Category: Tax News

Get up to date on all tax news from the IRS. The IRS is constantly updating us with law changes and new rules. Sometimes, it’s too much to keep up with. We’ll decipher the confusing lingo while you focus on staying current  on what’s really important.

If you have more questions about staying up to date with the IRS, leave a comment. Our tax team is ready to help!

Archive for the ‘Tax News’ Category

Obamacare VS. Trumpcare: 3 Ways Taxes Will Be Affected

Posted by admin on April 14, 2017
Last modified: April 14, 2017

Obamacare made it through the election. Will it stay on your tax return?

Every new president brings on a new aura for Americans to bask in, and while emotions run high, opinions begin to surface. Suddenly, cheerful holiday dinners turn into political debates. Some chime in while the rest of us are just trying to decide between pecan pie or pumpkin. One debate is the replacement of Obamacare, or the American Health Care Act. Lately, we’ve introduced a new word into our vocabulary that will likely stick; TrumpCare

 

Flexible Spending Account (FSA) for Over-the-Counter Medicine

According to the IRS in 2011, under the Affordable Care Act (aka Obamacare), “Distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs if they are purchased with a prescription.” This will remain accurate until Obamacare is no longer in effect. However, there are limits to the Flexible Spending Account. For example, the pre-tax dollars you can have contributed to your account adjusts each year depending on inflation. The FSA limit is currently $2,500.

The American Health Care Act (aka TrumpCare) having one foot in the door, we can expect to see a few changes. President Trump truly believes in the benefits of Health Savings Accounts (HSAs). Although these accounts have been available to eligible Americans for the past decade, they tend to attract mostly higher-income earners. TrumpCare will remove the $2,500 FSA limit for those who want to purchase a high deductible medical coverage plan. Therefore, for larger deductibles, HSAs come into play. The HSA contribution limit for individuals is $3,400.

Lower to middle-income earners are finding this new plan hard to swallow since HSAs require a high-deductible account and the money to fund it. Long story short, with the existing HSA guidelines, many will not qualify and will therefore not be able to use either of these accounts to purchase over-the-counter medication like they can now with FSAs.

 

Individual Shared Responsibility Tax Payment

We can all agree that the Affordable Care Act increased health care coverage among Americans, the statistics speak for themselves. However, the reason why might have to do with the tax penalty you would be subject to paying if you didn’t have any coverage at all. The Individual Shared Responsibility Tax Payment ensured that you (and each member of your household) would either have the minimum essential health coverage or pay a pretty penny out of your tax refund. The choice was yours but either way, you pay. As of 2016, the penalty had increased to the larger of:

  • $695 for each adult and $347.50 for each child without minimum coverage (maxing out at $2,085 per household), or
  • 2.5% of your household income above the tax return filing threshold for your filing status

President Trump’s plan repeals this tax penalty. There are rumors that Americans who have paid this penalty in the past will be able to amend their tax returns to accommodate for the repeal. 

 

Medical Itemized Deduction Threshold

Currently, Obamacare allows individuals who itemize medical expenses to deduct costs that exceed 10% of their AGI (Adjusted Gross Income).

Under the American Health Care Act, those who itemize their deductions would be able to write off medical expenses exceeding 5.8%, reducing the current threshold of 10% by almost half. This would allow those who have large, out-of-pocket medical expenses to deduct more on their tax returns for the year.

 

When one door closes, another one opens…even in the tax world.

Taxes and politics are two subjects that are the furthest from appetizing yet always seem to sneak into dinner table conversations. Get started filing your current or prior year taxes whichever political party or tax bracket you fall under. Create an account today or feel free to give us a call with any questions you have.

 

Obamacare

PriorTax Partners With Trustpilot to Spread the Word

Posted by Michelle O'Brien on April 14, 2016
Last modified: November 2, 2016

This tax season, PriorTax has joined forces with Trustpilot to show just how much our customers enjoy working with us!

We know how important customer reviews are. From vacation spots to the next restaurant we plan to dine at, we’re constantly researching to find the best. The same goes for filing your taxes.

That’s why we’ve partnered with Trustpilot, an online customer review website. With the Trustpilot platform, you’ll be able to get down to the nitty gritty about what our customers think about their experience with us. Turns out, our customers have been loving us!

Here are some of the thoughtful words our customers have been sharing about us.

 

“I’ve never done my taxes THIS fast with the least amount of questions and as a bonus when entering the W2 amounts, it fills in 95% of the amounts for me!!! WOW! Where have these guys been all my life?”  

-Miguel

 

“Prior to finding Prior Tax, it was really painful with OLT, TaxACT, and Turbotax when trying to file past taxes. These folks reviews your input, sends you an email verifying if an item is validated with backup, and they give you advice. If I had a word to describe them, I would use “Caring”. They understand that you are stressing trying to catch up. Good work Prior Tax!”  

-Sulu

 

“I have used PriorTax for 5 years. Each year I share with family and friends how happy I am with them. Each year more and more join me with tax season and using PriotTax. Very happy customer.”

-Mary

(more…)

2016 Tax Rates and Standard Deduction

Posted by Michelle O'Brien on January 27, 2016
Last modified: December 21, 2016

Time to reflect on the new 2016 tax rates.

Once the new year comes around, we tend to reevaluate ourselves and reflect on our accomplishments (and setbacks) from the past year. This is also a time when we think about how we can better ourselves for the year to come. For many of us, that means following through with a career move, proposing to that special someone, having a baby, or buying a new house.

All of these life events come with a price tag that are likely to affect your tax situation. You’ll want to take a look at the following tables as a reference to adjust your W-4 withholdings accordingly. Look at it as one more save-the-date or housewarming invite you need to send out to share the good news!

 

2016 Standard Deduction Amounts

If your Filing Status is: Your Standard Deduction is:
Single$6,300
Married Filing Jointly$12,600
Married Filing Separately$6,300
Head of Household$9,300
Surviving Spouse$12,600

(more…)

7 Tax Updates for 2016

Posted by Michelle O'Brien on December 11, 2015
Last modified: December 21, 2016

5…4…3…2…1….. Happy Tax Season 2016!

With the new year comes promises to lose weight, shiny new engagement rings, and of course…annual tax updates. While most tax laws remain consistent from one year to the next, there are some that change.

We are here to share a sneak peek of 7 tax updates coming your way for 2016. Let’s get started.

 

1. Tax Day is April 18th this year.

Since April 15th falls on Washington D.C. Emancipation Day, the tax deadline date will extend to the following Monday, April 18th. Are you among the lucky ones living in a New England state? Extend that deadline one more day to April 19th.

 

2. Tax penalties related to Obamacare are increasing yet AGAIN.

If you’ve reached the ripe ol’ age of 26, then you’re familiar with health insurance and the recent changes to it via Obama. For those without coverage last year, a penalty of $285 (or 2% of income above the filing limit) was billed to them. Still don’t have coverage for 2016? If you don’t apply for an eligible health care plan, then the tax penalty could hit an all-time high of $695 per adult (or 2.5% of income).

 

3. The Earned Income Credit is increasing.

2016 brings a small but modest increase to the EIC. If you are a taxpayer with three or more qualifying dependent children, then the maximum credit will be increasing by $27 to $6,269. For those with two dependent children, your maximum will be increasing by $24 to $5,572. For those taxpayers with an only child, you can receive a maximum of $3,373 which is up $14 from 2015. No kids to worry about? You’ll still get an increase of $3 from last year which will leave you with $506 for 2016. (more…)

NY Middle Class Families to Receive $350 Check | Tax Rebate

Posted by admin on October 2, 2014
Last modified: October 6, 2016

Thousands of NY Middle Class Families will be receiving a $350 Rebate Check from NY State This Month

If sometime over the next month you receive a $350 check from New York State, don’t throw it away.  It’s not a joke. Instead, it’s a Middle Class Family Rebate from the state.

That’s right, instead of you writing a check to the government, they may be writing you one.

Along with the NY state check, there will be a letter stating something along the lines of “Dear Taxpayer: Last year’s State Budget included this Family Tax Relief Credit. This tax relief is part of New York State’s new effort to reduce taxes”.

Who is Eligible to Receive NY Middle Class Family Rebate Check

You can expect to see the Family Relief $350 check if you meet the following qualifications;  

  • you’re a New York State resident
  • you claimed a child under age 17 on your 2012 tax return
  • your family’s 2012 adjusted gross income was between $40,000 and $300,000 (more…)

Federal Tax Debt Relief

Posted by admin on October 22, 2013
Last modified: December 21, 2016

There’s nothing less pleasant than owing the IRS money. Find out how PriorTax can help.

Most people who are late on their taxes find there’s nothing to worry about. In fact many get a refund. But for an unfortunate few, late taxes mean crippling debt that seems impossible to pay off. These problems, however, are not insurmountable.

Scary as it might seem, the IRS is a reasonable organization willing to work out a solution that works for you. In order to get results, however, you have to know how to navigate the tax code and the IRS bureaucracy.

That’s where PriorTax comes in. Our experienced professionals can work with you and negotiate with the IRS to make your tax burden more manageable. Here’s what we can do:

Stop Collections

The first thing we’ll do is stop collection of your tax debt while we negotiate a solution. We can issue a Stay of Collections which will stop IRS tax liens, levies, and seizures. This includes negotiating a full or partial release of IRS wage garnishment so that you can start making money again. (more…)

How Long Does It Take for the New York State E-File to Process?

Posted by admin on March 15, 2013
Last modified: December 22, 2016

New York State says to expect your refund in 14-30 days, but many are experiencing delays

Once you’ve filed your federal and state returns, you begin the dreaded waiting game. The states tend to be a little slower than the IRS. So even after you get your federal refund, you could still be worrying about your money from the state.

New York has a slightly more sophisticated tax system than other states. However, it can still take a long time for your return to be processed and refund issued. Many taxpayers have unrealistic expectations. They expect NY to be as fast as the IRS.

What is the quickest way to get your tax refund?

The fastest way to get your refund is to e-file your return and request your refund via direct deposit. The Department of Taxation and Finance declares that these taxpayers can receive their refund in as little as 14 days. Most, however, will have to wait somewhere between 14 and 30 days. Note also that it is hardly uncommon for refunds to take even longer than that.

Any deviation from the e-file/direct deposit combination means that your refund will take even longer than this 14-30 day window. In addition to direct deposit, New York allows you to get your refund sent to you on a debit card or in the traditional form of a paper check. As both of these options involve sending a physical thing through the mail, they take a little longer, usually about 2-5 business days more. (more…)

Hurricane Sandy Tax Relief

Posted by admin on November 7, 2012
Last modified: December 21, 2016

Dealing with Hurricane Sandy’s destruction is a little easier with these tax breaks from the IRS

No amount of help will make recovering from the damage Hurricane Sandy inflicted on the Northeast easy, but tax breaks could help ease the pain. Thankfully, the IRS has taken many measures to provide tax relief to Hurricane Sandy victims.

Deadlines pushed back

For taxpayers in Connecticut, New Jersey, and New York who were affected by the storm, the IRS has pushed back multiple tax deadlines to February 1, 2013. This new deadline applies to

  • fourth quarter individual estimated tax payments normally due January 15
  • payroll and excise tax returns and their accompanying payments for the third and fourth quarters, normally due October 31 and January 31
  • Form 990 series returns for tax-exempt organizations with original/extended due dates during this period

Not only are deadlines pushed back, but the IRS will also abate all interest, late-payment penalties, and late-filing penalties for taxpayers located in the disaster zone. (more…)

The Back Tax Fallacy

Posted by admin on January 24, 2012
Last modified: October 6, 2016

Filing a Late Tax Return Doesn’t Necessarily Mean You Owe Back Taxes

The tax world is full of technical jargon that might not mean very much to the layman. But one distinction you really should pay attention to is the difference between back taxes and late taxes, especially if you’ve neglected your taxes in years past.

The phrase “back taxes” gets thrown around a lot in reference to all sorts of different tax issues from previous years. It often gets mixed up with the term “late taxes” and, in certain quarters, the two are used interchangeably.

But in reality late taxes do not necessarily result in back taxes – all back taxes are late taxes, but not all late taxes are back taxes.

So what exactly are back taxes and how are they different from late taxes? (more…)

2010 Tax Filing: What’s New This Year?

Posted by admin on January 11, 2011
Last modified: December 20, 2016

Here are some important changes you should keep in mind prior to filing your taxes this year.

First, the due date to file your Form 1040 is April 18 instead of the customary 15th deadline. This is due to the Emancipation Day holiday observed in Washington DC falling on the 15th this year. The April 18th return date is applicable whether you reside in the District of Columbia or not.

For 2010, there are no longer any limits on the number of personal exemptions and itemized deductions that you can claim. In other words, you will not lose part to your deduction, irrespective of the actual amount of your adjusted gross income.

Please note however that all unemployment compensation you may have received in 2010 generally is now fully taxable. The exclusion from income of up to $2400 that applied in 2009 has been rescinded and is no longer available. (more…)