503-289-2885 / 503-285-5074 shirleywarner@msn.com

      Preparing for tax day

      Use these tips to help you prepare for your appointment

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      Call First for Appointment?

      Call or Schedule here.

      Electronic Filing Offered?

      Yes.

      Drop-off Service Available?

      Yes, strongly encouraged.

      Required documents to keep on file:

      • Copies of Drivers License or State IDs
      • Social Security Cards
      • Proof of Residence for dependents claiming EIC

      Income documents:

      • W-2s
      • 1099s
      • Proof of jury duty pay
      • Proof of alimony you received
      • Social Security statement (1099-SSA)
      • Dividend and interest statements (1099-DIV and 1099-INT)
      • Retirement distributions (1099-R)
      • Brokerage statements (1099-B), along with statements showing when you bought and sold your investments.
      • K-1 statements reporting profits from partnerships, trusts, and small businesses
      • Record of income and expenses for your rental property
      • Record of income and expenses for your self-employment

      (Use our handy IRS document search tool for your documents)

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      Other tax documents:

      • HUD-1 Escrow statement for property you bought or sold
      • Summary of moving expenses
      • Summary of educational expenses (college tuition)
      • Summary of your child care, day care, or adult day care expenses
      • IRA contributions (traditional, SEP, or rollovers)
      • Student loan interest paid (1098-E)

      Tax deduction documents:

      • Health care expenses (doctors, dentists, health insurance, eye care, medicine)
      • Real estate taxes
      • Motor vehicle registration
      • Mortgage interest paid (1098)
      • Gifts to charity
      • Last year’s tax preparation fees
      • Job-related expenses (union dues, job education, uniforms
      • Loss of property due to casualty or theft
      • Gambling losses

      How can I check on my tax refunds?

      Tax Related Web-sites/phone numbers:
      IRS www.irs.gov
      IRS Get Refund Status
      IRS Inquiry Phone: (800) 829-1040

      Current Tax rates

      Current rates information provided by Tax Foundation

      2018 Tax Brackets

      Income Tax Brackets and Rates

      In 2018, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Tables 1 and 2). The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $500,000 and higher for single filers and $600,000 and higher for married couples filing jointly.

      Table 1. Tax Brackets and Rates, 2018

      Rate
      For Unmarried Individuals, Taxable Income Over
      For Married Individuals Filing Joint Returns, Taxable Income Over
      For Heads of Households, Taxable Income Over
      10%
      $0
      $0
      $0
      12%
      $9,525
      $19,050
      $13,600
      22%
      $38,700
      $77,400
      $51,800
      24%
      $82,500
      $165,000
      $82,500
      32%
      $157,500
      $315,000
      $157,500
      35%
      $200,000
      $400,000
      $200,000
      37%
      $500,000
      $600,000
      $500,000

      Standard Deduction and Personal Exemption

      The standard deduction for single filers will increase by $5,500 and by $11,000 for married couples filing jointly (Table 4).

      The personal exemption for 2018 is eliminated.

      Table 2. 2018 Standard Deduction and Personal Exemption

      Filing Status
      Deduction Amount
      Single
      $12,000
      Married Filing Jointly
      $24,000
      Head of Household
      $18,000

       

      Alternative Minimum Tax

      The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two.

      The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

      The AMT exemption amount for 2018 is $70,300 for singles and $109,400 for married couples filing jointly (Table 7).

      Table 3. 2018 Alternative Minimum Tax Exemptions

      Filing Status
      Exemption Amount
      Unmarried Individuals
      $70,300
      Married Filing Jointly
      $109,400

      In 2018, the 28 percent AMT rate applies to excess AMTI of $191,500 for all taxpayers ($95,750 for married couples filing joint returns).

      Under the TCJA, AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2018, the exemption will start phasing out at $500,000 in AMTI for single filers and $1 million for married taxpayers filing jointly (Table 8.)

      Table 4. 2018 Alternative Minimum Tax Exemption Phaseout Thresholds

      Filing Status
      Threshold
      Unmarried Individuals
      $500,000
      Married Filing Jointly
      $1,000,000

       

      Earned Income Tax Credit

      The maximum Earned Income Tax Credit in 2018 for single and joint filers is $520, if the filer has no children (Table 9). The credit is $3,468 for one child, $5,728 for two children, and $6,444 for three or more children. All of these are relatively small increases from 2017.

      Table 5. 2018 Earned Income Tax Credit Parameters

      Filing Status
       
      No Children
      One Child
      Two Children
      Three or More Children
      Single or Head of Household
      Income at Max Credit
      $6,800.00
      $10,200.00
      $14,320.00
      $14,320.00
      Maximum Credit
      $520.00
      $3,468.00
      $5,728.00
      $6,444.00
      Phaseout Begins
      $8,510.00
      $18,700.00
      $18,700.00
      $18,700.00
      Phaseout Ends (Credit Equals Zero)
      $15,310.00
      $40,402.00
      $45,898.00
      $49,298.00
       
       
       
       
       
       
      Married Filing Jointly
      Income at Max Credit
      $6,800.00
      $10,200.00
      $14,320.00
      $14,320.00
      Maximum Credit
      $520.00
      $3,468.00
      $5,728.00
      $6,444.00
      Phaseout Begins
      $14,200.00
      $24,400.00
      $24,400.00
      $24,400.00
      Phaseout Ends (Credit Equals Zero)
      $21,000.00
      $46,102.00
      $51,598.00
      $54,998.00

      2017 Tax Rates

      Estimated Income Tax Brackets and Rates

      In 2017, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Table 1). The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $418,400 and higher for single filers and $470,700 and higher for married couples filing jointly.

      Table 1. Single Taxable Income Tax Brackets and Rates, 2017

      Rate
      Taxable Income Bracket
      Tax Owed

      10%

      $0 to $9,325
      10% of Taxable Income

      15%

      $9,325 to $37,950
      $932.50 plus 15% of the excess over $9325

      25%

      $37,950 to $91,900
      $5,226.25 plus 25% of the excess over $37,950

      28%

      $91,900 to $191,650
      $18,713.75 plus 28% of the excess over $91,900

      33%

      $191,650 to $416,700
      $46,643.75 plus 33% of the excess over $191,650

      35%

      $416,700 to $418,400
      $120,910.25 plus 35% of the excess over $416,700

      39.60%

      $418,400+
      $121,505.25 plus 39.6% of the excess over $418,400

      Table 2. Married Filing Joint Taxable Income Tax Brackets and Rates, 2017

      Rate
      Taxable Income Bracket
      Tax Owed

      10%

      $0 to $18,650
      10% of taxable income

      15%

      $18,650 to $75,900
      $1,865 plus 15% of the excess over $18,650

      25%

      $75,900 to $153,100
      $10,452.50 plus 25% of the excess over $75,900

      28%

      $153,100 to $233,350
      $29,752.50 plus 28% of the excess over $153,100

      33%

      $233,350 to $416,700
      $52,222.50 plus 33% of the excess over $233,350

      35%

      $416,700 to $470,700
      $112,728 plus 35% of the excess over $416,700

      39.60%

      $470,700+
      $131,628 plus 39.6% of the excess over $470,700

      Table 3. Head of Household Taxable Income Tax Brackets and Rates, 2017

      Rate
      Taxable Income Bracket
      Tax Owed

      10%

      $0 to $13,350
      10% of taxable income

      15%

      $13,350 to $50,800
      $1,335 plus 15% of the excess over $13,350

      25%

      $50,800 to $131,200
      $6,952.50 plus 25% of the excess over $50,800

      28%

      $131,200 to $212,500
      $27,052.50 plus 28% of the excess over $131,200

      33%

      $212,500 to $416,700
      $49,816.50 plus 33% of the excess over $212,500

      35%

      $416,700 to $444,500
      $117,202.50 plus 35% of the excess over $416,701

      39.60%

      $444,550+
      $126,950 plus 39.6% of the excess over $444,550
      Source: IRS.

      Standard Deduction and Personal Exemption

      The standard deduction for single filers will increase by $50 and $100 for married couples filing jointly (Table 4). The personal exemption for 2017 remains the same at $4,050.

      Table 4. 2017 Standard Deduction and Personal Exemption

      Filing Status
      Deduction Amount
      Single
      $6,350
      Married Filing Jointly
      $12,700
      Head of Household
      $9,350
      Personal Exemption
      $4,050
      Source: IRS.

      PEP and Pease

      PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. PEP is the phaseout of the personal exemption and Pease (named after former Senator Donald Pease) phases out the value of most itemized deductions once a taxpayer’s adjusted gross income reaches a certain amount. The income threshold for both PEP and Pease will increase from last year to $261,500 for single filers and $318,800 for married couples filing jointly (Tables 5 and 6). PEP will end at $384,000 for singles and $436,300 for married couples filing jointly (both will increase from 2016), meaning that taxpayers with AGI above these limits will no longer benefit from personal exemptions.

      Table 5. 2017 Pease Limitations on Itemized Deductions

      Filing Status
      Income
      Single
      $261,500
      Married Filing Jointly
      $313,800
      Head of Household
      $287,650
      Married Filing Separately
      $156,900
      Source: IRS.

      Table 6. 2017 Personal Exemption Phaseout

      Filing Status
      Phaseout Begins
      Phaseout Complete
      Single
      $261,500
      $384,000
      Married Filing Jointly
      $313,800
      $436,300
      Head of Household
      $287,650
      $410,150
      Married Filing Separately
      $156,900
      $218,150
      Source: IRS.

      Alternative Minimum Tax

      The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two. The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent. The AMT exemption amount for 2017 is $54,300 for singles and $84,500 for married couples filing jointly (Table 7).

      Table 7. 2017 Alternative Minimum Tax Exemptions

      Filing Status
      Exemption Amount
      Single
      $54,300
      Married Filing Jointly
      $84,500
      Married Filing Separately
      $42,250
      Trusts & Estates
      $24,100
      Source: IRS.

      In 2017, the 28 percent AMT rate applies to excess AMTI of $187,800 for all taxpayers ($93,900 for married couples filing joint returns). Under current law, AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2017, the exemption will start phasing out at $120,700 in AMTI for single filers and $160,900 for married taxpayers filing jointly (Table 8.

      Table 8. 2017 Alternative Minimum Tax Exemption Phaseout Thresholds

      Filing Status
      Threshold
      Single
      $120,700
      Married Filing Jointly
      $160,900
      Married Filing Separately, Estates and Trusts
      $80,450

      Earned Income Tax Credit

      2017’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $510, if the filer has no children (Table 9). The credit is $3,400 for one child, $5,616 for two children, and $6,318 for three or more children. All of the aforementioned are relatively small increases from 2016.

      Table 9. 2017 Earned Income Tax Credit Parameters

      Filing Status
      No Children
      One Child
      Two Children
      Three or More Children
      Single or Head of Household
      Income at Max Credit

      $6,670

      $10,000

      $14,040

      $14,040

      Maximum Credit

      $510

      $3,400

      $5,616

      $6,318

      Phaseout Begins

      $8,340

      $18,340

      $18,340

      $18,340

      Phaseout Ends (Credit Equals Zero)

      $15,010

      $39,617

      $45,007

      $48,340

      Married Filing Jointly
      Income at Max Credit

      $6,670

      $10,000

      $14,040

      $14,040

      Maximum Credit

      $510

      $3,400

      $5,616

      $6,318

      Phaseout Begins

      $13,930

      $23,930

      $23,930

      $23,930

      Phaseout Ends (Credit Equals Zero)

      $20,600

      $45,207

      $50,597

      $53,930

      Source: IRS.

      Tax Records Retention

      Tax record retention times

      Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the “three-year law” and leads many people to believe they’re safe provided they retain their documents for this period of time.

      Even if the original records are provided only on paper, they can be scanned and converted to a digital format. Once the documents are in electronic form, taxpayers can download them to a backup storage device, such as an external hard drive, or burn them onto a CD or DVD (don’t forget to label it).

      Create a Backup Set of Records and Store Them Electronically. Keeping a backup set of records — including, for example, bank statements, tax returns, insurance policies, etc. — is easier than ever now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet.

      You might also consider online backup, which is the only way to ensure that data is fully protected. With online backup, files are stored in another region of the country, so that if a hurricane or other natural disaster occurs, documents remain safe.

      Caution: Identity theft is a serious threat in today’s world, and it is important to take every precaution to avoid it. After it is no longer necessary to retain your tax records, financial statements, or any other documents with your personal information, you should dispose of these records by shredding them and not disposing of them by merely throwing them away in the trash.

      However, if the IRS believes you have significantly underreported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidelines.

      Business Documents To Keep For One Year

      • Correspondence with Customers and Vendors
      • Duplicate Deposit Slips
      • Purchase Orders (other than Purchasing Department copy)
      • Receiving Sheets
      • Requisitions
      • Stenographer’s Notebooks
      • Stockroom Withdrawal Forms

      Business Documents To Keep For Three Years

      • Employee Personnel Records (after termination)
      • Employment Applications
      • Expired Insurance Policies
      • General Correspondence
      • Internal Audit Reports
      • Internal Reports
      • Petty Cash Vouchers
      • Physical Inventory Tags
      • Savings Bond Registration Records of Employees
      • Time Cards For Hourly Employees

      Business Documents To Keep For Six Years

      • Accident Reports, Claims
      • Accounts Payable Ledgers and Schedules
      • Accounts Receivable Ledgers and Schedules
      • Bank Statements and Reconciliations
      • Cancelled Checks
      • Cancelled Stock and Bond Certificates
      • Employment Tax Records
      • Expense Analysis and Expense Distribution Schedules
      • Expired Contracts, Leases
      • Expired Option Records
      • Inventories of Products, Materials, Supplies
      • Invoices to Customers
      • Notes Receivable Ledgers, Schedules
      • Payroll Records and Summaries, including payment to pensioners
      • Plant Cost Ledgers
      • Purchasing Department Copies of Purchase Orders
      • Sales Records
      • Subsidiary Ledgers
      • Time Books
      • Travel and Entertainment Records
      • Vouchers for Payments to Vendors, Employees, etc.
      • Voucher Register, Schedules

      Special Circumstances

      • Car Records (keep until the car is sold)
      • Credit Card Receipts (keep with your credit card statement)
      • Insurance Policies (keep for the life of the policy)
      • Mortgages / Deeds / Leases (keep 6 years beyond the agreement)
      • Pay Stubs (keep until reconciled with your W-2)
      • Property Records / improvement receipts (keep until property sold)
      • Sales Receipts (keep for life of the warranty)
      • Stock and Bond Records (keep for 6 years beyond selling)
      • Warranties and Instructions (keep for the life of the product)
      • Other Bills (keep until payment is verified on the next bill)
      • Depreciation Schedules and Other Capital Asset Records (keep for 3 years after the tax life of the asset)

      Personal Documents To Keep For One Year

      • Bank Statements
      • Paycheck Stubs (reconcile with W-2)
      • Canceled checks
      • Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year end statement)

      Personal Documents To Keep For Three Years

      • Credit Card Statements
      • Medical Bills (in case of insurance disputes) 
      • Utility Records
      • Expired Insurance Policies 

      Personal Documents To Keep For Six Years

      • Supporting Documents For Tax Returns
      • Accident Reports and Claims
      • Medical Bills (if tax-related)
      • Property Records / Improvement Receipts
      • Sales Receipts
      • Wage Garnishments
      • Other Tax-Related Bills

      Personal Records To Keep Forever

      • CPA Audit Reports
      • Legal Records
      • Important Correspondence
      • Income Tax Returns
      • Income Tax Payment Checks
      • Investment Trade Confirmations
      • Retirement and Pension Records

      Business Records To Keep Forever

      While federal guidelines do not require you to keep tax records “forever,” in many cases there will be other reasons you’ll want to retain these documents indefinitely.

      • Audit Reports from CPAs/Accountants
      • Cancelled Checks for Important Payments (especially tax payments)
      • Cash Books, Charts of Accounts
      • Contracts, Leases Currently in Effect
      • Corporate Documents (incorporation, charter, by-laws, etc.)
      • Documents substantiating fixed asset additions
      • Deeds
      • Depreciation Schedules
      • Financial Statements (Year End)
      • General and Private Ledgers, Year End Trial Balances
      • Insurance Records, Current Accident Reports, Claims, Policies
      • Investment Trade Confirmations
      • IRS Revenue Agents’ Reports
      • Journals
      • Legal Records, Correspondence and Other Important Matters
      • Minute Books of Directors and Stockholders
      • Mortgages, Bills of Sale
      • Property Appraisals by Outside Appraisers
      • Property Records
      • Retirement and Pension Records
      • Tax Returns and Worksheets
      • Trademark and Patent Registrations

      CONTACT US

      1415 N Rosa Parks Way
      Portland, OR 97217

      Phone: 503-289-2885
      Phone: 503-285-5074
      Fax: 503-715-5877

      E-MAIL: shirleywarner@msn.com

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