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Keeping up with the latest tax law changes and IRS updates is a never-ending process. So here I am at an all-day tax update class to cover everything coming down the pike for the upcoming tax season. More to come...
Over the years, we've all become so accustomed to April 15th being the tax deadline, that it may come as a shock to many people to find out that's not the case this year.
In 2016, the deadline to file individual tax returns is, in fact, April 18th. And, if you find yourself breathing a sigh of relief that you have a few extra days to finish your return, you have a little-known holiday to thank for it.
Emancipation Day is a holiday celebrated in the District of Columbia in remembrance of an act signed by President Lincoln on April 16, 1862, which freed 3,000 slaves in Washington, D.C. The holiday is normally falls on April 16th, but since the 16th falls on a weekend this year, it is being celebrated on the 15th. That being the case, the tax deadline has been pushed back to the next weekday, which is Monday, April 18th.
So as long as your tax return is mailed or electronically filed by April 18th, the IRS will consider it to be submitted on time. If you owe and your payment is submitted by the 18th, that will be considered on time as well.
If you need to file an extension this year, that will give you until October 17th to submit your return.
And, in case you were thinking that everything will return to normal next year, think again. Because of the combination of April 15th being on a weekend and the Emancipation Day holiday, the tax deadline is going to be different the next couple of years.
In 2017, the tax deadline will again be April 18th
Tax season has barely begun and I am already seeing evidence of a long-time scam rearing its ugly head again. It's none other than the infamous IRS phone scam.
One of my clients called me just yesterday to say that she got a phone call from someone claiming to be from the IRS. He said that she owed thousands of dollars in back taxes - which she doesn't, by the way - and threatened to throw her in jail if she didn't pay up immediately. Thank goodness she had the good sense to not divulge any personal information to this crook.
For the record, the IRS NEVER calls taxpayers. If they want something, they send you a letter in the mail. So a word to the wise, don't fall for this scam. If you get a phone call like the one I described above, get as much information from the caller as you can, and when you hang up, report it to your local police department.
And whatever you do, NEVER, EVER give out any personal information to a stranger on the phone. It's a sure-fire way to fall victim to identity theft, or worse!
The Supreme Court this week upheld a key provision of the Affordable Care Act, commonly referred to as Obamacare, which will directly affect the federal tax returns of millions of Americans.
In a 6-3 ruling, the justices determined that insurance subsidies can be offered by both state and federal marketplaces. The ruling was a victory for the Obama administration and virtually guaranteed that the embattled health care law will stay in effect at least through the remainder of this presidency.
So what does this have to do with our tax returns? A lot!
When a taxpayer signs up for health insurance on the state or federal marketplaces, also called exchanges, they may qualify for a subsidy to help defray the cost. The following tax season, they need to report the subsidy on their tax return and calculate whether the amount was correct. If it was too little, they'll get an additional amount as part of their refund. However, if the subsidy was too much, then they'll have to pay it back through their tax return.
With Obamacare here to stay, it also means that millions of taxpayers will have to continue reporting on their tax returns whether they had health coverage that met minimum requirements for the preceding year. If they did, they're fine. If not, they could face a penalty - called an "individual responsibility" payment - on their tax return unless they qualify for an exclusion. And that individual responsibility payment increases year by year.
The bottom line is, our already over-complicated income tax system is not going to get any simpler in the foreseeable future.
To read more about the high court's decision, click on this link:
Many thanks to Springfield Mayor David Barnett and Mike Scalera and Elliot Merkin of the Springfield Patriot Chamber of Commerce for helping us cut the ribbon at our Grand Opening last night. Thanks also to our clients, friend and family who joined in the celebration.
There have been reports of an ongoing phone scam in which taxpayers are receiving phone calls purportedly from the IRS stating that they owe back taxes and must submit immediate payment. Some of these poor souls are taken in and provide credit card payments over the phone, only to find out later that the calls were bogus.
The IRS NEVER calls people up to demand payment. If you have a balance due, they contact you by mail. So be on guard against this. And if anyone calls you trying to perpetrate this scam, be sure to alert the authorities.
With the deadline to file personal income tax returns looming, here are a few things to keep in mind:
Tax returns are considered filed on time if they are postmarked or electronically filed by midnight on April 15th.
If your e-filed return is rejected, you have a 5-day window to correct the return and get it accepted.
If you can't get things together in time to meet the deadline, you can seek an extension. That will automatically give you an addtional 6 months to get your tax return completed. But remember, an extension gives you extra time to file your tax return. It does not give you extra time to pay. If you owe, the IRS expects payment by April 15th.
If you owe and you cannot pay in full by the deadline, you can request an installment agreement to pay your balance over a period of time. Bear in mind, there is a fee of up to $120 to set up this monthly payment plan. You also need to specify the amount you will pay and the day of the month you will submit the payments.
If you'd rather not get involved in a monthly payment arrangement, the IRS also accepts debit and credit card payments.
With the usual last-minute flurry of tax return filings, you may experience e-file processing delays. So the sooner you get your return sent off, the better.
As a veteran tax professional, I can tell you that it has always been a real pain in the neck for taxpayers to claim a deduction for a home office. People had to dig through their annual household bills and then struggle to determine how to allocate those costs between personal and business use. Then they had to calculate depreciation for that small portion of their home. It's a real headache.
This season, the IRS has made it easier for taxpayers to claim the home office deduction by offering a new Simplified Option. By opting to use this new method, people will receive a flat rate of $5 per square foot (up to a maximum of 300 square feet) and don't have to fuss with depreciation.
It's a great option for folks who don't want to be bothered with all the tedious calculations and paperwork.
Failure to comply with the Obamacare health insurance mandate may be quite steep starting next year. The deadline for enrollment is coming up soon. If you are not certain about how to proceed, feel free to contact Tax Express at (908) 686-8600. We have the answers to this perplexing issue.
Check out this story in the March 16th edition of the Star-Ledger to gain more insights into this complex matter: