As Tax Season 2018, approaches most people are getting prepared to take their tax documents to the same tax professional believing they are getting the best service and maximizing your tax refund.

However, what has your tax professional done to ensure he/she is ready for Tax Season 2018? Whether a tax preparer, enrolled agent, tax accountant, or CPA, yearly continuing education is necessary to stay abreast of the ever-changing tax laws. 

Here are some questions you need to ask to ensure you are getting the best service and maximizing your tax refund. 

1. Are they listed on the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications?
2. What new training did they take to update themselves on all the new tax laws? (great question for CPAs)
3. Did they attend the IRS Forum this year and ask to see a copy of their CPE credits?
4. What other training did they acquire from the previous tax year?

Asking your tax professional questions is your right.  Verify credentials, it's important to know your information is in the hands of a reputable and honest tax professional.

Nine out of ten if your tax professional cannot answer these simple questions, they cannot offer you the best service or maximizing your tax refund.  

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Monday is October 16th and frantic tax filers of late returns will be looking for any means possible to pay less to Uncle Sam.
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​The following tips should help you file your return and officially close this tax reporting year:

1. If you are a victim of a natural disaster, the IRS usually extends the filing of these tax returns. You can check to see if you are eligible and what the deadlines are at IRS Tax Relief in Disaster Situations page.
2. E-file your tax return. It’s the fastest way to ensure the IRS receives and accepts your return today. However, if you are too close to the deadline, find a late night post office and mail in your return.  You do not want any internet or tax software problems preventing you from filing on time.
3. On the off chance that you want to file on paper, make sure that you know ahead of time which post offices will be open until midnight. This way you will know precisely where to go. Anticipate long lines, go at least one hour before closing time.
4. If you don’t have all the forms needed to complete your return, you still have to file. Make reasonable assumptions of the missing items, and document those assumptions. If you miss the October 16th deadline, you will be subject to the 5% monthly late filing penalty, up to a maximum of 25% of the tax due. You definitely do not want to pay Uncle Sam more than you have to.
5. Once you have received all the missing information, file an amended return. You have up to three years to send the IRS an amended return after you file your first return.
6. If you need professional help, make your appointment NOW! Tax accountants are busy now too.  Expect to pay extra for on-time last-minute tax filings.
7. If a payment is due with your return, use IRS Direct Pay. It directly debits your account and provides you confirmation that IRS has received your payment.  Best of all the process is FREE!
8. If you don’t have all funds to make payment, send the IRS whatever you can.  It’s better to make a partial payment then no payment at all.  If you can get the remaining balance to the IRS within 90 days, send it in and wait for a letter if they decide to assess penalties. If you need more time than this, call the IRS to set-up an installment plan.  Please note an installment plan has additional costs involved.
9. Keep a secure copy of your tax return, and all documents such as W-2s, 1099s, and 1098T forms used to complete your tax return. Also, keep a copy of all IRS payments receipts.

The most critical thing you have to do is to file. Try not to put it off because you are nervous. Once you file your tax return, the anxiety is off.

Article Highlights: 

• Disaster Losses 
• Elections 
• Net Operating Loss 
• AGI Limitations 
• Possible Gain 
• Filing Extensions 

​With the historic flooding and damage caused by recent hurricanes, President Trump has declared the affected areas disaster areas. If you were an unlucky victim and suffered a loss as a result of these disasters, you may be able to recoup a portion of that loss through a tax deduction. When you suffer a casualty loss within a federally declared disaster, you can elect to claim the loss in one of two years: the tax year in which the loss occurred or the immediately preceding year. 

Income Tax Casualty Loss - By taking the deduction for a 2017 disaster area loss on the prior year (2016) return, you may be able to get a refund from the IRS before you even file your tax return for 2017, the loss year. You have until six months after the original due date of the 2017 return to make the election to claim it on your 2016 return, in most cases by filing an amended 2016 return to claim the disaster loss. Before making the decision to claim the loss in 2016, you should consider which year’s return would produce the greater tax benefit, as opposed to your desire for a quicker refund. 

If you elect to claim the loss on either your 2016 original or amended return, you can generally expect to receive the refund within a matter of weeks, which can help to pay some of your repair costs. 

If the casualty loss, net of insurance reimbursement, is extensive enough to offset all of the income on the return, whether the loss is claimed on the 2016 or 2017 return, and results in negative income, you may have what is referred to as a net operating loss (NOL). When there is an NOL, the unused loss can be carried back two years and then carried forward until it is all used up (but not more than 20 years), or you can elect to only carry the unused loss forward. 

Determining the more beneficial year in which to claim the loss requires a careful evaluation of your entire tax picture for both years, including filing status, amount of income and other deductions, and the applicable tax rates. The analysis should also consider the effect of a potential NOL. 

Ordinarily, casualty losses are deductible only to the extent they exceed $100 plus 10% of your adjusted gross income (AGI). Thus, a year with a larger amount of AGI will cut into your allowable loss deduction and can be a factor when choosing which year to claim the loss. 

For verification purposes, keep copies of local newspaper articles and/or photos that will help prove that your loss was caused by the specific disaster. 

As strange as it may seem, a casualty might actually result in a gain. This sometimes occurs when insurance proceeds exceed the tax basis of the destroyed property. When a gain materializes, there are ways to exclude or postpone the tax on the gain. 

Extension of Filing and Payment Due Dates

The IRS has announced that Hurricane Harvey and Irma victims have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments. 

This tax relief postpones various tax filing and payment deadlines that occurred starting on:
 

• Aug. 23, 2017 for Harvey victims, 
• September 4, 2017 for Irma victims in Florida, and 
• September 5, 2017 for Irma victims in Puerto Rico and the Virgin Islands. 

As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period. This includes:
 

• The Sept. 15, 2017 and Jan. 16, 2018 deadlines for individuals making quarterly estimated tax payments.
  
  
• The 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief and may be subject to late payment penalties.
  
  
• A variety of business tax deadlines are also affected, including the Oct. 31 deadline for quarterly payroll and excise tax returns. Businesses with extensions, including among others, calendar-year partnerships whose 2016 extensions run out on Sept. 15, 2017 and calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017, also have the additional time. The disaster relief page on www.irs.gov has details on other returns, payments and tax-related actions qualifying for the additional time. 
  
  
• In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. Check out the disaster relief page for the time periods that apply to each jurisdiction.  

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in a disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated. 

In addition, the IRS will work with any taxpayer who lives outside of a disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. 

The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov. 

For information on government-wide efforts related to: 

• • Hurricane Harvey, please visit: https://www.usa.gov/hurricane-harvey.
• • Hurricane Irma, please visit: https://www.usa.gov/hurricane-irma.  

If you need further information on filing extensions, casualty and disaster losses, your particular options for claiming a loss, or if you wish to amend your 2016 return to claim your 2017 loss, please give this office a call at (770) 829-0082.

The reason withdrawals from an Individual Retirement Account (IRA) prior to age 59½ are generally subject to a 10% tax penalty is that policymakers wanted to create a disincentive to use these savings for anything other than retirement.¹

Yet, policymakers also recognize that life can present more pressing circumstances that require access to these savings. In appreciation of this, the list of withdrawals that may be taken from an IRA without incurring a 10% early withdrawal penalty has grown over the years.
Penalty-Free WithdrawalsOutlined below are the circumstances under which individuals may withdraw from an IRA prior to age 59½, without a tax penalty. Ordinary income tax, however, generally is due on such distributions.

1. Death — If you die prior to age 59½, the beneficiary(ies) of your IRA may withdraw the assets without penalty. However, if your beneficiary decides to roll it over into his or her IRA, he or she will forfeit this exception.²​
2. Disability — Disability is defined as being unable to engage in any gainful employment because of a mental or physical disability, as determined by a physician.
3. Substantially Equal Periodic Payments — You are permitted to take a series of substantially equal periodic payments and avoid the tax penalty, provided they continue until you turn 59½ or for five years, whichever is later. The calculation of such payments is complicated, and individuals should consider speaking with a qualified tax professional.
4. Home Purchase — You may take up to $10,000 toward the purchase of your first home. (According to the Internal Revenue Service, you also qualify if you have not owned a home in the last two years). This is a lifetime limit.
5. Un-reimbursed Medical Expenses — This exception covers medical expenses in excess of 7.5% of your adjusted gross income.
6. Medical Insurance — This permits the unemployed to pay for medical insurance if they meet specific criteria.
7. Higher Education Expenses — Funds may be used to cover higher education expenses for you, your spouse, children or grandchildren. Only certain institutions and associated expenses are permitted.
8. IRS Levy — Funds may be used to pay an IRS levy.
9. Active Duty Call-Up — Funds may be used by reservists called up after 9/11/01, and whose withdrawals meet the definition of qualified reservist distributions.

 

1. With an IRA, once you reach age 70½, generally you are obligated to begin taking required minimum distributions.
2. Your required minimum distribution (RMD) may be based on your age or the deceased’s age at the time of death. Penalties may occur for missed RMDs. Most are required to begin by December 31 of the year following the date of death. Any RMDs due for the original owner must be taken by their deadlines to avoid penalties. You will pay taxes on any distributions you take. Consider speaking with a financial professional who can help you evaluate the potential impact an inheritance might have on your overall tax situations.