Hello Fellow Taxpayers,
For those of you who wait with great anticipation for my weekly emails, I am sorry that I did not prepare one last week.
After a few days in Dallas where Ali and I attended our annual tax practice “enhancement” summit, I was back in town this past week (yes, a whole week). However, I head out to DC after the Labor Day holiday for the Internal Revenue Service Advisory Council’s late summer meetings (IRSAC). For those of you who do not know what IRSAC is let me explain. The council makes recommendations to the IRS Commissioner on many topics depending on what the members feel needs fixing at a systemic level. Several business acquaintances and clients asked me to do something about the tax laws. Unfortunately, we have no input on tax law as that is Congress’s job, and they tend not to listen to anyone.
This week I am busy preparing business (corporations and partnerships) tax returns for 2018. These extended returns are due September 15th with no additional extensions allowed. Then it is on to extended personal and trust returns that now have a due date of October 15th.
Speaking of September 15th, are you ready to make your third-quarter estimate? Are you sure that your withholdings on your paystub are enough to pay your tax? Are you withholding too much? You do not want too much of a refund that equates to you are giving the US Government a tax-free loan.
I just prepared a return that generated a low 5 figure refund. The client was ecstatic as she was expecting about half that. That is way too much. When I explained that she could have used that money each pay period (almost $200 per week), she never thought of it that way (Even half of that amount is too much). She said she likes that money at one shot. I asked her if she can direct deposit her check. She does, so I suggested splitting it into two accounts. I received a call yesterday telling me that she did and was appreciative.
IRS Tax Withholding Estimator
The IRS has developed a “Tax Withholding Estimator” (https://www.irs.gov/individuals/tax-withholding-estimator). IRSAC was asked to review this, and I did. It is not bad, and better than nothing. It will give you a general idea as to where you are. Free is good! We also can do that for you (though it is not without a cost). If you would like a paycheck review, book your appointment online, https://meetme.so/SFSTax
The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.” This is even more important following the recent changes to the tax law for 2018 and beyond. The Estimator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work. This is even more important following the recent changes to the tax law for 2018 and beyond.
Could you use some additional money each pay period? Or could you not owe a significant amount come April, or at least not be surprised when you do? Many people believe that being a wage earner (only has a W2) that knowing where you are is not necessary. However, with all the law changes in 2018, it may be more important than ever. It is especially important if you are a sole proprietor (even LLC’s can be taxed as if it does not exist) or an S-corporation shareholder. Or if you have other income items outside of a W2.
So take advantage of the IRS estimator or give us a call. You should consider this task sooner rather than later.
So until next time,
C Ya and have a fun three day weekend. Stay dry!
Jeffrey “The Great Estimator” Schneider