Changes for Filing Your 2018 Taxes

Tax season is here again, and with a new tax season comes changes to tax laws and the filing process. Keeping up with the latest tax laws is important so you know what’s going on with your return. Today in the LongSchaefer blog, we’ll talk about the changes for filing your 2018 taxes.

Lower Marginal Tax Rates

This part of the tax reform is actually good news for taxpayers. Marginal tax rates are percentages owed for different income amounts for different tax brackets. With lower marginal tax rates, you won’t have to take as much out of your paycheck in order to pay what you owe. Some rates have dropped as much as 2-4%. For instance, if you filed Single in last year’s return and your taxable income was between $9,326-37,950, you would have been taxed 15% of your income. This year, that tax rate has been changed to 12% and applies to those whose taxable income was between $9,526 – $38,700. This is a lot of potential savings across the board.

Standard Deductions

Standard deductions have nearly doubled this year. A standard deduction is automatically applied to your return unless you choose to itemize. This is great news for taxpayers too, because it means you won’t owe as much, or you might get a bigger return.

Health Care Penalty

There is still a shared responsibility payment for 2018 if the taxpayer didn’t have full year health coverage or a documented exemption for coverage.  This is repealed for 2019.

Charitable Donations

If you give to charity, you can claim these donations as deductions if you itemize. Typically, this deduction amount was limited to 50% of your income, but now the limit has increased to 60% of your income.

Fewer Deductions

It’s not all good news though, some deductions can no longer be claimed on your tax return. These deductions include theft losses, unreimbursed employee expenses, alimony payments depending on inception, moving expenses for non-military, 2% AGI limited itemized deductions and more. Make sure to consult with your tax advisor to see what deductions you’re still eligible for.  

These are just a few of the significant changes that came with the new tax reform bill. Your tax advisor can run through any others that are pertinent to your filing this year.

Choose LongSchaefer as Your Tax Advisor

You don’t have to worry about the nuances of tax filing when you hire a professional to help you. The tax advisors at LongSchaefer are more than happy to help you file for yourself or your business. We also help with tax planning so you can get a head start on next year. Contact us today for more information and to speak with a member of our team.

Common Tax Penalties

Filing and paying taxes is something everyone has to do, and neglecting it could lead to penalties. If you want to avoid penalties, you should make sure to pay your taxes on time and pay them correctly. Today in the LongSchaefer blog, we’ll discuss how to avoid common tax penalties.

Avoid These Common Penalties

Here are some common penalties that you’ll want to avoid this tax season:

Late Payment Penalty

Late payment penalties are the most common penalties that occur. You’ll need to make sure to pay your taxes by the deadline in April. If you can’t pay by then, you can file for an extension to file later but this doesn’t extend the time for payment so you should pay in as much of the tax due that you can with the extension. You can also use a credit card to cover the payment for the time being, even if this isn’t ideal.

Late Filing Penalty

The late filing penalty is even more expensive than the late payment penalty. You need to make sure to file your taxes before the deadline, even if you don’t think you can pay the tax bill. Figuring out a payment alternative is a possibility, whereas there’s no forgiveness or working with the IRS if you forget to file or forget to file an extension.

Accuracy Penalty

Sometimes people make mistakes on their tax return. Typically, the mistakes are small and aren’t a big deal if they weren’t purposeful. However, if noticeable amounts of income are left off a return, you’ll have to pay an accuracy penalty which can be quite expensive.

Fraud Penalty

Fraud is much worse than the accuracy penalty. This penalty applies to those who purposely alter their taxes or evade them. If you lie on your tax return and get caught, the penalty will be significant and can be criminal as well as civil.

Health Insurance Penalty

You’re required to carry a minimum health insurance policy throughout the year. If you or other members of your household didn’t have minimum coverage, you’ll be subject to this penalty.

Choose LongSchaefer as Your Tax Advisor

The easiest way to avoid penalties is by letting a tax professional help you with your taxes this year. They can help you file in a timely manner and let you know when payment needs to be made. The tax advisors at LongSchaefer can help you file your taxes and advise you on ways to maximize your return and minimize what you owe. We can also help you start tax planning for next year. Contact us today for more information and see how we can help you.

Why Do I Owe Taxes this Year?

People don’t typically look forward to tax season, but they definitely look forward to their tax return. Getting that money back makes the annoyance of filing worth it. However, sometimes people owe on their taxes. This can be frustrating, especially if you don’t know why. Today in the LongSchaefer blog, we’ll explain some reasons you might owe on your taxes.

Reasons You Might Owe on Your Taxes

Here are some come reasons you might owe taxes this year:

Not Withholding Enough

When you first start your job, you’ll be given a W-4 to fill out. When filling this out you can claim dependents and allowances. The more of these you claim, the less taxes will be taken out of your paycheck. But, if you claim this incorrectly, you’ll end up not having enough taxes withheld throughout the year. The boost in your paycheck might be nice, but the taxes will be assessed at the end of the year. You’ll have to pay back what you owe based on the correct withholding.

Not Making Changes to Your Filing Status

Sometimes people neglect to make the necessary changes to their filing status. For instance, if your child is now self-sustaining and living on their own, you can no longer claim them as a dependent. Certain events, like getting married or getting divorced, can also have similar effects to your tax filing status. These factors can affect your tax return and possibly cause you to owe money. Make sure you keep up with any necessary changes in your filing status.

Not Reporting Freelance Income

If you start a side job as an independent contractor, whether it be freelancing or working for Uber, you have to report this income and consider making estimated tax payments if withholdings elsewhere can’t be adjusted to accommodate. If you’ve neglected to pay taxes on these side jobs throughout the year, you’ll probably have a tax bill at the end of the year that requires you to pay the missed taxes.

Choose LongSchaefer as Your Tax Professional

If you’re looking for someone to take care of your taxes this year, LongSchaefer is your solution. Our tax advisors help you file your taxes, which in turn may minimize your tax burden or maximize your return. They can also help you understand why you owe taxes this year, and what you can do to prevent it from happening next year. Contact us today for more information and see how we can help you.

Common Tax Deductions

Claiming deductions is an important part of filing your taxes, but some people don’t do it. Some people do submit claims, but they miss valuable deductions without realizing it. You definitely want to claim as many deductions as you are entitled to. This can lead to a bigger return and help make sure you don’t pay more than you owe in taxes. Today in our LongSchaefer blog, we’ll talk about some common deductions you might be missing out on.

Don’t Overlook These Deductions

Here are some common deductions that people overlook when filing their taxes:

Education Expenses

If you took a class this year that is meant to improve your skills in your field, you might be able to deduct it from your taxes or possibly get a credit depending on facts and circumstances. This includes everything from tuition to books to transportation expenses.

Medical Expenses

If you had to go to the doctor frequently this year, you might be able to deduct some of the expenses. Remember, you’re only eligible for this deduction if the expenses exceeded 10% 7.5% of your adjusted gross income with the passage of the TCJA tax act starting this year and you itemize your deductions. Keep in mind that medical expenses include dental, chiropractic & ophthalmic care too.

Charitable Donations

This deduction isn’t overlooked too often, but it’s still important to keep track of all your charitable donations. Make sure you keep a written record of all your donations. You’ll need to prove that you made the donation and have a valuation of how much you donated. Charities such as Goodwill and The Salvation Army will even provide a “Donated Goods Valuation Guide” to help facilitate the record keeping substantiation.  

Student Loan Interest

There is a possibility to deduct up to $2,500 of interest paid on qualified education loans as an above the line deduction.  There are nuances that must be considered for taxpayers who are dependents versus those that aren’t as well as who is legally obligated to repay the loan for the deduction.  It is important to navigate the restrictions to realize the maximum benefit.

State Sales Tax

If you live in a state that doesn’t impose an income tax, you may consider deducting your state sales tax. When making this deduction, you’ll choose between your state and local income taxes or your state and local sales taxes. Choose whichever will give you the bigger deduction. The new TCJA tax act does limit this part of the itemized deductions to $10K.

Choose LongSchaefer as Your Tax Professional

If you don’t want to miss any deductions this year, you can always trust a highly trained and educated tax professional to help you out. Filing your taxes can be difficult and time-consuming, but when you let someone qualified file your taxes for you, all you have to do is send them the proper documentation and answer some relevant questions to put your best foot forward. If you’re interested in having someone take care of your taxes for you, trust LongSchaefer. Contact us today for more information.

May 2020 COVID-19 Update

In order to comply with the Ohio Health Department Order & CDC social distancing recommendations, our offices are closed until further notice. Rest assured that our established protocols and available technology will allow us to provide the same level of service and quality you expect from LongSchaefer during this time.

The SBA has announced details of how it’s helping small businesses through the Coronavirus outbreak. The IRS is sending payments to families affected by this crisis. 

Please click on our Coronavirus information pages for more information.