Find out how tax reform affects your businesses' bottom line at IRS.gov

Business may find they have questions about how 2017’s tax reform legislation affects their organization and their bottom line. IRS.gov is a great place to find answers. Here are several resources on the IRS website that address tax reform.

Tax reform provisions that affect businesses
This is the main page for businesses. Users can link from this page out to more resources with additional information, which is organized in sections by topic. These sections include a plain language description and links to news releases, notices and other technical guidance. Here are a few of the main tax topics on this page and the subtopics highlighted in each section:

• Income: taxation of foreign income, carried interest, and like-kind exchanges
• Deductions and depreciation: fringe benefits, moving expenses, standard mileage rates, deduction for passthrough businesses, and business interest expenses
• Credits: employer credit for paid family and medical leave, and the rehabilitation tax credit
• Taxes: blended federal income tax and withholding
• Accounting method changes
• Opportunity zones

This page also includes information for specific industries, such as farming, insurance companies, and aircraft management services.

Tax Reform Small Business Initiative
This one-stop shop highlights important tax reform topics for small businesses. From this page, users can link to several additional resources.

Tax reform resources
From this page, people can link to helpful products including news releases, tax reform tax tips, revenue procedures, fact sheets, FAQs and drop-in articles. Organizations can share these materials including the drop-in articles with employees, customers and volunteers to help them better understand tax reform.

Tax Cuts and Jobs Act: A comparison for businesses
This side-by-side comparison can help businesses understand the changes the new law made to previous law. It will help businesses then make decisions and plan accordingly. It covers changes to deductions, depreciation, expensing, tax credits, and other tax items that affect businesses.

Tax reform: What’s new for your business 
This electronic publication covers many of the TCJA provisions that are important for small and medium-sized businesses, their owners, and tax professionals to understand. This concise publication includes sections about:

• Qualified business income deduction
• Depreciation: Section 168 and 179 modifications
• Business-related losses, exclusions and deductions
• Business credits
• Corporate tax provisions
• S corporations
• Farm provisions

Income Tax Preparation Done Right

Your Grain Valley tax preparation needs are as individual as you are. Alliance Financial & Income Tax takes an active approach to our tax planning and tax preparation services, giving you the personalized guidance you need. Today's tax laws are so complicated that filing taxes, no matter how simple, can quickly become confusing.

10 million tax payers missed out on a chance to receive a bigger refund last year simply because they neglected to fill out one line on their tax return. Will you miss a similar opportunity this year?

Today's tax laws are increasingly complicated and the rules for deductions and credits change year by year. Are you aware of all the deductions and credits that might be available to you this year, even on the most basic of tax returns? Perhaps you feel secure in your do-it-yourself tax preparation software, but lets face it...There is not substitute for an experienced Enrolled Agent who can answer your questions and ask you the questions that might be key to saving you hundreds or even thousands in tax dollars.

Schedule an appointment today by calling 816-220-2001 or by visiting www.afit-calendar.info.

Taxbot Ringmaster - 14 Day Free Trial

12 Common Tax Problems to Avoid

If you’re one of those who gets worked up over filing your tax return, there are specific steps you can take to help ease the struggle and avoid the most common tax issues that are reported each year.

Here are the top 12 tax issues, broken down into categories for business owners and individual taxpayers, and how everybody can minimize their impact this year provided by your Grain Valley income tax preparation firm Alliance Financial & Income Tax.

If you own your own business:

1. Avoid penalties and fines by understanding the rules about deductions.

Though tax deductions are a great way to minimize taxes when they’re used the right way, they are frequently abused and overused. The whole point of deductions is to provide businesses the ability to eliminate taxes for items they purchased in the furtherance of their business. Though this includes capital expenditures, client gifts, and business travel, it does not mean that you can include expenses that you incur while talking about your business while you’re on vacation with your family. The IRS has published rules about how much of each expense can be deducted, what type of expense can be deducted and under what circumstance. If you include something that is questionable, you’re going to be asked to justify it, and if you can’t, you’re going to end up worse off than if you hadn’t made an attempt in the first place.

2. Failing to keep track of business expenses that can be deducted.

The flip side of people try to game the system by taking expenses to which they’re not entitled is people failing to deduct expenses that they could have because they’re not careful about keeping track. This frequently happens when people don’t have a credit card or account that is dedicated specifically to their business expenses, or when cash is used when traveling or attending business meetings. When you don’t deduct legitimate expenses, you’re cheating yourself out of tax savings, so start keeping all receipts, and talk to a tax professional so that you understand exactly what you can write off, and what you can’t.

Individual taxpayer problems:

3. Failing to choose a reputable professional tax preparer.

It’s nice of your cousin or next-door neighbor to offer to help, and you might save money by going to a storefront tax preparer that claims they will do the whole job quickly and at a low cost, but an awful lot of taxpayers end up in big trouble as a result of these types of offers. Whether the issue is incompetence or fraud, plenty of people are finding themselves facing penalties and fines or having their refund money stolen as a result of choosing the wrong tax preparer. Do your homework and be willing to spend the money to have your return prepared by a legitimate professional. The things to watch out for include promises of specific refund amounts prior to reviewing your documentation, fees that are based on the amount of your refund, and fly-by-night operations that appear right before tax season and then are gone on April 16th. If you do find a fraudulent tax preparer has victimized you, contact the IRS and attorney right away who will pursue justice and act as your advocate.

4. Filing after the deadline.

If you were late in filing last year, you had plenty of company – the IRS reported that almost 45 million taxpayers waited until April. But filing late is a mistake. You are likely to end up paying extra money in fines and penalties, and the later you are, the more likely you are to make errors that will make the entire process take longer and may lead to audits and delays. More importantly, if your lateness is a recurring theme and you still haven’t gotten in paperwork from previous years, it affects the accuracy of your current return and may impact your ability to get any refund or credit that you’re owed.

5. Failure to file a return at all.

Plenty of people disregard the tax laws and don’t submit a return. Many of them may not actually owe any taxes, while others reason that since they can’t afford to pay what they owe, they’re better off not submitting anything. This is absolutely wrong. If you are anticipating a problem with submitting the tax that you owe, you can file an installment agreement request that will help you set up a schedule of periodic payments instead of submitting the amount in full at tax time. This is a much better option than not filing, as even though you may have to pay some interest or penalties, they won’t be as punishing as the fees you’ll pay for failure to file a return. You can also choose to file an application for an automatic extension, which gives you more time to get the documentation together, if not the payments. Again, penalties and interest rates are much lower when you avail yourself of this option rather than failing to file.

6. Simple mathematical errors

Remember when you were a kid in math class and you’d get a quiz back with mistakes that you’d have spotted if you’d just double checked? Same is true with your taxes. Take the time to go back over your math before you sign on the dotted line or send your return in. It just takes a few extra minutes, and it can save a lot of time and aggravation. Alternatively, use a professional tax preparer and then you don’t have to worry about it at all.

7. Administrative errors

Just as you need to check that you’ve done your math computations correctly, you also need to take the time to take a second look at the forms that you’re filling out to make sure that you’ve filled in every box, used all the appropriate forms, and filled in your information correctly. You’d be amazed at how many people transpose the numbers of their social security number or whose handwriting is so bad that it can’t be read by the IRS and gets sent back. Take your time, be careful and do it right to save yourself a headache in the future. A few areas worth double-checking include: 

• Social Security Number 
• Bank Account Numbers and Routing Numbers 
• Signature and Date Lines 

8. Not staying current with updates to tax laws. 

Every year, there are new updates to the tax code that can make a big difference, and every year there are taxpayers who fail to take advantage of them because they simply weren’t aware that they existed. If you’re going to do your taxes yourself, take the time to stay up-to-date. Alternatively, you can work with a tax professional: part of their job is to know all the new laws and apply them to your best advantage. 

9. Don’t use the wrong filing status. 

Single. Head of Household. Married filing jointly. Married filing single. It can be very confusing to know which benefits you most, and choosing wrong can make an enormous difference. There are a lot of things that married couples are entitled to if they file jointly, and a lot of disadvantages to filing single. Take the time, do the math so that you know you’re doing the right thing. 

10. Clutter may be bad, but you should hold on to your old tax returns. 

No matter how much you try to keep it simple and purge old paperwork, your past tax return is one thing you really need to hold on to in case the IRS comes back and asks questions or you realize that you’re entitled to a refund if you file an amended return. Having the paperwork handy means you can give it to attorneys, mortgage brokers, accountants and the IRS itself in case they ask for it or if providing it would help your situation. 

11. Learn about and take advantage of every potential deduction 

Of all the painful mistakes that taxpayers make, overpaying is at the top of everybody’s list. What could be worse than giving the government more of your hard-earned money than you needed to? The best way to avoid this mistake is to go through the lists of possible deductions and write down every one you might be able to take, then see if you can use it. 

12. Not using the right tax forms for your needs or status. 

Though most people are familiar with the 1040 form, it’s not necessarily the right one for everyone. While the 1040 works for those who itemize or who own their own business, people who are W-2 employees without a lot of complicating factors may be better off using the 1040EZ form. Likewise, you need to make sure that there aren’t mistakes on any of the paperwork that you’re handing in, whether it’s your W-2 or information from any of your banks. Finally, many people are taking advantage of electronic filing to get their returns in on time and get their refunds more quickly, and if you’re doing that too, make sure that you’ve input the correct. 

If there are errors on your W-2 Forms or other financial forms, make sure you address them sooner rather than later, or else the IRS will become involved. If you’re filing electronically, double check every digit of your information to avoid delays. 

What if you can’t avoid a tax issue? 

No matter how hard you try, at some point, you may find yourself facing one or more of the issues cited above (or something entirely different that we haven’t included). If that happens to you, contact us immediately for expert professional help.  816-220-2001

IRS Withholding Calculator

The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.”  This is even more important following the recent changes to the tax law for 2018 and beyond.

The Calculator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.

There are several reasons to check your withholding:

• Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. 
• At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks. 

If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate. You can use your results from the Calculator to help fill out the form and adjust your income tax withholding.  If you receive pension income, you can use the results from the calculator to complete a Form W-4P and give it to your payer.

Plan Ahead: Tips For Using This Program

The Calculator will ask you to estimate values of your 2019 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2019 taxes. This process will take a few minutes.

• Gather your most recent pay stubs.
• Have your most recent income tax return handy; a copy of your completed Form 1040 will help you estimate your 2019 income and other characteristics and speed the process. 
• Keep in mind that the Calculator’s results will only be as accurate as the information you provide.  If your circumstances change during the year, come back to this Calculator to make sure that your withholding is still correct.
• The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Calculator.

IMPORTANT NOTE: This Withholding Calculator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe self-employment tax, alternative minimum tax, the tax on unearned income of dependents or certain other taxes, people with long-term capital gains or qualified dividends, and taxpayers who have taxable social security benefits.  (The calculator won’t determine the taxable portion of your social security benefits, but if you estimate the taxable amount (e.g., using the worksheet in the Form 1040 instructions), you can enter that into the calculator as other nonwage income so that the calculator can take it into account.).

Ready to start? Make sure Javascript is enabled.

Withholding Calculator

To Change Your Withholding:

• Use your results from this Calculator to help you complete a new Form W-4, Employee's Withholding Allowance Certificate, and
• Submit the completed Form to your employer as soon as possible. Withholding takes place throughout the year, so it’s better to take this step as soon as possible.

Special Note for 2020:  If you follow the recommendations at the end of this Calculator and change your withholding for 2019, the IRS reminds you to be sure to recheck your withholding at the start of 2020. This is especially important if you reduce your withholding sometime during 2019. A mid-year withholding change in 2019 may have a different full-year impact in 2020. So if you do not file a new Form W-4 for 2020, your withholding might be higher or lower than you intend. To help protect against having too little withheld in 2020, we encourage checking your withholding again early in 2020.

If you have additional questions about your withholding, consult your employer or tax adviser.

IRS Withholding Calculator How To

Need someone to prepare your tax return?

There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and many others who don’t have a professional credential. You expect your preparer to be skilled in tax preparation and to accurately file your income tax return. You trust him or her with your most personal information. They know about your marriage, your income, your children and your social security numbers – the details of your financial life.

Most tax return preparers provide outstanding and professional tax service. However, each year, some taxpayers are hurt financially because they choose the wrong tax return preparer. 

Things to Remember When Choosing a Blue Springs Income Tax Preparer

Taxpayers should choose their tax return preparer wisely – with good reason. Taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return. Here are ten tax tips to keep in mind:

1. Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with the qualifications that they prefer. The Directory is a searchable and sortable listing of preparers with a credentials or filing season qualifications. It includes the name, city, state and zip code of:
    
   • Attorneys.
   • Certified Public Accountants.
   • Enrolled Agents.
   • Enrolled Retirement Plan Agents.
   • Enrolled Actuaries.
   • Annual Filing Season Program participants.
      
   Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent clients in more limited situations. Non-credentialed preparers who do not participate in the Annual Filing Season Program may only represent clients before the IRS on returns they prepared and signed on or before December 31, 2015.
   
   For more information, check the Understanding Tax Return Preparer Credentials and Qualifications page.
    
2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.
    
3. Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When inquiring about a preparer’s services and fees, don’t give them tax documents, Social Security numbers and other information. Some preparers have improperly used this information to file returns without the taxpayer’s permission.
    
4. Ask to e-file. Taxpayers should make sure their preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must file electronically. The IRS has safely processed billions of e-filed tax returns
    
5. Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 18 due date. Avoid fly-by-night preparers.
    
6. Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure the total income, tax deductions, credits, etc. Taxpayers should not use a preparer who will e-file their return using their last pay stub instead of a Form W-2. This is against IRS e-file rules.
    
7. Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form.
    
8. Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return.
    
9. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number (PTIN). By law, paid preparers must sign returns and include their PTIN.
    
10. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. Taxpayers can get these forms on IRS.gov any time.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Additional IRS Resources:

• Tax Topic 254 - How to Choose a Tax Return Preparer
• Choosing a Tax Professional
• How to Make a Complaint About a Tax Return Preparer
• How to Report Suspected Tax Fraud Activity
• IRS Tax Pro Association Partners

IRS YouTube Videos:

• Choose a Tax Preparer Wisely – English | Spanish | ASL

Getting the W-4 Right Is Important

Article Highlights: 

• W-4 Complications 
• Working Spouse 
• Adjusting Refund 
• Other Income and Tax Issues 

As they do at the beginning of every year, employers will be requesting employees to complete the IRS Form W-4. Its purpose is to provide employers with the information they need to determine the amount of federal income taxes to withhold from an employee’s paycheck. So, it is very important that the form be completed correctly. 

The problem is that as simple as the form looks, getting those entries on the form to produce the desired withholding amount can be tricky. The passage of the tax reform added additional complications, and the IRS has delayed a major revision of the W-4 until the 2020 tax year. In the meantime, taxpayers must get along as best they can using the old version of the W-4. 

Even though the W-4 form itself appears to be simple, the instructions come with an extensive worksheet, which may or may not produce the desired results. In addition, there are other issues to consider, such as: 

• Perhaps you desire to have a substantial refund when your taxes are completed next year. This generally requires custom W-4 adjustments, to produce excessive withholding. Keep in mind: when you have a large refund, you have provided Uncle Sam with an interest-free loan.
  
• Your spouse may also work, and your combined incomes may put you in a higher tax bracket. Although the IRS provides a special worksheet for married taxpayers if both spouses work, it may not always provide the desired results.
  
• In addition to payroll income, you may also have self-employment income, which is subject to both income tax and self-employment, and so you may require a combination of payroll withholding and estimated tax payments, adding additional complications to the W-4.
  
• These are just the tip of the iceberg, as there may be investment income or losses, business losses, tax credits, special deductions and loss carryovers, just to name a few more situations that could impact your tax prepayments and withholding for the year. 

If you are concerned about getting your withholding correct, please contact the Blue Springs income tax and financial services firm of Alliance Financial & Income Tax. We can project your 2019 tax liability and complete your W-4 after taking into account multiple employments, a working spouse, self-employment income and other tax issues unique to your specific tax situation.

When You Buy Local

It is that time of year again, Tax Time.  Every tax payer has a multitude of options when it comes to how to file their tax returns each year.  They have the DIY software, they have the family member or friend, the BIG corporations or they may elect to file with a local family owned business.  For those that choose to hire a professional to handle filing their taxes this year, may I suggest using the local family owned business method.  Blue Springs has several experienced and affordable family owned business to choose from.  T&T Tax and Accounting, Norma’s Tax Service, Fullerton CPAs, PCA Services and Alliance Financial & Income Tax.

Local business owners know that you have chose to where you do business.  Speaking for myself, thank you for choosing local. 

Turbo Tax and the DIY Tax Software

I had a new client come in with an insurmountable problem. His off-the-shelf tax software would not and could not handle the problem. 

The new client thought that I probably also would find it an insurmountable problem. 

I just chuckled and said "No, this is an easy problem to fix when you know how."

I suppose the greatest part about being a Grain Valley tax professional is getting to be a hero to people who have been banging their heads on the wall. 

Hire an Enrolled Agent, the antidote for your headache. No problem too big.

7 Ways Small Business Owners Can Save On Taxes

Everybody wants to lower the amount they pay in taxes, but it is an especially important goal for small business owners. Every penny in taxes avoided are a double victory: you avoid overpaying and add to your bottom line. Here are seven tips to use to spot potential savings provided by the Grain Valley Income Tax Preparation firm of Alliance Financial & Income Tax

Big Tax Changes for Divorce Decrees after 2018

Article Highlights: 

• Pre-2019 Alimony 
• Post-2018 Alimony 
• Definition of Alimony 
• Alimony and IRA Contributions 
• State Treatment of Alimony

Welcome to 2019 and a delayed provision of the tax reform, also known as the Tax Cuts and Jobs Act (TCJA). For divorce agreements entered into after December 31, 2018, or pre-existing agreements that are modified after that date to expressly provide that alimony received is not included in the recipient’s income, alimony will no longer be deductible by the payer and won’t be income to the recipient. 

This is in stark contrast to the treatment of alimony payments under decrees entered into and finalized before the end of 2018, for which alimony will continue to be deductible by the payer and income to the recipient. 

Having the alimony treated one way for one segment of the population and the exact opposite for another group of individuals seems unfair and may ultimately make its way into the court system. But in the meantime, parties to a divorce action need to be aware of the change and compensate for it in their divorce negotiations, for a decree entered into after 2018. 

This is not the first time Congress has tinkered with alimony. Way back in the mid-1980s, the definition of alimony was altered to prevent property settlements and child support from being deducted as alimony. Under the definition of alimony since then, payments: 

(1) Must be in cash, paid to the spouse, the ex-spouse, or a third party on behalf of a spouse or ex-spouse, and the payments must be made after the divorce decree. If made under a separation agreement, the payment must be made after execution of that agreement. 

(2) Must be required by a decree or instrument incident to divorce, a written separation agreement, or a support decree that does not designate payments as non-deductible by the payer or excludable by the payee. Voluntary payments to an ex-spouse do not count as alimony payments. 

(3) Cannot be designated as child support. Child support is not alimony. 

(4) Are valid alimony only if the taxpayers live apart after the decree. Spouses who share the same household can’t qualify for alimony deductions. This is true even if the spouses live separately within a dwelling unit. 

(5) Must end on the death of the payee (recipient) spouse. If the divorce decree is silent, courts will generally consider state law, and where state law is vague, judges may make their own decision based on the facts and circumstances of the case. 

(6) Cannot be contingent on the status of a child. That is, any amount that is discontinued when a child reaches 18, moves away, etc., is not alimony. 

Taxable alimony payments under pre-2019 decrees and agreements are treated as earned income for IRA contribution purposes, allowing the spouse receiving the alimony to make IRA contributions based upon the alimony. The ability to make IRA contributions under pre-2019 decrees and agreements remains unchanged. However, for alimony received as a result of a post-2018 decree or agreement, the alimony can no longer be used as a basis for making an IRA contribution. 

To summarize: 

Pre-2019 Decrees – For decrees entered into before 2019 and unmodified after 2018: 

• Alimony continues to be deductible by the payer spouse/ex-spouse. 
• Alimony is includable in the income of the recipient spouse/ex-spouse. 
• The recipient spouse/ex-spouse can make IRA contributions based upon the alimony received. 

Post-2018 Decrees– For decrees entered into after 2018 (and pre-2019 decrees that are modified and include the TCJA alimony rules): Alimony is not deductible by the payer-spouse/ex-spouse. 

• Alimony is not includable in the income of the recipient spouse/ex-spouse. 
• The recipient spouse/ex-spouse cannot make IRA contributions based upon the alimony received. 

One additional complication is if state tax treatment is different than that at the federal level. Some states, such as California, have not conformed to the TCJA; as a result, the state treatment of alimony paid under both pre-2019 and post-2018 decrees in these states will continue to follow pre-2019 law, with alimony payments continuing to be deductible and alimony received being taxable. 

If you have questions related to alimony or about how your state will tax alimony beginning in 2019, please give the office a call.

How Tax Reform Effects Business Entertainment

If you entertain for your business, change is here. With the new tax law, your ability to deduct 50% of the cost of recreation, entertainment or amusement expenses disappeared. Watch the video to learn more.


  If you have questions please contact your Grain Valley Income Tax Preparation firm of Alliance Financial & Income Tax.

The Tax Consequences of Losing your Job

If you've lost your job you may have questions surrounding unemployment compensation, severance, and other issues that could affect your tax situation. 

Here are some answers provided by your Blue Springs tax professionals at Alliance Financial & Income Tax.

Q: What if I receive unemployment compensation?

A: Unemployment compensation you receive under the unemployment compensation laws of the United States or of a state are considered taxable income and must be reported on your federal tax return. If you received unemployment compensation, you will receive Form 1099-G, Certain Government Payments (Info Copy Only), showing the amount you were paid and any federal income tax you elected to have withheld.

Types of unemployment benefits include:

• Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
• Railroad unemployment compensation benefits
• Disability payments from a government program paid as a substitute for unemployment compensation
• Trade readjustment allowances under the Trade Act of 1974
• Unemployment assistance under the Disaster Relief and Emergency Assistance Act

You must also include benefits from regular union dues paid to you as an unemployed member of a union in your income. However, other rules apply if you contribute to a special union fund and your contributions are not deductible. If this applies to you, only include in income the amount you received from the fund that is more than your contributions.

Q: Can I have federal income tax withheld?

Yes, you can choose to have federal income tax withheld from your unemployment benefits by filling out Form W-4V, Voluntary Withholding Request. If you complete the form and give it to the paying office, they will withhold tax at 10 percent of your payments. If you choose not to have tax withheld, you may have to make estimated tax payments throughout the year and you may owe tax when you file your tax return in April.

Q: What if I lost my job?

A: The loss of a job may create new tax issues. Severance pay and unemployment compensation are taxable. Payments for any accumulated vacation or sick time are also taxable. You should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time. Public assistance and SNAP (formerly known as food stamps) are not taxable.

Q: What if I searched for a job?

A: Under tax reform, many miscellaneous deductions were eliminated. As such, for tax years 2018-2025, you are no longer able to deduct certain expenses such as travel, resume preparation, and outplacement agency fees incurred while looking for a new job. In prior years, job-seekers were able to deduct these expense-even if they did not get a new job. Moving costs for a new job at least 50 miles away from your home were also deductible; but again, under tax reform, and for tax years 2018-2025, job-related moving expenses are not deductible.

Q: What if my employer went out of business or into bankruptcy?

A: Your employer must provide you with a W-2 Form showing your wages and withholdings by January 31. You should keep up-to-date records or pay stubs until you receive your Form W-2. If your employer or its representatives fail to provide you with a Form W-2, contact the IRS. They can help by providing you with a substitute Form W-2. If your employer liquidated your 401(k) plan, you have 60 days to roll it over into another qualified retirement plan or IRA.

If you've experienced a job loss and have questions about how it affects your tax situation, help is just a phone call away. 816-220-2001

Tips for a Faster Refund

As the tax filing season approaches, there are steps you can take now to speed up the filing process. The faster your return is filed, the faster you get your refund. Even if you end up owing money to the IRS, knowing the amount due sooner gives you more time to come up with the funds needed to pay your tax bill. Here are things you can do now to get organized:

1. Look for your tax forms. Forms W-2, 1099, and 1098 will start hitting your mailbox. Look for them and get them organized. Create a checklist of the forms to make sure you aren't missing any.
2. Don't wait for Form 1095s. Once again, proof of health insurance coverage forms are delayed. The deadline for companies to distribute most Form 1095s to employees is pushed back to March 4. The IRS is OK with filing your return prior to receiving the proof of insurance form as long as you can provide other forms of proof. Remember, 2018 is the last year of penalties if you do not have adequate insurance coverage.
3. Finalize name changes. If you were recently married or had a name change, file your taxes using the correct name. File your name change with the Social Security Administration as soon as possible, but be aware of the timing with a potential name conflict with the IRS.
4. Collect your statements and sort them. Using last year's tax return, gather and sort your necessary tax records. Sort your tax records to match the items on your tax return. Here is a list of the more common tax records:
   
   
   • Informational tax forms (W-2, 1099, 1098, 1095-A, plus others) that disclose wages, interest income, dividends and capital gain/loss activity
   • Other forms that disclose possible income (jury duty, unemployment, IRA distributions and similar items)
   • Business K-1 forms
   • Social Security statements
   • Mortgage interest statements
   • Tuition paid statements
   • Property tax statements
   • Mileage log(s) for business, moving, medical and charitable driving
   • Medical, dental and vision expenses
   • Business expenses
   • Records of any asset purchases and sales
   • Health insurance records (including Medicare and Medicaid)
   • Charitable receipts and documentation
   • Bank and investment statements
   • Credit card statements
   • Records of any out of state purchases that may require use tax
   • Records of any estimated tax payments
   • Home sales (or refinance) records
   • Educational expenses (including student loan interest expense)
   • Casualty and theft loss documentation (federally declared disasters only)
   • Moving expenses (military only)
   
   
   If you are not sure whether something is important for tax purposes, retain the documentation. It is better to save unnecessary documentation than to later wish you had the document to support your deduction.
5. Clean up your auto log. You should have the necessary logs to support your qualified business miles, moving miles, medical miles and charitable miles driven by you. Gather the logs and make a quick review to ensure they are up to date and totaled.
6. Coordinate your deductions. If you and someone else may share a dependent, confirm you are both on the same page as to who will claim the dependent. This is true for single taxpayers, divorced taxpayers, taxpayers with elderly parents/grandparents, and parents with older children.

While you are organizing your records, ride the momentum to start your filing system for the new year. Doing so will make this process a breeze this time next year!

Most Small Businesses PAY TOO MUCH in Taxes Every Year! Look Below To See If You Are One Of Them…

Your Blue Springs tax professional may be asleep at the wheel.  Ask yourself… - Does your accountant only call at tax time? - Are you consistently paying a little more  tax each year but aren’t quite sure why? - Can you remember the last time your Blue Springs accountant called you with a tax saving strategy? Call 816-220-2001 for a completely FREE, No Obligation review of your tax situation. We’ll tell you immediately how you can pay less this year – and boost your profits! “Thank you! You saved me $5,200 in taxes that I would have paid if you hadn’t stepped in!”  J. Doe – J. Doe Construction

Alliance Financial & Income Tax We’ve been serving businesses just like yours since 2002.  Call us at 816-220-2001 or visit our location at 807 NW Vesper St, Blue Springs, MO. 64015 AFITonline.com Proud Member of the Blue Springs Chamber of Commerce Dave Ramsey Endorsed Local Provider