Month: May 2018

Tax Tips: Obtaining Prior-Year Tax Information

Tax season may be over, but you still need to hang onto your tax returns and other tax records for at least three years. However, if the IRS believes you have significantly underreported your income (by 25 percent or more), or believes there may be an indication of fraud they have the authority to go back six years in an audit. Furthermore, some documents including those related to real estate sales should be kept for three years after filing the return on which they reported the transaction.

In certain instances, such as when filling out financial aid forms for college, you may be required to upload your tax documents from prior years. If you haven’t kept copies of your tax returns, you can obtain them through the IRS, but you’ll have to pay a fee for them.

If you need an actual copy of a tax return you can get one from the IRS for the current tax year and as far back as six years. The fee per copy is $50. Taxpayers can complete and mail Form 4506, Request for Copy of Tax Return to request a copy of a tax return and mail the request to the appropriate IRS office listed on the form.

If taxpayers need information to verify payments within the last 18 months or a tax amount owed, they can view their tax account using the “View your account” tool on the IRS website. The tool is only available during certain hours, and your balance updates no more than once every 24 hours, usually overnight. You will also need to allow 1 to 3 weeks for payments to appear in the payment history.

Ordering a Tax Transcript

Taxpayers who cannot get a copy of a prior-year return (and don’t need an actual tax return) may order a tax transcript from the IRS. A transcript summarizes return information and includes AGI. They’re free and available for the most current tax year after the IRS has processed the return, as well as the past three years.

When ordering a transcript it’s important to plan ahead. Delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. Taxpayers who order by mail should allow 30 days to receive transcripts and 75 days for tax returns.

There are three ways for taxpayers to order a transcript:

  • Online. Use “Get Transcript Online” on IRS.gov to view, print or download a copy of all transcript types. Those who use it must authenticate their identity using the Secure Access process. Taxpayers who are unable to register or prefer not to use Get Transcript Online may use “Get Transcript by Mail,” also on the IRS website to order a tax return or account transcript type. Please allow five to 10 calendar days for delivery.
  • By phone. The number is 800-908-9946.
  • By mail. Taxpayers can complete and send either Form 4506-T, Request for Transcript of Tax Return, or Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to the IRS to get one by mail. Form 4506-T is used to request other tax records such as tax account transcript, record of account, wage and income and verification of non-filing. Both forms are available on the Forms, Instructions and Publications page on IRS.gov.

If you need assistance obtaining prior year tax information, please call.

Health Care Tax Credit Relief for Small Employers

Tax relief is available for certain small employers who provide health coverage to their employees and wish to claim the Small Business Health Care Tax Credit for 2017 and later years.

To qualify for the credit small employers must provide employees with a qualified health plan from a Small Business Health Options Program (SHOP) Marketplace and may only claim the credit for two consecutive years.

This tax relief helps employers who first claim the credit for all or part of 2016 or a later taxable year for coverage offered through a SHOP Marketplace, but don’t have SHOP Marketplace plans available to offer to employees for all or part of the remainder of the credit period because the county where the employer is located has no SHOP Marketplace plans.

As such, employers can claim the credit for health insurance coverage provided outside of a SHOP Marketplace for the remainder of the credit period if that coverage would have qualified under the rules that applied before January 1, 2014.

The notice does not affect previous transition relief for the credit that was separately provided for 2014, 2015, and 2016.

If you need help calculating the credit under these circumstances or would like more information on whether a county had or has coverage available through a SHOP Marketplace, please call.

Home Equity Loan Interest Still Deductible

The Tax Cuts and Jobs Act has resulted in questions from taxpayers about many tax provisions including whether interest paid on home equity loans is still deductible. The good news is that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labeled.

Background

The Tax Cuts and Jobs Act of 2017, enacted December 22, 2017, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements.

New dollar limit on total qualified residence loan balance

For anyone considering taking out a mortgage, the new law imposes a lower dollar limit on mortgages qualifying for the home mortgage interest deduction. Beginning in 2018, taxpayers may only deduct interest on $750,000 of qualified residence loans. The limit is $375,000 for a married taxpayer filing a separate return. These are down from the prior limits of $1 million, or $500,000 for a married taxpayer filing a separate return. The limits apply to the combined amount of loans used to buy, build or substantially improve the taxpayer’s main home and second home.

For more information about deducting interest on home equity loans or the new tax law, please call.

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