Featured Information Archives - MJW EA & Company LLC

August 7, 2018 Leave a Comment

IRA owners be aware!

IRA owners need to ensure they are taking appropriate measures to avoid having their IRAs treated as inactive under an unclaimed property statute! New IRS ruling regarding tax treatment of IRAs that become unclaimed property.

In light of the recent change to federal tax law limiting the income tax deduction for state and local taxes, many states are searching for revenue. One increasingly important non-tax source of revenue for states is unclaimed property, which is turned over to the states under a process referred to as escheatment. Over the past few years, state unclaimed property administrators have initiated numerous IRA-focused, multi-state audits of banks, broker-dealers, life insurers and other financial institutions. Under the statutes of most states, traditional IRAs are presumed abandoned—and therefore due for escheat to the states—if there is no owner-generated activity in the account for three to five years after the date for required minimum distributions, i.e., age 70½. These standards are non-uniform by state, and several states purport to count the period backwards, presuming that an account is abandoned at age 70½ if there has been no activity within the prior three to five years. The treatment of Roth IRAs is also non-uniform, and state laws vary on whether age 70½ is a potential trigger for escheat.
The death of the IRA account owner is also a potential trigger for escheat.

To ensure that the state does not get your IRA account as unclaimed property be sure that you have listed beneficiaries on all IRA accounts!

Bottomline: If you are an IRA owner you will need to be extra vigilant to ensure that you are taking steps to avoid having your IRAs treated as inactive under an unclaimed property statute. To avoid escheating an IRA you should take steps such as logging into your IRA account (if you have access online) or contacting the IRA custodian at least every few months.

July 10, 2018 Leave a Comment

Tax Simplification: It isn’t so simple – It’s simply complicated

Wow! Weren’t we promised that taxes were going to be easier? Remember that picture of the president kissing the new “postcard tax return?!”

Well, tax simplification is in the works. We now have a “draft” copy of the “postcard.” The results….it isn’t a REAL postcard -it can’t be mailed. It has names and social security numbers on it! It will have to be mailed in some kind of secure fashion (good old fashioned envelope!?). So, each envelope will have to be opened and an IRS employee will most likely enter the data into an IRS computer.

Wait a minute…what happened to electronic filing – the be-all and end-all of government efficiency? That was a good idea, but now it seems we are working our way back toward the stone-age. For what? A campaign photo op?

Tax simplification makes good sense. People with relatively simple financial lives should be able to file their own taxes (electronically or by mail) without the aid of a tax professional. Using averaged standard deductions would allow many to complete tax returns themselves. So does the “Post Card in an envelope” provide that option? Let’s say you have a salary, a house, some medical expenses, an IRA, etc. Will you be able to file your taxes on the simplified form?

Maybe, yes…maybe, no. It simply may be too confusing to determine if you will benefit from itemizing deductions, for one thing. What we see in the new “draft” form is a typical IRS form, masquerading as a post card that will not simplify tax filing for very many people. It is short for sure, but primarily because the type size has been reduced to the point many will need new prescription glasses to read it and many supporting schedules will be required. (When you next run across your magnifying glass, keep it handy!)

Now, let’s not forget that the tax tables for 2018 have been altered and as a result are generating reductions in withholding from your wages. This may feel good in the paycheck, but no one knows for sure that the reduced withholding will be sufficient for the taxes you will ultimately owe. This is something we have been urging you to pay attention to through the year.

To help with this piece…..The IRS just came out with a new W4 form for employees to complete and determine their withholding rate beginning in 2019. It’s almost like asking the employee to complete their income tax return first and then provide a summary to the employer. In fairness to the IRS the 11 pages of instructions (yep….11 pages!!) try to explain and instruct!

Overall, there will be tax cuts for some and simplification for a few, but chances you will benefit from both are unlikely. Careful tax planning and education will continue to be important…..maybe even more so than ever. We are here to help throughout this year and beyond.

June 27, 2018 Leave a Comment

DUCKY DASH FOR DIAPERS!

At MJW EA & Co we are supporting Bare Necessities’ third annual, second largest annual fundraiser – the DUCKY DASH FOR DIAPERS!
No, this is not a real duck race! And, no, we are not selling live ducks!
We are selling raffle tickets. With each raffle ticket a few things happen:

$5.00 raffle ticket will allow Bare Necessities to purchase 3 days of diapers for a baby in need along the shoreline.
$5.00 raffle ticket gives you the opportunity to win one of many cool prizes.

Please join us on Saturday, July 14th at 2PM beside Clinton Town Hall on the Indian River for the big event. One thousand plus rubber ducks will be traveling down the river for the race of a lifetime! The winning ducks provide the corresponding raffle ticket with various donated prizes.

It’s a sight to see; the prizes are great (including a trip to Block Island and an Apple Watch , Plus ! Plus!) the event itself is a GREAT family event ( crafts, snacks, face painting, science experiments and more) ; babies and shoreline families in need benefit; an all out WIN WIN for everyone.

For more information about Bare Necessities, diaper need, and volunteer opportunities go to http://www.barenecessitiesct.org/

Please…..Come visit us at 206 A Boston post road to purchase your Ducky Dash raffle tickets . It will be here before you know it!!
P.S. We want the notoriety of selling the most tickets!!! We’d love your help!!

June 11, 2018 Leave a Comment

2018 CT Estimated Taxes Required from Pass-Through Entities

Important! If you receive income from pass-through entities, which includes partnerships & S-Corps, the way you pay your CT estimated taxes has changed.

Why?

On June 4, 2018, Governor Dannel Malloy signed into law the “Act Concerning
Connecticut’s Response to Federal Tax Reform” (the “Act”) which provides a work-around to the $10,000 limitation on state and local tax (“SALT”) itemized deduction imposed by the recently passed federal Tax Cuts and Jobs Act of 2017 (the “TCJA”) for Connecticut taxpayers with income from pass-through entities.

The Act imposes a Connecticut income tax on pass-through entities at a flat tax rate of 6.99% of the entity’s taxable income. This tax will be an expense on the pass-through entity’s tax return (barring any IRS interference) and will reduce the income flowing through to taxpayers’ individual 1040 returns. The tax is offset by a tax credit on the taxpayers’ individual CT-1040 return. For example:

Assume A and B are equal members of AB LLC, and that AB LLC has net
income of $200,000. A tax is now imposed on AB LLC at a 6.99% rate, for
a tax of $13,980. AB LLC will deduct that amount on its federal income tax
return, as it would any other expense, and the net income of ABC LLC is
reduced to $186,020. A and B therefore will each report one-half of that lower amount, or $93,010, as income on their federal and Connecticut income tax returns. To avoid double taxation on the CT level, a tax credit based on the tax paid by the entity will be allowed on members’ CT-1040 forms to reduce their CT income tax liability.

Beginning with the 2018 taxable year, the Act requires each pass-through entity to make estimated tax payments, similar to those which the owners of the entity previously paid. Recognizing that the Pass-Through Entity Tax (“PET’) was not enacted until after the April 15^th due date of first estimated tax payment, pass-through entities may comply with their 2018 estimated payment requirements by making a “catch-up” payment with the June payment that satisfies both the first and second estimated payment requirements. The DRS will also allow pass-through entities to re-characterize some or all of the April 15^th or June 15^th estimated payments made by the individual members so that payments are applied to the pass-through entity’s estimated payment requirements.

What should you do?

If your CT estimates are based solely on income from a pass-through entity, you should verify the entity will be making these required PET payments. Once verified, you should not make any additional CT-1040ES payments for 2018.
If your CT estimates are based on income from a pass-through entity and other sources of income, you should still verify PET payments are being made by the entity and review/recalculate the amounts of CT-1040ES payments you will be required to pay.
If you are responsible for the filing of a pass-through entity tax return (Form 1065 or Form 1120S), then you will need to begin to make the 2018 PET payments for the entity using CT-1065/CT-1120SI ES Vouchers.

As always, we are here to help if you have additional questions and will update you as more information becomes available.

May 17, 2018 Leave a Comment

Second Quarter Estimated Taxes

As the Second Quarter of 2018 winds to a close, estimated taxes are due.

In the tax return packet we gave you, we provided pre-addressed envelopes and vouchers with the amounts due. Please make sure that your payments are mailed by June 15^th. If we keep your envelopes and vouchers here in our office, please make sure you stop by before June 15^th so that we may mail out your checks by the deadline.

As always, we are here to answer any questions you may have.

IRA owners be aware!

Tax Simplification: It isn’t so simple – It’s simply complicated

DUCKY DASH FOR DIAPERS!

2018 CT Estimated Taxes Required from Pass-Through Entities

Important! If you receive income from pass-through entities, which includes partnerships & S-Corps, the way you pay your CT estimated taxes has changed.

Second Quarter Estimated Taxes

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