Today TaxMama® wants to address several issues that are confusing people this year – or important for you to know.
Dear Friends and Family,
We are getting a great many questions this year. These are some of the important issues we are seeing.
ACA Penalties – You probably know that President Trump signed an Executive Order (EO) that appeared to wipe out all the ObamaCare penalties. Well, it doesn’t quite work that way. Congress still has to write changes to the various laws that are affected. And the IRS still has to issue procedures. When all that is done, your tax software will incorporate the changes and make it possible for you to get your penalties canceled. In the meantime, if you face 2016 penalties, put your tax return on extension and wait. Or file your tax return to get your refunds, less your penalties. You might be able to amend later to get a refund for the penalties you paid.
Incorporating or setting up LLCs, then not having income – folks, when you set up an entity, please be prepared to use it – or don’t set it up until you’re ready. Once you’ve set up an LLC, partnership, corporation or whatever, you are on the hook to file a tax return each year. Even if you have no income, or no activity. And if your state (like California) requires an annual fee, you must pay that each year, or face increasing penalties. So, please, think before you entitize.
Premature deposits into IRAs, HSAs or other tax deferred or retirement accounts – make sure that your income doesn’t disqualify your deposits to these accounts, right away. If you have over-contributed, draw the money out before April 18th or re-characterize them as 2017 deposits. Otherwise, you might face penalties, which start at 6% of the excess contribution – and increase over time.
1040NR and other visa and immigrant-related questions. So many of you have questions about these issues. Thank goodness we have folks like Jean Mammen, EA, Mike Reed, EA and “Uncle” Bill Porter, EA to answer these particular questions. While we try to answer them all, I urge you to buy a copy of Jean Mammen’s book, “
1040NR? or 1040? U.S. Income Tax Returns for Visa Holders +: International Organization and Foreign Embassy Employees.” It will guide you through the steps you need to take to prepare your own tax return.
Please drop by MarketWatch.com and the TaxWatch columns for more tips.
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