Category: INDIVIDUALS

September 12th, 2019 by Oscar

With major tax reform now in its second year and taxpayers seeing its full effect on 2018 returns, the Internal Revenue Service reminded people who pay estimated tax that their third quarter payment for 2019 is due Monday, Sept. 16.

The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, fundamentally changed the way tax is calculated for most taxpayers, including those with income not subject to withholding. By making quarterly estimated tax payments, however, people can better stay up to date with their taxes throughout the year.

Who need to pay estimated tax?

Most often, self-employed people, including many involved in the sharing economy, need to pay quarterly installments of estimated tax. Similarly, investors, retirees and others often need to make these payments as well. That’s because a substantial portion of their income is not subject to withholding. Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income.

Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year.

Taxpayers can avoid an underpayment penalty by owing less than $1,000 at tax time or by paying most of their taxes during the year. Generally, for 2019, that means making payments of at least 90% of the tax expected on their 2019 return. 

Taxes are pay-as-you-go

This means taxpayers need to pay most of their taxes owed during the year as income is received. There are two ways to do that:

  • Withholding from pay, pension or certain government payments such as Social Security; and/or
  • Making quarterly estimated tax payments during the year.

As a result of tax reform or a recent life change such as marriage, many taxpayers may need to raise or lower the amount of tax they pay each quarter through the estimated tax system.

Tax Withholding Estimator

This new and improved tool is now more mobile friendly and replaces the Withholding Calculator on IRS.gov. The new design makes it easier for everyone to do a Paycheck Checkup and have the right amount of tax withheld during the year. The estimator offers workers, as well as retirees, self-employed individuals and other taxpayers a clear, step-by-step method for effectively tailoring the amount of income tax they should have withheld from wages and pension payments.

The IRS urges everyone to use the estimator as soon as possible to make any potential tax withholding adjustments while there is still ample time in 2019. To help people do that most effectively, the IRS is holding a free two-hour webinar on Thursday, Sept. 19 at 2 p.m. Eastern time. Among other things, the webinar will feature step-by-step instructions on how to use the new estimator and a live question-and-answer session.

Posted in INDIVIDUALS

September 5th, 2019 by Oscar

Millions of people have filed their 2018 tax return, making this a prime time to consider whether their tax situation came out as expected. If not, taxpayers can use their  finished 2018 return and, if needed, adjust their withholding. Having their 2018 return handy can make it easier for taxpayers to estimate deductions, credits and other amounts for 2019. Performing a Paycheck Checkup is a good idea for anyone who:

  1. Adjusted their withholding in 2018, especially those who did so later in the year.
  2. Owed additional tax when they filed their tax return this year.
  3. Had a refund that was larger or smaller than expected.
  4. Had life changes such as marriage, childbirth, adoption, buying a home or income changes.

Since most people are affected by the Tax Cuts and Jobs Act all taxpayers should check their withholding. They should do a checkup even if they did one in 2018. This especially includes taxpayers who:

  1. Have children and claim credits such as the Child Tax Credit.
  2. Have older dependents, including children age 17 or older.
  3. Experienced changes to itemized deductions this year.
  4. Itemized deductions in the past.
  5. Are a two-income family.
  6. Have two or more jobs at the same time.
  7. Only work part of the year.
  8. Have high income or a complex tax return.

This Tax Withholding Estimator works for most taxpayers. Those with more complex situations may need to use Tax Withholding and Estimated Tax, instead of the Tax Withholding Estimator. This includes taxpayers who owe alternative minimum tax or certain other taxes, and people with long-term capital gains or qualified dividends.

Taxpayers can use the results from the Tax Withholding Estimator to see if they need to complete a new Form W-4, Employee’s Withholding Allowance Certificate, and submit it to their employer. In some instances, the calculator may recommend they have an additional flat-dollar amount withheld each pay period. Taxpayers give this form to their employer and do not send this form to the IRS.

Posted in INDIVIDUALS, NEWS

August 29th, 2019 by Oscar

Starting a business can be very rewarding. It can also be a little overwhelming. From business plans to market strategies, and even tax responsibilities…there are many things to consider. Here’s what new business owners can do to help get off to a good start.

  • Choose a business structure. The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:
    • Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business.
    • Partnership: An unincorporated business with ownership shared between two or more people.
    • Corporation: Also known as a C corporation. It’s a separate entity owned by shareholders.
    • S Corporation: A corporation that elects to pass corporate income, losses, deductions, and credits through to the shareholders.
    • Limited Liability Company: A business structure allowed by state statute.
  • Choose a tax year. A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:
    • Calendar year: 12 consecutive months beginning January 1 and ending December 31.
    • Fiscal year: 12 consecutive months ending on the last day of any month except December.
  • Apply for an employer identification number. An EIN is also called a federal tax identification number. It’s used to identify a business. Most businesses need an EIN.
  • Have all employees complete these forms:
    • Form I-9, Employment Eligibility Verification
    • Form W-4, Employee’s Withholding Allowance Certificate
  • Pay business taxes. The form of business determines what taxes must be paid and how to pay them.

Each state has additional requirements for starting and operating a business. Prospective business owners should visit their state’s website for info about state requirements.

Posted in INDIVIDUALS, SMALL BUSINESSES

August 22nd, 2019 by Oscar

Contribuyentes con Números de Identificación Personal del Contribuyente que expiran pronto deben renovar su número lo antes posible. Hay casi dos millones de ITINs que están por expirar a fines de 2019. Contribuyentes con un número que expirará deben renovar antes de fin de año. Esto ayudara a evitar retrasos innecesarios relacionados al reembolso tributario del año próximo.

Los ITINs son usados por contribuyentes quienes deben pagar impuestos, pero que no son elegibles para un número de seguro social.

A continuación, información acerca de cuáles ITINs expirarán y cómo los contribuyentes pueden renovarlos.

  1. Los siguientes ITINs expiran el 31 de diciembre de 2019 son aquellos no usados en una declaración federal al menos una vez en los últimos tres años y los números con dígitos medios de 83, 84, 85 ,86 y 87 no renovados previamente.
     
  2. ITINs con dígitos medios 83, 84, 85, 86 y 87 deben renovarse, aunque se hayan usado en los últimos tres años.
     
  3. Contribuyentes cuyos ITINs están por expirar y quienes anticipan tener requisito de presentar en 2020, deben renovar su número. Otros no necesitan tomar ninguna acción.
     
  4. El IRS envía notificaciones a los contribuyentes afectados. Este es el Aviso CP48 que explica los pasos para renovar el ITIN.
     
  5. Contribuyentes quienes reciben el Aviso después de renovar su ITIN, no necesitan tomar acción adicional a no ser que otro miembro de la familia sea afectado.
     
  6. ITINs con dígitos medios de 70 a 82 ya expiraron. Contribuyentes con estos ITINs pueden renovar en cualquier momento, si no la han hecho aún.
     
  7. Aquellos quienes reciben una carta de renovación del IRS pueden renovar los ITINs de la familia a la vez. Pueden hacerlo, aunque miembros de la familia tengan un ITIN con dígitos medios que no estén por expirar. Miembros de la familia incluyen al que presenta los impuestos, su cónyuge y cualquier dependiente.
     
  8. Para renovar un ITIN, un contribuyente debe completar el Formulario W-7 y presentar toda la documentación requerida, No necesitan incluir la declaración de impuestos. Sin embargo, los contribuyentes deben incluir en el W-7 la razón por la cual necesitan un ITIN.
     
  9. Hay tres maneras en que los contribuyentes presentan la solicitud de renovación:
    1. Enviar el formulario a la dirección del IRS señalada en las instrucciones del Formulario W-7
    2. Trabajar con un Agente Tramitador autorizado por el IRS para ayudar a los contribuyentes.
    3. Hacer una cita en un Centro de Asistencia al Contribuyente para que la identidad de cada solicitante sea autenticada en persona.

Posted in INDIVIDUALS

August 16th, 2019 by Oscar

Small business owners, self-employed people, and some wage earners should look into whether they should make estimated tax payments this year. Doing so can help them avoid an unexpected tax bill and possibly a penalty when they file next year.

Everyone must pay tax as they earn income. Taxpayers who earn a paycheck usually have their employer withhold tax from their checks. This helps cover taxes the employee owes. On the other hand, some taxpayers earn income not subject to withholding. For small business owners and self-employed people, that usually means making quarterly estimated tax payments.

Here’s some information about estimated tax payments:

  • Taxpayers generally must make estimated tax payments if they expect to owe $1,000 or more when they file their 2019 tax return.
  • Whether or not they expect to owe next year, taxpayers may have to pay estimated tax for 2019 if their tax was more than zero in 2018.
  • Wage earners who also have business income can often avoid having to pay estimated tax. They can do so by asking their employer to withhold more tax from their paychecks.
  • Aside from business owners and self-employed individuals, people who need to make estimated payments also includes sole proprietors, partners and S corporation shareholders. It also often includes people involved in the sharing economy.
  • Estimated tax requirements are different for farmers and fishermen.
  • Corporations generally must make these payments if they expect to owe $500 or more on their 2019 tax return.
  • Aside from income tax, taxpayers can pay other taxes through estimated tax payments. This includes self-employment tax and the alternative minimum tax.
  • The final two deadlines for paying 2019 estimated payments are Sept. 16, 2019 and Jan. 15, 2020.
  • Taxpayers can check out these forms for details on how to figure their payments:
    • Form 1040-ES, Estimated Tax for Individuals.
    • Form 1120-W, Estimated Tax for Corporations.
  • Taxpayers can visit IRS.gov to find options for paying estimated taxes. These include:
    • Direct Pay from a bank account.
    • Paying by credit or debit card or the Electronic Federal Tax Payment System.
    • Mailing a check or money order to the IRS.
    • Paying cash at a retail partner.
  • Anyone who pays too little tax through withholding, estimated tax payments, or a combination of the two may owe a penalty. In some cases, the penalty may apply if their estimated tax payments are late. The penalty may apply even if the taxpayer is due a refund.
  • For tax year 2019, the penalty generally applies to anyone who pays less than 90 percent of the tax reported on their 2019 tax return.

Posted in INDIVIDUALS, SMALL BUSINESSES

August 8th, 2019 by Oscar

El verano es una temporada en que las personas se divierten, pero también llevan a cabo tareas importantes.  Desde comprar una casa nueva hasta limpiar su casa antigua. Los contribuyentes que detallan sus deducciones podrían hacer cosas este verano que tengan un efecto en las declaraciones presentadas el año entrante. 

La deducción estándar más alta significa que menos contribuyentes detallan sus deducciones. Sin embargo, los contribuyentes que aún planifican detallar el año entrante deben tener en cuenta estos consejos: 

  • Deducción de impuestos estatales y locales, ventas e impuestos a la propiedad. La deducción que los contribuyentes pueden reclamar de los ingresos estatales y locales, las ventas y los impuestos a la propiedad es limitada. Esta deducción se limita a una deducción total combinada de $10,000. La cantidad es $5,000 si el estado civil tributario es casado, presentando por separado. Los impuestos estatales y locales pagados que superan esta cantidad no pueden deducirse.
     
  • Refinanciamiento de una vivienda. La deducción de los intereses hipotecarios también es limitada. Esto se limita al interés pagado por un préstamo garantizado por la vivienda principal o la segunda casa del contribuyente. Los propietarios que deciden refinanciar deben usar el préstamo para comprar, construir, o mejorar sustancialmente su vivienda principal o secundaria.
     
  • Comprar una casa. Las personas que compran una casa nueva este año solo pueden deducir los intereses pagos sobre la cantidad máxima de $750,000 en deuda calificada de la casa principal o secundaria. La cantidad es $375,000 si la persona es casada presentando por separado. Para hipotecas existentes, si el préstamo se originó en o antes del 15 de diciembre de 2017, los contribuyentes pueden continuar deduciendo los intereses pagos sobre un total de $1 millón en deuda calificada garantizada por la primera y segunda vivienda.
     
  • Donar artículos y deducir dinero. Muchos contribuyentes hacen una buena limpieza y se organizan durante el verano. A menudo encuentran artículos sin usar en buenas condiciones que pueden donar a una organización caritativa calificada Estas donaciones podrían calificar para una deducción tributaria. Los contribuyentes deben detallar deducciones para poder deducir las contribuciones caritativas y deben mantener evidencia de todas las donaciones.
     
  • Deducción de millas usadas para actos de caridad. Manejar un vehículo personal mientras dona servicios en un viaje patrocinado por una organización benéfica podría calificar para un beneficio tributario. Las personas que detallan pueden deducir 14 centavos por milla por el millaje caritativo conducido en 2019.
     
  • Reportar ganancias y pérdidas en juegos. Los contribuyentes que detallan pueden deducir las pérdidas de juegos hasta la cantidad de ganancias de juego que reporten.

Posted in INDIVIDUALS

August 1st, 2019 by Oscar

Taxpayers who have deducted the business use of their car on past tax returns should review whether or not they can still claim this deduction. Some taxpayers can. Some cannot.

Here’s a breakdown of which taxpayers can claim this deduction when they file their tax returns.

Business owners and self-employed individuals
Individuals who own a business or are self-employed and use their vehicle for business may deduct car expenses on their tax return. If a taxpayer uses the car for both business and personal purposes, the expenses must be split. The deduction is based on the portion of mileage used for business.

There are two methods for figuring car expenses:

1. Using actual expenses, that includes: depreciation, lease payments, gas and oil, tires, repairs and tune-ups, insurance and registration fees.

2. Using the standard mileage rate. The standard mileage rate for 2018 is 54.5 cents per mile. For 2019, it‘s 58 cents. Taxpayers who want to use the standard mileage rate for a car they own must choose to use this method in the first year the car is available for use in their business. Taxpayers who want to use the standard mileage rate for a car they lease must use it for the entire lease period.

There are recordkeeping requirements for both methods. 

Employees
Employees who use their car for work can no longer take an employee business expense deduction as part of their miscellaneous itemized deductions reported on Schedule A.  Employees can’t deduct this cost even if their employer doesn’t reimburse the employee for using their own car. This is for tax years after December 2017. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2% floor.  

However, certain taxpayers may still deduct unreimbursed employee travel expenses, this includes Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials.

Posted in INDIVIDUALS

July 25th, 2019 by Oscar

Tax planning should happen all year long, not just when someone is filing their tax return.  An important part of tax planning is record-keeping. Well-organized records make it easier for a taxpayer to prepare their tax return. It can also help provide answers if a taxpayer’s return is selected for examination or if the taxpayer receives an IRS notice.

Here are some suggestions to help taxpayers keep good records:

  • Taxpayers should develop a system that keeps all their important info together. They can use a software program for electronic record-keeping. They could also store paper documents in labeled folders.
  • Throughout the year, they should add tax records to their files as they receive them. Having records readily at hand makes preparing a tax return easier.
  • It may also help them discover potentially overlooked deductions or credits. Taxpayers should notify the IRS if their address changes. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
  • Records that taxpayers should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.
  • Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
  • In general, the IRS suggests that taxpayers keep records for three years from the date they filed the return.
  • For business taxpayers, there’s no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. The records should confirm income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.

The IRS has several online tools taxpayers can use to stay updated on important tax information that may help with tax planning.

Posted in INDIVIDUALS, SMALL BUSINESSES

July 18th, 2019 by Oscar

Los contribuyentes que tengan preguntas acerca de sus cuentas de impuestos federales pueden acudir a IRS.gov para obtener respuestas. Los contribuyentes individuales pueden iniciar sesión en la página “Cómo ver la información de su cuenta” para ver detalles específicos sobre la información de su cuenta de impuestos federales.

Los contribuyentes pueden ver:

  • Su monto de pago, que se actualiza para el día actual
  • El saldo de cada ejercicio tributario por el que adeudan impuestos
  • Su historial de pago
  • Información clave de su declaración de impuestos más reciente tal como se presentó originalmente

Después de ver su información, un contribuyente puede:

  • Seleccionar una opción de pago electrónico
  • Establecer un acuerdo de pago en línea
  • Ir directamente a Ordenar Transcripción

El saldo del contribuyente se actualizará no más de una vez cada 24 horas, generalmente durante la noche. Los contribuyentes también deben permitir de 1 a 3 semanas para que los pagos aparezcan en el historial de pagos.

Para acceder a su información en línea, los contribuyentes deben inscribirse a través de Acceso Seguro. Este es el proceso de autenticación de dos factores de la agencia que protege la información personal. Los contribuyentes pueden revisar el proceso de la página Acceso Seguro antes de iniciar la inscripción.

Los contribuyentes también pueden visitar IRS.gov para usar muchas otras herramientas de autoservicio y recursos útiles. Estos incluyen “¿Dónde está mi reembolso?” y la aplicación “IRS2Go”. Estas son las mejores maneras en que los contribuyentes pueden verificar el estado de su reembolso de impuestos. Estas herramientas se actualizan no más de una vez al día, por lo que los contribuyentes no necesitan verificar con más frecuencia.

Posted in INDIVIDUALS

July 11th, 2019 by Oscar

Los contribuyentes deben conocer los cambios de la ley tributaria relacionados con los pagos al cónyuge o excónyuge. Estos pagos se efectúan después de un divorcio o separación. La Ley de Empleos y Reducción de Impuestos (TCJA, por sus siglas en inglés) modificó las reglas de estos pagos, lo que afectará a ciertos contribuyentes cuando presenten sus declaraciones de impuestos de 2019 el próximo año.

Aquí hay algunos datos que ayudarán a las personas a entender estos cambios y a quién impactarán:

  1. La ley se refiere a los pagos en virtud de un acuerdo de divorcio o separación. Esto incluye decretos de divorcio; decretos separados de sostenimiento y acuerdos de separación por escrito.
  2. En general, el contribuyente que realiza pagos a un cónyuge o excónyuge puede deducirlo en su declaración de impuestos. El contribuyente que recibe los pagos debe incluirlo en sus ingresos.
  3. A partir del 1ro de enero de 2019, los pagos efectuados a un cónyuge o excónyuge o sostenimiento por separado no son deducibles de los ingresos del cónyuge pagador, ni se incluyen en los ingresos del cónyuge que recibe, si se hacen bajo un acuerdo de divorcio o separación ejecutado después del 31 de diciembre de 2018.
  4. Si un acuerdo se ejecutó el 31 de diciembre de 2018 o antes y luego se modificó después de esa fecha, también se aplica la nueva ley. La nueva ley se aplica si la modificación hace estas dos cosas:
     
    • Cambia los términos de los pagos al excónyuge pagos de sostenimiento por separado.
    • Dice específicamente que los pagos al excónyuge y pagos de sostenimiento por separado no son deducibles por el cónyuge pagador ni se incluyen en los ingresos del cónyuge que los recibe.
       
  5. Los acuerdos ejecutados a más tardar el 31 de diciembre de 2018 siguen las reglas anteriores. Si se modificó un acuerdo después de esa fecha, el acuerdo seguirá la ley anterior siempre que las modificaciones no hagan lo que se describió anteriormente.

Posted in INDIVIDUALS