July 2018 Summer Newsletter

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July 2018 Summer Newsletter

 
Upcoming Deadlines:
July 31, 2018:  Form 5500 Filing Requirement deadline (see below)
September 15, 2018:  3rd Quarter Estimated Payments
September 15, 2018:  Partnership Extension Returns Due
October 15th, 2018:  Tax Returns on Extension Due
October 15th, 2018:  All retirement contributions for returns on extension must be made.

IMPORTANT REQUIREMENT:  Form 5500
If you have a Keogh or Solo K retirement plan worth $250,000 or more, you are required to file a Form 5500 with the IRS by July 31st of each year.  This requirement does NOT pertain to SEP-IRA accounts, other traditional IRA accounts or employer held retirement plans. It is a separate filing from your tax return. Steep penalties are incurred for non-compliance. For more information see the IRS website here:   

Form 5500 Corner | Internal Revenue ServiceFiling tips, notices, updates of filing requirements, and other helpful material to assist you in preparing your Form 5500 (Form 5500-EZ).

W-2 Employees:  Check Your Paystub Withholdings
 
In accordance with IRS issued guidelines on the 2017 tax bill, most payroll services have adjusted down payroll withholdings on federal and state income taxes.  As a result, W-2 employee withholdings may be too low leaving many taxpayers actually owing money come next spring.
 
We suggest that you do a check based on your most recent paystub.  Compare the annualized federal and state tax withholdings for 2018 with those from your 2017 W2. (i.e. multiply one month of Federal and state income tax withheld, not including social security, medicare or SDI by 12).  If the amounts withheld are significantly lower, we suggest that you contact your employer's HR department and adjust your withholdings (via form W-4) so that the total withheld at year-end approximates 2017 withholding amounts.

IRS Withholding Calculator

2017 Tax Law Update:
California Compliance with New Federal Tax Law
California currently does not comply with almost any of the recent changes to the federal tax code.  Below are important recommendations: 
 
Recordkeeping:
We recommend that you continue to keep track of the following for your 2018 tax return (as relevant):
- unreimbursed employee expenses
- investment advisory fees
- union and professional dues.
 
529 Accounts:
While the new federal law allows taxpayers to use up to $10,000 per year of 529 funds for K-12 education, California does not comply.  The growth on any withdrawals of 529 money not used for university education, are subject to penalty and taxes in CA.
 
As a result of the disparities between federal and state law, the preparation of your tax return could be increasingly complex and time consuming. We may be increasing our fees accordingly, although the amount of increase will depend on the return.

Cybersecurity and Tax Fraud
 
As we see in the news all too often, cybersecurity (and related tax fraud) is a serious concern.  As a precautionary step enhancing our office's security, we offer our tax clients the use of a cloud based encrypted portal to house all tax documents including tax returns.
 
The service is free, and a convenient way to send us your completed organizer, tax documents, and to keep copies of your final tax returns.
 
If you are interested in signing up, please contact our office.
 
For more information about common tax scams please click here:

IRS Tax Scams