Fox Tax 2019

IRS News for 2019

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NEVER reply to an E-mail from the IRS or STATE requesting information.  Call us if questions!  Phone calls from the IRS are usually a scam.  The IRS does not threaten over the phone or send the local police to collect fees.  Treat all verbal requests from the IRS as a scam.
 
Receive any IRS Notice?  Always forward a copy to our office, in that even IRS notices may be fake.  Notices involving stocks are almost always incorrect, and if you had a loss the IRS will pay you and usually with interest.  If you pay an IRS notice you will shortly receive a notice from WI.

Owe the IRS Money? Click here for link to Financial Management Services

Filing deadline for 2019 is April 15th. Deadline for filing an extension is October 15th. You may e-file returns up to 3 years, then a paper return is required. Between the end of November and middle of January e-filing is not accepted, since the IRS is converting for the next tax year.
You have 3 years to file your Federal return and 4 years to file WI return. If you file after the above dates you usually will pay any amounts due and will not be entitled to any refund. WI Homestead also can be filed with 4 years.

Keep in mind identity theft is everywhere, "Don't take the bait". Report fraud to 1-(800) 366-4484.

Again in 2019, returns claiming the Earned Income Credit and Educational Credit will be help by the IRS until mid February. Returns may and should be submitted prior to mid February.

Major items for 2018:
(1) New Family Credit of $500 for all Dependents on return.
(2) QBI reduces taxable income of a business by 20% (not for self-employment)
(3) Standard Deduction is basically doubled
(4) All Misc. Deductions on Sch A eliminated
(5) There is NO personal exemption for anyone
(6) Home equity line of credit, to be used, must be for home.
(7) Kiddie Tax now uses estate and trust tax brackets
(8) Beginning for 2019 divorces Alimony is not a deduction or income.
(9) Moving expenses for Military only
(10) All Cryptocurrency transactions must be reported on form 8989.
(11) Cryptocurrency Wallets are considered an asset for FBAR
(12) New tax rates. Note that these may have been reflected in take home pay.
(13) Business Section 179 maximum is $510,000.
(14) Two suggestions to protect your identity: (1) Freeze you credit through a credit bureau (it is free) (2) Never give information regarding taxes over the phone or via e-mail.
(15) Give $15,000 per individual without Gift Tax.  If a tax, it is paid by "giver".
(16) For inheritance the value is the value on date of inheritance.

Some 2018 W-2's may contain a 16 digit verification code in box 9 of the "B" and "C" copies of your W-2. Use them to avoid delays.

Electronic deposit to a financial institution must be made at time of completing the calendar insert. If not sure of info suggest having a paper check mailed. New IRS/software procedures make any change time consuming.

The IRS does participate using the following: You Tube; Twitter; Facebook; and Tumblr, along with the IRS website. Use for information only, never submit personal information.

Extensions allow you an extra 6 months to file. If you owe money you are charged interest from April 18th, and a penalty if the amount owed is large. For federal purposes, if you are due a refund you may be paid interest by the IRS.



If you owe money and don't file by October 15th you will usually pay, in addition to interest, a 25% penalty of taxes owed to the Federal and a $50 late filing fee by WI. Even if you can not pay, you should always file by October 15th to avoid additional penalties.

Common Questions and Problems

(1) Is income under $600 taxable? Yes. If you ever received an audit and you had $1 interest from a bank that was not on your return, it will be listed. A better example: suppose you sell something an make $500. If you think it is not taxable because it is under $600, then do it a thousand times and try not paying tax on $500,000. All income is taxable, including illegal.

(2) Can you deduct the car sales tax you paid? Yes, BUT it will have to be a larger deduction than the state withholding on your W-2, and you will need to have enough other deductions in order to itemize.

(3) If I owe the IRS over $10,000 can I get it reduced(this is the common TV ad)? Yes you can. Your can also win the lottery by buying a ticket. Ask why is it over $10,000. Because of the fees. Only the IRS or Federal tax court can reduce what you owe. We have clients who received a full pardon but there are circumstances. If you are of working age it is very difficult to achieve. Schedule an offseason appointment for further details.

(4) Separated. If you did not live with your spouse after June 30th your filing status can change.

(5) Placement can be awarded by the courts, but Federal law states that if a dependent lived with you for more than half the year you may claim the dependent for placement.

(6) LLC. If you are the sole member of an LLC you may report using Sch C of federal 1040. Because WI is a community property state you may also do so if both husband and wife are members of the LLC. This is much easier and less expensive than using form 1065.

(7) Remember that Marketplace insurance has a carryover for months not covered.

(8) K-1's with only have $1 reported on a few lines is best to not enter as long as the total amount does not exceed $5. Reason: some K-1's might have say $3 worth of reporting and generate $25 and up in separate forms. K-1's for 2018 should contain QBI information.

(9) Identity Issues. Fox Tax uses a secure system for e-mails and document transmission; Texting to notify you of completed returns; Additional identity for returns involves drivers license data, which is optional but strongly suggested if you have had any type of identity problems in the past.

(10) No USB. We will continue to offer our client's a paper return. If you loose a paper return how much easier it would be to loose a small USB device.

(11) Do you believe it? In many cases snail mail is faster and more efficient than electronic means. This is the law of diminishing return, meaning the more and more you add to and improve something the less effective it gets.

(12) Is WePay, GoFundMe, Kickstarter, etc. taxable?  This is new to the IRS.  Can be non-taxable gifts, since the donor(s) were under no obligation to give the money and they should have been made aware that this was not a deductible charitable contribution, since it was for the benefit of a specific individual.  But, services must report activity that totals more than $20,000 and at least 200 transactions.  This is a gray area and Fox Tax can handle each return in a different manner.  If you are thinking about this we would suggest contacting a non-profit entity (like the person's Church, if one) and asking if they would set up a fund for the individual.  This way the donor can deduct all donations.

ADA Income
 
Income includes taxpayers and/or spouse income. It also includes dependents on their tax return who are required to file taxes.  Filing a return to receive withholding only is not considered part of ADA income.
 
Medical Hardship Exemption

To obtain a Hardship Exemption you must obtain a Exemption Certificate Number (ECN).  You can't obtain this electronically.  Complete the form (available at the link below) then mail.  Instructions state a 1 to 3 week wait which could probably be longer. Believe it or not, a utility disconnection notice will usually get you an exemption.

Affordable Care Act - General Questions

Business Repair Regulation
Repairs in some cases are depreciated over time.

Foreign Bank & financial Accounts
A separate e-file system to report any aggregate over $10,000. (Gambling Included!)


Fiscal Cliff Highlights
 
Extension of $1,000 Child Tax Credit.
Tax rate changes if making more than $400,000.
Preservation of the Bush-era tax cuts up to $400,000.
$5 million individual ($10 million couple) estate limit.
Dividends/capital gains tax raises earners over $400K.
AMT patch for inflation. 
 
Capital Gains/Losses require an additional form(s) 8949.
 
Divorced or Separated Parents.  The noncustodial parent must obtain form 8332 from the custodial parent.  Court papers are not allowed if the decree of agreement was executed after 2008.  Prior to 2009 court papers are allowed. Remember that placement is whoever furnishes support for a dependent for more than half of the year.
 
Settle with the IRS?
 
  Offer in Compromise is the form required, and once completed only the IRS or a court can reduce your taxes.  Today's TV ads offer help if you owe $10,000 or more.  Know why it's $10,000 or more?
 
 
 
 
 

Insolvency: If your net debts are larger than assets you may qualify to file insolvency to avoid paying a debt that was forgiven and taxable.

Per Diem is no longer allowed on Sch A under Misc. deductions.

Day Care Per Diem  Breakfast, $1.31; Lunch/Supper, $2.46; Snacks, $0.73.


Early distributions from an IRA usually result in approx. 35% to 46% going toward Federal and State taxes and penalities if you have an income.  Call us first.  
 
If you had a dependent turn 17 on or before December 31st, then you lose the Child Tax Credit, which is in most cases $2,000.  You still can claim the child as a dependent.

Informing the IRS of a Change of Address

The IRS issued Revenue Procedure 2010-16 explaining how taxpayers must inform the IRS of a change of address. The new procedure is effective June 1, 2010. The IRS uses a taxpayer's address of record for the various notices or documents that are required to be sent to a taxpayer's "last known address." A notice or document sent to a taxpayer's last known address is legally effective even if the taxpayer never receives it.  IRS Form 8822, change of address, is available on this website under "Internet Links".  Fill in the form while at the site, print, and mail.  Keep a copy for your records.

Fox Tax 606 W Murdock Ave, Oshkosh, WI 54901-2220

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Information on this site is a guideline for general use. Exact information varies with each individual.