Melco Business Service

A further suggestion for companies that want to help their employees: Provide your employees with assistance to properly calculate their tax withholding. For many, over-withholding is a forced savings program (with no interest paid) and when their refund arrives they blow it, so it's not a savings program at all. And with the recent changes in the tax law, many workers failed to realize that they needed to change their withholding. The result was that many taxpayers who were expecting a refund ended up with a balance due. And because they were "expecting" a refund, they didn't have money saved to pay their tax bill.

A couple of takeaways from this: First, this bill is a recognition that taxpayers are working longer and often have little in retirement savings. Second, if this is signed into law inherited retirement accounts will be more costly for most people. Yet another reason to consult with a tax professional!

People often ask me, "Why should I pay someone to do my taxes when I can do it myself?" This is why....

Speaking of unexpectedly owing taxes, if that happens to you this year you may be tempted to delay filing your return because you don't have the money to pay. Don't do it! The penalty for filing your tax return late is 25% of the tax due. Another reason to file on time: The statute of limitations on collections does not start running until your tax return is filed. That means that if you don't file, you are giving the IRS longer to collect from you (and add on penalties and interest along the way).

Did you take advantage of the IRS online Tax Withholding Calculator last year? If so, you may find that you did not have enough tax withheld from your paycheck. The online calculator was poorly designed, and IRS has owned up to it. As a result, if you have a balance due on your 2018 tax return the IRS will waive the underpayment penalty. Want to avoid having that happen again? Give me a call, and I can help you to calculate your withholding correctly for 2019,

Breaking news for military taxpayers: The federal Veteran's Benefits and Transaction Act of 2018 (VBTA) allows spouses of military service members to claim the same state of residence as the service member for state tax purposes, regardless of whether the spouse had ever resided in that state, beginning with the 2018 tax year. This is a BIG change from prior law, and will significantly benefit spouses of service members stationed in California. And the California Franchise Tax Board has confirmed that they will comply, because federal law preempts state law in this area.

Are you ready? The IRS will begin accepting e-filed returns on January 28 (and the government shutdown is ending just in time). Don't expect to get your refund quickly, though. There is already a backlog of returns waiting to be processed, and if your tax return includes the Earned Income Tax Credit (EITC) or refundable Child Tax Credit (CTC) your refund will not be issued until February 15. Ironically, this is also the date that the temporary funding bill expires.

If you are attempting to reach me today, you will notice that I am not answering the phone. That is because I am home sick in bed. Good news, though: You can still set up an appointment with me by going to https://melcobusinesstaxservice.youcanbook.me.

Good news for California employers: After 7 years, the state of California has finally paid off its loan from the federal government to cover unemployment benefits. That means that instead of paying 2.7% for federal unemployment tax (FUTA), employers will now pay only 0.6%. The rate reduction for 2018 is not yet official, as the Department of Labor has to officially announce this year's rates, but it is still something to look forward to, especially for employers with numerous employees.

https://www.apnews.com/7b8c31c334874860b5397c0169505617 While this article notes that many taxpayers file their tax returns "online," it fails to mention that only a very small percentage of taxpayers actually complete their tax returns on paper. Tax software (either for self-preparation or used by tax professionals) has been the standard for a long time, and e-file has virtually eliminated the need to mail in your tax returns. Thus, the supposed "complexity" of the new forms is a non-issue.

We are excited to announce that Philip A. Helmuth, EA, is now part of the Dave Ramsey Endorsed Local Provider program. What is an ELP? Check it out here:https://www.daveramsey.com/elp/why-use-an-elp

Good news for hurricane victims and for you: The recently signed H.R. 3823 (Disaster Relief and Airport and Airway Extension Act of 2017) provides that charitable contributions to hurricane relief made between August 23 and December 31, 2017, are not subject to the AGI limitation for charitable contributions. If you don't itemize your deductions, the Act provides that may take a deduction for your contributions in addition to your standard deduction. Be sure to get a receipt!