Portal Uploads: ***Important*** Information You Need to Know

Before you upload your documents to the portal this tax season, take a moment to make sure you have collected everything we’re going to need to process your return. We keep a log of client upload notifications, and process them in the order they are received, provided that we have all of the necessary documentation. If information is missing and/or if we receive multiple notifications of uploads to your folder, you will be required to notify us when the FINAL upload has been submitted. This will allow us to log you in as received and begin processing your returns.

One upload per client ensures that we can keep returns moving through as quickly and efficiently as possible. Thank you for helping us continue our commitment to excellence in customer service!

Remember: Don’t file your taxes until all of your 2018 health insurance tax forms have been received

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The Mass Health Connector will send Form 1095-A to members by the end of January. Those insured through the Health Connector should wait to get a Form 1095-A before filing their federal tax return.

If you had a 2018 ConnectorCare plan, or a monthly tax credit to lower your premiums in 2018, you must file a federal income tax return.Filing is a requirement even if you normally don’t file a federal tax return because you have no income or your income is low.

What is Form 1095-A?

Form 1095-A provides the following information for Health Connector members

  • Months covered by the Health Connector
  • How much tax credit was applied to monthly premiums in 2018
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Form 1095-A has information needed to answer questions for Form 8962 when you file a federal tax return. Form 8692 tells the IRS if you got the correct amount of tax credit in 2018.  For more information, you can visit the Mass health connector website here.

Tax Year Organizers: Keep an Eye Out for the E-mail

Our only automated delivery method for organizers this year will be via the portal, though we will still make hard copies available to our clients by special request.

You should keep an eye on your inbox for an e-mail with a link to the portal where you can retrieve your organizer. If you do not have an e-mail on file with us, or would prefer to receive a hard copy mailed to you, you will need to call our office at (781) 337-8788 to make the request.

As always, we are happy to accommodate hard copy requests, but bear in mind that this may cause a delay in receiving your organizer, and consequently in processing your return.

Deductible Mileage Rates Increase for 2019

The optional standard mileage rates taxpayers use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes are going up for 2019. Keep in mind, though, that there are also new rules to consider under the Tax Cuts and Jobs Act, and not everyone can deduct these expenses.  

Notably, for self-employed business owners there will be an increase to 58 cents per mile for cars, vans, pickups, or panel trucks used for business.The IRS has issued Notice 2019-02, available here, which details all of the new rates.

The notice also provides the amount taxpayers must use in calculating reductions to basis for vehicle depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

An overview of the recently issued notice, including eligibility limitations and can be found on the official IRS website here.

IRS: Tax Filing Season Won’t Be Delayed by Government Shutdown

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According to Ken Corbin, the commissioner of the IRS’s Wage and Investment division, the IRS will start the tax filing season on time in spite of the agency being shut down as Congress negotiates a government funding deal.

“The start of the filing season hasn’t yet been announced, but the agency is ‘tracking very well’ for it to begin in late January or early February, as is typical,” said Corbin. The agency will announce a start date after it has completed testing all systems in compliance with the Tax Cuts and Jobs Act. When the government shuts down, “the agency can still have ‘critical staff’ work to complete tasks required to launch the filing season,” he said.

If anything should change, we’ll be sure to keep you informed.

2019 MA Vehicle Rentals Will Support Police Training

Starting January 1, 2019, if you rent a vehicle in Massachusetts you might notice a small but unexpected addition to your bill. In July of 2018 Governor Baker signed into law Bill H.4516, “An Act Relative to the Municipal Police Training Fund,” that, in part, adds a two-dollar surcharge to short-term vehicle rentals in the state.

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The proceeds from the vehicle rental surcharge will go to support the efforts of the Municipal Police Training Committee, which is responsible for setting standards and conducting trainings for local police, UMass police, and state environmental police.

Vendors are being notified of this new surcharge, which they will be required to add to rentals of passenger cars, trucks, vans, and trailers, but only for contracts with a duration of more than 12 hours, but less than 30 days.

You can visit the Mass.gov website here if you are interested in learning more.

The Potential Tax Reform Timing Glitch

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Let’s face it: Taxes are complicated. That’s why so many people hire professionals to assist in the process. Ironically, this year’s tax season headaches started for the IRS shortly after the Tax Cuts and Jobs Act passed last year. While many are anticipating a simpler process moving forward, the sheer amount of documentation that must be updated to comply with new and existing rules is anything but simple for the agency that regulates it.Imagine all the different forms, guides, systems and software the IRS uses that have to be changed and checked before April 15th, 2019. The article linked below discusses how, even though the IRS didn’t waste any time setting up a plan to get the revisions done as quickly as possible, the complex nature of the overall task is pushing deadlines. 

What does this mean for you? It could mean that the filing window gets delayed. And while that may be frustrating for early filers who count on quick returns, it’s also a reminder that an undertaking this massive—that affects literally every taxpayer in the country—requires special attention. And that may take some extra time.Read more about the details here: http://www.fool.com/taxes/2018/11/18/why-the-2019-tax-season-could-get-off-to-a-rocky-s.aspx

The IRS is Calling! What Should I Do?!

Hang up. Or better yet, don’t answer the phone if you don’t recognize the number. Then report the call. We guarantee you it’s not the IRS on the other end of the line. 

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If you’re like most people these days, you or someone you know has received a call claiming to be from the IRS. Often the caller says there is a warrant out for your arrest and you need to pay back taxes and fines right away to avoid legal action. The script is designed to frighten and intimidate people into giving up sensitive personal information, and sadly, it often works.

Scammers are everywhere, and they continue to become more savvy and creative. The bottom line is that as long as these calls continue to work, the criminals are not going to stop. That is why we want to do our part to help put them out of business. Learning how to spot the signs of a fraudulent call is the key to avoid being scammed, so the IRS has provided the guidelines below.

Remember, the IRS will never:

  1. Call to demand immediate payment, nor call about taxes owed without first having mailed you a bill.
  2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  4. Ask for your credit or debit card number over the phone.
  5. Threaten to bring in local law enforcement to have you arrested.

That Additional IRA Withdrawal Could Be Lost to Social Security Taxes

According to the IRS, the formula to determine if you will pay taxes on your Social Security income is to take one half of your Social Security benefits and add that amount to all your other income, including tax-exempt interest. This number is known as your combined income (combined income = adjusted gross income + nontaxable interest + half of your Social Security benefits).

Combined income info

If your combined income is above a certain limit (the IRS calls this limit the base amount), you will need to pay at least some tax. The limit is $25,000 if you are a single filer, head of household or qualifying widow or widower with a dependent child. The same applies if you are married filing separately and you lived apart from your spouse for the entire tax year. The limit for joint filers is $32,000. If you are married filing jointly and you lived with your spouse for any part of the tax year, all of your Social Security income is taxable.

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When retirees need extra money their first choice is generally taking an additional IRA distribution. What they may not realize is that this is taxable income, and therefore it increases their taxable Social Security amount. For example, an additional $12,000 IRA distribution may increase the taxable Social Security portion by as much as $6,000.

If it’s available to you, the safest bet for an immediate cash need is to use your savings. Though this may seem counterintuitive, you can see how adding any money that is considered taxable income to your base limit could potentially end up costing you money.

For the same reason, if you do need to take an additional distribution from your IRA, make sure you think about how much you really need. For instance, if you only need $5,000, but take $10,000 with the idea that it will give you a rainy day fund, at least some of that money may be eaten up in taxes if it causes your taxable income to exceed the base limit. 

Whatever your circumstance, we are here to help. Give us a call if you have questions about the best course of action for your particular situation. 

Charitable Donations: A Tax Planning Win-Win 

There are many ways to reduce your overall tax burden, but perhaps the most satisfying is one where the benefit you get is the result of doing something good for others. As with all things tax-related, there are limitations, and things to watch out for, but that shouldn’t prevent you from making meaningful donations to worthy causes. The article at the link below gives a great summary of how to make the most of your generosity:
https://money.usnews.com/money/blogs/my-money/articles/how-to-score-a-tax-break-from-making-charitable-donations