You thought tax season was over, but there are always lingering questions following it. I wanted to address them here today so then we could leave the tax stuff behind for a little while.
One of the biggest questions people have after they file their taxes is when they can expect to receive their refund. I certainly understand why people have this question, some of those refunds are sizable and we always want to know when we can expect a big check. Unfortunately, when people come to us with this question, we do not have any secret Batphone way to get an answer or to push things up the calendar. We can say that if you are expecting a direct deposit instead of a paper check, you can expect your refund earlier. When it comes to just how early, though, the best way to get that answer is by using the IRS’s “Where’s My Refund” page, which can be accessed via this link. That is definitely the biggest question we field from those who have already filed their taxes, but this post-tax season time also comes with plenty of questions from those who have not yet filed. The answer to these questions varies depending upon one’s situation. First, if you filed an extension for your taxes, remember it is only an extension for filing, not for paying anything you owe. Tax owed and not paid by May 17 can be subject to penalties and interest. If you are in that situation, filing as soon as possible can be a good strategy. That will at least let you know where things stand and start to determine what you must pay and how to pay it. Next, if you owe taxes from 2020, did not file your taxes, and did not file for an extension, then you are opening yourself up to even more of those potential penalties. Pretending that what you owe doesn’t exist only lets those penalties and interest grow, so it becomes even more crucial to get the filing done and start to figure out how to handle your outstanding burden. Remember all those tax forms you received that tell you what you earned last year? Those also went to the IRS, so they know if you are going to owe them money. Of course, this also means that the agency knows if you are expecting a refund. And that brings us to the last group of people, those who have not filed but are expecting to get that money back. To start, what are you waiting for? It is great if you don’t need that money and aren’t worrying about it, but why let the government hold it for you? Get it into your own account and let yourself get a little interest instead of someone else. Beyond that, there is no penalty involved if you are late in filing the paperwork that tells the IRS you want your refund, but it also means the agency is not going to try to track you down and give you the money owed to you. So no matter what situation you are in, the takeaway in all of them is that acting quickly serves you better than waiting. And once you do that, we really can leave this tax season behind. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter
0 Comments
Well, we did it … again.
It seems wild to think about this being the second straight tax season affected by COVID. This pandemic struggle sometimes feels like it has been going on forever and at other times feels like it has just started. Our whole sense of time feels out of whack. The extended deadlines allotted by the IRS the last two tax seasons only added to that. But we did it … again. And that means I want to thank you again. Filing taxes for anyone is always a bit of an honor with the level of trust we receive from people who ask us to do that personal work for them. It is not something ever taken lightly, but it feels a little stronger after these last couple of filing seasons. In a time when so many have had so much of their life upended in so many ways, we all need a little stability wherever we can find it. We hope that we have been able to be that for you in these trying times because you have certainly been that for us. Because we did it … again. And that ‘we’ is not just us here in the (home) office(s). That ‘we’ includes the work we do together with all of you. So please accept a heartfelt thanks from us for the trust you put in us and for sticking with us in unconventional times. We hope you are pleased with the work we did and endeavor to keep it up into the future. Until we do it ... again. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Occasionally in this spot I talk about making charitable donations. This often comes in the form of how it relates to tax deductions, but it is also something of value on its own. Combining both of those dynamics this time, I want to talk about how those who are taking distributions from a traditional IRA or other retirement plan can use part of it for a qualified charitable distribution (QCD).
A QCD occurs as a direct transfer of funds from your IRA custodian to a qualified charity. Utilizing this can have many advantages depending on your personal situation. It can count toward satisfying a required minimum distribution but is excluded from taxable income. A QCD also does not require that you itemize deductions to receive that advantage. This recent article will give you some of minutiae of how this would look on your tax return and the math behind it. Personally, though, I would like to spend a little time saying more about what the article only quickly mentions, which is making sure your paperwork is in order. I think that such ideas are often glossed over, because it can seem obvious that you must have paperwork that fits the rules. The problem, though, is that not many people may know the rules. So, if you are making a QCD from a retirement plan, then know you should also receive a statement from the charity that they received that money from you. This is something that reputable charities do as a rule, but it is also something that many people throw out when received. It is nice to have your gift acknowledged, but it is not like that acknowledgment becomes a keepsake. Even if not a memento, though, it does become part of your tax paper trail. This is because you are also going to receive a 1099-R from the retirement plan that says how much money was disbursed, but it will not specify where it went. You are going to want to be able to back up how much of it was sent to charity. The most beneficial ways to use this (and how much money is involved) will vary widely based on individual situations. It is a possibility that not everyone is aware of, though, so I wanted to have this blog be a possible starting point for that conversation. So as always, please do not hesitate to contact us if you would like to continue the conversation. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Now that we are reaching the end of an extended tax season, it may be time to start looking to the future. This may be necessitated more than usual since the whole country is focusing their eyes in that direction.
Last week, President Joe Biden gave his first address to Congress and it is clear where he wants that future to go. I am not going to get into deep policy matters here, but the Cliffs Notes version is he has a lot of plans and programs he wants to implement, they are going to cost a lot of money, and he wants to fund them by increasing taxes on the wealthy. Just how much Biden is able to get passed is going to take some trudging through the mire of the political wasteland to figure out. His dream is a large, sweeping bill that covers many areas but practicality may necessitate breaking it up into smaller portions. And no matter how any of those plans get passed, the tax increase that will theoretically fund it could take another vote. So first, for those who want a deeper look into what may be coming on the tax front, follow this link for a quick, easy-to-understand overview from CNN.com that tackles the highlights. But second, even if you read that and it frightens you, don’t act too rashly. Remember it was not that long ago (even though it kind of feels like ages have passed since then), that Donald Trump entered the presidency with promises of vast changes to the tax system. And yes, he got them. But it took him about a year and a half to get there and that was with a little more congressional sway than Biden appears to have right now. I know that I caution such things often, but this is another time when it seems appropriate - you have to operate under the rules that are already in place. It could also be good to try to separate political emotion from any acts we take. Yes, there are people who greatly benefited from Trump’s move. Yes, many of those people would then be the ones who pay more in taxes under Biden’s plan. Worrying and dreading such passage is only going to make it feel bigger than it is, though. So for now, be knowledgeable, Know what might be coming that could affect you. The current rules are still the current rules, though, and you can do what you can to use them to your advantage. If the rules change, then use those new ones to your best advantage. At no point does one need to throw their hands up, for with knowledge comes the advantage of time to plan for what you will do when things change. Steady action will serve you better than inflamed passion. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter |
Archives
November 2024
Categories
All
|
Website by Odeh Media Group
Copyright ©2024 TSBAS.com, All Rights Reserved |
The Small Business Accounting Solution, Inc
50 South 1st Avenue, Coatesville PA 19320 (844) 208-2937 |