Getting A Tax Break From the IRS

         It has been stated many times on this blog and from many other Tax news sources, the Tax Cuts and Jobs Act (TCJA) has been a game changer. Even basic calculations now need to be looked in a different way. Nothing will be done the same way. One example is tax withholding and estimated payments.
          In general, when it comes to tax withholding from paychecks, things are very simple. A Form W-4 is filled out and given to your employer and that determines how much in taxes are withheld from your wages earned. However, when the TCJA went into effect, the withholding tables were adjusted, which meant less would be held from your pay. Most people saw an increase in wages last year. The real reasons for this were a suspension of certain exemptions and deductions.
          What many Taxpayers may not have realized is that they needed to submit a revised W-4 to make sure their estimated tax payments were correct. Not many were aware of this. As a result, while refunds will be issued to many, some will be surprised to find out they owe taxes. Considering these factors and the fact that the IRS is not fully functional during the current partial Federal Government shutdown, Taxpayers are being given a break. The penalty for those who did not withhold or estimate their tax appropriately will be waived for this year. This will apply for those who paid at least 85% of their tax liability, not the usual 90%. Only time will tell how many Taxpayers this will benefit. We at Anthony Sykes and Company are here to help you navigate this new tax landscape. Please contact us to make an appointment to discuss how to make the best choices for you and your business.

Comments

Post a Comment

Popular posts from this blog

What is Fair in the Tax System?

                 Everyone wants to be treated fairly. That is an essential quality that all people have. But what is fairness? Trying to answer that question can prove to be difficult for some. While fairness is impartial and just treatment without favoritism or discrimination, applying this principle is a challenge. Each person has their own idea of what is fair. That is certainly true when it comes to the current tax system.           The Internal Revenue Service ( IRS ) is aware of that sentiment. After a year of review following the passing of the 2022 Inflation Reduction Act funding, they are determined to make a change. These changes will focus attention on the wealthy, partnerships, and other high-income earners who in recent years have had a sharp reduction in audits. The IRS is planning to use Artificial Intelligence to detect patterns in tax avoidance and new threats. They will also make sure that audit rates do not increase for modest earners. This is just one area that i
Read more

What is the Educator Expense Deduction for 2023?

            With the start of the new school year upon us, educators will want their students to have a complete classroom available to them. That might mean having some out-of-pocket expenses that are not reimbursed. If that’s the case, any principal, counselor, aide, or teacher who works at a K-12 school for at least 900 hours in a year can claim the Educator Expense Deduction . The current limit is $300, but that can be adjusted in the future based on inflation.           The qualifying costs can be related to books, supplies, and other materials used in the classroom. Equipment, including computer equipment and software can qualify. COVID-19 protective items used in the classroom would also apply. This can be claimed even if you use the standard deduction on your tax return. As a reminder, it is always best practice, especially when claiming a deduction, to keep good records which would include receipts. Your qualified tax professional can advise you further.
Read more

Beware of Employee Retention Credit Scams

          The Employee Retention Credit ( ERC ) is a tax credit for employers who kept paying employees while closed by government order or had a great decrease in income due to COVID-19. This is a credit that can only be claimed by certain businesses and organizations that had employees during specific time periods. With this set of criteria, the ERC is continuing to be the subject of a growing advertising campaign. Wild claims are being made about who can qualify for it.           The eligibility requirements should be considered closely. One sign of a scam is stating that the application process is easy, or that someone can find out if they are eligible for it in minutes. The ERC is noted for being a very complex credit. Scammers are trying to use this situation to steal personal information or run away with large upfront fees for work that will never take place. Dishonest promoters try to lure in victims by offering to work for a fee based on a percentage of the credit or sayin
Read more