IRS released the “Get Transcript” app this week for all taxpayers – this is HUGE news!

Any taxpayer can view, print or download their own transcripts on-line in real-time using a computer or a smart phone.  Note:  This is not a “traditional” app; rather, it is a means to access the information that previously would have taken a Power of Attorney or written requests or meticulous personal bookkeeping.

Go to www.IRS.gov and enter “get transcript” in the site search bar or click here.

You need to log onto the IRS website and then click on the link ”Order a Return or Account Transcript” under the “Tools” menu and then choose to either order a transcript to be mailed to you or get a transcript online.

If you choose to get a transcript online, you will follow a six step process to enter your information (including getting a code emailed to you and answering some personal security questions), and you will be able to request a transcript.  You will also be given several reasons to choose from as to why you are requesting the transcript and recommendations as to which transcript to best suit your needs.

Why is this huge news?  Check out what you can get in a moment’s notice:

Definitions of the various types of Transcripts

  • Account Transcript – (2013 back to 2006) History for Each Tax Year

This is a history of each tax year.  It shows estimated payments made for current tax year (2013) as well as showing when the return was filed, filing status, number of exemptions, AGI, Taxable Income, refund / balance due, etc. An illustrated example is included.

  • Return Transcript (2013 back to 2010)

This shows most line items from your tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any accompanying forms and schedules. This transcript does not reflect any changes you, your representative or the IRS made after you filed your return. In many cases, a Return Transcript will meet the requirements of lending institutions offering mortgages and student loans.

  • Record of Account (2012 back to 2010)

This combines the information from tax account and tax return transcripts.

  • Wage & Income (2013 back to 2004)

This shows data from information returns, such as W-2s, 1099s and 1098s, reported to the IRS. Most recent year information (2013) may not be complete until January of the following year.  Most Wage and Income Transcripts are reasonably complete by mid-summer but the database continues to develop throughout the year.

  • Verification of Nonfiling Letters

These are proof from the IRS that you did not file a return. Current year requests are only available after June 15.  A taxpayer may fail to file a tax return even though he/she has a filing requirement. This letter does not address whether or not the taxpayer should have filed a tax return.

This will significantly aid in your tax time gathering process.  Check it out today!

MaryJoWalker.com

 

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I Now Pronounce You: Filing Married

This tax season marks the first time that same sex married couples can file as “married” on their federal return!  There could be some benefits to filing this way – deductions or credits can now be claimed, but because of the so-called “marriage penalty,” you may wind up paying more. This new policy will simplify the process for preparing federal taxes, but it may boost some couple’s total tax liability.  Couples who have been married in a state that recognized gay marriages before 2013 might want to revisit their prior returns to see if they should refile them.

New IRS policy (Federal):

  • If you were legally married in any state (more on this part below) or foreign country by the last day of 2013, you are married for tax purposes.
  • The rules apply only to couples who are legally married. The IRS does not consider domestic partnerships or civil unions to be marriages.
  • For federal filing purposes, you will file as married, even if the state in which you live does not recognize same sex marriage.

IRS policy (State):

  • Same-sex marriage is not legal in all states. If a gay couple got married in one state but live in or move to another that does not recognize their marriage, each spouse may have to file a “single” state income tax return.
  • Each state gets to make up its own rules for filing state income taxes, and in some cases, those rules are still in flux. Some states have created new forms for same-sex couples to use if they file a joint federal return.

On December 16, the IRS released Notice 2014-1, providing additional guidance on administration of employee benefit plans and held that same-sex married couples will be treated as married under federal tax law. The new guidance consists of questions, answers and examples relating to elections and reimbursements under cafeteria plans, FSAs and HSAs.  In some cases, you may need to request a new W-2 from your employer if you were impacted by these changes to the federal laws.

With this decision brings a number of changes, some of which may seem counter-intuitive or not obvious.  With an ADPA on site, we are ready to work with you to help you navigate all the new rules and regulations.

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Small Business Accounting Services We Provide

If you own your own small business, you are all too aware that it’s not just the dream that’s going to make the business run and be successful – there’s the business plan and the start-up capital and the website design.  And somewhere in all that planning, we put to the side the task of accounting.  The only accounting that’s “really important” is how to make any income on this brand new venture, right?  Not true – having a good handle on your accounting is critical to your endeavor’s success.

If you are self-employed, having an in-depth understanding of your bottom line, your inventory and your efficiency are imperative.  If you know everything there is to know about fashion design but didn’t know that quarterly payroll taxes even existed and are now confronted with the daunting task of figuring them out, we are here to help.

Some of the accounting services that MJW EA & Company, LLC provides to our small business clients are:

  • Peachtree and QuickBooks training, consulting and transaction work when required
  • Balance Sheet reconciliations and analysis
  • Preparation of monthly, quarterly or annual bank reconciliations
  • Recommendations of improvements in many key business areas including operations, systems, HR, tax, credit & collections and accounting.

Think there are not any “real” consequences to shirking the accounting?  You will not be able to accurately estimate your taxes and you may be subject to penalties for underpayment come tax time.  You may incur overdraft fees at your bank and/or interest for late payments of bills.  If you are applying for a loan, the bank will require timely and accurate financials and banks will not lend money to businesses that aren’t able to provide them.  Lastly, tax preparation fees will increase as more work is needed on our end to get your financials in order.

Bottom line?  Our help can make the difference when it comes to your bottom line.

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Year-End Reminder for Tax Deductions: Only Four Days Remaining in 2013!

If you itemize deductions on your tax return, here is a quick refresher on the guidelines.

Types of expenses that you may be able to itemize:

  • Medical expenses
  • Charitable contributions
  • Real estate and/or car taxes (property)
  • State estimated taxes
  • Mortgage interest
  • Certain nonreimbursed employee expenses

Items count as expenses in the year they are paid.

To clarify, “paid” means:

  • Checks: date check is issued
  • Credit cards: date expense is charged (even if credit card bill is not paid)
  • Cash: when exchanged

You have four days until the end of the year! If you have items that you want to include on your 2013 tax return, they need to be paid by the 31st.

MaryJoWalker.com

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What’s New at MJW EA & Company, LLC?

We are pleased to announce that we are offering new valuable services to our clients!

MJW EA & Company LLC is providing services in social security retirement benefit claiming strategies

Finally, after you’ve worked hard for so many years, it is your turn to think about retirement. Do you know that there are various claiming strategies you could use to optimize your total lifetime income benefits? MJW EA & Company LLC will work with you, based on your financial and health situation, to help you navigate the maze of claiming strategies to provide you added income for your retirement years.

We also provide services to our clients to minimize the tax effect by designing a withdrawal strategy so you can keep more of your hard earned money.  Ask us about it when you come in!

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What’s new at MJW, EA & Company LLC?

We are pleased to announce that we are offering new valuable services to our clients!

Offering full service advice on college financial planning!

Whether you have a child in college already or your precious one is just born, MJW EA & Company LLC can help you create a sound college financial plan which will help you save serious dollars in taxes and/or obtain more favorable financial aid packages.   With so many tax benefit options – including the federal government’s American Opportunity Credit or a state sponsored 529 Plan like CHET – families are either lost in a labyrinth of options or are not aware of the best strategies available to them to maximize the benefits.  We can help you develop a well thought out plan to fit your family’s financial situation and needs.

We also provide services to families who need FAFSA and/or institutional form preparation or support to make your college financial aid process less stressful.  Call, come in or email to learn how we can help!

MaryJoWalker.com

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What’s new at MJW, EA & Company LLC?

We are pleased to announce that we are offering new valuable services to our clients!

Mary Jo is an Accredited Domestic Partner Adviser (ADPA)

Congratulations, Mary Jo!  With this designation, she is licensed and prepared to discuss appropriate tax filing, retirement planning and wealth saving strategies with clients who are in registered domestic partnerships, civil unions, gay marriages or other similar formal relationships that are not considered “marriages” under state law.

The 1996 Defense of Marriage Act, or DOMA, was signed into law by President Bill Clinton, barring federal recognition of same-sex marriages for purposes such as Social Security survivors’ benefits, insurance benefits, immigration and tax filing. Even with the reversal of this ruling on June 26th of this year, federal and state laws continue to be confusing. MJW EA & Company LLC would like to help you navigate these or other issues that are of interest or concern to you.  For example:

  • Did you know that the Social Security Administration has begun processing claims for surviving members of same-sex marriages and paying benefits where they are due?
  • Are you missing out on any other tax benefits or entitlements as a married couple?

Call or email to find out how we can help you!

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New – Special Offers!

Please be sure to check out our Small Business and Personal Accounting page or our Tax Preparation and Taxpayer Representation page for downloadable offers to suit your needs in the upcoming year!

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Holiday Schedule

We will be closing the office at 12:30p on Friday, December 20th, 2013.

We will be closed Tuesday, December 24th and Wednesday, December 25th in observance of the Christmas Holiday.  We will be open Monday, Thursday and Friday of the Christmas week.

Our office will also be closed New Year’s Day.

Happy Holidays from all of us at MJW EA & Company LLC!

 

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Q&A: Affordable Care Act and Additional Medicare Tax

As part of the Affordable Care Act of 2010, new Medicare taxes went into effect in 2013. Intended to impact “higher-income individuals,” many taxpayers may be surprised come April when they end up owing taxes versus getting a refund. The .9% Medicare Payroll Tax is assessed over the traditional 1.45% Medicare tax if wages are more than $200,000 from one employer. Employers don’t have to consider a spouse’s wages or if you have a second job. So taxes could be over-withheld or under-withheld, and high-wage employees should be prepared for this surprise come April.

Following are answers to the most frequently asked questions:

1. Are wages that are not paid in cash, such as fringe benefits, subject to Additional Medicare Tax?

Yes. The value of taxable wages not paid in cash, such as non-cash fringe benefits, are subject to Additional Medicare Tax, if, in combination with other wages, they exceed the individual’s applicable threshold. Non-cash wages are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold.

2. Are tips subject to Additional Medicare Tax?

Yes. Tips are subject to Additional Medicare Tax, if, in combination with other wages, they exceed the individual’s applicable threshold. Tips are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold.

3. Will Additional Medicare Tax be withheld from an individual’s wages?

An employer must withhold Additional Medicare Tax from wages it pays to an individual in excess of $200,000 in a calendar year, without regard to the individual’s filing status or wages paid by another employer. An individual may owe more than the amount withheld by the employer, depending on the individual’s filing status, wages, compensation, and self-employment income. In that case, the individual should make estimated tax payments and/or request additional income tax withholding using Form W-4, Employee’s Withholding Allowance Certificate.

4. Can I request additional withholding specifically for Additional Medicare Tax?

No. However, if you anticipate liability for Additional Medicare Tax, you may request that your employer withhold an additional amount of income tax withholding on Form W-4. The additional income tax withholding will be applied against your taxes shown on your individual income tax return (Form 1040), including any Additional Medicare Tax liability.

5. If my employer withholds Additional Medicare Tax from my wages in excess of $200,000, but I won’t owe the tax because my spouse and I file a joint return and we won’t meet the $250,000 threshold for joint filers, can I ask my employer to stop withholding Additional Medicare Tax?

No. Your employer must withhold Additional Medicare Tax on wages it pays to you in excess of $200,000 in a calendar year. Your employer cannot honor a request to cease withholding Additional Medicare Tax if it is required to withhold it. You will claim credit for any withheld Additional Medicare Tax against the total tax liability shown on your individual income tax return (Form 1040).

6. What should I do if I have two jobs and neither employer withholds Additional Medicare Tax, but the sum of my wages exceeds the threshold at which I will owe the tax?

If you anticipate that you will owe Additional Medicare Tax but will not satisfy the liability through Additional Medicare Tax withholding (for example, because you will not be paid wages in excess of $200,000 in a calendar year by an employer), you should make estimated tax payments and/or request additional income tax withholding using Form W-4.

7. Will individuals calculate Additional Medicare Tax liability on their income tax returns?

Yes. Individuals will calculate Additional Medicare Tax liability on their individual income tax returns (Form 1040),using Form 8959, Additional Medicare Tax. Individuals will also report Additional Medicare Tax withheld by their employers on their individual income tax returns. Any Additional Medicare Tax withheld by an employer will be applied against all taxes shown on an individual’s income tax return, including any Additional Medicare Tax liability.

To visit the IRS page directly, click here.

 

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