When are quarterly estimated tax payments due in 2017?

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return at the end of the year.

When are quarterly estimated tax payments due in 2017?

If you mail your estimated tax payment and the date of the U.S. postmark is on or before the due date, the IRS will generally consider the payment to be on time.

When to Pay Estimated Tax
Payment Period Due Date
January 1 – March 31 April 15
April 1 – May 31 June 15
June 1 – August 31 September 15
September 1 – December 31 January 15* of the following year. *See January payment in Chapter 2 of Publication 505, Tax Withholding and Estimated Tax
Fiscal year taxpayers If your tax year does not begin on January 1, see the special rules for fiscal year taxpayers in Chapter 2 of Publication 505
Farmers and Fishermen See Chapter 2 of Publication 505

Note: If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday.

When Can I File My 2015 Taxes in 2016?

What is the first day to file my tax return in 2016?

Many people want to get a jump on filing their 2015 taxes in 2016. Others may want to claimed the earned income tax credit as soon as possible in 2016 by filing their taxes early. The choice is up to the taxpayer when they decide to file their taxes in 2016. The IRS has announced that they will begin accepting tax returns on January 19, 2016. This is the first day that people can file their 2015 taxes.

What is the First Day to File Taxes?

The first day to file taxes in 2016 and the day when the IRS will begin accepting and processing tax returns in 2016 has not been announced yet. Typically the IRS will post the first day to file taxes in mid December 2015. Remember though, you cannot file your taxes until you get all your W-2 forms, so the earliest date that you can file may be later than the IRS starting date. Typically people will receive W-2 forms from their employers or their employers accountant by the end of January. If you have not received a W-2 by the end of February, it should be very important to contact your employer and special steps may need to be taken.

See more information:  IRS Tax Bracket for 2015 and Standard Deduction

 

First Day to File Taxes in Past

Last year the IRS announced the starting date at the end of December, and the date was January 20.

  • Tuesday, January 20, 2015
  • Friday, January 31, 2014
  • Tuesday, January 22, 2013
  • Tuesday, January 17, 2012

The IRS starts processing previously stockpiled returns. Most (but not all) are processed on a first-in, first-out basis. The IRS will run a small number of stockpiled returns through their systems up to a week before this date for testing purposes. If yours is one of them, please note that your tax refund (if any) will not be processed until after the IRS processing date.

 

Preparing Ahead to File 2016 Taxes

Even though you cannot submit a tax return to the IRS before they start accepting them, you can start assembling papers that will be necessary to complete your 2015 taxes and file early in 2016. This includes assessing income, expenses, and other deductions you may be able to take. You may start receiving tax forms such as W-2, 1099, 1099-INT, and others. Gathering these documents will speed up filing once  the IRS begin accepting returns in 2016.

 

When do tax refunds start getting mailed?

If you’re waiting on a tax refund, you can‘t get it until you file, and the IRS says it will accept returns starting January 20, 2015. Following the passage of the extenders legislation, the IRS says it anticipates opening the 2015 filing season as scheduled in January.

 

Last Day to File Taxes in 2016

April 18, 2016 is the last day to file your 2015 tax returns without penalty or fines. This is different than previous years where tax returns are typically due on April 15. Like every year, taxes are due by April 15th. However, you have an option to request a 6-month extension that moves the filing deadline to October 15th. The quickest and most accurate way to file your tax return and receive your refund is to e-file. We are not attempting to pretend to be the IRS. We are in no relation to the federal government.

 

 

More Information about 2015 and 2016 Earned Income Tax credit (2015 EIC)

Common 2015 Tax Errors to Avoid This Year

Before you file your return, review it and make sure it is complete and correct. The following checklist can help you avoid common mistakes:

 

Errors Filing Taxes Electronically

Did you consider filing your taxes electronically? When filing your taxes electronically, you can avoid many common errors, which are corrected by the computer program. Depending on your income, you may qualify to use free electronic filing system of the IRS. Free File More information about the “e-file” is available on the website of the IRS .

 

Entering Mistakes on Tax Forms

Did you write the statement in print and clearly, or print your name, Social Security number and address including postal code in the tax return ? Note: If you are married but filing separately, do not include the name of your spouse designated for the name, address and Social Security number in the declaration fields.

Did you write down the names and Social Security numbers for yourself, your spouse (if they make a joint return), their dependents and children qualified for purposes of the earned income credit or child tax credit, exactly like those names and numbers are on Social Security cards? If there has been any change of name, be sure to contact the Social Security Administration, accessing http://www.ssa.gov/r by calling 1-800-772-1213.

 

Mistakes with Tax Exemptions

Did you check only one filing status declaration? Did you check the appropriate boxes exemption for all dependents claimed by you and scored the names and Social Security numbers exactly as those names and numbers are on the Social Security card for each person? Do I indicate the number full of exemptions claimed?

 

Mistakes on Tax Calculations

Did you write down the income, deductions and credits on the right lines? Are the totals correct? If your tax return shows a negative amount, did you write in the brackets? If you take the standard deduction and marked the boxes that indicate you or your spouse are age 65 or older or is blind, scored the correct standard deduction using the worksheet contained on the tax return? Did you correctly calculated the tax? If you used the correct tax tables for year 2014? Did you use the correct column for your filing status declaration?

 

Forgetting to Sign a Tax Return

Did you sign and date the return? If a joint return, does your spouse also signed and dated the declaration? Do you have a Form W-2 from each of your employers and attached to your statement Copy B of each Form W-2? If you have more than one job, combine wages and withholding taxes of all Forms W-2 to receive and report these amounts in a single statement. Did you append each Form 1099-R showing federal withholding tax? Did you attach to your return all required schedules and forms in sequence numerical order as shown in the upper right corner?

 

Correct Mailing Address with Tax Return

Did you use the correct mailing address to send your return, which can be found in the corresponding instruction booklet to your tax form? Did you include the corresponding postmark on the envelope? If you owe taxes, did you include a check or money order payable to “United States Treasury” with the return? Did you write on the check or money order, your name, address, Social Security number, phone number where we can reach you during the day, the tax form used and the tax year? If you receive a refund and requested direct deposit, did you check account numbers and circulation or transit of your bank? Did you keep a copy of the signed and dated tax return and all schedules and attachments for your records?

 

Some of the most common tax returns errors are:

  1. Social Security numbers missing or incorrect.
  2. The tax does not match recorded taxable income and filing status of the statement indicated in the statement.
  3. Miscalculations in determining taxable income, withholding and estimated tax payments, the Earned Income Tax Credit, the standard deduction for being age 65 or older or be blind, the taxable amount of Social Security benefits and credit care expenses for child and dependent. Furthermore, the identification numbers of child care providers are omitted or are incorrect.
  4. Withholding and estimated tax payments are recorded in the wrong line.
  5. Mathematical errors, both sum and subtraction.

 

Fixing Common Tax Return Errors

It is important to review the full statement as an error could delay the processing for a long time.

 

Taxation of Variable Annuities

The income tax treatment of annuities under § 72 is similar to the taxation of life insurance proceeds received by a beneficiary under a settlement option in that the installment payments in both cases contain return-of-capital and income components. In the case of an annuity contract, the amount paid to the insurer, whether as a single premium or as a series of premium payments, is returned to the annuitant in annual or more frequent installments combined with an interest element, commencing either immediately or at a deferred date and continuing for the annuitant’s life or, if the contract so provides, for the lives of two or more annuitants.

 

Variable annuities are subject to certain types of taxation.

If the amount to be paid under an annuity contract varies in response to the insurer’s investment experience, cost-of-living indexes, or other fluctuating criteria, the “expected return” cannot be predicted with accuracy; and this in turn makes it impossible to compute an exclusion ratio in the usual manner. The regulations cope with this problem by (1) treating the amount received by the beneficiary as an annuity payment only to the extent that it does not exceed a taxpayer’s investment in the contract (less the value of any refund feature), divided by the number of anticipated periodic payments; (2) applying an exclusion ratio of 100 percent to this amount, thus excluding it from gross income in its entirety; and (3) requiring any additional amounts received to be included in gross income.

 

How are Variable Annuities Taxed?

Because the amount excluded in any taxable year cannot exceed the larger of (1) the amount actually received or (2) the ratable portion of the taxpayer’s investment, a taxpayer would not recover his investment tax-free if he received less than the excludable amount in any year and lived no longer than his life expectancy. To correct for this deficiency, the regulations permit a taxpayer to elect to recompute the excludable annuity portion of payments received after a shortfall, thus restoring the possibility of recovering his investment tax-free if investment experience under the contract improves.

 

Variable Annuity Contracts

Variable annuity contracts giving the policyholder control over the insurer’s investment decisions are not treated as genuine annuity contracts subject to § 72. They are taxed as custodial accounts generating income that is includable in the policyholder’s gross income as realized. If, however, the investor merely has the ability to allocate premiums paid among various sub-accounts available under the contract (in none of which any person can invest directly), and does not have the power to control or influence the investments made by the company in any of the sub-accounts themselves, then the contract will be recognized as a life insurance or annuity contract.

IRS Penalty Case 6694(a)

For returns and claims for refunds prepared after May 2007, a tax return preparer who prepares a return or claim for refund may be liable for a penalty in the amount of $1,000 if a position is taken on the return or claim for refund and the preparer knew, or reasonably should have known, of the position, there was not substantial authority for the position, or the position was not disclosed or there was no reasonable basis for the position. Now, for 6694(a) penalties, substantial authority has the same meaning as in the accuracy-related penalty regulations.

 

Proving IRS Penalties

the government has the burden to produce sufficient evidence to establish the penalty applies to him. But the preparer has the burden of proving that the position taken on the return or in a claim for refund of income taxes would, number one, have a realistic possibility of being sustained on its merits, or that there was reasonable cause for the position and that such position was maintained in good faith, or that the position was adequately disclosed. The preparer also has the burden of proving the absence of negligence

 

IRS Code Section 6694(a)

Solely for purposes of 6694(a), the return preparer will still be considered to have met the standard concerning an unreasonable position if he relies in good faith and without verification on the advice of another advisor, another return preparer, or another party. Factors used for that good faith reliance on the advice of another are found in the regulations.

 

Recovering IRS Penalty

But the code in the regulations provide that no penalty under 6694(a) will be imposed if there is reasonable cause for the understatement and the preparer acted in good faith. Generally, a preparer is found to have acted in good faith if the preparer relied on the advice of a third party, and the preparer had reason to believe that the third party was competent to render that advice.

 

IRS Penalty Code Sections

IRC 6038(b) – IRC Section 6038(a) requires information reporting with respect to certain foreign corporations (Form 5471) and describes the information required to be reported on this form. IRC Section 6038(b)(1) provides for a monetary penalty of $10,000 for each Form 5471 that is filed after the due date of the income tax return (including extensions) or does not include the complete and accurate information described in Section 6038(a).

IRC 6694(a) – This is the Internal Revenue Code section which includes the regulations regarding return preparer penalties.

IRC 6694(b) – Return preparers who prepare a client return for which any part of an understatement of tax liability is due to the return preparer’s willful, reckless or intentional disregard of rules or regulations by the tax preparer, can be assessed a minimum penalty of $5,000.

 

Interactive Tax Assistant (ITA)

Interactive Tax Assistant (ITA)

The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

  • Simply answer the questions and click the “Continue Button” to progress to the next question screen.
  • When you reach the response screen, you have the option to print the entire interview and the final response.

The tool is designed for use by taxpayers that were U.S. citizens or resident aliens for the entire tax year for which they are inquiring about.  If married, the spouse must also have been a U.S. citizen or resident alien for the entire tax year.  For information regarding nonresidents or dual status aliens, please see Publication 519U.S. Tax Guide for Aliens.

 

ITA Tool

The ITA tool covers a limited number of topics listed below. If you use the search feature and the requested topic is not covered by the tool, then you may be sent to the IRS.gov Tax Trailsapplication. See our new topic lookup tool, the IRS Tax Map. To use the IRS Tax Map you’ll need to click a button that says “Leave IRS Site” Please continue! The IRS Tax Map contains official information; it’s just delivered from a different government website.

ITIN for Immigrants

What information do immigrants need to know about getting an ITIN?

If you earned income in the United States as a resident, citizen or visitor, you must file a tax return. If you can not obtain a Social Security number, you will need a Personal Identification Number (ITIN) to file your taxes and get important loans.

 

What is an ITIN (IRS Individual Taxpayer Identification)?

  • The ITIN is an identification number for individuals who can not obtain a Social Security number to file taxes and receive a refund for income retained by the IRS (IRS).
  • People who can not get a Social Security number can get an ITIN despite their immigration status or country of origin. .
  • By law, you can not have an ITIN and SSN .
  • The ITIN is a nine-digit number that always begins with the number 9 and has a 7 or 8 in the fourth place (for example 9XX-7X-XXXX).

 

Who needs an ITIN?

  • You, your husband / wife or any dependents who can not get a Social Security number must apply for an ITIN to be included in a tax return.
  • If you have dependents living in Mexico or Canada and sends more than 50 percent of the money they need for your expenses, you can apply for an ITIN for each of them and include them on your tax return. This can increase the reimbursement you receive or reduce the amount of tax you owe.

 

Can I use an ITIN to bank accounts and loans?

  • Some banks, credit unions and financial institutions accept the ITIN to open savings accounts or checking accounts that pay interest. You can also apply for loans to purchase a car or a home with ITIN
  • The ITIN does not authorize work and should not be used to apply for job

 

How I can apply for an ITIN?

  • Need the Form W-7 , your tax return and an additional form of identification (see list below) to apply for an ITIN.
  • Mail the form and your tax return to the address that is included in the instructions for Form W-7.
  • You will receive a letter in the mail with your ITIN between 6 and 8 weeks after submitting your application (you will not receive a card with your ITIN).

 

What documents do you need to apply for an ITIN?

  • Original passport (or a certified or notarized copy of passport), 
  • Two of the following documents, which are in effect (including at least one photo ID and an identification of the country of origin):
    • National identification card (with photo, name, current address, date of birth and expiration date)
    • Birth certificate (original or notarized copy)
    • Driver’s license in the United States
    • Driver’s license from their country of origin
    • Identification credential status (U.S.)
    • Credential voting record of their country of origin
    • Military Identification Card U.S.
    • Military identification card from their country of origin
    • Visa
    • Identification card with photo issued by USCIS (Citizenship and Immigration Services)
    • Medical records (dependents under 15 years only)
    • Academic records (only for dependents and / or students under 19 years)

 

How do I declare my income if I have an ITIN?

If you are reporting the wages you have earned, you must include the social security number listed on the W-2 or 1099 forms you received the income section fill in your tax return. The person who has the ITIN will receive credit for the income declared. 

 

Deducting Casualty Loss or Theft

Generally, taxpayers may deduct casualty and theft losses relating to your home, household items and vehicles on their federal income tax return. The IRS would like taxpayers who experience certain types of major personal casualties recover some of their losses through tax savings. If a fire, theft, vandalism, earthquake, storm, floods, terrorism, or similar event damages your property, you may have undergone a casualty loss, which can be deductible as an itemized deduction on your return.

 

What is a casualty loss?

A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration. The deduction is only available for physical damage or loss to your property. Medical losses are not casualty losses and cannot be deducted under this rule. Casualty losses are treated differently depending on whether the loss occurred to property used in your trade or business, to generate investment income, or for personal or family purposes.

 

Deducting Casualty Loss or Theft

A casualty loss is not allowed when the loss is gradual, such as insect damage to trees or water damage from a leaky roof. Therefore, damage or destruction resulting from progressive deterioration of property, such as beachfront erosion, would not qualify as a casualty loss. Loss of property through theft is deductible, but merely misplacing property is not.

 

How to Calculate and Claim Casualty Loss?

A casualty loss is measured as the lesser of (a) the drop in value and (b) your basis in the property.  Remember, for income tax purposes, only losses to property are deductible as a casualty loss. You can’t deduct the loss of future earnings if your business is damaged in a fire, nor can you deduct the loss of time you spent cleaning up after the fire.

It may be difficult to establish these elements and original receipts showing actual costs are necessary. If the casualty loss is big, an appraisal might be required.

 

Limitations Casualty Loss Deduction.

There are three main limitations on deducting a loss on your tax return as an itemized deduction.

  1. If you are insured, you must reduce your loss by your reimbursement.
  2. For each casualty, you must reduce your loss amount by $100. Note that this reduction is per “event,” not per item damaged.
  3. After combining all your losses under the above guidelines, you must reduce them by 10% of adjusted gross income (AGI). Only the loss amount above this “floor” can be deducted. The 10%-of-AGI limit on casualty losses is waived for federally declared disasters in 2008 and 2009.

 

When to take Casualty Loss Deduction

The deduction must be taken in the year the loss is incurred (or, for a theft, the year it’s discovered by the taxpayers). Individual taxpayers who do not itemize deductions cannot deduct their casualty losses. Following these rules should provide a guideline to determine if the loss of property is deductible on a tax return. If your loss deduction is more than your income, you may have a net operating loss. You do not have to be in business to have a net operating loss from a casualty.

 

How much can you deduct on a casualty loss?

The amount of the loss is further reduced by any amounts covered by your insurance company, regardless of whether or not you file a claim.  After the loss is determined and the insurance reimbursement is subtracted, the loss deduction is generally reduced by $100 for each casualty, any casualty gains, and 10 percent of your adjusted gross income.

 

IRS Forms and Publications on Casualty Losses

Report casualty and theft losses on Form 4684Casualties and Thefts. Use Section A for personal-use property and Section B for business or income-producing property. If personal-use property was damaged, destroyed or stolen, you may wish to refer to Publication 584Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property). For losses involving business-use property, refer toPublication 584-B Business Casualty, Disaster, and Theft Loss Workbook.

Donating LEAPS Stock Options

Question: If I were to buy $1000 of stock, and it went up to $2000 in value, I would be able to donate the stock, claim a $2000 deduction, and report no capital gains.

Let’s say now that I purchase $1000 worth of publically traded stock options on the market. They go up to $2000 in market value, and I donate them. Do I report capital gains of $0 or $1000?

 

Donating LEAPS Stock Options

Answer: Your first example only works if you hold the stock for at least a year. If the stock is held for less than one year, you only get to deduct the lower of your cost basis of $1,000 or the stock’s value but you still report no gain,.

If you buy an option contract for $1K and it goes to $2K and you donate it, you have a chartiable contribution for $1k assuming you owned the contract for less than a year, or $2K if you owned it for 12 months or more, and no capital gain. Since publicly traded options typically have a life of less than a year, I don’t see how you would qualify to meet the one-year holding period.

Most charitable organizations probably wouldn’t accept an option donation. They generally have restrictions on what they can invest in and options (or any kind of derivative) is almost universally excluded.

They’d also be inclined to not accept it since they’d have to pay to exercise them (or alternately they’d expire worthless).