October 15th Deadline is Looming!

October 15, 2019 can signify several important tax deadlines.  I will only be pinpointing a few that effect most filers.

For individuals it is the last day that you can electronically file your 2018 Income Tax Return if you filed for a 6-month extension to file.  Any income taxes owed for the 2018 tax year should have been paid with the extension. The extended deadline did not buy you more time to pay any taxes owed!

Still not ready to file?  We recommend gathering as much information as possible and hiring a professional to prepare and file your return before the deadline.  The penalties for not filing are generally higher than not paying all taxes owed by the due date.  After the October 15, 2019 deadline passes, you will begin to face the failure-to-file penalty, which is 5% of the amount owed for every month (or part of) in which taxes go unpaid.  The maximum for this penalty is 25% of your unpaid taxes!

If you are unable to pay your tax liability, file now and pay what you can.  We can help you determine which IRS plan best fits your needs!

What does October 1st and October 15th mean for the self-employed?  This goes for independent contractors and LLC business owners.  October 1st is the deadline to set up and fund a SIMPLE IRA and for those business owners who received a 6-month filing extension, October 15th is the last day to set up and fund a SEP IRA or solo 401K.

To discuss how any of these plans can benefit your tax situation, call today for an appointment! 203-296-0391

2017/2018 Tax Law Changes Summarized

President Trump signed the H.R. 1 (The Tax Cuts and Jobs Act) bill on December 22, 2017.  The bill will impact almost every individual and business and is the biggest tax change in the past 30 years.  The following is a summary of the highlights of the bill.  Many of the changes of the code are temporary with no guarantee that a future Congress will extend them.

Remember these changes do not affect your 2017 income tax!

2017 Tax Law

H.R. 1 (2018)

Tax rates

10%, 15%, 25%, 28%, 33%, 35% & 39.6% 10%, 12%, 22%, 24%, 32%, 35% & 37%

Filing Thresholds

MFJ/Qualifying Widow(er) $20,800.00 MFJ/Qualifying Widow(er) $24,000.00
HoH $13,400.00 HoH $18,000.00
Single $10,400.00 Single $12,000.00
MFS $4,050.00 MFS $0.00

Standard Deduction

MFJ $12,700.00 MFJ $24,000.00
HoH $9,350.00 HoH $18,00.00
All Others $6,350.00 All Others $12,000.00

Personal Exemption

$4,050.00 Repealed

Pass through income

Taxed same as individual 20% deduction

Kiddie Tax

Unearned income in excess of $2,100.00 taxed at parents’ tax rate Unearned income taxed at trust & estate tax rates

Discharge of student loan debt

Considered income unless meets certain exceptions Discharges during 2018-2025 not considered income if discharge was due to student’s death or total and permanent disability

Alimony

Payor is allowed deduction from income and recipient reports as income Repeals deduction for alimony payments and inclusion in income for divorce/separation executed after 12/31/18

Qualified higher education expense

Includes expenses for tuition in connection with enrollment or attendance at a post-secondary school Includes expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school

Shared Responsibility Payment & Maintaining Minimum Essential Coverage

Penalty if do not maintain minimum essential health insurance coverage Penalty if do not maintain minimum essential health insurance coverage

Child Tax Credit

Up to $1,000.00 refundable credit $2,000.00 credit (refundable credit up to $1,400.00)

Education credits

American Opportunity credit equals 100% of the first $2,000.00 of a student’s qualified education expenses plus 25% of the next $2,000.00. Maximum credit is $2,500.00 per student (40% refundable) American Opportunity credit equals 100% of the first $2,000.00 of a student’s qualified education expenses plus 25% of the next $2,000.00. Maximum credit is $2,500.00 per student (40% refundable)
Lifetime Learning credit is a 20% non-refundable credit of up to $10,000.00 of qualified education expenses. Maximum credit $2,000.00 per return Lifetime Learning credit is a 20% non-refundable credit of up to $10,000.00 of qualified education expenses. Maximum credit $2,000.00 per return

Itemized Deductions

Phase out limits:

Single $261,500.00

MFJ or Qualifying widow(er) $313,800.00

MFS $156,900.00

Can deduct medical expenses in excess of 7.5% of AGI Can deduct medical expenses in excess of 7.5% of AGI
State and local taxes fully deductible Up to $10,000.00 ($5,000.00 MFJ) of state and local taxes are deductible for the primary residence and/or auto of the Taxpayer or spouse
Mortgage interest $1 mil limit Mortgage interest $750,000.00 limit
Home equity interest deductible Home equity interest no longer deduction
Maximum charitable donations are 50% of adjusted gross income

Charitable donations of $250.00 or more require contemporaneous written acknowledgment

Maximum charitable donations are 60% of adjusted gross income

Charitable donations of $250.00 or more require contemporaneous written acknowledgment

Casualty losses from sudden events are deductible Casualty losses are only deductible if they are due to an event that has been declared a federal disaster
Miscellaneous itemized expenses subject to 2% of AGI No miscellaneous itemized expenses

Section 179 Deduction

Deduction limit $500,000 Deduction limit $1 mil
Spending cap $2.0 mil Spending cap $2.5 mil
50% bonus depreciation until 9/27/17 100% bonus depreciation

Estate & Gift Tax

CT lifetime exclusion $2.0 mil CT lifetime exclusion $2.6 mil
Federal exclusion $5.49 mil

Federal gift tax exclusion amount $14,000.00 per year per person

 

Federal gift tax exclusion amount $15,000.00 per year per person

Prepare for the 2018 income tax year and contact Esposito Tax Services at 203-296-0391 for a comprehensive tax review and recommendation.  

Information is being provided as a courtesy.  You should seek professional tax advice prior to carrying out any income, gift or estate tax plan.  

Summer Deductions Not To Miss!

Many people don’t think about taxes during the summer months but it is a great time to do so!  If you are planning on spending a relaxing vacation at a vacation home, there are some tax implications you should be aware of:

  • Paying mortgage interest on a second home? A second home can be a house, condo, mobile home, co-op or similar property as long as there are sleeping, cooking and toilet facilities.  So if you have camper with the above facilities you may be able to deduct the mortgage interest you pay on any mortgage against the property.   If this applies to you call us for a free evaluation of your tax situation to see if you qualify for this deduction!
  • Is your vacation home used exclusively for personal use? If so, the mortgage interest and real estate taxes can be included in your itemized deductions on Schedule A.  And time share owners you may be able to deduct time share fees as real estate taxes.
  • Did you rent out your vacation property? The property must not be used personally more than 14 days or 10% of the days it is rented to others at fair rental price.  If the property is considered a rental, you should keep detailed records on the amount of rental income you receive, the expenses you pay (utilities, cleaning, repairs, insurance, mortgage interest, taxes, depreciation and other associated costs), and the number of days rented.  Many times vacation rentals produce a passive loss, which can offset other passive income (wages!) so a little record keeping can be beneficial.  Should you need assistance in record keeping for your rental, contact us to learn about our services.  We can take the stress out of tax time by doing all the work for you in advance! 

While these are all beneficial tax deductions, there are possible limits and exclusions that can apply.   To make sure you are taking all possible deductions call Esposito Tax Services today 203-296-0391!

Important Deadlines for 2015 Tax Filings

If you cannot file your income tax return by April 18, 2016, contact our office today so we can timely file an extension.

April 18, 2016

  • Deadline for filing 2015 personal, partnership, or calendar year estates/trusts income tax returns.
  • Deadline for e-filing or postmarked extension. Remember even if you file an extension you will need to pay any taxes owed to avoid any late payment penalties and interest.
  • First quarter 2016 estimated tax payments are due.

June 15, 2016

  • Deadline for filing 2015 personal income tax returns for US citizens or residents living and working abroad, i.e. military personnel.
  • Second quarter 2016 estimated tax payments are due.

September 15, 2016

  • Deadline for filing 2015 corporation, S corporation, or partnership income tax returns that were put on extension.
  • Third quarter 2016 estimated tax payments are due.

September 30, 2016

  • Deadline for filing 2015 calendar year estates/trusts income tax returns that were put on extension.

October 17, 2016

  • Deadline for filing 2015 personal or C corporation income tax returns that were put on extension.

We are working all year-round to meet your income tax deadlines. Call us at 203-296-0391.

 

State of CT property tax credit error

DRS has issued a press release that can change your 2015 tax liability or refund that you received. If you filed your CT income tax return before March 17, 2016 chances are you will receive a reduced refund or notice of additional tax due. DRS did not advise taxpayers, tax preparers or tax software companies of the phase down in the property tax credit enacted by the General Assembly in the 2015 legislative session.  If you already received your refund you can repay what you owe now or offset any refund next year. DRS will not impose penalties to the taxpayers affected. You do not need to amend your 2015 CT 1040.

Tax filing deadline is fast approaching!

If you have been procrastinating filing your tax return, procrastinate no longer. Contact Esposito Tax Services! We are fully staffed to assist you file in a timely manner. If you are not prepared to file by April 18, 2016 we can put your return on extension click over here. Remember the IRS can assess substantial penalties for both failure to file and failure to pay by the deadline unless you can show reasonable cause. Don’t waste your hard earned money, call Dana at 203-296-0391 today!