News and Updates for 2018 Tax Return Filing for forms
1040, 1065, 990,& 1120
- The 2018 Individual Tax Returns regular filing season will start January 3 2019 until April 15, 2019 without
- extension. The extension filing deadline is April,15, 2019. which is valid till Oct. 15,2019.
- The individual Mandate Affordable Care Act (Obama Care)has been eliminated. The employer mandate is still in effect. A copy of form 1095B or C will be required if your employer provided health insurance and employs more than 50 employees.
IMPORTANT 1040-2018 TAX RETURN HIGHLIGHTS.
- Extensions must be filed no later than April 15 2019. The extension is good for six months on or before October 15, 2019.
- If you are in a foreign country, your Regular Income Tax filing deadline is June 15, 2019.
- Filing an extension does not stop the penalties and interest from accruing. If you owe taxes You must pay 90% of the Tax due at the time of filing your extension. The penalty is 0.5% up 1%. per month.
IRS penalties without extension or after extension. if you owe.
- Penalty for Failure to File Timely Returns is five (5%) percent per month up to twenty five (25%) percent per year maximum penalties.
- Penalty is seventy five (75%) percent, if Fraud is involved.
- Penalty If you File sixty (60) days after the due date or extension due date a $ 135.00 or 100% penalty whichever is greater will be assess by the IRS. If you have a refund your refund will be reduced by this amount
- Penalty for Failure to Timely Pay After Issuance of Notice is 0.5% for each month or partial month up to a maximum of 25%.
- Penalty for Accuracy related penalty is 20% to 40% of the increase in the tax due in the case of substantial understatement of tax.
- Penalty in connection with information returns (Form W2, 1099 series) is maximum amount of Two Hundred Fifty ($250.00) dollars per form. Many of these forms must be filed electronically, and filing on paper is considered non filing.
- Penalty on unpaid withholding taxes is one hundred (100%) percent. There have been reported cases of the IRS seizing houses of those failing to pay over employee taxes. This applies to company employees and officers as individual, as well as to companies themselves.
For 2018 Tax Return Filing important Changes:
A. Earned Income Tax Credit:
The maximum amount are as follows:
With 3 or more qualifying Children --------------------- $ 6,431
With 2 qualifying children ----------------------------------$ 5,716
With 1 qualifying child---------------------------------------$ 3,461
With no qualifying child-------------------------------------$ 519
Warning: both the IRS and the State Taxing Agency are strictly verifying Tax Returns of taxpayers that filed Head of Household status.
B. Standard Mileage Rates 2017 2018
Business Use of Vehicle (Auto, Truck or Van) $ .53.5 cents per mile. $ .54.5 cents per mile
Charitable $ .17 cents per mile. $ .14 cents per mile
Medical & Moving Expenses $ .23 cents per mile. $ .18 cents per mile
Note: Employees get no deduction for job related mileage and Expenses for tax year 2018.
C. Depreciation Limits on Vehicles placed in service Calendar year 2018 (Must be over 50% business related)
Pass, Auto Veh, < 6000 LBS Pass. Trk /Van/SUV > 6000 LBS Non Pass Comcial . Veh.
Ist year $ 18,000 $ 25,000 100 % deduction
2nd year $ 16,000 Bal the next 4 yrs
3rd year $ 9,600
4th year and after $ 5,760
D. Internal Revenue Code Section 179. 2018
Deduction $ 1,000,000
Threshold limit cost is $ 2,500,000
E. 2018 Individual Income Tax Rates. 10%, 12%, 22%, 24%, 32%, 35%. and 37%.
STANDARD DEDUCTIONS RATES:
SINGLE FILERS--------------------------------- $ 12,000
HEAD OF HOUSEHOLD---------------------- $ 18,000
MARRIED FILING JOINT-------------------- $ 24,000
FOR THE AGED AND BLIND --------------- $ 1.300 In addition to the above. $ 1,600 if unmarried.
F. Child Tax Credit - ---------------------$ 2,000 per child under 17 yrs old
G. FOR 2018 The following may still be in effect:
Medicare Tax of 0.9%both on wages W2 and Self employed 1099 misc.
Net Investment income tax of 3.8% on the lower of Modified Adjusted Gross Income or Net Investment Income. Both of these new taxes apply to Individuals earning more than $ 200,000.00 (for single filers) or $ 250,000.00 (for married filing jointly)
Social Security tax has reverted back to its normal rate of 12.4% (it had been 10.4% for 2011 and 2012)
Medicare Tax remains at 2.9% + theres an additional Medicare tax of 0.9% on wages and self employment over a threshold amount, Combined would be at 3.8%.
Alternative minimum tax is at 26% and 28%.
Medical Dental Expenses deductions (Unreimbursed) For 2018 the threshold amount for you to deduct these expenses have been increased to 7.5% of your (AGI) Adjusted Gross Income
H. 1120 & 1120S 2018 Corporate Tax Returns.
- Calendar year S Corporation Tax Return filing deadline is March 15, 2019.
- Calendar year C Corporation Tax Return Filing Deadline is April 15 2019.
- For fiscal year filers, after closing of business year, the 15th day of the third month.
- LLC, S Corp. Extensions must be filed no later than March 15, 2019.
- The extension deadline is September 15, 2019.
- LLC, S Corp the IRS is now enforcing late filing penalty of $ 195.00 per shareholder per month.
- The penalty is charged if you miss filing regular or extended deadlines.
I. Corporations 2018 Tax Rates.
Beginning with 2018 Tax year, the TCJA makes the corporate tax rate a flat 21%.
It also eliminates the corporate AMT (Alternative Minimum Tax)
Personal Service Corporations................................ 21% of Taxable Income
S Corp........................................................................ Pass through entity (K1) to shareholders
Capital gains and qualified dividends tax rates are now 0%, 15% ,and new rate of 20%. Capital gains could also be subject to the new net investment tax of 3.8%, making the top rate on long term gains effectively 23.8%
J Partnerships and Limited Liability Company (LLC).
- All types of Partnerships .........................Pass through entities (K1) to Partners.
- Limited Liability Company (LLC) .........Can elect to file one of three (3) ways as follows:
1. As a Disregarded Entity -One Member (Form 1040 Schedule C).
2. As a Partnership - More than one member, (Partnership Form 1065).
3. As a Corporation when election is made. (Form 1120).
- Be Aware that when you File form 7004 Extension for the LLC the extension is for 6 months. If you file beyond this date the LLC will be charge late filing penalty of $ 195.00 per LLC member per month.
- This penalty is also charged to Corporation Shareholders.
K. IRS Audit / Examination selection process. IRS Publication 556.
- By computer scoring Tax Returns using the DIF (Discriminant Inventory Function).
- DIF Assigns a numeric score to each individual returns and some corporate returns after they are processed.
- Returns that gets a high score are selected for audit examinations.
- The following situations will result in a DIF high score.
1. Mismatch Of information from third party documentation such as forms 1099's W2s as compared to
to tax return filed.
2. If you belong to a group or industry with a high audit rate history.
3. Information from a number of sources, internet, newspapers, public records
and from any individual.
Church and Charitable, contributions, gifts and donations. Can be claimed, if fully substantiated and documented.
- The IRS had increased the number of examinations and audits of tax returns due to a huge tax gap
L. Retirement Plans 2018 Contribution (Traditional) $ 5,500 if under 55 years of
age, $ 6,500 if over 55.
401(k),403(b) and 457 plans $ 18,500 and if over 50 years of age $ 24,500.
Contributions must be made by April 15 to be deductible.
M. FBAR(Foreign Bank Account Report) Requirement.- Retroactive to 2005 the IRS has a
questionnaire on form 1040 Schedule B Part 111 asking all US person and businesses to report to the US
Treasury Department the existence of Foreign bank accounts if aggregate total goes over $ 10,000. A report
(TD F90-22.1) must be filed to the US Treasury Department no later than June 30 the following year. Failure to
file the report will subject the US Person or Business to stiff fines, penalties and in extreme cases imprisonment.
N. FATCA (Foreign Account Tax Compliance).-was enacted by the IRS in 2010. FATCA requires certain US taxpayers holding financial assets with aggregate value exceeding $ 50,000 to report certain
information about those assets on a new (Form 8938 must be attached to the tax return) Reporting applies for
assets held in taxable years beginning after March 18 2010. Failure to file the report will result in penalty of
$ 10,000 up to $ 50,000 for continued violation. Further underpayments of Tax attributable to non-disclosed
foreign financial assets will be subject to a substantial underpayment penalty of 40%. Implementation is after
June 30 2013.
O. Foreign Corporation and Foreign Trust. Information-Taxpayer(s) who areShareholder(s) of
controlled foreign corporations must file form 5741andmust be attach to the tax return.with respect to each
such controlled foreign corporation. Penalties for failure to timely file are $10,000 to $50,000 per required form,
plus possible loss of foreign tax credits. US corporations more than 25% owned, directly or indirectly by foreign
persons must file form 5742 and must be attach to the tax return to report such ownership and
transactions related parties. Failure to timely file carries $10,000 penalty per required form. This penalty maybe
increased by $10,000 per month per form for continued failure to file. In addition, taxpayer(s)who fail to report
changes in foreign taxes used as credits against Federal Income Tax maybe subject to penalties.
"ALERT ALERT ALERT ALERT ALERT "
THE IRS IS NOW FILING LIENS AND LEVYING BANK ACCOUNTS AND OTHERS ASSETS BY CANCELLING EXISTING INSTALLMENT AGREEMENTS OF INDIVIDUALS AND BUSINESS ENTITIES ,WHENEVER TAXES OWED IS INCREASED DUE TO A RECENTLY FILED TAX RETURN IN ORDER TO AVOID THE FILING OF LIEN AND LEVY, THE TAXPAYER MUST PROPOSE A NEW INSTALLMENT AGREEMENT. ADDING THE NEW TAX LIABILITY TO THE TOTAL AMOUNT OWED.
This website page is constantly being updated for the current tax filing season new information. More updates are still in progress.
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