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Top 3 Timely Tax Tips for September

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Top 3 Timely Tax Tips for September

Tip 1: Double-Check Your Withholding Before It is Too Late – The IRS has been issuing repeated warnings that many individuals will find that they have inadequate withholding, because taking too many withholding allowances could cause you to owe this year, when you didn’t in the past.  Why?  The TCJA increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions and changed the tax rates and brackets.  Who should check their withholding?  Two-income families, working two or more jobs, who regularly take the Child Tax Credit, who have dependents, including children age 17 or older, and who itemized deductions in 2017.  For these groups, the TCJA is likely to cause your taxes to go up when deductions are factored in.  https://www.irs.gov/newsroom/irs-encourages-paycheck-checkup-for-taxpayers-to-check-their-withholding-special-week-focuses-on-changes

Tip 2: Make Your Estimated Tax Payments – Sep. 17, 2018 – the date of this writing – is the deadline for making Q3 estimated payments.  If you haven’t made your payment, its not too late.  If you are self-employed or work primarily as an independent contractor and need to make estimated tax payments, it is time to calculate what you owe and take a trip to the IRS website.  Part of the gig economy?  Drive an Uber?  Have a Turo business?  That means you.  Form 1040-ES, available on IRS.gov, is designed to help taxpayers figure these payments simply and accurately.  For tax-year 2018, estimated tax payment due dates are April 18, June 15, Sept. 17 and Jan. 15, 2019.  The fastest and easiest way to make estimated tax payments is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. For filers paying by check, the check must be made payable to the “United States Treasury.”

More information about tax withholding and estimated tax can be found on the agency’s Pay As You Go web page as well as in Publication 505, Tax Withholding and Estimated Tax.

Tip 3: Extension Filers – Go See Your Accountant!  Mon. Oct. 15, 2018 Deadline for 2017 Returns is Looming!  One thing you don’t want to do is miss the tax extension deadline.  You will immediately get hit with a failure-to-file penalty of 5% of the tax due, and an additional 5% for each additional month it takes you to get that return filed for a total of 25% of the unpaid tax after 5 months.  Add to that the smaller failure-to-pay penalty of .5% of your unpaid taxes for each month the payment is outstanding, capping out at a rate of 25% of the unpaid tax.  On top of that the interest tab starts to run at 3% above the Applicable Federal Rate (“AFR”) as published by the Treasury.  Bottom-line, even if you can’t pay get to your accountant now and make sure they have everything they need so that you can be sure to file before the deadline.

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