Graduation Season Reminder: Save Money with Tax Credits & a 529 Savings Plan

Graduation Season Reminder: Save Money with Tax Credits & a 529 Savings Plan

If your child is graduating from high school this year, congratulations! You’re obviously very proud. But you may also be more than a little worried about how to pay for higher education. Whether it’s specialized job training or an advanced degree, there are a lot of costs associated with higher education.

Thankfully, there are two education tax credits designed to help offset these costs: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits can reduce the amount of tax you owe. To be eligible to claim either of these credits, you or your dependent must receive a Form 1098-T from an eligible educational institution.

The American Opportunity Tax Credit Is:

  • Worth a maximum benefit of up to $2,500 per eligible student.
  • Only available for the first four years at an eligible college or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable (up to $1,000 back).

The Lifetime Learning Credit Is:

  • Worth a maximum benefit of up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years.

Open a 529 Plan, Too

If you still have a few years before your child graduates, consider opening a 529 plan — a tax-advantaged savings plan designed to help you save for future education costs. Any contributions you make to Georgia’s official college savings plan, called Path2College 529 Plan, are eligible for up to an $8,000 state income deduction on your 2022 Georgia income tax return (when filing jointly). What’s more, any earnings on those contributions are federal and Georgia income tax deferred.

When it’s time to use your savings, withdrawals for qualified higher education expenses — such as tuition, books, supplies and many other items — are federal and Georgia income tax-free. And that applies to schools in the United States and abroad for eligible education-related expenses.

 If you have any questions about the education tax credits or 529 plan, contact us for details. We’re here to help you make the most of your money.

If You Get Mail from the IRS …

Now that you’ve filed your federal income taxes, you could receive a letter or notice from the IRS for any one of a variety of reasons, including:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • The IRS has a question about your tax return.
  • The IRS needs to verify your identity.
  • The IRS needs additional information.
  • The IRS made a change to your return.

What Should You Do?

If you receive an IRS letter or notice, you should respond accordingly.

  • Do NOT ignore it. Most IRS letters and notices are about your federal tax return or tax account. Read the notice to learn the reason for the contact and find out the instructions on what to do (if anything). Most of the time, you simply need to read the letter and take the appropriate action.
  • Read it carefully. If the IRS made changes to your tax return, you should compare the information provided in the notice or letter with the information in your original return. In general, there is no need to contact the IRS if you agree with the change.
  • Respond in a timely manner. If the notice or letter requires a response by a specific date, be sure to reply quickly to avoid delays in processing your tax return, minimize interest and penalty charges, and preserve your rights to an appeal.
  • Pay any amount due. If there is an additional tax due, you should pay as much as you can, even if you can’t pay the full amount. You can pay online or apply for a payment agreement (i.e., installment agreement) or an offer in compromise.
  • Keep a copy. It’s important to retain copies of all notices or letters with your other tax records.
  • Do not call the IRS unless requested to do so. If you must contact the IRS by phone, use the number in the upper right-hand corner of the notice. You should have a copy of your related tax return and letter when calling. Generally, however, it’s better to write to the IRS to respond to any requests so you have a written history.

Contact Us First

If we prepared your tax return, we are prepared to help you with any notices you receive from the IRS. Please send us a copy of the notice and we’ll draft any letters and supply any necessary information you may need. If you’re unsure, show us the letter and we can help you determine your best course of action.

Also keep in mind that the IRS will never contact you via social media or text message. The first contact from the IRS usually comes in the mail, so be alert to possible scams asking you for money.

Educator Deduction Increases to $300

For the first time in 20 years, teachers will now be able to deduct up to $300 of out-of-pocket classroom expenses beginning with their 2022 tax return. Previously, the limit was $250; it will now rise in $50 increments in future years based on inflation. Married teachers who file jointly with another eligible educator can deduct up to $600.

Eligible educators include anyone who is a K-12 teacher, instructor, counselor, principal or aide in a public or private school for at least 900 hours during the school year. Eligible expenses include:

  • Books, supplies and other materials used in the classroom.
  • Equipment, including computer equipment, software and services.
  • COVID-19 protective supplies.
  • Professional development courses (not claimed via the lifetime learning credit).

IRS Video Tax Tip

See if money you pay for day camp or other child care expenses can help you claim the Child and Dependent Care Tax Credit.

There’s Still Time To Contribute To Your IRA for 2021

There’s Still Time To Contribute To Your IRA for 2021

If you haven’t yet made a contribution to your IRA for 2021, you still have time. The deadline is the same as the tax-filing deadline: April 18, 2022. What’s more, if you plan to make a contribution by that date, you may be able to claim the deduction on your 2021 tax return.

 

Know Your Traditional IRA

An Individual Retirement Account (IRA) is a tax-advantaged personal savings plan that lets you set money aside for retirement. Generally, you can contribute up to $6,000 to your IRA for 2021. If you were 50+ by December 31, 2021, you can add another $1,000 to that limit. Depending on your status, your contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of your compensation, whichever is less.

If you make contributions to employer retirement plans, such as a 401(k) or 403(b), an IRA, or an Achieving a Better Life Experience (ABLE) account, may also be able to claim the Saver’s Credit. Also known as the Retirement Savings Contributions Credit, the amount of the credit is generally based on the amount of your contributions, your adjusted gross income and your filing status (see the chart below).

 

Know Your Roth IRA

While you may contribute to a Roth IRA, you cannot deduct those amounts. However, any qualified distributions you take at retirement age are tax-free. Note that Roth IRA contributions may be limited based on your filing status and income.

Please don’t hesitate to call us at 706-632-7850 with any questions. 

 

March 25th Deadline

March 25 is the last day we can accept materials to file your Personal Tax Return by the April 18 due date. If you’re running late, we’ll be happy to file an extension for you. Please bring your paperwork to our office during regular business hours, or drop it off in our after-hours dropbox. Our 2021 Personal Tax Preparation Checklist will help make sure you provide everything we need.

Remove Excess Salary Deferrals by April 15, 2022

If you contribute to a retirement plan at work, you are allowed a total of $19,500 (plus an additional $6,500 if age 50+) in salary deferrals. If you exceeded this limit in 2021, however, you must withdraw any excess deferral amounts, plus earnings, by April 15, 2022.

If you withdraw the excess salary deferrals, plus earnings, by April 15:

  • Excess deferrals are taxed in the calendar year deferred (2021).
  • Earnings on the excess are taxed in the year withdrawn (2022).
  • Excess is not subject to the 10% early distribution tax, 20% withholding, or spousal consent requirements.

If you do NOT withdraw the excess salary deferrals, plus earnings, by April 15:

  • Excess deferrals are taxed in the calendar year deferred (2021) and again in the year withdrawn.
  • Earnings on the excess are taxed in the year withdrawn.
  • Withdrawals may be subject to the 10% early distribution tax, 20% withholding, and spousal consent requirements.

If you made contributions to more than one retirement plan, you may have accidentally gone over the limit. If you’re not sure, contact us today for help determining this amount.

Parental Custody & Tax Credits: What You Need to Know

Parental Custody & Tax Credits: What You Need to Know

Do you have a legal agreement with your child’s other parent about who claims the child on their taxes? If so, you may have some questions about how to handle the Child Tax Credit and the 2021 Recovery Rebate Credit when filing your tax return.

Economic Impact Payments and the Recovery Rebate Credit

The third Economic Impact Payment (EIP) was an advance payment of the 2021 Recovery Rebate Credit. The IRS used your 2020 or 2019 tax information to determine eligibility and amounts. Here’s what that means for you:

  • If you did NOT receive a third-round EIP for a child you will be claiming on your tax return, you can claim the Recovery Rebate Credit, regardless of any EIP the other parent received.
  • If you DID receive a third-round EIP for a child you will NOT be claiming on your tax return, you are NOT required to pay back the EIP if, based on the information reported on your 2021 tax return, you should have received less.

Child Tax Credit

The IRS determined who received 2021 Advance Child Tax Credit payments based on the information on your prior-year’s tax return. So if you claimed the Child Tax Credit on your 2020 return, you would have received the Advance Child Tax Credit payments in 2021. Here’s what that means for you: 

  • If you knew you would not claim a child on your 2021 return, you had the option to unenroll from receiving monthly payments. If you did NOT unenroll and received monthly payments last year for a child you won’t be claiming on your 2021 tax return, you may have to repay those payments when you file. You may be excused from repaying some or all of the excess amount if you qualify for repayment protection.
  • If you were an eligible parent who did NOT receive advance payments for your child, you will be able to claim the full amount of the Child Tax Credit on your 2021 tax return — even if the other parent received Advance Child Tax Credit payments.

Where Do You Stand?

The rules on economic impact and child tax credit payments can be confusing. If we’re preparing your taxes for you, we’ll make sure to take advantage of every tax credit available to you. Please don’t hesitate to call us at 706-632-7850 with any questions.

 

Start 2022 Off Right by Checking Your Withholding

If you’re getting back a large tax refund, that only means that you’ve been giving the IRS more money from each paycheck than you should. Since you don’t earn interest on that money, you should not be using that as a way to save. It’s often smarter to have less money withheld from your paycheck and sock it away in a savings account that pays you interest.

On the other hand, if you owe a lot on your taxes, then you should be having more money taken out of your paycheck, or you should be making quarterly estimated payments. Not paying enough taxes throughout the year can incur fees and penalties, adding to your tax bill.

Get the new year off to a good start by checking your federal income tax withholding and adjusting it if necessary. You can use the IRS’ Tax Withholding Estimator to help you figure the right amount of tax to withhold, whether you’re an employee or self-employed. To use the tool, you’ll need to estimate:

  • Your 2022 income.
  • The number of children you will claim for the child tax credit and earned income tax credit.
  • Other items that will affect your 2022 tax return.

If you have more complicated income and expenses, such as pension income or long-term capital gains, you will not get a valid result using the Tax Withholding Estimator. Instead, contact us for help determining the appropriate withholding for your situation.

Tax Checklists & Deadlines

Please note the following deadlines for providing your materials to us:

  • March 1: Corporate/Partnership Tax Returns to file by March 15 (without extension).
  • March 25: Personal Tax Returns to file by April 18 (without extension).

You may bring your paperwork to our office during regular business hours, or drop it off in our after-hours dropbox. To make sure you provide everything we need, please use our 2021 Tax Preparation Checklist (Personal and/or Business):

IRS Video Tax Tip

Don’t have all the documents needed to file your return? Watch this tax tip for information on what to do.

Don’t Forget to Take Your RMD by Dec. 31

Don’t Forget to Take Your RMD by Dec. 31

December 31 is the deadline to take your required minimum distribution (RMD) for 2021. The RMD is the minimum amount you must withdraw from your retirement plan account annually starting with the year you reach 72 (in most cases). RMD amounts not withdrawn on time may be subject to penalties.

If you reached age 70½ in 2019 (your 70th birthday was June 30, 2019, or earlier), you did not have an RMD due for 2020, but you will have to take one by December 31, 2021. If you reached age 72 in 2021 (and your 70th birthday was July 1, 2019, or later), your first RMD is due by April 1, 2022.

The RMD is based on your account balance and life expectancy, which is calculated based on Uniform Lifetime Table III in Publication 590-B, Distributions from IRAs. You can also use the IRS’s online worksheets to figure your RMD.

RMD Rules Apply If You:

  • Have a traditional IRA,
  • Have a traditional SEP IRA,
  • Have a SIMPLE IRA, or
  • Participate in a workplace retirement plan, including a 401(k), Roth 401(k), 403(b) or 457(b) plan.

(Note that Roth IRAs do NOT require distributions while the original owner is alive.)

An IRA trustee or plan administrator will report the amount of the RMD to you, typically using Form 5498. As the IRA owner, you must calculate the RMD separately for each IRA you have. However, you can choose to withdraw the total amount from one or more of the IRAs. In contrast, RMDs required from workplace retirement plans must be taken separately from each plan. Not taking an RMD, or not withdrawing enough, could result in a 50% excise tax on the amount not distributed.

Did you know that you can make a qualified charitable distribution up to $100,000 directly from your IRA (other than a SEP or SIMPLE IRA) to a qualified charitable organization? It’s generally a nontaxable distribution made by the IRA trustee directly to a charitable organization. A qualifying deduction may also count toward your RMD requirement for the year.

2020 RMD Rules

Due to Covid tax law changes, an IRA owner or beneficiary who received an RMD in 2020 had the option of returning it to their account or other qualified plan to avoid paying taxes on that distribution. A 2020 RMD that qualified as a coronavirus-related distribution may be repaid over a 3-year period or have the taxes due on the distribution spread over three years. A 2020 withdrawal from an inherited IRA could not be repaid to the inherited IRA but may be spread over three years for income inclusion.

Tax Checklist Coming Soon

With the many tax changes over the past year, we expect another challenging tax season. So look for our checklist — coming next year — to help you gather your files and paperwork for us to prepare your taxes.

We’re taking tax appointments now if you’re a new client or have major changes to your taxes. Plan ahead and call 706-632-7850 to reserve your spot. Note that you do NOT need an appointment for us to handle your tax preparation — you can just drop off your files when you’re ready.

Money Brief: Out-of-pocket Classroom Expenses May Be Deductible

If you’re a teacher, chances are you dip into your own pocket to buy classroom supplies. And those expenses can add up fast. Fortunately, you may be able to deduct $250 of unreimbursed expenses ($500 for two educators filing jointly) on your federal tax return.

You qualify for the deduction if you:

  • Are a teacher (K-12), instructor, counselor, principal or aide.
  • Work at least 900 hours during the school year.
  • Work in a school that provides elementary or secondary education.

Qualified expenses include:

  • Professional development courses.
  • Books, supplies and supplementary materials.
  • Computer equipment and software.
  • Athletic supplies for health and physical education.
  • Personal protective equipment, disinfectant and other supplies used for the prevention of the spread of coronavirus.

IRS Video Tip:

Find out if you need to fill out a new Form W-4 to make sure you’re having enough federal tax withheld from your paycheck. For more information, go to https://www.irs.gov/withholding.

Plan Ahead: Consider These 8 Smart Tax Tips for Year-end 2021

Plan Ahead: Consider These 8 Smart Tax Tips for Year-end 2021

With only a few weeks left until the new year, it’s time to take a look at your year-end finances. There are a few things you can do before the calendar changes to get ready for the 2022 tax-filing season.

Your Year-End To-Do List

#1  Report changes — If you moved in 2021, notify the IRS of your new address. Name changes should be updated with the Social Security Administration.

#2 Renew expiring ITINs — If your Individual Taxpayer Identification Number is set to expire at the end of this year, be sure to renew it now. Visit the ITIN page for more details.

#3 Donate to charity — Even if you don’t itemize your deductions, the law now permits you to claim a limited deduction on your federal income tax returns for cash contributions made to certain qualifying charities. Singles and marrieds filing separate returns can claim a deduction of up to $300, while marrieds filing jointly can claim a maximum deduction of $600. Cash contributions include those made by check, credit card or debit card, as well as unreimbursed out-of-pocket expenses in connection with volunteer services to a qualifying charitable organization.

#4 Track Advance Child Tax Credit Payments — If you received advance payments in 2021, you will need to compare the amount of payments you received with the amount of the Child Tax Credit that you can claim on your tax return. If you received less than the amount that you’re eligible for, you’ll claim a credit for the remaining amount of Child Tax Credit. If you received more than you’re eligible for, you may need to repay some or all of that excess payment when you file. The IRS will send you Letter 6419 in January, which will provide the total amount of Advance Child Tax Credit payments that you received in 2021. Provide this letter to your tax preparer when you file.

#5 Check your Recovery Rebate Creidt — If you didn’t qualify for a third Economic Impact Payment (EIP) or did not receive the full amount, you may be eligible for the Recovery Rebate Credit. The IRS will send you Letter 6475 in January, which will provide the total amount of the third EIP and any Plus-Up payments that you received in 2021. You’ll need to provide this letter to your tax preparer when you file. Note that if you received the full amount of your third Economic Impact Payment, you don’t need to include any information about it when you file your 2021 tax return.

#6 Contribute to your retirement plan — Depending on your AGI, you may be able to take a tax credit of 50%, 20% or 10% of:

  • Contributions you make to a traditional or Roth IRA;
  • Elective salary deferral contributions to a 401(k), 403(b), governmental 457(b), SARSEP, or SIMPLE plan;
  • Voluntary after-tax employee contributions made to a qualified retirement plan (including the federal Thrift Savings Plan) or 403(b) plan;
  • Contributions to a 501(c)(18)(D) plan; or
  • Contributions made to an ABLE account for which you are the designated beneficiary.

Rollover contributions do not qualify for the credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA, or from an ABLE account.

While the total salary deferral limit for 2021 is $19,500 ($26,000 if you’re 50+), only contributions of up to $2,000 qualify for the credit ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). See the chart below for details.

There is not a maximum age for traditional IRA contributions, so you can continue to contribute to a traditional IRA at any age as long as you earn compensation. Also, the minimum required minimum distribution (RMD) age is now 72.

#7 Verify your withholding — Use the IRS’s tax withholding estimator to make sure your withholding and estimated taxes align with what you actually expect to pay. Keep in mind that most income is taxable, including unemployment compensation. If you received non-wage income like self-employment income, investment income, taxable Social Security benefits and, in some instances, pension and annuity income, you may be in danger of underpaying your taxes, which could result in penalties. In this case, you can make an end-of-the-quarter estimated tax payment or have additional taxes withheld from your next few paychecks.

#8 Make business purchases — If you own a business, consider purchasing some business supplies now to take the deduction in 2021. Everything from printer ink to a new laptop or desk can qualify as an eligible business expense. Also make sure to keep your receipts related to the temporary 100% business deduction for food or beverages from restaurants. The Taxpayer Certainty and Disaster Relief Act of 2020 added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100% deduction for food or beverages from restaurants, as long as the expense is paid or incurred in 2021 or 2022.

Prep Now for a Smoother Tax-Filing Season

While 2021 was not as crazy as 2020, there are still many changes that will affect next year’s tax filing. Start gathering your paperwork now, so you’re ready to go when your Forms W-2, Forms 1099-Misc and other income documents start arriving in the mail. If you have any questions, we’re here to help — just call 706-632-7850 or email us.

Money Brief: Jan. 31, 2022, Deadline

Year-end wage and tax statements will be due on January 31, 2022. Mark your calendar if you are required to file:

  • Form W-2, Wage and Tax Statements;
  • Form W-3, Transmittal of Wage and Tax Statements;
  • Forms 1099-MISC, Miscellaneous Income; and
  • Forms 1099-NEC, Nonemployee Compensation.

Automatic extensions of time to file Forms W-2 are not available. If you need assistance filing any of these forms for your employees, please contact us as early in January as possible. You might want to get a head start now on verifying or updating employee information like names, addresses and Social Security numbers.

Money Brief: Inflation Adjustments for Tax Year 2022

The IRS recently announced inflation adjustments for the 2022 tax year (for returns filed in 2023).

Standard Deduction Increases:

  • To $25,900 for marrieds filing jointly (up $800).
  • To $12,950 for singles and marrieds filing separately (up $400).
  • To $19,400 for heads of household (up $600).

Marginal Rates:

  • 37% for singles with incomes greater than $539,900 ($647,850 for marrieds filing jointly);
  • 35% for singles over $215,950 ($431,900 for marrieds filing jointly);
  • 32% for singles over $170,050 ($340,100 for marrieds filing jointly);
  • 24% for singles over $89,075 ($178,150 for marrieds filing jointly);
  • 22% for singles over $41,775 ($83,550 for marrieds filing jointly);
  • 12% for singles over $10,275 ($20,550 for marrieds filing jointly).
  • 10% for singles at $10,275 or less ($20,550 for marrieds filing jointly).

IRS Video Tip:

With more taxpayers and tax preparers working remotely, identity thieves are trying to use COVID-19 to scare and scam people out of their identities or money. Everyone should remember to take basic steps to protect themselves.

American Rescue Plan Updates Employer Paid Sick & Family Leave Tax Credits

American Rescue Plan Updates Employer Paid Sick & Family Leave Tax Credits

Paid Sick & Family Leave Credits were enhanced under the American Rescue Plan (ARP), which was enacted in March. The credits reimburse small and mid-size (and certain governmental) employers for the cost of providing paid sick and family leave to their employees for reasons related to COVID-19, including vaccinations. The updates apply to leave taken from April 1 – September 30, 2021.

How the Credits Work

As an employer, the paid leave credits are provided as tax credits against your share of the Social Security and Medicare tax. The tax credits are refundable, which means that you are entitled to payment of the full amount of the credits if it exceeds your share of the tax. The credit is equal to:

  • The sick leave wages paid for up to two weeks (80 hours), limited to $511 per day and $5,110 in total, at 100 percent of the employee’s regular rate of pay; or
  • The family leave wages paid for up to 12 weeks, limited to $200 per day and $12,000 in total, at 2/3rds of the employee’s regular rate of pay.

Note that the amount of the tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

How to Claim the Credit

You can claim the credits on your Form 941, Employer’s Quarterly Federal Tax Return, by keeping the federal employment taxes that you otherwise would have deposited — including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes, and your share of social security and Medicare taxes. The Form 941 instructions PDF explains how to do this.

If you do not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages, you may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. You will account for the amounts received as an advance when you file your Form 941 for the relevant quarter.

Note that if you are self-employed, you may claim comparable tax credits on your individual Form 1040.

If you need assistance filing for the tax credits, please contact us. We’ll be happy to help you work out all the details.

Beware of These Costly Errors When Claiming Credits

Errors on your Form 941 can be costly. If we handle the filing for you, then we’ll be responsible for any errors made. If you file the forms yourself, however, keep these tips in mind:

  • Ensure line 1 (number of employees) is accurate.
  • Report advanced credits received, not the requested payment of credits.
  • Use Form 7200 to request the advance payment of a credit only, not for reporting the credit.
  • Inform your third-party payers or reporting agents of any credits requested and received.
  • Use fractions of cents line correctly.
  • Only claim credits you are entitled to and don’t exceed the limitations.
  • Complete amended tax returns in detail and be sure they are accurate.
Premier CPA Services 10 year anniversary logo

May 31 was the 10-Year Anniversary of Premier CPA Services! Over the next few months, we will be offering some great giveaways to our clients and Facebook friends to celebrate! Be sure to follow us and stay tuned!

Let Us File Your Payroll Taxes & Forms

Are you filing your payroll taxes electronically? It can save you time and effort, because it’s secure and efficient. Plus, the IRS provides 24-hour confirmation.

You can submit the forms yourself if you have IRS-approved software (there may be a fee).

Or, you can let us file the necessary forms for you. Because we are an authorized IRS e-file provider, we can help you electronically file the following forms:

  • Form 940, Employer’s Annual Federal Unemployment Tax Return
  • Form 941, Employer’s Quarterly Federal Tax Return
  • Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees
  • Form 944, Employer’s Annual Federal Tax Return
  • Form 945, Annual Return of Withheld Federal Income Tax

Are you ready to simplify your payroll accounting? Contact Amber today at amber@premiercpaservices.com for details on how we can help.

Do You Have Children? You May Start Receiving Monthly Child Tax Credit Payments in July

Do You Have Children? You May Start Receiving Monthly Child Tax Credit Payments in July

If you have one or more children age 17 or under, you may automatically begin receiving advance payments of the Child Tax Credit on July 15th. Roughly 39 million households — covering 88% of children in the United States — will begin receiving the payments as part of The American Rescue Plan Act, which was passed in March.

The new law increased the maximum Child Tax Credit (for 2021 only) to $3,600 for children under age 6 and to $3,000 for children between 6 and 17. As a result, eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 to 17. Payments will continue monthly on the 15th of each month — via direct deposit, paper check or debit card — through the end of the year.

Other Details Include:

  • The payments are an advance of any credit due on your 2021 tax return. (Keep in mind this may reduce the amount of your tax refund next year, or even trigger the need to pay back some of the funds if your financial situation changes significantly.)
  • The credit for qualifying children is fully refundable, which means you can benefit from the credit even if you don’t have earned income or don’t owe income taxes.
  • The credit will include children who turn age 17 in 2021.
  • The amount of the CTC was previously up to $2,000 annually per qualifying child under the age of 17.
  • The increased amounts are phased out if your income is over $150,000 (married filing jointly or qualifying widow/widower), $112,500 (head of household) or $75,000 (all others).
  • The advance payments will be made monthly from July through December as long as you live in the U.S. for more than half the year. The total of the advance payments will equal up to 50% of the full Child Tax Credit, and will be estimated from your 2020 tax return (or 2019 return if 2020 is not yet filed).

More to Come

The IRS is sending out letters to families it believes qualifies for the credit. If you qualify, you do not need to take any action to get your payment.

Later this summer, the IRS will be adding a Child Tax Credit Update Portal to its website. You can use the portal to notify the IRS of changes in your income, filing status or number of qualifying children, or update your direct deposit information. You will also be able to unenroll from receiving the advance payments (and instead receive the full amount of the credit when you file your 2021 return next year) if you wish.

Additional information on how you can access the Child Tax Credit can be found on the IRS website at IRS.gov/childtaxcredit2021. Feel free to contact us if you have any questions about how the credit will affect your 2021 tax return.

Premier CPA Services 10 year anniversary logo

May 31 was the 10-Year Anniversary of Premier CPA Services! Over the next few months, we will be offering some great giveaways to our clients and Facebook friends to celebrate! Be sure to follow us and stay tuned!

Extension Date: Still October 15th

Please note that if you filed an extension with the IRS, the due date for your federal income tax return is still October 15. Although the original tax deadline was moved from April 15th to May 17th, the extension deadline has NOT changed. In order to complete your taxes to meet the October 15th deadline, we will need all your paperwork by Friday, September 24th.

Payroll & Accounting Services Available

You may count on Premier CPA Services to file your personal and/or business taxes each year. And for that, we say “Thank You!” But did you know that we also offer Payroll and Accounting Services?

We can handle your employee payroll through MyPay, as well as in-house live payroll, no matter how many employees you have (whether one or 100!). We can also handle your after-the-fact payroll — processing all the necessary forms, and relieving you of the burden of all that tedious paperwork.

For more details, contact Amber at amber@premiercpaservices.com or call (706) 632-7850. It’s easy to get started, and can save you a ton of time and effort.

Common Tax Deductions to Know for Your New Business

Common Tax Deductions to Know for Your New Business

When you first start a business, you don’t know what you don’t know. This can be especially true when it comes to taxes. As a new business owner, you may not be aware of the many tax deductions available that can help take the sting out of starting up.

The IRS defines a business expense as a cost of carrying on a trade or business. “Ordinary and necessary” expenses are usually deductible if you are operating the business to make a profit. When you deduct an expense on your tax return, you lower your taxable income — and reduce your tax liability. When you reduce the amount you owe the IRS, you have more money to re-invest back into your business.

Which Expenses Are Deductible?

With tax laws always changing, it’s often hard to keep up. Below is a general guide, but be sure to check with us to verify that these deductions are still current — and how they may apply to you and your situation.

1. Startup Costs — You may not realize that you can claim business expenses that hit prior to your business’ launch. There are conditions, of course, but most small businesses can deduct up to $5,000 on the first year’s return.

2. Taxes, Interest, Fees & Charitable Contributions — If your business pays tax to a state or local jurisdiction, you may be able to deduct those taxes as a business expense. If you pay for business expenses with credit cards, you can deduct interest and late fees. You can also deduct bank fees, credit card processing fees, payment fees, and other fees incurred on your business banking accounts (i.e., QuickBooks fees). Money you borrowed to start the business can be recorded as a business liability and any interest can be expensed accordingly. Also, charitable contributions may be deductible as well.

3. Wages and Payroll Taxes — Employee wages and payroll taxes are deductions for your business. But being an employee in your own business has benefits, too. When you pay yourself a wage or salary rather than a distribution or dividend, you avoid paying self-employment tax on your personal return. And that allows you to pass the payroll tax deduction onto the business.

4. Retirement Plan Contributions — The benefits are two-fold here: Contributing to a retirement plan will not only give you a deduction now, but it will increase your retirement savings for the future. As a small business, you can establish an inexpensive 401(k) plan or other retirement account option for both you and your employees.

5. Bad Debt — Whether it’s loans to clients or suppliers, goods sold but not paid for, or the sale of a mortgaged property, bad debts are just one cost of doing business. You can claim bad debt as a deduction if the amount owed is included in your gross income or lent out as cash. You’ll just need proof that the debt is worthless.

6. Home Office — Do you run your business out of your home? There are plenty of home-related expenses that can be deducted, including insurance, utilities, property taxes, repairs & maintenance, basic office supplies and more. You do need to have a dedicated space for running your business, and it needs to be your principal place of operation.

7. Health Insurance — Depending on the type of business, you may be eligible for a self-employed health insurance deduction. Given the costs of health insurance, this could be a pretty significant deduction.

8. Education & Training — Investing in education — whether your own or your employees’ — is always a smart move. That’s especially true when you can deduct fees and costs for attending workshops, conferences, tradeshows and other types of classes that will improve your business knowledge.

9. Marketing — Marketing your business through advertising and promotion is not only necessary to succeed, but a deductible expense, too! Some of the expenses that qualify include print materials (e.g., business cards and brochures), print and web ads, website development, email marketing and more.

10. Travel & Entertainment — Some business travel and entertaining expenses have been curtailed over the past few years. The Taxpayer Certainty and Disaster Relief Act of 2020, however, temporarily allows a 100% business expense deduction for meals as long as the expense is for food or beverages provided by a restaurant. This provision is effective for expenses incurred through December 31, 2022. Some other expenses are still deductible up to certain limits.

Keep Track of Your Expenses

Whether you’re just starting a new business or have been running one for 25 years, you know how important it is to take advantage of every possible tax deduction. The money you save not only affects your bottom line, but can be re-invested to help grow the business. We can help you identify which deductions you may qualify for and help you make the most of them — now and at tax time. Call us today at 706-632-7850 to make an appointment with Jackie or Donna.

Source: Score.org 

Do You Need an Extension?

If you have not yet filed your federal income tax return, we can file an extension for you. The deadline to file your taxes or file an extension is Monday, May 17. This will give you until October 15 to file your tax return. Keep in mind, however, that an extension to file is NOT an extension to pay. Any tax due must still be paid by May 17 to avoid penalties and interest. To help you prepare your files, please download a copy of our 2020 Personal Tax Preparation Checklist.

Tax Credits Available for Vaccine-Related Leave

Are you providing paid leave for your employees to receive COVID-19 vaccinations? If so, you may receive a tax credit, available as part of the American Rescue Plan. This also applies to self-employed individuals, who can claim comparable credits.

Eligible employers can receive a tax credit for providing paid time off for each employee to receive the vaccine and for any time needed to recover from it. If you offer your employees a paid day off to get vaccinated, you can receive a tax credit equal to the wages paid to employees for that day. The tax credits are available for leave from April 1, 2021, through September 30, 2021.

The credits are claimed on Form 941, Employer’s Quarterly Federal Tax Return. You’ll keep the federal employment taxes that you otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of Social Security and Medicare taxes, and your share of Social Security and Medicare taxes.

Let us know if you need assistance filing for the vaccine credit. You can contact us here.

What to Do If You Get a Letter from the IRS

What to Do If You Get a Letter from the IRS

Tax Return Deadline: May 17

While the IRS has extended the federal income tax filing due date for individuals to May 17, we can no longer accept returns to meet that deadline. If we have NOT yet received your paperwork, we will be happy to file an extension for you.

To help you prepare your files, please download a copy of our 2020 Personal Tax Preparation Checklist.

First of all, don’t panic! The IRS mails letters or notices for a variety of reasons, including if:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • The IRS has a question about your tax return.
  • The IRS needs to verify your identity or that of a dependent.
  • The IRS is requesting additional information.
  • The IRS made changes to your tax return.

What to Do and Not Do

Follow these tips if you receive a notice from the IRS:

Don’t ignore the letter. Most IRS letters and notices are about your federal tax return or tax account. The notice or letter will explain the reason for contacting you and provide instructions on what to do.

Read the notice. Read the letter carefully and take the appropriate action. If the IRS changed your tax return, compare the information provided in the notice with the information in your original return. Generally, you do NOT need to contact the IRS if you agree with the notice.

Respond quickly. If the letter requires a response by a specific date, be sure to reply in a timely manner. This will minimize any additional interest and penalty charges, and preserve your right to appeal.

Pay any amount due. If you owe money, you should pay as much as you can, even if you cannot pay the full amount. You can pay online or apply for an Online Payment Agreement or Offer in Compromise. The IRS offers several payment options.

Keep a copy of the notice. Be sure to keep a copy of any notice or letter you receive with your other tax records. You may need these documents later.

Contact the IRS only if necessary. If you must contact the IRS by phone, use the number provided in the upper right-hand corner of the notice, and have a copy of your tax return and letter when calling. Typically, you only need to contact the IRS if you don’t agree with the information, if the IRS requests additional information, or if you have a balance due. Generally, it’s best if you write to the IRS at the address on the notice and keep a copy for yourself; allow at least 30 days for a response.

Beware of scams. The IRS will not contact you using social media or text message. The first contact from the IRS usually comes in the mail. If you are unsure if you owe money to the IRS, you can review your tax account information on IRS.gov.

 

We’re Here to Help

While getting a letter from the IRS in the mail can be intimidating, you don’t have to worry. If we prepared your taxes, we’ll help you respond to the IRS letter with the appropriate information. Just email us a copy of the letter you received. If you have any questions or concerns, please contact us. We’re here to help!

Reminder: Dine Out and Take a Tax Deduction

The Taxpayer Certainty and Disaster Relief Act of 2020 (enacted in December) temporarily allows a 100% business expense deduction for meals as long as the expense is for food or beverages provided by a restaurant. The previous deduction was limited to 50%. This provision is effective for expenses incurred from January 1, 2021, through December 31, 2022.

Should You Be Paying Excise Taxes?

An excise tax is imposed on the sale of specific goods or services, such as fuel, airline tickets, heavy trucks, highway tractors, tires and tobacco, or on certain uses, such as indoor tanning. Excise taxes typically help fund projects related to the taxed product or service, such as highway paving projects or airport improvements.

Depending on the good or service, excise tax may be imposed at the time of:

  • Import,
  • Sale by the manufacturer,
  • Sale by the retailer, or
  • Use by the manufacturer or consumer.

If you are subject to excise tax, you must file one or more of the following forms:

  • Form 720, Quarterly Federal Excise Tax
  • Form 2290, Heavy Highway Vehicle Use Tax
  • Form 8849, Claim for Refund of Excise Taxes, Schedules 1, 2, 3, 5, 6 and 8

If you’re unsure if your business should be paying and filing excise taxes, give us a call. We can help you determine your status and take care of any paperwork.

New Tax Relief Notices Announced by the IRS

New Tax Relief Notices Announced by the IRS

Notice #1: Additional Returns Postponed

As previously announced, the IRS has provided filing and payment relief for federal income tax returns and payments due April 15, 2020. Last week, additional automatic (no application required) tax-filing and payment-deadline relief — also now July 15, 2020 — was announced in a new notice issued by the IRS. Notice 2020-23 applies to individuals, partnerships, trusts, estates, corporations and other noncorporate tax-filing entities filing Forms 1120, 1065, 1066, 1041, 706 and 709, among others.

Notice #2: Estimated Tax Payments Postponed

The IRS has also postponed the June 15 deadline for second quarter Estimated Tax Payments to July 15. Now, both first quarter AND second quarter estimated taxes are due on July 15, 2020.

Notice #3: New Employee Retention Credit Announced

The IRS announced a new Employee Retention Credit for businesses. This new relief option is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages a business pays to employees between March 12, 2020, and January 1, 2021. Eligible employers get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer’s employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.

For each employee, wages (including certain health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. Because this credit can apply to wages already paid after March 12, 2020, many struggling employers can get access to this credit by reducing upcoming deposits or requesting an advance credit on Form 7200, Advance of Employer Credits Due To COVID-19.

Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and experience either:

  • the full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or
  • a significant decline in gross receipts (50% less than the prior year’s quarter).

The definition of qualified wages varies depending on if you have more than or less than 100 full-time employees. And the credit is also impacted if you take advantage of other relief provisions, such as the Paycheck Protection Program.

If you’re not sure if you qualify for this new Employee Retention Credit, please contact us. We can help you determine the best relief program for your business.

When Will You Get Your Stimulus Money?

When Will You Get Your Stimulus Money?

The first round of stimulus money should start arriving this week for those who already have direct deposit set up with the IRS. But that’s just the beginning … the process could take several months to get money to every taxpayer — more than 100 million of us!

Also, it will likely take longer if a check must be mailed to you. So if you don’t already have direct deposit set up with the IRS, you can do so on the IRS’s website here.

While most taxpayers will receive the maximum of $1,200 each, the amount you receive depends on the amount of your adjusted gross income from either your 2018 or 2019 taxes. You can use this calculator to figure out how much you’ll receive.

Note that the IRS plans to mail a letter to your last known address within 15 days after the payment is made to verify you have indeed been paid. The letter will provide information on how the payment was made and how to report a missing payment.

Keep Those Returns Coming!

Although the tax-filing deadline has been extended to July 15, we recommend completing your return as soon as you are able. (It may help you get your stimulus check sooner, too!) We’re continuing to work in the office full-time, so you’re welcome to drop off your paperwork anytime. We have a dropbox outside our office door. Or you may simply email it to us at jackie@premiercpaservices.com.

Have You Renewed Your LLC or Corporation Yet?

If you plan to apply for the Paycheck Protection Program, note that you must have a current business registration, which shows your company is in good standing with the State. In light of the COVID-19 crisis, the 2020 annual registration period has been extended an extra month, now ending on May 1, 2020. Note that if your registration has not been renewed for two years, the State may dissolve your business entity! This will require a trip to your attorney and additional fees to make your company active again. You can check your company’s status at the Georgia Secretary of State website here. You can now register your business for one, two or three years.

Are You at Risk for an IRS Audit?

Are You at Risk for an IRS Audit?

This tax season, it’s estimated that the IRS will handle roughly 150 million returns.

Chances are, you will never face an IRS audit — only 0.45% of taxpayers were audited last year. However, you may encounter other types of more-frequent IRS inquiries, such as income-reporting discrepancies or additional tax due notices.

This happens because IRS systems are automated to spot certain types of discrepancies. What’s more, some portions of your tax return invite more scrutiny than others.

The biggest trigger for an audit is higher income (the audit rate is 2.21% for incomes between $1 million and $5 million). Here are some other things that might spark IRS attention:

Unreported Income — If your tax return shows a different amount than is reported directly to the IRS via your Form W-2 and Form 1099, you may get a letter from the IRS. Remember to keep track of the forms you get showing employment income, contract work and taxable interest. If you earn at least $400 from a “side gig,” then you should be paying self-employment taxes on your earnings. Cryptocurrency earnings (or losses) should also be reported.

Earned Income Tax Credit — While this credit is valuable to working taxpayers with children and for low earners, it does invite scrutiny from the IRS because it is often abused. Make sure you truly qualify before taking this credit.

Large Charitable Donations — Because the standard deduction has been increased for 2019 to $24,400 for married couples and $12,200 for singles, taking credit for charitable donations requires you to itemize deductions, which may invite scrutiny depending on your income because the IRS knows how much taxpayers at various income levels typically donate. Also, there is a limit for cash donations of up to 60% of your Adjusted Gross Income (AGI), while donated property also faces limits.

Miscellaneous Errors — Little things like a wrong Social Security number, address or missed checks on boxes can get your return flagged by the IRS. So be sure to double-check everything before you sign and send it.

We Can Help

Not sure if your return invites IRS scrutiny? Let us help you prepare and file your return. We’ll make sure everything is correct, and alert you if we uncover any issues. Give us a call or drop off your paperwork today.

Source: CNBC

atFun Facts: What Happened in the Last Decade?

2010 — The first iPad was launched, sparking the tablet and large phone craze. “Snowmageddon” blanketed the east coast with up to 40 inches of snow. And the Deepwater Horizon offshore oil rig exploded, killing 11 and spilling oil into the Gulf of Mexico for months.

2011 — Prince William of Wales and Catherine Middleton were married (they now have 3 children). U.S. Navy Seals killed Osama Bin Laden in a late-night raid in Pakistan. And the final Harry Potter movie, Harry Potter and the Deathly Hallows, Part 2, was released.

2012 — “Gangnam Style,” by South Korean musician Psy, became the most-watched video ever. The Mayan calendar said the world would end on December 21, 2012.

2013 — Former National Security Administration contractor Edward Snowden claimed to have stolen tens of thousands of confidential and classified documents from the NSA’s internal computer system. The word “selfie” became Oxford dictionary’s “Word of the Year.” And Candy Crush became the most popular game on Facebook, with 46 million average monthly users.

2014 — Malaysia Airlines flight #370 disappeared while flying from Kuala Lumpur to Beijing; 239 passengers and crew were aboard. The Ice Bucket Challenge filled your Facebook newsfeed.

2015 — The internet debated the color of a dress: was it #blackandblue or #whiteandgold? (It was really black and blue.) Same-sex marriage became legal in the US when the Supreme Court ruled in Obergefell v. Hodges.

2016 — Pokémon Go became the latest world-wide craze, encouraging folks to look for Pokémon around every corner. Businessman Donald Trump was elected 45th president of the United States.

2017 — Thanks to streaming services like Netflix, binge watching became popular. And here in North Georgia, we experienced a total solar eclipse, if even for just a few minutes.

2018 — Hawaii’s Kilauea volcano began erupting soon after a magnitude-5.0 earthquake struck the Big Island of Hawaii. Prince Harry of Sussex married American Meghan Markle (they now have one child). And a record 102 women won seats in the House of Representatives during the mid-term elections.

2019 — NASA astronauts Jessica Meir and Christina Koch conducted the first all-female spacewalk outside of the International Space Station. Category 5 Hurricane Dorian devastated the Bahamas and skirted its way up the eastern coast of the U.S.

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.

Plan Ahead: Consider These 8 Smart Tax Tips for Year-end 2021

2020 Tax Season Updates Announced

Over the last couple weeks, the IRS has announced a few updates that will apply to the 2020 tax-filing season (for returns processed in 2021). Keep these changes in mind while planning your finances.

Retirement Plan Contribution Limits Increased

» The limit on elective deferral contributions to Sec. 401(k) plans, Sec. 403(b) plans, most Sec. 457 plans, and the federal government’s Thrift Savings Plan increases to $19,500 in 2020, up from $19,000 in 2019. If you’re 50+, the catch-up contribution limit increases to $6,500 in 2020, up from $6,000 in 2019.

» The maximum deductible IRA contribution for 2020 remains at $6,000. If you also have a workplace retirement plan, your ability to deduct your IRA contribution is phased out depending on your adjusted gross income (AGI):

  • $65,000-$75,000 for singles and heads of household
  • $104,000 to $124,000 for married couples filing jointly, where the spouse who makes the IRA contribution is covered by a workplace retirement plan
  • $196,000 and $206,000 for married couples filing jointly, where the spouse who makes the IRA contribution is NOT covered by a workplace retirement plan but is married to someone who is.

» If you contribute to a Roth IRA, the phaseout range for determining the maximum contribution increases to $196,000 to $206,000 for married couples filing jointly, and $124,000 to $139,000 for singles and heads of household.

» The AGI limit for the Retirement Savings Contribution Credit (Saver’s Credit) also increases slightly for 2020: $65,000 for married couples filing jointly, $48,750 for heads of household, and $32,500 for single taxpayers and for married individuals filing separately.

Inflation Adjustments and Tax Table Changes

» The Standard Deduction increases to $24,800 for married individuals filing joint returns or surviving spouses, $18,650 for heads of household, and $12,400 for unmarried individuals (other than surviving spouses) and married individuals filing separate returns.

» The Earned Income Tax Credit (for taxpayers with three or more children) increases to $6,660, up from $6,557 in 2019. The Adoption Tax Credit also increases to $14,300, up from $14,080 in 2019.

» The 2020 exemption amounts for the Alternative Minimum Tax rises to $113,400 for married individuals filing joint returns and surviving spouses, $72,900 for unmarried individuals (other than surviving spouses), $56,700 for married individuals filing separate returns, and $25,400 for estates and trusts.

» The Sec. 179 depreciation deduction for small businesses increases to $1,040,000, with a phaseout threshold of $2,590,000.

» The Sec. 199A income deduction threshold for a qualified trade or business increases to $326,600 for married individuals filing joint returns, and $163,300 for married individuals filing separate returns, single individuals, and heads of household.

For more details on these updates, or help planning your finances in relation to these changes, please give us a call today.

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.

Know Your Payroll Tax Due Dates

Know Your Payroll Tax Due Dates

I your small business has employees, you need to withhold and pay Georgia AND Federal income tax on a regular basis. There are five possible payment schedules for withholding taxes in Georgia:

  • Next-business-day
  • Semi-weekly
  • Monthly
  • Quarterly
  • Annually

Your payment schedule depends on the average amount you withhold from employee wages over time. The more you withhold, the more frequently you need to make withholding tax payments. (Note: The IRS requires three deposit schedules: semi-weekly, monthly, or quarterly if your overall liability is $2,500 or less.)

Threshold dollar amounts for the different payment schedules may change over time, so check with us (or the Georgia Department of Revenue) at least once a year for the latest information. Due dates for payments are:

  • Semi-weekly: Payments are due by Wednesday for amounts withheld on the preceding Wednesday, Thursday or Friday — or by Friday for amounts withheld on the preceding Saturday, Sunday, Monday or Tuesday.
  • Monthly: Payments are due by the 15th day of the month following the month in which the tax was withheld.
  • Quarterly: Payments are due by the last day of the month following the end of the quarter.
  • Annually: Payment is due by January 31st.
Businesses making semi-weekly or monthly payments must also file quarterly withholding tax returns. (Quarterly and annual filers only need to file the correct version of Form G-7.) G-7 returns are due on or before the last day of the month following the end of the quarter:
  • April 30 for 1Q (Jan–Mar)
  • July 31 for 2Q (Apr–Jun)
  • October 31 for 3Q (July–Sep)
  • January 31 for 4Q (Oct–Dec)

For specific dates and forms, please refer to the Georgia Department of Revenue website.

We Can Handle Your Payroll

Speaking of payroll, did you know that Premier CPA Services can handle your payroll processing? We can also take some of the pain out of your business reporting chores by taking care of Quarterly Payroll Reporting (Federal and State), as well as state and/or local sales tax reports on a monthly, quarterly or annual basis. Give us a call today to find out more about our small business services.

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.

Identity Theft—The IRS Has Your Back

Identity Theft—The IRS Has Your Back

In the battle against identity theft, the IRS is now permitting employers to use truncated (shortened) taxpayer identification numbers (TTINs) on W-2 Forms that are given to employees.

Typically, this means the first five digits of your nine-digit Social Security number will be replaced with asterisks or XXXs (e.g.: ***-**-1234 or XXX-XX-1234).

Note, however, that truncated numbers are NOT permitted on W-2 Forms that are sent to the IRS or the Social Security Administration (to ensure wage information is relayed accurately). For now, we’ll have to see if the State of Georgia makes a decision about accepting truncated ID numbers before changing this across the board.

Also, the IRS has announced that it will stop faxing tax transcripts to taxpayers, tax professionals and third parties, and stop mailing tax transcripts to third parties. The new policy covers individuals and businesses.

Individual taxpayers will be able to obtain their own tax transcripts, which are summaries of tax return information, by:

  • Using IRS.gov or the IRS2Go app to access Get Transcript Online (taxpayers may immediately download or print their transcript after first verifying their identities);
  • Using IRS.gov or the IRS2Go app to access Get Transcript by Mail (the transcript will be delivered within 10 days to the address of record);
  • Calling 800-908-9946 for an automated Get Transcript by Mail feature; or
  • Submitting Form 4506-T, Request for Transcript of Tax Return, or 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to have a transcript mailed to the taxpayer’s address of record. (Forms 4506, 4506-T and 4506T-EZ will no longer provide an option to have transcripts mailed to a third party.)

Lenders and others that need to verify income for non-tax purposes will now use the IRS’s Income Verification Express Service (IVES). However, tax return information currently available via the IRS Data Retrieval Tool through the Free Application for Federal Student Aid (FAFSA) process will continue to be available.

Please let us know if you have any question about these changes; we’ll be happy to walk you through them.

Fun Facts: Acronyms

  • M&M’s = Mars & Murrie’s, which refers to founders Forrest Mars Sr. and Bruce Murrie.
  • 3M Company = Minnesota Mining and Manufacturing Company.
  • JCPenney = James Cash Penney, the name of the founder.
  • FIAT = Fabbrica Italiana Automobili Torino, which means “Italian automobile factory of Turin.”
  • BMW = Bayerische Motoren Werke in German, which translates to “Bavarian Motor Works.”
  • Aflac = American Family Life Assurance Company, which adopted the acronym in 1989.
  • GEICO = Government Employees Insurance Company, which started by serving U.S. government employees and military personnel.
  • ZIP = Zone Improvement Plan, which was introduced by the US Postal Service in 1963.
  • CAPTCHA = Completely Automated Public Turing test to tell Computers and Humans Apart. It was invented in 1997, coined in 2003 and completely annoys humans to this day!

Have You Done a Paycheck Check-up Recently?

The Tax Cuts and Jobs Act made major revisions to taxpayer withholding. To accommodate those changes, the IRS will be releasing a new Form W-4 for the 2020 tax year (probably in November). The new Form W-4 should allow you to more simply calculate your income tax withholding by eliminating the use of withholding allowances, which were tied to the personal exemption amount.

In the meantime, the IRS encourages you to do a “Paycheck Checkup” to ensure that you are having the right amount of tax withheld. This is especially important if changes to the tax law affected the size of your refund this year. Remember: Withholding too little could mean an unexpected tax bill or penalty.

Visit the IRS’s Paycheck Checkup website and have your most recent pay stub and most recent income tax. Or give us a call and we can help you determine the correct amount for withholding.

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.