Blog Post

YEAR-END TAX PLANNING FOR INDIVIDUALS

Byrd & Massey, Inc. • Nov 20, 2018


Once again, tax planning for the year ahead presents a number of challenges, this year, primarily due to tax laws changes brought about the passage of the Tax Cuts and Jobs Act of 2018. These changes include the nearly doubling of the standard deduction, elimination of personal exemptions, and numerous itemized deductions reduced or eliminated. Let's take a closer look.

General Tax Planning

General tax planning strategies for individuals this year include postponing income and accelerating deductions, as well as careful consideration of timing related investments, charitable gifts, and retirement planning. For example, taxpayers might consider using one or more of the following:

  • Selling any investments on which you have a gain or loss this year. For more on this, see Investment Gains and Losses , below.
  • If you anticipate an increase in taxable income this year, in 2018, and are expecting a bonus at year-end, try to get it before December 31. Keep in mind, however, that contractual bonuses are different, in that they are typically not paid out until the first quarter of the following year. Therefore, any taxes owed on a contractual bonus would not be due until you file your 2019 tax return in 2020. Don't hesitate to call the office if you have any questions about this.
  • Prepaying deductible expenses this year using a credit card. Examples of deductible expenses include charitable contributions and medical expenses. This strategy works because deductions may be taken based on when the expense was charged on the credit card, not when the bill was paid. Likewise with checks. For example, if you charge a medical expense in December but pay the bill in January, assuming it's an eligible medical expense, it can be taken as a deduction on your 2018 tax return.
  • If your company grants stock options, then you may want to exercise the option or sell stock acquired by exercise of an option this year. Use this strategy if you think your tax bracket will be higher in 2019. Generally, exercising this option is a taxable event; sale of the stock is almost always a taxable event.
  • If you're self-employed, send invoices or bills to clients or customers this year to be paid in full by the end of December.

Caution: Keep an eye on the estimated tax requirements.

Accelerating Income and Deductions

Accelerating income and deductions are two strategies that are commonly used to help taxpayers minimize their tax liability. Most taxpayers anticipate increased earnings from year to year, whether it’s from a job or investments, so this strategy works well. On the flip side, however, if you anticipate a lower income next year or know you will have significant medical bills, you might want to consider deferring income and expenses to the following year.

Accelerating Income

If you anticipate being in a higher tax bracket next year, accelerating income into 2018 is a good idea, especially for taxpayers whose earnings are close to threshold amounts ($200,000 for single filers and $250,000 for married filing jointly) that make them liable for additional Medicare Tax or Net Investment Income Tax (see below).

Caution: Taxpayers close to threshold amounts for the Net Investment Income Tax (3.8 percent of net investment income) should pay close attention to "one-time" income spikes such as those associated with Roth conversions, sale of a home or other large assets that may be subject to tax.

Tip: If you know you have a set amount of income coming in this year that is not covered by withholding taxes, there is still time to increase your withholding before year-end and avoid or reduce any estimated tax penalty that might otherwise be due. On the other hand, the penalty could be avoided by covering the extra tax in your final estimated tax payment and computing the penalty using the annualized income method.


In cases where tax benefits are phased out over a certain adjusted gross income (AGI) amount, a strategy of accelerating income and deductions might allow you to claim larger deductions, credits, and other tax breaks for 2018, depending on your situation. Roth IRA contributions, conversions of regular IRAs to Roth IRAs, child tax credits, higher education tax credits, and deductions for student loan interest are examples of these types of tax benefits.

Examples of other strategies a taxpayer might take include:

  • Pay a state estimated tax installment in December instead of at the January due date. However, make sure the payment is based on a reasonable estimate of your state tax.

  • Pay your entire property tax bill, including installments due in year 2019, by year-end. This does not apply to mortgage escrow accounts.

  • Pay 2019 tuition in 2018 to take full advantage of the American Opportunity Tax Credit, an above-the-line credit worth up to $2,500 per student to cover the cost of tuition, fees and course materials paid during the taxable year. Forty percent of the credit (up to $1,000) is refundable, which means you can get it even if you owe no tax.

  • Try to bunch medical expenses. For example, you might pay medical bills in whichever year they would do you the most tax good. Medical expenses are deductible only to the extent they exceed a certain percentage of adjusted gross income (AGI). For example, to deduct medical and dental expenses these amounts must exceed 7.5 percent of AGI. By bunching these expenses into one year, rather than spreading them out over two years, you have a better chance of exceeding the thresholds, thereby maximizing your deduction.


    Note: The 7.5 percent threshold is only in effect for tax years 2017 and 2018. In 2019, it reverts to 10 percent AGI.

Additional Medicare Tax

Taxpayers whose income exceeds certain threshold amounts ($200,000 single filers and $250,000 married filing jointly) are liable for an additional Medicare tax of 0.9 percent on their tax returns, but may request that their employers withhold additional income tax from their pay to be applied against their tax liability when filing their 2018 tax return next April.

High net worth individuals should consider contributing to Roth IRAs and 401(k) because distributions are not subject to the Medicare Tax.

If you're a taxpayer close to the threshold for the Medicare Tax, it might make sense to switch Roth retirement contributions to a traditional IRA plan, thereby avoiding the 3.8 percent Net Investment Income Tax (NIIT) as well (more about the NIIT below).

Alternate Minimum Tax

The alternative minimum tax (AMT) applies to high-income taxpayers that take advantage of deductions and credits to reduce their taxable income. The AMT ensures that those taxpayers pay at least a minimum amount of tax and was made permanent under the American Taxpayer Relief Act (ATRA) of 2012.

Although the AMT remained under the TCJA exemption amounts increased significantly. As such, the AMT is not expected to affect as many taxpayers. Furthermore, the phaseout threshold increases to $500,000 ($1 million for married filing jointly). Both the exemption and threshold amounts are indexed for inflation.

Note: AMT exemption amounts for 2018 are as follows:

  • $70,300 for single and head of household filers,


  • $109,400 for married people filing jointly and for qualifying widows or widowers,


  • $54,700 for married people filing separately.


Charitable Contributions

Property, as well as money, can be donated to a charity. You can generally take a deduction for the fair market value of the property; however, for certain property, the deduction is limited to your cost basis. While you can also donate your services to charity, you may not deduct the value of these services. You may also be able to deduct charity-related travel expenses and some out-of-pocket expenses, however.

Keep in mind that a written record of your charitable contributions--including travel expenses such as mileage--is required in order to qualify for a deduction. A donor may not claim a deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a canceled check) or written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

Tip: Contributions of appreciated property (i.e. stock) provide an additional benefit because you avoid paying capital gains on any profit.

Taxpayers age 70 ½ or older can reduce income tax owed on required minimum distributions (RMDs) from IRA accounts by donating them to a charitable organization(s) instead.

Investment Gains and Losses

This year, and in the coming years, investment decisions are often more about managing capital gains than about minimizing taxes per se. For example, taxpayers below threshold amounts in 2018 might want to take gains; whereas taxpayers above threshold amounts might want to take losses.


Caution: Fluctuations in the stock market are commonplace; don't assume that a down market means investment losses as your cost basis may be low if you've held the stock for a long time.

Minimize taxes on investments by judicious matching of gains and losses. Where appropriate, try to avoid short-term capital gains, which are taxed as ordinary income (i.e., the rate is the same as your tax bracket).

In 2018 tax rates on capital gains and dividends remain the same as 2017 rates (0%, 15%, and a top rate of 20%); however, due to tax reform, threshold amounts do not correspond to the new tax bracket structure as in prior years:

  • 0% - Maximum capital gains tax rate for taxpayers with income up to $38,600 for single filers, $77,200 for married filing jointly.
  • 15% - Maximum capital gains tax rate for taxpayers with income above $38,600 for single filers, $77,200 for married filing jointly.
  • 20% - Maximum capital gains tax rate for taxpayers with income above $425,800 for single filers, $479,000 for married filing jointly.

Where feasible, reduce all capital gains and generate short-term capital losses up to $3,000. As a general rule, if you have a large capital gain this year, consider selling an investment on which you have an accumulated loss. Capital losses up to the amount of your capital gains plus $3,000 per year ($1,500 if married filing separately) can be claimed as a deduction against income.

Wash Sale Rule. After selling a securities investment to generate a capital loss, you can repurchase it after 30 days. This is known as the "Wash Rule Sale." If you buy it back within 30 days, the loss will be disallowed. Or you can immediately repurchase a similar (but not the same) investment, e.g., and ETF or another mutual fund with the same objectives as the one you sold.

Tip: If you have losses, you might consider selling securities at a gain and then immediately repurchasing them, since the 30-day rule does not apply to gains. That way, your gain will be tax-free; your original investment is restored, and you have a higher cost basis for your new investment (i.e., any future gain will be lower).

Net Investment Income Tax (NIIT)

The Net Investment Income Tax, which went into effect in 2013, is a 3.8 percent tax that is applied to investment income such as long-term capital gains for earners above certain threshold amounts ($200,000 for single filers and $250,000 for married taxpayers filing jointly). Short-term capital gains are subject to ordinary income tax rates as well as the 3.8 percent NIIT. This information is something to think about as you plan your long-term investments. Business income is not considered subject to the NIIT provided the individual business owner materially participates in the business.

Please call if you need assistance with any of your long-term tax planning goals.

Mutual Fund Investments

Before investing in a mutual fund, ask whether a dividend is paid at the end of the year or whether a dividend will be paid early in the next year but be deemed paid this year. The year-end dividend could make a substantial difference in the tax you pay.

Example: You invest $20,000 in a mutual fund in 2018. You opt for automatic reinvestment of dividends, and in late December of 2018, the fund pays a $1,000 dividend on the shares you bought. The $1,000 is automatically reinvested.

Result: You must pay tax on the $1,000 dividend. You will have to take funds from another source to pay that tax because of the automatic reinvestment feature. The mutual fund's long-term capital gains pass through to you as capital gains dividends taxed at long-term rates, however long or short your holding period.

The mutual fund's distributions to you of dividends it receives generally qualify for the same tax relief as long-term capital gains. If the mutual fund passes through its short-term capital gains, these will be reported to you as "ordinary dividends" that don't qualify for relief.

Depending on your financial circumstances, it may or may not be a good idea to buy shares right before the fund goes ex-dividend. For instance, the distribution could be relatively small, with only minor tax consequences. Or the market could be moving up, with share prices expected to be higher after the ex-dividend date. To find out a fund's ex-dividend date, call the fund directly.

Please call if you'd like more information on how dividends paid out by mutual funds affect your taxes this year and next.

Year-End Giving To Reduce Your Potential Estate Tax

The federal gift and estate tax exemption is currently set at $11.18 million but is projected to increase to $11.4 million in 2019. ATRA set the maximum estate tax rate set at 40 percent.

Gift Tax. Sound estate planning often begins with lifetime gifts to family members. In other words, gifts that reduce the donor's assets subject to future estate tax. Such gifts are often made at year-end, during the holiday season, in ways that qualify for exemption from federal gift tax.

Gifts to a donee are exempt from the gift tax for amounts up to $15,000 a year per donee in 2018 and are expected to remain the same in 2019.

Caution: An unused annual exemption doesn't carry over to later years. To make use of the exemption for 2018, you must make your gift by December 31.

Husband-wife joint gifts to any third person are exempt from gift tax for amounts up to $30,000 ($15,000 each). Though what's given may come from either you or your spouse or both of you, both of you must consent to such "split gifts."

Gifts of "future interests," assets that the donee can only enjoy at some future time such as certain gifts in trust, generally don't qualify for exemption; however, gifts for the benefit of a minor child can be made to qualify.

Tip: If you're considering adopting a plan of lifetime giving to reduce future estate tax, don't hesitate to call the office for assistance.

Cash or publicly traded securities raise the fewest problems. You may choose to give property you expect to increase substantially in value later. Shifting future appreciation to your heirs keeps that value out of your estate. But this can trigger IRS questions about the gift's true value when given.

You may choose to give property that has already appreciated. The idea here is that the donee, not you, will realize and pay income tax on future earnings and built-in gain on sale.

Gift tax returns for 2018 are due the same date as your income tax return (April 15, 2019). Returns are required for gifts over $15,000 (including husband-wife split gifts totaling more than $15,000) and gifts of future interests. Though you are not required to file if your gifts do not exceed $15,000, you might consider filing anyway as a tactical move to block a future IRS challenge about gifts not "adequately disclosed." Please call the office if you're considering making a gift of property whose value isn't unquestionably less than $15,000.

New Tax Rate Structure for the Kiddie Tax

Under the TCJA, the kiddie tax rules have changed. For tax years 2018 through 2025, unearned income exceeding $2,100 is taxed at the rates paid by trusts and estates. For ordinary income (amounts over $12,501), the maximum rate is 37 percent. For long-term capital gains and qualified dividends, the maximum rate is 20 percent.

Other Year-End Moves

Maximize Retirement Plan Contributions. If you own an incorporated or unincorporated business, consider setting up a retirement plan if you don't already have one. It doesn't actually need to be funded until you pay your taxes, but allowable contributions will be deductible on this year's return.

If you are an employee and your employer has a 401(k), contribute the maximum amount ($18,500 for 2018), plus an additional catch-up contribution of $6,000 if age 50 or over, assuming the plan allows this and income restrictions don't apply.

If you are employed or self-employed with no retirement plan, you can make a deductible contribution of up to $5,500 a year to a traditional IRA (deduction is sometimes allowed even if you have a plan). Further, there is also an additional catch-up contribution of $1,000 if age 50 or over.

Health Savings Accounts. Consider setting up a health savings account (HSA). You can deduct contributions to the account, investment earnings are tax-deferred until withdrawn, and amounts you withdraw are tax-free when used to pay medical bills.

In effect, medical expenses paid from the account are deductible from the first dollar (unlike the usual rule limiting such deductions to the amount of excess over 7.5 percent of AGI). For amounts withdrawn at age 65 or later that are not used for medical bills, the HSA functions much like an IRA.

To be eligible, you must have a high-deductible health plan (HDHP), and only such insurance, subject to numerous exceptions, and must not be enrolled in Medicare. For 2018, to qualify for the HSA, your minimum deductible in your HDHP must be at least $1,350 for single coverage or $2,700 for a family.

529 Education Plans. Maximize contributions to 529 plans, which starting in 2018, can be used for elementary and secondary school tuition as well as college or vocational school.

Summary

These are just a few of the steps you might take. Please contact the office for assistance with implementing these and other year-end planning strategies that might be suitable for your particular situation.


25 Apr, 2024
We are thrilled and humbled to announce that we have been recognized as the best in our field! Thanks to the unwavering trust and support of our incredible clients, we have been awarded the prestigious Gold for Best Accounting Firm and Silver for Best Tax Services . This achievement would not have been possible without your continued faith in our expertise and dedication. We are truly honored and grateful for your partnership. Here at Byrd and Massey, we are committed to providing exceptional accounting services and top-notch tax solutions. This recognition motivates us to push even harder and strive for excellence in everything we do. Rest assured, we will continue to serve you with the utmost professionalism, integrity, and attention to detail. Your financial success remains our top priority. We extend our heartfelt gratitude to each and every one of our clients for their invaluable support. Together, we have built a strong foundation of trust and collaboration, and we look forward to many more years of working together. Once again, thank you for making us the best. We are truly honored to be your trusted accounting partner.
22 Apr, 2024
Franchise Tax in Arkansas The deadline for Arkansas Franchise Tax is May 1 st , 2024. If you haven’t already prepared, filed, and paid your tax, we can help! This service is part of our contract for bookkeeping clients; however, if you're not a bookkeeping client and would still like assistance, we can take care of it for you. Here is a breakdown of fees: Tax: $150 + $5 credit card processing fee Our Fee: $75 Don’t wait! If you would like for us to prepare and send in your Franchise Tax, we MUST have your information no later than Friday, April 26 th to allow for setup and processing. Please Note Your Franchise Tax will continue to accrue until your business has been dissolved. If you need guidance, you can set up an advisory appointment with a CPA by going here , or calling our office. Final Thoughts Remember to file a BOI (Beneficial Ownership Information) report with FinCen by going here . It is now required for both new and existing businesses under the Corporate Transparency Act.
01 Feb, 2024
The Battle of "Us" vs. "Them" When it comes to figuring out who best to call when tax issues arise, it can sometimes seem tricky, but we’ve got you covered! We have compiled a list of situations and scenarios to help guide you through tax season and navigate the stress of dealing with the IRS all year long. Tax Return Preparation and Filing - US We will always handle ALL your tax prep and filing. We can file for all 50 states and will work with you to minimize your taxes throughout the year, not just at the end of the year. Notice or Letter from the IRS - US When you receive a letter from the IRS about your tax return, please reach out to us so we can review the notice for possible errors or even incomplete information and assist in resolving the issue as quickly as possible. Tax Disputes or Audits - US We know it can be nerve wracking to receive any notice from the IRS let alone a notice specifying you’re being audited, so that’s where we come in. We handle it all for you. Simply bring in or forward the notification to us and we’ll take care of everything from A to Z. Identity Verification – THEM If the IRS is asking to verify your identity for any reason, contact them directly using their official website or by calling their toll-free number at 1-800-829-1040. Remember, the IRS will never ask to verify personal identifiable information via call, text, message, or email. General Tax Inquiries – US For general tax questions throughout the year, we are here for you, and you can reach out to us at any time. We offer advisory services from $125 per hour where our CPAs can answer all your questions. We will guide you through any adjustments that may need to be made to your finances and contributions, simplify complicated tax laws and rules, and boost your deductions. We make it a priority to proactively stay up to date on current tax law, tax code, and new regulations so we can serve you better. To schedule an advisory, you can book online by clicking here or you can give us a call at 479-867-5599 .
25 Jan, 2024
QuickBooks Online is cloud-based and can be accessed through any web browser or mobile app. It functions similarly to its counterpart (QuickBooks Desktop), however, offers much more flexibility making it ideal for small to medium-sized businesses. We’ve compiled a list of tips to help even the most seasoned user. Tip 1: “More” is More! You may or may not have noticed it at the bottom of your transaction screen, but next to the Print button, there’s More! It can come in handy if you need to make edits, delete, void, or even copy a transaction. Tip 2: Did You Document It? QBO is an amazing tool, so you may think it’s okay to toss or shred your documents once you enter them; however, it is always a great idea to scan and attach a copy of the original document (i.e., receipt, check, etc.) to the transaction, especially if you plan on claiming it on your tax return. There is a handy box in the transaction specifically for attachments, and you can simply upload or drag documents from the location you choose into the attachment box. Once it has finished uploading, save the transaction and voila! *Hint* You can view all your attachments by clicking the gear icon in the upper right corner and look under “Lists.” Tip 3: Use Your Tabs Sometimes it’s necessary to move back and forth between two screens simultaneously. You can do so by hovering over one of the navigation links, like Sales, and clicking your mouse wheel; doing this will automatically open a new tab. You can also right-click and select “open link in new tab.” This can be a huge help and time saver. Tip 4: Take Ctrl Ctrl is a modifier key that only works in conjunction with another key on your keyboard. In QBO there are many shortcuts you can take using the ctrl key (i.e. ctrl + another key). The two that we will share are the favorite functions Nita, our staff accountant, finds most useful: 1. [Ctrl + A] opens the Chart of Accounts 2. [Ctrl + F] helps find an entry. Bonus Tip: QuickBooks ProAdvisor Program This program connects customers with Intuit Certified local bookkeepers, accountants, and CPAs - like us - who help establish QBO accounts. This allows our clients the ability to easily track income and expenses, reconcile statements, eliminates the need to manually enter data, create short-cuts, and even better, have convenient remote access from anywhere in the world! Interested in one-on-one QBO training? You’re in luck! Call our office or click here to book a session with a certified trainer. *Please note that we will need to be able to look at your QB file before training can begin.
23 Jan, 2024
What's It All Mean? Confusion tends to spring up when it comes to tax time; especially while dealing with three specific tax forms: W-2’s, 1099-MISC, and 1099-NEC. Businesses are required to report payments made to employees throughout the calendar year; and these forms are how they get reported to the IRS. Let’s look at each form below: The Good Ole W-2 The Wage and Tax Statement might not be as old as sliced bread, but it has been around for a long time; since 1944 in fact. Employers must complete and send, either by mail or electronically, their employees W-2’s by January 31 to avoid being penalized. The W-2 shows the breakdown of all wages, taxes withheld, FICA, and more for that calendar year. Who Gets One? W-2’s are issued to employees who are officially employed by a company. This means that they have filled out a W-4, I-9, etc. for formal employment. The Gist About 1099-Misc The 1099-Misc Form began as a way to report earnings for independent contractors, consultants, or freelancers at the end of the calendar year. Box 7 was intended for that, specifically, but in 2020 the IRS switched things up a little. While you still use a 1099-MISC for earnings, it’s more focused on prizes and royalties rather than income. Click here for more information about what ways to use form 1099-MISC. Non-Employee Compensation (1099-NEC) Beginning in 2020, the IRS introduced a new form for businesses and organizations to report compensation. On the 1099-NEC, taxes are generally never withheld due to the nature of the work in question (i.e., contract, non-employees, consultants, etc.). You may also only receive this form if you’ve earned $600 or more during the calendar year. *Please Note: If you made less than $600 and did not receive a 1099-NEC, you are still required to report your earnings on your tax return. What If I Don’t Get All My Tax Documents? If you’re unsure if you should be receiving one, whether it’s a W-2, 1099-MISC, or 1099-NEC, reach out to the business, person, or organization who paid you; that is often the best way to resolve the issue. Be sure to verify your address and Social Security Number since those two things are reported directly to the IRS. Errors and Inaccuracies If you receive a form with errors on it, immediately tell the company and ask them to correct it. With the new program, IRIS (Information Returns Intake System) implemented by the IRS, corrections are much easier to do and can be done electronically. With tax season upon us, it’s crucial to get your documents in as soon as possible! Schedule an appointment today by clicking here or call us at 479-876-5599 . We are here to help and we’re easy to talk to!
10 Jan, 2024
Here’s the Scoop: If you had a balance due during 2020 or 2021, the IRS announced in December 2023 that they would be automatically waiving any “failure to pay” penalties on assessed taxes that were less than $100,000. Those who filed the following ways are automatically eligible: Filed a Form 1040, 1041, 1120 series or Form 990-T tax return for years 2020 and/or 2021. Were assessed taxes of less than $100,000, and Received an initial balance due notice, typically the CP14 or CP161, between Feb 5, 2022, and Dec. 7, 2023. If you made payments on your account or your balance is paid in full, you are automatically eligible for this “failure to pay” penalty relief on assessed taxes of less than $100,000 per year. How Do I Get the Credit? According to the IRS, a credit will automatically be applied to any other tax year with a balance due. If no balance is due, a refund (by mail) will be issued. Please note - if your address has changed, you will need to update your account to make sure you receive your refund and/or any notices from the IRS. You may do so by clicking here . The IRS asks that you allow 4-6 weeks for processing. In the meantime, the IRS suggests notifying the post office that services your old address. I’m Not Eligible, What Can I Do? If you have assessed taxes of more than $100,000, you can apply for penalty relief under the reasonable cause criteria or the First-Time Abate program. Go here to view the various types of relief you may qualify for. Remember, all hope is not lost!
26 Dec, 2023
Melissa goes "On the Record" with 40/29 Yuna Lee at 40/29 News --Fort Smith & Fayetteville, Arkansas to talk about how to prepare for end-of-year taxes, and what to plan for going into 2024
05 Dec, 2023
Here's the Scoop As 2023 draws to a close, our team would like to share vital information that could greatly impact your business. The following updates will help you prepare for important deadlines and keep your business in good standing as we get ready to step into 2024. Franchise Tax Payments Deadline – December 31, 2023 If you haven’t already done so, please remember to file and pay your franchise tax for the 2023 tax year no later than December 31st. Failure to pay by the deadline will enter your business into revoked status . To check your current status, visit the Arkansas Secretary of State (SOS) website here . At Byrd and Massey, we automatically file franchise taxes for all our contract clients and extend our services to non-contract clients should you need our assistance. Please feel free to reach out to us. Due to the deadline falling on a Sunday, we ask that you contact us no later than December 21st if you need help filing. Dissolution and Franchise Tax Deadline – December 31, 2023 If you currently own a business but wish to dissolve it and avoid accruing additional franchise taxes, you must do so by December 31st. We can file Articles of Dissolution on your behalf for a nominal fee. Call us at 479-876-5599 or send an inquiry by clicking here . Accrual Reminder It's crucial to remember that even if a company is no longer in operation, the corporation will continue to accrue franchise taxes until it is formally dissolved with the Arkansas Secretary of State. Finally… Stay informed and act now to ensure compliance with Arkansas business regulations. Your timely attention to these matters will help protect your business and avoid any unnecessary penalties. As always, if you have questions let us know. After all, we are here to help and we’re easy to talk to!
04 Dec, 2023
Making Change... When you give to charities and non-profit organizations, it not only impacts those organizations in a positive way by helping them accomplish their goals, but it can also provide a sense of personal satisfaction whether you are donating as an individual or a business. Since it can sometimes be unclear as to what qualifies and how to keep track of your giving for tax purposes, we have made a checklist of 3 important things to keep in mind when you give. · Be sure the recipient is an organization qualified under section 170(c) of the Internal Revenue Code. This includes 501(c)(3) and religious organizations. · Maintain records of your contribution(s) (receipts, bank records, letter from organization(s)) with the name of org, amount donated, and date of the contribution. · Donations to individuals or groups through crowdfunding services, such as GoFundMe, are generally considered to be "personal gifts," and monetary gifts are likely not tax deductible. If you have general questions please reach out to us at 479-876-5599. To schedule an advisory for a more in-depth look at your giving and how it might affect your taxes, click here . We are always here to help!
irs
28 Nov, 2023
The IRS and the Identity Protection PIN ID Theft is Not a Victimless Crime If you’ve been a victim of identity theft, or the IRS has identified you as a possible victim of tax-related identity theft, chances are you will receive a 6-digit PIN to authenticate your identity when you file your tax return. Here are 6 tips you need to know about your IP PIN for the upcoming tax season: Your IP PIN is ONLY valid for your federal tax return. You will receive a CP01A notice from the IRS from mid-December through early January. Please DO NOT throw it away! Keep it with all other tax-related documents you receive and bring it in to your tax preparer when you are ready to file your taxes. If you are married and you file a joint return, EACH person who has a PIN must be sure to enter it on the return. If only one of you has a PIN (i.e., only one spouse has been a victim of ID theft and has been issued an IP PIN), then only one PIN will be entered on the tax return. If you are filing for the current year AND a previous or previous years in the current year, you will use the same PIN for all tax returns during the calendar year. Dependents with their own IP PIN must share that PIN with their parent(s) or guardian(s) if they are still being claimed on a tax return. *Note: Your e-file return will be rejected If you do not enter a dependent’s IP PIN. According to the IRS, the IP PIN is only used on tax Forms 1040, 1040-NR, 1040-PR, 1040-SR, and 1040-SS. *Note: If you file an Amended return, you will need to include your IP PIN! Where Do I Sign Up? If you’ve been a victim of identity theft, the IRS has provided ways to get an IP PIN. Remember – having this PIN will prevent someone from filing a tax return using your Social Security number or Individual Taxpayer Identification Number (ITIN). Get one online. The fastest way to get an IP PIN is to use the IRS.gov websites . Get an IP PIN tool; however, if you don’t have an IRS.gov account, you will have to register and validate your identity, which can be a tedious process. Fill out and mail or fax an application for an IP PIN, which can be printed by going here . Get your IP PIN in-person by going to your local IRS Taxpayer Assistance Center. You will have to call to make an appointment, of course, and you can find an office here . Lost and Found If you lost or misplaced your PIN, not to worry, there are a couple of ways to recover your original PIN or even get a replacement! Call the IRS. They have a team that specializes in IP PIN retrieval. Once they verify your identity, they will mail your IP PIN to your address on file within 21 days. The number is 800-908-4490 and they are available to help Monday – Friday, 7:00am – 7:00pm local time. The retrieval tool online is the fastest way to receive your IP PIN. This is also the same tool that allows you to register for a PIN initially. Click here to log into the tool. Last But Not Least The IRS has created an Identity Theft Affidavit for victims of identity theft that can be found here . You can fill it out and submit online or print it and either mail or fax the form. All information for each option is at the link above. A Quick Recap Open IRS letters and keep your PIN with your other tax docs Your PIN is REQUIRED to file your tax return If you have a dependent(s), you will need their PIN to file The IP PIN is for Federal ONLY Your tax return will be REJECTED if you do not use your PIN You CAN recover your IP PIN by using one of the methods in the above post If you have any questions regarding the Identity Protection PIN, please do not hesitate to reach out to us via e-mail info@byrdandmassey.com , phone, or our website . We’re here to help any way we can! Don’t forget we are also now accepting appointments for the 2024 Tax Season. You can view our calendar online and schedule an appointment by clicking here , or by calling our office at 479-876-5599 and Jen, our friendly Receptionist, will help you find a date and time that works best for you!
Show More
Share by: