Well, Tax Season is here. 

Now is the time of the year that individuals, businesses and other entities (such as nonprofits, estates and trusts) must gather their financial information, and report to the Internal Revenue Service the amount of income that they earned, and estimated taxes paid, and any balance owed, or due to be refunded. Most of us are familiar with the process. I have prepared this article highlighting some of the changes that apply to this tax year.

 Deadlines:

The deadline for filing the 1040 for individuals is April 18th this year. (The 15th is a Saturday, the 16th is a Sunday, and the 17th is a legal holiday in the District of Columbia, so the next working day after the 15th is the 18th.) Significantly, the 18th is the last day of Pesach. Yomtov will be ending between 8:30 and 9 that evening. If you want to file on time, you will want to file in advance of the deadline. Alternatively, right after havdala that night, you can file for a six-month extension, paying any expected tax due along with the filing.

If you manage a partnership or a C corporation, the deadlines for these entities has been changed, The partnership return (1065) is now due March 15th, and the calendar -year C corporation return (1120) is now due April 15th in general, or April 18th this year. Both entities can request a 6-month extension.

Healthcare:

The “Individual Shared Responsibility Provision” also known as the penalty for not having health insurance is now $695 per month for adults, and $347.50 for children, with a household maximum of $2085.

Temporary Tax Laws That Are Now Permanent:

Many provisions of the tax code that had been temporary law until now have been made into the law on a permanent basis (until the time that Congress and the President decide to permanently change it.)

One of these provisions is the provision to allow taxpayers who itemize their deductions to deduct sales taxes instead of state income taxes. This means that those who do not pay state income taxes can deduct sales taxes. Since Maryland (in general) does not tax the first $29,400 of pension income for seniors nor does it tax Social Security benefits, many Maryland seniors do not pay state income tax, and are eligible to deduct sales taxes instead.

Another provision is the provision that someone who has reached the age of 701/2 who is required to take a minimum distribution from a retirement account can direct the trustee to distribute the funds directly to a qualified charity. Those trustee-to-charity distributions are not considered to be distributed to the IRA holder, (that would increase the IRA holder’s Adjusted Gross Income) yet will satisfy the requirement to take the minimum distribution.

As you can see, this year was a quiet year, as everyone was focusing on the election. There was a significant change regarding Social Security, which I will discuss in my next article.

If you have any questions, feel free to email them to me at mpelberg@moshepelbergcpa.com

Moshe Pelberg CPA

 

Moshe Pelberg is a CPA in private practice in Northwest Baltimore.