

The rational from California regulators is this: Text messaging uses the same cell towers as phone calls, yet do not face similar fees—particularly in the era where voice calls have dropped precipitously over the last number of years.

A number of business groups are already criticizing the bill, saying that Californians could start seeing  taxes of over $44 million annually. Other wireless carriers, like  Apple, might be immune from the charges because of apps like iMessage.

The exact amount of the fee has not yet been decided.

So what do you think? Good idea or bad?
Please comment below.

Tax Email Scam Alert – Be Careful!

Tax Email Scam Alert – Be Careful!

Taxpayers should be aware of a new round of fraudulent emails that impersonate the IRS and use tax transcripts as bait to entice users to open documents containing malware. The scam is especially problematic for businesses whose employees might open the emails infected with malware as it can spread throughout the network and may take months to remove.

This well-known malware, which is called Emotet, typically tricks people into opening infected documents by posing as specific banks and financial institutions. However, in the past few weeks, the scam has masqueraded as the IRS, pretending to be from “IRS Online.” Many of these malicious remote emails were recently forwarded to phishing@irs.gov.

The scam email carries an attachment labeled “Tax Account Transcript” or something similar, and the subject line uses some variation of the phrase “tax transcript.” The exact wording often changes with each version of the malware.

Taxpayers should remember that the IRS does not send unsolicited emails to the public, nor would it email a sensitive document such as a tax transcript (a summary of a tax return). Taxpayers receiving a suspicious email are urged not to open the email or the attachment. If using a personal computer, delete or forward the scam email to phishing@irs.gov. If you see these types of emails when using an employer’s computer, notify your company’s internet technology (IT) department immediately.

In July, the United States Computer Emergency Readiness Team (US-CERT) issued a warning in July about earlier versions of the Emotet, which it has called one of the most costly and destructive malware affecting the private and public sectors.

Let’s be careful out there!

California’s top court clarifies independent contractor vs. employee for employers

California’s top court clarifies independent contractor vs. employee for employers

On April 30, 2018, the California Supreme Court issued its long-awaited opinion in Dynamex Operations West, Inc. v. Superior Court, clarifying the standard for determining whether workers in California should be classified as employees or as independent contractors for purposes of the wage orders adopted by California’s Industrial Welfare Commission (“IWC”).

The Court held that there is a presumption that individuals are employees, and that an entity classifying an individual as an independent contractor bears the burden of establishing that such a classification is proper under the “ABC test” used in some other jurisdictions.

To meet this burden, the hiring entity must establish each of the following three factors, commonly known as the “ABC Test”:

(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Fail just one part, and the worker is an employee under California wage and hour law. This new test is even stricter than most other states’ “ABC Tests”, which usually include two ways that Part B can be satisfied.

California employers will now need to reevaluate the way they treat independent contractors under the “ABC Test” to determine whether any or all such workers should be reclassified.

2018 Business Tax Deadlines for 2017 Tax Filing

2018 Business Tax Deadlines for 2017 Tax Filing

2018 Business Tax Deadlines for 2017 Tax Filing

Your business’s tax return deadline is based on its entity type, whether or not you plan on filing an extension, and if there are any weekend or federal holidays in the picture.

The table below details when each type of business entity needs to file 2017 taxes in 2018 (using the calendar year)

 Entity Type Tax Deadline Due Date
Original deadline for partnerships (Form 1065) and S Corporations (Form 1120S) March 15, 2018
Original deadline for C Corporations (Form 1120) and individuals (Form 1040) April 17, 2018
Original deadline for exempt organizations (Form 990) May 15, 2018
Final deadline for partnerships and S Corporations (with extension) September 17, 2018
Final deadline for C Corporations and individuals (with extension) October 15, 2018
Final deadline for exempt organizations (with extension) August 15, 2018

 

Typically, the tax return due date for flow-through entities is the fifteenth day of the third month of the company’s fiscal year. So the S Corporation and LLC tax return due date in 2018 will fall on March 15 (for partnerships that follow the calendar year). The extended due date for flow-through taxes will be September 17, 2018.