TaxMamas TaxQuips: Tax Quips

TaxMama® wants to bring some pending and potential tax legislation to your attention, today. Dear Family, On June 14th, I told you about the Taxpayer First Act that was waiting to be signed by the President. He signed that bill into law on July 1st. But there is still a lot that needs to be done on the tax front. Will the Legislature stop squabbling long enough to pass a coherent budget, some much needed tax legislation, and other key legislation to make life smoother for Americans? Heaven only knows. Regardless, this week, in the #TaxBuzzChat on Twitter, tax professionals around the country discussed their views about several pending pieces of tax legislation.  Lauren @ CountingWorks PRO was kind enough to provide links directly to the various laws under consideration, including the just passed Act.  Here are the proposed laws and a brief description of their purpose. The Secure Act – The Setting Every Community Up For Retirement Enhancement Act Of 2019 (increasing the limits and benefits for us to actively save for our retirements) and perhaps increasing the amount of time for beneficiaries to cash out inherited IRAs. Performing Arts Legislation – Increasing the income level allowing ‘starving artists’ to claim their job-related deductions without itemizing – from $16,000 (per person OR per couple) presently, to $100,000 per person ($200,000 per couple) The Gig Act – Designed to establish clear(er) definitions of whether a worker (think Uber or Lyft) is an employee or not. From the summary description, it appears designed to protect the companies from all the employee lawsuits going on. The Extender Act – Still trying to extend certain tax provisions that expired on 12/31/2017. Considering that about 92% of all 2018 tax returns have already been filed…it’s too little, too late. But, it would also include extenders for 2019. College Admissions Fairness Act – Essentially to disallow charitable contributions deductions for parents buying their way into colleges for their children. (It’s already part of the law that you cannot get a deduction for contributions where you get a benefit. So…how about just enforcing the present law?) The Taxpayer First Act – we have already outlined that. Taxpayer Certainty and Disaster Tax Relief Act – interestingly enough, this includes the extenders, and a several other provisions relating to tax breaks for people experiencing disasters, including addressing drawing funds from retirement accounts. It also contains a provision that ends the $10+ million estate tax limit in 2023, instead of 2026. (I am not certain if that means it will bring the exclusion down to $5 million or $1 million.)   These are just the high points. The proposed laws contain many more provisions. You have the access to read them all, starting with the #TaxBuzzChat summary. This affects your life. So, consider taking the time to understand what’s being done to  you, or for you, and let your legislators know. You can find them here, if you don’t know where else to look. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.  

Photo by KJGarbutt[/caption]  TaxMama® has news about a bill just passed by both houses of Congress. The Taxpayer First Act is expected to be signed by the President. Dear Family, As you all know, we have been waiting for two pieces of tax legislation from Congress this year: a) An extender act to reinstate some of the tax provisions that expired at the end of 2017 (mortgage insurance deduction, tuition and fees deduction, etc.) b) A law giving the IRS specific authority to require paid tax preparers to actually know something about the tax laws and procedures. (Did you know that 46 states and the District of Columbia have absolutely no licensing or knowledge requirements for paid tax preparers?) Well, this Bill provides neither of those eagerly-awaited bits of legislation.  So what does the Taxpayer First Act do for you? It establishes an independent IRS Office of Appeals (which is pretty independent already), which may require new procedures for taxpayers who want to appeal IRS determinations. (Incidentally, the Chief of Appeals will be getting a pretty high rate of pay – budgetary provisions for that and the additional costs to administer this separate division?) It includes a comprehensive customer service strategy (I didn’t read it closely, but didn’t see a corresponding budget provision to pay for this – did you?). It provides a fee waiver for low income taxpayers who file for an Offer in Compromise (which has already been in place for at least a decade – read page 24 of the Form 656B package). Sensible Enforcement provisions – OK, now, here are some good features designed to make our lives easier for things like innocent spouse, private debt collections, third-party contacts, and a few other useful fixes. Modernizing the office of the Taxpayer Advocate and the IRS organizational structure. Definitely could use it! But…again…budget provisions to pay for this? Funds for VITA centers and LITC centers to help low income taxpayers with free services. It’s the 50th anniversary of the VITA program! New rules and protections for tax whistleblowers. Who knows, you might actually be able to get paid for turning in a real tax crook! And you might be protected from retaliation by employers. (Really? But they can still make your life a living h-e-double hockey sticks.) The IRS has to give 90 days’ notice when they are going to close a customer service center. (So what? It will still be closed.) Misdirected refunds – Sec. 1407 – this could prove to be really helpful to folks who entered the wrong bank account for their electronic refunds. Until now, the IRS has bowed out of the issue, since they have no actual responsibility for our errors. Now Congress mandates them to work with the financial institutions to recover money deposited to the wrong account. And lots and lots of steps to improve Cybersecurity and reduce Identity Theft. Do you want to read all the details? Please do. You may find something that can help you with your tax issues. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.    

  Photo by jaingolfsland  Last week, TaxMama® visited the IRS, at our Practitioner Stakeholder Liaison meeting. Here is a brief summary of our six-hour session. Dear Family, Believe it or not, one of my favorite activities is spending time with the IRS. Over the years, the terrifying auditors and collections officers become real people I learn to trust and respect – and frankly, to like very much. So the first thing I am going to tell you is – if you’re a tax professional, talk to your professional organization about being that organization’s representative to these meetings. And if you’re not a tax pro – the IRS’s Stakeholder Liaison’s mandate has been expanded to reach out to the public. They are looking for ways to educate and help taxpayers whose needs might be overlooked (like those who don’t speak English and are victimized by tax preparers who create fraudulent tax returns with big refunds for them). Speaking of criminal tax preparers (because that’s exactly what those people are), both the IRS and the State of California (that’s where I am) are actively going after these folks – with fines, penalties, and potentially even jail time.  This page will give you links to some of the prosecutions. More importantly, it will help you identify abusive preparers and how to report them. (Here is the resource for California.) (Shhhh….Incidentally, there is a way to get refunds for turning in tax criminals – use Form 211.) And here’s good news (or bad, depending on your perspective). The IRS is hiring. All over the country. Here’s how to apply. The good news for people fearing audits is – the IRS staff has decreased dramatically. By about 50% in the key examination and enforcement groups. Aside from funding, the experienced people have been retiring. The bad part about this? New hires will be getting a brief training period, then being placed in customer-contact positions for their actual, live training. You’re going to be encountering IRS staff who will know less than you do about tax law and procedure. The only advice I can give you is – be kind. Don’t beat them over the head with what you know. Remember, if they are being rigid and inflexible with you about technical issues, it’s because they don’t have the experience to understand what leeway they have – and they have close oversight. So, again, be kind. But ask to speak to a manager – and make it a learning experience, not an adversarial one. You’re apt to come up against this person again in the future. So wouldn’t you like to make this person an ally, rather than an enemy? (People do remember and appreciate kindnesses.) Did you file an amended return and feel like you’re waiting an eternity for it to get processed? Well, you are – it’s not your imagination. IRS is way behind on 1040X’s – they are not a priority (did I hear 18 months, instead of 12 weeks, somewhere?) Priority #1 – to get refunds issued Priority #2 – finish processing returns being held up for various reasons. Priority #3 – 1040X’s So, if you are nearly ready to file your tax return, but still need information  – don’t file, then amend. Wait for the information and file before October 15th. Your tax return and/or refund will be processed faster. Speaking of refunds. There’s a glitch in the refund release algorithm and legitimate refunds are being held back for investigation.  The IRS is trying to fix that. But that’s another reason why your seemingly innocent refund-tax return isn’t being released yet. There’s more. Lots more. But I’ll tell you about later. After we get the summary and transcripts from the meeting. And now it’s time for me to get back to work on this week’s EA classes. Tomorrow, we’re working on sample tax returns all week. . And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion   To make comments please drop into the TaxQuips Forum.

  TaxMama® welcomes you to Small Business Week! The IRS has been sending out all kinds of helpful information. (You know – I’m from the IRS and I’m here to help you!) Dear Family, It is, indeed, Small Business Week. And since many of you own your business, or run a business or profitable hobby on the side, I thought you might want to get some benefit from the IRS’ materials. Back-up withholding on wages and bonuses has dropped from 28% to 24%. This can be good windfall for some people. But please check to see how this affects your total tax liability – you might find yourself coming up short because of this. New criteria applies to people applying for an Employer ID Number (EIN). Only individuals with tax identification numbers – either a Social Security number (SSN) or an individual taxpayer identification number (ITIN) may apply for an EIN. It is no longer possible to use an existing business’ EIN to apply for a new one. There must be identifiable, responsible individuals behind the applications. This is designed to increase security and to avoid fraudulent filings. Exempt Organizations have until May 15 to file their annual reports. Form 8868 is available for a 6 month extension. Social Security numbers are not requested on the forms. Small organizations can use the “postcard” Form 990-EZ, file online. Neglecting to file for 3 years will cost the organization to lose its exempt status. That means no contributions are deductible by the donors. And all income is taxed at C corporation rates. Business owners are reminded to make quarterly estimated tax The next one is due on June 15th. Either as individuals, via Form 1040-ES, or as corporations – paying online. The IRS provides a nice summary of the current, new and improved depreciation benefits This includes bonus depreciation, Section 179, luxury vehicle depreciation, and real property. This resource will answer many of your questions. Last, but not least, the IRS highlights credits and deductions. They start with the Section 199A Qualified Small Business Income Deduction, and work their way down from there, to : Business losses, net operating losses, expenses and so forth. Incidentally, the IRS has also scheduled two webinars for tax practitioners this month (no charge). You just might find the topics quite useful – if you can get access: Understanding Bankruptcy from an IRS Perspective – May 16, 2019 (1 CE) Qualified Business Income Deduction (199A) – May 30, 2019 (2 CE) They have also built quite an extensive Small Business –Self-Employed information resource. It includes videos and articles. Consider visiting it. https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center And now it’s time for me to get back to work on this week’s EA classes. Tomorrow, we’re learning about Income and Deductions. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion  

TaxMama® is hearing from readers or friends about things they left off their tax returns, or errors they made in the course of filing…perhaps a little too soon. Dear Family, TaxMama®  is a big proponent of the “slow-down” philosophy. Use the extension. Take the time to review the tax return and the information in it – and take the time to think back on the year to see what’s missing from that tax return. Here in our office, we ask all our clients (as early in the year as possible) if they opened any new businesses, or established any LLC’s or got tax ID#s that we don’t know about. Did they have household help, or pay anyone as a freelancer – so we can issue W-2s and 1099s in time. Did they get any notices from the IRS or state that changed their prior year refunds (up or down)? Or that changed the estimated tax carried over from the previous year? By filing a tax return once, with all the required income and deduction information, you dramatically reduce your chances of audit. Anytime you file an amended return to correct something (anything), a real, live IRS agent is going to look over your tax return. And they just might stumble across some glaring error you didn’t notice because you were zipping along to file quickly – and again, didn’t check to see if there were any other things to change when you filed your 1040X (or business correction). The IRS just issued a Tax Tip about this (as I was writing this message to you). There’s some excellent advice. Especially about when NOT to amend – because the IRS will take care of it. Yesterday, Kelly Phillips Erb wrote about 15 things you need to know when making a mistake on your tax return. Some of the errors that have been asked about this tax season include: Missing 1099s The wrong employer ID # on an S Corp election. Not making the S Corp election – for current or several earlier years. E-filed right on the deadline and the tax return was rejected – uh oh – it’s late?! Missing pass-through income from K-1s. Filing a tax return to report income that should have been split among family members – without making the necessary disclosures and reductions. Forgetting to include various types of income, like unemployment, Social Security, or other things you don’t really think about at tax time. Wanting to move 2018 expenses into 2019, because they left them off the return. Leaving estimated numbers in the tax return when you thought you replaced them with the actual amounts – and doubled the income or deduction. Entering the wrong information on the W-2s – sometimes off significantly. Using the wrong distribution code on an IRA or retirement account distribution (and getting hit with thousands of dollars of penalties – needlessly). These are just the usual suspects. There are all kinds of other mistakes resulting from excessive speed. My message to those of you who are on extension, please, slow down. Read everything in your tax return. Think through about what else might be missing, duplicated or estimated. Run the review tool in your software. Make any last minute retirement account contributions (if available). Only then, file your tax return. But, please do all this well before the filing deadline. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

TaxMama® is hearing from readers or friends about issues they are encountering as they reach the dreaded (or desired) Social Security and Medicare ages. Dear Family, While working on a client’s tax return last month, I noticed that he was over 65. Still an active executive of a Fortune 100 company, his human resources department had informed him that he doesn’t need to file for Medicare, since he has full insurance coverage. Opps! That’s bad advice. Here are 5 tips about Medicare: 1) At age 65, all Americans who are eligible for Social Security MUST register for Medicare. If not, we face penalties. “In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty. You’ll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it.” There may be a way around the penalties, but the Medicare site doesn’t describe that. So, if you’re eligible for Medicare Part B – sign up immediately, even if you don’t need to use it or pay for it! 2) Next bit of news (you may have seen this on my Facebook or Twitter feeds). If you’re already on Social Security before you turn age 65, they will automatically enroll you in Medicare and mail you your card. You don’t have to go through the process of applying. In fact, if you try to apply online during the 3-month period before turning 65, you’ll just get an odd error message. But, to be safe, call the Social Security office near you to make sure they have started the process. 3) Tip to let your own Social Security account grow in value until you turn age 70. “If you were born before January 2, 1954 and have already reached full retirement age, you can choose to receive only the spouse’s benefit and delay receiving your retirement benefit until a later date.” Doing this, you need your spouse (or ex-spouse’s) permission to claim part of his/her benefits. (You must have been married for at least 10 years – and only one spouse may do this.) This doesn’t reduce their benefit at all. Your benefits grow by about 8% until age 70 – then you can switch. Folks who are still working and have reached age 66 are eligible to get these funds – even if they still work full-time. At age 66, you can collect Social Security benefits while working without having to pay the benefits back. (Of course, 85% of the funds you receive will be taxable – but, it’s basically free money, since you aren’t tapping into your own account.) 4) Don’t collect Social Security early (at age 62) if you cannot live on the benefits and your savings or investments. Why? Because if you are still working or have to run your business, you get two strikes against you. Your benefit is substantially lower than if you had waited until age 66 – nearly 18% less (73.3% of maximum benefit, instead of 91.1% at age 66). That will be your base benefit for the rest of your life. https://www.ssa.gov/planners/retire/1956.html If you earn more than the annual limit ( $17,640 for 2019), you have to pay back the money you received. You pay back the SSA, $1 for every $2 earned over that limit. (Of course, this isn’t affected by interest, dividends or investments. This only affects less affluent people who cannot afford to live on SS benefits alone.) 5) Incidentally, there’s one more benefit not to overlook, once you’re on Medicare. The Silver Sneakers program. https://www.silversneakers.com/ You might have free access to gyms or health clubs in your area as part of your Medicare provider’s plan. You do have choices about your supplemental coverage. So look for one that gives you wellness benefits. We’re all getting older. Maybe it’s time to do some planning. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion  

Today TaxMama® hears from Pistachios, who asks a good question. Basically, he’s a trucker and wants to know what tax entity to use for his new LLC. Dear Family, Let’s just clear up some myths about LLCs and the rush to make entity changes. The answer is a bit long, so if you are thinking of making this decision, please read the whole answer – including my recommendation, in TaxMama’s® TaxQuips Forum. Here are the high points: As an individual, you have the following choices when you have an LLC: a) You can be a disregarded entity This means you file a Schedule C as part of your personal Form 1040 tax return. You can take all your deductions on the Schedule C Your business qualifies for the new 20% qualified business income deduction – Sec 199A. b) You can be an S corporation. That means filing a separate corporation tax return, Form 1120S,having a payroll (even if you’re the only employee), and  issuing a Schedule K-1 to include in your personal Form 1040 tax return. The S Corp doesn’t pay taxes – you do.You can have the corporation pay all the expenses and deduct them. If you pay anything out of pocket, you MUST submit an expense report and have the corporation reimburse you, in order for the corporation to take the deductions. AND the reimbursement arrangement must be defined in the corporate minutes. Your business qualifies for the new 20% qualified business income deduction – Sec 199A – which gets passed through to your 1040 and you sort out the numbers there.. c) You can be a C corporation That means filing a separate corporation tax return, Form 1120, having a payroll (even if you’re the only employee). The corporation pays taxes on the profit. They issue you a Form W-2 to report your income on your personal Form 1040 tax return. You can have the corporation pay all the expenses and deduct them. If you pay anything out of pocket, you MUST submit an expense report and have the corporation reimburse you, in order for the corporation to take the deductions. AND the reimbursement arrangement must be defined in the corporate minutes. Your business does NOT qualify for the new 20% qualified business income deduction – Sec 199A.  You can read the recommendation in the in TaxMama’s® TaxQuips Forum. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

Today TaxMama® wants to alert you to a tax extender bill sitting in Congress. It’s the Tax Extender and Disaster Relief Act of 2019. Dear Family, Great news! The extender bill that Congress is working on will buy us two years of (relative) certainty about our tax lives. The  provisions in this bill will extend tax benefits that expired at the end of 12/31/17 to be available to us for 2018 AND 2019. (disclosure -  I am one of the few tax writers who was SURE they would include 2019 – despite everyone else being convinced that they would only cover 2018.) I could give you a link to the entire law, but here’s a 5 page summary, instead. https://www.finance.senate.gov/imo/media/doc/Tax%20Extender%20and%20Disaster%20Relief%20Act%20of%202019%20Summary.pdf The personal highlights: Exclusion from income of cancellation of debt on principal residences (acquisition debt) for agreements entered into before 01/01/2020 Mortgage insurance premiums (PMI) are deductible for 2018 and 2019 Tuition and Fee expenses are deductible for 2018 and 2019 7.5% reduction in medical expenses stays until 12/31/2019 There are several other provisions that affect various businesses and enterprises, like mining, the film industry, racehorses… Read the summary to see if they affect you. Remember, this isn’t law yet. But it probably will be. So if you need these tax breaks, put your 2018 tax return on extension if this doesn’t quite pass by before April 15th. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion Note to those who bought the Trump Tax Cut book. Thank you. To show my appreciation, I have some bonus resources for you. Drop by  http://www.trumptaxplanbook.com/ to pick them up.

Today TaxMama® wants to toot her own horn for a change. Dear Family, We are celebrating 2019 as TaxMama’s® 20th anniversary and will be providing goodies to our members along the way, throughout the year. Twenty years ago, I set up the TaxMama.com website to solve a problem I saw over and over again. People getting into tax trouble due to life changes and not knowing how to file their tax returns with more complex issues, or how to pay the balances that they owed. I wanted to provide a safe, free resource where people could ask questions before they did something that’s really hard to correct – or to help people understand how to file a tax return after a divorce, death, or new business changed their financial landscape. Thank goodness people HAVE come to us, often in time. And we have helped thousands of others fix problems they created by not knowing, not asking, or relying on bad advice. So please, DO come and ask us about your tax issue – BEFORE buying or selling something, or making retirement contributions or withdrawals. It’s also the 15th anniversary of TaxMama’s® Online EA Review course Although the course started, in person, at UCLA over 25 years ago, we have been teaching and refining the online course for a decade and a half. Save this special coupon – TM15  – use this to get $50 off the course, and other tax workshops throughout the year. Doesn’t seem like much? Well, when you add in the $300 early-bird savings on the class that just went into effect today – that’s pretty darn generous. (You won’t need a coupon for that – it’s built into the order form.) The early-bird savings will be good until March 15th. This year’s class is going to be better than ever. We have a lot of changes in the 2019-20 course, because of the Tax Cuts and Jobs Act. While most tax professionals are raising their fees – we are not raising the cost of our EA course. In fact, we’re adding another terrific resource – the TaxMama® Appitur mobile App. All new, paid, students will get that as part of their registration. (Current students are advised to buy their copy immediately because the $10.49 price per part is going to rise to over $50 per part. We are doing a major update on the App – and everyone who already owns it when we release the new App, will get the new version at no additional charge.) And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

Today TaxMama® says you can breathe a sigh of relief. The U.S. government will stay open. The IRS is still funded. You, your family and friends, who work for the government will be able to continue to pay your living costs. Whew! Photo by Got Credit Dear Family, The IRS is trying to catch up with their functions – which did, as expected, fall behind. Tax professionals waiting for licensing renewals have automatically been extended. Those applying for the first time are experiencing delays getting their Enrolled Agent designations – but they will come. (Hopefully before tax season ends.) To reduce the long waits on IRS telephone lines, the IRS is encouraging more use of their online resources. Taxpayers can get their own information online using the Get Transcript Online service. Of course, you must pass the Secure Access identity verification process. So if you put a freeze on your Equifax credit reports – unlock them for the time it takes to get into your IRS accounts. And how IS tax season going? Asking tax pros around the country, they report that I need to explain the concept of tax liability to you – rather than tax refund. So here goes. Most people in the lower and middle income brackets, especially those with children, are seeing lower tax liabilities. (That’s the total amount of tax based on your income, reduced by your tax credits .) However, many are seeing lower refunds – or they owe some money. And they are frustrated and upset, taking it out on their tax pros – please don’t do that. Why the lower refunds, if your tax liabilities are lower? You have been getting less money taken out of your paycheck since February 2018. I alerted you to this problem last May and again, last November. Moving on… How are people affected who cannot deduct their job-related expenses? Honestly? Some people who were only able to itemize because of the employee business expenses – some of them are doing fine because of the higher standard deductions. But those who deduct mortgage and taxes AND job-related expenses are showing much higher taxable income than before. In some cases, the lower tax bracket helps. For others, they are hit with much higher tax liabilities. What about people with businesses – especially those who might benefit from the new 20% Qualified Business Income Deduction (Sec 199A). Unless your business is really straight-forward (say, a Schedule C and no employees) – consider putting your tax return on extension. Folks who have multiple streams of pass-through income (partnerships, rentals, S corporations, Schedule Cs, and certain investments) – each one of those requires a separate Sec 199A computations. Definitely do not prepare your own tax return this year. Incidentally, it’s OK to file extensions early (Form 4868 and Form 7004). No need to wait until the last minute. And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At http://iTaxMama.com/AskQuestion Note to those who bought the Trump Tax Cut book. Thank you. To show my appreciation, I have some bonus resources for you. Drop by  http://www.trumptaxplanbook.com/ to pick them up.

Today TaxMama® says that we are flooded with questions from members. So drop by the TaxQuips forum to see if someone already received an answer to one of your issues. Dear Family, Well, the U.S. Government is finally back open – if for only three weeks. The IRS is driving along on all cylinders. But it’s really hard to get through to them or to the Taxpayer Advocate Service. (TaxPros who are subscribed to my IRS News feed will get a link to a special service soon.) So what’s a taxpayer to do? 1) If you have issues that really need answers before you can file – plan to put your tax return on extension. That way, you’ll get the answers you need when things slow down. 2) Ladies, if you got married recently, make sure the name on your tax return matches your Social Security card. If not, either use the name that’s on your SS card on your tax return, or put the tax return on extension until you update your name with the Social Security Administration. Having the wrong name can hold up your refunds. 3) Check TaxMama’s® Tax Calendar regularly to see if you have any deadlines coming up. TaxMama’s® 2019 calendar is ready for you – http://taxmama.com/tax-calendar/ 4) Slow down on your frantic filing. Many information forms have a February 28th filing deadline. So you might not get these forms before the first week of March:       1099-INT; 1099-DIV; 1099-B; 1099-C;1098 Warning: the investment forms – especially the 1099-Bs are apt to be wrong. The companies issue them to meet the deadlines – then send out corrected, amended forms a month later. 5) If you really, really need your refund soon, file with the best estimates you have for those issues where you have questions – and plan to file an amended return. Be sure to include a disclosure statement with your tax return to explain about the estimates. 6) We are working with an entirely new tax law this year. There are a lot of changes. So make sure you know which ones affect you, especially if you are preparing your own tax return. The IRS has released nearly 300 pages of procedures just on the 20% Qualified Business Income deduction. You can wade your way through the raw data here – https://www.irs.gov/downloads/irs-drop Or visit the IRS’s special website for businesses – https://www.irs.gov/newsroom/find-out-how-tax-reform-affects-your-businesses-bottom-line-at-irsgov 7) For those people who bought the Trump Tax Cut book, the book’s website is now open. http://www.trumptaxplanbook.com/ The site will tell you where to find the password, in the book, so you can log in and get the resources handout and some of the other updates, so you can finish your 2018 tax returns – and do some planning for 2019. And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.

Photo by KJGarbutt Today TaxMama® wants to give you some key information from the IRS’s mass of November and December announcements and news. Dear Family, This month, the IRS is catching up on procedures, alerts and announcements. We are getting several announcements each day. Here are some of the more important things that you need to know. For IndividualsWith so many major disasters, fires, floods and plagues around the country, the IRS offers tips on how to reconstruct records. And TaxMama® reminds you of the importance of saving important and precious (family photos) information in the cloud. https://www.irs.gov/newsroom/reconstructing-records-after-a-disaster-irs-provides-tips-to-help-taxpayers The IRS is now on Instagram. They are also on YouTube, Twitter, Facebook and LinkedIn. These are information resources only. https://www.irs.gov/newsroom/taxpayers-can-now-instantly-get-tax-info-on-instagram No more deduction for moving expenses – except for active duty military – thank your elected officials for this one. https://www.irs.gov/newsroom/tax-reform-brings-changes-to-qualified-moving-expenses Are you buying alternative powered vehicles hoping for a big tax credit? Beware, at least one vehicle (Tesla) has sold so many than the credit is being phased down. In any case, if your tax liability isn’t high enough – you won’t be able to use some, or any, of the credit. https://www.irs.gov/newsroom/first-plug-in-electric-vehicle-manufacturer-crosses-200000-sold-thresholdtax-credit-for-eligible-consumers-begins-phase-down-on-jan-1 For Businesses The IRS offers a series of tips for business taxpayers. Even if you don’t read this long page, at least scan it to see which topics affect you. https://www.irs.gov/newsroom/the-highlights-of-tax-reform-for-businessesNew law is totally confusing when it comes to employee Achievement Awards. Cannot give cash or anything cash-like. So what can you give an employee, aside from useless plaques.TaxMama® thinks that gift books might work. But it’s really not clear. https://www.irs.gov/newsroom/tax-reform-law-makes-changes-to-employee-achievement-award-rules Farmers have some new, and more liberal, accounting and deduction rules. This IS worth exploring – after all, this also applies to cannabis growers. https://www.irs.gov/newsroom/whats-new-for-farmers-in-2018 IRS clarifies the rules on parking and other fringe benefits – and provides employers with additional time (to 03/31/19) to retroactively correct the non-taxable benefits. See if you can figure this out – it’s important. https://www.irs.gov/newsroom/irs-issues-guidance-for-determining-nondeductible-amount-of-parking-fringe-expenses-and-unrelated-business-taxable-income-provides-penalty-relief-to-tax-exempt-organizations Security Issues Employers need to be very careful. There is a W-2 scam floating around. NEVER, and I repeat, NEVER provide any information to someone who contacts you by email unless you actually know who it is and what the request is for. Even then, call the individual directly, in case their email account has been copied or stolen. https://www.irs.gov/newsroom/employers-should-be-aware-of-w-2-scam-protect-employee-information It’s time to establish stronger passwords on all accounts – and don’t use the same password everywhere. Unlike what you see in movies and CSI/NCIS-type shows, it’s not that easy for anyone to hack passwords that have random numbers, upper-and lower-case letters and special characters. THAT and, at least 8 digits will help protect you. https://www.irs.gov/newsroom/strong-passwords-help-protect-accounts-against-cybercriminals Shopping online? Of course you are. Please be very careful. The IRS provides tips to help you protect yourself from scams. https://www.irs.gov/newsroom/follow-these-tips-to-protect-data-when-shopping-online And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At www.TaxMama.com.

          Today TaxMama®finally got the 2019 mileage rates from the IRS. Dear Family, Normally, the IRS releases the next year’s mileage information by the end of October. This year, we’re feeling lucky to get it in mid-December.Here are the new and old rates: Type of mileage 20192018Business58.0¢54.5¢Moving/Medical20.0¢18.0¢Charity14.0¢14.0¢Depreciation includedin the mileage rate26.0¢25.0¢ Charity never changes – it literally takes an act of Congress. The IRS doesn’t have the right to update that number for inflation. And just in case you were not aware, when you use the mileage rate, you are also depreciating your car. Surprised? Uh huh. So when you sell the business vehicle, make sure to reduce the basis by the amount of the depreciation you wrote off each year. Above, you can see the numbers for 2019 and 2018. To look up the depreciation amounts built into the mileage rate for earlier years, visit this website: http://www.smbiz.com/sbrl003.html#dsm Incidentally,these rates only apply to businesses. Employees may no longer take deductions for their business mileage. And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At www.TaxMama.com. To make comments please drop into the TaxQuipsForum. To help you with your 2018/2019 tax planning, please sign up for the on-demand webinar –  SPECIAL Tax Cuts and Jobs Act to help folks who are self-employed, and folks with large employee business expenses to restructure your tax picture and cut your taxes.  Practical Templates and handouts are included.http://taxmama.com/asktaxmama/webinar-the-trump-tax-plan/

Today TaxMama®wants to give you some steps to take before the end of 2018. Dear Family, This year, it’s especially difficult to figure out how to reduce your taxes. The average couple is not likely to be itemizing any more. Folks with high employee business expenses won’t be able to use them. Individuals with mortgages might still have expenses above the standard deduction. Or folks, who, heaven forbid,have been seriously ill with minimal insurance coverage. So what’s a taxpayer to do? Here are some ideas. Do a withholding check-up – you’re apt to come up short this year - IRS payroll check-up tool https://www.irs.gov/newsroom/time-for-a-paycheck-checkup Seniors age 70 1/2 -remember to withdraw your Required Minimum Distribution from your retirement accounts – https://www.irs.gov/newsroom/irs-reminder-deadline-dec-31-for-most-retirees-who-must-make-required-retirement-plan-distributions -50% penalty if you don’t – but you may have the draw sent directly to your favorite charity to avoid taxation Make charitable contributions now deductible up to 60% of income, instead of 50% – and start getting copies of receipts right now – https://www.irs.gov/taxtopics/tc506 Also a great time for the annual “clear out the clutter” effort to donate clothing, toys and other household effects in good condition to charitiesReview your investment portfolio - If you have capital gains this year, sell some losers to offset the gains. If you’re in the two lowest tax brackets (10% – 12%), your capital gains rate is -0-!Maximize your Retirement contributions – one of the best ways to reduce your taxes and build up savings – up to $18,500 for 401ks – http://www.401khelpcenter.com/2019_401k_plan_limits.htmlMake your January mortgage payment in the last week of December to get the maximum interest deduction earlyGenerate enough medical expenses by 12/31 to get reimbursed for your Flexible Savings account fundswithheld from your pacheck – https://www.irs.gov/publications/p969#en_US_2017_publink1000204176Roth Conversion, anyone? If you’re in a low enough tax bracket, it may be worthwhile moving money from a regular IRA to aRoth IRAAnd employees with high business expenses – you really should re-negotiate your situation with your employer. Sign up for TaxMama’s® Special Trump Update on-demand webinar to get the tools and template to make this negotiation work. (Note: the on-demand video version of this will be ready next week – but anyone who signs up now will get the template, the book and all handouts and the written lecture, right away.) http://iTaxMama.com/TrumpTax_Planning Incidentally, I don’t know if you know – TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves. And remember, you can find answers to all kinds of questions about taxes and business issues, free. Where? Where else? At www.TaxMama.com. To make comments please drop into the TaxQuipsForum.

Paycheck Check-Up