PEOPLES TAX SERVICE, INC.
426 E Blackstock Rd. Spartanburg SC 29301
Phone
864-574-2961 / 1-866-574-2961
864-574-0876 / 1-877-576-5179
Fax Numbers
864-576-5179
Website & Email
www.peoplestaxservicesc.com
peoplestaxservice84@gmail.com
TAX SMART NEWSLETTER
HAPPY NEW YEAR!!!
TAX SEASON START DATE
The Internal Revenue Service announced that tax season will open on Monday, January 23, 2017. The IRS will begin accepting electronic lived tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017.
Every year, taxpayers have questions about early filing. Many software companies and tax professionals will accept tax returns before opening day, January 23, 2017. That doesn’t mean that your tax return gets filed early. Those software companies and tax professionals will submit returns when IRS systems open and the IRS will begin processing paper tax returns at the same time. There is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting lived E-Filed returns.
TAX SEASON END DATE
The Internal Revenue Service (IRS) announced that the 2017 Tax Season end date for filing tax returns and extension requests will be the same as the prior Tax Season, April 18. This is due to the April 15th due date falling on a Saturday and Emancipation Day on Monday April 17.
SOME REFUNDS DELAYED UNTIL AT LEAST FEBRUARY 15
Due to changes in the PATH Act, some people will get refunds a little later. The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until February 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC. The IRS is cautioning all taxpayers to not count on getting a refund by a certain date. Though the IRS issues more than 9 out of 10 refunds within 21 days they can hold some for further review.
RESIDENTS OF SOUTH CAROLINA
Residents of South Carolina are required to file an income tax return, even if they do not earn income in the state. A resident is an individual who is “domiciled” in South Carolina.
If you moved in South Carolina from another state during the year you may be considered as a part year resident of SC and a part year resident of the other state. However, depending on the tax savings you could either file as a full year resident of SC and a nonresident of the other state or a part year resident of both states.
SC INCREASES RETIREMENT PAY DEDUCTION
Recently, South Carolina Governor Nikki Haley signed a law increasing the amount of military retired pay that can be deducted from gross income when filing state income tax for veterans receiving retired pay and surviving spouses receiving survivors’ benefits.
South Carolina joins 17 other states that exempt a portion of, or all military retired pay from state income tax. 9 states currently do not have any state income tax. By increasing the deduction to $17,500 for retirees under age 65 and $30,000 for those 65 and older, the new law almost totally eliminates state income tax on military retired pay.
Currently, veterans’ retirement income tax exemption for those 64 and younger is $3,000. Under the new law, SC military pay exemptions will be phased in over a period of five years. Under the new law, exemptions will go up to:
- $5,900 in 2016
- $8,800 in 2017
- $11,700 in 2018
- $14,600 in 2019
- $17,500 in 2020
For ages 65 and older, tax exemption is $15,000 under the current law. Under the new law, that figure increases to:
- $18,000 in 2016
- $21,000 in 2017
- $24,000 in 2018
- $27,000 in 2019
- $30,000 IN 2020
SOUTH CAROLINA INCOME TAX WITHHOLDING TABLES CHANGE
For the first time in 25 years, the South Carolina Department of Revenue (SCDOR) will update the state’s Withholding Tax tables. According SCDOR Director Rick Reames many taxpayers were having too much money withheld from wages and it was time to put money into taxpayer’s paychecks over the next 10 years. Updating the tax withholding taxes will nevertheless bring about a reduction in expected refunds. Also, he indicates that the expectation of smaller refunds may have a tremendous impact on the onslaught and potential of tax refund fraud. This is a nationwide problem that SCDOR and other states are working hard to mitigate.
Employees need to remind their employers to implement the newly updated withholding tables into their payroll systems
2016 W2 AND 1099-MISC
New this year, in an effort to reduce identity theft, the IRS is requiring employers to file Forms W2, W3 and 1099-Misc by January 31, 2017. This new requirement may result in taxpayers receiving the above mentioned forms early.
DUE DATE CHANGES
The IRS has changed the filing due dates for various business tax returns in 2017:
- Partnership tax returns (Form 1065) are due March 15, 2017.
- Corporate tax returns (Form 1120) are due April 18, 2017.
- Corporate tax returns (Form 1120S) are due March 15, 2017.
AFFORDABLE CARE ACT
Taxpayers who are filing tax returns and had insurance from the Health Insurance Marketplace (Obamacare) should bring all 1095-A Forms associated with your health insurance plan or plans to avoid refund delays.
The Marketplace will issue these forms to you as well as to the Internal Revenue Service by March 2, 2017.
Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren’t liable for the individual shared responsibility payment.
Minimum essential coverage includes government-sponsored programs, eligible employee plans, and other coverage the Department of Health and Human Services designates minimum essential coverage.
Form 1095-C is filed to any employee of an ALE member who is full-time employee for one or more months of the calendar year. ALE members must report that information for all twelve months of the calendar year for each employee.
The due date for furnishing to individuals the 2016 Form 1095-B or 1095-C, health coverage has changed from January 31, 2017, to MARCH 2, 2017.
If you normally do not file a tax return and you have health insurance from the Marketplace you are required to file one.
For tax year 2016, the penalty will rise to 2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, to a maximum of $2,085 for tax year 2017 and beyond.
TAX BREAKS EXTENDED FOR THE MIDDLE CLASS
- The $250 above-the line deduction for certain expenses of elementary and secondary school teachers.
- Qualified charitable distribution tax free from an IRA of up to $100,000 per year.
- Deduction for state and local general sales tax as an itemized deduction, instead of deducting state and local income tax.
- The American Opportunity Tax Credit qualifies for the first four years of post-secondary education. Retroactive claiming of the AOTC after the year has expired will not be allowed.
- The above the line deduction for qualified tuition and related expenses of up to $4000 subject to possible phase-outs.
- The itemized deduction for mortgage insurance premiums as qualified residence interest.
- The exclusion of debt discharge income from gross income, which is known as qualified principal residence indebtedness exclusion.
- The credit for nonbusiness energy property, such as windows and doors, which must meet certain specifications.
RETIREMENT ISSUES
Taxability of a Traditional IRA are generally taxable in the year of the distribution.
All contributions to a Traditional IRA are taxable because of the no basis aspect. If the Taxpayer made any nondeductible contributions to a Traditional IRA the taxpayer has a cost basis in the IRA equal to the amount of the nondeductible contributions.
Qualified Distributions from a Roth IRA are typically not included in gross income if certain conditions are met.
Distributions from a pension or annuity plan are taxable to the extent the payment exceeds the employee’s cost of the contract.
Under RMD rules, An IRA owner or a participant in a defined contribution plan generally must start receiving an annual required distribution by April 1 of the year following the year that the taxpayer attains the age of 701/2. Failure to take an RMD is substantial, under certain conditions the penalty could be waived.
SOCIAL SECURITY BENEFITS
Taxpayers should consider many factors whether it is in their benefit to start receiving benefits prior to reaching full retirement age (FRA). An individual who is still working, receiving benefits and not yet reached full retirement age receives reduced benefits if earnings exceed certain limits. Once a retiree reaches FRA, there is no reduction in benefits in that month and after. Approximately one-third of people who receive social security pay tax on the benefits. An individual who files a federal tax return and has combined income between $25,000 and $34,000 may have to pay taxes on up to 50% of his or her social security benefits.
However, incomes of over $34,000 will bring about a possible 85% of benefits taxable.
HOUSEHOLD CAREGIVER
Nannies and Senior Caregivers who provide care in the taxpayer’s home are typically household employees because the taxpayer controls what work is done and how it is done. However, if any agency provides the caregiver and controls his or her work, the caregiver is an employee of the agency. Employers must file Schedule H (Form 1040) household employment taxes to report federal income tax withheld for a household employee during the calendar year. Employment taxes are withheld from household employee cash wages if wages exceeds $2,000 or more during the calendar year.
CHARITABLE CONTRIBUTIONS OF FOOD INVENTORY
Taxpayers may qualify for an enhanced charitable contribution deduction if they donate food inventory. A qualified contribution must be made to a qualified organization. A qualified contribution must meet certain conditions. Remember all charitable contributions with a value of $250 or more has to have proper documentation.
IDENTITY THEFT
Continues to be a thorn in the side of IRS, Tax Practitioners and Taxpayers. Tax related identity theft occurs when someone uses a taxpayer’s stolen social security number to file a tax return claiming a fraudulent refund. Thieves may also use a stolen employer identification number (EIN) from a business client to create false W-2 to support refund fraud schemes. The IRS has implemented new procedures to prevent and detect identity theft as well as reduce the time it takes to resolve these cases. Last year the IRS stopped 1,400,000 returns ($8.7 billion in fraudulent refunds) that were confirmed to have been filed by identity thieves, and they currently have many open cases to work by hundreds of IRS criminal investigators.
Recent Comments