Month: February 2018

Updated income-tax withholding tables have been released for 2018 reflecting changes made by the tax reform legislation enacted last month.

The updated withholding information, available on IRS.gov, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than February 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid, generally weekly, biweekly or monthly.

To minimize the burden on taxpayers and employers, the new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. Employees do not have to do anything at this time.

Under the new law there are a number of changes for 2018 that affect individual taxpayers. The new withholding tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

For people with more simple tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.

To help people determine their withholding (and adjust as needed), the IRS is revising the withholding tax calculator on IRS.gov and should be available by the end of February.

Don’t hesitate to call if you need help figuring out your withholding in 2018.

• By Leon Clinton
• February 22, 2018

Most people file a tax return because they have to, but even if you don’t, there are times when you should–because you might be eligible for a tax refund and not know it. The six tax tips below should help you determine whether you’re one of them.

1. General Filing Rules. Whether you need to file a tax return this year depends on several factors. In most cases, the amount of your income, your filing status, and your age determine whether you must file a tax return. For example, if you’re single and 28 years old you must file if your income, was at least $10,400 ($20,800 if you are married filing a joint return). If you’re self-employed or if you’re a dependent of another person, other tax rules may apply.

2. Premium Tax Credit. If you purchased coverage from the Marketplace in 2017 you might be eligible for the Premium Tax Credit if you chose to have advance payments of the premium tax credit sent directly to your insurer during the year; however, you must file a federal tax return and reconcile any advance payments with the allowable premium tax credit.

3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund, but you have to file a tax return to receive the refund.

4. Earned Income Tax Credit. Did you work and earn less than $53,930 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,318. If you qualify, file a tax return to claim it.

5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit and receive a refund even if you do not owe any tax.

6. American Opportunity Credit. The AOTC (up to $2,500 per eligible student) is available for four years of post-secondary education. You or your dependent must have been a student enrolled at least half-time for at least one academic period. Even if you don’t owe any taxes, you still may qualify; however, you must complete Form 8863, Education Credits, and file a return to claim the credit.

If you have any questions about whether you should file a return, please contact the office.

• By Leon Clinton
• February 19, 2018

More than 155 million individual tax returns are expected to be filed in 2018, according to the IRS, which began accepting electronic and paper tax returns on Monday, January 29, 2018. The January 29 opening date was set to ensure the security and readiness of key tax processing systems in advance of the opening and to assess the potential impact of tax legislation on 2017 tax returns.

Note: Although the IRS began accepting both electronic and paper tax returns January 29, paper returns will not begin processing until mid-February as system updates continue.

April 17 Filing Deadline

The filing deadline to submit 2017 tax returns is Tuesday, April 17, 2018, rather than the traditional April 15 date. In 2018, April 15 falls on a Sunday, and this would usually move the filing deadline to the following Monday (April 16). However, Emancipation Day, which is a legal holiday in the District of Columbia, will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 17, 2018. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

Refunds in 2018

The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind.

The IRS will begin releasing refunds for taxpayers claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) starting February 15. However, these refunds–even the portion not associated with the EITC and ACTC–are not likely to arrive in bank accounts or on debit cards until the week of February 27. This date assumes that there are no processing issues with the tax return and the taxpayer chose direct deposit.

Taxpayers should be aware that many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For example, the three-day holiday weekend involving Presidents’ Day may affect the timing of refunds for EITC and ACTC filers.

Don’t hesitate to call if you have any questions or need assistance filing your tax return this year.

• By Leon Clinton
• February 17, 2018