Author: LiberatoreCPA

What If You Want To File Your Taxes But Can’t Afford To Pay Them?

It’s a common conundrum: You want to file your taxes on time, but you anticipate or already know that you will owe money you can’t afford to pay right now. As a result, you put off filing your tax return under the assumption that the IRS can only bill you if they receive your latest outstanding tax return that’s due.

If you want to file your taxes right now, you should!

Am I Required to File a Tax Return?

You may want to file a tax return, but you are not actually required to. Generally, the gross income filing requirement is based on the standard deduction plus personal exemption for your filing status. The IRS has a tool to determine if you are required to file a tax return based on your income alone. Notably, taxpayers who are married and filing separately have a gross income filing requirement.

Regardless of the total reported income on your tax return, there are other situations in which you must file a tax return. If you owe self-employment tax on net self-employment income of $400 or more, you are obligated to file a tax return. It’s easy to go past this amount if you drive for Lyft or Uber, are giving freelance work a try, or have any other form of self-employment income that nets out to $400 or more after your deductible expenses.

You also must file a tax return if you receive Affordable Care Act subsidies for your health insurance, and if you have any recapture payments such as the First-Time Homebuyer Credit. Any early distributions taken against an IRA or 401(k) also require you to file a tax return even if you had no other income, and the same is true if you reach age 70 1/2 during the tax year and were required to make required minimum distributions (RMDs) from your retirement plan, but did not actually start these payments yet.

Even if you are not mandated to file a tax return, you may still want to file one to get a tax refund. If you aren’t due a tax refund, it’s still a good idea to have a tax return on file with the IRS. Tax returns are commonly requested when applying for a lease or mortgage, or to show proof of income and demonstrate ability (or inability) to pay for higher education and other important aspects of life that may arise.

Filing a Tax Return vs. Paying Your Actual Tax Bill

A common misconception is that you need to pay all taxes due when you file your tax return. While it’s prudent to do so, you are not actually required to. Filing your actual tax return is still the very first thing you should do no matter how much you owe, even if you’re filing it late. Doing so will prevent steep penalties from being incurred if you were required to file a tax return. Additionally, if you put off filing your tax return for too long, the IRS can file a substitute return that won’t apply any tax benefits and will make their assessment against you larger than it actually should be.

Even if you can’t afford to put anything toward your tax bill right now, the very least you should do is file your tax return before the deadline every year. If you want to file your taxes despite being unable to pay your bill right now, you can still do so.

Receiving an Automated Tax Bill  From the IRS

If you are unable to pay your taxes, you should still file a tax return without including payment. You can also include a partial payment of any size, even if it’s a small amount like $20. The IRS will not issue a judgment that quickly after you file your return, and even a small payment can help you save some money on interest.

If you do not pay your entire tax bill upon filing your return, the IRS will send an automated bill by mail. You can pay your balance before the bill arrives if you have the money to do so, but getting the bill in the mail doesn’t mean you are facing a lien against your bank account.

Interest will accrue on the unpaid balance as long as it goes unpaid, but owing money is a separate concept from filing your tax return on time, so you can and should file even if you can’t pay.

Hobby or Business? It Makes a Difference for Taxes – Now More than Ever

Taxpayers are often confused by the differences in tax treatment between businesses that are entered into for profit and those that are not, commonly referred to as hobbies. Recent tax law changes have added to the confusion. The differences are:

Businesses Entered Into for Profit – For businesses entered into for profit, the profits are taxable, and losses are generally deductible against other income. The income and expenses are commonly reported on a Schedule C, and the profit or loss—after subtracting expenses from the business income—is carried over to the taxpayer’s 1040 tax return. (An exception to deducting the business loss may apply if the activity is considered a “passive” activity, but most Schedule C proprietors actively participate in their business, so the details of the passive loss rules aren’t included in this article.)

Hobbies – Hobbies, on the other hand, are not entered into for profit, and the government currently does not permit a taxpayer to deduct their hobby expenses but does require the income from the activity to be declared. (Prior to the changes included in the Tax Cuts and Jobs Act of 2017, hobbyists were allowed to deduct expenses up to the amount of their hobby income as a miscellaneous itemized deduction on Schedule A. Being able to take this deduction is suspended for years 2018 through 2025.) Thus, hobby income is reported on Schedule 1 of their 1040 and no expenses are deductible.

So, what distinguishes a business from a hobby? The IRS provides nine factors to consider when making the judgment. No single factor is decisive, but all must be considered together in determining whether an activity is for profit. The nine factors are:

(1) Is the activity carried out in a businesslike manner? Maintenance of complete and accurate records for the activity is a definite plus for a taxpayer, as is a business plan that formally lays out the taxpayer’s goals and describes how the taxpayer realistically expects to meet those expectations.

(2) How much time and effort does the taxpayer spend on the activity? The IRS looks favorably at substantial amounts of time spent on the activity, especially if the activity has no great recreational aspects. Full-time work in another activity is not always a detriment if a taxpayer can show that the activity is regular; time spent by a qualified person hired by the taxpayer can also count in the taxpayer’s favor.

(3) Does the taxpayer depend on the activity as a source of income? This test is easiest to meet when a taxpayer has little income or capital from other sources (i.e., the taxpayer could not afford to have this operation fail).

(4) Are losses from the activity the result of sources beyond the taxpayer’s control? Losses from unforeseen circumstances like drought, disease, and fire are legitimate reasons for not making a profit. The extent of the losses during the start-up phase of a business also needs to be looked at in the context of the kind of activity involved.

(5) Has the taxpayer changed business methods in an attempt to improve profitability? The taxpayer’s efforts to turn the activity into a profit-making venture should be documented.

(6) What is the taxpayer’s expertise in the field? Extensive study of this field’s accepted business, economic, and scientific practices by the taxpayer before entering into the activity is a good sign that profit intent exists.

(7) What success has the taxpayer had in similar operations? Documentation on how the taxpayer turned a similar operation into a profit-making venture in the past is helpful.

(8) What is the possibility of profit? Even though losses might be shown for several years, the taxpayer should try to show that there is realistic hope of a good profit.

(9) Will there be a possibility of profit from asset appreciation? Although profit may not be derived from an activity’s current operations, asset appreciation could mean that the activity will realize a large profit when the assets are disposed of in the future. However, the appreciation argument may mean nothing without the taxpayer’s positive action to make the activity profitable in the present.

There is a presumption that a taxpayer has a profit motive if an activity shows a profit for any three or more years within a period of five consecutive years. However, the period is two out of seven consecutive years if the activity involves breeding, training, showing, or racing horses.

All of this may seem pretty complicated, so please call thif you have any questions or need additional details for your particular circumstances.

MIDYEAR 2019 TAX PLANNING LETTER

Dear Clients and Friends,

For better or worse, the past tax season provides you a clear picture of how the updated tax code impacts your situation. Now it’s time to use this insight to ensure you’re in the best position to effectively minimize your 2019 tax obligations.

Consider the actions you can take today that will make a difference to next year’s tax bill. Have you adjusted your withholdings or boosted your retirement plan contributions? Are you saving the right records for the deductions you want to take? If you own a business, have you made any equipment purchases or updated your employee benefits? Address these questions now while there’s still time to adjust your money-saving strategies for maximum results.

Call today to set up a midyear review so you can make the most of your tax-cutting efforts. And as always, feel free to share this newsletter with friends and associates who are interested in cutting their tax bills for 2019 and beyond.

Letter Highlights

Plan now and pay less later – Procrastination is easy, especially when it comes to summertime tax planning. But waiting to implement strategies to reduce your 2019 tax obligations could cost you money. CONTINUE READING HERE

Add your business tax planning to your summer to-do list – A midyear tax review of your business can pay off in big ways. CONTINUE READING HERE

Fund retirement or your child’s education? Should you prioritize your own future over your child’s education? This is an emotionally charged question that leads many parents to fund college at the expense of their own retirement. However, with proper planning, you may be able to fund your retirement and still offer financial support for college. CONTINUE READING HERE

Read the complete letter here: http://www.planningtips.com/Planning_Tips.asp?Co_ID=42935&Tip_ID=4422

New Twists on Tax Scams

On June 5, 2019, The IRS released and article urging taxpayers to be on the lookout for a spring surge of evolving phishing emails and telephone scams. 

The IRS is seeing signs of two new variations of tax-related scams. One involves Social Security numbers related to tax issues and another threatens people with a tax bill from a fictional government agency. Here are some details:

  • The SSN hustle. The latest twist includes scammers claiming to be able to suspend or cancel the victim’s Social Security number. In this variation, the Social Security cancellation threat scam is similar to and often associated with the IRS impersonation scam. It is yet another attempt by con artists to frighten people into returning ‘robocall’ voicemails. Scammers may mention overdue taxes in addition to threatening to cancel the person’s SSN.
  • Fake tax agency. This scheme involves the mailing of a letter threatening an IRS lien or levy. The lien or levy is based on bogus delinquent taxes owed to a non-existent agency, “Bureau of Tax Enforcement.” There is no such agency. The lien notification scam also likely references the IRS to confuse potential victims into thinking the letter is from a legitimate organization.

Both display classic signs of being scams. The IRS and its Security Summit partners – the state tax agencies and the tax industry – remind everyone to stay alert to scams that use the IRS or reference taxes, especially in late spring and early summer as tax bills and refunds arrive.

As a reminder the IRS will never: 

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.

Report the caller ID and/or callback number to the IRS by sending it to [email protected] (Subject: IRS Phone Scam)

June Estimated Tax Payments Are Around The Corner

June 15th falls on the weekend this year, so the due date for the second installment of estimated taxes is the next business day, June 17, which is just around the corner. So, it is time to determine if your estimated tax payment should be lowered if you overestimated your income for 2019 or increased if you underestimated it.

Unlike employees, a self-employed individual must estimate his or her net earnings for the year and pay taxes on a quarterly basis according to that estimate. Failure to do so will result in interest penalties.

The self-employed are not the only ones who are subject to estimated tax requirements, which also apply to anyone who has income that is not subject to withholding taxes and even to those whose taxes are not sufficiently withheld. Thus, if you have income from stock sales, property sales, investments, alimony, partnerships, S-corporations, inherited pension plans, or other sources that are not subject to withholding, you may also be required to pay either estimated taxes or an underpayment penalty. Others subject to making estimated payments are individuals who must pay special taxes such as the 3.8% tax on net investment income or the employment tax on household employees.

Although these payments are called “quarterly” estimates, the periods they cover do not usually coincide with a calendar quarter.

Quarter
Period Covered
Months
Due Date*
First January through March 3 April 15
Second April and May 2 June 15
Third June through August 3 September 15
Fourth September through December 4 January 15

 

 *If the due date falls on a Saturday, Sunday, or holiday, the payment is due on the next business day.

An underestimate penalty won’t apply if the tax due on a return (after withholding and refundable credits) is less than $1,000; this is the “de minimis amount due” exception. When the tax due is $1,000 or more, underpayment penalties are assessed.

These underpayment penalties are determined on a quarterly basis, so an underpayment in an earlier quarter cannot be made up for in a later quarter; however, an over payment in an earlier quarter is applied to the following quarter.

The amount of an estimated payment is determined by estimating one fourth of the taxpayer’s tax for the entire year; the projected tax is paid in four installments. When the income is seasonal, sporadic, or the result of a windfall, the IRS provides a special form, and the underpayment penalty is based on actual income for the period.

For individuals who do not want to take the time to estimate their quarterly taxes but who still want to avoid the underpayment penalty, Uncle Sam also provides safe-harbor estimates.

However, even these can be tricky. Generally, a taxpayer can avoid an underpayment penalty if his or her withholding and estimated payments are equal to or greater than:

  • 90% of the current year’s tax liability or
  • 100% of the prior year’s tax liability.

However, these safe harbors do not apply if the prior year’s adjusted gross income is over $150,000, in which case, the safe harbors are:

  • 90% of the current year’s tax liability or
  • 110% of the prior year’s tax liability.

Sometimes, individuals who have withholding on some (but not all) of their sources of income will increase that withholding to compensate for the additional income that comes from sources that have no withholding. Although this may work, withholding adjustments are not as precise as quarterly payments and should be used with caution. Similarly, when the safe harbor method based on the prior year’s tax liability is used, and the taxpayer has some withholding and also makes estimated tax payments, it’s important to monitor the current year’s withholding to be sure that the combined withholding and estimated installment prepayments will meet the safe harbor target amount.

We can assist you in estimating payments, adjusting withholding, and setting up safe-harbor payments. Please call for assistance at 562-404-7996 for more information.

School’s Out – Who Is Going to Take Care of the Kids?

Summer has just arrived, and there is a tax break that working parents should know about. Many working parents must arrange for care of their children under 13 years of age (or any age if disabled) during the school vacation period. A popular solution — with a tax benefit — is a day camp program. The cost of day camp can count as an expense toward the child and dependent care credit. But be careful; expenses for overnight camps do not qualify. Also, not eligible are expenses paid for summer school and tutoring programs.

For an expense to qualify for the credit, it must be an “employment-related” expense; i.e., it must enable you and your spouse, if married, to work, and it must be for the care of your child, stepchild, foster child, brother, sister or stepsibling (or a descendant of any of these) who is under 13, lives in your home for more than half the year and does not provide more than half of his or her own support for the year. Married couples must file jointly, and both spouses must work (or one spouse must be a full-time student or disabled) to claim the credit.

The qualifying expenses are limited to the income you or your spouse, if married, earn from work, using the figure for whoever earns less. However, under certain conditions, when one spouse has no actual earned income and that spouse is a full-time student or disabled, that spouse is considered to have a monthly income of $250 (if the couple has one qualifying child) or $500 (two or more qualifying children). This means the income limitation is essentially removed for a spouse who is a student or disabled.

The qualifying expenses can’t exceed $3,000 per year if you have one qualifying child, while the limit is $6,000 per year for two or more qualifying persons. This limit does not need to be divided equally. For example, if you paid and incurred $2,500 of qualified expenses for the care of one child and $3,500 for the care of another child, you can use the total, $6,000, to figure the credit. The credit is computed as a percentage of your qualifying expenses; in most cases, 20%. (If your joint adjusted gross income [AGI] is $43,000 or less, the percentage will be higher, but it will not exceed 35%.)

Example: Al and Janice both work, each with earned income in excess of $40,000 per year. Janice has a part-time job, and her work hours coincide with the school hours of their 11-year-old daughter, Susan. However, during the summer vacation period, they place Susan in a day camp program that costs $4,000. Since the expense limitation for one child is $3,000, their child credit would be $600 (20% of $3,000).

The credit reduces a taxpayer’s tax bill dollar for dollar. Thus, in the above example, Al and Janice pay $600 less in taxes by virtue of the credit. However, the credit can only offset income tax and alternative minimum tax liability, and any excess is not refundable. The credit cannot be used to reduce self-employment tax or the taxes imposed by the Affordable Care Act.

If the qualifying child turned 13 during the year, the care expenses paid for the child for the part of the year he or she was under age 13 will qualify.

If you have questions about how the childcare credit applies to your particular tax situation, please give us a call at 562-404-7996.

June 2019 Individual Due Dates

June 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during May, you are required to report them to your employer on IRS Form 4070 no later than June 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

June 17 – Estimated Tax Payment Due

It’s time to make your second quarter estimated tax installment payment for the 2019 tax year. Our tax system is a “pay-as-you-earn” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-earn” requirement. These include:

  • Payroll withholding for employees;
  • Pension withholding for retirees; and
  • Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is equal to the federal short-term rate plus 3 percentage points, and the penalty is computed on a quarter-by-quarter basis.

Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than $1,000 (the “de minimis amount”), no penalty is assessed. In addition, the law provides “safe harbor” prepayments. There are two safe harbors:

  • The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.
  • The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You can’t avoid the penalty under this exception.

However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.

This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. Timely payment of each required estimated tax installment is also a requirement to meet the safe harbor exception to the penalty. If you have questions regarding your safe harbor estimates, please call this office as soon as possible.

CAUTION: Some state de minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call this office for particular state safe harbor rules.

June 17 – Taxpayers Living Abroad

If you are a U.S. citizen or resident alien living and working (or on military duty) outside the United States and Puerto Rico, June 17 is the filing due date for your 2018 income tax return and to pay any tax due. If your return has not been completed and you need additional time to file your return, file Form 4868 to obtain 4 additional months to file. Then, file Form 1040 by October 15. However, if you are a participant in a combat zone, you may be able to further extend the filing deadline (see below).

Caution: This is not an extension of time to pay your tax liability, only an extension to file the return. If you expect to owe, estimate how much and include your payment with the extension. If you owe taxes when you do file your extended tax return, you will be liable for both the late payment penalty and interest from the due date.

Combat Zone – For military taxpayers in a combat zone/qualified hazardous duty area, the deadlines for taking actions with the IRS are extended. This also applies to service members involved in contingency operations, such as Operation Iraqi Freedom or Enduring Freedom. The extension is for 180 consecutive days after the later of:

  • The last day a military taxpayer was in a combat zone/qualified hazardous duty area or served in a qualifying contingency operation, or have qualifying service outside of the combat zone/qualified hazardous duty area (or the last day the area qualifies as a combat zone or qualified hazardous duty area), or
  • The last day of any continuous qualified hospitalization for injury from service in the combat zone/qualified hazardous duty area or contingency operation, or while performing qualifying service outside of the combat zone/qualified hazardous duty area.

In addition to the 180 days, the deadline is also extended by the number of days that were left for the individual to take an action with the IRS when they entered a combat zone/qualified hazardous duty area or began serving in a contingency operation.

It is not a good idea to delay filing your return because you owe taxes. The late filing penalty is 5% per month (maximum 25%) and can be a substantial penalty. It is generally better practice to file the return without payment and avoid the late filing penalty. We can also establish an installment agreement, which allows you to pay your taxes over a period of up to 72 months.

Please contact this office for assistance with an extension request or an installment agreement.

Forget Something on Your 2018 Return?

If you forgot to include necessary information on your 2018 return, you are not alone. In addition, you may have received a revised 1099 or K-1 since filing your return. The IRS has struggled to deal with the enormity of the changes in the recent tax reform; despite significant pressure to update its regulations, forms, and publications, the IRS could not finish all of its tax-reform updates in a timely manner. Some IRS publications still have not been updated for 2018, and others even include errors. The new tax regulations have been dribbling out, but the IRS still has not provided sufficient guidance for some issues.

As a result of this uncertainty, you may receive a corrected 1099 or K-1. You may also need to update your return because, like most taxpayers, you did not fully comprehend all of the provisions of the new tax law thus failing to include an item of income, deduction, or credit. You also may have simply overlooked an item of income or missed a significant deduction. These mistakes happen, which is why the IRS and state tax agencies allow for amended tax returns.

A failure to report an item of income will generate an IRS inquiry; this typically happens a year or so after the filing of the original return—which is after the interest and penalties have built up. On the other hand, if you forgot a deduction and are owed a refund, you should not let that go by the wayside.

In some cases, marital problems lead taxpayers to file incorrectly—for instance, by incorrectly claiming children or not allocating income correctly. These and myriad other issues can be corrected by amending the returns. As warning, please note that, if you are married and filed a joint return, you cannot amend to file separate returns. However, a married couple’s separate returns can be amended into a single joint return.

Regardless of the issue, the solution is to file an amended return as soon as possible. This will minimize the penalties and interest in the case of omitted income and will also prevent you from getting those annoying letters from the IRS. Amended returns can also be used to claim an overlooked credit, to correct your filing status or number of dependents, to report an omitted investment transaction, to submit a delayed K-1, or to include any other information that should have been on the original return.

If an overlooked item results in a tax increase, filing the amended return quickly will mitigate the penalties and interest. Procrastination will lead to further complications when the IRS eventually determines that information is missing, so it is always best to take care of the issue right away.

Generally, to claim a refund on an amended return, you must file the amendment within three years of the date when you filed the original return, or within two years of the date when you paid the tax—whichever is later.

If any of these issues apply to you, please give this office a call so that we can prepare the necessary amended returns.

Made a Mistake on Your Tax Return?

Generally speaking, tax return mistakes are a lot more common than you probably realize. Taxes are naturally complicated, and the paperwork required to file them properly is often convoluted. This is especially true if you’re filing your taxes yourself — and all of this is in reference to a fairly normal year as far as the IRS is concerned.

The 2018 tax year, however, certainly does not qualify as a “normal year.”

With the passage of the Tax Cuts and Jobs Act, even seasoned financial professionals are having a hard time digesting all of the changes that they and their clients are now dealing with. All of this is to say that if you’ve just discovered that you’ve made a BIG mistake on your tax return this year, the first thing you should do is stop and take a deep breath. It happens. It’s understandable. There ARE steps that you can take to correct the situation quickly — you just have to keep a few key things in mind.

Fixing Tax Return Mistakes: Here’s What You Need to Do

All told, you have three years from the date that you originally filed your tax return (or two years from the date you paid the tax bill in question) to make any corrections necessary to fix your mistakes. If nothing about your return ultimately changes, you probably don’t have anything to worry about — in fact, there’s a good chance that the IRS will catch the mistake and fix it themselves. This is especially true in terms of math errors, or if you’ve left out an important document. The IRS will probably send you a letter letting you know what happened and what you need to do to correct it.

If fixing the mistake ultimately results in you owing more taxes, you should pay that difference as quickly as possible. Penalties and interest will keep accruing on that unpaid portion of your bill for as long as it takes for you to pay it, so it’s in your best interest to take care of this as soon as you can afford to do so.

If you’ve made a much larger mistake (like if you understated or overstated your income, for example), you’ll need to file what is called an amended tax return. This is essentially your “second chance” at getting things right, and the timetable above still applies. Understand, however, that ALL errors must be corrected in the amended return. This means that if you find three errors that will reduce your tax liability and two that actually increase it, you are legally required to correct all five. You can’t correct only the mistakes that benefit you.

An amended return can be used to correct a variety of issues, including but not limited to ones like:

  • Overstating or understating your income
  • Changing an incorrect filing status
  • Accounting for dependents
  • Taking care of discrepancies in terms of deductions or tax credits

If any of the above apply to the error you’ve just discovered, you can — and absolutely should — file an amended return.

A sudden increase in your tax liability notwithstanding, it’s again important to understand that even “major” errors on your income taxes aren’t really worth stressing out about. The IRS understands that sometimes mistakes happen, and they have a variety of processes in place designed to help make things right.

This does, however, underline how valuable it can be to partner with the right financial professional to do your taxes next year. You’ve got a career and a life to lead — you’re probably not going to be up to date on every small change that rolls out in the tax code. A financial professional will, as it is literally their job to do so.

If nothing else, this will help generate some much-needed peace-of-mind regarding the accuracy of your return. You won’t have to worry about whether or not the IRS is going to find some big mistake down the road because you’ve dramatically reduced the chances of those mistakes happening in the first place.

Happy Tax Day!

April 15 is a date Americans often dread. But this year, as millions of families finished filing their taxes, most were in for a pleasant surprise: a much lower bill from Uncle Sam.

Today marks the first “Tax Day” under President Donald J. Trump’s new, simplified tax code. “When government loosens its grip, there is no summit we cannot reach,” the President said before the Tax Cuts and Jobs Act passed into law in 2017. He promised that historic tax cuts would “breathe new life into the American economy.”

He was right. Here are some of the big wins for working families under the new code:

  • A doubled Child Tax Credit—from $1,000 to $2,000 per child
  • A nearly doubled Standard Deduction
  • More than $2,000 in savings for an average family of four earning $75,000
  • $5.5 trillion in total tax cuts, nearly 60 percent of which goes to families

Just as important, President Trump fixed the business tax code to put American companies—and our workers—on a level playing field with the rest of the world. In addition to lowering our sky-high statutory corporate tax rate, the Tax Cuts and Jobs Act also allowed businesses to immediately deduct expenses to invest in growing their companies.

America is open for business again as a result of those reforms:

  • Real GDP growth hit 3 percent recently for the first time since 2005
  • Half a trillion dollars in investment poured back into the U.S in 2018 alone
  • For the first time ever, there are more job openings than unemployed workers
  • Small business optimism soared a record high in 2018

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