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NOTICE TO RESIDENTS OF MARYLAND

We are NOT affiliated with the State of Maryland. If you are looking for information about Maryland income taxes, please go to www.marylandtaxes.com.


Useful Links:

FindAGoodCPA.com - Not a healthcare professional?  Find a CPA or EA who understands the tax issues specific to you.

Nanny Taxes - Find out what's involved with complying with the Nanny Tax Rules

IRS Web Site - for tax forms, publications, and general tax information.

Exchange Authority - New England's first authority for IRC 1031 Exchanges

Cost Segregation Studies - Accelerate tax depreciation deductions on new and existing buildings through cost segregation studies

Social Security - find out the latest rules or your projected retirement benefit.

The Company Corporation offers fast, reliable & affordable incorporation and LLC services.


MONTHLY TAX NEWSLETTER

April 2017

FILE YOUR TAX RETURNS OR EXTENSION REQUESTS BY TUESDAY APRIL 18TH

by Andrew D. Schwartz, CPA

Good news for procrastinators.  The IRS is giving everyone a few extra days to complete their 2016 federal income returns this year.  According to the IRS:

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday — April 17. However, Emancipation Day — a legal holiday in the District of Columbia — will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

Extensions to file - If you cannot file by the due date of your return, then you can request an extension of time to file. To receive an automatic 6-month extension of time to file your return, you can file Form 4868 by the due date of your return. See Topic 304 [see below] for more information. However, an extension of time to file is not an extension of time to pay. You will owe interest on any past-due tax and you may be subject to a late-payment penalty if the payment of tax is not made by the original due date of your return [and the amount of taxes you owe exceeds 10% of your total tax liability] .

Topic 304 - Extensions of Time to File Your Tax Return

There are three ways to request an automatic extension of time to file your U.S. individual income tax return. The request for extension of time to file must be made by the regular due date of your return to avoid the penalty for filing late. An extension of time to file is not an extension of time to pay.

You may file your extension in any one of three ways listed below:

  • E-file Form 4868 (PDF), Application For Automatic Extension of Time To File U.S. Individual Tax Return, using your personal computer or through a tax professional.
  • File a paper Form 4868 and enclose payment of your estimate of tax due. 

If you file the Form 4868 electronically, be sure to have a copy of your prior year's return; you will be asked to provide your prior year's adjusted gross income (AGI) amount for verification purposes. Once you file, you will receive an electronic acknowledgement that the IRS has accepted your filing. Keep this for your records.

Out of the Country – You are allowed two extra months (generally until June 15) to file your return and pay any tax due without requesting an extension if you are a U.S. citizen or resident alien, and on the regular due date of your return you are either living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside of the United States and Puerto Rico, or in military or naval service on duty outside of the United States and Puerto Rico.

Check Out Some Articles About Extensions Written for Prior Years' Newsletters:

Below are some informative articles we posted during April of the prior years  addressing the April 15th deadline:

TOP


MIKE'S TAX SEASON TAKES

by Michael Bohigian CPA

As we approach the final stretches of tax season and the looming April 18th filing deadline, we wanted to share some observations from the past couple months working with our clients.

One general observation we’ve had as a firm is the interesting way in which tax information is circulated throughout the professional community.  The cycle appears to go something like this:

  • First, Congress enacts new tax laws and provisions.

  • In the first year or two after these tax changes occur, the accounting profession must learn the myriad rules and how to process any accompanying tax documents, and then learn how to educate their clients on the tax implications for these new rules.

  • This begins a period of adaption for both accountants and clients, as tax strategies are developed to suit everyone’s individual circumstances.

  • Eventually, after a period of four or five years, we all get the hang of it.

  • And then invariably Congress passes new tax laws and the learning curve starts all over again. 

A good example of this educational cycle is the Roth conversion.  A Roth conversion is simply a conversion of a traditional IRA into a Roth IRA, also known as a “Backdoor Roth”. Prior to 2010, Congress had imposed strict income limits on a person’s ability to convert a traditional IRA into a Roth.  In 2010, however, they lifted these income limits, allowing anybody to make a conversion. While some of our clients took advantage of the law in the early years after its enactment, we have noticed a huge upsurge in the number of our clients who have made Roth conversions in the past couple years.  For these clients, making a traditional non-deductible IRA contribution and then immediately converting this to a Roth IRA has become almost second nature.

Of course, we still do encounter questions and confusion about Roth conversions, and a Roth conversion isn’t the right strategy for everyone.  Taxpayers must be wary of the dreaded “cream in the coffee” problem in which a Roth conversion can become taxable by the percentage that a person has money in pre-tax IRA accounts, including SEP IRAs. For this reason, we tell clients to check with us before making a Roth conversion for the first time.

Another trend we have recently noticed is the uptick in the number of clients with Health Savings Accounts (HSAs). With the rising cost of health care, many employers are offering high-deductible health care plans with an accompanying Health Savings Account and making contributions into the HSA on behalf of their employees. For anyone who enjoys studying the fine art of the W2, the code W with a dollar amount is the earmarked contribution into an HSA. 

One point worth making is that although we are now in 2017, someone who has not maxed out their HSA can still contribute additional funds into their account, allocate this money toward 2016, and deduct the contribution on their 2016 tax return up until the deadline of the tax return.  For 2016, the maximum for individuals is $3,350 and for families is $6,750, with a $1,000 catch-up for anyone age 55 or older. In 2017, the maximum for individuals will increase to $3,400.

While it may be too late to make an additional HSA contribution for 2016 if you’ve already filed your tax return, it is good information to have for the future; a future that will last as indefinitely as the new tax laws that come down the pike, and then the circulation of new information will begin again.

TOP


DENTIST MONEY™: HOW TO KEEP OVERHEAD FROM BRINGING YOUR DOWN

Dentistry is what you do, and money is what you make. But unless you keep an eye on overhead, just making ends meet might be hard enough. In this Yankee Dental Congress edition of the Dentist Money™ Show, Reese Harper welcomes CPA, Andrew Schwartz who works with hundreds of dentists around New England and understands the science of overhead distribution. He explains how much dentists should spend on staff, when you know your margins are too low, and common themes he’s observed among practices who experience above average growth.

Please listen to this DENTIST MONEY podcast or read the article posted in their February 2017 newsletter that details the information in this podcast.

The Dentist Money™ Show, hosted by Reese Harper, CFP, is one of the fastest growing podcasts in dentistry and was recently named one of the "7 Best Podcasts In Dentistry." Thousands of dentists across the country tune in each week to learn how to make smart financial decisions. Listeners get straightforward advice about investing, retirement planning, debt reduction, practice management, tax planning, real estate, and other important topics related to personal and practice finance. The show is always entertaining and tailor made for dentists and specialists. Subscribe to the Dentist Money™ Show on iTunes or visit DentistAdvisors.com/listen.

TOP


TAX AND FINANCIAL PLANNING CALENDAR FOR APRIL 2017

Month

Income Taxes

Saving and Investing

 

 

April

  • Personal income tax returns are due  4/18/17 this year since 4/15/17 falls on a Saturday and 4/17/17 is a federal holiday
  • Request for automatic six month extension, Form 4868, due 4/18/17
  • 1st Quarter estimates due 4/18/17
  • Due date for funding your 2016 Roth or Traditional IRA, or Education Savings Account (ESA) is 4/18/17
  • Due date for self-employed individuals to fund their retirement plans is 4/18/17
  • Self-employed individuals who need additional time to fund a retirement plan should file a Form 4868 with the IRS by 4/18/17

 TOP


2016 & 2017 TAX FACTS

  • For 2016, the standard deduction for a single individual is $6,300 and for a married couple is $12,600. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes), real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses.
  • For 2016, the personal exemption is $4,050. Individuals will claim a personal deduction for themselves, their spouse, and their dependents. 
  • The maximum earnings subject to social security taxes is $127,200 for 2017, up from $118,500 for 2015 and 2016.
  • The standard mileage rate is $.535 per business mile as of January 1, 2017, down from $.54 for 2016.
  • The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $18,000 in 2015, 2016 and 2017, up from $17.5k in 2014.  And if you'll be 50 or older by December 31st, you can contribute an extra $6,000 into your 401(k) or 403(b) account this year.
  • The maximum annual contribution to your IRA is $5,500 for 2014 through 2017.  And if you turn 50 by December 31st, you can contribute an extra $1,000 that year.  You have until April 15, 2017 to make your 2016 IRA contributions.

TOP

Need Help With Your Nanny Payroll?
 

This Month's Topics

File Your Tax Returns Or Extension Requests By Tuesday April 18th

Mike's Tax Season Takes

Dentist Money™: How To Keep Overhead From Bringing Your Down

The FICA Refund for Medical Residents 

2016 & 2017 Tax Facts

Tax and Financial Planning Calendar for April 2017

 

NEWSLETTER ARCHIVES
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WHAT'S NEW WITH THE FICA REFUND?

In a shocking development, the IRS recently announced that they will be honoring the FICA tax refunds submitted by residency programs and individual doctors.  The catch is that only FICA taxes paid prior to 4/1/05 qualify.

For more information, go to our April 2010 Newsletter, our January 2009 Newsletter, or our February 2001 Newsletter or read through the IRS' Chief Counsel Advice Memorandum on this issue.

Let's work together to keep current on this hugely valuable tax break.  Please post whatever you read or hear regarding this FICA issue on our new Message Board we set up just for this topic.

 

 
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