Did you pay penalties or interest on taxes filed or paid late in the 2019, 2020, 2021 or 2022 tax years? You may be eligible for a refund.
Did you pay late payment penalties, late filing penalties or late payment interest on your 2019, 2020, 2021 and/or 2022 tax returns? If so, you may be entitled to a refund of the penalties and/or interest. A federal court case has recently been decided in the lower level courts decided in favor of the taxpayers, Kwong vs United States, where it was held that taxpayers could not be penalized for late filings or late payments during this extended 3.5-year window that was in place during the Covid 19 pandemic. In order to preserve your right to a refund, a protective claim needs to be filed in the next few weeks while this case is under appeal. Late filing penalties, late payment penalties and late payment interest all have the potential of being refunded if you paid any on your 2019, 2020, 2021 and 2022 tax returns, or are still disputing them for another reason. Contact us and I'll take a look at your transcripts for those years to see if it is worth filing a protective refund claim for a fixed fee plus postage. The consultation is free and there will no fee charged if I determine it is not worth filing a claim. Get in touch with me as soon as possible - the deadline for filing these protective claims is next month!
Put some extra $ toward retirement if you can.
Now that we're almost halfway into the year, time to look at how much you've put away toward retirement. If you have access to a 401(k) or 403(b) plan, the most you can contribute during 2026 is $ 24,500, or $ 32,500 if you are 50 or older. Maximum Individual Retirement Account (IRA) contributions are $ 7500, or $ 8600 if you are 50 or older, and self-employed-IRA maximum is $ 72,000 (or the lower of approximately 18% of your business's net income). Putting these funds toward retirement on a pre-tax basis will save you federal and possibly state income taxes today and the funds will grow tax-deferred until you start making mandatory retirement withdrawals. Putting these funds toward retirement on a post-tax basis (also known as a Roth 401k or Roth IRA) will not save you any taxes today but the funds will grow tax-free. Now is the time to look at how much you've been contributing and adjust it if necessary - contributing the maximum amount should be your goal!
It’s almost June…time to think about mid-year tax planning
Busy season flew by and now we’re almost into June. Crazy how time flies, particularly during the tax season. You may think your tax issues are completely behind you at this point, but the fact is for most people, taxes are a year-round endeavor. If you don’t stay attentive to your tax issues and plan accordingly, you could be in for an unpleasant surprise when it’s time to file. You don’t want to be owing a substantial amount, potentially with underpayment penalties that has to be paid by the following April 15 or you can expect to pay more penalties with interest. The next estimated payment is due on June 15 and if you’re self-employed OR have a substantial amount of non-wage income (dividends, interest, capital gains, etc.), or both, it’s necessary to review your total income and deductions for the year, along with the tax payments you’ve already made so far, and see where things stand. Additionally, if you qualify to make contributions to a deductible Individual Retirement Account (IRA) or can increase your 401k contributions, either of which can reduce your federal tax liability, consider making a contribution at this time as well. Making contributions to these retirment accounts over the course of a year is generally easier than making one lump sum payment, and can spread out the time your retirement investment has to grow. Then be prepared to make the right amount of quarterly federal and state estimated payments, no later than June 15. You’ll thank yourself when filing season comes and don’t have a huge check to write. Need some assistance with this? Contact CAJ Tax Solutions and we can help you out.
Time for Another Busy Season…
It is expected to be a busy one with the passing of the OBBBA (I refuse to refer to it as “beautiful”) which will have a major effect on most of my clientele’s taxes, most commonly with the increased deduction for state and local taxes. It was only $ 10,000 and now for 2025 it will be $ 40,000, which means a lot more people will be able to itemize instead of taking the standard deduction and ultimately save more on their federal taxes. Hopefully I’ll have many more happy clients this year with higher refunds, but you never know…