Updated Withholding Calculator Reflects Changes in New Tax Law

To help taxpayers, the IRS updated the special Withholding Calculator tool on IRS.gov to reflect changes in the Tax Cuts and Jobs Act passed in December.

With most employees seeing withholding changes in their paychecks, the IRS recommends taxpayers use the Withholding Calculator to do a “paycheck checkup.” This will help taxpayers check that they are having the correct amount of income tax withheld from their paychecks.

Doing a checkup can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. Some taxpayers might prefer to have less tax withheld up front and receive more in their paychecks, which would reduce their tax refund next year.

The IRS encourages everyone to check their withholding as soon as possible, but it’s especially important for these people to use the Withholding Calculator to make sure they have the right amount of tax withheld:

• Two-income families
• People with two or more jobs at the same time or who only work for part of the year
• People who claim credits such as the Child Tax Credit
• People who claim older dependents, including children age 17 or over
• People who itemized deductions in 2017
• People with high incomes and more complex tax returns
• People with large tax refunds or large tax bills for 2017

Remember, the Withholding Calculator does not ask the user for personally identifiable information, such as name, social security number, address, or bank account numbers. The IRS does not save or record the information the taxpayer enters in the calculator.

More information:
Withholding Calculator Frequently Asked Questions
Withholding Calculator

IRS Tax Problems

The IRS can piece together a taxpayer’s income and deductible expenses if it suspects the person didn’t correctly report them. That’s what happened in one case when the tax agency performed a “bank deposits reconstruction” of a married couple’s income. The couple questioned the validity of the reconstruction but a federal appeals court ruled that it was properly handled because the taxpayers didn’t keep adequate records or offer any evidence to rebut the IRS’s calculations. 

Alliance Financial & Income Tax, a Blue Springs tax resolution firm, is here to help you resolve your tax problem and put an end to the misery that the IRS can put you through. We pride ourselves on being very efficient, affordable, and extremely discrete. The IRS problems will not just go away by themselves but will keep getting worse with penalties and interest added each day if not addressed quickly.

If you owe the IRS, you have a very serious problem. It may take the IRS several years to catch up to you, but they're relentless and have no mercy in collecting all the money that is owed. When the collection process starts, they'll make your life miserable and literally ruin all aspects of your life. This is where Alliance Financial can help with IRS debt and other problems with taxes.

Do you have any of these questions listed below? If so, call Alliance Financial and Income Tax today so we can help.

IRS Problems

• Have you received an IRS audit notification?
• Haven't filed your tax returns for years?
• Do you owe back taxes?
• Do you have payroll tax problems?
• Has the IRS placed tax liens on your home?
• Is the IRS threatening to seize your bank account and take your money out of the bank.
• Is the IRS threatening to take your paycheck, 401(k), and other retirement accounts?
• Is the IRS threatening to seize your personal property? 
• Has the IRS placed tax liens on your home? 
   
• Is the IRS threatening to seize your bank account and take your money out of the bank. 
   
• Is the IRS threatening to take your paycheck, 401(k), and other retirement accounts? 
   
• Is the IRS threatening to seize your personal property? 

IRS Solutions

• Owe the IRS a lot of money? - Settle for pennies on the dollar!
• Need more time to pay.
• Like to get out from under your tax burden completely.
• Like to get out of a tax debt caused by misdeeds committed by your spouse?
• Like to see what the IRS has on you.

Please contact us if you have any questions or if we may be of any assistance. If you are ready to schedule a time for us to visit you may choose a time online that is convenient for you.  

 

Things to Remember when Considering Early Withdrawals from Retirement Plans

Many taxpayers may need to take out money early from their Individual Retirement Account or retirement plan. Doing so, however, can trigger an additional tax on early withdrawals. They would owe this tax on top of other income tax they may have to pay. Here are a few key points to know:

• Early withdrawals. An early withdrawal is taking a distribution from an IRA or retirement plan before reaching age 59½.
• Additional tax. Taxpayers who took early withdrawals from an IRA or retirement plan must report them when they file their tax return. They may owe income tax on the amount plus an additional 10 percent tax if it was an early withdrawal.
• Nontaxable withdrawals. The additional 10 percent tax doesn’t apply to nontaxable withdrawals, such as contributions that taxpayers paid tax on before they put them into the plan.
• Rollover. A rollover happens when someone takes cash or other assets from one plan and puts it in another plan. They normally have 60 days to complete a rollover to make it tax-free.
• Exceptions. There are many exceptions to the additional 10-percent tax. Some of the rules for retirement plans are different from the rules for IRAs.
• Disaster Relief. Participants in certain disaster areas may have relief from the 10-percent early withdrawal tax on early withdrawals from their retirement accounts.
• File Form 5329. Taxpayers who took early withdrawals last year may have to file Form 5329,  Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, with their federal tax returns. Alliance Financial & Income Tax, a tax and financial services firm in Blue Springs Missouri can help.  

Where is your tax refund?

The IRS has started releasing refunds for taxpayers who claimed the earned income tax credit and the additional child tax credit. Many of the refunds should arrive in bank accounts or on debit cards this week. The IRS also explained some facts about tax refunds, such as: Nine out of 10 are usually issued in less than 21 days, IRS customer service representatives can’t provide refund information until 21 days have passed since a return was filed and requesting a transcript won’t reveal the status of a refund. 

Choosing the Correct Filing Status

It's important to use the right filing status when you file your tax return because the filing status you choose can affect the amount of tax you owe for the year. It may even determine if you must file a tax return. Keep in mind that your marital status on December 31 is your status for the whole year. Sometimes more than one filing status may apply to you. If that happens, choose the one that allows you to pay the least amount of tax.

The easiest and most accurate way to file your tax return is to consult a Grain Valley income tax professional who is able to choose the right filing status based on your circumstances. Here's a list of the five filing statuses:

1. Single. This status normally applies if you aren't married. It applies if you are divorced or legally separated under state law.

2. Married Filing Jointly. If you're married, you and your spouse can file a joint tax return. If your spouse died in 2017, you can often file a joint return for that year.

3. Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit you if it results in less tax owed than if you file a joint tax return. You may want to prepare your taxes both ways before you choose. You can also use it if you want to be responsible only for your own tax.

4. Head of Household. In most cases, this status applies if you are not married, but there are some special rules. For example, you must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Don't choose this status by mistake. Be sure to check all the rules.

5. Qualifying Widow(er) with Dependent Child. This status may apply to you if your spouse died during 2015 or 2016 and you have a dependent child. Other conditions also apply.

Don't hesitate to call Alliance Financial & Income Tax at 816-220-2001 if you have any questions about filing your tax return this year.