How a Summer Wedding Can Affect Your Taxes
With all the planning and preparation that goes into a wedding, taxes may not be high on your summer wedding checklist. However, you should be aware of the tax issues that come along with marriage. Here are some basic tips to help with your planning:
• Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov, by calling 800-772-1213 or from your local SSA office.
• Change tax withholding. A change in your marital status means you must give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. If you and your spouse both work, your combined incomes may move you into a higher tax bracket or you may be affected by the Additional Medicare Tax. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4.
• Changes in circumstances . If you or your spouse purchased a Health Insurance Marketplace plan and receive advance payments of the premium tax credit in 2016, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace when they happen. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance credit payments are paid directly to your insurance company on your behalf to lower the out-of-pocket cost you pay for your health insurance premiums. Reporting changes now will help you get the proper type and amount of financial assistance so, you can avoid getting too much or too little in advance, which may affect your refund or balance due when you file your tax return.
• Address change. Let the IRS know if your address changes. To do that, send the IRS Form 8822, Change of Address. You should also notify the U.S. Postal Service. You can ask them online at USPS.com to forward your mail. You may also report the change at your local post office. You should also notify your Health Insurance Marketplace when you move out of the area covered by your current health care plan.
• Tax filing status. If you are married as of Dec. 31, that is your marital status for the whole year for tax purposes. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to figure the tax both ways to find out which status results in the lowest tax.
• Select the right tax form. Choosing the right income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. You must claim itemized deductions on a Form 1040, not a Form 1040A or Form 1040EZ.
How to Register for Get Transcript Online Using New Authentication Process
The IRS recently enhanced its e-authentication procedures required to register and use certain self-help tools on IRS.gov. This is a more rigorous e-authentication process than IRS has used in the past. It is in line with federal information security standards and the latest industry practices used by major financial institutions as well as many other large businesses.
We continue to support multiple options for those taxpayers who may be unable to access online features, and will continue to look for ways to expand options for all taxpayers.
The new e-authentication procedures currently are being applied to Get Transcript Online. The new procedures are scheduled to be applied to some other tools, such as Get an Identity Protection PIN, later this year.
Here’s what new users need to get started:
- A readily available email address;
- Your Social Security number;
- Your filing status and address from your last-filed tax return;
- Access to certain account numbers for either:
- credit card, or
- home mortgage loan, or
- home equity (second mortgage) loan, or
- home equity line of credit (HELOC), or
- car loan
- A readily available mobile phone. Only U.S-based mobile phones may be used. Your name must be associated with the mobile phone account. Landlines, Skype, Google Voice or similar virtual phones as well as phones associated with pay-as-you-go plans cannot be used;
- If you have a “credit freeze” on your credit records through Equifax, it must be temporarily lifted before you can successfully complete this process.
Because this process involves verification using financial records, there may be a “soft notice” placed on your credit report. This notice does not affect your credit score.
To securely access Get Transcript Online, first-time users must:
- Submit their name and email address to receive a confirmation code;
- Enter the emailed confirmation code;
- Provide their SSN, date of birth, filing status and address on the last filed tax return;
- Provide some financial account information for verification such as the last eight digits of their credit card number or car loan number or home mortgage account number or home equity (second mortgage) loan number;
- Enter a mobile phone number to receive a six-digit activation code via text message;
- Enter the activation code;
- Create username and password, create a site phrase and select a site image.
Returning taxpayers who have not completed the new secure access process:
- Log in with an existing username and password;
- Submit financial account information for verification, for example, the last eight digits of a credit card number or car loan number or home mortgage account number or home equity (second mortgage) loan account number;
- Submit a mobile phone number to receive an activation code via text;
- Enter the activation code.
Returning taxpayers who have completed the new secure access process:
- Log in with an existing username and password;
- Receive a security code text via mobile phone provided with account set up;
- Enter the security code into secure access.
If at any point, you cannot validate your identity – for example, you cannot provide financial verification information or you lack access to a mobile phone – you may use Get Transcript by Mail.
Get Transcript by Mail allows you to go online and select a return or account transcript type to be mailed to your address of record and delivered within five to 10 days. You may also call 1-800-908-9946 to order these transcripts by phone.
Why Employers Need to Count Employees
It’s important to know how many full-time employees you have because two provisions of the Affordable Care Act – employer shared responsibility and employer information reporting for offers of minimum essential coverage – apply only to applicable large employers. Employers average the number of their full-time employees, including full-time equivalents, for the months from the previous year to see whether they are considered an applicable large employer.
Whether your organization is an ALE for a particular calendar year depends on the size of your workforce in the preceding calendar year. To be an ALE, you must have had an average of at least 50 full-time employees – including full-time-equivalent employees – during the preceding calendar year. So, for example, you will use information about the size of your workforce during 2016 to determine if your organization is an ALE for 2017.
- A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
- A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
- An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.
There are many additional rules on determining who is a full-time employee, including what counts as hours of service.
Extensions for calendar year Corporations & S-Corporations are due now.
Do not let this slip by you. File an extension for your Corporations & S-Corporations before March 15, 2016. This is an extension of time to file your corporate return. This does not extend the payment deadline.
IRS Has Refunds Totaling $950 Million for People Who Have Not Filed a 2012 Federal Income Tax Return
IRS Has Refunds Totaling $950 Million for People Who Have Not Filed a 2012 Federal Income Tax Return
The Internal Revenue Service announced today that Federal income tax refunds totaling $950 million may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2012. To collect the money, these taxpayers must file a 2012 tax return with the IRS no later than this year’s April tax deadline.
“A surprising number of people across the country overlook claiming tax refunds each year. But the clock is ticking for taxpayers who didn’t file a 2012 federal income tax return, leaving nearly $1 billion in refunds unclaimed,” said IRS Commissioner John Koskinen. “We especially encourage students and others who didn’t earn much money to look into this situation because they may still be entitled to a refund. Don’t forget, there’s no penalty for filing a late return if you’re due a refund.”
The IRS estimates the midpoint for potential refunds for 2012 to be $718, with half being worth more than $718 and half being worth less.
In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. For 2012 tax returns, the window closes on April 18, 2016 (or April 19 for taxpayers in Maine and Massachusetts). The law requires the tax return to be properly addressed, mailed and postmarked by that date.
The IRS reminds taxpayers seeking a 2012 refund that their checks may be held if they have not filed tax returns for 2013 and 2014. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.
By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2012. Many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2012, the credit is worth as much as $5,891. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2012 were:
- $45,060 ($50,270 if married filing jointly) for those with three or more qualifying children,
- $41,952 ($47,162 if married filing jointly) for people with two qualifying children,
- $36,920 ($42,130 if married filing jointly) for those with one qualifying child, and
- $13,980 ($19,190 if married filing jointly) for people without qualifying children.
Current and prior year tax forms and instructions are available on the IRS.gov Forms and Publications page, or by calling toll-free: 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2012, 2013 or 2014 should request copies from their employer, bank or other payer.
Taxpayers who are unable to get missing forms from their employer or other payer should go to IRS.gov and use the “Get a Transcript by Mail” button to order a paper copy of their transcript and have it sent to their address of record. Taxpayers can also file Form 4506-T to request a transcript of their tax return. Taxpayers can use the information on the transcript to file their return.
WELCOME TO THE 2016 TAX SEASON!
The IRS declared the official start to the 2016 Tax Season on January 19, 2016. At T. Dennis Connally Consultant P.C., CPA we have sharpened our pencils, pumped up on caffeine and are ready to hit the ground running.
If you are already our client you will have received your annual tax organizer. We look forward to seeing you again this year. Remember to fill out the organizer COMPLETELY and provide ALL supporting documents in order for us to prepare your returns in a timely manner.
We are proud to welcome Kathy Barnes CPA to our firm. Kathy has been working as a CPA locally in Douglasville for over 20 years. We are happy to have her join our team.
We are also proud to announce that Andrew Jordan, Senior Accountant, has received his Masters Degree in Accounting and his license to practice as a Certified Public Accountant. Congratulations Andrew!
With Andrew’s status as a CPA, that gives our firm three Certified Public Accountants and an Enrolled Agent to handle any situation you may have.
If you are not a client, do not hesitate to call, we still a few appointments available.
We have a top notch team ready to assist you with all your accounting and tax needs.
What’s wrong with the IRS?
In the old days of paper spreadsheets, tax returns, and publications, the Internal Revenue Service would provide guidance to tax preparers and taxpayers before the start of tax season, which would be used as guidance throughout the year. As a result of the digital age, the IRS has increased its capabilities, allowing them to streamline this guidance with their website. The website has provided substantial benefit, allowing taxpayers to track their refund, amended return, or even reviewing transcripts of what the IRS has on file. However, this streamlined process also allows the IRS to provide guidance and change guidance with the click of a mouse. This means that guidance for your return may differ if it was prepared in February versus if it were prepared in April. What the IRS does not understand is the cost to the taxpayers, as they are the ones that pay for these changes, whether it be from their preparer changing a completed return or a possible audit arising from inconsistency in the return. These costs can be substantial, and a prime example is the Form 3115 and tangible property regulations during this last tax season.
Many of you probably heard us warning everyone about the Form 3115 this tax season. In case you do not remember, the Form 3115 was an IRS initiative resulting from their final regulations with respect to tangible property. Around this time last year, the IRS released final regulations that changed the way taxpayers are allowed to expense certain items. More specifically, these new regulations changed what had to be capitalized (expensed over multiple years) and what could be written off in the year of purchase. The biggest challenge with the new regulations is that by adopting them, a taxpayer is changing his/her method of accounting. The only way to properly change a method of accounting with the IRS is by filing Form 3115. The IRS estimated that Form 3115 would take the average person approximately 24 hours to prepare after learning about the new laws. In order to better accommodate our clients, we quickly restructured our processes to provide this form for a fee. After enough research and development, we reduced the preparation time from the IRS estimated 24 hours to anywhere between a half hour to two hours, depending on the complexity.
The American Institute of Certified Public Accountants (AICPA) fought the IRS for several months on the additional requirement of filing Form 3115. Their advocacy started from the release of the final regulations in October 2014, and continued all the way through the middle of tax season, when the IRS finally agreed to relieve smaller businesses of the requirement to file Form 3115. On February 13, 2015, the IRS released Revenue Procedure 2015-20, which allowed smaller businesses to adopt the new regulations as of January 1, 2014 without having to file Form 3115. The decision provided major relief for many smaller taxpayers, but only at a cleverly hidden cost.
The biggest cost of Rev. Proc. 2015-20 is that taxpayers do not receive the audit protection for prior years that the Form 3115 offered. This means that the IRS can audit prior years and argue that a taxpayer did not comply with the new laws, even if the laws did not exist at the time. The only way to receive the benefit of the audit protection was by filing a Form 3115, which we strongly advised for many of our clients with substantial activity. In addition to informing everyone at the beginning of tax season through our newsletters and packets, we examined each client’s prior year depreciation schedules and tax returns on a case-by-case basis to determine if Form 3115 was essential for the audit protection.
Another major cost is that Revenue Procedure 2015-20 allows taxpayers to adopt the new regulations on a prospective basis as of January 1, 2014, but does not allow a taxpayer to go back for any prior year deductions. For this benefit, we also examined each client’s depreciation schedule to determine if there were any hidden deductions under the new law, and then weighed our fee for the form(s) versus the benefit of the deduction. If someone could receive $300 in tax savings, but would pay $600-$800 for multiple forms, we did not see the form as a cost savings to the client.
Lastly, Rev. Proc. 2015-20 did not allow the adoption of the new removal cost option, which allows the immediate deduction of removal costs during renovations, large repairs, improvements, etc. As with the other determinations, we examined past client records to determine if this change might be a major factor, or if the form was even necessary. The removal cost benefit might not even be necessary if there were not any apparent removal costs in past year returns, as a taxpayer cannot change a method of accounting that he/she has not yet implemented.
Overall, the Form 3115 was a large factor this year for both preparers and taxpayers. The AICPA finally convinced the IRS to provide some relief. After much negotiation with between the two parties, the resulting Revenue Procedure 2015-20 was not entirely a relief. With all of the costs and forgone benefits, we acted as duly diligent accountants and advised many of you of the consequences of these new laws.
We are pleased to announce that we have recently upgraded our phone system in order to better serve you.
Our front desk number has not changed, we may be reached at
770-920-2890 and 770-942-7180 for our office fax.
Other numbers previously used are no longer in service.
We will look forward to hearing from you soon.
There are only 10 days until the October 15 deadline for Individual Tax filing. If you fail to file by the deadline the IRS will impose late filing penalties and, if you owe, there are late payment penalties and interest that are added to the amount you owe. Do not delay!
T. Dennis Connally Consultant, PC, CPA awarded Douglas County Chamber of Commerce 2015 Small Business of ExcellenceCongratulations to Dennis Connally, Donna Cox and the staff at T. Dennis Connally, CPA for being awarded the 2015 Douglas County Chamber of Commerce Small Business of Excellence Award. We are grateful to the business community that we serve for this recognition. We will continue to provide our clients with the most comprehensive financial advise, ensuring that they are our number one priority. Mr. Connally stated upon accepting the award that he ” could not have done this without my excellent staff…”.