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
(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.
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
(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.
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
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
Per Diem is no longer allowed on Sch A under Misc. deductions.
Day Care Per Diem Breakfast, $1.31; Lunch/Supper, $2.46; Snacks,
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
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.