Since Tax is a common topic these days. Congress is may have passed a limited new tax law, many are trying to get their tax returns prepared before the April 15th deadline, politicians using tax law change promises to get contributions to their reelection campaigns, etc.
Here is a smattering of mostly unrelated tax thoughts that run through my sleepless brain at 1:30 in the morning…
3.8% Net Investment Tax Credit (NIIT) is computed on passive income over certain income limits. $200,000 single, $250,000 married, $125,000 married filing separate. Organize your income to move as much as needed from being subject to NIIT to non-passive sources.
Beware of shady tax preparers who use fake information to get the tax refund desired. The joke around the office is that there are more of those type in New Jersey for some reason. So, if you are shopping for shady tax preparers, you might try googling the ones in New Jersey?
Intuit/Turbo Tax is in hot water for false advertising. They were pushing the line that using their software was free. All I can say is “caveat emptor!” (Buyer beware. If it sounds too good to be tru, it probably is.)
Individual and corporate returns are due on April 15th this year. (last year you had until April 17th)
Make sure you verify the bank information on page 2 of your tax return. You don’t want your refund going into somebody else's account!!!
You must answer a question about “digital assets” on your tax return. (Cryptocurrency, bitcoin, etc.) If you own, bot, or sold any, you must answer yes. Be prepared to defend what you report for crypto related income. IRS is starting to crack down on this.
If you still mail your tax return, in order to get credit for filing on time, you must use a service that the IRS approves for time dating when you sent your return off. The obvious default is the US Postal Service. They also accept DHL, FedEx, and UPS when using tracking services.
If you’re going through a divorce with retirement funds involved, make sure you have the courts do approved QDRO (Qualified Domestic Retirement Order) that has the retirement administrators split the plans into yours and your x, rather than distributing half to the x, which can trigger a taxable event, with early withdrawal penalties too.
If this year is your first year for IRA Required Minimum Distributions (RMD), make sure you notify your IRA administrator and get that going. You do NOT want to deal with the penalties for not doing an RMD.
Have you heard? Prov 6:4 says, “Give no sleep to your eyes, nor slumber to your eyelids.”