Prevent a Tax-Time Surprise
Miscellaneous Deductions Can Trim Taxes
How a Summer Wedding Can Affect Your Taxes
Check Your Tax Withholding this
Summer to Prevent a Tax-Time Surprise
year, many people get a larger refund than they expect. Some
find they owe a lot more tax than they thought they would.
If this has happened to you, review your situation to prevent
a tax surprise. Did you marry? Have a child? Change in income?
Life events can have a major impact on your taxes. Bring the
taxes you pay closer to the amount you owe. Here are some tips
to help you come up with a plan:
Job. When you start a new job, you must fill out a Form
W-4, Employee's Withholding Allowance Certificate, and give it
to your employer. Your employer will use the form to figure
the amount of federal income tax to withhold from your pay.
Use the IRS Withholding Calculator on IRS.gov to help you fill
out the form. This tool is easy to use and it's available
Tax. If you earn income that is not subject to withholding
you may need to pay estimated tax. This may include income
such as self-employment, interest, dividends or rent. If you
expect to owe $1,000 or more in tax, and meet other
conditions, you may need to pay this tax. You normally pay it
four times a year. Use the worksheet in Form 1040-ES,
Estimated Tax for Individuals, to figure the tax.
Events. Check to see if you need to change your Form W-4
or change the amount of estimated tax you pay when certain
life events take place. A change in your marital status, the
birth of a child or the purchase of a new home can change the
amount of taxes you owe. In most cases, you can submit a new
Form W–4 to your employer anytime.
in Circumstances. If you are receiving advance payments of
the premium tax credit, it is important that you report
changes in circumstances, such as changes in your income or
family size, to your Health Insurance Marketplace. You should
also notify the Marketplace when you move out of the area
covered by your current Marketplace plan. Advance payments of
the premium tax credit help you pay for the insurance you buy
through the Health Insurance Marketplace. Reporting changes
will help you get the proper type and amount of financial
assistance so you can avoid getting too much or too little in
For more see Publication 505, Tax Withholding and Estimated
Tax. You can get it on IRS.gov/forms at any time.
Deductions Can Trim Taxes
deductions may reduce your tax bill. These may include certain
expenses you paid for in your work if you are an employee.
You must itemize deductions when
you file to claim these costs. Many taxpayers claim the
standard deduction, but you might pay less tax if you itemize.
Here are some IRS tax tips you should know about these
The Two Percent Limit. You can deduct most miscellaneous costs
only if their sum is more than two percent of your adjusted
gross income. These include expenses such as:
Job search costs for a new job in the same line of work.
Tools for your job.
Work-related travel and transportation.
The cost you paid to prepare your tax return. These fees
include the cost you paid for tax preparation software. They
also include any fee you paid for e-filing of your return.
Not Subject to the Limit. Some deductions are not subject
to the two percent limit. They include:
Certain casualty and theft losses. In most cases, this rule is
for damaged or stolen property you held for investment. This
may include property such as stocks, bonds and works of art.
Gambling losses up to the total of your gambling winnings.
Losses from Ponzi-type investment schemes.
You can't deduct some expenses. For example, you can't deduct
personal living or family expenses. Claim allowable
miscellaneous deductions on Schedule A, Itemized Deductions.
For more about this topic see Publication 529, Miscellaneous
Deductions. You can get it on IRS.gov/forms at any time.
Summer Wedding Can Affect Your Taxes
all the planning and preparation that goes into a wedding,
taxes may not be high on your summer wedding checklist.
However, you should be aware of the tax issues that come along
with marriage. Here are some basic tips to help with your
change. The names and Social Security numbers on
your tax return must match your Social Security Administration
records. If you change your name, report it to the SSA. To do
that, file Form SS-5, Application for a Social Security Card.
You can get the form on SSA.gov, by calling 800-772-1213 or
from your local SSA office.
tax withholding. A change in your marital status
means you must give your employer a new Form W-4, Employee's
Withholding Allowance Certificate. If you and your spouse both
work, your combined incomes may move you into a higher tax
bracket or you may be affected by the Additional Medicare Tax.
Use the IRS Withholding Calculator tool at IRS.gov to help you
complete a new Form W-4. See Publication 505, Tax Withholding
and Estimated Tax, for more information.
in circumstances. If you or your spouse purchased a
Health Insurance Marketplace plan and receive advance payments
of the premium tax credit in 2016, it is important that you
report changes in circumstances, such as changes in your
income or family size, to your Health Insurance Marketplace
when they happen. You should also notify the Marketplace when
you move out of the area covered by your current Marketplace
plan. Advance credit payments are paid directly to your
insurance company on your behalf to lower the out-of-pocket
cost you pay for your health insurance premiums. Reporting
changes now will help you get the proper type and amount of
financial assistance so you can avoid getting too much or too
little in advance, which may affect your refund or balance due
when you file your tax return.
change. Let the IRS know if your address changes.
To do that, send the IRS Form 8822, Change of Address. You
should also notify the U.S. Postal Service. You can ask them
online at USPS.com to forward your mail. You may also report
the change at your local post office. You should also notify
your Health Insurance Marketplace when you move out of the
area covered by your current health care plan.
filing status. If you're married as of Dec. 31,
that's your marital status for the whole year for tax
purposes. You and your spouse can choose to file your federal
income tax return either jointly or separately each year. You
may want to figure the tax both ways to find out which status
results in the lowest tax.
the right tax form. Choosing the right income tax
form can help save money. Newly married taxpayers may find
that they now have enough deductions to itemize on their tax
returns. You must claim itemized deductions on a Form 1040,
not a Form 1040A or Form 1040EZ.
Don't hesitate to call us if you
need help or want to
get started on tax planning for 2016!
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articles, as usual feel free to call our offices.
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