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Goldsmith & Associates Accounting & Financial Services
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Goldsmith & Associates
Goldsmith & Associates
goldsmithandassociates.com
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New website roll out last week. We are excited to offer a more interactive and resourceful site for our clients.
Home | BRADLEY W GOLDSMITH
Home | BRADLEY W GOLDSMITH
goldsmithandassociates.com
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2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17
Friday, January 5, 2018
The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 29, 2018 and reminded taxpayers claiming certain tax credits that refunds won’t be available before late February.

The IRS will begin accepting tax returns on Jan. 29, with nearly 155 million individual tax returns expected to be filed in 2018. The nation’s tax deadline will be April 17 this year – so taxpayers will have two additional days to file beyond April 15.

Many software companies and tax professionals will be accepting tax returns before Jan. 29 and then will submit the returns when IRS systems open. Although the IRS will begin accepting both electronic and paper tax returns Jan. 29, paper returns will begin processing later in mid-February as system updates continue. The IRS strongly encourages people to file their tax returns electronically for faster refunds.

The IRS set the Jan. 29 opening date to ensure the security and readiness of key tax processing systems in advance of the opening and to assess the potential impact of tax legislation on 2017 tax returns.

The IRS reminds taxpayers that, by law, the IRS cannot issue refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) before mid-February. While the IRS will process those returns when received, it cannot issue related refunds before mid-February. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return.

The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least three years. Taxpayers who are using a tax software product for the first time will need their adjusted gross income from their 2016 tax return to file electronically. Taxpayers who are using the same tax software they used last year will not need to enter prior-year information to electronically sign their 2017 tax return. Using an electronic filing PIN is no longer an option. Taxpayers can visit IRS.gov/GetReady for more tips on preparing to file their 2017 tax return.

April 17 Filing Deadline
The filing deadline to submit 2017 tax returns is Tuesday, April 17, 2018, rather than the traditional April 15 date. In 2018, April 15 falls on a Sunday, and this would usually move the filing deadline to the following Monday – April 16. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 17, 2018. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

The IRS also has been working with the tax industry and state revenue departments as part of the Security Summit initiative to continue strengthening processing systems to protect taxpayers from identity theft and refund fraud. The IRS and Summit partners continued to improve these safeguards to further protect taxpayers filing in 2018.
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A Brief Recap of the Tax Cuts and Jobs Act
Tuesday, January 2, 2018
The major changes take effect for tax returns filed in 2019 although taxpayers may see a change in their withholding starting in February of 2018. Many of the changes are not permanent but instead planned to revert after 2026.

1) Tax rates have been lowered

The seven tax brackets under the old law were 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.

The new rates are now 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.

These are the brackets for a single taxpayer

10% 0 to $9,525

12% $9,525 to $38,700

22% $38,700 to $82,500

24% $82,500 to $157,500

32% $157,500 to $200,000

35% $200,000 to $500,000

37% $500,000 and up

These are the brackets for married filing joint.

10% 0 to $19,050

12% $19,050 to $77,400

22% $77,400 to $165,000

24% $165,000 to $315,000

32% $315,000 to $400,000

35% $400,000 to $600,000

37% $600,000 and up

These are the brackets for head of household

10% 0 to $19,050

12% $19,050 to $77,400

22% $77,400 to $165,000

24% $165,000 to $315,000

32% $315,000 to $400,000

35% $400,000 to $600,000

37% $600,000 and up

2) Personal exemptions have been repealed. Previously there was a deduction of $4,050 for yourself and each of your dependents. This has been offset by an increased standard deduction and an increase in child tax credit.

3) Standard deductions have been raised. Previously the standard deductions would have been $13,000 for married filing joint, $9,550 for head of households and $6,500 for others. The standard deductions under the new law are almost twice the original. $24,000 for married filing joint, $18,000 for head of households and $12,000 for others.

4) Some itemized deductions have been limited or repealed.

a) The deduction for state and local taxes has been limited to $10,000. The limit is half for married filing separate taxpayers. Taxpayers can choose to deduct sales tax instead of state and local income taxes.

b) There was a lot of discussion about limiting the mortgage deduction on higher mortgage amounts but in the end the limit was left at $1,000,000 of indebtedness for existing morggages and lowered to $750,000 for mortgages after 2017. The mortgage interest deduction is only allowed for home acquisition (and improvement) debt not for equity debt.

c) Medical deductions are allowed in excess of 7.5% of AGI. Previously they were only allwed in excess of 10% of AGI.

d) Charity deductions are unchanged except now they are limited to 60% of AGI instead of 50% under the old rules.
e) Only casualty losses in a federally declared disaster area will be allowed.

f) All job expense and other miscellaneous deductions subject to a 2% limit have been repealed. Some of the more common deduction repealed are unreimbursed employee expenses, tax preparation fees, safe deposit box fees and union dues.

g) One more change to itemized deductions is the allowed deductions are no longer phased out for higher income taxpayers.

5) The Child Tax Credit is increased to $2,000. Up to $1,400 of this will be refundable even with no tax liability. There will also be a new qualifying dependent tax credit of $500 for dependents who do not qualify for the Child Tax Credit. This is a non refundable credit. The phase out for the credit now starts at an AGI of $400,000 for married filing joint returns and $200,000 for all others.

6) Alimony will no longer be deductible from income or reported as income. This only applies to divorce or separation documents executed after 12/31/2018.

7) The individual mandate penalty for no health insurance coverage remains in place for 2018 but will be repealed in 2019.
8) Pass through income and income attributable to a sole proprietorship will be taxed at individual tax rates less a deduction of up to 20% to bring the rate lower. This attempts to even out the taxes on these types of income with the new lower corporate rate of 21%. The rules and calculations for this are complicated.

9) The Alternative Minimum Tax has been retained but the exemption has been increased and the phase out level for the exemption has been increase. The exemptions increase to $70,300 for individuals and $109,400 for married taxpayers filing jointly. The exemption phaseout will be $1,000,000 for married taxpayers filing jointly and $500,000 for individuals.

10) Depreciation changes:
a) Bonus depreciation has been increased to 100% for any qualifying asset place in service after September 27, 2017 and before December 31, 2022.

b) The annual depreciation limit on passenger autos placed in service after December 31,2017 (luxury auto depreciation) has been increased to $10,000 for the 1st year, $16,000 for the 2nd year, $9,600 for the 3rd year and $5,760 for each remaning year.
c) For property placed in service in tax years beginning after Dec. 31, 2017, the maximum amount a taxpayer may expense under Code Sec. 179 is increased to $1 million, and the phase-out threshold amount is increased to $2.5 million.
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National Tax Security Awareness: Online Security - Seven Steps for Safety

Tuesday, December 5, 2017

During the online holiday shopping season, the IRS, state tax agencies and the tax industry remind people to be vigilant with their personal information. While shopping for gifts, criminals are shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data that could help them file a fraudulent tax return.

Anyone who has an online presence should take a few simple steps that could go a long way to protecting their identity and personal information.

Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund.

Here are seven steps to help with online safety and protecting tax returns and refunds in 2018:

1. Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy.

2. Avoid unprotected Wi-Fi. Beware purchases at unfamiliar sites or clicks on links from pop-up ads. Unprotected public Wi-Fi hotspots also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.

3. Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords. An attachment may download malware that tracks keystrokes.

4. Keep a clean machine. This applies to all devices – computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.

5. Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. Use a password manager, if necessary.

6. Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication, meaning users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords. For added protection, some financial institutions also will send email or text alerts when there is a withdrawal or change to the account. Generally, users can check account profiles at these locations to see what added protections may be available.

7. Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. And, when disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before trashing.

There are also a few additional steps people can take a few times a year to make sure they have not become an identity theft victim.

Receive a free credit report from each of the three major credit bureaus once a year. Check it to make sure there are no unfamiliar credit changes. Create a “My Social Security” account online with the Social Security Administration. There users can see how much income is attributed to their SSN. This can help determine if someone else is using the SSN for employment purposes.

The IRS, state tax agencies and the tax industry are committed to working together to fight against tax-related identity theft and to protect taxpayers. But the Security Summit needs help. People can take steps to protect themselves online. Visit the “Taxes. Security. Together.” awareness campaign or review IRS Publication 4524, Security Awareness for Taxpayers, to see what can be done.
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Five Things to Know about Estimated Taxes and Withholding

Friday, November 10, 2017

People pay taxes on income through withholding on their paycheck or through estimated tax payments. Taxpayers who pay enough tax throughout the year can avoid a large tax bill and penalties when they file their return.

Taxpayers should make estimated tax payments if:
• The tax withheld from their income does not cover their tax for the year.

• They have income without withholdings. Some examples are interest, dividends, alimony, self-employment income, capital gains, prizes or awards.
Here are five actions taxpayers can take to avoid a large bill and estimated tax penalties when they file their return. They can:

• Use Form 1040-ES. Individuals, sole proprietors, partners and S corporation shareholders can use this form to figure estimated tax. This form helps someone calculate their expected income, taxes, deductions and credits for the year. They can then figure their estimated tax payments.

• Use the Withholding Calculator on IRS.gov. This tool helps users figure how much money their employer should withhold from their pay so they don’t have too much or too little tax withheld. The results from the calculator can also help them fill out their Form W-4. Taxpayers whose income isn’t paid evenly throughout the year, can check Publication 505 instead of the calculator.

• Have more tax withheld. Taxpayers with a regular paycheck can have more tax withheld from it. To do this, they must fill out a new Form W-4 and give it to their employer. This is a good option for taxpayers who participate in a sharing economy activity as a side job or part-time business.

• Use estimated payments to pay other taxes. Self-employed individuals can make estimated tax payments to pay both income tax and self-employment tax. Self-employment tax includes Social Security and Medicare.

• Use Form W-4P. Generally, pension and annuity plans withhold tax from retirees’ payments. Recipients of these payments can adjust their withholding using Form W-4Pand give it to their payer.
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Social Security Announced Increase in Maximum Amount of Earnings Subject to Social Security Tax
Wednesday, November 1, 2017

Some adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $128,700 from $127,200. Of the estimated 175 million workers who will pay Social Security taxes in 2018, about 12 million will pay more because of the increase in the taxable maximum.
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