Tag Archives: IRS

Pay Attention When You Get Paid

Over the past couple of months, it has been hard to avoid the noise coinciding with what is formally known as the Tax Cuts & Jobs Act. Now that the bill has passed, and much of that noise has become a reality, the consequences of the reform are impossible to avoid.

While the broader effects of the new legislation are yet to be seen, there are some components of the law that will have an effect on the majority of Americans within the next few weeks.

On January 11, 2018, the IRS released Notice 1036, which serves to update employers on how much federal tax they should be withholding from their employee’s paychecks. Implementation of the new withholding amounts (as adjusted for the new tax landscape) is to begin “as soon as possible, but not later than February 15th, 2018”. To put it simply, this means that many of us will see a change in our take home pay very soon.

You may recall filling out a Form W-4 when you began your employment? That form is what your employer uses to calculate the amount of federal income tax they should remit from your paycheck. Using the updated withholding tables released with Notice 1036, employers will be adjusting their employees’ paychecks to more accurately cover their (new) income tax liability.

Here is what is important to remember: while employers can accurately determine the amount of tax owed based off of the wages they pay their employees, they have no way of considering the other elements that factor into an employee’s tax situation. Taxpayers need to consider a more involved approach at determining what their overall tax liability will be. In order to do so, each of us needs to develop an understanding of the new tax laws, and applicably determine how the new laws will affect them.

Take for example, an employee who gets compensated for mileage. In the past, the compensation was likely included on the employee’s W-2, as taxable income. On their tax return, the employee would pick up the mileage compensation as part of their taxable wages, then deduct the mileage as an unreimbursed business expense on Schedule A. Now, however, as a result of the recent tax reform, that deduction for unreimbursed business expenses is no longer available; meaning that the mileage compensation will still be included as taxable income, but there will no longer be an offsetting deduction. If taxpayers aren’t proactive in making sure that they appropriately adjust their withholdings, they could potentially be in for quite a surprise when they file their tax return in April of 2019.

There has a been a lot of curiosity amongst our clients lately; many of them have been asking us how they will fare under the new tax law. It is not necessary, and it might even be unwise, to wait until you file your 2018 tax return to get your answer. The tax reform act certainly did create change. If you pay federal income tax, it will bode you well to consult your tax advisor sooner rather than later; taking a comprehensive look at your new tax environment now can help you plan ahead.

John Massey is a Senior Accountant at Perry, Fitts, Boulette & Fitton CPAs. He helps individuals and businesses with tax planning preparation and works on compiled and reviewed financial statements for businesses. He can be reached at jmassey@pfbf.com or 873-1603.

Cyber Security Threats. Are you a victim?

You may (or may not) have heard about cyber threats in the news, especially those targeting tax professionals. We want to reassure you that all of us at Perry, Fitts, Boulette & Fiton CPAs have been taking every precaution to protect your personal tax information. Your trust and the security of your information are crucial to us.

The latest round of threats are fake IRS tax bills that may arrive by email, as an attachment, or by mail purportedly related to the Affordable Care Act (ACA). You will NOT receive correspondence from the IRS via email. You can safely delete any such email. Never open the attachment. If you receive correspondence by mail it has many signs of being fake:

  • The CP2000 notices appear to be issued from an Austin, Texas, address;
  • The letter says the issue is related to the Affordable Care Act  and requests information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C;
  • Requests checks made out to I.R.S. and sent to the “Austin Processing Center” at a post office box.

IRS impersonation scams take many forms: threatening phone calls, phishing emails and demanding letters. Learn more at Reporting Phishing and Online Scams. The IRS does not initiate unsolicited email contact or contact by social media.

An authentic CP2000 notice is used when income reported from third-party sources such as an employer does not match the income reported on the tax return. Unlike the fake, it provides extensive instructions to taxpayers about what to do if they agree or disagree that additional tax is owed. A real notice requests that checks be made out to “United States Treasury.” (Source www.irs.gov)

At Perry, Fitts, Boulette & Fitton CPAs, we have formed a special security committee, updated password protocol, continue to have an on-site technology professional monitoring our systems and continue to follow safe practices in safeguarding your data. We password protect your tax return when sent by email and will also redact social security numbers for an additional layer of security. We have ongoing security training in place for our staff. We will call if you send us an attachment that we are not expecting or to let you know we are sending a safe, secure attachment to you.

If you have any questions or concerns, please contact us! 207-873-1603 or 207-371-8003. Your security is our priority.

About the Author: Lynn Stover is an integral part of the PFBF CPAs tax team and a valued senior tax specialist. She operates primarily from our mid-coast Bath location, meeting with clients for tax planning and preparation. She can be reached via email, lynn@pfbf.com or by the above phone numbers.