How will the new tax rates 2019 affect you?

How will the new tax rates 2019 affect you?

by | Mar 12, 2019 | Amendment of Tax Return, News and Social, Tax Extension, Tax Planning, Tax Preparation

How will the new tax rates 2019 affect you?

Changes to the tax regulations are a common occurrence. The landscape of income changes on a regular basis and it makes sense to adjust the income tax laws accordingly. tax rates usually are not much of a concern as long as you are aware of the changes.

The IRS (Internal Revenue Service) has revised the tax rates for 2019. These new tax rates are adjusted for inflation as the IRS does on a regular basis. If you were to compare the changes made in 2017 with the introduction of Tax Cuts and Jobs Act, the latest changes are almost negligible.

The inflation-adjusted tax rates would stand applicable from the 1st of January. Which means that taxpayers need not use these for filing 2018 tax returns filed in 2019. The changes would be effective for the filing of 2019 in the year 2020.

Per the IRS, they are going to follow a new method to adjust inflation into the tax rates. This would ensure a slower moving inflation measure rate and would affect the taxes that Americans must pay in the long run. The Congress’s Joint Committee on Taxation has revealed that the proposed changes would cost taxpayers a little over $133.5 Billion over a decade.

Adjusted Rates

  • There has been an increase in the standard deduction for single taxpayers and married individuals filing separately. The new deduction stands at $12,200 up by $200. The same for married individuals who file jointly has seen a $400 increase to $24,400. The standard deductions have seen a $350 rise for the head of households at $18,350.
  • The inflation-adjusted tax brackets for different categories are mentioned below.
    • Individuals with income above $510,300 and $612,350 for married couples who file jointly would have to pay 37% as taxes.
    • Individuals with income above $204,100 and $408,200 for married couples who file jointly would have to pay 35% as taxes.
    • Individuals with income above $160,725 and $321,450 for married couples who file jointly would have to pay 32% as taxes.
    • Individuals with income above $84,200 and $168,400 for married couples who file jointly would have to pay 24% as taxes.
    • Individuals with income above $39,475 and $78,950 for married couples who file jointly would have to pay 22% as taxes.
    • Individuals with income above $9,700 and $19,400 for married couples who file jointly would have to pay 12% as taxes.
    • Individuals earning less than $9,700 and $19,400 for married couples who file jointly would have to pay 10% as taxes.

Other Changes

  • Earned income credit is now up at $6,431 for taxpayers who are filing jointly and have three or more dependent children from the current $6,557.
  • The Alternative Minimum Tax exemption stands at $71,000 and is phased out eventually for individuals earning above $510,300 as single taxpayers. The same for married couples filing jointly is $111,700 and the phase-out begins with $1,020,600.
  • The earlier limit for employee’s contribution towards health flexible expenditure was $50. It has been increased to $2,700.
  • Apart from increasing the income tax levels and tax credits, the new modifications also get rid of a few things. The individual mandate is a good example of the same. It is the penalty that one had to pay for not maintaining the minimum health insurance coverage. It has been eliminated now.
  • And the personal exemption remains at $0 for the year 2019.

The above details should help you traverse through the waters of tax filing and returns for the current year without much confusion.

How Far Would I Go Back to Amend My Income Taxes?

How Far Would I Go Back to Amend My Income Taxes?

by | Sep 22, 2017 | Amendment of Tax Return

How Far Would I Go Back to Amend My Income Taxes?

The question of how far can one go back to correct a previously filed income tax return is not only time sensitive but also quite dicey (legally speaking), especially for foreigners living permanently or temporarily in the United States. But before that, let’s put a few things straight.

For starters, an income tax amendment is simply a correction to a return that was filed sometime in the past. Technically speaking, you are allowed to make amendments to a return should you discover deductions or credits that you’re eligible to (but which you missed during the original filing process). The ball rolls both ways, however.

You’re also required by the law to amend your tax return if you discover that you hadn’t included a part of your annual income while filing the original tax returns.

And if any of these amendments result in any changes to your federal taxable income, you’re also legally obligated to file an amendment for your annual state tax return as well.

That being said, the gavel is struck differently for different tax brackets as far as how far one can go to correct a filed return. Here’s a quick primer on that.

1. Federal Taxes

Generally speaking, federal taxes can be amended as far back as three from the original due date of the return. Note that ‘the original due date of the income tax return’ is not the same as the ‘original tax year.’ In addition to making amendments to changes in the deductions, credits, and general income, you can also amend your previously filed return to omit or add new dependents. You can also change your filing status from ‘single’ to ‘married’ or vice-versa as long as you weren’t filing jointly with your previous spouse.

2. State Taxes

Some states will impose income tax on their residents. In such a case, you’re obligated to file a new state return if any changes made in the federal tax amendment will result in alterations in the resultant federal taxable income. Like federal taxes above, you usually have three years from the original due date of the previously filed state return.

3. Substitute Returns

A substitute return is basically an income tax return the state or the IRS will prepare for you. This is quite common among foreigners especially when the taxing authority receives income documents from your employer/any other third party without an accompanying tax return from you for the same tax year. The IRS or the concerned state taxing authority will then use the income document to prepare a tax return. As it often happens, the taxing authority will miss any eligible deductions or list an incorrect filing status. If this happens, you can request an amendment to the previously filed substitute tax return at any time. There are no time limits whatsoever on how far this can go.

In Closing: How to Order Income Documents

Just as the IRS or any other stately taxing authority will use your income documents ( sourced from your employer ) to prepare a personal substitute return for you, you too can also make use of the same information to verify/proof that you’ve included all your qualifying income when making an amending a return. You can order these docs by completing one IRS Form 4506-T then checking the box found on line 8. You should receive a transcript showing the companies you’ve worked for, the amount of money earned and, of course, any taxes that were withheld from your previous payments/earnings.

Read more about When You Can File an Amended Tax Return.

 

When You Can File an Amended Tax Return

When You Can File an Amended Tax Return

by | Sep 8, 2017 | Amendment of Tax Return

When You Can File an Amended Tax Return

It is not uncommon for many people to realize that they have made mistakes after filing their tax returns. Making such mistakes can be costly for you in the long run and the advice is that you should amend your tax returns at any opportunity you get. For people in sole proprietorship businesses such as freelancing, filling 1099-MISC form is a necessity the same way full-time employees are required to have their W-2 forms filled appropriately. In any instance IRS sees a mismatch in your tax return filing numbers, you can be certain of what follows next – you will be required to make necessary adjustments so that your tax statements can fully justify all your documented income.

Filing tax often passes to be a complicated task and consequently, many people often find themselves losing track of all their deductions and credits or sometimes fill in the wrong tax returns.

Again, your 1099-INT form your bank may not appear where you expect it to be in your mail and thereby forget about it, or in some instances, you may receive the 1099-INT form at a time when filing tax returns was the last thing on your mind.

If you make a huge mistake while filing your tax returns, you will be required to account for the mistakes by amending your returns. It is important for any person to have detailed information on what should be done to avoid amending of tax returns. Here are some situations that may cause IRS to request you to amend your tax returns.

  • If you inaccurately report on the number of dependents
  • If you make a mistake in reporting your total annual income
  • Errors in deductions/credit figures
  • If you change your tax filing status

Still, if you have any of the above mistakes and you successfully submit your tax return to IRS, it will be returned at a later time so that you can provide accurate information. If you e-file your tax return but it is rejected and you discover a mistake that usually calls for amendment; you can then correct the error in your tax return without the need for an amendment because in the first place IRS didn’t accept your returns.

If you miss out on the e-filing deadline, still you can proceed to print as well as paper your returns.

Again, you should pay special attention to your state tax filing because sometimes it may be accepted even when the federal tax return is rejected. If you find yourself in that situation, you will have to amend your tax returns.

Here is how you can file a tax return amendment

If you want to have an amendment return, you will need Form 1040X.

You can amend your tax returns several times for multiple years but you will be required to have different Form 1040X for each year you want to amend your returns.

As you are filling your details, you should have in mind that Column A should contain original figures while Column C should have new figures. The difference between the two columns should be documented under Column B. If you intend to list changes in schedules, you will have to include them in Form 1040X.

Important note

If you mistakenly your tax return result to you underpaying taxes, you should consider having an amendment as soon as you can. The more you wait to amend your returns will see an increase in penalties and interest fees and that is one thing you wouldn’t want to experience. Always remember to keep an original copy of your original tax returns as well that of the amended return.

 

7 Simple Rules You Should Know While Filing a Tax Return Amendment

7 Simple Rules You Should Know While Filing a Tax Return Amendment

by | Aug 22, 2017 | Amendment of Tax Return

7 Simple Rules You Should Know While Filing a Tax Return Amendment

Tax Return Amendment We as a whole need a do over notwithstanding with regards to our assessment forms. Luckily, if you have committed an error on your original return or missed asserting a deduction or credit, the IRS has an answer. It is called Form 1040X, Amended U.S. Singular Income Tax Return. Filing an amended  Tax return does not have to be difficult. We make it much less demanding. If you are considering filing Form 1040X, here are a couple of important focuses to remember.

1. Try not to record another total expense form to make redress.

If you have filed your government form and notice you forgot a deduction or credit, your first slant may be to send another expense form and advise the IRS to overlook the old one. However, that is not the correct answer. Regardless of whether you have hit the catch to re-record your return or dropped a printed copy in the mail, once you document your original wage assessment form that is considered your exchange of the pertinent duty year. You can just record an entire expense form with all schedules and attachments once. You can make changes, yet you can’t begin once again.

2. Utilize Form 1040X to alter your return

Rather than sending a whole new assessment form, you should utilize Form 1040X to change any inaccurate things. Also, you may need to incorporate refreshed variants of any forms or schedules you originally included in case the changes you make have an effect on those records. Remember, you should just include the revised forms or schedules with Form 1040X. Try not to attach duplicates of forms or schedules that remained the same.

3. You cannot e-document an amended return.

Shockingly, e-filing an amended return is impossible. You should print and mail Form 1040X, alongside any redressed forms and schedules. If you received Form 1099 after you filed, and it incorporates wage impose withheld, make certain to attach that form too.

4. You may have to record amended returns for over one year.

5. Now and then, a change in one year return changes a segment of another year’s return.

For instance, a few credits can be conveyed forward or in reverse to other years. If the credit you guarantee for one-year changes, you may need to alter another year as well. Revising a government return may mean filing an amended state Tax return.

State returns begin with information from your government return. In you live in a place with a state pay assess, you, by and large, should revise both returns. Make certain to contact your state branch of income or assessment agency for guidance on what you have to do.

6. You have limited time to alter and receive a discount.

For the most part, you should document Form 1040X within some years from the time you originally filed and in two years from the date you paid the expense, whichever is later. If you have to revise more than one government form, you’ll need to finish a separate Form 1040X for each.

7. Some amended returns are not necessary.

There are a few situations when filing an amended return is not necessary regardless of the possibility that you discover little duty receipts a year later or remember an excursion that ought to have been considered deductible mileage. If the change won’t influence the amount of duty you owe, it’s not necessary to correct your return.

In some cases, you cannot record an amended return because the IRS fixed your original return for you. If you receive a letter expressing the IRS has found a mistake or rolled out an improvement on your performance, and you consent to the changes, you don’t have to record an amended return. However, you should always adjust Social Security numbers if they are incorrect regardless of the possibility that no other piece of the return is wrong.