All of the names on a taxpayer’s tax return must match Social Security Administration records because a name mismatch can delay a tax refund. Here’s what you should do if anyone listed on their tax return changed their name:

1. Reporting Taxpayer’s Name Change. Taxpayers who should notify the SSA of a name change include the following:

• Taxpayers who got married and use their spouse’s last name.
• Recently married taxpayers who now use a hyphenated name.
• Divorced taxpayers who now use their former last name.

2. Reporting Dependent’s Name Change. Taxpayers should notify the SSA if a dependent’s name changed. This includes an adopted child who now has a new last name. If the child doesn’t have a Social Security number, the taxpayer may use a temporary Adoption Taxpayer Identification Number (ATIN) on the tax return. Taxpayers can apply for an ATIN by filing a Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions.

3. Getting a New Social Security Card. Taxpayers who have a name change should get a new card that reflects a name change. File Form SS-5, Application for a Social Security Card. Taxpayers can get the form on SSA.gov or by calling 800-772-1213.

If you have any questions about reporting name changes or any other aspects of filing your tax return, please call the office as soon as possible for assistance.

Obtaining a 6-month extension to file is relatively easy and there are legitimate reasons for doing so; however, there are also a few downsides. If you need more time to file your tax return this year, here’s what you need to know about filing an extension.

What is an Extension of Time to File?

An extension of time to file is a formal way to request additional time from the IRS to file your tax return, which in 2019, is due on April 15 (if you live in Maine or Massachusetts you may file by April 17). Anyone can request an extension and you don’t have to explain why you’re asking for more time.Continue reading

Congratulations to our 2018 fourth quarter Employee of the Quarter, Evan Benevento! Evan started with Wheeler in 2018 and is based in the Watsonville office; in his first year with the firm, he has become a huge asset to the Wheeler Team. Evan has been focused on getting to know his new client base, involved in community activities, and mastering the firm’s processes. He has proved himself to be a quick learner. He has a very positive attitude and willing to step in and help a client or team member as needed. We are proud to recognize Evan’s hard work and growth in his position here at Wheeler.

The estimated tax penalty has been waived for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year; however, there is a catch: the penalty is only waived for taxpayers who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. Typically, a taxpayer must pay 90 percent to avoid a penalty.

The waiver computation will be reflected in a revised Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and instructions.

This penalty relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017. Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.

The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant taxpayers had less tax withheld in 2018 and saw more in their paychecks.

However, the updated withholding tables were not able to fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during the year, if they did not submit a properly-revised W-4 withholding form to their employer or increase their estimated tax payments; i.e., a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns.

Please call the office if you need assistance updating your withholding this year to make sure you are having the correct amount of tax withheld for 2019.

Providing tax benefits to investors who invest eligible capital into distressed communities throughout the U.S. and its possessions, Qualified Opportunity Zones (QOZs) were created under the Tax Cuts and Jobs Act of 2017 to spur economic development and job creation. If you’re considering investing in a QOZ, here are five facts you should know:

1. Defer Tax on Capital Gains. Taxpayers may defer tax on eligible capital gains by making an appropriate investment in a Qualified Opportunity Fund (QOF) and meeting other requirements.

2. Partnerships. In the case of an eligible capital gain realized by a partnership, the rules allow either a partnership or its partners to elect deferral. Similar rules apply to other pass-through entities, such as S corporations and its shareholders, as well as estates and trusts and its beneficiaries.

3. Qualifying for the Deferral. To qualify for the deferral, investors must meet the following criteria:

• Capital gains must be invested in a QOF within 180 days.
• Taxpayer elects deferral on Form 8949 and files with its tax return.
• Investment in the QOF must be an equity interest, not a debt interest.

4. Investment held 5 to 7 years. If a taxpayer holds its QOF investment at least five years, the taxpayer may exclude 10 percent of the original deferred gain. If a taxpayer holds its QOF investment for at least seven years, the taxpayer may exclude an additional five percent of the original deferred gain for a total exclusion of 15 percent of the original deferred gain. The original deferred gain – less the amount excluded due to the five and seven year holding periods – is recognized on the earlier of sale or exchange of the investment, or December 31, 2026.

5. Investment held 10 years. If the taxpayer holds the investment in the QOF for at least 10 years, the taxpayer may elect to increase its basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged. This may eliminate all or a substantial amount of gain due to appreciation on the QOF investment.

To view the current list of designated Qualified Opportunity Zones navigate to the Opportunity Zones Resources page at the Department of Treasury’s www.cdfifund.gov.

Questions about the Opportunity Zone Tax Incentive? Don’t hesitate to call. You can also listen to a podcast where Matt Wheeler and Michael Bryant Qualified Opportunity Zones by clicking here.

January 28, 2019, marked the start of this year’s tax filing season, and it’s the first time taxpayers will be filing under the new tax reform laws, most of which became effective in 2018. Complicating matters is a newly revised Form 1040, U.S. Individual Income Tax Return, as well as the partial shutdown of the federal government. With more than 150 million individual tax returns expected to be filed for the 2018 tax year, here’s what individual taxpayers can expect:Continue reading

The complexity of the tax code generates a lot of folklore and misinformation that could lead to costly mistakes such as penalties for failing to file on time or, on the flip side, not taking advantage of deductions you are legally entitled to take and giving the IRS more money than you need to. With this in mind, let’s take a look at seven common small business tax myths.Continue reading

The partners and staff of Wheeler Accountants, LLP, are pleased to announce the successful completion of an independent peer review of it accounting and auditing practice. Wheeler Accountants, LLP is a member of the Private Companies Practice Section (PCPS) and Government Audit Quality Center (GAQC)of the American Institute of Certified Public Accountants (AICPA). In conjunction with these memberships, our firm has an outside peer review of our quality control procedures every three years. These reviews include a broad spectrum of engagements. We have consistently received the highest ratings in our peer reviews.

To see a copy of our latest peer review report, please click here.