02/12/19

Here’s how taxpayers can pay their taxes

The IRS offers several payment options where taxpayers can pay immediately or arrange to pay in installments. Taxpayers can pay online, by phone, or with their mobile device and the IRS2Go app. Taxpayers should pay in full whenever possible to avoid interest and penalty charges.

Here are some electronic payment options for taxpayers:

  • Electronic Funds Withdrawal. Taxpayers can pay using their bank account when they e-file their tax return. EFW is free and only available through e-File.
  • Direct Pay. Taxpayers can pay directly from a checking or savings account for free with IRS Direct Pay. Taxpayers receive instant confirmation after they submit a payment. With Direct Pay, taxpayers can schedule payments up to 30 days in advance. They can change or cancel their payment two business days before the scheduled payment date. Taxpayers can choose to receive email notifications each time they make a payment.
  • Credit or debit cards. Taxpayers can also pay their taxes by debit or credit card online, by phone, or with a mobile device. Card payment processing fees vary by service provider and no part of the service fee goes to the IRS. Telephone numbers for service providers are at IRS.gov/payments.
  • Pay with cash. Taxpayers can make a cash payment at a participating retail partner. Taxpayers can do this at more than 7,000 locations nationwide. Taxpayers can visit IRS.gov/paywithcash for instructions on how to pay with cash.
  • Installment agreement. Taxpayers who are unable to pay their tax debt immediately may be able to make monthly payments. Before applying for any payment agreement, taxpayers must file all required tax returns. They can apply for an installment agreement with the Online Payment Agreement tool, which also has more information about who’s eligible to apply for a monthly installment agreement.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

02/06/19

Where’s My Refund? tool lets taxpayers check status of their refund

The best way for taxpayers to check the status of their refund is to use the Where’s My Refund? tool on IRS.gov. This tool gives taxpayers access to their tax return and refund status anytime. All they need is internet access and three pieces of information:

  • Their Social Security number
  • Their filing status
  • The exact whole dollar amount of their refund

Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. Where’s My Refund? includes a tracker that displays progress through three stages: the IRS receives the tax return, then approves the refund, and sends the refund.

Where’s My Refund? Updates once a day, so taxpayers don’t need to check more often.

Taxpayers on the go can track their return and refund status on their mobile devices using the free IRS2Go app. Those who file an amended return should check out the Where’s My Amended Return? tool.

Generally, the IRS issues most refunds in less than 21 days, but some may take longer. IRS phone and walk-in representatives can research the status of refunds only if it’s been 21 days or more since a taxpayer filed electronically, or more than six weeks since they mailed a paper return. Taxpayers can also contact the IRS if Where’s My Refund? directs them to do so.

01/31/19

Here’s what taxpayers should consider when determining if they need to file

As people prepare to file their taxes, there are things to consider. They will want to determine if they need to file and the best way to do so.

For tax year 2018, all individual taxpayers will file using the new Form 1040. Forms 1040A and 1040EZ are no longer available.  Taxpayers who previously filed these forms will now file Form 1040. The new Form 1040 uses a “building block” approach allowing individuals to add only the schedules they need to their 2018 federal tax return. Taxpayers with more complicated returns will need to complete one or more of the new Form 1040 Schedules. This group of taxpayers includes those who claim certain deductions or credits, or who owe additional taxes.

Individuals who filed their federal tax return electronically last year may not notice any changes, as the tax return preparation software will automatically use their answers to the tax questions to complete the Form 1040 and any needed schedules.

Here are three more things for people to keep in mind as they prepare to file their taxes:

Who is required to file.  In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or if they are a dependent of another person. For example, if a taxpayer is single and younger than age 65, they must file if their income was at least $12,000. There are other instances when a taxpayer must file. Taxpayers can visit IRS.gov/filing for more information.

Filing to get a refund. Even if a taxpayer doesn’t have to file, they should consider filing a tax return if they can get money back. If a taxpayer answers “yes” to any of these questions, they could be due a refund:

  • Did my employer withhold federal income tax from my pay?
  • Did I make estimated tax payments?
  • Did I overpay on my 2017 tax return and have it applied to 2018?
  • Am I eligible for certain refundable credits such as, the earned income tax credit

Taxpayers can file for free. Join the millions of Americans who safely file their taxes and save money using IRS Free File. Seventy percent of the nation’s taxpayers are eligible for IRS Free File. The IRS’s commercial partners offer free brand-name software to about 100 million individuals and families with incomes of $66,000 or less. Taxpayers who earned more can use Free File Fillable Forms. This option allows taxpayers to complete IRS forms electronically. It is best for those who are comfortable doing their own taxes.

Taxpayers can also use the Interactive Tax Assistant tool on IRS.gov to answer many tax questions.. They should look for “Do I need to file a return?” under general topics.

All taxpayers should keep a copy of their tax return. Taxpayers using a software product for the first time may need their adjusted gross income amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

11/27/18

What’s new with the child tax credit after tax reform

Many people claim the child tax credit to help offset the cost of raising children. Tax reform legislation enacted last year made changes to that credit. Here are some important things for taxpayers to know about the changes to the credit.

  • Credit amount. The new law increases the child tax credit from $1,000 to $2,000. Eligibility for the credit has not changed. As in past years, the credit applies if all of these apply:
    • the child is younger than 17 at the end of the tax year, December 31, 2018
    • the taxpayer claims the child as a dependent
    • the child lives with the taxpayer for at least six months of the year
  • Credit refunds. The credit is refundable, now up to $1,400. If a taxpayer doesn’t owe any tax before claiming the credit, they will receive up to $1,400 as part of their refund.
  • Earned income threshold. The income threshold to claim the credit has been lowered to $2,500 per family. This means a family must earn a minimum of $2,500 to claim the credit.
  • Phaseout. The income threshold at which the child tax credit begins to phase out is increased to $200,000, or $400,000 if married filing jointly. This means that more families with children younger than 17 qualify for the larger credit.

Dependents who can’t be claimed for the child tax credit may still qualify the taxpayer for the credit for other dependents.  This is a non-refundable credit of up to $500 per qualifying person. These dependents may also be dependent children who are age 17 or older at the end of 2018. It also includes parents or other qualifying relatives supported by the taxpayer.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

10/25/18

Business owners can claim a qualified business income deduction

Eligible taxpayers may now deduct up to 20 percent of certain business income from domestic businesses operated as sole proprietorships or through partnerships, S corporations, trusts, and estates.  The deduction may also be claimed on certain dividends.  Eligible taxpayers can claim the deduction for the first time on the 2018 federal income tax return they file in 2019. This provision is the result of tax reform legislation passed in December 2017.

Here are some things business owners should know about this deduction:

  • The deduction applies to qualified:
    – Business income
    – Real estate investment trust dividends
    – Publicly traded partnership income
  • Qualified business income is the net amount of qualified items of income, gain, deduction and loss connected to a qualified U.S. trade or business. Only items included in taxable income are counted.
  • The deduction is available to eligible taxpayers, whether they itemize their deductions on Schedule A or take the standard deduction.
  • The deduction is generally equal to the lesser of these two amounts:
    – Twenty percent of qualified business income plus 20 percent of qualified real estate investment trust dividends and qualified publicly traded partnership income.
    – Twenty percent of taxable income computed before the qualified business income deduction minus net capital gains.
  • For taxpayers with taxable income computed before the qualified business income deduction that exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers, the deduction may be subject to additional limitations or exceptions. These are based on the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid by the qualified trade or business, and the unadjusted basis immediately after acquisition of qualified property held by the trade or business.
  • Income earned through a C corporation or by providing services as an employee is not eligible for the deduction.
  • Taxpayers may rely on the rules in the proposed regulations until final regulations appear in the Federal Register.

 

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

 

 

08/29/18

Six things for extension filers to remember

Oct. 15 is almost here, and it’s the last day to file for most people who requested an automatic six-month extension for their 2017 tax returns. These taxpayers should remember that they can file any time before Oct. 15 if they have all their required tax documents. They can also pay their tax bill in full, or make a partial payment, anytime, by visiting IRS.gov/payments.

As extension filers prepare to file, here are some things they should know:

  • They can still use IRS Free File.  Nearly everyone can e-file their tax return for free through IRS Free File. The program is available on IRS.gov now through Oct. 15. IRS e-file is easy, safe and the most accurate way for people to file their taxes. E-file also helps people get all the tax benefits they’re entitled to claim.
  • A refund may be waiting.  Anyone due a refund should file as soon as possible to get their money. The sooner someone files, the sooner they’ll get it. Don’t forget to use Direct Deposit. It is the best and fastest way for taxpayers to get their tax refund electronically deposited for free into their financial account.
  • They should consider IRS Direct Pay.  Taxpayers who owe taxes can pay them with IRS Direct Pay. It’s the simple, quick and free way to pay from a checking or savings account. Taxpayers can just click on the ‘Pay’ at IRS.gov.
  • Here’s what taxpayers should do about a missed deadline. Anyone who did not request an extension by this year’s April 17 deadline should file and pay as soon as possible. This will stop additional interest and penalties from adding up. IRS Direct Pay offers a free, secure and easy way to pay taxes directly from a checking or savings account. There is no penalty for filing a late return for people who are due a refund.
  • Taxpayers should remember the Oct. 15 Deadline.  Taxpayers who aren’t ready to file yet should remember to file by Oct. 15 to avoid a failure-to-file penalty. Taxpayers who owe and can’t pay their balance in full should pay as much as they can to reduce interest and penalties for late payment. They can use the Online Payment Agreement tool to apply for more time to pay or set up an installment agreement. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty.
  • More Time for the MilitaryMembers of the military and others serving in a combat zone get more time to file. These taxpayers typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

 

08/01/18

What taxpayers should know about amending a tax return

Taxpayers who discover they made a mistake on their tax returns after filing can file an amended tax return to correct it. This includes things like changing the filing status, and correcting income, credits or deductions.

Here are some tips for taxpayers who need to amend a tax return.

  • Complete and mail the paper Form 1040X, Amended U.S. Individual Income Tax Return. Taxpayers must file an amended return on paper whether they filed the original return on paper or electronically. Filers should mail the Form 1040X to the address listed in the form’s instructions. However, taxpayers filing Form 1040X in response to a notice received from the IRS, should mail it to the address shown on the notice.
  • If taxpayers used other IRS forms or schedules to make changes, they should attach those schedules to their Form 1040X.
  • Taxpayers should not amend a tax return to correct math errors; the IRS will make the math corrections for the taxpayers.
  • Taxpayers should also not amend if they forgot to include a required form or schedule. The IRS will mail a request about the missing item.
  • Anyone amending tax returns for more than one year will need a separate 1040X for each tax year. They should mail each tax year’s Form 1040X in separate envelopes.
  • Taxpayers should wait for the refund from their original tax return before filing an amended return. They can cash the refund check from the original return before receiving any additional refund.
  • Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
  • Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax – usually April 15 – whichever is later.
  • Taxpayers can track the status of an amended return three weeks after mailing using “Where’s My Amended Return?” Processing can take up to 16 weeks.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

03/22/18

IRS Phone Scam Intensifies During Filing Season

As taxpayers are working to file their taxes, criminals are also hard at work — attempting to steal their money. While there are several versions of tax scams, the classic telephone con continues to thrive, especially during filing season. As a reminder, here’s how the scam works:

  • Scammers call taxpayers telling them they owe taxes and face arrest if they don’t pay. Sometimes, the first call is a recording, asking taxpayers to call back to clear up a tax matter or face arrest.
  • When taxpayers call back, the scammers often use threatening and hostile language. The thief claims the taxpayers may pay their debts using a gift card, other pre-paid cards or wire transfers.
  • Taxpayers who comply lose their money to the scammers.

Taxpayers should remember that the IRS does not:

  • Call taxpayers demanding immediate payment using a specific payment method, but will first mail a bill.
  • Threaten to have taxpayers arrested for not paying taxes.
  • Demand payment without giving taxpayers an opportunity to question or appeal the amount the IRS believes they owe.
  • Ask for credit or debit card numbers over the phone.

Taxpayers who receive these phone calls should:

  • Hang up the phone immediately, without providing any information.
  • Report these calls to the:

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

 

03/08/18

Taxpayers Should Report Name Changes Before Filing Taxes

When a taxpayer changes their name, that change can affect their taxes. All the names on a taxpayer’s tax return must match Social Security Administration records. A name mismatch can delay a tax refund. Here’s what a taxpayer should do if anyone listed on their tax return changed their name:

  • Reporting Taxpayer’s Name Change. Taxpayers who should notify the SSA of a name change include:
    • Taxpayers who got married and use their spouse’s last name.
    • Recently married taxpayers who now use a hyphenated name.
    • Divorced taxpayers who now use their former last name.
  • Reporting Dependent’s Name Change. Taxpayers should notify the SSA if a dependent’s name changed.  This includes an adopted child who now has a new last name. If the child doesn’t have a Social Security number, the taxpayer may use a temporary Adoption Taxpayer Identification Number on the tax return. Taxpayers can apply for an ATIN by filing a Form W-7A.
  • Getting a New Social Security Card. Taxpayers who have a name change should get a new card that reflects a name change. File Form SS-5, Application for a Social Security Card. Taxpayers can get the form on SSA.gov or by calling 800-772-1213.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

 

02/22/18

Taxpayers Can Choose to Itemize or Take Standard Deduction for Tax Year 2017

Most taxpayers claim the standard deduction when they file their federal tax return. However, some filers may be able to lower their tax bill by itemizing when they file their 2017 tax return. Before choosing to take the standard deduction or itemize, it’s a good idea to figure deductions using both methods and choose the method with the most benefit. The IRS offers the following tips to help taxpayers decide:

• Figure Itemized Deductions. Taxpayers who itemize basically add up the year’s deductible expenses to arrive at their total deduction. Deductions include:   o Home mortgage interest

  • State and local income taxes or sales taxes – but not both
  • Real estate and personal property taxes
  • Gifts to charities
  • Casualty or theft losses
  • Unreimbursed medical and employee business expenses above certain amounts

• Know the Standard Deduction. For taxpayers who don’t itemize, the standard deduction for 2017 depends on their filing status:   o Single — $6,350

  • Married Filing Jointly — $12,700
  • Head of Household — $9,350
  • Married Filing Separately — $6,350
  • Qualifying Widow(er) — $12,700

If a taxpayer is 65 or older, or blind, the standard deduction is more, but may be limited if another person claims that taxpayer as a dependent.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

02/13/18

The Right to Be Informed – Taxpayer Bill of Rights #1

All taxpayers have basic rights when filing taxes and dealing with the IRS. The Taxpayer Bill of Rights takes the multiple existing rights in the nation’s tax code and groups them into 10 categories. This makes them easier to find, understand and use. This tip is one in a series outlining these rights.

The right to be informed is the first one highlighted in the Taxpayer Bill of Rights. Taxpayers have the right to:

  • Know what they need to do to comply with the tax laws.
  • Have clear explanations of the laws and IRS procedures in all forms, instructions, publications, notices and correspondence.
  • Be informed of IRS decisions about their tax accounts, and to receive clear explanations of the outcomes.

The IRS will take these actions to make sure taxpayers are informed:

  • Certain notices must include any amount of the tax, interest and certain penalties the taxpayer owes.
  • The IRS must explain why the taxpayers owes any taxes.
  • When the IRS disallows a claim for a refund, the agency must explain the specific reasons why.
  • The IRS posts information on IRS.gov to help taxpayers understand their IRS notice or letter.
  •  If the IRS proposes to assess tax, the agency sends an initial letter. That letter must include:
    • Information on how the taxpayer can appeal the decision
    • An explanation of the entire process from audit through collection.
    • Details on how the Taxpayer Advocate Service can help.
  • The IRS must send an annual statement to taxpayers who enter into a payment plan, which is also known as an installment agreement. The statement will include how much the taxpayer:
    • Owes at the beginning of the year.
    • Paid during the year.
    • Still owes at the end of the year.
  • IRS makes forms and publications available on IRS.gov. Taxpayers can also have hard copies mailed to them by calling 800-829-3676.
  • IRS uses social media to provide helpful tax information to a wide audience of taxpayers.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank

02/07/18

Five Things to Remember About Exemptions and Dependents for Tax Year 2017

Most taxpayers can claim one personal exemption for themselves and, if married, one for their spouse. This helps reduce their taxable income on their 2017 tax return. They may also be able to claim an exemption for each of their dependents. Each exemption normally allows them to deduct $4,050 on their 2017 tax return. While each is worth the same amount, different rules apply to each type.

Here are five key points for taxpayers to keep in mind on exemptions and dependents when filing their 2017 tax return:

1. Claiming Personal Exemptions.  On a joint return, taxpayers can claim one exemption for themselves and one for their spouse. If a married taxpayer files a separate return, they can only claim an exemption for their spouse if their spouse meets all of these requirements. The spouse:

  • Had no gross income.
  • Is not filing a tax return.
  • Was not the dependent of another taxpayer.

2. Claiming Exemptions for Dependents.  A dependent is either a child or a relative who meets a set of tests. Taxpayers can normally claim an exemption for their dependents. Taxpayers should remember to list a Social Security number for each dependent on their tax return.

3. Dependents Cannot Claim Exemption. If a taxpayer claims an exemption for their dependent, the dependent cannot claim a personal exemption on their own tax return. This is true even if the taxpayer does not claim the dependent’s exemption on their tax return.

4. Dependents May Have to File a Tax Return. This depends on certain factors like total income, whether they are married, and if they owe certain taxes.

5. Exemption Phase-Out.  Taxpayers earning above certain amounts will lose part or all the $4,050 exemption. These amounts differ based on the taxpayer’s filing status.

The IRS urges taxpayers to file electronically. The software will walk taxpayers through the steps of completing their return, making sure all the necessary information is included about dependents.  E-file options include free Volunteer AssistanceIRS Free Filecommercial software and professional assistance.

Taxpayers can get questions about claiming dependents answered by using the Interactive Tax Assistant tool on IRS.gov. The ITA called Whom May I Claim as a Dependent will help taxpayers determine if they can claim someone on their return.

Michael B. Welch, CPA  199 S. Briggs Street, Ste. 205  Erie, CO  80516  Tax Returns  Accountant  Bookkeeping Accounting Payroll CPA Tax  Tax Returns Internet Based Tax Returns Citywide Bank Louisville Lafayette Erie Niwot  Gunbarrel Boulder Longmont Brighton Broomfield Dacono Centennial Bank