Happy Tax Season 2019
We are looking forward to a wonderful tax season with lots of challenges and excitement ahead. We are extremely appreciative of your continued patronage of our firm over the years.
This will be the first year where we fully implement all the tax law changes enacted under the Tax Cuts and Jobs Act of 2017. The changes to the Internal Revenue Code under the new law are the largest changes to our Federal Tax Code since 1986. The IRS completely revamped Form 1040 so it will look very different this year. The changes in the tax law were reflected in payroll withholding tables which may mean you saw more in your paycheck. However, reduced withholdings may not clearly reflect your actual tax savings or in a few rare cases increases in your tax liability. North Carolina has also changed how we can transmit W-2s and 1099s from paper to electronic. And, last, but not least, our Federal Government is “shut down” and this includes the IRS during our busiest time of year.
Two weeks ago we began mailing out organizers to our clients and as of last week, all organizers for clients we prepared returns for in the prior year have been mailed. Some of our newer clients will receive their organizer in the next few days if, they have not already. If you have not received your organizer by the end of this week, please contact our office.
In order to make our tax preparation services as efficiently and accurate as possible, we have made some changes to the pages included in your Organizer. Our individual clients will note that we have eliminated the detail pages for interest and dividends. This year we have provided a summary pages listing the sources of these types of income and request that you provide us the original documents (1099 Forms) with your tax return information. We have also eliminated the pages to list your Social Security benefits. Again, we prefer the source documents.
Having the source documents allows us to verify the amounts against the official government form, eliminates handwriting issues and human error in transposing numbers when copying the amounts to the organizer.
We ran some reports on our existing database of clients and determined about 65% of the clients that itemized in 2017 would have taken the standard deduction had the new tax law been in effect in 2017. Therefore, we encourage our clients to use the information we provided to determine if they need to plan to take the standard deduction or if they would like to determine what is more beneficial. We have included some summary information on a hot pink piece of paper in your organizer packet to help you decide how you would like us to proceed and some tax preparation savings you can realize if you would like to take the standard deduction automatically.
Under the new tax law, our clients with businesses may be eligible for a 20% deduction. We may need to ask you questions about the ownership of your business interests and the activities of those businesses to determine if you qualify for the deduction. This is a complex calculation with many variables and alternatives.
There have been many changes related to the depreciation allowed on business assets. Again, this may result in additional questions to determine the eligibility of these additional deductions. Communication will be key this year.
We look forward to working with you again this year and if you have any questions about the organizers you received, please feel free to contact our office.
