Personal Finance: The Fine Art of Estimating Tax Payments

Personal Finance: The Fine Art of Estimating Tax Payments

Our tax system is a “pay-as-you-go” process, which is all pretty straightforward when you receive a regular paycheck, and money is withheld on your behalf. But when you are self-employed — or earn certain other types of income — making estimated tax payments is your responsibility. If you don’t pay in enough during the year to cover your taxes, you could be faced with an underpayment penalty.

In addition to self-employment income, quarterly estimated tax payments are used to pay tax on other types of income that aren’t typically subject to withholding, including earnings from:

  • Interest
  • Dividends
  • Rents
  • Alimony

Likewise, if you don’t elect voluntary withholding, you should make estimated tax payments on other taxable income, such as unemployment compensation and the taxable part of your social security benefits. Here’s how:

Do the math. In most cases, you’ll need to pay estimated tax for 2019 if both of the following apply.

  1. You expect to owe at least $1,000 in tax for 2019, after subtracting your withholding and refundable credits.
  2. You expect your withholding and refundable credits to be less than the smaller of:
    a) 90% of the tax to be shown on your 2019 tax return,
    b) 100% of the tax shown on your 2018 tax return. Your 2018 tax return must cover all 12 months.
    Note that these percentages may be different if you are a farmer, fisherman, or higher income taxpayer.

Look at last year’s return. If you don’t anticipate any significant changes this year, you can aim to pay 100% of last year’s tax as a safe-harbor estimate (110% if your adjusted gross income for the prior year was more than $150,000).

Use the right form. IRS Form 1040-ES is used to figure and pay estimated tax — typically in four quarterly payments (due on the 15th day of April, June, September and the following January).

Get some help. Calculating estimated payments is complex. It depends on your tax bracket, deductions and credits, and needs to reflect any changes in the tax law. Just schedule an appointment and I’ll be happy to go over it with you. Like I always say, tax planning isn’t a year-end event — it should be an ongoing process throughout the year.

Small Business Smarts

When you set up a business checking account, it’s also a good idea to set up a separate savings account to help you organize funds and set aside money for taxes and other incidentals.

Let Us Help!

Are you feeling a little overwhelmed trying to keep up with your estimated tax payments and due dates? Let us help relieve some stress. We can manage your payroll filing, sales tax deposits and other tedious tasks for you. Contact us today to find out more.

Call 706-632-7850 oremail Jackie 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.
The Fight Against “Bracket Creep”

The Fight Against “Bracket Creep”

Sounds pretty scary, doesn’t it? Well it is. Each year, the IRS makes adjustments for inflation to more than 40 different tax provisions. The idea is to prevent what is known as “bracket creep.” Without these annual adjustments, you could find yourself creeping into a higher income tax bracket — or lose value from credits and deductions.

In the past, the IRS used the Consumer Price Index to set the annual adjustments. Under the recent tax reform legislation, the IRS will now use what is known as the Chained Consumer Price Index (C-CPI), also known as chain-weighted CPI or chain-linked CPI.

C-CPI will be used to adjust income thresholds, deduction amounts and credit values accordingly. The chart here from the Tax Policy Center shows inflation-adjusted income limits for the various tax brackets.

Questions on Where You Stand?

We’re always here to answer your tax questions, so please call us at 706-632-7850 or email Donna here.

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With two CPAs and a full-time staff, we can provide you with experienced, hands-on guidance for all your accounting and financial needs — year-round.

⇒ Tax Preparation & Planning
⇒ Accounting & Bookkeeping Services
⇒ Payroll Processing & Business Tax Filing

Tax Reform — Boon or Bust?

Tax Reform — Boon or Bust?

The Tax Cuts and Jobs Act (TCJA) was announced with much fanfare at the end of 2017. The Act amended the Internal Revenue Code of 1986, including reducing tax rates for businesses and individuals. It simplified personal tax by increasing the standard deduction and family tax credits, but it also eliminated personal exemptions and made it less beneficial to itemize deductions.

So, with tax season now in the rearview mirror, let’s look at what tax reform did and did not accomplish:

Did Filing Get Any Easier?

The big increase in the standard deduction made filing much easier for many taxpayers, with less time spent tracking deductible expenses. The Tax Policy Center estimates that the number of itemizers fell from about 46 million to only about 19 million.

Yet, the Treasury Department also killed Forms 1040A and 1040EZ, which had made filing super easy for folks with very simple tax situations.

In addition, the TCJA included new tax benefits that required millions of filers to do some extra work in return for tax savings. For example, 14 million more households were able to claim the child tax credit for 2018 than for 2017. Others who could benefit from the TCJA’s special 20% deduction for qualified income from pass-through businesses, such as partnerships and sole proprietorships, also had to sort through complex new rules.

Did Refunds Get Any Bigger?

The number of tax returns claiming refunds increased (very) slightly to 95.7 million. The average refund was $2,725, down just a bit from $2,780 in 2018.

Overall, about 64% of households paid less in individual income tax for 2018 than they would have under the pre-TCJA law, while about 6% paid more. In addition, the share of households that did NOT pay federal income tax increased by about 2%.

The Tax Policy Center estimated that the average individual income tax cut for 2018 was about $1,300. Middle-income households (those making between about $50,000 and $85,000) got an income tax cut of about $800 on average, while those in the top 1% paid about $51,000 less.

What It All Means

In the end, tax reform took some and gave some. But as with most things, victory goes to the well-prepared. So make sure you are taking steps now to maximize the benefits of tax reform legislation. We’re always here to answer your tax questions, so please Call 706-632-7850 or email Jackie today.

Did You Know?

President Nixon was the first American president to release his tax returns, starting a practice that most U.S. presidents have since followed. You can find copies of presidential tax returns on the Tax Notes website

Another interesting fact: The check box for the Presidential Campaign Funds contribution (originally $1) was implemented in 1966 during the Johnson administration. Checking the box (now $3) does not change the amount of your tax or refund. Rather, $3 of your tax dollars are simply designated to go to this fund rather than the regular pool.

Easy IRS Tax Calendar

Easy IRS Tax Calendar

Stay on top of your business taxes this year with a free Tax Calendar from the IRS. It’s easy to customize this handy calendar tool to keep track of important dates and deadlines. For example, you can list dates when payroll deposits are due, or filing deadlines for 1099 and W-2 forms.

Here’s how to access the calendar (https://www.tax.gov/calendar/):

ONLINE – Simply bookmark the link in your web browser and refer to it each month. You can also skip through tabs for previous and upcoming months, as well as view last year’s key dates. A filter option allows you to sort and view tax dates and event types.

SUBSCRIBE – Subscribe to or download the calendar and incorporate it into your Microsoft Outlook, Apple Calendar, on your iPhone or iPad, or any other calendar that uses .ics format.

RSS FEED – You can have your Calendar reminders sent to your email inbox via RSS feeds one or two weeks in advance of when a form or payment is due.

Let Us Help!

Are you feeling a bit overwhelmed just trying to keep up with all the tax filing due dates? Let us help relieve some stress. We can manage your payroll filing, sales tax deposits and other tedious tasks for you. Contact us today to find out more. Call 706-632-7850 or email Jackie today.

Organizational Sanity: Win the Paper Chase with These 5 Tips

Organizational Sanity: Win the Paper Chase with These 5 Tips

Whew! Tax season has finally wrapped up, and we can all breathe a sigh of relief. The hunt for paperwork is over … for now.

If pulling your tax records together was a struggle this year, I’m going to suggest some simple tips for storing your financial records. Ultimately, the tax return we prepare for you or your business is a product of your record-keeping.

Consider these tips for keeping your documents — and your sanity — together:

1 — Put in the time. Spend some time each month to make sure your documents are in order. Go ahead and put it on your calendar or to-do list that you will spend an hour or two one afternoon or evening a month.

2 — File everything immediately. You don’t have to organize everything as you go, but do put receipts and statements in a folder or envelope. “I’ll get to it later” doesn’t always happen.

3 — Create a central location. Have a place for all statements, tax forms, receipts and other documents — ideally in a fireproof safe or cabinet.

4 —Organize electronic records the same way you would paper records. Keep your electronic scans and statements in a central location on your computer, organized and clearly labeled. Give everything a once-over during your monthly organizing.

5 — Keep everything secure. File cabinets should be locked, computers should be password protected and backup copies should be kept in a separate safe place, such as a safety deposit box.

It won’t take a lot of your time now, but following these five tips can save you time come next tax filing season! Of course, we’re always here to answer your tax questions, so feel free to email or call us at 706-632-7850.

Now Hiring a Seasonal Tax Preparer

Now Hiring a Seasonal Tax Preparer

Premier CPA Services PC is seeking Seasonal Tax Preparer to join our team during the 2017 tax season. The main responsibilities include:

  • Prepare individual tax returns utilizing information provided by clients,
  • Reviewing client information, and
  • Inputting into tax preparation software.

Successful candidates will possess the following qualifications: Excellent organizational skills, detail-orientation and a minimum of three  years of individual income tax preparation experience with recent work history.

Please email resume to Jackie@premiercpaservices.com or fax it to 706-632-7850.

Are You Ready for Tax Season?

Are You Ready for Tax Season?

The 2017 tax season will be here before you know it. To be prepared, schedule your year-end tax planning appointment today! Call or email Sandy to schedule an appointment in November or December: 706-632-7850 or Sandy@premiercpaservices.com.

Tax Season Appointments Information

We are also now taking appointments for the 2017 tax season. We ask that, as a courtesy to other clients, you only schedule an appointment to see Jackie Self during the 2017 tax season if you have had significant changes during 2016 or are a new client for the 2016 tax year.

A meeting is not required. If you have not had any major changes, you are welcome to drop your documents off at the firm and we will prepare your return. If you have questions, a tax preparer can contact you to discuss.

2015 Tax Season Is Here

2015 Tax Season Is Here

Avoid Tax Season Stress!

Are you ready for tax time? There are a couple of steps you can take now to alleviate some of the stress of filing your return. Plan to get organized early. Begin by putting together a tax folder with W-2s from your employer, 1099s for other income you may have earned, bank and other financial statements and receipts for things like medical bills and charitable donations. Once you’ve gathered all your important paperwork, this is a good time to meet with Jackie to talk about changes in your financial situation or in tax laws that may have an effect on your return. A meeting is not required; you are more than welcome to drop your documents off at the firm and we will be happy to prepare your return. But don’t wait too long! Our schedule fills up fast!

Make an Appointment Today!

Do you need an appointment to meet with Jackie? We suggest calling within the next two weeks — appointment times are filling up fast! Call us today to set up your appointment at 706-632-7850 or email Sandy to request a time.