Federal income tax withholding may need adjustment

The Tax Cuts and Jobs Act changed the way taxable income is calculated and reduced the tax rates on that income. The IRS had to address and make changes to income tax withholding in response to the new law as soon as possible after it passed. This issue affects every taxpayer who receives a paycheck. The U.S. tax system operates on a pay-as-you-go basis. Taxpayers must generally pay at least 90 percent of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. THIS MEANS THAT…you need to pay most of your tax during the year, as the income is earned or received. If you don’t, you may owe an estimated tax penalty when you file
For employees, income tax withholding is the amount of federal income tax withheld from your paycheck. The amount of income tax your employer withholds from your regular pay depends on two things: „ The amount you earn. „ The information you give your employer on Form W–4, Employee’s Withholding Allowance Certificate. The IRS issued new withholding tables for 2018 to reflect the changes in tax rates and tax brackets, the increased standard deduction and the suspension of personal exemptions, among other things. The IRS also reissued withholding tables, which show payroll service providers and employers how much tax to withhold from employee paychecks, taking into account each employee’s wages, marital status, and the number of withholding allowances they claim. The IRS also modified Form W-4, Employee’s Withholding Allowance Certificate, which is the IRS form that employees provide to their employers, so that the employer may determine the amount of federal income tax to withhold from the employees’ paychecks. The form helps employees adjust withholding based on their personal circumstances, such as whether they have children or a spouse who is also working. The IRS recommends employees check their withholding any time their personal or financial information changes. The Form W-4 relates to an employee’s federal income tax withholding. State income tax withholding is separate. THIS MEANS THAT…You should have started seeing withholding changes in your paycheck around the end of February 2018. The exact timing depends on when your employer made the change and how often you are paid. You still need to check your withholding and make sure it is correct so there is no surprise at tax filing time. Just as the amount of your withholding has changed based upon the change in tax rates, you may also need to adjust your withholding or make estimated or additional tax payments due to other changes in the tax law. You should review your withholding in 2018 and make adjustments if there is still time this year. Review your withholding again, early in 2019 to make sure you don’t have too little or too much withheld from your paychecks next year. To help with this, the IRS issued a new Withholding Calculator and updated Form W-4 to help you check and update your withholding with your employer, if necessary. You can use the Withholding Calculator to estimate your income tax. The Withholding Calculator compares that estimate to your current tax withholding and can help you decide if you need to change your withholding with your employer. The new withholding tables were designed to produce the right amount of withholding for people with simple tax situations. Some people have more complicated tax situations and face the possibility of not having enough income tax withheld by their employer. If not enough tax is withheld by your employer, you could have an unexpected tax bill and even a penalty when you file your return next year. More information on the withholding tables is available in the IRS Withholding Tables Frequently Asked Questions page

Changes in Tax Rates 2018

For 2018, most tax rates have been reduced. This means most people will pay less tax starting this year. The
2018 tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
In addition, for 2018, the tax rates and brackets for the unearned income of a child have changed and are no
longer affected by the tax situation of the child’s parents. The new tax rates applicable to a child’s unearned
income of more than $2,550 are 24%, 35%, and 37%.
In addition to lowering the tax rates, some of the changes in the law that affect you and your family include
increasing the standard deduction, suspending personal exemptions, increasing the child tax credit, and limiting
or discontinuing certain deductions.
Most of the changes in this legislation take effect in 2018 for federal tax returns filed in 2019. It is important that
individual taxpayers consider what the TCJA means and make adjustments in 2018 and 2019.

Overview of the Tax Cuts and Jobs Act

Major tax reform that affects both individuals and businesses was enacted in December 2017. It’s commonly referred to as the Tax Cuts and Jobs Act, TCJA or tax reform. The IRS estimates that we will need to create or revise more than 400 taxpayer forms, instructions and publications for the filing season starting in 2019. It’s more than double the number of forms we would create or revise in a typical year. The IRS collaborates with the tax professional community, industry, and tax software partners each year as we implement changes to the tax law, including the Tax Cuts and Jobs Act, to ensure that our shared customer – you, the taxpayer - has information about how the law applies to your particular situation and you are prepared to file. Using tax preparation software is the best and simplest way to file a complete and accurate tax return. The software guides you through the process and does all the math. Electronic filing options include IRS Free File for taxpayers who qualify, Free File Fillable Forms for all taxpayers, commercial software, and professional assistance. The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs offer free tax help and e-file for taxpayers who qualify. This publication covers some of the provisions of the TCJA. It provides information for you and your family to help you understand, take action - if necessary - and comply with your federal tax return filing requirements. It is not intended to replace or supersede IRS tax forms, instructions or other official guidance. The official IRS.gov website includes a Tax Reform page that highlights what you need to know about the tax law changes. This page also provides links to news releases, publications, notices, and legal guidance related to the legislation. IRS.gov/getready has information about steps you can take now to get a jump on next year’s taxes including how the new tax law may affect you.

ADATAX’S APPOINTMENT-tax season 2019

Si usted lo desea ya puede solicitar appointment para los taxes, 2018 contacte con nosotros llamando a nuestra oficina.

Mas Tax Accounting Services

14263 SW 42nd St

Miami, FL 33175

Email: ada@ada.tax

Phone: (305) 227-7210

Fax: (305) 227-4240

https://ada.tax/

AP

New Tax Law Effective Date MAS TAX ACCOUNTING

Virtually all taxpayers are impacted by changes in the tax reform legislation. Find out what could be changing on your return.

Congress just passed the Tax Cuts and Jobs Act (TCJA). Next, it will go to President Trump to be signed into law. The TCJA makes changes that affect all kinds of taxes – individual, corporate, partnership and other “pass through” business entities, estate, and even tax-exempt organizations. This article looks at tax changes for individuals.

Most changes take effect on January 1, 2018. Tax returns filed during the spring of 2018 (for the 2017 tax year) are generally not affected. But knowing about these changes now will help taxpayers plan and understand how the TCJA could impact their take-home pay and their 2018 tax refund.

Tax brackets and tax rates change for most taxpayers

Most tax filers will pay tax using a new tax bracket and tax rate structure. However, the tax rates remain progressive, meaning tax rates rise as income increases.

In comparison to previous tax brackets and tax rates, the new rates due to the Tax Cuts and Jobs Act are slightly lower and the brackets are generally slightly broader.

Rates under the TCJA	Pre-TCJA rates
10%, 12%, 22%, 24%, 32%, 35%, 37%	10%, 15%, 25%, 28%, 33%, 35%, 39.6%

MAS TAX ACCOUNTING

Under the 2017 tax brackets and rates, a single taxpayer with $40,000 of taxable income would be in the 25% tax bracket and would have a tax liability of $5,739.

Under the 2018 tax brackets and rates, a single taxpayer with $40,000 of taxable income would be in the 22% tax bracket and would have a tax liability of $4,740.

Going forward, the brackets will be adjusted based on a different inflation measure – the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) –  that is expected to grow more slowly than the previous inflation measure.

While most taxpayers will pay less, some taxpayers will pay a slightly higher tax rate under the TCJA. This is most likely to impact an upper-middle class individual with a marginal tax rate of 35%, up from 33%.

Tip: Tax brackets, rates and credits play a big part in how much tax a taxpayer will pay, but the amount of taxable income plays perhaps an even bigger role.

Personal and dependent exemptions are eliminated

In 2017, taxpayers claimed a personal exemption for themselves, their spouse (if married filing jointly) and each qualifying child or qualifying relative. Each exemption reduced taxable income by over $4,000 in 2017. Under the TCJA, personal and dependent exemptions are eliminated from 2018 through 2025.

In 2026, taxpayers can claim personal and dependent exemptions again.

Child tax credit increased through 2025

Through 2025, the TCJA increases the maximum child tax credit from $1,000 to $2,000 per qualifying child. The refundable portion of the credit increases from $1,000 to $1,400. That means taxpayers who don’t owe tax can still claim a credit of up to $1,400. The higher child tax credit will be available for qualifying children under age 17, as under current law.

Also, the child tax credit begins to phase out for taxpayers with modified adjusted gross income (MAGI) of over $200,000 or $400,000 (MFJ). This phaseout more than doubles the phaseout range under current law. Taxpayers can’t claim a child tax credit for a child who does not have a Social Security Number (SSN) by the due date of the return.

In 2026, the child tax credit will change to the rules used in 2017, with a maximum credit of $1,000 per qualifying child, and lower phaseouts.

New credit for non-child dependents available through 2025

The TCJA allows a new $500 nonrefundable credit for dependents who do not qualify for the child tax credit. Taxpayers can claim this credit for children who are too old for the child tax credit, as well as for non-child dependents. There is no SSN requirement to claim this credit, so taxpayers can claim the credit for children with an Individual Tax Identification Number (ITIN NUMBERS) or an Adoption Tax Identification Number (ATIN) if they otherwise qualify.

Taxpayers cannot claim the credit for themselves or their spouse (if MFJ).

In 2026, the credit for non-child dependents will no longer be available.

Standard deduction increases through 2025

The standard deduction will increase. In 2018, the standard deduction amounts will be:

• $12,000 (single)
• $18,000 (head of household)
• $24,000 (married filing jointly)

Because of the increase and because of changes to the rules for itemized deductions, many taxpayers who previously itemized deductions will now claim the standard deduction instead. This means they may not have to file Schedule A. However, taxpayers may want to continue to track their expenses so they have the information to make the comparison and choose the tax benefit with the bigger value.

Many itemized deductions eliminated, limited or modified

Before the tax reform bill takes effect, about 30% of taxpayers itemized deductions on Schedule A, instead of taking the standard deduction associated with their filing status. However, the TCJA has a large impact on itemized deductions, as several itemized deductions have been eliminated or modified.

 Fully eliminated

• Miscellaneous itemized deductions subject to the 2-percent floor
  • Employee business expenses
  • Tax preparation fees
  • Investment interest expenses
• Personal casualty and theft losses (except for certain losses in certain federally declared disaster areas)

Limited

• State and local income taxes (SALT) or state and local sales tax, plus real property taxes, may be deducted, but only up to a combined total limit of $10,000 ($5,000 if MFS)
• Home mortgage interest has several modifications:
  • Interest on a home equity loan is no longer deductible
  • Interest on a new home mortgage is limited to interest paid on a maximum of $750,000 ($375,000 if MFS) of a new mortgage taken out after December 14, 2017.
  • Taxpayers with a mortgage taken out before December 15, 2017 can continue to claim home mortgage interest on up to $1 million ($500,000 if MFS) going forward; the $1 million ($500,000 if MFS) limit continues to apply to a refinanced mortgage incurred before December 15, 2017.

Modified

• Charitable contributions: The deduction for charitable contributions is expanded so that taxpayers may contribute up to 60% of their adjusted gross income, rather than up to 50%.
• Gambling losses remain deductible, but only to the extent of gambling winnings. The definition of losses from wagering transactions is modified.
• Medical expenses remain deductible. For 2017 and 2018, medical expenses are deductible to the extent they exceed 7.5% of AGI. In 2019, the threshold will increase to 10% of AGI.

The overall limit on itemized deductions (often called the Pease limit) is also eliminated by tax reform under President Trump.

Most of the changes to itemized deductions will remain in place through 2025. In 2026, itemized deductions will generally follow the rules in place before the TCJA.

Many “Above-the-line” deductions eliminated, limited or modified

 As with itemized deductions, many “above-the-line” adjustments have also been eliminated or limited:

Fully eliminated

• Alimony deduction for payments made under orders executed after December 31, 2018. For new orders, the TCJA no longer allows payors to deduct alimony payments or requires the recipient to report income for alimony received. (Payments under existing orders are grandfathered and may continue to be deducted by the payor and should be reported as income by the recipient.)
• Tuition and fees deduction expired under previous law and was not renewed by the TCJA.
• Domestic production activities deduction (DPAD)

Mostly eliminated

• Moving expenses are disallowed (except for the expenses of active members of the military who relocate pursuant to military orders).

Stays the same

• Educator expense deduction (K-12 educators can deduct up to $250 per year for unreimbursed classroom supplies.)
• Student loan interest of up to $2,500 can be deducted by qualifying taxpayers for interest paid on student loans.
• Health savings account (HSA) deduction
• IRA deduction
• Deductions for self-employed taxpayers (SE tax, SE health insurance, SE qualified retirement plan contributions)

Some education benefits remain the same, others modified

Taxpayers can continue to claim the American Opportunity Credit, a credit of up to $2,500 per year for the first four years of college education, and the lifetime learning credit, a credit of up to $2,000 per year for qualifying education expenses.

Taxpayers can continue to use savings bonds for education, educational assistance programs provided by employers, 529 plans and Coverdell education savings plans to save for college. Some scholarships and tuition waivers can continue to be treated as tax-free if certain conditions are met.

 529 plans can now be used for K-12 expenses.

• Plans can distribute up to $10,000 each year for tuition incurred for enrollment or attendance at a public, private, or religious elementary or secondary school.
• The $10,000 limit for elementary and secondary school is applied on a per-student limit.

Taxpayers whose student loans are cancelled because death or total and permanent disability may be eligible to treat the cancellation of debt as tax-free.

Health care penalty eliminated

The penalty for failure to obtain health insurance coverage (the “individual mandate”) will be eliminated beginning in 2019. Taxpayers who did not have coverage in 2017 or 2018 will continue to owe a penalty for those years, unless they qualify for an exemption.

Self-employed taxpayers may claim a new deduction for qualified business income

Self-employed taxpayers can deduct up to 20% of qualified business income from a sole proprietorship, partnership, or S corporation. There are a few limitations placed on the deductions, but many small businesses will be able to benefit.

Example: A self-employed taxpayer has taxable income of $60,000. All of the income is from the business. The qualified business income deduction is $12,000 ($60,000 × 20%).

Taxpayers may benefit by adjusting withholding and estimated taxes

Because of all the changes made by the TCJA, taxpayers should consult their tax professionals for next steps. For an estimate of how the TCJA may affect you, visit our tax return and tax reform calculator.

Tax professionals can help with Form W-4 planning by verifying they have the correct income tax withholding set up with their employer.

Taxpayers who are self-employed and others who make quarterly estimated tax payments should check with a tax professional and determine whether they need to adjust their estimated payments.

Taking the time to make changes now will help ensure a smooth transition from year to year and eliminate refund surprises.

Mas Tax Accounting Services http://mastaxaccounting.com
14263 SW 42nd St
Miami, FL 33175
Email: ada@ada.tax
Phone: (305) 227-7210
Fax: (305) 227-4240

Contribuyentes pueden seguir estos pasos para usar Calculadora de Retención en IRS.gov

Contribuyentes pueden seguir estos pasos para usar Calculadora de Retención en IRS.gov

El IRS anima a todos a usar la Calculadora de Retención para “verificar su cheque de pago” rápidamente, lo cual es aún más importante hacerlo este año debido a los cambios en la ley tributaria. Los contribuyentes que aún no lo hayan hecho pueden seguir los siguientes pasos para usar la calculadora.

Los resultados de la calculadora incluyen una recomendación de si los usuarios deben considerar o no entregar a sus empleadores un nuevo Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado. Antes de comenzar, los contribuyentes deben tener una copia de su declaración de impuestos y comprobante de pago más recientes.

Primero, los contribuyentes deben ir a la página principal de la Calculadora de Retención en IRS.gov. Deben leer toda la información cuidadosamente y oprimir el botón azul de la Calculadora de Retención.

Se deben usar los botones al final de cada página para navegar por la calculadora. Los botones permiten a los usuarios continuar ingresando su información, reiniciar la entrada de la información en esa página o volver al principio.

Ingrese información general acerca de la situación tributaria, que incluye:

• Estado civil tributario
• Si otra persona puede reclamar al usuario como dependiente
• Número total de trabajos que tuvo durante el año
• Aportaciones a un plan de ahorros para la jubilación con impuestos diferidos, de tipo cafetería, u otro plan de ahorros antes de impuestos
• Becas o subvenciones recibidas que se incluyen en los ingresos brutos
• Número de dependientes

Ingrese información acerca de los créditos, que incluye:

• Crédito por cuidado de hijos y dependientes
• Crédito tributario por hijos
• Crédito tributario por ingreso del trabajo

Ingrese el total de los ingresos tributables estimados que se esperan durante el año. La cantidad que el usuario ingresará incluye salarios, bonificaciones, pagos de la jubilación militar, pensiones tributables y compensación por desempleo. Los usuarios deben ingresar un “0” en las líneas que piden cantidades que no les aplican.

Ingrese un estimado de los ajustes a los ingresos, incluidas las aportaciones deducibles del plan de ahorros para la jubilación de tipo IRA y los intereses sobre los préstamos educativos.

Indique la deducción estándar o las deducciones detalladas. Los usuarios que planifiquen detallar ingresarán estimados de estas deducciones.

Imprima el resumen de los resultados. La calculadora proporcionará un resumen de la información del contribuyente. Los contribuyentes usan los resultados para determinar si tienen que completar un nuevo Formulario W-4(SP), que entregarán a sus empleadores.

Type of Business-the best Accounting Services

Business owners and other authorized individuals can submit a name change for their business. The specific action required may vary depending on the type of business. If the EIN was recently assigned and filing liability has yet to be determined, send Business Name Change requests to IRS-Stop 343, Cincinnati, OH 45999.

In some situations a name change may require a new Employer Identification Number (EIN) or a final return. See Publication 1635, Understanding Your EIN, to make this determination.

Follow the chart below to determine who the authorized individual is to make the business name change for your type of business:

Type of Business	Action Required
Sole Proprietorship	Write to us at the address where you filed your return, informing the Internal Revenue Service (IRS) of the name change. Note: The notification must be signed by the business owner or authorized representative.
Corporation	If you are filing a current year return, mark the appropriate name change box of the Form 1120 type you are using: Form 1120: Page 1, Line E, Box 3 Form 1120S: Page 1, Line H, Box 2 If you have already filed your return for the current year, write to us at the address where you filed your return to inform us of the name change. In addition: The notification must be signed by a corporate officer.
Partnership	If you are filing a current year Form 1065, mark the appropriate name change box on the form: Page 1, Line G, Box 3. If you have already filed your return for the current year, write to us at the address where you filed your return to inform us of the name change. In addition: The notification must be signed by a partner of the business.

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TAXES 2017 límite es el 15 de octubre

Consejo Tributario del IRS 2018-156SP

En Esta Edición

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Aviso para contribuyentes que solicitaron prórroga: fecha límite es el 15 de octubre

El 15 de octubre es la fecha límite para los contribuyentes que solicitaron una prórroga para su declaración de impuestos de 2017. No obstante, aquellos que recibieron una prórroga deben marcar este próximo lunes, 15 de octubre como la fecha límite para presentar. 

Aunque la fecha límite está a la vuelta de la esquina, aún hay cosas que estos contribuyentes deben recordar para asegurar que presentan una declaración completa y exacta. Los siguientes son algunos consejos y recordatorios para los contribuyentes que todavía no han presentado: