Tax Tips
Preventing Penalties and Problems
Check Your Withholdings to Avoid Tax Surprises
If you owed tax last year or received a large refund, you may want to think about adjusting your tax withholding. Owing tax at the end of the year could result in penalties being assessed. We can help you analyze your tax situation and make suggestions to avoid underpayment penalties and estimate the cash flow needed to avoid an unexpected tax bill.
Affordable Care Act
Did you have health insurance coverage all year? The individual shared responsibility provision of the Affordable Care Act requires that you and each member of your family have qualifying health insurance, a health coverage exemption, or make a payment when you file. If you, your spouse, and dependents had health insurance coverage all year, you will indicate this by simply checking a box on your tax return.
Marriage or Divorce
Did you tie the knot or did you part ways? If you are a newlywed or recently divorced, make sure that the names on your tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) can cause delays, unexpectedly increase your tax bill, or reduce the size of your refund. Visit SSA online for information about making changes.
Ten Ways to Avoid Problems at Tax Time
Looking for ways to avoid the last-minute rush for doing your taxes? It pays to plan ahead. Schedule an appointment with the experts at SFW Partners, and we will sit with you and sort through your tax documents to maximize our efficiency and minimize your headaches. Existing clients receive an income tax organizer to guide them through the document collection process. The IRS also offers 10 tips of sound advice.
Filing Deadlines, Extensions, Amending Returns, and Refunds
Filing Deadlines and Payment Options
Are you sweating the tax deadline? If you need last-minute help, schedule a face-to-face meeting or give us a call. Our experts are here and ready to assist you. If you need more time to finish your return, request a six-month extension, using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. And if you have trouble paying your tax bill, the IRS has several payment options available.
Filing an Extension
The deadline is here. Now what? If you can’t meet the April 15 deadline to file your tax return, you can get an automatic 6-month extension from the IRS, giving you extra time to file your tax returns. However, even though you get a filing reprieve you don’t get an extension on paying any tax due. Proper planning prior to the deadline can help minimize any interest and/or late payment penalties, which could arise on balances due after the April 15 deadline.
Amended Returns
Oops! You’ve discovered an error after your tax return has been filed. What should you do? Mistakes can be big or small. They may or may not be in your favor. Whatever the case, don’t hesitate. Contact SFW Partners and find out if you need to amend your return. We will review your prior returns and let you know if we can identify tax savings that could result in additional tax refunds. The IRS allows a limited time for filing credits and refunds, so contact us as soon as possible.
Refund, Where’s My Refund?
Are you expecting a tax refund this year? If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date the IRS receives your return. If you file your return electronically, your refund should be issued in about half that time. Speed up the receipt of your refund even more by choosing direct deposit.
Tax Credits, Incentives, and Deductions
Tax Incentives for Higher Education
Do you have kids in college or have you gone back to school? The tax code provides a variety of tax incentives for people who are paying higher education costs or who are repaying student loans. You may be able to claim an American Opportunity Credit or Lifetime Learning Credit for the qualified tuition and related expenses of the students in your family who are enrolled in eligible educational institutions.
Car Donations
Are you buying a new car? If you want to get rid of your old car easily, help your favorite non-profit, and get a tax deduction, you might consider donating your old car to a charity. Learn about out the specific IRS rules for taking a tax deduction when donating cars to charities and find out if it’s a good fit for you.
Charitable Contributions
Have you given money or donated other items to charity? When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. Your donations can add up to a nice tax deduction, if you itemize on IRS Form 1040-A. Get additional tips about your donations from the IRS.
Plug-In Electric Vehicles (PEVs)
Did you buy a plug-in electric car? Internal Revenue Code Section 30-D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles, including passenger vehicles and light trucks.
Earned Income Tax Credit for Certain Workers
Are you one of the millions of Americans who miss out on critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes? If you qualify and claim the credit, you could pay less federal tax, pay no tax, or even get a tax refund. Our experts carefully prepare your tax return and will let you know if you qualify for this credit.
Selling or Refinancing Your Home
Did you sell your main home this year? If you did, you might be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return. On the other hand, if you refinanced your home you may be eligible to deduct some of the costs associated with your loans.
Deductible Taxes
Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can, if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation.
Credit for the Elderly or Disabled
You may be able to take the Credit for the Elderly or the Disabled if you were age 65 or older at the end of last year, or if you are retired on permanent and total disability, according to the IRS.
Reporting Income and Gifts
Foreign Income
Did you receive income from a foreign source last year? Are you a United States citizen or resident who worked abroad last year? With more and more U.S. citizens earning money from foreign sources, the IRS is reminding people that they have to report all such income on their tax return, unless it is exempt under federal law. U.S. citizens are taxed on their worldwide income. Check out 8 tax tips when reporting foreign income.
Tip Income and Taxes
Do you work at a hair salon, barber shop, casino, golf course, hotel, restaurant, or drive a taxicab? The tip income you receive as an employee from those services is taxable income. Be sure to include it on your tax return. The IRS makes reporting easy with Form 4070, Employee’s Report of Tips to Employers.
Gift Giving
If you gave any one person gifts valued at more than $14,000, you have to report the total gift to the IRS. Consult with the experts at SFW Partners to find out if you will have to pay tax on your gift.
Resources
Tips for Early Preparation
Don’t procrastinate! Earlier is better when it comes to working on your taxes, and the IRS encourages everyone to get a head start on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund. Check out IRS tips for steps you can take now and how to get ready for taxes.
The Tax Advocate Service, Provided by the IRS
Have you tried everything to resolve a tax problem with the IRS but are still experiencing delays? Are you facing what you consider to be an economic burden or hardship due to IRS collection or other actions? If so, you can seek the assistance of the Taxpayer Advocate Service. Your Taxpayer Advocate is your voice at the IRS who ensures you are treated fairly and know and understand your rights. Visit today to find out how you can take advantage of this free service.
Ayuda en Español
Hablas español? Do you need help from someone who speaks Spanish? If you need federal tax information, the IRS provides free Spanish language products and services. Visit IRS.gov and click on the language option to translate webpages into Spanish (or other languages). The IRS also provides refund information, tax publications, and toll-free telephone assistance in Spanish.
