Deadline changes for various filings have been made by congress. But wait, has anyone seen any pigs flying lately? Well, they are about to because the deadline changes make perfect sense.
Your regular 1040 tax return does not change; we all still need to file by 4/15. However, in the past, if you were waiting for a K-1 from a Partnership you could find yourself waiting for that final tax document until 4/15. Partnership returns were not due until 4/15. Many a business partner have found themselves waiting for that elusive K-1 right up to the deadline. Beginning in 2017, there are more deadline changes. Forms 1065 and 1120S will be due on 3/15. This is welcomed news for many small business partners and it makes sense that the pass through returns would be due before the taxpayer returns.
Corporate Returns Deadline Changes Help Small Business
The Corporate 1120 returns are pushed back to 4/15. This can help small business owners from a cash flow perspective. This is because any tax payments would also get pushed back from 3/15 to 4/15. Finally, this also makes sense intuitively that a taxpayer (C-corp) would be due after a pass through return (1120S and 1065).
Foreign Bank and Financial Accounts Deadline Changes
One more change is the filing date for the FBAR. This is where you get to report your Swiss bank account to the Financial Crimes Enforcement Network. This deadline was 6/30. It has been moved to 4/15. HOWEVER, with a six month extension allowed so it lines up with your regular tax return filing. Once again, this is a deadline change that makes complete sense as it syncs with, and streamlines, two filing requirements.
The Deadline Changes Bad News?
The only bad news is that we will have to wait until the 2017 filing season for all these deadline changes to take place. Hey, I will take it. To be fair, there are a number of other filing requirement deadlines and extension deadlines that are changing. If you are responsible for filing anything, it would be wise to double check your filing deadlines.
Any thoughts, questions, concerns? Call Alex Franch, BS EA at our WorthTax office. He has all the answers for you. He can help you with a smooth filing and can help you meet every one of these changed deadlines. You can also learn more about us here.
While there are several updates and changes that Congress has enacted, this post deals with Itemized Deductions on Schedule A.
If you elect to itemize your allowable personal deduction items on Schedule A then there are a few deductions that have been extended for 2013 and scheduled to expire at the end of 2013. One item is the sales tax deduction for those taxpayers who do not pay any or little state income taxes. Therefore, based on Tables established by the IRS you may be able to deduct the sales taxes paid on your consumption of goods and services. In addition to the Standard Table amounts you can also deduct the sales tax paid or incurred on big ticket items such as automobiles, boats, building materials, etc. You will need to have your receipts in order to deduct and verify the sales tax deduction. Contact us for more information.
The other Schedule A itemized deduction that is extended and scheduled for expiration after 2013 is the deduction for Mortgage Insurance Premiums (PMI). If you have a mortgage and are paying PMI then you could be eligible for this deduction. The deduction does have a phase-out provision once your Adjusted Gross Income (AGI) reaches $100,000. It is completely phased out when your AGI reaches $110,000. If you fall into this category, it’s an opportunity worth further discussion with us.
Other changes enacted by Congress will be covered in subsequent posts.
It’s true that the agreement reached by Democrats and Republicans on January 1st averted a tax increase for 99% of us. Nevertheless, taxes will increase in 2013. Why? Because the reduction in Social Security taxes that we enjoyed in 2011 and that was extended to 2012 will expire. For employees, this means a rate increase of 2%, from 4.2% to 6.2%. For individuals making $50,000 a year, this means having an added $1,000 taken out of their pockets.
Although the argument for letting the 4.2 rate expire is not yet being yelled from the bell towers, it is a legitimate one. In 2010 and 2011, the Social Security tax did not collect enough money to cover the benefits paid out. Even at the rate of 6.2%, some say there will be a continued shortfall throwing us off another fiscal cliff in the not too distant future.
With Social Security costs continuing to rise as more and more baby boomers reach retirement age, we can expect that this discussion won’t go away. So what’s in store – more taxes, reduced Social Security benefits, or both? Time will tell.
The political gridlock is worse this year than ever before. Taxpayers are left in the dark, not knowing how to plan finances and businesses are undecided about capital investments and hiring new employees. There are more tax provisions expiring this year than ever before and, if Congress does nothing, there will be a huge tax increase across the board affecting just about every taxpayer, rich and poor alike. Economists agree that if action isn’t taken within three weeks, we could find ourselves back in a recession.
To realize the enormity of the problem, read the full article explaining the significance of the expiring provisions.