Did You Change Your Name Last Year?
If you did, it can affect your taxes…
All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:
- Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
- Dependent Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.
- If you adopted a child who does not have a SSN, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.
- Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.
- Report Changes in Circumstances in 2015. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, be sure to report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace throughout the year. Reporting changes will help make sure that you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance.
Have a question? Want to schedule a tax appointment? Call us at 804-204-1040 or email us.
Social Security Benefits and Your Taxes
You may have to pay federal income tax on part of your benefits…
These IRS tips will help you determine whether or not you need to pay taxes on your benefits. They also explain the best way to file your tax return.
- Form SSA-1099. If you received Social Security in 2014, you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of your benefits.
- Only Social Security. If Social Security was your only income in 2014, your benefits may not be taxable. You also may not need to file a federal income tax return. If you get income from other sources you may have to pay taxes on some of your benefits.
- File Your Taxes at Peoples Tax. Our tax professionals will know exactly what you need to do about your Social Security benefits. Schedule your appointment now by calling 804-204-1040 or email us.
- Ask Us For Free. Call us with your questions and, with no obligation, we will give you the information you need to see if any of your benefits are taxable. 804-204-1040
- Tax Formula. Here’s a quick way to find out if you must pay taxes on your Social Security benefits: Add one-half of your Social Security to all your other income, including tax-exempt interest. Then compare the total to the base amount for your filing status. If your total is more than the base amount, some of your benefits may be taxable.
- Base Amounts. The three base amounts are:
- $25,000 – if you are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from your spouse for all of 2014
- $32,000 – if you are married filing jointly
- $0 – if you are married filing separately and lived with your spouse at any time during the year.
Key Points to Know about Early Retirement Distributions
Some people take an early withdrawal from their IRA or retirement plan. Doing so in many cases triggers an added tax on top of the income tax you may have to pay. Here are some key points you should know about taking an early distribution:
- Early Withdrawals. An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.
- Additional Tax. If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an added 10 percent tax.
- Nontaxable Withdrawals. The added 10 percent tax does not apply to nontaxable withdrawals. They include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.
- A rollover is a type of nontaxable withdrawal. A rollover occurs when you take cash or other assets from one plan and contribute the amount to another plan. You normally have 60 days to complete a rollover to make it tax-free.
- Check Exceptions. There are many exceptions to the additional 10 percent tax. Some of the rules for retirement plans are different from the rules for IRAs.
- File Form 5329. If you made an early withdrawal last year, you may need to file a form with your federal tax return. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, for details.
- File Your Taxes With Peoples Tax. Our tax professionals are qualified to handle any early retirement situation. Schedule your appointment today or call us with any questions at 804-204-1040 or email us.
Top Six Things You Should Know about the Child Tax Credit
The Child Tax Credit may save you money at tax-time if you have a qualified child. Here are six things you should know about the credit.
- Amount. The Child Tax Credit may help reduce your federal income tax by up to $1,000 for each qualifying child that you are eligible to claim on your tax return.
- Additional Child Tax Credit. If you qualify and get less than the full Child Tax Credit, you could receive a refund even if you owe no tax with the Additional Child Tax Credit.
- Qualifications. For this credit, a qualifying child must pass several tests:
- Age test. The child must have been under age 17 at the end of 2014.
- Relationship test. The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. The child may be a descendant of any of these individuals. A qualifying child could also include your grandchild, niece or nephew. You would always treat an adopted child as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
- Support test. The child must not have provided more than half of their own support for the year.
- Dependent test. The child must be a dependent that you claim on your federal tax return.
- Joint return test. The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.
- Citizenship test. The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
- Residence test. In most cases, the child must have lived with you for more than half of 2014.
- Limitations. The Child Tax Credit is subject to income limitations. The limits may reduce or eliminate your credit depending on your filing status and income.
- Schedule 8812. If you qualify to claim the Child Tax Credit, make sure to check whether you must complete and attach Schedule 8812, Child Tax Credit, with your tax return. For example, if you claim a credit for a child with an Individual Taxpayer Identification Number, you must complete Part I of Schedule 8812. If you qualify to claim the Additional Child Tax Credit, you must complete and attach Schedule 8812.
- File Your Taxes at Peoples Tax. Let our tax professionals help you take full advantage of the Child Tax Credit. Schedule your appointment now by calling 804-204-1040 or email us.
Small Business Corner
Changes to Small Business Health Care Tax Credit
Small employers should be aware of changes to the small business health care tax credit, a provision in the Affordable Care Act that gives a tax credit to eligible small employers who provide health care to their employees.
Beginning in 2014, there are changes to the tax credit that may affect your small business or tax-exempt organization:
- Credit percentage increased from 35 percent to 50 percent of employer-paid premiums; for tax-exempt employers, the percentage increased from 25 percent to 35 percent.
- Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.
- For 2014, the credit is phased out beginning when average wages equal $25,400 and is fully phased out when average wages exceed $50,800. The average wage phase out is adjusted annually for inflation.
- Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit. Transition relief from this requirement is available to certain small employers.
Small employers may still be eligible to claim the tax credit for tax years 2010 through 2013. Employers who were eligible to claim this credit for those prior years – but did not do so – may consider amending prior years’ returns if they’re eligible to do so in order to claim the credit.
The following information will assist you in completing Form 8941, Credit for Small employer Health Insurance Premiums.
- SHOP QHP documentation or letter of eligibility from SHOP, unless transition relief applies
- Numbers of full-time and part-time employees and numbers of hours worked
- Average annual wages for employees
- Employer premiums paid per employee, if applicable
- Relevant K-1s and other pass-through credit information
- Cost of coverage for each employee
- Payroll tax liability – for tax-exempt organizations only
- Pass-through credit info – for K-1s of other small employers
IRS Makes It Easier To Apply Repair Regulations
The Internal Revenue Service made it easier for small business owners to comply with the final tangible property regulations.
Requested by many small businesses and tax professionals, the simplified procedure is available beginning with the 2014 return taxpayers are filling out this tax season. The new procedure allows small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014.
Also, the IRS is waiving the requirement to complete and file a Form 3115 for small business taxpayers that choose to use this simplified procedure for 2014.
“We are pleased to be able to offer this relief to small business owners and their tax preparers in time for them to take advantage of it on their 2014 return,” said IRS Commissioner John Koskinen. “We carefully reviewed the comments we received and especially appreciate the valuable feedback provided by the professional tax community on this issue.”
The new simplified procedure is generally available to small businesses, including sole proprietors, with assets totaling less than $10 million or average annual gross receipts totaling $10 million or less. Details are in Revenue Procedure 2015-20.
The revenue procedure also requests comment on whether the $500 safe-harbor threshold should be raised for businesses that choose to deduct, rather than capitalize, certain capital expenses.