Who Should File a 2015 Tax Return?

Most people file a tax return because they have to, but even if you don’t, there are times when you should because you might be eligible for a tax refund and not know it. This year, there are a few new rules for taxpayers who must file. The six tax tips below should help you determine whether you’re one of them.

1. General Filing Rules. Whether you need to file a tax return this year depends on a few factors. In most cases, the amount of your income, your filing status, and your age determine if you must file a tax return. For example, if you’re single and 28 years old you must file if your income, was at least $10,300. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. If you have any questions, don’t hesitate to call.

2. Premium Tax Credit. If you bought health insurance through the Health Insurance Marketplace in 2015, you might be eligible for the Premium Tax Credit; however, you will need to file a return to claim the credit.

If you purchased coverage from the Marketplace in 2015 and chose to have advance payments of the premium tax credit sent directly to your insurer during the year, you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit.

You should have received Form 1095-A, Health Insurance Marketplace Statement, in February. The new form has information that helps you file your tax return and reconcile any advance payments with the allowable Premium Tax Credit.

3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.

4. Earned Income Tax Credit. Did you work and earn less than $53,267 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,242. If you qualify, file a tax return to claim it.

5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.

6. American Opportunity Credit. The AOTC (up to $2,500 per eligible student) is available for four years of post-secondary education. You or your dependent must have been a student enrolled at least half-time for at least one academic period. Even if you don’t owe any taxes, you still may qualify; however, you must complete Form 8863, Education Credits, and file a return to claim the credit.

Which Tax Form is Right for You?

You can generally use the 1040EZ if:

• Your taxable income is below $100,000;
• Your filing status is single or married filing jointly;
• You don’t claim dependents; and
• Your interest income is $1,500 or less.

Note: You can’t use Form 1040EZ to claim the new Premium Tax Credit. You also can’t use this form if you received advance payments of this credit in 2015.

The 1040A may be best for you if:

• Your taxable income is below $100,000;
• You have capital gain distributions;
• You claim certain tax credits; and
• You claim adjustments to income for IRA contributions and student loan interest.

You must use the 1040 if:

• Your taxable income is $100,000 or more;
• You claim itemized deductions;
• You report self-employment income; or
• You report income from sale of a property.

Questions?

Help is just a phone call away. Call or make an appointment now and get the answers you need today.

Six Overlooked Tax Breaks for Individuals

Confused about which credits and deductions you can claim on your 2015 tax return? You’re not alone. Here are six tax breaks that you won’t want to overlook. Read more

LMGW Receives Highest Rating in 2015 Peer Review Report

LMGW Certified Public Accountants, LLP has received a rating of “pass” related to the system of quality control for the accounting and auditing practice in its most recent peer review. Pass is the highest rating a firm can receive. The peer review program is dedicated to enhancing the quality of accounting, auditing and attestation services performed by CPAs in public practice. Peer reviews are required every 3 years. For our clients, this ensures that LMGW is providing the highest quality service. For a copy of our latest system review report please click the link below:

Peer Review Report – 2015

LMGW Now Offering Small Business IT Services

LMGW is proud to announce the hiring of  Jeff Berman as IT Manager to provide outsourced IT services for our small and mid-sized business clients.  Jeff has nearly 20 years of experience in Computers and Information Technology specializing in desktop support and network administration. He holds a Bachelor of Science degree in Network and Communications Management.
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IRS Issues Proposed Reg 1.83-2 on the IRC 83(b) Election

The IRS has issued proposed regulation 1.83-2 on 7/16/15 which eliminates the requirement to submit an original copy of the approved 83(b) election with a taxpayer’s originally filed income tax return beginning with the 2015 tax year.

Internal Revenue Code Section 83(b) requires the taxpayer to submit an election to the IRS within 30 days of the receipt of property received in exchange for services that is subject to a substantial risk of forfeiture. The election is made to include the excess of the fair market value of property received over the amount paid, if any, into income in the year of receipt. Absent a valid election the taxpayer is required to include the value of the property in income at the time the risk of forfeiture is lifted. For most taxpayers, especially in Silicon Valley, 83(b) elections are common when founder’s stock or other early stage company stock is received in exchange for services being performed. At grant the shares are typically worth very little and there is no downside to making the 83(b) election as all future gains are capital gain after the date of receipt with a valid election. Without the election, under a normal four year vesting cycle, for instance, the taxpayer would be required to report income each month as the stock vested at the then current market value or 409A valuation amount, possibly triggering large ordinary income amounts to be recognized and substantial tax liabilities to be incurred.

This is a welcome move as the IRS and many tax software providers have no mechanism in place to submit an original stamped copy of the 83(b) election with a taxpayer’s return without resorting to paper filing. There has been debate in the tax preparer community in the past whether an election “statement” included in the electronically filed return is considered meeting this requirement rather than submitting an actual copy of the election with a paper filing. This move appears to support the notion that a simple statement with the electronically filed return is adequate. The original requirement is redundant as the taxpayer is already required to submit an 83(b) election to the IRS within 30 days of the receipt of qualifying property. The proposed regulation is effective for property received after 1/1/16 but taxpayers can rely on the new proposed regulation for the 2015 tax year. Keep in mind the regulation does not relieve the taxpayer of any other record keeping responsibilities related to the receipt of 83(b) property, but nonetheless it appears the IRS has got this one right at least!