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

Here’s how the new tax law revised family tax credits

More families will be able to get more money under the newly-revised Child Tax Credit, according to the Internal Revenue Service.

The Tax Cuts and Jobs Act (TCJA), the tax reform legislation passed in December 2017, doubled the maximum Child Tax Credit, boosted income limits to be able to claim the credit, and revised the identification number requirement for 2018 and subsequent years. The new law also created a second smaller credit of up to $500 per dependent aimed at taxpayers supporting older children and other relatives who do not qualify for the Child Tax Credit.

Here are some important things taxpayers need to know as they plan for the Blue Springs tax-filing season in early 2019:

Child Tax Credit increased

Higher income limits mean more families are now eligible for the Child Tax Credit. The credit begins to phase out at $200,000 of modified adjusted gross income, or $400,000 for married couples filing jointly, which is up from the 2017 levels of $75,000 for single filers or $110,000 for married couples filing jointly.

Increased from $1,000 to $2,000 per qualifying child, the credit applies if the child is younger than 17 at the end of the tax year, the taxpayer claims the child as a dependent, and the child lives with the taxpayer for more than six months of the year. The qualifying child must also have a valid Social Security Number issued before the due date of the tax return, including extensions.

Up to $1,400 of the credit can be refundable for each qualifying child. This means an eligible taxpayer may get a refund even if they don’t owe any tax.

New Credit for Other Dependents

A new tax credit – Credit for Other Dependents — is available for dependents for whom taxpayers cannot claim the Child Tax Credit. These dependents may include dependent children who are age 17 or older at the end of 2018 or parents or other qualifying relatives supported by the taxpayer.

The IRS offer an Interactive Tax Assistant to see if you qualify for either of these credits.

Tax Time is Ahead

WARNING: IRS Audits Rapidly Increasing…
How Confident Are You That
Your Return is Accurate?

Could You be Missing Potential Deductions?

Your 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. 

Tax Preparation in Blue Springs and Surrounding Area

Our Tax Preparation Services Include:

• Assurance that your return has been checked and double-checked for mathematical accuracy and errors that are commonly flagged by the IRS, resulting in fewer chances for contact by the IRS.
• Tips for better managing your payroll withholding so that you can have the advantage of greater income all year long, rather than loaning that money to the government and waiting for it to come back in the form of your yearly tax return.
• A list of common deductions that may benefit you in the coming year, and tips for limiting your future tax liability.
• Electronic filing for a quicker refund.

We  can help you get your paperwork organized with our tax preparation checklist of materials needed for individuals and small businesses.

If  you own a small business and haven't kept up your bookkeeping, don't worry; we can help.  We'll prepare your small business bookkeeping for the year, prepare your business tax return, as well as your personal income tax return.  Then we'll help you set up an easy system that allows you keep your books in great shape for next year.

If you'd like to receive more information about our Blue Springs Tax Preparation Services, please contact us today. If you are ready to schedule a time for us to visit you may schedule a time online that is convenient for you.  

 

Related Links

Income Tax Organizer

Individual Tax Preparation Checklist

Business Tax Preparation Checklist

What Is a 1035 Exchange?

What Is a 1035 Exchange?

Dear Friend,

I hope you’ll forgive me for being blunt.

I realize that you may not be used to seeing a tax professional talk like this. It’s not my intention to offend (I’m actually being very careful with my words–I am a tax professional, after all).

But I think you’ll agree that the times we’re currently facing require a little straight talk.

Here’s a certain truth: the State and Federal Government would love to have more of your hard-earned money in their accounts. Sure, even though it’s painful, none of us begrudge paying our legal and fair share of taxes. But the problem is that regular taxpayers, like you, are missing out on legal and safe deductions, to the tune of hundreds of millions of dollars in unclaimed refunds every year!

As a tax professional, it truly breaks my heart, knowing that just a few thousand, or even a few hundred bucks for us “regular guys” out of that vast pool of overcharging could make a world of difference–and they are just sitting there, unclaimed! And with the economy we’re facing now…it’s essential that the “right” professional handles your taxes and other financial matters.

You see, all tax professionals are not the same. From the “discount” chains (notice the quotes) to classic accounting firms, most fly through tax season in a disorganized mess–bleary-eyed and hopped-up on caffeine. It’s no wonder that they treat you like a number and lapse into excuses and tax-talk. (I told you that I would be blunt.)

I’ve put more of my thoughts on these matters in a Free Report for Individuals: “The New Tax Code: 9 Simple Tax Secrets Easily Overlooked by Taxpayers.”

Feel free to poke around our site and discover why I’ve been called “The Most Trusted Tax Professional in the Jackson county, MO Area.”

Mike Mead, EA, CTC
Alliance Financial & Income Tax 
807 NW Vesper Street
Blue Springs, MO. 64015 
P - 816-220-2001 x201  
F - 816-220-2012 
AFITOnline.com

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