FOR IMMEDIATE RELEASE
Michael P. Moi/PR Manager
212.719.8433/mmoi@nysscpa.org 

Tax time is here and the members of the New York State Society of CPAs want to share with you the:

NYSSCPA 2016 Top 10 Tax Filing Tips

1. New York State driver’s license requirement – When New York taxpayers begin filing their 2016 returns, they’ll also need to provide their accountant with their New York State driver’s license or state-issued IDs. This new information will act as an additional level of identity authentication to prevent fraudulent returns from being filed by criminals. Alabama and Ohio have similar requirements with more states to follow. Only one ID is necessary for married couples filing jointly.
2. Maximizing retirement contributions – Retirement contributions can really add up and won’t hurt your paycheck as much when you consider that these contributions are not subject to federal and state income taxes. For high-income tax states like N.Y. the income tax savings are substantial. If contributing to an IRA before April 18, 2017and you want the contribution to apply to the prior year (2016), make sure you advise the custodian of this, so it’s filed for applicable tax year.
3. Review your return – You may be paying someone to file your return, but you should still review the return for errors that might jump out at you and to better understand what you’re reporting. Check the spelling of your name, Social Security Number, review your address–even a missing apartment number could delay a refund check or correspondence.
4. Direct debit of refund – When available, always try to have a refund deposited directly into your checking or savings account. It is more secure and you’ll receive it much faster. Refund checks sent via the mail can get lost or even stolen; criminals know what these envelopes look like. To get another check issued may delay your refund by months and can be financially harmful for taxpayers who need the money ASAP.
5. Required Minimum Distributions (RMD) – The first of the baby boomers are turning age 70 and that could mean  many of them will soon be required to start making distributions from their retirement accounts (e.g. IRAs, 401(k)s). This is required when a taxpayer reaches age 70½; the first distribution can be taken as late as April 1following the year one turns age 70½. Delaying the RMD would create and require two distributions to be made in the second year, potential putting one in a higher bracket in the 2nd year. Planning with your accountant can help minimize taxes. New York for example may allow a $20k exclusion for retirement type income. Not taking the distribution creates a penalty equal to 50% of the shortfall (amount required by not taken) – most retirees cannot afford this.
6. Your state’s tax refund may be taxable in the following year – The logic behind this is that if you took a deduction for your state and local income taxes if you itemized, and then later had some of those taxes paid refunded. New York used to mail out Form 1099-G, but now it can only be retrieved via their website. This refund might not be taxable if the individual was subject to Alternative Minimum Tax in the prior year. This is often a big mistake for individuals who self-prepare their returns. Consult an accountant for help when you are unsure, the tax-savings are worth the fee many times.
7. Child and Dependent Care Credit vs. Flexible Spending Account – Taxpayers should discuss with their accountant the Child and Dependent Care Credit, a credit for qualified expense to have a child in daycare so the taxpayer can work. Depending on your income, the credit is worth between 20% to 35% of the dependent care expenses you paid if an employer offers a Flexible Spending Account for dependent care services, the tax savings of these contributions avoid fed and state income taxes as well as social security (6.2%) and Medicare (1.45%) taxes. Consult your accountant on the potential tax savings and best approach to capitalize on your particular situation.
8. Keep appropriate records – There’s nothing worse than to be innocent and in tax compliance but lacking the necessary records to substantiate your position. Whether it’s keeping track of mileage, expenses, or hours for material participation (passive vs. non-passive) in an activity, there may be software apps taxpayers can download onto their phone to facilitate the required documentation so discuss with your accountants on the best options.
9. Trump tax changes – At the date of this writing, we’re still unclear exactly what will happen but whatever is proposed will not affect 2016 filings. However, change is definitely on the horizon and taxpayers should touch base with their accountant during the year to plan prospectively rather than discussing 2017 in 2018 when their returns will be filed.
10. Identity theft – Please make note the IRS will never call you asking for money, they generally communicate via mailing your correspondence with concerns and they have. If someone calls and asks you to pay your taxes immediately, hang up and call the IRS directly to verify if there is any issues at hand. If you receive a suspicious email supposedly from the IRS requesting immediate payment and requesting you click on a link to submit personal information, ignore it and contact the IRS directly.

About the NYSSCPA
Founded in 1897, the New York State Society of CPAs is the premiere professional membership association representing the interests of a membership of more than 26,000 licensed CPAs and other financial professionals practicing in New York State, and encompassing all areas of practice including in government, education, technology, nonprofit, real estate, healthcare and industry.

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