Taxpayers and tax professionals alike are breathing a sigh this week. The final tax extension Oct. 15 filing deadline has come and gone. Sure, there's some cleanup left. The storing of files. The adjusting of withholding where tax bills were larger or smaller than expected. And, yes, the waiting for refunds by procrastinating filers who weren't in a hurry to get their tax cash. It does happen. Chances are, however, that the Internal Revenue Service isn't sending out many refunds this month. I'm not just saying that because most October filers don't get refunds. I'm basing my expectation on recently... Read more →
Withholding
Andrew Luck announces his retirement from the NFL's Indianapolis Colts. The main reason the young quarterback quit the game was injuries. A bonus to his departure: no more jock tax calculations. The National Football League's 2019 season kicks off tomorrow night, but Indianapolis Colts quarterback Andrew Luck won't be on the field. The 29-year-old stunned the sports world on Aug. 24 when he confirmed rumors that he was retiring from the sport. Colts owner Jim Irsay estimated that Luck could be giving up as much as $450 million in future salary. Luck, however, obviously thinks he has made enough money... Read more →
Labor Day is a time to celebrate and honor workers. This year commemoration is the 125th anniversary of the day being recognized as a national holiday. This holiday, now officially the first Monday of September, began as a creation of the labor movement. It was looking for a way to highlight the social and economic achievements of American workers. "It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity and well-being of our country," according to the U.S. Department of Labor's (DOL) history of Labor Day. The Labor Department elaborates on the holiday's development:... Read more →
The tax law changes under the Tax Cuts and Jobs Act (TCJA) and its effect on withholding wreaked havoc this filing season. Some folks found, much to their dismay (and stronger reactions…) that for the first time in their tax-paying lives they owed taxes because they didn't have enough tax withheld from their paychecks. The Internal Revenue Service saw this coming. It tried to warn folks, encouraging them to adjust their withholding so that they wouldn't face this predicament. Then the IRS announced an easing of the penalty owed if you under withheld. Twice. Now, with the 2019 tax season... Read more →
Paycheck withholding is most Americans' introduction to taxes. But even though millions of us have been seeing income taxes come out of our checks for years, the system still is confusing for many. It became a bigger mess this filing season, when folks filed their first tax returns under the Tax Cuts and Jobs Act (TCJA) changes. A lot of them were not amused. The unexpected price of wrong withholding: They discovered that they weren't getting the same big tax refunds they had in prior years. These annual spring payouts had served as distributions from their withholding tax deposits to... Read more →
Hello, July! The heat is definitely on, but there are plenty of ways to chill out, both personally and to put your 2019 tax bill on ice. Yes, I know you want to head to the pool or beach or catch up on neglected novels or just be generally lazy. I'm right there with you. But you'll enjoy those recreational pursuits a lot more once you've taken some steps, like the seven listed below, to lower your 2019 tax bill. Let's get to 'em! 1. Get weather ready. A low pressure trough moved overnight from Georgia to the Florida panhandle... Read more →
Backup withholding basically is the tax collector's knuckleball mitt. The over-sized baseball glove helps a catcher handle, he hopes, the hard to predict (and hold onto!) pitches. The IRS uses backup withholding to catch potentially errant income amounts. (Baltimore Orioles' Gus Triandos showed how the mitt at left, which he used when Hall of Fame knuckleballer Hoyt Wilhelm was on the mound, compared to his regular one. Photo courtesy Tom's Old Days via Twitter) In most income earning instances, the Internal Revenue Service finds out how much we make and owe taxes on thanks to reports from those who pay... Read more →
June is one of the most popular months to get married. Why? Some point to the weather. Peak spring thunderstorm season has passed. Temperature wise, it's warm, but not hot (unless you're in Texas, but that's another post). Ditto with humidity, meaning that June is one of the better months for an outdoor wedding. Then there's matrimonial history. The early Romans gave us Juno, the goddess protector of women in all aspects of life, but especially in marriage and childbearing. So a wedding in the month named for Juno was, and still is for many, considered most auspicious, notes the... Read more →
The Internal Revenue Service did do away with two versions of Form 1040 and shortened, a bit, the lone document we now use to file our annual tax returns. But the tax agency went the other way with Form W-4. This form, officially titled Employee's Withholding Allowance Certificate. is what we give to our bosses to ensure that the correct amount of income taxes come out of our paychecks each pay period. Now instead of a brief, 10-item form, the IRS' W-4 proposed revision takes up a full letter-sized page. And while there are just seven boxes to fill out,... Read more →
A big part of companies' federal tax responsibilities is paying employment taxes for their workers. These are the Social Security, Medicare and unemployment taxes on those employees' wages. However, when it comes to workers who are hired as contractors, it's the worker who's totally responsible for these taxes, in addition income tax withholding via estimated tax payments. That's why, when appropriate and fiscally feasible, many firms try to hire independent contractors. Sometimes, though, the line between employees and contractor is fine. It's facts and circumstances in each case when deciding how to classify a worker. And if the Internal Revenue... Read more →
High tax filing season is over and the numbers have been tallied. Unfortunately for Republicans who still are fighting the public relations war over their major tax reform law, the figures aren't good. Yes, fractionally more money has been delivered to taxpayers through April 21, almost a week after the filing deadline for most U.S taxpayers. But the average refund check remains smaller than it was last year. In 2018, the average refund was $2,780. This year, it came to $2,725. In case you're not good at math in your head (I'm not) and don't have a calculator handy, that's... Read more →
Broad City image via Giphy.com Do you have to file a return? Sorry to be the bearer of bad news, but the answer usually is yes. But there's a difference between having to file a tax return and submitting a 1040 form because you should. And by should, I mean when it's to your advantage to do so. Yes, that does happen in the tax world now and then. When filing is required: First, though, let's look at when the tax code says we must send the Internal Revenue Service a Form 1040. Although the 1040 has a new look... Read more →
We've got just more than three weeks before our 2018 tax returns are due, but most of us aren't in any hurry to complete this task. Through March 15, the Internal Revenue Service reports that it has received almost 76 million 2018 tax year returns. That's 2.5 percent fewer than this point in last year's filing season. In fact, the IRS latest filing season data shows that 9 of 12 tracked areas are still slightly behind last year's pace. Only visits to IRS.gov, tax returns directly e-filed by taxpayers and directly deposited refunds are up over 2018 numbers by 11.2... Read more →
It's taken a few weeks, four to be exact, but the 2019 tax season is finally catching up. The latest Internal Revenue Service filing season statistics show that while most categories that the agency tracks each filing season are still lagging 2018 figures, the differences are starting to shrink. And there's even better news for folks who are getting refunds. The average check amounts issued through Feb. 22 are dramatically larger than the week before. More notable, those average refund amounts have finally topped the averages of year ago. Unpleasant tax refund surprises: In case you haven't been following the... Read more →
Do you overwithhold to get an annual tax refund because money burns a hole in your pocket? (Photo by Matthew via Flickr) It's no secret that Americans like their tax refunds. The Internal Revenue Service for years has reported that most filers get at least some money back at tax-filing time. That refund data has fueled another annual debate. How to get people to adjust their withholding so that they get use of their money throughout the year in paychecks instead of having to wait for it in the form or a tax refund. As a tax journalist, I get... Read more →
By now, everyone knows that a lot of taxpayers are getting the worst news ever at filing time. They owe the U.S. Treasury money. We can debate the reasons for the unexpected tax bills ad infinitum. Withholding tables were rejiggered in 2018 following the changes in the Tax Cuts and Jobs Act (TCJA). Itemized deductions and exemptions were reduced or eliminated by that tax legislation. Taxpayers didn't adjust their withholding to get their paycheck amounts more in line with the new law. The bottom line is that more than the usual number of filers this year are going to have... Read more →
Most taxpayers every year end up getting refunds. But some folks are at the opposite end of the tax spectrum. They owe Uncle Sam at filing time. And some of those owing taxpayers end up in an even worse situation. Their tax bills are large enough that they also face added penalty charges. This filing season, though, those penalty-paying taxpayers could get a break. Tax underpayment penalty calculations: A tax penalty assessment usually occurs when wage earners don't have enough income tax withheld from paychecks or, if they have other income not subject to withholding, don't pay enough (or any)... Read more →
Today should be payday for hundreds of thousands of federal government workers. The partial government shutdown, however, means they're not getting their money. And even though the White House, Treasury and the Internal Revenue Service say that the 2019 filing season will open at the end of January as it has in years past and that refunds will be issued, there's no guarantee that things will go smoothly. We are, after all, talking about Uncle Sam's operations. Can IRS meet refund challenge? The IRS says it will recall "a significant portion" of its currently furloughed workforce to open tax season... Read more →
Hello 2019! I'm not sure we're ready for you, particularly when it comes to the major tax code changes under the Tax Cuts and Jobs Act (TCJA). We'll deal with the real-life effects of the new tax laws for the first time when we file our 2018 returns. When that will be is still up in the air and depends on a resolution to the partial government shutdown. But even though Capitol Hill and many of Uncle Sam's offices remain in limbo, we taxpayers need to start now taking an up close and personal look at what the TCJA will... Read more →
There's one more day in 2018, but it's too late to adjust your withholding for this almost over tax year. Following enactment of the Tax Cuts and Jobs Act (TCJA), a lot of folks earlier this year should have tweaked the amount of federal taxes they have taken out of their paychecks. Those TCJA changes, which went into full effect for 2018, could mean some — OK, a lot; one estimate says 30 million — taxpayers could face an unexpected tax bill when they file their returns in 2019. If you discover in a few months that you're one of... Read more →