1. Report worldwide income.
2. File required tax forms.
3. Consider the automatic extension.
4. Review the foreign earned income exclusion.
5. Don’t overlook credits and deductions.
6. Get tax help outside the U.S.
If you have questions or would like more details, call me at 734.332.9949. I offer a free half hour consultation for new clients.
Personal Exemptions Allowances: The annualized allowance for each tax payer and dependent is $4,000. The reason for the odd number is due to the fact that the annual rate changed as of October 1, 2012. Additional exemption allowances were eliminated for anyone over 65. No additional exemption is allowed for any child over the age of 19. If you collect unemployment- any exemption amount exceeding 50% of your income is eliminated.
The annualized tax rate for 2016 is 4.25%.
The Earned Income Tax Credit on the state was 20% of the Federal tax credit in prior years. This credit has been reduced to 6%.
The Credit for Dividend/Interest Income/Capital Gains has been available for seniors in prior years. This credit is not available for some seniors depending on their year of birth.
You can no longer deduct Political Contributions. Also regular Michigan Contributions are no longer available in most cases as a credit.
Personal Exemption Allowances: Personal and Dependent amounts are $4,050 Each.
Capital Gains and Qualified Dividends: If you are in the 10 OR 15% tax bracket, the tax rate is 0%. For other income tax brackets, the tax rate is 15%.
If you have Business Mileage, your allowance per mile for 2016 is 54 cents per mile.
If you have Charity Miles, you can deduct 14 cents per mile.
If you have Medical or Moving expenses, you can deduct 19 cents per mile.
Outsourcing payroll duties to third-party service providers can streamline business operations, but the IRS reminds employers that they are ultimately responsible for paying federal tax liabilities.
Recent prosecutions of individuals and companies who – acting under the guise of a payroll service provider – have stolen funds intended for payment of employment taxes makes it important that employers who outsource payroll are aware of the following tips from the IRS:
1. Employer Responsibility: Even though you forward the tax payments to the third-party to make the tax deposits, you – the employer – are the responsible party. If the third-party fails to make the federal tax payments, the IRS may assess penalties and interest. The employer is liable for all taxes, penalties and interest due. The IRS can also hold you personally liable for certain unpaid federal taxes.
2. Correspondence: The IRS strongly suggest you do not change the address of record to that of the payroll service provider. That could limit your ability to stay informed of tax matters involving your business.
3. EFTPS: Choose a payroll service provider that uses the Electronic Federal Tax Payment System.
Contact me if you have any questions!
I had a client come to me with an envelope from the IRS and it was unopened. They had received the envelope a couple of months before.
Mail from the IRS or the State, is usually time dated and you need to respond.
They might just want clarification or they might say you owe money.
You can write and dispute, but you must respond.
I can help you with your tax problem. I am a licensed enrolled agent and can help respond to letters you receive from the IRS or the State of Michigan.
Make time in your weekly and monthly schedule for recordkeeping and filing.
Entering checks and receipts into an accounting system, filing your paperwork, and reviewing your business financial statements needs to be done on an ongoing basis. Even 10 minutes a day can make a huge difference in how well your office is organized.
Also, doing a monthly review of your Profit and Loss and Balance Sheet statements should reveal any glaring mistakes that can be corrected now instead of next tax time.