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TaxTip of the Week | No. 343 | Filing Status February 24, 2016

Posted by bradstreetblogger in : Electronic Tax Filing, General, tax changes, Tax Deadlines, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes , add a comment

Tax Tip of the Week | February 24, 2016 | No. 343 | Filing Status

How Are You Going to File?

Some tips are worth repeating—-a reminder we offer every year:

If you were legally married on 12/31/15, the IRS considers you married for the entire year of 2015.

You now must decide if you are going to file as Married Filing Jointly (MFJ) or Married Filing Separately (MFS). Note, however, if you file MFJ it is an irrevocable election—you cannot go back and amend a MFJ return to a MFS return.

The primary reason to file MFS is to pay less tax.  This is particularly beneficial to save on the amount of Ohio taxes paid.  Another reason to file separately is to avoid joint liability. Each spouse who signs a joint return is responsible for the accuracy and tax liability on the return.

Many times, for example, in a second marriage situation we see couples who have a desire to maintain separate financial responsibilities.  While this is understandable, it could lead to paying several thousand dollars in additional taxes.  If you file MFS, you will lose the following:

–    Lost credits for child care, education credits, adoption credits and EIC
–    Student loan interest deduction, tuition and fees deduction, savings bond interest deduction
–    If one spouse itemizes, or takes the standard deduction, the other spouse must do the same.  (That is, one cannot itemize and the other take the standard deduction.)
–    A greater percentage of your Social Security benefits may be taxable
–    Your ability to contribute to traditional or Roth IRA will be greatly limited
–    Capital losses will be limited to a maximum of $1,500
–    Passive losses will be limited

Before filing your return you need to look at both MFJ and MFS to see which lowers your tax burden the greatest.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 342 | 2016 Filing Deadlines February 17, 2016

Posted by bradstreetblogger in : General, tax changes, Tax Deadlines, Tax Preparation, Uncategorized , add a comment

Tax Tip of the Week | February 17, 2016 | No. 342 | 2016 Filing Deadlines

The tax season is a little bit longer this year…

As you know, your federal and state tax returns are generally due on April 15th of each year.  For 2015 returns, however, you get a few extra days.

The deadline for 2015 returns is April 18, 2016.  This is because Washington, D.C. will celebrate their Emancipation Day holiday on Friday April 15, 2016. This pushes the deadline to the following Monday for most of the nation. (Due to Patriots Day, the deadline will be Tuesday, April 19, for Maine and Massachusetts residents.)

(The change from the normal Friday deadline date to the following Monday also means our office will be open one additional weekend—we will so look forward to that!)

In addition to observance of these local holidays, 2016 is also a Leap Year. This adds another day in February.

So use your four extra days wisely in 2016 to meet your filing deadline on time!
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 341 | IRS Tests W-2 Verification Codes for Next Season February 10, 2016

Posted by bradstreetblogger in : General, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | February 10, 2016 | No. 341 | IRS Tests W-2 Verification Codes for Next Season

For filing season 2016, the Internal Revenue Service will test a capability to verify the authenticity of W-2 data as part of a series of steps to combat tax-related ID theft and refund fraud.

The IRS has partnered with certain payroll service providers to include a 16-digit code and a new verification code field on a limited number of W-2 copies provided to employees. The code will be displayed in four groups of four alphanumeric characters, separated by hyphens.

The verification code will appear on some versions of payroll firms’ W-2 Copies B and C, in a separate, labeled box (Copy B is “To be filed with employee’s federal tax return” and Copy C is “For employee’s records.”)

The form will include these instructions to taxpayer and tax preparers: “Verification Code. If this field is populated, enter this code when it is requested by your tax return preparation software. It is possible your software or preparer will not request the code. The code is not entered on paper-filed returns.”

Some W-2 employees receive will have a “verification code” box that is blank. These taxpayers do not need to enter any code data into their tax software product.

For the purposes of the test, omitted and incorrect W-2 verification codes will not delay the processing of a return. The IRS will analyze this pilot data to see if it is useful in evaluating the integrity of W-2 information.

The code will not be included in W-2s or W-2 data submitted by the payroll service providers to the Social Security Administration or any state or local departments of revenue, nor will this pilot affect state and local income tax returns or paper federal returns.

 
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 340 | Ohio Tax Forms Revamped in 2016 February 3, 2016

Posted by bradstreetblogger in : Deductions, General, tax changes, Tax Preparation, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | February 3, 2016 | No. 340 | Ohio Tax Forms Revamped in 2016

New forms for your 2015 tax return……

The Ohio Department of Taxation is continuously looking for ways to simplify the income tax filing process. This year, several tax forms have been revamped to make the process easier and more efficient.

Most prominently, the IT 1040, IT 1040 EZ and amended IT 1040X forms have been consolidated into one Universal IT 1040 tax return. Combining these forms will allow amended returns to be filed electronically, rather than on a paper form as required previously. It will also enable refunds from amended returns to now be direct deposited, rather than issuing a paper check as was done in the past.

This will speed up processing and the delivery of refunds. Taxpayers will also benefit by seeing all of the tax credits in one place, making it easier to identify those credits for which they are eligible.

Similarly, the SD 100 and amended SD 100X school district forms have been merged into the Universal SD 100 tax return. The universal forms and new schedules should be used for Tax Year 2015 and thereafter. However, the relevant old forms should still be used for Tax Years 2014 and earlier.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.