Last Minute Tax Tips

April 15th Tax Deadline Approaches; Are You Prepared?

April is here and the final rush is upon us.  The following are some last minute tax tips to keep in mind for the end of this tax season and to prepare you for next tax season (tax year 2019).  If you are still in need of professional tax help, please do not hesitate to call us toll free at (888) APRIL-15 or click the green bar to schedule an appointment.  But hurry; the April 15th deadline is quickly approaching:

Know Your Withholding:  One of the features of the new tax laws was a change in withholding tables resulting in reduced tax withholding for many W2 employees. While reduced withholding increases your weekly paycheck, it also reduces–or in some cases entirely eliminates–your expected refund.  Please check with your employer’s accounts department to verify your withholding and make any preferred adjustments.

Extension Filings Are Up:  We’ve seen a number of our clients taking a “wait-and-see” approach to these new tax law changes.  As such, we’ve seen a large increase in the amount of extensions filed this year. If you haven’t filed yet & owe money to the government, you might want to consider filing an extension. Remember: An extension is only an extension to file your final tax return; it is not an extension to pay the taxes you owe.  An estimate of taxes due is sent along with your extension by the deadline.

IRS Filings Are Down:  The number of returns submitted to the IRS is down about 2% compared to last year.  2018 was the busiest April R&G Brenner has ever had. We expect an even busier final 2 weeks this year.

Tax Filing Deadline:  To make matters worse, the past couple of years we’ve had a couple of extra days to file. Not this year: the final day to file is April 15th.  Tax returns must be electronically filed or postmarked by 11:59 pm on 4/15 or you will be subjected to penalties and interest.  Remember: This deadline is only if you owe.  If you are due a refund you have 3 more years to claim your 2018 refund.

Maximize Your Return

There are many ways to maximize your refund  in any given tax year.  However, as opposed to sifting through reams of tax laws to determine whether or not you qualify for certain tax credits, various deductions or if you should file additional tax schedules, one of the easiest & most frequently overlooked adjustments you can make is to your employee withholding.

Your employee withholding is the amount of taxes your employer withholds from your paycheck for tax purposes.  In the absence of credits/deductions, the majority of a taxpayer’s refund comes from an overpayment of this withholding.  Hence the term “Tax Return”.  Asking your employer to slightly increase your weekly withholding, can make a significant difference in your future tax returns.

This is especially important now because the IRS has made changes to their federal with holding tax tables. The new Working Pay Credit aims to off-set the decrease in tax withholdings.  However, not all employees will qualify for this credit, which means that those who are normally accustomed to a refund, can wind up OWING taxes.

Most wage earners will benefit from larger paychecks in 2009 and 2010 as a result of the changes made to the federal income tax withholding tables to implement the Making Work Pay tax credit. However, some people may find that the changes built into the withholding tables result in less tax being withheld than they prefer.

If you’re not eligible for the Making Work Pay tax credit, withholding changes could mean a smaller refund next spring. A limited number of people, including those who usually receive very small refunds, could in some situations owe a small amount rather than receiving a refund. Those who should pay particular attention to their withholding include:

  • Pensioners
  • Married couples with two incomes
  • Individuals with multiple jobs
  • Dependents
  • Some Social Security recipients who work
  • Workers without valid Social Security numbers

The Making Work Pay tax credit, normally a maximum of $400 for working individuals and $800 for working married couples, is reduced by the amount of any Economic Recovery Payment ($250 per eligible recipient of Social Security, Supplemental Security Income, Railroad Retirement or Veteran’s benefits) or Special Credit for Certain Government Retirees ($250 per eligible federal or state retiree) that you receive. If you are affected by this reduction, you should review your withholding to ensure that sufficient funds have been withheld to meet your tax obligation.

Click HERE for more information on who qualifies for the Making Work Pay tax credit, withholding information for employees & employers, as well as special penalty relief for taxpayers.

This all boils down to the personal preference of the taxpayer.  If you are accustomed to a refund and do not qualify for this new credit, or simply wish to have a bigger refund come tax time, then it is a very good idea to increase your withholding.  If you require those additional fund to make end meet weekly, then you must do what in necessary.  However, this may mean smaller refunds than you are accustomed to and even the possibility you will owe taxes.

Contact an R&G Brenner professional today for more information and assistance.

Source:  IRS.gov