Six Reasons to Choose Direct Deposit for Your Tax Refund
When you file your taxes, you have options on how to receive your refund. The best way to get it is by direct deposit. Eight out of 10 taxpayers get their refunds by direct deposit. Here are six good reasons why you should do the same in 2016:
IRS Direct Deposit:
- Is Fast. The fastest way to get your refund is to electronically file your federal tax return and use direct deposit. Use IRS Free File to prepare and e-file your federal return for free. You can still use direct deposit even if you file a paper tax return.
- Is Secure. Since your refund goes directly into your account, there's no risk of having your refund check stolen or lost in the mail. This is the same electronic transfer system used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts.
- Is Convenient. With direct deposit, your refund goes directly into your bank account. There's no need to wait for your check to come in the mail.
- Is Easy. Choosing direct deposit is easy. When you e-file, just follow the instructions in the tax software. If you file a paper return, the tax form instructions will guide you. Make sure that you enter the correct bank account and routing number.
- Has Options. You can split your refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. Beginning this year, there is a new retirement account offered by the U.S. Treasury Department. It's called a MyRA account and you can designate all or a portion of your refund to a new MyRA account if you mark the "savings" box in the refund section of your return. Use IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), to deposit your refund in up to three accounts. Don't use Form 8888 to designate part of your refund to pay your tax preparer.
- Saves Money. Direct deposit also saves you money. It costs the nation's taxpayers more than $1 for every paper refund check issued but only a dime for each direct deposit made.
You should deposit your refund into accounts in your own name, your spouse's name or both. Avoid making a deposit into accounts owned by others. Some banks require both spouses' names on the account to deposit a tax refund from a joint return. Check with your bank for their direct deposit requirements.
There is a limit of three electronic direct deposit refunds made into a single financial account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and a check refund in the mail. Helpful tips about direct deposit and the split refund option are available in Publication 17, Your Federal Income Tax. You can view, download and print tax products on IRS.gov/forms anytime.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights.
Explore your rights and our obligations to protect them on IRS.gov.
Don't Let Taxes Disrupt Your Retirement Plans!
Many people carefully plan ahead for retirement, setting up tax-advantaged savings accounts and deciding on the best place to live. They may be surprised, then, to learn about the many tax issues that apply to retirees, all of which should be taken into account in their planning. That can include taxes on distributions from retirement or investment accounts, required minimum distributions from some retirement nest eggs and potential taxes on Social Security payments. Many fail to consider state and local income, sales or property taxes-as well as state taxes on retirement benefits and estates.
The good news is that it's possible to anticipate and reduce some of the complications that taxes can cause in retirement. If you're not certain how to get started, be sure to call our office. We can provide the advice you need to build a foundation for a secure retirement.
2016 Standard Mileage Rates for Business, Medical and Moving Announced
WASHINGTON - The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
* 54 cents per mile for business miles driven, down from 57.5 cents for 2015
* 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
* 14 cents per mile driven in service of charitable organizations
The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Important Tax Break Approved by the IRS
We would like to take this opportunity to describe a very important tax break approved by the IRS for owners of residential rental property and other types of buildings purchased or constructed after 1986. This tax break is called "cost segregation." The tax savings can be very substantial and realized immediately.
Most owners of residential rental property depreciate the entire cost of their building over 27.5 years. Owners of other types of buildings, such as offices, retail space, grocery stores, restaurants, warehouses, and manufacturing plants often depreciate the entire cost using a 39-year or 31.5-year depreciation period, depending upon the date of acquisition. Under IRS cost segregation guidelines, however, a significant portion of a building's cost can be depreciated over much shorter periods, usually five or seven years.
The cost segregation rules are complicated, but in brief, they allow a taxpayer to separately depreciate components of a building that are unrelated to its "operation and maintenance" over the shortened depreciation periods. In addition, these depreciation deductions are computed using an accelerated depreciation method (the "200 percent declining balance method") which allows costs to be recovered at twice the rate that applies under the "straight-line" method. The slower straight-line method is used to depreciate residential rental property and other types of buildings.
Many types of building components can qualify for the shortened depreciation period and accelerated depreciation method. It would be impossible to list them all, but common examples include molding, millwork, and other decorative elements, carpeting, wall coverings, partitions, window treatments, counters, cabinets, shelving, special lighting, specialized machinery and equipment (such as kitchen equipment), and the costs of plumbing and electrical components allocable to such equipment. In addition, certain land improvements located outside of a building may be depreciated over 15 years. Land improvements include items such as landscaping, fences, sidewalks, curbs, parking lots, lighting, utilities, signs, swimming pools, tennis courts, and playgrounds. Depending upon the type of building, you can expect to deduct between 10 and 60 percent of its cost over the shorter recovery period.
If you would like more information on cost segregation or if you feel you may benefit from a cost segregation analysis, please contact our office at your earliest convenience so that we may discuss this in greater detail.