Tax season is over, but I need to talk about taxes for one more week. And much of what I’m going to include here are things I have mentioned before, but I thought it would still be valuable to put it all together.
The Tax Cuts and Jobs Acts (TCJA) came at a time that made it feel like there was no break between its passage and the start of tax season. That kept most of our attention on what was due first, under the old rules, while keeping an eye on the implementation of the new one. For yes, the congressmen and senators passed the rules, but just how they will work can be unclear before the IRS implements them. That is no small task, and the implementation will take a lot of time and a lot of money (about $397 million as this article states).
So along the way during tax season, I certainly did touch on some of the aspects of the TCJA, but always with some caveats, and ones that I think are worth stating again here. First, with something that takes that much money to put into effect, you can tell this is a big deal. And it is a big deal because it is going to affect EVERYONE. But second, it is also important to note that it will not affect everyone in the same way.
Many people have already seen a change in their paycheck as new withholding rates were put into effect, and many people were excited by this change because it meant they took home a little more money. But even when that is the case, it does not mean that everything else will remain the same in your tax picture, and you are just getting to keep more money. That money you see now could mean you will get less of a refund, or it could even mean that you will be left with a tax bill come next filing season.
A little vigilance could hold off these unpleasant surprises, though. The best place to start with that may be the IRS’s withholding calculator. This will at least give you a good enough baseline to let you know if you should think about changing how money is taken out of your paycheck.
As you answer the questions for the calculator, though, you may not be sure of some answers, or you may be confused as to how they will affect your tax situation. Remember, this is a complicated issue, so you should not feel bad if it is not clear. Also remember, though, that we are here to help you figure it all out, and now that tax season is over we are ready to make appointments to help you plan for the future.
It can be even more confusing (and almost certainly more complicated) if you are a business owner. After all, the TCJA affects everyone paying taxes, and businesses have to pay taxes, too. Also, those entities aren’t really helped by that fancy calculator.
I don’t want to get into any of the specific changes in the law here, for that will just take up much too much space. The IRS, however, has gathered information on many of these changes, and how it is handling them, on one web page.
Be warned, there is already A LOT of information of that page, and it is bound to only grow. That is another reason why I don’t always want to go into specifics on the changes, because there is no way that I can cover them all. And even if by some Herculean effort I did cover them all, it still would not be clear how they all add up to affect any one person or business.
So again, don’t be afraid to reach out for that personal touch. Information and knowledge will keep you from being surprised by any of the new changes, and give you the best chance to make them work in your favor.
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There are a few times a year when I ask you to forgive me for writing a smaller blog entry, and yes, this is one of them. Hopefully, everyone can understand why this is so.
For yes, we just made it through another tax season, and I need to let my brain recover. At the same time, though, these are some of my favorite pieces to write, and not just because I feel justified in doing a little less.
You see, although the rush to the end of tax season leaves us feeling a little ragged around here, it also leaves us feeling fulfilled. It is the time when we get to do a lot of work for a lot of different people, and that is amazing. There is such trust placed in us by all of our clients, big and small, that we just want to say thank you.
Although this feeling is something that comes up every tax season, it seems a little stronger this year. Some clients we see year after year, and their situation never changes that much. This doesn’t mean that their situation isn’t complicated, just that what they do with their money sees only minimal change. Now, though, everyone is entering a realm of uncertainty.
As I have said many times over the past few months, it is impossible to give answers that cover everyone when it comes to how the Tax Cuts and Jobs Act will affect your next tax return. It is possible, however, to say that everyone is going to see some differences. So if you want to get together again and start looking at what you can individually expect, we are happy to now start booking those appointments.
For the 2017 tax season has come to an end (well, minus those who filed for extensions, but the mad rush is over anyway), but our commitment to helping you navigate the often difficult waters that make up tax world does not end. So, we thank you again for the trust it takes to make that a successful partnership, and promise to only increase our pledge to help during these more uncertain times.
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We are almost to the end of tax season, and that means a few things around here. First, I’m tired.
Second, if you haven’t yet made a tax preparation appointment, it is time to file an extension. We will still be happy to help you with your taxes in the future, though, and setting an appointment to do so could be a good idea to help hold off any future procrastination.
Finally, we can also start to see beyond tax season. And with that long view, maybe tax time made you think that it is time to make some changes.
Did you wish you had kept better records? Did you wish you had a better handle on where your finances stood before the calendar turned? Sometimes these things are difficult to keep at the front of our mind when tax season is so far away, but being a little proactive as a constant rule can make those difficult times easier.
This is something that tends to come up more often with business clients than when doing individual taxes. One begins a business because they have a passion in some area, and that area is often not worrying about finances and bank statements (only a select few are crazy enough to do that). Keeping those things in order, however, is a critical part of running a successful business, and gives you the knowledge to help make sure the venture will thrive.
There are so many tools and technologies out there that can help with this. Determining which ones will most help your business depends upon what you’re doing and how big of a company you are, but there is something for everyone that will fit within your budget.
And it is not as if we are reaching any endpoint with those helpers, as improvements and updates are being made all the time. Some of these improvements, though, mean that some older things go away. This is happening on May 31 as QuickBooks 2015 will sunset and some of its functionality will no longer be supported. This does not mean that the software will suddenly stop working, but many pieces of it will no longer work. Some of these can be critical, including online banking and credit card processing. Essentially, if it is a feature that pulls in information from outside of the program, it is one that goes away.
This can be remedied by updating to the latest version of the program, and that moving forward taps into my overall point. If you keep making those little changes, continue being a little more proactive, and refuse to stay stuck in old ways, then you give yourself a better chance to grow.
When it comes to that upward trajectory, we would love to help you there, too. Sure, with the passage of the Tax Cuts and Jobs Act at the end of last year leading us right into tax season, that topic has dominated these blogs and the financial mind of many people. It is not all we do, though, and is not all that is involved in one’s financial picture. So now that the tax finish line is in view, don’t hide until next year, instead keep moving forward, and reach out if there is any way we can help you.
As tax season rushes toward its conclusion, the caffeine intake increases around here. That’s what I will blame this week’s blog on, as this is kind of just a catch-all list of things to think about as we push toward April 17th.
First, yes, you read that right that the calendar benefits you by a couple days this year as a weekend and holiday have made April 17th the deadline for tax filing. At the same time, though, our calendar is already pretty packed, and although we do have some appointments left, the times can be sparse, so guaranteeing you can get something that will work for you is no longer possible.
That makes my second point one about extensions. This is something that many taxpayers use from time to time, and yes, it is pretty simple to get yourself an extra six months to file your taxes. This does not, however, mean that you get any extra time to pay your taxes. So if you are expecting a refund, there are no worries (but why didn’t you act earlier to get that money?), if you expect to owe taxes, however, you still want to get in a payment by the deadline.
If you are being affected by some of these issues, there may be a lesson to be learned about procrastination and how a little more initiative can remove some of the stress from this season. This is something that may even be more important than ever to learn before next year. With many new pieces of tax law coming into effect following the Tax Cuts and Jobs Act, it could serve everyone well to take the time to look at how their tax picture will be affected. The IRS is even urging everyone to do a checkup with its withholding calculator. That is a great place to start, but if you want more help or guidance, we will be very happy to set up tax planning appointments after tax season.
Finally, I mentioned in passing last week the steadily decreasing number of audits that the IRS is performing, and since that time news came out that the tally went down again last year, making it six years in a row of declines, and the lowest number of audits since 2002. Overall, only about 1 in 160 individuals, or 0.62 percent, had their 2016 returns audited. And sure, this can never really feel like bad news, but it can still be a little confusing.
I mean, high-income households saw a significant drop with only 4.37% of households with an income of $1 million or more being audited, down from 9.55% in 2015. This could reflect just how bad things are for the IRS – since those are the returns with more complications, more chances for error, and more potential for a higher return for the agency. At the same time, though, they can also be the returns with the most backing from professionals, and thus could take more effort from the already strapped IRS to combat.
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