Thoughts on the 2018 Tax Season

April 15th is behind us and if you’ve filed your tax return you’ve probably had the chance to see how the Tax Act affected you. Here are some thoughts on this past tax season and about the tax seasons going forward:

    • In 2018, the look of the 1040 tax form was completely different than in previous years. That didn’t diminish the amount of information needed. It will be a bit harder to trace your income and deductions from previous years.
    • tax seasonIf you are 70 ½ or older consider charitable contributions directly from your IRA required minimum distribution (RMD). This reduces your taxable income and is a much more tax effective way than the usual cash contributions. This distribution must be from your account-do not take the money first and give to the charity.
    • The IRS is already issuing guidance on more information they will require for the 2019 tax season in 2020. If you are divorced or separated we will need to know the date of the decree if we don’t already have it on file.
    • As you have read, Illinois wants to replace the current flat tax to a graduated rate. For household incomes up to $250,000 the rate will be 4.95% or lower. If your family income is $250K or more, your rate goes to 7.75%. The top rate is 7.95% for incomes at $1,000,000 or more. Also, if you are at this level the higher tax is effective for all income, not just the incremental amount. There is no inflation indexing in these rates.
    • If this tax change occurs, the State Business Tax Climate index estimates the overall tax rate will be 48th out of 50 states. It currently is at #36. Our property taxes rate the 45th highest (only 5 states are higher).
    • The Illinois corporate rate will be 10.45% the third highest in the nation.
    • Indiana, Iowa, Kentucky and Missouri have all lowered tax rates.
    • Illinois has instituted the $15 minimum wage requirement by 2025.
    • If you’re an S Corporation shareholder the IRS is requiring additional information if the company has loss, if you loaned the company funds and were repaid (full or partial), or dispose of your stock. They require that “basis” information be provided with the tax return. If we prepare your corporate tax return we’ll provide this information. If another tax preparer provides form K-1 please ask them for the basis statement.
    • Illinois is sending notices requesting additional information on property tax payments and verification of Illinois withholding payments. If you receive a notice it’s not that something is wrong-Illinois wants further information. Failure to provide this information can result in you losing your Illinois refund.

There are some big changes that are happening and it will be interesting to see their effects. It’s best to stay on top of the changes. We can help you there! Contact us about your financial needs.

Get Help with Tax Season for Yourself or your Business

This tax season, make sure you are getting the tax return you deserve with our help. Taxes are a complex system and having a knowledgeable and experienced professional at your back can be the best way to improve your return. We offer tax planning and preparation for both individuals and small to medium sized businesses.

Tax Preparation for Businesses

For business owners, your personal and businesses taxes are closely linked. It’s especially important for business owners to have proper tax preparation. One issue many business owners face is that sometimes business owners think only of yearly taxes, but they are subject to many more such as:

  • tax seasonFederal and state payroll withholding and taxes
  • Appropriate tax deposits to avoid penalties
  • Sales tax and use tax issues
  • Worker’s compensation issues
  • Local sales taxes
  • Union reporting
  • Retirement plan contributions and deductions

We have the experience and knowledge required to guide you through the many regulations and laws. Minimizing these taxes is a goal of every business. We can help you and your business through our advising!

Tax Preparation for Individuals

Many individuals believe that their tax return is relatively simple. You can go the simple route, but you are likely making mistakes and missing out on deductions you are able to claim. We can help you get the most out of your tax return.

  • tax seasonIf you are a new client, we review your last 2-3 years tax returns to check for accuracy.
  • No matter if you owe money on your return or have a large refund, we will help you adjust your withholding tax to eliminate problems.
  • Tax returns are carefully reviewed to ensure you take all the deductions you are entitled to.
  • As part of our income tax preparation process, we electronically file your tax return.
  • We prepare most state income tax returns.
  • We can also help you with out-of-state individual tax preparation.

Get the most out of your tax return, call us today so we can provide you with professional tax preparation. You’ll see the difference for yourself and your business.

5 Reasons to Hire A Tax Consultant

If you are like most people when it comes to taxes, you don’t feel confident in what you are doing. A tax consultant can help relieve stress and reduce mistakes while filing taxes. Check out five reasons why you should consider hiring a tax consultant.

1. You Find A Mistake On A Previous Return

Have you found a mistake on a previous tax return in the past three years? You can work with a tax constant to file an amended return. A consultant can help to minimize any damage that may have been caused. It can also provide you with peace of mind in knowing that your tax return will be properly handled.

2. Your Marital Status Has Changed Tax consultant

Have you gotten married or divorced in the last year? If so, your tax filing may be affected.

  • Newly Married Couples: A consultant can help you decide whether to file your taxes together or separate. It is helpful to get a tax consultant’s opinion of what will be most beneficial since every couple’s situation is different.
  • Recently Divorced Couples: A consultant can help you determine if it is best to file separate or together. They can also help ensure that alimony has either been paid or received properly.

3. Filling Your Own Taxes Can Be Time Consuming

Filling Your taxes can be time-consuming. A tax consultant will be able to work quickly and efficiently. They will be able to save you the stress of making sure your taxes are done right.

4. You Work or Live In Different States

Taxes can become confusing if you live and work in different states. If you’ve recently moved to a new state it can be confusing as well.

A tax consultant will be able to assist you in the different states’ tax rules and can help you sort out any issues that arise.

5. You’ve Started A Business

A common mistake of new business owners is waiting to hire a tax professional. How you file your taxes the first year can impact future tax filings. It is important to start off right.

David Mills Can Assist You With Taxes

David Mills is proud to assist our customers with their taxes and make recommendations that fit your needs. Check out our Income Tax Planning service HERE. If you need assistance with your taxes, contact David Mills today. We look forward to working with you!

 

 

5 Reasons to File Your Taxes Early

5 Reasons to File Your Taxes Early

When it comes to paying your taxes, many people find themselves scrambling in April trying to get their act together. While you may think it would be an annual routine for many, about 20% of people wait until the last week to pay their taxes. Are you in that 20%? Whether you are or are not, understanding the benefits of filing taxes earlier than later is very important and will help taxpayers in the long run.

1. The faster you file, the faster you receive your tax refund.

The most obvious reason to file your taxes early is to receive your tax refund as soon as you can. Last year the IRS made it possible to have your tax refund direct deposited into your account, which will allow you to receive your tax refund even faster rather than waiting weeks for a paper return.

2. Filing your taxes early helps prevent tax fraud.

Tax fraud is a major issue that many people end up having to deal with. While tax fraud is more common than you think, there are ways to prevent it. One of these ways is to file your taxes as early as possible. By filing taxes early, it will be more difficult for criminals to pull off. This is because if the IRS receives a duplicate return after you have already filed yours, it will be noted as fraudulent. If you have not filed yours yet, you could be in trouble.

3. If you end up owing taxes, you’ll have extra time.

If you discover that you owe a balance to the IRS, filing taxes early will allow you extra time to sort everything out. If you file as soon as you can in January, then you will have until mid-April to come up with the extra money that you owe. The extra time makes it much less stressful for you and your financial situation.

4. Filing early ensures you won’t need a tax extension.

If you wait until the last minute to file your taxes, you may find yourself scrambling in search of receipts, personal information, etc. Thus, leading to the need for a tax extension. This turns into a serious issue when you owe a balance to the IRS and do not pay what you owe. The IRS will charge you interest and penalties until the full amount is paid off. Filing your taxes early will help you avoid all of these potential issues.

5. Save yourself the stress of waiting until the last minute.

Waiting until the last minute to file taxes will do nothing but add additional stress to your life. You will feel the pressure to find your needed information and file as fast as you possibly can, which can lead to errors and other problems down the road. Tax season is stressful enough, there is no need to add even more stress by waiting until the last minute.

If you are in need of additional tax information or need assistance in filing your taxes, contact David Mills CPA LLC today. We provide expert accounting and financial services to small and medium-sized businesses, as well as individuals across Morton, Peoria, & the rest of Central Illinois. We look forward to answering any questions you may have!