There are only 5 more weeks left in the standard 2020-2021 Tax Season.
April 15, 2021 is the tax deadline this year. April 16, 2021 is the 57th anniversary of the first Gemini Space Mission–unrelated, but very cool.
I am still available to file your 2020 tax return remotely, over Zoom, FaceTime, the phone, or through the mail.
You can also drop your documents off with me in my secure outdoor drop box.
Remember you are not alone! I am also here for previous year returns, amended returns, or any other tax accountant issues you may have at this point, however complicated.
You can pay online. Venmo preferred. Paypal also accepted. You can also still pay by check.
Remember: Due to new IRS security regulations, I need a copy of your driver’s license to submit with your tax return. If you don’t have one, I can give you a list of alternative documents.
I look forward to working with you this year. Enjoy the lighter days and warmer season now upon us.
Read a great post from Kailey Fralick on The Motley Fool breaking down the difference between two exciting things that reduce the amount of money you own the government. H/T @TMFKaily
Photo Credit Kevin Smith
From “What’s the Difference Between a Tax Deduction and a Tax Credit?”:
Tax deductions reduce your amount of taxable income in the eyes of the IRS, or in other words, how much money the government will consider in deciding what rate to use in taxing your income and how much cash to apply that rate to in tallying up your tax bill.
If you take a $1,000 tax deduction, your taxable income for the year will be reduced by $1,000. Depending on your annual income and how many tax deductions you qualify for, you could wind up in a lower income tax bracket, resulting in the government taxing a smaller percentage of your earnings.
Even if your tax deductions don’t change the bracket you occupy, allowing you to be taxed at a lower rate, they can still reduce the amount you owe in tax, by reducing your taxable income. You can figure out how much you’re saving by multiplying the value of the deduction by the income tax bracket you’re in. For example, a $1,000 tax deduction would be worth $220 off the tax bill for someone in the 22% income tax bracket.
I hope these definitions and examples help to clarify what these two commonly-heard tax terms mean–and what they could mean for you.
What is a tax credit?
Tax credits reduce the amount of taxes you owe, but instead of doing so by reducing your taxable income, tax credits reduce your actual tax liability, acting as a dollar-for-dollar reduction of your tax bill.
If you qualify for a $1,000 tax credit, the total in taxes you owe will be reduced by $1,000. So to answer the question at the start of this article: You’re much better off taking the $1,000 tax credit over the $1,000 tax deduction.
When it comes to tax credits, there are two main types: refundable and nonrefundable. Refundable tax credits offer the better deal, if you can take advantage of them, because if their value exceeds your tax liability, the government will actually refund you the difference. Nonrefundable tax credits may reduce your tax liability to zero, but the government does not refund you any excess once you hit zero.
One of the most common refundable tax credits is the earned income tax credit (EITC). It’s designed to help lower-income families, especially those with dependent children, save on their taxes. The maximum income requirement to use in qualifying for the EITC depends on your tax filing status and your number of qualifying children. This tax credit could be worth $519 for the 2018 tax year to couples with no children, $3,461 to families with one child, $5,716 to families with two children and $6,431 to families with three or more children. If these amounts exceed your total tax liability for the year, the government will give you the difference in your tax refund. This means it’s still worth filing a tax return if you will qualify for this benefit, even if your income for 2018 is less than $12,000, meaning you’re not legally required to file a tax return.
WASHINGTON – The Internal Revenue Service today warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.
Following up on a Security Summit alert issued Feb. 2, the IRS issued this additional warning about the new scheme after discovering more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation Division continues its investigation into the scope and breadth of this scheme.
These criminals have a new twist on an old scam. After stealing client data from tax professionals and filing fraudulent tax returns, these criminals use the taxpayers’ real bank accounts for the deposit.
Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.
Different Versions of the Scam
In one version of the scam, criminals posing as debt collection agency officials acting on behalf of the IRS contacted the taxpayers to say a refund was deposited in error, and they asked the taxpayers to forward the money to their collection agency.
In another version, the taxpayer who received the erroneous refund gets an automated call with a recorded voice saying he is from the IRS and threatens the taxpayer with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security Number. The recorded voice gives the taxpayer a case number and a telephone number to call to return the refund.
The IRS urged taxpayers to follow established procedures for returning an erroneous refund to the agency. The IRS also encouraged taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts. Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.
Here are the official ways to return an erroneous refund to the IRS.
Taxpayers who receive the refunds should follow the steps outlined by Tax Topic Number 161 – Returning an Erroneous Refund. The tax topic contains full details, including mailing addresses should there be a need to return paper checks. By law, interest may accrue on erroneous refunds.
This is a very different year and confusion surrounding taxes seems to be at an all-time high. I’m writing not only because tax season is on its way, but to tell you that I am here to help.
I am now accepting appointments in my home office for tax preparation. Call: 845-986-6158 or email: joemartintax@gmail.com to schedule your appointment.
You can do your taxes via Facetime / email and pay online via Paypal.
You can also process with me by mail.
→$10 credit for using Facetime, email, or postal preparation.
→$10 credit to any client who refers new clients to my business.
As always, I’m also happy continue to meet with you in-person.
I am very grateful to all of you who have already referred your friends and family.
Speaking of family, my daughter, Emily, will be working with me again this year. She is a certified tax preparer and excited to start her 3rd year in the family business.
The return price varies depending on the service. This year the average charge for most returns will be $200.00 long form and $80.00 short form.
**Please remember that due to new IRS security regulations, you need to supply a copy of your driver’s license for me to submit with your tax return**
and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.
The IRS will begin accepting electronic tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017. The IRS again expects more than four out of five tax returns will be prepared electronically using tax return preparation software.
Many software companies and tax professionals will be accepting tax returns before Jan. 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. There is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.
The IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. In addition, the IRS wants taxpayers to be aware it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual access to their refunds until the week of Feb. 27.
“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay. Even with these significant changes, IRS employees and the entire tax community will be working hard to make this a smooth filing season for taxpayers.”
The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option. Taxpayers can visit IRS.Gov/GetReady for more tips on preparing to file their 2016 tax return.
April 18 Filing Deadline
The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday – April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.
“The opening of filing season reflects months and months of work by IRS employees,” Koskinen said. “This year, we had a number of important legislative changes to program into our systems, including the EITC refund date, as well as dealing with resource limitations. Our systems require extensive programming and testing beforehand to ensure we’re ready to accept and process more than 150 million returns.”
The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. A number of new provisions are being added in 2017 to expand progress made during the past year.
Refunds in 2017
Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund.
The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.
Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.
As in past years, the IRS will begin accepting and processing tax returns once the filing season begins. All taxpayers should file as usual, and tax return preparers should also submit returns as they normally do – including returns claiming EITC and ACTC.
The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27 (assuming there are no processing issues with the tax return and the taxpayer chose direct deposit). This additional period is due to several factors, including banking and financial systems needing time to process deposits.
After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving President’s Day may affect their refund timing.
Where’s My Refund? on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers will not see a refund date on Where’s My Refund? or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so Where’s My Refund? remains the best way to check the status of a refund.
Although the year is almost over, you still have time to take steps that can lower your 2013 taxes. Now is a good time to prepare for the upcoming tax filing season. Taking these steps can help you save time and tax dollars. They can also help you save for retirement. Here are three year-end tips from the IRS for you to consider:
1. Start a filing system. If you don’t have a filing system for your tax records, you should start one. It can be as simple as saving receipts in a shoebox, or more complex like creating folders or spreadsheets. It’s always a good idea to save tax-related receipts and records. Keeping good records now will save time and help you file a complete and accurate tax return next year.
2. Make Charitable Contributions. If you plan to give to charity, consider donating before the year ends. That way you can claim your contribution as an itemized deduction for 2013. This includes donations you charge to a credit card by Dec. 31, even if you don’t pay the bill until 2014. A gift by check also counts for 2013 as long as you mail it in December. Remember that you must give to a qualified charity to claim a tax deduction. Use the IRS Select Check tool at IRS.gov to see if an organization is qualified.Make sure to save your receipts. You must have a written record for all donations of money in order to claim a deduction. Special rules apply to several types of property, including clothing or household items, cars and boats. For more about these rules see Publication 526, Charitable Contributions.If you are age 70½ or over, the qualified charitable distribution allows you to make tax-free transfers from your IRAs to charity. You can give up to $100,000 per year from your IRA to an eligible charity, and exclude the amount from gross income. You can use the excluded amount to satisfy any required minimum distributions that you must otherwise receive from your IRAs in 2013. This benefit is available even if you do not itemize deductions. This special provision is set to expire at the end of 2013. See Publication 590, Individual Retirement Arrangements (IRAs), for more information.
3. Contribute to Retirement Accounts. You need to contribute to your 401(k) or similar retirement plan by Dec. 31 to count for 2013. On the other hand, you have until April 15, 2014, to set up a new IRA or add money to an existing IRA and still have it count for 2013.The Saver’s Credit, also known as the Retirement Savings Contribution Credit, helps low- and moderate-income workers in two ways. It helps people save for retirement and earn a special tax credit. Eligible workers who contribute to IRAs, 401(k)s or similar workplace retirement plans can get a tax credit on their federal tax return. The maximum credit is up to $1,000, $2,000 for married couples. Other deductions and credits may reduce or eliminate the amount you can claim.For more on all these topics, visit the IRS.gov website.
IRS SCAM ALERT:
This is a very different year and confusion surrounding taxes seems to be at an all-time high. I’m writing not only because tax season is on its way, but to tell you that I am here to help.
Joseph T. Martin Income Tax Service 