Summer Weddings Mean Tax Changes

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1 Bill Sipes Stacy Seaton Sipes & Seaton 166B West University Parkway Jackson, TN Tel: (731) Dear Reader, Hot! Hot! Hot! Hope you are spending the summer keeping cool! Our August 2014 Newsletter is a great beach or pool read! We look forward to seeing you soon and keep sending in those referrals! Summer Weddings Federal Income Tax What to Do? Tax Calendar Phishing Scams Midyear Tax Planning AUGUST 2014 Summer Weddings Mean Tax Changes Taxes may not be high on your summer wedding plan checklist. But you should be aware of the tax issues that come along with marriage. Here are some basic tips that can help keep those issues to a minimum: Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov, by calling or from your local SSA office. Change tax withholding. A change in your marital status means you must give your employer a new Form W-4, Employee's Withholding Allowance Certificate. If you and your spouse both work, your combined incomes may move you into a higher tax bracket. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information. Changes in circumstances. If you receive advance payment of the premium tax credit in 2014, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance. Bill Sipes, CPA/ABV/PFS/ BVAL/CS Stacy Seaton, EA *Bill Sipes is a registered representative and investment advisor representative with Sunset Financial Services, Inc. Securities & Investment Advisory Services offered through Sunset Financial Services, Inc Broadway, Kansas City, MO (816) (Home Office) Member FINRA/SIPC. Sipes & Seaton, PC, CPAs and Business Appraisers is not affiliated with Sunset Financial Services, Inc. Address change. Let the IRS know if your address changes. To do that, file Form 8822, Change of Address, with the IRS. You should also notify the U.S. Postal Service. You can ask them online at USPS.com to forward your mail. You may also report the change at your local post office. Change in filing status. If you re married as of Dec. 31, that s your marital status for the whole year for tax purposes. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to figure the tax both ways to find out which status results in the lowest tax. irs.gov Business is great and we re looking for more!!

2 Federal Income Tax Withholding Adjustment Update July Howard J. Schneider, CPA Do you need to adjust your federal income tax withholding amount? With over half the year already gone, now is a good time to check to see if you are on track to have about the right amount of federal income tax withheld from your paychecks for The problem with not having the correct amount of taxes withheld for the year is that: * If your taxes are significantly under-withheld for the year, you risk being hit with a nondeductible IRS interest rate penalty. * If your taxes are significantly over-withheld for the year, you are basically making an interest-free loan to the government when you could be putting that money to work for you. Neither situation is good. The simplest way to correct your withholding is by turning in a new Form W-4 ( Employee s Withholding Allowance Certificate ) to your employer. Taking this action now will adjust the amount of federal income tax that is withheld from your paychecks for the rest of Specifically, you can adjust your withholding by increasing or decreasing the number of allowances claimed on your Form W-4. The more allowances claimed, the lower the withholding from each paycheck; the fewer allowances claimed, the greater the withholding. If claiming zero allowances for the rest of the year would still not result in enough extra withholding, you can ask your employer to withhold an additional amount of federal income tax from each paycheck. While filling out a new Form W-4 seems like something that should be quick and easy, it s not necessarily so because the tax rules are neither quick nor easy. Fortunately, there is an online Form W-4 calculator on the IRS website at that can help to make the job simpler. From the IRS home page, click on the More link under Tools. Then click on the IRS withholding calculator link. You will see the entry point for the online calculator. It s pretty easy to use once you assemble information about your expected 2014 income and expenses, plus your most recent pay stub and tax return. Please understand that the IRS calculator is not perfect. (Remember, it s free, and to some extent, you always get what you pay for.) However, using the calculator to make withholding allowance changes on a new Form W-4 filed with your employer is probably better than doing nothing, especially if you believe you are likely to be significantly under-withheld or over-withheld for this year. Of course, if you want more precise results, we would be happy to put together a 2014 tax projection for you. At the same time, we can probably recommend some planning strategies to lower this year s tax bill. Contact Sipes & Seaton for details. ALERT! Its time for... Annual Investment* Reviews! This service is provided for clients with whom we currently manage investment accounts.* Call for an appointment today! We are scheduling for August 20th-31st. *Securities & Investment Advisory Services offered through Sunset Financial Services, Inc Broadway, Kansas City, MO (816) (Home Office) Member FINRA/SIPC. Sipes & Seaton, PC, CPAs and Business Appraisers is not affiliated with Sunset Financial Services, Inc.

3 TAX CALENDAR August 15 What to Do if you Get a Notice from the IRS Each year the IRS mails millions of notices. Here s what you should do if you receive a notice from the IRS: 1. Don t ignore it. You can respond to most IRS notices quickly and easily. And it s important that you reply promptly. 2. IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information. 3. Read it carefully and follow the instructions about what you need to do. 4. If it says that the IRS corrected your tax return, review the information in the notice and compare it to your tax return. If you agree, you don t need to reply unless a payment is due. If you don t agree, it s important that you respond to the IRS. Write a letter that explains why you don t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS. 5. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. Make sure you have a copy of your tax return and the notice with you when you call. 6. Keep copies of any notices you get from the IRS. 7. Don t fall for phone and phishing scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail not by phone. The IRS does not contact taxpayers by , text or social media about their tax return or tax account. For more on this topic visit IRS.gov. Click on Responding to a Notice at the bottom left of the home page. Also see Publication 594, The IRS Collection Process. You can get it on IRS.gov or call 800-TAX-FORM ( ) to get it by mail. * If the monthly deposit rule applies, employers must deposit the tax for payments in July for Social Security, Medicare, withheld income tax, and nonpayroll withholding. September 15 * Third quarter estimated tax payments are due for individuals, trusts, and calendar-year corporations. * If a five-month extension was obtained, partnerships should file their 2013 Form 1065 by this date. * If a six-month extension was obtained, calendar-year corporations should file their 2013 income tax returns by this date. * If the monthly deposit rule applies, employers must deposit the tax for payments in August for Social Security, Medicare, withheld income tax, and nonpayroll withholding. August 1-3 The State of Tennessee's Annual Sales Tax Holiday is held every year on the first Friday in August and ends the following Sunday night. This year's tax-free holiday weekend begins at 12:01 a.m on Friday, August 1 and ends Sunday, August 3 at 11:59 p.m.

4 IRS Warns Taxpayers to Beware of Phishing Scams Phishing is a scam typically carried out by unsolicited and/or bogus websites posing as legitimate sites luring unsuspecting victims to provide personal and financial information. The IRS has recently warned consumers to watch for s appearing to be from the Taxpayer Advocate Service (TAS) that include a bogus case number. The may include the following message: Your reported 2013 income is flagged for review due to a document processing error. Your case has been forwarded to the Taxpayer Advocate Service for resolution assistance. To avoid delays processing your 2013 filing contact the Taxpayer Advocate Service for resolution assistance. The may contain links appearing to provide information about the advocate assigned to the recipient s case but actually lead to Web pages soliciting personal information. If you receive an claiming to be from the IRS that contains a request for personal information, do not reply to the , open any attachments, or click on any links. Instead, forward the to the IRS at phishing@irs.gov. After forwarding the to the IRS, delete the original you received. Remember, the IRS, including the TAS, does not initiate contact with taxpayers by , text, or any social media. If you receive a phone call from an individual claiming to be from the IRS but you suspect they are not an IRS employee: (1) Ask for a call-back number and employee badge number, and (2) contact the IRS to determine if the caller is an IRS employee with a legitimate need to contact you. If you determine it is a legitimate call, then call the IRS employee back or call us to handle it for you. If you receive a notice or letter via paper mail, contact us to help you determine if it is a legitimate IRS letter. If it is a legitimate IRS letter, we can help you reply if needed. For information on how to contact the IRS, see If either the caller or letter is not legitimate, report the Working with us... Putting together a financial incident to the Treasury Inspector General for Tax Administration. strategy* can be complicated making it easy to get Courtesy of: Howard J. Schneider, CPA overwhelmed. A financial professional or advisor* can help you cut through the confusion and create a personalized strategy to help you achieve your dreams. Certified Public Accountants, Accredited in Business Valuation, Business Advisors, Financial Planning* & Investment Representatives* 166B West University Parkway Jackson, Tennessee Phone: (731) Fax: (731) What a financial professional or advisor can do for you: Assess your current financial situation Set realistic and achievable goals *Bill Sipes is a registered representative and investment advisor representative with Sunset Financial Services, Inc. Securities & Investment Advisory Services offered through Sunset Financial Services, Inc Broadway, Kansas City, MO (816) (Home Office) Member FINRA/SIPC. Sipes & Seaton, PC, CPAs and Business Appraisers is not affiliated with Sunset Financial Services, Inc. Create a financial strategy Help you put your plan into action Help you keep your plan on track no matter what life throws at you Serving West Tennessee for more than 35 years.

5 Midyear Tax Planning Ideas Tax planning is a year-round process, so now is a good time to think about the following: Are you considering making a cash gift to a relative? If so, consider making the gift in conjunction with the overall revamping of your stocks and mutual funds held in taxable brokerage accounts to achieve better tax results. Don t gift loser shares (currently worth less than you paid for them). Instead, sell these shares, recognize the capital loss on your tax return, and then gift the cash proceeds to a relative. However, do gift winner shares to lower tax bracket relatives (unless they are under age 24 and subject to the Kiddie Tax). The 2014 annual gift tax exclusion is $14,000. Are you considering making a contribution to a favorite charity? The previous strategies will also work well for contributions to qualified charities. Sell loser shares, recognize the loss on your tax return, and then give the cash proceeds to the charity and claim the resulting charitable contribution (if you itemize). Donate winner shares to the charity and deduct the full current fair market value at the time of the gift (without being taxed on the capital gain). The tax-exempt organization can sell your donated shares without owing tax. Are you self-employed? Consider employing your child in the business (but pay a reasonable wage for their age and work skills). This practice can shift income (which is not subject to the Kiddie Tax) to the child who is normally in a lower tax bracket, decrease payroll taxes, and enable the child to contribute to an IRA. Is your estate plan current? If you already have an estate plan, it may need updating to reflect the current estate and gift tax rules. For 2014, the unified federal gift and estate tax exemption is a generous $5.34 million, and the rate is 40%. Furthermore, the impact of the Supreme Court s Windsor decision and resulting IRS changes in the federal definition of marriage mean that legally married same-sex couples need to revise their estate plan. Plus, there may be nontax reasons to update your estate plan. Please contact Sipes & Seaton to discuss any tax planning strategies you are interested in implementing. Courtesy of: Howard J. Schneider, CPA sipescpa.com

6 166B West University Pkwy. Jackson, TN Here s What We Can Do For You! Tax Planning and Preparation Preparation of Federal Income Tax Returns Individuals, Corporations, Partnerships, LLCs, Estates & Trust Preparation of State Income Tax Returns Individuals, Corporations, Partnerships, LLCs, Estates & Trust Preparation of Sales tax Returns Preparation of Business Tax and Personal Property Tax returns Call us today!