The 2016 Statistics of Income Report for 2016 was released by the IRS on August 31.
Publication 17, Your Federal Income Tax, for use in preparing 2016 tax returns features details on taking advantage of a wide range of tax-saving opportunities. This includes tax credits such as the American Opportunity Tax Credit for parents and college students, the Additional Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers. Publication 17 also features a rundown on tax changes for 2016. These changes include one-on-one service at local IRS offices by appointment, Individual Taxpayer Identification Number (ITIN) renewal, revised tax rates and limits on various tax benefits for some taxpayers. This 293-page guide also provides thousands of interactive links to help taxpayers quickly get answers to their questions. The IRS has published Publication 17 annually since the 1940s. It has been available on the IRS web site since 1996. As in prior years, this publication is packed with basic tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions and using IRAs to save for retirement.
Lately, the NSTP Hotline has been receiving numerous calls on the appropriate filing status and who is a dependent. It is important to be aware of the regulations as the due diligence penalties can be assessed for multiple credits on the tax return. Be sure you start with Publication 501, Exemptions, Standard Deduction, and Filing Information for flow charts, worksheets and explanations of who is a qualifying child or a qualifying relative. We are receiving many questions regarding who qualifies as a dependent. Can a child be a qualifying dependent for more than one person? The answer is yes – and Pub 501 has examples to help you make this determination. Your due diligence requirements are outlined in the instructions for the Form 8867, Paid Preparer’s Due Diligence Checklist for the Earned Income Credit (EIC), the Child Tax Credit (CTC)/Additional Child Tax Credit (ACTC), and/or the American Opportunity Tax Credit (AOTC). If you still have questions, check out the IRS EITC Central website for information regarding due diligence compliance. There are worksheets, toolkits and videos to help you understand the regulations and your due diligence requirements. If you have not attended the NSTP Federal Tax Updates Seminars then be sure … Read More
Taxes must be paid as income is earned or received during the year, either through withholding or estimated tax payments. If the amount of income tax withheld from payroll or pension is not enough, or if income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards is received, taxpayers may have to make estimated tax payments. Self-employed individuals generally need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. The next estimated payment, for calendar year taxpayers, is due on or before Thursday, September 15, 2016. If not enough tax is paid through withholding and estimated tax payments, taxpayers may be charged a penalty. They may also be charged a penalty if estimated tax payments are late, even if the taxpayer is due a refund when the tax return is filed. Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules. Penalty for Underpayment of Estimated Tax If not enough tax is paid throughout the year, either through withholding or by making estimated tax payments, … Read More