Tax filing 2017 AND Planning for new year!
Happy New Year to you all! With New Year comes tax filings and planning!:
Tips for Tax filing 2017
Get organized : Start collecting and organizing all of the receipts, canceled checks and other documents that support the income, deductions and credits you’ll be reporting or claiming on your return. The better your records, the more accurate your tax returns will be. Specially, look for W-2, 1099 (INT/DIV/MISC/Brokers) etc. Many of these documents may be available electronically.
Contribute to Retirement Accounts You may be eligible to contribute for traditional or Roth IRAs if you are not participating in any employment sponsored retirement plans. Also, if you are self employed or own S-Corporation, LLC, etc. you may contribute to SEP IRA/Solo 401K before the filing dates.
Itemize Deductions: If you are eligible, you can itemize your deductions including mortgage interest, real estate taxes, sales/state taxes, charitable contributions, and other miscellaneous expenses.
Charitable Contributions (Donations) to be deductible, charitable contributions must be made to qualified organizations. Payments to individuals are never deductible. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deductions, review Exempt Organizations on the IRS.gov website.
Estimated Taxes If you have not paid enough taxes for the tax year you may pay estimated taxes before Jan. 15, 2017. Estimated taxes are normally paid each Quarter during April, June, September and January. Paying appropriate taxes before Jan. 15th may reduce any penalties and interests.
Health Care Act Penalty If you were not covered for any health insurance or went without “essential health benefits” in 2016 and didn’t qualify for an exemption, you may be required to submit to the penalty on your tax return.
Alternative Minimum Tax (AMT): Individuals with a higher income may be subject to the Alternative Minimum Tax. Under the tax law, certain tax benefits can significantly reduce a taxpayer’s regular tax amount. The AMT sets a limit on those benefits. If the tax benefits would reduce total tax below the AMT limit, the taxpayer must pay the higher Alternative Minimum Tax amount.
FBAR/Foreign Income: Ensure that you have included all the ‘foreign source income’ like – dividends, interests, rental, etc. If required you may have to file forms 8938, FBAR, etc.
Home office deduction
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The home office deduction is available for homeowners and renters, and applies to all types of homes.
The standard method has some calculation, allocation, and substantiation requirements that are complex and burdensome for small business owners. This new simplified option can significantly reduce recordkeeping burden by allowing a qualified taxpayer to multiply a prescribed rate by the allowable square footage of the office in lieu of determining actual expenses
File electronically and pay on time: Filing electronically has many advantages – it is faster to file and refund, more accurate, better tracking and filing acknowledgement.
Tax Planning for the New Year
Verify W-2 tax withholdings: Many times the tax payers either withhold too much or too little tax deductions from their payroll/W-2 income. Review withholdings to make the taxes withheld from your pay closer to the taxes you’ll owe this year. This is especially true if you normally get a large refund and you would like more money in your paycheck. If you owed tax when you filed, you may need to increase the federal income tax withheld from your wages.
Maximize Retirement plan contributions: If you have a retirement plan at work, check to see if you qualify to contribute more to the plan and to make sure you are taking advantage of an employer match. If you have no retirement plan in place, open an IRA, Roth IRA or other such plans.
- Business - Form 1120 – April 17, 2017
- 1120 S – March 15, 2017 (6 months extensions available – Form 7004); Partnership/LLC – March 15, 2017
- Individual - Form 1040 – April 17, 2017 (6 months extensions available – Form 4868)
There are various limitations, thresholds and procedures for many of the deduction and filings. Please consult your CPA/Tax attorney/or tax consultant for proper guidance with the above subject matter.
In accordance with IRS Circular 230, the above information is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.
Suresh Kumar, CPA, MBA is the Principal of Kumar Consulting, PA, a CPA & Consulting firm licensed in the states of FL, KS and MO and maybe reached at (813) 421-5068 or firstname.lastname@example.org / www.kumarconsultingcpa.com