Blog - ATS Advisors - Certified Public Accountants in Plymouth, MI

IRS Withholding Calculator

On March 31, 2015 / IRS

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The Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.

Who Can Benefit From The Withholding Calculator?

Employees who would like to change their withholding to reduce their tax refund or their balance due;
Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.

CAUTION: If you will be subject to alternative minimum tax, self-employment tax, or other taxes; you will probably achieve more accurate withholding by following the instructions in Pub 505: Tax Withholding and Estimated Tax.

Ready to start? Make sure scripting is enabled before using this application. Continue to the Withholding Calculator

Tips For Using This Program

Have your most recent pay stubs handy.
Have your most recent income tax return handy.
Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.

To Change Your Withholding:

Use your results from this calculator to help you complete a new Form W-4, Employee’s Withholding Allowance Certificate.
Submit the completed Form to your employer.

For tax help or more information contact one of our offices:
Plymouth 734.454.4100, Allen Park 313.388.7180, Grayling 989.348.4055,
Royal Oak 248.399.7331, Saginaw 989.782.1985, St. Clair Shores 313.371.6600

The Health Care Law and Taxes: Reporting Coverage, Exemptions and Payments

On March 27, 2015 / IRS

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Under the Affordable Care Act, you will need to report minimum essential coverage, report or claim a coverage exemption, or make an individual shared responsibility payment when you file your 2014 federal income tax return. If you are not required to file a tax return and don’t want to, you do not need to file a return solely to report your coverage or to claim an exemption.

If you and your dependents all had minimum essential coverage for each month of the tax year, you will indicate this on your 2014 tax return by simply checking a box on Form 1040, 1040A or 1040EZ; no further action is required.

If you obtained a coverage exemption from the Marketplace or you qualify for an exemption that you can claim on your return, you will file Form 8965 with your tax return.

For any month you or your dependents did not have coverage or a coverage exemption, you will have to make a shared responsibility payment. The payment will be reported on Form 1040, line 61 in the Other Taxes section and on the corresponding lines on Form 1040A and 1040EZ.

See the Claiming and Reporting an Exemption and Individual Shared Responsibility Provision – Reporting and Calculating the Payment pages on IRS.gov for more information about figuring and reporting the payment.

Easy E-Pay and Payment Agreement Options Available to People Who Owe Income Tax

On March 24, 2015 / Uncategorized

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The Internal Revenue Service today reminded taxpayers that it’s easier than ever to pay their taxes electronically, and for those who can’t pay on time, quick and easy solutions are available.
This is the tenth and final in a series of 10 daily IRS tips called the Tax Time Guide. These tips are designed to help taxpayers navigate common tax issues as the April 15 deadline approaches.
Taxpayers who owe taxes can now choose among several quick and easy e-pay options, including the newest and easiest, IRS Direct Pay. Available options include:
• Direct Pay. Available at IRS.gov/directpay, this free online tool allows individuals to securely pay their income tax directly from checking or savings accounts without any fees or pre-registration. No need to write a check, buy a stamp or find a mailbox. Payments can even be scheduled up to 30 days in advance, and the tool is available round the clock. Any taxpayer who uses the tool receives instant confirmation that their payment was submitted.
• Electronic Federal Tax Payment System. This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll or for more information, call 800-316-6541 or visit www.eftps.gov.
• Electronic funds withdrawal. E-file and e-pay in a single step.
• Credit or debit card. Both paper and electronic filers can pay their taxes by phone or online through any of several authorized credit and debit card processors. Though the IRS does not charge a fee for this service, the card processors do.
Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” Also, print on the front of the check or money order: “2014 Form 1040”; name; address; daytime phone number; and Social Security number.
To help insure that the payment is credited promptly, also enclose a Form 1040-V payment voucher.
The IRS advises taxpayers to file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline to avoid stiff late-filing penalties.

Still Time to Contribute to an IRA for 2014

On March 18, 2015 / IRS

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Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and self-employed people to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs. Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for 2014, contributions must be made by April 15, 2015. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they fill out their 2014 returns. Eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2014, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2014 is barred from making contributions to a traditional IRA for 2014 and subsequent years.
For tax help or more information contact one of our offices:
  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,
  Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600

IRS May Drop Jackpot Reporting Thresholds

On March 13, 2015 / Uncategorized

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The IRS is suggesting a change in gambling tax laws. A new proposal requires gamblers to report winnings on slot machines, video poker, keno and bingo for jackpots of $600 or more. That’s quite a cut compared to today’s thresholds of $1,200 for slot and video poker players and $1,500 for keno players. The IRS has set a 90-day period for the casino industry to respond to the suggested changes.

If you’ve ever hit a $1,200 jackpot on a slot or video poker machine, you’ve probably had to sit around and wait for a casino employee to pay you and to sign off on your tax forms. Depending on the time of day and casino, this process could take anywhere from five to 30 minutes.

If the IRS threshold is lowered to $600, casinos would need more staff to fill out tax forms to meet the increased number of jackpots that would need to be reported. Additionally, more machines will be offline while that’s taking place. Obviously, casino operators and their lobbying group, the American Gaming Association, aren’t happy about this.

The current $1,200 and $1,500 thresholds were established in 1977 and haven’t been adjusted for inflation. If anything, I would think the jackpot threshold should increase, not decrease.

We should hear more on the matter some time in June. Until then, you can see the full IRS proposal here and the American Gaming Association’s commentary here.

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2011 Federal Income Tax Return

On March 11, 2015 / IRS

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Federal income tax refunds totaling $1 billion may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2011, the Internal Revenue Service announced today. To collect the money, these taxpayers must file a 2011 tax return with the IRS no later than Wednesday, April 15, 2015.

“Time is running out for people who didn’t file a 2011 federal income tax return to claim their refund,” said IRS Commissioner John Koskinen. “People could be missing out on a substantial refund, especially students or part-time workers. Some people may not have filed because they didn’t make much money, but they may still be entitled to a refund.”

The IRS estimates half of the potential refunds for 2011 are more than $698.

In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. For 2011 tax returns, the window closes on April 15, 2015. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

The law requires the tax return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return that qualifies for a refund.

The IRS reminds taxpayers seeking a 2011 refund that their checks may be held if they have not filed tax returns for 2012 and 2013. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.

Current and prior year tax forms and instructions are available on the IRS.gov Forms and Publications page, or by calling toll-free: 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years: 2011, 2012 or 2013 should request copies from their employer, bank or other payer.

If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by going to IRS.gov. Taxpayers can also file Form 4506-T to request a transcript of their tax return.

Need help? Contact one of our offices.

Standard Mileage Rates

On March 10, 2015 / Uncategorized

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Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

57.5 cents per mile for business miles driven, up from 56 cents in 2014
23 cents per mile driven for medical or moving purposes, down half a cent from 2014
14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously). Details on these and other special rules are in Revenue Procedure 2010-51, the instructions to Form 1040 and various online IRS publications including Publication-17, Your Federal Income Tax.

Besides the standard mileage rates, Notice 2014-79, posted on IRS.gov, also includes the basis reduction amounts for those choosing the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing an allowance under a fixed and variable rate plan.

Education Tax Credits: Two Benefits to Help You Pay for College

On March 7, 2015 / Uncategorized

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Did you pay for college in 2014? If you did it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. The credits may reduce the amount of tax you owe on your tax return. Here are some important facts you should know about education tax credits.

American Opportunity Tax Credit:

You may be able to claim up to $2,500 per eligible student.
The credit applies to the first four years at an eligible college or vocational school.
It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
It is available for students earning a degree or other recognized credential.
The credit applies to students going to school at least half-time for at least one academic period that started during the tax year.
Costs that apply to the credit include the cost of tuition, books and required fees and supplies.

Lifetime Learning Credit:

The credit is limited to $2,000 per tax return, per year.
The credit applies to all years of higher education. This includes classes for learning or improving job skills.
The credit is limited to the amount of your taxes.
Costs that apply to the credit include the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.

For both credits:

The credits apply to an eligible student. Eligible students include yourself, your spouse or a dependent that you list on your tax return.
You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.
Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different than what you actually paid. For example, the form may not include the cost of books that qualify for the credit.
You can’t claim either credit if someone else claims you as a dependent.
You can’t claim both credits for the same student or for the same expense, in the same year.
The credits are subject to income limits that could reduce the amount you can claim on your return.
Visit IRS.gov and use the Interactive Tax Assistant tool to see if you’re eligible to claim these credits. Also visit the IRS Education Credits Web page to learn more. If you can’t claim a tax credit, check the other tax benefits you might be able to claim.

Five Key Facts about Unemployment Benefits

On March 3, 2015 / Uncategorized

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If you lose your job, you may qualify for unemployment benefits. The payments may serve as much needed relief. But did you know unemployment benefits are taxable? Here are five key facts about unemployment compensation:

Unemployment is taxable. You must include all unemployment compensation as income for the year. You should receive a Form 1099-G, Certain Government Payments by Jan. 31 of the following year. This form will show the amount paid to you and the amount of any federal income tax withheld.
Paid under U.S. or state law. There are various types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws. For more information, see Publication 525, Taxable and Nontaxable Income.
Union benefits may be taxable. You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and those contributions are not deductible. In that case, you only include as income any amount that you got that was more than the contributions you made.
You may have tax withheld. You can choose to have federal income tax withheld from your unemployment. You can have this done using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.
Visit IRS.gov for help. If you’re facing financial difficulties, you should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of events such as job loss. For example, if your income decreased, you may be eligible for certain tax credits, like the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill, contact the IRS. In many cases, the IRS can take steps to help ease your financial burden.

For more details visit IRS.gov and check Publication 525. You can view, download and print Form W-4V at IRS.gov/forms anytime.

What to do if You Get a Notice from the IRS

On February 27, 2015 / Uncategorized

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Each year the IRS mails millions of notices. Here’s what you should do if you receive a notice from the IRS:

Don’t ignore it. You can respond to most IRS notices quickly and easily. And it’s important that you reply promptly.
IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information.
Read it carefully and follow the instructions about what you need to do.
If it says that the IRS corrected your tax return, review the information in the notice and compare it to your tax return.If you agree, you don’t need to reply unless a payment is due.If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.
You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. Make sure you have a copy of your tax return and the notice with you when you call.
Keep copies of any notices you get from the IRS.
Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not contact taxpayers by email, text or social media about their tax return or tax account.

For more on this topic visit IRS.gov. Click on ‘Responding to a Notice’ at the bottom left of the home page. Also see Publication 594, The IRS Collection Process. You can get it on IRS.gov or call 800-TAX-FORM (800-829-3676) to get it by mail.