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Macchietto Roth & Company, P.C.
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Issue Number: Tax Tip 2018-40
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Things to Remember when Considering Early Withdrawals from Retirement Plans

Many taxpayers may need to take out money early from their Individual Retirement Account or retirement plan. Doing so, however, can trigger an additional tax on early withdrawals. They would owe this tax on top of other income tax they may have to pay. Here are a few key points to know:

• Early withdrawals. An early withdrawal is taking a distribution from an IRA or retirement plan before reaching age 59½.

• Additional tax. Taxpayers who took early withdrawals from an IRA or retirement plan must report them when they file their tax return. They may owe income tax on the amount plus an additional 10 percent tax if it was an early withdrawal.

• Nontaxable withdrawals. The additional 10 percent tax doesn’t apply to nontaxable withdrawals, such as contributions that taxpayers paid tax on before they put them into the plan.

• Rollover. A rollover happens when someone takes cash or other assets from one plan and puts it in another plan. They normally have 60 days to complete a rollover to make it tax-free.

• Exceptions. There are many exceptions to the additional 10-percent tax. Some of the rules for retirement plans are different from the rules for IRAs.

• Disaster Relief. Participants in certain disaster areas may have relief from the 10-percent early withdrawal tax on early withdrawals from their retirement accounts.

• File Form 5329. Taxpayers who took early withdrawals last year may have to file Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, with their federal tax returns.
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Still haven't filed a tax return for 2014? Let's get you your refund!! Give us a call 815-941-9050

IRS: Refunds worth $1.1 billion waiting to be claimed by those who have not filed 2014 federal income tax returns
WASHINGTON ―Unclaimed federal income tax refunds totaling about $1.1 billion may be waiting for an estimated 1 million taxpayers who did not file a 2014 federal income tax return, according to the Internal Revenue Service.

To collect the money, these taxpayers must file their 2014 tax return with the IRS no later than this year's tax deadline, Tuesday, April 17.
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Check Status of a Tax Refund in Minutes Using Where’s My Refund?
The Where's My Refund? tool gives taxpayers access to their tax return and refund status anytime. All they need is internet access and three pieces of information:
• Their Social Security number.
• Their filing status.
• The exact whole dollar amount of their refund.
Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. Where’s My Refund? includes a tracker that displays progress through three stages: the IRS receives the tax return, then approves the refund, and sends the refund.
Where’s My Refund? updates once every 24 hours, usually overnight. Taxpayers should remember that checking the status more often will not produce new results!
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Moving after retirement? Check the tax rates out and what they tax - such as social security and retirement benefits before deciding.
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The IRS announced that the standard deduction for 2018 is $24,000 for married taxpayers filing jointly, $12,000 for single individuals and married taxpayers filing separate returns, and $18,000 for heads of household. After 2018, these amounts will be adjusted for inflation. Fewer people will be able to itemize next year.
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Breaking up is hard to do - here are the changes to alimony deduction and taxation for the new year and future!
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The IRS has released a new withholding calculator due to the new tax law changes for 2018 and going forward. You may want to check it out to see if your withholding is still enough.
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IRS: Many EITC, ACTC Refunds Arriving Soon

WASHINGTON – As the Internal Revenue Service begins releasing refunds for taxpayers who claimed the Earned Income Tax Credit and the Additional Child Tax Credit, the agency reminds them that many of these refunds should arrive in bank accounts or on debit cards this week. That is if they chose direct deposit and there are no other issues with the tax return.
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Having trouble getting your W-2? The IRS Can Help Taxpayers Get Form W-2

Most taxpayers got their Form W-2, Wage and Tax Statement, by the end of January. Taxpayers need their W-2s to file an accurate tax returns, as the form shows an employee’s income and taxes withheld for the year.

Taxpayers who haven’t received their W-2 by the end of February should:

• Contact their Employer. Taxpayers should ask their current or former employer for a copy of their W-2. Be sure the employer has the correct address.

• Call the IRS. Taxpayers who are unable to get a copy from their employer by the end of February may call the IRS at 1-800-829-1040 for a substitute W-2. The IRS will send a letter to the employer on taxpayers’ behalf. When they call, taxpayers need their:

Name, address, Social Security number and phone number.
Employer’s name, address and phone number.
Employment dates.
Estimate of wages and federal income tax withheld in 2017. Use a final pay stub for these amounts.

• File on Time. Taxpayers should file their tax return by April 17, 2018. If they still haven’t received their W-2, they should use Form 4852, Substitute for Form W-2, Wage and Tax Statement. They should estimate their wages and taxes withheld as best as possible. To request more time to file, they should use Form 4868, Application for Automatic Extension of Time to File. Taxpayers can also e-file a request for more time using IRS Free File. Taxpayers should remember that an extension of time to file isn’t an extension of time to pay taxes owed. Taxpayers can also get an extension by paying all or part of their estimated income tax due, and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System, or a credit or debit card. This way, the taxpayer won’t have to file a separate extension form and will receive a confirmation number for their records.

• Correct a Tax Return, if Necessary. Taxpayers may need to correct their tax return. This could happen if they get a missing W-2 after they file. If the tax information on the W-2 is different from what they first reported, they may need to file an amended tax return. Use Form 1040X, Amended U.S. Individual Income Tax Return, to make the change.

All taxpayers should keep a copy of their tax return. Taxpayers using a software product for the first time may need their Adjusted Gross Income from last year’s tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
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Teachers - For tax years beginning on and after January 1,
2017, eligible educators may claim an Instructional
Materials and Supplies Credit up to $250 for qualified expenses
paid during the tax year. This is a new Illinois credit just for you!
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