Monthly Archives: December 2016

Do you have everything you need before you file a federal tax return this year?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

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By Taxpayer Advocate Service 

There are several changes that might require some up-front actions by you, so that you are ready to file your federal tax return this coming year. The IRS has provided a listing titled Get Ready on IRS.gov.

Reviewing this list now can help you avoid return processing delays or last minute scrambles for information you will need to prepare your return.

Number one on that list is Individual Taxpayer Identification Number (ITIN) renewal – for anyone who has not used it on a federal tax return at least once in the last three years. Additionally, all ITINs issued before 2013 will begin expiring January 1, 2017, starting with those with middle digits of 78 and 79 (Example: (9XX-78-XXXX). All expired ITINs must be renewed before being used on a U.S. tax return. This year, there are also new documentation requirements when applying for or renewing an ITIN for certain dependents – so be sure to read those before applying. This process can take seven weeks if you qualify for an ITIN and your application is complete. If your information is not complete, it can take longer, so start the process now of applying for or renewing an ITIN.

Others changes are that some taxpayers:

Life events can also make a big difference in taxes and healthcare, so remember to account for all life events that could affect your tax liability.

Any of these events during 2016 may affect the taxes you owe:

  • Birth of a child or a child turning age 17,
  • Marriage, divorce or separation,
  • Career or job changes, unemployment or furlough,
  • Planning for retirement,
  • Withdrawal from the Thrift Savings Plan or a 401(k),
  • Natural disasters,
  • Moving or home ownership, and
  • Foreclosure, debt forgiveness or bankruptcy.

The Individual Shared Responsibility Provision of the Affordable Care Act requires you, your spouse and your dependents to report qualifying health insurance for the entire year. If not, you need to be able to claim a health coverage exemption or report an individual shared responsibility payment when you file. In addition, you may be eligible for the premium tax credit if you purchased health coverage through the Health Insurance Marketplace.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

IRS Issues Guidance For Energy Tax Credit Claimants

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

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By Tax News 

The US Internal Revenue Service, in its Notice 2017-04, has updated and clarified the guidance provided in its prior notices regarding the extension, at the end of last year, of the dates by which facilities must begin construction to claim the renewable electricity production tax credit (PTC) and investment tax credit (ITC).

Under the Protecting Americans from Tax Hikes Act, taxpayers can now claim the PTC for certain renewable energy facilities if construction begins before January 1, 2017. The Act also renewed the PTC for wind facilities if construction begins before January 1, 2020 (with the credit being phased out over that period), and extended the ITC for solar energy facilities, if construction begins before January 1, 2022.

A taxpayer may establish that construction of a qualified facility has begun by starting physical work of a significant nature (“Physical Work Test”) or incurring at least five percent of the costs of the planned project (“Safe Harbor Provision”). Notice 2017-04 clarifies the costs that may be included in the Safe Harbor Provision for retrofitted renewable energy facilities.

A taxpayer is also required to make continuous progress towards completion, determined by the relevant facts and circumstances, once construction has begun. Previously, the IRS would agree that a project had satisfied the continuous construction test if the facility was placed in service and generated power within four calendar years after the calendar year during which construction of the facility began, or by December 31, 2016, whichever is later (“Continuity Safe Harbor”).

Under the new Notice, December 31, 2016, is now replaced by December 31, 2018. For example, if construction began on a facility on January 15, 2013, and the facility is placed in service by December 31, 2018, the facility will be considered to satisfy the Continuity Safe Harbor, as will a facility where construction began on January 15, 2016, and is placed in service by December 31, 2020.

The guidance confirms that taxpayers are prohibited from combining methods to satisfy the beginning of construction requirement. For example, a taxpayer may not rely upon the Physical Work Test and the Safe Harbor Provision in alternating calendar years to satisfy the beginning of construction requirement or the continuity requirement. The Notice confirms that this rule applies to facilities for which construction began after June 6, 2016.

The PTC and ITC are aimed at leveling the playing field between US-produced wind, solar, and geothermal energy and cheaper non-renewable alternatives, such as natural gas.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

IRS Announces 2017 Filing Season Date

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

2016 Year-End Tax Planning

 

Download our 2016 year-end tax planning guide for free! 

By Tax News

The Internal Revenue Service (IRS) has announced that the next US tax season will begin on January 23, 2017, and reminded individual taxpayers claiming certain tax credits to expect a longer wait for their refunds.

More than 153m individual tax returns are expected to be filed in 2017, and the agency expects more than four out of five will be prepared electronically using tax return preparation software.

Many software companies and tax professionals will be accepting tax returns before January 23 and then will submit the returns when IRS systems open. While the IRS will begin processing paper tax returns at the same time, it was stressed that there is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.

The IRS said it anticipates issuing more than nine out of ten refunds in fewer than 21 days, but reminded taxpayers that it is now required to hold refunds claiming the earned income tax credit and the additional child tax credit until February 15.

In addition, the IRS said it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the agency cautioned that many affected taxpayers may not have actual access to their refunds until the week of February 27.

“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay.”

The filing deadline to submit 2016 tax returns will be April 18, 2017, rather than the traditional April 15 date due to a weekend and a holiday.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.