Monthly Archives: April 2016

Stock Options and the 101% “Tax”

Do Stock Options Make You Feel Taxed?

Did you ever get the feeling you paid too much in taxes? Probably every paycheck, right? Did you exercise stock options or restricted stock last year? Exercise meaning, you bought the issuer’s common stock at the grant price or the price set by the option. This purchase was regardless of the stock’s price at the time you purchased the option. If so, then you should read the rest of this blog post. Continue reading

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Owe Taxes, Can’t Pay?

owe taxes, can't payDo you owe taxes to the IRS or your state but you do not have the money to pay your taxes? You are not alone.

The IRS wants you to pay the full amount of your tax liability on time. In fact, the IRS imposes significant penalties and interest on late payments if you don’t. Ideally, it is in your best interest to estimate what you may owe and then build that into your family or business budget.  Okay, so you didn’t do that. Continue reading

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File Your Taxes In Less Than 1 Week!

We are not trying to stress you out, BUT you have less than one week to file your taxes. You have until April 18 to file your tax return. That’s one week away. These suggestions should help you reach the goal.

File an Extension

Yup, that is our first suggestion, unless you have all your information consolidated, just file an extension. You will automatically get six more months to complete your return. If you decide to go this route, remember that if you owe the IRS money, you still have to pay at least 90% of what you ow by April 18. This will allow you to dodge the Failure-To-Pay penalty.

The good news for our military? If you or a spouse are currently in an active combat zone, or you live overseas, you have to file by

Note that if you are in the military, have a spouse in an active combat zone, or live abroad there are are granted a deadline and payment extension. The IRS website states, “In general, the deadlines for performing certain actions applicable to his taxes are extended for the period of service in the combat zone, plus 180 days after last day in the combat zone. In addition to the 180 days, an extension period may include the 46 days that were left before the April 18th deadline when entered the combat zone.  During a 226-day extension period, assessment and collection deadlines will be extended, and will not be charged interest or penalties attributable to the extension period.” You can read more here.

You can file your taxes yourself, but there goes your weekend!

2016_04_14 Tax filingYou can, but keep in mind, it will be grueling. On average, according to the IRS, tax returns take an average of 13 hours to prepare and file. That’s almost 6.5 hour work days, four 3.25 hour days and if you start today, it will be almost 3 hours every night starting tonight!

First, find all the backup documentation for earnings (W2’s, 1099’s), proof of expenses, donations, 1095 form (health coverage), or whatever information you have to file, such as your 1098-T for student loan interest. Here is a full list of forms and publications that we have for your reference.

What? You don’t have your tax information?

You could look in every file you have or you can just call the place that issued the form. Some resources will have a website that you can download your forms too. If your employer or the person who hired you as a contractor emails the forms then you have the backup right online (provided you did not delete the link to access it). Also, Navient has a link you can download your student loan interest information from too (provided your loan is with the former Sallie Mae).

If you are not familiar with the IRS Interactive Tax Assistant you will be! It is a great tool. You can try and look up your tax questions there. Just plug in common keywords related to taxes and returns or scroll down the page and review the Topics by Category and select the link. You will be asked questions that should help you determine your specific tax need along with a solution.

We suggest next year, whenever something comes via email, print it right away and electronically file he document in an email folder. And, if you get something in the mail have one pocket folder that you can just file the information in and have ready for when you are about to file.

Before You Hit Submit to File Your Taxes

2016_04_14 Tax filingkeyboardDouble check all your information! Spelling of names, addresses, social security numbers, bank information, etc. It may be a good idea to have your spouse check the information while you quote it to avoid any typos or mistakes. You may know it by heart, but when you are looking at numbers and information for hours and then you are under pressure, mistakes can happen. Plus, do you really want to file an amended return?

If you do, you can file online using a software package; however you should note fees to file online can be anywhere from $0 to $25 depending if it is a state return or an IRS return.

Call WorthTax (or another trusted professional)

Why put yourself through all the stress, when WorthTax can help? We can file your extension or your return for you. Call l Alex Franch, BS EA at 781.849.7200 right away so that he can schedule an appointment and/or file an extension if necessary. You can also schedule an appointment at one of Worthtax’s locations in Quincy, Weymouth and Dedham.

Sources and Resources:

2015 Tax Changes for Massachusetts
Tax Deadline is Rapidly Approaching
Massachusetts Tax Filing
April is a Very Busy Tax Month
Employer Relief: Affordable Care Act Reporting
Deadline Changes: Congress Did Something Right!
Statute of Limitations: How Long Am I On the Hook for a Tax Assessment?

 

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2015 Tax Changes for Massachusetts

Here are four 2015 tax changes. Have your filed your income tax return yet in Massachusetts?

2016_04_13 2015 Tax Changes graphicIf not, you may want to get your tax information together today before your run the risk of being late. If you can’t get your information together, at the very least, consider filing an extension. The Massachusetts tax filing extension allows for an automatic six months. Note this is also the case for the IRS. Before you do that, take a few minutes to read about these income tax changes that took place on or before January 1, 2015 for the State of Massachusetts:

Filing Due Date for 2015 Income Tax Returns

If you are not aware, you should be that the filing of tax returns that include Forms 1, 1NR/PY and extensions are due on or before April 19, 2016. Please make a note of it. That is one week away!

Tax Rates

Personal income tax rates are applied against different classes of Massachusetts taxable income. The tax rate on most classes of income is scheduled to decrease in years where the state achieves revenue growth benchmarks set forth by the formula in M.G.L. Chapter 62, Section 4(b).

As of January 1, 2015, the 5.2% tax rate on most taxable income has been reduced to 5.15%. If you sell or exchange capital assets, let it be known that the short-term gains remains at 12%. Also, long-term gains from the sale or exchange of collectibles (after a 50% deduction) conitnues to be at 12%.

Gambling Loss Deduction

Did you take a gamble this year and lose? For the Massachusetts taxpayer, you should note that the new gambling loss deduction is the only deduction for gambling losses permitted. Massachusetts does not take up with the federal deduction under IRC § 165(d) for gambling losses.

A deduction  from Part B income for gambling losses experienced at certain Massachusetts licensed (under General Laws chapter 23K) gaming establishments, this includes racing meeting licensee or simulcasting licensee establishments. However, this is only limited to winnings from such Massachusetts establishments. This includes gross income for the calendar year and the deduction is claimed on Schedule Y.

Health Insurance, Penalty for Failure to Purchase – Tax Year 2015

Individuals who can afford health insurance in accordance with the law but do not act on it are subject to penalties for each month of non-compliance in the tax year. The exception is the provision for no penalty in the case of a gap in coverage of 63 consecutive days or less. The penalty will not be more than 50% of the minimum monthly insurance premium the individual would have been eligible for had they participated in the Connector, and will be enforced through the individual’s personal income tax return upon filing.

The Massachusetts Health Care Reform Act insists that an adult 18 and over who has access to affordable health insurance to purchase it. In 2015, individuals had to be enrolled in health insurance policies that meet minimum approved coverage standards according to the guidelines approved by the Commonwealth Health Insurance Connector Authority (the Health Connector).

These penalties apply only to adults who are considered able to afford health insurance according to Massachusetts guidelines. Annually, the Health Connector sets up individual criteria that decides if individuals, married couples and families can afford health insurance This is according to their incomes and affordable health insurance premiums. Those who are not deemed able to afford health insurance according to the Massachusetts benchmarks will not be penalized. An appeal process is available to file with the Connector stating any hardship that may inhibit them from buying health insurance. If that is the case, they may have to pay a tax penalty).

Real Estate Tax Credit for Persons Age 65 and Older (Circuit Breaker)

Certain taxpayers age 65 or older may be eligible to claim a refundable credit on their state income taxes for the real estate taxes or rent paid during the tax year on the residential property they own or rent in Massachusetts that is used as their principal residence. If the credit due the taxpayer exceeds the amount of the total income tax payable for the year by the taxpayer, the excess amount of the credit will be refunded to the taxpayer without interest. For tax year 2015, the maximum credit allowed for both renters and homeowners is $1,070.
To be eligible for the credit for the 2015 tax year: the taxpayer or spouse, if married filing jointly, must be 65 years of age or older at the close of the 2015 tax year; the taxpayer must own or rent residential property in Massachusetts and occupy the property as his or her principal residence; the taxpayer’s “total income” cannot exceed $57,000 for a single filer who is not the head of a household, $71,000 for a head of household, or $85,000 for taxpayers filing jointly; and for homeowners, the assessed valuation as of January 1, 2015, before residential exemptions but after abatements, of the homeowner’s personal residence cannot exceed  $693,000.

Conclusion

Take these 2015 tax changes seriously, the State does. If your returns have not yet been completed, please all Alex Franch, BS EA at 781.849.7200 right away so that he can schedule an appointment and/or file an extension if necessary. You can also schedule an appointment at one of Worthtax’s locations in Quincy, Weymouth and Dedham.

Sources and Resources

Funny Money: Four Odd Types of Taxable Income
Itemized Deductions: Should I Itemize My Tax Deductions
Employer Relief: Affordable Care Act
2014 Income Tax Impact of the Affordable Care Act (ACA) in a NutshellHealth Insurance: Ways to Deduct
Health Insurance Plans: Beware of Penalties
Tax Changes for 2015 – Commonwealth of Massachusetts

 

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Tax Deadline is Rapidly Approaching

When is the Tax Deadline to file my 2015 tax return?

2016_04_05 Tax DeadlineisThe tax deadline is rapidly approaching, so this article serves as a reminder to those who have not yet filed their 2015 tax return. April 18, 2016 is the due date to either file your tax return and pay any taxes owed, or file for the automatic six-month extension and pay the tax you estimate to be due. Usually April 15 is the due date, but because Friday, April 15, is a legal holiday in the District of Columbia (where the IRS is headquartered), the filing date is advanced to the next day that isn’t a weekend or holiday – Monday, April 18 – even for taxpayers not living in DC.

What other tax deadlines are there?

In addition to the tax deadline to file the 2015 tax return, the April 18, 2016 deadline also applies to the following:

Tax year 2015 balance-due payments

Taxpayers that are filing extensions are cautioned that the filing extension is an extension to file. It is NOT an extension to pay a balance due. Late payment penalties and interest will be assessed on any balance due, even for returns on extension. Taxpayers anticipating a balance due will need to estimate this amount and include their payment with the extension request.

When is the last day for contributions to a Roth or traditional IRA?

April 18th is the last day contributions for 2015 can be made to either a Roth or traditional IRA, even if an extension is filed.

When are estimated tax payments due for the first quarter of 2016?

Taxpayers (individuals), especially those who have filed for an extension, are cautioned that the first installment of the 2016 estimated taxes are due on April 18. If you are on extension and anticipate a refund, all or a portion of the refund can be allocated to this quarter’s payment on the final return when it is filed at a later date. If the refund won’t be enough to fully cover the first installment, you may need to make a payment with the April 18 voucher. Please call this office for any questions.

Individual refund claims for tax year 2012

The regular three-year statute of limitations expires on April 18 for the 2012 tax return. Thus, no refund will be granted for a 2012 original or amended return that is filed after April 18.

Caution: The statute does not apply to balances due for unfiled 2012 returns.

Note: The deadline for any of the above actions is increased by an additional day, to April 19, 2016, for taxpayers who live in Maine or Massachusetts because of a holiday observed on the 18th in Massachusetts which affects the IRS Service Center located in Massachusetts that serves these two states.

Can Worthtax get my tax return files in time?

If Worthtax is holding up the completion of your returns because of missing information, please forward that information as quickly as possible in order to meet the April 18 deadline. Keep in mind that the last week of tax season is very hectic, and your returns may not be completed if you wait until the last minute. If it is apparent that the information will not be available in time for the April 18 deadline, then let the office know right away so that an extension request, and 2016 estimated tax vouchers if needed, may be prepared. If your returns have not yet been completed, please all Alex Franch, BS EA at 781.849.7200 right away so that he can schedule an appointment and/or file an extension if necessary. You can also schedule an appointment online at

 

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