If you own a business and prepare payroll taxes and/or have independent contractors, when you get ready to file the 2016 W2s and 1099MISCs, be aware that the rules have changed. The IRS is trying to prevent identity theft and so is trying to get information sooner so items can be looked over quicker. So they have changed the filing date for W2s (and some of their equivalents) and forms 1099MISC when line 7 is filled out. In the past the employees and independent contractors were supposed to receive their forms by January 31, and you would file the W2s with the Social Security Administration and the 1099s with the Internal Revenue Service by the end of February. Now everything has to be filed by the end of January starting January 1, 2017. There is still a 30 day extension to file these forms that you can file on form 8809; however in the past you could get a 30 day automatic extension (till the end of March). This “automatic” extension has disappeared! In 2017 you can file a 30 day extension until the end of February on form 8809, but it is no longer automatic. The extensions are granted [...]
Tax Musings of a Burbank CPA: Book Report on “Deduct Everything” – How to save Money on Taxes
I recently purchased and read a book about how anyone can save money on their income taxes. It is called “Deduct Everything” by Eva Rosenberg, an Enrolled Agent here in the Los Angeles area who also writes columns for MarketWatch and teaches an online review course for taking the Enrolled Agent exam. She goes by the name TaxMama to answer questions and give advice and help to taxpayers through her website and other resources. Anyway, after reading her book I was impressed with the wide range of information available for the novice tax preparer to get their income taxes correctly prepared and filed. Eva goes into many subjects in the book including: 1. Record keeping tips and tools 2. Should you prepare your own taxes 3. Choosing an tax professional 4. Medical and charity deductions 5. Retirement tax issues 6. Education tax savings 7. Tax no-nos ..and much more including a glossary of tax terms and a resource section to help you do things right. I would highly recommend this book to anyone considering preparing their own income tax returns as well as an information source to help understand the process as well as giving you the ability to [...]
Musings of a Burbank CPA: Can a Big Income Tax Refund Be a Bad Thing?
(This is a re-post of an article I wrote in April 2015 about getting a large tax refund.) Well you have filed taxes for this year and are getting a big refund. What to do with this windfall? How about kicking yourself. You do realize that a “tax refund” is made up of two parts – you give your federal or state government YOUR hard earned money throughout the year and when you file your taxes, said government gives you YOUR money back. Effectively you are letting the government have it interest free for the year (so it gets the ‘float’ on the money!) then returns it to you. You are hiding your money under the IRS mattress (except you don’t have access to it.) Here is another idea. Say you get approximately a $4000 refund every year when you file your taxes. What would happen if you reduced your withholding $250 a month and put that into a savings account paying .75% a year. That means you have $3000 in the bank with about $15 interest by the time you would get your $1000 tax refund on Feb 28. Doesn’t sound like much does it? Well what if you put [...]