The new 2020 W-4 Form. What shall we do?

Now that tax season is underway we may find a few of you may need a bit of adjustment to your W-2 withholding.  So just like always just give your employer a new W-4 form and change the number of exemptions and your filing status. Right?  No Wrong!

IRS has radically changed the W-4 form. No more exemptions. Simpler? Kinder? Easier to fill out? No. In fact extremely confusing. The good news is if you already have a job and like your withholding the way it is, you can keep it (shades of Obamacare).

The problem is what if you want to decrease your withholding to get less of a refund or increase it so that you have more tax withheld because you owed tax on this year's return. Or what if you take a new job? All bets are off and "if you like it you can keep it withholding" is out the window and you have to start from scratch.

Step 1 is the easiest part of filling out the form: note your filing status which will determine your withholding, Single, Married, or Head of Household. Keep in mind that we have have already advised some of our married clients to use the Single status anyway as there withholding was always short.    

Step 2 Sends you to a multiple jobs work sheet because just like Cheech Marin you must have three jobs or well, at least a spouse that works too.


 Step 3 Identifies whether you think (Yes? No? Maybe?) you'll be entitled to the $2,000 child credit and $500 credit for other dependents.

Step 4 Is probably the most sensible part of the form all together. 

a) What other income do you have? Interest,? Dividends? Uber?
 (OK we'll try and withhold on that too!)

b)  Deductions - this is messy. This line attempts to ask you if you are itemizing and if so how much will it be in excess of the standard deduction.  Too much thinking is required for this line I think.  If you have to fill out a new W-4 form, maybe it's better to just leave this blank for many of you.

c) Yes please withhold extra. Oh this is a good idea, especially if you owed money last year or there is some extraneous circumstance.  Our concern is if you are filing the W-4 to just do this it will not work as it will through  your "if you like it you can keep it withholding" from your job into a tailspin. Thus the job withholding will start on the new system from scratch.


One more thing. If you think this is just too hard to fill our on your own, IRS has a web application that will estimate your withholding needs and fill out the W-4 form for you.  We've tried it ourselves and find it difficult to use and we feel it could mess you up even more. Hopefully we've gotten it right last year and you won't need to change anything.

 Call us if you are a client and have any questions.
 


   

Huh! Why Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 may matter to you

The recently enacted “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (P.L. 114-41) contains significant changes to filing deadlines and extensions for certain business and special entity tax returns.


On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.” Although this new law was primarily designed as a 3-month stopgap extension of the Highway Trust Fund and related measures, it includes a number of important tax provisions, including revised due dates for partnership and C corporation returns and revised extended due dates for some returns. This provides an overview of these provisions, which may have an impact on you, your family, or your business.

Revised Due Dates for Partnership and C Corporation Returns
Domestic corporations (including S corporations) currently must file their returns by the 15th day of the third month after the end of their tax year. Thus, corporations using the calendar year must file their returns by Mar. 15 of the following year. The partnership return is due on the 15th day of the fourth month after the end of the partnership's tax year. Thus, partnerships using a calendar year must file their returns by Apr. 15 of the following year. Since the due date of the partnership return is the same date as the due date for an individual tax return, individuals holding partnership interests often must file for an extension to file their returns because their Schedule K-1s may not arrive until the last minute.
Under the new law, in a major restructuring of entity return due dates, effective generally for returns for tax years beginning after Dec. 31, 2015:

• Partnerships and S corporations will have to file their returns by the 15th day of the third month after the end of the tax year. Thus, entities using a calendar year will have to file by Mar. 15 of the following year. In other words, the filing deadline for partnerships will be accelerated by one month; the filing deadline for S corporations stays the same. By having most partnership returns due one month before individual returns are due, taxpayers and practitioners will generally not have to extend, or scurry around at the last minute to file, the returns of individuals who are partners in partnerships.
• C corporations will have to file by the 15th day of the fourth month after the end of the tax year. Thus, C corporations using a calendar year will have to file by Apr. 15 of the following year. In other words, the filing deadline for C corporations will be deferred for one month.

Keep in mind that these important changes to the filing deadlines generally won't go into effect until the 2016 returns have to be filed. Under a special rule for C corporations with fiscal years ending on June 30, the change is deferred for ten years — it won't apply until tax years beginning after Dec. 31, 2025.

Revised Extended Due Dates for Various Returns
Taxpayers who can't file a tax form on time can ask the IRS for an extension to file the form. Effective for tax returns for tax years beginning after Dec. 31, 2015, the new law directs the IRS to modify its regulations to provide for a longer extension to file a number of forms, including the following:

• Form 1065 (U.S. Return of Partnership Income) will have a maximum extension of six-months (currently, a 5-month extension applies). The extension will end on Sept. 15 for calendar year taxpayers.
• Form 1041 (U.S. Income Tax Return for Estates and Trusts) will have a maximum extension of five and a half months (currently, a 5-month extension applies). The extension will end on Sept. 30 for calendar year taxpayers.
• The Form 5500 series (Annual Return/Report of Employee Benefit Plan) will have a maximum automatic extension of three and a half months (under currently law, a 2½ month period applies). The extension will end on Nov. 15 for calendar year filers.

FinCEN Report Due Date Revised
Taxpayers with a financial interest in or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Currently, this form must be filed by June 30 of the year immediately following the calendar year being reported, and no extensions are allowed.
Under the new law, for returns for tax years beginning after Dec. 31, 2015, the due date of FinCEN Report 114 will be Apr. 15 with a maximum extension for a 6-month period ending on Oct. 15. The IRS may also waive the penalty for failure to timely request an extension for filing the Report, for any taxpayer required to file FinCEN Form 114 for the first time.
I hope this information is helpful. If you would like more details about these changes or any other aspect of the new law, please do not hesitate to c

Happy New Year 2015 from these guys!

Its 2015 and well another year has past us by and have we posted here on our blog?  No. Oh Horse feathers! There's nothing new here at all in quite a while as you can see but possibly in the future.   But read on my friend.

Visit Fred N Boehm CPA & Associates Facebook page.

But all is not lost. Head over to our Facebook page which is regularly updated.  No it is not updated by that cool kid in the picture, a third party service, but actually by Fred N Boehm CPA himself. Click this link and we'll take you there: The Fred N Boehm CPA & Associates LLC Facebook Page.

Have you been over to our Facebook page.



We are posting a lot of great information over there on Facebook as we find out about it and want to let you know. And of course if you have not already done so,  Please Like our Facebook fan page and you will automatic  ally receive updates in your stream.  

We're Tweeting, Facebooking and Blogging

Welcome to the Fred N. Boehm CPA   Social Media Party!

We're Tweeting, Face-booking, and hopefully Blogging right here too! When will you find the time for all this you might ask?   I'm not sure I said to our cute new little Maltese who is named Lulu.  She's sitting patiently by my side as we are composing this  new blog entry on our formerly dormant Blogger site. 

Winter is here and Tax Season is 2 weeks away. Watch out for dangerous curves on the road and in the new tax laws!

Sure we send our our monthly email newsletter as we've been doing for years.  But there is so much information out there I'd love to start getting it over to you as soon as I discover it.  So now I can Tweet it out from my IPod, Post a link to a PDF article on  Facebook, and who knows what else. Only the future will tell. Stay tuned!

The State tax elevator Going Up !

States are increasing income and other taxes this year in the face of the dragging economy. In California, Governor Schwarzenegger has increased income taxes, sales taxes, and car license taxes.

California's budget and it's deficit are bigger than the entire budget of many entire countries. It's deficit, originally pegged at $41 billion (Yes billion!).




Closer to home, New York's Governor Paterson has also signed a budget which adds a 7.85% bracket for high income taxpayers, and 8.97% for taxpayer earning over $500,000. Itemized deductions for those making more than $1 million dollars are now disallowed completely. Want a flat tax, here it is!

There's also an MTA Tax on employer's based on the amount of wages paid to employers in NYC and MTA surrounding suburbs. This tax also applies to self employed people.

Here in our home state of New Jersey, the tax increases just keep on coming. Governor Corzine signed the budget bill a day early, June 29, 2009. Time to change our license plates from "The Garden State" to "The Income Tax State". Congratulations, we've got the highest marginal rate in the country now. But not necessarily the highest income taxes on an effective basis, probably New York or California still hold that title!


Income tax rate increases. Here's the new added brackets:
$400,000-$500,000 8%
$500,000-$999,999 10.25%
over $1,000,000 10.76%
The old prior year brackets topped out at 6.375% up to $500,000 and 8.97% over $500,000.

Property tax deductions are limited to:
$10,000 if your income is under $150,000
$5,000 if your income is under $250,000
$0 if your income is over $250,000

Homestead Rebates are limited to those making $75,000 or less and will be less than in prior years. If you are a senior citizen or disabled, the income limit is $150,000. No Rebates for renters this year unless you're over 65 or disabled.

Increases to the taxes on cigarettes, liquor, and insurance companies. The evil doers of the world. And by the way, forget about trying to win the New Jersey Lottery! Previously not taxed, all winnings over $10,000 are now subject to state income tax and withholding. So the left hand giveth, the right hand taketh away.


If Mr. T lived here, he might say, Pity the fool who runs for governor!

Two Camels for President Obama?

Our new President is hot on the tail of jump-starting the economy. He has asked our Congress to craft an economic stimulus plan including some strategically placed tax incentives, and to have it on his desk by mid-February. It's called "The American Recovery and Reinvestment Bill" The real question is who will get the bill (Is that Al Franken I hear laughing)?


What will Congress send President Obama?

A camel of course! A Camel by definition is a horse built by a committee. When too many people are involved, what you intended to accomplish becomes so confused and mired, the result is often an odd and unusual creature.

Committees: Our Congress has lots of committees, 435 House Representatives, 99 Senators, and one Comedian waiting to be seated.



If you'll recall your grade school education: Think of the Congressional process like a giant grinder. Bills (tax) are proposed. They are sponsored by particular members of Congress, who advocate them (both in the House of Representatives and Senate). They are discussed, debated, argued, and extolled. If the two branches of Congress can agree separately to pass the bill, a committee then reconciles the two bills into one piece of law, and sends it off for the President's signature. What comes out the bottom of the grinder is often unrecognizable from what went in, kind-of like a piece of sausage.

I can tell you what is supposed to be in the bill, but not what will fall out the bottom of the grinder. Here's what's under discussion right now.

A $500 tax credit for working singles, $1,000 for working married couples, and a $300 credit for retired Seniors and the disabled. Is it a rebate like last year? No, right now it's a credit that will allegedly be passed on to you via immediate lower withholding. Oh wait! There is word that this will be as a payroll tax cut, not an income tax cut. Huh?

A $2,500 higher education credit. A $7,500 non-repayable tax credit for first-time home buyers (for houses bought until July 1).

Senator Grassley has proposed an increase in the rate of the standard mileage rate for charitable work. It has been stuck at 14 cents a mile since 1984. I'm not sure how this helps the economy. Maybe they think people wealthy people will buy more cars, so the can drive them around and get more deductions? Were you wondering? Yes Grassley is a Republican.

A Separate act called "The FREEDOM Act of 2009" (as in energy freedom) has tax credits for plug in electric vehicles and plug in conversions. Right now you can get your Prius converted to plug in if you live in San Francisco, elsewhere good luck. Factory Plug-in vehicle from auto makers are only pretty Autoshow cars at this point and not yet available for sale.

Tax increases? Thursday the Senate passed a 65 billion dollar 10 year increase in Tobacco taxes to fund State Children's Health Insurance Programs.

Stay tuned for more.