The IRS finally started processing returns on January 29. If you’re one of the millions of Americans who are asking, “When can I expect my income tax refund?” we have the answer. It depends on a couple of things, but the good news is that there are several tools to help find out.
First of all, taxpayers who use a professional, such as a CPA or EA, can ask that professional for an estimated date. Taxpayers who’ve already filed can also go to the Internal Revenue Service’s website, which has a tool designed specifically for that called, “Where’s My Refund?”
Coinbase told its customers on Friday that it plans to comply with a court order and hand over about 13,000 customers’ data to the IRS within 21 days. The IRS made the request back in November 2016, asking for the Coinbase records of all the people who bought bitcoin from 2013 to 2015 to seek out those who were evading cryptocurrency taxes. Anyone affected by the order should now have received an email from Coinbase to that effect.
Coinbase heavily resisted the summons. But ultimately, in November last year, the San Francisco court ruled Coinbase had to turn over identifying records for all users who have completed transactions of more than $20,000 through their accounts in a single year between 2013 and 2015. The data requested includes taxpayer IDs, names, dates of birth, addresses, and transaction records from that period.
In an email and on its website on Friday, Coinbase noted that it had tried: “Coinbase fought this summons in court in an effort to protect its customers, and the industry as a whole, from unwarranted intrusions from the government.”
It informed its 13,000 affected customers that the “court order requires us to produce information specific to your account,” but that the company could not provide legal or tax advice. So far, 2022 is shaping up to be the year that tax collectors get serious about bitcoin earnings, meaning that it’s a good time to be extra careful about compliance.
Lady Luck must be Uncle Sam’s cousin, because taxes must be paid on all gambling winnings.
Here’s a look at the federal tax forms you’ll need in order to share your wagering good fortune with the IRS. And if you lost a few rounds before your numbers came up, there’s a way you can turn those losses to your tax advantage.
Tax filing time will be here before you know it, and while it may seem like an odd time to worry about such a faraway event, that may be the first clue you have a problem. You believe you only need to think about your taxes once a year.
Sure, for plenty of individuals, if taxes come out of your paycheck, and you don’t have much excitement in your financial life, you may be perfectly fine with thinking about taxes and the Internal Revenue Service for just a few weeks or days in the first few months of the year. But there are plenty of other taxpayers who aren’t so lucky. They may be making mistakes right now that will haunt them later.
But don’t be scared. Pull out the flashlight, look into the darkness, be proactive – and make sure not to avoid these tax-filing mistakes.
Nobody likes paying taxes on the money they’ve worked hard to save and invest for their future. The taxes paid over a lifetime of investing can have a big impact on the amount of money that will be available to use for future spending and achieving goals, but commonly get overlooked when people are planning for retirement. Fortunately, you have many options to minimize the taxes on your investment portfolio. Some of them are so simple anyone can do them, while others are more complicated and may require the help of a professional.
With the end of the year looming, the window is quickly closing for taxpayers who want to minimize the taxes they will pay next spring.
What’s more, for those trying to make year-end adjustments to their income and deductions, a tax reform bill being discussed in the District of Columbia has created uncertainty. Although it’s tempting to take action based on expected changes to the law, some finance experts urge caution. “Until the law becomes formal, we have to be very careful,” says Kristin Bulat, senior vice president of strategic resources for insurance and consulting firm NFP.
Taxpayers shouldn’t make rash decisions based on a bill which may or may not become law. However, there are some smart money moves that can help hedge against potential changes.
Here are 10 tax tips to reduce the amount of federal income tax you’ll pay for 2017.
Within 24 hours after we’ve received your e-filed tax return; or
4 weeks after mailing your paper return.
When the IRS processes your tax return and approves your refund, you can see your actual personalized refund date. Even though the IRS issues most refunds in less than 21 days after we receive your tax return, it’s possible your tax return may require additional review and take longer.
As taxpayers and tax professionals race to finish up their tax returns by April 18, or opt to file for an extension, there are still a few last-minute things they can do, along with plenty to think about for next year.
“There’s not a lot of last-minute tax planning that can be done, but there are minimal things, like if you haven’t done an IRA contribution, you can both set up an IRA as well as contribute to an IRA if you’re within the limits of what would be a deduction,” said Greg Rosica, a tax partner at Ernst & Young and a contributing author of the EY Tax Guide 2017. “If you haven’t set the account up yet, it’s probably getting close to when the various custodians will still allow you to do that, but nonetheless that can be done up until April 18, next Tuesday, so that can decrease your taxes as well.”
Taxpayers and preparers should also take a close look at some of the deductions they are planning to claim.
“You can still pull together things like evaluating your state income tax situation,” said Rosica. “Make sure you have all of the right state tax deductions and payments. If you’re in a low- or no-tax state, make sure you’ve really maximized the amount of sales tax that you can do by looking at your spending for the entire year. There are tables that the IRS provides you, but for most taxpayers those tables aren’t accurate. They’re not going to give you the best answer. Search through your credit card statements and the year-end summary of the credit card statement to look at how much you actually spent. Back out things that are not sales taxable, like groceries and things like that. Then you can make a pretty good estimate based on that as to how much sales tax you paid, which is probably in most cases well in excess of what’s provided in the tables. Digging a little deeper for some deductions that you may be entitled to is something that still can impact your taxes. Even though you can’t change what you’ve already spent, maybe you can refine some of those things, or mine some of those items.”
Those taxpayers who are filing an extension will have some extra time to mull over their tax planning.
“As you’re finishing up ’16 and doing your tax return, it’s a great time to be focusing on what didn’t work great and what wasn’t as deductible as you thought it would be, meaning you maybe didn’t get a full benefit, or maybe you ended up being in alternative minimum tax, AMT, so that took away some of the deductions you thought you were going to get,” said Rosica. “Looking at what happened last year, and trying to change what’s happening this year, can be very effective for people.”
That can be especially true for taxpayers who find themselves subject to AMT.
“Look at the timing of things,” Rosica advised. “If you’re making certain itemized deductions that put you into AMT, maybe you should look at whether you’re going to be in AMT again this year and project that. If you are, then consider not making those payments this year because you’re going to get no tax deduction for it. Payments that are flexible in terms of timing—oftentimes things like real estate taxes, state income taxes that you paid through estimated tax payments—those generally you have flexibility as to which tax year you pay it, so you might not pay those in 2017 and push them off into January of 2022 if it looks like you’re going to be in AMT. That’s important to do.”
He also recommends taking a closer look at capital gains income. “Some people that have a lot of capital gains income and harvest a lot of losses, they may harvest enough losses to offset all their gains, but if they don’t have a lot of other income, then they don’t take advantage of the lower tax brackets,” said Rosica. “You want to make sure you have taxable income when you’re planning so you’re at least paying tax out of the lower tax brackets. I see people sometimes—particularly retired folks that generally don’t have wage income anymore, but they have income from capital gains and dividends— they can offset a lot of their income, which generally isn’t that great. You want to be able to pay income [tax] at the low brackets, the 10, the 15, the 25 percent rate each year. Otherwise if you bunch it into the following year, you’re going to be paying at much higher rates.”
While President Trump and lawmakers in Congress are working on their promised tax reform plans, it’s difficult to be certain what the tax rates and rules will be a year or two from now. That makes tax planning especially difficult this year for tax professionals.
“Because we are in a time of uncertainty as to what the rates will be and when they will change, to the extent that you can put off certain decisions or undo certain decisions, then those can be good strategies,” said Rosica. “If you have a big sale of something coming up, you want to make sure you do it for the right investment or business decision first, but if there’s flexibility as to when that can get paid, when you can realize that, maybe you do that as an installment sale. You can push out when that income is going to come to you. If tax rates actually go down, then you’ve pushed it into the next year or so, and that can be very helpful to you. You can still have the sale, but maybe when you receive the proceeds can change and therefore the tax ramifications can change as well.”
Tax reform could affect certain tax deductions, such as for charitable contributions. “We know what the rules are today, and things aren’t necessarily going to be retroactive,” said Rosica. “They could be, but they typically are not. So taking deductions today when you know we have higher income tax rates can be beneficial. We certainly looked at that last year in ’16, not knowing when we would see things change in ’17, if they would. We knew the top rate was 39.6 percent, and if you could take a charitable deduction that offsets that. It’s worth more at 39.6 percent than it would be at 33 percent if the rates go down to that. Taking advantage of what you know today and what’s certain today can help position you for tax reform changes that might be coming.”
One of Trump’s tax reform proposals involves eliminating the AMT, and some taxpayers might want to plan ahead for that happening. “When you get those types of deductions that might be subject to AMT or eliminated because of AMT this year, if you can push those into next year, you either might not be into AMT because of your tax situation, or the AMT might not even exist, so therefore you wouldn’t be subject to it either,” Rosica suggested.
Tax time is also a great opportunity for tax clients to reevaluate their withholding. “This is a good time to do that if it looks like you’re getting a big refund,” said Rosica. “You want to be controlling that money throughout the year, not the government, so adjust your W-4 if you still get big refunds. If you like the surprise of the refund and the exhilaration from it, that’s fine. Just set up a new bank account and put it in there, and don’t ever look at the statements until April of next year.”
As tax season rushes to a close, the IRS is reminding tax professionals that some of their clients in special situations qualify for more time to file without having to ask.
First and foremost are victims of natural disasters.Taxpayersin several presidentially declared disaster areas across the country qualify for more time to file their returns and pay any taxes due.
Currently (and depending on Mother Nature), taxpayers in parts of Georgia and Mississippi have until May 31 to file and pay. Taxpayers in parts of Louisiana have until June 30.
These extensions also apply to other tax-related actions, including the deadline for contributing to an IRA.
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