2017 is the last year for: $500 residential energy credit; mortgage insurance premium deduction; 7.5% deduction of AGI
from medial expenses for seniors.
2016 W-2 may contain a verification Code to help prevent identity theft.
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.
(9) Identity Issues. New at Fox Tax for 2017 we use 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.
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
Affordable Care Act - General Questions
Business Repair Regulation
Repairs in some cases are depreciated over
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.
Mileage (up to 2 vehicles) deduction for business, 54
cents; medical and moving, 23 cents; Charitable, 14 cents.
Maximum Earned Income Credit. No child, $506; One child, $3,373; Two
children, $5,572, Three children, $6,269.
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
Per Diem Lodging, $91; Transportation
M & IE (CONUS) $59; M & IE, $46; Incidental, $5 .
Day Care Per Diem Breakfast, $1.32/$1.31; Lunch/Supper, $2.48;
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 $1,000. You still can claim the child as
Informing the IRS of a Change of Address
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.