Sebastian's Tax Service

Use your FSA funds before year-end. Money set aside in a flexible spending account must be spent by the end of the year, else the funds are lost. But some employers allow a two-and-a-half month grace period, so check with your employer to see what your personal deadline is for utilizing your FSA savings.... (You can spend FSA funds to pay health deductibles and copayments, but not insurance premiums. You can spend FSA funds on prescription medications, medical equipment and supplies, and other permitted medical and dental expenses. Here's a list of what's allowed: https://bit.ly/3rE37Qk )

Here's a feel-good story about the "secret" to finding wealth... A rich farmer liked to ride around his vast estate so he could enjoy his great wealth. One day, while riding his favorite horse, he saw Hans, an old tenant farmer, sitting under a tree. Annoyed because Hans wasn't hard at work, he halted his horse and asked, "What are you doing there?" Hans replied, "I was just taking a minute to be thankful for my meal." And the farmer saw Hans eating a modest lunch of rice and... beans. "If that was my lunch, I wouldn't be giving thanks for it," the farmer said. "It's all I have," said Hans, "but it's all I need, so I give thanks." The farmer was about to ride on when Hans called out to him. "I thought I should tell you that I had a dream this morning. A voice said to me, 'The richest man in the valley will die tonight.' I just thought you should know." The farmer rode away, but Hans' words worried him. He was the richest man in the valley, wasn't he? So he called his doctor when he got back to his mansion. The doctor came out and looked him over, but found nothing wrong with him. The farmer went to bed, still worried, and slept fitfully. When he woke the next morning he thought, "Well, there was nothing to that dream after all. Here I am, alive and well." Then a servant knocked at his door. "What is it?" the farmer asked. "It's about that old tenant farmer, Hans, sir," the servant said. "What about it?" "He died in his sleep last night, sir."

The greatest gift we can give this season is love. Let our hearts be open not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, and show patience and empathy. Happy Holiday from our homes to yours.

The new stimulus bill passed. For businesses, there will be forgiveness for all PPP loans below $150k, and deductibility of PPP expenses. So after the new year when the SBA has time to build the new forms, people can apply for forgiveness whenever they want now. Plus new PPP and tax credits, which are all gated on proving revenue loss. Anyone whose business is down more than 25% from the prior year could be eligible for some more financial aid.... Here is a link to the full bill, if you want to review the 5,600 pages (the longest in history)...

Congress has officially passed a new stimulus bill. The legislation includes a new round of stimulus checks to individuals and families, an extension of unemployment insurance, funding for more business loans, vaccine funding, renter support, and education funds.

Now this is interesting!!

IRS statement-on-getting-answers-to-economic-impact-payment-questions

IRS Offer in Compromise You May Now Qualify. Now that many tax debtors find themselves without a job or closed businesses due to Covid-19. This might be the best time to determine if you qualify for an offer in compromise for tax debts.... IRS Form 656 Offer in Compromise and Qualifier is available on www.irs.gov. Remember, filing an offer will extend the collection statute for collection. Penalties and interest keep on accruing. You need to be current with filing all required tax returns thru 2019. Current with Estimated tax payments for 2020. Or, sufficient tax withholdings to date. If not, change your W-4 Tax withholding with employer. Offers in compromise are determined by current financial condition, compliance with filing and current year payments, equity in assets, special circumstances, future income potential and more. Make sure you read all the requirements on Form 656 Offer in Compromise Booklet. If your offer is accepted, you have to remain in compliance with future filing and payment requirements for 5 years. Otherwise, the offer is defaulted and you will owe all previous years on original al offer if the statute for collection on each year has not expired. It usually takes 8 to 12 months for an offer to be assigned for investigation and determination for accepting, rejection or withdrawal. Appeal rights available depending on rejection or withdrawal issues. If you need assistants call us. See our professional profile on Facebook, LinkedIn, and via our names on google.

DISASTER-RELATED PROPERTY TAX RELIEF California Revenue and Taxation Code section 170 provides that you may be eligible for property tax relief if a calamity such as fire, earthquake, or flood damages or destroys your property. This relief is dependent upon whether the county where your property is located has adopted an ordinance allowing property tax relief to owners of damaged or destroyed property, without fault from the assessee. In such cases, the county assessor will immediately reappraise the property to reflect its damaged condition. In addition, when it is rebuilt in a like or similar manner, the property will retain its prior value (Proposition 13) for tax purposes. All California counties, except for Fresno County, have adopted an ordinance for disaster relief.

Partnership and S Corporation tax returns are due March 15th 2018, if you haven't filed, extension needs to filled by tomorrow.

SCAM ALERT!!!! Tax Pros Urged to Step Up Security as Filing Scheme Emerges, Reminded to Report Data Thefts!!!!!... Only a few days into the filing season, the IRS has already identified a new scam that began with cybercriminals accessing several tax professionals’ computers, stealing data, and then filing fraudulent tax returns. In a few cases, the fraudulent returns used taxpayers’ actual bank accounts for the direct deposit of the refund. A woman posing as a debt collection agency official then contacted the taxpayers to say a refund was deposited in error to their bank account and asked the taxpayers to return the money to her. There are procedures in place for practitioners to report data thefts to both FTB and IRS. For FTB, tax professionals should contact our Identity Theft Hotline at (916) 845-7088. This would also be the number to contact FTB if a taxpayer receives an unexpected refund from us, e.g., for the current tax year before they have filed their return. For IRS, practitioners should contact their state’s IRS Stakeholder Liaison, who will notify appropriate IRS officials and serve as a point of contact. When there is a suspected data theft, it is important that both FTB and IRS are notified. When notified immediately, both FTB and IRS can take steps to help protect taxpayers from tax-related identity theft. All tax professionals should review IRS’ Data Theft Information for Tax Professionals for details about the process and the additional steps they should take. Tax professionals should also review IRS’ Security Summit’s Don’t Take the Bait campaign, which outlined the various scams used by criminals to trick practitioners. SEBASTIANS TAX SERVICE

TAX SEASON IS NEXT WEEK. We know you're most likely still waiting on your W-2s, but now is the perfect time to start gathering the other pieces of information we'll need to prepare your tax return. RECEIPTS are a big one - think of all charitable donations, mileage logs, mortgage interest payments, job-search costs, etc. We'll need to know about it all - after all, our goal is to get you the biggest deduction legally allowable.

8 tax changes for 2017 tax you need to know. Standard deductions Those who are married and filing jointly will have a standard deduction of $13,000, a $300 raise from $12,700.... Single taxpayers and those who are married and file separately will see their standard deduction rise to $6,500. For heads of households, the deduction will be $9,550. Personal exemption The personal exemption will grow by $100 to $4,150. The phase-out for this exemption begins at income of $266,700, or $320,000 for married couples who file jointly, and phases out completely at $389,200 for individuals and $442,500 for couples who file together. Higher contribution limits for retirement savings Employees who participate in certain retirement plans 401(k)s, 403(b)s, most 457 plans and the Thrift Savings plan will be able to contribute as much as $18,500, a $500 increase from the current $18,000 limit. Deductible contributions to IRAs Savers who contribute to individual retirement accounts will have higher income ranges following cost-of-living adjustments. Note that the deduction phases out for individuals and their spouses who are covered by workplace retirement plans. For single taxpayers, the limit will be $63,000 to $73,000. For married couples, the phase-out range will vary depending on whether the IRA contributor is covered by a workplace retirement plan or not. When the spouse who is investing has access to an employer plan, the range is $101,000 to $121,000. For individuals who don't have a retirement plan but are married to someone who does, the phase out has been raised to $189,000 to $199,000. The phase-out was not adjusted for married individuals who file a separate return and who are covered by a workplace retirement plan. That range is $0 to $10,000. Contributions to Roth IRAs For individuals who are single or the heads of their households, the income phase-out has been raised to $120,000 to $135,000. For married couples who file jointly, the range climbs to $189,000 to $199,000. The phase out was not adjusted for married individuals who file a separate return. That is $0 to $10,000. Top income tax rate The 39.6 percent tax rate will affect individuals with income over $426,700. Top rate kicks in for married taxpayers who file jointly at $480,050. Alternative Minimum Tax The exemption amount will be $55,400 for individuals before the AMT kicks in, and begins to phase out at $123,100. For married couples who file jointly, that will be $86,200, and will begin to phase out at $164,100. Estate tax The basic exclusion amount for estates of decedents who die in 2018 will be $5.6 million, up from $5.49 million in 2017.

Welcome to the tax 2017 filing season!!! The Internal Revenue Service (IRS) has announced that tax season will open on Monday, January 29, 2018. The IRS will begin accepting paper and electronic tax returns that day, with more than 155 million individual tax returns expected to be filed in 2018. This is a week later than had been widely reported. Every year, taxpayers have questions about early filing. Many software companies and tax professionals will accept tax returns befo...re opening day, January 29, 2018. That doesn't mean that your tax return will be filed early. Those software companies and tax professionals will submit returns when IRS systems open. Although the IRS will begin accepting both electronic and paper tax returns on January 29, 2018, paper tax returns will be processed later, in mid-February, as system updates continue. The IRS strongly encourages people to file their tax returns electronically for faster refunds The filing deadline to submit 2017 tax returns is April 17, 2018.That's because April 15 falls on a Sunday in 2018. That would normally result in a move to the following Monday (April 16, 2018). However, Emancipation Day falls on Monday, April 16 this year. Since that's a legal holiday in the District of Columbia, the tax filing deadline will be pushed ahead for all individual taxpayers to Tuesday, April 17, 2018. And even though it feels like extra time, it's actually a shorter tax season. Because of the delayed start, the 2018 tax season will last just 79 days. In contrast, the 2017 tax season lasted 86 days. In 2017, the season started six days earlier (on January 23, 2017) and ran through April 18, 2017. There's another delay to keep in mind, too. As I reported in prior years, the law now requires the IRS to hold refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until February 15. There may be additional delays: factoring in weekends and the President’s Day holiday, the IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on February 27, 2018. That's assuming that affected taxpayers opt for direct deposit and that there are no other issues with the tax return. Plan accordingly. Remember that the rule which bars IRS from issuing refunds for taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February applies to the entire refund - even the portion not associated with the EITC and ACTC. The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days. Taxpayers can check out Where's My Refund? on IRS.gov or the IRS2Go phone app for projected deposit dates. If you have any questions, Please call us

The 2016 tax season E-File doors open January 23rd!!!

The start of the actual 2016 tax filing (E-File doors) will not begin until January 23rd. This does NOT mean that we can't begin the preparation necessary prep earlier (we can, if you really have your paperwork in order). The Internal Revenue Service said, their will be delays as a result of a new anti-fraud regulation that will take effect in 2017. The rule will give the agency more time to sniff out phony returns and prevent refunds from going to scammers.