Estimated Taxes Form and Publication Can Help People Pay the Right Amount in 2019

The following article was published by the IRS.

safe-2379735_1280The Internal Revenue Service is reminding self-employed individuals, retirees, investors and others who pay their taxes quarterly that the first estimated tax payment for tax year 2019 was due Monday, April 15, 2019, for most taxpayers. A 2018 tax return and 2019 Form 1040-ES, Estimated Tax for Individuals, can help these taxpayers estimate their first quarterly tax payment.

The Tax Cuts and Jobs Act changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. The law changed tax rates and brackets, revised business expense deductions, increased the standard deduction, removed personal exemptions, increased the child tax credit and limited or discontinued other deductions. As a result, many taxpayers may need to raise or lower the amount of tax they pay each quarter through estimated tax payments. The 2019 Form 1040-ES and instructions include inflation adjustments for the standard deduction, income tax rate schedules for tax year 2019 and a worksheet to help taxpayers figure estimated tax payments correctly.

A companion publication, Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, which can help taxpayers determine whether they should change their withholding or make estimated income tax payments. This publication may be helpful for those who have dividend or capital gain income, owe alternative minimum tax or have other special situations. Continue reading

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Can’t Pay Your Taxes? Do This

Most people are rewarded for filing their taxes because the majority of filers receive a refund. But there are those who owe money to the IRS and can’t pay it, and as a result are often afraid to file.

If you can’t afford to pay your taxes, file anyway! If you file your taxes but don’t pay, you will be assessed a 0.5% penalty per month. However, if you don’t file your taxes, that penalty climbs to 5%, a ten-fold increase.

So the moral of the story is to file no matter what. But if you can’t pay, consider other options. The best option is usually an interest-free loan from a friend, family member, or boss. Second-best might be a signature loan through a credit union. You may also pay with a credit card; however, the fee is around 2.5%, plus the interest expense of your credit card. Continue reading

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Contribute to an IRA by April 15 to Claim It on 2018 Tax Returns

The following article was published by the IRS.

money-2724241_1280It’s not too late to contribute to an Individual Retirement Arrangement (IRA) and still claim it on a 2018 tax return. Anyone with a traditional IRA may be eligible for a tax credit or deduction on their 2018 tax return if they make contributions by April 15, 2019.

An IRA is designed to enable employees and the self-employed to save for retirement. Most taxpayers who work are eligible to start a traditional or Roth IRA or add money to an existing account.

Contributions to a traditional IRA are usually tax deductible, and distributions are generally taxable. To count for a 2018 tax return, contributions must be made by April 15, 2019 (April 17, 2019 for residents of Maine and Massachusetts). Taxpayers can file their return claiming a traditional IRA contribution before the contribution is actually made. The contribution must then be made by the April due date of the return. While contributions to a Roth IRA are not tax deductible, qualified distributions are tax-free. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the Saver’s Credit.

Generally, eligible taxpayers can contribute up to $5,500 to an IRA for 2018. For someone who was 50 years of age or older at the end of 2018, the limit is increased to $6,500. Continue reading

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Do I Need To Fill Out A W4?

This video was published by the IRS

With the new tax laws, some may be wondering how they can be sure they don’t end up with an unexpected tax bill next year. The simplest way is to use the IRS Withholding Calculator, available at It will walk you through the process and determine how many allowances you should claim.

If the calculator results suggest you should change your withholding, you will need to submit a new W4 Form to your employer to withhold the correct amount of taxes from your pay. You can download a W4 Form from

Fill out the top with your personal information. Then, on line 5 put the allowances suggested by the calculator. If you need to withhold more taxes, you can add that amount on line 6. Only use line 7 if you qualify to claim a total exemption from withholding. Continue reading

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There are Six New Schedules Some Taxpayers will File with the New Form 1040

The following article was published by the IRS.

Form 1040The 2018 Form 1040 replaces prior year Forms 1040, 1040A and 1040EZ. The 2018 Form 1040 uses a building-block approach that allows individuals to file only the schedules they need with their federal tax return. Many people will only need to file Form 1040 and no schedules.

Electronic filers may not notice these changes as the tax software will automatically use their responses to complete the Form 1040 and any needed schedules. For taxpayers who filed paper returns in the past and are concerned about the 2018 changes, this may be the year to consider the benefits of filing electronically.

While commonly used lines on the prior year form are still on the 2018 Form 1040, other lines are now Schedules 1 through 6 and organized by category. The six new numbered schedules are in addition to the existing schedules, such as Schedule A, Itemized Deductions, or Schedule C, Profit or Loss from Business. Continue reading

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How College Grads (or Anyone) Can Build Credit

The currency of the college years is good grades. Once you graduate, your credit score often dictates much of your financial path going forward. There are several entities who will look at your credit and potentially make decisions based on your history:

  1. Your Employer
  2. Insurance Companies
  3. Landlords
  4. Lenders

So if you are just starting out, or even if you are starting over, here are some really useful tips to help you build your credit: Continue reading

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Safekeeping Tax Records Helps for Future Filing, Amended Returns, Audits

The following article was published by the IRS.

income-tax-491626_1280The IRS generally recommends keeping copies of tax returns and supporting documents at least three years. Employment tax records should be kept at least four years after the date that the tax becomes due or paid, whichever is later. Tax records should be kept at least seven years if a return claims a loss from worthless securities or a bad debt deduction.

Copies of previously-filed tax returns are helpful in preparing current-year tax returns and making computations if a return needs to be amended. Continue reading

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